SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period ended March 30, 1997
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to .
Commission file number 0-15325
INFORMIX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-3011736
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4100 Bohannon Drive, Menlo Park, CA 94025
(Address of principal executive office)
415-926-6300
(Registrant's telephone number, including area code)
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 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 .
At April 25, 1997, 151,679,178 shares of the Registrant's Common Stock
were outstanding.
Total number of pages 23
.
FORWARD LOOKING STATEMENTS
This Quarterly 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
section of this Report entitled "Business Risks" and 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.
PART I. FINANCIAL INFORMATION
INDEX
Part I. Financial Information
Page
Item 1. Condensed Consolidated Financial
Statements (Unaudited):
Condensed Consolidated Statements of
Operations for the three-month periods
ended March 30, 1997 and March 31, 1996 3
Condensed Consolidated Balance Sheets as of
March 30, 1997 and December 31, 1996 4
Condensed Consolidated Statements of Cash
Flows for the three-month periods ended
March 30, 1997 and March 31, 1996 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 19
Signature page 20
INFORMIX CORPORATION
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 30, March 31,
1997 1996
---------- ----------
<S> <C> <C>
Net revenues:
Licenses $ 71,676 $ 151,193
Services 61,988 52,828
---------- ----------
133,664 204,021
Costs and expenses:
Cost of software distribution 29,327 10,028
Cost of services 41,152 33,409
Sales and marketing 125,548 91,143
Research and development 35,289 25,544
General and administrative 29,237 14,681
Write-off of goodwill and other
long-term assets 30,473 -
Write-off of acquired research
and development 7,000 -
Expenses related to Illustra merger - 5,914
---------- ----------
298,026 180,719
---------- ----------
Operating income (loss) (164,362) 23,302
Interest income 1,267 2,250
Interest expense (725) (264)
Other income/(expense), net 2,778 (64)
---------- ----------
Income (loss) before income taxes (161,042) 25,224
Income taxes (benefits) (20,935) 9,333
---------- ----------
Net income (loss) $(140,107) $ 15,891
========== ==========
Net income (loss) per share $ (0.93) $ 0.10
Weighted average number of common
and common equivalent shares
outstanding 151,049 155,788
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
INFORMIX CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
<TABLE>
<CAPTION>
March 30, December 31,
1997 1996
----------- -----------
<S> <C> <C>
(Note)
ASSETS
Current assets:
Cash and cash equivalents $ 85,291 $ 226,508
Short-term investments 35,280 34,512
Accounts receivable, net 193,618 254,096
Deferred taxes 13,134 13,329
Other current assets 37,152 29,479
---------- ----------
Total current assets 364,475 557,924
Property and equipment, net 175,495 186,727
Software costs, net 43,457 54,486
Deferred taxes 7,775 7,775
Long-term investments 6,639 6,639
Intangible assets 12,131 34,693
Restricted cash 61,500 -
Other assets 48,189 55,598
---------- ----------
Total assets $ 719,661 $ 903,842
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 46,797 $ 65,446
Accrued expenses 54,147 52,347
Accrued employee compensation 65,752 57,626
Income taxes payable 1,713 34,508
Deferred revenue 90,955 84,102
Other liabilities 3,271 5,537
---------- ----------
Total current liabilities 262,635 299,566
Other liabilities 2,404 2,359
Deferred taxes 32,374 31,203
Commitments and contingencies
Stockholders' equity:
Common stock 1,512 1,508
Additional paid-in capital 245,177 243,564
Retained earnings 182,698 322,805
Unrealized gain on available-
for-sale securities, net of tax 7,837 11,690
Foreign currency translation
adjustment (14,976) (8,853)
---------- ----------
Total stockholders' equity 422,248 570,714
---------- ----------
Total liabilities and
stockholders' equity $ 719,661 $ 903,842
========== ==========
</TABLE>
(Note) Columnar amounts are derived from audited consolidated
financial statements
See Notes to Condensed Consolidated Financial Statements.
INFORMIX CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
------------------------
March 30, March 31,
1997 1996
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $(140,107) $ 15,891
Adjustments to reconcile net
income to net cash and cash
equivalents provided by (used
in) operating activities:
Depreciation and
amortization 23,404 8,798
Amortization and write-off
of capitalized software 20,233 3,624
Deferred tax expense - (134)
Provisions for losses on
accounts receivable 11,006 2,350
Write-off of goodwill and
other long-term assets 30,473 -
Write-off of acquired research
and development 7,000 -
Foreign currency transaction
loss 5,066 1,138
(Gain) loss on disposal of
property and equipment (50) 713
Changes in operating assets
and liabilities:
Accounts receivable 41,960 (2,464)
Other current assets (16,628) (1,442)
Accounts payable and
accrued expenses (28,917) (22,383)
Deferred revenue 8,651 5,037
---------- ----------
Net cash and cash equivalents
provided by (used in) operating
activities (37,909) 11,128
INVESTING ACTIVITIES
Investments of excess cash:
Purchases of available-for-sale
securities (10,374) (55,827)
Maturities of available-for-sale
securities 9,585 38,053
Purchases of strategic investments (1,750) -
Purchase of property and
equipment (20,431) (15,797)
Amount held as restricted cash (61,500) -
Proceeds from disposal of
property and equipment 279 1,064
Additions to software costs (8,104) (6,742)
Business combinations, net of
cash acquired (8,786) (1,000)
Other (253) (3,087)
---------- ----------
Net cash and cash equivalents
used in investing activities (101,334) (43,336)
FINANCING ACTIVITIES
Proceeds from issuance of stock 1,617 5,661
Principal payments on capital
leases (885) (207)
---------- ----------
Net cash and cash equivalents
provided by financing
activities 732 5,454
---------- ----------
Effect of exchange rate changes
on cash and cash equivalents (2,706) (451)
---------- ----------
Decrease in cash and cash
equivalents (141,217) (27,205)
Cash and cash equivalents
at beginning of period 226,508 164,305
---------- ----------
Cash and cash equivalents at
end of period $ 85,291 $ 137,100
========== ==========
See Notes to Condensed Consolidated Financial Statements.
