-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N48u7VNGvfDCqeCHUOUmObeoF+Lz7/ciqJLUKPcgUKnk178US0G8keD5bksw648H GzZTOtcqK/dRUlPDxc+54g== 0000912057-01-008068.txt : 20010326 0000912057-01-008068.hdr.sgml : 20010326 ACCESSION NUMBER: 0000912057-01-008068 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFORMIX CORP CENTRAL INDEX KEY: 0000799089 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 943011736 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-15325 FILM NUMBER: 1578077 BUSINESS ADDRESS: STREET 1: 4100 BOHANNON DR CITY: MENLO PARK STATE: CA ZIP: 94025 BUSINESS PHONE: 6509266300 MAIL ADDRESS: STREET 1: 4100 BOHANNON DRIVE CITY: MENLOW PARK STATE: CA ZIP: 94025 10-K 1 a2033399z10-k.txt 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K (MARK ONE) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-15325 ------------------------ INFORMIX CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 94-3011736 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
50 WASHINGTON STREET, WESTBOROUGH, MA 01581 (Address of principal executive office) 508-366-3888 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, $0.01 PAR VALUE ------------------------ 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 the 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of 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/A. / / The aggregate market value of the voting stock held by non-affiliates of the Registrant as of January 31, 2001 based on the closing sales price of the Company's Common Stock, as reported on The Nasdaq Stock Market, was approximately $2,094,982,536. Shares of Common Stock held by each officer and director 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. As of January 31, 2001, Registrant had 280,490,365 shares of Common Stock issued and outstanding. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INFORMIX CORPORATION ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS
PAGE -------- PART I........................................................................ 1 ITEM 1. BUSINESS.................................................... 1 ITEM 2. PROPERTIES.................................................. 13 ITEM 3. LEGAL PROCEEDINGS........................................... 13 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 14 PART II....................................................................... 15 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS....................................... 15 ITEM 6. SELECTED FINANCIAL DATA..................................... 16 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................. 17 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...................................................... 36 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................. 36 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.................................. 36 PART III...................................................................... 37 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......... 37 ITEM 11. EXECUTIVE COMPENSATION...................................... 37 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................................................ 37 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 37 PART IV....................................................................... 38 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K....................................................... 38 SIGNATURES.................................................................... 44
PART I THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WHICH ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR ANTICIPATED RESULTS, INCLUDING THOSE SET FORTH UNDER "FACTORS THAT MAY AFFECT FUTURE RESULTS" UNDER "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND ELSEWHERE IN, OR INCORPORATED BY REFERENCE INTO, THIS REPORT. ITEM 1. BUSINESS Informix Corporation, a global provider of information management software, is made up of two operating businesses, Informix Software and Ascential Software. Beginning in the third quarter of 2000, we undertook a strategic realignment of our operations, including: - The consolidation of five former business units into the two operating businesses; - The relocation of our corporate headquarters from Menlo Park, California to Westborough, Massachusetts; and - A reduction in operating expenses by certain cost containment measures, including headcount reductions around the world. The transition from the five former business units into the two operating businesses was undertaken during the second half of 2000. By December 31, 2000, we defined and allocated personnel among the management, selling, marketing, research & development and service organizations for the two operating businesses. Informix Software has retained the core of the Informix Corporation infrastructure functions, such as the operations, finance and administrative groups. These infrastructure groups will continue to provide services to both operating businesses during 2001, as Ascential Software continues to build its own infrastructure. We have not achieved sufficient separation of the employees and infrastructure to properly measure the results of the operations separately for the two operating businesses. Accordingly, although we can define and separate the revenues of the two operating businesses on a historical basis, we have not presented separate historical expense information for the two businesses. We currently report the results of our business operations based on four distinct geographic operating segments. See Note 9 to the Consolidated Financial Statements. We intend to report the results of our operations based on the two operating businesses on a prospective basis. Throughout this report, the terms "the Company" and "Informix" refer to Informix Corporation. "Informix Software" refers to Informix Software, Inc. and "Ascential" refers to Ascential Software, Inc., each a wholly-owned subsidiary of Informix Corporation. INFORMIX SOFTWARE, THE DATABASE COMPANY GENERAL Informix Software, the database company, is a technology leader and a global provider of database software systems for business information management. Informix Software designs, develops, manufactures, markets and supports a range of database management systems and application development tools for building applications that allow customers to access, retrieve, and manipulate business data. Informix Software offers complete database solutions by developing strategic partnerships with application, hardware, and systems integration providers. INFORMIX SOFTWARE--PRODUCTS Informix Software products run on a wide range of hardware and operating systems, including Hewlett-Packard (HP/UX), SUN (Solaris), IBM (AIX), Linux, and many others. 1 Informix Software's product line includes the following: INFORMIX INTERNET FOUNDATION is a complete data management platform for the Internet, which provides the tools and features to publish business-critical data to the Internet and enable sophisticated Internet applications and electronic commerce. Informix Internet Foundation is a bundle of the following products: - INFORMIX DYNAMIC SERVER ("IDS") is the database server for Informix Internet Foundation, and is the latest generation of our flagship database server. Informix Dynamic Server delivers an industry-proven transaction engine for mission-critical applications, while providing an upgrade path to the Internet. Capable of supporting thousands of concurrent users, Informix Dynamic Server delivers extensibility, reliability, availability, and scalability to power the largest transaction processing systems. - INFORMIX J/FOUNDATION integrates Java, the programming language of the Internet, into the database, providing an open, flexible, embedded Java Virtual Machine ("JVM") environment that enables scalable Java applications to be executed directly in the server. - INFORMIX WEB DATABLADE MODULE extends the functionality of both IDS and Informix Internet Foundation with features that ease the development, management, and deployment of database applications for the Web. - INFORMIX EXCALIBUR TEXT DATABLADE MODULE provides full text searching of documents and text fields directly inside the database engine in virtually any format that contains ASCII and ISO characters. Fuzzy search capabilities allow users to find results, regardless of errors in data entry that would otherwise cause them to be overlooked in standard text searches. This DataBlade module supports any language, word, or phrase that can be expressed in an 8-bit, single-byte character set. Formatted documents such as PDF, Microsoft Word, and HTML can be filtered prior to indexing. - INFORMIX OFFICE CONNECT simplifies the task of retrieving data and visualizing it in Microsoft Excel worksheets, regardless of data type. Office Connect's architecture provides power and ease of use. This design utilizes database schema images (model views of the database structure) to generate optimized SQL commands that populate Excel worksheets and manage all interactions between the client and the database server. - INFORMIX DATABLADE DEVELOPERS KIT allows customers to create DataBlade modules when a DataBlade module does not currently exist to fit the customer's particular need. This allows the database server to accommodate new business requirements as they evolve. - INFORMIX CONNECT ("I-CONNECT") is a runtime connectivity product that includes the runtime libraries of our application programming interfaces that comprise Informix Client SDK. These libraries are required by applications running on client machines to access Informix servers. I-Connect is needed when finished applications are ready to be deployed. - INFORMIX SERVER ADMINISTRATOR is a collection of Web browser-based and cross-platform administrative tools, that provides access to every Informix database command line function and presents the output in an easy-to-read format. INFORMIX DYNAMIC SERVER can also be purchased as a stand-alone product. It is Informix Software's multithreaded enterprise database server designed for scalability, manageability, and performance. IDS offers full relational database management system ("RDBMS") and object-relational database management system ("ORDBMS") functionality. As an open system built to support industry standards, IDS uses a single architecture for the Windows NT, UNIX, and Linux operating systems. Informix Software also provides a workgroup version of IDS for workgroup environments. Based on Informix Software's Dynamic Scalable Architecture, IDS features parallel data processing capability, replication, and connectivity options built into its core. IDS supports extensibility, as well as SQL3 and DataBlade modules. Extensibility includes the ability to add new objects and data types, such as image, audio, video, and spatial data; 2 business-specific procedures and logic; and new indexing search methods to the server. DataBlade modules encapsulate specific data types and logic for integration with IDS so that organizations can extend the functionality of the database to support data types unique to an organization. DATABLADES. Informix DataBlade modules extend IDS to manage rich, diverse data. DataBlade modules integrate traditional alphanumeric data types with rich content, without sacrificing the reliability and scalability of the traditional RDBMS. We offer DataBlade modules for text, image, video, geodetic, spatial, time series, and financial data. Additional DataBlade modules are available from third parties, including DataBlade modules for local languages, advanced search and retrieval capabilities, digital media, spatial and geodetic applications, messaging, data warehousing (data cleansing, qualification, and queries), and security. RED BRICK DECISION SERVER. Unlike traditional on-line transaction processing ("OLTP") databases, Informix Red Brick Decision Server is a specialized database technology designed to meet the requirements of data marts and data warehouses without the complexity and overhead that OLTP technology imposes. Red Brick is a high performance data warehouse solution that offers sophisticated data querying and analysis to support demanding business intelligence and decision-making activities. Renowned for its groundbreaking schema for organizing and managing data, Red Brick is designed for organizations in need of a fast, easy-to-manage data warehousing solution with the proven technology to scale to meet their rapid growth. EXTENDED PARALLEL SERVER ("XPS") is designed for the largest, most demanding, and most complex data warehouse applications, and uses a sophisticated and highly scalable "shared--nothing" architecture. This allows the XPS product to achieve near-linear scalability, robust business intelligence capabilities, and support of true transaction processing. Like Red Brick, XPS offers a world-class data warehousing solution, but also includes the flexible interactivity of OLTP functionality. XPS is based on "shared-nothing" architecture, which was pioneered by Informix Software as an efficient and reliable method for managing and analyzing enormous volumes of data. METACUBE is Informix Software's on-line analytical processing ("OLAP") product. MetaCube is a fully extensible business intelligence solution, optimized for smarter data access, analysis, and reporting. MetaCube delivers a flexible, and customizable decision-support environment for data warehouses and data marts. INFORMIX DATA DIRECTOR FOR WEB is a robust and visually intuitive development environment that enables developers to quickly prototype, build, and deploy dynamic Web applications. INFORMIX 4GL product family includes Informix 4GL Rapid Development System, Informix 4GL Interactive Debugger, and Informix 4GL Compiler. Together they form a comprehensive fourth-generation application development and production environment that provides power and flexibility without the need for third-generation languages like C or COBOL. INFORMIX DYNAMIC 4GL is the latest addition to the Informix 4GL product family and enables transformation of character-based 4GL programs into Windows and Motif Graphical User Interface database applications, with a simple recompile. Informix Dynamic 4GL offers customers a choice of deployment options from character, Windows 3.11, Windows 95, Windows NT, and X11 Window System (UNIX and Macintosh) clients, to NT and UNIX servers. Informix Dynamic 4GL's "thin client" three-tier architecture, combined with flexible deployment options, allows customers to deploy new, Graphical User Interface applications within existing desktop and network infrastructures. CLOUDSCAPE. The Cloudscape product family provides a 100% Pure Java SQL DBMS, as well as synchronization capabilities to address the demands of e-business. Our Cloudscape product family allows companies to create synchronized applications that can be deployed outside the firewall to partners, 3 customers, and mobile workers. The Cloudscape product family is designed to support three fundamental needs: - The creation of sophisticated, cost-effective e-business applications, typically e-catalogs and deployed portals. - The local data management needs of Java applications, particularly those meant for resale, where platform independence is a critical requirement. - The database-enabling of Java-supported devices of all kinds, including telecommunication switches, non-traditional computing devices, and future light-weight devices. INFORMIX U2 DATABASES AND TOOLS. Informix's UniData and UniVerse (which together are referred to as "U2") databases offer high-performance, scalable data management environments for embedding in vertical applications. Their extended-relational design supports nested tables and allows for rapid business data modeling, eliminating redundant data, excessive resource usage, and unnecessary Input/Output through time-consuming joins. U2 Tools provide native facilities that fully leverage the power of the relational model supported by UniData and UniVerse. U2 Tools, which range from application renovation to 4GL development to next-generation e-commerce tools, can also be deployed in legacy multi-valued environments. - WINTEGRATE is an application renovation and desktop integration tool that provides a modern look and feel to existing applications and also provides terminal emulation. - SYSTEM BUILDER ("SB+") AND SBCLIENT, the U2 development tools, provide for rapid development of applications that can be run in either a server-centric, character-based mode or a fully graphical client/server mode. - REDBACK, an object-oriented business rules server, provides the infrastructure and technology to enable e-commerce applications based on open interfaces to access relational data and embedded business logic. INTEGRATION PRODUCTS. Where companies once stored their data on mainframes, today their applications may be spread across divergent computing platforms, operating systems, and databases, including proprietary and open, relational and non-relational. These disparate applications present a major challenge for IS departments, which need to ensure that end-users have easy access to the data they need--regardless of where the data is located. To address this challenge, Informix Software offers a variety of connectivity and gateway products that make enterprise-wide data access a reality. CONNECTIVITY PRODUCTS. - INFORMIX CLIENT SDK offers customers a single package of application programming interfaces ("APIs") needed to develop applications for Informix servers. These interfaces allow developers to write applications in the language they are familiar with, whether it be Java, C++, C, or SQL. - INFORMIX MAXCONNECT is Informix's new connection server, which can be used in Informix server environments for improved performance and user scalability. It increases system scalability by increasing the number of users that can be simultaneously connected to the Informix database server. The product saves on system resources required on the Informix Server for communications processes, thereby reducing response times and database server CPU consumption. GATEWAY PRODUCTS. - THE INFORMIX ENTERPRISE GATEWAY FAMILY is a complete set of standards-based gateways allowing access to non-Informix Databases from the Informix server. 4 INFORMIX SOFTWARE--SERVICES Services revenues are derived from fees collected for technical support, consulting and education. Informix Software maintains a network of call centers and local offices responsible for delivering a comprehensive range of technical support services to our partners and customers. Technical support revenues are derived primarily from fees for maintenance (which includes providing product updates) and post-sales support. Consulting services include custom engagements and pre-packaged programs designed to assist customers with the planning, design, installation, integration, and implementation of Informix products and Informix-based technology solutions. Education services provide a full suite of classroom, computer-based certification, and custom education offerings that enable our partners and customers to use Informix products and related technologies effectively. INFORMIX SOFTWARE--PRODUCT DEVELOPMENT Major product releases resulting from research and development projects in 2000 included Informix Internet Foundation 9.21; IDS 9.21; XPS 8.31; Cloudscape 3.5; UniData 5.2; and UniVerse 9.6. Informix Software's product strategy for the future is to provide customers the best infrastructure for data management within a single integrated framework. This strategy, which was announced at the end of 2000, is code-named "Arrowhead" because Informix is integrating the best of its database technology into a single data management framework--putting "all of its wood behind one arrow." The resulting product is intended to meet the market demand for the infinitely scalable database required for development of next generation integrated applications. The Arrowhead data management system provides several key components that address customer needs: - SINGLE FRAMEWORK--an integrated framework that meets all the data management objectives of a customer with scalability, speed and multi-functionality. - INTEGRATED SERVER & WAREHOUSE--an integrated application server and data repository that customers can deploy over multi-tier configurations. - RELIABILITY AND SPEED--a framework that allows customers to develop information systems that are fail-safe and scale to meet end user response needs. - REDUCED DEMAND FOR IT MANAGEMENT--a tool suite that minimizes the cost of managing the DBMS infrastructure and decreases the time it takes to solve a business problem. - INTEROPERABILITY--a deployment environment that offers easy integration with other data repositories and applications through gateways, ETL functions, and the support of interoperability standards such as CRBA, XML, IIOP, SOAP and COM. While Arrowhead represents a future option for Informix Software's customers, it will not supplant our separate existing product offerings. INFORMIX SOFTWARE--SALES AND MARKETING Informix Software products are used in many industries, including retail, telecommunications, financial services, healthcare, pharmaceutical/biochemistry, manufacturing, and media and publishing. Informix Software markets its products to end-users on a worldwide basis directly through its sales force and distributes its products indirectly through the channels of original equipment manufacturers ("OEMs"), value-added application vendors and independent software vendors ("ISVs"). Informix Software has chosen a multiple channel distribution strategy to maintain broad market coverage and product availability. It has generally avoided exclusive relationships with its licensees and other resellers of its products. Discount policies and reseller licensing programs are intended to support each distribution 5 channel with a minimum of channel conflict. For 2000, sales of licenses directly to end users accounted for 64% of Informix Software's total license revenues and sales through indirect channels accounted for 36% of total license revenues. The principal geographic markets for Informix Software's products are North America, Europe, the Asia/Pacific region, and Latin America. In recent years, approximately half of our total revenues have been generated outside North America. Informix Software's customers include businesses ranging from small corporations to Fortune 1000 companies. Informix Software also markets its products to state, local and national governments. INFORMIX SOFTWARE--LICENSING END-USER LICENSING Informix Software licenses products to organizations worldwide through our direct sales force and our telemarketing groups. Informix Software believes that the common core technology of its database management system products, based on standard operating systems and the SQL database language, helps it to sell its products to major corporations and government agencies that wish to standardize their diverse computing environments. As a result, certain of these end-user organizations have entered into general purchasing agreements which offer volume discounts. APPLICATION VENDOR AND OEM LICENSING Since its inception, Informix Software has licensed application vendors to distribute our products. A typical application vendor develops an application (e.g., an insurance agency management system) using one of its products. The application vendor purchases a license for the use of the Informix Software product to develop the application program. Depending on the application developed, the vendor may purchase a run-only license, a full version license or multiple product licenses. In addition, the application vendor may resell products to end-users for use in conjunction with its own applications. Application vendors develop applications using a wide array of application development tools, including products offered by third parties. Applications developed using our products are generally portable across various brands of computers and different operating systems. Informix Software has specialized programs to support the application vendor distribution channel. Under these programs, it provides to selected application vendors a combination of marketing development services, consulting and technical marketing support, and discounts. Other technology companies also distribute products under OEM licenses as an embedded part of their products. DISTRIBUTOR LICENSING Informix Software has established a network of full service international distributors who provide local service and support, as well as products, to their respective national markets. Informix Software uses distributors to supplement its direct sales force, which enables it to increase our worldwide market coverage. INFORMIX SOFTWARE--COMPETITION The RDBMS software market is extremely competitive and subject to rapid technological change and frequent new product introductions and enhancements. Informix Software's competitors in the market include several large vendors that develop and market databases, applications, development tools or decision support products including: Computer Associates International, Inc.; IBM; Microsoft; NCR/ Teradata; Oracle; and Sybase. 6 ASCENTIAL SOFTWARE GENERAL Ascential Software, Inc. ("Ascential") is a leading supplier of information asset management software and solutions to enterprises and government organizations worldwide. Ascential designs, develops, markets and supports software that allows large organizations to manage complex and varied enterprise information, focusing on the collection, validation, organization, administration and delivery of customers' information assets for maximum business value. Ascential's information infrastructure solutions integrate and manage a wide range of data and content sources, including data from mainframe legacy systems, relational database management systems, enterprise resource planning systems and applications, web-generated transactions and clickstreams, eXtensible Markup Language ("XML") data, graphical images, video, audio and maps. Ascential's solutions support an information infrastructure enabling customers to identify unrefined data and content through a set of value creating processes that transform them into managed information assets used and re-used by employees, partners/suppliers, and customers. The solutions offered by Ascential provide a singular view of an enterprise's information assets for the purpose of acting on--and re-purposing them to achieve a greater competitive position in the market. Its products support: - PROCESS FLOW SUPPORTING SOLUTIONS FOR STRUCTURED AND UNSTRUCTURED DATA/CONTENT Software that supports the collection, organization, and delivery of business data and media content including components for extraction, transformation and loading ("ETL"), meta data management, data quality assurance, digitization, archiving, retrieving and sharing of varied media content (media asset management), business information directories, and portal delivery. - INDIVIDUAL ANALYTIC COMPONENTS Software components that enhance the above solutions by providing the structured data to information conversion process, including enterprise data models and graphical data analysis. Ascential solves customer's business problems by delivering suites of products, components and services, and by leveraging strategic partnerships with systems integrators, hardware vendors, solution and application vendors, and complementary technology vendors. Ascential's solutions are used in many industries, including retail, telecommunications, financial services, healthcare, pharmaceuticals, manufacturing, transportation, broadcast media, publishing and government agencies. PRODUCTS As described above, Ascential's products and solutions can be divided into two main categories: - Process Flow Supporting Solutions for Structured and Unstructured Data/Content - Analytic Components. In addition, Ascential provides a wide range of services, including product maintenance, consulting, education and customer support. PROCESS FLOW SUPPORTING SOLUTIONS FOR STRUCTURED AND UNSTRUCTURED DATA/CONTENT - DATASTAGE XE. The DataStage XE data integration product family is a comprehensive set of software components that perform the vital functions necessary to extract, transform and load data from a wide variety of source systems to data warehouses, data marts and analytic applications. DataStage XE also includes meta data management and data quality assurance capabilities. DataStage XE 7 provides support for native integration with mainframe legacy systems, XML documents, and the leading packaged applications such as SAP. The DataStage XE Series was introduced to the Ascential product line through the 1999 acquisition of Ardent Software by Informix Corporation. - AXIELLE is Ascential's enterprise information portal infrastructure product, introduced in 2000. Axielle organizes and delivers relevant business information to users across an enterprise. Axielle categorizes information and tailors it to reflect a company's business model and corporate terminology, and personalizes and distributes a wide variety of data and content sources, including applications, business intelligence reports, text documents, graphs, maps and other images. Axielle's Java and XML foundation enable it to deliver information and content in a device-independent manner supporting both standard as well as wireless environments. - MEDIA360 is a complete solution for collecting, organizing and delivering all types of media assets, specifically for businesses highly reliant on media content. Media360 loads, digitizes, indexes, archives and retrieves a wide range of media assets, including video, audio, images, maps, 3-D images, blueprints, diagrams, digital special effects, and web pages. - I.REACH is a comprehensive solution that assists teams of content owners to create, edit, publish, and update corporate information to the Internet, intranets and extranets, transforming static Web sites into useful, current, and interactive work environments. ANALYTIC COMPONENTS - I.DECIDE WEB SUCCESS, introduced in 2000, is an integrated, component-based solution which addresses specific, customer-centric business problems related to the identity, preferences and buying behavior of website visitors and customers. The solution comprises a foundation of information infrastructure, analytic models and a graphical, intuitive user interface: the VISIONARY executive dashboard component. - INDUSTRY ANALYTIC PACKAGES ("IAP") comprise infrastructure component building blocks, including DataStage, Visionary, vertical industry-specific data and complementary services, which in total allow organizations to quickly implement and customize data warehouses, data marts and analytic applications. The first of the IAPs, TELCO SUCCESS, was introduced in 2000. The Telco Success package is designed to help telecommunications companies understand customer segmentation, retention, churn rate and profitability. - VISIONARY is a no-code, enabling technology that offers customers powerful visual information and exploration capabilities. Users are able to explore ever-increasing levels of information detail leveraging Visionary's unique "drill-down" technology. The full product suite includes Visionary Studio, a no-code authoring environment, and a runtime viewer that can be embedded as an ActiveX control, providing seamless integration with other best-of-breed business intelligence and development tools. E-COMMERCE In February 2001, Ascential Software discontinued the e-commerce solution i.Sell, as a result of deciding to focus our core competencies on delivering leading-edge software infrastructure and solutions for information asset management. i.Sell was an electronic storefront solution that integrates Informix Software's database technology with application server technology and application software to provide a complete, rapidly deployable electronic commerce solution. We licensed the underlying technology for the i.Sell solution from Art Technology Group, Inc. ("ATG") and we have now entered into an agreement with ATG pursuant to which our i.Sell customers and partners will migrate to ATG's latest product suite. ATG will then assume support and maintenance obligations for those customers and partners. 8 To assist these customers and partners, Ascential and ATG have developed consulting services and software tools to allow the migration without significant impact upon functionality or performance. The customers and partners will have access to the latest version of ATG's complete product suite. In addition to using ATG's transaction, personalization and merchandizing services, the customers and partners will also have access to ATG's core web analytic services. ASCENTIAL SOFTWARE--SERVICES Ascential maintains field-based and centralized corporate technical staffs to provide a comprehensive range of assistance to its customers. These services include post-sales technical assistance, consulting, product education and technical support services. Consultants and educators provide services to customers to assist them in the use of Ascential products and the design and development of applications that utilize Ascential products. ASCENTIAL SOFTWARE--MARKETING AND CUSTOMERS Ascential distributes its products through four main channels: direct end-user licensing, embedded resellers, value-added resellers, and solutions vendors addressing specific markets. Ascential has chosen a multiple channel distribution strategy to maintain broad market coverage and competitiveness. Discount policies and reseller licensing programs are intended to support each distribution channel with a minimum of channel conflict. For 2000, sales of licenses directly to end users accounted for 80% of Ascential's total license revenues and sales through embedded resellers, value-added resellers and solutions vendors accounted for 20% of total license revenues. ASCENTIAL SOFTWARE--LICENSING Ascential licenses its products to organizations worldwide through our direct sales force, telesales, distributors, embedded and value-added resellers, and system integrators. END-USER LICENSING Ascential licenses its products to organizations worldwide through a direct sales force and telesales group. Ascential's infrastructure solutions are sold to Global 2000 and government organizations looking to convert their volumes of unrefined data and content into reliable and reusable information assets. A majority of these organizations enter into standard agreements with us and are subject to industry-standard discount structures. Certain organizations have begun to standardize their information asset management solutions enterprise-wide and are entering into more global agreements with us which can result in discounts for those organizations. EMBEDDED RESELLER, VALUE-ADDED RESELLER AND SOLUTION VENDOR LICENSING Ascential licenses application vendors to distribute its products. A typical application vendor develops an application (e.g., a risk management analytic application) using one of our products. The application vendor purchases a license for the use of our product to develop the application program. Depending on the application developed, the vendor may purchase a run-only license, a full version license or multiple product licenses. In addition, the application vendor may resell Ascential products to end users for use in conjunction with its own applications. Ascential has specialized programs to support the application vendor distribution channel. Under these programs, Ascential has provided to selected application vendors a combination of marketing development services, consulting and technical marketing support and discounts. 9 ASCENTIAL SOFTWARE--PRODUCT DEVELOPMENT Major product releases resulting from research and development projects in 2000 included DataStage XE 2.0 including DataStage XE 390; SAP R/3 Extract Pack 2.0; SAP BW Load Pack 1.0; Media360 1.0; Axielle 1.0; i.Decide Web Success 1.0; i.Decide Telco Success 1.0; Visionary 2.0; i.Reach 2.2; and i.Sell 2.1. Ascential's current product development efforts are focused on: - Enhancing and improving current products with a focus on leveraging hardware and software architectures for data integration services, support for industry standard J2EE-compliant application servers, market-specific analytic components extensions, market-specific media asset management modules, and continued support of industry-standard platforms. - Enhancing usability for all of our infrastructure solutions. - Enhancing the integration of our infrastructure solutions across all major product lines to enable us to deliver modular yet integrated infrastructure solution suites. ASCENTIAL SOFTWARE--COMPETITION The information asset management software market is extremely competitive and subject to rapid technological change and frequent new product introductions and enhancements. Ascential's competitors in the market include vendors that develop and market data integration, business intelligence and portal software, and companies that provide media content management solutions. Principal competitors include Informatica, Hummingbird, Sagent, and Cognos for the data integration and analytic component market segment, and Bulldog and Artesia for the media and content management market segment. There are several players who traverse both segments and compete across the full spectrum of Ascential product offerings. These include Hummingbird, Oracle, and IBM. INFORMIX CORPORATION The following is a discussion of common business elements of both Informix Software and Ascential Software as components of Informix Corporation. REVENUES Revenues derived from and expenses associated with the business operations of both Informix Software and Ascential are subject to seasonal fluctuations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." INTELLECTUAL PROPERTY Our success depends on proprietary technology. To protect our proprietary rights, we rely primarily on a combination of patent, copyright and trademark laws, trade secrets, confidentiality procedures, contractual provisions contained in our license agreements and technical measures. We seek to protect our software, documentation and other written materials under trade secret and copyright laws, which provide only limited protection. We hold 18 United States patents and have several pending applications. Our products are generally licensed to end-users on a "right-to-use" basis pursuant to a license that restricts the use of the products for the customer's internal business purposes. We also rely on "shrink wrap" and "click wrap" licenses, which include a notice informing the end-user that, by opening the product packaging or, in the case of an online transaction, by downloading the product, the end-user agrees to be bound by our license agreement printed on the package or displayed on the customer's computer screen. Despite such precautions, it may be possible for unauthorized third parties to copy aspects of our current or future products or to obtain and use information that we regard as proprietary. In particular, we have licensed the source code of our products to certain customers for restricted uses under 10 certain circumstances. We have also entered into source code escrow agreements with a number of our customers that generally require release of source code to the customer in the event of our bankruptcy, liquidation or otherwise ceasing to conduct business. RESEARCH AND DEVELOPMENT Our research and development expenditures for 2000, 1999 and 1998 were $166.1 million, $188.1 million and $167.2 million, respectively, representing approximately 18%, 18% and 20% of net revenues for these periods. In addition, during 2000, 1999 and 1998, we capitalized product development costs of $32.8 million, $29.1 million and $21.6 million, respectively. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Costs and Expenses." EMPLOYEES As of December 31, 2000, Informix Corporation and its subsidiaries employed 3,680 regular employees worldwide, of which approximately 1,431 were located outside North America. None of our employees located in the United States are represented by a labor union. A small number of employees located outside the United States are represented by labor unions, and the degree and scope of representation varies from country to country. We have not experienced any work stoppages either domestically or internationally. As of December 31, 2000, the Informix Corporation regular employees were separated into the two operating businesses as follows:
INFORMIX ASCENTIAL INFORMIX SOFTWARE SOFTWARE CORPORATION -------- --------- ----------- Operations...................................... 54 -- 54 Services........................................ 713 234 947 Sales and Marketing............................. 863 477 1,340 Research and Development........................ 604 290 894 Administrative and Finance...................... 399 46 445 ----- ----- ----- Total........................................... 2,633 1,047 3,680 ===== ===== =====
EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth certain information concerning our executive officers as of December 31, 2000.
