INFORMIX CORP, S-1, 1998-01-09

INFORMIX CORP
S-1, 1998-01-09
PREPACKAGED SOFTWARE

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 9, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INFORMIX CORPORATION

(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7372 94-3011736
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>

4100 BOHANNON DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 926-6300

(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

JEAN-YVES F. DEXMIER
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY
INFORMIX CORPORATION
4100 BOHANNON DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 926-6300

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------

COPIES TO:

DOUGLAS H. COLLOM, ESQ.
ROBERT F. KORNEGAY. ESQ.
MARK A. CLAWSON, ESQ.
MARK B. BAUDLER, ESQ.
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
(650) 493-9300
------------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------------

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(2) PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value.................. 22,900,000 $5.21875 $119,509,375 $35,255.27
</TABLE>

(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended,
based on the average of the high and low sales prices as reported on the
Nasdaq National Market on January 2, 1998.

(2) Pursuant to Rule 416, this Registration Statement also relates to an
indeterminate number of additional shares of Common Stock issuable (i) to
prevent dilution resulting from stock splits, stock dividends or similar
transactions or (ii) by reason of changes in the conversion price of the
Series B Convertible Preferred Stock, $0.01 par value per share, or the
exercise of certain warrants issuable upon conversion thereof.
------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such
State.
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 9, 1998
PROSPECTUS

22,900,000 SHARES

[LOGO]

COMMON STOCK

-------------------

This Prospectus relates to an aggregate of 22,900,000 shares (the "Shares")
of Common Stock, $0.01 par value, of Informix Corporation ("Informix" or the
"Company") which may be offered and sold from time to time by certain
stockholders of the Company (the "Selling Stockholders"). See "Principal and
Selling Stockholders." The Selling Stockholders acquired shares of the Company's
Series B Convertible Preferred Stock (the "Series B Preferred") on November 17,
1997. The Shares are issuable upon conversion of the Series B Preferred and upon
exercise of certain warrants (the "Warrants") to purchase shares of Common Stock
to be granted upon conversion of the Series B Preferred. In general, the Series
B Preferred is not convertible prior to May 18, 1998. The number of Shares
issuable upon conversion of the Series B Preferred is presently indeterminate
and will depend on the trading price of the Common Stock in the period prior to
conversion. The number of Shares registered for sale hereunder has been
calculated based on an assumed Series B Preferred conversion price of $4.00.
Pursuant to the terms of an agreement between the Company and certain of the
Selling Stockholders, the Company is registering for resale under this
Prospectus 150% of the number of shares of Common Stock issuable upon conversion
of the Series B Preferred, based on an assumed conversion price of $4.00, and
upon exercise of the Warrants. The Shares also include 100,000 shares of Common
Stock issued to a financial advisor to the Company in connection with the sale
of the Series B Preferred. See "Description of Capital Stock."

In addition, pursuant to Rule 416 of the Securities Act of 1933, as amended
(the "Securities Act"), this Prospectus also relates to such additional number
of Shares as may become issuable upon conversion of the Series B Preferred or
exercise of the Warrants as a result of, among other things, stock splits, stock
dividends and anti-dilution adjustment provisions (including by reason of any
reduction in the conversion price of the Series B Preferred).

The Selling Stockholders may sell the Shares from time to time in
transactions on the Nasdaq National Market, in negotiated transactions or by a
combination of these methods, at fixed prices that may be changed, or at market
prices. The Selling Stockholders may effect these transactions by selling the
Shares to or through broker-dealers, who may receive compensation in the form of
discounts or commissions from the Selling Stockholders or from the purchasers of
the Shares for whom the broker-dealers may act as an agent or to whom they may
sell as a principal, or both. See "Principal and Selling Stockholders" and "Plan
of Distribution." If required, the names of any such agents or underwriters
involved in the sale of the Shares in respect of which this Prospectus is being
delivered and the applicable agent's commission, dealer's purchase price or
underwriter's discount, if any, will be set forth in an accompanying supplement
to this prospectus (a "Prospectus Supplement").