INFORMIX CORPORATION
Notes to Condensed Consolidated Financial Statements
March 30, 1997
(Unaudited)
Note A - Presentation of Interim Financial Statements
All significant adjustments, in the opinion of management, which
are normal, recurring in nature and necessary for a fair presentation
of the financial position and results of the operations of the Company,
have been consistently recorded. The operating results for the interim
periods presented are not necessarily indicative of expected
performance for the entire year.
Note B - Net Income (Loss) Per Share
Net income (loss) per share is computed using the weighted average
number of shares outstanding. Common equivalent shares from stock
options (using the treasury stock method) have been included in the
computation only when dilutive.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 ("FAS 128"), "Earnings per Share", which is required
to be adopted on December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings per
share and to restate all prior periods. Under the new requirements for
calculating primary earnings per share, the dilutive effect of stock
options will be excluded. The impact is expected to result in an
increase in primary earnings per share for the first quarter ended
March 31, 1996 to $0.11. The impact of Statement 128 on the
calculation of primary earnings per share for the first quarter ended
March 30, 1997 is not material.
Note C - Stockholders' Equity
Reconciliation of outstanding shares:
Shares outstanding at December 31, 1996 150,781,634
Shares issued upon exercises of stock options 432,459
-------------
Shares outstanding at March 30, 1997 151,214,093
Note D - Business Combinations
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 with the
assumption of Illustra's outstanding options. The transaction has been
accounted for as a pooling of interests, and accordingly, the
consolidated financial statements for all periods presented include the
accounts and operations of Illustra. Related merger and transaction
fees of approximately $5.9 million have been recorded in the first
quarter of 1996.
In February 1997, the Company acquired all of the outstanding
capital stock of Centerview Software, Inc. ("Centerview"), a privately
owned corporation that provides software tools for application
development. The aggregate purchase price was approximately $8.7
million, which included cash plus direct costs of acquisition. For
financial statement purposes, the acquisition has been accounted for as
a purchase and, based on an independent appraisal of all the assets
acquired and liabilities assumed, the purchase price was allocated to
the specifically identifiable tangible and intangible assets acquired,
including approximately $7 million of purchased research and
development which has been charged to operations in the period the
acquisition was consummated - the first quarter of 1997.
Note E - Commitments
In January 1997, the Company entered into a two-year lease ("the
Real Estate Lease") for twenty seven acres of undeveloped commercial
real estate to construct new corporate headquarters in Santa Clara,
California. Upon termination of the lease term, the Company will have
the option to purchase the land, or if such purchase option is not
exercised, arrange for the sale of the parcels to an unrelated third
party. In the event the latter option is exercised, the Company is
required to pay the lessor any difference between the net sales
proceeds and the lessor's investment in the parcels, approximately
$61.5 million. In order to secure performance of its obligation under
the lease, the Company was required to pledge certain cash collateral
to the lessor throughout the full term of the lease. Accordingly, in
January 1997, the Company deposited $61.5 million in cash into a non-
interest bearing collateral account controlled by an affiliate of the
lessor. This cash is reflected in long term assets on the balance
sheet. Interest on these deposits computed at market rates, otherwise
due to the Company, have been assigned by the Company to the lessor in
order to reduce the gross monthly lease payments due under the lease.
The resulting net monthly lease payments will be recognized by the
Company as rent expense over the lease term. The real estate lease also
includes certain financial performance criteria which must be met by
the Company during the lease term. As of March 30, 1997, the Company is
in compliance with its financial ratio covenants under this agreement.
The Company expects it will not be in compliance with these financial
covenants at the end of the second quarter and is currently in the
process of discussing the terms of the contract with the lessor. The
lease is fully cash collateralized and the Company has the right to
terminate the lease, on thirty days notice, by releasing the cash
collateral to the lessor in exchange for taking title to the land.
Note F - Write-off of Goodwill and Other Long-Term Assets
In accordance with Financial Accounting Standards Board Statement
No. 121, "Accounting for the Impairment of Long Lived Assets and for
Long-Lived Assets to be Disposed of", the Company records impairment
losses on long-lived assets used in operations when events and
circumstances indicate that the assets might be impaired and the
estimated future undiscounted cash flows to be generated by those
assets are less than the assets' carrying amounts. During the first
quarter of 1997, the Company's Japanese subsidiary experienced a
significant sales shortfall and operating losses. Accordingly, the
Company evaluated the ongoing value of the subsidiary's long-lived
assets (primarily computer and other equipment) and related goodwill.
Based on this evaluation, the Company determined that the subsidiary's
assets had been impaired and wrote them down by $30.5 million to their
estimated fair values. Fair value was determined using estimated future
discounted cash flows and/or resale market quotes as appropriate.
