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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549


Form 10-K

|  |  |                                                                                       
|- |  | --------------------------------------------------------------------------------------
|þ |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
	15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934
| 
|  |  | For the fiscal year ended September 30,
	2001                                         

0-24339

(Commission File Number)




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Inktomi Corporation

(Exact name of Registrant as specified in its
charter)




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|                         |  |                                     
|------------------------ |  | ------------------------------------
|Delaware                 |  | 94-3238130                          
|(State of Incorporation) |  | (I.R.S. Employer Identification No.)

4100 East Third Avenue

Foster City, California 94404


(Address of principal executive
offices)


(650) 653-2800

(Registrants telephone number, including
area code)




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Securities registered pursuant to
Section 12(b) of the Act: None

Securities registered pursuant to
Section 12(g) of the Act:

Common Stock, $0.001 Par Value


(Title of Class)


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 þ          No o

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 or any
amendment to this
Form 10-K.     o

Based on the closing sale price of the Common
Stock on the NASDAQ National Market System on November 30,
2001, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $692,144,202. Shares of
Common Stock held by each officer and director and by each
person known by the Company to own 5% or more of the outstanding
Common Stock have been excluded in that such persons may be
deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.

The number of shares outstanding of
Registrants Common Stock, $0.001 par value, was
143,019,218 at November 30, 2001.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information is incorporated by reference
to the Proxy Statement for the Registrants 2002 Annual
Meeting of Stockholders to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A not later
than 120 days after the end of the fiscal year covered by
this Form 10-K.



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TABLE OF CONTENTS



|                                           |                                                                                              |                                                            |  |  |  |  |  | 
|------------------------------------------ | -------------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|PART I                                    
|                                           | Item 1.Business                                                                             
|                                           | Item 2.Properties                                                                           
|                                           | Item 3.Legal Proceedings                                                                    
|                                           | Item 4.Submission of Matters to a Vote of Security Holders                                  
|PART II                                   
|                                           | Item 5.Market for Registrants Common Stock and Related Stockholder Matters                 
|                                           | Item 6.Selected Financial Data                                                              
|                                           | Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                           | Item 7A.Quantitative and Qualitative Disclosures About Market Risk                          
|                                           | Item 8.Consolidated Financial Statements and Supplementary Data                             
|                                           | Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III                                  
|                                           | Item 10.Directors and Executive Officers of the Registrant                                  
|                                           | Item 11.Executive Compensation                                                              
|                                           | Item 12.Security Ownership of Certain Beneficial Owners and Management                      
|                                           | Item 13.Certain Relationships and Related Transactions                                      
|PART IV                                   
|                                           | Item 14.Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|SIGNATURES                                
|REPORT OF INDEPENDENT ACCOUNTANTS         
|                                           |                                                                                              | CONSOLIDATED BALANCE SHEETS                               
|                                           |                                                                                              | INKTOMI CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS 
|                                           |                                                                                              | CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
|                                           |                                                                                              | INKTOMI CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|EXHIBIT INDEX                             
|Exhibit 10.34                             
|Exhibit 10.36                             
|Exhibit 21.1                              
|Exhibit 23.1                              



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INKTOMI CORPORATION

FORM 10-K

FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
2001

TABLE OF CONTENTS

|                     |  |                                                                                        |     |      |    | 
|-------------------- |  | -------------------------------------------------------------------------------------- | --- | ---- | -- | 
|                     |  |                                                                                        |     | Page
|                     |  |                                                                                        |     |     
|PART I              
|Item 1.              |  | Business                                                                               |     |      | 3  | 
|Item 2.              |  | Properties                                                                             |     |      | 12 | 
|Item 3.              |  | Legal Proceedings                                                                      |     |      | 12 | 
|Item 4.              |  | Submission of Matters to a Vote of Security
	Holders                                   |     |      | 13 | 
|                    
|PART II             
|Item 5.              |  | Market Registrants Common Stock and Related
	Stockholder Matters                      |     |      | 13 | 
|Item 6.              |  | Selected Financial Data                                                                |     |      | 14 | 
|Item 7.              |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |     |      | 14 | 
|Item 7A.             |  | Quantitative and Qualitative Disclosures About
	Market Risk                            |     |      | 30 | 
|Item 8.              |  | Financial Statements and Supplementary Data                                            |     |      | 31 | 
|Item 9.              |  | Changes and Disagreements with Accountants on
	Accounting and Financial Disclosure     |     |      | 32 | 
|                    
|PART III            
|Item 10.             |  | Directors and Executive Officers of the Registrant                                     |     |      | 32 | 
|Item 11.             |  | Executive Compensation                                                                 |     |      | 32 | 
|Item 12.             |  | Security Ownership of Certain Beneficial Owners
	and Management                        |     |      | 32 | 
|Item 13.             |  | Certain Relationships and Related Transactions                                         |     |      | 32 | 
|                    
|PART IV             
|Item 14.             |  | Exhibits, Financial Statement Schedules and
	Reports on Form 8-K                       |     |      | 32 | 
|SIGNATURES           |  |                                                                                        | 36  |     
|FINANCIAL STATEMENTS |  |                                                                                        | F-1 |     

This report on Form 10-K and other oral and
written statements made by the Company to the public contain and
incorporate forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, and
Section 21E of the Securities Exchange Act of 1934. When
used in this report, the words anticipate,
believe, expect, intend,
may, will and similar expressions
identify forward-looking statements. Forward-looking statements
in this report include, but are not limited to, those relating
to the general direction of our business; our ability to
successfully penetrate the enterprise market; our ability to
develop and deliver more point applications; our ability to
continue to support the service provider market; our success in
generating sales through our OEM partners; our ability to
introduce new products and services and enhance existing
products and services to meet customer needs, particularly in
the area of on-demand and live streaming media; our expected
expenses and cash reserves for future periods; our ability to
improve our sales and distribution capabilities; our focus on
both domestic and international markets; our ability to develop
and maintain productive relationships with providers of leading
network technologies; the possibility of acquiring complementary
businesses, products, services and technologies; and the
conditions of markets that impact our business. Although we
believe our plans, intentions and expectations reflected in
these forward-looking statements are reasonable, we can give no
assurance that these plans, intentions or expectations will be
achieved. Actual results, performance or achievements could
differ materially from those contemplated, expressed or implied
by the forward-looking statements contained in this report.
Important factors that could

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cause actual results to differ materially from
our forward-looking statements are set forth in this report
under the headings Factors Affecting Operating
Results, Managements Discussion and Analysis
of Financial Condition and Results of Operations and in
other reports filed with the Securities and Exchange Commission.
These factors are not intended to represent a complete list of
the general or specific factors that may affect us. Other
factors, including general economic factors and business
strategies, may be significant, presently or in the future, and
the factors set forth in this report may affect us to a greater
extent than indicated. You should not rely on these
forward-looking statements, which reflect our position as of the
date of this report. We do not assume any obligation to revise
forward-looking statements.


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PART I




Item 1.     Business

Overview

Inktomi Corporation is a leading provider of
scalable network infrastructure software and services. Inktomi
develops, markets, licenses and supports a range of network
infrastructure applications that enhance the performance and
intelligence of large-scale networks, enabling enterprises and
network service providers to publish, distribute, manage and
retrieve content quickly and efficiently.

Our primary software products include our Traffic
Server network cache platform, a powerful caching technology
that enables frequently accessed information to be stored in and
served from dedicated local systems close to the users who use
the information most often; our Content Delivery Suite, a set of
applications that manage the complex task of distributing and
tracking content and applications across service provider and
enterprise networks; our Media Products, technologies that
enable live and on-demand broadcasting across enterprise and
service provider networks; and Inktomi Enterprise Search, a
comprehensive information retrieval platform that delivers
access to content across an enterprise, regardless of location,
language, or file format.

In July 2001, we introduced the following new
software products designed to further our presence in the
enterprise market and provide enhanced solutions to our service
provider customers: Traffic Edge, an intelligent, content-aware
edge server that caches and delivers audio, video and other
large content files storing such frequently requested content at
the edge of the network; Traffic Core, a robust solution that
provides application level networking and routing capabilities
for content as it flows between the network core and end users;
and Traffic Controller, an application that manages and monitors
both core and edge software, providing end-to-end visibility and
network-wide control over content. Together, Traffic Edge,
Traffic Core and Traffic Controller make up the Inktomi Content
Networking Platform. We also introduced Inktomi Media Publisher,
an advanced solution that allows enterprises to integrate
content publishing, scheduled distribution, and search retrieval
into a single, end-to-end business solution that manages audio,
video and other large content files. We have combined the
products of the Inktomi Content Networking Platform with the
Inktomi Media Publisher to create a solution specifically for
enterprises, the Enterprise Communications Suite.

We also provide Web search engine services for
several portals and destination sites on the Internet. The
Inktomi Search Engine provides a customizable, private label
solution that offers portals and destination sites the ability
to serve differentiated, highly relevant search results. The
Inktomi Search Engine, through its paid inclusion services,
provides content publishers greater access to end users through
portal and destination site customers of our search engine
services.

Based in Foster City, Calif., we were
incorporated in California in February 1996 and reincorporated
in Delaware in February 1998. In this report,
Inktomi, the Company, our,
us, we and similar expressions refer to
Inktomi Corporation and its subsidiaries. Inktomi, Essential to
the Internet, Traffic Server, Content Delivery Suite, Content
Bridge, Search Everywhere, Traffic Edge, Traffic Core, Traffic
Controller, Inktomi Media Publisher and the tri-colored cube
design and other marks are service marks, trademarks and
registered trademarks of Inktomi Corporation in the United
States and in other countries. All other trademarks, trade names
or service marks appearing herein are owned by their respective
owners.

Business Background and Strategy

Historically, sales to the Internet service
provider market have comprised a substantial portion of our
revenues. Since the introduction of our first software products
in 1998, Internet portals, Internet service providers, content
distribution network providers and hosting providers have been
an important and consistent customer base. We expect to continue
to support and sell new products to this market and to pursue
new service provider customers, particularly in the Asia-Pacific
region, and we expect that revenues from these markets will
continue to account for a significant percentage of our revenues.

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In response to the changing market environment
for service providers in North America and Europe, we recently
refocused our business and sales strategies to provide our
software solutions to the enterprise market. Through
acquisitions and internal development, we have created a
portfolio of network infrastructure software products to address
the content and information management and distribution
requirements of large enterprises.

In July 2001, we introduced several new products
designed to further our enterprise software strategy and to
provide enhanced solutions to our service provider customers.
These products include Inktomi Media Publisher, Inktomi Traffic
Core, Inktomi Traffic Edge, and Inktomi Traffic Controller. In
an effort to penetrate the enterprise market we are offering
some of our products such as Inktomi Enterprise Search and
Inktomi Media Publisher individually as low-cost, easily
deployed solutions. In addition, Inktomi products are available
through our OEM partners, who offer server-based appliances that
embed our caching and streaming media products. For
organizations with more complex requirements, we offer
comprehensive end-to-end software solutions tailored to the
requirements of the enterprise.

We reorganized our sales organizations and
modified our sales strategies in the quarter ending
September 30, 2001 in response to our changing business
focus. We are actively marketing our infrastructure software
solutions to new enterprise accounts as well as to our installed
base of enterprise customers that have licensed Inktomi
Enterprise Search. We have focused our sales force on
establishing new relationships by offering our low-cost, high
value applications as an entry point into the enterprise and
then leveraging those relationships to offer our more
comprehensive infrastructure applications and architecture.
Finally, we recently combined our separate product sales forces
for content networking and enterprise search into one integrated
sales force where each salesperson is responsible for marketing
and selling our complete product line.

We believe that to market to a large number of
enterprises, we will also need to access the existing enterprise
relationships of our OEM partners through their substantial
direct sales forces and distributor relationships. To date, we
have entered into OEM distribution agreements with Dell Computer
Corporation, Compaq Computer Corporation, F5 Networks
Corporation, Hewlett-Packard Company and the 3Com Corporation.
These distribution partners market and sell servers pre-loaded
with our network caching and streaming media technologies.

Compared with the service provider market, the
enterprise market is in a relatively early stage with respect to
its implementation of network infrastructure products such as
those we offer. We cannot predict how the market for our
enterprise solutions will develop, and part of our strategic
challenge will be to convince enterprise customers of the
productivity, communications, cost and other benefits of our
products. Our future revenues and revenue growth rates will
depend in large part on our success in creating market
acceptance of our enterprise solutions.

Products and Services

We develop and market scalable software
applications designed to significantly enhance the performance
and intelligence of large-scale networks.

Software Products

Todays networks are becoming more diverse,
are carrying increasing traffic from growing user bases, and
need to deliver increasingly complex information including audio
and video in live streaming and on-demand formats. Enterprise
networks are growing rapidly by moving away from closed systems
to open networks, connecting employees, suppliers and customers
in locations all over the globe. These challenges are placing a
high demand on network providers to control the operating costs
of their networks, while offering up-to-date and innovative
services. Our software products are designed to solve these
challenges by allowing our target customers to publish,
distribute, manage and retrieve large amounts and disparate
types of content.

Traffic Server.Traffic Server is a network cache
platform designed to enable network providers to manage
bandwidth resources more effectively, significantly improve the
quality of service for their end users, and offer new
value-added services. At the core of the Traffic Server platform
is a highly scalable,

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high-performance cache server that is designed to
reduce Internet congestion and increase overall network
efficiency by intelligently eliminating redundant traffic and
smoothing traffic patterns, thereby leveraging and enhancing
existing bandwidth within the network. Traffic Server is
designed to be particularly effective in alleviating information
delivery bottlenecks during peak periods of network usage and
bursts in traffic volume driven by news and other significant
events, thereby significantly enhancing the online experience
for the end user.


Once installed in a network, Traffic Server acts
as an intermediary between end-user clients and information
residing on the network, interacting with nearly all data flows
over the network. This enables Traffic Server to function as a
platform for a wide variety of value-added services that network
providers can offer their end users. These services today
include advanced media streaming, distributed Web hosting and
content distribution, interactive applications and
software-on-demand, content filtering, virus detection and
content transformation for devices such as set-top boxes and
wireless telephones.

Traffic Server has been designed to integrate
quickly and easily into existing network infrastructures of both
service providers and enterprises. Traffic Server runs on
standard off-the-shelf servers, including servers made by Sun,
Hewlett-Packard and Intel, and other servers running standard
operating systems, including Solaris, Linux, and Windows 2000.
Traffic Server inter-operates with standard networking
equipment, and is compatible with standard Web browsers and
supports an array of popular Internet protocols, including HTTP,
FTP, RTSP, NNTP, ICP and SNMP. We license Traffic Server based
on the number of CPUs or nodes running the software, and also on
the throughput of Traffic Server. Upgrades and support are
priced separately.

Content Delivery Suite.Our Content Delivery Suite is a
robust software solution for content distribution, delivery and
management. As more complex information is delivered to
increasing numbers of users, locating content at many delivery
points across the network is important to performance and
availability. Our Content Delivery Suite provides all of the
tools needed to distribute diverse content across network
servers and caches, and to manage and monitor distributed
content and applications. The Content Delivery Suite includes
the Content Distributor, which proactively distributes and
synchronizes content and applications across live servers and
caches within global networks. The Content Delivery Suite
integrates seamlessly with our Traffic Server network cache
platform for content storage and the delivery of content
services. Together, Content Delivery Suite and Traffic Server
are intended to provide a complete infrastructure solution for
the distribution, delivery and management of content and
applications. We license the Content Delivery Suite based on the
number of CPUs or machines running the software and provide
upgrades and support separately.

Media Products
Overview.The number of
broadcasts of audio and video across the Internet and enterprise
networks is growing rapidly. However, current live and on-demand
broadcasts of audio and video on the Internet and enterprise
networks suffer from sound and visual quality shortfalls,
service failures from the strain of the bandwidth demand and an
inability to measure usage information. We have focused our
Media efforts over the past year on developing and marketing
software products that specifically address these problems. We
believe our technology delivers the distribution and management
capabilities needed to build reliable, high-value broadcasting
businesses; offer enterprises the ability to communicate with
employees, customers and partners through a robust streaming
communication infrastructure; take advantage of the reach,
scalability and ubiquity of Internet and intranet networks;
reach targeted audiences of all sizes at any location; and
monitor, measure and analyze the audience and manage network
performance. Our Media Products include MediaBridge, MediaBridge
ServerLinks, Broadcast Manager and Media-IXT.

MediaBridge.MediaBridge is a software component designed to deliver live
streaming broadcasts with a high-level of reliability. Media
Bridge utilizes an application-level multicasting approach that
requires less bandwidth than existing streaming technologies,
makes more efficient use of underlying network infrastructure
and delivers a better quality broadcast to the audience.
MediaBridge nodes work in unison to determine the optimal paths
for distributing content across the network and can recognize
network congestion and server or link failure and re-route
streams around trouble spots, enabling streaming content to
seamlessly bypass node failures and network blackouts.
MediaBridge can stream content into any node on the network,
from anywhere at anytime, and deliver it wherever the audience
is located. It can spread the load across the

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network, reducing stress so the audience can
count on a better quality broadcast, delivered reliably and
consistently.


MediaBridge
ServerLinks.MediaBridge
ServerLinks is a software component designed to distribute
streaming broadcasts over a single network using leading player
formats. The ServerLinks form fast, flexible and reliable
connections between the MediaBridge nodes and the
platform-specific media servers at the edge of a network. The
ServerLinks also actively gather and aggregate data during
broadcast such as audience size and location, what the audience
is watching and listening to and for how long.

Broadcast
Manager.Broadcast Manager is a
software component designed to gather data from every node in a
streaming network in real time to improve a broadcast
mid-stream, or to use it later to plan and enhance future
broadcasts. Broadcast Manager provides a complete picture of the
network during every broadcast, with the capability to scan the
entire network or drill down to an individual stream or link.
Broadcast Manager can also monitor and manage the amount of
bandwidth served, concurrent streams, stream paths, information
distribution rates and information packet loss. Broadcast
Manager alerts the user when a server goes down and keeps the
user up-to-date on bandwidth allocation to ensure all audience
members stay connected.

Media-IXT.Media-IXT is designed to enable networks to deliver
high-quality streaming content on-demand, such as entertainment,
news or business-critical communications like executive
broadcasts and sales presentations. Media-IXT integrates
seamlessly with the Traffic Server network cache, storing audio
and video files at the edge of the network and streaming them in
a way that provides users with a high quality experience.

We typically license MediaBridge, MediaBridge
ServerLinks and Broadcast Manager in a single bundle per CPU,
per system or per node, depending on the customer deployment. We
generally license Media-IXT in conjunction with Traffic Server.
Upgrades and support are priced separately.

Traffic Edge.Traffic Edge leverages our
caching, content distribution, media and management techonology
and is designed as a universal edge node. Traffic
Edge is an integrated edge delivery system installed on servers
located at the edge of the network that optimizes the
distribution of static and streaming content by storing content
close to end users, resulting in significant bandwidth savings.
Traffic Edge works seamlessly with Inktomi Traffic Core software
to achieve fast and reliable content delivery. Traffic Edge is
compatible with standard server hardware and other end-user
device and also provides integrated authentication control to
manage access to streaming content through directory access
protocols and content filtering technology. In addition, it can
support value-added service plug-ins such as content
transformation, filtering and virus checking.

Traffic Core.Traffic Core is an intelligent,
policy-driven content routing system that manages the flow of
Internet Protocol (IP)-based traffic as it travels from the core
to the edge of the network. Traffic Core serves as the nucleus
within distributed networks. Inktomi Traffic Core interoperates
with existing IP networks and improves their efficiency, without
requiring additional deployment of IP multicast hardware.
Inktomi Traffic Core software intelligently transmits only one
copy of a piece of content to multiple recipients for bandwidth
savings and rapid scalability as well as automatically redirects
content around network failures or congestion using the most
efficient route. In addition, this product distributes and
controls text, graphics, applications, and live and on-demand
streaming media to multiple types of delivery vehicles, such as
Web, cache, media and application servers.

Traffic Controller.Traffic Controller software
seamlessly integrates with Inktomi Traffic Core and Traffic Edge
products to deliver a comprehensive network management solution.
It provides robust control and visibility of content, bandwidth
and usage data through a rich graphical interface. Inktomi
Traffic Controller software aggregates network performance and
usage information of Traffic Edge and Traffic Core nodes, Web
servers, and media servers to provide real-time monitoring and
management of network characteristics and performance. This
software also provides audience-viewing metrics for companies to
better measure content usage.

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Traffic Edge, Traffic Core and Traffic Controller
have been designed to integrate quickly and easily into existing
network infrastructures. These products run on standard
off-the-shelf servers and other servers running standard
operating systems. These products inter-operate with standard
network equipment, are compatible with standard Web browsers and
support an array of popular Internet protocols, including HTTP,
FTP, RTSP, NNTP, ICP and SNMP. We license Traffic Edge, Traffic
Core and Traffic Controller as separate products and as part of
our Content Networking Platform and our Enterprise
Communications Suite. We license Traffic Edge based on the
aggregate throughput of bandwidth being served at the edge.
Traffic Core is licensed on the number of nodes running the
software. We license Traffic Controller based on the total
number of Traffic Edge and Traffic Core nodes being managed.
Upgrades and support are priced separately.

The underlying technology that coordinates
content distribution across Traffic Core and Traffic Edge nodes
and tightly monitors, manages and controls with Traffic
Controller, is our Application Level Networking technology
(ALN). ALN is the key Inktomi technology that enables Traffic
Core and Traffic Edge nodes to coordinate with one another to
provide intelligent distribution of content (versus discrete
packets) throughout the network. ALN is made up of protocols and
a communication framework that sit on top of IP and IP Multicast
and provide many of the benefits of IP Multicasting without
requiring any changes or upgrades to the underlying IP
infrastructure.

Inktomi Media Publisher.Inktomi Media Publisher is
designed to enable enterprises to organize, schedule,
personalize and display rich media content through an online
catalog of programs organized into customizable channels and
categories. This software product also incorporates features
that allow for the creation, administration and instant
archiving of live presentations. Inktomi Media Publisher
incorporates our Enterprise Search software, which enables
indexing and retrieval of files managed with Inktomi Media
Publisher, ensuring that communications archives are easily
accessible from the desktop.

Inktomi Media Publisher software is installed on
a server and is configured to interact with a local database and
all necessary file and media repositories. Inktomi Media
Publisher can be installed as a standalone product or as part of
larger deployment that includes Inktomis Content
Networking Platform. Integration with the Content Networking
Platform enables Inktomi Media Publisher to perform more
advanced content management and content distribution tasks
necessary for bandwidth and network optimization of media.

The Inktomi Media Publisher is licensed on a per
CPU model in configurations that include and do not include
advanced live media event management functionality. Additional
instances of the software, called Domains, as well as,
additional administrator seats may also be licensed. Upgrades
and support are priced separately.

Content Networking
Platform.We
have bundled together our Traffic Edge, Traffic Core and Traffic
Controller products to offer the Inktomi Content Networking
Platform (CNP). CNP provides an intelligent end-to-end solution
for the distribution, delivery and management of all IP content,
including streaming media, throughout a network. The Inktomi CNP
creates an intelligent layer above a networks existing IP
infrastructure. This network overlay improves performance,
reduces operating costs and enables the delivery of live and
on-demand streaming media, as well as other bandwidth intensive
content without negatively impacting network operations or
requiring the purchase of costly hardware upgrades. This
platform optimizes content delivery to the edge of the network
while protecting underlying network resources from otherwise
uncontrolled IP traffic. The Inktomi CNP is designed for both
enterprise and service provider customers.

The Inktomi CNP enables enterprises to move,
manage and control information across virtual private, satellite
and terrestrial networks, both within and outside the firewall.
Enterprises can also scale streaming media by distributing
bandwidth-intensive content to the network edge without
impacting other business applications or the corporate wide area
network. With this technology, an enterprise may increase the
productivity of its employees, customers and partners by
enabling rich forms of communication such as executive
broadcasts, earnings announcements, online trading and corporate
TV programming. In addition, enterprises can utilize the CNP to
optimize the distribution and management of non-streaming
content, such as large documents or application data, within its
organization. This technology also enables enterprises to

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increase productivity through lower
administrative and bandwidth costs as well as through online
sales training and other communications that reduce travel
expenses.


The Inktomi CNP provides network service
providers with the capability to move beyond simply providing
Internet access. A service provider who adds the Inktomi CNP to
its existing network infrastructure can offer value-added
services such as pay-per-view, targeted advertising, performance
streaming and Internet content acceleration. The service
provider can then offer these value-added services to its
customers for a premium.

Enterprise Communications Suite.The Enterprise Communications
Suite is designed to help enterprises securely publish,
distribute, manage and retrieve information through their
networks in an efficient and cost-effective manner. The
Enterprise Communication Suite is comprised of the Inktomi CNP
and the Inktomi Media Publisher. Enterprises utilizing the
Enterprise Communications Suite are able to connect users with
relevant content regardless of the distance or underlying
bandwidth, distribute information such as Web pages media and
applications to edge access points, manage access to content in
a secure and reliable way, stream media without negatively
impacting other business-critical applications and optimize
bandwidth usage and savings.

Enterprise Search.Our search software products
include Search/ Enterprise, Search/ Site and Search/ CCE.
Search/ Enterprise is designed to enable an enterprise to crawl
and index content within its private intranet and make this
information searchable by its employees. Search/ Site is
designed to enable an enterprise to crawl and index content on a
public Internet site and make this information searchable by
customers, prospects and other visitors. Either search product
allows content to be searched through a traditional search box,
or, by bundling the product with our Search/ CCE product,
through a category structure. Our search software products have
won industry acclaim for their ease-of-use and scalability.

Our search software products are designed for
scalability and high-quality search results. Each product
incorporates a management environment that enables the product
to be deployed quickly and with a minimum of ongoing operations.
These features enable corporate intranets and public Web site
owners to quickly enable search in their network and ensure the
service will grow as their sites add content. Our software
products are able to index not only Web pages but more than 200
file types including Office, HTML, XML, text, RTF,
MS Office, PDF, PostScript, FrameMaker, Lotus SmartSuite
and WordPerfect. They also handle formats in English, French,
German, Spanish, Portuguese, Italian, Dutch, Swedish, Norwegian,
Danish, Finnish, Chinese and Japanese. Our software products run
on various operating systems including Solaris, Windows and
Linux.

We license our search software products based on
the number of documents being searched. Upgrades and support,
and add-on components are priced separately.

Web Search Services

We entered the Internet search services market in
May 1996 as the first OEM search infrastructure provider. Our
search services enable our customers to provide a variety of
online search services to end-users. We use the Inktomi Search
Engine to provide search results information to our customers,
who in turn incorporate these results into their online
offerings to end users. We provide and manage hardware, software
and operational aspects of the Inktomi Search Engine and the
associated database of Internet content. We also provide the
customer with a programming interface and software tools to
enable the customer to custom design its own search service user
interface. The user interface communicates with the Inktomi
Search Engine via a communication protocol, called the Inktomi
Data Protocol. Separating the user interface enables this
portion of the service to reside in a different physical
location from the Inktomi Search Engine and to run on the
customers choice of computing equipment. In addition, the
customer can customize the user interface as to look and feel
and functionality and can change the user interface at any time
without affecting the operation of the Inktomi Search Engine.
This turn-key model allows us to serve multiple customers while
continuing to concentrate on developing our core search engine
technology.

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Our Search Engine comprises a crawler, an indexer
and search engine servers. The crawler and indexer are software
programs that collect and organize information, and store that
information on the cluster of search engine servers. The search
engine servers are a collection of workstations that are linked
together as a coupled cluster through the use of Inktomis
software. The search engine servers provide powerful full-text
query operations, including full Boolean support, date
restrictions and the recognition of multimedia files and other
embedded objects. Search results are relevance-ranked using
state-of-the-art text indexing and concept induction methods.
Advanced searching features allow end users to specify the
number and types of responses to a search.

We generate search service revenues through a
variety of contractual arrangements, which include per-query
search fees, search service hosting fees, content provider paid
inclusion fees, license fees and support fees. Our search
services revenues result primarily from the number of end-user
searches that are processed by the Inktomi Search Engine and the
level of advertising revenue generated by customers. We have
historically generated our search services revenues directly
from Internet portal and other online destination site
customers. We have recently launched a number of initiatives to
broaden the revenue sources associated with our search services,
focusing on providing enhanced services to content providers and
other companies who desire to be more easily found on the
Internet.

Sales and Marketing

Our sales strategy is to pursue opportunities
with large accounts through a direct sales force, and to
penetrate various targeted market segments through multiple
indirect distribution channels.

We currently maintain direct sales personnel in
several locations throughout the United States, managed through
four regions consisting of the Western region, the Central
region, the Northeast region and the Eastern region. Our direct
sales force is generally organized into individual account
teams, each consisting of a sales representative and a systems
engineer. We generate leads from contacts made through seminars,
conferences, telesales programs, trade shows, customers and
ongoing public relations and advertising programs. We qualify
the leads and assign an account team to major prospective
customers. Our account teams and sales personnel are empowered
to sell the full line of our products. The account team
initiates the sales process, which generally involves multiple
presentations to information technology and business
professionals within the prospective customers
organization. As part of the initial sales process, our account
teams attempt to seed customers with our point applications that
have shorter sales cycles and which provide an up-sell
opportunity for our infrastructure products. Account teams are
assisted by engineers, specialists and management in order to
complete a sale. Sales of our software products generally
include a pilot implementation, successful completion and
testing of which is a prerequisite to full-scale deployment.

In order to achieve broad distribution of our
products and services, we have established multiple indirect
distribution channels, including OEMs, resellers, systems
integrators and joint marketing partners. These channels are
intended to increase geographic sales coverage and to address
small and medium sized customers. As part of our strategy to
sell our products into the enterprise market, we have entered
into OEM relationships with major hardware vendors to market and
sell their hardware pre-loaded with our caching and streaming
media products. To date, we have entered into OEM distribution
agreements with Dell Computer Corporation, Compaq Computer
Corporation, F5 Networks Corporation, Hewlett-Packard Company,
and the 3Com Corporation. We believe these OEM relationships
will drive sales in the future.

We believe it is important to have a strong
international presence and intend to continue to translate and
localize our products and services to address international
markets. We have generally focused our international efforts on
Europe and Asia Pacific and have established sales offices
throughout these regions. In Europe, our sales have been
generated principally through direct efforts and in Asia
Pacific, our sales have been generated principally through our
channel partners.