The Selling Stockholders will receive all of the net proceeds from the sale
of Shares held by them and will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of the Shares. The Company is
responsible for payment of all other expenses incident to the offer and sale of
the Shares. The Selling Stockholders and any broker/dealers, agents or
underwriters which participate in the distribution of the Shares may be deemed
to be "underwriters" within the meaning of the Securities Act, and any
commissions, discounts or concessions received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Company will not receive
any of the proceeds from the sale of the Shares.

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," BEGINNING ON PAGE 7.

The Company's Common Stock is quoted on the Nasdaq National Market under the
symbol "IFMX." On January 8, 1998, the last reported sale price of the Common
Stock was $5.28125 per share. See "Price Range of Common Stock."

---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

-------------------

THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
TABLE OF CONTENTS

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<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary......................................................................................... 4
Risk Factors............................................................................................... 7
Use of Proceeds............................................................................................ 20
Dividend Policy............................................................................................ 20
Price Range of Common Stock................................................................................ 20
Capitalization............................................................................................. 21
Selected Consolidated Financial Data....................................................................... 22
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 24
Business................................................................................................... 39
Management................................................................................................. 49
Certain Transactions....................................................................................... 63
Principal and Selling Stockholders......................................................................... 65
Description of Capital Stock............................................................................... 68
Plan of Distribution....................................................................................... 73
Legal Matters.............................................................................................. 74
Experts.................................................................................................... 74
Index to Financial Statements.............................................................................. F-1
</TABLE>

--------------------------

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED HEREIN AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE COMMON STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
<PAGE>
ADDITIONAL INFORMATION

The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected without charge at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
Seven World Trade Center, Suite 1300, New York, New York 10048 and Northwestern
Atrium Center, 500 Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such materials may be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates, and through the National Association of Securities Dealers, Inc. located
at 1735 K Street, N.W., Washington, D.C. 20006. The Commission maintains a World
Wide Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the Commission's Web site is http://www.sec.gov.

The Company has filed with the Commission a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Common Stock, reference is made to the Registration Statement and the exhibits
and schedules filed as a part thereof. Statements contained in this Prospectus
as to the contents of any contract or any other document referred to are not
necessarily complete. In each instance, reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, and each
such statement is qualified in all respects by such reference. The Registration
Statement may be inspected at the locations indicated above.

FORWARD LOOKING STATEMENTS

THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT"). DISCUSSIONS CONTAINING SUCH FORWARD-LOOKING STATEMENTS MAY BE
FOUND IN THE MATERIAL SET FORTH UNDER "PROSPECTUS SUMMARY," "RISK FACTORS,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND "BUSINESS" AS WELL AS IN THE PROSPECTUS GENERALLY. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET
FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS, WHICH PROSPECTIVE
INVESTORS SHOULD REVIEW CAREFULLY.

TRADEMARKS

This Prospectus contains trademarks and trade names of Informix and other
companies.

3
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING NOTES
THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT AND SECTION 21E OF THE EXCHANGE ACT. DISCUSSIONS CONTAINING SUCH
FORWARD-LOOKING STATEMENTS MAY BE FOUND IN THE MATERIAL SET FORTH UNDER
"PROSPECTUS SUMMARY," "RISK FACTORS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS" AS WELL AS IN THE
PROSPECTUS GENERALLY. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS
PROSPECTUS.

THE COMPANY

Informix Corporation ("Informix" or the "Company") is a leading
multinational supplier of information management software. The Company designs,
develops, manufactures, markets and supports relational database management
systems ("RDBMS"), connectivity interfaces and gateways and application
development tools for graphical and character-based software applications as
part of an RDBMS. Database management software permits multiple individual
users, employing different application software, to access and manage the same
data concurrently without corrupting the underlying database. RDBMS software
extends the functionality and utility of non-relational database management
software by simplifying the data retrieval process for end-users, who do not
require specific knowledge about the structure of the database but need only to
specify the data to be retrieved. Companies commonly employ RDBMS software for
use in storing, managing and retrieving the large amounts of data necessary to
support internal management information and decision-support systems as well as
mission-critical data processing applications.