Note G - Subsequent events
Following the Company's announcement on April 1, 1997 of its
preliminary results for the first quarter ending March 30, 1997,
several class action lawsuits were filed against the Company and
certain of its current and former executive officers in the U.S.
District Court, Northern District of California. The complaints are
similar and allege violations of federal and state securities laws.
Management believes that the claims made in the lawsuits are meritless
and intends to vigorously defend these suits. In the opinion of
Management, resolution of this litigation is not expected to have a
material adverse effect on the financial position of the Company.
However, although no estimate of any outcome can currently be made, an
unfavorable resolution of this matter could materially affect the
Company's future results of operations or cash flows in the period of
resolution.
The Company is also a party to various legal disputes and
proceedings arising from the ordinary course of business. Although no
estimate of any outcome can currently be made, an unfavorable
resolution of these matters could materially affect the Company's
future results of operations or cash flows in the period of resolution.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
This Quarterly 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
section of this Report entitled "Business Risks" and 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.
RESULTS OF OPERATIONS
The following table sets forth operating results as a percentage
of net revenues for the three-month periods ended March 30, 1997 and
March 31, 1996, respectively, and the percent change in the operating
results for three-month period ended March 30, 1997 compared to the
respective three-month period ended March 31, 1996.
</TABLE>
<TABLE>
<CAPTION>
Percent of Net Period-to-period
Revenues Percent
Increase (Decrease)
Three months ended Three months ended
March 30, March 31, March 30, 1997 vs.
1997 1996 March 31, 1996
--------- --------- ------------------
<S> <C> <C> <C>
NET REVENUES:
Licenses 54% 74% (53%)
Services 46% 26% 17%
--------- ---------
Total net revenues 100% 100% (34%)
COSTS AND EXPENSES:
Cost of software
distribution 22% 5% 192%
Cost of services 31% 16% 23%
Sales and
marketing 94% 45% 38%
Research and
development 26% 13% 38%
General and
administrative 22% 7% 99%
Write-off of
goodwill and
long-term assets 23% 0% N/A
Write-off of
acquired research
and development 5% 0% N/A
Merger expenses
with Illustra 0% 3% N/A
--------- ---------
Total operating
expenses 223% 89% 65%
--------- ---------
OPERATING INCOME
(LOSS) (123%) 11% N/A
INTEREST INCOME 1% 1% (44%)
INTEREST EXPENSE 0% 0% 175%
OTHER INCOME/
(EXPENSE),NET 2% 0% N/A
--------- ---------
INCOME (LOSS)
BEFORE INCOME
TAXES (120%) 12% N/A
INCOME TAXES
(BENEFIT) (15%) 4% N/A
--------- ---------
NET INCOME (LOSS) (105%) 8% N/A
========= =========
</TABLE>
Informix's operating results for the first quarter ended March 30,
1997 were significantly below the same period of the prior year due to
a 34 percent decrease in revenue. Sales declined in all geographic
regions, particularly in Europe where sales declined 57 percent as
compared to the first quarter of 1996. Sales declined in all channels.
The Company's inability to close a number of large deals at the end of
the quarter contributed to the decline. These lower revenues combined
with a 65 percent increase in operating costs resulted in an operating
loss of $164.4 million. The increase in operating costs included one
time charges of $30.5 million related to the Company's Japanese
operation and the write-off of acquired research and development costs
of $7.0 million during the period ended March 30, 1997.
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 value added resellers (VAR's).
During 1996, approximately half of the Company's revenues were reseller
sales as the Company increased its focus on its partnerships with
several hardware vendors in order to utilize their sales forces, obtain
access to their installed bases in certain industries and benefit from
their consulting and systems integration organizations. First quarter
license revenue derived from resellers decreased from $79.9 million in
1996 to $26.9 million in 1997. At March 30, 1997, the Company estimates
that almost half of the licenses sold to resellers in 1996 and the
first quarter of 1997 have not been resold. These licenses were sold on
an irrevocable and non-refundable basis and do not provide return
rights. In addition, license sales to end users in the first quarter of
1997 declined by 37 percent versus the prior year comparable period.
Although end-user sales contracts can be relatively large in size and
are difficult to forecast both in timing and dollar value, the Company
did not expect this magnitude of decline.
In hindsight, the Company believes that an over-emphasis on the
release and marketing of INFORMIX-Universal Server, as opposed to its
OnLine products, contributed to the decline in first quarter results.
Without the necessary emphasis, the OnLine products' sales momentum was
lost. Object relational database products, including INFORMIX-
Universal Server and the Illustra Server, generated only ten percent of
the first quarter license revenue. In addition, it appears in hindsight
that the Company did not fully support the NT product line during the
period.
The increase in service revenue, as a percentage of total revenue,
was primarily the result of the decrease in license revenue. The
Company continues to emphasize support services as a source of revenue
and the growth achieved in absolute dollars versus the prior year
quarter reflects the growth in the Company's installed base.
During the first quarter ended March 30, 1997, Informix's net
revenues from sales to foreign customers was 48 percent of total
revenue as compared to 60 percent in the similar period in 1996. In
absolute dollars, foreign sales decreased from $123.0 million in the
quarter ended March 31, 1996 to $64.6 million in the quarter ended
March 30, 1997. Sales in Europe and Japan decreased 57 and 73 percent,
respectively. In addition to the factors noted above which impacted
worldwide sales, the decrease in Europe was partially due to changing
sales management during the quarter and failure to close a number of
large sales transactions. Sales in Asia/Pacific and Latin America were
unchanged versus the previous period.
