INFORMIX CORP, 10-K, 1996-03-29

INFORMIX CORP
10-K, 1996-03-29
PREPACKAGED SOFTWARE

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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, 1995
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
(State or other jurisdiction of
incorporation or organization)

94-3011736
(I.R.S. Employer Identification No.)

4100 Bohannon Drive, Menlo Park, CA 94025
(Address of principal executive office)

415-926-6300
(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
(Title of each class)

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. [ X ]

The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of February 29, 1996 was approximately
$5,152,802,594. 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 February 29, 1996, Registrant had outstanding 148,426,144 shares
of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE (to be deemed filed only to the
extent specifically incorporated herein by reference and not otherwise
excluded by law):

Parts of the Proxy Statement to be used in conjunction with
Registrant's Annual Stockholders Meeting to be held May 16, 1996:
PART III
______________________________________________________________________

INFORMIX CORPORATION
1995 FORM 10-K ANNUAL REPORT
Table of Contents

PART I

Item 1. Business

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Submission of Matters to a Vote of Security Holders

PART II

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters

Item 6. Selected Financial Data

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure

PART III

Item 10. Directors and Executive Officers of Registrant

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and
Management

Item 13. Certain Relationships and Related Transactions

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K

Signatures

_______________________________________________________________________

FORWARD LOOKING STATEMENTS

This Annual Report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Actual
results could differ materially from those projected in the forward-
looking statements as a result of certain factors described herein and
in other documents. Readers should pay particular attention to the risk
factors described in the section of this Report entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations". Readers should also carefully review the risk factors
described in the other documents the Company files from time to time
with the Securities and Exchange Commission, specifically the Quarterly
Reports on Form 10-Q to be filed by the Company in 1996 and any Current
Reports on Form 8-K filed by the Company.
_______________________________________________________________________

PART I

ITEM 1. BUSINESS

BACKGROUND

The Company is a multinational supplier of high-performance,
parallel processing database technology for open systems. The Company's
products also include applications development tools for creating
client/server production applications, decision-support systems, ad-hoc
query interfaces, and software that allows information to be shared
transparently from personal computers to mainframes within the corporate
computing environment. In addition to software products, the Company
offers training, consulting, and post-contract support to its customers.
The principal geographic markets for the Company's products are in North
America, Europe, Asia/Pacific, Japan, and Latin America. Customers
include large-, medium- and small-sized corporations in the
manufacturing, financial services, telecommunications, retail/wholesale,
hospitality, and government services sectors.

The Company was initially incorporated in California in 1980 and
was reincorporated in Delaware in August 1986. Unless the context
requires otherwise, the terms "Company" and "Informix" refer to Informix
Corporation and its subsidiaries. The Company maintains its executive
offices at 4100 Bohannon Drive, Menlo Park, California 94025. Its
telephone number is (415) 926-6300.

All of the Company's database products developed since 1983 support
Structured Query Language ("SQL"), an industry standard created by IBM.
The Company believes that its INFORMIX(R)-4GL Product, introduced in
1986, was the first fourth-generation applications development language
consolidating SQL with syntax for menu creation, formatted screen
generation and report writing. The combination of these features
significantly increases programmer productivity and flexibility in
developing applications software. The Company's core database
management software runs on the UNIX(R), Windows(TM) and Windows/NT(TM)
operating systems, and certain networks composed of computers running
these operating systems.

The Company's customers consist primarily of end-users, application
vendors, original computer equipment manufacturers ("OEMs") and
distributors. The Company markets its products directly to end-users
through its sales force and indirectly to end-users through application
vendors, OEMs and distributors.

In 1995, the Company had three internal sales organizations: North
America; Europe, Middle East and Africa; and the Intercontinental Group,
which included Japan and the Asia/Pacific and Latin America regions.
Effective January 1, 1996, these sales organizations were reorganized
into the following groups: Americas, including the North America and
Latin America regions; International, including the Europe, Middle East,
Africa and Asia/Pacific regions; and Japan. The Americas sales
organization is headquartered in Menlo Park, California, has sales
offices located in major cities throughout the United States and Canada
and in 7 Latin American countries. The International sales
organization, headquartered in the United Kingdom, has sales offices in
29 countries. Informix also has a European development, production and
distribution center located in Ireland. The Japan sales organization is
headquartered in Tokyo, Japan. Informix has operating subsidiaries in 36
foreign countries.

In February 1996, the Company acquired Illustra Information
Technologies, Inc. ("Illustra"), a United States based provider of
object-relational database systems and tools for managing complex data,
such as audio, video, text and images. The Company intends to integrate
the functionality of Illustra's object-relational products into its core
database technology. Approximately 12,700,000 shares of the Company's
common stock were issued to acquire all of the outstanding shares of
Illustra stock. An additional 2,300,000 shares were reserved by the
Company for future issuance in connection with the assumption of
Illustra's outstanding options. The transaction will be accounted for
as a pooling of interests.

Products

Database Engines

The Company offers the following relational database SQL engines,
which share a common set of development tools:

INFORMIX-OnLine, the Company's first generation on-line
transaction processing ("OLTP") database server with stored procedures,
triggers, referential integrity, high availability, document imaging
support and fast response times in heavy transaction environments.

INFORMIX-OnLine Dynamic Server(TM), the Company's second
generation OLTP engine. This server is based on the Company's Dynamic
Scalable Architecture and features parallel data processing capability,
replication and connectivity options built into the core database
server, offering users significant enhancements without adding
additional cost. This product is available on uniprocessor and symmetric
multiprocessing systems.

INFORMIX-OnLine Extended Parallel Server, a new, high-
performance, scalable database server which extends the Company's
Dynamic Scalable Architecture to loosely coupled, "shared nothing"
computing architectures, including clusters of symmetric multiprocessing
systems and massively parallel processing systems. This product became
available in the third quarter of 1995 on a limited basis.

INFORMIX-SE, designed for smaller organizations with limited
MIS staffing or minimal database expertise because it is easy to install
and maintain. This product provides the power of SQL without the complex
database administration requirements.

Database Tools

The Company offers a variety of database application development
tools designed to allow users to build applications quickly and maintain
them easily. The Company's database tools are:

INFORMIX-NewEra(TM), a graphical, object-oriented development
environment designed for creating enterprise-wide multi-tier
client/server database applications. INFORMIX-NewEra features a fourth-
generation object-oriented programming language, reusable class
libraries, application partitioning, and flexible application
deployment, and supports open connectivity to Informix and non-Informix
databases. INFORMIX-NewEra is currently available for Microsoft(R)
Windows(TM) and OSF Motif(TM).

INFORMIX-4GL, a character-based development environment, which
includes a fourth-generation programming language with full screen-
building, report entry and SQL database input/output capabilities. The
INFORMIX-4GL product family is comprised of three core products:
INFORMIX-4GL Compiled, INFORMIX-4GL Rapid Development System and
INFORMIX-4GL Interactive Debugger.

INFORMIX-SQL, a package of five interactive tools for creating
character-based applications. INFORMIX-SQL consists of a forms package,
a report writer, an interactive SQL editor, a menu builder and an
interactive schema editor.

C-ISAM(R), a library of C functions that manage indexed
sequential access method files. C-ISAM bypasses the overhead of an
entire database management system and allows direct access to an
application's records.

INFORMIX-NewEra ViewPoint(TM), a graphical database access and
analytical tool specifically designed to give non-technical computer
users point and click access to information contained in corporate or
departmental databases and to run their own customized forms and
reports.

INFORMIX-NewEra ViewPoint Pro, a graphical database
administration tool which includes all of the features of INFORMIX-
NewEra ViewPoint, as well as a database schema builder, a SQL editor and
a SuperView(TM) builder, for creating highly specialized views to the
database that simplify access, retrieval and analysis of data.

INFORMIX-MetaCube(TM), a high-performance on-line analytical
processing engine that automatically preconsolidates data and provides a
multidimensional view of data without the constraints of a two
dimensional (row and table) data model. The INFORMIX-MetaCube product
family also includes MetaCube Explorer, an adhoc decision support tool
for end users, MetaCube Warehouse Manager, a graphical tool for
administering the "metadata" describing a database in a logical, user-
friendly view, MetaCube Agents, a scheduler to perform user queries and
administrative tasks on a database in the background, and MetaCube for
Excel, an add-in to the standard Microsoft spreadsheet environment. The
MetaCube products became available in the fourth quarter of 1995 as a
result of the Company's October 1995 acquisition of Stanford Technology
Group, Inc., a United States based provider of on-line analytical
processing technology.

In February 1995, the Company entered into an agreement with
Investment Intelligence Systems Limited ("IISL") which gave IISL
exclusive rights to develop, distribute, sell and support the
INFORMIX-Wingz(R) spreadsheet and the INFORMIX-HyperScript(R) Tools
graphical development environment to new and existing customers. IISL
assumed full responsibility for both products effective June 30, 1995.
The agreement is world-wide, with the exception of Japan, where ASCII
Corporation retains the exclusive rights to market and distribute the
Kanji version of INFORMIX-Wingz.

Connectivity Products

The Company's connectivity products are:

INFORMIX-Gateway(TM) with DRDA, a UNIX-based connectivity tool
allowing interoperability to IBM databases such as DB2, DB2/VM and
DB2/400 from Windows and UNIX clients. INFORMIX-Gateway with DRDA allows
applications built with Informix application development tools to
transparently access and modify information in Distributed Relational
Database Architecture(TM)-compliant database management systems.

INFORMIX-Enterprise Gateway(TM), a UNIX-based connectivity
tool which incorporates the Enterprise Data Access SQL suite of products
from Information Builders, Inc. This product provides transparent access
through SQL statements and remote procedure calls to over 60 relational
and non-relational data sources on 35 different hardware platforms and
operating systems.

INFORMIX-STAR, provides the ability to access INFORMIX-OnLine
databases stored on multiple servers in the same transaction. INFORMIX-
STAR allows the joining and viewing of multiple databases at different
locations as if they were one common database. The functionality of
this product is automatically included in INFORMIX-OnLine Dynamic Server
and INFORMIX-OnLine Extended Parallel Server.

INFORMIX-NET, allows the off-loading of application processing
from the server to a client workstation. The functionality of this
product is included in INFORMIX-SE and all of the Informix UNIX-based
tools. INFORMIX-NET PC for DOS permits the same offloading between a PC
workstation and an Informix database server.

INFORMIX DCE/NET, a connectivity product based on the Open
Software Foundation Distributed Computing Environment specification.
This Product allows customers transparent access to Informix and other
relational databases and takes advantage of DCE security and directory
services.

INFORMIX-TP/XA, links INFORMIX-OnLine to a transaction manager
to support transactions involving multiple databases and multiple
computer systems. INFORMIX-TP/XA is a library of C functions that
establishes the connection between INFORMIX-OnLine and the transaction
manager.

INFORMIX-ESQL for C and COBOL, embedded SQL products which
permit developers to take advantage of SQL technology while building
applications in C or COBOL.

Object-Relational Products

In February 1996, the Company acquired Illustra Information
Technologies, Inc., a United States provider of object-relational
database systems and tools. As a result of this acquisition, the
Company added the following object-relational products to its product
family. The Company intends to integrate the functionality of these
object-relational products into its core database technology.

Illustra(TM) Server, a full-featured database management
system designed for the management of complex data. The Illustra Server
allows users to store, manage and analyze complex data such as
audio, video and image files in a single database with traditional
text and numbers using industry-standard SQL.

Illustra DataBlade(R) Modules, "snap-in" software modules
which extend the Illustra Server's ability to handle new data types and
provide new "methods" for specific handing of the data. DataBlade
modules can work alone or in conjunction with one another. DataBlade
modules can even include completely new access methods, providing quick
access to data not well served by the B-trees of standard relational
database management systems. Current Illustra DataBlade modules
include:

Image DataBlade, a module which supports over 50 image
formats (e.g. GIF, TIFF, PICT), both color and monochrome, and image
manipulation, including rotation, edge enhancement and convolution. With
the Image DataBlade, expertise at managing images is in the database
manager, instead of in each application.

2D Spatial DataBlade, a module which supplies a set of
over 200 functions to allow manipulation and querying of two-dimensional
spatial data, including points, lines, polygons and other spatial and
location data.

3D Spatial DataBlade, a module which supplies a set of
over 1,000 functions to allow manipulation and querying of spatial data
that enables the database to manage three-dimensional spatial
information.

Text DataBlade, a module which supplies a large set of
functions to allow easy development of complex searches -- accessing
documents by their content. Stored text can be queried for keyword
matches as well as for idea and concept relevance.

TimeSeries DataBlade, a module which enables the database
to manage time series and temporal data, which are particularly useful
for systems used in the financial services arena. The TimeSeries
DataBlade supports a regularly repeating time-stamped series of any type
or assortment of data-integer, floating point numbers, currency, text
fields, spatial information that can be represented in digital form, or
any structure or combination of these. The granularity of time
recording can be in a variety of units. Support for two new data types,
time series and calendars, and over 40 functions to manage them, is
included.

