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Filed Pursuant to Rule 424(b)(1)
Registration No. 333-42120
PROSPECTUS
INFORMATICA CORPORATION
1,189,084 SHARES OF COMMON STOCK
1,189,084 shares of our common stock were issued to former shareholders of
Influence Software, Inc. as payment for the acquisition of Influence Software,
Inc. Some of these stockholders may wish to sell these shares in the future, and
this prospectus allows them to do so. We will not receive any of the proceeds
from any sale of shares by these stockholders, but we have agreed to bear the
expenses of registration of the shares by this prospectus.
Our stock is listed on the Nasdaq National Market under the symbol: INFA
The last sale price of the common stock on the Nasdaq National Market on
October 25, 2000 was $97.00 per share.
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INVESTING IN THE COMMON STOCK INVOLVES A HIGH LEVEL OF INVESTMENT RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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October 26, 2000
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TABLE OF CONTENTS
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Available Information....................................... 1
Incorporation of Certain Documents by Reference............. 1
The Company................................................. 3
Use of Proceeds............................................. 3
Risk Factors................................................ 4
Special Note Regarding Forward-Looking Statements........... 13
Selling Stockholders........................................ 14
Plan of Distribution........................................ 14
Experts..................................................... 15
Legal Matters............................................... 15
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No person has been authorized to give any information or to make any
representations not contained or incorporated by reference in this prospectus in
connection with the offer described in this prospectus and, if given or made,
such information and representations must not be relied upon as having been
authorized by the Company or the selling stockholders. Neither the delivery of
this prospectus nor any sale made under this prospectus shall under any
circumstances create any implication that there has been no change in the
affairs of Informatica Corporation since the date hereof or since the date of
any documents incorporated herein by reference. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the securities to which it relates, or an offer or solicitation in
any state to any person to whom it is unlawful to make such offer in such state.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance with the Act we
file reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy statements and
other information filed can be inspected and copied at the Commission's Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C., 20549, and at the
following regional offices of the Commission: Seven World Trade Center, 13th
Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Commission maintains a web site
(http://www.sec.gov) containing reports, proxy and information statements and
other information of registrants, including ours, that file electronically with
the Commission. In addition, the Common Stock is listed on the Nasdaq National
Market and similar information concerning us can be inspected and copied at the
offices of the National Association of Securities Dealers, Inc., 9513 Key West
Avenue, Rockville, Maryland 20850.
We have filed with the Commission a registration statement on Form S-3 (of
which this prospectus is a part) under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the shares being offered by this
prospectus. This prospectus does not contain all of the information set forth in
this registration statement, some portions of which have been omitted as
permitted by the rules and regulations of the Commission. Statements contained
in this prospectus as to the contents of any contract or other documents are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the registration statement,
each of these statements are qualified in all respects by this reference and the
exhibits and schedules thereto. For further information regarding us and the
shares being offered by this prospectus, reference is hereby made to the
registration statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by Informatica Corporation under
the Exchange Act with the Commission and are incorporated herein by reference:
a. Our Annual Report on Form 10-K filed on March 30, 2000 for the year
ended December 31, 1999;
b. Our Quarterly Report on Form 10-Q filed on May 15, 2000 for the
quarter ended March 31, 2000;
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c. Our Quarterly Report on Form 10-Q filed on August 14, 2000 for the
quarter ended June 30, 2000;
d. Our Current Report on Form 8-K dated September 6, 2000;
e. Our Definitive Proxy on Form 14A filed on April 20, 2000; and
f. The description of our Common Stock contained in our registration
statement on Form 8-A (File No. 000-25871).
Each document we file pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act subsequent to the date of this prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference in this prospectus and to be part hereof from the date of filing such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein (or in the applicable prospectus supplement) or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
prospectus is delivered upon written or oral request. Requests should be
directed to Earl E. Fry, Chief Financial Officer, 3350 W. Bayshore Road, Palo
Alto, California 94303, telephone number: (650) 687-6200.
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THE COMPANY
We are a leading provider of e-business infrastructure and analytic
software that enables our customers to automate the integration, analysis and
delivery of critical corporate information. Using our products, managers and
executives gain valuable business insight they can use to improve operational
performance and enhance competitive advantage.
We provide our customers with a comprehensive suite of software products
that are designed to support more effective and timely business decision-making.
Our infrastructure products simplify the process of integrating and analyzing
data from multiple systems, while our complementary packaged analytic
applications provide our customers with reports and metrics that can be extended
to meet their unique business requirements. Using our products, customers can
evaluate the performance of their entire business value-chain, including direct
and indirect sales, marketing, customer service, operations, human resources,
procurement and finance. We plan to extend our products to allow a broader range
of corporate employees to access corporate information through wireless devices,
voice recognition technology and the Internet.
