Interland Reports Fourth-Quarter and 2005 Fiscal Year End Results

Quarter Highlighted by New Chief Executive Officer, Board of Directors Additions and Sale of Dedicated Server Assets


ATLANTA, Nov. 7, 2005 (PRIMEZONE) -- Interland (Nasdaq:INLD), a leading provider of websites and online services for small and medium-sized businesses (SMBs), today reported results for its fourth quarter and fiscal year ended August 31, 2005.

The quarter was highlighted by the appointment of Jeffrey M. Stibel as CEO and Director. The Board of Directors also added three other new members, including Seymour Holtzman as Chairman. In addition, Interland sold its dedicated server assets to Peer 1 Network for approximately $14 million in cash.

"While these results are a reflection of previous management's performance, since my arrival at the end of the quarter, Interland has begun a definitive restructure geared to improving the business," stated Jeff Stibel, President and CEO, Interland. "At our core, we are focused on providing websites and online services that create a powerful Web presence for small and medium-sized businesses. Our goals going-forward are to stabilize the business, grow our subscriber base, take advantage of our under-utilized assets, and move toward profitability to increase shareholder value."



 Summary of Fiscal Fourth Quarter 2005 Quarter Results:
 ------------------------------------------------------
 -- Total revenues for the quarter were $20.6 million, down 7.6%,
    or $1.7 million from $22.3 million, in the third quarter.

 -- Net loss was $6.2 million, or negative $0.38 per share, flat
    from $6.2 million, or negative $0.39 per share, in the third
    quarter.

 -- Earnings before interest, taxes, depreciation, and amortization
    ("EBITDA")(a) for the quarter was negative $2.1 million, down
    $1.6 million from negative $0.5 million in the third quarter.

 -- Cash and investment position, which includes cash and
    cash equivalents of $16.9 million and restricted investments of
    $9.6 million, was $26.5 million (excludes approximately 
    $11.4 million of net proceeds from the dedicated server assets 
    sale to Peer 1 received in September), compared to $33.7 million in
    the previous quarter.


 Summary of Results for the Fiscal Year Ended August 31, 2005:
 -------------------------------------------------------------
 -- Total revenues for the year were $88.6 million, down 13.8%
    versus $102.7 million year over year.

 -- Net loss was negative $19.9 million, or negative $1.24 per
    share, versus negative $104.7 million, or negative $6.50 per share
    in the previous year.

 -- EBITDA(a) for the year was positive $0.5 million, from negative
    $72.1 million in the previous year (negative $72.1 million from
    fiscal 2004 included $74 million in goodwill intangible and asset
    impairments write-down).

"Interland strengthened its team and business with the addition of new management and a new philosophy that embraces our fundamentals," stated Gonzalo Troncoso, Executive Vice President and CFO. "The company has a solid reputation in the SMB marketplace and is well-positioned to take advantage of its core competencies. With $26.5 million of cash (not including the proceeds from the dedicated server assets deal), 280 employees and Sarbanes-Oxley 404 compliance under its belt, Interland is prepared to focus on its core strengths of providing high-quality websites and online services to the SMB market."

"In the short time since I joined Interland, the company has announced the sale of its dedicated server assets and multiple data centers for approximately $14 million in cash, a 38% reduction in head count, and a restructuring of the organization," Stibel continued. "We have also successfully concluded our first Sarbanes-Oxley Section 404 certification, demonstrating the effectiveness of our internal controls. We are taking a very thorough look at the business and are committed to growing key strategic areas such as direct and indirect sales, intellectual and human capital, technology and software development and our brand in the marketplace. I am encouraged by our efforts thus far and am confident in the new management team we are building."

As announced by previous management, Interland received a termination notice from Verizon in November 2004. The contract is set to expire on December 31, 2005. Interland anticipates that Verizon will migrate its customers in 2006. Verizon accounted for approximately 2.1% of Interland's August 2005 revenue. The company will maintain a smaller agreement with Verizon and continue to provide its SiteBuilder services.

For further information on the quarter and fiscal year, please refer to the Company's Form 10-K.

About Interland

Interland, Inc. (Nasdaq:INLD) is a leading provider of websites and online services focused on helping small and medium-sized businesses achieve success by providing the knowledge, services and tools to build, manage and promote businesses online. Interland offers a wide selection of online services, including standardized web hosting, ecommerce, application hosting, website development, online marketing and optimization tools. For more information about Interland, please visit www.interland.com or call at 800-336-9883.

Interland will be hosting a conference call today at 9:30AM ET (6:30AM PT) to discuss its quarterly and year end results. A live webcast of the call can be accessed on the investors section of the company's website at www.interland.com. A replay of the call will be available on the site for seven days.