S-Plus DataBlade, a module which is a user-installable
extension to the Illustra Server that adds support for over 1,000
statistical functions. The S-Plus DataBlade module maps S-Plus data
types to Illustra data types, making it possible to incorporate S-Plus
functions directly inside of Illustra SQL.

Web DataBlade, a module which substantially reduces the
required effort (and thus cost) of developing World Wide Web-enabling
database applications. The Web DataBlade consists of a core
functionality that makes it possible to store HTML pages in the
database. These pages can contain SQL queries which are triggered when
accessed and the results are formatted. The programmer can therefore
generate HTML pages automatically without knowledge of programming
languages such as C, perl or tcl and focus on the "look and feel" of the
pages, using only industry standard HTML and SQL.

Visual Information Retrieval ("VIR") DataBlade, a module
which is a content-based image retrieval system for retrieving images,
animation and video from complex multimedia databases. Users can
perform searches on any kind of image, including video, based on the
actual content of the image. The VIR Image Viewer, a graphical user
interface to the VIR DataBlade module, allows users to visually search
through collections of images stored in the server.

Illustra DataBlade Developer's Kit. The DataBlade
Developer's Kit includes machine-readable source code, the Illustra
Architecture Manual and the Example Data Blades Manual to allow a
developer to develop new DataBlade modules.

Other tool and toolkit products which provide mechanisms
for enabling application development against the Illustra Server include
Illustra Schema Knowledge, the Illustra ODBC Driver, the Illustra C++
Interface and the Illustra Client Toolkit for Windows.

Maintenance, Consulting and Services

The Company maintains field-based and centralized corporate
technical staffs to provide a comprehensive range of assistance to its
customers. These services include pre- and post- sales technical
assistance, consulting, product and sales training and technical support
services. Consultants and trainers provide services to customers to
assist them in the use of the Company's products and the design and
development of applications that utilize the Company's products.

Informix provides post-sales support to its customers on an
optional basis for fees ranging from 10% to 18% of the license fees paid
by the customer which generally includes product updates.

Marketing and Customers

The Company distributes its products through the channels of direct
end-user licensing, OEMs, application vendors addressing specific
markets and distributors. The Company has chosen a multiple channel
distribution strategy to maintain broad market coverage and product
availability. The Company, therefore, 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 channel with a minimum of channel conflict.
The Company also provides a financing option to customers in connection
with the license of software.

At December 31, 1995, the Company's sales, marketing and support
staff totaled 1,011 regular employees in the North America region; 103
regular employees in the Latin America region, 652 regular employees in
the Europe, Middle East and Africa regions, 231 regular employees in the
Asia/Pacific region and 77 regular employees in Japan.

In January 1995, the Company acquired a 90 percent interest in the
database division of ASCII Corporation, a distributor of its products in
Japan. The Company acquired the remaining 10 percent interest in
January 1996. This acquisition has been recorded as a purchase. The
purchase cost of this business was approximately $46,000,000.
Additionally, in April 1995, the Company acquired an 80 percent interest
in the database division of Daou Corporation, a distributor of its
products in Korea. The Company will acquire the remaining 20 percent
interest in January 1997. This acquisition has been recorded as a
purchase with the purchase cost of this business being approximately
$4,600,000.

Licensing

End-User Licensing

The Company licenses its products to large companies and government
entities through its direct sales force, and to certain of these
companies, as well as smaller end-users, through its telemarketing sales
force. The Company believes that the common core technology of its
RDBMS software products, based on standard operating systems and the SQL
database language places it in a strong position to sell into 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 with the
Company which offer volume discounts.

Application Vendor Licensing

Since its inception, the Company has licensed application vendors
to distribute its products. A typical application vendor develops an
application product (e.g., an insurance agency management system) using
one of the Company's products and then licenses the resultant
application software to its customers in the target market. The
application vendor customer purchases a license for use of the Company's
product to develop an applications program. Depending on the
application program developed, it may include a run-only license, a full
version license or even multiple product licenses.

Application vendors develop applications using a wide array of
application development tools, including products from the Company, such
as INFORMIX-NewEra, INFORMIX-4GL and INFORMIX-SQL, as well as products
offered by third parties. Applications developed using the Company's
products are generally portable across various brands of computers and
different operating systems. The Company believes that this feature is
significant to this distribution channel.

The Company has specialized programs to support the application
vendor distribution channel. Under these programs, the Company provides
to selected application vendors a combination of marketing development
services, consulting and technical marketing support and discounts.

OEM Licensing

The Company's products are also marketed with the assistance of the
sales forces of its OEM customers who have concluded that "solution
selling" of a combination of software and hardware to their respective
customers enhances the sales of their computer equipment. The Company
believes that the compatibility and range of applications for its
products is significant to this distribution channel.

Distributor Licensing

The Company has established a network of full service international
distributors who provide local service and support, as well as the
Company's products, to their respective national markets. The Company's
products have been translated by the Company or the Company's
distributors into a number of foreign languages, including Japanese
(Kanji), Chinese (Simplified and Traditional), Czech, Danish, French,
German, Hebrew, Hungarian, Korean (Hangul), Italian, Polish, Russian,
Slovak, Spanish, Swedish and Thai.

Product Development

The computer software industry is highly competitive and rapidly
changing. Consequently, the Company dedicates considerable resources to
research and development efforts to enhance its existing product lines
and to develop new products to meet new market opportunities. Major
research and development projects in 1995 included new releases of
INFORMIX-NewEra and INFORMIX-OnLine Dynamic Server and the release of
INFORMIX-OnLine Extended Parallel Server on a limited basis.

Most of the Company's current software products and accompanying
documentation have been developed internally; however, the Company has
acquired certain software products from others and plans to do so again
in the future.

Current product development is focused toward:

Integration of the Illustra object-relational database
technology into the Company's core parallel database
technology to provide support for complex data, such as audio,
video and images of the type often used in World Wide Web or
other Internet-based applications, in a high performance,
scalable environment.

Improvement and enhancement of current products and new
products, with particular emphasis on parallel computer
architecture, graphical desk top, system administration,
application partitioning and mobile capabilities.

Improvements to the Company's products to provide greater
speed and support for larger numbers of concurrent users.

Adaptation of new products to the broad range of computer
brands and operating systems the Company currently supports
and adaptation of current products to new brands of computers
and operating systems which represent attractive market
opportunities for the Company's products.

There can be no assurance that the Company's product development
efforts will be successful or that any new products will achieve
significant market acceptance.

As of December 31, 1995, the Company had 644 regular employees
engaged in research and development.

Competition

The Company faces intense competition in the market for RDBMS
software products. Companies in the RDBMS market compete primarily on
the basis of price/performance characteristics, name recognition, and
technical support, training and consulting services.

With respect to RDBMS performance, the Company believes that the
principal competitive factors include:

Application development productivity (the speed with which
applications can be built).

Database performance (the speed at which database storage and
retrieval functions are executed).

The ability to support large warehouses of information.

Reliability, availability and serviceability.

The distribution of RDBMS software applications and data
across networks of computers from multiple suppliers.

Increasingly, the ability to manage complex data and solve
more complex business problems based on such data.

The Company believes that the technical advantages of its products,
its approach to sales and marketing, its relations with application
vendors, OEMs and distributors and its customer service and support
contribute to its ability to compete favorably in this market.

The chief competition faced by the Company is currently provided by
Oracle Corporation, Sybase, Inc., CA Ingres (a subsidiary of Computer
Associates International, Inc.), IBM Corporation, Microsoft Corporation
and Red Brick Systems, Inc. and suppliers of third party tools such as
Gupta Corporation, Forte Software, Inc. and Dynasty Technologies, Inc.
The Company believes that there is a large market for RDBMS software
which might attract additional competitors. Additionally, some of the
Company's current competitors and many potential competitors have
greater financial, technical and marketing resources than the Company.

To the extent that market acceptance for personal computer oriented
technologies increases at the expense of UNIX or other non-PC platforms,
this could result in greater price pressure on certain of the Company's
database products and services. The availability and market acceptance
of Microsoft Corporation's Windows NT operating system may increase the
competition faced by the principal operating system platforms on which
the Company's products operate and may result in greater price pressure
on certain of the Company's database products and services. Also, new
or enhanced products introduced by existing or future competitors could
have an adverse effect on the Company's business. Existing and future
competition or changes in the Company's product or service pricing
structure or product or service offerings could result in an immediate
reduction in the prices of the Company's products or services. If this
were to result in significant price declines, the effects of which were
not offset by any resulting increases in sales volume of the Company's
products or services, the Company's business, results of operations and
financial condition would be adversely affected.

Product Protection

The Company relies on a combination of trade secret, copyright and
trademark laws, license agreements and technical measures to protect its
rights in its software products. Like many software companies, the
Company has no patents to date, although it has applied for four
software patents for core technology present in the Company's products,
and is proceeding with applications for several other software patents.
The Company maintains trademark and service mark registrations in the
United States and numerous other foreign jurisdictions.

The Company's 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 either on a
single computer at a single site or to a specific number of users at a
single site or enterprise wide. The Company also relies on "shrink-
wrap" licenses. The Company's "shrink-wrap" license includes a
prominently displayed notice informing the end-user that, by opening the
product packaging, the end-user agrees to be bound by the Company's
license agreement printed on the package. Copyright and trade secret
protection for source and object code version of software products may
be unavailable in certain foreign countries. In addition, "shrink-wrap"
licenses may be wholly or partially unenforceable under the laws of
certain jurisdictions.

The Company protects the human readable, source code version of its
products as a trade secret and an unpublished copyrighted work. The
Company has licensed the source code of its products to certain
customers under certain circumstances, and for restricted uses. In
addition, the Company has entered into source code escrow agreements
with a number of its customers that generally require release of source
code to the customer in the event there is a bankruptcy or similar
proceeding by or against the Company, the Company ceases to do business
or the Company ceases to support the product. In the event of a release
of the source code to a customer, the customer is required to maintain
its confidentiality and, in general, to use the source code solely for
internal business purposes or for the purpose of providing maintenance
and support to its customers, and, in certain circumstances, to
embedding it in customer products.

The Company believes that, because of the rapid pace of
technological change in the computer software industry, patent, trade
secret and copyright protection are less significant than factors such
as the knowledge, ability and experience of the Company's personnel, new
product introduction, frequent product enhancement, name recognition and
ongoing product maintenance.

Employees

As of December 31, 1995, the Company and its subsidiaries had 3,219
regular employees worldwide, including 2,074 in sales, marketing and
support; 644 in research and development; 90 in operations and 411 in
administration and finance.

Competition in recruiting personnel in the computer software
industry is intense. The Company believes that its future success will
depend in part on its continued ability to recruit and retain highly
skilled management, marketing and technical personnel.

None of the Company's U.S. employees are represented by a labor
union. A small number of employees located outside of the United States
are represented by labor unions. The degree of this representation
varies from country to country. The Company has experienced no work
stoppages and believes that its employee relations are excellent.

EXECUTIVE OFFICERS

Set forth below in alphabetical order are biographical summaries of
the current executive officers of the Company.

Ronald M. Alvarez, 46, rejoined the Company in December 1991 as
Director of Latin America Operations. He was promoted to Executive
Director, Latin America Operations in March 1993, and to Vice President,
Latin America in May 1995. He was appointed to his current position of
Vice President, Americas Sales in January 1996. From August 1991 to
December 1991, Mr. Alvarez occupied a sales position at MarketMax, a
provider of software and data feeds for the financial community. From
May 1988 to August 1991, Mr. Alvarez was a District Manager in the
Company's U.S. sales organization.

Richard C. Blass, 41, joined the Company in February 1985 as
Controller and became Vice President, Corporate Controller in February
1988.

Margaret R. Brauns, 41, became Vice President and Treasurer of the
Company in November 1992. Ms. Brauns joined the Company as Treasurer in
May 1990. From February 1988 to May 1990, she served as Treasurer at
Wyse Technology Incorporated.

D. Kenneth Coulter, 51, joined the Company in February 1988 as
Managing Director, UK. He became Senior Vice President, Europe, Middle
East and Africa, in April 1992. From January 1990 to April 1992, Mr.
Coulter was Vice President, Europe of the Company. He was named Senior
Vice President, International in January 1996.

Ira H. Dorf, 55, joined the Company as Vice President, Human
Resources in October 1989.

Howard H. Graham, 48, joined the Company in February 1990 as Vice
President, Finance and Chief Financial Officer and became Senior Vice
President, Finance and Chief Financial Officer in March 1991.