NAME AGE POSITION - ---- -------- --------------------------------------------------- Peter Gyenes.............................. 55 President, Chief Executive Officer and Chairman of the Board of Directors James Arnold, Jr.......................... 44 Vice President and Chief Financial Officer Gary Lloyd................................ 53 Vice President, Legal, General Counsel and Secretary William F. O'Kelly........................ 46 Vice President, Corporate Finance and Treasurer James Foy................................. 53 Senior Vice President and President, Informix Software Peter Fiore............................... 43 Senior Vice President and President, Ascential Software
PETER GYENES is the President, Chief Executive Officer and Chairman of the Board of Directors for Informix Corporation. Mr. Gyenes has over 30 years of experience in sales, marketing and general management positions within the computer systems and software industry. Prior to Informix Corporation's acquisition of Ardent Software, Inc. in March 2000, Mr. Gyenes was the President, Chief Executive Officer 11 and Chairman of the Board of Directors of Ardent, which he joined in 1996. Prior to joining Ardent, he was the President and Chief Executive Officer of Racal InterLan, Inc. Previously, Mr. Gyenes served in executive sales, marketing, and general management positions at Prime Computer Inc., Encore Computer and Data General Corporation. Earlier in his career, Mr. Gyenes held technical positions with Xerox Data Systems and IBM. Mr. Gyenes currently serves on the Board of Directors for Applix Computer Systems (NASDAQ: APLX), Axis Computer Systems, Cornerstone Internet Solutions (NASDAQ:CNRS), Davox Corp. (NASDAQ: DAVX) and the Massachusetts Software and Internet Council. Mr. Gyenes received a Bachelor of Arts degree in Mathematics and a Masters of Business Administration from Columbia University. JAMES ROBERT ARNOLD, JR. is the Vice President and Chief Financial Officer for Informix Corporation and Informix Software, Inc., the database company. He is responsible for corporate finance and administration. Prior to becoming Chief Financial Officer in August 2000, Mr. Arnold served in several senior financial positions at Informix. Prior to joining Informix in 1997, Mr. Arnold served as corporate controller for Centura Software a data management solutions company based in Redwood Shores, California. He also served as senior manager at Price Waterhouse LLP. Mr. Arnold is a certified public accountant and holds a Masters in Business Administration from Loyola University, New Orleans and a Bachelor of Business Administration from Delta State University, Cleveland MS. GARY LLOYD has served as Vice President, Legal and General Counsel since January 1998 and as Secretary since February 1998. From November 1997 until January 1998, Mr. Lloyd served as interim General Counsel. From March 1994 until October 1997, Mr. Lloyd was with the law firm of Farella Braun & Martel L.L.P. From 1984 until February 1994, Mr. Lloyd served in a variety of positions at the Securities and Exchange Commission, most recently as its Assistant Director, Division of Enforcement. Mr. Lloyd holds a B.A. in political science and English from Kent State University and a J.D. from Case Western Reserve University. WILLIAM F. O'KELLY joined Informix Corporation in August 1999 as Vice President, Corporate Finance and Treasurer. Mr. O'Kelly also served as a financial consultant to the Company from May 1998 until August 1999. Previously, Mr. O'Kelly was Chief Financial Officer at Chemical Supplier Technology Inc. and Corporate Controller at Air Liquide America Corporation, an industrial and medical gases company, from August 1993 until December 1995. Mr. O'Kelly holds at B.S. in accounting from the University of Florida. JAMES D. FOY is a Senior Vice President of Informix Corporation and the President of Informix Software, Inc. Previously, Mr. Foy was head of the Informix TransAct business unit. Prior to Informix's acquisition of Ardent Software, Inc. in March 2000, Mr. Foy served as Ardent's executive vice president of engineering after joining the company in 1994. In addition, he was the founder, president and Chief Executive Officer of Constellation Software, Inc., which was acquired by Vmark Software (the predecessor company to Ardent). Prior to founding Constellation Software, Inc., Mr. Foy was employed at Prime Computer, Inc., holding positions as a senior executive in Prime's Unix Development Business Unit, as well as the company's senior executive responsible for international research and development. Additionally, Mr. Foy also served on the Board of Directors of X/Open and Unix International during his tenure at Prime. PETER FIORE is a Senior Vice President of Informix Corporation and the President of Ascential Software, Inc. Prior to Informix's acquisition of Ardent Software, Inc. in March 2000, Mr. Fiore was the Executive Vice President and General Manager, Marketing Operations and Business Development for Ardent. Mr. Fiore joined Ardent in 1994 as Vice President of worldwide marketing and was appointed Vice President and General Manager of Ardent's data warehouse business unit in June 1996. Mr. Fiore has twenty years of sales, marketing, engineering and business development experience in the high-technology industry. Prior to joining Ardent, Mr. Fiore was Senior Director of Channel Marketing at CrossComm 12 Corp. and held various sales and marketing management positions at Stratus Computer, Inc. Mr. Fiore received a Bachelor of Arts degree in Engineering and Applied Sciences from Harvard College. ITEM 2. PROPERTIES Until the third quarter of 2000, our headquarters and principal marketing, finance, sales, administration and a portion of our customer service and research and development operations were located in seven buildings throughout a corporate office park in Menlo Park, California. During the third quarter of 2000, we moved our corporate headquarters to a 93,000 square foot facility in Westborough, Massachusetts that was formerly occupied by Ardent Software, Inc. The lease for the Westborough facility expires on December 31, 2008. The majority of the other lease obligations for facilities assumed from Ardent have been disposed of via a termination or sublease arrangement. In addition, we established the headquarters of Ascential Software in the same facility. The headquarters and principal marketing, finance, sales, administration and a portion of our customer service and research and development operations for the Informix Software business operations remain in the Menlo Park facilities. We currently lease approximately 234,000 square feet of office space in these buildings. The lease agreements for two of the buildings, totaling approximately 83,000 square feet, expire in October 2001. The lease agreements for the remaining five buildings expire on various dates in 2003. We also occupy approximately 135,000 square feet in Lenexa, Kansas, which is located approximately 12 miles southwest of Kansas City, Missouri. This facility incorporates a portion of the research and development, customer service and telemarketing organizations and serves as the principal domestic manufacturing facility. There are two separate buildings, one totaling approximately 44,000 square feet and the other totaling approximately 91,000 square feet, that are adjacent to each other and are each under a separate lease agreement. The lease agreement for each building is scheduled to expire in April 2003, subject to our rights to renew each agreement for an additional 5 years. Some of the research and development operations for our products as well as a portion of our customer service and sales training operations are located in Oakland, California. We lease approximately 130,000 square feet at this site, and this lease is scheduled to expire in May 2003. We also lease approximately 59,000 square feet on five separate floors in the Informix Center in downtown Portland, Oregon, which is primarily utilized for research and development. This facility was occupied in early 2000, and the current lease is scheduled to expire in June 2005. We also lease office space, principally for sales and support offices, in a number of facilities in the United States, Canada and outside North America. As of December 31, 2000, we controlled approximately 1,600,000 square feet of office and/or manufacturing space. Approximately 86% of the total portfolio is actively being utilized, while the balance has been either vacated or sublet. Of the entire portfolio, approximately 70% is located in the Americas region (United States, Canada and Latin America), 22% is located in EMEA (Europe, Middle East and Africa) and the remaining 8% is located in the Asia Pacific region. The significant sites in EMEA are in London (Bedfont Lakes Business Park), Dublin and Munich where we control approximately 45,000 square feet, 42,000 square feet and 68,000 square feet, respectively. In the Asia Pacific region, the largest three sites are Seoul, Sydney and Tokyo where we lease approximately 27,000 square feet, 17,000 square feet and 15,000 square feet, respectively. We believe that our existing facilities are adequate to meet our business needs through the next twelve months. ITEM 3. LEGAL PROCEEDINGS On May 26, 1999, we entered into a memorandum of understanding regarding the settlement of pending private securities and related litigation against us, including a federal class action, a derivative action, and a state class action. In November 1999, the settlement was approved by the applicable Federal and state courts. The settlement resolves all material litigation arising out of the restatement of our 13 financial statements that was publicly announced in November 1997. In accordance with the terms of the memorandum of understanding, we paid approximately $3.2 million in cash during the second quarter of 1999 and an additional amount of approximately $13.8 million of insurance proceeds was contributed directly by certain of our insurance carriers on behalf of certain of our current and former officers and directors. We will also issue a minimum of nine million shares of our common stock, which will have a guaranteed value of $91 million for a maximum term of one year from the date of final approval of the settlement by the courts. Our former independent auditors, Ernst & Young LLP, have paid $34 million in cash. The total amount of the settlement will be $142 million. As of December 31, 2000, we had issued 2.9 million of the minimum amount of 9 million shares issuable pursuant to the memorandum of understanding. In July 1997, the Securities and Exchange Commission ("SEC") issued a formal order of private investigation of us and certain unidentified other entities and persons with respect to non-specified accounting matters, public disclosures and trading activity in our securities. During the course of the investigation, we learned that the investigation concerned the events leading to the restatement of our financial statements, including fiscal years 1994, 1995 and 1996, that was publicly announced in November 1997. We have entered into a settlement with the SEC regarding the investigation against us. Pursuant to the settlement, we consented to the entry by the SEC of an Order Instituting Public Administrative Proceedings Pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Section 21C of the Securities Exchange Act of 1934 ("Exchange Act"), Making Findings, and Imposing a Cease and Desist Order (the "Order"). The Order was issued by the SEC on January 11, 2000. Pursuant to the Order, we neither admitted nor denied the findings, except as to jurisdiction, contained in the Order. The Order directs us to cease and desist from committing or causing any violation, and any future violation, of Section 17(a) of the Securities Act and Sections 10(b), 13(a) and 13(b) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1 under the Exchange Act. Pursuant to the Order, we are also required to cooperate in the SEC's continuing investigation of other entities and persons. As a consequence of the issuance of the Order, we are statutorily disqualified, pursuant to Section 27A(G)(1)(A)(ii) of the Securities Act and Section 21E(b)(1)(A)(ii) of the Exchange Act, for a period of three years from the date of the issuance of the Order, from relying on the protections of the "safe harbor" for forward-looking statements set forth in Section 27(A)(c) of the Securities Act and Section 21(E)(c) of the Exchange Act. On February 3, 2000, International Business Machines Corporation ("IBM") filed an action against us in the United States District Court for the District of Delaware alleging infringement of six United States patents owned by IBM. In the complaints, IBM seeks against us, and we seek against IBM, permanent injunctions against further alleged infringement, unspecified compensatory damages, unspecified treble damages, and interest, costs and attorney's fees. On March 28, 2000, we filed an answer and counterclaims in the United States District Court for the District of Delaware against IBM denying IBM's allegations of patent infringement and alleging infringement by IBM of four United States patents owned by us. In addition, on March 28, 2000, we filed a separate action against IBM in the United States District Court for the Northern District of California alleging infringement of four other United States patents owned by us. On June 22, 2000, that action was transferred to the United States District Court for the District of Delaware. We strongly believe that the allegations in IBM's complaint are without merit and intend to defend the action and prosecute our claims vigorously. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS We did not submit any matters to a vote of security holders during the fourth quarter of 2000. 14 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Our Common Stock is traded on the National Market of The Nasdaq Stock Market under the symbol "IFMX." The following table lists the high and low sales prices of our Common Stock for the periods indicated.
HIGH LOW -------- -------- FISCAL YEAR ENDING DECEMBER 31, 2000: Fourth Quarter............................................ $ 4.75 $2.63 Third Quarter............................................. 6.81 3.69 Second Quarter............................................ 21.25 6.19 First Quarter............................................. 20.97 7.88 FISCAL YEAR ENDING DECEMBER 31, 1999: Fourth Quarter............................................ $13.31 $6.38 Third Quarter............................................. 9.75 6.75 Second Quarter............................................ 9.81 6.03 First Quarter............................................. 14.00 7.00
At December 31, 2000, there were approximately 4,450 stockholders of record of our Common Stock, as shown in the records of our transfer agent. DIVIDEND POLICY We have never declared or paid cash dividends on our Common Stock. We expect to retain future earnings, if any, for use in the operation of our business and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. 15 ITEM 6. SELECTED FINANCIAL DATA FINANCIAL OVERVIEW FIVE-YEAR SUMMARY
YEAR ENDED DECEMBER 31, -------------------------------------------------------- 2000(1) 1999(2) 1998(3) 1997(4) 1996 -------- ---------- --------- --------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenues........................... $929,319 $1,039,111 $ 854,520 $ 766,620 $845,039 Net income (loss)...................... (98,315) (2,988) 52,452 (369,309) (84,012) Preferred stock dividend............... (191) (995) (3,478) (301) -- Value assigned to warrants............. -- -- (1,982) (1,601) -- Net income (loss) applicable to common stockholders......................... (98,506) (3,983) 46,992 (371,211) (84,012) Net income (loss) per common share: Basic................................ (0.34) (0.02) 0.21 (1.85) (0.43) Diluted.............................. (0.34) (0.02) 0.19 (1.85) (0.43) Total assets........................... 655,881 793,337 695,802 653,342 971,112 Long-term obligations.................. 787 1,420 3,759 27,734 24,098 Retained earnings (accumulated deficit)............................. (359,132) (260,817) (259,849) (312,301) 57,556
- ------------------------------ (1) In 2000, we recorded merger, realignment and other charges of $126.8 million. (2) In 1999, we recorded restructuring-related adjustments that increased operating income by $0.6 million and, in connection with our acquisition of Cloudscape, Inc. in October 1999, recorded a charge of $2.8 million for merger related expenses. In addition, we recorded a charge of $97.0 million related to the settlement of private securities and related litigation against us. Also in connection with Ardent Software, Inc.'s acquisition of Prism Solutions, Inc., we recorded a charge of $9.9 million for merger and restructuring charges as well as a $5.1 million charge for in-process research and development which had not yet reached technological feasibility and had no alternative future uses. (3) In 1998, we recorded restructuring-related adjustments that increased operating income by $10.3 million and, in connection with our acquisition of Red Brick Systems, Inc. in December 1998, recorded a charge of $2.6 million for in-process research and development which had not yet reached technological feasibility and had no alternative future uses. In addition, we recorded a charge of $14.9 million for merger and restructuring charges related to Ardent's merger with Unidata. (4) In 1997, we recorded a restructuring charge of $108.2 million, a write-down of certain assets in Japan of $30.5 million and a charge to operations of $7.0 million for in-process research and development which had not yet reached technological feasibility and had no alternative future uses in connection with our acquisition of CenterView. We also recorded a charge of $3.0 million in connection with Ardent's acquisition of O2 Technologies for in-process research and development which had not yet reached technological feasibility and had no alternative future uses. 16 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS RELATING TO FUTURE EVENTS OR THE COMPANY'S FUTURE FINANCIAL PERFORMANCE, WHICH INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH UNDER "FACTORS THAT MAY AFFECT FUTURE RESULTS," AND ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K. OVERVIEW Informix Corporation is a global provider of information management software through its two operating businesses, Informix Software and Ascential Software. Informix Software, the database company, develops, markets and supports object-relational and relational database management systems for data warehousing, transaction processing and e-business applications. Ascential Software is a supplier of information asset management software and solutions to enterprises and government organizations worldwide. During the second half of 2000, Informix Corporation undertook a strategic realignment to transition from five former business units into the two operating businesses. By December 31, 2000, we defined and allocated personnel among the management, selling, marketing, research and development and service organizations for the two operating businesses. However, the core infrastructure groups of Informix Corporation (operations, finance and administration) have been retained by Informix Software and these groups will continue to provide services to both operating businesses through much of 2001. Our intent continues to be to create two separate publicly traded companies when market conditions permit. We have not achieved sufficient separation of the employees and infrastructure of the two operating businesses to properly measure the results of the operations on a stand-alone basis. Accordingly, although we present the separate revenue information for the two operating businesses on a historical basis, we do not present separate historical operating income information. We intend to disclose the results of operations based on the two operating businesses on a prospective basis. On March 1, 2000, we acquired Ardent Software, Inc. ("Ardent"), a leading provider of data integration infrastructure software for data warehouse, business intelligence, and e-business applications. In the acquisition, the former shareholders of Ardent received 3.5 shares of our common stock in exchange for each outstanding Ardent share and we assumed all outstanding Ardent options and warrants. The transaction has been accounted for as a pooling of interests and, therefore, all historical financial information has been restated to include Ardent. As more fully described in Note 13 to the Consolidated Financial Statements, we recorded merger, realignment and other charges of $126.8 million, during 2000 of which $43.8 million related to non-cash charges. As of December 31, 2000, we had made cash payments of $58.2 million related to the $126.8 million charge and expect to make additional cash payments of approximately $24.8 million during the first half of 2001. In addition to the $126.8 million charge, we expect to incur further realignment charges during the first half of 2001 of approximately $6.0 million for primarily employee compensation related costs. We expect to realize total quarterly expense reduction of approximately $19.7 million as a result of this realignment and approximately 86% of this expected amount represents cash savings with the balance attributable to reductions in non-cash depreciation and amortization. The expected quarterly expense reduction began during the quarter ended December 31, 2000 but the full effect will not be realized until the quarter ended June 30, 2001. The expected quarterly expense reduction is estimated to reduce specific quarterly expense components as follows: cost of software distribution, $2.0 million; cost of services, $2.2 million; sales and marketing, $7.2 million; research and development, $5.0 million; general and administrative, $3.3 million. 17 These realignment and other charges are subject to continuing review and adjustment as we implement the realignment. RESULTS OF OPERATIONS The following table and discussion compares the results of operations for the years ended December 31, 2000, 1999 and 1998.
YEARS ENDED DECEMBER 31, ------------------------------------ 2000 1999 1998 -------- -------- -------- PERCENT OF NET REVENUES Net revenues: Licenses.................................................. 44% 52% 53% Services.................................................. 56 48 47 Total net revenues...................................... 100 100 100 Cost and expenses: Cost of software distribution............................. 5 5 5 Cost of services.......................................... 20 20 21 Sales and marketing....................................... 43 36 37 Research and development.................................. 18 18 20 General and administrative................................ 11 9 10 Write-off of acquired research and development............ -- -- -- Merger and restructuring charges.......................... 14 1 -- Total expenses.......................................... 111 89 93 Operating income (loss)..................................... (11) 11 7 Net income (loss)........................................... (11)% --% 6%
REVENUES We derive revenues from licensing software and providing post-license technical product support and updates to customers and from consulting and education services. Our revenue recognition policy is described in Note 1 to our Consolidated Financial Statements. LICENSE REVENUES. License revenues may involve the shipment of product by us or the granting of a license to a customer to manufacture products. Our products are sold directly to end-user customers or through resellers, including OEMs, distributors and value added resellers ("VARs"). Revenue from license agreements with resellers is recognized as earned by us, generally, when the licenses are resold or utilized by the reseller and all of our related obligations have been satisfied. Accordingly, amounts received from customers in advance of revenue being recognized are recorded as a liability in "advances from customers" in our financial statements. Advances in the amount of $10.5 million and $34.3 million had not been recognized as earned revenue as of December 31, 2000 and December 31, 1999, respectively. During the year ended December 31, 2000, we received $10.7 million in customer advances and recognized revenue from resellers with previously recorded customer advances of $34.5 million. Included in the $34.5 million recognized were $21.4 million of licenses that were resold or utilized by the reseller, $11.1 million related to contractual reductions in customer advances and $2.0 million related to previously deferred revenue for solution sales, which has now been recognized as services have been completed. During 1999 and 1998, we recognized revenue of $11.4 million and $4.4 million, respectively, as a result of contractual reductions in customer advances. Contractual reductions result from settlements between us and resellers in which the customer advance contractually expires or a settlement is structured wherein the rights to resell our products terminate without sell through or deployment of the software. Our license transactions can be relatively large in size and difficult to forecast both in timing and dollar value. As a result, license transactions have caused fluctuations in net revenues and net income 18 (loss) because of the relatively high gross margin on such revenues. As is common in the industry, a disproportionate amount of our license revenue is derived from transactions that close in the last weeks or last few days of a quarter. The timing of closing large license agreements also increases the risk of quarter-to-quarter fluctuations. We expect that these types of transactions and the resulting fluctuations in revenue will continue. SERVICE REVENUES. Service revenues are comprised of maintenance, consulting and education revenues. Maintenance contracts generally call for us to provide technical support and software updates to customers. The following table and discussion compares the revenues for the businesses of Informix Software and Ascential Software for the years ended December 31, 2000, 1999 and 1998 (in millions):
2000 1999 1998 -------- -------- -------- INFORMIX SOFTWARE License revenues.......................................... $337.7 $ 481.9 $439.6 Service revenues Maintenance revenues.................................... 392.4 361.3 285.7 Consulting and education revenues....................... 77.5 111.8 111.7 ------ -------- ------ Total service revenues.................................. 469.9 473.1 397.4 ------ -------- ------ Total revenues--Informix Software......................... $807.6 $ 955.0 $837.0 ====== ======== ====== License revenues as a percent of total revenues........... 42% 50% 53% Service revenues as a percent of total revenues........... 58% 50% 47% ASCENTIAL SOFTWARE License revenues.......................................... $ 66.7 $ 54.0 $ 14.3 Service revenues Maintenance revenues.................................... 20.1 6.9 0.9 Consulting and education revenues....................... 34.9 23.2 2.3 ------ -------- ------ Total service revenues.................................. 55.0 30.1 3.2 ------ -------- ------ Total revenues--Ascential Software........................ $121.7 $ 84.1 $ 17.5 ====== ======== ====== License revenues as a percent of total revenues........... 55% 64% 82% Service revenues as a percent of total revenues........... 45% 36% 18% INFORMIX CORPORATION (COMBINED TOTAL OF INFORMIX SOFTWARE AND ASCENTIAL SOFTWARE) License revenues.......................................... $404.4 $ 535.9 $453.9 Service revenues Maintenance revenues.................................... 412.5 368.2 286.6 Consulting and education revenues....................... 112.4 135.0 114.0 ------ -------- ------ Total service revenues.................................. 524.9 503.2 400.6 ------ -------- ------ Total revenues--Informix Corporation...................... $929.3 $1,039.1 $854.5 ====== ======== ====== License revenues as a percent of total revenues........... 44% 52% 53% Service revenues as a percent of total revenues........... 56% 48% 47%
INFORMIX SOFTWARE--REVENUES LICENSE REVENUES. License revenues for 2000 decreased 30% to $337.7 million from $481.9 million in 1999. The decrease in license revenues was due in large part to a significant decline in revenues from our 19 traditional client-server and tools products (which we refer to as "Classic" products) and our Enterprise database servers. We believe that this decline is attributable to slower market demand for our Classic products in the post-Y2K environment and the failure of our sales and field marketing organizations to effectively market and sell our products due to a number of factors, including attrition and turnover in our sales and marketing organization, the announcement during the third quarter of our corporate restructuring and reorganization, and delays encountered in integrating certain of Ardent's operations and products into our sales, product marketing and general operations. In addition to this decline in license revenue in absolute dollars, our license revenue is also declining as a percentage of our total revenue. Although we do not expect this latter trend to continue, we are unable to predict whether market demand for our products will rebound in future quarters or whether our license revenues will continue to decline in absolute dollars. License revenues for 1999 increased 10% to $481.9 million from $439.6 million in 1998. This increase was primary a result of increased license revenues from our Enterprise database servers. This was driven by the introduction of several new products in the second half of 1999, including the first release of Informix Internet Foundation and a next generation release of Informix Dynamic Server. SERVICE REVENUES. Service revenues decreased 1% to $469.9 million in 2000 and increased 19% to $473.1 million in 1999 from $397.4 million in 1998. Service revenues accounted for 58%, 50%, and 47% of total revenues in 2000, 1999 and 1998, respectively. Maintenance revenues increased 9% to $392.4 million in 2000 and increased 26% to $361.3 million in 1999 from $285.7 million in 1998. The increase in maintenance revenues, was attributable primarily to the renewal of maintenance contracts and our growing installed customer base. During 2000, consulting and education revenues decreased 31% to $77.5 million primarily due to the 30% decline in license revenues experienced in 2000 as consulting and education revenues are typically driven by engagements and projects associated with new license revenues. During 1999, consulting and education revenues remained flat at $111.8 million versus $111.7 million in 1998. ASCENTIAL SOFTWARE--REVENUES LICENSE REVENUES. License revenues increased 24% to $66.7 million in 2000 and increased 278% to $54.0 million in 1999 from $14.3 million in 1998. The increase in 2000 was due principally to increased sales of Ascential's content management product offerings; Media360 and i.Reach, as well as increased sales of i.Sell, all of which experienced growth as part of their early life stage. The increase during 1999 was driven primarily by increased sales of Ascential's Datastage product as well as the acquisition of Prism Solutions, Inc. ("Prism") by Ardent. SERVICE REVENUES. Service revenues increased 83% to $55.0 million in 2000 and increased 841% to $30.1 million in 1999 from $3.2 million in 1998. Service revenues accounted for 45%, 36%, and 18% of total revenues in 2000, 1999 and 1998, respectively. Maintenance revenues increased 191% to $20.1 million in 2000 and increased 667% to $6.9 million in 1999 from $0.9 million in 1998. Maintenance revenues are increasing for Ascential Software as it continues to build its installed customer base. Consulting and education revenues increased 50% to $34.9 million in 2000 and increased 909% to $23.2 million in 1999 from $2.3 million in 1998. Consulting and education revenues are typically driven by engagements and projects associated with new license revenues. COSTS AND EXPENSES AS DISCUSSED ABOVE, OUR DISCUSSION AND ANALYSIS OF COSTS AND EXPENSES IS PRESENTED ON A COMBINED BASIS FOR THE TWO OPERATING BUSINESSES. COST OF SOFTWARE DISTRIBUTION. Cost of software distribution consists primarily of: (1) manufacturing personnel costs, (2) third-party royalties, and (3) amortization of previously capitalized software development costs and any write-offs of previously capitalized software (except during the quarter ended September 30, 2000, when we wrote-off approximately $15.2 million of capitalized software to merger, realignment and other charges--for more information see Note 13 to the Consolidated Financial Statements). Cost of software distribution increased slightly to $50.4 million in 2000 from $50.2 million in 1999 20 even though license revenues decreased 25% during 2000. This increase was primarily due to an increase in third party royalties associated with increased license revenue from certain Ascential Software product offerings. This increase was partially offset by a decrease in capitalized software amortization as certain database products became fully amortized during 2000 and a decrease in manufacturing costs as we realized efficiencies due to the consolidation of our manufacturing operations. Cost of software distribution increased 19% during 1999 when compared to 1998, which is in line with the 18% increase in license revenues experienced during the same period, due to an increase in royalties and the write-off of capitalized software costs. During the third quarter of 1999, approximately $2.4 million of previously capitalized software costs were written down to the estimated net realizable value after it was determined that the projected sales of certain tools products and system management programs were not sufficient to realize the capitalized product development costs. COST OF SERVICES. Cost of services consists primarily of maintenance, consulting and training personnel expenses. Cost of services decreased 11% to $184.6 million in 2000 from $208.0 million in 1999 and service margins increased to 65% in 2000 from 59% in 1999. The decrease in cost of services in absolute dollars and as a percentage of net service revenues is primarily due to cost containment actions that included headcount reductions as a result of the realignment and synergies realized from the Ardent acquisition. The increase in service margins experienced during 2000 was also due to the mix of service offerings, as there was a lower proportion of consulting and training revenue in 2000, which generate significantly lower margins than maintenance. Cost of services increased 17% to $208.0 in 1999 from $178.5 million in 1998 due primarily to increased headcount related costs incurred to support the 26% increase in service revenues achieved during the period. Part of the increase in headcount resulted from the addition of Prism's and Red Brick Systems, Inc.'s ("Red Brick") consulting teams subsequent to the completion of the acquisitions in April 1999 and December 1998, respectively. SALES AND MARKETING EXPENSES. Sales and marketing expenses consist primarily of salaries, commissions, marketing and communications programs and related overhead costs. Sales and marketing expenses increased 9% to $402.6 million in 2000 and 18% to $370.7 million in 1999 from $313.6 million in 1998. The increase in 2000 was due primarily to increased marketing costs for advertising and marketing programs focused on promoting our Internet-based electronic commerce and business intelligence products and solutions. The increase in sales and marketing expenses in 1999 as compared to 1998 was primarily the result of increased advertising and marketing efforts in connection with the introduction of new products and our new corporate identity in order to increase brand awareness. The increase in sales and marketing expenses experienced during 1999 was in line with the increase in revenues over the same period. RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses consist primarily of salaries, project consulting and related overhead costs for product development. Research and development expenses decreased 12% to $166.1 million in 2000 from $188.1 million in 1999 but as a percentage of net revenues remained consistent at 18% for both 2000 and 1999 due to the realization of cost containment efforts employed during 2000, which included headcount reductions resulting from the realignment. During 1999, research and development expenses increased 13% due to increased headcount related costs as a result of the acquisitions of Prism and Red Brick in April 1999 and December 1998, respectively. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist primarily of finance, legal, information systems, human resources, bad debt expense and related overhead costs. During 2000, general and administrative expenses increased $10.6 million to $100.0 million from $89.4 million in 1999 and $88.2 million in 1998. As a percentage of net revenues, general and administrative expenses remained fairly consistent at 11%, 9% and 10% in 2000, 1999 and 1998 respectively. The increase in general and administrative expenses experienced during 2000 was caused by increased bad debt and legal expenses offset by a decrease in employee-related costs. Bad debt expense increased approximately $7.1 million as a result of increased reserves against defaults by technology start-up companies, write-offs of certain receivables acquired in the merger with Ardent and reserves related to several Eastern European government entities where recent political changes make collection no longer probable. The 21 increase in legal expenses was related primarily to a $4.3 million reserve with respect to the Unidata lawsuit and $3.0 million paid to Cincom Systems, Inc. See Note 12 to the Consolidated Financial Statements. WRITE-OFF OF ACQUIRED RESEARCH AND DEVELOPMENT. In-process research and development represents the estimated fair value of incomplete technologies acquired by us for our own development efforts. In connection with Ardent's acquisition of Prism in April 1999, Ardent recorded a charge of approximately $5.1 million, or 6.9% of the $74.2 million in total consideration and liabilities assumed, for in-process research and development expense that had not yet reached technological feasibility and had no alternative future uses. In connection with our acquisition of Red Brick in December 1998, we recorded a charge of $2.6 million, or 4.7% of the $55.8 million in total consideration and liabilities assumed, for in-process research and development expense that had not yet reached technological feasibility and had no alternative future uses. Actual results to date have been consistent, in all material respects, with the assumptions used at the time of the Prism and Red Brick acquisitions. The assumptions primarily consisted of an expected completion date for the in-process projects, estimated costs to complete the projects, and revenue and expense projections once the products had entered the market. MERGER, REALIGNMENT AND OTHER CHARGES. During the second half of 2000, we recorded a charge of $76.8 million mostly to account for the actions taken to realign our operational structure into two separate companies and to refine our product strategy. Included in this charge was $40.9 million for severance and employment related costs, $32.0 million for the write-off of goodwill and intangible assets, $7.5 million for the closure of facilities and equipment costs, $4.0 million for costs to exit various commitments and programs, $2.5 million of miscellaneous other charges and a credit of approximately $10.1 million for adjustments recorded in order to reduce previously accrued merger and restructuring charges primarily for a decrease in estimated facility costs related to the merger with Ardent. See Note 13 to the Consolidated Financial Statements. During the quarter ended March 31, 2000, we recorded a charge of $50.0 million associated with the merger with Ardent. Of this amount, approximately $10.1 million related to integration and transition costs incurred during the quarter ended March 31, 2000. Also included in the $50.0 million was approximately $39.9 million of accrued merger and restructuring costs which consisted of the following components: $14.5 million for financial advisor, legal and accounting fees related to the merger; $13.0 million for severance and employment related costs; $8.9 million for the closure of facilities and equipment costs and $3.5 million for the write-off of redundant technology and other duplicate costs. During the quarter ended December 31, 1999, we recorded a charge of $2.8 million associated with the merger with Cloudscape. This amount included $1.2 million for financial advisor, legal and accounting fees related to the merger and $1.6 million for costs associated with combining the operations of the two companies; including expenditures of $0.7 million for severance and related costs, $0.4 million for closure of facilities and $0.5 million for the write-off of redundant assets. During the quarter ended June 30, 1999, Ardent adopted a formal plan to exit the operations of O2 Technologies, Inc., which had been acquired by Ardent in December 1997, and recorded a charge of $9.9 million for accrued restructuring charges. The charge was comprised of $5.9 million for asset impairment, $3.6 million for severance and related costs and $0.4 million for facility closings and other obligations. During the quarter ended March 31, 1998, Ardent recorded a charge of $14.9 million associated with the merger with Unidata. The charge included $3.9 million for financial advisor, legal and accounting fees, $6.2 million for severance and related costs, $2.2 million for closure of facilities, and $2.6 million for the write-off of redundant assets. During 1999 and 1998, adjustments of $0.6 million and $10.3 million, respectively, were recorded to the results of operations which appear as a credit to merger, realignment and other charges in our Consolidated Statement of Operations for the years ended December 31, 1999 and 1998, to adjust the 22 estimated severance and facility components of the 1997 restructuring charge to actual costs incurred. See Note 13 to our Consolidated Financial Statements. OTHER INCOME (EXPENSE) INTEREST INCOME. Interest income for 2000 increased $1.9 million or 15% to $14.3 million from $12.4 million for both 1999 and 1998. This increase was due in part to the increase in interest rates experienced during 2000 as well as an increase in the average interest-bearing cash and short-term investment balances held during 2000 when compared to the same periods in 1999 and 1998. During the first nine months of 2000, we maintained higher short-term investment balances than in previous years as a result of increased operating cash flows. INTEREST EXPENSE. Interest expense decreased to $0.5 million for 2000 from $4.5 million and $6.9 million for 1999 and 1998, respectively. Interest expense of $0.5 million incurred during 2000 related primarily to interest charges on capital lease payments. The decrease experienced during 2000 was due primarily to a decline in the interest charges related to the line of credit which was terminated effective December 31, 1999. The decrease during 1999 when compared to 1998 was due to a decrease in the financing of customer accounts receivable and a decrease in interest charges related to payments on capital leases. We did not enter into any accounts receivable financing transactions during 2000, and interest charges related to payments on capital leases have been declining each year as we have not been entering into new capital lease arrangements. LITIGATION SETTLEMENT EXPENSE. During 1999, we incurred a charge of $97.0 million in connection with our entering into a memorandum of understanding regarding the settlement of the private securities and related litigation against us. The charge consisted of $3.2 million in cash and $91.0 million in common stock for settlement expenses plus approximately $2.8 million in legal fees required to obtain and complete the settlement. The charge excludes approximately $13.8 million of insurance proceeds which, according to the terms of the memorandum of understanding, were contributed directly by our insurance carriers. OTHER INCOME (EXPENSE), NET. Other income (expense), net, increased $2.4 million to $5.0 million in 2000 from $2.6 million in 1999. For 2000, other income included approximately $2.9 million of net realized gains on the sale of long-term investments and approximately $1.3 million of VAT refunds received in China. Other income (expense), net, increased to $2.6 million for 1999 from a net other expense of $4.0 million for 1998. For 1999, other income included approximately $3.7 million of net realized gains on the sale of long-term investments, offset by a downward adjustment of $0.5 million to the carrying value of certain investments and approximately $0.3 million of net foreign currency transaction losses. During 1998, other income (expense) included $4.8 million of foreign currency transaction losses. INCOME TAXES Income tax expense of $16.0 million, $32.0 million and $6.9 million for 2000, 1999 and 1998, respectively, resulted primarily from foreign withholding taxes and taxable earnings in certain foreign jurisdictions. 23 QUARTERLY OPERATING RESULTS