We have over 900 customers, which include companies in a wide variety of
industries, ranging from e-business to manufacturing, and from financial
services to telecommunications. Our top ten customers by revenue for the six
quarters ending June 30, 2000 are Bell Atlantic, Citibank, Deutsche Post,
Gateway, General Electric, Hewlett-Packard, Lucent Technologies, Merrill Lynch,
Philips Electronics and UUNET Technologies. We also maintain relationships with
a variety of strategic partners to jointly develop, market, sell and implement
our solutions. Our significant strategic partners include Andersen Consulting,
Ariba, BroadVision, Business Objects, Deloitte Consulting, KPMG, PeopleSoft,
PricewaterhouseCoopers, SAP, Siebel Systems and Sybase. We market and sell our
software services through our direct sales force in the United States, Canada,
Germany, Switzerland and the United Kingdom. We also have relationships with
distributors in various regions, including Asia-Pacific, Australia, Europe,
Japan and Latin America, who sublicense our products and provide service and
support within their territories. More than 20 independent software vendors,
including several of our strategic partners, have licensed our technology for
inclusion in their products.
Our principal executive offices are located at 3350 W. Bayshore Road, Palo
Alto, California 94303, and our telephone number is (650) 687-6200. We were
incorporated in California in February 1993 and reincorporated in Delaware in
April 1999.
USE OF PROCEEDS
All of the shares being offered under this prospectus are offered by the
selling stockholders, and we will not receive any of the proceeds from the sale
of the shares. This registration statement is intended to satisfy certain of our
obligations under our agreement and plan of merger with Influence. Under that
agreement, we have agreed to pay expenses of registration of these shares under
federal and state securities laws.
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RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks described below are not the only risks we face.
Additional risks we are not presently aware of or that we currently believe are
immaterial may also impair our business operations. Our business could be harmed
by any of these risks. The trading price of our common stock could decline due
to any of these risks, and you may lose all or part of your investment. In
assessing these risks, you should also refer to the other information contained
or incorporated by reference in this prospectus, including our financial
statements and related notes.
OUR QUARTERLY RESULTS FLUCTUATE, WHICH MAY CAUSE OUR STOCK PRICE TO EXPERIENCE
SIGNIFICANT FLUCTUATIONS.
Our quarterly operating results have fluctuated in the past and are likely
to do so in the future. These fluctuations could cause our stock price to also
significantly fluctuate or experience declines. Some of the factors that could
cause our operating results to fluctuate include:
- the size and timing of customer orders, which can be affected by customer
order deferrals in anticipation of future new product introductions or
product enhancements and customer budgeting and purchasing cycles;
- market acceptance of our products;
- the length and variability of our sales cycle for our products;
- the length of time and costs associated with the implementation of our
products;
- introduction or enhancement of our products or our competitors' products
and changes in our or our competitors' pricing policies;
- our ability to develop, introduce and market new products on a timely
basis;
- the mix of our products and services sold and the mix of distribution
channels utilized;
- our success in expanding our sales and marketing programs;
- an increase in analytic applications licensing, which may result in a
smaller percentage of our revenue from licenses being recognized when
such licenses are made, and increased implementation cost;
- seasonality with respect to our license revenues;
- technological changes in computer systems and environments; and
- general economic conditions, which may affect our customers' capital
investment levels.
Our product revenues are not predictable with any significant degree of
certainty. Historically, we have recognized a substantial portion of our
revenues in the last month of the quarter. If customers cancel or delay orders,
it can have a significant adverse impact on our revenues and results of
operations for the quarter. To the extent any such cancellations or delays are
for large orders, this impact will be greater. To the extent that the average
size of our orders increases, customers' cancellations or delays of orders will
more likely harm our revenues and results of operations. Our quarterly product
license revenues are difficult to forecast because we historically have not had
a substantial backlog of orders, and therefore revenues in each quarter are
substantially dependent on orders booked and shipped in that quarter and cash
collections from international customers and specific resellers. Our product
license revenues are also difficult to forecast because the market for our
products is rapidly evolving, and our sales cycles, which may last many months,
vary substantially from customer to customer and vary in general due to a number
of factors over which we have little
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or no control. Nonetheless, our short-term expense levels are relatively fixed
and based, in part, on our expectations of future revenues.
The difficulty we have in predicting our quarterly revenue means revenue
shortfalls are likely to occur at some time, and our inability to adequately
reduce short-term expenses means such shortfalls will affect not only our
revenue, but also our overall business, results of operations and financial
condition. Due to the uncertainty surrounding our revenues and expenses, we
believe that quarter-to-quarter comparisons of our operating results are not a
good indication of our future performance. While we achieved significant
quarter-to-quarter revenue growth in the past, you should not take these recent
quarterly results to be indicative of our future performance. We do not expect
to sustain this same rate of sequential quarterly revenue growth in future
periods. Moreover, our future quarterly operating results may fall below the
expectations of stock analysts and investors. If this happens, the price of our
common stock may fall.
THE MARKET IN WHICH WE SELL OUR PRODUCTS IS HIGHLY COMPETITIVE.