(a) EBITDA from continuing operations is a non-GAAP financial measure that is most directly comparable to the GAAP financial measure of Net Loss from continuing operations. Reconciliations of the non-GAAP measure to both Net Loss from continuing operations, as well as to Net Cash Used in Operating Activities, are attached.

Forward-looking Statements

Except for the historical information contained in this press release, statements in this press release may be considered forward-looking statements. These forward-looking statements include, but are not limited to: our plans to stabilize the business, grow our subscriber base and product offerings, take advantage of our under-utilized assets, move toward profitability, and take advantage of core competencies; and other statements concerning matters that are not historical facts. Actual results may differ materially from those contained in the forward-looking statements in this press release. Factors which could affect these forward-looking statements, and Interland's business, include but are not limited to: the ability to operate within budgeted expense, the ability of the company to improve customer satisfaction, reduce churn, and expand its customer base as planned, our growing dependence on our reseller and other indirect sales channels, general economic conditions, the impact of competition, quarterly fluctuations in operating results, the loss of customers with failing businesses and customer churn in general, customer acceptance of new products and services, the possible lack of availability of our restricted investments, the retention of key employees, the company's ability to make infrastructure investments at a lower cost per customer than its competition, potential liabilities from the sale of our dedicated server assets, possible disruptions due to our data centers being maintained by third parties, higher than expected costs of litigation and the impact of liabilities that could carry over from Micron Electronics' discontinued operations. Certain of these and other risks associated with Interland's business are discussed in more detail in its public filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K, and its proxy statement. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not undertake to update its forward-looking statements.



 INTERLAND, INC.
 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)

                                      For the            For the 
                                Fiscal Years Ended    Quarter Ended
                              --------------------   -----------------
                              8/31/05     8/31/04    8/31/05   5/31/05
                              --------------------   -----------------
 Revenues                     $ 88,608   $ 102,745   $20,618   $22,307
                                                              
 Operating costs and expenses:                                
  Network operating costs,                                    
   exclusive of depreciation                                  
   shown below                  22,903      28,254     5,642     6,272
  Sales and marketing,                                        
   exclusive of depreciation                                  
   shown below                  18,503      19,948     4,469     5,687
  Technical support, exclusive                                
   of depreciation                                            
   shown below                  13,084      17,965     2,612     3,005
  General and administrative,                                 
   exclusive of depreciation                                  
   shown below                  30,489      30,835     7,980     7,672
  Bad debt expense               1,761       3,690       321       535
  Depreciation and                                            
   amortization                 21,239      30,650     4,370     5,686
  Restructuring costs            2,616         756       950     1,666
  Goodwill impairment               --      66,587        --        --
  Asset impairment                  --       7,009        --        --
  Gain on sale of accounts      (1,210)         --       705    (1,915)
  Other expense (income), net      (41)       (192)       (4)      (96)
                              --------------------   -----------------
  Total operating costs                                       
   and expenses                109,344     205,502    27,045    28,512
                              --------------------   -----------------
 Operating loss                (20,736)   (102,757)   (6,427)   (6,205)
 Interest income (expense),                                   
  net                              436        (202)      181       131
                              --------------------   -----------------
 Loss from continuing                                         
  operations before income                                    
  taxes                        (20,300)   (102,959)   (6,246)   (6,074)
 Income tax benefit (expense)      850          --       850        --
                              --------------------   -----------------
 Net loss from continuing                                     
  operations                   (19,450)   (102,959)   (5,396)   (6,074)
 Income/(loss) from                                           
  discontinued operations,                                    
  net of tax                      (439)     (1,704)     (778)     (173)
                              --------------------   -----------------
 Net loss                     $(19,889)  $(104,663)  $(6,174)  $(6,247)
                              ====================   =================
                                                              
 Net Income/(loss) per share,                                 
  basic and diluted:                                          
   Continuing operations      $  (1.21)  $   (6.40)  $ (0.34)  $ (0.38)
   Discontinued operations       (0.03)      (0.10)    (0.04)    (0.01)
                              --------   ---------   -------   -------
                              $  (1.24)  $   (6.50)  $ (0.38)  $ (0.39)
                              ========   =========   =======   =======
 Number of shares used in per                                 
  share calculation:                                          
   Basic and diluted            16,044      16,096    16,103    16,032