James F. Hendrickson, Jr., 56, joined the Company as Vice
President, Customer Services in July 1992. In February 1995, Mr.
Hendrickson assumed the additional responsibility of Lenexa Site
Manager. Prior to joining the Company, Mr. Hendrickson was Senior Vice
President of Marketing at Image Business Systems from 1991. From 1988
to 1990, Mr. Hendrickson worked as Executive Vice President of
Development at International Customer Solutions, Inc.

Stephen E. Hill, 37, joined the Company in December 1985, and has
served the Company in a variety of strategic planning, development and
marketing positions. Mr. Hill currently serves as Vice President,
Advanced Technology.

Jeffrey V. Hudson, 43, joined the Company in June 1995 as Vice
President, Business Development. From December 1993 to January 1995,
Mr. Hudson was President and Chief Executive Officer of Visioneer
Communications, Inc. From June 1989 to December 1993, he was Vice
President, Sales, Marketing and Service for Netframe Systems, Inc.

Mike Saranga, 58, joined the Company as Senior Vice President,
Product Management and Development in May 1993. Prior to joining the
Company, Mr. Saranga was employed by IBM for 30 years, most recently as
Assistant General Manager of Programming Systems, where Mr. Saranga
developed IBM's technical and business strategies for key technologies
including client/server, distributed systems and multimedia.

Steven R. Sommer, 40, joined the Company as Vice President,
Marketing in May 1993. Mr. Sommer was employed by Cognos, Inc., an
application development tools software company, from February 1990 to
March 1993. At Cognos, Inc., Mr. Sommer had responsibility for world-
wide marketing as Vice President of Corporate Marketing and Vice
President of Marketing Operations.

David H. Stanley, 49, joined the Company as Vice President, Legal,
General Counsel and Assistant Secretary in July 1988. In August 1990,
Mr. Stanley was elected to the additional office of Secretary. In March
1995, Mr. Stanley assumed the additional responsibility for corporate
services and became Vice President, Legal and Corporate Services,
General Counsel and Secretary.

Michael R. Stonebraker, 52, joined the Company as Vice President
and Chief Technology Officer in February 1996. Dr. Stonebraker
cofounded Illustra Information Technologies, Inc. ("Illustra"), a
supplier of object-relational database management systems, in July 1992,
and served in a consulting capacity with Illustra as Chief Technology
Officer until February 1996. Dr. Stonebraker is professor emeritus of
Electrical Engineering and Computer Sciences at the University of
California, Berkeley, where he joined the faculty in 1971.

Phillip E. White, 53, has been the Company's Chief Executive
Officer and a director since January 1989. He has held the additional
office of President since August 1990 and of Chairman since December
1992. Mr. White also serves as a director of Adaptec, Inc., a computer
input/output technology company, and of Legato Systems, a manufacturer
and developer of network storage management software products.

Richard H. Williams, 52, joined the Company as Senior Vice
President in February 1996. Prior to joining the Company, Mr. Williams
had been the President, Chief Executive Officer and a director of
Illustra since December 1993. Mr. Williams was Executive Vice President
of Sales for Novell, Inc., a computer software company ("Novell"), and
General Manager of Novell's Digital Research Systems Group from 1991 to
1992. From 1987 to 1991, Mr. Williams served as President and Chief
Executive Officer of Digital Research, Inc., a computer software
company, which merged with a wholly-owned subsidiary of Novell in 1991.
Mr. Williams retired upon completion of the integration of Digital
Research, Inc. into Novell in 1992 and remained in retirement until he
joined Illustra in December 1993.

Edwin C. Winder, 46, joined the Company in February 1990. Since
joining the Company, Mr. Winder has held a variety of executive
positions in sales, marketing and customer service. He is currently the
Company's Senior Vice President, Japan Operations.

______________

Distributed Relational Database Architecture, Microsoft, Motif, UNIX,
Windows and Windows/NT are trademarks of their respective owners. All
other names indicated by (R) or (TM) are trademarks of the Company.

ITEM 2. PROPERTIES

The Company's headquarters and its marketing, finance, Americas
sales, administration, customer service and research and development
operations are located in five modern buildings in a seven building
office park in Menlo Park, California, approximately 30 miles south of
San Francisco. The Company leases approximately 214,000 square feet of
space in these buildings. The leases for spaces in three of the
buildings expire in March 1998. The Company has options to renew each
lease for up to two additional five year terms at 95% of the then fair
rental value. The leases for space in the other two buildings expire in
September 2001.

Some of the research and development for the Company's tools
products, a portion of the Company's customer service organization, the
Company's principal manufacturing facility and the Company's
telemarketing organization are located in two modern buildings
aggregating approximately 135,000 square feet in Lenexa, Kansas, a
suburb of Kansas City. The buildings are owned by a partnership, of
which the Company is a 50% partner, and leased by the partnership to the
Company under a lease with an initial ten-year term that expires in
March 1998. There are two five-year renewal options. Rental under this
lease remains fixed through 1998, and then adjusts to prevailing rates
for the renewal terms.

The Company also leases office space in approximately 47 facilities
in the United States and Canada and approximately 60 facilities
internationally.

The Company believes that its facilities are adequate for its
current needs and that suitable additional or substitute space will be
available as needed to accommodate the expansion of the Company's
operations.

ITEM 3. LEGAL PROCEEDINGS

The Company is not involved in any legal proceedings, other than
ordinary routine litigation incidental to the business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company did not submit any matters to a vote of security
holders during the fourth quarter of the fiscal year ended December 31,
1995.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.

Market Information

The Company's common stock has been traded on the over-the-counter
market under the NASDAQ symbol IFMX since the Company's initial public
offering on September 24, 1986. The following table sets forth the
range of high and low closing prices as reported on the NASDAQ National
Market System for the periods indicated.

<TABLE>
<CAPTION>
High Low
<S> <C> <C>
Fiscal 1994*
First Quarter $12.06 $8.00
Second Quarter 11.06 7.25
Third Quarter 13.88 7.94
Fourth Quarter 16.06 11.88

Fiscal 1995*
First Quarter 19.63 14.63
Second Quarter 25.94 17.06
Third Quarter 34.00 25.25
Fourth Quarter 33.00 24.13

</TABLE>
______________
* The prices shown prior to June 26, 1995 reflect a two-for-one stock
split effected in the form of a stock dividend as of that date.

Common Stockholders of Record and Dividends

At December 31, 1995, there were approximately 1,763 stockholders
of record of the Company's common stock, as shown in the records of the
Company's transfer agent. The Company has never paid dividends on its
common stock and its present policy is to retain its earnings to finance
anticipated future growth.

ITEM 6. SELECTED FINANCIAL DATA

FINANCIAL OVERVIEW

Five-Year Summary

(in thousands, except per-share data) 1995 1994 1993 1992 (1) 1991
<S> <C> <C> <C> <C> <C>
Net Revenues $708,985 $468,697 $352,915 $283,594 $179,811
Net Income 105,333 66,196 56,115 47,782 12,610
Net Income per Share (2) 0.76 0.49 0.42 0.38 0.10
Total Assets 674,416 444,410 326,633 231,459 132,924
Long-Term Obligations 1,313 522 451 1,797 25,383

</TABLE>
The Company has not paid and does not anticipate paying cash dividends
on its common stock.

(1) In 1991, the Company was selected to provide the database
component of a decision-support system for the Army National Guard and
Army Reserves. In 1992, the Company received $26.8 million for license
fees and support as part of this Reserve Component Automation System
(RCAS) contract and recorded $21.8 million as license revenue and
incurred $3.2 million in operating expenses in 1992. The remaining $5.0
million of service revenue was recognized over the support period.

(2) Per-share information applicable to prior periods has been restated
to reflect a two-for-one stock split (effected in the form of a stock
dividend) which was effective June 26, 1995.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Selected elements of Informix's financial statements are shown
below for the last three years as a percentage of revenue and as a
percentage change from year to year.

% Increase (Decrease)
Percent of Net Revenue 1995 1994
Years Ended December 31, Compared Compared
1995 1994 1993 to 1994 to 1993
<S> <C> <C> <C> <C> <C>
Licenses 76% 78% 81% 47% 28%
Services 24 22 19 65 53
Net revenues 100 100 100 51 33
Cost and Expenses:
Cost of software distribution 5 5 6 53 23
Cost of services 13 10 9 94 40
Sales and marketing 42 43 39 47 46
Research and development 11 13 12 31 39
General and administrative 7 7 10 42 4
Total costs and expenses 78 78 76 50 37

Operating income 22 22 24 55 20
Net income 15% 14% 16% 59% 18%

</TABLE>

Informix's operating margins have exceeded or equaled 20 percent
over the last several years. However, Informix's expenses are relatively
fixed in the near term and unexpected variances in planned revenues,
which are difficult to forecast, can result in variations in operating
margins and cost ratios. In the fourth quarter of 1995, Informix
acquired Stanford Technology Group (STG), a company that develops and
sells on-line analytical processing (OLAP) technology, in exchange for
approximately 533,000 shares of its common stock in a pooling of
interests transaction. In February 1996, the Company acquired Illustra
Information Technologies, Inc. (Illustra), a company that provides
dynamic content management database software and tools for managing
complex data in the Internet, multimedia/entertainment, financial
services, earth sciences and other markets. Approximately 12.7 million
shares of Informix common stock were issued to acquire all outstanding
shares of Illustra stock. An additional 2.3 million shares of Informix
common stock were reserved for issuance in connection with the
assumption of Illustra's outstanding options. The transaction will be
accounted for as a pooling of interests. Transaction fees of
approximately $6 million will be recorded in the first quarter of 1996.

Informix expects that its operating margins will be affected
negatively in 1996 as STG and Illustra are integrated with Informix and
the transaction fees for the Illustra acquisition are expensed. Informix
is investing in extensive training for sales, marketing, and customer
service to educate employees of both the acquired companies and Informix
regarding the products of the combined companies and revisions to
Informix operations required to integrate the operations of the
companies. The Company will be investing in the development of a
database management system that will merge technology from both Illustra
and Informix. Informix intends to exert marketing efforts to launch this
product in 1996. In addition, both STG and Illustra businesses are in
developing technology markets. Informix does not expect either business
to contribute 20 percent operating margins in 1996. These integration
and marketing expenses and the relatively low margins of the acquired
companies may adversely affect Informix's ability to achieve quarterly
operating margins consistent with recent quarters. Earnings per share
may also be diluted as a result of the issuance of Informix common stock
in connection with the STG and Illustra acquisitions.

Revenues

The Company derives revenues principally from licensing its
software and providing technical product support and updates to
customers. License revenues may involve the shipment of product by the
Company or the granting of a license to a customer to manufacture
products. Service revenue consists of customer telephone or direct
support, update rights for new product versions, consulting, and
training fees. The Company's products are sold directly to end-user
customers or through resellers, including original equipment
manufacturers (OEM's), distributors, and application vendors. The
Company's revenues have been increasingly derived from sales contracts
directly with end users and less from the distributor or OEM sales
channels. These end-user sales contracts can be relatively large in size
and are difficult to forecast both in timing and dollar value. In
addition, these revenue contracts have lower associated software
distribution and selling costs. From time to time, the Company has
recognized substantial net revenue from these large software license
agreements. These transactions, which are difficult to predict, have
caused fluctuations in net revenues and net income because of the
relatively high gross margin on such revenues. The Company expects that
these sorts of transactions and the resulting fluctuations will
continue.

The increase in service revenue, as a percentage of total revenue,
in each of the years presented, was primarily attributable to the
continued growth of the installed customer base, the renewal of
maintenance contracts and increased consulting revenue. The Company
continues to emphasize support services as a source of revenue.

The overall revenue growth in 1995 primarily reflects continued
strong worldwide acceptance for the Company's new and existing
technology and products. Although the Company expects revenues to grow
in 1996, there can be no assurance that quarterly revenue growth rates
or geographical growth rates will be comparable with those achieved in
1995. As it has done from time to time in the past, Informix
restructured its sales organization effective in the first quarter of
1996. The reorganization includes new management in North America and
the integration of Illustra products and personnel.

The Company's revenues, along with those of the relational database
management system (RDBMS) industry as a whole, have shown substantial
growth over the last several years. The industry has benefited from
trends to downsize from large proprietary computer systems and market
acceptance of UNIX(R), Windows(TM), Windows NT(TM) and other open
operating environments.

The Company has also developed and released connectivity products
to allow access to other relational databases, both proprietary and
open, and access to this data through various protocols such as IBM's
DRDA(TM). The industry movement to new, open operating systems like
Windows NT, access through low-end desktop machines, and access to data
through the Internet may cause downward pressure on prices of database
and related products. If such downward pressure on prices were to occur,
margins would be adversely affected.