Substantially all of the Company's Latin American revenue is U.S.
dollars denominated. In Europe, Asia/Pacific, and Japan, most revenues
and expenses are denominated in local currencies. The U.S. dollar
strengthened in the first quarter of 1997 against the major European
and Asia/Pacific currencies, which resulted in lower revenue and
expenses recorded when translated into U.S. dollars, compared with the
prior year period.
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. Changes in foreign cur
rency 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 as a percentage of total 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,
respectively.
Cost of Software Distribution
(DOLLARS IN MILLIONS) First Quarter First Quarter Percentage
1997 1996 Change
------------- ------------- ----------
[S] [C] [C] [C]
Manufactured cost of
software distribution $ 9.1 $ 6.4 42%
Percentage of license
revenue 13% 4%
Amortization of
capitalized software $ 5.5 $ 3.6 53%
Percentage of license
revenue 8% 3%
Write down to net
realizable value $ 14.7 - N/A
Percentage of license
revenue 20% -
Cost of software
distribution $ 29.3 $ 10.0 193%
Percentage of license
revenue 41% 7%
Software distribution costs consist primarily of: 1) manufacturing
and related costs such as media, documentation, product assembly and
purchasing costs, freight, customs, and third party royalties; and 2)
amortization of previously capitalized software development costs and
any write-offs of previously capitalized software.
The manufactured cost of software distribution as a percentage of
license revenue increased significantly in the first quarter of 1997
compared to the same period in 1996. This increase was primarily caused
by the reduction in sales as a large portion of these costs are fixed
in nature. In addition higher royalties were incurred on software
acquired after the first quarter of 1996 where third party software is
bundled with Informix products. In the future, the cost of software
distribution as a percentage of revenue may vary depending upon the
sales levels, third party software costs where their software is
bundled with Informix's and whether the product is reproduced by the
Company or by customers.
Amortization of capitalized software costs begin in the quarter
following product introduction. The increase of amortization of
capitalized software in the first quarter of 1997 compared to the first
quarter of 1996 is due to the release of various products subsequent
to the first quarter of 1996. The absolute value of amortization of
capitalized software will vary slightly quarter to quarter as new
products are released and other products become fully amortized.
In addition, due to the Company's acquisition of Centerview
Software, Inc. and the announcement of its revised tool strategy, and
in accordance with Financial Accounting Standards Board Statement No.
86, "Accounting for the Costs of Computer Software to Be Sold, Leased,
or Otherwise Marketed", a net realizable value test performed on
certain of the Company's tool products resulted in a write-down of
$14.7 million of previously capitalized software costs.
Cost of Services
(DOLLARS IN MILLIONS) First Quarter First Quarter Percentage
1997 1996 Change
------------- ------------- ----------
Cost of Services $ 41.2 $ 33.4 23%
Percentage of service
revenue 66% 63%
Cost of services consists primarily of maintenance, consulting and
training expenses. Costs of services for the first quarter of 1997 are
comparable to expense in the prior year quarter on a percentage of
service revenue basis. In the future, the Company expects that cost of
services as a percentage of net service revenue will approximate the
rate in the first quarter of 1997.
Sales and Marketing Expenses
(DOLLARS IN MILLIONS) First Quarter First Quarter Percentage
1997 1996 Change
------------- ------------- ----------
Sales and marketing
expenses $ 125.5 $ 91.1 38%
Percentage of net
revenue 94% 45%
The increase in sales and marketing expenses in the first quarter
of 1997, in absolute dollars, as compared to the first quarter of 1996
was primarily a result of the addition of sales and marketing personnel
worldwide. Over the twelve month period ending March 30, 1997, the
headcount for sales and marketing personnel grew from 1,553 to 2,009 or
29 percent, which accounts for the majority of the increase both in
percentage growth and absolute dollars spent. Approximately half of
the additional sales staff were assigned to the European region and the
domestic marketing group more than doubled to 243 employees.
Depreciation expense charged to Sales and Marketing increased
approximately $8 million versus the prior year quarter in connection
with the Company's Superstores which are more fully described in
"Liquidity and Capital Resources". The increase of costs as a
percentage of revenue reflects that despite sales commissions being a
large variable cost, there are significant sales and marketing costs
that are fixed in nature.
Research and Development Expenses
The Company accounts for its product development costs 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 periods ended March 30, 1997 and March 31,
1996:
(DOLLARS IN MILLIONS) First Quarter First Quarter Percentage
1997 1996 Change
------------- ------------- ----------
Incurred product
development costs $ 41.6 $ 31.6 32%
Expenditures capitalized 6.3 6.1 3%
Research and development
expenses $ 35.3 $ 25.5 38%
Expenditures capitalized
as a percentage of
incurred 15% 19%
The increase in research and development expenditures in absolute
dollars in the first quarter of 1997 was primarily attributed to an
increase in staff of 18 percent versus the prior year quarter. The
proportion of capitalized expenditures as a percentage of total
incurred expenses decreased in the first quarter of 1997. The decrease
is attributable to the fact that during the first quarter of 1996, a
large portion of expenses incurred were on products which had reached
technological feasibility. The Company expects the proportion of work
on capitalized projects for the remainder of 1997 to remain relatively
stable compared to the first quarter of 1997 as other major new
products reach technological feasibility, and capitalization of the
related software development costs begins.
