Vicinity Corporation Reports First Quarter Fiscal 2003 Results

SUNNYVALE, Calif., Oct. 23 -- Vicinity Corporation (Nasdaq: VCNT) today reported financial results for its first quarter fiscal 2003 ended September 30, 2002. Vicinity is a leading provider of Web, wireless and speech-based location-based services.

Total revenues for the first quarter fiscal 2003 were $4.3 million compared to $4.7 million for the first quarter fiscal 2002. On a GAAP basis, net loss for the first quarter fiscal 2003 was $3.5 million, or a loss of $0.13 per share, compared with a net loss of $2.6 million, or a loss of $0.09 per share, for the first quarter fiscal 2002.

Pro forma net loss per share for the first quarter fiscal 2003 was $0.09 per share as compared with the net loss of $0.09 per share for the first quarter of fiscal 2002. Pro forma amounts for the first quarter fiscal 2003 exclude a special charge of $0.9 million related to the loss on the Company`s subleased office space in its headquarter facility. There were no pro forma adjustments for the first quarter fiscal 2002.

On a sequential basis, first quarter fiscal 2003 revenues of $4.3 million increased $0.1 million or 2 percent from revenues of $4.2 million for the three months ended June 30, 2002. Pro forma net loss per share for the first quarter fiscal 2003 increased to $0.09 per share when compared with the net loss of $0.07 per share for the three months ended June 30, 2002. Pro forma net loss of $2.6 million for the first quarter fiscal 2003 increased $0.8 million from the net loss of $1.8 million for the three months ended June 30, 2002. Pro forma amounts for the first quarter fiscal 2003 exclude charges related to the loss on the Company`s subleased office space in its headquarter facility. There were no pro forma adjustments for the three months ended June 2002.

As previously announced, Vicinity changed the last day of its fiscal year from July 31 to June 30 effective in the fourth quarter of fiscal year 2002. Accordingly, all comparisons of the first quarter of fiscal 2003 to the first quarter fiscal 2002 compare the three months ended September 30, 2002 to the three months ended October 31, 2001. All sequential comparisons of the first quarter fiscal 2003 compare the three months ended September 30, 2002 to the three months ended June 30, 2002.

"During the first quarter, we continued to build sales momentum as we added 23 new brand-name customers and renewed 61 of our existing customers," said Chuck Berger, President and CEO of Vicinity. "We continue to increase our gross profit percentage on a quarter-over-quarter basis and have demonstrated disciplined operating expenditures. We did experience higher than normal general and administrative costs in the first quarter in connection with increased legal and corporate development activities."

Recent Fiscal 2003 Highlights

-- Yesterday, Vicinity announced a definitive agreement to be acquired by Microsoft Corporation in a transaction valued at approximately $96 million. By combining key assets and working in tandem, the two companies aim to more quickly and effectively design, build and deliver enhanced MapPoint .NET platforms, tools and solutions that let customers take full advantage of location-enabled applications.

-- The Company added 23 new customers including Exxon Mobil, Orbitz, 411 Web, Ryobi Technologies, BlueCross BlueShield of Alabama, NorthStar Travel Media, Utell Limited, All First Bank, Key Bank National Association, and Catholic Health System of Long Island.

-- Vicinity renewed 61 existing customers, including Best Western, Bridgestone/Firestone, Mitsubishi, Allied Domecq, Prudential, Delta Dental, Nordstrom and Polaroid.

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-- The Company was issued a patent for its LineDrive technology from the U.S. Patent and Trademark Office. LineDrive technology provides an extremely effective way to present driving directions on a map. Instead of the traditional style of displaying a route by highlighting roads on an existing map, the LineDrive technology generates maps that are specific to a route by creating a turn-by-turn path of only the streets and intersections necessary to get from start to finish.

-- In July 2002, Vicinity launched the latest version of its Vicinity Location Server(SM) (VLS), Version 3.1. Major new features included Vicinity Location Customizer(SM), a service that allows customers to easily manage and deliver location specific information. Street level maps with address level accuracy were added for Australia, furthering the company`s commitment to coverage in Asia Pacific. Vicinity Location Analyzer, which allows customers to easily overlay the geographic location of their outlets with other data sets such as the location of prospects, was significantly enhanced as well.

Investor Conference Call
Vicinity Corporation will host a conference call to discuss first quarter fiscal 2003 results on October 23, 2002 at 5:00 p.m. EDT. U.S. callers should dial 1-800-406-5356. International callers should dial +1-913-981-5572. A live, listen-only Web cast of the conference call will be available at www.vicinity.com under the "Investor Relations" section of the Web site. The call will be available for replay starting three hours following the call until October 30, 2002 at 10:01 p.m. PST. The replay number is 1-888-203-1112, or +1-719-457-0820 for international callers; the pass code is 198230.

About Vicinity Corporation
Vicinity Corporation provides technology-based solutions that enable businesses, governments, and agencies to market the local availability of their products and services. Using Web, wireless and speech platforms, Vicinity offers a comprehensive portfolio of application services and application programming interfaces (APIs) that allow enterprises to direct their customers to a brick-and-mortar store, branch or outlet near them that offers the specific product or service they are seeking. Vicinity`s customers include Bank of America, Baskin-Robbins, Delta Dental, DHL Worldwide Express, Hilton Hotels Corporation, John Deere, Lexus, McDonald`s, Pizza Hut, Ritz- Carlton, Starwood Hotels & Resorts Worldwide, Taco Bell, and The Home Depot. Vicinity was established in 1995 and is headquartered in Sunnyvale, California.

NOTE: Vicinity(SM), Vicinity Location Server(SM), Vicinity Location Analyzer(SM) and Vicinity Location Customizer(SM) are service marks of Vicinity Corporation. All other names or product names are trademarks or service marks of their respective companies.

Business Risks and Forward-Looking Statements
This press release contains forward-looking statements which are subject to safe harbors created under the U.S. federal securities laws. These forward- looking include among other things, statements relating to the proposed acquisition of Vicinity by Microsoft, the future business outlook for Vicinity, trends in business conditions, revenues, expenses and earnings, customer renewals, new service features, and development of our technology strategy and intellectual property. Our proposed merger with Microsoft is subject to the satisfaction of several closing conditions, including approval of our stockholders, regulatory approvals and satisfaction of a minimum "net working capital" requirement. We have a limited operating history, which limits the ability of past performance to act as a predictor of future events. Statements regarding future events and results and Vicinity`s business outlook are based on our current expectations and are necessarily subject to associated business risks related to, among other things, the speed which with the market for our services develops, our ability to expand into new vertical markets, our ability to further expand the sales of existing products and to up-sell our existing customers, the ability to resolve pending litigation on satisfactory terms, the ability to identify acquisition targets and to productively integrate the people and technologies of any future acquisitions into our business, and retention of key employees. Sales and earnings trends are also affected by many other factors including, among others, general economic conditions and the effectiveness of our pricing, sales and technology strategies. In light of these risks, there can be no assurance that the forward-looking statements contained in this press release will in fact be realized. Actual events or results may differ materially.

The statements made in this press release above represent Vicinity`s views as of the date of this press release, and it should not be assumed that the statements made herein remain accurate as of any future date. Vicinity does not presently intend to update these statements and undertakes no duty to any person to affect any such update under any circumstances, except as otherwise required by law.

For a further discussion of risks associated with the Vicinity`s business, please see the discussion under the caption, "Factors That May Affect Future Results" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2002 and the other reports that have been filed by Vicinity with the Securities and Exchange Commission. These reports may be accessed through the EDGAR database maintained by the SEC at www.sec.gov.