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER ------------- -------------- ------------- -------------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Year ended December 31, 2000 Net revenues........................... $250,884 $240,494 $211,105 $226,836 Gross profit........................... 189,567 178,964 151,616 174,169 Net income (loss)...................... (22,983) 5,018 (80,627) 277 Preferred stock dividend............... (87) (89) (15) -- -------- -------- -------- -------- Net income (loss) applicable to common stockholders......................... $(23,070) $ 4,929 $(80,642) $ 277 ======== ======== ======== ======== Net income (loss) per common share: Basic................................ $ (0.08) $ 0.02 $ (0.28) $ 0.00 ======== ======== ======== ======== Diluted.............................. $ (0.08) $ 0.02 $ (0.28) $ 0.00 ======== ======== ======== ======== Year ended December 31, 1999 Net revenues........................... $227,531 $250,623 $261,124 $299,833 Gross profit........................... 165,425 186,844 194,917 233,789 Net income (loss)...................... 8,779 (89,142) 27,480 49,895 Preferred stock dividend............... (303) (279) (247) (166) -------- -------- -------- -------- Net income (loss) applicable to common stockholders......................... $ 8,476 $(89,421) $ 27,233 $ 49,729 ======== ======== ======== ======== Net income (loss) per common share: Basic................................ $ 0.03 $ (0.35) $ 0.10 $ 0.18 ======== ======== ======== ======== Diluted.............................. $ 0.03 $ (0.35) $ 0.09 $ 0.17 ======== ======== ======== ========
LIQUIDITY AND CAPITAL RESOURCES Our cash, cash equivalents and short-term investments totaled $217.0 million at December 31, 2000. The decrease of $55.6 million from $272.6 million at December 31, 1999, was primarily caused by the repurchase of 6.4 million shares of our common stock for approximately $33.7 million and the payment of approximately $58.2 million of costs in connection with merger, realignment and other charges, including the $126.8 million of charges recorded during 2000. Aside from these items, we continue to generate cash from operations. We will continue to invest in research and development activities as well as sales and marketing and product support. Our investment in property and equipment will continue as we purchase computer systems for research and development, sales and marketing, support and administrative staff. During 2000, capital expenditures totaled $44.6 million. As of December 31, 2000, we did not have any significant long-term debt or significant commitments for capital expenditures. We believe that our current cash, cash equivalents and short-term investments balances and cash generated from operations will be sufficient to meet our working capital requirements for at least the next 12 months. 24 DISCLOSURES ABOUT MARKET RATE RISK MARKET RATE RISK. The following discussion about our market rate risk involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. We are exposed to market risk related to changes in interest rates, foreign currency exchange rates and equity security price risk. We do not use derivative financial instruments for speculative or trading purposes. INTEREST RATE RISK. Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio. We maintain a short-term investment portfolio consisting mainly of debt securities with an average maturity of less than two years. We do not use derivative financial instruments in our investment portfolio and we place our investments with high quality issuers and, by policy, limit the amount of credit exposure to any one issuer. We are averse to principal loss and ensure the safety and preservation of our invested funds by limiting default, market and reinvestment risk. These available-for-sale securities are subject to interest rate risk and will fall in value if market interest rates increase. If market interest rates were to increase immediately and uniformly by 10 percent from levels at December 31, 2000 and 1999, the fair value of the portfolio would decline by an immaterial amount. We have the ability to hold our fixed income investments until maturity and believe that the effect, if any, of reasonably possible near-term changes in interest rates on our financial position, results of operations and cash flows would not be material. EQUITY SECURITY PRICE RISK. We hold a small portfolio of marketable-equity traded securities that are subject to market price volatility. Equity price fluctuations of plus or minus 10% would have had a $0.4 million and $1.2 million impact on the value of these securities in 2000 and 1999, respectively. FOREIGN CURRENCY EXCHANGE RATE RISK. We enter into foreign currency forward exchange contracts to reduce our exposure to foreign currency risk due to fluctuations in exchange rates underlying the value of intercompany accounts receivable and payable denominated in foreign currencies (primarily European and Asian currencies) until such receivables are collected and payables are disbursed. A foreign currency forward exchange contract obligates us to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates or to make an equivalent U.S. dollar payment equal to the value of such exchange. These foreign currency forward exchange contracts are denominated in the same currency in which the underlying foreign currency receivables or payables are denominated and bear a contract value and maturity date which approximate the value and expected settlement date of the underlying transactions. As these contracts are not designated and effective as hedges, discounts or premiums (the difference between the spot exchange rate and the forward exchange rate at inception of the contract) are recorded in earnings to other income (expense), net at the time of purchase, and changes in market value of the underlying contract are recorded in earnings as foreign exchange gains or losses in the period in which they occur. We operate in certain countries in Latin America, Eastern Europe, and Asia/Pacific where there are limited forward foreign currency exchange markets and thus we have unhedged exposures in these currencies. Most of our international revenue and expenses are denominated in local currencies. Due to the substantial volatility of currency exchange rates, among other factors, we cannot predict the effect of exchange rate fluctuations on our future operating results. Although we take into account changes in exchange rates over time in our pricing strategy, we do so only on an annual basis, resulting in substantial pricing exposure as a result of foreign exchange volatility during the period between annual pricing reviews. In addition, the sales cycle for our products is relatively long, depending on a number of factors including the level of competition and the size of the transaction. Notwithstanding our efforts to manage foreign exchange risk, there can be no assurances that our hedging activities will adequately protect us against the risks associated with foreign currency fluctuations. 25 The table below provides information about our foreign currency forward exchange contracts. The information is provided in U.S. dollar equivalents and presents the notional amount (contract amount), the weighted average contractual foreign currency exchange rates and fair value. Fair value represents the difference in value of the contracts at the spot rate at December 31, 2000 and the forward rate. All contracts mature within twelve months. FORWARD CONTRACTS
WEIGHTED AVERAGE AT DECEMBER 31, 2000 CONTRACT AMOUNT CONTRACT RATE FAIR VALUE - -------------------- --------------- ---------------- -------------- (IN THOUSANDS) (IN THOUSANDS) Forward currency to be sold under contract: Euro............................................ $25,666 1.07 $ 49 Japanese Yen.................................... 8,491 112.67 95 Australian Dollar............................... 7,546 1.79 25 Taiwan Dollar................................... 4,319 34.50 (162) Korean Won...................................... 3,937 1,270.10 (32) Swiss Franc..................................... 2,797 1.63 10 German Deutschmark.............................. 2,490 2.09 7 Singapore Dollar................................ 2,382 1.72 16 South African Rand.............................. 2,815 7.62 (33) French Franc.................................... 2,151 7.03 5 Thailand Bhat................................... 2,285 42.75 0 Czech Koruna.................................... 1,887 37.40 7 Other (individually less than $1 million)....... 1,549 * (2) ------- ----- Total............................................. $68,315 $ (15) ======= ===== Forward currency to be purchased under contract: British Pound................................... $10,843 0.67 $ (18) Other (individually less than $1 million)....... 530 * (2) ------- ----- Total............................................. $11,373 $ (20) ======= ===== Grand Total....................................... $79,688 $ (35) ======= =====
- ------------------------------ * Not meaningful EUROPEAN MONETARY CONVERSION On January 1, 1999, eleven of the fifteen member countries of the European Economic Community entered into a three-year transition phase during which a common currency, the "Euro," was introduced. Between January 1, 1999 and January 1, 2002, governments, companies and individuals may conduct business in these countries in both the Euro and existing national currencies. On January 1, 2002, the Euro will become the sole currency in these countries. During the transition phase, we will continue to evaluate the impact of conversion to the Euro on our business. In particular, we are reviewing: - Whether our internal software systems can process transactions denominated either in current national currencies or in the Euro, including converting currencies using computation methods specified by the European Economic Community, - The cost to us if we must modify or replace any of our internal software systems, and - Whether we will have to change the terms of any financial instruments in connection with our hedging activities 26 Based on current information and our evaluation to date, we do not expect the cost of any necessary corrective action to have a material adverse effect on our business. We have reviewed the effect of the conversion to the Euro on the prices of our products in the affected countries. As a result, we have made some adjustments to our prices to attempt to eliminate differentials that were identified. However, we will continue to evaluate the impact of these and other possible effects of the conversion to the Euro on our business. We cannot guarantee that the costs associated with conversion to the Euro or price adjustments will not in the future have a material adverse effect on our business. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities," which establishes standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. We adopted SFAS 133 in the first quarter of 2001. The initial adoption of SFAS 133 did not have a material effect on our operations or financial position. FACTORS THAT MAY AFFECT FUTURE RESULTS CURRENT AND POTENTIAL STOCKHOLDERS SHOULD CONSIDER CAREFULLY EACH OF THE FOLLOWING FACTORS IN MAKING THEIR INVESTMENT DECISIONS. THESE FACTORS SHOULD BE CONSIDERED TOGETHER WITH THE OTHER INFORMATION INCLUDED OR INCORPORATED BY REFERENCE IN THIS ANNUAL REPORT ON FORM 10-K. RISK FACTORS RECENT ORGANIZATIONAL CHANGES COULD DISRUPT OUR BUSINESS OPERATIONS, ADVERSELY AFFECT OUR ABILITY TO DEVELOP AND SELL OUR PRODUCTS AND MATERIALLY ADVERSELY AFFECT OUR FINANCIAL RESULTS. Beginning in August 2000, we began a comprehensive reorganization and restructuring of our company and business operations, including, among other things, consolidating our five operating business groups into two wholly owned operating subsidiaries. In addition, during the quarter ended September 30, 2000, we moved our corporate headquarters from Menlo Park, California to Westborough, Massachusetts and we formalized plans to reduce total headcount to approximately 3,400 and to consolidate certain physical locations in California and elsewhere. We may not achieve the anticipated benefits of the reorganization and restructuring. Moreover, it has and may in the future cause significant disruptions of our daily business operations, including the loss of key personnel and other employees necessary for us to effectively operate at all levels. Disruptions or operational difficulties could result in delays in product development cycles and sales of our products. In addition, we may not be able to create two separate, publicly-traded companies as a result of financial market conditions, a decrease in demand for our product offerings and other conditions beyond our control. The occurrence of one or more of these factors could distract our management team and materially adversely affect our business and financial results. WE MAY NOT BE ABLE TO RETAIN OUR KEY PERSONNEL DURING OUR ONGOING REORGANIZATION AND RESTRUCTURING AND ATTRACT AND RETAIN THE NEW PERSONNEL NECESSARY TO GROW THE TWO NEW OPERATING COMPANIES, WHICH COULD MATERIALLY ADVERSELY AFFECT OUR ABILITY TO DEVELOP AND SELL OUR PRODUCTS, SUPPORT OUR BUSINESS OPERATIONS AND GROW OUR BUSINESSES. Our future success depends on retaining the services of key personnel in all functional areas of our company, including engineering, sales, marketing, consulting and corporate services. For instance, we may be unable to continue to develop and support technologically advanced products and services if we fail to 27 retain and attract highly qualified engineers, and to market and sell those products and services if we fail to retain and attract well-qualified marketing and sales professionals. We may be unable to retain key individuals in all of these areas during our reorganization and restructuring and we may not succeed in attracting new employees to one or both of the new operating companies after the completion of the restructuring. The competition for experienced, well-qualified personnel in the software industry is intense, especially in the San Francisco and Boston metropolitan areas. Our ongoing reorganization and restructuring may make it difficult for us to compete effectively for the services of these individuals. If we fail to retain, attract and motivate key employees, we may be unable to complete the reorganization and restructuring, develop, market and sell new products, support the operations of the two new operating companies and sustain and grow the two businesses in the future, the occurrence of any of which could materially adversely affect our operating and financial results. OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO FLUCTUATIONS CAUSED BY MANY FACTORS, WHICH COULD RESULT IN OUR FAILING TO ACHIEVE REVENUE OR PROFITABILITY EXPECTATIONS. Our quarterly and annual results of operations have varied significantly in the past and are likely to continue to vary in the future due to a number of factors described below and elsewhere in this "Management's Discussion and Analysis of Financial Conditions and Results of Operations" section, many of which are beyond our control. Any one or more of the factors listed below or other factors could cause us to fail to achieve our revenue or profitability expectations. In particular, the failure to meet market expectations could cause a sharp drop in our stock price. These factors include: - Changes in demand for our products and services, including changes in growth rates in the industry as a whole and in the traditional database market and the relatively new business intelligence and electronic commerce markets in particular, - The size, timing and contractual terms of large orders for our software products, - Adjustments of delivery schedules to accommodate customer or regulatory requirements, - The budgeting cycles of our customers and potential customers, - The reaction of our customers and potential customers to our ongoing reorganization and restructuring, - Any downturn in our customers' businesses, in the domestic economy or in international economies where our customers do substantial business, - Changes in our pricing policies resulting from competitive pressures, such as aggressive price discounting by our competitors or other factors, - Our ability to develop and introduce on a timely basis new or enhanced versions of our products and solutions, - Changes in the mix of revenues attributable to domestic and international sales, and - Seasonal buying patterns which tend to peak in the fourth quarter. OUR COMMON STOCK HAS BEEN AND LIKELY WILL CONTINUE TO BE SUBJECT TO SUBSTANTIAL PRICE AND VOLUME FLUCTUATIONS WHICH MAY PREVENT STOCKHOLDERS FROM RESELLING THEIR SHARES AT OR ABOVE THE PRICE AT WHICH THEY PURCHASED THEIR SHARES. Fluctuations in the price and trading volume of our common stock may prevent stockholders from reselling their shares above the price at which they purchased their shares. Stock prices and trading volumes for many software companies fluctuate widely for a number of reasons, including some reasons 28 which may be unrelated to their businesses or results of operations. This market volatility, as well as general domestic or international economic, market and political conditions could materially adversely affect the market price of our common stock without regard to our operating performance. In addition, as occurred in the quarter ended September 30, 2000, our operating results may be below the expectations of public market analysts and investors. If this were to occur again, the market price of our common stock would likely decrease significantly again. The market price of our common stock has fluctuated significantly in the past and may continue to fluctuate significantly because of: - Market uncertainty about the company's business prospects as a result of our ongoing reorganization and restructuring, - Market uncertainty about the company's business prospects or the prospects for the relational database management systems ("RDBMS") and object-relational database management systems ("ORDBMS") markets, the business intelligence software market and the electronic commerce software solutions market, - Revenues or results of operations that do not meet or exceed analysts' expectations, - The introduction of new products or product enhancements by us or our competitors, and - General business conditions in the software industry. FLUCTUATIONS IN THE VALUE OF FOREIGN CURRENCIES COULD RESULT IN CURRENCY TRANSACTION LOSSES. Despite efforts to manage foreign exchange risk, our hedging activities may not adequately protect us against the risks associated with foreign currency fluctuations. As a consequence, we may incur losses in connection with fluctuations in foreign currency exchange rates. Most of our international revenue and expenses are denominated in local currencies. Due to the substantial volatility of currency exchange rates, among other factors, it is not possible to predict the effect of exchange rate fluctuations on our future operating results. Although we take into account changes in exchange rates over time in our pricing strategy, we do so only on an annual basis, resulting in substantial pricing exposure as a result of foreign exchange volatility during the period between annual pricing reviews. In addition, as noted previously, the sales cycles for our products is relatively long. Foreign currency fluctuations could, therefore, result in substantial changes in the financial impact of a specific transaction between the time of initial customer contact and revenue recognition. We have implemented a foreign exchange hedging program consisting principally of the purchase of forward foreign exchange contracts in the primary European and Asian currencies. This program is intended to hedge the value of intercompany accounts receivable or intercompany accounts payable denominated in foreign currencies against fluctuations in exchange rates until such receivables are collected or payables are disbursed. Additionally, uncertainties related to the Euro conversion could adversely affect our hedging activities. IF THE RDBMS AND THE ORDBMS MARKETS DECLINE OR DO NOT GROW, WE MAY SELL FEWER DATABASE PRODUCTS AND OUR SEPARATE DATABASE OPERATING BUSINESS MAY BE UNABLE TO SUSTAIN ITS CURRENT LEVEL OF OPERATIONS. If the growth rates for RDBMS or ORDBMS, respectively, decline for any reason, there will be less demand for Informix Software products, which would have a negative impact on our business and financial results. In particular, we cannot predict whether the sharp decline in revenue derived from licenses of these products during the year ended December 31, 2000 will continue. If it does, our financial results will be materially adversely affected. Declining demand for such products could threaten Informix Software's ability to sustain its present level of operations or to meet our expectations for future growth. Delays in market acceptance of our ORDBMS products could also result in fewer product sales. In recent years, the types and quantities of data required to be stored and managed has grown increasingly complex and includes, in addition to conventional character data, audio, video, text and three-dimensional 29 graphics in a high-performance scaleable environment. We have invested substantial resources in developing our ORDBMS product line. The market for ORDBMS products is new and evolving, and its growth depends upon a growing need to store and manage complex data and upon broader market acceptance of our products as a solution for this need. Organizations may not choose to make the transition from conventional RDBMS products to ORDBMS products. IF THE BUSINESS INTELLIGENCE AND DATA WAREHOUSE MARKETS DO NOT CONTINUE TO GROW, OR IF OUR PRODUCT OFFERINGS IN THESE MARKETS ARE NOT ACCEPTED, WE MAY NOT BE ABLE TO SELL OUR PRODUCTS OR GROW OUR OPERATING BUSINESSES. The business intelligence and data warehouse markets may not continue to grow, or may not grow rapidly, and our customers may not expand their use of data warehouse and business intelligence products. In addition, we may not be able to market and sell our products in these markets or otherwise compete effectively and generate significant revenue. Although demand for data warehouse and business intelligence software has grown in recent years, the markets are still emerging. Our future financial performance in this area and the success of both of our operating businesses will depend to a large extent on: - Continued growth in the number of organizations adopting data warehouses, - Our success in developing partnering arrangements with developers of software tools and applications for the data warehouse and business intelligence markets, - Existing customers expanding their use of data warehouses, and - The success of Ascential Software in developing and selling solutions for the business intelligence market. INTENSE COMPETITION COULD ADVERSELY AFFECT OUR ABILITY TO SELL OUR PRODUCTS AND SOLUTIONS OR GROW OUR TWO OPERATING BUSINESSES. We may not be able to compete successfully against current and/or future competitors and such inability could impair our ability to sell our products. The market for our products and solutions is highly competitive, diverse and is subject to rapid change. In particular, we expect that the technology underlying database solutions and products for the Internet and business intelligence needs will continue to change rapidly. For example, as customers embrace the Internet, Ascential Software will need to develop and enhance software solutions to support Internet applications. It is possible that our products and solutions will be rendered obsolete by technological advances. In addition, it is possible that demand for our traditional database products may decline sharply as customers demand more comprehensive software solutions, thereby jeopardizing our ability to grow the business of Informix Software. We currently face competition from a number of sources, including several large vendors that develop and market databases, applications, development tools, decision support products, consulting services and/ or complete database-driven solutions for the Internet. Our principal competitors for Informix Software include Computer Associates, IBM, Microsoft, NCR/Teradata, Oracle and Sybase. Our principal competitors for Ascential Software include IBM, Informatica, Bulldog, Hummingbird, Sagent, Cognos and Artesia and small, highly-focused companies offering single products or services that we include as part of an overall solution. A number of our competitors have significantly greater financial, technical, marketing and other resources than we have. As a result, these competitors may be able to respond more quickly to new or emerging technologies, evolving markets and changes in customer requirements or to devote greater resources to the development, promotion and sale of their products than we can. 30 IF THE INTERNET DOES NOT DEVELOP AS A MARKET FOR OUR SOLUTIONS OFFERINGS, WE MAY NOT BE ABLE TO GROW ASCENTIAL SOFTWARE INTO A VIABLE INDEPENDENT OPERATING BUSINESS. The Internet is a rapidly evolving market. We are unable to predict whether and to what extent Internet computing and electronic commerce will be embraced by consumers and traditional businesses. Our successful introduction of database-driven products and solutions for the Internet market will depend in large measure on: - The commitment by hardware and software vendors to manufacture, promote and distribute Internet access appliances, - The lower cost of ownership of Internet computing relative to client/server architecture, and - The ease of use and administration of the Internet relative to client/server architecture. In addition, if a sufficient number of vendors do not undertake a commitment to the internet, the market may not accept Internet computing or Internet computing may not generate significant revenues for our business. Also, standards for network protocols, as well as other industry-adopted and de facto standards for the Internet, are evolving rapidly. There can be no assurance that standards we have chosen will position our products to compete effectively for business opportunities as they arise on the Internet. The widespread acceptance and adoption of the Internet by traditional businesses for conducting business and exchanging information is likely only if the Internet provides these businesses with greater efficiencies and improvements. The failure of the Internet to continue to develop as a commercial or business medium could materially adversely affect our business. Even if the Internet and electronic commerce are widely accepted and adopted by consumers and businesses, our database-driven solutions for the Internet may not succeed. This market is new to our product development, marketing and sales organizations. We may not be able to market and sell products and solutions in this market successfully. In addition, our database-driven solutions for the Internet may not compete effectively with our competitors' products and solutions. Further, we may not generate significant revenue and/or margin in this market. Any of these events could materially, adversely affect our business, operating results and financial condition and our ability to create a separate, viable operating company. COMPETITION MAY AFFECT THE PRICING OF OUR PRODUCTS OR SERVICES, AND CHANGES IN PRODUCT MIX MAY OCCUR, EITHER OF WHICH MAY REDUCE OUR MARGINS. Existing and future competition or changes in our product or service pricing structure or product or service offerings could result in an immediate reduction in the prices of our products or services. Also, a significant change in the mix of software products and services that we sell, including the mix between higher margin software and maintenance products and lower margin consulting and training, could materially adversely affect our operating results for future quarters. In addition, the pricing strategies of competitors in the software database industry have historically been characterized by aggressive price discounting to encourage volume purchasing by customers. We may not be able to compete effectively against competitors who continue to aggressively discount the prices of their products. IF WE DO NOT RESPOND ADEQUATELY TO OUR INDUSTRY'S EVOLVING TECHNOLOGY STANDARDS OR DO NOT CONTINUE TO MEET THE SOPHISTICATED NEEDS OF OUR CUSTOMERS, SALES OF OUR SOLUTIONS OR PRODUCTS MAY DECLINE. Our future success will depend on our ability to address the increasingly sophisticated needs of our customers by supporting existing and emerging hardware, software, database and networking platforms. We will have to develop and introduce commercially viable enhancements to our existing products and solutions on a timely basis to keep pace with technological developments, evolving industry standards and changing customer requirements. If we do not enhance our products to meet these evolving needs, we will not sell as many products and solutions and our position in existing, emerging or potential markets could 31 be eroded rapidly by product advances. In addition, commercial acceptance of our products and solutions could also be adversely affected by critical or negative statements or reports by brokerage firms, industry and financial analysts and industry periodicals about us, our products or business, or by the advertising or marketing efforts of competitors, or by other factors that could adversely affect consumer perception. Our product development efforts will continue to require substantial financial and operational investment. We may not have sufficient resources to make the necessary investment or to attract and retain qualified software development engineers. In addition, we may not be able to internally develop new products or solutions quickly enough to respond to market forces. As a result, we may have to acquire technology or access to products or solutions through mergers and acquisitions, investments and partnering arrangements. We may not have sufficient cash, access to funding, or available equity to engage in such transactions. Moreover, we may not be able to forge partnering arrangements or strategic alliances on satisfactory terms, or at all, with the companies of our choice. IF A LARGE NUMBER OF THE ORDERS THAT ARE TYPICALLY BOOKED AT THE END OF A QUARTER ARE NOT BOOKED, OUR NET INCOME FOR THAT QUARTER COULD BE SUBSTANTIALLY REDUCED. Our software license revenue in any quarter often depends on orders booked and shipped in the last month, weeks or days of that quarter. At the end of each quarter, we typically have either minimal or no backlog of orders for the subsequent quarter. If a large number of orders or several large orders do not occur or are deferred, revenue in that quarter could be substantially reduced. SEASONAL TRENDS IN SALES OF OUR SOFTWARE PRODUCTS COULD ADVERSELY AFFECT OUR QUARTERLY OPERATING RESULTS AND LENGTHY SALES CYCLES FOR PRODUCTS MAKES REVENUES SUSCEPTIBLE TO FLUCTUATIONS. Our sales of software products have been affected by seasonal purchasing trends that materially affect our quarter-to-quarter operating results. We expect these seasonal trends to continue in the future. Revenue and operating results in our quarter ending December 31 are typically higher relative to other quarters because many customers make purchase decisions based on their calendar year-end budgeting requirements and because we measure our sales incentive plans for sales personnel on a calendar year basis. As a result, we have historically experienced a substantial decline in revenue in the first quarter of each fiscal year relative to the preceding quarter. Our sales cycles typically take many months to complete and vary depending on the product, service or solution that is being sold. The length of the sales cycle may vary depending on a number of factors over which we have little or no control, including the size of a potential transaction and the level of competition that we encounter in our selling activities. The sales cycle can be further extended for sales made through third party distributors. OUR FUTURE REVENUE AND OUR ABILITY TO MAKE INVESTMENTS IN DEVELOPING OUR PRODUCTS IS SUBSTANTIALLY DEPENDENT UPON OUR INSTALLED CUSTOMER BASE CONTINUING TO LICENSE OUR PRODUCTS AND RENEW OUR SERVICE AGREEMENTS. We depend on our installed customer base for future revenue from services and licenses of additional products. If our customers fail to renew their maintenance agreements, our revenue will be harmed. The maintenance agreements are generally renewable annually at the option of the customers and there are no minimum payment obligations or obligations to license additional software. Therefore, current customers may not necessarily generate significant maintenance revenue in future periods. In addition, customers may not necessarily purchase additional products or services. Our services revenue and maintenance revenue also depend upon the continued use of these services by our installed customer base. Any downturn in software license revenue could result in lower services revenue in future quarters. Moreover, if either license revenue or revenue from services declines, we may not have sufficient cash to finance investments or acquire technology. 32 THE SUCCESS OF OUR INTERNATIONAL OPERATIONS IS DEPENDENT UPON MANY FACTORS WHICH COULD ADVERSELY AFFECT OUR ABILITY TO SELL OUR PRODUCTS INTERNATIONALLY AND COULD AFFECT OUR PROFITABILITY. International sales represented approximately 50% of our total revenue during the year ended December 31, 2000. The international operations are, and any expanded international operations will be, subject to a variety of risks associated with conducting business internationally that could adversely affect our ability to sell our products internationally, and therefore, our profitability, including the following: - Difficulties in staffing and managing international operations, - Problems in collecting accounts receivable, - Longer payment cycles, - Fluctuations in currency exchange rates, - Seasonal reductions in business activity during the summer months in Europe and certain other parts of the world, - Uncertainties relative to regional, political and economic circumstances, - Recessionary environments in foreign economies, and - Increases in tariffs, duties, price controls or other restrictions on foreign currencies or trade barriers imposed by foreign countries. IF WE FAIL TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, COMPETITORS MAY BE ABLE TO USE OUR TECHNOLOGY OR TRADEMARKS AND THIS WOULD WEAKEN OUR COMPETITIVE POSITION, REDUCE OUR REVENUE AND INCREASE COSTS. Our success will continue to be heavily dependent upon proprietary technology. We rely primarily on a combination of patent, copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect our proprietary rights. These means of protecting proprietary rights may not be adequate, and the inability to protect intellectual property rights may adversely affect our business and/or financial condition. We currently hold 18 United States patents and several pending applications. There can be no assurance that any other patents covering our inventions will be issued or that any patent, if issued, will provide sufficiently broad protection or will prove enforceable in actions against alleged infringes. Our ability to sell our products and prevent competitors from misappropriating our proprietary technology and trade names is dependent upon protecting our intellectual property. Our products are generally licensed to end-users on a "right-to-use" basis under a license that restricts the use of the products for the customer's internal business purposes. We also rely on "shrink-wrap" and "click-wrap" licenses, which include a notice informing the end-user that by opening the product packaging, or in the case of a click-on license by clicking on an acceptance icon and downloading the product, the end-user agrees to be bound by the license agreement. Despite such precautions, it may be possible for unauthorized third parties to copy aspects of our current or future products or to obtain and use information that is regarded as proprietary. In addition, we have licensed the source code of our products to certain customers under certain circumstances and for restricted uses. In addition, we have also entered into source code escrow agreements with a number of our customers that generally require release of source code to the customer in the event the company enters bankruptcy or liquidation proceedings or otherwise ceases to conduct business. We may also be unable to protect our technology because: - Competitors may independently develop similar or superior technology, - Policing unauthorized use of software is difficult, - The laws of some foreign countries do not protect proprietary rights in software to the same extent as do the laws of the United States, 33 - "Shrink-wrap" and/or "click-wrap" licenses may be wholly or partially unenforceable under the laws of certain jurisdictions, and - Litigation to enforce intellectual property rights, to protect trade secrets, or to determine the validity and scope of the proprietary rights of others could result in substantial costs and diversion of resources. IN THE FUTURE, THIRD PARTIES COULD, FOR COMPETITIVE OR OTHER REASONS, ASSERT THAT OUR PRODUCTS INFRINGE THEIR INTELLECTUAL PROPERTY RIGHTS. As discussed in "Notes to the Consolidated Financial Statements--Note 12--Litigation," in February 2000, IBM filed a lawsuit against us claiming that some of our products infringe certain of IBM's patents ("IBM claim"). Although we dispute IBM's claims and intend to vigorously defend against them, other third parties may claim that our current or future products infringe their proprietary rights. The IBM claim and these other claims, with or without merit, could harm our business by increasing costs and by adversely affecting our ability to sell our products. Any such claim, including the IBM claim, with or without merit, could be time consuming to defend, result in costly litigation, cause product shipment delays or require us to enter into royalty or licensing agreements. Royalty or license agreements may not be available on acceptable terms or at all. It is expected that software product developers will increasingly be subject to infringement claims as the number of products and competitors in the software industry segment grows and the functionality of products in different industry segments overlaps. OUR INABILITY TO RELY ON THE STATUTORY "SAFE HARBOR" AS A RESULT OF THE SETTLEMENT OF THE SEC INVESTIGATION COULD HARM OUR BUSINESS. In July 1997, the SEC issued a formal order of private investigation against us and certain unidentified other entities and persons with respect to accounting matters, public disclosures and trading activity in our securities that were not described in the formal order. During the course of the investigation, we learned that the investigation concerned the events leading to the restatement of its financial statements, including fiscal years 1994, 1995 and 1996, that was publicly announced in November 1997. Effective January 11, 2000, the SEC and we entered into a settlement of the investigation against us. Pursuant to the settlement, we consented to the entry by the SEC of an Order Instituting Public Administrative Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease and Desist Order. Pursuant to the order, we neither admitted nor denied the findings, except as to jurisdiction, contained in the order. The order prohibits us from violating and causing any violation of the anti-fraud provisions of the federal securities laws, for example by making materially false and misleading statements concerning its financial performance. The order also prohibits us from violating or causing any violation of the provisions of the federal securities laws requiring us to: (1) file accurate quarterly and annual reports with the SEC; (2) maintain accurate accounting books and records; and (3) maintain adequate internal accounting controls. Pursuant to the order, we are also required to cooperate in the SEC's continuing investigation of other entities and persons. In the event that we violate the order, we could be subject to substantial monetary penalties. As a consequence of the issuance of the January 2000 order, we will not, for a period of three years from the date of the issuance of the order, be able to rely on the "safe harbor" for forward-looking statements contained in the federal securities laws. The "safe harbor," among other things, limits potential legal actions against us in the event a forward-looking statement concerning our anticipated performance turns out to be inaccurate, unless it can be proved that, at the time the statement was made, we actually knew that the statement was false. If we become a defendant in any private securities litigation brought under the federal securities laws, our legal position in the litigation could be materially adversely affected by our inability to rely on the "safe harbor" provisions for forward-looking statements. 