The Company believes that technological advances, including the development
and commercialization of the Internet, will lead to increasingly sophisticated
customer requirements for data storage and management beyond the functionality
offered by conventional RDBMS products. In recent years, the types and
quantities of data required to be stored and managed has grown increasingly
complex and includes, in addition to conventional character data, audio, video,
text and three dimensional graphics. In 1996, the Company focused substantial
resources in the development of object-relational database management systems
("ORDBMS") and tools for applications in multimedia and entertainment, digital
media publishing and financial services.

The Company markets its products to end-users on a worldwide basis directly
through its sales force and indirectly through application resellers, original
equipment manufacturers ("OEMs") and distributors. The principal geographic
markets for the Company's products are North America, Europe, the Asia/ Pacific
region and Latin America. In recent years, approximately half of the Company's
total revenues have been generated outside North America. The Company's
principal customers include businesses ranging from small corporations to
Fortune 1000 companies, principally in the manufacturing, financial services,
telecommunications, media, retail/wholesale, hospitality and government services
sectors.

The Company was incorporated in California in 1980 and reincorporated in
Delaware in August 1986. Unless the context otherwise requires, references in
this Prospectus to "Informix" and the "Company" refer to Informix Corporation, a
Delaware corporation and, except as otherwise indicated, its subsidiaries. The
Company's executive offices are located at 4100 Bohannon Drive, Menlo Park,
California 94025, and its telephone number at that address is (650) 926-6300.

4
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
152,428,733 shares
Common Stock outstanding prior to the offering................... (1)(2)
Series A-1 Convertible Preferred Stock........................... 160,000 shares (3)
Common Stock offered by the Selling Stockholders related to
Series B Preferred............................................. 15,300,000 shares (4)
167,728,733 shares
Common Stock to be outstanding after the offering................ (2)(4)
Nasdaq National Market symbol.................................... IFMX
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------- YEAR ENDED DECEMBER 31,
SEPTEMBER 28, ---------------------------------------------------------
1997 1993 1992
------------- SEPTEMBER 29, 1996 1995 1994 -------- --------
1996 ---------- ---------- ----------
------------- (RESTATED) (RESTATED) (RESTATED)
(RESTATED)
<C> <C> <C> <C> <C> <C> <C>
STATEMENT
OF
OPERATIONS
DATA:
Net
revenues... $ 481,146 $511,001 $727,849 $632,770 $451,969 $353,115 $283,594
Operating
income
(loss)... (375,176) (61,804) (68,017) 64,948 77,229 83,925 73,895
Net
income
(loss)... (366,061) (66,555) (73,565) 38,600 48,293 54,989 47,782
Net
income
(loss)
per
share... $ (2.41) $ (0.45) $ (0.49) $ 0.26 $ 0.34 $ 0.40 $ 0.38
Weighted
average
number
of
common
and
common
equivalent
shares
outstanding... 151,708 149,194 149,310 150,627 142,782 137,827 125,742
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 28, 1997
--------------------------------
ACTUAL PRO FORMA ADJUSTED(5)
--------- ---------------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........................... $ 95,470 $ 144,270
Working deficit............................................................. (254,893 (6) (206,093)(6)
Total assets................................................................ 587,598 636,398
Long-term obligations....................................................... 6,927 6,927
Stockholders' equity (deficit).............................................. (43,877) 42,123
</TABLE>

- ------------------------------

(1) Based upon shares outstanding as of September 28, 1997. Excludes an
indeterminate number of shares of Common Stock issuable upon conversion of
the Company's outstanding Series A-1 Convertible Preferred Stock (the
"Series A-1 Preferred") and the Series B Preferred. See "Description of
Capital Stock" and Note 6 of Notes to Consolidated Financial Statements.

(2) Excludes (i) 19,292,160 shares of Common Stock issuable upon exercise of
options outstanding at September 28, 1997 under the Company's 1986 Employee
Stock Option Plan, 1994 Stock Option and Award Plan, the 1992 Illustra Stock
Option Plan and 1989 Outside Director Option Plan at a weighted average
exercise price of $15.33 (without giving effect to an option repricing
effected in November 1997) and (ii) 9,149,321 shares of Common Stock
reserved at September 28, 1997 for future issuance under the 1994 Stock
Option and Award Plan, the 1989 Outside Director Option Plan and the 1997
Employee Stock Purchase Plan. See "Management--Stock Plans," "Description of
Capital Stock" and Note 7 of Notes to Consolidated Financial Statements.