The market for our products is highly competitive, quickly evolving and
subject to rapidly changing technology. Many of our competitors have longer
operating histories, substantially greater financial, technical, marketing or
other resources, or greater name recognition than we do. Our competitors may be
able to respond more quickly than we can to new or emerging technologies and
changes in customer requirements. Competition could seriously impede our ability
to sell additional products and services on terms favorable to us. Our current
and potential competitors may develop and market new technologies that render
our existing or future products obsolete, unmarketable or less competitive. We
believe we currently compete more on the basis of our products' functionality
than on the basis of price. If our competitors develop products with similar or
superior functionality, we may have difficulty competing on the basis of price.
Our current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with other solution
providers, thereby increasing the ability of their products to address the needs
of our prospective customers. Our current and potential competitors may
establish or strengthen cooperative relationships with our current or future
strategic partners, thereby limiting our ability to sell products through these
channels. Competitive pressures could reduce our market share or require us to
reduce our prices, either of which could harm our business, results of
operations or financial condition. We compete principally against providers of
decision support, data warehousing and analytic application software. Such
competitors include Acta Technology, Broadbase Software, E.piphany, Informix
Corporation and Sagent Technology.
In addition, we compete against database vendors that currently offer, or
may develop, products with functionalities that compete with our solutions.
These products typically operate specifically with these competitors'
proprietary databases. Such competitors include IBM, Microsoft and Oracle.
ANY SIGNIFICANT DEFECT IN OUR PRODUCTS COULD CAUSE US TO LOSE REVENUE AND EXPOSE
US TO PRODUCT LIABILITY CLAIMS.
The software products we offer are inherently complex and, despite
extensive testing and quality control, have in the past and may in the future
contain errors or defects, especially when first introduced. These defects and
errors could cause damage to our reputation, loss of revenue, product returns,
order cancellations or lack of market acceptance of our products, and as a
result, harm our business, results of operations or financial condition. We have
in the past and may in the future need to issue corrective releases of our
software products to fix these defects or errors. For example, we issued
corrective releases to fix problems with the version of our PowerMart released
in the first quarter of 1998. As a result, we had to allocate significant
customer support resources to address these problems. Our license agreements
with our customers typically contain provisions designed to
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limit our exposure to potential product liability claims. The limitation of
liability provisions contained in our license agreements, however, may not be
effective as a result of existing or future national, federal, state or local
laws or ordinances or unfavorable judicial decisions. Although we have not
experienced any product liability claims to date, the sale and support of our
products entails the risk of such claims, which could be substantial in light of
the use of our products in enterprise-wide applications. If a claimant
successfully brings a product liability claim against us, it would likely
significantly harm our business, results of operations or financial condition.
BECAUSE WE SELL A LIMITED NUMBER OF PRODUCTS, IF THESE PRODUCTS DO NOT ACHIEVE
BROAD MARKET ACCEPTANCE, OUR REVENUES WILL BE ADVERSELY AFFECTED.
To date, substantially all of our revenues were derived from our
PowerCenter, PowerCenter.e, PowerConnects, PowerMart, our analytic application
software products and related services. We expect revenues derived from these
products and related services to comprise substantially all of our revenues for
the foreseeable future. Even if the emerging software market in which these
products are sold grows substantially, if any of these products do not achieve
market acceptance, our revenues will be adversely affected. In particular, we
recently released our analytic application products and the degree of market
acceptance for these products is unknown. Market acceptance of our products
could be affected if, among other things, applications suppliers integrate their
products to such a degree that the utility of the data integration functionality
that our products provide is minimized or rendered unnecessary.
IF THE MARKET IN WHICH WE SELL OUR PRODUCTS AND SERVICES DOES NOT GROW AS WE
ANTICIPATE, OUR REVENUES WILL BE HARMED.
The market for software solutions that enable more effective business
decision-making by helping companies aggregate and use data stored throughout an
organization is relatively new and still emerging. Substantially all of our
revenues are attributable to the sale of products and services in this market.
If this market does not grow at the rate we anticipate, our business, results of
operations and financial condition will be adversely affected. One of the
reasons this market might not grow as we anticipate is that many companies are
not yet fully aware of the benefits of using these software solutions to help
make business decisions or the benefits of our specific product solutions. As a
result, we believe large companies to date have deployed these software
solutions to make business decisions on a relatively limited basis. Although we
have devoted and intend to continue to devote significant resources to promote
market awareness of the benefits of these solutions, our efforts may be
unsuccessful or insufficient.
TECHNOLOGICAL ADVANCES AND EVOLVING INDUSTRY STANDARDS COULD ADVERSELY IMPACT
OUR FUTURE PRODUCT SALES.
The market for our products is characterized by continuing technological
development, evolving industry standards and changing customer requirements. The
introduction of products by our direct competitors or others embodying new
technologies, the emergence of new industry standards or changes in customer
requirements could render our existing products obsolete, unmarketable or less
competitive. In particular, an industry-wide adoption of uniform open standards
across heterogeneous analytic applications could minimize the importance of the
integration functionality of our products and harm the competitiveness and
market acceptance of our products. Our success depends upon our ability to
enhance existing products, to respond to changing customer requirements and to
develop and introduce in a timely manner new products that keep pace with
technological and competitive developments and emerging industry standards.