34 OTHER PROVISIONS IN OUR CHARTER DOCUMENTS MAY DISCOURAGE POTENTIAL ACQUISITION BIDS AND PREVENT CHANGES IN OUR MANAGEMENT THAT OUR STOCKHOLDERS MAY FAVOR. Other provisions in our charter documents could discourage potential acquisition proposals and could delay or prevent a change in control transaction that our stockholders may favor. The provisions include: - Elimination of the right of stockholders to act without holding a meeting, - Certain procedures for nominating directors and submitting proposals for consideration at stockholder meetings, and - A board of directors divided into three classes, with each class standing for election once every three years. These provisions are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and in the policies formulated by the board of directors and to discourage certain types of transactions involving an actual or threatened change of control. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal and, accordingly, could discourage potential acquisition proposals and could delay or prevent a change in control. Such provisions are also intended to discourage certain tactics that may be used in proxy fights but could, however, have the effect of discouraging others from making tender offers for shares of our common stock, and consequently, may also inhibit fluctuations in the market price of our common stock that could result from actual or rumored takeover attempts. These provisions may also have the effect of preventing changes in our management. In addition, we have adopted a rights agreement, commonly referred to as a "poison pill," that grants holders of our common stock preferential rights in the event of an unsolicited takeover attempt. These rights are denied to any stockholder involved in the takeover attempt and this has the effect of requiring cooperation with our board of directors. This may also prevent an increase in the market price of our common stock resulting from actual or rumored takeover attempts. The rights agreement could also discourage potential acquirers from making unsolicited acquisition bids. DELAWARE LAW MAY INHIBIT POTENTIAL ACQUISITION BIDS, WHICH MAY ADVERSELY AFFECT THE MARKET PRICE FOR OUR COMMON STOCK AND PREVENT CHANGES IN ITS MANAGEMENT THAT OUR STOCKHOLDERS MAY FAVOR. We are incorporated in Delaware and are subject to the anti-takeover provisions of the Delaware General Corporation Law, which regulates corporate acquisitions. Delaware law prevents certain Delaware corporations, including those corporations, such as Informix, whose securities are listed for trading on the Nasdaq National Market, from engaging, under certain circumstances, in a "business combination" with any "interested stockholder" for three years following the date that the stockholder became an interested stockholder. For purposes of Delaware law, a "business combination" would include, among other things, a merger or consolidation involving Informix and an interested stockholder and the sale of more than 10% of our assets. In general, Delaware law defines an "interested stockholder" as any entity or person beneficially owning 15% or more of the outstanding voting stock of a corporation and any entity or person affiliated with or controlling or controlled by such entity or person. Under Delaware law, a Delaware corporation may "opt out" of the anti-takeover provisions. We do not intend to "opt out" of these anti-takeover provisions of Delaware law. PROVISIONS IN OUR CHARTER DOCUMENTS WITH RESPECT TO UNDESIGNATED PREFERRED STOCK MAY DISCOURAGE POTENTIAL ACQUISITION BIDS FOR INFORMIX. Our board of directors is authorized to issue up to approximately 4,000,000 shares of undesignated preferred stock in one or more series. Our board of directors can fix the price, rights, preferences, privileges and restrictions of such preferred stock without any further vote or action by its stockholders. However, the issuance of shares of preferred stock may delay or prevent a change in control transaction without further action by our stockholders. As a result, the market price of our common stock and the 35 voting and other rights of the holders of our common stock may be adversely affected. The issuance of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of our common stock, including the loss of voting control to others. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is set forth in the section of Management's Discussion and Analysis of Financial Condition and Results of Operations Captioned "Disclosures about Market Rate Risk." ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is set forth in our Financial Statements and Notes thereto beginning at page F-1 of this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 36 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information regarding directors and executive officers required by Item 10 is incorporated by reference from our definitive proxy statement for our annual stockholders' meeting to be held on June 4, 2001. The information regarding executive officers required by Item 10 is provided in Item 1--Business. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 is incorporated by reference from our definitive proxy statement for our annual stockholders' meeting to be held on June 4, 2001. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by Item 12 is incorporated by reference from our definitive proxy statement for our annual stockholders' meeting to be held on June 4, 2001. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by Item 13 is incorporated by reference from our definitive proxy statement for our annual stockholders' meeting to be held on June 4, 2001. 37 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K The following are filed as a part of this Annual Report and included in Item 8: (A) 1. FINANCIAL STATEMENTS
PAGE -------- Report of Independent Auditors--KPMG LLP.................... F-2 Report of Independent Auditors--Deloitte & Touche LLP....... F-3 Consolidated Balance Sheets................................. F-4 Consolidated Statements of Operations....................... F-5 Consolidated Statements of Cash Flows....................... F-6 Consolidated Statements of Stockholders' Equity............. F-7 Notes to Consolidated Financial Statements.................. F-9
(A) 2. FINANCIAL STATEMENT SCHEDULE Schedule II--Valuation and Qualifying Accounts.............. F-43
(A) 3. EXHIBITS
EXHIBIT NO. EXHIBIT TITLE - ----------- ------------------------------------------------------------ 3.1 (3) Certificate of Incorporation of the Registrant, as amended 3.2 (a)(3) Bylaws of the Registrant, as amended 3.2 (b)(25) Amendment to Bylaws, dated April 24, 1998 3.2 (c)(2) Amendment to Bylaws, dated June 19, 1998 3.2 (d)(2) Amendment to Bylaws, dated July 15, 1998 3.2 (e)(27) Amendment to Bylaws, dated April 30, 1999 3.2 (f)(28) Amendment to Bylaws, dated August 16, 1999 3.2 (g)(29) Amendment to Bylaws, dated November 15, 1999 3.2 (h)(31) Amendment to Bylaws, dated March 16, 2000 3.2 (i)(32) Amendment to Bylaws, dated June 13, 2000 3.2 (j)(33) Amendment to Bylaws, dated September 18, 2000 3.2 (k)(1) Amendment to Bylaws, dated December 12, 2000 3.3 (5) Certificate of Designation of Series B Convertible Preferred Stock 4.1 (6) First Amended and Restated Rights Agreement, dated as of August 12, 1997, between the Registrant and BankBoston N.A., including the form of Rights Certificate attached thereto as Exhibit A 4.2 (7) Amendment, dated as of November 17, 1997, to the First Amended and Restated Rights Agreement between the Registrant and BankBoston, N.A. 10.1 (2) Form of Change of Control Agreement 10.2 (9) Form of Amended Indemnity Agreement 10.3 (10) 1989 Outside Directors Stock Option Plan 10.4 (25) Amendment to the 1989 Outside Directors Stock Option Plan 10.5 (2) Form of Nonqualified Stock Option Agreement under the Registrant's 1989 Outside Director's Stock Option Plan
38
EXHIBIT NO. EXHIBIT TITLE - ----------- ------------------------------------------------------------ 10.6 (12) 1986 Stock Option Plan, as amended 10.7 (13) 1994 Stock Option and Award Plan 10.8 (25) Form of Stock Option Agreement and Performance Award Agreement under the Registrant's 1994 Stock Option and Award Plan 10.9 (13) Form of Nonqualified Stock Option Agreement under the Registrant's 1994 Stock Option Plan 10.10(14) 1997 Employee Stock Purchase Plan 10.11(2) Enrollment/Change Form under the Registrant's 1997 Employee Stock Purchase Plan 10.12(15) Employment Agreement, dated July 18, 1997, between the Registrant and Robert J. Finocchio, Jr. 10.14(15) Offer of Employment Letter, dated September 24, 1997, from the Registrant to Jean-Yves Dexmier 10.23(5) Securities Purchase Agreement, dated as of November 17, 1997, between the Company and the purchasers listed therein 10.24(5) Registration Rights Agreement, dated as of November 17, 1997, between the Company and the purchasers listed therein 10.25(8) Menlo Oaks Corporate Center Standard Business Lease, dated May 16, 1985, between the Registrant and Amarok Bredero Partners for office space at 4100 Bohannon Drive, Menlo Park, California 10.26(8) Lease Amendment #1, dated July 2, 1986, between the Registrant and Amarok Bredero Partners for office space at 4100 Bohannon Drive, Menlo Park, California 10.27(18) Second Amendment to Lease, dated November 7, 1986 between the Registrant and Amarok Bredero Partners for office space at 4100 Bohannon Drive, Menlo Park, California 10.28(19) Third Amendment to Lease, dated June 18, 1991, between the Registrant and Menlo Oaks Partners, L.P. for office space at 4100 Bohannon Drive, Menlo Park, California 10.29(2) Fourth Amendment to Lease, dated June 30, 1997, between the Registrant and Menlo Oaks Partners, L.P. for office space at 4100 Bohannon Drive, Menlo Park, California 10.30(9) Menlo Oaks Corporate Center Standard Business Lease, dated September 4, 1987 between the Registrant and Menlo Oaks Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California 10.31(2) Side Letter Agreement, dated August 31, 1987, between the Registrant and Menlo Oaks Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California 10.32(2) Side Letter Agreement, dated October 27, 1987, between the Registrant and Menlo Oaks Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California 10.33(19) First Amendment to Lease, dated June 18, 1991, between the Registrant and Menlo Oaks Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California 10.34(20) Second Amendment to Lease, dated July 17, 1992, between the Registrant and Menlo Oaks Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California 10.35(2) Third Amendment to Lease, dated June 8, 1993 between the Registrant and Menlo Oaks Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
39
EXHIBIT NO. EXHIBIT TITLE - ----------- ------------------------------------------------------------ 10.36(21) Fourth Amendment to Lease, dated February 10, 1994, between the Registrant and Menlo Oaks Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California 10.37(2) Fifth Amendment to Lease, dated June 30, 1997 between the Registrant and Menlo Oaks Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California 10.38(21) Menlo Oaks Corporate Center Standard Business Lease, dated February 10, 1994 between the Registrant and Menlo Oaks Partners, L.P. for office space at 4600/4700 Bohannon Drive, Menlo Park, California 10.39(21) First Amendment to Lease, dated March 17, 1994, between the Registrant and Menlo Oaks Partners, L.P. for office space at 4600/4700 Bohannon Drive, Menlo Park, California 10.40(2) Second Amendment to Lease, dated September 22, 1994, between the Registrant and Menlo Oaks Partners, L.P. for office space at 4600/4700 Bohannon Drive, Menlo Park, California 10.41(2) Third Amendment to Lease, dated December 28, 1994, between the Registrant and Menlo Oaks Partners, L.P. for office space at 4600/4700 Bohannon Drive, Menlo Park, California 10.42(9) Office Lease, dated August 15, 1987, between the Registrant and Southlake Partners #1 for office space at 15961 College Blvd. and 11170 Lakeview Avenue, Lenexa, Kansas 10.43(2) First Amendment to Office Lease, dated April 15, 1988, between the Registrant and Southlake Partners #1 for office space at 15901 College Blvd., Lenexa, Kansas 10.44(2) Amendment to Office Lease, dated October 20, 1997, between the Registrant and Southlake Partners #1 for office space at 15901 College Blvd. (now 16011 College Blvd) Lenexa, Kansas 10.45(2) Office Lease, dated October 20, 1997, between the Registrant and Southlake Partners #1 for office space at 11170 Lakeview Avenue, Lenexa, Kansas 10.46(2) Senior Secured Credit Agreement, dated December 31, 1997, among Informix Software, Inc., certain banks and other financial institutions that either now or in the future are parties to the agreement, BankBoston, N.A. and Canadian Imperial Bank of Commerce 10.47(2) Pledge Agreement, dated December 31, 1997, by and between the Registrant and BankBoston, N.A. 10.48(2) Pledge and Security Agreement, dated as of December 31, 1997, between Informix Software, Inc. and BankBoston, N.A. 10.49(2) Continuing Guaranty, dated as of December 31, 1997, by the Registrant 10.50(25) 1997 Non-Statutory Stock Option Plan and form of Stock Option Agreement thereunder 10.52(25) Offer of Employment Letter, dated January 19, 1998, from the Registrant to Gary Lloyd 10.54(26) Offer of Employment Letter, dated December 16, 1998, from the Registrant to Howard A. Bain, III 10.55(25) Office Lease, dated November 10, 1994, between WVP Income Plus III and Siebel Systems, L.P. (assigned to Informix Corporation) for office space at 4005 Bohannon Drive, including addenda and amendments thereto. 10.56(25) Office Lease, dated April 10, 1995, between the Registrant and 3905 Bohannon Partners for office space at 3905 Bohannon Drive, including addenda thereto. 10.57(1) 1998 Non-Statutory Stock Option Plan, as amended
40
EXHIBIT NO. EXHIBIT TITLE - ----------- ------------------------------------------------------------ 10.58(30) Informix Corporation Change of Control and Severance Agreement, dated December 17, 1999, between the Registrant and F. Steven Weick 10.59(30) Informix Corporation Change of Control and Severance Agreement, dated December 15, 1999, between the Registrant and Wayne E. Page 10.60(30) Informix Corporation Change of Control and Severance Agreement, dated December 16, 1999, between the Registrant and Jean-Yves F. Dexmier 10.61(30) Informix Corporation Change of Control and Severance Agreement, dated December 15, 1999, between the Registrant and Gary Lloyd 10.62(30) Informix Corporation Change of Control and Severance Agreement, dated December 12, 1999, between the Registrant and James F. Hendrickson 10.63(30) Informix Corporation Change of Control and Severance Agreement, dated December 15, 1999, between the Registrant and Charles W. Chang 10.64(30) Informix Corporation/Robert J. Finocchio, Jr. Employment Transition Agreement, dated July 16, 1999, between the Registrant and Robert J. Finocchio, Jr. 10.65(30) Separation Agreement and Release of Claims, dated November 23, 1999, between the Registrant and Stephanie P. Schwartz 10.66(30) Separation Agreement and Release of Claims, dated December 23, 1999, between the Registrant and Diane L. Fraiman 10.67(31) Employment Agreement, dated February 3, 2000, between the Registrant and James Foy 10.68(31) Part-Time Employment and Transition Agreement between the Registrant and Peter Gyenes 10.69(31) Separation Agreement, dated March 20, 2000, between the Registrant and Howard A. Bain III 10.70(31) Offer of Employment Letter, dated March 9, 2000, from the Registrant to Laurent Mayer 10.71(32) Offer of Employment Letter, dated May 22, 2000, from the Registrant to Yon Yoon Jorden 10.72(33) Offer of Employment Letter, dated July 31, 2000, between the Registrant and Peter Gyenes 10.73(33) Informix Corporation Change of Control and Severance Agreement, effective August 28, 2000, between the Registrant and Peter Gyenes 10.74(33) Informix Corporation Change of Control and Severance Agreement, effective October 3, 2000, between the Registrant and Jamie Arnold 10.75(33) Indemnity Agreement, dated September 14, 2000, between the Registrant and Peter Gyenes 10.76(33) Indemnity Agreement, dated October 3, 2000, between the Registrant and Jamie Arnold 10.77(33) Settlement Agreement and General Release, effective July 12, 2000, between the Registrant and Jean Yves Dexmier 10.78(33) Separation Agreement, effective September 30, 2000, between the Registrant and F. Steven Weick 10.79(1) Separation Agreement, effective December 19, 2000, between the Registrant and Wayne E. Page 10.80(34) Settlement Agreement, effective January 11, 2000, between the Registrant and the Securities and Exchange Commission
41
EXHIBIT NO. EXHIBIT TITLE - ----------- ------------------------------------------------------------ 10.81(1) Fourth Addendum to Industrial Real Estate Lease, dated December 15, 2000, between Registrant and 3905 Bohannon Partners for office space at 3905 Bohannon Drive, Menlo Park, California 21.1 (1) Subsidiaries of the Registrant 23.1 (1) Consent of KPMG LLP, Independent Auditors 23.2 (1) Consent of Deloitte & Touche LLP, Independent Auditors 24.1 (2) Power of Attorney (set forth on signature page)
- ------------------------------ (1) Filed herewith (2) Incorporated by reference to exhibits filed with the Registrant's Registration Statement on Form S-1 (333-43991) (3) Incorporated by reference to exhibits filed with the Registrant's quarterly report on Form 10-Q for the fiscal quarter ended July 2, 1995 (4) Incorporated by reference to exhibits filed with the Registrant's report on Form 8-K filed with the Commission on August 25, 1997 (5) Incorporated by reference to exhibits filed with the Registrant's report on Form 8-K filed with the Commission on December 4, 1997 (6) Incorporated by reference to exhibits filed with the amendment to the Registrant's Registration Statement on Form 8-A/A (File No. 000-15325) filed with the Commission on September 3, 1997 (7) Incorporated by reference to exhibits filed with the amendment to the Registrant's Registration Statement on Form 8-A/A (File No. 000-15325) filed with the Commission on December 3, 1997 (8) Incorporated by reference to exhibits filed with the Registrant's Registration Statement on Form S-1 (File No. 33-8006) (9) Incorporated by reference to exhibit filed with the Registrant's annual report on Form 10-K for the fiscal year ended December 31, 1988 (10) Incorporated by reference to exhibits filed with the Registrant's Registration Statement on Form S-8 (File No. 33-31116) (11) Incorporated by reference to exhibits filed with the Registrant's Registration Statement on Form S-8 (File No. 33-50608) (12) Incorporated by reference to exhibits filed with Registrant's Registration Statements on Form S-8 (File Nos: 33-22862, 33-31117 and 33-506-10) (13) Incorporated by reference to exhibits filed with the Registrant's Registration Statement on Form S-8 (File No. 333-31369) filed with the Commission on July 16, 1997 (14) Incorporated by reference to exhibits filed with the Registrant's Registration Statement on Form S-8 (File No. 333-31371) filed with the Commission on July 16, 1997 (15) Incorporated by reference to exhibits filed with the Registrant's quarterly report on Form 10-Q for the fiscal quarter ended September 28, 1997 (16) Incorporated by reference to exhibits filed with Registrant's annual report on Form 10-K for the fiscal year ended December 31, 1989 (17) Incorporated by reference to exhibits filed with Registrant's report on Form 8-K filed with the Commission on December 2, 1997 (18) Incorporated by reference to exhibits filed with Registrant's annual report on Form 10-K for the fiscal year ended December 31, 1986 (19) Incorporated by reference to exhibits filed with Registrant's annual report on Form 10-K for the fiscal year ended December 31, 1991 (20) Incorporated by reference to exhibits filed with Registrant's annual report on Form 10-K for the fiscal year ended December 31, 1992 (21) Incorporated by reference to exhibits filed with Registrant's annual report on Form 10-K for the fiscal year ended December 31, 1993 42 (22) Incorporated by reference to exhibits filed with the Registrant's amendment to its annual report on Form 10-K/A for the fiscal year ended December 31, 1996 filed with the Commission on November 18, 1997 (23) Incorporated by reference to exhibits filed with the Registrant's annual report on Form 10-K for the fiscal year ended December 31, 1996 (24) Incorporated by reference to exhibits filed with the Registrant's Registration Statement on Form S-8 (File no. 333-61843) filed with the Commission on August 19, 1998 (25) Incorporated by reference to exhibits filed with the Registrant's annual report on Form 10-K for the fiscal year ended December 31, 1997 (26) Incorporated by reference to exhibits filed with the Registrant's annual report on Form 10-K for the fiscal year ended December 31, 1998 (27) Incorporated by reference to exhibits filed with the Registrant's quarterly report on Form 10-Q for the fiscal quarter ended May 17, 1999 (28) Incorporated by reference to exhibits filed with the Registrant's quarterly report on Form 10-Q for the fiscal quarter ended August 16, 1999 (29) Incorporated by reference to exhibits filed with the Registrant's quarterly report on Form 10-Q for the fiscal quarter ended November 15, 1999 (30) Incorporated by reference to exhibits filed with the Registrant's annual report on Form 10-K for fiscal year ended December 31, 1999 (31) Incorporated by reference to exhibits filed with the Registrant's quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2000 (32) Incorporated by reference to exhibits filed with the Registrant's quarterly report on Form 10-Q for the fiscal quarter ended June 20, 2000 (33) Incorporated by reference to exhibits filed with the Registrant's quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2000 (34) Incorporated by reference to exhibits filed with the Registrant's report on Form 8-K filed with the Commission on January 19, 2000 Schedules not listed above have been omitted because the information required to be set forth therein is not applicable. (b) Reports on Form 8-K None 43 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Menlo Park, State of California, on the 23rd day of March, 2001. INFORMIX CORPORATION By: /s/ PETER GYENES -------------------------------------------- Peter Gyenes PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD OF DIRECTORS
POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY CONSTITUTES AND APPOINTS PETER GYENES AND GARY LLOYD AND EACH ONE OF THEM, ACTING INDIVIDUALLY AND WITHOUT THE OTHER, 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 EACH OF SAID ATTORNEYS-IN-FACT, OR HIS SUBSTITUTE OR SUBSTITUTES MAY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT ON FORM 10-K HAS BEEN SIGNED ON BEHALF OF THE REGISTRANT BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE --------- ----- ---- /s/ PETER GYENES ------------------------------------ President, Chief Executive Officer and March 23, 2001 (Peter Gyenes) Chairman of the Board of Directors /s/ JAMES ROBERT ARNOLD, JR. ------------------------------------ Vice President and Chief Financial March 23, 2001 (James Robert Arnold, Jr.) Officer (Principal Financial Officer) /s/ LESLIE G. DENEND ------------------------------------ Director March 23, 2001 (Leslie G. Denend) /s/ JAMES L. KOCH ------------------------------------ Director March 23, 2001 (James L. Koch) /s/ THOMAS A. MCDONNELL ------------------------------------ Director March 23, 2001 (Thomas A. McDonnell) /s/ ROBERT M. MORRILL ------------------------------------ Director March 23, 2001 (Robert M. Morrill)
44 INFORMIX CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE -------- Report of Independent Auditors--KPMG LLP.................... F-2 Report of Independent Auditors--Deloitte & Touche LLP....... F-3 Consolidated Balance Sheets................................. F-4 Consolidated Statements of Operations....................... F-5 Consolidated Statements of Cash Flows....................... F-6 Consolidated Statements of Stockholders' Equity............. F-7 Notes to Consolidated Financial Statements.................. F-9
F-1 REPORT OF INDEPENDENT AUDITORS Board of Directors and Stockholders-- Informix Corporation We have audited the accompanying consolidated balance sheets of Informix Corporation and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2000. The consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We did not audit the financial statements of Ardent Software, Inc., a company acquired by Informix Corporation in a business combination accounted for as a pooling-of-interests as described in Note 11 to the consolidated financial statements, which statements reflect total revenues constituting 16% and 14% in fiscal 1999 and 1998, respectively, of the consolidated totals. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Ardent Software, Inc., is based solely on the report of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Informix Corporation and subsidiaries as of December 31, 2000 and 1999 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP Mountain View, California January 24, 2001 F-2 REPORT OF INDEPENDENT AUDITORS TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF INFORMIX CORPORATION: We have audited the consolidated balance sheets of Ardent Software, Inc. and its subsidiaries as of December 31, 1999 (not included separately herein), and the related consolidated statements of operations, stockholders' equity, comprehensive income (loss), and cash flows for each of the two years in the period ended December 31, 1999 (not included separately herein). 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 in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, based on our audits, such consolidated financial statements present fairly, in all material respects, the financial position of the Company and its subsidiaries at December 31, 1999, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 to those financial statements, on March 1, 2000, Ardent Software, Inc. and its subsidiaries merged into Informix Corporation. The consolidated financial statements do not include any adjustments that might result from such event. /s/ DELOITTE & TOUCHE LLP Boston, Massachusetts January 28, 2000 (March 1, 2000 as to Note 1, "Merger with Informix Corporation") F-3 INFORMIX CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
DECEMBER 31, --------------------- 2000 1999 --------- --------- ASSETS CURRENT ASSETS Cash and cash equivalents................................. $ 128,420 $ 170,118 Short-term investments.................................... 88,541 102,469 Accounts receivable, net.................................. 235,429 247,196 Deferred taxes............................................ -- 5,544 Other current assets...................................... 17,330 38,056 --------- --------- Total current assets........................................ 469,720 563,383 --------- --------- PROPERTY AND EQUIPMENT, net................................. 67,617 68,581 SOFTWARE COSTS, net......................................... 41,444 45,722 LONG-TERM INVESTMENTS....................................... 11,185 17,272 INTANGIBLE ASSETS, net...................................... 48,258 81,843 OTHER ASSETS................................................ 17,657 16,536 --------- --------- Total Assets................................................ $ 655,881 $ 793,337 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable.......................................... $ 27,881 $ 30,694 Accrued expenses.......................................... 38,922 48,353 Accrued employee compensation............................. 66,167 70,875 Income taxes payable...................................... 23,139 21,803 Deferred revenue.......................................... 141,735 147,118 Advances from customers................................... 10,492 34,302 Accrued merger, realignment and other charges............. 28,210 8,675 Other current liabilities................................. 427 3,878 --------- --------- Total current liabilities................................... 336,973 365,698 --------- --------- OTHER NON-CURRENT LIABILITIES............................... 787 1,420 COMMITMENTS AND CONTINGENCIES (Note 8) STOCKHOLDERS' EQUITY Preferred stock, par value $.01 per share--5,000,000 shares authorized....................................... -- -- Series A-1 convertible preferred stock, 300,000 shares issued; none outstanding in 2000 and 1999............. -- -- Series B convertible preferred stock--50,000 shares issued; none outstanding in 2000 and 7,000 outstanding in 1999............................................... -- -- Common stock, par value $.01 per share--500,000,000 shares authorized; 280,363,000 and 275,594,000 shares issued and outstanding in 2000 and 1999, respectively.......... 2,804 2,756 Shares to be issued for litigation settlement............. 61,228 61,228 Additional paid-in capital................................ 632,866 632,536 Treasury stock............................................ -- (2,956) Accumulated deficit....................................... (359,132) (260,817) Accumulated other comprehensive loss...................... (19,645) (6,528) --------- --------- Total stockholders' equity.................................. 318,121 426,219 --------- --------- Total Liabilities and Stockholders' Equity.................. $ 655,881 $ 793,337 ========= =========
See Notes to Consolidated Financial Statements. F-4 INFORMIX CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED DECEMBER 31, ---------------------------------- 2000 1999 1998 ---------- ---------- -------- NET REVENUES Licenses................................................. $ 404,421 $ 535,879 $453,943 Services................................................. 524,898 503,232 400,577 ---------- ---------- -------- 929,319 1,039,111 854,520 COSTS AND EXPENSES Cost of software distribution............................ 50,422 50,157 41,996 Cost of services......................................... 184,581 207,979 178,458 Sales and marketing...................................... 402,569 370,701 313,642 Research and development................................. 166,076 188,105 167,167 General and administrative............................... 100,027 89,445 88,153 Write-off of acquired research and development........... -- 5,052 2,600 Merger, realignment and other charges.................... 126,828 12,093 4,640 ---------- ---------- -------- 1,030,503 923,532 796,656 ---------- ---------- -------- Operating income (loss).................................... (101,184) 115,579 57,864 OTHER INCOME (EXPENSE) Interest income.......................................... 14,339 12,362 12,424 Interest expense......................................... (454) (4,504) (6,934) Litigation settlement expense............................ -- (97,016) -- Other, net............................................... 5,002 2,574 (4,002) ---------- ---------- -------- INCOME (LOSS) BEFORE INCOME TAXES.......................... (82,297) 28,995 59,352 Income taxes............................................. 16,018 31,983 6,900 ---------- ---------- -------- NET INCOME (LOSS).......................................... (98,315) (2,988) 52,452 Preferred stock dividend................................. (191) (995) (3,478) Value assigned to warrants............................... -- -- (1,982) ---------- ---------- -------- NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS........ $ (98,506) $ (3,983) $ 46,992 ========== ========== ======== NET INCOME (LOSS) PER COMMON SHARE Basic.................................................... $ (0.34) $ (0.02) $ 0.21 ========== ========== ======== Diluted.................................................. $ (0.34) $ (0.02) $ 0.19 ========== ========== ======== SHARES USED IN PER SHARE CALCULATIONS Basic.................................................... 286,138 262,645 221,344 ========== ========== ======== Diluted.................................................. 286,138 262,645 241,187 ========== ========== ========
See Notes to Consolidated Financial Statements. F-5 INFORMIX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEARS ENDED DECEMBER 31, ------------------------------- 2000 1999 1998 --------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss)........................................... $ (98,315) $ (2,988) $ 52,452 Adjustments to reconcile net income (loss) to cash and cash equivalents provided by (used in) operating activities: License fees received in advance.......................... (34,506) (81,984) (66,069) Depreciation and amortization............................. 54,471 59,687 54,013 Amortization of capitalized software...................... 21,692 21,346 21,924 Write-off of capitalized software......................... -- 2,371 771 Write-off of long term assets............................. -- 5,894 -- Write-off of acquired research and development............ -- 5,052 2,600 Litigation settlement..................................... -- 91,000 -- Foreign currency transaction losses (gains)............... 1,012 (1,900) 2,641 (Gain) loss on sales of equity securities................. (2,895) (2,953) 500 (Gain) loss on disposal of property and equipment......... 4,848 (66) 2,201 Deferred tax expense...................................... 8,257 9,653 2,976 Provisions for losses on accounts receivable.............. 8,338 1,269 651 Merger, realignment and other charges..................... 126,828 12,093 4,640 Stock-based employee compensation......................... 531 209 943 Changes in operating assets and liabilities: Accounts receivable..................................... 9,339 (60,110) (43,885) Other current assets.................................... 14,293 (8,397) 53,913 Accounts payable, accrued expenses and other liabilities............................................ (88,541) (12,105) (79,662) Deferred maintenance revenue............................ (10,873) 2,642 29,622 --------- -------- -------- Net cash and cash equivalents provided by operating activities................................................ 14,479 40,713 40,231 --------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Investments of excess cash: Purchases of available-for-sale securities................ (125,841) (124,304) (53,054) Maturities of available-for-sale securities............... 87,145 38,484 9,725 Sales of available-for-sale securities.................... 53,363 31,930 24,300 Purchases of non-marketable equity securities............... (5,500) -- (7,009) Proceeds from sales of equity securities.................... 5,130 5,792 1,500 Purchases of property and equipment......................... (44,616) (29,759) (23,538) Proceeds from disposal of property and equipment............ 166 1,248 864 Additions to software costs................................. (32,782) (29,083) (21,644) Business combinations, net of cash acquired................. -- (3,248) 1,834 Other....................................................... 668 (1,522) (1,143) --------- -------- -------- Net cash and cash equivalents used in investing activities................................................ (62,267) (110,462) (68,165) --------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Advances from customers..................................... 10,733 6,539 11,402 Proceeds from issuance of common stock, net................. 37,204 35,635 25,145 Acquisition of common stock................................. (33,722) -- -- Proceeds from issuance of preferred stock, net.............. -- -- 42,919 Payments for structured settlements with resellers.......... (152) (4,135) -- Principal payments on capital leases........................ (1,853) (4,810) (16,840) Net borrowings under line of credit......................... -- 935 (6,932) --------- -------- -------- Net cash and cash equivalents provided by financing activities................................................ 12,210 34,164 55,694 --------- -------- -------- ADJUSTMENT TO CONFORM FISCAL YEAR OF POOLED COMPANY......... -- (733) -- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS............................................... (6,120) (3,190) 16,152 --------- -------- -------- Increase (decrease) in cash and cash equivalents............ (41,698) (39,508) 43,912 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 170,118 209,626 165,714 --------- -------- -------- CASH AND CASH EQUIVALENTS AT END OF YEAR.................... $ 128,420 $170,118 $209,626 ========= ======== ========
See Notes to Consolidated Financial Statements. F-6 INFORMIX CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