The license revenue growth in 1995 and 1994 reflects strong demand
for the Company's products, particularly for the Company's flagship
database server, INFORMIX-OnLine Dynamic Server(TM). The Company has
also started to see revenue growth in the tools area with the
introduction of INFORMIX-NewEra(TM), a next-generation client/server
application development tool which became available in the second half
of 1994. In 1995, the Company introduced, on a limited basis, INFORMIX-
OnLine Extended Parallel Server(TM) (XPS), a new high-performance,
scalable database server based on the Company's Dynamic Scalable
Architecture(TM) (DSA) and also introduced INFORMIX-NewEra 2.0 on the
Windows platform. In February 1996, the Company announced the
development of an enterprise-capable, fully extensible database
management system that can manage all information assets - including
numbers, images, maps, sound, video, Web pages, and text, as well as
other user-defined rich data types. This product will incorporate
Illustra's object-relational technology into Informix's core database
technology. It is scheduled to be commercially available in late 1996 or
early 1997.

Over half of the Company's net revenues are derived from its
international operations. In Europe, Asia/Pacific, and Japan, most
revenues and expenses are now denominated in local currencies. The U.S.
dollar weakened in 1995 and 1994 against the major European and
Asia/Pacific currencies, which resulted in higher revenue and expenses
recorded when translated into U.S. dollars, compared with the prior year
periods. Through 1994, most revenues from Asia/Pacific, Canada, and
Latin America were denominated in U.S. dollars. Accordingly, the
translation of the revenues for these regions was less impacted by
fluctuations in foreign exchange rates. The Company has increased its
direct sales presence in Asia/Pacific by opening offices and acquiring
its primary software distributors in Malaysia in 1994, and Japan and
Korea in early 1995. This increased the proportion of direct sales
denominated in local currency in these regions. The Company has also
increased its direct presence in Latin America, although a significant
percentage of the revenue is still denominated in U.S. dollars. In the
future, the Company expects currency fluctuations in Mexico, and to a
lesser extent, other Latin American countries, to continue. The
Company's operating and pricing strategies take into account changes in
exchange rates over time; however, the Company's results of operations
may be significantly affected in the short term by fluctuations in
foreign currency exchange rates.

Approximately 59 percent, 55 percent and 58 percent of Informix's
net revenues were derived from sales to foreign customers in 1995, 1994,
and 1993, respectively. The increase in foreign revenues in absolute
dollars is primarily attributable to the establishment of new
subsidiaries and sales offices in Europe, Asia/Pacific, Japan, and Latin
America, the acquisition of several foreign distributors, and continued
international acceptance for Informix's new and existing technology.
Informix expects that foreign revenues will continue to provide a
significant portion of total revenues. However, changes in foreign
currency exchange rates, the strength of local economies, and the
general volatility of software markets may result in a higher or lower
proportion of foreign revenues in the future.

The Company enters into forward foreign exchange contracts
primarily to hedge the value of accounts receivable or accounts payable
denominated in foreign currencies against fluctuations in exchange rates
until such receivables are collected or payables are disbursed. This
program involves the use of forward foreign exchange contracts in the
primary European and Asian currencies. The Company has limited unhedged
transaction exposures in certain secondary currencies in Latin America,
Eastern Europe, and Asia Pacific because there are limited forward
currency exchange markets in these currencies. The Company does not
attempt to hedge the translation to U.S. dollars of foreign denominated
revenues and expenses not yet earned or incurred.

Informix's distribution markets were reorganized into three general
markets at the beginning of the second quarter of 1994: North America;
Europe, Middle East, and Africa; and the Intercontinental Group,
consisting of Latin America, Japan, and the Asia/Pacific region. These
organizations contributed 42 percent, 38 percent and 20 percent of
Informix's net revenues, respectively, in 1995, compared to 46 percent,
38 percent, and 16 percent, respectively, in 1994 and 43 percent, 41
percent and 16 percent, respectively, in 1993. Effective January 1,
1996, these sales organizations were reorganized into the following
groups: Americas, including the North America and Latin America regions;
International, including the Europe, Middle East, Africa, and
Asia/Pacific regions; and Japan.

Cost of Software Distribution

(Dollars in Millions) 1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
Manufactured cost of software distribution $25.8 53% $16.9 13% $14.9
Percentage of license revenue 5% 5% 5%
Amortization of capitalized software $12.0 53% $ 7.8 50% $ 5.2
Percentage of license revenue 2% 2% 2%
Cost of software distribution $37.8 53% $24.7 23% $20.1
Percentage of license revenue 7% 7% 7%

</TABLE>

Software distribution costs consist primarily of: 1) manufacturing
and related costs such as media, documentation, product assembly and
purchasing costs, freight, and third-party royalties; and 2)
amortization of previously capitalized software development costs.

The increase in amortization of capitalized software in absolute
dollars in 1995 and 1994 compared to the corresponding prior year
periods was due to the release of several database server and
application tool products in the latter half of 1994 continuing through
1995. The Company expects that amortization of capitalized software in
absolute dollars will continue to increase in the future as new products
are released.

Manufactured cost of software distribution in 1995, as a percentage
of license revenues, remained flat compared to 1994 and 1993. The cost
of software distribution as a percentage of license revenue may vary
depending upon whether the product is reproduced by the Company or by
its customers.

Cost of Services

(Dollars in Millions) 1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
Cost of services $89.0 94% $46.0 40% $32.9
Percentage of service revenue 51% 44% 48%

</TABLE>

Cost of services consists primarily of customer service, consulting
and training expenses. The increase in cost of services in 1995 in
absolute dollars and as a percentage of net revenues compared to 1994 is
primarily due to the Company's increased expenditures in developing
consulting and support services. The decrease in cost of services as a
percentage of service revenue in 1994 compared to 1993 is primarily due
to higher growth in maintenance revenues, derived from product update
rights and technical support, than in maintenance expenses, primarily
related to technical customer support. In the future, the Company
expects that cost of services as a percentage of net revenues will
approximate the rate in 1995.

Sales and Marketing Expenses

(Dollars in Millions) 1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
Sales and marketing $294.6 47% $200.5 46% $137.7
Percentage of net revenue 42% 43% 39%

</TABLE>

The increase in sales and marketing expenses, in absolute dollars,
in 1995 and 1994 compared to the corresponding prior year periods, is a
result of increased sales personnel worldwide as Informix expanded its
investment in the worldwide direct sales organizations, opening of new
subsidiaries, acquisition of several foreign distributors, higher
commission expense associated with the increase in revenues, and
increased marketing programs associated with new product launches.

With the continuing expansion throughout 1996 of worldwide
operations, as well as increased sales and marketing expenditures aimed
at positioning Informix and its new and existing products in the
marketplace, Informix expects that sales and marketing expenses will
increase in absolute terms in 1996.

Research and Development Expenses

Informix 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 following table summarizes research and development costs
for the prior three years:

(Dollars in Millions) 1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
Incurred product development costs $96.8 31% $74.0 42% $52.2
Expenditures capitalized 17.5 29% 13.6 58% 8.6
Research and development expenses $79.3 31% $60.4 39% 43.6
Expenditures capitalized as a percent of incurred 18% 18% 17%

</TABLE>

The increase in research and development expenditures in absolute
dollars from year to year is attributed to an increase in staff working
on new products and product extensions.

The higher capitalization in absolute dollars of product
development expenditures from year to year resulted from an increase in
the work involved in projects reaching technological feasibility as they
neared their release dates. The Company expects the proportion of work
on capitalized projects to remain relatively stable throughout 1996.

Major new programs currently under development include an
enterprise-capable, fully extensible database management system that can
manage all information assets - including numbers, images, maps, sound,
video, Web pages, and text, as well as other user-defined rich
datatypes; the expansion of the DSA family of servers and connectivity
products; and subsequent versions of the Company's graphical, object-
oriented tool, INFORMIX-NewEra. The Company believes that research and
development expenditures are essential to maintaining its competitive
position in its primary markets and expects the expenditure levels to
increase in absolute dollars.

General and Administrative Expenses

(Dollars in Millions) 1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
General and administrative expenses $49.0 42% $34.5 4% $33.2
Percentage of net revenues 7% 7% 10%

</TABLE>

General and administrative expenses in 1995 increased in absolute
dollars compared to 1994 as a result of the continued expansion in
international operations as well as the acquisition of several foreign
distributors. The slight increase in absolute dollars from 1993 to 1994
was primarily due to an increase in the costs of supporting Informix's
international operations as new subsidiaries and branch offices were
established and existing subsidiaries were expanded. Informix will
expense approximately $6 million of transaction fees related to the
Illustra acquisition in the first quarter of 1996. Informix expects that
other 1996 general and administrative expenses as a percentage of net
revenues will remain similar to 1995.

Interest Income

(Dollars in Millions) 1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
Interest income $7.9 106% $3.8 (2 %) $3.9
Percentage of net revenues 1% 1% 1%

</TABLE>

The increase in absolute dollars from 1994 to 1995 resulted from
higher balances of cash and cash equivalents and short-term investments.
Interest income in 1994 remained flat compared with 1993 despite higher
cash and investments as Informix invested a large percentage of its cash
and investments in lower nominal-yield, tax-exempt securities.

Provision for Income Taxes

(Dollars in Millions) 1995 Change 1994 Change 1993
<S> <C> <C> <C> <C> <C>
Provision for income taxes $60.8 63% $37.2 18% $31.6
Effective tax rate 36.6% 36.0% 36.0%

</TABLE>

Informix's effective tax rates for fiscal years 1995, 1994, and
1993 are less than the combined federal and state statutory rates
primarily due to the permanent reinvestment offshore of a portion of the
earnings of Informix's lower-taxed Irish operations and the federal
research and development tax credit prior to its expiration in 1995. The
amount considered permanently invested in the Irish operations may vary
from year to year and may affect Informix's effective tax rate.

Informix anticipates its fiscal 1996 effective tax rate to remain
approximately the same as 1995; however, this rate could change based on
a change in the geographic mix of Informix's earnings, the amount of
permanent reinvestment offshore of a portion of the 1996 earnings of
Informix's lower-taxed Irish operations, and the reinstatement of the
federal research and development tax credit.

Impact of Inflation

The effect of inflation on the Company's financial position has not
been significant.

Liquidity and Capital Resources

(Dollars in Millions)
1995 1994 1993
<S> <C> <C> <C>
Cash, cash equivalents, and investments $261.9 $196.0 $143.5
Working capital 246.3 194.5 156.0
Cash provided by operations 164.8 114.5 64.8
Cash used in investment activities, excluding
investments of excess cash 122.1 51.4 36.7
Cash provided by (used in) financing activities 19.1 (10.8) (3.5)

</TABLE>

Cash generated by operations provided sufficient resources to fund
the Company's headcount growth and capital asset needs in all periods
presented.

The increase in net cash and cash equivalents provided by
operations in 1995 compared with 1994 was primarily attributable to
higher income before depreciation and amortization charges. The increase
in net cash and cash equivalents provided by operations in 1994 compared
with 1993 was due mainly to higher income before depreciation and
amortization charges, increased accounts payable and accrued expenses,
and the litigation settlement in 1993; all of which were partially
offset by an increase in accounts receivable.

Accounts receivable increased by $63.3 million in 1995 and by $23.2
million in 1994, principally as a result of higher sales, partially
offset by strong collections and the use of third-party financing
programs. Days sales outstanding was approximately 76 days at the end of
the fourth quarter of 1995 compared with 79 days and 97 days at the end
of the same periods in 1994 and 1993. Commencing in late 1993, the
Company instituted programs to have third-party financial institutions
provide financing for extended credit terms instead of such terms being
provided by the Company. The days sales outstanding ratio is dependent
on many factors, including the mix of contract-based revenue with
significant OEMs and large corporate and government end users versus
revenue recognized on shipments to application vendors and distributors
and the success of the Company's financing programs. Although a large
portion of the Company's revenues is derived from resellers, the
Company's revenues since 1993 have shifted substantially from
distributors to direct end users. These end-user sales contracts
frequently bear extended payment terms which result in an increase in
days sales outstanding ratios unless the contracts are financed. The
aforementioned shift in distributor channels is likely to continue as
products and markets mature. The Company is using a variety of
activities to reduce the days sales outstanding ratio. In the future,
the Company expects this ratio to vary within the range which prevailed
in the last several quarters; however, there is no assurance that it
will do so.

Excluding investments of excess cash, net cash and cash equivalents
used in investing activities increased in 1995 compared with 1994 and
1993 levels. In 1995, 1994, and 1993, the Company acquired $53.0
million, $25.2 million, and $22.1 million, respectively, of capital
equipment consisting primarily of computer equipment, computer software,
and office equipment. The increase of capital equipment purchases in
1995 and 1994 resulted from the Company's growing employee headcount and
the investment in new capital equipment as well as new technology. In
the future, the Company anticipates the actual level of capital spending
will be dependent on a variety of factors, including the Company's
business requirements and general economic conditions. In 1995, 1994,
and 1993, the Company made equity investments of $1.0 million, $1.6
million, and $3.5 million, respectively, in companies of strategic
interest to the Company.