(3) Excludes 140,000 shares of Series A-1 Preferred issuable upon exercise of an
outstanding warrant to acquire additional Series A-1 Preferred (the "Series
A-1 Warrant") at a per share exercise price of $250. The Series A-1
Preferred, including the Series A-1 Preferred issuable upon exercise of the
Series A-1 Warrant, is convertible into a presently indeterminate number of
shares of Common Stock. See "Description of Capital Stock--Preferred Stock."

(4) Assumes 12,500,000 shares of Common Stock issued upon conversion of the
Series B Preferred and 2,700,000 shares of Common Stock issued upon exercise
of the Warrants, in each case based upon an assumed Series B Preferred
conversion price of $4.00. Also assumes payment of accrued dividends to
holders of Series B Preferred in cash and not in shares of Common Stock. If
the Company were to elect to make payment of such dividends in Common Stock,
the number of shares of Common Stock outstanding after the offering would
increase. See "Description of Capital Stock--Preferred Stock." Also includes
100,000 shares of Common Stock issued to a financial advisor to the Company
in connection with the sale of the Series B Preferred.

(5) Pro forma adjusted to give effect to (i) the exchange in November 1997 of
all the Company's outstanding Series A Convertible Preferred Stock (the
"Series A Preferred") for the Series A-1 Preferred, (ii) the issuance of
50,000 shares of the Series B Preferred in November 1997 and (iii) the
issuance of 100,000 shares of Common Stock. As adjusted to give effect to
(i) the

5
<PAGE>
conversion of the Series B Preferred at an assumed conversion price of $4.00
into 12,500,000 shares of Common Stock and Warrants to acquire 2,700,000
shares of Common Stock, assuming no exercise of the Warrants, and (ii) the
issuance of 100,000 shares of Common Stock to a financial advisor to the
Company in connection with the issuance of the Series B Preferred. The
rights, preferences and privileges of the Series A-1 Preferred are
substantially identical to those of the previously outstanding Series A
Preferred, except that the mandatory redemption terms and certain other
provisions differ. As a result of these differences, the Series A Preferred
was excluded from stockholders' equity on the Company's consolidated balance
sheet, while the Series A-1 Preferred is included in stockholders' equity.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources," "Description of Capital
Stock--Preferred Stock," "Certain Transactions" and Note 6 of Notes to
Consolidated Financial Statements.

(6) Includes $210.3 million in advances on unearned license revenues. See "Risk
Factors--Working Capital Deficit," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 3 of Notes to
Consolidated Financial Statements.

------------------------------

EXCEPT AS OTHERWISE NOTED, ALL INFORMATION IN THIS PROSPECTUS HAS BEEN
ADJUSTED TO GIVE EFFECT TO A TWO-FOR-ONE SPLIT OF THE COMPANY'S COMMON STOCK
EFFECTED IN JUNE 1995 IN THE FORM OF A STOCK DIVIDEND. IN ADDITION, EXCEPT AS
OTHERWISE INDICATED, ALL INFORMATION AND DATA RELATING TO THE COMPANY'S
OUTSTANDING COMMON STOCK ASSUMES THE CONVERSION OF ALL OUTSTANDING SERIES B
PREFERRED INTO 12,500,000 SHARES OF COMMON STOCK, BASED ON AN ASSUMED SERIES B
PREFERRED CONVERSION PRICE OF $4.00, AND THE GRANT OF THE WARRANTS TO PURCHASE
2,700,000 SHARES OF COMMON STOCK. SEE "DESCRIPTION OF CAPITAL STOCK--PREFERRED
STOCK" AND "--REGISTRATION RIGHTS."

6
<PAGE>
RISK FACTORS

THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF A VARIETY OF
FACTORS, INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK FACTORS AND ELSEWHERE
IN, OR INCORPORATED BY REFERENCE INTO, THIS PROSPECTUS. IN EVALUATING AN
INVESTMENT IN THE COMMON STOCK, PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY
THE FOLLOWING RISK FACTORS IN ADDITION TO THE OTHER INFORMATION PRESENTED IN
THIS PROSPECTUS.