PREFERRED STOCK ----------------------------------------- SERIES A-1 SERIES B CLOUDSCAPE ------------------- ------------------- ------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT (In thousands) -------- -------- -------- -------- -------- -------- Balance at December 31, 1997................................ 160 $ 2 50 $ 1 3,535 $ 35 ---- --- --- --- ------ ---- Comprehensive income Net income................................................ Other comprehensive income Unrealized gain on available-for-sale securities, net of reclassification adjustments(1)....................... Foreign currency translation adjustments................ Other comprehensive income................................ Comprehensive income........................................ Issuance of preferred stock of Cloudscape................... 2,808 28 Tax benefit arising from early disposition of stock options................................................... Common stock issued under employee stock purchase and option plans..................................................... Issuance of common stock for services....................... Stock-based compensation expense resulting from stock options................................................... Exercise of Series A-1 convertible preferred stock warrants, net....................................................... 140 1 Conversion of Series A-1 to common stock.................... (300) (3) Conversion of Series B to common stock...................... (27) (1) Accrual of 5% cumulative preferred dividends on Series B convertible preferred stock............................... Additional Series B dividend................................ Acquisition of Red Brick.................................... ---- --- --- --- ------ ---- Balance at December 31, 1998................................ -- $-- 23 $-- 6,343 $ 63 ---- --- --- --- ------ ---- Comprehensive income Net income................................................ Other comprehensive income................................ Unrealized gain on available-for-sale securities, net of reclassification adjustments(1)....................... Foreign currency translation adjustments................ Other comprehensive income................................ Comprehensive income........................................ Acquisition of Prism Solutions, Inc......................... Conversion of Cloudscape Preferred to common stock.......... (6,343) (63) Tax benefit arising from early disposition of stock options................................................... Common stock issued under employee stock purchase and option plans..................................................... Repurchase and retirement of unvested Cloudscape options and founder's stock........................................... Stock-based compensation expense resulting from stock options................................................... Conversion of Series B to common stock...................... (16) Accrual of 5% cumulative preferred dividends on Series B convertible preferred stock............................... Repayment of Cloudscape shareholder loans................... Value of stock to be issued in Litigation Settlement........ Shares issued in Litigation Settlement...................... Adjustment to conform fiscal year of pooled company......... ---- --- --- --- ------ ---- Balances at December 31, 1999............................... -- $-- 7 $-- -- $ -- ---- --- --- --- ------ ---- SHARES TO BE ISSUED FOR LITIGATION COMMON STOCK SETTLEMENT ADDITIONAL TREASURY ------------------- -------------------- PAID-IN STOCK SHARES AMOUNT SHARES AMOUNT CAPITAL AMOUNT (In thousands) -------- -------- --------- -------- ---------- -------- Balance at December 31, 1997................................ 203,871 $2,039 -- $ -- $411,416 $(2,956) ------- ------ --------- ------- -------- ------- Comprehensive income Net income................................................ Other comprehensive income Unrealized gain on available-for-sale securities, net of reclassification adjustments(1)....................... Foreign currency translation adjustments................ Other comprehensive income................................ Comprehensive income........................................ Issuance of preferred stock of Cloudscape................... 9,991 Tax benefit arising from early disposition of stock options................................................... 1,244 Common stock issued under employee stock purchase and option plans..................................................... 10,069 100 25,052 Issuance of common stock for services....................... 46 1 14 Stock-based compensation expense resulting from stock options................................................... 943 Exercise of Series A-1 convertible preferred stock warrants, net....................................................... 32,899 Conversion of Series A-1 to common stock.................... 17,413 174 (171) Conversion of Series B to common stock...................... 6,471 65 (65) Accrual of 5% cumulative preferred dividends on Series B convertible preferred stock............................... (2,178) Additional Series B dividend................................ (1,300) Acquisition of Red Brick.................................... 7,591 76 35,838 ------- ------ --------- ------- -------- ------- Balance at December 31, 1998................................ 245,461 $2,455 -- $ -- $513,683 $(2,956) ------- ------ --------- ------- -------- ------- Comprehensive income Net income................................................ Other comprehensive income................................ Unrealized gain on available-for-sale securities, net of reclassification adjustments(1)....................... Foreign currency translation adjustments................ Other comprehensive income................................ Comprehensive income........................................ Acquisition of Prism Solutions, Inc......................... 8,720 86 48,098 Conversion of Cloudscape Preferred to common stock.......... 6,343 63 Tax benefit arising from early disposition of stock options................................................... 6,784 Common stock issued under employee stock purchase and option plans..................................................... 10,061 101 34,960 Repurchase and retirement of unvested Cloudscape options and founder's stock........................................... (157) (28) Stock-based compensation expense resulting from stock options................................................... 209 Conversion of Series B to common stock...................... 2,223 22 (22) Accrual of 5% cumulative preferred dividends on Series B convertible preferred stock............................... (995) Repayment of Cloudscape shareholder loans................... 104 Value of stock to be issued in Litigation Settlement........ 91,000 Shares issued in Litigation Settlement...................... 2,943 29 (29,772) 29,743 Adjustment to conform fiscal year of pooled company......... ------- ------ --------- ------- -------- ------- Balances at December 31, 1999............................... 275,594 $2,756 -- $61,228 $632,536 $(2,956) ------- ------ --------- ------- -------- ------- ACCUMULATED OTHER ACCUMULATED COMPREHENSIVE COMPREHENSIVE DEFICIT INCOME (LOSS) INCOME (LOSS) TOTALS (In thousands) ------------ -------------- -------------- -------- Balance at December 31, 1997................................ $(312,301) $(12,055) $ 86,181 --------- -------- -------- Comprehensive income Net income................................................ 52,452 52,452 52,452 Other comprehensive income Unrealized gain on available-for-sale securities, net of reclassification adjustments(1)....................... 5,202 5,202 Foreign currency translation adjustments................ 3,259 3,259 -------- Other comprehensive income................................ 8,461 8,461 -------- Comprehensive income........................................ 60,913 ======== Issuance of preferred stock of Cloudscape................... 10,019 Tax benefit arising from early disposition of stock options................................................... 1,244 Common stock issued under employee stock purchase and option plans..................................................... 25,152 Issuance of common stock for services....................... 15 Stock-based compensation expense resulting from stock options................................................... 943 Exercise of Series A-1 convertible preferred stock warrants, net....................................................... 32,900 Conversion of Series A-1 to common stock.................... -- Conversion of Series B to common stock...................... (1) Accrual of 5% cumulative preferred dividends on Series B convertible preferred stock............................... (2,178) Additional Series B dividend................................ (1,300) Acquisition of Red Brick.................................... 35,914 --------- -------- -------- Balance at December 31, 1998................................ $(259,849) $ (3,594) $249,802 --------- -------- -------- Comprehensive income Net income................................................ (2,988) (2,988) (2,988) Other comprehensive income................................ Unrealized gain on available-for-sale securities, net of reclassification adjustments(1)....................... 69 69 Foreign currency translation adjustments................ (3,003) (3,003) -------- Other comprehensive income................................ (2,934) (2,934) -------- Comprehensive income........................................ (5,922) ======== Acquisition of Prism Solutions, Inc......................... 48,184 Conversion of Cloudscape Preferred to common stock.......... -- Tax benefit arising from early disposition of stock options................................................... 6,784 Common stock issued under employee stock purchase and option plans..................................................... 35,061 Repurchase and retirement of unvested Cloudscape options and founder's stock........................................... (28) Stock-based compensation expense resulting from stock options................................................... 209 Conversion of Series B to common stock...................... -- Accrual of 5% cumulative preferred dividends on Series B convertible preferred stock............................... (995) Repayment of Cloudscape shareholder loans................... 104 Value of stock to be issued in Litigation Settlement........ 91,000 Shares issued in Litigation Settlement...................... -- Adjustment to conform fiscal year of pooled company......... 2,020 2,020 --------- -------- -------- Balances at December 31, 1999............................... $(260,817) $ (6,528) $426,219 --------- -------- --------
See Notes to Consolidated Financial Statements. F-7 INFORMIX CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)
PREFERRED STOCK ----------------------------------------- SERIES A-1 SERIES B CLOUDSCAPE ------------------- ------------------- ------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT (In thousands) -------- -------- -------- -------- -------- -------- Balances at December 31, 1999............................... -- $-- 7 $-- -- $ -- ---- --- --- --- ------ ---- Comprehensive income Net loss.................................................. Other comprehensive income................................ Unrealized loss on available-for-sale securities, net of reclassification adjustments(1)....................... Foreign currency translation adjustments................ Other comprehensive income................................ Comprehensive income........................................ Retirement of Ardent treasury stock......................... Exercise of stock options................................... Common stock issued under employee stock purchase plans..... Reversal of tax benefit arising from early disposition of stock options............................................. Exercise of warrants to purchase common stock............... Stock-based compensation expense resulting from stock options................................................... Repurchase and retirement of common stock................... Repurchase and retirement of unvested Cloudscape options and founder's stock........................................... Repayment of Cloudscape shareholder loans................... Conversion of Series B to common stock...................... (7) -- Accrual of 5% cumulative preferred dividends on Series B.... ---- --- --- --- ------ ---- Balance at December 31, 2000................................ -- $-- -- $-- -- $ -- ==== === === === ====== ==== SHARES TO BE ISSUED FOR LITIGATION COMMON STOCK SETTLEMENT ADDITIONAL TREASURY ------------------- -------------------- PAID-IN STOCK SHARES AMOUNT SHARES AMOUNT CAPITAL AMOUNT (In thousands) -------- -------- --------- -------- ---------- -------- Balances at December 31, 1999............................... 275,594 $2,756 -- $61,228 $632,536 $(2,956) ------- ------ --------- ------- -------- ------- Comprehensive income Net loss.................................................. Other comprehensive income................................ Unrealized loss on available-for-sale securities, net of reclassification adjustments(1)....................... Foreign currency translation adjustments................ Other comprehensive income................................ Comprehensive income........................................ Retirement of Ardent treasury stock......................... (2,956) 2,956 Exercise of stock options................................... 7,222 72 26,265 Common stock issued under employee stock purchase plans..... 2,043 21 9,692 Reversal of tax benefit arising from early disposition of stock options............................................. (488) Exercise of warrants to purchase common stock............... 412 4 1,068 Stock-based compensation expense resulting from stock options................................................... 531 Repurchase and retirement of common stock................... (6,400) (64) (33,658) Repurchase and retirement of unvested Cloudscape options and founder's stock........................................... (139) (1) (37) Repayment of Cloudscape shareholder loans................... 120 Conversion of Series B to common stock...................... 1,631 16 (16) Accrual of 5% cumulative preferred dividends on Series B.... (191) ------- ------ --------- ------- -------- ------- Balance at December 31, 2000................................ 280,363 $2,804 -- $61,228 $632,866 $ -- ======= ====== ========= ======= ======== ======= ACCUMULATED OTHER ACCUMULATED COMPREHENSIVE COMPREHENSIVE DEFICIT INCOME (LOSS) INCOME (LOSS) TOTALS (In thousands) ------------ -------------- -------------- -------- Balances at December 31, 1999............................... $(260,817) $ (6,528) $426,219 --------- -------- -------- Comprehensive income Net loss.................................................. (98,315) (98,315) (98,315) Other comprehensive income................................ Unrealized loss on available-for-sale securities, net of reclassification adjustments(1)....................... (7,332) (7,332) Foreign currency translation adjustments................ (5,785) (5,785) -------- Other comprehensive income................................ (13,117) (13,117) -------- Comprehensive income........................................ (111,432) ======== Retirement of Ardent treasury stock......................... -- Exercise of stock options................................... 26,337 Common stock issued under employee stock purchase plans..... 9,713 Reversal of tax benefit arising from early disposition of stock options............................................. (488) Exercise of warrants to purchase common stock............... 1,072 Stock-based compensation expense resulting from stock options................................................... 531 Repurchase and retirement of common stock................... (33,722) Repurchase and retirement of unvested Cloudscape options and founder's stock........................................... (38) Repayment of Cloudscape shareholder loans................... 120 Conversion of Series B to common stock...................... -- Accrual of 5% cumulative preferred dividends on Series B.... (191) --------- -------- -------- Balance at December 31, 2000................................ $(359,132) $(19,645) $318,121 ========= ======== ========
- ---------------------------------- (1) Disclosure of reclassification amount for the years ended:
2000 1999 1998 -------- -------- -------- Net unrealized gain (loss) on available-for-sale securities arising during period..................................... $(7,648) $ 5,189 $7,059 Tax (expense) or benefit on unrealized gain (loss) arising during period............................................. 3,211 (1,439) (1,857) Less: reclassification adjustment for net gains included in net income (loss)......................................... (2,895) (3,681) -- ------- ------- ------ Net unrealized gain (loss) on available-for-sale securities................................................ $(7,332) $ 69 $5,202 ======= ======= ======
See Notes to Consolidated Financial Statements. F-8 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND OPERATIONS. The Company is a leading multinational supplier of information management software and solutions to governments and enterprises worldwide. The Company designs, develops, manufactures, markets and supports relational and object-relational database management systems, connectivity interfaces and gateways and graphical and character-based application development tools for building database applications that allow customers to access, retrieve and manipulate business data. The Company also offers complete solutions, which include its database management software, its own and third party software and consulting services to help customers design and rapidly deploy data warehousing (decision support), web-based enterprise repository and electronic commerce applications. The principal geographic markets for the Company's products are North America, Europe, Asia/ Pacific, and Latin America. Customers include businesses ranging from small corporations to Fortune 1000 companies, principally in the manufacturing, financial services, telecommunications, media, retail/wholesale, hospitality, and government services sectors. BASIS OF PRESENTATION. The consolidated financial statements have been prepared to give retroactive effect to the merger with Cloudscape, Inc. ("Cloudscape") on October 8, 1999 and the merger with Ardent Software Inc. ("Ardent") on March 1, 2000. The consolidated financial statements also reflect Ardent's merger with Unidata, Inc. ("Unidata") in February 1998. The mergers were accounted for as poolings of interests and, accordingly, the consolidated financial statements have been restated for all periods presented as if Cloudscape, Ardent, Unidata and the Company had always been combined. Prior to the Cloudscape merger, Cloudscape's fiscal year ended March 31. In recording the pooling-of-interests combination, Informix's statement of operations for the year ended December 31, 1998 has been combined with the Cloudscape statement of operations for the year ended March 31, 1999. As a consequence, the results of Cloudscape for the three-month period ended March 31, 1999 are included in the results of operations for both the year ended December 31, 1998 and the year ended December 31, 1999. Cloudscape revenues and net loss for the three-month period ended March 31, 1999 were $347,000 and $2,020,000, respectively. The consolidated balance sheet of Informix at December 31, 1998 has been combined with the balance sheet of Cloudscape as of March 31, 1999. 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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of Informix Corporation and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. FOREIGN CURRENCY TRANSLATION. For foreign operations with the local currency as the functional currency, assets and liabilities are translated at year-end exchange rates, and statements of operations are translated at the exchange rates during the year. Exchange gains or losses arising from translation of such foreign entity financial statements are included as a component of other comprehensive income (loss). For foreign operations with the U.S. dollar as the functional currency, monetary assets and liabilities are remeasured at the year-end exchange rates as appropriate and non-monetary assets and liabilities are remeasured at historical exchange rates. Statements of operations are remeasured at the exchange rates during the year. Foreign currency transaction gains and losses are included in other income (expense), net. F-9 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The Company recorded net foreign currency transaction losses of $0.3 million, $0.3 million and $4.8 million for the years ended December 31, 2000, 1999 and 1998, respectively. DERIVATIVE FINANCIAL INSTRUMENTS. The Company enters into foreign currency forward exchange contracts to reduce its exposure to foreign currency risk due to fluctuations in exchange rates underlying the value of intercompany accounts receivable and payable denominated in foreign currencies (primarily European and Asian currencies) until such receivables are collected and payables are disbursed. A foreign currency forward exchange contract obligates the Company to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates or to make an equivalent U.S. dollar payment equal to the value of such exchange. These foreign currency forward exchange contracts are denominated in the same currency in which the underlying foreign currency receivables or payables are denominated and bear a contract value and maturity date which approximate the value and expected settlement date of the underlying transactions. As the Company's contracts are not designated and effective as hedges for financial reporting, discounts or premiums (the difference between the spot exchange rate and the forward exchange rate at inception of the contract) are recorded in earnings to other income (expense), net and changes in market value of the underlying contract are recorded in earnings as foreign exchange gains or losses. The Company operates in certain countries in Latin America, Eastern Europe, and Asia/Pacific where there are limited forward currency exchange markets and thus the Company has unhedged exposures in these currencies. Most of the Company's international revenue and expenses are denominated in local currencies. Due to the substantial volatility of currency exchange rates, among other factors, the Company cannot predict the effect of exchange rate fluctuations on the Company's future operating results. Although the Company takes into account changes in exchange rates over time in its pricing strategy, it does so only on an annual basis, resulting in substantial pricing exposure as a result of foreign exchange volatility during the period between annual pricing reviews. In addition, the sales cycles for the Company's products is relatively long, depending on a number of factors including the level of competition and the size of the transaction. Notwithstanding the Company's efforts to manage foreign exchange risk, there can be no assurances that the Company's hedging activities will adequately protect the Company against the risks associated with foreign currency fluctuations. REVENUE RECOGNITION. Revenue consists principally of fees for licenses of the Company's software products, maintenance, consulting, and training. The Company recognizes revenue using the residual method in accordance with Statement of Position 97-2 (SOP 97-2), "Software Revenue Recognition," as amended by SOP 98-9, "Modification of SOP 97-2, Software Revenue Recognition with Respect to Certain Transactions." Under the residual method, revenue is recognized in a multiple element arrangement in which Company-specific objective evidence of fair value exists for all of the undelivered elements in the arrangement, but does not exist for one or more of the delivered elements in the arrangement. Company-specific objective evidence of fair value of maintenance and other services is based on the Company's customary pricing for such maintenance and/or services when sold separately. At the outset of the arrangement with the customer, the Company defers revenue for the fair value of its undelivered elements (e.g., maintenance, consulting, and training) and recognizes revenue for the remainder of the arrangement fee attributable to the elements initially delivered in the arrangement (i.e., software product) when the basic criteria in SOP 97-2 have been met. If such evidence of fair value for each element of the arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence of fair value does exist or until all elements of the arrangement are delivered. F-10 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Under SOP 97-2, revenue attributable to an element in a customer arrangement is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, collectibility is probable, and the arrangement does not require services that are essential to the functionality of the software. If at the outset of the customer arrangement, the Company determines that the arrangement fee is not fixed or determinable or that collectibility is not probable, revenue is recognized when the arrangement fee becomes due and payable. The Company's specific policies for recognition of license revenues and services revenues are as follows: LICENSE REVENUE. The Company recognizes revenue from sales of software licenses to end users upon persuasive evidence of an arrangement, delivery of the software to a customer, determination that collection of a fixed or determinable license fee is considered probable, and determination that no undelivered services are essential to the functionality of the software. If consulting services are essential to the functionality of the licensed software, then both the license revenue and the consulting service revenue are recognized under the completed contract method of contract accounting. The Company's arrangements generally do not include services that are essential to the functionality of the software. Revenue for transactions with application vendors, OEMs, and distributors is generally recognized as earned when the licenses are resold or utilized by the reseller and all related obligations of the Company have been satisfied. The Company provides for sales allowances on an estimated basis. The Company accrues royalty revenue through the end of the reporting period based on reseller royalty reports or other forms of customer-specific historical information. In the absence of customer-specific historical information, royalty revenue is recognized when the customer-specific objective information becomes available. Any subsequent changes to previously recognized royalty revenues are reflected in the period when the updated information is received from the reseller. SERVICE REVENUE. Maintenance contracts generally call for the Company to provide technical support and software updates and upgrades to customers. Maintenance revenue is recognized ratably over the term of the maintenance contract, generally on a straight-line basis where all revenue recognition requirements are met. Other service revenue, primarily training and consulting, is generally recognized at the time the service is performed and it is determined that the Company has fulfilled its obligations resulting from the services contract. During the fourth quarter of 2000, the Company adopted Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," ("SAB No. 101"). The adoption of SAB No. 101 did not have a material effect on the Company's consolidated statement of financial position or results of operation. ADVANCES FROM CUSTOMERS. Amounts received in advance of revenue being recognized are recorded as a liability on the accompanying financial statements. The Company's license arrangements with some of its customers provide contractually for a non-refundable fee payable by the customer in single or multiple installment(s) at the initiation or over the term of the license arrangement. If the Company fails to comply with certain contractual terms of a specific license agreement, the Company could be required to refund the amount(s) received to the customer. F-11 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) RECEIVABLES FINANCING ARRANGEMENTS. Prior to 2000, the Company periodically sold certain accounts receivable to financial institutions. Such factoring arrangements are treated as sales, since the Company relinquishes control and all rights over the accounts that are transferred to the financial institution. Receivables sold under these arrangements totaled approximately $10.8 million in 1999 and $13.2 million in 1998. These sales were typically done on a limited recourse basis, and any potential losses were evaluated at the time the asset was sold. To date, no losses on factored receivables have been incurred and the fee charged to the Company by the factor has been recorded as interest expense. SOFTWARE COSTS. The Company accounts for its software development expenses in accordance with Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed." This statement requires that, once technological feasibility of a developing product has been established, all subsequent costs incurred in developing that product to a commercially acceptable level be capitalized and amortized ratably over the revenue life of the product. The Company uses a detail program design approach in determining technological feasibility. Software costs also include amounts paid for purchased software and outside development on products which have reached technological feasibility. All software costs are amortized as a cost of software distribution either on a straight-line basis, or on the basis of each product's projected revenues, whichever results in greater amortization, over the remaining estimated economic life of the product, which is generally estimated to be three years. The Company recorded amortization of $21.7 million, $21.3 million and $21.9 million of software costs in 2000, 1999 and 1998, respectively, in cost of software distribution. The Company accounts for the costs of computer software developed or obtained for internal use in accordance with Statement of Position 98-1 (SOP 98-1), "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," which was effective for fiscal years beginning after December 15, 1998. This statement requires that certain costs incurred during a software development project be capitalized. During the years ended December 31, 2000 and 1999, the Company capitalized approximately $3.3 million and $2.8 million under SOP 98-1, which will be amortized over the estimated useful life of the software developed, which is generally three years. During 2000, $2.4 million of software costs previously capitalized under SOP 98-1 were written off to sales and marketing expense when the Company determined that it was no longer probable that the development of a project would be completed. PROPERTY AND EQUIPMENT. Property and equipment are stated at cost less accumulated depreciation and amortization which is calculated using the straight-line method over the estimated useful lives of the assets. Estimated useful lives of 36 to 48 months are used on computer equipment, and an estimated useful life of seven years is used for furniture and fixtures. Depreciation and amortization of leasehold improvements is computed using the shorter of the remaining lease term or seven years. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of property and equipment to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets. Property and equipment to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. BUSINESSES ACQUIRED. The purchase price of businesses acquired, accounted for as purchase business combinations, is allocated to the tangible and identifiable intangible assets acquired based on their estimated fair values with any amount in excess of such allocations being designated as goodwill. Intangible F-12 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) assets are amortized on a straight-line basis over their estimated useful lives, which to date range from three to ten years. As of December 31, 2000, and 1999, the Company had $86.1 million and $115.0 million of intangible assets, with accumulated amortization of $37.8 million and $33.2 million, respectively, as a result of these acquisitions. Management periodically reviews intangible assets for impairment indicators. At the time management determines the existence of such indicators, the Company uses undiscounted cash flows of the acquired business over the remaining amortization period to initially determine whether impairment should be recognized. The Company then performs a subsequent calculation to measure the amount of the impairment loss based on the excess of the carrying value over the fair value of the impaired assets. If quoted market prices for the assets are not available, the fair value is calculated using the present value of estimated expected future cash flows. The cash flow calculation would be based on management's best estimates, using appropriate assumptions and projections at the time. The carrying-value of identifiable intangible assets are reviewed in a manner consistent with the policy for reviewing impairment of property and equipment, as described above. STOCK-BASED COMPENSATION. The Company accounts for stock-based awards to employees in accordance with Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees". Under APB 25, the Company generally recognizes no compensation expense with respect to such awards. CONCENTRATION OF CREDIT RISK. The Company designs, develops, manufactures, markets, and supports computer software systems to customers in diversified industries and in diversified geographic locations. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral. No single customer accounted for 10% or more of the consolidated net revenues of the Company in 2000, 1999 or 1998. CASH, CASH EQUIVALENTS, SHORT-TERM INVESTMENTS, AND LONG-TERM INVESTMENTS. The Company considers liquid investments purchased with an original remaining maturity of three months or less to be cash equivalents. Investments with an original remaining maturity of more than three months and which represent cash available for current operations are considered to be short-term investments. All other investments are considered long-term investments. Short-term and long-term investments are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, reported as a component of other comprehensive income (loss). The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in interest income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in other income (expense), net. The cost of securities sold is based on the specific identification method. Interest on securities classified as available-for-sale is included in interest income. The Company realized gross gains of approximately $2.9 million and $3.7 million on the sale of available-for-sale marketable securities during 2000 and 1999, respectively. Realized losses during 2000 and 1999 were not significant and during 1998 realized gains and losses were not significant. The Company invests its excess cash in accordance with its short-term and long-term investments policy, which is approved by the Board of Directors. The policy authorizes the investment of excess cash in government securities, municipal bonds, time deposits, certificates of deposit with approved financial institutions, commercial paper rated A-1/P-1, and other specific money market instruments of similar liquidity and credit quality. The Company has not experienced any significant losses related to these investments. F-13 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The Company invests in equity instruments of privately-held, information technology companies for business and strategic purposes. These investments are included in long-term investments and are accounted for under the cost method when ownership is less than 20% and the Company does not otherwise have significant influence over the investee. For these non-quoted investments, the Company's policy is to regularly review the assumptions underlying the operating performance and cash flow forecasts in assessing the carrying values. When the Company determines that a decline in fair value below the cost basis is other than temporary, the related investment is written down to fair value. FAIR VALUE OF FINANCIAL INSTRUMENTS. Fair values of cash, cash equivalents, short and long term investments and foreign currency forward contracts are based on quoted market prices. RECLASSIFICATIONS. Certain prior period amounts have been reclassified to conform to the current period presentation. SUPPLEMENTAL CASH FLOW DATA. The Company paid income taxes in the net amount of $4.3 million and $10.3 million during 2000 and 1999, respectively, and received a refund in the net amount of $31.0 million during 1998. NEW ACCOUNTING PRONOUNCEMENTS. In June 1998, the Financial Accounting Standards Board issued Statement No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities," which establishes standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The Company adopted SFAS 133 in the first quarter of 2001, and such adoption did not have a material effect on the Company's results of operations or financial position. NOTE 2--BALANCE SHEET COMPONENTS
DECEMBER 31, --------------------- 2000 1999 --------- --------- (IN THOUSANDS) Accounts receivable, net: Receivables............................................... $ 249,663 $ 264,077 Less: allowance for doubtful accounts..................... (14,234) (16,881) --------- --------- $ 235,429 $ 247,196 ========= ========= Property and equipment, net: Computer equipment........................................ $ 164,666 $ 200,651 Furniture and fixtures.................................... 33,323 47,601 Leasehold improvements.................................... 30,356 30,500 Buildings and other....................................... 2,772 2,837 --------- --------- 231,117 281,589 Less: accumulated depreciation and amortization........... (163,500) (213,008) --------- --------- $ 67,617 $ 68,581 ========= ========= Software costs, net: Capitalized software development costs.................... $ 67,949 $ 75,230 Less: accumulated amortization............................ (26,505) (29,508) --------- --------- $ 41,444 $ 45,722 ========= ========= Long-term investments: Marketable equity securities (Note 3)..................... $ 3,874 $ 12,466 Investments in privately-held companies................... 7,311 4,806 --------- --------- $ 11,185 $ 17,272 ========= =========
F-14 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 3--FINANCIAL INSTRUMENTS The following is a summary of available-for-sale debt and marketable equity securities:
AVAILABLE-FOR-SALE SECURITIES ----------------------- GROSS GROSS UNREALIZED UNREALIZED ESTIMATED DECEMBER 31, 2000 COST GAINS LOSSES FAIR VALUE - ----------------- -------- ---------- ---------- ---------- (IN THOUSANDS) U.S. treasury securities............................ $ 24,532 $ 69 $ (23) $ 24,578 Commercial paper, corporate bonds and medium-term notes............................................. 69,855 539 (76) 70,318 Municipal bonds..................................... 16,352 6 -- 16,358 -------- ------ ------- -------- Total debt securities............................. 110,739 614 (99) 111,254 Marketable equity securities........................ 7,217 1,487 (4,830) 3,874 -------- ------ ------- -------- $117,956 $2,101 $(4,929) $115,128 ======== ====== ======= ======== Amounts included in cash and cash equivalents....... $ 22,666 $ 48 $ (1) $ 22,713 Amounts included in short-term investments.......... 88,073 566 (98) 88,541 Amounts included in long-term investments........... 7,217 1,487 (4,830) 3,874 -------- ------ ------- -------- $117,956 $2,101 $(4,929) $115,128 ======== ====== ======= ======== DECEMBER 31, 1999 U.S. treasury securities............................ $ 30,118 $ 4 $ (179) $ 29,943 Commercial paper, corporate bonds and medium-term notes............................................. 104,229 336 (444) 104,121 Municipal bonds..................................... 11,733 -- (20) 11,713 -------- ------ ------- -------- Total debt securities............................. 146,080 340 (643) 145,777 Marketable equity securities........................ 4,448 8,018 -- 12,466 -------- ------ ------- -------- $150,528 $8,358 $ (643) $158,243 ======== ====== ======= ======== Amounts included in cash and cash equivalents....... $ 43,275 $ 33 $ -- $ 43,308 Amounts included in short-term investments.......... 102,805 307 (643) 102,469 Amounts included in long-term investments........... 4,448 8,018 -- 12,466 -------- ------ ------- -------- $150,528 $8,358 $ (643) $158,243 ======== ====== ======= ========
Maturities of debt securities at market value at December 31, 2000 are as follows (in thousands): Mature in one year or less.................................. $ 60,280 Mature after one year through five years.................... 50,974 -------- $111,254 ========
F-15 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 4--DERIVATIVE FINANCIAL INSTRUMENTS The Company enters into foreign currency forward exchange contracts primarily to hedge the value of intercompany accounts receivable or accounts payable denominated in foreign currencies against fluctuations in exchange rates until such receivables are collected or payables are disbursed. The purpose of the Company's foreign exchange exposure management policy and practices is to attempt to minimize the impact of exchange rate fluctuations on the value of the foreign currency denominated assets and liabilities being hedged. The table below summarizes by currency the contractual amounts of the Company's foreign currency forward exchange contracts at December 31, 2000 and December 31, 1999. The information is provided in U.S. dollar equivalents and presents the notional amount (contract amount) and the related fair value. As the Company's foreign currency forward contracts are not accounted for as hedges, they are carried at fair value. Fair value represents the prevailing financial market information as of December 31, 2000 and 1999. All contracts mature within twelve months. FORWARD CONTRACTS