We conduct a variety of programs worldwide to
stimulate market demand for our products, including public
relations activities, advertising, trade shows and collateral
development. These programs are focused on our target markets
and are designed to create awareness and generate sales leads.

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Customer Service and Support

We believe that a high level of customer service
and support is critical to the successful marketing, sale, and
deployment of our products. We have developed a comprehensive
service and support organization to manage our service provider
customer accounts and expect to continue to adapt our
capabilities to address support needs of our enterprise
customers.

We provide a base level of technical support to
our customers through support agreements. The base level of
support includes remote assistance with installation,
configuration and initial set-up of the application, run-time
support, and software releases. For additional fees, a customer
may choose to receive support during extended hours. We
generally provide support via e-mail, our Web site, fax and
telephone.

We also provide a variety of professional
services to our customers. These services include customer
network evaluation and implementation guidance, assistance with
installation, configuration and initial set-up of the
application at the customers facility,network growth and
other scaling recommendations and training.

We require highly trained customer service and
support personnel to support our products. The hiring of
customer service and support personnel is very competitive in
our industry due to the limited number of people available with
the necessary technical skills and understanding of the Internet.

Research and Development

We believe that strong product development
capabilities are essential to our strategy of enhancing our core
technology, developing additional applications incorporating
that technology, and maintaining the competitiveness of our
product and service offerings. We have invested significant time
and resources in creating a structured process for undertaking
all product development projects. This process involves all
functional groups and all levels within Inktomi and is designed
to provide the framework for defining and addressing the steps,
tasks and activities required to bring product concepts and
development projects to market successfully. In addition, we
have actively recruited and hired key computer scientists,
engineers and software developers with expertise and degrees in
the areas of massively parallel computing, networking and
mathematics, and have complemented these individuals by hiring
senior management with extensive backgrounds in the network
infrastructure, enterprise software and Internet industries.
Through this mix of personnel, we strive to create and maintain
an environment of rapid innovation and product development.

Our current research and development efforts are
focused on adding features and functionality across each of our
current applications, developing stronger integration among our
current applications, modifying and adapting our products and
services for use with enterprise networks and developing
low-cost and high-value applications. Our research and
development expenses totaled $77.9 million,
$59.7 million and $29.3 million for the fiscal years
ended September 30, 2001, 2000 and 1999, respectively.

Competition

We compete in markets that are new, intensely
competitive, highly fragmented and rapidly changing. We have
experienced and expect to continue to experience increased
competition from current and potential competitors in each of
our market segments, many of which are bringing new solutions to
market, establishing technology alliances and OEM relationships
with larger companies, and focusing on specific segments of our
target markets. In some cases, our competitors are implementing
aggressive pricing and other strategies that are focused in the
short term on building customer bases, name recognition in the
market and capturing market share. This may cause some price
pressure on our products and services in the future.

We directly or indirectly compete against
multiple companies with our software products, including Akamai,
CacheFlow, Cisco Systems, InfoLibria, Microsoft, Netscape,
Network Appliance, Novell, RealNetworks and Volera. We are aware
of numerous other major software developers as well as smaller
entrepreneurial companies that are focusing significant
resources on developing and marketing products and services that
will compete with our products. We also believe that we may face
competition from other providers of competing solutions to
network infrastructure problems, including networking hardware
and software manufacturers, traditional hardware manufacturers,
telecommunications providers, cable

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TV/communications providers, software database
companies, and large diversified software and technology
companies. Many of these companies provide or have announced
their intentions to provide a range of software and hardware
products based on Internet protocols and to compete in the broad
Internet/intranet software market as well as in specific market
segments in which we compete.


In the search software market, our primary
competitors include AltaVista, Autonomy, Dataware, Excalibur,
Fulcrum, Lotus, Microsoft and Verity. We also indirectly compete
in this market with Oracle and other database vendors that offer
information search and retrieval capabilities with their core
database products, and Web platform companies such as Netscape.

We compete with a number of companies to provide
Internet search and directory services and technology. In the
Web services marketplace, our primary competitors include a
variety of established and newer companies, including AltaVista,
Ask Jeeves, FAST Search and Transfer, Google, Overture,
LookSmart, Northern Light, and Yahoo. These companies and other
competitors have focused on search result relevance, database
size metrics and ease of use to differentiate their services. In
addition, several large media and other Internet-based companies
have made investments in, or acquired, Internet search engine
companies and may seek to develop or customize their products
and services to deliver to our target customers.

Our competitors may be able to respond more
quickly to new or emerging technologies and changes in customer
requirements than we can. In addition, our current and potential
competitors may bundle their products with other software or
hardware, including operating systems, browsers and network
hardware in a manner that may discourage users from purchasing
products offered by us. Also, current and potential competitors
have or may have greater name recognition, more extensive
customer bases and access to proprietary content. Increased
competition could result in price reductions, fewer customer
orders, fewer search queries served, reduced gross margins and
loss of market share.

Proprietary Rights

Our success and ability to compete are
substantially dependent upon our internally developed
technology, which we protect through a combination of patent,
copyright, trade secret and trademark law. We generally enter
into confidentiality or license agreements with our employees,
consultants and corporate partners, and generally control access
to and distribution of our software, documentation and other
proprietary information. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy or
otherwise obtain and use our products or technology. Policing
unauthorized use of our products is difficult, and we cannot be
sure that the steps we have taken will prevent misappropriation
of our technology, particularly in foreign countries where the
laws may not protect our proprietary rights as fully as in the
United States.

Substantial litigation regarding intellectual
property rights exists in the software industry. We expect that
software products may be increasingly vulnerable to third-party
infringement claims as the number of competitors in our industry
segments grow and the functionality of products in different
industry segments overlaps. We believe that many companies have
filed or intend to file patent applications covering aspects of
their technology that they may claim our technology infringes.
Some of these companies have sent copies of their patents to
Inktomi for informational purposes. We cannot be sure that these
parties will not make a claim of infringement against us with
respect to our products and technology. To this point, in August
2001, Network Caching Technology L.L.C. (NCT) initiated an
action against us that our caching products violate one or more
patents owned by NCT. The complaint seeks compensatory and other
damages and injunctive relief. This case, and any future actions
initiated against us, will be time consuming and expensive to
defend, will direct managements attention and resources,
and could cause product shipment delays or require us to
reengineer our products or enter into royalty or licensing
agreements. These royalty or licensing agreements, if required,
may not be available on acceptable terms, if at all.

Our products and services operate in part by
making copies of material available on the Internet and other
networks and aggregating this content within centralized or
distributed applications. This creates the potential for claims
to be made against us (either directly or through contractual
indemnification provisions with customers) for defamation,
negligence, copyright or trademark infringement, personal
injury, invasion of privacy or other legal theories based on the
nature, content, copying, collection or use of these materials.
These

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claims have been threatened against us from time
to time and have been brought, and sometimes successfully
pressed, against online service providers. It is also possible
that if any information provided through any our Web search
business or facilitated by our software products contains
errors, third parties could make claims against us for losses
incurred in reliance on this information. Although we carry
general liability insurance, our insurance may not cover
potential claims of this type or be adequate to protect us from
all liability that may be imposed.


Employees

We had 774 full-time employees as of
September 30, 2001. On October 2, 2001, we announced a
restructuring which resulted in the elimination of
115 full-time employee positions. None of our employees are
represented by a labor union. We have not experienced any work
stoppages and consider relations with our employees to be good.




Item 2.     Properties

Our corporate headquarters consist of
approximately 177,000 square feet of office space in Foster
City, California. In June 2000, we entered into a synthetic
lease agreement for the land and facilities of our corporate
headquarters. Immediately prior to the closing, the agreement
was assigned to a third-party lessor under the terms of a lease
finance structure. In accordance with this agreement, we have
created and will maintain a cash collateral account that limits
the liquidity of approximately $119.6 million of our cash.
We have sublet a portion of our headquarters facilities through
July 2006 to various subtenants for an aggregate future rental
expense offset of $18.8 million.

In April 2000, we entered into a lease commencing
November 1, 2001 for approximately 400,000 square feet
of office space in two mid-rise office buildings in Foster City,
California. The lease is for substantially more space than we
will need for the next several years. The commercial real estate
market in San Mateo County, California is volatile and
unpredictable in terms of rental fees, occupancy rates and
preferred locations. If we fail to sublease a significant
portion or all of this new space at or above the rate we are
paying under the lease agreement, we will incur substantial
additional operating expense during the lease term. Aggregate
payments to be made under the lease are approximately
$324.4 million over the lease term ending October 31,
2016. Payments under the lease will commence when the property
is delivered to Inktomi by the developer. We expect this
delivery to occur in the quarter ending March 31, 2002.
This lease limits the liquidity of $9.3 million of our cash.

We also lease space in Atlanta, Beijing, Carlsbad
(California), Dallas, Denver, Downers Grove (Illinois), Herndon
(Virginia), Issaquah (Washington), Kuala Lampur (Malaysia),
London, Madrid, Munich, Needham (Massachusetts), New York,
Paris, Redwood Shores (California), Rome, San Francisco, South
San Francisco, San Mateo, Seoul, Shanghai, Tulsa and Tokyo. The
Herndon, Virginia lease covers approximately 25,000 square
feet and expires in July 2005. The London leases cover
approximately 8,500 square feet and expires September 2015.
The Tokyo lease covers approximately 7,000 square feet and
expires in October 2003. There are two San Francisco leases that
cover approximately 30,000 square feet of office space and
expire in December 2002 and July 2004. The Needham,
Massachusetts lease covers approximately 15,000 square feet
and expires in July 2003. The Redwood Shores lease covers
property that has been sublet to e-centives, Inc. in connection
with their acquisition of our Commerce Division. The remaining
leases are executive leases for local sales offices.




Item 3.     Legal
Proceedings

On August 2, 2001, an amended complaint was
filed by Network Caching Technology, L.L.C. in the United States
District Court for the Northern District of California against
Inktomi as well as other providers of caching technologies
including Novell, Inc., Akamai Technologies, Inc., Volera, Inc.,
and Cacheflow, Inc. Plaintiff alleges that certain products
marketed by Inktomi and the other defendants violate one or more
patents owned by plaintiff. The complaint seeks compensatory and
other damages and injunctive relief. We

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were served the complaint on August 7, 2001.
We subsequently filed a response denying the allegations and
asserting a number of defenses. We intend to vigorously defend
against this action.


Other than as described above, we are not
involved in any legal proceedings at this time that we currently
believe would be material to our business, financial condition
or results of operations.




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

We did not submit any matter to a vote of
security holders during the fourth quarter of the fiscal year
ended September 30, 2001.




PART II




Item 5.     Market
for Registrants Common Stock and Related Stockholder
Matters

Our Common Stock is quoted on the NASDAQ National
Market under the symbol INKT. The following table
shows the high and low daily closing sale prices per share of
our Common Stock as reported on the NASDAQ National Market for
the periods indicated:

|             |                                           |      |   |        |  |  |   |       | 
|------------ | ----------------------------------------- | ---- | - | ------ |  |  | - | ----- | 
|             |                                           | High |   | Low   
|             |                                           |      |   |       
|Fiscal 2000: |                                           |      |   |        |  |  |   |      
|             | First Quarter                             |      | $ | 100.19 |  |  | $ | 47.81 | 
|             | Second Quarter                            |      |   | 231.63 |  |  |   | 80.50 | 
|             | Third Quarter                             |      |   | 180.88 |  |  |   | 92.00 | 
|             | Fourth Quarter                            |      |   | 139.00 |  |  |   | 98.31 | 
|Fiscal 2001: |                                           |      |   |        |  |  |   |      
|             | First Quarter                             |      |   | 108.94 |  |  |   | 17.88 | 
|             | Second Quarter                            |      |   | 18.63  |  |  |   | 5.74  | 
|             | Third Quarter                             |      |   | 10.96  |  |  |   | 2.79  | 
|             | Fourth Quarter                            |      |   | 9.17   |  |  |   | 2.25  | 
|Fiscal 2002: |                                           |      |   |        |  |  |   |      
|             | First Quarter (through November 30, 2001) |      |   | 6.19   |  |  |   | 2.70  | 

As of November 30, 2001, there were
approximately 1,357 holders of our Common Stock. We have
never declared or paid any dividends on our capital stock. We
currently expect to retain future earnings, if any, for use in
the operation and expansion of our business and do not
anticipate paying any cash dividends in the foreseeable future.
The covenants under our Loan and Security Agreement with Silicon
Valley Bank prohibit us from paying cash dividends.

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Item 6.     Selected
Financial Data

The selected consolidated financial data set
forth below should be read in conjunction with
Managements Discussion and Analysis of Financial
Condition and Results of Operations and the Consolidated
Financial Statements of Inktomi Corporation and the notes
thereto included elsewhere in this report. The historical
results are not necessarily indicative of results to be expected
for any future period.

CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:

|                                                                                              |  |                                       |          |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------------------- |  | ------------------------------------- | -------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                              |  |                                      
|                                                                                              |  | For the Year Ended September 30,     
|                                                                                              |  |                                      
|                                                                                              |  | 2001                                  |          | 2000 |  | 1999 |         | 1998 |  | 1997
|                                                                                              |  |                                       |          |      |  |      |         |      |  |     
|                                                                                              |  |                                      
|                                                                                              |  | (In thousands, except per share data)
|Total revenues                                                                                |  | $                                     | 198,562  |      |  | $    | 224,217 |      |  | $    | 73,503  |   |  | $ | 21,355  |   |  | $ | 5,853   |  
|Operating loss                                                                                |  |                                       | (239,989 | )    |  |      | (41,420 | )    |  |      | (37,619 | ) |  |   | (30,428 | ) |  |   | (12,229 | )
|Net loss                                                                                      |  |                                       | (296,482 | )    |  |      | (27,340 | )    |  |      | (33,028 | ) |  |   | (29,915 | ) |  |   | (12,409 | )
|Basic and diluted net loss per share                                                          |  |                                       | (2.36    | )    |  |      | (0.24   | )    |  |      | (0.32   | ) |  |   | (0.38   | ) |  |   | (0.45   | )
|Weighted average shares outstanding used in
	calculating basic and diluted net loss per share |  |                                       | 125,608  |      |  |      | 113,030 |      |  |      | 102,033 |   |  |   | 79,252  |   |  |   | 29,609  |  

CONSOLIDATED BALANCE SHEETS DATA:

|                                                          |  |                |         |      |  |      |         |      |  |      |         |  |  |   |        |  |  |   |        | 
|--------------------------------------------------------- |  | -------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------ |  |  | - | ------ | 
|                                                          |  |               
|                                                          |  | September 30, 
|                                                          |  |               
|                                                          |  | 2001           |         | 2000 |  | 1999 |         | 1998 |  | 1997
|                                                          |  |                |         |      |  |      |         |      |  |     
|                                                          |  |               
|                                                          |  | (In thousands)
|Cash and cash equivalents and short-term
	investments     |  | $              | 84,513  |      |  | $    | 218,511 |      |  | $    | 304,214 |  |  | $ | 54,711 |  |  | $ | 7,921  | 
|Long term restricted cash                                 |  |                | 128,957 |      |  |      | 119,616 |      |  |      |        |  |  |   |       |  |  |   |       | 
|Investments in equity securities                          |  |                | 1,381   |      |  |      | 117,898 |      |  |      | 8,180   |  |  |   |       |  |  |   |       | 
|Working capital                                           |  |                | 7,672   |      |  |      | 165,328 |      |  |      | 298,764 |  |  |   | 40,949 |  |  |   | 3,428  | 
|Total assets                                              |  |                | 583,123 |      |  |      | 919,256 |      |  |      | 385,337 |  |  |   | 78,946 |  |  |   | 16,606 | 
|Debt and capital lease obligations, less current
	portion |  |                | 5,649   |      |  |      | 3,748   |      |  |      | 8,293   |  |  |   | 9,074  |  |  |   | 5,094  | 
|Total stockholders equity                                |  |                | 471,981 |      |  |      | 803,062 |      |  |      | 343,867 |  |  |   | 50,184 |  |  |   | 5,700  | 



|      |                                                                                                                                                                                                                                                                                                                                          
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note: | All historical information has been restated to
	reflect the acquisitions of C2B Technologies, Inc. in
	September 1998, Impulse! Buy Network, Inc. in April 1999,
	WebSpective Software, Inc. in October 1999, and FastForward
	Networks, Inc. in October 2000. Each of these acquisitions were
	accounted for as a pooling of interests.






Item 7.     Managements
Discussion and Analysis of Financial Condition and Results of
Operations


Overview

Inktomi Corporation is a leading provider of
scalable network infrastructure software and services. Inktomi
develops, markets, licenses and supports a range of network
infrastructure applications that enhance the performance and
intelligence of large-scale networks, enabling enterprises and
network service providers to publish, distribute, manage and
retrieve content quickly and efficiently.

In this filing, we are changing how we classify
revenues. In past filings, we classified revenues as either
Network Products or Portal Services. Network Products included
revenues from our software license products and related services
other than Enterprise Search software, and Portal Services
included revenues from our Web search engine, Commerce engine
and Enterprise Search software. In the past fiscal year, we
divested our Commerce business, restructured our business to
align all of our software products under single management, and
saw service revenues associated with our software products
become a larger percentage of revenue. Accordingly, in this
filing and future filings, we have classified revenues for this
period and all earlier periods as

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licenses, services or Web search services. We
believe this change in classification of revenues better
reflects the division of our products and services.


Licenses revenues are composed of license and
upgrade fees in connection with our software products including
Traffic Server network cache platform, Content Delivery Suite
software solutions, Media Products, enterprise search products
and our recently introduced products, Traffic Core, Traffic
Edge, Traffic Controller and Inktomi Media Publisher. License
fees are generally based on the number of CPUs or nodes running
the software, or on network traffic throughput across our
products, depending on customer deployment, and are generally
recognized upon shipment of the software assuming all other
revenue recognition criteria have been met. License fees for our
enterprise search products are generally based on the number of
documents being searched.

Services revenues are composed of revenues
generated through consulting and support fees related to our
software products and through fees generated from our Commerce
Engine. Consulting and support fees are recognized ratably over
the service period as the services are performed. We completed
the sale of our Commerce Division in March 2001 and, therefore,
services revenues for the quarters ended June 30, and
September 30, 2001 consisted of only consulting and support
fees.

Web search services revenues are generated
through a variety of contractual arrangements related to our Web
search services, which include general service fees, per-query
search fees, search service hosting fees and database inclusion
fees, all of which are recognized in the period earned.

In fiscal 2001, the business climate in general
and our target service provider market in particular experienced
a dramatic decline. This adversely impacted our ability to
generate revenues or maintain the revenue growth we achieved in
fiscal 2000. We have undertaken a number of initiatives to
adjust to this new business environment including instituting a
strategy of developing and marketing products and services for
the enterprise market, reducing expenses through strong cost
cutting measures and work force reductions and integrating our
sales force such that each person is responsible for selling our
complete line of products. We believe that gaining traction from
these efforts will take the next several quarters and be subject
to a number of risks and uncertainties.

Our strategy is to grow organically as well as
through acquisition. Since fiscal 1998, we have made seven
acquisitions and one disposition. In September 1998, we acquired
C2B Technologies, Inc., and in April 1999, we acquired Impulse!
Buy Network, Inc., to initiate our online commerce efforts. In
October 1999, we acquired Webspective Software, Inc., a
developer of content distribution and management software. In
July 2000, we acquired Ultraseek Corporation, and entered into
the licensed search and navigation software business. In October
2000, we acquired FastForward Networks, Inc., a developer of
software solutions for efficiently enabling streaming media over
networks. In December 2000, we acquired various business assets
of Adero, Inc. relating to billing, settlement and traffic
reporting and licensed other related technologies. In March
2001, we divested our online commerce business to e-centives,
Inc. In June 2001, we acquired eScene Networks, Inc., a
developer of advanced streaming media applications and services.
The C2B, Impulse! Buy, Webspective and FastForward transactions
were all accounted for as a pooling of interests. The Ultraseek,
Adero and eScene transactions were each accounted for under the
purchase method of accounting. All financial information
contained herein has been adjusted to reflect these
transactions. For additional details on these transactions,
please refer to Note 1 of the Notes to Consolidated
Financial Statements included with this Annual Report.

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Results of Operations

The following table sets forth our results of
operations expressed as a percentage of revenues. Our historical
operating results are not necessarily indicative of the results
for any future period.

|                          |                                               |                      |                          |      |    |      |     |    |    |     |     |    |   |     |   
|------------------------- | --------------------------------------------- | -------------------- | ------------------------ | ---- | -- | ---- | --- | -- | -- | --- | --- | -- | - | --- | --
|                          |                                               |                     
|                          |                                               | For the Year Ended  
|                          |                                               | September 30,       
|                          |                                               |                     
|                          |                                               | 2001                 |                          | 2000 |    | 1999
|                          |                                               |                      |                          |      |    |     
|Revenues                  |                                               |                      |                          |      |    |      |     |    |    |     |     |   
|                          | Licenses                                      |                      |                          | 54   | %  |      |     | 61 | %  |     |     | 54 | %
|                          | Services                                      |                      |                          | 20   | %  |      |     | 16 | %  |     |     | 8  | %
|                          | Web search services                           |                      |                          | 26   | %  |      |     | 23 | %  |     |     | 38 | %
|                          |                                               |                      |                          |      |    |      |     |    |    |     |     |   
|                          |                                               |                      | Total revenues           |      |    | 100  | %   |    |    | 100 | %   |    |   | 100 | % 
|Cost of revenues          |                                               |                      |                          |      |    |      |     |    |    |     |     |   
|                          | Licenses                                      |                      |                          | 4    | %  |      |     | 3  | %  |     |     | 1  | %
|                          | Services                                      |                      |                          | 9    | %  |      |     | 6  | %  |     |     | 5  | %
|                          | Web search services                           |                      |                          | 12   | %  |      |     | 10 | %  |     |     | 15 | %
|                          |                                               |                      |                          |      |    |      |     |    |    |     |     |   
|                          |                                               |                      | Total cost of revenues   |      |    | 25   | %   |    |    | 19  | %   |    |   | 21  | % 
|Gross Profit              |                                               |                      | 75                       | %    |    |      | 81  | %  |    |     | 79  | % 
|Operating expenses        |                                               |                      |                          |      |    |      |     |    |    |     |     |   
|                          | Sales and marketing                           |                      |                          | 70   | %  |      |     | 54 | %  |     |     | 76 | %
|                          | Research and development                      |                      |                          | 40   | %  |      |     | 27 | %  |     |     | 40 | %
|                          | General and administrative                    |                      |                          | 12   | %  |      |     | 9  | %  |     |     | 12 | %
|                          | Amortization of intangibles and other assets  |                      |                          | 35   | %  |      |     | 6  | %  |     |     |   |  
|                          | Impairment of intangibles and other assets    |                      |                          | 23   | %  |      |     |   |    |     |     |   |  
|                          | Restructuring                                 |                      |                          | 6    | %  |      |     |   |    |     |     |   |  
|                          | Purchased in-process research and development |                      |                          | 0    | %  |      |     | 2  | %  |     |     |   |  
|                          | Acquisition-related costs                     |                      |                          | 10   | %  |      |     | 2  | %  |     |     | 2  | %
|                          |                                               |                      |                          |      |    |      |     |    |    |     |     |   
|                          |                                               |                      | Total operating expenses |      |    | 196  | %   |    |    | 100 | %   |    |   | 130 | % 
|Operating loss            |                                               |                      | (121                     | )%   |    |      | (18 | )% |    |     | (51 | )%
|Impairment of investments |                                               |                      | (33                      | )%   |    |      |    |    |    |     |    |   
|Other income, net         |                                               |                      | 5                        | %    |    |      | 7   | %  |    |     | 6   | % 
|                          |                                               |                      |                          |      |    |      |     |    |    |     |     |   
|Pretax loss               |                                               |                      | (149                     | )%   |    |      | (11 | )% |    |     | (45 | )%
|                          |                                               | Income tax provision |                          |      | (1 | )%   |     |    | (1 | )%  |     |    |  |    
|                          |                                               |                      |                          |      |    |      |     |    |    |     |     |   
|                          |                                               |                      | Net loss                 |      |    | (149 | )%  |    |    | (12 | )%  |    |   | (45 | )%
|                          |                                               |                      |                          |      |    |      |     |    |    |     |     |   

Fiscal Years Ended September 30, 2001 and
2000

Revenues

Revenues totaled $198.6 million in fiscal
2001, a decrease of $25.7 million or 11% from revenues of
$224.2 million in fiscal 2000. No single customer
represented over 10% of total revenues in either fiscal 2001 or
2000. We market and sell our products to customers located in
the United States and abroad, both through our direct sales
force and through our channel partners. Historically, the
percentage of sales to customers located outside of the United
States has varied substantially, reflecting the early stage
build-out of our international operations. We have generated
most of our revenues through direct sales efforts, except in
Asia where our revenues have been principally generated through
our channel partners.

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License revenues totaled $106.7 million in
fiscal 2001, representing a decrease of $29.1 million or
21% from license revenues of $135.8 million in fiscal 2000.
A majority of our license revenues to date have been generated
from service providers. In previous fiscal years, service
providers were investing substantial amounts of capital to build
out their networks to address Internet opportunities. In fiscal
2001, this segment substantially curtailed spending in response
to the challenging economic environment. Our year to year
decrease in license revenue is attributable in part to this
decrease in spending by service providers. We believe that in
the short term until our enterprise focus takes hold, our
revenues will be derived substantially from service providers
with revenue contribution from enterprises increasing over time.
We also expect license revenue through our OEM relationships to
contribute to revenue in fiscal 2002. The year to year decrease
in license revenue was partially offset by the inclusion of
revenue derived from the licensing of our enterprise search
product that we launched in earnest in fiscal 2002.

Services revenues totaled $40.5 million in
fiscal 2001, representing an increase of $4.2 million or
12% over services revenues of $36.3 million in fiscal 2000.
The increase was primarily due to an increase in our support
revenues generated from service provider customers who purchased
support for our products over the last several fiscal years,
partially offset by the termination of revenues derived from our
Commerce Division that was sold in March 2001. In order to
maintain or grow the level of our services revenues, we will
need to renew support agreements that are due to expire over the
next fiscal year and enter into new support agreements with new
service provider and enterprise customers.

Web search services revenues totaled
$51.3 million in fiscal 2001, representing a decrease of
$0.8 million or 2% from Web search services revenues of
$52.1 million in fiscal 2000. The decrease was primarily
due to weakness in the Internet portal market where many smaller
or poorly funded companies could not raise sufficient funds to
continue to purchase our services, partially offset by growth in
revenue from our larger customers and growth in our Index
Connect and Search Submit paid inclusion services.

During fiscal 2001 and 2000, we recognized
revenues of approximately $29.5 million and
$31.3 million, respectively, on contracts, development, and
licensing arrangements with customers in which we were equity
shareholders at September 30, 2001 and 2000, respectively.
Prices on these contracts and arrangements were comparable to
those given to other similarly situated customers.



| |         
| | --------
| | Expenses

Operating expenses include cost of revenues,
sales and marketing expenses, research and development expenses,
general and administrative expenses, amortization of intangibles
and other assets, impairment of intangibles and other assets,
restructuring expenses, acquisition-related costs and purchased
in-process research and development. Research and development,
sales and marketing and general and administrative expenses
primarily consist of personnel and related costs.



| |                 
| | ----------------
| | Cost of Revenues

Cost of revenues generally consist of expenses
related to the operation of our Web search business, primarily
depreciation and network and hosting charges. Also included in
cost of revenues are expenses associated with our professional
services and technical support departments as well as royalties
or license fees associated with licensed technologies used in
our software applications. Cost of revenues were
$50.2 million for fiscal 2001, representing an increase of
$8.0 million or 19% over cost of revenues of
$42.2 million in fiscal 2000. The increase was due
primarily to additional depreciation resulting from expansions
of our Web search data centers, increased royalties associated
with our enterprise search software and an increase in expenses
related to our technical support and professional services
departments.



| |                             
| | ----------------------------
| | Sales and Marketing Expenses

Sales and marketing expenses consist of personnel
and related costs for our direct sales force and marketing staff
and marketing programs, including trade shows and advertising.
Sales and marketing expenses were $138.1 million in fiscal
2001, an increase of $15.0 million or 12% over fiscal 2000.
This increase was

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primarily due to an increase in headcount in the
first half of fiscal 2001, offset partially by workforce
reductions implemented in April and September 2001.




| |                                   
| | ----------------------------------
| | Research and Development
	Expenses

Research and development expenses consist
primarily of personnel and related costs for our development
efforts. Research and development expenses were
$77.9 million in fiscal 2001, an increase of
$18.2 million or 30% over fiscal 2000. This increase was
primarily due to an increase in headcount in the first half of
fiscal 2001, offset partially by workforce reductions
implemented in April and September 2001.



| |                                     
| | ------------------------------------
| | General and Administrative
	Expenses

General and administrative expenses consist
primarily of personnel and related costs for general corporate
functions, including finance, accounting, purchasing, human
resources, facilities and legal. General and administrative
expenses totaled $24.6 million in fiscal 2001, an increase
of $5.5 million or 29% over fiscal 2000. This increase was
primarily related to an increase in headcount and consulting
expenses, offset partially by a reduction in relocation and
recruiting expenses.



| |                                              
| | ---------------------------------------------
| | Amortization of Intangibles and Other
	Assets

Amortization of intangibles and other assets
primarily relates to amortization of goodwill acquired through
our purchase acquisitions of Ultraseek Corporation and eScene
and through our asset purchase from Adero. Amortization of
intangibles and other assets totaled $70.4 million in
fiscal 2001, an increase of $57.2 million or 434% over
fiscal 2000. The increase was primarily due to amortization of
goodwill associated with our acquisition of Ultraseek in the
fourth quarter of fiscal 2000 and our Adero and eScene
acquisitions consummated in fiscal 2001.



| |                                            
| | -------------------------------------------
| | Impairment of Intangibles and Other
	Assets

We record impairments or write-downs of
intangibles and other 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, but are not limited to, 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 not considered temporary, 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. During fiscal 2001 we recorded
$44.9 million in charges to reflect the impairment of
intangibles and other assets, primarily related to our goodwill
associated with our investment in AirFlash and with the assets
acquired from Adero.



| |                    
| | -------------------
| | Restructuring Costs

In fiscal 2001, in light of a challenging
operating and business environment, we implemented two
restructurings and workforce reductions, totaling approximately
235 employee positions, to reduce our operating expenses.
As a result of these workforce reductions, we incurred
restructuring charges of $12.5 million in fiscal 2001. The
restructuring charge included approximately $6.2 million of
severance related amounts, $4.8 million of committed excess
facilities, $0.9 million of fixed asset impairments, and
$0.6 million of professional fees.



| |                                               
| | ----------------------------------------------
| | Purchased In-Process Research and
	Development

A portion of the purchase prices we paid for
Ultraseek and various assets of Adero have been identified as
developed technology and in-process research and development
(IPRD). We identified and valued the

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developed technology and IPRD by conducting
extensive interviews, analyzing data provided by the acquired
companies concerning developmental products, considering the
stage of development of such products and the time and resources
needed to complete them, and assessing the expected income
generating ability of the products, target markets and
associated risks. The income approach, which includes an
analysis of the markets, cash flows, and risks associated with
achieving such cash flows, was the primary technique utilized in
valuing the developed technology and IPRD. Based on our analysis
of these variables, we recorded a one-time purchased IPRD charge
of $0.4 million in fiscal 2001 associated with our purchase
of various assets of Adero, and a one-time purchased IPRD charge
of $4.4 million in fiscal 2000 associated with our
Ultraseek acquisition because technological feasibility had not
been established and no future alternative uses existed.




| |                          
| | -------------------------
| | Acquisition-Related Costs

As a result of our FastForward acquisition in
October 2000 and our WebSpective acquisition in October 1999, we
recorded acquisition-related cots of $19.5 million and
$4.0 million in fiscal 2001 and 2000, respectively,
primarily for investment banking fees, accounting, legal and
other professional expenses.



| |                          
| | -------------------------
| | Impairment of Investments

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 a decline is not considered
temporary. Our investments in privately held companies are
considered impaired when a review of the investees
operations and other indicators of impairment indicate that the
carrying value of the investment is not likely to be
recoverable. Such indicators include, but are not limited to,
limited capital resources, limited prospects of receiving
additional financing, and prospects for liquidity of the related
securities. Impaired investments in privately held companies are
written down to estimated fair value, which is the amount we
believe is recoverable from our investment. We recorded
write-downs of $65.9 million during fiscal 2001 related to
impairments of our investments in publicly traded and private
companies.



| |                  
| | -----------------
| | Other Income, Net

Other income, net includes interest on our cash
and cash equivalents, short-term investments and our long-term
restricted cash, less expenses related to our debt and capital
lease obligations and loss on disposal of assets. Other income,
net, totaled $10.3 million of income in fiscal 2001, a
decrease of $5.6 million or 35% over fiscal 2000. The
decrease was the result of greater foreign exchange losses,
increased realized losses on the sale of investments and lower
interest income in fiscal 2001 as a result of lower cash
balances and declining interest rates. Interest expense
decreased from $2.2 million during fiscal 2000 to
$1.1 million during fiscal 2001.