Significant programs currently under development include
improvements and enhancements of current products, with particular
emphasis on parallel computer architecture, user-defined database
extensions, web technology integration, database application tools and
systems administration. 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
continue to constitute a significant percentage of revenues.
General and Administrative Expenses
(DOLLARS IN MILLIONS) First Quarter First Quarter Percentage
1997 1996 Change
------------- ------------- ----------
General and
administrative expenses $ 29.2 $ 14.7 99%
Percentage of net
revenue 22% 7%
General and administrative expenses increased in absolute dollars
in the first quarter of 1997 compared to the same prior year period
primarily as a result of the higher bad debt expense of approximately
$8.7 million. In addition, headcount in general and administration grew
10 percent over this period.
Write-off of goodwill and long-term assets
In accordance with Financial Accounting Standards Board Statement
No. 121, "Accounting for the Impairment of Long Lived Assets and for
Long-Lived Assets to be Disposed of", the Company records impairment
losses on long-lived assets used in operations when events and
circumstances indicate that the assets might be impaired and the
estimated future undiscounted cash flows to be generated by those
assets are less than the assets' carrying amounts. During the first
quarter of 1997, the Company's Japanese subsidiary experienced a
significant sales shortfall and operating losses. Accordingly, the
Company evaluated the ongoing value of the subsidiary's long-lived
assets (primarily computer and other equipment) and related goodwill.
Based on this evaluation, the Company determined that the subsidiary's
assets had been impaired and wrote them down by $30.5 million to their
estimated fair values. Fair value was determined using estimated future
discounted cash flows and/or resale market quotes as appropriate.
The Company plans on significantly restructuring the Japan office
in the second quarter of 1997 and will charge earnings for the costs in
that period. The Company will also evaluate other functions and
locations throughout the Company to determine if further restructuring
is warranted. These further actions are expected to result in
additional second quarter charges.
Write-off of acquired research and development
In February 1997, the Company acquired all of the outstanding
capital stock of Centerview, a privately owned corporation that
provides software tools for application development. The aggregate
purchase price was approximately $8.7 million, which included cash plus
direct costs of acquisition. For financial statement purposes, the
acquisition has been accounted for as a purchase and, based on an
independent appraisal of all the assets acquired and liabilities
assumed, the purchase price was allocated to the specifically
identifiable tangible and intangible assets acquired, including
approximately $7 million of purchased research and development which
has been charged to operations in the period the acquisition was
consummated - the first quarter of 1997.
Merger expenses
In the first quarter of 1996, the Company had expenses of
approximately $5.9 million as a result of the acquisition of Illustra,
which was accounted for as a pooling of interests. These costs
consisted primarily of investment banking, legal and accounting fees.
Provision for Income Taxes
The Company recorded an income tax benefit for the quarter ended
March 30, 1997 at an effective rate of 13 percent versus an income tax
provision at an effective rate of 37 percent in the prior year
comparable quarter. The effective rate used to record the income tax
benefit in the current quarter is based on the Company's anticipated
results for the year. The effective rate differs from the statutory
rate primarily due to certain foreign and domestic operating losses and
the write-off of goodwill and other long-term assets which are not
expected to generate a current year tax benefit and the write-off of
acquired research and development which is not deductible for tax
purposes. The effective rate could change in future quarters based on
a change in the nature of the geographic mix of the Company's
anticipated results.
Impact of Inflation
The effect of inflation on the Company's financial position has
not been significant.
Liquidity and Capital Resources
(in millions of dollars) First Quarter
1997 1996
-------- -------
Cash, cash equivalents, and investments $ 127.2 $ 253.5
Working capital 101.8 269.3
Cash provided by (used in) operating
activities (37.9) 11.1
Cash used for investment activities,
excluding investments of excess cash 100.5 25.6
Cash provided by financing activities 0.7 5.5
Net cash used in operating activities was $37.9 million in the
first quarter of 1997 compared to net cash provided by operating
activities of $11.1 million in the first quarter of 1996. Net cash used
by operating activities during the first quarter of 1997 reflects a net
loss of $140.1 million versus a net income of $15.9 million in the same
period last year partially offset by an increase in various non-cash
charges totaling $77.4 million. The increase in non-cash charges
includes a write-off of $30.5 million related to the Japanese
operation, higher depreciation of $14.6 million, an increase in
amortization of capitalized software of $16.6 million, which includes a
write-down of capitalized software of $14.7 million, increase in
provisions for losses on accounts receivable of $8.7 million and the
write-off of acquired research and development costs for Centerview of
$7.0 million. Additionally, the variance versus last year reflects a
decrease in accounts receivable, an increase in other current assets, a
decrease in accounts payable and accrued expenses compared to the same
period last year.
Net accounts receivable decreased by $60.5 million in the first
quarter of 1997 as compared to the fourth quarter of 1996 reflecting
the 51 percent decline in revenues. Days sales outstanding increased
from 84 days in December 1996 and from 82 days in the first quarter of
1996 to 130 days in the first quarter of 1997. 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 as well as any extended terms granted. In addition
to the Company granting extended payment terms in certain instances,
the Company has programs whereby third-party financing institutions
provide financing for extended credit terms. The Company at times
enhances its cash position through certain financing activities related
to its accounts receivable.