AT DECEMBER 31, 2000 CONTRACT AMOUNT FAIR VALUE - -------------------- --------------- ---------- (IN THOUSANDS) Forward currency to be sold under contract: Euro...................................................... $25,666 $ 49 Japanese Yen.............................................. 8,491 95 Australian Dollar......................................... 7,546 25 Taiwan Dollar............................................. 4,319 (162) Korean Won................................................ 3,937 (32) Swiss Franc............................................... 2,797 10 German Deutschmark........................................ 2,490 7 Singapore Dollar.......................................... 2,382 16 South African Rand........................................ 2,815 (33) French Franc.............................................. 2,151 5 Thailand Bhat............................................. 2,285 -- Czech Koruna.............................................. 1,887 7 Other (individually less than $1 million)................. 1,549 (2) ------- ----- Total....................................................... $68,315 $ (15) ======= ===== Forward currency to be purchased under contract: British Pound............................................. $10,843 $ (18) Other (individually less than $1 million)................. 530 (2) ------- ----- Total....................................................... $11,373 $ (20) ======= ===== Grand Total................................................. $79,688 $ (35) ======= =====
F-16 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 4--DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
AT DECEMBER 31, 1999 CONTRACT AMOUNT FAIR VALUE - -------------------- --------------- ---------- (IN THOUSANDS) Forward currency to be sold under contract: Euro...................................................... $33,352 $ 198 Korean Won................................................ 5,314 (23) Australian Dollar......................................... 3,116 (7) Czech Koruna.............................................. 2,620 1 German Mark............................................... 2,013 122 Thai Bhat................................................. 1,852 (12) Singapore Dollar.......................................... 1,814 13 French Franc.............................................. 1,749 104 Other (individually less than $1 million)................. 3,687 (35) ------- ----- Total....................................................... $55,517 $ 361 ======= ===== Forward currency to be purchased under contract: British Pound............................................. $34,445 $ (52) Japanese Yen.............................................. 2,484 (36) Other (individually less than $1 million)................. 2,480 (57) ------- ----- Total....................................................... $39,409 $(145) ======= ===== Grand Total................................................. $94,926 $ 216 ======= =====
While the contract amounts provide one measure of the volume of these transactions, they do not represent the amount of the Company's exposure to credit risk. The amount of the Company's credit risk exposure (arising from the possible inabilities of counterparties to meet the terms of their contracts) is generally limited to the amounts, if any, by which the counterparties' obligations exceed the obligations of the Company as these contracts can be settled on a net basis at the option of the Company. The Company controls credit risk through credit approvals, limits and monitoring procedures. As of December 31, 2000 and 1999, other than foreign currency forward exchange contracts discussed immediately above, the Company does not currently invest in or hold any other derivative financial instruments. NOTE 5--PREFERRED STOCK In connection with the conversion of the Company's Series A Convertible Preferred Stock ("Series A Preferred") to Series A-1 Convertible Stock ("Series A-1 Preferred") in 1997, a warrant for 140,000 shares of Series A Preferred became a warrant for 140,000 shares of Series A-1 Preferred Stock. The aggregate purchase price is up to $35.0 million. The Series A-1 Preferred shares are generally not entitled to vote on corporate matters. The Series A-1 Preferred shares are convertible into common shares at any time, at the holder's option, at a per share price equal to 101% of the average price of the Company's common stock for the 30 days ending five trading days prior to conversion, but not greater than the lesser of (i) 105% of the common stock's average price of the first five trading days of such thirty day period, or (ii) $12 per share. If not converted prior, the Series A-1 Preferred will automatically convert into common shares eighteen months after their issuance, subject to extension of the automatic conversion date in certain defined circumstances of default. However, if at the time of conversion, the aggregate number of shares of common stock already issued and to be issued as a result of the conversion of the shares of the Series A-1 F-17 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 5--PREFERRED STOCK (CONTINUED) Convertible Preferred Stock were to exceed 19.9% of the total number of shares of then outstanding common stock, then such excess does not convert unless or until stockholder approval is obtained. In 1998, the holders of the Series A-1 Preferred Stock exercised warrants to purchase 140,000 additional shares of Series A-1 Preferred at $250 per share, resulting in net proceeds to the Company of $32.9 million. In addition, the Series A-1 Preferred stockholders converted 300,000 shares of Series A-1 Preferred into 17,412,433 shares of the Company's Common Stock. As a result of these conversions, no Series A-1 Preferred Stock or Series A-1 Preferred Warrants were outstanding at December 31, 1998 or thereafter. In November 1997, the Company sold 50,000 shares of newly authorized Series B Convertible Preferred Stock ("Series B Preferred"), face value $1,000 per share, for aggregate proceeds of $50.0 million. Such shares are generally not entitled to vote on corporate matters. In connection with this original offering, the Company also agreed to issue a warrant upon conversion of such Series B Preferred to purchase 20% of the shares of Common Stock into which the Series B Preferred is convertible, but no less than 1,500,000 shares at a per share exercise price which is presently indeterminable and will depend on the trading price of the Common Stock of the Company in the period prior to the conversion of the Series B Preferred. The Company also agreed to issue additional warrants to purchase up to an aggregate of 200,000 shares at a per share exercise price which is presently indeterminable and will depend on the trading price of the Common Stock of the Company in the period prior to the conversion of the Series B Preferred. The Series B Preferred is convertible at the election of the holder into shares of Common Stock beginning six months after issuance, and upon the occurrence of certain events, including a merger. The Series B Preferred will automatically convert into Common Stock three years following the date of its issuance. Each Series B Preferred share is convertible into the number of shares of Common Stock at a per share price equal to the lowest of (i) the average of the closing prices for the Common Stock for the 22 days immediately prior to the 180th day following the initial issuance date, (ii) 101% of the average closing price for the 22 trading days prior to the date of actual conversions, or (iii) 101% of the lowest closing price for the Common Stock during the five trading days immediately prior to the date of actual conversion. The conversion price of the Series B Preferred is subject to modification and adjustment upon the occurrence of certain events. The Company reserved 22.8 million shares of Common Stock for issuance upon conversion of the Series B Preferred and upon the exercise of the Series B Warrants. The Series B Preferred accrues cumulative dividends at an annual rate of 5% of per share face value. The dividend is generally payable upon the conversion or redemption of the Series B Preferred, and may be paid in cash or, at the holder's election, in shares of Common Stock. During 1998, holders of the Series B Preferred Stock converted a total of 26,700 shares of Series B Preferred into 6,471,647 shares of the Company's Common Stock. In connection with such conversions, the Company also issued such Series B Preferred Stockholders warrants to purchase up to 1,494,319 shares of Common Stock at a purchase price of $7.84 per share and paid cash dividends in the amount of $1,170,068 to such stockholders. Also during 1998, the Company issued a warrant pursuant to the provisions of the Series B Preferred to purchase up to an additional 50,000 shares of Common Stock at a purchase price of $7.84 per share to a financial advisor of the Company in connection with services provided by such financial advisor related to the sale of shares of the Series B Preferred in November 1997. During 1999, holders of the Series B Preferred Stock converted a total of 16,300 shares of Series B Preferred into 2,223,156 shares of the Company's Common Stock. In connection with such conversions, the Company also issued such Series B Preferred Stockholders warrants to purchase up to 444,628 shares of F-18 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 5--PREFERRED STOCK (CONTINUED) Common Stock at a purchase price of $7.84 per share and paid cash dividends in the amount of $1,528,699 to such stockholders. During 2000, the sole remaining holder of the Company's Series B Preferred Stock converted all 7,000 shares of the Company's remaining Series B Preferred Stock into 1,630,751 shares of the Company's Common Stock. In connection with this conversion, the Company also issued this Series B Preferred Stockholder a warrant to purchase up to 326,150 shares of Common Stock at a purchase price of $7.84 per share and paid cash dividends, which were previously accrued, in the amount of $932,055 to this stockholder. As of December 31, 2000, no Series B Convertible Preferred Stock was outstanding and approximately 2,303,000 Series B Warrants were outstanding and exercisable through November 2002 at a per share exercise price of $7.84. The fair value of the warrants issued in connection with the Series A-1 Preferred and Series B Preferred was deemed to be a discount to the conversion price of the respective equity instruments available to the preferred stockholders. The discounts were recognized as a return to the preferred stockholders (similar to a dividend) over the minimum period during which the preferred stockholders could realize this return, immediate for the Series A-1 Preferred and six months for the Series B Preferred. The discount has been accreted to additional paid in capital (accumulated deficit) in the Company's balance sheet and has been disclosed as a decrease in the amount available to common stockholders on the face of the Company's statements of operations and for purposes of computing net income (loss) per share. The fair value assigned to the warrants is based on an independent appraisal performed by a nationally recognized investment banking firm. On June 9, 1998, the Company filed a Post-Effective Amendment to its Registration Statement on Form S-1 pertaining to the Company's sale of its Series B Preferred. The Securities and Exchange Commission ("SEC") reviewed the Post-Effective Amendment and declared it effective on August 13, 1998. The Series B Preferred stockholders claimed that during August 1998 they were prevented from selling shares of Series B Preferred stock until the SEC completed its review of the Post-Effective Amendment and, as a result, the Company had failed to comply with certain terms of a Registration Rights Agreement between the Series B Preferred stockholders and the Company. As a result, the Company recorded a $1.3 million dividend as of December 31, 1998, which was paid in cash to the Series B Preferred stockholders in the first quarter of 1999. F-19 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 6--NET INCOME (LOSS) PER COMMON SHARE The following table sets forth the computation of basic and diluted net income (loss) per common share:
2000 1999 1998 ---------- ---------- ----------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Numerator: Net income (loss)......................................... $(98,315) $ (2,988) $ 52,452 Preferred stock dividends................................. (191) (995) (3,478) Value assigned to warrants................................ -- -- (1,982) -------- -------- --------- Numerator for basic and diluted net income (loss) per common share............................................ $(98,506) $ (3,983) $ 46,992 Denominator: Denominator for basic net income (loss) per common share-- Weighted-average shares outstanding..................... 280,082 257,220 221,344 Weighted-average shares to be issued for litigation settlement............................................ 6,056 5,425 -- -------- -------- --------- 286,138 262,645 221,344 -------- -------- --------- Effect of dilutive securities: Employee stock options and restricted common stock...... -- -- 11,047 Series A-1 convertible preferred stock and warrants..... -- -- 2,748 Cloudscape convertible preferred stock.................. -- -- 5,794 Ardent warrants......................................... -- -- 254 -------- -------- --------- Denominator for diluted net income (loss) per common share--adjusted weighted-average shares and assumed conversions............................................. 286,138 262,645 241,187 ======== ======== ========= Basic net income (loss) per common share.................... $ (0.34) $ (0.02) $ 0.21 ======== ======== ========= Diluted net income (loss) per common share.................. $ (0.34) $ (0.02) $ 0.19 ======== ======== =========
The Company excluded potentially dilutive securities for each period presented from its diluted EPS computation because either the exercise price of the securities exceeded the average fair value of the Company's common stock or the Company had net losses, and, therefore, these securities were F-20 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 6--NET INCOME (LOSS) PER COMMON SHARE (CONTINUED) anti-dilutive. A summary of the excluded potentially dilutive securities and the related exercise/conversion features follows:
DECEMBER 31, ------------------------------ 2000 1999 1998 -------- -------- -------- (IN THOUSANDS) Potentially dilutive securities: Stock options............................................... 47,121 40,109 12,187 Contingently issuable shares for litigation settlement...... 12,730 -- -- Common Stock Warrants Series B.................................................. 2,303 2,168 1,750 Ardent Warrants........................................... -- 400 -- Series B Convertible Preferred Stock Preferred Shares.......................................... -- 7 23 Equivalent common shares upon assumed conversion.......... 887 2,568 7,901 Cloudscape Restricted Common Stock.......................... 36 212 --
The stock options have per share exercise prices ranging from $0.05 to $28.10, $0.05 to $33.25, and $6.75 to $42.09, at December 31, 2000, 1999 and 1998, respectively. As part of the Company's settlement of various private securities and related litigation arising out of the restatement of its financial statements, the Company agreed to issue a minimum of nine million shares ("settlement shares") of the Company's Common Stock at a guaranteed value of $91 million ("stock price guarantee"). The stock price guarantee is satisfied with respect to any distribution of settlement shares if the closing price of the Company's Common Stock averages at least $10.11 per share for ten consecutive trading days during the six-month period subsequent to the distribution. The first distribution of settlement shares occurred in November and December 1999 when the Company issued approximately 2.9 million settlement shares to the plaintiff's counsel. The stock price guarantee was satisfied with respect to the first distribution of settlement shares. The Company will issue the remainder of the settlement shares after the claims administrator notifies the Company that it has processed all of the claims submitted by class members. Based on the average closing price of the Company's Common Stock for the twenty consecutive trading days prior to December 31, 2000, it is estimated that the Company would have been obligated to issue an additional 12.7 million shares to satisfy the stock price guarantee ("contingently issuable shares"). The warrants to purchase shares of Common Stock of the Company (the "Series B Warrants") were issued in connection with the conversion of certain shares of the Company's Series B Preferred into shares of Common Stock of the Company. Upon conversion of the Series B Preferred, the holders are eligible to receive Series B Warrants to purchase that number of shares of the Company's Common Stock equal to 20% of the shares of the Company's Common Stock into which the Series B Preferred is convertible. As of December 31, 2000, approximately 2,303,000 Series B Warrants were outstanding and exercisable through November 2002 at a per share exercise price of $7.84. As of December 31, 2000, there was no Series B Convertible Preferred Stock outstanding as all remaining shares were converted into shares of common stock in July 2000. During 1996, Ardent issued warrants to existing stockholders to acquire approximately 400,000 shares of its common stock at an exercise price of $2.45. In February 2000, prior to the merger, all warrants were exercised. F-21 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 6--NET INCOME (LOSS) PER COMMON SHARE (CONTINUED) Certain of the outstanding shares issued in exchange for Cloudscape common stock and held by employees are subject to repurchase upon termination of employment. The number of shares subject to this repurchase right decreases as the shares vest over time, generally for four years. As of December 31, 2000, 1999 and 1998, 36,000, 212,000, and 1,407,000, shares, respectively, were subject to repurchase at a weighted-average exercise price of $0.23, $0.24, and $0.13, respectively. NOTE 7--EMPLOYEE BENEFIT PLANS OPTION PLANS In February 1989, the Company adopted the 1989 Outside Directors Stock Option Plan, whereby non-employee directors are automatically granted 15,000 non-qualified stock options upon election or re-election to the Board of Directors. One-third of the options vest and become exercisable in each full year of the Outside Director's continuous service as a director of the Company. A total of 1,600,000 shares have been authorized for issuance under the 1989 Plan, of which 515,000 shares are reserved for future issuance as of December 31, 2000. In April 1994, the Company adopted the 1994 Stock Option and Award Plan (the "1994 Plan"). Incentive Stock Options, Nonqualified Stock Options, Performance Shares, or a combination thereof, can be granted to employees, at not less than the fair market value on the date of grant and generally vest in annual installments over two to four years. The Compensation Committee may grant awards, provided that during any fiscal year of the Company, no participant shall receive stock options covering more than 250,000 shares or Performance Shares covering more than 100,000 shares. However, the committee may grant up to 500,000 shares during any fiscal year of the Company in which the individual first becomes an employee and/or is promoted from a position as a non-executive officer employee to a position as an executive officer. In April 2000, the Company's Board of Directors approved an amendment to this Plan whereby the options are generally not exercisable until one year from the date of grant. A total of 24,000,000 shares have been authorized for issuance under the 1998 Plan, of which 1,770,000 shares are reserved for future issuance as of December 31, 2000. In July 1997, the Company adopted the 1997 Non-Statutory Stock Option Plan ("the 1997 Stock Plan"), authorizing the grant of non-statutory stock options to employees and consultants. Terms of each option are determined by the Board or committee delegated such duties by the Board. A total of 1,015,000 shares have been authorized for issuance under the 1997 Stock Plan, none of which are reserved for future issuance as of December 31, 2000. In December 1997, the Company's Board of Directors authorized the repricing of outstanding options to purchase Common Stock under the Company's stock option plans. Employees were eligible to participate only if they remained actively employed at the effective date of the repricing and were only permitted to exchange options granted and outstanding prior to May 1, 1997. The repricing/option exchange was effective January 9, 1998 (the "Repricing Effective Date"). The repricing program offered eligible employees the opportunity to exchange eligible outstanding options with exercise prices in excess of the closing sales price of the Company's Common Stock on the Repricing Effective Date for a new option with an exercise price equal to such price. Other than the exercise price, each new option issued upon exchange has terms substantially equivalent to the surrendered option, including the number of shares, vesting terms and expiration except that options issued in connection with the exchange may not be exercised for a period of one year from the Repricing Effective Date. In addition, Officers and Directors of F-22 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7--EMPLOYEE BENEFIT PLANS (CONTINUED) the Company were not eligible to have their shares repriced. The exercise price for repriced options was $5.0938, the closing sales price of the Company's Common Stock on the Repricing Effective Date. In July 1998, the Company adopted the 1998 Non-Statutory Stock Option Plan ("the 1998 Stock Option Plan"). Options can be granted to employees and consultants with terms which are determined by the Board or committee delegated such duties by the Board. A total of 15,500,000 shares have been authorized for issuance under the 1998 Stock Plan, of which 1,617,000 shares are reserved for future issuance as of December 31, 2000. As a result of its acquisition of Red Brick Systems, Inc. ("Red Brick") in December 1998, the Company assumed all outstanding Red Brick stock options. Each Red Brick stock option so assumed is subject to the same terms and conditions as the original grant and generally vests over four years and expires ten years from the date of grant. Each option was adjusted at a ratio of 0.6 shares of Informix Common Stock for each one share of Red Brick Common Stock, and the exercise price was adjusted by dividing the exercise price by 0.6. As a result of its acquisition of Ardent in March 2000, the Company assumed all outstanding Ardent stock options. Each Ardent stock option so assumed is subject to the same terms and conditions as the original grant and generally vests over four years and expires ten years from the date of grant. Each option was adjusted at a ratio of 3.5 shares of Informix Common Stock for each one share of Ardent Common Stock, and the exercise price was adjusted by dividing the exercise price by 3.5. As a result of its acquisition of Cloudscape, Inc. ("Cloudscape") in October 1999, the Company assumed all outstanding Cloudscape stock options. Each Cloudscape stock option so assumed is subject to the same terms and conditions as the original grant and generally vests over four years and expires ten years from the date of grant. Each option was adjusted at a ratio of approximately 0.56 shares of Informix Common Stock for each one share of Cloudscape Common Stock, and the exercise price was adjusted by dividing the exercise price by approximately 0.56. F-23 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7--EMPLOYEE BENEFIT PLANS (CONTINUED) Following is a summary of activity for all stock option plans for the three years ended December 31, 2000:
NUMBER OF WEIGHTED AVERAGE SHARES EXERCISE PRICE ----------- ---------------- Outstanding at December 31, 1997............................ 33,922,370 $5.30 Options granted............................................. 21,900,385 4.45 Options assumed............................................. 2,466,727 5.40 Options exercised........................................... (7,927,561) 2.06 Options canceled............................................ (10,008,877) 8.41 ----------- ----- Outstanding at December 31, 1998............................ 40,353,044 4.71 Options granted............................................. 13,102,052 8.14 Options assumed............................................. 2,212,781 3.76 Options exercised........................................... (8,441,804) 3.04 Options canceled............................................ (7,117,793) 6.55 ----------- ----- Outstanding at December 31, 1999............................ 40,108,280 5.77 Options granted............................................. 24,801,805 6.71 Options exercised........................................... (7,222,002) 3.64 Options canceled............................................ (10,567,200) 7.50 ----------- ----- Outstanding at December 31, 2000............................ 47,120,883 $6.20 =========== =====
The following table summarizes information about options outstanding at December 31, 2000:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE -------------------------------------- ------------------------ NUMBER WEIGHTED NUMBER OUTSTANDING AVERAGE WEIGHTED EXERCISABLE WEIGHTED AS OF REMAINING AVERAGE AS OF AVERAGE DECEMBER 31, CONTRACTUAL EXERCISE DECEMBER 31, EXERCISE RANGE OF EXERCISE PRICES 2000 LIFE PRICE 2000 PRICE - ------------------------ ------------- ----------- -------- ------------- -------- $0.050 to $2.858....................... 5,858,459 6.49 $ 2.287 5,119,198 $ 2.260 $2.929 to $4.590....................... 4,355,193 7.95 3.760 1,461,486 3.698 $4.750 to $4.938....................... 13,693,685 9.52 4.937 814,011 4.932 $5.063 to $6.750....................... 7,299,159 7.48 5.467 4,473,613 5.459 $6.781 to $9.031....................... 8,448,520 8.13 7.719 3,035,893 7.937 $9.126 to $12.500...................... 5,404,861 8.20 10.425 1,967,501 10.627 $14.063 to $28.100..................... 2,061,007 9.00 16.174 97,602 21.357 ---------- ---------- $0.050 to $28.100...................... 47,120,884 8.26 6.201 16,969,304 5.451 ========== ==========
At December 31, 1999 and 1998, respectively, 14,331,842 and 13,242,144 options were exercisable in connection with all stock option plans. EMPLOYEE STOCK PURCHASE PLAN In May 1997, the Company's stockholders approved the 1997 Employee Stock Purchase Plan (the "1997 ESPP"). The Company has reserved 4,000,000 shares of Common Stock for issuance under the 1997 F-24 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7--EMPLOYEE BENEFIT PLANS (CONTINUED) ESPP. The 1997 ESPP permits participants to purchase Common Stock through payroll deductions of up to 15 percent of an employee's compensation, including commissions, overtime, bonuses and other incentive compensation. The price of Common Stock purchased under the 1997 ESPP is equal to 85 percent of the lower of the fair market value of the Common Stock at the beginning or at the end of each calendar quarter in which an eligible employee participates. The Plan qualifies as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended. During 2000, 1999 and 1998, the Company issued approximately 2,043,000 shares, 1,187,000 shares and 1,613,000 shares, respectively, under the 1997 ESPP. Ardent's Employee Stock Purchase Plan ("the Purchase Plan") provided for the purchase of common stock at six-month intervals at 85% of the lower of the fair market value on the first day or the last day of each six-month period. Ardent issued 432,000 and 528,000 shares in 1999 and 1998, respectively, under the Purchase Plan. This plan was terminated in April, 2000. STOCK-BASED COMPENSATION Pro forma information regarding the net income (loss) and net income (loss) per share is required by Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation," as if the Company had accounted for its stock based awards to employees under the fair value method of SFAS 123. The fair value of the Company's stock-based awards to employees was estimated using a Black-Scholes option pricing model. The fair value of the Company's stock-based awards was estimated assuming no expected dividends and the following weighted-average assumptions:
OPTIONS ESPP -------------------------------- -------------------------------- 2000 1999 1998 2000 1999 1998 -------- -------- -------- -------- -------- -------- Expected life (years)................... 4.5 4.5 4.5 .25 .25 .25 Expected volatility..................... 90% 70-73% 64-73% 90% 70-73% 56-95% Risk-free interest rate................. 5.8% 5.7% 4.7% 5.9% 4.6-5.1% 4.7-5.3%
For pro forma purposes, the estimated fair value of the Company's stock-based awards is amortized over the award's vesting period (for options) and the three month purchase period (for stock purchases under the ESPP). The Company's pro forma information follows:
2000 1999 1998 ---------- --------- --------- (IN THOUSANDS EXCEPT FOR PER SHARE INFORMATION) Net income (loss) applicable to common stockholders................................... As reported $ (98,506) $ (3,983) $46,992 Pro forma (140,654) (45,289) 7,050 Net income (loss) per common share: Basic.......................................... As reported $ (0.34) $ (0.02) $ 0.21 Pro forma (0.49) (0.17) 0.03 Diluted........................................ As reported (0.34) (0.02) 0.19 Pro forma (0.49) (0.17) 0.03
F-25 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7--EMPLOYEE BENEFIT PLANS (CONTINUED) The weighted-average fair value of the options granted during 2000, 1999 and 1998 was $4.70, $5.24 and $3.58 per share, respectively. The weighted-average fair value of employee stock purchase rights granted under the ESPP during 2000, 1999 and 1998 were $1.97, $2.27 and $1.72 per share, respectively. 401(k) PLAN The Company has a 401(k) plan covering substantially all of its U.S. employees. Under this plan, participating employees may defer up to 15 percent of their pre-tax earnings, subject to the Internal Revenue Service annual contribution limits. The Company matches 50 percent of each employee's contribution up to a maximum of $2,500. The Company's matching contributions to this 401(k) plan for 2000, 1999 and 1998 were $4.9 million, $4.2 million and $3.5 million, respectively. NOTE 8--COMMITMENTS AND CONTINGENCIES In the past, the Company has leased certain computer and office equipment under capital leases having terms of three-to-five years. During 2000, the Company did not enter into any new capital lease arrangements and during 1999 and 1998, did not finance a significant amount of equipment purchases under capital lease arrangements. Amounts capitalized for such leases are included on the consolidated balance sheets as property and equipment and at December 31, 2000 the amount was not significant. As of December 31, 1999, computer and office equipment under capital leases included in property and equipment was $8.8 million and accumulated amortization was $7.1 million. Amortization of the cost of leased equipment is included in depreciation expense. The Company leases certain of its office facilities and equipment under non-cancelable operating leases and total rent expense was $44.0 million, $42.4 million and $34.7 million in 2000, 1999 and 1998, respectively. The Company had a twenty-year capital lease on one of its operating facilities, which commenced in November 1994. In March 1998, the Company renegotiated this lease. As part of the renegotiation, the term of the lease was modified and reduced from 20 years to 14 years. As a result, the lease no longer qualified as a capital lease and had been reclassified as an operating lease. In connection with this reclassification, the Company removed the asset and liability from the balance sheet and recorded a net gain of approximately $0.6 million as a component of other income (expense) in 1998. In November 1996, the Company leased approximately 200,000 square feet of office space in Santa Clara, California. The lease term extends through March 2013 and the remaining minimum lease payments amount to approximately $68.6 million. In the fourth quarter of 1997, the Company assigned the lease to an unrelated third party. The Company remains contingently liable for minimum lease payments under this assignment. F-26 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 8--COMMITMENTS AND CONTINGENCIES (CONTINUED) Future minimum payments, by year and in the aggregate, under the capital and non-cancelable operating leases (excluding the assigned lease mentioned above) as of December 31, 2000, are as follows:
NON-CANCELABLE YEAR ENDING DECEMBER 31 CAPITAL LEASES OPERATING LEASES - ----------------------- -------------- ---------------- (IN THOUSANDS) 2001........................................................ $51 $ 36,312 2002........................................................ 2 26,880 2003........................................................ -- 15,318 2004........................................................ -- 6,091 2005........................................................ -- 3,778 Thereafter.................................................. -- 8,309 --- -------- Total payments.............................................. 53 $ 96,688 ======== Less: amount representing interest.......................... 2 --- Present value of minimum lease payments..................... 51 Less current portion........................................ 49 --- $ 2 ===
The Company has several active software development and service provider contracts with third-party technology providers. These agreements contain financial commitments by the Company of $8.3 million and $4.7 million in fiscal 2001 and 2002, respectively. In addition, the Company makes annual payments of approximately $1.8 million to third-party technology providers, and will continue to do so for such period as the Company utilizes the related technology in its products. NOTE 9--BUSINESS SEGMENTS In recent years, the Company has operated under four reportable operating segments which report to the Company's president and chief executive officer, (the "Chief Operating Decision Maker"). These reportable operating segments, North America, Europe, Asia/Pacific and Latin America, are organized, managed and analyzed geographically and operate in one industry segment: the development and marketing of information management software and related services. The Company has evaluated operating segment performance based primarily on net revenues and certain operating expenses. The Company's products are marketed internationally through the Company's subsidiaries and through application resellers, OEMs and distributors. F-27 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 9--BUSINESS SEGMENTS (CONTINUED) Financial information for the Company's North America, Europe, Asia/Pacific and Latin America operating segments is summarized below by year:
NORTH LATIN AMERICA EUROPE ASIA/PACIFIC AMERICA OTHER(3) TOTAL --------- -------- ------------ -------- --------- ---------- (IN THOUSANDS) 2000: Net revenues from unaffiliated customers.... $ 481,973 $278,534 $ 99,429 $ 69,383 $ -- $ 929,319 Transfers between segments(1)............... (25,191) 9,808 8,866 6,517 -- -- Total net revenues.......................... 456,782 288,342 108,295 75,900 -- 929,319 Operating income (loss)(2).................. (149,647) 53,936 (7,219) 1,628 118 (101,184) Identifiable assets at December 31.......... 653,565 177,003 32,018 13,348 (220,053) 655,881 Depreciation and amortization expense....... 42,945 7,332 2,853 1,341 -- 54,471 Capital expenditures........................ 32,258 9,246 1,995 1,117 -- 44,616 1999: Net revenues from unaffiliated customers.... $ 551,051 $320,040 $106,011 $ 62,009 $ -- $1,039,111 Transfers between segments(1)............... (34,259) 19,738 7,776 6,745 -- -- Total net revenues.......................... 516,792 339,778 113,787 68,754 -- 1,039,111 Operating income(2)......................... 58,142 19,764 32,908 3,700 1,065 115,579 Identifiable assets at December 31.......... 839,686 67,424 16,954 15,167 (145,894) 793,337 Depreciation and amortization expense....... 47,023 7,556 3,584 1,524 -- 59,687 Capital expenditures........................ 22,221 5,088 1,403 1,047 -- 29,759 1998: Net revenues from unaffiliated customers.... $ 438,539 $278,249 $ 87,754 $ 49,978 $ -- $ 854,520 Transfers between segments(1)............... (11,256) (52) 4,093 7,215 -- -- Total net revenues.......................... 427,283 278,197 91,847 57,193 -- 854,520 Operating income (loss)(2).................. 1,573 61,116 1,645 (7,173) 703 57,864 Identifiable assets at December 31.......... 747,074 156,949 79,754 40,328 (328,303) 695,802 Depreciation and amortization expense....... 37,702 10,779 4,047 1,485 -- 54,013 Capital expenditures........................ 16,611 5,047 1,086 794 -- 23,538
- ------------------------------ (1) The Company makes allocations of revenue to operating segments depending on the location of the country where the order is placed, the location of the country where the license is installed or service is delivered, the type of revenue (license or service) and whether the sale was through a reseller or to an end user. The accounting policies of the segments are the same as those described in Note 1--Summary of Significant Accounting Policies. (2) Operating income/(loss) excludes the effect of transfers between segments. (3) Represents consolidating adjustments such as elimination of intercompany balances. F-28 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 9--BUSINESS SEGMENTS (CONTINUED) The reconciliation of the operating income (loss) of the Company's reportable operating segments to the Company's income (loss) before income taxes is as follows:
2000 1999 1998 --------- -------- -------- (IN THOUSANDS) Operating income (loss) of reportable operating segments.... $(101,302) $114,514 $57,161 Consolidating adjustments................................... 118 1,065 703 Other income (expense)...................................... 18,887 (86,584) 1,488 --------- -------- ------- Income (loss) before income taxes........................... $ (82,297) $ 28,995 $59,352 ========= ======== =======
On September 19, 2000, the Company announced organizational changes as part of its strategic realignment, which include the establishment of two operating businesses. The first, Informix Software, will focus on providing database management systems for data warehousing, transaction processing, and e-Business applications. The second, Ascential Software, is a newly established information asset management company being launched to provide content management, data integration infrastructure and enterprise portal software solutions to organizations worldwide. This follows the Company's announcement on August 9, 2000, of several strategic initiatives, amongst which was the consolidation of five business groups into two operations, Database Business Operations and Solutions Business Operations, which more effectively capture the Company's current operations and form the foundation for the two new operating companies, Informix Software and Ascential Software. Revenues from external customers for each group of similar products and services are summarized below by year (in millions):
2000 1999 1998 -------- -------- -------- INFORMIX SOFTWARE License revenues.......................................... $337.7 $ 481.9 $439.6 Service revenues Maintenance revenues.................................... 392.4 361.3 285.7 Consulting and education revenues....................... 77.5 111.8 111.7 ------ -------- ------ Total service revenues.................................. 469.9 473.1 397.4 ------ -------- ------ Total revenues--Informix Software......................... $807.6 $ 955.0 $837.0 ====== ======== ====== ASCENTIAL SOFTWARE License revenues.......................................... $ 66.7 $ 54.0 $ 14.3 Service revenues Maintenance revenues.................................... 20.1 6.9 0.9 Consulting and education revenues....................... 34.9 23.2 2.3 ------ -------- ------ Total service revenues.................................. 55.0 30.1 3.2 ------ -------- ------ Total revenues--Ascential Software........................ $121.7 $ 84.1 $ 17.5 ====== ======== ====== INFORMIX CORPORATION (COMBINED TOTAL OF INFORMIX SOFTWARE AND ASCENTIAL SOFTWARE) License revenues.......................................... $404.4 $ 535.9 $453.9 Service revenues Maintenance revenues.................................... 412.5 368.2 286.6 Consulting and education revenues....................... 112.4 135.0 114.0 ------ -------- ------ Total service revenues.................................. 524.9 503.2 400.6 ------ -------- ------ Total revenues--Informix Corporation...................... $929.3 $1,039.1 $854.5 ====== ======== ======