UNCERTAIN IMPACT OF RESTATEMENT OF FINANCIAL STATEMENTS

Subsequent to the filing with the Commission of its Quarterly Report of Form
10-Q for the quarter ended March 30, 1997, the Company became aware of errors
and irregularities that ultimately affected the timing and dollar amount of
reported earned revenues from license transactions in the three years ended
December 31, 1996. As a result of the restatement, total revenues were reduced
from amounts previously reported by $211.5 million, $81.5 million and $18.1
million for each of the years ended December 31, 1996, 1995, and 1994,
respectively. In addition, the restatement resulted in the Company's reporting a
net loss of $73.6 million for 1996, compared to net income of $97.8 million as
originally reported, and substantial reductions in net income in 1995 and 1994,
compared to amounts originally reported. As a result of the restatement, total
revenues originally reported as $133.7 million for the quarter ended March 30,
1997 were increased to $149.2 million. The restatement had a material adverse
effect on the Company's financial condition, most notably evidenced by
substantial reductions in retained earnings and working capital. See "--Working
Capital Deficit" and "Management's Discussion and Analysis of Financial
Condition and Result of Operations."

In October 1997, the Company's independent auditors reported to the
Company's Board of Directors their conclusion that, based on their investigation
related to the restatement of the Company's financial statements, material
weaknesses existed in the Company's internal accounting control systems. The
independent auditors made a number of recommendations intended to strengthen the
Company's internal accounting controls. The Company has reviewed the independent
auditors' report, substantially agrees with its recommendations, and is taking
actions intended to implement such recommendations. The Audit Committee of the
Board of Directors has initiated a plan to monitor the Company's implementation
of these recommendations and will consider other actions that might be
undertaken by the Company to further improve the accuracy and integrity of its
financial reporting process. Such implementation is expected to require
substantial management attention. See "-- Dependence on Key Personnel; Personnel
Changes; Ability to Recruit Personnel."

The Company's public announcement in August 1997 of the pending restatement,
delays in reporting operating results for the quarters ended September 28, 1997
and June 29, 1997 while the restatement was being compiled, threatened
de-listing of the Company's Common Stock from the Nasdaq National Market as a
result of the Company's failure to satisfy its public reporting obligations,
corporate actions to restructure operations and reduce operating expenses, and
customer uncertainty regarding the Company's financial condition have adversely
affected the Company's ability to sell its products. In addition, since the
beginning of 1997, the Company and its competitors in the RDBMS industry have
experienced substantially slower growth in the market for RDBMS products. The
financial restatement has now been completed, its results have been publicly
disclosed, and the Company is current with respect to its public reporting
obligations. Nevertheless, there can be no assurance that uncertainties
resulting from the restatement, including ongoing customer concern about the
Company's financial condition, will not continue to have a material adverse
effect on the Company's competitive position and results of operations. See
"--Fluctuations in Quarterly Results; Seasonality."

NEED FOR ADDITIONAL FINANCING; CUSTOMER FINANCING

The Company's cash, cash equivalents and short-term investments declined to
$95.5 million at September 28, 1997 from $261.0 million at December 31, 1996.
The Company believes that its revenues,

7
<PAGE>
cash flows and results of operations will continue to be uncertain and that, as
a result, its financial condition could be impaired for an indefinite period.
Such uncertainty results primarily from the financial restatement and
restructuring as well as from recent uncertainty concerning future growth rates
in the market for relational database software. In addition, recent instability
in the Asian-Pacific economies and financial markets, which accounted for
approximately 12.6% and 12.9% of the Company's total revenues for the nine
months ended September 28, 1997 and the year ended December 31, 1996,
respectively, has created further uncertainty concerning the Company's revenues,
cash flows and results of operations. The Company raised aggregate net proceeds
of $37.2 million in August 1997 and $48.8 million in November 1997 in separate
financing transactions in which the Company issued newly authorized series of
convertible Preferred Stock. In the fourth quarter of 1997, the Company raised
aggregate net proceeds of $58.1 million through the sale of real property it had
purchased earlier in the year.