We have in the past experienced delays in releasing new products and
product enhancements and may experience similar delays in the future. As a
result, some of our customers have deferred
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purchasing products until their upgrades were released. For example, an upgrade
to a version of our PowerMart product, which was scheduled to be released in
December 1997, was not shipped until February 1998. As a result, some of our
customers deferred purchasing this version of our PowerMart product until the
upgrade was released. Future delays or problems in the installation or
implementation of our new releases may cause customers to forego purchases of
our products and purchase those of our competitors instead. Failure to develop
and introduce new products, or enhancements to existing products, in a timely
manner in response to changing market conditions or customer requirements will
harm our business, results of operations and financial condition.
IF WE DO NOT MAINTAIN AND STRENGTHEN OUR RELATIONSHIPS WITH OUR STRATEGIC
PARTNERS, OUR ABILITY TO GENERATE REVENUE AND CONTROL IMPLEMENTATION COSTS WILL
BE ADVERSELY AFFECTED.
We believe that our ability to increase the sales of our products and our
future success will depend in part upon maintaining and strengthening successful
relationships with our current or future strategic partners. In addition to our
direct sales force, we rely on established relationships with a variety of
strategic partners, such as systems integrators, resellers and distributors, for
marketing, licensing, implementing and supporting our products in the United
States and internationally. We also rely on relationships with strategic
technology partners, such as enterprise resource planning providers, for the
promotion and implementation of our solutions. In particular, our ability to
market our products depends substantially on our relationships with significant
strategic partners, including Andersen Consulting, Ariba, BroadVision, Business
Objects, Deloitte Consulting, KPMG, PeopleSoft, PricewaterhouseCoopers, SAP,
Siebel Systems and Sybase. In addition, our strategic partners may offer
products of several different companies, including, in some cases, products that
compete with our products. We have limited control, if any, as to whether these
strategic partners devote adequate resources to promoting, selling and
implementing our products.
We may not be able to maintain our strategic partnerships or attract
sufficient additional strategic partners who are able to market our products
effectively, who are qualified to provide timely and cost-effective customer
support and service or who have the technical expertise and personnel resources
necessary to implement our products for our customers. In particular, if our
strategic partners do not devote adequate resources for implementation of our
products, we will incur substantial additional costs associated with hiring and
training additional qualified technical personnel to timely implement solutions
for our customers. Furthermore, our relationships with our strategic partners
may not generate enough revenue to offset the significant resources used to
develop these relationships.
WE RELY ON THIRD-PARTY TECHNOLOGIES AND IF WE ARE UNABLE TO USE OR INTEGRATE
THESE TECHNOLOGIES, OUR PRODUCT AND SERVICE DEVELOPMENT MAY BE DELAYED.
We intend to continue to license technologies from third parties, including
applications used in our research and development activities and technologies,
which are integrated into our products and services. If we cannot obtain or
integrate any of these licenses, we may experience a delay in product and
service development until equivalent technology can be identified, licensed and
integrated. These technologies may not continue to be available to us on
commercially reasonable terms or at all. We may not be able to successfully
integrate any licensed technology into our products or services, which would
harm our business and operating results. Third-party licenses also expose us to
increased risks that include:
- risks of product malfunction after new technology is integrated;
- the diversion of resources from the development of our own proprietary
technology; and
- our inability to generate revenue from new technology sufficient to
offset associated acquisition and maintenance costs.
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THE LENGTHY SALES CYCLE AND IMPLEMENTATION PROCESS OF OUR PRODUCTS MAKES OUR
REVENUES SUSCEPTIBLE TO FLUCTUATION.
Our sales cycle can be lengthy because the expense, complexity, broad
functionality and company-wide deployment of our products typically requires
executive-level approval for investment in our products. In addition, to
successfully sell our products, we frequently must educate our potential
customers about the full benefits of our products, which also can require
significant time. Due to these factors, the sales cycle associated with the
purchase of our products is subject to a number of significant risks over which
we have little or no control, including:
- customers' budgetary constraints and internal acceptance review
procedures;
- the timing of budget cycles;
- concerns about the introduction of our products or competitors' new
products; or
- potential downturns in general economic conditions.
Further, our sales cycle may lengthen as we continue to focus our sales
efforts on large corporations. The implementation of our products, and
particularly our analytic application products, is also a complex and
time-consuming process, the length and cost of which is difficult to predict. If
our sales cycle and implementation process lengthens unexpectedly, it could
adversely affect the timing of our revenues or increase costs, either of which
may independently cause fluctuations in our revenue.
WE EXPECT SEASONAL TRENDS TO CAUSE OUR QUARTERLY REVENUES TO FLUCTUATE.