Fiscal Years Ended September 30, 2000 and
1999



| |         
| | --------
| | Revenues

Revenues totaled $224.2 million in fiscal
2000, an increase of $150.7 million or 205% over revenues
of $73.5 million in fiscal 1999. No single customer
represented over 10% of total revenues in either fiscal 2000 or
1999.

License revenues totaled $135.8 million in
fiscal 2000, representing an increase of $96.3 million or
244% over license revenues of $39.5 million in fiscal 1999.
The increase was primarily due to increased licenses of the
Traffic Server network cache platform and Content Delivery Suite
software solution, particularly to network service provider
customers in the content delivery, access and backbone markets.
These revenues consisted primarily of a small number of
multi-million dollar contracts per quarter and several other
smaller contracts generally ranging between $0.1 million
and $0.5 million.

Services revenues totaled $36.3 million in
fiscal 2000, representing and increase of $30.3 million or
505% over services revenues of $6.0 million in fiscal 1999.
The increase was primarily due to increases in support revenues
associated with our software products and increased Commerce
revenues.

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Web search services revenues totaled
$52.1 million in fiscal 2000, representing an increase of
$24.2 million or 86% over Web search services revenues of
$28.0 million in fiscal 1999. Most of the increase resulted from
the addition and launch of new Web search customers, primarily
smaller and mid-tier portals.

During fiscal 2000 and 1999, we recognized
revenues of approximately $31.3 million and
$6.9 million, respectively, on contracts, development, and
licensing arrangements with customers in which we were equity
shareholders at September 30, 2000 and 1999, respectively.
Prices on these contracts and arrangements were comparable to
those given to other similarly situated customers.

Expenses



| |                 
| | ----------------
| | Cost of Revenues

Cost of revenues consists primarily of expenses
related to the operation of our search and commerce services,
primarily depreciation, network and hosting charges, as well as
royalties for our Media-IXT application. Also included in cost
of revenues are expenses associated with our professional
services and tech support departments. Cost of revenues were
$42.2 million for fiscal 2000, representing an increase of
$26.6 million or 170% over cost of revenues of
$15.6 million in fiscal 1999. The increase was due
primarily to additional depreciation, network and hosting
charges resulting from expansions of our Web search data centers
in the United States and abroad during fiscal 2000 and 1999.



| |                             
| | ----------------------------
| | Sales and Marketing Expenses

Sales and marketing expenses consist of personnel
and related costs for our direct sales force and marketing staff
as well as expenses related to our marketing programs, including
trade shows and advertising. Sales and marketing expenses were
$123.0 million in fiscal 2000, an increase of
$66.9 million or 119% from fiscal 1999. This increase was
primarily due to an increase in the number of sales and
marketing personnel, increased sales commissions and additional
marketing programs, including the undertaking of a branding
campaign.



| |                                   
| | ----------------------------------
| | Research and Development
	Expenses

Research and development expenses consist
primarily of personnel and related costs for our development
efforts. Research and development expenses were
$59.7 million in fiscal 2000, an increase of
$30.4 million or 104% over the comparable period in fiscal
1999. The increase was primarily due to an increase in the
number of research and development personnel to support
expansion of our software products, Web search business, online
commerce development, and increases in quality assurance,
technical support and technical publications personnel.



| |                                     
| | ------------------------------------
| | General and Administrative
	Expenses

General and administrative expenses consist
primarily of personnel and related costs for general corporate
functions, including finance, accounting, human resources,
facilities and legal. General and administrative expenses
totaled $19.1 million in fiscal 2000, an increase of
$10.2 million or 114% over fiscal 1999. This increase was
due primarily to an increase in the number of general and
administrative personnel, increased accounting and legal costs
incurred in connection with business activities and purchases
related to our corporate headquarters in Foster City, California.



| |                          
| | -------------------------
| | Acquisition-Related Costs

In October 1999, we acquired WebSpective
Software, Inc., a developer of software solutions for content
and application distribution, delivery and management, to
supplement our Software Products offerings. The acquisition of
WebSpective was accounted for as a pooling of interests. We
recorded acquisition-related costs of approximately
$4.0 million in the quarter ended December 31, 1999,
primarily for investment banking fees, accounting, legal and
other expenses.

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In April 1999, we acquired Impulse! Buy Network,
a developer of online merchandising software. We accounted for
the acquisition as a pooling of interests. We recorded
acquisition costs of approximately $1.1 million in fiscal
1999 as a result of the acquisition, primarily for accounting,
legal and other expenses.

As of September 30, 2000, all
acquisition-related costs had been paid.



| |                                               
| | ----------------------------------------------
| | Purchased In-Process Research and
	Development

A portion of the purchase price we paid for
Ultraseek has been allocated to developed technology and
in-process research and development (IPRD). We
identified and valued the developed technology and IPRD by
conducting extensive interviews, analyzing data provided by
Ultraseek concerning developmental products, considering the
stage of development of such products and the time and resources
needed to complete them, and assessing the expected income
generating ability of the products, target markets and
associated risks. The income approach, which includes an
analysis of the markets, cash flows, and risks associated with
achieving such cash flows, was the primary technique utilized in
valuing the developed technology and IPRD. Based on our analysis
of these variables, we recorded a one-time purchased IPRD charge
of $4.4 million in fiscal 2000 because technological
feasibility had not been established and no future alternative
uses existed.



| |                                              
| | ---------------------------------------------
| | Amortization of Intangibles and Other
	Assets

Amortization of intangibles and other assets
primarily relates to our purchase acquisition of Ultraseek in
July 2000. As a result of this acquisition, we recorded goodwill
of $319.4 million under intangibles and other assets.
Amortization of intangibles and other assets was
$13.2 million in fiscal 2000.



| |                  
| | -----------------
| | Other Income, Net

Other income, net includes interest on our cash
and cash equivalents, short-term investments and restricted cash
less expenses related to our debt and capital lease obligations.
Other income, net, totaled $15.9 million of income in
fiscal 2000, an increase of $11.3 million or 246% over
fiscal 1999. Most of this increase was generated from
$3.6 million from gains on sales of investments in equity
securities and $16.7 million in interest income from our
cash and cash equivalents. These gains were partially offset by
interest expense. The increase was also offset by the write-off
of obsolete computer and networking equipment, and interest
charges. We also recognized losses for the abandonment of
leasehold improvements and equipment with a net book value of
approximately $1.9 million due to corporate relocation in
fiscal 1999.



| |                                 
| | --------------------------------
| | Liquidity and Capital
	Resources

Cash and cash equivalents and short-term
investments totaled $84.5 million at September 30,
2001, a decrease of $134.0 million or 61% from
$218.5 million at September 30, 2000. The decrease
primarily came from cash used in operating activities and
investing activities, including purchases of property and
equipment and investments in equity securities. At
September 30, 2001 and 2000, our long-term restricted cash
was $129.0 million and $119.6, respectively.

In November 2001, we completed a public offering
of our Common Stock in which we sold approximately
13.2 million shares raising $52.9 million, net of
estimated issuance costs and underwriters discounts.

We used $76.9 million in cash from
operations during fiscal 2001 as compared to generating a cash
flow from operations of $65.7 million during the prior
year. The change was primarily due to the increase in our net
loss and decrease in deferred revenue, partially offset by
collections of accounts receivable and an increase in non-cash
charges. Cash provided by investing activities was
$50.6 million in fiscal 2001, as compared to cash used in
investing of $207.3 million in the prior year. The change
was primarily the result of reduced strategic investment
activity and reduced property and equipment purchases in fiscal
2001 and due to the restriction of $119.6 million of cash
in fiscal 2000 associated with the lease of our corporate
headquarters. Cash provided by financing activities was
$3.6 million in fiscal 2001, a decrease of
$92.3 million from the prior year, as fewer

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employees exercised stock options due to the
change in value of our stock price and many employees
participated in our Stock Option Exchange Program.


In fiscal 2000, we generated cash from operations
of $65.7 million, as compared to using $31.0 million
in cash from operations in fiscal 1999. The change was primarily
the result of increases in accrued liabilities and deferred
revenue. Cash used in investing activities was
$207.3 million in fiscal 2000, a decrease of $34.9 from the
prior year. Cash provided by financing activities was
$95.9 million in fiscal 2000, a decrease of
$229.8 million from the prior year. The decrease was
primarily due to a public offering in fiscal 1999 that raised
$305.1 million.

Investments in equity securities totaled
$1.4 million at September 30, 2001, a decrease of
$116.5 million or 99% from $117.9 million at fiscal
year-end September 30, 2000, primarily related to
impairment write-downs on our investments and decreases in the
stock values of the technology companies that comprise our
equity investment portfolio. All of our investments in equity
securities are comprised of strategic investments in publicly
traded and private technology companies.

From time to time, we have used debt and leases
to partially finance capital purchases. At September 30,
2001, we had $9.6 million in total loans and capitalized
lease obligations outstanding. Our underlying assets
collateralize the loans, and the underlying equipment obtained
through the lease agreements collateralizes each capitalized
lease. Approximately $6.7 million of our debt at
September 30, 2001 was in the form of bank loans. The bank
loans include certain covenants requiring minimum liquidity,
tangible net worth and profitability over time, and do not allow
us do distribute cash dividends. As of September 30, 2001,
we were in compliance with all financial covenants.

In April 2000, we entered into a lease commencing
November 1, 2001 for approximately 400,000 square feet of
office space in two mid-rise office buildings in Foster City,
California. The lease is for substantially more space than we
will need for the next several years. The commercial real estate
market in San Mateo County, California is volatile and
unpredictable in terms of rental fees, occupancy rates and
preferred locations. If we fail to sublease a significant
portion or all of this new space at or above the rate we are
paying under the lease agreement, we will incur substantial
additional operating expense during the lease term. Aggregate
payments to be made under the lease are approximately
$324.4 million over the lease term ending October 31,
2016. Payments under the lease will commence when the property
is delivered to Inktomi by the developer. We expect this
delivery to occur in the quarter ending March 31, 2002.
This lease limits the liquidity of $9.3 million of our
cash, which is classified as long-term on our balance sheet.

In August 2000, we entered into a lease agreement
commencing August 24, 2000 for our corporate headquarters
in Foster City, California, including all improvements related
to this property. Under the lease terms, we are required to pay
lease payments for five years to the lessor. The payments are
calculated based on a floating interest rate applied against a
$114 million principle value. Future minimum lease payments
under this lease are calculated based on the 1-year LIBOR as of
September 30, 2001. The agreement was assigned to a third
party lessor under the terms of a lease finance structure. This
structure also required the creation and maintenance of a cash
collateral account that limits the liquidity of
$119.6 million of our cash, which is classified as
long-term on our balance sheet. At the end of the lease term, we
have the option to buy the building or to extend the lease. If
we elect not to purchase the building or extend the lease term,
we have guaranteed a residual value of $101 million. We
have sublet a portion of our headquarters facilities through
July 2006 to various subtenants for an aggregate future rental
expense offset of $18.8 million.

Our capital and liquidity requirements depend on
numerous factors, including market acceptance of our products,
economic conditions impacting our revenue generation, the
resources we devote to developing, marketing, selling and
supporting our products, the timing and extent of establishing
international operations, the resources we commit to facilities,
the extent and timing of our investments, the value of our
investments in equity securities and real estate, acquisition
costs, and the ability to raise capital and other factors. We
believe that we have adequate cash resources to fund operations
for at least the next twelve months.

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FACTORS AFFECTING OPERATING RESULTS

Interested persons should carefully consider the
risks described below in evaluating us. Additional risks and
uncertainties not presently known to us or that we currently
consider immaterial may also impair our business operations. If
any of the following risks actually occur, our business,
financial condition or results of operations could be materially
adversely affected. In that case, the trading price of our
Common Stock could decline.

OUR FUTURE GROWTH DEPENDS ON THE COMMERCIAL
SUCCESS OF EACH OF OUR SOFTWARE PRODUCTS AND OUR ABILITY TO
LEVERAGE THESE TECHNOLOGIES TO DEVELOP, INTRODUCE AND MARKET NEW
PRODUCTS FOR EMERGING MARKETS.

Our future growth substantially depends on the
commercial success of our Traffic Server network cache product,
our Content Delivery Suite, our Media Products, and our recently
introduced content networking applications. The markets for
these products are in their early stages and we cannot be sure
that our target customers will widely adopt and deploy these
technologies throughout their networks. Demand for our products
has fluctuated significantly over the past several quarters as
our core telecommunications and network service provider
customers and prospects have deferred and downsized purchases
and as the Content Delivery Network market has declined. We
expect this business environment to continue for the foreseeable
future, and expect we will need to continue to modify and
enhance our products for multiple market segments including in
particular the enterprise market. In this connection, we
introduced a suite of content networking applications which
includes Traffic Core, Traffic Edge, Traffic Controller and
Inktomi Media Publisher. We are targeting these new products
primarily towards enterprise customers and we expect revenues
from these products to be modest over the next several quarters.
We cannot be sure we will be successful in our development
efforts or that our products will gain market traction. Our
future success substantially depends on our ability to generate
substantial and sustained revenues from our existing network
software products and new content networking products in each of
our market segments and substantially increase the number of new
and repeat customer transactions.

DEMAND FOR OUR STREAMING MEDIA PRODUCTS IS
DEPENDENT ON INCREASING AVAILABILITY OF MEDIA CONTENT ON
NETWORKS, THE BUILD OUT OF BROADBAND CAPABILITIES AND THE
ESTABLISHMENT OF PROFITABLE BUSINESS MODELS BY OUR CUSTOMERS,
AMONG OTHER FACTORS, ALL WHICH ARE OUTSIDE OF OUR
CONTROL.

The streaming media market is in its early stages
and sales of our Media Products to date have been modest and
fluctuated from quarter to quarter. The amount of streaming
content available over public networks and enterprise networks
must increase substantially for some of our potential customers
to justify their purchase of our Media Products. Our Media
Products are complex which may limit their market acceptance and
deployment. Growth in sales of our Media Products in the service
provider space depends on the increased availability and usage
of broadband access to the Internet. We cannot be sure that
broadband access to the Internet will grow fast enough or be
utilized by enough persons to create a sustainable marketplace
for our Media Products. In addition, successful business models
for the delivery of streaming media content must be developed in
order for there to be sufficient demand for our Media Products
in the service provider marketplace. As we focus on the
enterprise content networking market, enterprises building out
their content networks must realize the value of live and
on-demand webcasts, training seminars and other media
applications in order for our Media Products as well as our
recently introduced content network applications to be widely
adopted. There can be no assurances that enterprises will adopt
streaming or on-demand media solutions for the operation of
their business or networks, or that our solutions will meet
their requirements. Our Media Products and our content
networking applications that enhance the streaming of media rely
in part on continued access to third party technology that
enables them to effectively recognize and stream media. Failure
to maintain our current arrangements to use these third party
technologies may adversely affect the appeal our Media Products.

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OUR BUSINESS WOULD BE HARMED IF CUSTOMERS
CHOOSE NOT TO USE OR PROMOTE OUR WEB SEARCH SERVICES.

Revenues from our Web search services result
primarily from the number of end-user searches processed by our
Search Engine. Our agreements with customers do not require them
to direct end-users to our search services or to use our search
services exclusively or at all. Accordingly, revenues from
search services are highly dependent upon the willingness of
customers to promote and use the search services we provide, the
ability of our customers to attract end-users to their online
services, the volume of end-user searches that are processed by
our Search Engine, and the ability of customers to monetize
traffic from their Web site search pages. Some of our customers
have selected competing search and directory services to operate
in combination with our services, which has reduced the number
of queries available for us to serve and may erode future
revenue growth opportunities. The technological barriers for
customers to implement additional services or to replace our
services are not substantial. The market for Internet search is
maturing and many smaller and medium size portals are not
profitable, suffer from declining revenue growth and have
limited access to capital to fund operational needs. Many of our
smaller search services customers have elected not to renew
their contracts and our market opportunity from portals has
become more limited. As a result, our Web search revenues are
dependent on a relatively few number of major customers.
Economic conditions may lead such customers of our Web search
services to stop paying for such services or to only pay for
such services at highly reduced rates. In order for us to
increase revenues from our Search Engine business, we will need
to attract new customers, develop and deliver new search
services, products and features to existing and future
customers, establish deeper strategic relationships with our
customers, and increase the adoption of our Index Connect and
Search Submit paid inclusion services for content publishers.

WE MAY BE UNABLE TO GROW SALES OF OUR
ENTERPRISE SEARCH PRODUCTS.

Our revenue growth is dependent upon, among other
things, the growth of sales of our search software products to
enterprises. Such revenues are derived from software license
fees and fees derived from support and upgrades of such
software. A number of factors could cause sales of our
enterprise search products to slow or decline. We face intense
competition from companies with more experience in the
marketplace and who offer a broad set of products and services
to our target customers. In addition, these companies have
deeper strategic relationships and have established well
developed channels to sell and distribute their products and
services. We historically have sold our enterprise search
products primarily at the departmental level within large
enterprises, through a direct sales force. To expand our market
opportunities, we will need to enhance our product and service
offerings, effectively market our products as enterprise wide
search and navigation solutions, and develop channel and
licensing programs to extend our reach and partner with
companies offering complementary products to offer collectively
a broader set of integrated products.

OUR SUCCESS IN THE ENTERPRISE MARKETPLACE
DEPENDS ON OUR ABILITY TO NAVIGATE A SET OF MARKET AND
DEVELOPMENT CHALLENGES.

Our shifting focus towards marketing our products
to the enterprise market introduces new challenges to our
business. The enterprise market for network infrastructure
products and applications is in its early stage and the market
may develop more slowly than expected. Our target customers may
not be convinced of the productivity, communications, cost and
other benefits of large-scale network core to network edge
content distribution and management, or may believe their
existing network infrastructure is adequate to support their
needs. Large software and/or hardware companies with broad
enterprise applications and infrastructure suites may pursue our
market segment with integrated offerings that obviate the need
for our software applications. Conversely, enterprises may base
their network infrastructure purchases on available point
applications for which we have limited offerings and limited
ability to develop. We will need to expend resources to develop
or acquire additional point applications to drive growth in the
enterprise market. In addition, the point applications that we
currently offer may not provide the foothold within the
enterprise to up-sell our infrastructure software.

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THE MARKETS IN WHICH WE OPERATE ARE HIGHLY
COMPETITIVE AND RAPIDLY CHANGING AND WE MAY BE UNABLE TO COMPETE
SUCCESSFULLY AGAINST NEW ENTRANTS AND ESTABLISHED COMPANIES WITH
GREATER RESOURCES.

We compete in markets that are new, intensely
competitive, highly fragmented and rapidly changing. We have
experienced and expect to continue to experience increased
competition from current and potential competitors in each of
our market segments, many of which are bringing new solutions to
market, establishing technology alliances and OEM relationships
with larger companies, and focusing on specific segments of our
target markets. In some cases, our competitors are implementing
aggressive pricing and other strategies that are focused in the
short term on building customer bases, name recognition in the
market and capturing market share. This may cause some price
pressure on our products and services in the future.

We directly or indirectly compete against
multiple companies with our software products, including Akamai,
CacheFlow, Cisco Systems, InfoLibria, Microsoft, Netscape,
Network Appliance, Novell, RealNetworks and Volera. We are aware
of numerous other major software developers as well as smaller
entrepreneurial companies that are focusing significant
resources on developing and marketing products and services that
will compete with our products. We also believe that we may face
competition from other providers of competing solutions to
network infrastructure problems, including networking hardware
and software manufacturers, traditional hardware manufacturers,
telecommunications providers, cable TV/communications providers,
software database companies, and large diversified software and
technology companies. Many of these companies provide or have
announced their intentions to provide a range of software and
hardware products based on Internet protocols and to compete in
the broad Internet/intranet software market as well as in
specific market segments in which we compete.

In the search software market, our primary
competitors include AltaVista, Autonomy, Dataware, Excalibur,
Fulcrum, Lotus, Microsoft and Verity. We also indirectly compete
in this market with Oracle and other database vendors that offer
information search and retrieval capabilities with their core
database products, and Web platform companies such as Netscape.

We compete with a number of companies to provide
Internet search and directory services and technology. In the
Web services marketplace, our primary competitors include a
variety of established and newer companies, including AltaVista,
Ask Jeeves, FAST Search and Transfer, Google, Overture,
LookSmart, Northern Light, and Yahoo.

These companies and other competitors have
focused on search result relevance, database size metrics and
ease of use to differentiate their services. In addition,
several large media and other Internet-based companies have made
investments in, or acquired, Internet search engine companies
and may seek to develop or customize their products and services
to deliver to our target customers.

Our competitors may be able to respond more
quickly to new or emerging technologies and changes in customer
requirements than we can. In addition, our current and potential
competitors may bundle their products with other software or
hardware, including operating systems, browsers and network
hardware in a manner that may discourage users from purchasing
products offered by us. Also, current and potential competitors
have or may have greater name recognition, more extensive
customer bases and access to proprietary content. Increased
competition could result in price reductions, fewer customer
orders, fewer search queries served, reduced gross margins and
loss of market share.

THE NETWORK INFRASTRUCTURE MARKET IS RAPIDLY
CHANGING AND WE MUST DEVELOP, ACQUIRE, AND INTRODUCE NEW
PRODUCTS AND TECHNOLOGIES TO GROW OUR REVENUES AND REMAIN
COMPETITIVE.

The network infrastructure market is
characterized by rapid technological change, frequent new
product introductions, changes in customer requirements and
evolving industry standards. The introduction of products
embodying new technologies and the emergence of new industry
standards could render our existing products obsolete. Our
future success and revenue growth will depend upon our ability
to develop, acquire and introduce a variety of new products and
product enhancements to address the increasingly sophisticated
needs

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of our customers, particularly in the content
networking and enterprise markets. We have experienced delays in
releasing new products and product enhancements and may
experience similar delays in the future. Material delays in
introducing new products and enhancements may cause customers to
forego purchases of our products or to purchase those of our
competitors.


OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE
SIGNIFICANTLY, AND THESE FLUCTUATIONS MAY CAUSE OUR STOCK PRICE
TO FALL.

We expect that a significant portion of our
future revenues will come from our licensed software products.
In the short-term, we expect that these revenues will come from
licenses to a relatively small number of customers. The volume
and timing of orders are difficult to predict because the
markets for our software products are in their early stages and
the sales cycle varies substantially from customer to customer.
In addition, many customers in our target markets are
scrutinizing their capital spending budgets in light of the
slowing economy, and other customers have limited access to
capital to fund operational needs. These companies are shifting
their buying patterns as a result, taking a more cautious and
measured approach to their network build-out plans.
Historically, customer orders during a quarter, excluding our
search related products and services, have consisted of a small
number of multi-million dollar deals and several other smaller
orders ranging from $0.1 million to $0.5 million. The
cancellation, deferral or reduction of even a small number of
licenses of any of our products would reduce our expected
revenues, which would adversely affect our quarterly financial
performance. To the extent significant sales occur earlier than
expected, operating results for later quarters may not compare
favorably with operating results from earlier quarters.

Our operating expenses are largely based on
anticipated revenue trends and a high percentage of our expenses
are fixed in the short term. Despite our recent workforce
reductions, we expect to continue to make significant
investments to develop and market products for the enterprise
and content networking markets, broaden our customer support
capabilities, develop new distribution channels, and fund
greater levels of research and development. A delay in
generating or recognizing revenue for the reasons already
discussed or for any other reason could cause significant
variations in our operating results from quarter-to-quarter and
could result in substantial operating losses.

Due to these factors, we believe that
quarter-to-quarter comparisons of our operating results are not
a good indication of our future performance. It is likely that
in some future quarter, our operating results may be below the
expectations of public market analysts or investors, and the
price of our Common Stock may fall.

OUR FUTURE REVENUE GROWTH DEPENDS ON OUR
ABILITY TO IMPROVE THE EFFECTIVENESS AND BREADTH OF OUR SALES,
DISTRIBUTION AND SUPPORT ORGANIZATIONS.

We will need to improve the effectiveness and
breadth of our direct and indirect sales operations, both
domestically and internationally, in order to increase market
awareness and sales of our products. Our products and services
require sophisticated sales efforts targeted at several people
within our prospective customers organizations.
Competition for qualified sales personnel is intense, and we
might not be able to hire the kind and number of sales personnel
we are targeting. In addition, we will need to effectively train
and educate our sales force if we are to be successful in
selling into the enterprise market, build out our lead
management system, complete the deployment of our inside sales
force, and improve our overseas sales efforts.

Our future revenue growth is dependent upon
establishing and maintaining productive relationships with a
variety of distribution partners, including OEMs, resellers,
systems integrators and joint marketing partners. We seek to
sign up distribution partners that have a substantial amount of
technical and marketing expertise. Even with this expertise, our
distribution partners generally require a significant amount of
training and support from us, and we anticipate that it will
take the next few quarters before our distribution partners will
develop the expertise and skills necessary to effectively sell
our products. We may be adversely affected if our distribution
partners fail to ship products in a timely manner or according
to agreed upon schedules. In recent quarters we have focused our
efforts on entering into OEM relationships with prominent
network hardware providers to bundle our software products into
their hardware offerings. Several risks arise in connection with

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these relationships including conflicts with our
other sales channels, unpredictable product support obligations
and reliance on such third parties for sales results.


We require highly trained customer service and
support personnel. We currently have a relatively small customer
service and support organization and will need to continue to
train our staff to support new customers, new product lines, the
expanding needs of existing customers and the
internationalization of our business. Competition for customer
service and support personnel is intense in our industry due to
the limited number of people available with the necessary
technical skills and understanding of the relevant industries
including the Internet, telecommunications, commerce and media.

THE LOSS OF A KEY CUSTOMER COULD ADVERSELY
AFFECT OUR REVENUES AND BE PERCEIVED AS A LOSS OF MOMENTUM IN
OUR BUSINESS.

We have generated a substantial portion of our
historical revenues from a limited number of customers. We
expect that a small number of customers will continue to account
for a substantial portion of revenues for the foreseeable
future. As a result, if we lose a major customer for any reason,
including non-renewal of a customer contract or a failure to
meet performance requirements, or in the case of our Search
Engine business if there is a decline in usage of any
customers search service, our revenues would be adversely
affected. Our potential customers and public market analysts or
investors may perceive any such loss as a loss of momentum in
our business, which may adversely affect future opportunities to
sell our products and services and cause our stock price to
decline. We cannot be sure that customers that have accounted
for significant revenues in past periods, individually or as a
group, will continue to generate revenues in any future period.

IF WE ARE UNABLE TO MAINTAIN OUR RELATIONSHIPS
WITH CUSTOMERS AND THE COMPANIES THAT SUPPLY AND DISTRIBUTE OUR
PRODUCTS, WE MAY HAVE DIFFICULTY SELLING OUR PRODUCTS AND
SERVICES.

We believe that our success in penetrating our
target markets depends in part on our ability to develop and
maintain strategic relationships with key hardware and software
vendors, Internet technology and service providers, distribution
partners and customers. We believe these relationships are
important in order to validate our technology, facilitate broad
market acceptance of our products, enhance our product and
service offering, and expand our sales, marketing and
distribution capabilities. If we are unable to develop these key
relationships or maintain and enhance existing relationships,
particularly in the areas of streaming audio and video, our
Traffic Server product and our new products for the content
networking market, we may have difficulty selling our products
and services.