In December 1997, Informix Software, Inc., a Delaware corporation and the
Company's principal operating subsidiary ("Informix Software"), entered into a
Senior Secured Credit Agreement with a syndicate of commercial banks, including
BankBoston, N.A. as administrative agent and Canadian Imperial Bank of Commerce
as syndication agent, providing for a revolving credit facility of up to $75
million (the "Credit Facility"). The actual amount available under the Credit
Facility, for either direct borrowings or issuances of letters of credit, is
based on eligibility criteria for certain accounts receivable, which are
measured on a revolving basis. As a result, the aggregate amount available under
the Credit Facility will vary from time to time based on the amount and
eligibility of the Company's receivables. As of the date of this Prospectus, no
borrowings were outstanding under the Credit Facility, and the Company had not
yet determined the actual amount available, although it believes, based on
accounts receivable at December 31, 1997, that its borrowing base would have
been substantially less than $75 million. The purpose of the Credit Facility is
to provide the Company working capital and finance general corporate purposes.
The term of the Credit Facility is two years. Amounts outstanding under the
Credit Facility bear interest at a premium over one of two alternative variable
rates selected by the Company. The "Base Rate" equals the greater of (i) the
rate of interest announced by BankBoston, N.A. as its "base rate" and (ii) the
Federal Funds Effective Rate plus 1/2 of 1% per year. The "Adjusted LIBOR Rate"
equals (i) the London Interbank Offered Rate divided by (ii) one minus the
applicable reserve requirement under Regulation D of the Federal Reserve Board.
The maximum premium over the Base Rate is 1.25%, and the maximum premium over
the LIBOR Rate is 2.50%, subject to downward adjustment based on the Company's
realizing certain financial thresholds. The Credit Facility is secured by all of
the assets of Informix Software and the capital stock of the Company's
subsidiaries that are domiciled in the United States, including Informix
Software. The availability of the Credit Facility is also subject to the
Company's compliance with certain covenants, including financial covenants
relating to financial ratios and minimum thresholds for quarterly revenues,
operating profits, and cashflows.

There can be no assurance that amounts raised in connection with financing
and asset sale transactions described above and amounts available under the
Credit Facility will be sufficient to cover the Company's working capital needs
or that the Company will not require additional debt or equity financing in the
future. In addition, there can be no assurance that additional debt or equity
financing will be available, if and when needed or that, if available, such
financing could be completed on commercially favorable terms. Failure to obtain
additional financing, if and when needed, could have a material adverse effect
on the Company's business, results of operations and financial condition. To the
extent the terms of any available financing are materially unfavorable to the
Company, such a financing could impair the Company's ability to obtain
additional financing in the future, to implement its business plan, or to engage
in various corporate transactions, including potential acquisitions of the
Company. See "--Working Capital Deficit," "--Risks Associated with Preferred
Stock Financings," "--Antitakeover Protections" and "Description of Capital
Stock--Preferred Stock."

In the normal course of its business, the Company arranges for non-recourse
financing through the sale of customer accounts receivable to third-party
financial institutions. The Company has traditionally relied on a limited number
of financial institutions for most of the customer financings it arranges. The

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terms of the Credit Facility prevent the Company from selling accounts
receivable with an aggregate face value in excess of $20 million during any
twelve month period. See "--Working Capital Deficit," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Note 3 of
Notes to Consolidated Financial Statements.

WORKING CAPITAL DEFICIT

The restatement of the Company's financial statements have had a material
adverse effect on the Company's financial condition, most notably evidenced by
substantial reductions in retained earnings and working capital. At December 31,
1996, after giving effect to the restatement, the Company's working capital
totaled $3.1 million, compared to $258.4 million as originally reported. At
September 28, 1997, the Company had a working capital deficit of $254.9 million.
The substantial reduction in working capital, as restated, at December 31, 1996
reflects net losses in fiscal 1996 of $73.6 million and the addition of $239.5
million of "advances on unearned license revenue" as a current liability on the
Company's balance sheet. The working capital deficit at September 28, 1997
reflects net losses of $366.1 million for the nine months ended September 28,
1997, $210.3 million in advances on unearned license revenue as of such date,
the Company's use of $61.5 million in January 1997 to purchase certain real
property for construction of a new headquarters facility, and substantial uses
of cash as a result of the Company's internal restructuring which commenced in
the second quarter of 1997. The real property purchased by the Company in early
1997 was sold in the fourth quarter of 1997.