In recent years, there has been a relatively greater demand for our
products in the fourth quarter than in each of the first three quarters of the
year, particularly the first quarter. As a result, we historically have
experienced relatively higher bookings in the fourth quarter and relatively
lighter bookings in the first quarter. While some of this effect can be
attributed to the rapid growth of revenues in recent years, we believe that
these fluctuations are caused by customer buying patterns (often influenced by
year-end budgetary pressures) and the efforts of our direct sales force to meet
or exceed year-end sales quotas. In addition, European sales may tend to be
relatively lower during the summer months than during other periods. We expect
that seasonal trends will continue for the foreseeable future. This seasonal
impact may increase as we continue to focus our sales efforts on large
corporations.
WE RECOGNIZE REVENUE FROM SPECIFIC CUSTOMERS AT THE TIME WE RECEIVE PAYMENT FOR
OUR PRODUCTS, AND IF THESE CUSTOMERS DO NOT MAKE TIMELY PAYMENT, OUR REVENUES
COULD DECREASE.
We recognize revenue from sales to OEMs, specific resellers, international
customers and specific customers based on their credit history, at the time we
receive payment for our products, rather than at the time of sale. If these
customers do not make timely payment for our products, our revenues could
decrease. Further, if our revenues from sales to these customers increase as a
percentage of total revenues, our revenues could decrease. If our revenues
decrease, the price of our common stock may fall.
WE HAVE A LIMITED OPERATING HISTORY AND A HISTORY OF LOSSES, AND WE MAY NOT BE
ABLE TO ACHIEVE PROFITABLE OPERATIONS.
We were incorporated in 1993 and began selling our products in 1996; and
therefore, we have a limited operating history upon which investors can evaluate
our operations, products and prospects. We have incurred significant net losses
since our inception, and we may not achieve profitability. We
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incurred net losses of $8.0 million, $9.3 million and $1.5 million in 1997, 1998
and 1999, and $3.5 million for the six-month period ended June 30, 2000. As of
December 31, 1999, we had an accumulated deficit of $23.9 million, and as of
June 30, 2000, our accumulated deficit was $27.4 million. We intend to increase
our operating expenses significantly in the next 12 months; therefore, our
operating results will be harmed if revenues do not increase significantly.
OUR BUSINESS COULD SUFFER AS A RESULT OF OUR STRATEGIC ACQUISITIONS AND
INVESTMENTS.
In December 1999, we acquired Influence, a developer of analytic
applications for e-business, in a transaction accounted for as a
pooling-of-interests. In February 2000, we acquired Delphi, a distributor of our
products in Switzerland, in a transaction accounted for as a purchase. In August
2000, we acquired Zimba, a provider of applications that enable mobile
professionals to have real-time access to enterprise and external information
through wireless devices, voice recognition technologies and the Internet, in a
transaction accounted for as a purchase. In April 2000, we acquired certain
PricewaterhouseCoopers intellectual property rights and personnel in exchange
for shares of our common stock. We may not be able to effectively integrate
these companies, intellectual property, or personnel, and our attempts to do so
will place an additional burden on our management and infrastructure. These
acquisitions will subject us to a number of risks, including:
- the loss of key personnel, customers and business relationships;
- difficulties associated with assimilating and integrating the new
personnel and operations of the acquired company;
- the potential disruption of our ongoing business;
- the expense associated with maintenance of uniform standards, controls,
procedures, employees and clients;
- the risk of product malfunction after new technology is integrated;
- the diversion of resources from the development of our own proprietary
technology; and
- our inability to generate revenue from new technology sufficient to
offset associated acquisition and maintenance costs.
There can be no assurance that we will be successful in overcoming these
risks or any other problems encountered in connection with our acquisitions.
WE MAY ENGAGE IN FUTURE ACQUISITIONS OR INVESTMENTS THAT COULD DILUTE OUR
EXISTING STOCKHOLDERS, OR CAUSE US TO INCUR CONTINGENT LIABILITIES, DEBT OR
SIGNIFICANT EXPENSE.
From time to time, in the ordinary course of business, we may evaluate
potential acquisitions of, or investments in, related businesses, products or
technologies. Future acquisitions could result in the issuance of dilutive
equity securities, the incurrence of debt or contingent liabilities.
Furthermore, there can be no assurance that any strategic acquisition or
investment will succeed. Any future acquisition or investment could harm our
business, financial condition and results of operation.
Recently, the Financial Accounting Standards Board, or FASB, voted to
eliminate pooling-of-interests accounting for acquisitions and the ability to
write-off in-process research and development has been limited by recent
pronouncements. The effect of these changes would be to increase the portion of
the purchase price for any future acquisitions that must be charged to our cost
of revenues and operating expenses in the periods following any such
acquisitions. As a consequence, our results of operations could be harmed.
Although these changes would not directly affect the purchase price for any of
these acquisitions, they would have the effect of increasing the reported
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expenses associated with any of these acquisitions. To that extent, these
changes may make it more difficult for us to acquire other companies, product
lines or technologies.