The Company's investments in software costs were previously
discussed under "Results of Operations."

In April 1995, the Company acquired an 80 percent interest in the
database division of Daou Corporation, a distributor of its products in
Korea. The Company will acquire the remaining 20 percent by January
1997. The acquisition was recorded as a purchase. The initial purchase
price of this business was approximately $4.6 million, of which
approximately $4.0 million has been allocated to intangible assets
acquired.

The operating results of these distributors subsequent to the
acquisition dates, which were not significant in relation to those of
Informix, have been included in the consolidated results of operations
since their acquisition dates.

In October 1995, the Company acquired STG, a U.S.-based company
that provides on-line analytical processing technology, in exchange for
approximately 533,000 shares of its common stock. The transaction has
been accounted for as a pooling of interests. However, since the
operating results of STG are insignificant to the Company, prior period
annual and quarterly results have not been restated for this
transaction.

In February 1996, the Company acquired Illustra, a U.S.-based
company that provides dynamic content management database software and
tools for managing complex data in the Internet,
multimedia/entertainment, financial services, earth sciences, and other
markets. Approximately 12.7 million shares of Informix common stock were
issued to acquire all outstanding shares of Illustra stock. An
additional 2.3 million shares of Informix common stock were reserved for
issuance in connection with the assumption of Illustra's outstanding
options. The transaction will be accounted for as a pooling of
interests.

Net cash and cash equivalents provided by financing activities in
1995 consisted primarily of proceeds from the sale of the Company's
common stock to employees, partially offset by payments on capital
leases. Net cash and cash equivalents used in financing activities in
1994 and 1993 included payments on capital leases and repurchases of
the Company's common stock, offset by proceeds from the sale of the
Company's common stock to employees.

In 1993 and 1994, the Board of Directors authorized the repurchase
of up to 8 million shares of the Company's common stock in the open
market. As of December 31, 1995, the Company had repurchased 3,580,000
shares with an aggregate cost of approximately $32.1 million on the open
market. During 1994 and 1993, all repurchased shares were re-issued to
partially satisfy requirements under Stock Option and Stock Purchase
Plans.

The Company expects current balances of cash, cash equivalents, and
short-term investments will be sufficient to fund anticipated levels of
operations at least through 1996 and may be used for investments and
acquisitions to supplement internal revenue growth and for other
corporate purposes.

Business Risks

Fluctuations in Quarterly Results. The Company's operating results
can vary substantially from period to period. The timing and amount of
the Company's license revenues are subject to a number of factors that
make estimation of operating results prior to the end of a quarter
extremely uncertain. The Company has operated historically with little
or no backlog and, as a result, license revenues in any quarter are
dependent on contracts entered into or orders booked and shipped in that
quarter. The Company's operating margins have generally followed a
historic pattern, with second half revenues and operating margins being
higher than those of the preceding first half. The Company believes that
this pattern has been primarily related to customers' capital spending
cycles at the end of a calendar year as well as to the Company's selling
efforts, influenced by annual sales incentive plans, at the end of the
calendar year, which is the end of the Company's fiscal year.
Additionally, as is common in the industry, a disproportionate amount of
the Company's license revenues is derived from transactions that close
in the last few weeks of a quarter. The timing of closing large license
agreements also increases the risks of quarter-to-quarter fluctuations
and the uncertainty of estimating quarterly operating results. The
Company's operating expenses are based on projected annual and quarterly
revenue levels, which have been increasing at rates approaching the rate
of total revenue growth and are incurred approximately ratably
throughout each quarter. As a result, if projected revenues are not
realized in the expected period, the Company's operating results for
that period would be adversely affected as the operating expenses are
relatively fixed in the short term. Failure to achieve revenue, earnings
and other operating and financial results as forecasted or anticipated
by brokerage firm analysts or industry analysts could result in an
immediate and adverse effect on the market price of the Company's common
stock. Further, the Company may not learn of, or be able to confirm,
revenue or earnings shortfall until the end of each quarter, which could
result in an even more immediate and adverse effect on the trading price
of the Company's common stock.

Volatility of Informix Stock Prices. The market for the Company's
common stock is highly volatile. The trading price of the Company's
common stock could be subject to wide fluctuations in response to
quarterly variations in operating and financial results, announcements
of technological innovations or new products by the Company or its
competitors, changes in prices of the Company's or its competitors'
products and services, changes in product mix, change in the Company's
revenue and revenue growth rates for the Company as a whole or for
individual geographic areas, business units, products or product
categories, as well as other events or factors. Statements or changes in
opinions, ratings, or earnings estimates made by brokerage firms or
industry analysts relating to the market in which the Company does
business or relating to the Company specifically have resulted, and
could in the future result, in an immediate and adverse effect on the
market price of the Company's common stock. In addition, the stock
market has from time to time experienced extreme price and volume
fluctuations which have particularly affected the market price for the
securities of many high technology companies and which often have been
unrelated to the operating performance of these companies. These broad
market fluctuations may adversely affect the market price of the
Company's common stock.

Competition. The market for the Company's software products and
services is extremely competitive. Some of the Company's current
competitors and many potential competitors have greater financial,
technical and marketing resources than the Company. To the extent that
market acceptance for personal computer oriented technologies increases
at the expense of UNIX or other non-PC platforms, this could result in
greater price pressure on certain of the Company's database products and
services. The availability and market acceptance of Microsoft
Corporation's Windows NT operating system may increase the competition
faced by the principal operating system platforms on which the Company's
products operate and may result in greater price pressure on certain of
the Company's database products and services. Also, new or enhanced
products introduced by existing or future competitors could have an
adverse effect on the Company's business, results of operations and
financial condition. Existing and future competition or changes in the
Company's product or services pricing structure or product or service
offerings could result in an immediate reduction in the prices of the
Company's products or services. If this were to result in significant
price declines - the effects of which were not offset by any resulting
increases in sales volume of the Company's products or services - the
Company's business, results of operations and financial condition would
be adversely affected. There can be no assurance that the Company will
continue to compete successfully with its existing competitors or will
be able to compete successfully with new competitors.

Technological Change and New Products. The market for the Company's
products and services is characterized by rapidly changing technology
and frequent new product introductions. The Company's success will
depend upon its ability to enhance its existing products and to
introduce new products on a timely and cost-effective basis that meet
dynamic customer requirements. There can be no assurance that the
Company will be successful in developing new products or enhancing its
existing products or that such new or enhanced products will receive
market acceptance or be delivered timely to the market. The Company has
experienced product delays in the past and may have delays in the
future. Delays in the scheduled availability or a lack of market
acceptance of its products or failure to accurately anticipate customer
demand and meet customer performance requirements could have a material
adverse effect on the Company's business, results of operations and
financial condition. In addition, products as complex as those offered
by the Company may contain undetected errors or bugs when first
introduced or as new versions are released. There can be no assurance
that, despite testing, new products or new versions of existing products
will not contain undetected errors or bugs that will delay the
introduction or commercial acceptance of such products. A key factor in
determining the success of the Company will continue to be the ability
of the Company's products to interoperate and perform well with existing
and future leading, industry-standard leading application software
products intended to be used in connection with relational database
management systems. Failure to meet existing or future interoperability
and performance requirements of certain independent vendors marketing
such applications in a timely manner could adversely affect the market
for the Company's products. Commercial acceptance of the Company's
products and services could also be adversely affected by critical or
negative statements or reports by brokerage firms, industry and
financial analysts and industry periodicals concerning the Company, its
products, business or competitors or by the advertising or marketing
efforts of competitors, or other factors that could affect consumer
perception.

International Operations. Over half of the Company's net revenues
are derived from its international operations. The Company's operations
and financial result could be significantly affected by factors
associated with international operations could be significantly
affected by factors associated with international operations such as
changes in foreign currency exchange rates and uncertainties relative to
regional economic circumstances, as well as by other risks associated
with international activities. Most of the Company's international
revenue and expenses are denominated in local currencies. Although the
Company takes into account changes in exchange rates over time in its
pricing strategy, the Company's business, results of operations and
financial condition could be materially and adversely affected by
fluctuations in foreign currency exchange rates. There can be no
assurance that the Company will not experience fluctuations in
international revenues.

Integration of Acquired Companies. The Company has completed
several acquisitions including the database division of ASCII
Corporation in Japan; distributors in Germany, Korea and Malaysia; STG
and, more recently, Illustra in the United States. The Company may
acquire other distributors, companies, products or technologies in the
future. There can be no assurance that these acquisitions can be
effectively integrated, that such acquisitions will not result in costs
and liabilities that could adversely affect the Company's results of
operations and financial condition, or that the Company will obtain the
anticipated or desired benefits of such acquisitions.

Infringement Claims. As the number of software products and
software patents in the industry increases, the Company believes that
software developers may become increasingly subject to infringement
claims. There can be no assurance that a third party will not assert
that its patents or other proprietary rights are violated by products
offered by the Company. Any such claims, with or without merit, can be
time consuming and expensive to defend and could have an adverse effect
on the Company's business, results of operations, financial position,
and cash flows.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

December 31, December 31,
(in thousands, except share and per-share amounts) 1995 1994
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $163,260 $131,882
Short-term investments 88,904 59,644
Accounts receivable, less allowances for doubtful
accounts of $ 12,710 in 1995 and $6,036 in 1994 182,720 131,548
Deferred taxes 11,704 9,978
Other current assets 25,310 14,964

Total current assets 471,898 348,016

Property and Equipment, at cost
Computer equipment 100,166 68,240
Office equipment and leasehold improvements 46,997 28,069

147,163 96,309
Less accumulated depreciation and amortization (69,935) (52,188)

77,228 44,121
Software Costs, less accumulated amortization
of $18,980 in 1995 and $7,973 in 1994 36,866 24,681
Deferred taxes 16,248 7,651
Long-term investments 9,781 4,477
Intangible assets 40,730 6,089
Other assets 21,665 9,375

Total Assets $674,416 $444,410

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $28,598 $18,737
Accrued expenses 33,036 27,784
Accrued employee compensation 49,911 33,777
Income tax payable 41,221 17,725
Deferred taxes 1,612 1,612
Deferred revenue 62,424 48,580
Current portion of capital lease obligations 518 391
Other current liabilities 8,240 4,946

Total current liabilities 225,560 153,552

Capital lease obligations, less current portion 770 343
Other noncurrent liabilities 543 179
Deferred taxes 24,488 14,692
Commitments and contingencies

Stockholders' Equity:
Preferred stock, par value $.01 per share- - -
5,000,000 shares authorized, none issued
Common stock, par value $.01 per share-
350,000,000 shares authorized, issued 135,328,554
and 130,947,778 in 1995 and 1994, respectively 1,353 1,310
Additional paid-in capital 182,657 139,242
Retained earnings 241,188 136,025
Unrealized gain on available-for-sale securities, net of tax 4,064 665
Foreign currency translation adjustment (6,207) (1,598)

Total stockholders' equity 423,055 275,644

Total Liabilities and Stockholders' Equity $674,416 $444,410

</TABLE>

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31,
(in thousands, except per-share data) 1995 1994 1993
<S> <C> <C> <C>
Net Revenues
Licenses $535,895 $363,756 $284,338
Services 173,090 104,941 68,577

708,985 468,697 352,915
Costs and Expenses
Cost of software distribution 37,846 24,669 20,077
Cost of services 89,001 45,986 32,944
Sales and marketing 294,647 200,538 137,698
Research and development 79,273 60,417 43,619
General and administrative 48,965 34,526 33,188

549,732 366,136 267,526
Operating income 159,253 102,561 85,389

Interest income 7,934 3,847 3,943
Interest expense (1,035) (380) (371)
Other expense, net (12) (2,598) (1,282)
Income before income taxes 166,140 103,430 87,679
Income Taxes 60,807 37,234 31,564

Net Income $105,333 $66,196 $56,115

Net Income Per Common Share $0.76 $0.49 $0. 42

Weighted Average Number of Common and
Common Equivalent Shares Outstanding: 138,896 134,610 135,202

</TABLE>

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Years ended December 31,
(in thousands) 1995 1994 1993
<S> <C> <C> <C>
Operating Activities
Net income $105,333 $ 66,196 $56,115
Adjustments to reconcile net income to cash and cash
equivalents provided by operating activities:
Depreciation and amortization 29,031 16,206 11,414
Amortization of capitalized software 12,041 7,848 5,220
Deferred tax expense (593) (624) 7,164
Provisions for losses on accounts receivable 8,377 3,824 1,578
Foreign currency transaction loss (gain) (4,609) (1,323) 1,444
Changes in operating assets and liabilities:
Accounts receivable (63,323) (23,167) (45,389)
Other current assets (8,280) (1,518) (2,666)
Accounts payable and accrued expenses 74,595 35,557 19,952
Deferred revenue 12,275 11,467 9,942