Excluding investments of excess cash, net cash and cash
equivalents used in investing activities increased in the first quarter
of 1997 compared with the same period in 1996 due to restricted cash
for a security deposit on the Santa Clara property, purchase of
Centerview, and the purchase of capital equipment, partially offset by
a decrease in investment activity. In the first quarters of 1997 and
1996, the Company acquired $20.4 million and $15.8 million,
respectively, of capital equipment consisting primarily of computer
equipment, computer software and office equipment. The increase of
capital equipment purchases in the first quarter of 1997 resulted from
the Company's growing employee headcount and the investment in new
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.
The Company's investments in software costs were previously
discussed under "Results of Operations."
In February 1997, the Company acquired all of the outstanding
capital stock of Centerview, a privately owned corporation that
provides software tools for application development. The aggregate
purchase price was approximately $8.7 million, which included cash plus
direct costs of acquisition. For financial statement purposes, the
acquisition has been accounted for as a purchase and, based on an
independent appraisal of all the assets acquired and liabilities
assumed, the purchase price was allocated to the specifically
identifiable intangible assets acquired, including approximately $7
million of purchased research and development which has been charged to
operations in the period the acquisition was consummated - the first
quarter of 1997.
Net cash and cash equivalents provided by financing activities in
the first quarter of 1997 and 1996 consist primarily of proceeds from
the sale of the Company's common stock to employees, partially offset
by payments on capital leases.
Informix will continue to launch a series of Information
Superstores worldwide which demonstrate and offer the most recent
Informix technology advances. Along with the core Informix product
line, these locations have tools from leading third-party tools and
application vendors installed on a wide variety of hardware platforms.
Initial participants include Data General, Hewlett Packard, IBM, NCR,
Pyramid, Sequent, Silicon Graphics, and Sun, among others. Engineers
from both the Informix Professional Services and the Informix Advanced
Technology Group are working with prospects and customers at the
Superstores to create information technology prototypes, such as pilot
Data Warehouses, based on comprehensive, proven methodology. To date,
the Company has spent approximately $70 million and has committed to
spend approximately an additional $55 million in the acquisition of
capital equipment to support the launch of the Information Superstores.
The Company expects to satisfy up to $38.3 million of these capital
commitments over the next two quarters.
In January 1997, the Company entered into a two year lease ("the
Real Estate Lease") for twenty-seven acres of undeveloped commercial
real estate to construct new corporate headquarters in Santa Clara,
California. Upon termination of the lease term, the Company will have
the option to purchase the land, or if such purchase option is not
exercised, arrange for the sale of the parcels to an unrelated third
party. In the event the later option is exercised, the Company is
required to pay the lessor any difference between the net sales
proceeds and the lessor's investment in the parcels, approximately
$61.5 million. In order to secure performance of its obligation under
the lease, the Company was required to pledge certain cash collateral
to the lessor throughout the full term of the lease. Accordingly, in
January 1997, the Company deposited $61.5 million in cash into a non-
interest bearing collateral account controlled by an affiliate of the
lessor. This cash is reflected in long term assets on the balance
sheet. Interest on these deposits computed at market rates, otherwise
due to the Company, have been assigned by the Company to the lessor in
order to reduce the gross monthly lease payments due under the lease.
The resulting net monthly lease payments will be recognized by the
Company as rent expense over the lease term. The real estate lease also
includes certain financial performance criteria which must be met by
the Company during the lease term. As of March 30, 1997, the Company is
in compliance with its financial covenants under this agreement. The
Company expects it will not be in compliance with these financial
covenants at the end of the second quarter and is currently in the
process of discussing the terms of the contract with the lessor. The
lease is fully cash collateralized and the Company has the right to
terminate the lease, on thirty days notice, by releasing the cash
collateral to the lessor in exchange for taking title to the land.
The Company's cash, cash equivalents and short term investments
declined in the first quarter of 1997 from $261.0 million to $120.6
million. Part of this decline is attributable to the fact that in early
January 1997 the Company placed $61.5 million on deposit as cash
collateral with Banque Nationale de Paris (BNP) as part of the
synthetic lease transaction for approximately 27 acres of land in Santa
Clara, California. (That cash is shown on the balance sheet in the long
term assets section labeled "Restricted Cash"). The Company intends to
raise additional working capital in order to fund the Company's desired
level of operations. In addition to requiring working capital to
offset potential future operating losses, the Company will require
additional working capital or lease financing to satisfy up to $38.3
million of capital commitments over the next two quarters incurred
primarily in connection with the opening of Information Superstores.
Potential capital sources include commercial banks and the capital
markets. The Company is also considering arranging for the refinancing
or sale of the Santa Clara land and is pursuing lease financing of
certain Superstore equipment. While the Company believes it will
acquire the necessary financing, there can be no assurance that such
financing will be available. The Company's failure to raise working
capital when required would have a material adverse effect on the
Company's business, results of operations and financial condition.
Business Risks
Recent Financial Results. The Company reported a net loss of
$140.1 million, or $0.93 per share, for the quarter ended March 30,
1997, as a result of a significant shortfall from anticipated revenue.
The Company experienced sales weakness in all geographic regions,
particularly in Europe. The Company's inability to close a number of
large transactions at the end of the quarter contributed to the
decline. First quarter license revenue derived from resellers decreased
from $79.9 million in 1996 to $29.5 million in 1997.