OUR INTERNATIONAL OPERATIONS EXPOSE US TO GREATER INTELLECTUAL PROPERTY,
COLLECTIONS, EXCHANGE RATE FLUCTUATIONS, REGULATORY AND OTHER RISKS, WHICH COULD
LIMIT OUR FUTURE GROWTH.
We intend to expand our international operations, and as a result, we may
face significant additional risks. Our failure to manage our international
operations and the associated risks effectively could limit the future growth of
our business. International revenues accounted for 6%, 12%, and 18% of total
consolidated revenues in 1997, 1998 and 1999, and 21% for the six-month period
ended June 30, 2000, substantially all of which consisted of sales to customers
in Europe. The expansion of our existing international operations and entry into
additional international markets will require significant management attention
and financial resources.
Our international operations face numerous risks. Our products must be
localized -- customized to meet local user needs -- in order to be sold in
particular foreign countries. Developing local versions of our products for
foreign markets is difficult and can take longer than we anticipate. We
currently have limited experience in localizing products and in testing whether
these localized products will be accepted in the targeted countries. We cannot
assure you that our localization efforts will be successful. In addition, we
have only a limited history of marketing, selling and supporting our products
and services internationally. As a result, we must hire and train experienced
personnel to staff and manage our foreign operations. However, we may experience
difficulties in recruiting and training an international staff. We must also be
able to enter into strategic relationships with companies in international
markets. If we are not able to maintain successful strategic relationships
internationally or recruit additional companies to enter into strategic
relationships, our future growth could be limited.
Our international business is subject to a number of risks, including the
following:
- greater difficulty in protecting intellectual property;
- greater difficulty in staffing and managing foreign operations;
- greater risk of uncollectible accounts;
- longer collection cycles;
- potential unexpected changes in regulatory practices and tariffs;
- potential unexpected changes in tax laws;
- sales seasonality;
- the impact of fluctuating exchange rates between the U.S. dollar and
foreign currencies in markets where we do business; and
- general economic and political conditions in these foreign markets.
We may encounter difficulties predicting the extent of the future impact of
these conditions. These factors and other factors could harm our ability to gain
future international revenues and consequently on our business, results of
operations and financial condition.
DIFFICULTIES WE MAY ENCOUNTER MANAGING OUR GROWTH COULD HARM OUR RESULTS OF
OPERATIONS.
We have experienced a period of rapid and substantial growth that has
placed and, if such growth continues, will continue to place a strain on our
administrative and operational infrastructure. We increased the number of our
employees from 187 at December 31, 1998, to 332 at December 31, 1999, and to 552
as of June 30, 2000. Our revenues increased from $30.3 million in 1998 to
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$62.4 million in 1999, and our revenues for the six-month period ended June 30,
2000 were $59.8 million. If we are unable to manage this growth effectively, our
business, results of operations or financial condition may be significantly
harmed. Our ability to manage our operations and growth effectively requires us
to continue to improve our operational, financial and management controls,
reporting systems and procedures and hiring programs. We may not be able to
successfully implement improvements to our management information and control
systems in an efficient or timely manner, and we may discover deficiencies in
existing systems and controls.
IF WE ARE NOT ABLE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS, OUR BUSINESS
COULD BE HARMED.
Our success depends upon our proprietary technology. We rely on a
combination of patent, copyright, trademark and trade secret rights,
confidentiality procedures and licensing arrangements to establish and protect
our proprietary rights. Our pending patent applications may not be allowed or
our competitors may successfully challenge the validity or scope of any of our
four US and one European issued patents or any future issued patents. Our
patents alone may not provide us with any significant competitive advantage.
Third parties could copy or otherwise obtain and use our products or technology
without authorization, or develop similar technology independently. We cannot
easily monitor any unauthorized use of our products, and, although we are unable
to determine the extent to which piracy of our software products exists,
software piracy is a prevalent problem in our industry in general.
Furthermore, effective protection of intellectual property rights is
unavailable or limited in various foreign countries. The protection of our
proprietary rights may be inadequate and our competitors could independently
develop similar technology, duplicate our products or design around any patents
or other intellectual property rights we hold.
WE MAY FACE INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS THAT COULD BE COSTLY TO
DEFEND AND RESULT IN OUR LOSS OF SIGNIFICANT RIGHTS.
As is common in the software industry, we have received and may continue
from time to time receive notices from third parties claiming infringement by
our products of third-party patent and other proprietary rights. Third parties
could claim that our current or future products infringe their patent or other
proprietary rights. Any claims, with or without merit, could be time-consuming,
result in costly litigation, cause product shipment delays or require us to
enter into royalty or licensing agreements, any of which could adversely effect
our business, financial condition and operating results. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
us, or at all. Legal action claiming patent infringement could be commenced
against us, and we may not prevail in such litigation given the complex
technical issues and inherent uncertainties in patent litigation. Moreover, the
cost of defending patent litigation could be substantial, regardless of the
outcome. In the event a patent claim against us was successful and we could not
obtain a license on acceptable terms, license a substitute technology or
redesign to avoid infringement, our business, financial condition and operating
results would be significantly harmed.