We have from time to time licensed components
from others such as reporting functions and security features
and incorporated them into our products and services. If these
licensed components are not maintained, it could impair the
functionality of our products and services and require us to
obtain alternative products from other sources or to develop
this software internally. In either case, this could involve
costs and delays as well as diversion of engineering resources.

THE LEGAL ENVIRONMENT IN WHICH WE OPERATE IS
UNCERTAIN AND CLAIMS AGAINST US COULD CAUSE OUR BUSINESS TO
SUFFER.

Our products and services operate in part by
making copies of material available on the Internet and other
networks and making this material available to end-users from a
central location or local systems. In addition, our Portal
Services technology systems collect end-user information, which
we use to deliver services to our customers and our customers
use to deliver services to their users. This creates the
potential for claims to be made against us (either directly or
through contractual indemnification provisions with customers)
for defamation, negligence, copyright or trademark infringement,
personal injury, invasion of privacy or under other legal
theories based on the nature, content, copying, dissemination,
collection or use of these materials. These claims have been
threatened against us from time to time and have been brought,
and sometimes successfully pressed, against online service
providers. It is also possible that if any information provided
through any of our products or services contains errors, third
parties could make claims against us for losses

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incurred in reliance on this information.
Although we carry general liability insurance, our insurance may
not cover potential claims of this type or be adequate to
protect us from all liability that may be imposed.


INTERNET-RELATED LAWS COULD ADVERSELY AFFECT
OUR BUSINESS.

Laws and regulations that apply to communications
and commerce over the Internet are becoming more prevalent. The
United States Congress has enacted Internet laws regarding
childrens privacy, copyrights, taxation and the
transmission of sexually explicit material. The European Union
has enacted its own privacy regulations as well as legislation
governing e-commerce, copyrights and caching. The law of the
Internet, however, remains largely unsettled, even in areas
where there has been some legislative action. It may take years
to determine whether and how existing laws such as those
governing intellectual property, privacy, libel and taxation
apply to the Internet. In addition, the growth and development
of the market for online commerce may prompt calls for more
stringent consumer protection laws, both in the United States
and abroad, that may impose additional burdens on companies
conducting business online. The adoption, implementation or
modification of laws and regulations relating to the Internet,
or interpretations of existing law, could adversely affect our
business.

ANY ACQUISITIONS WE MAKE COULD ADVERSELY
AFFECT OUR OPERATIONS OR FINANCIAL RESULTS.

We have made seven acquisitions since September
1998 and may invest in or acquire complementary companies,
products and technologies in the future. If we buy a company, we
could have difficulty in assimilating that companys
personnel and operations and maintaining acceptable standards,
controls, procedures and policies. In addition, the key
personnel of the acquired company may decide not to work for us.
Also, we could have difficulty in integrating the acquired
technology or products into our operations. There could be
potential unknown liabilities associated with the purchased
company. These difficulties could disrupt our ongoing business,
distract our management and employees and increase our expenses.
Furthermore, we may have to incur debt or issue equity
securities to pay for any future acquisitions, the issuance of
which could be dilutive to our stockholders.

WE MAY NOT BE ABLE TO RECRUIT AND RETAIN THE
PERSONNEL WE NEED TO SUCCEED.

Our primary asset is the intellectual
capabilities of our employees. We are therefore dependent on
recruiting and retaining a strong team of personnel across all
functional areas. Competition for these individuals is intense,
and we may not be able to attract or retain the highly qualified
personnel necessary for our success. Our employment
relationships are generally at-will. We have had key employees
leave us in the past and we can make no assurance that one or
more will not leave us in the future. If any of our key
employees were to leave us, we could face substantial difficulty
in hiring qualified successors and could experience a loss in
productivity while any such successor obtains the necessary
training and experience. Many of our key employees have reached
or will soon reach the four-year anniversary of their hiring
date and will be fully vested in their initial stock option
grants. While our key employees are typically granted additional
stock options to provide additional incentive to remain with us,
the initial option grant is typically the largest and an
employee may be more likely to leave us upon completion of the
vesting period for the initial option grant. In light of current
market conditions, we may undertake programs to retain our
employees that may be viewed as dilutive to our shareholders. We
do not have key person life insurance policies covering any of
our employees other than our Chief Executive Officer.

OUR EFFORTS TO INCREASE OUR PRESENCE IN
MARKETS OUTSIDE OF THE UNITED STATES MAY BE UNSUCCESSFUL AND
COULD RESULT IN LOSSES.

We market and sell our products in the United
States and internationally, principally Europe and Asia.
Historically, the percentage of sales to customers located
outside of the United States has varied substantially,
reflecting the early stage build-out of our international
operations. We have limited experience in developing

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localized versions of our products and marketing
and distributing our products internationally. In addition,
other inherent risks may apply to international markets and
operations, including:




| |   |                                                                                             
| | - | --------------------------------------------------------------------------------------------
| |  | the impact of recessions in economies outside the
	United States;                           
|
| |  | greater difficulty in accounts receivable
	collection and longer collection periods;        
|
| |  | the impact of changes in foreign currencies, in
	particular the EUs conversion to the Euro;
|
| |  | unexpected changes in regulatory requirements;                                              
|
| |  | difficulties and costs of staffing and managing
	foreign operations;                        
|
| |  | potentially adverse tax consequences; and                                                   
|
| |  | political and economic instability.                                                         

We also have limited experience operating in
foreign countries and managing multiple offices with facilities
and personnel in disparate locations. We may not be able to
manage our resources effectively, coordinate our efforts,
supervise and train our personnel or otherwise successfully
manage our resources. The laws and cultural requirements in
foreign countries can vary significantly from those in the
United States. The inability to integrate our business in these
jurisdictions and to address cultural differences may adversely
affect the success of our international operations.

INTELLECTUAL PROPERTY CLAIMS AGAINST US COULD
CAUSE OUR BUSINESS TO SUFFER.

Substantial litigation regarding intellectual
property rights exists in the software industry. We expect that
software products may be increasingly vulnerable to third-party
infringement claims as the number of competitors in our industry
segments grow and the functionality of products in different
industry segments overlaps. We believe that many companies have
filed or intend to file patent applications covering aspects of
their technology that they may claim our technology infringes.
Some of these companies have sent copies of their patents to
Inktomi for informational purposes. We cannot be sure that these
parties will not make a claim of infringement against us with
respect to our products and technology. To this point, in August
2001, Network Caching Technology L.L.C. (NCT) initiated an
action against us that our caching products violate one or more
patents owned by NCT. The complaint seeks compensatory and other
damages and injunctive relief. This case, and any future actions
initiated against us, will be time consuming and expensive to
defend, will direct managements attention and resources,
and could cause product shipment delays or require us to
reengineer our products or enter into royalty or licensing
agreements. These royalty or licensing agreements, if required,
may not be available on acceptable terms, if at all.

ANTI-TAKEOVER PROVISIONS CONTAINED IN OUR
CHARTER AND UNDER DELAWARE LAW COULD IMPAIR A TAKEOVER
ATTEMPT.

We are subject to the provisions of
Section 203 of the Delaware General Corporation Law
prohibiting, under some circumstances, publicly held Delaware
corporations from engaging in business combinations with some
stockholders for a specified period of time without the approval
of the holders of substantially all of our outstanding voting
stock. Such provisions could delay or impede the removal of
incumbent directors and could make more difficult a merger,
tender offer or proxy contest involving us, even if such events
could be beneficial, in the short term, to the interests of the
stockholders. In addition, such provisions could limit the price
that some investors might be willing to pay in the future for
shares of our Common Stock. These provisions, in addition to
provisions contained in our charter, may have the effect of
deterring hostile takeovers or delaying changes in our control
or management.

OUR STOCK PRICE IS VOLATILE.

The market price of our Common Stock has been and
may continue to be subject to wide fluctuations. Our stock price
may fluctuate in response to a number of events and factors,
such as quarterly variations in

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operating results, announcements of technological
innovations or new products by us or our competitors,
announcements of technological alliances and partnerships,
changes in financial estimates and recommendations by securities
analysts, the operating and stock price performance of other
companies that investors may deem comparable, and news reports
relating to trends in our markets. In addition, the stock market
in general, and the market prices for Internet-related companies
in particular, have experienced extreme volatility that often
has been unrelated to the operating performance of such
companies. These broad market and industry fluctuations may
adversely affect the price of our stock, regardless of our
operating performance. In the past, companies that have
experienced volatility in the market price of their stock have
been the subjects of securities class action litigation. If we
were the subject of securities class action litigation, it could
result in substantial costs and a diversion of managements
attention and resources.





Item 7A.     Quantitative
and Qualitative Disclosures About Market Risk

We do not use derivative financial instruments to
hedge interest rate and foreign currency exposure. We limit our
interest rate risks by placing our marketable securities
investments with high quality issuers principally in United
States government and corporate debt securities with terms of
less than two years. We do not expect any material losses from
our marketable securities investments and believe that our
interest rate exposure is modest. We sell our products and
services in the United States and abroad. Historically, the
percentage of sales to customers located outside the United
States has varied substantially. We currently transact
substantially all of our revenues, whether domestic or abroad,
in United States currency. Our expenditures and consolidated
financial results could be affected by a change in the exchange
rate of the U.S. Dollar versus a foreign currency.

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Item 8.     Consolidated
Financial Statements and Supplementary Data

The Consolidated Financial Statements and
Supplementary Data required by this Item are set forth at the
pages indicated in Item 14 (a).

Quarterly Results of Operations

The following table presents our operating
results for each of the eight quarters in the period ending
September 30, 2001. The information for each of these
quarters is unaudited and has been prepared on the same basis as
the audited consolidated financial statements. In the opinion of
management, all necessary adjustments (consisting only of normal
recurring adjustments) have been included to present fairly the
unaudited quarterly results when read in conjunction with our
audited consolidated financial statements and the notes thereto
appearing elsewhere in this Annual Report on Form 10-K.
These operating results are not necessarily indicative of the
results of any future period.

|                                     |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |         |        |        |  
|------------------------------------ | ---------------------------------------------------------------- | ------------------------------------------------ | -------- | -------- | ------ | -------- | -------- | -------- | ------ | -------- | ------- | -------- | ------ | -------- | ------- | -------- | ------ | ------- | ------- | ------- | ------ | ------- | ------ | ------- | ------ | ---- | ------ | ------- | ------ | ------ | ------- | ------- | ------ | ------ | -
|                                     |                                                                  |                                                 
|                                     |                                                                  | For the Quarters Ended                          
|                                     |                                                                  |                                                 
|                                     |                                                                  | Sep. 30,                                         |          | Jun. 30, |        | Mar. 31, |          | Dec. 31, |        | Sep. 30, |         | Jun. 30, |        | Mar. 31, |         | Dec. 31,
|                                     |                                                                  | 2001                                             |          | 2001     |        | 2001     |          | 2000     |        | 2000     |         | 2000     |        | 2000     |         | 1999    
|                                     |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |         
|                                     |                                                                  |                                                 
|                                     |                                                                  | (Unaudited, in thousands, except per share data)
|Revenues                             |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|                                     | Licenses                                                         |                                                  | $        | 17,772   |        |          | $        | 20,068   |        |          | $       | 17,676   |        |          | $       | 51,223   |        |         | $       | 51,724  |        |         | $      | 37,390  |        |      | $      | 26,993  |        |        | $       | 19,689  |       
|                                     | Services                                                         |                                                  |          | 9,230    |        |          |          | 8,118    |        |          |         | 8,863    |        |          |         | 14,326   |        |         |         | 13,454  |        |         |        | 9,744   |        |      |        | 7,310   |        |        |         | 5,786   |       
|                                     | Web search services                                              |                                                  |          | 12,011   |        |          |          | 11,374   |        |          |         | 12,946   |        |          |         | 14,955   |        |         |         | 14,143  |        |         |        | 14,366  |        |      |        | 12,966  |        |        |         | 10,652  |       
|                                     |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|                                     |                                                                  | Total revenues                                   |          |          | 39,013 |          |          |          | 39,560 |          |         |          | 39,485 |          |         |          | 80,504 |         |         |         | 79,321 |         |        |         | 61,500 |      |        |         | 47,269 |        |         |         | 36,127 |       
|Cost of Revenues                     |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|                                     | Licenses                                                         |                                                  |          | 1,951    |        |          |          | 2,095    |        |          |         | 879      |        |          |         | 2,352    |        |         |         | 2,914   |        |         |        | 1,570   |        |      |        | 1,321   |        |        |         | 644     |       
|                                     | Services                                                         |                                                  |          | 2,878    |        |          |          | 3,179    |        |          |         | 6,282    |        |          |         | 5,906    |        |         |         | 4,647   |        |         |        | 4,419   |        |      |        | 2,871   |        |        |         | 2,015   |       
|                                     | Web search services                                              |                                                  |          | 5,574    |        |          |          | 6,369    |        |          |         | 6,458    |        |          |         | 6,254    |        |         |         | 6,755   |        |         |        | 5,479   |        |      |        | 4,647   |        |        |         | 4,893   |       
|                                     |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|                                     |                                                                  | Total cost of revenues                           |          |          | 10,403 |          |          |          | 11,643 |          |         |          | 13,619 |          |         |          | 14,512 |         |         |         | 14,316 |         |        |         | 11,468 |      |        |         | 8,839  |        |         |         | 7,552  |       
|Gross Profit                         |                                                                  |                                                  | 28,610   |          |        |          | 27,917   |          |        |          | 25,866  |          |        |          | 65,992  |          |        |         | 65,005  |         |        |         | 50,032 |         |        |      | 38,430 |         |        |        | 28,575  |        
|Operating expenses:                  |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|                                     | Sales and marketing                                              |                                                  |          | 26,496   |        |          |          | 29,587   |        |          |         | 37,665   |        |          |         | 44,321   |        |         |         | 40,494  |        |         |        | 32,856  |        |      |        | 27,403  |        |        |         | 22,293  |       
|                                     | Research and development                                         |                                                  |          | 16,368   |        |          |          | 17,776   |        |          |         | 22,283   |        |          |         | 21,498   |        |         |         | 19,161  |        |         |        | 16,388  |        |      |        | 13,244  |        |        |         | 10,921  |       
|                                     | General and administrative                                       |                                                  |          | 6,112    |        |          |          | 5,733    |        |          |         | 6,812    |        |          |         | 5,924    |        |         |         | 6,132   |        |         |        | 4,376   |        |      |        | 4,621   |        |        |         | 3,992   |       
|                                     | Amortization of intangibles and other assets                     |                                                  |          | 16,557   |        |          |          | 18,353   |        |          |         | 19,308   |        |          |         | 16,208   |        |         |         | 13,182  |        |         |        |        |        |      |        |        |        |        |         |        |       
|                                     | Impairment of intangibles and other assets                       |                                                  |          | 2,600    |        |          |          | 42,315   |        |          |         |         |        |          |         |         |        |         |         |        |        |         |        |        |        |      |        |        |        |        |         |        |       
|                                     | Restructuring                                                    |                                                  |          | 7,282    |        |          |          | 5,249    |        |          |         |         |        |          |         |         |        |         |         |        |        |         |        |        |        |      |        |        |        |        |         |        |       
|                                     | Purchased in-process research and development                    |                                                  |          |         |        |          |          |         |        |          |         |         |        |          |         | 430      |        |         |         | 4,400   |        |         |        |        |        |      |        |        |        |        |         |        |       
|                                     | Acquisition-related costs                                        |                                                  |          |         |        |          |          |         |        |          |         |         |        |          |         | 19,497   |        |         |         |        |        |         |        |        |        |      |        |        |        |        |         | 3,999   |       
|                                     |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|Total operating expenses             |                                                                  |                                                  | 75,415   |          |        |          | 119,013  |          |        |          | 86,068  |          |        |          | 107,878 |          |        |         | 83,369  |         |        |         | 53,620 |         |        |      | 45,268 |         |        |        | 41,205  |        
|                                     |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|Operating loss                       |                                                                  |                                                  | (46,805  | )        |        |          | (91,096  | )        |        |          | (60,202 | )        |        |          | (41,886 | )        |        |         | (18,364 | )       |        |         | (3,588 | )       |        |      | (6,838 | )       |        |        | (12,630 | )      
|Impairment of Investments            |                                                                  |                                                  |         |          |        |          | (65,895  | )        |        |          |        |          |        |          |        |          |        |         |        |         |        |         |       |         |        |      |       |         |        |        |        |        
|Other income, net                    |                                                                  |                                                  | 1,924    |          |        |          | 2,101    |          |        |          | 2,320   |          |        |          | 3,995   |          |        |         | 4,287   |         |        |         | 4,050  |         |        |      | 3,757  |         |        |        | 3,812   |        
|                                     |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|Pretax loss                          |                                                                  |                                                  | (44,881  | )        |        |          | (154,890 | )        |        |          | (57,882 | )        |        |          | (37,891 | )        |        |         | (14,077 | )       |        |         | 462    |         |        |      | (3,081 | )       |        |        | (8,818  | )      
|Income tax provision                 |                                                                  |                                                  | (145     | )        |        |          | (141     | )        |        |          | (436    | )        |        |          | (216    | )        |        |         | (1,031  | )       |        |         | (795   | )       |        |      |       |         |        |        |        |        
|                                     |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|                                     |                                                                  |                                                  | Net loss |          | $      | (45,026  | )        |          | $      | (155,031 | )       |          | $      | (58,318  | )       |          | $      | (38,107 | )       |         | $      | (15,108 | )      |         | $      | (333 | )      |         | $      | (3,081 | )       |         | $      | (8,818 | )
|                                     |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|Earnings per share:                  |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|                                     | Basic and diluted net loss per share                             |                                                  | $        | (0.35    | )      |          | $        | (1.22    | )      |          | $       | (0.46    | )      |          | $       | (0.31    | )      |         | $       | (0.13   | )      |         | $      | (0.00   | )      |      | $      | (0.03   | )      |        | $       | (0.08   | )     
|Weighted average shares outstanding: |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        
|                                     | Shares used in calculating basic and diluted net
	loss per share |                                                  |          | 127,487  |        |          |          | 126,755  |        |          |         | 125,731  |        |          |         | 124,452  |        |         |         | 116,997 |        |         |        | 113,771 |        |      |        | 111,602 |        |        |         | 110,138 |       
|                                     |                                                                  |                                                  |          |          |        |          |          |          |        |          |         |          |        |          |         |          |        |         |         |         |        |         |        |         |        |      |        |         |        |        |         |        

31



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Item 9.     Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure

Not Applicable.




PART III




Item 10.     Directors
and Executive Officers of the Registrant

Information concerning our directors and
executive officers is incorporated by reference to the sections
entitled Proposal No. 1: Election of
Directors  Nominees and
Management  Executive Officers contained
in our definitive Proxy Statement with respect to our 2002
Annual Meeting of Stockholders to be filed with the Securities
and Exchange Commission not later than 120 days after the
end of the fiscal year covered by this Form 10-K.
Information concerning compliance with Section 16(a) of the
Exchange Act of 1934 is incorporated by reference to the section
entitled Compliance with Section 16(a) of the
Exchange Act contained in our Proxy Statement.




Item 11.     Executive
Compensation

Information concerning executive compensation is
incorporated by reference to the sections entitled
Proposal No. 1: Election of
Directors  Director Compensation,
Management  Summary Compensation Table,
Management  Option Grants in Last Fiscal
Year, Management  Option Exercises in
Last Fiscal Year and Fiscal Year-End Option Values, and
Management  Employment Agreement
contained in our definitive Proxy Statement referred to in
Item 10 above.




Item 12.     Security
Ownership of Certain Beneficial Owners and
Management

Information concerning the security ownership of
certain beneficial owners and management is incorporated by
reference to the section entitled Information Concerning
Solicitation and Voting Security Ownership of Certain Beneficial
Owners and Management contained in definitive Proxy
Statement referred to in Item 10 above.




Item 13.     Certain
Relationships and Related Transactions

Information concerning certain relationships is
incorporated by reference to the section entitled Certain
Transactions contained in our definitive Proxy Statement
referred to in Item 10 above.




PART IV




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

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



| |                          
| | -------------------------
| | (1) Financial Statements:

|                                                                                                                     |  |      |     | 
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                     |  | Page
|                                                                                                                     |  |     
|Report of Independent Accountants                                                                                    |  |      | F-1 | 
|Consolidated Balance Sheets at September 30,
	2000 and 1999                                                          |  |      | F-2 | 
|Consolidated Statements of Operations 
	Fiscal Years Ended September 30, 2000, 1999, and 1998                       |  |      | F-3 | 
|Consolidated Statements of Changes in
	Stockholders Equity  Fiscal Years Ended
	September 30, 2000, 1999, and 1998 |  |      | F-4 | 
|Consolidated Statements of Cash Flows 
	Fiscal Years Ended September 30, 2000, 1999, and 1998                       |  |      | F-5 | 
|Notes to Consolidated Financial Statements                                                                           |  |      | F-6 | 

32



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| |                                   
| | ----------------------------------
| | (2) Financial Statement Schedules:



| |                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following financial statement schedule of
	Inktomi for the years ended September 30, 2001,
	September 30, 2000 and September 30, 1999 is filed as
	part of this Annual Report and should be read in conjunction
	with the Financial Statements of Inktomi:

Schedule II  Valuation and
Qualifying Accounts

For the years ended September 30, 2001,
2000, and 1999

|                                |      |                |   |            |  |            |   |             |  |  |   |        |  |  |   |       | 
|------------------------------- | ---- | -------------- | - | ---------- |  | ---------- | - | ----------- |  |  | - | ------ |  |  | - | ----- | 
|                                |      | Balance at     |   | Charged to |  | Write-Offs |   |            
|                                |      | Beginning      |   | Costs and  |  | Net of     |   | Balance at 
|                                |      | of Year        |   | Expenses   |  | Recoveries |   | End of Year
|                                |      |                |   |            |  |            |   |            
|                                |      |               
|                                |      | (In thousands)
|Allowance for Doubtful Accounts |      |                |   |            |  |            |   |             |  |  |   |        |  |  |   |      
|                                | 2001 |                | $ | 4,902      |  |            | $ | 10,544      |  |  | $ | 10,536 |  |  | $ | 4,910 | 
|                                | 2000 |                | $ | 3,282      |  |            | $ | 6,366       |  |  | $ | 4,746  |  |  | $ | 4,902 | 
|                                | 1999 |                | $ | 632        |  |            | $ | 2,822       |  |  | $ | 172    |  |  | $ | 3,282 | 

All other schedules are omitted because they are
not applicable or the required information is shown in
consolidated financial statements or notes thereto.



| |             
| | ------------
| | (3) Exhibits

|          |  |                                                                                                                                                     
|--------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit   |  |                                                                                                                                                     
|Number    |  | Description                                                                                                                                         
|          |  |                                                                                                                                                     
|3.2(3)    |  | Amended and Restated Certificate of Incorporation
	of Inktomi.                                                                                      
|3.2a(6)   |  | Amendment to Amended and Restated Certificate of
	Incorporation of Inktomi.                                                                         
|3.2b(12)  |  | Amendment to Amended and Restated Certificate of
	Incorporation of Inktomi.                                                                         
|3.4(3)    |  | Bylaws of Inktomi.                                                                                                                                  
|4.1(3)    |  | Specimen Common Stock Certificate.                                                                                                                  
|10.1(3)   |  | Form of Indemnification Agreement between Inktomi
	and each of its directors and officers.                                                          
|10.2(16)  |  | 1998 Stock Plan and form of agreement thereunder.                                                                                                   
|10.3(3)   |  | 1998 Employee Stock Purchase Plan and form of
	agreements thereunder.                                                                               
|10.4(3)   |  | 1996 Equity Incentive Plan and form of agreement
	thereunder.                                                                                       
|10.5(3)   |  | Fifth Amended and Restated Investors Rights
	Agreement dated as February 13, 1998 among Inktomi and
	certain of its security holders named therein.
|10.6(3)   |  | Executive Employment Agreement dated as of
	July 1, 1996 between Inktomi and
	David C. Peterschmidt.                                                
|10.7(10)  |  | Agreement of Sublease dated July 1, 1998 by
	and between Designs, Inc. and Atreve Software, Inc.                                                    
|10.8(11)  |  | First Amended and Restated Lease Agreement
	between Parkside Towers Co-Tenancy and Inktomi.                                                         
|10.9      |  | Reserved for future use.                                                                                                                            
|10.10(13) |  | Ultraseek Stock Option Plan and form of agreement
	thereunder.                                                                                      
|10.11(14) |  | Purchase and Sale Agreement dated June 30,
	2000 by and between WHFST Real Estate Limited Partnership and
	Inktomi.                                 
|10.12(14) |  | First Amendment to Purchase and Sale Agreement
	dated as of July 14, 2000 by and between WHFST Real Estate
	Limited Partnership and Inktomi.        
|10.13(12) |  | Preferred Stock Rights Agreement dated as of
	August 10, 2000 between Inktomi and Wells Fargo Shareowners
	Services.                                
|10.14     |  | Reserved for future use.                                                                                                                            
|10.15     |  | Reserved for future use.                                                                                                                            

33



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|          |  |                                                                                                                                                                                                                                                                                       
|--------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit   |  |                                                                                                                                                                                                                                                                                       
|Number    |  | Description                                                                                                                                                                                                                                                                           
|          |  |                                                                                                                                                                                                                                                                                       
|10.16(1)  |  | Office Lease dated October 9, 1998 between
	Inktomi and WHFST Real Estate Limited Partnership, a Delaware
	limited partnership.                                                                                                                                                       
|10.17(4)  |  | C2B Technologies Inc. (formerly BeyondNews, Inc.)
	1997 Stock Plan and form of agreement thereunder.                                                                                                                                                                                  
|10.18(2)  |  | Registration Rights Agreement dated
	September 25, 1998 between Inktomi and former stockholders
	of C2B Technologies Inc. (included in Exhibit 2.1).                                                                                                                                  
|10.19(16) |  | 1998 Nonstatutory Stock Option Plan and form of
	agreement thereunder.                                                                                                                                                                                                                
|10.20(5)  |  | Declaration of Registration Rights dated
	April 30, 1999 for the benefit of former Impulse! Buy
	Network, Inc. stockholders (included in Exhibit 2.2).                                                                                                                                
|10.21(1)  |  | Amended and Restated Loan and Security agreement
	dated as of September 2, 1998 between Inktomi and Silicon
	Valley Bank.                                                                                                                                                             
|10.22(6)  |  | Amendment dated January 28, 1999 to Amended
	and Restated Loan and Security Agreement dated as of
	September 2, 1998 between Inktomi and Silicon Valley Bank.                                                                                                                         
|10.23(8)  |  | Impulse! Buy Network, Inc. 1997 Stock Plan and
	form of agreement thereunder.                                                                                                                                                                                                         
|10.24(9)  |  | WebSpective Software, Inc. (formerly Atreve
	Software, Inc.) 1997 Stock Option Plan and form of agreement
	thereunder.                                                                                                                                                                
|10.25(7)  |  | Declaration of Registration Rights dated
	October 1, 1999 for the benefit of former WebSpective
	Software, Inc. stockholders (included in Exhibit 2.3).                                                                                                                               
|10.26(16) |  | Amendment to 1996 Equity Incentive Plan.                                                                                                                                                                                                                                              
|10.27(16) |  | Amendment to C2B Technologies 1997 Stock Plan                                                                                                                                                                                                                                         
|10.28(16) |  | Amendment to Impulse! Buy Network, Inc. 1997
	Stock Plan.                                                                                                                                                                                                                             
|10.29(16) |  | Amendment to WebSpective Software, Inc. 1997
	Stock Plan.                                                                                                                                                                                                                             
|10.30(15) |  | FastForward Networks, Inc. 1998 Stock Plan and
	form of agreement thereunder.                                                                                                                                                                                                         
|10.31(17) |  | Amendment to the Ultraseek Stock Option Plan.                                                                                                                                                                                                                                         
|10.32(17) |  | Amendment to the FastForward Networks, Inc. 1998
	Stock Plan.                                                                                                                                                                                                                         
|10.33(18) |  | Participation Agreement dated August 24,
	2000 between Inktomi, Wilmington Trust Company, Wilmington Trust
	FSB, Deutsche Bank AG, New York, Deutsche Bank AG, New
	York and/or Cayman Islands Branch and Deutsche Bank Securities,
	Inc. and the amendment thereto dated May 7, 2001.
|10.34     |  | Amendment dated October 23, 2001 to the
	Participation Agreement between Wilmington Trust Company,
	Wilmington Trust FSB, Deutsche Bank AG, New York, Deutsche Bank
	AG, New York and/or Cayman Islands Branch and Deutsche Bank
	Securities, Inc.                                    
|10.35(21) |  | Employee Loan Agreement dated April 30, 2001
	between Inktomi and Edward Hally.                                                                                                                                                                                                       
|10.36     |  | Promissory Note dated December 10, 2001
	executed by David Peterschmidt for the benefit of Inktomi
	Corporation.                                                                                                                                                                      
|21.1      |  | Subsidiaries                                                                                                                                                                                                                                                                          
|23.1      |  | Consent of PricewaterhouseCoopers, LLP                                                                                                                                                                                                                                                



---



|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference from Inktomis
	Registration Statement on Form S-1 (Reg.
	No. 333-66661), as amended.                                 
|   
|(2) | Incorporated by reference from Inktomis
	Current Report on Form 8-K filed with the Commission on
	October 9, 1998, as amended November 2, 1998.
|   
|(3) | Incorporated by reference from Inktomis
	Registration Statement on Form S-1 (Reg.
	No. 333-50247), as amended.                                 
|   
|(4) | Incorporated by reference from Inktomis
	Registration Statement on Form S-8 (Reg.
	No. 333-71037).                                             
|   
|(5) | Incorporated by reference from Inktomis
	Current Report on Form 8-K filed with the Commission on
	May 13, 1999.                                