"Advances on unearned license revenues" reflects amounts previously received
from customers or in connection with accounts receivable financing transactions
with third party financial institutions in advance of revenue being recognized.
Prior to the restatement, these amounts were improperly recognized as earned but
have now been designated as advances. A substantial majority of such revenues
arose in connection with license agreements between the Company and OEMs,
distributors and other resellers. In connection with the review of its
historical financial results, the Company determined that sufficient post-
contractual contingencies existed in connection with certain reseller license
arrangements so as to preclude recognizing revenue. In addition, the Company
concluded that informal or otherwise undisclosed arrangements with a number of
resellers have resulted or could result in significant concessions or allowances
that were not accounted for when revenue was originally reported as earned.
Although the Company's license agreements provide for a non-refundable fee
payable by the customer in single or multiple installments at the beginning or
over the term of the license arrangements, amounts received by the Company under
its license agreements could be subject to refund in the event the Company fails
to satisfy certain post-signing obligations. The Company is presently unable to
estimate what portion, if any, of such advances may be subject to potential
refund. Certain amounts recognized as advances on unearned license revenues are
presently subject to commercial disputes with a number of its customers, several
of which have proceeded to litigation. See Note 3 and Note 12 of Notes to
Consolidated Financial Statements.

The Company has abandoned its plans to construct a new headquarters facility
and in December 1997 sold the real property it had purchased earlier in the
year, raising aggregate net proceeds of approximately $58.1 million. In August
1997 and November 1997, the Company sold and issued newly designated series of
Preferred Stock in two separate financing transactions, raising aggregate net
proceeds of approximately $86.0 million. In addition, in the fourth quarter of
1997, the Company entered into a senior secured credit facility agreement in the
amount of $75.0 million with a syndicate of commercial banks with BankBoston
N.A., as Administrative Agent and Canadian Imperial Bank of Commerce, as
Syndication Agent. The term of the credit facility is two years. Although these
financing transactions have improved the Company's working capital position, in
the event the Company continues to maintain a substantial working capital
deficit, such a deficit could materially impair the Company's ability to sell
its products as a result of customer uncertainty about the Company's financial
condition. See "--Uncertain Impact of Restatement of Financial Statements,"
"--Need for Additional Financing; Customer Financing," "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and Note 2 of
Notes to Consolidated Financial Statements.

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FLUCTUATIONS IN QUARTERLY RESULTS; SEASONALITY

The Company's quarterly operating results have varied significantly in the
past and may vary significantly in the future depending upon a number of
factors, many of which are beyond the Company's control. These factors include,
among others, (i) customer uncertainty about the Company's financial condition
and business prospects, (ii) market demand for the Company's software, including
changes in industry growth rates for the Company's products, (iii) the timing of
the introduction of new products or product enhancements by the Company or its
competitors, (iv) the size, timing and contractual terms of significant orders,
(v) changes in pricing policies by the Company or its competitors, (vi)
budgeting cycles of customers and potential customers, (vii) changes in the mix
of revenues attributable to domestic and international sales, and (viii)
seasonal trends in technology purchases and other general economic conditions.
The Company has operated historically with little or no backlog and has
generally recognized a substantial portion of its revenues in the last weeks or
days of a quarter. As a result, license revenues in any quarter are
substantially dependent on orders booked and shipped in the last weeks or days
of that quarter. In addition, the sales cycle for the Company's products is
relatively long and may vary depending on a number of factors, including the
size of the transaction and the level of competition the Company encounters in
its selling activities. Due to the foregoing factors, quarterly revenues and
operating results are not predictable with any significant degree of accuracy.
In the event of any downturn in potential customers' businesses, the domestic
economy in general, or in international economies where the Company derives
substantial revenues, planned purchases of the Company's products may be
deferred or canceled, which could have a material adverse effect on the
Company's business, operating results, and financial condition. Because the
Company's operating expenses are based on anticipated revenue levels and because
a high percentage of the Company's expenses are relatively fixed, delays in the
recognition of revenues from even a limited number of license transactions could
cause significant variations in operating results from quarter to quarter and
could cause net income to fall significantly short of anticipated levels. In the
quarters ended September 28, 1997 and June 29, 1997, costs associated with the
Company's internal restructuring, aggregating $109.4 million, had a material
adverse effect on results of operations. Management continues to evaluate the
Company's cost structure in light of projected revenues and cash-flows, both of
which are variable and uncertain. There can be no assurance that the Company
will not be required to undertake additional restructuring activities in the
future, which would have a material adverse effect on the Company's business,
results of operations and financial condition.