OUR DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS CONTROL
INFORMATICA.
Our officers, directors and principal stockholders (i.e., greater than 5%
stockholders) together control approximately 36.7% of our outstanding common
stock. As a result, these stockholders, if they act together, are able to
control our management and affairs and all matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions. This concentration of ownership may have the effect of
delaying or preventing a change in control and might affect the market price of
our common stock.
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<PAGE> 14
OUR STOCK PRICE FLUCTUATES AS A RESULT OF OUR BUSINESS AND STOCK MARKET
FLUCTUATIONS.
The market price for our common stock has experienced significant
fluctuations and may continue to fluctuate significantly. The market price for
our common stock following this offering will be affected by a number of
factors, including the following:
- the announcement of new products or product enhancements by us or our
competitors;
- quarterly variations in our or our competitors' results of operations;
- changes in earnings estimates or recommendations by securities analysts;
- developments in our industry; and
- general market conditions and other factors, including factors unrelated
to our operating performance or the operating performance of our
competitors.
In addition, stock prices for many companies in the technology and emerging
growth sectors have experienced wide fluctuations that have often been unrelated
to the operating performance of such companies. After periods of volatility in
the market price of a particular company's securities, securities class action
litigation has often been brought against that company. We may become involved
in this type of litigation in the future, which is often expensive and diverts
management's attention and resources, which could harm our ability to execute
our business plan. Such factors and fluctuations, as well as general economic,
political and market conditions, may cause the market price of our common stock
to decline.
THE LOSS OF KEY PERSONNEL OR THE INABILITY TO ATTRACT AND RETAIN ADDITIONAL
PERSONNEL, PARTICULARLY IN THE SILICON VALLEY AREA, WHERE WE ARE HEADQUARTERED,
COULD HARM OUR RESULTS OF OPERATIONS.
We believe our success depends upon our ability to attract and retain
highly skilled personnel, including Gaurav S. Dhillon, our Chief Executive
Officer, Diaz H. Nesamoney, our President and Chief Operating Officer, and other
key members of our management team. We currently do not have any key-man life
insurance relating to our key personnel, and their employment is at-will and not
subject to employment contracts.
We may not be successful in attracting, assimilating and retaining key
personnel in the future. As we seek to expand our operations, the hiring of
qualified sales and technical personnel will be difficult due to the limited
number of qualified professionals. Competition for these types of employees,
particularly in the Silicon Valley area, where we are headquartered, is intense.
We have in the past experienced difficulty in recruiting qualified sales and
technical personnel. Failure to attract, assimilate and retain key personnel,
particularly sales and technical personnel, would harm our business, results of
operations and financial condition.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS CONTAIN PROVISIONS THAT COULD
DISCOURAGE A TAKEOVER.
Our basic corporate documents and Delaware law contain provisions that
might enable our management to resist a takeover. These provisions might
discourage, delay or prevent a change in the control of Informatica or a change
in our management. Our amended and restated certificate of incorporation
provides that we will have a classified board of directors, with each class of
directors subject to re-election every three years. This classified board has
the effect of making it more difficult for third parties to insert their
representatives on our board of directors and gain control. These provisions
could also discourage proxy contests and make it more difficult for you and
other stockholders to elect directors and take other corporate actions. The
existence of these provisions could limit the price that investors might be
willing to pay in the future for shares of the common stock.
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<PAGE> 15
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, as well as the Forms 10-Q, Form 10-K, Form 8-K, Form 14A
and Form 8-A incorporated by reference into this prospectus, include
"Forward-Looking Statements." All statements other than statements of historical
fact are "Forward-Looking Statements" for purposes of these provisions,
including any projections of earnings, revenues or other financial items, any
statements of the plans and objectives of management for future operations, any
statements concerning proposed new products or services, any statements
regarding future economic conditions or performance, and any statement of
assumptions underlying any of the foregoing. In some cases, Forward-Looking
Statements can be identified by the use of terminology such as "may," "will,"
"expects," "plans," "anticipates," "estimates," "potential," or "continue," or
the negative thereof or other comparable terminology. Although Informatica
believes that the expectations reflected in the Forward-Looking Statements
contained herein are reasonable, there can be no assurance that such
expectations or any of the Forward-Looking Statements will prove to be correct,
and actual results could differ materially from those projected or assumed in
the Forward-Looking Statements. Future financial condition and results of
operations, as well as any Forward-Looking Statements, are subject to inherent
risks and uncertainties, including but not limited to the factors described
under "Risk Factors" beginning on page 7 and the reasons described elsewhere in
this prospectus. All Forward-Looking Statements and reasons why results may
differ included in this prospectus are made as of the date hereof, and
Informatica assumes no obligation to update any such Forward-Looking Statement
or reason why actual results might differ.