In addition, the Company recorded a $30.5 million one time write-
off related to its Japanese operation and a $7.0 million write-off of
acquired research and development. The Company expects to incur certain
restructuring charges in the second quarter of 1997 and if the Company
does not return to profitability in subsequent quarters, the Company
may be required to further restructure its operations. Restructuring
may include reductions in force, asset sales or write-offs and other
measures designed to reduce ongoing operating expenses. Any such
restructuring may cause the Company to incur additional charges which
could have a material adverse effect on the Company's business, results
of operations and financial condition.
The Company's cash, cash equivalents and short term investments
declined in the first quarter of 1997 from $261.0 million to $120.6
million. Part of this decline is attributable to the fact that in early
January 1997 the Company placed $61.5 million on deposit as cash
collateral with Banque Nationale de Paris (BNP) as part of the
synthetic lease transaction for approximately 27 acres of land in Santa
Clara, California. (That cash is shown on the balance sheet in the long
term assets section labeled "Restricted Cash"). The Company intends to
raise additional working capital in order to fund the Company's desired
level of operations. In addition to requiring working capital to
offset potential future operating losses, the Company will require
additional working capital or lease financing to satisfy up to $38.3
million of capital commitments over the next two quarters incurred
primarily in connection with the opening of Information Superstores.
Potential capital sources include commercial banks and the capital
markets. The Company is also considering arranging for the refinancing
or sale of the Santa Clara land and is pursuing lease financing of
certain Superstore equipment. While the Company believes it will
acquire the necessary financing, there can be no assurance that such
financing will be available. The Company's failure to raise working
capital when required would have a material adverse effect on the
Company's business, results of operations and financial condition.
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
which culminate at the end of the calendar year, which is the end of
the Company's fiscal year. The Company's revenue generation is also
highly dependent on the economic conditions. If the economy were to
slow down, existing and potential customers might delay the purchase of
the Company's products, which would negatively affect the Company's
revenue. Additionally, as is common in the industry, a disproportionate
amount of the Company's license revenues are 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 expenditures are guided by projected
annual and quarterly revenue levels and are incurred approximately
ratably throughout each quarter. As a result, if projected revenues are
not realized in the expected period, as occurred in the first quarter
of 1997, the Company's operating results for that period would be
adversely affected as the operating expenses are relatively fixed in
the short term.
In the first quarter of 1997, the Company experienced a
significant shortfall in anticipated revenue as a result of sales
weakness in all geographic regions, particularly in Europe, and in all
channels, including end users and resellers. The shortfall included
the failure by Company's to close a number of large transactions at the
end of the quarter. This shortfall, along with certain charges, caused
the Company to incur a substantial loss for the quarter.
During 1996, the Company's sales and marketing strategy became
increasingly focused on sales through resellers, with sales to third
party application providers, distributors and original equipment
manufacturers accounting for approximately one half of the license fee
revenue of the Company in 1996. First quarter revenue derived from
resellers decreased from $79.9 million in 1996 to $26.9 million in
1997. At March 30, 1997, the Company estimates that almost half of the
licenses sold to resellers in 1996 and the first quarter of 1997 have
not been resold. These licenses were sold on an irrevocable and non-
refundable basis and do not provide return rights. To the extent these
resellers are unable to sell the Company's products through to end
users, these resellers will not be able to commit to licensing the same
level of products for resale in future periods that they committed to
in prior periods. This would have an adverse effect on the Company's
future revenues. There is no assurance that the Company's current sales
and marketing strategy emphasizing resellers will be successful.
In the latter half of 1996, the Company began making significant
capital commitments in connection with the opening of several
Information Superstores designed to provide customers with a dedicated
environment in which they can plan, prototype and test information
technology investments using the expertise of Company specialists and
partners. Through the first quarter of 1997, these capital commitments
totaled $125 million. If the Company's Information Superstore strategy
is not effective in increasing revenues, the Company may be required to
write off a significant portion of these costs and take other charges
associated with its Superstores. Any such write-offs or charges may
have a material adverse effect on the Company's business, results of
operations and financial condition in the period taken.
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 the first quarter of 1997, the Company experienced a
significant shortfall in anticipated revenue as a result of sales
weakness in all geographic regions and channels. The shortfall
included the failure by the Company to close a number of large
transactions at the end of the quarter. This shortfall, along with
certain charges, caused the Company to incur a substantial loss for the
quarter. The announcement of the revenue shortfall resulted in a sharp
decline in the trading price of the Company's common stock. The
Company's failure to achieve revenue, earnings and other operating and
financial results as forecasted or anticipated by brokerage firm
analysts or industry analysts in the future could result in additional
declines in 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.
Personnel changes. The Company's future performance will depend to
a significant extent on its ability to attract and retain highly
skilled sales, consulting, technical, marketing and management
personnel. The competition for employees in the database software
industry is intense, and the Company expects that such competition will
continue for the foreseeable future. From time to time the Company has
experienced difficulty in locating candidates with appropriate
qualifications. The Company also believes stock options are a critical
component for motivating and retaining its key employees. The recent
decline in the price of the Company's Common Stock has made stock
options previously granted less valuable to the Company's current
employees and has consequently made it more difficult for the Company
to retain its key employees. The failure of the Company to attract and
retain key personnel could have an adverse effect on the Company's
business, results of operations, financial position and cash flows.
Competition. The market for the Company's software products and
services is extremely competitive. Some of the Company's current
competitors have greater financial, technical and marketing resources
than the Company.