Net cash and cash equivalents provided by operating activities 164,847 114,466 64,774

Investing Activities
Investments of excess cash:
Purchases of held-to-maturity securities (144,517) (124,102) (42,117)
Purchases of available-for-sale securities (425) (108,846) (94,790)
Maturities of held-to-maturity securities 83,159 106,513 36,929
Sales of available-for-sale securities 27,261 138,423 70,437
Increase in strategic investments (1,000) (1,623) (3,487)
Purchase of property and equipment (52,992) (25,247) (22,071)
Additions to software costs (23,977) (15,048) (9,576)
Business combinations, net of cash acquired (38,413) (8,799) -
Other (5,670) (699) (1,585)

Net cash and cash equivalents used in investing activities (156,574) (39,428) (66,260)

Financing Activities
Proceeds from issuances of common stock 20,171 4,611 6,044
Principal payments on capital leases (1,116) (1,179) (2,458)
Acquisition of common stock - (22,139) (9,999)
Reissuance of treasury stock - 7,915 2,957

Net cash and cash equivalents provided by
(used in) financing activities 19,055 (10,792) (3,456)
Effect of exchange rate changes on cash and cash equivalents 4,050 307 (526)

Increase (decrease) in cash and cash equivalents 31,378 64,553 (5,468)
Cash and cash equivalents at beginning of period 131,882 67,329 72,797

Cash and cash equivalents at end of year $163,260 $131,882 $67,329

</TABLE>

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Unrealized Foreign
Additional Gain on Currency
Common Stock Paid-in Treasury Stock Retained Available-for- Translation
(in thousands) Shares Amount Capital Shares Amount Earnings Sale Securities Adjustment Totals
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1992 125,672 $1,257 $ 98,078 - $ - $34,980 $ - $(1,663) $132,652
Exercise of stock options 3,934 39 5,020 5,059
Sale of stock to employees under
employee stock purchase plan 132 2 983 985
Tax benefits related to stock options 20,500 20,500
Foreign currency translation adjustment (864) (864)
Acquisition of treasury stock (980) (9,999) (9,999)
Reissuance of treasury stock 714 7,568 (4,611) 2,957
Net income 56,115 56,115

Balances at December 31, 1993 129,738 1,298 124,581 (266) (2,431) 86,484 - (2,527) 207,405
Exercise of stock options 1,120 11 3,547 3,558
Sale of stock to employees under
employee stock purchase plan 90 1 1,052 1,053
Tax benefits related to stock options 10,062 10,062
Foreign currency translation adjustment 929 929
Acquisition of treasury stock (2,600) (22,139) (22,139)
Reissuance of treasury stock 2,866 24,570 (16,655) 7,915
Unrealized gain on available-for-sale
securities, net of tax 665 65
Net income 66,196 66,196

Balances at December 31, 1994 130,948 1,310 139,242 - - 136,025 665 (1,598) 275,644
Exercise of stock options 3,499 35 13,530 13,565
Sale of stock to employees under
employee stock purchase plan 349 3 6,603 6,606
Tax benefits related to stock options 21,291 21,291
Acquisition of STG 533 5 1,991 (170) 1,826
Foreign currency translation adjustment (4,609) (4,609)
Unrealized gain on available-for-sale
securities, net of tax 3,399 3,399
Net income 105,333 105,333

Balances at December 31, 1995 135,329 $1,353 $182,657 - $- $241,188 $4,064 $(6,207) $423,055

</TABLE>

See Notes to Consolidated Financial Statements.

Note 1 - Summary of Significant Accounting Policies

Organization and Operations. Informix Corporation ("the Company") is a
multinational supplier of high-performance, parallel processing database
technology for open systems. The Company's products also include
applications development tools for creating client/server production
applications, decision-support systems, ad-hoc query interfaces, and
software that allows information to be shared transparently from
personal computers to mainframes within the corporate computing
environment. In addition to software products, the Company offers
training, consulting, and post-contract support to its customers. The
principal geographic markets for the Company's products are North
America, Europe, Asia/Pacific, Japan, and Latin America. Customers
include large-, medium- and small-sized corporations in the
manufacturing, financial services, telecommunications, retail/wholesale,
hospitality, and government services sectors.

Use of Estimates. The preparation of financial statements in conformity
with general 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 accounts, transactions, and
profits 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 income are
translated at the average exchange rates during the year. Exchange gains
or losses arising from translation of foreign currency denominated
assets and liabilities are included as a component of stockholders'
equity.
For foreign operations with the U.S. dollar as the functional
currency, assets and liabilities are remeasured at the year-end exchange
rates. Statements of income are remeasured at the average exchange rates
during the year. Gains and losses resulting from foreign currency
remeasurement are included in other expense, net.
The Company enters into forward foreign exchange contracts
primarily to hedge the value of accounts receivable or accounts payable
denominated in foreign currencies (mainly European and Asian foreign
currencies) against fluctuations in exchange rates until such
receivables are collected or such payables are disbursed. The Company
has limited unhedged transaction exposures in certain secondary
currencies in Latin America and Eastern Europe because there are limited
forward currency exchange markets in these currencies. Gains and losses
associated with exchange rate fluctuations on forward foreign exchange
contracts are recorded currently as income or loss as they offset
corresponding gains and losses on the foreign currency denominated
assets and liabilities being hedged. The costs of the forward foreign
exchange contracts are recorded as other expense, net. See Note 3 of
Notes to Consolidated Financial Statements.

Revenue Recognition. The Company generally recognizes license revenue
from sales of software licenses upon delivery of the software product to
a customer. However, for certain computer hardware manufacturers and
end-user licensees with amounts payable within twelve months, the
Company will recognize revenue at the time the customer makes a
contractual commitment for a minimum non-refundable license fee, if such
computer hardware manufacturers and end-user licensees meet certain
criteria established by the Company. License revenue from resellers
(such as distributors and application vendors) and from other computer
hardware manufacturers and end users may be recognized at the earlier of
either payment of the license fee or the shipment of the software media
on a per-unit basis. However, in no case is revenue recognized unless a
master or first copy is delivered to the customer.
Maintenance contracts generally call for the Company to provide
technical support and software updates to customers. Maintenance
contract revenue is recognized ratably over the term of the maintenance
contract, generally on a straight-line basis. Where maintenance revenue
is not separately invoiced, it is unbundled from license fees and
deferred for revenue recognition purposes. Other service revenue,
primarily training and consulting, is generally recognized at the time
the service is performed.
The Company's revenue recognition policy is in compliance with the
provisions of the American Institute of Certified Public Accountants'
Statement of Position 91-1, "Software Revenue Recognition."
No single customer accounted for 10 percent or more of consolidated
revenues in 1995, 1994, or 1993.

Income Taxes. The Company accounts for income taxes in accordance with
the provisions of the Financial Accounting Standards Board Statement No.
109 (FAS 109) "Accounting for Income Taxes." Under FAS 109, the
liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on
differences between the financial reporting and income tax bases of
assets and liabilities, and are measured by applying enacted tax rates
and laws to the taxable years in which such differences are expected to
reverse.

Inventories. Inventories, which consist primarily of software product
components, finished software products, and marketing and promotional
materials, are carried at the lower of cost (first in, first out) or
market value, and are included in other current assets.

Software Costs. The Company capitalizes software development costs
incurred in developing a product once technological feasibility of the
product has been determined. 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 over the
remaining estimated economic life of the product or on the basis of each
product's projected revenues, whichever results in greater amortization.
The Company recorded amortization of $12.0 million, $7.8 million, and
$5.2 million of software costs in 1995, 1994, and 1993, respectively, in
cost of software distribution.

Property and Equipment. Depreciation of property and equipment is
calculated using the straight-line method over its estimated useful
life, generally the shorter of the lease term or three-to-seven years
for financial reporting purposes, and by accelerated methods for tax
purposes.

Businesses Acquired. The purchase price of businesses acquired,
accounted for as purchased business combinations, is allocated to the
tangible and specifically identifiable intangible assets acquired based
on their fair values with any amount in excess of such allocations being
designated as goodwill. Intangible assets are amortized over their
estimated useful lives, which to date have been five to seven years. The
carrying values of goodwill and specified intangible assets are reviewed
if the facts and circumstances suggest that they may be impaired. If
this review indicates that the asset will not be recoverable, as
determined based on the undiscounted cash flows of the acquired business
over the remaining amortization period, the Company's carrying value is
reduced to net realizable value. There were no writedowns of intangible
assets in 1995, 1994 or 1993. As of December 31, 1995 and 1994, the
Company had $48.4 million and $6.6 million of intangible assets, with
accumulated amortization of $7.7 million and $0.5 million,
respectively, as a result of these acquisitions.

Net Income per Common Share. Net income per common share is based on the
weighted average number of common and dilutive common equivalent shares
outstanding during each year. All stock options are considered common
stock equivalents and are included in the weighted average computations
when the effect is dilutive.

Stock Split. All share and per-share amounts for all periods presented
have been restated to reflect a two-for-one stock split (effected in the
form of the stock dividend) which was effective June 26, 1995.

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.

Cash, Cash Equivalents, Short-Term Investments, and Long-Term
Investments. The Company considers liquid investments purchased with an
original maturity of three months or less to be cash equivalents. The
Company considers investments with an original maturity of more than
three months but less than one year to be short-term investments.
Investments with an original maturity of more than one year are
considered long-term investments. Short-term and long-term investments
are carried at either amortized costs or fair value, depending on their
classification as held-to-maturity or available-for-sale, respectively.
Cash equivalents are carried at amortized cost.
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 (a small portion of the portfolio may consist of commercial paper
rated A-2/P-2), and other specific money market instruments of similar
liquidity and credit quality. The Company has not experienced any
significant losses related to these investments.

Securities Held-to-Maturity and Available-for-Sale. Management
determines the appropriate classification of debt securities at the time
of purchase and re-evaluates such designation as of each balance sheet
date. Debt securities are classified as held-to-maturity when the
Company has the positive intent and the ability to hold the securities
until maturity. Held-to-maturity securities are stated at amortized
cost, adjusted for amortization of premiums and accretion of discounts
to maturity. Such amortization, as well as any interest on the
securities, is included in interest income.
Marketable equity securities and debt securities not classified as
held-to-maturity are classified as available-for-sale. Available-for-
sale securities are carried at fair value, with the unrealized gains and
losses, net of tax, reported in a separate component of stockholders'
equity. 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 expense, net. The
cost of securities sold is based on the specific identification method.
Interest on securities classified as available-for-sale are included in
interest income. There were no material gross realized gains or losses
from sales of securities during the year.

Stock Options. The Company has elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25) and related Interpretations in accounting for its employee stock
options. Under APB 25, because the exercise price of the Company's stock
options equals the market price of the underlying stock on the date of
grant, no compensation expense is recognized.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-based Compensation" (FAS 123). FAS 123 encourages, but does not
require, the recognition of expense for stock-based awards based on
their fair value on the date of grant. Upon adoption of FAS 123 on
January 1, 1996, the Company will continue to account for all employee-
stock-based compensation, including employee stock options, using the
"intrinsic value" method under APB 25 rather than the "fair value"
approach encouraged by FAS 123. However, as required by FAS 123, the
Company will provide proforma disclosures of what net income and net
income per share would have been had the new fair value method been
used.

Note 2 - Fair Values of Financial Instruments

Effective January 1, 1994, the Company adopted Financial Accounting
Standards Board Statement No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" (FAS 115).
The following is a summary of available-for-sale securities and
held-to-maturity securities:

December 31, 1995 Available-for-sale securities
(Dollars in thousands) Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 5,608 $ 5,608
Commercial Paper 51,288 146 (88) 51,346
Municipal Bonds 82,096 71 (213) 81,954
Auctioned Preferred Stock 2,506 (5) 2,501
Total Debt Securities 141,498 217 (306) 141,409
U.S. Equity Securities 6,110 7,500 (831) 12,779
$147,608 7,717 (1,137) $154,188

Amounts included in cash and cash equivalents $ 42,724 $ 42,724
Amounts included in short-term investments 89,072 137 (305) 88,904
Amounts included in long-term investments 9,702 80 (1) 9,781
Amounts included in other assets 6,110 7,500 (831) 12,779
$147,608 7,717 (1,137) $154,188

</TABLE>

December 31, 1994 Held-to-maturity securities
(Dollars in thousands) Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 4,863 4 $ 4,867
Municipal Bonds 31,020 2 (119) 30,903
Commercial Paper 39,602 4 39,606
$ 75,485 10 (119) $ 75,376

Amounts included in cash and cash equivalents $ 38,604 3 $ 38,607
Amounts included in short-term investments 32,404 5 (119) 32,290
Amounts included in long-term investments 4,477 2 4,479
$ 75,485 10 (119) $ 75,376

</TABLE>

December 31, 1994 Available-for-sale securities
(Dollars in thousands) Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 356 $ 356
Commercial Paper 223 223
Municipal Bonds 6,079 (62) 6,017
Auctioned Preferred Stock 21,000 21,000
Total Debt Securities 27,658 (62) 27,596
Equity Securities 3,000 1,124 4,124
$30,658 1,124 (62) $31,720

Amounts included in cash and cash equivalents $ 356 $ 356
Amounts included in short-term investments 27,302 (62) 27,240
Amounts included in intangibles and other assets 3,000 1,124 4,124
$ 30,658 1,124 (62) $31,720

</TABLE>

In the fourth quarter of 1995, the Company re-evaluated the initial
designation of certain of its investments in debt securities as held-to-
maturity based on the Company's current ability and intent to hold such
securities to their contractual maturity. As a result, in December 1995,
these securities were transferred from held-to-maturity to available-
for-sale at their estimated fair value of $125.7 million. The difference
between amortized cost of $125.8 million and estimated fair value of
these securities at the date of transfer, $0.1 million, was charged to a
separate component of stockholders' equity.