F-29 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 9--BUSINESS SEGMENTS (CONTINUED) Information as to the Company's operations in different geographical areas is as follows:
2000 1999 1998 -------- -------- -------- (IN MILLIONS) Revenues, net of transfers between segments: United States............................................. $456.8 $ 516.8 $427.3 ------ -------- ------ Total North America....................................... 456.8 516.8 427.3 ------ -------- ------ United Kingdom............................................ 79.4 104.7 86.8 Germany................................................... 65.4 75.1 69.9 France.................................................... 31.0 47.1 29.1 Italy..................................................... 16.4 13.6 10.9 Spain..................................................... 13.9 14.5 10.8 Other countries........................................... 82.2 84.8 70.7 ------ -------- ------ Total Europe.............................................. 288.3 339.8 278.2 ------ -------- ------ Japan..................................................... 27.5 32.3 26.2 Australia................................................. 19.0 24.3 17.1 China..................................................... 13.4 15.7 9.7 Korea..................................................... 13.1 8.6 5.6 Other countries........................................... 35.3 32.9 33.2 ------ -------- ------ Total Asia/Pacific........................................ 108.3 113.8 91.8 ------ -------- ------ Mexico.................................................... 34.8 31.4 21.6 Brazil.................................................... 12.6 9.6 11.3 Argentina................................................. 8.9 9.0 7.5 Other countries........................................... 19.6 18.7 16.8 ------ -------- ------ Total Latin America....................................... 75.9 68.7 57.2 ------ -------- ------ $929.3 $1,039.1 $854.5 ====== ======== ======
F-30 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 9--BUSINESS SEGMENTS (CONTINUED)
2000 1999 -------- -------- (IN MILLIONS) Property and equipment, net United States............................................. $51.8 $52.7 Other..................................................... 0.6 0.2 ----- ----- Total North America....................................... 52.4 52.9 ----- ----- United Kingdom............................................ 2.7 2.7 Ireland................................................... 2.2 1.7 Germany................................................... 1.4 1.8 France.................................................... 1.1 1.4 Other countries........................................... 2.5 2.5 ----- ----- Total Europe.............................................. 9.9 10.1 ----- ----- Asia/Pacific.............................................. 2.8 3.0 Latin America............................................. 2.5 2.6 ----- ----- Total Asia/Pacific and Latin America...................... 5.3 5.6 ----- ----- $67.6 $68.6 ===== =====
NOTE 10--INCOME TAXES The provision for income taxes applicable to income (loss) before income taxes consists of the following:
2000 1999 1998 -------- -------- -------- (IN THOUSANDS) Currently payable: Federal................................................... $ 0 $ 5,929 $ 889 State..................................................... 50 754 195 Foreign................................................... 7,711 15,647 2,840 ------- ------- -------- 7,761 22,330 3,924 Deferred: Federal................................................... 3,211 187 (3,459) State..................................................... -- (958) (1,389) Foreign................................................... 5,046 10,424 7,824 ------- ------- -------- 8,257 9,653 2,976 ------- ------- -------- $16,018 $31,983 $ 6,900 ======= ======= ========
F-31 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10--INCOME TAXES (CONTINUED) Income (loss) before income taxes consists of the following:
2000 1999 1998 --------- -------- -------- (IN THOUSANDS) Domestic.................................................... $(152,876) $(20,705) $ 5,278 Foreign..................................................... 70,579 49,700 54,074 --------- -------- ------- $ (82,297) $ 28,995 $59,352 ========= ======== =======
The provision for income taxes differs from the amount computed by applying the federal statutory income tax rate to income (loss) before income taxes. The sources and tax effects of the differences are as follows:
2000 1999 1998 -------------------- ------------------- ------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT --------- -------- -------- -------- -------- -------- (IN THOUSANDS) Computed tax (benefit) at federal statutory rate....................... $ (28,804) 35.0% $ 10,148 35.0% $ 20,773 35.0% Valuation allowance.................... 46,854 (56.9) (11,940) (41.2) (11,396) (19.2) State income taxes, net of federal tax benefit.............................. 50 (0.1) 644 2.2 (1,229) (2.1) Foreign withholding taxes not currently creditable........................... 3,672 (4.5) 8,957 30.9 2,690 4.5 Foreign taxes, net..................... (20,078) 24.4 18,686 64.5 (4,729) (7.9) Non-deductible charges................. 15,750 (19.1) 3,515 12.1 1,272 2.1 Other, net............................. (1,426) 1.7 1,973 6.8 (481) (0.8) --------- ----- -------- ------ -------- ----- $ 16,018 (19.5)% $ 31,983 110.3% $ 6,900 11.6% ========= ===== ======== ====== ======== =====
F-32 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10--INCOME TAXES (CONTINUED) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities as of December 31, 2000 and 1999 are as follows:
2000 1999 --------- --------- (IN THOUSANDS) Deferred Tax Assets: Reserves and accrued expenses............................... $ 8,156 $ 11,373 Deferred revenue............................................ 4,039 3,098 Foreign net operating loss carryforwards.................... 23,114 21,025 Domestic net operating loss carryforwards................... 128,464 97,862 Lawsuit settlement.......................................... 23,085 23,085 Foreign taxes credit........................................ 14,257 10,077 R&D and AMT credit carryforwards............................ 31,038 28,474 Acquisition and restructuring reserve....................... 11,014 -- Other....................................................... 17,743 7,701 --------- --------- Total deferred tax assets................................... 260,910 202,695 Valuation allowance for deferred tax assets................. (250,549) (176,830) --------- --------- Deferred tax assets, net of valuation allowance............. 10,361 25,865 ========= ========= Deferred Tax Liabilities: Capitalized software........................................ 10,361 17,110 Valuation of investment portfolio FAS 115................... -- 3,211 --------- --------- Total deferred tax liabilities.............................. 10,361 20,321 --------- --------- Net deferred tax assets..................................... $ -- $ 5,544 ========= =========
At December 31, 2000, the Company had approximately $73.1 million and $321.2 million of foreign and federal net operating loss carryforwards, respectively. The foreign net operating loss carryforwards expire at various dates beginning in 2001. The federal net operating loss carryforwards expire at various dates beginning in 2004. At December 31, 2000, the Company had approximately $45.3 million of various federal tax credit carryforwards that will expire at various dates beginning in 2001. The valuation allowance was increased by $73.7 million in 2000 and was decreased by $0.7 million in 1999. At December 31, 2000 the Company has provided a valuation allowance against deferred tax assets in all jurisdictions as future income in each jurisdiction is uncertain. At December 31, 1999 the net deferred tax asset of $5.5 million represented the tax effect of net operating loss carryforwards existing in certain foreign jurisdictions that the Company believed were more likely than not to be realized, based on earnings in those jurisdictions. F-33 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10--INCOME TAXES (CONTINUED) Subsequently recognizable tax benefits relating to the valuation allowance for deferred tax assets at December 31, 2000 will be as follows: Income tax benefit from continuing operations............... $194,985 Goodwill and other noncurrent intangible assets............. 28,410 Additional paid-in capital.................................. 27,154 -------- Total....................................................... $250,549 ========
NOTE 11--BUSINESS COMBINATIONS POOLING-OF-INTERESTS COMBINATIONS On March 1, 2000, the Company completed its acquisition of Ardent, a provider of data integration infrastructure software for data warehouse, business intelligence, and e-business applications. In the acquisition, the former shareholders of Ardent received 3.5 shares of the Company's common stock in exchange for each outstanding Ardent share (the "Ardent Merger"). An aggregate of 70,437,000 shares of Informix common stock were issued pursuant to the Ardent Merger, and an aggregate of 17,174,000 options to purchase Ardent common stock were assumed by Informix. The Ardent Merger was accounted for as a pooling-of-interests combination and, accordingly, the consolidated financial statements for periods prior to the combination have been restated to include the accounts and results of operations of Ardent and all intercompany transactions have been eliminated. On October 8, 1999, the Company completed its acquisition of Cloudscape, a privately-held provider of synchronized database solutions for the remote and occasionally connected workforce. In the acquisition, the former shareholders of Cloudscape received 0.56 shares of the Company's common stock in exchange for each outstanding Cloudscape share (the "Cloudscape Merger"). An aggregate of 9,583,000 shares of Informix common stock were issued pursuant to the Cloudscape Merger, and an aggregate of 417,000 options and warrants to purchase Cloudscape common stock were assumed by Informix. The acquisition of Cloudscape was accounted for as a pooling-of-interests combination and, accordingly, the consolidated financial statements for the periods prior to the combination have been restated to include the accounts and results of operations of Cloudscape. In February 1998, Ardent merged with Unidata, Inc. ("Unidata") and issued 5,750,000 shares of Ardent common stock to Unidata shareholders for all their interest in Unidata. All outstanding Unidata options were assumed by Ardent. The merger was accounted for as a pooling-of-interests and, accordingly, the consolidated financial statements include the accounts and results of operations of Unidata for all periods prior to the merger. F-34 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 11--BUSINESS COMBINATIONS (CONTINUED) The results of operations previously reported by the separate pooled enterprises and the combined amounts presented in the accompanying consolidated financial statements are summarized below (in thousands):
YEARS ENDED DECEMBER 31, ------------------------- 1999 1998 ---------- -------- Net revenues: Informix.................................................. $ 868,708 $734,737 Ardent.................................................... 169,186 119,260 Cloudscape(1)............................................. 1,217 523 ---------- -------- Combined.................................................. $1,039,111 $854,520 ========== ======== Net income (loss): Informix.................................................. $ (5,256) $ 58,349 Ardent.................................................... 8,597 1,637 Cloudscape(1)............................................. (6,329) (7,534) ---------- -------- Combined.................................................. $ (2,988) $ 52,452 ========== ========
No adjustments were necessary to conform accounting policies of the combined entities. - ------------------------ (1) The amounts reported for Cloudscape for 1999 are for the nine months ended September 30, 1999 as the merger was completed on October 8, 1999. PURCHASE COMBINATIONS On April 26, 1999, Ardent acquired Prism Solutions, Inc. ("Prism"), a provider of data warehouse management software that assists customers in developing, managing and maintaining data warehouses. Under terms of the acquisition, Ardent issued 2,492,000 shares of its common stock in exchange for all outstanding shares of Prism common stock. In addition, Ardent issued options to purchase 632,000 shares of Ardent's common stock in exchange for outstanding options to purchase Prism common stock. The acquisition was accounted for using the purchase method of accounting, and a summary of the purchase price for the acquisition is as follows (in thousands): Stock and stock options, net of issuance costs.............. $48,184 Liabilities assumed......................................... 16,332 Accrued merger and integration costs........................ 9,724 ------- Total....................................................... $74,240 =======
F-35 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 11--BUSINESS COMBINATIONS (CONTINUED) The purchase price was allocated as follows: Tangible assets acquired.................................... $ 9,388 Intangible assets: Existing technology....................................... 10,296 Workforce................................................. 4,274 Customer list............................................. 1,645 Goodwill.................................................. 43,585 ------- Total intangible assets..................................... 59,800 In-process research and development......................... 5,052 ------- Total....................................................... $74,240 =======
Ardent determined the amount of the purchase price to be allocated to in-process research and development based on an independent appraisal of Prism, which indicated that approximately $5,052,000 of the acquired intangibles consisted of in-process research and development that had not yet reached technological feasibility and had no alternative future uses. Accordingly, Ardent expensed this amount to operations upon closing of the acquisition. The remaining identified intangible assets acquired were assigned fair values based upon an independent appraisal and amounted to $11.9 million. The excess of the purchase price over the identified tangible and intangible assets was recorded as goodwill and amounted to approximately $38.7 million. Total intangible assets acquired of approximately $50.6 million were included in "Intangible Assets" in the accompanying consolidated balance sheets, and are being amortized over three to ten years. On December 31, 1998, the Company acquired Red Brick Systems, Inc. ("Red Brick"), a provider of scalable decision support solutions for data warehousing, data marts, OLAP and data mining. Under terms of the acquisition, the Company issued approximately 7,600,000 shares of its common stock in exchange for all outstanding shares of Red Brick common stock. In addition, the Company issued options to purchase approximately 2.5 million shares of the Company's common stock in exchange for outstanding unvested options to purchase Red Brick common stock. The acquisition was accounted for using the purchase method of accounting, and a summary of the purchase price for the acquisition is as follows (in thousands): Stock and stock options, net of issuance costs.............. $35,914 Direct acquisition costs.................................... 1,042 Other liabilities assumed................................... 5,892 Accrued merger and integration costs........................ 7,850 Deferred revenue............................................ 5,149 ------- Total....................................................... $55,847 =======
F-36 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 11--BUSINESS COMBINATIONS (CONTINUED) The purchase price was allocated as follows: Cash and short-term investments acquired.................... $ 7,763 Other tangible assets acquired.............................. 10,281 Intangible assets Capitalized software...................................... 7,400 Workforce................................................. 4,700 Goodwill.................................................. 23,103 ------- 35,203 In-process research and development......................... 2,600 ------- Total....................................................... $55,847 =======
In-process research and development represents the fair value of technologies acquired for use in the Company's own development efforts. The Company determined the amount of the purchase price to be allocated to in-process research and development based on an independent appraisal of certain intangible assets which indicated that approximately $2.6 million of the acquired intangible assets consisted of in-process research and development that had not yet reached technological feasibility and had no alternative future uses. Accordingly, the Company recorded a charge to operations of $2.6 million in the fourth quarter of fiscal 1998. The remaining intangible assets acquired, with an assigned value of approximately $35.2 million, were included in "Intangible Assets" in the accompanying consolidated balance sheets, and are being amortized over three to five years. The following pro forma financial information presents the combined results of operations of Informix, Prism and Red Brick as if the acquisitions had occurred as of the beginning of 1999 and 1998, after giving effect to certain adjustments, including amortization of goodwill and excluding the write-off of acquired in-process research and development. The pro forma financial information does not necessarily reflect the results of operations that would have occurred had these three companies constituted a single entity during such periods.
YEAR ENDED DECEMBER 31, ----------------------------- 1999 1998 ------------ ---------- (IN THOUSANDS, EXCEPT FOR PER SHARE DATA) Net revenues................................................ $1,048,373 $935,934 Net income (loss)........................................... (23,711) 986 Net income (loss) per share................................. $ (0.09) $ (0.02)
NOTE 12--LITIGATION Commencing in April 1997, a series of class action lawsuits purportedly by or on behalf of stockholders and a separate but related stockholder action were filed in the United States District Court for the Northern District of California. These actions name as defendants the Company, certain of its present directors and former officers and directors and, in some cases, its former independent auditors. The complaints alleged various violations of the federal securities laws and sought unspecified but potentially significant damages. Similar actions were also filed in California state court and in Newfoundland, Canada. F-37 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 12--LITIGATION (CONTINUED) Stockholder derivative actions, purportedly on behalf of the Company and naming virtually the same individual defendants and the Company's former independent auditors, were also filed, commencing in August 1997, in California state court. While these actions allege various violations of state law, any monetary judgments in these derivative actions would accrue to the benefit of the Company. Pursuant to Delaware law and certain indemnification agreements between the Company and each of its current and former officers and directors, the Company is obligated to indemnify its current and former officers and directors for certain liabilities arising from their employment with or service to the Company. This includes the costs of defending against the claims asserted in the above-referenced actions and any amounts paid in settlement or other disposition of such actions on behalf of these individuals. The Company's obligations do not permit or require it to provide such indemnification to any such individual who is adjudicated to be liable for fraudulent or criminal conduct. Although the Company has purchased directors' and officers' liability insurance to reimburse it for the costs of indemnification for its directors and officers, the coverage under its policies is limited. Moreover, although the directors' and officers' insurance coverage presumes that 100 percent of the costs incurred in defending claims asserted jointly against the Company and its current and former directors and officers are allocable to the individuals' defense, the Company does not have insurance to cover the costs of its own defense or to cover any liability for any claims asserted against it. The Company has not set aside any financial reserves relating to any of the above-referenced actions. In October and November, 1999, state and federal courts granted final approval of a settlement agreed to by the Company and the other parties to the various private securities and related litigation against the Company (the "Settlement"). The Settlement resolved all material litigation arising out of the restatement of the Company's financial statements that was publicly announced in November 1997. In accordance with the terms of the Settlement, the Company paid approximately $3.2 million in cash during the second quarter of 1999 and an additional amount of approximately $13.8 million of insurance proceeds was contributed directly by certain insurance carriers on behalf of certain of the Company's current and former officers and directors. The Company will also contribute a minimum of 9.0 million shares of the Company's common stock, which will have a guaranteed value of $91.0 million for a maximum term of one year from the date of the final approval of the settlement by the courts. The first distribution of shares of the Company's common stock occurred in November and December 1999 when the Company issued approximately 2.9 million shares to the plaintiff's counsel. The Company will issue the remainder of the shares to be issued under the Settlement after the claims administrator notifies the Company that it has processed all of the claims submitted by class members. The Company's former independent auditors, Ernst & Young LLP, paid $34.0 million in cash. The total amount of the Settlement will be $142.0 million. EXPO 2000 filed an action against Informix Software GmbH (the Company's German subsidiary) in the Hanover (Germany) district court in September 1998 seeking recovery of approximately $6.0 million, plus interest, for breach of a sponsorship contract signed in 1997. Informix Software GmbH filed a counterclaim for breach of contract and seeks recovery of approximately $3.1 million. In August 1999, the court entered a judgment against Informix Software GmbH in the amount of approximately $6.0 million, although approximately $2.1 million of judgment is conditioned upon the return by EXPO 2000 of certain software. The Company has reserved $3.1 million for the expected outcome of the appeal. The next court date is scheduled for March 27, 2001. On February 3, 2000, International Business Machines Corporation ("IBM") filed an action against the Company in the United States District Court for the District of Delaware alleging infringement of six F-38 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 12--LITIGATION (CONTINUED) United States patents owned by IBM. In the complaints, IBM seeks against the Company, and the Company seeks against IBM, permanent injunctions against further alleged infringement, unspecified compensatory damages, unspecified treble damages, and interest, costs and attorney's fees. On March 28, 2000, the Company filed an answer and counterclaims in the United States District Court for the District of Delaware against IBM denying IBM's allegations of patent infringement and alleging infringement by IBM of four United States patents owned by the Company. In addition, on March 28, 2000, the Company filed a separate action against IBM in the United States District Court for the Northern District of California alleging infringement of four other United States patents owned by the Company. On June 22, 2000, that action was transferred to the United States District Court for the District of Delaware. The Company strongly believes that the allegations in IBM's complaint are without merit and intends to defend the action and prosecute the Company's claims vigorously. Ardent is a defendant in actions filed against Unidata prior to its merger with Ardent, one in May 1996 in the U.S. District Court for the Western District of Washington, and one in September 1996 in the U.S. District Court for the District of Colorado. The plaintiff, a company controlled by a former stockholder of Unidata and a distributor of its products in certain parts of Asia, alleges in both actions the improper distribution of certain Unidata products in the plaintiff's exclusive territory and asserts damages of approximately $30.0 million under claims for fraud, breach of contract, unfair competition, racketeering and corruption, and a trademark and copyright infringement, among other relief. Unidata denied the allegations against it in its answers to the complaints. In the Colorado action, Unidata moved that the matter be resolved by arbitration in accordance with its distribution agreement with the plaintiff. In May 1999, the U.S. District Court for the District of Colorado issued an order compelling arbitration and in September 2000, the arbitrator issued an award against Ardent for $3.5 million plus attorneys' fees and expenses estimated to be approximately $0.8 million. The Company is seeking reconsideration of the award but, in the meantime, has reserved $4.3 million. Discovery has not commenced in the Washington action, pending the outcome of the Colorado arbitration. Ardent, as successor-in-interest to Unidata, has been joined as a party in an action in China filed by the same plaintiff in the U.S. actions and a related company against Unidata, its former distributor and a customer arising out of the same facts at issue in the U.S. actions. The plaintiffs have asserted claims against Ardent in the total amount of $26.0 million, and against the customer in the approximate amount of $4.0 million (in addition to the assertion that the customer is jointly liable for the $26.0 million). The customer is expected to assert indemnity claims against Ardent for any liability in the action in China, and also is expected to seek recovery of its fees from Ardent, which the customer has alleged are approximately $3.0 million. The Company believes that Ardent has defenses to the claims and intends to defend the action in China vigorously. In July 2000, the Company agreed to pay Cincom Systems, Inc ("Cincom") $3.0 million to reimburse Cincom for operating expenses of CinMark, a joint venture entered into by Ardent and Cincom in 1996 to develop the Object Studio product, and $4.0 million as a fee to license the Object Studio technology. This agreement resolves all claims and counterclaims asserted by both Cincom and Ardent. During the period ended September 30, 2000, the Company discontinued use of the licensed technology as a result of the realignment and expensed the $4.0 million in the merger, realignment and other charge. From time to time, in the ordinary course of business, the Company is involved in various legal proceedings and claims. The Company does not believe that any of these proceedings and claims will have a material adverse effect on the Company's business or financial condition. F-39 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 13--ACCRUED MERGER, REALIGNMENT AND OTHER CHARGES During the year ended December 31, 2000, the Company approved plans to realign its operations by establishing two operating businesses. The strategic realignment included a refinement of the Company's product strategy, consolidation of facilities and operations to improve efficiency and a reduction in worldwide headcount of approximately 280 sales and marketing employees, 180 general and administrative employees, 200 research and development employees and 100 professional services and manufacturing employees. The Company recorded realignment and other charges of $86.9 million during the year ended December 31, 2000. The following analysis sets forth the significant components of this charge:
ACCRUAL REALIGNMENT BALANCE AT AND OTHER PAYMENTS/ DECEMBER 31, CHARGES CHARGES 2000 ----------- --------- ------------ Write-off of goodwill and other intangible assets................................... $32.0 $(32.0) $ -- Severance and employment related costs..... 40.9 (18.1) 22.8 Facility and equipment costs............... 7.5 (3.9) 3.6 Costs to exit various commitments and programs................................. 4.0 (1.7) 2.3 Other charges.............................. 2.5 (2.5) -- ----- ------ ----- $86.9 $(58.2) $28.7 ===== ====== Amount included in accrued employee compensation.................... (5.0) ----- Amount included in accrued merger, realignment and other charges.... $23.7 =====
The $32.0 million write-off of goodwill and other intangible assets consisted primarily of $12.0 million of goodwill, $4.8 million of purchased technology and $15.2 million of capitalized software. The $12.0 million write-off of goodwill resulted from the carrying amount of certain long-lived assets exceeding the estimated future undiscounted cash flows due to the decision to curtail development of certain database products over the next few years. The $4.8 million reduction of purchased technology is due to the carrying amount of certain purchased technology exceeding the estimated future undiscounted cash flows as a result of an abandonment of certain technology in the Company's solutions business. $15.2 million of capitalized software was written off because the carrying amount of certain capitalized costs exceeded net realizable value. Of the $15.2 million write-off, $9.0 million was for the abandonment of certain database development costs in conjunction with the decision to move to a single database-management system, $4.0 million related to the decision to discontinue use of licensed software, and $2.2 million was for abandonment of other developed tools and products. Severance and employment related costs of $40.9 million included $24.1 million of termination compensation and related benefits, $11.5 million of retention and incentive bonuses for employees who management believes are critical to the successful outcome of the realignment and $5.3 million for payments to qualified employees related to the Company's decision to terminate its sabbatical plan. The sabbatical plan provided employees a one-month sabbatical after every five years of continuous service. As a direct result of the plan termination, the Company paid cash bonuses to employees based upon their progress toward earning a sabbatical. As of December 31, 2000, approximately $10.7 million of termination compensation and related benefits had been paid to terminate approximately 430 employees and $7.4 million of retention and incentive bonuses had been paid. The remaining accrual balance of $22.8 million will be paid on various dates extending through June 2001. F-40 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 13--ACCRUED MERGER, REALIGNMENT AND OTHER CHARGES (CONTINUED) Included in the $7.5 million charge for facility and equipment costs was $3.2 million for the write-off of obsolete and abandoned computer and office equipment, as these assets are no longer being used, and $4.3 million for lease obligations for redundant facilities. The remaining accrual balance at December 31, 2000 of $3.6 million is for lease obligations that extend through 2004 for redundant facilities. Included in the $4.0 million charge for costs to exit various commitments and programs was $2.0 million for the termination of contracted service commitments and $2.0 million to cancel various marketing programs. The remaining accrual of $2.3 million should be paid by July 2001. Also, included in the $2.5 million of other charges is $1.3 million in receivables that have been deemed uncollectable as a direct result of merger, realignment and restructuring decisions. The impairment charge for long-lived assets related to identifiable assets previously classified within primarily the North America business segment. In connection with the merger with Ardent, the Company recorded a charge of $50.0 million for merger, integration and restructuring costs, of which $39.9 million was for accrued merger and restructuring costs and the remaining $10.1 million was for integration and transition costs incurred during the quarter ended March 31, 2000. This amount included $14.5 million for financial advisor, legal and accounting fees related to the merger, $13.0 million for severance and employment related costs associated with the termination of approximately 206 employees from various organizations throughout the Company who held overlapping positions, $8.9 million for the closure of facilities and equipment costs associated with combining the operations of the two companies and $3.5 million for the write-off of redundant technology and other duplicate costs. Subsequent to the quarter ended March 31, 2000, the Company recorded adjustments of $8.9 million to the merger and restructuring charge. The major components of the adjustments were a $4.7 million adjustment to accrued facility and equipment costs and a $2.6 million adjustment to accrued severance and employment costs. The adjustment to the accrued facility and equipment costs resulted from the Company's ability to exit or sub-lease certain facility leases in advance of original estimates, and the adjustment to accrued severance costs was because certain former Ardent executives will remain with the Company as a result of the realignment and therefore will not receive severance. The following analysis sets forth the significant components of the restructuring charge:
ACCRUAL MERGER AND BALANCE AT RESTRUCTURING PAYMENTS/ DECEMBER 31, CHARGE ADJUSTMENTS CHARGES 2000 ------------- ----------- --------- ------------ Financial advisor and other fees......................... $14.5 $ 0.1 $(13.5) $1.1 Severance and employment costs........................ 13.0 (3.5) (8.5) 1.0 Facility and equipment costs... 8.9 (4.7) (3.0) 1.2 Write-off of redundant technology................... 3.5 (0.8) (2.7) -- ----- ----- ------ ---- $39.9 $(8.9) $(27.7) $3.3 ===== ===== ====== ====
It is anticipated that the remaining $1.1 million for professional services related to the merger will be paid in 2001. As of December 31, 2000, essentially all 206 of the positions originally identified for termination had been eliminated and the remaining payments of $1.0 million for severance and employment costs are expected to be made through December 2001 as certain employees have elected to receive their severance payments over an extended period of time. The remaining facility costs of $1.2 million F-41 INFORMIX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 13--ACCRUED MERGER, REALIGNMENT AND OTHER CHARGES (CONTINUED) extend through 2003. The impairment charge for long-lived assets related to identifiable assets previously classified within primarily the North America business segment. As part of the Company's acquisition of Cloudscape, the Company recorded a charge of $2.8 million during the quarter ended December 31, 1999, for accrued merger and restructuring costs. This amount included $1.2 million for financial advisor, legal and accounting fees related to the merger and $1.6 million for costs associated with combining the operations of the two companies including expenditures of $0.7 million for severance and related costs, $0.4 million for closure of facilities and $0.5 million for the write-off of redundant assets and other costs. As of December 31, 2000, all obligations related to the Cloudscape merger had been paid. On April 26, 1999, Ardent acquired Prism Solutions, Inc. ("Prism"), a provider of data warehouse management software that assists customers in developing, managing and maintaining data warehouses. In connection with the merger with Prism, Ardent recorded a charge of $9.7 million for accrued merger and restructuring costs. The accrual included approximately $2.9 million for professional fees and other acquisition-related costs, $3.5 million for severance and related benefits to terminate 52 employees who held overlapping positions and $3.3 million for costs associated with the shutdown and consolidation of Prism facilities. As of December 31, 2000, approximately $0.3 million remained unpaid and comprised principally of future rental obligations on idle facilities which run through 2004. In May 1999, Ardent adopted a formal plan to exit the operations of O2 Technologies, Inc. ("O2"), which had been acquired by Ardent in December 1997, and recorded a charge of $9.9 million for accrued restructuring charges. The charge was comprised of $5.9 million for asset impairment, $3.6 million for severance and related costs and $0.4 million for facility closings and other obligations. As of December 31, 2000, all obligations related to the O2 restructuring had been paid. On December 31, 1998, the Company acquired Red Brick Systems, Inc. ("Red Brick"). Accrued merger and restructuring costs recorded in connection with the acquisition of Red Brick included approximately $1.6 million for severance and other acquisition-related costs, $4.7 million for costs associated with the shutdown and consolidation of the Red Brick facilities and $1.6 million for costs associated with settling acquired royalty commitments for abandoned technology. As of December 31, 2000, approximately $0.4 million remained unpaid and related to future rental obligations on idle facilities that extend through 2002. In February 1998, Ardent acquired Unidata and recorded a charge of $14.9 million for merger and restructuring costs related to the merger. The charge included $3.9 million for financial advisor, legal and accounting fees, $6.2 million for severance and benefit costs related to the termination of 139 Unidata employees who held overlapping positions, $2.2 million for the closure of facilities and $2.6 million for the write-off of redundant assets. As of December 31, 1999, all obligations related to the Unidata merger had been paid. During 1997, the Company approved plans to restructure its operations and recorded a charge of $108.2 million in order to bring expenses in line with forecasted revenues by substantially reducing worldwide headcount and consolidating facilities and operations to improve efficiency. As of December 31, 2000, approximately $0.5 million remained unpaid and related to rental obligations on idle facilities that expire at various dates through 2002. F-42 INFORMIX CORPORATION SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
ADDITIONS ----------------------- BALANCE AT CHARGED TO BEGINNING OF COSTS AND CHARGED TO BALANCE AT PERIOD EXPENSES REVENUES DEDUCTIONS(1) OTHER(2) END OF YEAR ------------ ---------- ---------- ------------- -------- ----------- (IN THOUSANDS) Allowance for Doubtful Accounts Year ended December 31, 2000...... $16,881 $ 8,338 $ 6,640 $17,625 $ -- $14,234 Year ended December 31, 1999...... 18,440 1,269 4,868 9,898 2,202 16,881 Year ended December 31, 1998...... 33,233 651 (4,529) 12,392 1,477 18,440
