Spyglass™ Announces First Acquisition; Stonehand Strengthens Spyglass SGML, HTML, Unicode Technology Offerings

Spyglass and Stonehand Combination Will Facilitate Mission Critical Information on the World-Wide Web; Expands Opportunities in Financial, Government and Healthcare Markets

Naperville, Ill. -- Wednesday, January 24, 1996 -- Spyglass Inc. (NASDAQ: SPYG) announced today the execution of a definitive agreement for the acquisition of Stonehand Inc., a privately-held company based in Cambridge, Mass. that develops and licenses high performance, embeddable text formatting tools for application and system software developers. Spyglass will pay $9.5 million in a stock pooling transaction in which Stonehand employees and operations will become the core of Spyglass' East Coast research & development organization.

Spyglass reported net revenues of $3.85 million for the quarter ended December 31, 1995, a 91% increase over net revenues of $2.02 million for the same period last year. Of the $2.02 million, $512,000 was revenue from the Spyglass data visualization products, which the company sold at the end of fiscal 1995. According to President and CEO Douglas Colbeth, when the quarters are compared in terms of Internet technology revenues the increased revenue growth was 155%.

Douglas Colbeth, Spyglass president and CEO, cited a number of reasons the acquisition fits in with the company's business strategy and long-term goals:

• Opens New Markets for Spyglass and Stonehand Technology -- One of the critical issues facing the Web today, particularly in the financial, health care and government sectors, is document integrity (ensuring that companies are delivering and receiving mission critical information, intact, without alteration, on the Web). The combination of Spyglass and Stonehand technology will facilitate the publishing of complex documents.

• Synergy Between the Two Profitable Businesses -- A synergy between the businesses will ensure success -- each is active in and support open standards efforts; both have proven SGML/HTML, internationalization expertise; both have long histories of profitability and a commitment to a partner-based business model.

• Strengthens Spyglass core technology -- Stonehand's HTML Viewer and Composition Toolbox will enrich Spyglass core component technology, particularly in text and presentation viewing features.

• Expands and strengthens Spyglass R&D< -- Stonehand's operations will become a research and development facility for Spyglass concentrating on text formatting including further developing SGML, HTML and Unicode (internationalization features) tools for Spyglass products.

"This is a significant move for Spyglass because it is our first acquisition and sets the tone for future acquisitions," Colbeth said. "The companies have a lot in common, particularly a deep commitment to supporting open standards for the Web. There is a real synergy between us and we think that synergy will pay big dividends as we work together to build better technology to meet the needs of new customers interested in Web enabling their applications. We are pleased Stonehand agreed to become part of Spyglass."

"Spyglass and Stonehand have mutual goals," said Will Manis, president of Stonehand. "That was important to us when making the decision. We believe in keeping the Web open. Spyglass' open technology and open business model embodies that philosophy more than any other company involved in the Internet. The choice was pretty simple."

Combines the Strengths of Leading Web Technology Suppliers

• Stonehand Employees Form the Core of New East Coast R&D facility -- Forming the core of Spyglass' new R&D facility will be the 10 employees of Stonehand who will report to Tim Krauskopf, Spyglass vice president of Research and Development. They will concentrate on the development of text processing technology that will be incorporated in Spyglass' core offerings.

• Adds Text Formatting, Open Standards Expertise -- Stonehand employees are leaders in core technologies including developing text formatting and internationalization technologies, such as SGML, HTML, DSSSL and Unicode. Stonehand personnel are very active in the open standards community and Glenn Adams is a technical director of the Unicode Consortium, the creators of Unicode which is the world-wide character encoding standard.

• Adds New Product Line to Spyglass; Incorporates New Technology into Spyglass Mosaic -- Spyglass will continue to sell on a standalone basis the Stonehand Composition Toolbox, a platform-independent text formatting library for desktop publishing or graphic arts applications. The toolbox permits developers to add professional quality, multilingual, WYSIWYG desktop features to their application, cutting precious in-house development time. Stonehand HTML Viewer, an embeddable component technology designed to be integrated into new or existing browser or viewing applications, will be incorporated in Spyglass Mosaic core technology.

• Stonehand Customers to Become Spyglass Partners -- The Stonehand acquisition will add many new significant customers to Spyglass' base of 56 OEMs. Among Stonehand's customers are Adobe Systems Inc., Broderbund Software Inc., Compuserve Inc., Fujitsu Ltd. and Sumitomo Metal Industries Ltd.

Spyglass Inc.

Spyglass Inc. (NASDAQ: SPYG) licenses World-Wide Web client and server technologies. Spyglass technology is currently licensed by 56 customers, including AT&T,, Digital Equipment Corp., IBM, Microsoft and Oracle. Spyglass technology has been licensed for use in over 145 Internet-based products and services. Spyglass' headquarters are located at 1230 E. Diehl Road, Naperville, Ill. 60563, with research and development facilities in Champaign, Ill., and Cambridge, Mass. and regional sales offices in Cambridge, Mass., Morristown N.J. and San Ramon, Calif. (Headquarters: telephone -- 708.505.1010, ext. 504; fax: 708.505.4944; press email inquiries: rpitzer@spyglass.com; Web server, Internet: www.spyglass.com; Stonehand's Web address is www.stonehand.com.)

(January 1996)

Mosaic is a trademark of the University of Illinois. Spyglass, the Spyglass logo and "Make The Net Work" are trademarks of Spyglass Inc. (Other products and brand names are trademarks or registered trademarks of their respective companies.)