The industry movement to new operating systems, like Windows NT,
access to data 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.
New or enhanced products introduced by existing or future
competitors could also 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 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 significant price reductions in the Company's products or
services were to occur and not be offset by increases in sales volume,
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.
Beginning with the Company's acquisition of Illustra in February
1996, the Company's marketing strategy increasingly focused on the
introduction, development and release of INFORMIX-Universal Server. The
Company believed that extensive promotion of Universal Server and the
Company's technology vision would drive sales of both its current
INFORMIX-OnLine database server products, as well as the newer
Universal Server product. In the first quarter of 1997, the Company
experienced a substantial shortfall in anticipated license fee revenue
from its database server products which the Company attributes in part
to a lack of focus on the marketing of its OnLine server products. In
future quarters, the Company intends to increase marketing efforts
associated with OnLine server products. While the Company continues to
believe Universal Server will be successful in the marketplace and
ultimately replace OnLine server products, there can be no assurance
that market acceptance of Universal Server will occur in the time frame
envisioned by the Company or at all.
The Company has experienced product delays in the past and may
experience 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
have had and in the future 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 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. Approximately 48% of the Company's net
revenues were derived from its international operations during the
quarter ended March 30, 1997. The Company's operations and financial
results 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 factors associated with international activities. In
the first quarter of 1997, the Company experienced a significant
decline from anticipated revenue derived from its international
operations. This decrease occurred primarily in Europe where sales
decreased 57 percent versus the prior year quarter. In addition to the
factors causing worldwide sales declines discussed in "Revenues" above,
the decrease in Europe was partially due to changing sales management
during the quarter and the failure to close a number of large sales
contracts.
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.
Integration of Acquired Companies. The Company has completed
several acquisitions during the last two years, including Stanford
Technology Group, Illustra and Centerview 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.
Litigation. Following the Company's announcement on April 1, 1997
of its preliminary results for the first quarter ending March 30, 1997,
several class action lawsuits were filed against the Company and
certain of its current and former executive officers in the U.S.
District Court, Northern District of California. The complaints are
similar and allege violations of federal and state securities laws.
Management believes that the claims made in the lawsuits are meritless
and intends to vigorously defend these suits. In the opinion of
Management, resolution of this litigation is not expected to have a
material adverse effect on the financial position of the Company.
However, although no estimate of any outcome can currently be made, an
unfavorable resolution of this matter could materially affect the
Company's future results of operations or cash flows in the period of
resolution.
The Company is also a party to various legal disputes and
proceedings arising from the ordinary course of business. Although no
estimate of any outcome can currently be made, an unfavorable
resolution of these matters could materially affect the Company's
future results of operations or cash flows in the period of resolution.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) Exhibits
Exhibit 11.1 - Statement Regarding Computation of Net Income
(Loss) Per Share
Exhibit 27 - Financial Data Schedule.
B) Reports on Form 8-K.
The Company filed a Report on Form 8-K on April 2, 1997 related to
the release of the preliminary results for the quarter ending March 30,
1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
INFORMIX CORPORATION
Dated: May 13, 1997 /s/ Phillip E. White
----------------------------
Phillip E. White
Chairman, President, and
Chief Executive Officer
/s/ Karen Blasing
----------------------------
Karen Blasing
Corporate Controller and
Chief Accounting Officer
EXHIBIT INDEX
Exhibit Number Exhibit Title Page
11.1 Statement re Computation of Net Income
(Loss) per Share 22
27 Financial Data Schedule 23
INFORMIX CORPORATION
EXHIBIT 11.1
STATEMENT REGARDING COMPUTATION OF NET INCOME (LOSS)
PER SHARE
(in thousands, except per-share data)
FOR THE PERIODS ENDED
----------------------
MARCH 30, MARCH 31,
1997 1996
---------- ----------
(Note)
Net income (loss) $(140,107) $ 15,891
Weighted average outstanding
shares 151,049 148,289
Net effect of outstanding options - 7,499
---------- ----------
Weighted average common and common
equivalent shares outstanding 151 049 155,788
========== ==========
Net income (loss) per share $ (0.93) $ 0.10
========== ==========
Fully diluted computation not presented since such amounts
differ by less than 3 percent of the net income per share
amounts shown above.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from the
financial statements contained in the Company's Form 10-Q
for the period
ended March 30, 1997 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-30-1997
<CASH> 85,291
<SECURITIES> 41,919
<RECEIVABLES> 219,614
<ALLOWANCES> 25,996
<INVENTORY> 3,285
<CURRENT-ASSETS> 364,475
<PP&E> 308,455
<DEPRECIATION> 132,960
<TOTAL-ASSETS> 719,661
<CURRENT-LIABILITIES> 262,635
<BONDS> 0
0
0
<COMMON> 1,512
<OTHER-SE> 420,736
<TOTAL-LIABILITY-AND-EQUITY> 719,661
<SALES> 71,676
<TOTAL-REVENUES> 133,664
<CGS> 29,327
<TOTAL-COSTS> 70,479
<OTHER-EXPENSES> 227,547
<LOSS-PROVISION> 11,006
<INTEREST-EXPENSE> 725
<INCOME-PRETAX> (161,042)
<INCOME-TAX> (20,935)
<INCOME-CONTINUING> (140,107)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (140,107)
<EPS-PRIMARY> (0.93)
<EPS-DILUTED> (0.93)
</TABLE>