- ------------------------ (1) Uncollectible accounts written off, net of recoveries (2) Allowance for doubtful accounts acquired from Prism in 1999 and Red Brick in 1998 F-43 EX-3.2K 2 a2033399zex-3_2k.txt EX 3.2K EXHIBIT 3.2(k) ACTION BY UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF INFORMIX CORPORATION (a Delaware corporation) The undersigned, being all of the members of the Board of Directors (the "Board") of Informix Corporation, a Delaware Corporation (the "Corporation"), and desiring to take action without a meeting by written consent in accordance with the General Corporation Law of the State of Delaware and the Bylaws of the Corporation, do hereby adopt and approve the following resolutions and consent to the actions REDUCTION IN THE NUMBER OF MEMBERS OF THE BOARD AND AMENDMENT OF BYLAWS WHEREAS, the Board has determined it to be in the best interests of the Corporation to reduce the size of the Board to eliminate the vacancies. NOW, THEREFORE, BE IT RESOLVED, that pursuant to Article Six of the Certificate of Incorporation of the Corporation, the Board hereby approves an amendment to ARTICLE III, SECTION 1, of the Corporation's Bylaws to decrease the fixed number of directors to five (5), the amendment to be effective on December 12, 2000. RESOLVED FURTHER, that effective upon such amendment, ARTICLE III, SECTION 1, of the Bylaws of the Corporation shall be amended and restated as follows: SECTION 1. MANAGEMENT. The property, business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors. The number of Directors of the Corporation (including Directors to be elected by the holders of any one or more series of Preferred Stock voting separately as a class or classes) shall be five (5). As used in these Bylaws, the terms whole Board or whole Board of Directors mean the total number of Directors, which the Corporation would have if there were no vacancies. In addition to the powers and authorities by these Bylaws and the Certificate of Incorporation expressly conferred upon it, the Board of Directors may exercise all such powers of the Corporation, and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders. OMNIBUS RESOLUTION RESOLVED, that the officers of the Corporation, and each of them, are authorized and directed to do or cause to be done any and all such further acts and to execute and deliver any and all such additional documents as they may deem necessary or appropriate in order to carry into effect the purposes and intent of the foregoing resolutions. * * * Executed and effective as of December 12, 2000. /s/LESLIE G. DENEND -------------------------------- Leslie G. Denend /s/PETER GYENES -------------------------------- Peter Gyenes /s/JAMES L. KOCH -------------------------------- James L. Koch /s/THOMAS A. MCDONNELL -------------------------------- Thomas A. McDonnell /s/ROBERT M. MORRILL -------------------------------- Robert M. Morrill EX-10.57 3 a2033399zex-10_57.txt EX-10.57 Exhibit 10.57 INFORMIX CORPORATION 1998 NON-STATUTORY STOCK OPTION PLAN (EFFECTIVE AS OF JULY 17, 1998 AND AMENDED ON MAY 5, 1999, AUGUST 5, 1999, OCTOBER 21, 1999 AND APRIL 28, 2000) 1. PURPOSES OF THE PLAN. The purposes of this Non-Statutory Stock Option Plan are: (a) to attract and retain the best available personnel for positions of substantial responsibility, (b) to provide additional incentive to Employees and Consultants, and (c) to promote the success of the Company's business. Options granted under the Plan will be Nonstatutory Stock Options (as amended May 5, 1999). 2. DEFINITIONS. As used herein, the following definitions shall apply: (a) "ADMINISTRATOR" means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan. (b) "APPLICABLE LAWS" means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options are, or will be, granted under the Plan. (c) "BOARD" means the Board of Directors of the Company. (d) "CODE" means the Internal Revenue Code of 1986, as amended. (e) "COMMITTEE" means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan. (f) "COMMON STOCK" means the common stock of the Company. (g) "COMPANY" means Informix Corporation, a Delaware corporation. (h) "CONSULTANT" means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity. (i) "DIRECTOR" means a member of the Board. (j) "DISABILITY" means total and permanent disability as defined in Section 22(e)(3) of the Code. (k) "EMPLOYEE" means any person employed by the Company or any Parent or Subsidiary of the Company, including Officers. An Employee shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company. (as amended May 5, 1999). (l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. (m) "FAIR MARKET VALUE" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in THE WALL STREET JOURNAL or such other source as the Administrator deems reliable; (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in THE WALL STREET JOURNAL or such other source as the Administrator deems reliable; (iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator. (n) "NOTICE OF GRANT" means a written or electronic notice evidencing certain terms and conditions of an individual Option grant. The Notice of Grant is part of the Option Agreement. (o) "OFFICER" means any Employee who is (i) an officer of the Company pursuant to the specifications set forth in the By-Laws of the Company, (ii) holds a position of vice-president or above, or (iii) is otherwise treated as an officer by the Company. (p) "OPTION" means a nonstatutory stock option granted pursuant to the Plan, that is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. (q) "OPTION AGREEMENT" means an agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. (r) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding options are surrendered in exchange for options with a lower exercise price. (s) "OPTIONED STOCK" means the Common Stock subject to an Option. (t) "OPTIONEE" means the holder of an outstanding Option granted under the Plan. (u) "PARENT" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (v) "PLAN" means this 1998 Non-Statutory Stock Option Plan. (w) "SHARE" means a share of the Common Stock, as adjusted in accordance with Section 12 of the Plan. (x) "SUBSIDIARY" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Code. 3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is fifteen million five hundred thousand (15,500,000) Shares. This includes (i) 2,500,000 Shares added to the Plan on August 5, 1999, (ii) 2,500,000 added to the Plan on October 21, 1999, and (iii) 5,000,000 added to the Plan on April 28, 2000. The Shares may be authorized, but unissued, or reacquired Common Stock. (as amended August 5, 1999, October 21, 1999 and April 28, 2000). 4. ADMINISTRATION OF THE PLAN. (a) The Plan shall be administered by (i) the Board or (ii) a Committee, which committee shall be constituted to satisfy Applicable Laws. (b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion: (i) to determine the Fair Market Value of the Common Stock; (ii) to select the Employees (other than Officers and Directors) to whom Options may be granted hereunder; (iii) to determine whether and to what extent Options are granted hereunder; (iv) to determine the number of shares of Common Stock to be covered by each Option granted hereunder; (v) to approve forms of agreement for use under the Plan; (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; (vii) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option shall have declined since the date the Option was granted; (viii) to institute an Option Exchange Program; (ix) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan; (x) to modify or amend each Option (subject to Section 14(b) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Options longer than is otherwise provided for in the Plan; (xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option or previously granted by the Administrator; (xii) to determine the terms and restrictions applicable to Options; (xiii) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and (xiv) to make all other determinations deemed necessary or advisable for administering the Plan. (c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions, determinations and interpretations shall be final and binding on all Optionees and any other holders of Options. 5. ELIGIBILITY. Options may be granted hereunder only to Employees and Consultants. (as amended May 5, 1999). 6. LIMITATION. Neither the Plan nor any Option shall confer upon an Optionee any right with respect to continuing the Optionee's relationship as an Employee with the Company, nor shall they interfere in any way with the Optionee's right or the Company's right to terminate such relationship at any time, with or without cause. 7. TERM OF PLAN. The Plan shall become effective upon July 17, 1998. It shall continue in effect for ten (10) years, unless sooner terminated under Section 14 of the Plan. 8. TERM OF OPTION. The term of each Option shall be stated in the Option Agreement. 9. OPTION EXERCISE PRICE AND CONSIDERATION. (a) EXERCISE PRICE. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator. (b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised. (c) FORM OF CONSIDERATION. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist entirely of: (i) cash; (ii) check; (iii) promissory note; (iv) other Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; (v) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan; (vi) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (vii) any combination of the foregoing methods of payment. 10. EXERCISE OF OPTION. (a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share. An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan. Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. (b) TERMINATION OF RELATIONSHIP AS AN EMPLOYEE. If an Optionee ceases to be a an Employee, other than upon the Optionee's death or Disability, the Optionee may exercise his or her Option, but only within such period of time as is specified in the Option Agreement, and only to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (c) DISABILITY OF OPTIONEE. If an Optionee ceases to be an Employee as a result of the Optionee's Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement, to the extent the Option is vested on the date of termination, including as to accelerated vesting as set forth in the Option Agreement (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (d) DEATH OF OPTIONEE. If an Optionee dies while an Employee, the Option may be exercised within such period of time as is specified in the Option Agreement (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee's estate or by a person who acquires the right to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested on the date of death, including as to accelerated vesting as set forth in the Option Agreement. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. The Option may be exercised by the executor or administrator of the Optionee's estate or, if none, by the person(s) entitled to exercise the Option under the Optionee's will or the laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (e) BUYOUT PROVISIONS. The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. 11. NON-TRANSFERABILITY OF OPTIONS . Unless determined otherwise by the Administrator, an Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option transferable, such Option shall contain such additional terms and conditions as the Administrator deems appropriate. 12. CHANGES IN CAPITALIZATION AND OWNERSHIP. (a) CHANGES IN CAPITALIZATION. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option. (b) CHANGES IN CONTROL. All obligations of the Company under the Plan, with respect to Option granted thereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct on indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. 13. DATE OF GRANT. The date of grant of an Option shall be, for all purposes, the date on which the Administrator makes the determination granting such Option, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant. 14. AMENDMENT AND TERMINATION OF THE PLAN. (a) AMENDMENT AND TERMINATION. The Board may at any time amend, alter, suspend or terminate the Plan. (b) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to options granted under the Plan prior to the date of such termination. 15. CONDITIONS UPON ISSUANCE OF SHARES. (a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. (b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an Option the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 16. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 17. RESERVATION OF SHARES. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. INFORMIX CORPORATION 1998 NON-STATUTORY STOCK OPTION PLAN STOCK OPTION AGREEMENT Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement. I. NOTICE OF STOCK OPTION GRANT Optionee: You have been granted an option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:
Grant Number Date of Grant Vesting Commencement Date Exercise Price per Share $ Total Number of Shares Granted Total Exercise Price $ Type of Option: Nonstatutory Stock Option Term/Expiration Date:
VESTING SCHEDULE: Subject to the Optionee continuing to be an Employee on such dates, this Option shall vest and become exercisable in accordance with the following schedule: 25% of the Shares subject to the Option shall vest on the one year anniversary of the date of grant and with the remainder of the Shares vesting in equal monthly installments over the following thirty-six (36) months. TERMINATION PERIOD: This Option may be exercised for three months after Optionee ceases to be an Employee, including ceasing to be an Employee due to Disability. Upon the death of the Optionee, this Option may be exercised for one year. In no event shall this Option be exercised later than the Term/Expiration Date as provided above. II. AGREEMENT 1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants to the Optionee named in the Notice of Grant attached as Part I of this Agreement (the "Optionee") an option (the "Option") to purchase the number of Shares, as set forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the "Exercise Price"), subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 14(b) of the Plan, in the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Option Agreement, the terms and conditions of the Plan shall prevail. 2. EXERCISE OF OPTION. (a) RIGHT TO EXERCISE. This Option is exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and this Option Agreement. (b) METHOD OF EXERCISE. This Option is exercisable by delivery of an exercise notice, in the form attached as EXHIBIT A (the "Exercise Notice"), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the "Exercised Shares"), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the Optionee and delivered to a member of the Stock Option Administration Department of the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price. No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the Exercised Shares shall be considered transferred to the Optionee on the date the Option is exercised with respect to such Exercised Shares. 3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee: (a) cash; (b) check; (c) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan. 4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 5. TERM OF OPTION. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement. 6. TAX CONSEQUENCES. Some of the federal tax consequences relating to this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. (a) EXERCISING THE OPTION. The Optionee may incur regular federal income tax liability upon exercise of an NSO. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If the Optionee is an Employee or a former Employee, the Company will be required to withhold from his or her compensation or collect from Optionee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. (b) DISPOSITION OF SHARES. If the Optionee holds NSO Shares for at least one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. 7. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws, but not the choice of law rules, of California. 8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS AN EMPLOYEE AT ANY TIME, WITH OR WITHOUT CAUSE. By your signature and the signature of the Company's representative below, you and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan and this Option Agreement. Optionee has reviewed the Plan and this Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement and fully understands all provisions of the Plan and Option Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and Option Agreement. Optionee further agrees to notify the Company upon any change in the residence address indicated below. OPTIONEE INFORMIX CORPORATION __________________________________ ____________________________________ Signature By __________________________________ ____________________________________ Print Name Title __________________________________ Residence Address __________________________________ EXHIBIT A 1998 NON-STATUTORY STOCK OPTION PLAN EXERCISE NOTICE Informix Corporation 4100 Bohannon Drive Menlo Park, CA 94025 Attention: Stock Option Plan Administrator 1. EXERCISE OF OPTION. Effective as of today, ________________, ______, the undersigned ("Purchaser") hereby elects to purchase ______________ shares (the "Shares") of the Common Stock of Informix Corporation (the "Company") under and pursuant to the 1998 Non-Statutory Stock Option Plan (the "Plan") and the Stock Option Agreement dated _______, _______ (the "Option Agreement"). The purchase price for the Shares shall be $_______, as required by the Option Agreement. 2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the full purchase price for the Shares. 3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions. 4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired shall be issued to the Optionee as soon as practicable after exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date of issuance, except as provided in Section 12 of the Plan. 5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser's purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice. 6. ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option Agreement are incorporated herein by reference. This Agreement, the Plan and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Purchaser with respect to the subject matter hereof, and may not be modified adversely to the Purchaser's interest except by means of a writing signed by the Company and Purchaser. This agreement is governed by the internal substantive laws, but not the choice of law rules, of California. Submitted by: Accepted by: PURCHASER INFORMIX CORPORATION __________________________________ ____________________________________ Signature By __________________________________ ____________________________________ Print Name Title _________________________________ Date Received ADDRESS: ADDRESS: 4100 Bohannon Drive Menlo Park, CA 94025 EX-10.79 4 a2033399zex-10_79.txt EX 10.79 EXHIBIT 10.79 SEPARATION AGREEMENT This Separation Agreement ("Agreement") is made by and between Wayne E. Page ("Employee") and Informix Corporation, its affiliates and subsidiaries (the "Company") as of the Effective Date set forth in Paragraph 16 below. 1. In consideration of the mutual promises made herein, the Company and Employee (collectively referred to, where appropriate, as "the Parties") hereby agree as follows: (a). RESIGNATION. Employee will resign from the position of Vice President, Human Resources, effective December 31, 2000 ("Resignation Date"). The resignation shall be in writing and addressed to Mr. Peter Gyenes, the Company's President and Chief Executive Officer. In the absence of the Company's receipt of such resignation, Employee will be deemed to have resigned his position effective December 31, 2000. 2. CONSIDERATION. The Company has agreed, subject to the Employee's execution of this Ageement, to provide Employee with certain payments and benefits as described below: (a). PAYROLL CONTINUATION. Until December 31, 2000 ("Termination Date"), Employee shall remain on the Company's payroll, shall assume and discharge such duties as requested by the Company's executive management, and shall receive salary at his current annual base salary of Three Hundred Twenty-five Thousand Dollars ($325,000.00) payable in equal semi-monthly installments in accordance with the Company's usual payroll practices ("Payroll Continuation Period"). Except as otherwise specified in this Agreement, Employee shall not be eligible to receive any bonuses, or any other incentive compensation payments effective as of the Termination Date. Employee will be eligible to continue to participate in the Company's benefits through the Termination Date. Employee shall receive a payment representing all accrued but unused vacation with Employee's final paycheck on the Termination Date. (b). SEVERANCE. On January 2, 2001, Employee shall receive a lump-sum severance payment in the amount of Four Hundred Ninety-seven Thousand Five Hundred Dollars ($497,500.00), which is equal to the sum of: (i) Employee's base salary of Three Hundred Twenty-five Thousand Dollars ($325,000.00) for one (1) year; plus (ii) a retention payment in the amount of One Hundred Seventy-two Thousand, Five Hundred Dollars ($172,500.00) as set forth in a letter from the Company to the Employee dated July 31, 2000. Employee also shall receive an EICP payment ("Bonus Payment") for Fiscal Year 2000, in an amount and on a date to be determined by the Company but representing the same percentage determined for other senior executives, twenty-five per cent (25%) of which is guaranteed. The Severance Payment and the Bonus Payment will be paid less applicable withholdings for federal and state taxes and other payroll deductions, and less any other payroll deductions that Employee may authorize in writing. Employee shall receive payments of the net Severance Payment and Bonus Payment conditioned upon his having signed this Agreement. (c). STOCK OPTIONS. Notwithstanding any other provision of the applicable Informix Corporation Stock Option and Award Plans, and notwithstanding Employee's termination of employment as provided herein, all of Employee's unvested options shall continue to vest and become exercisable in accordance with their original vesting schedules, and all vested options, and all unvested options which become exercisable by virtue of this Agreement, shall continue to be exercisable up to March 31, 2002, at which time all unvested and vested but unexercised options shall expire. By virtue of this Agreement, the provisions entitled: Section 3. CHANGE OF CONTROL and Section 4. GOLDEN PARACHUTE EXCISE TAXES which provisions are contained in the Informix Corporation Change of Control and Severance Agreement ("COC Agreement") previously entered into between Employee and the Company shall continue in full force and effect up to March 31, 2002. Except for Sections 3 and 4 referred to above, the COC Agreement is terminated as of the Effective Date of this Agreement. (d). COBRA. Following temination of employment, Employee will receive, by separate cover, information regarding Employee's rights to health insurance continuation (COBRA rights). To the extent that Employee has COBRA rights, nothing in this Agreement will impair those rights. Should Employee elect health insurance continuation through COBRA, the Company agrees to pay the Employee's and the Company's portions of COBRA insurance continuation for Employee and his covered dependents through December 31, 2001. Thereafter, Employee shall pay for all costs of any COBRA continuation. (e). WAIVER OF REPAYMENT OF SIGN-ON BONUS AND RELOCATION PAYMENT. The Company hereby waives any rights that it may have arising out of or in connection with the Employee's receipt, upon commencement of his employment, of his sign-on bonus and relocation payment. 3. CONFIDENTIAL INFORMATION. Employee shall continue to maintain the confidentiality of all confidential and proprietary information of the Company and shall continue to comply with the terms and conditions of the Employee Inventions and Confidentiality Agreement between Employee and the Company, including continuing obligations of non-solicitation. Employee shall return all the Company's property, and confidential and proprietary documents, diskettes, manuals, and other information in his possession to the Company on or before the Termination Date, including but not limited to: marketing and product data; financial reports and forecasts; customer, partner and competitive data and information; customer and/or partner lists, reports and other proprietary and confidential Company property. 4. RELEASE OF CLAIMS. Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company. Employee, on behalf of himself, and his heirs, family members, executors and assigns, hereby fully and forever releases the Company and its past, present and future officers, agents, directors, employees, investors, stockholders, administrators, affiliates, divisions, subsidiaries, parents, predecessor and successor corporations, and assigns, from, and agrees not to sue or otherwise institute or cause to be instituted any legal action or administrative proceeding against the Company concerning any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess arising from any omissions, acts or facts that have occurred up until and including the effective date of this Agreement including, without limitation: (a) any and all claims under federal and state laws and statutes, in contract and in tort, relating to or arising from Employee's employment relationship with the Company and the termination of that relationship; -2- (b) any and all claims arising out of or in connection with Employee's right to purchase, or actual purchase, of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law; (c) any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; breach of contract, both express and implied; breach of a covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; and conversion; (d) any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, The Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment and Retraining Notification Act, the Family Medical and Leave Act, the California Fair Employment and Housing Act, and Labor Code section 201 ET SEQ. and section 970 ET SEQ. and all amendments to and regulations issued thereunder; (e) any and all claims for violation of the federal, or any state, constitution; (f) any and all claims arising out or in connection with of any other laws and regulations relating to employment or employment discrimination; and (g) any and all claims for attorneys'fees and costs. Employee agrees that the release of claims set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations created by or incurred under this Agreement, the Stock Option agreement evidencing Employee's stock options and the agreement(s) evidencing the exercise of such options and Employee's continuing obligations pursuant to Employee's Confidentiality and Nonsolicitation Agreement with the Company. Released claims shall include any and all claims to continued stock option vesting, exercise and acceleration of stock option vesting under the terms of the COC Agreement, and any other agreement, written or oral, including any applicable Stock Option agreement, except as specified in Paragraph 2 (c) above. 5. ACKNOWLEDGMENT OF WAIVER OF CLAIMS UNDER ADEA. Employee acknowledges that he is waiving and releasing any rights Employee may have under the Age Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and release is knowing and voluntary. Employee and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the effective date of this Agreement. Employee acknowledges that the consideration given for this waiver and Agreement is in addition to anything of value to which Employee was already entitled. Employee further acknowledges that Employee has been notified by this Agreement that: (a) Employee should consult with an attorney PRIOR to executing this Agreement; (b) Employee has at least twenty-one (21) days within which to consider this Agreement; -3- (c) Employee has seven (7) days following the execution of this Agreement by the parties to revoke this Agreement; and (d) this Agreement shall not be effective until the revocation period has expired. Any revocation must be in writing and must be hand-delivered to Gary Lloyd, Vice President, Legal, and General Counsel, by close of business on the seventh day from the date that Employee signs this Agreement. 6. CIVIL CODE SECTION 1542. Employee represents that Employee is not aware of any claims against the Company other than the claims that are released by this Agreement. Employee acknowledges that he has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. Employee acknowledges that he is aware of and understands the Civil Code Section set forth above and agrees expressly to waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect. 7. CONFIDENTIALITY. Employee agrees to use Employee's best efforts to maintain in confidence the existence of this Agreement, the substance of this Agreement, and the consideration for this Agreement (collectively, the "Separation Information"). Employee agrees to take all reasonable precautions to prevent disclosure of any Separation Information to third parties, and agrees that there will not cause any public disclosure, directly or indirectly, of any Separation Information. Employee agrees to disclose Separation Information only to those attorneys, accountants, governmental entities, and family members who have a reasonable need to know the information. 8. NO ADMISSION OF LIABILITY. Employee understands and acknowledges that this Agreement constitutes a compromise and settlement of disputed claims. No action taken by the Company, either previously or in connection with this Agreement shall be deemed or construed to be either: (a) an admission of the truth or falsity of any claims heretofore made; or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to the Employee or to any third party. 9. COSTS. The Parties shall each bear their own costs, expert fees, attorneys' fees and other fees incurred in connection with this Agreement. 10. ARBITRATION. The Parties agree that any and all disputes arising out of the terms of this Agreement, their interpretation, and any of the matters herein released, including any potential claims of harassment, discrimination or wrongful termination, shall be subject to binding arbitration, to the extent permitted by law, in its offices in San Francisco County, California, or at a mutually agreeable location in San Mateo County, California, before the American Arbitration Association under its National Rules for the Resolution of Employment Disputes. EMPLOYEE AGREES AND HEREBY WAIVES HIS RIGHT TO JURY TRIAL AS TO MATTERS ARISING OUT OF THE TERMS OF THIS AGREEMENT AND ANY -4- MATTERS HEREIN RELEASED TO THE EXTENT PERMITTED BY LAW. In the event that Employee is in breach of any of his obligations under this Agreement, nothing in this section is to be construed as a waiver of the Company's rights to seek injunctive or equitable relief in a court of competent jurisdiction and to seek to recover all monies and/or benefits paid pursuant to this Agreement, as well as its costs and attorneys' fees and expenses. The Parties agree that the prevailing party in any arbitration shall be entitled to all reasonable costs and attorneys' fees incurred in connection with the arbitration proceeding, and that the prevailing party is entitled to seek injunctive relief in any court of competent jurisdiction to enforce the arbitration award. 11. AUTHORITY. Employee represents and warrants that Employee has the capacity to act on his own behalf and on behalf of all who might claim through Employee to bind them to the terms and conditions of this Agreement. 12. NO REPRESENTATIONS. Employee represents that Employee has had the opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Neither party has relied upon any representations or statements made by the other party hereto which are not specifically set forth in this Agreement. 13. SEVERABILITY. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision. 14. ENTIRE AGREEMENT. This Agreement, the stock option agreements between the parties, and the Employee Confidentiality and Nonsolicitation Agreement represent the entire agreement and understanding between the Company and Employee concerning Employee's separation from the Company, and supersede and replace any and all prior agreements and understandings concerning Employee's relationship with the Company and his compensation by the Company. This Agreement may only be amended in writing signed by Employee and the Company's Vice President, Legal, and General Counsel. 15. GOVERNING LAW. This Agreement shall be governed by the internal substantive laws, but not the choice of law rules, of the State of California. 16. EFFECTIVE DATE. This Agreement is effective eight (8) days after it has been signed by both Parties. 17. COUNTERPARTS. This Agreement may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. 18. VOLUNTARY EXECUTION OF AGREEMENT. This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all claims. The Parties acknowledge that: (a) they have read this Agreement; (b) they have been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel; and (c) they understand the provisions and legal consequences of this Agreement. -5- IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below. INFORMIX CORPORATION Dated: December 11, 2000 By /s/ GARY LLOYD ---------------------------------- Gary Lloyd, Vice President, Legal, and General Counsel WAYNE E. PAGE Dated: December 7, 2000 /s/ WAYNE E. PAGE ------------------------------------- -6- EX-10.81 5 a2033399zex-10_81.txt EX 10.81 EXHIBIT 10.81 FOURTH ADDENDUM TO INDUSTRIAL REAL ESTATE LEASE This Fourth Addendum to Industrial Real Estate Lease is made this 15th day of December, 2000, by and between Informix Software, Inc. ("Lessee") and 3905 Bohannon Partners ("Lessor"). RECITALS Lessee currently leases from Lessor approximately 15,869 square feet of the building located at 3905 Bohannon Drive, Menlo Park, California ("Property"), consisting of suites A, C, D, E, F and G, and 5,500 square feet of parking lot storage located at the Property under the lease dated April 10, 1995, as amended by an Addendum to Industrial Lease executed by Lessor on May 30, 1995, and amended by a Second Addendum to Industrial Lease executed by Lessee on January 27, 1997, and amended by a Third Addendum to Industrial Lease dated December 17, 1998 ("Lease"). NOW THEREFORE, in consideration of the above recital and the mutual convenants and agreements herein, the parties hereby amend the Lease as follows: 1. Term. The Term of the Lease is hereby extended for a period of three years ("Extended Term") from November 1, 2000, to October 30, 2003. 2. Base Rent. The Base Rent for the office space during the Extended Term shall be as follows: PERIOD BASE RENT ------------------- -------------------- 11/01/00 - 10/30/01 $82,518.80 per month 11/01/01 - 10/30/02 $86,406.70 per month 11/01/02 - 10/30/03 $90,489.00 per month 3. Parking Lot Storage Rent. The Rent for the parking lot storage space during the Extended Term shall be as follows: PERIOD RENT ------------------- -------------------- 11/01/00 - 10/30/01 $1,800.00 per month 11/01/01 - 10/30/02 $1,890.00 per month 01/01/02 - 10/30/03 $1,984.50 per month 4. Paragraph 3.02 of the Lease is hereby deleted in its entirety. 5. The second sentence of Paragraph 4.02(a) of the Lease is hereby amended to read as follows: "Base Real Property Taxes" are real property taxes applicable to the Property as shown on the tax bill for the first fiscal year ending after November 1, 2000" 6. Paragraph 4.04(c)(i) of the Lease is hereby amended to read as follows: "Landlord shall pay the "Base Premiums" for the insurance policies maintained by Landlord under Paragraph 4.04(b). The Base Premiums are the insurance premiums paid during calendar year 2001." 7. Lessor and Lessee each represent to the other that they have dealt with no real estate brokers, finders, agents or salesmen in connection with this transaction other than Soroush Kaboli representing Lessor and Cushman & Wakefield representing Lessee. The parties agree that each of them shall be responsible for and pay any required commission to such party's own broker in connection with this Fourth Addendum pursuant to separate agreements. Both parties agree to indemnify, defend and hold the other harmless from any claims, demands, liabilities, costs and expenses, including reasonable attorneys' fees, arising out of or resulting from a claim by any person other than those specified above that it is entitled to a commission, finder's fee or other compensation in connection with this Fourth Addendum based on the acts or commissions of the other party. 7. Except as specifically modified herein, all terms, covenants and conditions of the Lease shall remain in full force and effect. In the event of any conflicts between this Fourth Addendum and the Lease, this Fourth Addendum shall prevail. IN WITNESS WHEREOF, the parties have executed this Fourth Addendum on the day and year first above written. LESSOR LESSEE 3905 Bohannon Partners Informix Software, Inc. By: /s/ ALYN T. BEALS By: /s/ SCOTT HARLAN ------------------------------ ----------------------------------- Its: Managing Partner Its: Assistant General Counsel and ----------------------------- Assistant Secretary ---------------------------------- Date: December 15, 2000 Date: December 6, 2000 ---------------------------- --------------------------------- EX-21.1 6 a2033399zex-21_1.txt EX 21.1 EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANT
JURISDICTION OF NAME PARENT INCORPORATION - ---- --------------------------------- --------------- Informix Software, Inc. Informix Corporation Delaware Informix International, LLC. Informix Software, Inc. Delaware Informix Credit Company Informix Software, Inc. Delaware Informix Software Argentina, S.A. Informix International, Inc. Argentina Informix Software GmbH Informix International, Inc. Austria Informix Software Pty. Ltd. Informix International, Inc. Australia Informix Software NV Informix International, Inc. Belgium Informix do Brasil Comercio e Servicios Ltda. Informix International, Inc. Brazil Informix Software (Canada), Inc. Informix International, Inc. Canada Informix Software de Chile, S.A. Informix International, Inc. Chile Informix Software de Colombia S.A. Informix International, Inc. Colombia Informix Software sro Informix International, Inc. Czech Republic Informix Software A/S Informix International, Inc. Denmark Informix Software Ltd. Informix International, Inc. England Informix IHQ Limited Informix Software Ireland Ltd. England Informix Software Bolivia, S.A. Informix International, Inc. France Informix Software SARL Informix International, Inc. France Informix Software GmbH Garmhausen & Partner GmbH Germany Informix GmbH Informix Software GmbH Germany Garmhausen & Partners, GmbH Informix International, Inc. Germany Informix Software (Hong Kong) Ltd. Informix International, Inc. Hong Kong Informix Holdings Company Informix Software Ireland Limited Ireland Informix Software Ireland Limited Informix International, Inc. Ireland Informix Software SpA Informix International, Inc. Italy Informix K.K. Informix Holdings Company Japan Informix Software K.K. Informix International, Inc. Japan Informix Korea Ltd. Informix Holdings Company Korea Informix Software (Korea) Ltd. Informix International, Inc. Korea Informix Sdn Bhd Informix International, Inc. Malaysia Informix Software de Mexico S.A. de C.V. Informix International, Inc. Mexico Informix Software B.V. Informix International, Inc. Netherlands Informix Software Limited Informix International, Inc. New Zealand Informix Software AS Informix International, Inc. Norway Informix Software de Peru S.A. Informix International, Inc. Peru Informix Software Spolka z.o.o. Informix International, Inc. Poland Informix Software Limited Liability Company Informix International, Inc. Russia Informix Software Asia-Pacific Pte. Ltd. Informix International, Inc. Singapore Informix Software, spol. s.r.o. Informix Software GmbH Slovakia Informix Software South Africa (Proprietary) Informix International, Inc. South Africa Informix Software Iberica, S.A. Informix International, Inc. Spain Informix Software AB Informix International, Inc. Sweden Informix Software AG Informix International, Inc. Switzerland Informix Software (Taiwan) Inc. Informix International, Inc. Taiwan Informix Software (Thailand) Limited Informix International, Inc. Thailand Informix Software, V.I., Inc. Informix International, Inc. Virgin Islands Informix Software de Venezuela, S.A. Informix International, Inc. Venezuela Informix Software (India) Pvt. Ltd. Informix International, Inc. Informix Software (China) Co., Ltd. Informix International, Inc. Informix Software A/O Informix International, Inc. Informix Software Portugal LDA. Informix International, Inc.
EX-23.1 7 a2033399zex-23_1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF KPMG LLP, INDEPENDENT AUDITORS The Board of Directors and Stockholders of Informix Corporation: The audits referred to in our report dated January 24, 2001, included the related financial statement schedule as of December 31, 2000, and for each of the years in the three-year period ended December 31, 2000, included in the annual report on Form 10-K for the year ended December 31, 2000. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits. In our opinion, based on our audits and the report of other auditors, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We consent to incorporation by reference in the registration statements (Nos. 333-01409, 33-11161, 33-22862, 333-31116, 33-31117, 333-31369, 33-31371, 33-50608, 33-50610, 33-56707, 333-61843, 333-70323, 333-89231, 333-31670, and 333-43238) on Form S-8 and (No. 333-90667) on Form S-3 of Informix Corporation of our report dated January 24, 2001, relating to the consolidated balance sheets of Informix Corporation and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2000, and the related financial statement schedule, which report appears in the December 31, 2000, annual report on Form 10-K of Informix Corporation. /s/ KPMG LLP Mountain View, California March 23, 2001 EX-23.2 8 a2033399zex-23_2.txt EX 23.2 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 333-90667 on Form S-3 and Registration Statements Nos. 33-11161, 33-22862, 33-31116, 33-31117, 33-50608, 33-50610, 33-56707, 333-01409, 333-31369, 333-31670, 333-31371, 333-61843, 333-70323, 333-89231 and 333-43238 on Form S-8 of Informix Corporation of our report dated January 28, 2000 (March 1, 2000 as to Note 1, "Merger with Informix Corporation") (relating to the consolidated financial statements of Ardent Software, Inc. and subsidiaries, which report expresses an unqualified opinion and contains an explanatory paragraph relating to the merger of Ardent Software, Inc. and subsidiaries into Informix Corporation on March 1, 2000), appearing in the Annual Report on Form 10-K of Informix Corporation for the year ended December 31, 2000. /s/ DELOITTE & TOUCHE LLP Boston, Massachusetts March 23, 2001 -----END PRIVACY-ENHANCED MESSAGE-----