34



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##### Table of Contents





|    |                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------
|(6) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	May 17, 1999.                              
|   
|(7) | Incorporated by reference from Inktomis
	Current Report on Form 8-K filed with the Commission on
	October 15, 1999, as amended November 5, 1999.
|   
|(8) | Incorporated by reference from Inktomis
	Registration Statement on Form S-8 (Reg.
	No. 333-80195).                                              
|   
|(9) | Incorporated by reference from Inktomis
	Registration Statement on Form S-8 (Reg.
	No. 333-89581).                                              



|     |                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	February 14, 2000.
|    
|(11) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	May 15, 2000.     
|    
|(12) | Incorporated by reference from Inktomis
	Current Report on Form 8-A filed with the Commission on
	August 11, 2000.     
|    
|(13) | Incorporated by reference from Inktomis
	Registration Statement on Form S-8 (Reg.
	No. 333-42102).                     
|    
|(14) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	August 14, 2000.  
|    
|(15) | Incorporated by reference from Inktomis
	Registration Statement on Form S-8 (Reg.
	No. 333-49874).                     
|    
|(16) | Incorporated by reference from Inktomis
	Annual Report on Form 10-K/A filed with the Commission on
	January 2, 2001.   
|    
|(17) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	February 14, 2001.
|    
|(18) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	May 14, 2001.     

(b) Reports on Form 8-K

On August 16, 2001 we filed a Current Report
on Form 8-K to comply with item 11(b) of Form S-3
that requires inclusion, directly or by reference, of financial
statements prepared in accordance with Regulation S-X when
one or more business combinations accounted for by the pooling
of interest method have been consummated subsequent to the most
recent fiscal year end. Restated consolidated financial
statements are filed herewith to reflect the acquisition of
FastForward in a transaction accounted for as a pooling of
interests and includes Inktomis consolidated balance
sheets as of September 30, 2000 and 1999 and its
consolidated statements of operations, changes in stockholders
equity, and cash flows for each of the three years in the period
ended September 30, 2000.

On October 9, 2001 we filed a Current Report
on Form 8-K/A to amend our Current Report on Form 8-K,
filed August 16, 2001. The purpose of this amendment was to
amend Exhibit 99.2 to that Form 8-K.

35



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized, on December 28,
2001.



| |                                 
| | --------------------------------
| | INKTOMI CORPORATION             
|
| | /s/ DAVID C. PETERSCHMIDT       
| |                                 
| | David C. Peterschmidt           
| | Chairman of the Board, President
| | and Chief Executive Officer     

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each
person whose signature appears below hereby constitutes and
appoints David C. Peterschmidt and Jerry M. Kennelly,
and each of them individually, as his attorney-in-fact, each
with full power of substitution, for him in any and all
capacities, to sign any and all amendments to this Report on
Form 10-K, and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorney-in fact, or his substitutes, may do or cause to be
done by virtue hereof.

Pursuant to the requirements of the Securities
Exchange Act of 1934, this Report has been signed below by the
following persons in the capacities and on the date indicated.

|                                               |  |                                                                                                      |  |                   |  | 
|---------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | ----------------- |  | 
|                                               |  |                                                                                                      |  |                  
|Signature                                      |  | Title                                                                                                |  | Date             
|                                               |  |                                                                                                      |  |                  
|                                              
|/s/ DAVID C. PETERSCHMIDTDavid C. Peterschmidt |  | Chairman of the Board, President, Chief Executive
	Officer
	(Principal Executive Officer)            |  | December 28, 2001
|                                              
|/s/ JERRY M. KENNELLYJerry M. Kennelly         |  | Executive Vice President and Chief Financial
	Officer
	(Principal Financial and
	Accounting Officer) |  | December 28, 2001
|                                              
|/s/ FRANK GILLFrank Gill                       |  | Director                                                                                             |  | December 28, 2001
|                                              
|/s/ ALAN F. SHUGARTAlan F. Shugart             |  | Director                                                                                             |  | December 28, 2001
|                                              
|/s/ DR. ERIC A BREWERDr. Eric A. Brewer        |  | Director                                                                                             |  | December 28, 2001
|                                              
|/s/ FREDRIC W. HARMANFredric W. Harman         |  | Director                                                                                             |  | December 28, 2001

36



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##### Table of Contents






REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Inktomi Corporation:

In our opinion, the accompanying consolidated
balance sheets and related consolidated statements of
operations, of changes in stockholders equity and of cash
flows present fairly, in all material respects, the financial
position of Inktomi Corporation and its subsidiaries at
September 30, 2001 and 2000, and the results of their
operations and cash flows for each of the three years in the
period ended September 30, 2001, in conformity with
accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of
the Companys management; our responsibility is to express
an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of
America, which 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, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.



| |                           
| | --------------------------
| | PRICEWATERHOUSECOOPERS LLP

San Jose, California

October 18, 2001, except as to


the public offering described in Note 16


and as to recently issued accounting


pronouncements in Note 2


which are as of November 15, 2001


F-1



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##### Table of Contents



INKTOMI CORPORATION






CONSOLIDATED BALANCE SHEETS


|                                                |                                                                                                                                                                                      |                                                             |          |        |         |  |          |         |         | 
|----------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------- | -------- | ------ | ------- |  | -------- | ------- | ------- | 
|                                                |                                                                                                                                                                                      |                                                            
|                                                |                                                                                                                                                                                      | September 30,                                              
|                                                |                                                                                                                                                                                      |                                                            
|                                                |                                                                                                                                                                                      | 2001                                                        |          | 2000  
|                                                |                                                                                                                                                                                      |                                                             |          |       
|                                                |                                                                                                                                                                                      |                                                            
|                                                |                                                                                                                                                                                      | (In thousands, except per                                  
|                                                |                                                                                                                                                                                      | share amounts)                                             
|ASSETS                                         
|Current assets:                                 |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|                                                | Cash and cash equivalents                                                                                                                                                            |                                                             | $        | 18,518 |         |  | $        | 41,879  |        
|                                                | Short-term investments                                                                                                                                                               |                                                             |          | 65,995 |         |  |          | 176,632 |        
|                                                |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|                                                |                                                                                                                                                                                      | Total cash and cash equivalents and short-term
	investments |          |        | 84,513  |  |          |         | 218,511 | 
|                                                | Accounts receivable, net of allowances of $4,910
	and $4,902, respectively                                                                                                           |                                                             |          | 22,449 |         |  |          | 50,633  |        
|                                                | Prepaid expenses and other current assets                                                                                                                                            |                                                             |          | 5,915  |         |  |          | 7,895   |        
|                                                |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|                                                |                                                                                                                                                                                      | Total current assets                                        |          |        | 112,877 |  |          |         | 277,039 | 
|Restricted cash                                 |                                                                                                                                                                                      |                                                             | 128,957  |        |         |  | 119,616  |        
|Investments in equity securities                |                                                                                                                                                                                      |                                                             | 1,381    |        |         |  | 117,898  |        
|Property and equipment, net                     |                                                                                                                                                                                      |                                                             | 76,101   |        |         |  | 85,055   |        
|Intangibles and other assets, net               |                                                                                                                                                                                      |                                                             | 263,807  |        |         |  | 319,648  |        
|                                                |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|                                                |                                                                                                                                                                                      | Total assets                                                |          | $      | 583,123 |  |          | $       | 919,256 | 
|                                                |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|LIABILITIES AND STOCKHOLDERS
	EQUITY          
|Current liabilities:                            |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|                                                | Accounts payable                                                                                                                                                                     |                                                             | $        | 7,979  |         |  | $        | 10,101  |        
|                                                | Accrued liabilities                                                                                                                                                                  |                                                             |          | 58,646 |         |  |          | 38,816  |        
|                                                | Deferred revenue                                                                                                                                                                     |                                                             |          | 34,610 |         |  |          | 53,774  |        
|                                                | Current portion of notes payable                                                                                                                                                     |                                                             |          | 2,500  |         |  |          | 5,307   |        
|                                                | Current portion of capital lease obligations                                                                                                                                         |                                                             |          | 1,470  |         |  |          | 3,713   |        
|                                                |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|                                                |                                                                                                                                                                                      | Total current liabilities                                   |          |        | 105,205 |  |          |         | 111,711 | 
|Notes payable, less current portion             |                                                                                                                                                                                      |                                                             | 4,231    |        |         |  | 1,261    |        
|Capital lease obligations, less current portion |                                                                                                                                                                                      |                                                             | 1,418    |        |         |  | 2,487    |        
|Other liabilities                               |                                                                                                                                                                                      |                                                             | 288      |        |         |  | 735      |        
|                                                |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|                                                |                                                                                                                                                                                      | Total liabilities                                           |          |        | 111,142 |  |          |         | 116,194 | 
|Commitments and contingencies (Note 12)         |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|Stockholders equity:                           |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|                                                | Common Stock, $0.001 par value; authorized:
	1,500,000 at September 30, 2001 and 2000, respectively;
	outstanding: 129,110 and 126,649 at September 30, 2001 and
	2000, respectively |                                                             |          | 129    |         |  |          | 127     |        
|Additional paid-in capital                      |                                                                                                                                                                                      |                                                             | 897,241  |        |         |  | 894,844  |        
|Deferred compensation and other equity          |                                                                                                                                                                                      |                                                             | (20,824  | )      |         |  | (46,514  | )      
|Accumulated other comprehensive income (loss)   |                                                                                                                                                                                      |                                                             | (2,545   | )      |         |  | 60,143   |        
|Accumulated deficit                             |                                                                                                                                                                                      |                                                             | (402,020 | )      |         |  | (105,538 | )      
|                                                |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|                                                |                                                                                                                                                                                      | Total stockholders equity                                  |          |        | 471,981 |  |          |         | 803,062 | 
|                                                |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        
|                                                |                                                                                                                                                                                      | Total liabilities and stockholders equity                  |          | $      | 583,123 |  |          | $       | 919,256 | 
|                                                |                                                                                                                                                                                      |                                                             |          |        |         |  |          |        

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

F-2



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##### Table of Contents






INKTOMI CORPORATION

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                     |                                                                  |                                       |          |         |          |      |         |         |         |   |         |         |         |  
|------------------------------------ | ---------------------------------------------------------------- | ------------------------------------- | -------- | ------- | -------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                     |                                                                  |                                      
|                                     |                                                                  | For the Year Ended September 30,     
|                                     |                                                                  |                                      
|                                     |                                                                  | 2001                                  |          | 2000    |          | 1999
|                                     |                                                                  |                                       |          |         |          |     
|                                     |                                                                  |                                      
|                                     |                                                                  | (In thousands, except per share data)
|Revenues:                            |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|                                     | Licenses                                                         |                                       | $        | 106,737 |          |      | $       | 135,796 |         |   | $       | 39,532  |        
|                                     | Services                                                         |                                       |          | 40,538  |          |      |         | 36,294  |         |   |         | 5,995   |        
|                                     | Web search services                                              |                                       |          | 51,287  |          |      |         | 52,127  |         |   |         | 27,976  |        
|                                     |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|                                     |                                                                  | Total revenues                        |          |         | 198,562  |      |         |         | 224,217 |   |         |         | 73,503  |  
|Cost of Revenues:                    |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|                                     | Licenses                                                         |                                       |          | 7,277   |          |      |         | 6,449   |         |   |         | 1,056   |        
|                                     | Services                                                         |                                       |          | 18,245  |          |      |         | 13,952  |         |   |         | 3,632   |        
|                                     | Web search services                                              |                                       |          | 24,655  |          |      |         | 21,774  |         |   |         | 10,913  |        
|                                     |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|                                     |                                                                  | Total cost of revenues                |          |         | 50,177   |      |         |         | 42,175  |   |         |         | 15,601  |  
|Gross Profit                         |                                                                  |                                       | 148,385  |         |          |      | 182,042 |         |         |   | 57,902  |        
|Operating expenses:                  |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|                                     | Sales and marketing                                              |                                       |          | 138,069 |          |      |         | 123,046 |         |   |         | 56,190  |        
|                                     | Research and development                                         |                                       |          | 77,925  |          |      |         | 59,714  |         |   |         | 29,306  |        
|                                     | General and administrative                                       |                                       |          | 24,581  |          |      |         | 19,121  |         |   |         | 8,915   |        
|                                     | Amortization of intangibles and other assets                     |                                       |          | 70,426  |          |      |         | 13,182  |         |   |         |        |        
|                                     | Impairment of intangibles and other assets                       |                                       |          | 44,915  |          |      |         |        |         |   |         |        |        
|                                     | Restructuring                                                    |                                       |          | 12,531  |          |      |         |        |         |   |         |        |        
|                                     | Purchased in-process research and development                    |                                       |          | 430     |          |      |         | 4,400   |         |   |         |        |        
|                                     | Acquisition-related costs                                        |                                       |          | 19,497  |          |      |         | 3,999   |         |   |         | 1,110   |        
|                                     |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|                                     |                                                                  | Total operating expenses              |          |         | 388,374  |      |         |         | 223,462 |   |         |         | 95,521  |  
|                                     |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|Operating loss                       |                                                                  |                                       | (239,989 | )       |          |      | (41,420 | )       |         |   | (37,619 | )      
|Impairment of investments            |                                                                  |                                       | (65,895  | )       |          |      |        |         |         |   |        |        
|Other income, net                    |                                                                  |                                       | 10,340   |         |          |      | 15,906  |         |         |   | 4,591   |        
|                                     |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|Pretax loss                          |                                                                  |                                       | (295,544 | )       |          |      | (25,514 | )       |         |   | (33,028 | )      
|Income tax provision                 |                                                                  |                                       | (938     | )       |          |      | (1,826  | )       |         |   |        |        
|                                     |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|                                     |                                                                  | Net loss                              |          | $       | (296,482 | )    |         | $       | (27,340 | ) |         | $       | (33,028 | )
|                                     |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|Earnings per share:                  |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|                                     | Basic and diluted net loss per share                             |                                       | $        | (2.36   | )        |      | $       | (0.24   | )       |   | $       | (0.32   | )      
|                                     |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|Weighted average shares outstanding: |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        
|                                     | Shares used in calculating basic and diluted net
	loss per share |                                       |          | 125,608 |          |      |         | 113,030 |         |   |         | 102,033 |        
|                                     |                                                                  |                                       |          |         |          |      |         |         |         |   |         |        

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

F-3



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##### Table of Contents



INKTOMI CORPORATION






CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS EQUITY


For the Years Ended September 30, 2001,
2000 and 1999


|                                                                                                                           |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   |          |  
|-------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---------- |  | -------------- | --- | ------------- |  | ----------- | ------- | ------- |  | ----- | ------- | - |  | - | ------- | - |  | - | -------- | - |  | - | -------- | -
|                                                                                                                           |  |                |         |            |  |                |     |               |  | Accumulated |         |         |  |      
|                                                                                                                           |  |                |         |            |  |                |     | Other         |  |             |         |        
|                                                                                                                           |  | Common Stock   |         | Additional |  | Deferred       |     | Comprehensive |  |             |         |        
|                                                                                                                           |  |                |         | Paid-in    |  | Compensation & |     | Income        |  | Accumulated |         |        
|                                                                                                                           |  | Shares         |         | Amount     |  | Capital        |     | Other Equity  |  | (Loss)      |         | Deficit |  | Total
|                                                                                                                           |  |                |         |            |  |                |     |               |  |             |         |         |  |      
|                                                                                                                           |  |               
|                                                                                                                           |  | (In thousands)
|Balances, September 30, 1998                                                                                               |  |                | 103,738 |            |  | $              | 103 |               |  | $           | 99,038  |         |  | $     | (3,738  | ) |  | $ | (49     | ) |  | $ | (45,170  | ) |  | $ | 50,184   |  
|Foreign currency translation                                                                                               |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   | (126    | ) |  |   |          |   |  |   | (126     | )
|Unrealized gain on short-term investments                                                                                  |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   | 1,622   |   |  |   |          |   |  |   | 1,622    |  
|Net loss                                                                                                                   |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   | (33,028  | ) |  |   | (33,028  | )
|                                                                                                                           |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   |          |  
|Total comprehensive loss                                                                                                   |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | (31,532  | )
|Issuance of Common Stock in public offerings, net
	of issuance costs of $1,143                                             |  |                | 7,560   |            |  |                | 8   |               |  |             | 305,100 |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | 305,108  |  
|Issuance of Common Stock for cash or notes,
	including for exercise of options and warrants, net of issuance
	costs of $22 |  |                | 6,389   |            |  |                | 6   |               |  |             | 20,055  |         |  |       | (1,476  | ) |  |   |         |   |  |   |          |   |  |   | 18,585   |  
|Stock compensation in connection with issuance of
	stock options to employees                                              |  |                |         |            |  |                |     |               |  |             |         |         |  |       | 819     |   |  |   |         |   |  |   |          |   |  |   | 819      |  
|Repurchase of Common Stock from founders                                                                                   |  |                | (1,551  | )          |  |                | (1  | )             |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | (1       | )
|Repayment of stockholder loans                                                                                             |  |                |         |            |  |                |     |               |  |             |         |         |  |       | 704     |   |  |   |         |   |  |   |          |   |  |   | 704      |  
|                                                                                                                           |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   |          |  
|Balances, September 30, 1999                                                                                               |  |                | 116,136 |            |  |                | 116 |               |  |             | 424,193 |         |  |       | (3,691  | ) |  |   | 1,447   |   |  |   | (78,198  | ) |  |   | 343,867  |  
|Foreign currency translation                                                                                               |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   | 189     |   |  |   |          |   |  |   | 189      |  
|Unrealized gain on short-term investments                                                                                  |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   | 58,507  |   |  |   |          |   |  |   | 58,507   |  
|Net loss                                                                                                                   |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   | (27,340  | ) |  |   | (27,340  | )
|                                                                                                                           |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   |          |  
|Total comprehensive income                                                                                                 |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | 31,356   |  
|Issuance of Common Stock for acquisition of
	Ultraseek                                                                     |  |                | 2,513   |            |  |                | 3   |               |  |             | 319,745 |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | 319,748  |  
|Issuance of Common Stock for cash, including for
	exercise of options and warrants, net of issuance costs of $71           |  |                | 8,000   |            |  |                | 8   |               |  |             | 99,234  |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | 99,242   |  
|Stock compensation in connection with issuance of
	stock options to non-employees                                          |  |                |         |            |  |                |     |               |  |             | 1,265   |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | 1,265    |  
|Stock compensation in connection with issuance of
	stock options to employees                                              |  |                |         |            |  |                |     |               |  |             | 50,407  |         |  |       | (43,066 | ) |  |   |         |   |  |   |          |   |  |   | 7,341    |  
|Repayment of stockholder loans                                                                                             |  |                |         |            |  |                |     |               |  |             |         |         |  |       | 243     |   |  |   |         |   |  |   |          |   |  |   | 243      |  
|                                                                                                                           |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   |          |  
|Balances, September 30, 2000                                                                                               |  |                | 126,649 |            |  |                | 127 |               |  |             | 894,844 |         |  |       | (46,514 | ) |  |   | 60,143  |   |  |   | (105,538 | ) |  |   | 803,062  |  
|Foreign currency translation                                                                                               |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   | (1,066  | ) |  |   |          |   |  |   | (1,066   | )
|Unrealized loss on short-term investments                                                                                  |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   | (86,720 | ) |  |   |          |   |  |   | (86,720  | )
|Reclassification adjustment for realized losses
	included in net income                                                    |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   | 25,098  |   |  |   |          |   |  |   | 25,098   |  
|Net loss                                                                                                                   |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   | (296,482 | ) |  |   | (296,482 | )
|                                                                                                                           |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   |          |  
|Total comprehensive loss                                                                                                   |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | (359,170 | )
|Issuance of Common Stock for acquisition of eScene                                                                         |  |                | 935     |            |  |                | 1   |               |  |             | 8,813   |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | 8,814    |  
|Issuance of Common Stock for cash, including for
	exercise of options and warrants                                         |  |                | 1,526   |            |  |                | 1   |               |  |             | 7,674   |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | 7,675    |  
|Tax benefit from employee stock option plan                                                                                |  |                |         |            |  |                |     |               |  |             | 871     |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | 871      |  
|Stock compensation in connection with issuance of
	stock options to non-employees                                          |  |                |         |            |  |                |     |               |  |             | 877     |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   | 877      |  
|Stock compensation in connection with issuance of
	stock options to employees                                              |  |                |         |            |  |                |     |               |  |             | 4,198   |         |  |       | 5,570   |   |  |   |         |   |  |   |          |   |  |   | 9,768    |  
|Reversal of stock compensation for terminated
	employees                                                                   |  |                |         |            |  |                |     |               |  |             | (20,036 | )       |  |       | 20,036  |   |  |   |         |   |  |   |          |   |  |   |         |  
|Repayment of stockholder loans                                                                                             |  |                |         |            |  |                |     |               |  |             |         |         |  |       | 84      |   |  |   |         |   |  |   |          |   |  |   | 84       |  
|                                                                                                                           |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   |          |  
|Balances, September 30, 2001                                                                                               |  |                | 129,110 |            |  | $              | 129 |               |  | $           | 897,241 |         |  | $     | (20,824 | ) |  | $ | (2,545  | ) |  | $ | (402,020 | ) |  | $ | 471,981  |  
|                                                                                                                           |  |                |         |            |  |                |     |               |  |             |         |         |  |       |         |   |  |   |         |   |  |   |          |   |  |   |          |  

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

F-4



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##### Table of Contents






INKTOMI CORPORATION

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |          |        |         |          |  
|------------------------------------------------------ | ---------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ------------------------------------------- | ---------------------------------------------------- | ------ | ------- | ------- | ---------- | ------ | ------- | -------- | -------- | ------ | ------- | -------- | -
|                                                       |                                                                              |                                                                                           
|                                                       |                                                                              | For the Year Ended September 30,                                                          
|                                                       |                                                                              |                                                                                           
|                                                       |                                                                              | 2001                                                                                       |                                             | 2000                                                 |        | 1999   
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |        
|                                                       |                                                                              |                                                                                           
|                                                       |                                                                              | (In thousands)                                                                            
|Cash flows from operating activities:                  |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       | Net loss                                                                     |                                                                                            | $                                           | (296,482                                             | )      |         | $       | (27,340    | )      |         | $        | (33,028  | )     
|                                                       |                                                                              | Adjustments to reconcile net loss to net cash
	provided by (used in) operating activities: |                                             |                                                      |        |         |         |            |        |         |          |          |        |        
|                                                       |                                                                              | Purchased in-process research and development                                              |                                             |                                                      | 430    |         |         |            | 4,400  |         |          |          |       |        
|                                                       |                                                                              | Amortization of intangibles and other assets                                               |                                             |                                                      | 70,426 |         |         |            | 13,182 |         |          |          |       |        
|                                                       |                                                                              | Depreciation and amortization                                                              |                                             |                                                      | 32,416 |         |         |            | 22,112 |         |          |          | 10,971 |        
|                                                       |                                                                              | Provision for doubtful accounts                                                            |                                             |                                                      | 10,544 |         |         |            | 6,366  |         |          |          | 2,822  |        
|                                                       |                                                                              | Non-cash stock compensation for stock options
	issued to non-employees                     |                                             |                                                      | 877    |         |         |            | 1,265  |         |          |          |       |        
|                                                       |                                                                              | Non-cash stock compensation for stock options
	issued to employees                         |                                             |                                                      | 9,768  |         |         |            | 7,341  |         |          |          | 819    |        
|                                                       |                                                                              | Amortization of warrants issued in connection
	with note payable                           |                                             |                                                      |       |         |         |            | 17     |         |          |          | 8      |        
|                                                       |                                                                              | Impairment of property and equipment                                                       |                                             |                                                      | 904    |         |         |            | 1,045  |         |          |          | 1,881  |        
|                                                       |                                                                              | Impairment of intangibles and other assets                                                 |                                             |                                                      | 44,915 |         |         |            |       |         |          |          |       |        
|                                                       |                                                                              | Loss on sale of Commerce Division                                                          |                                             |                                                      | 934    |         |         |            |       |         |          |          |       |        
|                                                       |                                                                              | Realized losses on sale of investments, net                                                |                                             |                                                      | 2,925  |         |         |            |       |         |          |          |       |        
|                                                       |                                                                              | Impairment of investments                                                                  |                                             |                                                      | 65,895 |         |         |            |       |         |          |          |       |        
|                                                       |                                                                              |                                                                                            | Changes in operating assets and liabilities |                                                      |        |         |         |            |        |         |          |          |        |         |         
|                                                       |                                                                              |                                                                                            | Accounts receivable                         |                                                      |        | 18,519  |         |            |        | (33,647 | )        |          |        | (21,004 | )       
|                                                       |                                                                              |                                                                                            | Prepaid expenses and other assets           |                                                      |        | (10,241 | )       |            |        | (7,295  | )        |          |        | (4,904  | )       
|                                                       |                                                                              |                                                                                            | Accounts payable                            |                                                      |        | (2,550  | )       |            |        | 3,599   |          |          |        | 1,543   |         
|                                                       |                                                                              |                                                                                            | Accrued liabilities and other               |                                                      |        | (6,373  | )       |            |        | 24,312  |          |          |        | 7,874   |         
|                                                       |                                                                              |                                                                                            | Deferred revenue                            |                                                      |        | (19,762 | )       |            |        | 50,385  |          |          |        | 1,994   |         
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       |                                                                              |                                                                                            |                                             | Net cash provided by (used in) operating
	activities |        |         | (76,855 | )          |        |         | 65,742   |          |        |         | (31,024  | )
|Cash flows from investing activities:                  |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       | Purchases of short-term investments                                          |                                                                                            |                                             | (566,318                                             | )      |         |         | (1,193,720 | )      |         |          | (674,064 | )     
|                                                       | Proceeds from the sale and maturity of short-term
	investments               |                                                                                            |                                             | 682,993                                              |        |         |         | 1,229,930  |        |         |          | 476,864  |       
|                                                       | Restriction of cash for lease agreements                                     |                                                                                            |                                             | (9,341                                               | )      |         |         | (119,616   | )      |         |          |         |       
|                                                       | Purchases of investments in equity securities                                |                                                                                            |                                             | (1,636                                               | )      |         |         | (55,863    | )      |         |          | (6,558   | )     
|                                                       | Purchases of property and equipment                                          |                                                                                            |                                             | (31,878                                              | )      |         |         | (67,950    | )      |         |          | (38,460  | )     
|                                                       | Acquisition of a companies, net of acquired cash                             |                                                                                            |                                             | (23,500                                              | )      |         |         | (3,500     | )      |         |          |         |       
|                                                       | Deposits on subleased property                                               |                                                                                            |                                             | 288                                                  |        |         |         |           |        |         |          |         |       
|                                                       | Proceeds from sale of property and equipment                                 |                                                                                            |                                             |                                                     |        |         |         | 3,431      |        |         |          |         |       
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       |                                                                              |                                                                                            |                                             | Net cash provided by (used in) investing
	activities |        |         | 50,608  |            |        |         | (207,288 | )        |        |         | (242,218 | )
|Cash flows from financing activities:                  |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       | Proceeds from notes payable                                                  |                                                                                            |                                             | 7,500                                                |        |         |         | 2,718      |        |         |          | 7,159    |       
|                                                       | Repayments on notes payable                                                  |                                                                                            |                                             | (7,337                                               | )      |         |         | (6,303     | )      |         |          | (5,341   | )     
|                                                       | Proceeds from sales leaseback transactions
	accounted for as capital leases  |                                                                                            |                                             | 995                                                  |        |         |         | 958        |        |         |          | 6,510    |       
|                                                       | Payments on obligations under capital leases                                 |                                                                                            |                                             | (5,302                                               | )      |         |         | (946       | )      |         |          | (7,054   | )     
|                                                       | Proceeds from loans issued to stockholders                                   |                                                                                            |                                             | 84                                                   |        |         |         | 243        |        |         |          | 704      |       
|                                                       | Proceeds from exercise of stock options and
	warrants, net of issuance costs |                                                                                            |                                             | 7,675                                                |        |         |         | 99,242     |        |         |          | 18,585   |       
|                                                       | Proceeds from issuance of Common Stock, net of
	issuance costs               |                                                                                            |                                             |                                                     |        |         |         |           |        |         |          | 305,108  |       
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       |                                                                              |                                                                                            |                                             | Net cash provided by financing activities            |        |         | 3,615   |            |        |         | 95,912   |          |        |         | 325,671  |  
|Effect of exchange rates on cash and cash
	equivalents |                                                                              |                                                                                            | (729                                        | )                                                    |        |         | 189     |            |        |         | (126     | )       
|Increase (decrease) in cash and cash
	equivalents      |                                                                              |                                                                                            | (23,361                                     | )                                                    |        |         | (45,445 | )          |        |         | 52,303   |         
|Cash and cash equivalents at beginning of period       |                                                                              |                                                                                            | 41,879                                      |                                                      |        |         | 87,324  |            |        |         | 35,021   |         
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|Cash and cash equivalents at end of period             |                                                                              | $                                                                                          | 18,518                                      |                                                      |        | $       | 41,879  |            |        | $       | 87,324   |         
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|Supplemental Disclosures of Cash Flow Information:     |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       | Assets acquired under capital lease                                          |                                                                                            | $                                           | 995                                                  |        |         | $       | 4,338      |        |         | $        | 5,288    |       
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       | Goodwill related to purchase of acquired company                             |                                                                                            | $                                           | 10,658                                               |        |         | $       | 319,436    |        |         | $        |          |       
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       | Common stock issued for acquisitions accounted
	for as a purchase            |                                                                                            | $                                           | 8,814                                                |        |         | $       | 319,748    |        |         | $        |         |       
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       | Stock received for Commerce sale                                             |                                                                                            | $                                           | 18,791                                               |        |         | $       |           |        |         | $        |         |       
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       | Cash paid for taxes                                                          |                                                                                            | $                                           | (570                                                 | )      |         | $       | (2,054     | )      |         | $        | (372     | )     
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         
|                                                       | Cash paid for interest                                                       |                                                                                            | $                                           | (1,076                                               | )      |         | $       | (2,233     | )      |         | $        | (1,693   | )     
|                                                       |                                                                              |                                                                                            |                                             |                                                      |        |         |         |            |        |         |          |         

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

F-5



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##### Table of Contents



INKTOMI CORPORATION






NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


(1)     Basis of
Presentation



| |                       
| | ----------------------
| | Nature of the Business

Inktomi Corporation (Inktomi or the
Company) was incorporated in California in February
1996 and reincorporated in Delaware in February 1998. We develop
and market scalable software applications designed to
significantly enhance the performance and intelligence of
large-scale networks.



| |                                     
| | ------------------------------------
| | Formation and Basis of
	Presentation

In April 1999, we acquired Impulse! Buy Network,
Inc. (Impulse! Buy), a developer of online
merchandising software. Under the terms of the merger agreement,
we acquired all outstanding shares of capital stock and assumed
all outstanding warrants, stock options and stock purchase
rights of Impulse! Buy in exchange for 1,799,934 shares of
Inktomi Common Stock. The transaction was accounted for as a
pooling of interests and accordingly, all prior financial
statements have been restated. No significant adjustments were
required to conform the accounting policies of the acquired
company. Impulse! Buy revenues since inception, were not
significant. Impulse! Buy raised $4.3 million through
various stock issuances in 1997 and 1998 and had net losses of
$2.2 million in the year ended September 30, 1998. We
recorded acquisition costs of approximately $1.1 million in
fiscal 1999 as a result of the acquisition, primarily for
accounting, legal and other expenses.