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SELLING STOCKHOLDERS
The following table provides the names of and the number of shares of
Common Stock beneficially owned by each selling stockholder, and the number of
shares of Common Stock beneficially owned by each selling stockholder upon
completion of the offering or offerings pursuant to this prospectus, assuming
each selling stockholder offers and sells all of its or his/her respective
shares. Selling stockholders may, however, offer and sell all, or some or none
of their shares. Under some circumstances, the respective donees, pledgees and
transferees or other successors in interest of the selling stockholders may also
sell the shares listed below as being held by the selling stockholders. No
selling stockholder beneficially owns one percent or greater of the Company's
outstanding Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP PRIOR OWNERSHIP AFTER
TO OFFERING THE OFFERING
---------------- OFFERED ----------------
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES
---------------- ---------------- ----------------
<S> <C> <C> <C>
Srinivasan Subramanian............... 604,412 604,412 0
James V. Caruso...................... 61,950 61,950 0
Jeffrey P. Smith..................... 24,780 24,780 0
James E. Cates....................... 24,780 24,780 0
M.R. Parthasarathy and Usha
Parthasarathy as trustees of the
Parthasarathy 1997 Trust dated
March 17, 1997..................... 58,232 58,232 0
Jeffrey Parkinson.................... 23,540 23,540 0
James C. Puthuff..................... 18,584 18,584 0
Prasad Vaidyanathan.................. 6,194 6,194 0
S. Kalyana Sundaram.................. 4,956 4,956 0
Thillagay Naidoo..................... 2,478 2,478 0
Bhushan R. Keshavabhotla............. 2,478 2,478 0
Firoz Kanchwala...................... 2,478 2,478 0
Deepak Tandon........................ 2,478 2,478 0
Pradeep Chowdhury.................... 2,478 2,478 0
Vasu R. Devan and Latha Devan as
trustees of the Devan Family Trust
dated January 1996................. 279,486 279,486 0
M.R. Ranganathan..................... 4,956 4,956 0
Deepak Sarangapani................... 4,956 4,956 0
Sean Kelley.......................... 1,238 1,238 0
Marvin L Mouchawar................... 49,346 49,346 0
Bennet Indart........................ 618 618 0
M.R. Raghavan........................ 4,956 4,956 0
</TABLE>
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time by the
holders of up to 1,299,084 shares of Common Stock. These shares were issued in
connection with the agreement and plan of merger between Informatica and
Influence Software, Inc. This prospectus has been prepared in connection with
registering these shares to allow for sales of these shares by the applicable
selling stockholders to the public. We have registered the shares for sale
pursuant to the terms of the
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<PAGE> 17
agreement and plan of merger, but registration of these shares does not
necessarily mean that any of these shares will be offered and sold by the
holders thereof.
We will not receive any proceeds from this offering. The shares may be sold
from time to time to purchasers directly by any of the selling stockholders, or
under some circumstances, donees, pledgees, transferees or other successors in
interest ("Transferees") thereof. Alternatively, the selling stockholders, or
Transferees thereof, may from time to time offer the shares through dealers or
agents, who may receive compensation in the form of commissions from the selling
stockholders, or Transferees thereof, and/or the purchasers of the shares for
whom they may act as agent. The selling stockholders, or Transferees thereof,
and any dealers or agents that participate in the distribution of the shares may
be deemed to be "underwriters" within the meaning of the Securities Act and any
profit on the sale of the shares by them and any commissions received by any
such dealers or agents might be deemed to be underwriting commissions under the
Securities Act.
At a time a particular offer of the shares is made, a prospectus
supplement, if required, will be distributed that will set forth the name and
names of any dealers or agents and any commissions and other terms constituting
compensation from the selling stockholders, or Transferees thereof, and any
other required information. The shares may be sold from time to time at varying
prices determined at the time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the shares may be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the shares may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from such registration or qualification requirement is available and is complied
with.
The shares may also be sold in one or more of the following transactions:
(a) block transactions (which may involve crosses) in which a broker-dealer may
sell all or a portion of such stock as agent but may position and resell all or
a portion of the block as principal to facilitate the transaction; (b) purchases
by any such broker-dealer as principal and resale by such broker-dealer for its
own account pursuant to a prospectus supplement; (c) ordinary brokerage
transactions and transactions in which any such broker-dealer solicits
purchasers; (d) sales "at the market" to or through a market maker or into an
existing trading market, on an exchange or otherwise, for such shares; and (e)
sales in other ways not involving market makers or established trading markets,
including direct sales to purchasers. In effecting sales, broker-dealers engaged
by the selling stockholders may arrange for other broker-dealers to participate.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and financial statement schedule included in our Annual
Report on Form 10-K for the year ended December 31, 1999, as set forth in their
report, which is incorporated by reference in this prospectus and elsewhere in
the registration statement. Our financial statements and financial statement
schedule are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered pursuant
to this prospectus will be passed upon for the Company by Morrison & Foerster
LLP, Palo Alto, California.
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