Note 3 - Derivative Financial Instruments

The Company enters into forward foreign exchange contracts
primarily to hedge the value of 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. Substantially all forward foreign exchange
contracts entered into by the Company have maturities of 360 days or
less. At December 31, 1995 and 1994, the Company had approximately $77.2
million and $94.3 million of forward foreign exchange contracts
outstanding, respectively. The table below summarizes by currency the
contractual amounts of the Company's forward foreign exchange contracts
at December 31, 1995 and December 31, 1994.

FORWARD CONTRACTS
At December 31, 1995 (Dollars in thousands) Face Value Unrealized Gain/(Loss)
<S> <C> <C>
Forward currency contracts sold:
Deutsche Mark $25,356 $(14)
Japanese Yen 21,817 (74)
Spanish Peseta 6,178 (4)
French Franc 4,807 (7)
Singapore Dollars 4,326 6
Italian Lira 2,403 4
British Pound 2,329 22
Malaysian Ringgit 2,287 (2)
Dutch Guilder 1,550 1
Portuguese Escudo 1,369 (1)
Austrian Schilling 1,361 -
Other 3,369 (1)
Total $77,152 $(70)

</TABLE>

At December 31, 1994 (Dollars in thousands) Face Value Unrealized Gain/(Loss)
<S> <C> <C>
Forward currency contracts sold:
Deutsche Mark $23,000 $ (394)
French Franc 6,922 (104)
Japanese Yen 4,182 14
British Pound 3,696 (46)
Spanish Peseta 3,147 (68)
Italian Lira 2,999 (4)
Singapore Dollar 2,144 (13)
Other 6,176 (92)
52,266 (707)
Forward currency contracts purchased:
Japanese Yen 42,009 (485)
Total $94,275 $(1,192)

</TABLE>

Other than the use of forward foreign exchange contracts as
discussed immediately above, the Company does not currently invest in or
hold any other financial instruments defined as derivative financial
instruments by FAS 119.

Note 4 - Employee Stock Option and Purchase Plans

Under the Company's 1986 Employee Stock Option Plan, options are
granted at fair market value on the date of the grant. Options are
generally exercisable in cumulative annual installments over three to
five years. Payment for shares purchased upon exercise of options may be
by cash or, with Board approval, by full recourse promissory note or by
exchange of shares of the Company's common stock at fair market value on
the exercise date. Options expire 10 years after the date of grant. At
December 31, 1995, 40,800,000 shares were authorized for issuance under
the Plan.
Additionally, 1,600,000 shares were authorized for issuance under
the 1989 Outside Directors Stock Option Plan, whereby non-employee
directors are automatically granted non-qualified stock options upon
election or re-election to the Board of Directors.
In April 1994, the Company adopted the 1994 Stock Option and Award
Plan. Options can be granted to employees on terms substantially
equivalent to those described above. The 1994 Stock Option and Award
Plan also allows the Company to award performance shares of the
Company's common stock to be paid to recipients on the achievement of
certain performance goals set with respect to each recipient. At
December 31, 1995, 8,000,000 shares were authorized under this Plan.
Following is a summary of activity for all stock option plans for
the three years ended December 31, 1995:

Number Options
of Shares Price per Share
<S> <C> <C>
Outstanding at December 31, 1992 16,650,748 $0.13 to $ 8.07
Options granted 4,567,800 7.13 to 13.13
Options exercised (4,386,334) 0.17 to 7.32
Options canceled (1,405,640) 0.42 to 8.63

Outstanding at December 31, 1993 15,426,574 $0.13 to $13.13
Options granted 2,695,900 7.38 to 14.44
Options exercised (3,579,546) 0.39 to 12.75
Options canceled (940,750) 0.39 to 11.88

Outstanding at December 31, 1994 13,602,178 $0.13 to $14.44
Options granted and assumed 3,970,627 1.78 to 34.00
Options exercised (3,499,885) 0.44 to 13.88
Options canceled (726,651) 0.75 to 32.75

Outstanding at December 31, 1995 13,346,269 $0.13 to $34.00
Available for grant at December 31, 1995 6,069,446

</TABLE>

In connection with all stock option plans, 19,415,715 shares of
common stock were reserved for issuance as of December 31, 1995. At
December 31, 1995 and 1994, options exercisable were 4,898,537 and
4,684,724, respectively.
The Company also has a qualified Employee Stock Purchase Plan under
which 7,600,000 shares of common stock in the aggregate have been
authorized for issuance. Under the terms of the Plan, employees may
contribute via payroll deductions up to 10 percent of their base pay and
purchase up to 500 shares per quarter (with the limitation of purchases
of $25,000 annually in fair market value of the shares). Employees may
elect to withdraw from the Plan during any quarter and have their
contributions for the period returned to them. Also, employees may elect
to reduce the rate of contribution one time in each quarter. The price
at which employees may purchase shares is 85 percent of the lower of the
fair market value of the stock at the beginning or end of the quarter.
The Plan is qualified under Section 423 of the Internal Revenue Code of
1986, as amended. During 1995, 1994, and 1993 the Company issued
347,743 shares, 484,756 shares, and 395,102 shares, respectively, under
this Plan. In connection with the Employee Stock Purchase Plan,
1,266,715 shares were reserved for issuance as of December 31, 1995.
The Board of Directors has authorized the purchase of up to 8
million shares of the Company's common stock in the open market to
satisfy requirements under Stock Option and Stock Purchase Plans, of
which 4,420,000 shares are still available for repurchase as of that
date.

Note 5 - 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 limit ($9,240 for 1995). In 1995, the
Company matched 50 percent of each employee's contribution up to a
maximum of $2,000. The Company's matching contributions to this 401(k)
plan for 1995, 1994, and 1993 were $2.5 million, $1.4 million, and $0.8
million, respectively.

Note 6 - Leases

The Company leases certain computer and office equipment under
capital leases having terms of three-to-five years. Amounts capitalized
for such leases are included on the consolidated balance sheets as
follows:

(in thousands) December 31, 1995 December 31, 1994
<S> <C> <C>
Computer equipment (at cost) $7,362 $7,701
Office equipment 1,380 1,438

8,742 9,139
Less: accumulated amortization 7,297 8,450

$1,445 $ 689

</TABLE>

Amortization with respect to leased equipment is included in
depreciation expense.
During 1995 and 1994, the Company financed approximately $1,677,000
and $381,000, respectively, of equipment purchases under capital lease
arrangements.
The Company leases certain of its office facilities and equipment
under non-cancelable operating leases.
Future minimum payments, by year and in the aggregate, under the
capital and non-cancelable operating leases as of December 31, 1995, are
as follows:

Year Ending December 31 Capital Non-Cancelable
(in thousands) Leases Operating Leases
<S> <C> <C>
1996 $ 721 $17,674
1997 448 13,571
1998 270 7,634
1999 - 4,769
2000 - 3,556
Thereafter - 2,254
Total payments 1,439 $49,458
Less: amount representing interest 151
Present value of minimum lease payments 1,288
Less current portion 518
$ 770

Total rent expense aggregated $19.2 million, $17.1 million, and
$14.4 million in 1995, 1994, and 1993, respectively.

Note 7 - Geographic Information

Net revenues, operating income (loss), and identifiable assets for
the Company's U.S., European, Asia/Pacific and other foreign operations
are summarized below by year:

</TABLE>
<TABLE>
<CAPTION>

(in thousands) United States European Asia/Pacific Other Eliminations Total
<S> <C> <C> <C> <C> <C> <C>
1995:
Net revenues $392,542 $274,739 $84,700 $39,550 $(82,546) $708,985
Operating income (loss) 84,233 74,204 (2,295) 4,514 (1,403) 159,253
Identifiable assets 604,236 227,058 85,712 29,445 (272,035) 674,416
1994:
Net revenues 303,611 $172,947 $17,965 $17,889 $(43,715) $468,697
Operating income (loss) 78,620 39,013 (11,594) (1,177) (2,301) 102,561
Identifiable assets 382,650 109,939 21,145 14,908 (84,232) 444,410

1993:
Net revenues $257,439 $137,404 $ 5,208 $ 6,195 $(53,331) $352,915
Operating income (loss) 92,987 11,192 (9,244) (1,413) (8,133) 85,389
Identifiable assets 287,538 74,004 6,723 6,632 (48,264) 326,633

</TABLE>

Sales and transfers between geographic areas are accounted for at
prices which the Company believes are arm's length prices, which in
general are in accordance with the rules and regulations of the
respective governing tax authorities.
Export revenues consisting of sales from the Company's U.S.
operating subsidiary to non-affiliated customers were as follows:

(in thousands) 1995 1994 1993
<S> <C> <C> <C>
Asia/Pacific $ 7,887 $32,820 $35,598
Other 14,334 15,256 19,703

Total $22,221 $48,076 $55,301

</TABLE>

Note 8- - Income Taxes

The provision for income taxes applicable to income before income
taxes consists of the following:

(in thousands) 1995 1994 1993
<S> <C> <C> <C>
Currently payable:
Federal $43,286 $27,150 $14,949
State 6,999 4,548 3,349
Foreign 13,181 6,160 6,102

63,466 37,858 24,400
Deferred:
Federal 5,376 2,855 5,704
State 1,075 675 2,098
Foreign (9,110) (4,154) (638)

(2,659) (624) 7,164

$60,807 $37,234 $31,564

</TABLE>

In 1995, 1994 and 1993, the Company recognized tax benefits related
to stock option plans of $21.3 million, $10.1 million and $20.5 million,
respectively. Such benefits were recorded as an increase to additional
paid-in capital.

Income before income taxes consists of the following:

(in thousands) 1995 1994 1993
<S> <C> <C> <C>
Domestic $132,468 $ 92,661 $69,155
Foreign 33,672 10,769 18,524

$166,140 $103,430 $87,679

</TABLE>
The provision for income taxes differs from the amount computed by
applying the federal statutory income tax rate to income before income
taxes. The sources and tax effects of the differences are as follows:

1995 1994 1993
(in thousands) Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Computed tax at federal statutory rate $58,149 35.0% $36,200 35.0% $30,688 35.0%
Losses which resulted in no current tax
benefit - - 908 0.9 - -
Research and development credits (935) (0.6) (976) (1.0) (1,273) (1.4)
State income taxes, net of federal tax benefit 5,248 3.2 3,395 3.3 3,540 4.0
Benefit from net earnings of foreign subsidiaries
considered to be permanently reinvested
in non-U.S. operations (3,000) (1.8) (2,000) (1.9) (850) (1.0)
Other, net 1,345 0.8 (293) (0.3) (541) (0.6)

$60,807 36.6 $37,234 36.0 $31,564 36.0

</TABLE>

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, 1995 and 1994 are as follows:

(in thousands) 1995 1994
<S> <C> <C>
Deferred Tax Assets:
Reserves and accrued expenses $ 6,784 $ 5,645
Deferred revenue 3,432 4,016
Foreign net operating loss carryforwards 6,964 2,823
Foreign taxes in excess of taxes at U.S. rate 3,226 1,107
Other 646 513

Total deferred tax assets 21,052 14,104
Valuation allowance for deferred tax assets (908) (908)

Net deferred tax assets 20,144 13,196

Deferred Tax Liabilities:
Capitalized software 10,329 9,038
Revenue recognition 1,612 1,612
Taxes on unremitted foreign earnings 3,850 850
Valuation of investment portfolio 2,501 371

Total deferred tax liabilities 18,292 11,871

Net deferred tax assets $ 1,852 $ 1,325

</TABLE>

Cumulative undistributed earnings of the Company's Irish subsidiary
for which no U.S. income taxes have been provided aggregated
approximately $23.4 million at December 31, 1995. These earnings are
considered to be permanently reinvested in non-U.S. operations.
Additional taxes of approximately $5.9 million would have to be provided
if these earnings were repatriated to the U.S.
At December 31, 1995 the Company had approximately $20.0 million of
foreign net operating loss carryforwards which expire at various dates
beginning in 1998. Income taxes paid amounted to $18.6 million, $22.5
million and $7.8 million in 1995, 1994 and 1993, respectively.
The deferred tax asset valuation allowance increased by $0.9
million in 1994 and decreased $9.9 million in 1993. Approximately $8.9
million of the 1993 valuation allowance decrease of $9.9 million was
related to tax carryforwards attributable to stock option deductions and
was credited to paid-in capital.