In October 1999, we acquired WebSpective
Software, Inc. (WebSpective), a developer of
software solutions for content and application distribution,
delivery and management. Under the terms of the merger
agreement, we acquired all outstanding shares of capital stock
and assumed all outstanding warrants, stock options and stock
purchase rights of WebSpective in exchange for 1,655,048 shares
of our Common Stock. We accounted for the acquisition as a
pooling of interests and accordingly, all prior financial
statements have been restated. No significant adjustments were
required to conform the accounting policies of the acquired
company. We recorded acquisition-related costs of approximately
$4.0 million in fiscal 2000, primarily for investment
banking fees, accounting, legal and other expenses. WebSpective
revenues from inception through September 30, 1999 were
$3.2 million. WebSpective raised $12.4 million through
various stock issuances since its inception in March 1997, and
had net losses from inception to September 30, 1999 of
$13.5 million.

In July 2000, we acquired Ultraseek, Inc.
(Ultraseek), a provider of scalable and customizable
search and navigation software solutions to businesses for their
corporate intranet and extranet sites. Under the terms of the
purchase agreement, we acquired all outstanding shares of
capital stock and assumed all outstanding warrants, stock
options and stock purchase rights of Ultraseek in exchange for
$3.5 million in cash and 2,512,880 shares of our Common
Stock then valued at $337.7 million. The transaction was
accounted for under the purchase method of accounting. As a part
of our Ultraseek acquisition, we recorded goodwill of
$319.4 million under intangibles and other assets. We began
amortizing this balance in July 2000, and will continue doing so
on a straight line basis over a period of 60 months. A
portion of the purchase price we paid for Ultraseek has been
allocated to developed technology and in-process research and
development (IPRD). We identified and valued the
developed technology and IPRD by conducting extensive
interviews, analyzing data provided by Ultraseek concerning
developmental products, considering the stage of development of
such products and the time and resources needed to complete
them, and assessing the expected income generating ability,
target markets and associated risks. The income approach, which
includes an analysis of the markets, cash flows, and risks
associated with achieving such cash flows, was the primary
technique utilized in valuing the developed technology and IPRD.
Based on our analysis of these variables, we recorded a one-time
purchased IPRD charge of $4.4 million in fiscal 2000 upon
our acquisition of Ultraseek because technological feasibility
had not been established and no future alternative uses existed.

In October 2000, we acquired FastForward
Networks, Inc. (FastForward), a developer of
software solutions for efficiently enabling streaming media over
networks, in exchange for approximately 12.0 million

F-6



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

shares of our Common Stock. The transaction was
accounted for as a pooling of interests. Accordingly, all prior
year financial information included herein has been restated to
reflect the combined operations of FastForward and Inktomi. No
significant adjustments were required to conform the accounting
policies of the acquired company. FastForward had
$0.7 million in revenues and raised $88.9 million through
various stock issuances from its inception in May 1998 through
September 30, 2000. We recorded acquisition-related costs
of approximately $19.5 million in the three months ended
December 31, 2000, primarily for investment banking fees,
accounting, legal and other expenses.

In December 2000, we acquired various business
assets of Adero, Inc. (Adero) relating to billing,
settlement and traffic reporting and licensed other related
technologies from Adero. The total purchase price was
approximately $39.5 million, comprised of
$23.5 million in cash, $15.0 million in assumed
liabilities and $1.0 million incurred in transaction costs.
With this transaction, we assumed the operator role for Content
Bridge alliance services. We accounted for the transaction under
the purchase method of accounting and recorded goodwill of
$35.9 million under intangibles and other assets and
recorded a one-time charge of $0.4 million upon acquisition
to write-off in-process research and development, because
technological feasibility had not been established and no future
alternative uses existed. We identified and valued the IPRD
consistent with the methodology discussed in the Ultraseek
acquisition discussion above. In June 2001, we ceased acting in
the operator role for Content Bridge alliance services and
transitioned the operator role to a third party. Included in our
fiscal 2001 revenues is installment basis revenue from Adero on
an agreement consummated in December 1999.

In March 2001, we consummated the divestiture of
our Commerce Division to e-centives, Inc.
(e-centives). As part of the divestiture, we sold
various business assets to e-centives consisting primarily of
computer equipment, software, intellectual property and
contracts, and e-centives hired certain employees of the
Commerce Division. In exchange for the assets, we received
2,551,700 shares of Common Stock of e-centives, of which 382,755
shares are held in escrow pending satisfaction of certain
performance criteria, and 637,925 shares are held in escrow
subject to claims for indemnity by e-centives. We also received
a warrant to purchase up to 1,860,577 shares of e-centives on or
after March 28, 2006, which will become exercisable, if at
all, upon the achievement of certain performance criteria by the
Commerce Division. Financial results herein include revenues and
expenses generated and incurred by our Commerce Division through
the closing of the transaction.

In June 2001, we acquired eScene Networks, Inc.
(eScene), a developer of advanced streaming media
applications and services. The total purchase price was
approximately $10.6 million, comprised of approximately
935,000 shares of our Common Stock valued at $8.8 million
and net liabilities assumed of $1.8 million. We accounted for
the transaction under the purchase method of accounting and
recorded goodwill and other intangibles of approximately $10.6
million under intangibles and other assets. This balance is
being amortized on straight line basis over 60 months.

Results of operations for acquisitions accounted
for as purchases have been included in the consolidated results
of operations from the date of acquisition as set forth above.

The following unaudited pro forma information
reflects the results of operations for the years ended
September 30, 2001, 2000, and 1999, as if the acquisition
of Ultraseek had occurred on October 1, 1998, and as if the
acquisition of eScene had occurred on October 1, 1999, and
after giving effect to purchase accounting adjustments,
principally amortization of goodwill and other intangibles. We
have not presented the pro forma financial information for the
Adero acquisition required under APB No. 16 since we have
effectively ceased the assumed operator role of the acquired
Adero division, Content Bridge, and have recognized the related
full impairment of goodwill and other assets.

F-7



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

These unaudited pro forma results have been
prepared for comparative purposes only and may not be indicative
of future operating results (in thousands, except per share
data).

|                                               |  |                                  |          |      |  |      |          |   |  |   |         |  
|---------------------------------------------- |  | -------------------------------- | -------- | ---- |  | ---- | -------- | - |  | - | ------- | -
|                                               |  |                                 
|                                               |  | For the Year Ended September 30,
|                                               |  |                                 
|                                               |  | 2001                             |          | 2000 |  | 1999
|                                               |  |                                  |          |      |  |     
|Pro forma revenues                             |  | $                                | 198,991  |      |  | $    | 232,115  |   |  | $ | 85,786  |  
|Pro forma net loss                             |  | $                                | (304,188 | )    |  | $    | (109,923 | ) |  | $ | (98,524 | )
|Pro forma basic and diluted net loss per share |  | $                                | (2.41    | )    |  | $    | (0.95    | ) |  | $ | (0.94   | )



| |             
| | ------------
| | Stock Splits

In December 1998, and again in December 1999, our
Board of Directors approved a two-for-one stock split (in the
form of a 100% stock dividend) of our Common Stock. These stock
splits have been retroactively reflected in our consolidated
financial statements.

Historical weighted average shares outstanding
and loss per share amounts have been restated to reflect all
stock splits and acquisitions accounted for as pooling of
interests.

(2)     Summary of
Significant Accounting Policies



| |                 
| | ----------------
| | Use of Estimates

The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make 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 amounts of revenues
and expenses during the reporting periods. Actual results could
differ from those estimates.



| |                            
| | ---------------------------
| | Principles of Consolidation

The consolidated financial statements include the
accounts of the Company and its 100% owned subsidiaries. All
inter-company balances and transactions have been eliminated in
the consolidated financial statements.



| |                             
| | ----------------------------
| | Foreign Currency Translation

We translate into U.S. Dollars the accounts of
our foreign subsidiaries using the local currency as the
functional currency. The balance sheets of our subsidiaries are
translated into U.S. dollars at period end rates of exchange.
Revenues and expenses are translated at average rates for the
period. The resulting translation adjustments are included in
other comprehensive income (loss). Exchange gains and losses
arising from transactions denominated in a foreign currency
other than the functional currency of the entity involved are
included in other income, net.



| |                  
| | -----------------
| | Reclassifications

Certain prior year balances have been
reclassified to conform to the current years presentation.



| |                                     
| | ------------------------------------
| | Fair Value of Financial
	Instruments

The Companys financial instruments,
including cash and cash equivalents, restricted cash, short-term
investments, accounts receivable, and accounts payable are
carried at cost, which approximates fair value due to the
relatively short maturity of those instruments. The market rate
structure of interest rates on notes payable approximates fair
value.

F-8



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                          
| | -------------------------
| | Cash and Cash Equivalents

Cash and cash equivalents are stated at cost,
which approximates fair value. Cash equivalents consist
primarily of money market funds.



| |                       
| | ----------------------
| | Short-Term Investments

Short-term investments are comprised primarily of
high-grade commercial paper and debt instruments and also
includes highly liquid investments that mature within three
months of the purchase date. These are classified as
available-for-sale investments. The carrying value of the
short-term investments is adjusted to fair value with a
resulting adjustment to stockholders equity. The amortized
cost of debt securities are adjusted for amortization of
premiums and accretion of discounts to maturity, both of which
are included in interest income. Realized gains and losses are
recorded using the specific identification method and have been
minimal through September 30, 2001.



| |                
| | ---------------
| | Restricted Cash

Restricted cash includes a cash collateral
account maintained under the terms of a lease finance structure
agreement and a lease commitment agreement for the land and
facilities of our corporate headquarters. In accordance with
these agreements, we have created and will maintain a cash
collateral account that limits the liquidity of
$129.0 million of our cash.



| |                                  
| | ---------------------------------
| | Investments in Equity
	Securities

Investments in equity securities include equity
investments in both publicly traded and privately held
technology companies. For companies where we do not have the
ability to exercise significant influence over any of these
companies, investments in publicly held companies are classified
as available-for-sale and are reported at fair value, with
unrealized gains and losses, net of tax, recorded in
stockholders equity and investments in privately held
companies are accounted for under the cost method of accounting.
For companies where we are able to exercise significant
influence investments are accounted for under the equity method.

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 a decline is not considered
temporary. Our investments in privately held companies are
considered impaired when a review of the investees
operations and other indicators of impairment indicate that the
carrying value of the investment is not likely to be
recoverable. Such indicators include, but are not limited to,
limited capital resources, limited prospects of receiving
additional financing, and prospects for liquidity of the related
securities. Impaired investments in privately held companies are
written down to estimated fair value, which is the amount we
believe is recoverable from our investment



| |                       
| | ----------------------
| | Property and Equipment

Property and equipment is stated at cost and is
depreciated using the straight-line method over the estimated
useful lives of the related assets, generally three years for
computer equipment and five years for furniture and fixtures.
Any gains or losses on the disposal of property and equipment
are recorded in the period of disposition. Assets held under
capital lease and leasehold improvements are amortized on a
straight-line basis over the shorter of their estimated useful
lives or remaining lease term. Major additions and improvements
are capitalized, while replacements, maintenance and repairs
that do not improve or extend the life of the assets are charged
to expense.

F-9



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                           
| | --------------------------
| | Software Development Costs

Software development costs have been accounted
for in accordance with Statement of Financial Accounting
Standards (SFAS) No. 86, Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise
Marketed. Under the standard, capitalization of software
development costs begins upon the establishment of technological
feasibility that, for us, is upon completion of a working model
and ends upon release of the product. To date, such amounts have
been insignificant, and accordingly, we have charged all
software development costs to research and development expense.



| |                  
| | -----------------
| | Other Income, Net

Other income, net includes gains on sales of
investments, interest income and expense, foreign exchange gains
and losses on asset dispositions. For fiscal 2001 and 2000,
interest expense was $1.1 million and $2.2 million,
respectively. For fiscal 2001 and 2000, interest and other
income, net was $9.2 million and $13.7 million,
respectively.



| |             
| | ------------
| | Income Taxes

Income taxes are accounted for in accordance with
SFAS No. 109, Accounting for Income Taxes, which
requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based
on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.
Valuation allowances are established when necessary to reduce
deferred tax assets to the amounts expected to be realized.
Income tax expense is the tax payable for the period and the
change during the period in deferred tax assets and liabilities.



| |                             
| | ----------------------------
| | Intangibles and Other Assets

Intangibles and other assets consists primarily
of goodwill and other intangibles from our acquisitions
accounted for under the purchase method. Goodwill is amortized
using the straight-line method over a period of one to five
years, based on the period of expected benefit.

We assess the impairment of identifiable
intangibles and related goodwill periodically in accordance with
the provisions of Statement of Financial Accounting Standards
(SFAS) No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed of.We also assess the impairment of enterprise level goodwill
periodically in accordance with the provision of Accounting
Principles Board (APB) Opinion No. 17, Intangible
Assets.An impairment review is performed whenever events or
changes in circumstances indicate that the carrying value may
not be recoverable. Factors we consider important which could
trigger an impairment review include, but are not limited to,
significant underperformance relative to expected historical or
projected future operating results, significant changes in the
manner of use of the acquired assets or the strategy for our
overall business, significant negative industry or economic
trends, a significant decline in our stock price for a sustained
period, and our market capitalization relative to net book
value. When we determine that the carrying value of goodwill may
not be recoverable based upon the existence of one or more of
the above indicators of impairment, we measure any impairment
based on a projected discounted cash flow method using a
discount rate commensurate with the risk inherent in our current
business model.



| |                    
| | -------------------
| | Revenue Recognition

Licenses revenues are composed of license and
upgrade fees in connection with our software products including
Traffic Server network cache platform, Content Delivery Suite
software solutions, Media Products,

F-10



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

enterprise search products and our recently
introduced products, Traffic Core, Traffic Edge, Traffic
Controller and Inktomi Media Publisher. License fees are
generally based on the number of CPUs or nodes running the
software and are generally recognized upon shipment of the
software assuming all other revenue recognition criteria have
been met. License fees for our enterprise search products are
based on the number of documents being searched.

We recognize revenues from software licenses when
the licensed product is delivered, collection is reasonably
assured, the fee for each element of the transaction is fixed or
determinable, persuasive evidence of an arrangement exists, and
vendor-specific objective evidence exists to allocate the total
fee to any undelivered elements of the arrangement.

Fees from licenses sold together with support and
upgrade rights, consulting and implementation services are
generally recognized upon delivery provided that the above
criteria have been met, payment of the license fees is not
dependent upon the performance of the services and the services
are not essential to the functionality of the licensed software.
Services are unbundled from these arrangements based on the
price sold separately, or in some instances for support and
upgrades, substantive renewal rates, using the residual method.

Services revenues are composed of revenues
generated through consulting and support fees related to our
software products and through fees generated from our Commerce
Engine.

Consulting and support fees are recognized over
the period which the services are performed.

In instances where the criteria for recognizing
licence revenues separate from the consulting or implementation
revenues have not been met, both the licenses and consulting
fees, excluding the maintenance and support elements, are
recognized using contract accounting. Where reliable estimates
can be made by management with respect to the extent of
consulting or implementation services required for full
functionality, the license and service revenue, excluding the
maintenance element, is recognized on a percentage-of-completion
method. Management estimates the percentage of completion for
contracts based on the labor hours incurred compared to total
estimated hours for the full implementation or completion of
consulting services as well as contract milestones completed. We
classify revenue from these arrangements as licenses and
services revenues, respectively, based upon the estimated fair
value of each element.

For fees generated from our Commerce Engine,
annual infrastructure service fees and general service fees are
recognized ratably over the contract period. Transaction and
per-query fees are recognized based on the activity in the
period and advertising revenues are recognized in the period
that the advertisement is displayed.

We generate Web search services revenues through
a variety of contractual arrangements, which include per-query
search fees, search service hosting fees, maintenance fees and
database inclusion fees. Subscription fees and other fixed
periodical fees are recognized ratably over the contract period.
Per-query fees are recognized based on the activity in the
period.



| |                  
| | -----------------
| | Advertising Costs

We expense advertising costs as they are
incurred. Advertising expense was approximately
$18.3 million, $18.8 million, and $10.2 million
in the years ended September 30, 2001, 2000, and 1999,
respectively.



| |            
| | -----------
| | 401(k) Plan

In May 1996, we established a 401(k) Plan which
covers substantially all employees. Under the 401(k) Plan,
employees are permitted to contribute up to 25% of gross
compensation not to exceed the annual 402(g) limitation for any
plan year. We may make discretionary contributions, but have not
made any contributions to the 401(k) Plan since inception.

F-11



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                         
| | ----------------------------------------
| | Accounting for Stock-Based
	Compensation

The Company uses the fixed intrinsic value method
to record stock-based compensation for employees provided the
stock options terms meet the requirements for fixed accounting.
The fixed intrinsic value method requires that deferred stock
compensation is recorded for the difference between the exercise
price and fair value of the underlying common stock on the grant
date of the stock option. Compensation expense resulting from
employee stock options is amortized to expense ratably over the
vesting period. Pro forma net loss disclosures are presented in
Note 13, assuming all employee stock options were valued
using the Black-Scholes model and the resulting stock-based
compensation is amortized ratably over the vesting term.
Stock-based compensation to non-employees is based on the fair
value of the stock option estimated using the Black-Scholes
model on the date of grant and re-measured until vested.



| |                            
| | ---------------------------
| | Comprehensive Income (Loss)

SFAS No. 130, Reporting Comprehensive
Income, requires companies to report foreign currency
translation gains and losses and unrealized gains and losses on
equity securities that have been previously excluded from net
income and reflected instead in stockholders equity.
Comprehensive income (loss) for the periods ended
September 30, 2001, 2000 and 1999 have been included in our
Consolidated Statements of Changes in Stockholders Equity.



| |                   
| | ------------------
| | Net Loss Per Share

We compute net loss per share in accordance with
SFAS No. 128, Earnings per Share, and SAB
No. 98. Under the provisions of SFAS No. 128 and SAB
No. 98, basic and diluted net loss per share are based on
the weighted average shares outstanding in each period. Basic
net loss per share is calculated by dividing net loss by the
weighted average number of outstanding shares during the period.
Diluted net loss per share is calculated by adjusting the
average number of outstanding shares assuming conversion of all
potentially dilutive stock options and warrants under the
treasury stock method. For all fiscal years presented,
potentially dilutive stock options and warrants were excluded
from the calculation of diluted net loss per share, as their
effect would have been anti-dilutive.

The following is a reconciliation of the
numerator and denominator used to determine basic and diluted
earnings per share (EPS) (in thousands, except per
share amounts):

|                                                                                              |                                                                                              |                                  |          |         |   |      |         |         |   |   |         |         |  
|--------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | -------------------------------- | -------- | ------- | - | ---- | ------- | ------- | - | - | ------- | ------- | -
|                                                                                              |                                                                                              |                                 
|                                                                                              |                                                                                              | For the Year Ended September 30,
|                                                                                              |                                                                                              |                                 
|                                                                                              |                                                                                              | 2001                             |          | 2000    |   | 1999
|                                                                                              |                                                                                              |                                  |          |         |   |     
|Numerator  Basic and diluted EPS net
	loss                                                   |                                                                                              | $                                | (296,482 | )       |   | $    | (27,340 | )       |   | $ | (33,028 | )      
|                                                                                              |                                                                                              |                                  |          |         |   |      |         |         |   |   |         |        
|Denominator  Basic and diluted EPS
	weighted average Common Stock outstanding                |                                                                                              |                                  | 127,361  |         |   |      | 124,068 |         |   |   | 116,881 |        
|                                                                                              | Less weighted average Common Stock subject to
	repurchase                                    |                                  |          | (1,753  | ) |      |         | (11,038 | ) |   |         | (14,848 | )
|                                                                                              |                                                                                              |                                  |          |         |   |      |         |         |   |   |         |        
|                                                                                              | Weighted average Common Stock used to calculate
	basic and diluted net loss per Common share |                                  |          | 125,608 |   |      |         | 113,030 |   |   |         | 102,033 |  
|                                                                                              |                                                                                              |                                  |          |         |   |      |         |         |   |   |         |        
|Basic and diluted net loss per Common share                                                   |                                                                                              | $                                | (2.36    | )       |   | $    | (0.24   | )       |   | $ | (0.32   | )      
|                                                                                              |                                                                                              |                                  |          |         |   |      |         |         |   |   |         |        
|Dilutive securities outstanding that are not
	included as their effect would be anti-dilutive |                                                                                              |                                  | 28,629   |         |   |      | 23,759  |         |   |   | 18,496  |        
|                                                                                              |                                                                                              |                                  |          |         |   |      |         |         |   |   |         |        



| |                                                
| | -----------------------------------------------
| | Business Risk and Concentration of Credit
	Risk

Financial instruments that potentially subject us
to concentrations of credit risk consist primarily of temporary
cash investments (including money market accounts), short-term
investments, and accounts

F-12



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

receivable. We place our cash, cash equivalents,
short-term investments and restricted cash with major financial
institutions and such deposits exceed federally insured limits.

We do not require collateral, and maintain
allowances for potential credit losses on customer accounts when
deemed necessary. For the years ended September 30, 2001,
2000, and 1999, no customer accounted for 10% of all revenue
generated. At September 30, 2001, no customer accounted for
10% of gross accounts receivable and at September 30, 2000,
one customer accounted for 14% of gross accounts receivable. Two
customers accounted for 13% and 34% of gross accounts receivable
at September 30, 1999.



| |                                           
| | ------------------------------------------
| | Recently Issued Accounting
	Pronouncements

In November 2001, the Financial Accounting
Standards Board (FASB) Emerging Task Force
(EITF) reached a consensus on EITF Issue 01-09,
Accounting for Consideration Given by a Vendor to a Customer
or a Reseller of the Vendors Products,which is a
codification of EITF 00-14, 00-22 and 00-25. This issue
presumes that consideration from a vendor to a customer or
reseller of the vendors products to be a reduction of the
selling prices of the vendors products and, therefore,
should be characterized as a reduction of revenue when
recognized in the vendors income statement and could lead
to negative revenue under certain circumstances. Revenue
reduction is required unless consideration relates to a separate
identifiable benefit and the benefits fair value can be
established. This issue should be applied no later than in
annual or interim financial statements for periods beginning
after December 15, 2001, which is our second quarter ended
March 31, 2002. We are currently evaluating the effects of
these changes on our consolidated financial statements.

In July 2001, the FASB issued SFAS 141,
Business Combinations. SFAS 141 requires the purchase
method of accounting for business combinations initiated after
June 30, 2001 and eliminates the pooling of interests
method. We believe that the adoption of SFAS 141 will not have a
significant impact on our financial statements.

In July 2001, the FASB issued SFAS 142,
Goodwill and Other Intangible Assets,which is effective
for fiscal years beginning after December 15, 2001.
SFAS 142 requires, among other things, the discontinuance
of goodwill amortization. In addition, the standard includes
provisions upon adoption for the reclassification of certain
existing recognized intangibles as goodwill, reassessment of the
useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously
reported goodwill and the testing for impairment of existing
goodwill and other intangibles. We are currently evaluating the
effects of these changes on our consolidated financial
statements.

In October 2001, the FASB issued SFAS 144,
Accounting for the Impairment or Disposal of Long-lived
Assets. The objectives of SFAS 144 are to address
significant issues relating to the implementation of
SFAS 121, Accounting for the Impairment of Long-lived
Assets to be Disposed of, and to develop a single accounting
model, based on the framework established by SFAS 121, for
long-lived assets to be disposed of by sale, whether previously
held and used or newly acquired. Although SFAS 144
supercedes SFAS 121, it retains some fundamental provisions
of SFAS 121. SFAS 144 is effective for financial
statements issued for fiscal years beginning after
December 15, 2001, and interim periods within those fiscal
years. We expect that the initial application of SFAS 144
will not have a material impact on our consolidated financial
statements.

F-13



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(3)     Property and
Equipment

Property and equipment consists of (in thousands):

|                                               |  |               |         |      |  |   |         |  
|---------------------------------------------- |  | ------------- | ------- | ---- |  | - | ------- | -
|                                               |  |              
|                                               |  | September 30,
|                                               |  |              
|                                               |  | 2001          |         | 2000
|                                               |  |               |         |     
|Computer equipment                             |  | $             | 83,140  |      |  | $ | 85,622  |  
|Furniture and fixtures                         |  |               | 10,030  |      |  |   | 7,984   |  
|Leasehold improvements                         |  |               | 35,306  |      |  |   | 21,020  |  
|                                               |  |               |         |      |  |   |         |  
|                                               |  |               | 128,476 |      |  |   | 114,626 |  
|Less accumulated depreciation and amortization |  |               | (52,375 | )    |  |   | (29,571 | )
|                                               |  |               |         |      |  |   |         |  
|Property and equipment, net                    |  | $             | 76,101  |      |  | $ | 85,055  |  
|                                               |  |               |         |      |  |   |         |  

We recognized losses for the abandonment of
leasehold improvements and equipment with a net book value of
approximately $904 due to restructuring in fiscal 2001, and
$1,045 in fiscal 2000 due to obsolescence. Gross assets acquired
under capitalized lease obligations are included in computer
equipment and furniture and fixtures and totaled $18,853 and
$17,858 at September 30, 2001 and 2000, respectively.

Depreciation expense for the year ended
September 30, 2001, 2000, and 1999 was $32.4 million,
$22.1 million, and $9.8 million, respectively.