 INTERLAND, INC.
 UNAUDITED CONSOLIDATED BALANCE SHEETS
 (In thousands)
                                                  As of August 31,
                                               ----------------------
                                                  2005        2004
                                               ---------    ---------
 Assets
  Current assets
   Cash and cash equivalents                   $  16,891    $  15,203
   Auction rate securities                            --       12,525
   Trade receivables, net of the
    allowance of $34 and $381, respectively        1,365        2,431
   Receivable on sale of assets                   11,367           --
   Other receivables                                 135          553
   Prepaids and other current assets               2,698        3,479
   Restricted investments                            258          283
                                               ---------    ---------
  Total current assets                            32,714       34,474

   Restricted investments                          9,299       10,609
   Securities, held-to-maturity                       50           --
   Property plant and equipment, net               5,858       24,508
   Goodwill                                           --           --
   Intangibles, net                                3,038       12,077
   Other assets                                    5,600        3,244
                                               ---------    ---------
 Total assets                                  $  56,559    $  84,912
                                               =========    =========
 Liabilities and shareholders' equity
  Current liabilities
   Accounts payable                            $   2,355    $   2,517
   Accrued expenses                               10,465       12,105
   Accrued restructuring charges                   4,717        4,393
   Current portion of long-term debt and
    capital lease obligations                        859        2,271
   Deferred revenue                                4,542        7,777
                                               ---------    ---------
  Total current liabilities                       22,938       29,063

   Long-term debt and capital lease obligations    2,510        3,473
   Deferred revenue, long-term                       229          268
   Other liabilities                                 939        3,209
                                               ---------    ---------
 Total liabilities                                26,616       36,013
                                               ---------    ---------

 Commitments and contingencies
  (notes 21 & 22)                                     --           --

 Shareholders' equity
   Common stock, $.01 par value, authorized
    21 million shares, issued and outstanding
    16.4 and 16.1 million shares, respectively       164          161
   Additional capital                            323,498      321,091
   Warrants                                        2,806        4,603
   Deferred compensation                              --         (320)
   Note receivable from shareholder                 (735)        (735)
   Accumulated deficit                          (295,790)    (275,901)
                                               ---------    ---------
  Total shareholders' equity                      29,943       48,899
                                               ---------    ---------
  Total liabilities and shareholders' equity   $  56,559    $  84,912
                                               =========    =========

 EBITDA is defined as net income (loss) less (i) provision for income
 taxes, (ii) interest income or expense, and (iii) depreciation and
 amortization. EBITDA is not an indicator of financial performance
 under generally accepted accounting principles and may not be
 comparable to similarly captioned information reported by other
 companies. In addition, it does not replace net income (loss),
 operating income (loss), or cash flows from operating activities as
 indicators of operating performance. The effect of taxes and interest
 on Interland’s net loss is not significant, but depreciation and
 amortization, primarily as a result of acquisitions, is significant.
 The Company believes that measuring the performance of the business
 without regard to non-cash depreciation and amortization can make
 trends in operating results more readily apparent, and when
 considered with other information, assist investors and other users
 of the Company’s financial statements who wish to evaluate the
 Company’s ability to generate future cash flows.

 The following table reflects the calculation of EBITDA from
 continuing operations and a reconciliation to net cash provided by
 (used in) operating activities:

                                   For the               For the 
                             Fiscal Years Ended       Quarter Ended
                            --------------------   -------------------
                             8/31/05    8/31/04     8/31/05    5/31/05
                            --------------------   -------------------

 Net loss                   $(19,889)  $(104,663)  $ (6,174)  $ (6,247)

  Depreciation and
   amortization               21,239      30,650      4,370      5,686
  Interest expense (income)     (436)        202       (181)      (131)
  Income tax benefit            (850)         --       (850)        --
  Discontinued operations        439       1,704        778        173
                            --------------------   -------------------
 EBITDA                     $    503   $ (72,107)  $ (2,057)  $   (519)
                            ====================   ===================

  Interest income/(expense)      436        (202)       181        131
  Provision for bad debts      1,761       3,690        321        535
  Gain on sale of accounts    (1,210)         --        705     (1,915)
  (Gain)/Loss on the sale
   of assets                     (41)       (159)        (4)       (96)
  Goodwill and asset
   impairment                     --      73,596         --         --
  Other non-cash adjustments     320         678         --         --
  Restructuring charges        2,616          --        950      1,666
  Income tax (expense)
   benefit                       850          --        850         --
  Changes in assets and
   liabilities:
    Receivables, net            (837)     (1,514)       548        149
    Income tax recoverable        --         612         --         --
    Other current assets         271        (206)      (534)       647
    Accounts payable, accrued
     expenses, and deferred
     revenue                  (6,613)     (8,447)    (5,320)     3,072
                            --------------------   -------------------
 Net cash provided by
  (used in) operating
  activities                $ (1,944)  $  (4,059)  $ (4,360)  $  3,670
                            ====================   ===================


            

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