Note 9 - Business Combinations

In the third quarter of 1994, the Company acquired two of its
distributors, one in Germany and the other in Malaysia. The transactions
were accounted for as purchases. The aggregate purchase price of these
two distributors were approximately $17.2 million, of which $8.2 million
has been allocated to intangible assets acquired.
In January 1995, the Company acquired a 90 percent interest in the
database division of ASCII Corporation, a distributor of its products in
Japan. The Company acquired the remaining 10 percent interest in January
1996. The acquisition was recorded as a purchase. The purchase price of
ASCII's database division was approximately $46.0 million, of which
approximately $35.4 million has been allocated to intangible assets
acquired.
In April 1995, the Company acquired an 80 percent interest in the
database division of Daou Corporation, a distributor of its products in
Korea. The Company will acquire the remaining 20 percent by January
1997. The acquisition was recorded as a purchase. The purchase price of
this business was approximately $4.6 million, of which approximately
$4.0 million has been allocated to intangible assets acquired.
All intangible assets acquired are amortized over a weighted
average life of five to seven years.
In October 1995, the Company acquired Stanford Technology Group
(STG), a U.S.-based company that provides on-line analytical processing
technology, for approximately 533,000 shares of its common stock. The
transaction has been accounted for as a pooling of interests. Since the
operating results of STG are insignificant to the Company, prior-period
annual and quarterly financial statements of the Company have not been
restated for this transaction. The Company's results of operations for
the year ended December 31, 1995 include the results of operations of
STG for such year, all of which were recorded in the fourth quarter, the
period in which the transaction was consummated.
The operating results of these businesses have not been material in
relation to those of the Company and are included in the Company's
consolidated results of operations from the date of acquisition.

Note 10 - Litigation

In the ordinary course of business, various lawsuits and claims are
filed against the Company. It is the Company's opinion that the
resolution of such litigation will not have a material effect on the
Company's financial position, results of operations, or cash flows.

Note 11 - Selected Quarterly Financial Data (Unaudited)

First Second Third Fourth
(in thousands, except per-share data) Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1995:
Net revenues $147,785 $163,607 $180,523 $217,070
Gross profit 122,054 134,180 148,710 177,194
Net income 19,096 22,122 25,281 38,834
Net income per share 0.14 0.16 0.18 0.28

1994:
Net revenues $ 96,100 $105,686 $116,843 $150,068
Gross profit 81,375 89,349 98,046 129,272
Net income 12,520 13,250 16,590 23,836
Net income per share 0.09 0.10 0.12 0.18

</TABLE>

Note 12 - Subsequent Events

In February 1996, the Company acquired Illustra Information
Technologies, Inc. (Illustra), a company that provides dynamic content
management database software and tools for managing complex data in the
Internet, multimedia/entertainment, financial services, earth sciences
and other markets. Approximately 12.7 million shares of Informix common
stock were issued to acquire all outstanding shares of Illustra common
stock. An additional 2.3 million shares of Informix common stock were
reserved for issuance in connection the assumption of Illustra's
outstanding options. The transaction will be accounted for as a pooling
of interests. Transaction fees of approximately $6 million will be
recorded in the first quarter of 1996.

INFORMIX CORPORATION

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

(amounts in thousands)
Balance at Charged to Charged to Balance at
Beginning Costs and Other Deductions End of
of Period Expenses Accounts (Describe) Period
(1) (2)
<S> <C> <C> <C> <C> <C>
Allowance For Doubtful Accounts

Year ended December 31, 1995 $6,036 $8,116 $ 261 $1,703 $12,710

Year ended December 31, 1994 $3,181 $1,924 $1,900 $ 969 $ 6,036

Year ended December 31, 1993 $3,021 $1,578 $ -- $1,418 $ 3,181

(1) Charged to net revenues

(2) Uncollectible accounts written off, net of recoveries

</TABLE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors - Informix Corporation

We have audited the accompanying consolidated balance sheets of Informix
Corporation as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1995. Our
audits also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedule based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Informix Corporation at December 31, 1995 and 1994, and the consolidated
results of its operations and its cash flows for each of the three years
in the period ended December 31, 1995 in conformity with generally
accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.

/S/ ERNST & YOUNG LLP
San Jose, California
January 30, 1996

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.

Not Applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding directors is incorporated herein by reference
from the section entitled "Election of Directors" of the Company's proxy
statement to be filed pursuant to Regulation 14A for its Annual
Stockholders Meeting to be held on May 16, 1996. For information
regarding executive officers of the Company, see the information
appearing under the caption "Executive Officers" in Part I, Item 1 of
this Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding executive compensation is incorporated herein
by reference from the section entitled "Executive Compensation" of the
Company's proxy statement to be filed pursuant to Regulation 14A for its
Annual Stockholders Meeting to be held on May 16, 1996.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

Information regarding security ownership is incorporated herein by
reference from the section entitled "Stock Ownership of Certain
Beneficial Owners and Management" of the Company's proxy statement to be
filed pursuant to Regulation 14A for its Annual Stockholders Meeting to
be held on May 16, 1996.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and related
transactions is incorporated herein by reference from the sections
entitled "Stock Ownership of Certain Beneficial Owners and Management",
"Executive Compensation" and "Transactions with Management" of the
Company's proxy statement to be filed pursuant to Regulation 14A for its
Annual Stockholders Meeting to be held on May 16, 1996.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K

(a)1. Financial Statements

The following financial statements are filed as a part of this
Annual Report:

Financial Statements Covered by Report of Independent Auditors:

Report of Ernst & Young LLP, Independent Auditors

Consolidated Financial Statements:
Balance Sheets at December 31, 1995 and 1994
Statements of Income for each of the
three years in the period ended December 31, 1995
Statements of Stockholders' Equity for each of the three
years in the period ended December 31, 1995
Statements of Cash Flows for each of the three years in the
period ended December 31, 1995
Notes to Consolidated Financial Statements (except Note 11)

Supplementary Financial Data Not Covered By Report of Independent
Auditors:

Note 11 of Notes to Consolidated Financial Statements

(a)2. Financial Statements Schedule

The following financial statement schedule is filed as a part of
this Annual Report:

Financial Statement Schedule Covered By Report of Independent
Auditors:

Schedule as of and for the three years in the period ended
December 31, 1995, as applicable:

Schedule II - Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
omitted because they are not required under the related instructions or
are not applicable.

(a)3. Exhibits

<S> <C>
3.1 (1) Restated Certificate of Incorporation, as amended.
3.2 (1) By-Laws, as amended.
4.1 (2) Amended and Restated Preferred Share Rights Agreement.
10.1 (3) Form of Indemnity Agreement.
10.2 (4) Form of Amended Indemnity Agreement.
10.3 (5) 1989 Directors Stock Option Plan.
10.4 (6) Amendment to the 1989 Directors Stock Option Plan.
11 Statement re Computation of Per Share Earnings.
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Power of Attorney (set forth on signature page).
27 Financial Data Schedules.
</TABLE>
_______________

(1) Incorporated by reference to exhibits to the Form 10-Q of
Informix Corporation for the fiscal quarter ended
July 2, 1995

(2) Incorporated by reference to exhibits to the Form 8-A/A
Registration Statement filed on August 11, 1995.

(3) Incorporated by reference to exhibits to the Form S-1
Registration Statement No. 33-8006.

(4) Incorporated by reference to exhibits to the Form 10-K of
Informix Corporation for the fiscal year ended December 31,
1988.

(5) Incorporated by reference to exhibits to the Form S-8
Registration Statement No. 33-31116.

(6) Incorporated by reference to exhibits to the Form S-8
Registration Statement No. 33-50608.

(b) Reports on Form 8-K

The Company filed no reports on Form 8-K during the fourth quarter
of the fiscal year ended December 31, 1995.

SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant, Informix Corporation,
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on March 28, 1996.

INFORMIX CORPORATION

By: /S/ PHILLIP E. WHITE
Phillip E. White,
Chairman, President and
Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David H. Stanley, Howard H.
Graham and Richard C. Blass, jointly and severally, his attorneys-in-
fact, each with the power of substitution, for him in any and all
capacities, to sign any 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 has been signed below by the following persons in the
capacities and on the dates indicated.

Signature Title Date
<S> <C> <C>
/s/ Phillip E. White Chairman, President, and March 28, 1996
(Phillip E. White) Chief Executive Officer
(Principal Executive Officer)

/s/ Howard H. Graham Sr. Vice President, Finance and March 28, 1996
(Howard H. Graham) Chief Financial Officer
(Principal Financial Officer)

/s/ Albert F. Knorp, Jr. Director March 28, 1996
(Albert F. Knorp, Jr.)

/s/ James L. Koch Director March 28, 1996
(James L. Koch)

/s/ Thomas A. McDonnell Director March 28, 1996
(Thomas A. McDonnell)

/s/ Cyril J. Yansouni Director March 28, 1996
(Cyril J. Yansouni)

/s/ Richard C. Blass Vice President, Corporate March 28, 1996
(Richard C. Blass) Controller
(Principal Accounting Officer)

</TABLE>

EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS

(in thousands, except per-share data)
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
<S> <C> <C> <C>
Net income used for earnings per
share calculation $105,333 $ 66,196 $ 56,115
Earnings Per Common Share:
Weighted average outstanding shares (1) 133,331 129,570 127,970
Net effect of outstanding options (1) 5,565 5,040 7,232
Weighted average common and common
equivalent shares outstanding (1) 138,896 134,610 135,202
Net income per share (1) $ 0.76 $ 0.49 $ 0.42

</TABLE>

Fully diluted computation not presented since such amounts differ by
less than 3 percent of the net income per share amounts shown above.

Note:

(1) Share and per-share information applicable to prior periods has
been restated to reflect a two-for-one stock split (effected in the form
of a stock dividend) which was effective June 26, 1995.

EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT

NAME PARENT JURISDICTION
OF
INCORPORATION
<S> <C> <C>
Informix Software, Inc. Informix Corporation Delaware
Informix International, Inc. Informix Software, Inc. Delaware
Informix Credit Company Informix Software, Inc. Delaware
Illustra Information Technologies, Inc. Informix Corporation Delaware
Picasso Systems, Inc. Illustra Information Technologies, Inc. Delaware
Stanford Technology Group, Inc. Informix Corporation California
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
Innovative Software Ltd. Informix Software Ltd. England
Illustra Information Technologies Limited Illustra Information Technologies, Inc. England
Illustra Information Technologies, S.A. Illustra Information Technologies, Inc. France
Informix Software SARL Informix International, Inc. France
Informix Software GmbH Informix International, Inc. 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 Daou Korea, Inc. 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
I.N.I.X. South Africa (Pty.) Limited Informix International, Inc. South Africa
Informix Software Iberica, S.A. Informix International, Inc. Spain
Informix Software Scandinavia 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

</TABLE>

EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Statements
(Form S-8, Nos. 33-46715, 33-50610, 33-50608, 33-56707 and 333-01409;
Form S-4 No. 333-143; and S-3 No. 333-273) and in the related
Prospectuses of our report dated January 30, 1996, with respect to the
consolidated financial statements and schedule of Informix Corporation
included in this Annual Report (Form 10-K) for the year ended December
31, 1995.

/S/ ERNST & YOUNG LLP

San Jose, California
March 25, 1996

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the financial statements contained in the Company's Form 10-K for the
period ending December 31, 1994 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000799089
<NAME> INFORMIX CORPORATION
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 163,260
<SECURITIES> 98,685
<RECEIVABLES> 195,430
<ALLOWANCES> 12,710
<INVENTORY> 2,801
<CURRENT-ASSETS> 471,898
<PP&E> 147,163
<DEPRECIATION> 69,935
<TOTAL-ASSETS> 674,416
<CURRENT-LIABILITIES> 225,560
<BONDS> 0
0
0
<COMMON> 1,353
<OTHER-SE> 421,702
<TOTAL-LIABILITY-AND-EQUITY> 674,416
<SALES> 535,895
<TOTAL-REVENUES> 708,985
<CGS> 37,846
<TOTAL-COSTS> 126,847
<OTHER-EXPENSES> 422,885
<LOSS-PROVISION> 8,377
<INTEREST-EXPENSE> 1,035
<INCOME-PRETAX> 166,140
<INCOME-TAX> 60,807
<INCOME-CONTINUING> 105,333
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 105,333
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.76

</TABLE>