(4)     Investments

The following tables summarize the Companys
investments in available-for-sale securities (in thousands):

|                                                                                        |  |                    |        |            |  |            |     |            |  |   |        |   |  |   |        | 
|--------------------------------------------------------------------------------------- |  | ------------------ | ------ | ---------- |  | ---------- | --- | ---------- |  | - | ------ | - |  | - | ------ | 
|                                                                                        |  |                   
|                                                                                        |  | September 30, 2001
|                                                                                        |  |                   
|                                                                                        |  | Gross              |        | Gross      |  | Gross      |     |           
|                                                                                        |  | Amortized          |        | Unrealized |  | Unrealized |     | Estimated 
|                                                                                        |  | Costs              |        | Gains      |  | Losses     |     | Fair Value
|                                                                                        |  |                    |        |            |  |            |     |           
|Certificates of Deposits, Money Market Funds,
	Mutual Funds and Auction Rate Securities |  | $                  | 34,309 |            |  | $          |    |            |  | $ | (1     | ) |  | $ | 34,308 | 
|United States Government and Agencies                                                   |  |                    | 1,008  |            |  |            | 172 |            |  |   | (14    | ) |  |   | 1,166  | 
|Municipal Bonds                                                                         |  |                    | 5,910  |            |  |            |    |            |  |   |       |   |  |   | 5,910  | 
|Corporate Debt Securities                                                               |  |                    | 24,417 |            |  |            | 205 |            |  |   | (11    | ) |  |   | 24,611 | 
|Investment in Equity Securities                                                         |  |                    | 3,222  |            |  |            | 37  |            |  |   | (1,878 | ) |  |   | 1,381  | 
|                                                                                        |  |                    |        |            |  |            |     |            |  |   |        |   |  |   |        | 
|                                                                                        |  | $                  | 68,866 |            |  | $          | 414 |            |  | $ | (1,904 | ) |  | $ | 67,376 | 
|                                                                                        |  |                    |        |            |  |            |     |            |  |   |        |   |  |   |        | 

|                                                                                        |  |                    |         |            |  |            |        |            |  |   |        |   |  |   |         | 
|--------------------------------------------------------------------------------------- |  | ------------------ | ------- | ---------- |  | ---------- | ------ | ---------- |  | - | ------ | - |  | - | ------- | 
|                                                                                        |  |                   
|                                                                                        |  | September 30, 2000
|                                                                                        |  |                   
|                                                                                        |  | Gross              |         | Gross      |  | Gross      |        |           
|                                                                                        |  | Amortized          |         | Unrealized |  | Unrealized |        | Estimated 
|                                                                                        |  | Costs              |         | Gains      |  | Losses     |        | Fair Value
|                                                                                        |  |                    |         |            |  |            |        |           
|Certificates of Deposits, Money Market Funds,
	Mutual Funds and Auction Rate Securities |  | $                  | 28,811  |            |  | $          |       |            |  | $ | (2     | ) |  | $ | 28,809  | 
|United States Government and Agencies                                                   |  |                    | 14,189  |            |  |            | 5      |            |  |   | (60    | ) |  |   | 14,134  | 
|Municipal Bonds                                                                         |  |                    |        |            |  |            |       |            |  |   |       |   |  |   |        | 
|Corporate Debt Securities                                                               |  |                    | 135,320 |            |  |            |       |            |  |   | (1,631 | ) |  |   | 133,689 | 
|Investment in Equity Securities                                                         |  |                    | 56,034  |            |  |            | 65,660 |            |  |   | (3,796 | ) |  |   | 117,898 | 
|                                                                                        |  |                    |         |            |  |            |        |            |  |   |        |   |  |   |         | 
|                                                                                        |  | $                  | 234,354 |            |  | $          | 65,665 |            |  | $ | (5,489 | ) |  | $ | 294,530 | 
|                                                                                        |  |                    |         |            |  |            |        |            |  |   |        |   |  |   |         | 

F-14



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The contractual maturities of available-for-sale
debt securities are as follows (in thousands):

|                    |  |               |        |      |  |   |         | 
|------------------- |  | ------------- | ------ | ---- |  | - | ------- | 
|                    |  |              
|                    |  | September 30,
|                    |  |              
|                    |  | 2001          |        | 2000
|                    |  |               |        |     
|Due within one year |  | $             | 49,644 |      |  | $ | 167,737 | 
|Due over one year   |  |               | 16,351 |      |  |   | 8,895   | 
|                    |  |               |        |      |  |   |         | 
|                    |  | $             | 65,995 |      |  | $ | 176,632 | 
|                    |  |               |        |      |  |   |         | 

(5)     Income
Taxes

|         |         |                    |     |      |  |      |       |     |  |   |   |   | 
|-------- | ------- | ------------------ | --- | ---- |  | ---- | ----- | --- |  | - | - | - | 
|         |         |                   
|         |         | For the Year Ended
|         |         | September 30,     
|         |         |                   
|         |         | 2001               |     | 2000 |  | 1999
|         |         |                    |     |      |  |     
|Current: |         |                    |     |      |  |      |       |     |  |   |   |  
|         | Federal |                    | $   |     |  |      | $     | 741 |  |   | $ |  | 
|         | State   |                    |     | 236  |  |      |       | 225 |  |   |   |  | 
|         | Foreign |                    |     | 702  |  |      |       | 860 |  |   |   |  | 
|         |         |                    |     |      |  |      |       |     |  |   |   |  
|         |         |                    | 938 |      |  |      | 1,826 |     |  |   |  |  
|Deferred |         |                    |    |      |  |      |      |     |  |   |  |  
|         |         |                    |     |      |  |      |       |     |  |   |   |  
|         |         | $                  | 938 |      |  | $    | 1,826 |     |  | $ |  |  
|         |         |                    |     |      |  |      |       |     |  |   |   |  

The principal items accounting for the difference
between the income tax benefits computed using the United States
statutory rate and the provision for income taxes are as follows
(in thousands):

|                                       |  |                    |          |      |  |      |        |   |  |   |         |  
|-------------------------------------- |  | ------------------ | -------- | ---- |  | ---- | ------ | - |  | - | ------- | -
|                                       |  |                   
|                                       |  | For the Year Ended
|                                       |  | September 30,     
|                                       |  |                   
|                                       |  | 2001               |          | 2000 |  | 1999
|                                       |  |                    |          |      |  |     
|Federal tax benefit at statutory rate  |  | $                  | (100,892 | )    |  | $    | (8,622 | ) |  | $ | (11,159 | )
|State taxes, net of federal tax effect |  |                    | (15,619  | )    |  |      | (839   | ) |  |   | (1,895  | )
|Research and experimentation credits   |  |                    | (1,000   | )    |  |      | (808   | ) |  |   | (420    | )
|Acquisition-related costs              |  |                    | 937      |      |  |      | 1,360  |   |  |   |        |  
|Amortization of deferred compensation  |  |                    | 3,853    |      |  |      | 2,410  |   |  |   |        |  
|Other                                  |  |                    | 262      |      |  |      | 586    |   |  |   | 1,680   |  
|Change in valuation allowance          |  |                    | 113,397  |      |  |      | 7,739  |   |  |   | 11,794  |  
|                                       |  |                    |          |      |  |      |        |   |  |   |         |  
|                                       |  | $                  | 938      |      |  | $    | 1,826  |   |  | $ |        |  
|                                       |  |                    |          |      |  |      |        |   |  |   |         |  

F-15



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Net deferred tax assets
(liabilities) comprise (in thousands):

|                                                                    |                         |               |          |      |  |   |         |   | 
|------------------------------------------------------------------- | ----------------------- | ------------- | -------- | ---- |  | - | ------- | - | 
|                                                                    |                         |              
|                                                                    |                         | September 30,
|                                                                    |                         |              
|                                                                    |                         | 2001          |          | 2000
|                                                                    |                         |               |          |     
|Net operating loss carryforwards 
	federal and state               |                         | $             | 56,440   |      |  | $ | 15,468  |  
|Research and experimentation credit and other
	credit carryforwards |                         |               | 5,179    |      |  |   | 4,179   |  
|Capital loss carryforward                                           |                         |               | 2,858    |      |  |   |        |  
|Other liabilities and reserves                                      |                         |               | 11,676   |      |  |   | 3,729   |  
|Deferred revenue                                                    |                         |               | 3,127    |      |  |   | 7,250   |  
|Property and equipment                                              |                         |               | 6,833    |      |  |   | 1,703   |  
|Goodwill and other intangibles amortization                         |                         |               | 35,206   |      |  |   | 5,338   |  
|Loss from equity investment                                         |                         |               | 30,308   |      |  |   | 649     |  
|Other                                                               |                         |               | 106      |      |  |   | 20      |  
|Valuation allowance                                                 |                         |               | (151,733 | )    |  |   | (38,336 | )
|                                                                    |                         |               |          |      |  |   |         |  
|                                                                    | Net deferred tax assets |               | $        |     |  |   | $       |  | 
|                                                                    |                         |               |          |      |  |   |         |  

Due to the uncertainty surrounding the
realization of the favorable tax attributes in future tax
returns, we have recognized a valuation allowance against our
otherwise recognizable net deferred tax assets.

At September 30, 2001, we had the following
carryforwards available to reduce future taxable income and
income taxes (in thousands):

|                                                                 |  |                    |         |       |  |   |         | 
|---------------------------------------------------------------- |  | ------------------ | ------- | ----- |  | - | ------- | 
|                                                                 |  |                   
|                                                                 |  | September 30, 2001
|                                                                 |  |                   
|                                                                 |  | Federal            |         | State
|                                                                 |  |                    |         |      
|Net operating loss carryforwards (excluding stock
	compensation) |  | $                  | 149,350 |       |  | $ | 99,439  | 
|Net operating loss carryforwards (including stock
	compensation) |  |                    | 425,932 |       |  |   | 250,431 | 
|Research and experimentation credit carryforwards                |  |                    | 3,511   |       |  |   | 2,656   | 

The federal and state net operating loss
carryforwards expire through 2020 and 2005, respectively, and
the research and experimentation credits expire through 2020.

For federal and state tax purposes, our net
operating loss and research and experimentation credit
carryforwards could be subject to certain limitations on annual
utilization if certain changes in ownership have occurred, as
defined by federal and state tax laws.

(6)     Notes Payable
and Equipment Line

Notes payable and line of credit comprise (in
thousands):

|                                    |  |               |        |      |  |   |        |  
|----------------------------------- |  | ------------- | ------ | ---- |  | - | ------ | -
|                                    |  |              
|                                    |  | September 30,
|                                    |  |              
|                                    |  | 2001          |        | 2000
|                                    |  |               |        |     
|Equipment notes(1)                  |  |               | 6,250  |      |  |   | 3,850  |  
|Equipment line(2)                   |  |               | 481    |      |  |   |       |  
|Notes payable(3)                    |  |               |       |      |  |   | 2,718  |  
|                                    |  |               |        |      |  |   |        |  
|                                    |  |               | 6,731  |      |  |   | 6,568  |  
|Current portion                     |  |               | (2,500 | )    |  |   | (5,307 | )
|                                    |  |               |        |      |  |   |        |  
|Notes payable, less current portion |  | $             | 4,231  |      |  | $ | 1,261  |  
|                                    |  |               |        |      |  |   |        |  

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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | At September 30, 2001, the equipment note
	consisted of one loan which has equal monthly payments of $208
	plus interest at prime (6% at September 30, 2001). At
	September 30, 2000, equipment notes included four loans.
	The first loan for $1,750 had monthly payments of interest only
	until May 1998 and then was payable in equal monthly payments of
	$49 plus interest at 0.5% over prime (10% at September 30,
	2000) through April 2001. The second loan for $2,000 had monthly
	payments of $56 plus interest at 0.25% over prime (9.75% at
	September 30, 2000) through June 2001. The third loan for
	$4,722 had monthly payments of $139 plus interest at 0.25% over
	prime (9.75% at September 30, 2000) through June 2002. The
	fourth loan for $81 was acquired as a part of our acquisition of
	FastForward, had monthly payments of $3 plus interest at 0.5%
	over prime (10% at September 30, 2000) through January
	2002. The maturity of this loan was accelerated with the change
	of control of FastForward in October 2000, and the loan was
	subsequently paid in full as a part of the closing of the
	FastForward acquisition. The four loans were refinanced into one
	equipment note on March 6, 2001. The master bank credit
	agreement requires us to comply with certain financial covenants
	related to working capital, tangible net worth and debt service
	and liquidity coverage. Pursuant to the agreement, we may not
	distribute cash dividends. As of September 30, 2001, we
	were in compliance with all financial covenants. The note is
	collateralized by the underlying equipment.
|   
|(2) | At September 30, 2001, we have an equipment
	line with a leasing company for $481. The monthly payment on the
	equipment line is $30 as of September 30, 2001. The
	equipment line is collateralized by the underlying equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(3) | At September 30, 2000, we had an
	interest-free note payable with a banking institution for $2,718
	that was collateralized by an equal amount of our accounts
	receivable. This note was paid-in-full during fiscal 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

Scheduled maturities of long-term debt at
September 30, 2001 are as follows (in thousands):

|              |                    |   |       |       | 
|------------- | ------------------ | - | ----- | ----- | 
|Years ending: |                    |   |       |      
|              | September 30, 2002 |   | $     | 2,500 | 
|              | September 30, 2003 |   |       | 2,981 | 
|              | September 30, 2004 |   |       | 1,250 | 
|              |                    |   |       |      
|              |                    | $ | 6,731 |      
|              |                    |   |       |      

The carrying value of notes payable approximated
fair value as the related interest rates approximate market
rates.

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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(7)     Accrued
Liabilities

Accrued liabilities comprise (in thousands):

|                                                 |                           |               |        |        |  |   |        |        | 
|------------------------------------------------ | ------------------------- | ------------- | ------ | ------ |  | - | ------ | ------ | 
|                                                 |                           |              
|                                                 |                           | September 30,
|                                                 |                           |              
|                                                 |                           | 2001          |        | 2000  
|                                                 |                           |               |        |       
|Accrued compensation                             |                           | $             | 21,831 |        |  | $ | 21,425 |       
|Accrued royalties                                |                           |               | 9,020  |        |  |   | 2,515  |       
|Accrued consulting                               |                           |               | 5,301  |        |  |   | 1,950  |       
|Accrued marketing                                |                           |               | 4.496  |        |  |   | 3,056  |       
|Accrued for restructuring 
	underutilized space |                           |               | 4,375  |        |  |   |       |       
|Accrued future software licenses                 |                           |               | 2,760  |        |  |   |       |       
|Accrued legal costs                              |                           |               | 2,021  |        |  |   | 678    |       
|Accrued taxes                                    |                           |               | 1,481  |        |  |   | 4,462  |       
|Other accrued liabilities                        |                           |               | 7,361  |        |  |   | 4,730  |       
|                                                 |                           |               |        |        |  |   |        |       
|                                                 | Total accrued liabilities |               | $      | 58,646 |  |   | $      | 38,816 | 
|                                                 |                           |               |        |        |  |   |        |       

(8)     Intangibles
and Other Assets

Intangible and other assets consist of (in
thousands):

|                                                         |                                    |               |          |         |  |   |         |         | 
|-------------------------------------------------------- | ---------------------------------- | ------------- | -------- | ------- |  | - | ------- | ------- | 
|                                                         |                                    |              
|                                                         |                                    | September 30,
|                                                         |                                    |              
|                                                         |                                    | 2001          |          | 2000   
|                                                         |                                    |               |          |        
|Goodwill and other intangibles (useful life of
	5 years) |                                    | $             | 374,125  |         |  | $ | 327,536 |        
|Security deposits                                        |                                    |               | 4,747    |         |  |   | 4,183   |        
|Notes receivable from related parties                    |                                    |               | 4,336    |         |  |   |        |        
|Other assets                                             |                                    |               | 731      |         |  |   | 1,110   |        
|                                                         |                                    |               |          |         |  |   |         |        
|                                                         |                                    |               | 383,939  |         |  |   | 332,829 |        
|Accumulated amortization                                 |                                    |               | (120,132 | )       |  |   | (13,181 | )      
|                                                         |                                    |               |          |         |  |   |         |        
|                                                         | Total Intangibles and Other Assets |               | $        | 263,807 |  |   |         | 319,648 | 
|                                                         |                                    |               |          |         |  |   |         |        

(9)     Impairment of
Intangibles and Other Assets

We record impairments or write-downs of
intangibles and other 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, but are not limited to, 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 not considered temporary, 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. During fiscal 2001, we recorded
a charge of $44.9 million to reflect the impairment of
intangibles and other assets, primarily related to our goodwill
associated with our investment in AirFlash and with the assets
acquired from Adero.

F-18



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(10)     Impairment
of Investments

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 a decline is not considered
temporary. Our investments in privately held companies are
considered impaired when a review of the investees
operations and other indicators of impairment indicate that the
carrying value of the investment is not likely to be
recoverable. Such indicators include, but are not limited to,
limited capital resources, limited prospects of receiving
additional financing, and prospects for liquidity of the related
securities. Impaired investments in privately held companies are
written down to estimated fair value, which is the amount we
believe is recoverable from our investment. We recorded
write-downs of $65.9 million during fiscal 2001 related to
impairments of our investments in publicly traded and private
companies.

(11)     Restructuring



| |                                               
| | ----------------------------------------------
| | Fiscal 2001 Third Quarter Restructuring
	Plan:

In the quarter ended June 30, 2001, in light
of a challenging operating and business environment, we
announced and substantially completed a restructuring and a
workforce reduction of approximately 200 employees to
reduce our operating expenses. All functional areas of the
Company were affected by the reduction. As a result of this
workforce reduction, we incurred a charge of $5.2 million.
As of September 30, 2001, all such amounts had been paid or
written off.

The following table sets forth an analysis of the
components of the fiscal 2001 third quarter restructuring charge
and the payments made against the accrual through
September 30, 2001 (in thousands):

|                                      |                             |           |        |            |       |         |      |       |     |   |      |     |       |   |        |       |       | 
|------------------------------------- | --------------------------- | --------- | ------ | ---------- | ----- | ------- | ---- | ----- | --- | - | ---- | --- | ----- | - | ------ | ----- | ----- | 
|                                      |                             | Severance |        | Asset      |       | Other   |      |      
|                                      |                             | Related   |        | Write-Offs |       | Charges |      | Total
|                                      |                             |           |        |            |       |         |      |      
|Restructuring Provision:              |                             |           |        |            |       |         |      |       |     |   |      |     |       |   |        |      
|                                      | Severance related           |           | $      | 3,999      |       |         | $    |      |     |   | $    |    |       |   | $      | 3,999 |      
|                                      | Professional fees           |           |        |           |       |         |      |      |     |   |      | 601 |       |   |        | 601   |      
|                                      | Committed excess facilities |           |        |           |       |         |      |      |     |   |      | 416 |       |   |        | 416   |      
|                                      | Fixed asset impairment      |           |        |           |       |         |      | 198   |     |   |      |    |       |   |        | 198   |      
|                                      |                             |           |        |            |       |         |      |       |     |   |      |     |       |   |        |      
|                                      |                             | Total     |        |            | 3,999 |         |      |       | 198 |   |      |     | 1,017 |   |        |       | 5,214 | 
|Cash paid                             |                             |           | (3,999 | )          |       |         |     |       |     |   | (705 | )   |       |   | (4,704 | )    
|Non-cash charges                      |                             |           |       |            |       |         | (198 | )     |     |   |     |     |       |   | (198   | )    
|                                      |                             |           |        |            |       |         |      |       |     |   |      |     |       |   |        |      
|Accrual balance at September 30, 2001 |                             | $         |       |            |       | $       |     |       |     | $ | 312  |     |       | $ | 312    |      
|                                      |                             |           |        |            |       |         |      |       |     |   |      |     |       |   |        |      



| |                                                
| | -----------------------------------------------
| | Fiscal 2001 Fourth Quarter Restructuring
	Plan:

In the quarter ended September 30, 2001, in
response to the continuing economic slowdown, we instituted a
restructuring and a workforce reduction of approximately
35 employees to reduce our operating expenses. The
reduction in workforce primarily affected our Wireless group. As
a result of this restructuring, we incurred a charge of
approximately $7.3 million in the quarter ended
September 30, 2001. As of September 30, 2001,
approximately $5.8 million of this restructuring accrual
remained outstanding.

F-19



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table sets forth an analysis of the
components of the fiscal 2001 fourth quarter restructuring
charge and the payments made against the accrual through
September 30, 2001 (in thousands):

|                                      |                             |           |       |               |       |            |       |       |       |  |      |     |     |   |       |       |       | 
|------------------------------------- | --------------------------- | --------- | ----- | ------------- | ----- | ---------- | ----- | ----- | ----- |  | ---- | --- | --- | - | ----- | ----- | ----- | 
|                                      |                             | Severance |       | Underutilized |       | Asset      |       |      
|                                      |                             | Related   |       | Space         |       | Write-offs |       | Total
|                                      |                             |           |       |               |       |            |       |      
|Restructuring Provision:              |                             |           |       |               |       |            |       |       |       |  |      |     |     |   |       |      
|                                      | Severance related           |           | $     | 2,201         |       |            | $     |      |       |  | $    |    |     |   | $     | 2,201 |      
|                                      | Committed excess facilities |           |       |              |       |            |       | 4,375 |       |  |      |    |     |   |       | 4,375 |      
|                                      | Fixed asset impairment      |           |       |              |       |            |       |      |       |  |      | 706 |     |   |       | 706   |      
|                                      |                             |           |       |               |       |            |       |       |       |  |      |     |     |   |       |      
|                                      |                             | Total     |       |               | 2,201 |            |       |       | 4,375 |  |      |     | 706 |   |       |       | 7,282 | 
|Cash paid                             |                             |           | (776  | )             |       |            |      |       |       |  |     |     |     |   | (776  | )    
|Non-cash charges                      |                             |           |      |               |       |            |      |       |       |  | (706 | )   |     |   | (706  | )    
|                                      |                             |           |       |               |       |            |       |       |       |  |      |     |     |   |       |      
|Accrual balance at September 30, 2001 |                             | $         | 1,425 |               |       | $          | 4,375 |       |       |  |     |     |     | $ | 5,800 |      
|                                      |                             |           |       |               |       |            |       |       |       |  |      |     |     |   |       |      

We have historically relied upon proceeds from
equity offerings to fund operations. During 2001, we undertook
restructurings to reduce costs and to reduce cash outflows from
operations. In addition, as described in Note 16 we
completed in November 2001 a public offering of our Common Stock
raising net proceeds of $52.9 million.

(12)     Commitments
and Contingencies

We have entered into non-cancelable operating
leases for office space and equipment and capital leases for
equipment with original terms ranging from six months to
15 years. The capital leases are collateralized by their
respective underlying assets. The future minimum lease payments
under capital leases and non-cancelable operating leases, and
the future sublease income under non-cancelable sublease
agreements at September 30, 2001 are as follows (in
thousands):

|                                                |      |           |         |          |  |         |        |       |  |   |        |       | 
|----------------------------------------------- | ---- | --------- | ------- | -------- |  | ------- | ------ | ----- |  | - | ------ | ----- | 
|                                                |      | Operating |         | Sublease |  | Capital
|                                                |      | Leases    |         | Income   |  | Leases 
|                                                |      |           |         |          |  |        
|Years ending September 30:                      |      |           |         |          |  |         |        |       |  |   |        |      
|                                                | 2002 |           | $       | 25,783   |  |         | $      | 7,255 |  |   | $      | 1,902 | 
|                                                | 2003 |           |         | 28,553   |  |         |        | 7,650 |  |   |        | 991   | 
|                                                | 2004 |           |         | 27,016   |  |         |        | 6,251 |  |   |        | 219   | 
|                                                | 2005 |           |         | 26,576   |  |         |        | 4,309 |  |   |        |      | 
|                                                | 2006 |           |         | 23,607   |  |         |        | 4,448 |  |   |        |      | 
|Thereafter                                      |      |           | 251,691 |          |  |         | 8,410  |       |  |   |       |      
|                                                |      |           |         |          |  |         |        |       |  |   |        |      
|Total minimum lease payments                    |      | $         | 383,226 |          |  | $       | 38,323 |       |  | $ | 3,112  |      
|                                                |      |           |         |          |  |         |        |       |  |   |        |      
|Amount representing interest                    |      |           |         |          |  |         |        |       |  |   | (224   | )    
|                                                |      |           |         |          |  |         |        |       |  |   |        |      
|Present value of minimum lease payments         |      |           |         |          |  |         |        |       |  |   | 2,888  |      
|Current portion                                 |      |           |         |          |  |         |        |       |  |   | (1,470 | )    
|                                                |      |           |         |          |  |         |        |       |  |   |        |      
|Capital lease obligations, less current portion |      |           |         |          |  |         |        |       |  | $ | 1,418  |      
|                                                |      |           |         |          |  |         |        |       |  |   |        |      

In April 2000, we entered into a lease commencing
November 1, 2001 for approximately 400,000 square feet of
office space in two mid-rise office buildings in Foster City,
California. The lease is for substantially more space than we
will need for the next several years. The commercial real estate
market in San Mateo County, California is volatile and
unpredictable in terms of rental fees, occupancy rates and
preferred locations. If we fail to sublease a significant
portion or all of this new space at or above the rate we pay
under

F-20



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

the lease agreement, we will incur substantial
additional operating expense during the lease term. Aggregate
payments to be made under the lease are approximately
$324.4 million over the lease term ending October 31,
2016. Payments under the lease will commence when the property
is delivered to Inktomi by the developer. We expect this
delivery to occur in the quarter ending March 31, 2002.
This lease limits the liquidity of $9.3 million of our
cash, which is classified as long-term on our balance sheet.

In August 2000, we entered into a lease agreement
commencing August 24, 2000 for our corporate headquarters
in Foster City, California, including all improvements related
to this property. Under the lease terms, we are required to pay
lease payments for five years to the lessor. The payments are
calculated based on a floating interest rate applied against a
$114 million principle value. Future minimum lease payments
under this lease are calculated based on the 1-year LIBOR as of
September 30, 2001. The agreement was assigned to a third
party lessor under the terms of a lease finance structure. This
structure also required the creation and maintenance of a cash
collateral account that limits the liquidity of
$119.6 million of our cash, which is classified as
long-term on our balance sheet. At the end of the lease term, we
have the option to buy the building or to extend the lease. If
we elect not to purchase the building or extend the lease term,
we have guaranteed a residual value of $101 million. We
have sublet a portion of our headquarters facilities through
July 2006 to various subtenants for an aggregate future rental
expense offset of $18.8 million.

In connection with our acquisition of
FastForward, we assumed operating leases on certain facilities
and equipment under non-cancelable operating leases, some of
which provide for periodic rent increases based on the general
rate of inflation.

Rent expense was approximately
$16.1 million, $10.0 million, and $3.6 million
for the years ended September 30, 2001, 2000 and 1999,
respectively.

On August 2, 2001, an amended complaint was
filed by Network Caching Technology, L.L.C. in the United States
District Court for the Northern District of California against
Inktomi as well as other providers of caching technologies
including Novell, Inc., Akamai Technologies, Inc., Volera, Inc.,
and Cacheflow, Inc. Plaintiff alleges that certain products
marketed by Inktomi and the other defendants violate one or more
patents owned by plaintiff. The complaint seeks compensatory and
other damages and injunctive relief. We were served the
complaint on August 7, 2001. We subsequently filed a
response denying the allegations and asserting a number of
defenses. At this time it is too early to estimate any potential
losses from this action and whether this action may have a
material impact on the results of operations. We intend to
vigorously defend against it.

(13)     Stockholders
Equity

In November 1998 and August 1999, we completed
public offerings of our Common Stock in which we sold
approximately 2.7 million shares raising
$88.9 million, and approximately 4.9 million shares
raising $216.2 million, respectively, net of issuance costs
and underwriters discounts. Additionally, in fiscal 1999,
we raised $18.6 million through the issuance of
approximately 6.4 million shares of Common Stock for cash,
notes or services, including for exercise of options and
warrants.

On June 30, 2000, our Board of Directors
adopted a Shareholders Rights Plan. Under the plan, we
issued a dividend of one right for each share of our Common
Stock held by stockholders of record as of the close of business
on August 21, 2000. The plan was designed to assure
stockholders fair value in the event of a future unsolicited
business combination or similar transaction we could become
involved in. Each right entitles stockholders to purchase a
fractional share of our Preferred Stock for $1,000. The rights
are not immediately exercisable and become exercisable only upon
the occurrence of certain events. Upon certain other events,
unless redeemed for $0.001 per right, the rights will become
exercisable by holders, other than rights held by an unsolicited
third party acquirer, for shares of Inktomi or of the third
party acquirer having a value of twice the rights
then-current exercise price.

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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

In fiscal 2001, we raised $3.9 million in
cash from the issuance of approximately 1.2 million shares
of Common Stock associated with option and warrant exercises. In
fiscal 2000, we raised $99.2 million from the issuance of
approximately 8.0 million shares of Common associated with
option and warrant exercises.

Stock Option Exchange Program

In February 2001, the Inktomi Board of Directors
approved a stock option exchange program. Under this program,
all employees (including executive officers and outside
directors) were given the opportunity to cancel one or more
stock options previously granted to them in exchange for one or
more new stock options to be granted at least six months and one
day from the date the old options are cancelled, provided the
individual is still employed or providing service on such date.
The participation deadline for the program was February 28,
2001. The number of shares subject to the new options were equal
to the number of shares subject to the old options, and the
exercise price of the new options was the fair market value of
Inktomi Common Stock on the date they were granted. The new
options have the same vesting schedule as the old options and
will be immediately exercisable as to vested shares when granted
(however, new options granted to executive officers and outside
directors will lose three months of vesting and be subject to a
trading blackout of three months following the grant). The
exchange resulted in the voluntary cancellation of options to
purchase approximately 12.8 million shares of Common Stock
with exercise prices ranging from $12.25 to $211.0 per share.
Approximately 10.6 million replacement options were granted
on August 29, 2001 at an exercise price of $4.21 per share
of Common Stock.

Stock options granted during the six month period
prior to implementation of the option exchange program that are
not canceled as part of the program are subject to variable plan
accounting beginning in the fiscal quarter ended March 31, 2001.
During the six months prior to implementation of the program,
Inktomi granted approximately 2.8 million options, at an
average price of $23.65 per option, that are subject to variable
plan accounting. Other stock options that are granted to
participants of the program in the six months following
implementation of the program will also be accounted for in this
manner. 1.4 million such options were granted during the six
months following implementation of the program, and an average
price of $7.18 per option, and are subject to variable plan
accounting. Under variable plan accounting, we are required to
record a non-cash compensation charge for the options until the
options are exercised, forfeited or cancelled without
replacement. The compensation charge will be based on any excess
of the closing stock price at the end of the reporting period or
date of exercise, forfeiture or cancellation without
replacement, if earlier, over the fair market value of our
Common Stock on the options issuance date. The resulting
compensation charge to earnings will be recorded as the
underlying options vest. Depending upon movements in the market
value of our Common Stock, this accounting treatment may result
in significant compensation charges in future periods. As of
September 30, 2001, we have recorded no compensation
charges related to this program.

Deferred Compensation and Other
Equity

Deferred compensation (principally related to the
differences between the fair value of the Common Stock at the
time of grant and the exercise price of options granted by
FastForward) and other equity includes (in thousands):

|                      |                                              |               |         |         |   |      |         |         |   |   |        |        |  
|--------------------- | -------------------------------------------- | ------------- | ------- | ------- | - | ---- | ------- | ------- | - | - | ------ | ------ | -
|                      |                                              |              
|                      |                                              | September 30,
|                      |                                              |              
|                      |                                              | 2001          |         | 2000    |   | 1999
|                      |                                              |               |         |         |   |     
|Deferred compensation |                                              | $             | (20,824 | )       |   | $    | (46,430 | )       |   | $ | (3,364 | )     
|Stockholder loans     |                                              |               |        |         |   |      | (84     | )       |   |   | (327   | )     
|                      |                                              |               |         |         |   |      |         |         |   |   |        |       
|                      | Total deferred compensation and other equity |               | $       | (20,824 | ) |      | $       | (46,514 | ) |   | $      | (3,691 | )
|                      |                                              |               |         |         |   |      |         |         |   |   |        |       

F-22



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The expected future annual amortization for stock
options granted through September 30, 2001, (assuming no
cancellations) is as follows:

|     |                             |  |        |         |  
|---- | --------------------------- |  | ------ | ------- | -
|2002 |                             |  | (7,547 | )      
|2003 |                             |  | (7,547 | )      
|2004 |                             |  | (4,799 | )      
|2005 |                             |  | (931   | )      
|     |                             |  |        |        
|     | Total deferred compensation |  | $      | (20,824 | )
|     |                             |  |        |        

Warrants

At September 30, 2001 the following warrant
was outstanding:

|             |  |              |           |           |  |                 |         |  |  |  |            | 
|------------ |  | ------------ | --------- | --------- |  | --------------- | ------- |  |  |  | ---------- | 
|             |  |              |           | Aggregate |  |                
|             |  | Shares Under |           | Exercise  |  |                
|             |  | Warrant      |           | Price     |  | Expiration Date
|             |  |              |           |           |  |                
|Common Stock |  |              | 1,670,804 |           |  | $               | 137,841 |  |  |  | April 2002 | 

At September 30, 2001, the outstanding
warrant was exercisable.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan (the
ESPP) has reserved for issuance 1,200,000 shares of
Common Stock plus an annual increase to be added on each
anniversary date of the adoption of the ESPP equal to the lesser
of (i) the number of shares needed to restore the maximum
aggregate number of shares available for purchase under the ESPP
to 1,200,000 shares or (ii) a lesser amount determined by
the Board. The ESPP is administered over offering periods of
24 months each, with each offering period divided into four
consecutive six month purchase periods beginning November 1
and May 1 of each year. Eligible employees may designate
not more than 15 percent of their cash compensation to be
deducted each pay period for the purchase of Common Stock under
the ESPP, and participants may not purchase more than $25,000
worth of stock in any one calendar year. Shares of Common Stock
are purchased with the employees payroll deductions
accumulated during the six months, generally at a price per
share of 85% of the market price of the Common Stock on the
employees entry date into the applicable offering period
or the last day of the applicable purchase period, whichever is
lower. As of September 30, 2001, there were 1,126,871
shares of Common Stock reserved for future issuance under the
ESPP.

Stock Option Plans

We have adopted various stock option plans and
assumed other stock option plans in connection with our
acquisitions (the Stock Option Plans). These Stock
Option Plans generally provide for the grant of stock options to
our employees, directors and consultants. Certain options
granted to our employees may qualify as incentive stock
options under applicable tax regulations. Options granted
under our Stock Option Plans are generally immediately vested
and exercisable, provided however that the shares are subject to
repurchase at cost in the event the option holder ceases to be
an employee or provide service, as the case may be. The
repurchase right generally lapses over 36 to 50 months. For
options that are not exercisable immediately, they generally
vest over 36 to 50 months. All options generally have a
term of ten years. At September 30, 2001, 30,921,263
shares of Common Stock were reserved for issuance under our
primary on-going Stock Option Plans.

F-23



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

A summary of the activity under the Stock Option
Plans is set forth below (in thousands, except per share
amounts):

|                                  |  |        |         |           |  |           |               |                |  |   |            |   |  |   |       | 
|--------------------------------- |  | ------ | ------- | --------- |  | --------- | ------------- | -------------- |  | - | ---------- | - |  | - | ----- | 
|                                  |  |        |         | Exercise  |  | Aggregate |               | Weighted      
|                                  |  |        |         | Price Per |  | Exercise  |               | Average       
|                                  |  | Shares |         | Share     |  | Price     |               | Exercise Price
|                                  |  |        |         |           |  |           |               |               
|Outstanding at September 30, 1998 |  |        | 11,105  |           |  | $         | 0.03-$13.44   |                |  | $ | 36,397     |   |  | $ | 3.28  | 
|Granted                           |  |        | 7,892   |           |  | $         | 0.09-$63.96   |                |  |   | 242,731    |   |  | $ | 30.75 | 
|Exercised                         |  |        | (1,894  | )         |  | $         | 0.08-$42.38   |                |  |   | (6,572     | ) |  | $ | 3.47  | 
|Canceled                          |  |        | (681    | )         |  | $         | 0.11-$42.38   |                |  |   | (8,532     | ) |  | $ | 12.53 | 
|                                  |  |        |         |           |  |           |               |                |  |   |            |   |  |   |       | 
|Outstanding at September 30, 1999 |  |        | 16,422  |           |  | $         | 0.03-$63.96   |                |  |   | 264,024    |   |  | $ | 16.08 | 
|Granted                           |  |        | 13,567  |           |  | $         | 0.17-$211.00  |                |  |   | 1,139,103  |   |  | $ | 83.96 | 
|Exercised                         |  |        | (6,177  | )         |  | $         | 0.03-$115.06  |                |  |   | (65,952    | ) |  | $ | 10.68 | 
|Canceled                          |  |        | (1,826  | )         |  | $         | 0.11-$211.00  |                |  |   | (63,042    | ) |  | $ | 34.52 | 
|                                  |  |        |         |           |  |           |               |                |  |   |            |   |  |   |       | 
|Outstanding at September 30, 2000 |  |        | 21,986  |           |  | $         | 0.03-$211.00  |                |  |   | 1,274,133  |   |  | $ | 57.95 | 
|Granted                           |  |        | 25,534  |           |  | $         | 0.001-$106.69 |                |  |   | 240,463    |   |  | $ | 9.43  | 
|Exercised                         |  |        | (1,172  | )         |  | $         | 2.45-$106.69  |                |  |   | (3,854     | ) |  | $ | 3.25  | 
|Canceled                          |  |        | (19,390 | )         |  | $         | 0.11-$211.00  |                |  |   | (1,348,329 | ) |  | $ | 68.71 | 
|                                  |  |        |         |           |  |           |               |                |  |   |            |   |  |   |       | 
|Outstanding at September 30, 2001 |  |        | 26,958  |           |  | $         | 0.001-$137.13 |                |  | $ | 162,413    |   |  | $ | 6.06  | 
|                                  |  |        |         |           |  |           |               |                |  |   |            |   |  |   |       | 

At September 30, 2001, 2000 and 1999 there
were 586,960, 3,043,061 and 2,358,394 shares of Common Stock
that were subject to repurchase. The weighted average exercise
price of shares subject to repurchase was $0.53, $0.39 and $0.28
per share as of September 30, 2001, 2000 and 1999,
respectively.

Utilizing the Black-Scholes Option Pricing Model,
the weighted average fair value of employee stock options
granted under the Stock Option Plans and shares purchased under
the ESPP during fiscal 2001, 2000, and 1999 was $9.00, $88.70,
and $33.22 per share, respectively.

The following table summarizes information with
respect to stock options outstanding at September 30, 2001
(in thousands):

|                |  |                     |        |                            |  |                |      |                           |  |                |        |  |  |  |       |  |  |   |        | 
|--------------- |  | ------------------- | ------ | -------------------------- |  | -------------- | ---- | ------------------------- |  | -------------- | ------ |  |  |  | ----- |  |  | - | ------ | 
|                |  |                     |        |                            |  |                |      |                          
|                |  |                     |        |                            |  |                |      | Options Outstanding and  
|                |  |                     |        |                            |  |                |      | Exercisable and No Longer
|                |  |                     |        | Subject to Repurchase Upon
|                |  | Options Outstanding |        | Exercise                  
|                |  |                     |        |                           
|                |  |                     |        | Weighted Average           |  | Weighted       |      |                           |  | Weighted      
|Range of        |  | Number of           |        | Remaining                  |  | Average        |      | Number of                 |  | Average       
|Exercise Prices |  | Shares              |        | Contractual Life (Years)   |  | Exercise Price |      | Shares                    |  | Exercise Price
|                |  |                     |        |                            |  |                |      |                           |  |               
|                |  | (in thousands)      |        |                            |  |                |      | (in thousands)            |  |               
|$0.001-$0.11    |  |                     | 3,280  |                            |  |                | 6.54 |                           |  | $              | 0.07   |  |  |  | 2,180 |  |  | $ | 0.11   | 
|$0.35-$2.25     |  |                     | 5,502  |                            |  |                | 9.85 |                           |  | $              | 2.20   |  |  |  | 400   |  |  | $ | 1.72   | 
|$2.63-$4.21     |  |                     | 10,719 |                            |  |                | 9.87 |                           |  | $              | 4.16   |  |  |  | 4,111 |  |  | $ | 4.15   | 
|$4.31-$15.50    |  |                     | 4,573  |                            |  |                | 8.48 |                           |  | $              | 9.83   |  |  |  | 709   |  |  | $ | 9.97   | 
|$15.98-$107.94  |  |                     | 2,881  |                            |  |                | 8.92 |                           |  | $              | 21.15  |  |  |  | 791   |  |  | $ | 23.58  | 
|$137.13-$137.13 |  |                     | 3      |                            |  |                | 8.42 |                           |  | $              | 137.13 |  |  |  | 1     |  |  | $ | 137.13 | 
|                |  |                     |        |                            |  |                |      |                           |  |                |        |  |  |  |       |  |  |   |        | 
|$0.001-$137.13  |  |                     | 26,958 |                            |  |                | 9.12 |                           |  | $              | 6.06   |  |  |  | 8,192 |  |  | $ | 5.36   | 

Options to purchase approximately
5.5 million shares and 6.0 million shares were
exercisable and no longer subject to repurchase upon exercise as
of September 30, 2000 and 1999, respectively. The weighted

F-24



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

average exercise prices per share for options
exercisable as of September 30, 2000 and 1999 we $22.06 and
$3.69, respectively.

In connection with the completion of our public
offerings, stock option grants, and the acquisitions of
FastForward, Ultraseek, WebSpective, C2B and Impulse! Buy,
certain options granted in 2001, 2000, and 1999 have been
considered to be compensatory. Compensation expense was
$10.6 million, $7.3 million and $0.8 million in
2001, 2000 and 1999, respectively. As of September 30,
2001, approximately $20.8 million remains to be amortized
over the remaining vesting periods of the options.

Fair Value Disclosures

The following information concerning both the
Stock Option Plans and the ESPP (together, The Plans) is
provided in accordance with SFAS No. 123. We account for
all Plans in accordance with APB No. 25 and related
interpretations; accordingly, compensation expense is recorded
for options awarded to employees and directors to the extent
that the exercise prices are less than the Common Stocks
fair market value on the date of grant, where the number of
options and exercise price are fixed. The difference between the
fair value of our Common Stock and the exercise price of the
stock option is recorded as deferred stock compensation, and is
amortized to compensation expense over the vesting period of the
underlying stock option.

The fair value of each employee and director
stock option grant and shares purchased under the ESPP have been
estimated using the Black-Scholes Option Pricing Model. The
Black-Scholes Option Pricing Model was developed for use in
estimating the fair value of traded options and warrants that
have no vesting restrictions and are fully transferable in
addition to shares purchased under the ESPP. In addition,
valuation models require the input of highly subjective
assumptions, including the expected stock price volatility. Our
options and shares purchased under the ESPP have characteristics
significantly different from those of traded options and shares,
and changes in the subjective input assumptions can materially
affect the fair value estimate. The following assumptions were
used in determining the fair value of options granted under the
Stock Option Plans:

|                         |  |               |             |      |  |      |             |  |  |  |             | 
|------------------------ |  | ------------- | ----------- | ---- |  | ---- | ----------- |  |  |  | ----------- | 
|                         |  |              
|                         |  | September 30,
|                         |  |              
|                         |  | 2001          |             | 2000 |  | 1999
|                         |  |               |             |      |  |     
|Risk-free interest rates |  |               | 4.57%-5.69% |      |  |      | 5.85%-6.83% |  |  |  | 4.23%-5.87% | 
|Expected life            |  |               | 5 years     |      |  |      | 5 years     |  |  |  | 5 years     | 
|Dividends                |  |               | 0%          |      |  |      | 0%          |  |  |  | 0%          | 
|Volatility               |  |               | 140%        |      |  |      | 104%        |  |  |  | 111%        | 

The following assumptions were used in
determining the fair value of shares purchased under the ESPP:

|                         |  |               |             |      |  |      |             |  |  |  |             | 
|------------------------ |  | ------------- | ----------- | ---- |  | ---- | ----------- |  |  |  | ----------- | 
|                         |  |              
|                         |  | September 30,
|                         |  |              
|                         |  | 2001          |             | 2000 |  | 1999
|                         |  |               |             |      |  |     
|Risk-free interest rates |  |               | 4.83%-5.73% |      |  |      | 4.83%-6.56% |  |  |  | 4.24%-6.57% | 
|Expected life            |  |               | 5 years     |      |  |      | 5 years     |  |  |  | 5 years     | 
|Dividends                |  |               | 0%          |      |  |      | 0%          |  |  |  | 0%          | 
|Volatility               |  |               | 140%        |      |  |      | 104%        |  |  |  | 111%        | 

F-25



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following comprises the pro forma information
pursuant to the provisions of SFAS No. 123 (in thousands):

|                                                   |  |               |          |      |  |      |          |   |  |   |         |  
|-------------------------------------------------- |  | ------------- | -------- | ---- |  | ---- | -------- | - |  | - | ------- | -
|                                                   |  |              
|                                                   |  | September 30,
|                                                   |  |              
|                                                   |  | 2001          |          | 2000 |  | 1999
|                                                   |  |               |          |      |  |     
|Net loss  historical                              |  | $             | (296,482 | )    |  | $    | (27,340  | ) |  | $ | (33,028 | )
|Net loss  pro forma                               |  | $             | (624,976 | )    |  | $    | (275,163 | ) |  | $ | (88,004 | )
|Basic and diluted net loss per
	share  historical |  | $             | (2.36    | )    |  | $    | (0.24    | ) |  | $ | (0.32   | )
|Basic and diluted net loss per sharepro
	forma    |  | $             | (4.98    | )    |  | $    | (2.43    | ) |  | $ | (0.86   | )

These pro forma amounts may not be representative
of the effects on pro forma net loss for future years as options
vest over several years and additional awards are generally made
each year.

(14)     Related
Party Transactions

In August and October 1999, we provided a
relocation loan to an employee totaling $2.2 million. The
loan was repaid in full in September 2000.

In March 2000, we provided a relocation loan to
an officer of the Company totaling $1.5 million. The loan,
plus any accrued unpaid interest, will be due in March 2004. As
a result of the employee leaving the Company in June 2001,
accrued interest will be due annually starting December 31,
2002. This note has interest of 6.8% per annum.

In January 2001, we provided a relocation loan to
an employee totaling $0.9 million. The loan, plus any accrued
unpaid interest, will be due in January 2005. If employment ends
before January 2005, accrued interest will be due annually
starting December 31st of the year following the year in
which the separation became effective. This note has interest of
5.61% per annum.

In April 2001, we provided a relocation loan to
an officer of the Company totaling $1.7 million. The loan,
plus any accrued unpaid interest, will be due in April 2005. If
employment ends before April 2005, accrued interest will be due
annually starting December 31st of the year following the
year in which the separation became effective. This note has
interest of 4.94% per annum.

We held investments in equity securities in
certain customers at September 30, 2001, 2000 and 1999.
These customers comprised $29.5 million,
$31.3 million, and $6.9 million of revenue,
respectively. These customers also accounted for
$4.0 million, $13.5 million, and $1.4 million of
accounts receivable as of September 30, 2001, 2000, and
1999, respectively.

(15)     Segment and
Geographic Information

Effective September 30, 1999, we adopted
SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information. SFAS No. 131
established standards for reporting information about operating
segments in annual financial statements and requires selected
information about operating segments in interim financial
reports issued to stockholders. It also established standards
for related disclosures about products and services, and
geographic areas. Operating segments are defined as components
of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating
decision maker, or decision making group, in deciding how to
allocate resources and in assessing performance. Our chief
operating decision-maker is our Chief Executive Officer. Our
reportable segments are organized primarily by technology. Each
of these segments is managed separately because they offer and
distribute distinct technologies and services with different
methods of delivery and customer bases.

We have two reportable operating segments:
Network Products and Portal Services. Network Products consists
of Inktomi Traffic Server, Content Delivery Suite, Media
Products, Wireless Products and associated

F-26



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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

applications. Until March 2001, when we sold our
Commerce Division, Portal Services consisted of both Inktomi
Search Solutions and the Inktomi Commerce Engine. Since the
divestiture, Portal Services consists of our Search Solutions
business. Search Solutions consists of Web search services and
enterprise search software products.

We evaluate performance and allocate resources to
our operating segments based on a variety of factors, including
revenues, operating profit, market potential, customer
commitments and strategic direction.

Acquisition-related costs, purchased in-process
research and development, amortization of intangibles and other
assets, impairment of intangibles and other assets,
restructuring, impairment of investments and amortization of
deferred compensation expense are not included in
managements evaluation of performance by the operating
divisions, as they are primarily organizational in nature. The
accounting policies of the reportable segments are the same as
those described in Note 2. We do not track assets by operating
segments.

Financial information about segments (in
thousands):

|               |  |                                       |         |              |  |               |         |               |  |           |         |               |  |       |         |   |  |   |         |   |  |   |         |   |  |   |          |  
|-------------- |  | ------------------------------------- | ------- | ------------ |  | ------------- | ------- | ------------- |  | --------- | ------- | ------------- |  | ----- | ------- | - |  | - | ------- | - |  | - | ------- | - |  | - | -------- | -
|               |  |                                      
|               |  | For the Year Ended September 30, 2001
|               |  |                                      
|               |  |                                       |         | Amortization |  |              
|               |  |                                       |         | of Deferred  |  |              
|               |  |                                       |         | Stock Exp.,  |  |              
|               |  |                                       |         | Acquisition  |  | Impairment of |         | Intangibles,  |  |          
|               |  | Network                               |         | Portal       |  | Related Costs |         | Intangibles & |  | and Other |         | Restructuring |  |      
|               |  | Products                              |         | Services     |  | and IPRD      |         | Other Asset   |  | Assets    |         | Charges       |  | Total
|               |  |                                       |         |              |  |               |         |               |  |           |         |               |  |      
|Revenues       |  | $                                     | 114,114 |              |  | $             | 84,448  |               |  | $         |        |               |  | $     |        |   |  | $ |        |   |  | $ |        |   |  | $ | 198,562  |  
|Operating loss |  | $                                     | (68,464 | )            |  | $             | (13,077 | )             |  | $         | (19,927 | )             |  | $     | (44,915 | ) |  | $ | (81,075 | ) |  | $ | (12,531 | ) |  | $ | (239,989 | )

|                        |  |                                       |         |             |  |            |         |                 |  |           |        |       |  |   |        |   |  |   |         |   |  |   |         |  
|----------------------- |  | ------------------------------------- | ------- | ----------- |  | ---------- | ------- | --------------- |  | --------- | ------ | ----- |  | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                        |  |                                      
|                        |  | For the Year Ended September 30, 2000
|                        |  |                                      
|                        |  |                                       |         | Acquisition |  | Purchased  |         | Amortization of |  |          
|                        |  |                                       |         | Related     |  | In-Process |         | Intangibles     |  |          
|                        |  | Network                               |         | Portal      |  | Costs and  |         | Research and    |  | and Other |        |      
|                        |  | Products                              |         | Services    |  | IPRD       |         | Development     |  | Assets    |        | Total
|                        |  |                                       |         |             |  |            |         |                 |  |           |        |      
|Revenues                |  | $                                     | 152,850 |             |  | $          | 71,367  |                 |  | $         |        |       |  | $ |       |   |  | $ |        |   |  | $ | 224,217 |  
|Operating income (loss) |  | $                                     | 7,777   |             |  | $          | (27,316 | )               |  | $         | (3,999 | )     |  | $ | (4,400 | ) |  | $ | (13,182 | ) |  | $ | (41,420 | )

|               |  |                                       |         |             |  |                 |         |              |  |           |        |       |  |   |   |  |  |   |   |  |  |   |         |  
|-------------- |  | ------------------------------------- | ------- | ----------- |  | --------------- | ------- | ------------ |  | --------- | ------ | ----- |  | - | - |  |  | - | - |  |  | - | ------- | -
|               |  |                                      
|               |  | For the Year Ended September 30, 1999
|               |  |                                      
|               |  |                                       |         | Purchased   |  | Amortization of |         |             
|               |  |                                       |         | Acquisition |  | In-Process      |         | Intangibles  |  |          
|               |  | Network                               |         | Portal      |  | Related         |         | Research and |  | and Other |        |      
|               |  | Products                              |         | Services    |  | Costs           |         | Development  |  | Assets    |        | Total
|               |  |                                       |         |             |  |                 |         |              |  |           |        |      
|Revenues       |  | $                                     | 43,242  |             |  | $               | 30,261  |              |  | $         |       |       |  | $ |  |  |  | $ |  |  |  | $ | 73,503  |  
|Operating loss |  | $                                     | (13,494 | )           |  | $               | (23,014 | )            |  | $         | (1,110 | )     |  | $ |  |  |  | $ |  |  |  | $ | (37,619 | )

For the year ended September 30, 2001, one
customer represented 14% of all Portal Services revenue
generated and no customers represented over 10% of all Network
Products revenue generated. For the year ended
September 30, 2000, no customers represented over 10% of
all Portal Services or Network Products revenue generated. For
the year ended September 30, 1999, no customers
individually represented over 10% of all Portal Services revenue
generated, and two customers represented 16% and 12% of all
Network Products revenue generated.

At September 30, 2001 and 2000, less than
10% of our tangible long-term assets were located outside the
United States.

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##### Table of Contents



INKTOMI CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table sets forth revenue
information for geographic areas: (in thousands):

|              |               |               |         |         |  |      |         |         |  |   |        |        | 
|------------- | ------------- | ------------- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------ | ------ | 
|              |               |              
|              |               | September 30,
|              |               |              
|              |               | 2001          |         | 2000    |  | 1999
|              |               |               |         |         |  |     
|United States |               | $             | 159,305 |         |  | $    | 173,701 |         |  | $ | 68,679 |       
|International |               |               | 39,257  |         |  |      | 50,516  |         |  |   | 4,824  |       
|              |               |               |         |         |  |      |         |         |  |   |        |       
|              | Total Revenue |               | $       | 198,562 |  |      | $       | 224,217 |  |   | $      | 73,503 | 
|              |               |               |         |         |  |      |         |         |  |   |        |       

(16)     Subsequent
Events

In October 2001, in response to the continuing
economic slowdown, we announced and completed a restructuring
and workforce reduction of approximately 115 employees to reduce
our operating expenses. The reduction primarily affected our
sales and marketing and our general administrative functions. As
a result of this restructuring, we expect to incur approximately
$3.9 million in primarily severance-related restructuring
costs in the quarter ending December 31, 2001.

In November 2001, we completed a public offering
of our Common Stock in which we sold approximately
13.2 million shares raising $52.9 million, net of
estimated issuance costs and underwriters discounts.

In December 2001, we provided two loans to our
CEO totaling $4.7 million, of which $2.7 million has
been repaid. These loans are represented by full recourse
promissory notes accruing interest at the rate of 6% per annum.
The remaining balance, of $2.0 million plus any accrued
unpaid interest, will become due in December 2003.

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##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS ON

FINANCIAL STATEMENT SCHEDULE


To the Board of Directors and Shareholders of
Inktomi Corporation:

Our audits of the consolidated financial
statements referred to in our report dated October 18, 2001
(except as to the public offering described in Note 16 and
as to recently issued accounting pronouncements in Note 2
which are as of November 15, 2001) which report and
consolidated financial statements are included in this Annual
Report Form 10-K, also included an audit of the financial
statement schedule listed in Item 14(a)(2) of this
Form 10-K. In our opinion, this financial statement
schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements.



| |                           
| | --------------------------
| | PRICEWATERHOUSECOOPERS LLP

San Jose, California

October 18, 2001, except as to the


public offering described in Note 16


and as to recently issued accounting


pronouncements in Note 2 which are as


of November 15, 2001


S-1



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##### Table of Contents






EXHIBIT INDEX

|          |  |                                                                                                                                                              
|--------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit   |  |                                                                                                                                                              
|Number    |  | Description                                                                                                                                                  
|          |  |                                                                                                                                                              
|3.2(3)    |  | Amended and Restated Certificate of Incorporation
	of Inktomi.                                                                                               
|3.2a(6)   |  | Amendment to Amended and Restated Certificate of
	Incorporation of Inktomi.                                                                                  
|3.2b(12)  |  | Amendment to Amended and Restated Certificate of
	Incorporation of Inktomi.                                                                                  
|3.4(3)    |  | Bylaws of Inktomi.                                                                                                                                           
|4.1(3)    |  | Specimen Common Stock Certificate.                                                                                                                           
|10.1(3)   |  | Form of Indemnification Agreement between Inktomi
	and each of its directors and officers.                                                                   
|10.2(16)  |  | 1998 Stock Plan and form of agreement thereunder.                                                                                                            
|10.3(3)   |  | 1998 Employee Stock Purchase Plan and form of
	agreements thereunder.                                                                                        
|10.4(3)   |  | 1996 Equity Incentive Plan and form of agreement
	thereunder.                                                                                                
|10.5(3)   |  | Fifth Amended and Restated Investors Rights
	Agreement dated as February 13, 1998 among Inktomi and
	certain of its security holders named therein.         
|10.6(3)   |  | Executive Employment Agreement dated as of
	July 1, 1996 between Inktomi and David C. Peterschmidt.                                                          
|10.7(10)  |  | Agreement of Sublease dated July 1, 1998 by
	and between Designs, Inc. and Atreve Software, Inc.                                                             
|10.8(11)  |  | First Amended and Restated Lease Agreement
	between Parkside Towers Co-Tenancy and Inktomi.                                                                  
|10.9      |  | Reserved for future use.                                                                                                                                     
|10.10(13) |  | Ultraseek Stock Option Plan and form of agreement
	thereunder.                                                                                               
|10.11(14) |  | Purchase and Sale Agreement dated June 30,
	2000 by and between WHFST Real Estate Limited Partnership and
	Inktomi.                                          
|10.12(14) |  | First Amendment to Purchase and Sale Agreement
	dated as of July 14, 2000 by and between WHFST Real Estate
	Limited Partnership and Inktomi.                 
|10.13(12) |  | Preferred Stock Rights Agreement dated as of
	August 10, 2000 between Inktomi and Wells Fargo Shareowners
	Services.                                         
|10.14     |  | Reserved for future use.                                                                                                                                     
|10.15     |  | Reserved for future use.                                                                                                                                     
|10.16(1)  |  | Office Lease dated October 9, 1998 between
	Inktomi and WHFST Real Estate Limited Partnership, a Delaware
	limited partnership.                              
|10.17(4)  |  | C2B Technologies Inc. (formerly BeyondNews, Inc.)
	1997 Stock Plan and form of agreement thereunder.                                                         
|10.18(2)  |  | Registration Rights Agreement dated
	September 25, 1998 between Inktomi and former stockholders
	of C2B Technologies Inc. (included in Exhibit 2.1).         
|10.19(16) |  | 1998 Nonstatutory Stock Option Plan and form of
	agreement thereunder.                                                                                       
|10.20(5)  |  | Declaration of Registration Rights dated
	April 30, 1999 for the benefit of former Impulse! Buy
	Network, Inc. stockholders (included in Exhibit 2.2).       
|10.21(1)  |  | Amended and Restated Loan and Security agreement
	dated as of September 2, 1998 between Inktomi and Silicon
	Valley Bank.                                    
|10.22(6)  |  | Amendment dated January 28, 1999 to Amended
	and Restated Loan and Security Agreement dated as of
	September 2, 1998 between Inktomi and Silicon Valley Bank.
|10.23(8)  |  | Impulse! Buy Network, Inc. 1997 Stock Plan and
	form of agreement thereunder.                                                                                
|10.24(9)  |  | WebSpective Software, Inc. (formerly Atreve
	Software, Inc.) 1997 Stock Option Plan and form of agreement
	thereunder.                                       
|10.25(7)  |  | Declaration of Registration Rights dated
	October 1, 1999 for the benefit of former WebSpective
	Software, Inc. stockholders (included in Exhibit 2.3).      



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##### Table of Contents



|          |  |                                                                                                                                                                                                                                                                                       
|--------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit   |  |                                                                                                                                                                                                                                                                                       
|Number    |  | Description                                                                                                                                                                                                                                                                           
|          |  |                                                                                                                                                                                                                                                                                       
|10.26(16) |  | Amendment to 1996 Equity Incentive Plan.                                                                                                                                                                                                                                              
|10.27(16) |  | Amendment to C2B Technologies 1997 Stock Plan                                                                                                                                                                                                                                         
|10.28(16) |  | Amendment to Impulse! Buy Network, Inc. 1997
	Stock Plan.                                                                                                                                                                                                                             
|10.29(16) |  | Amendment to WebSpective Software, Inc. 1997
	Stock Plan.                                                                                                                                                                                                                             
|10.30(15) |  | FastForward Networks, Inc. 1998 Stock Plan and
	form of agreement thereunder.                                                                                                                                                                                                         
|10.31(17) |  | Amendment to the Ultraseek Stock Option Plan.                                                                                                                                                                                                                                         
|10.32(17) |  | Amendment to the FastForward Networks, Inc. 1998
	Stock Plan.                                                                                                                                                                                                                         
|10.33(18) |  | Participation Agreement dated August 24,
	2000 between Inktomi, Wilmington Trust Company, Wilmington Trust
	FSB, Deutsche Bank AG, New York, Deutsche Bank AG, New
	York and/or Cayman Islands Branch and Deutsche Bank Securities,
	Inc. and the amendment thereto dated May 7, 2001.
|10.34     |  | Amendment dated October 23, 2001 to the
	Participation Agreement between Wilmington Trust Company,
	Wilmington Trust FSB, Deutsche Bank AG, New York, Deutsche Bank
	AG, New York and/or Cayman Islands Branch and Deutsche Bank
	Securities, Inc.                                    
|10.35(21) |  | Employee Loan Agreement dated April 30, 2001
	between Inktomi and Edward Hally.                                                                                                                                                                                                       
|10.36     |  | Promissory Note dated December 10, 2001
	executed by David Peterschmidt for the benefit of Inktomi
	Corporation.                                                                                                                                                                      
|21.1      |  | Subsidiaries                                                                                                                                                                                                                                                                          
|23.1      |  | Consent of PricewaterhouseCoopers, LLP                                                                                                                                                                                                                                                



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|    |                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference from Inktomis
	Registration Statement on Form S-1 (Reg.
	No. 333-66661), as amended.                                  
|   
|(2) | Incorporated by reference from Inktomis
	Current Report on Form 8-K filed with the Commission on
	October 9, 1998, as amended November 2, 1998. 
|   
|(3) | Incorporated by reference from Inktomis
	Registration Statement on Form S-1 (Reg.
	No. 333-50247), as amended.                                  
|   
|(4) | Incorporated by reference from Inktomis
	Registration Statement on Form S-8 (Reg.
	No. 333-71037).                                              
|   
|(5) | Incorporated by reference from Inktomis
	Current Report on Form 8-K filed with the Commission on
	May 13, 1999.                                 
|   
|(6) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	May 17, 1999.                              
|   
|(7) | Incorporated by reference from Inktomis
	Current Report on Form 8-K filed with the Commission on
	October 15, 1999, as amended November 5, 1999.
|   
|(8) | Incorporated by reference from Inktomis
	Registration Statement on Form S-8 (Reg.
	No. 333-80195).                                              
|   
|(9) | Incorporated by reference from Inktomis
	Registration Statement on Form S-8 (Reg.
	No. 333-89581).                                              



|     |                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	February 14, 2000.
|    
|(11) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	May 15, 2000.     
|    
|(12) | Incorporated by reference from Inktomis
	Current Report on Form 8-A filed with the Commission on
	August 11, 2000.     
|    
|(13) | Incorporated by reference from Inktomis
	Registration Statement on Form S-8 (Reg.
	No. 333-42102).                     
|    
|(14) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	August 14, 2000.  
|    
|(15) | Incorporated by reference from Inktomis
	Registration Statement on Form S-8 (Reg.
	No. 333-49874).                     



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##### Table of Contents





|     |                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------
|(16) | Incorporated by reference from Inktomis
	Annual Report on Form 10-K/A filed with the Commission on
	January 2, 2001.   
|    
|(17) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	February 14, 2001.
|    
|(18) | Incorporated by reference from Inktomis
	Quarterly Report on Form 10-Q filed with the Commission on
	May 14, 2001.