The Company's business has experienced and is expected to continue to
experience seasonality. International revenues comprise a significant percentage
of the Company's total revenues, and the Company may experience additional
variability in demand associated with seasonal buying patterns in foreign
markets. In particular, the Company's third quarter tends to reflect the effects
of summer slowing of international business activity, particularly in Europe. In
addition, variability and seasonality in the Company's business may result from
customer capital spending cycles, which tend to peak in the Company's fourth
quarter, and the Company's sales incentive plans for sales personnel, which are
measured on a calendar year basis. See "--Competition; Pricing Risks,"
"--International Operations; Currency Fluctuations" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

LITIGATION

Commencing in April 1997, a series of class action lawsuits purportedly by
or on behalf of stockholders and a separate but related stockholder action were
filed in the United States District Court for the Northern District of
California. These actions name as defendants the Company, certain of its present
and former officers and directors and, in some cases, its independent auditors.
The complaints allege various violations of the federal securities laws and seek
unspecified but potentially significant damages. Similar actions were also filed
in California state court and in Newfoundland, Canada. While management intends
to defend these actions vigorously, the disposition of this litigation could
have a material adverse effect on the Company's financial condition, results of
operations and cash flows.

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Stockholder derivative actions, purportedly on behalf of the Company and
naming virtually the same individual defendants and the Company's independent
auditors, were also filed, commencing in August 1997, in California state court.
While these actions allege various violations of state law, any monetary
judgments in these derivative actions would accrue to the benefit of the
Company.

Pursuant to Delaware law and certain indemnification agreements between the
Company and each of its current and former officers and directors, the Company
is obligated to indemnify its current and former officers and directors for
certain liabilities arising from their employment with or service to the
Company. This includes the costs of defending against the claims asserted in the
above-referenced actions and any amounts paid in settlement or other disposition
of such actions on behalf of these individuals. The Company's obligations do not
permit or require it to provide such indemnification to any such individual who
is adjudicated to be liable for fraudulent or criminal conduct. Although the
Company has purchased directors' and officers' liability insurance to reimburse
it for the costs of indemnification for its directors and officers, the coverage
under its policies is limited. Moreover, although the directors' and officers'
insurance coverage presumes that 100 percent of the costs incurred in defending
claims asserted jointly against the Company and its current and former directors
and officers are allocable to the individuals' defense, the Company does not
have insurance to cover the costs of its own defense or to cover any liability
for any claims asserted against it. The Company has not set aside any financial
reserves relating to any of the above-referenced actions. See
"Management--Limitations on Liability and Indemnification Matters."

In addition, in July 1997, the Securities and Exchange Commission issued a
formal order of investigation of the Company and certain unidentified
individuals associated with the Company with respect to non-specified accounting
matters, public disclosures and trading activity in the Company's securities.
The Company is cooperating with the investigation and is providing all
information subpoenaed by the Commission.

The Company is also party to certain commercial disputes with a number of
its customers, several of which have proceeded to litigation, relating to
amounts paid under license agreements with the Company. Although the Company is
vigorously defending such disputes, there can be no assurance that the outcome
of any current or future disputes will not have a material adverse effect on the
Company's financial condition, results of operations and cash flows. In
addition, the Company is unable to predict the extent to which legal action
under the Company's various contracts, licenses and business relationships may
result from the restatement. See "--Uncertain Impact of Restatement of Financial
Statements" and "--Need for Additional Financing; Customer Financing."

The uncertainty associated with substantial unresolved litigation can be
expected to have an adverse impact on the Company's business. In particular,
such litigation could impair the Company's relationships with existing customers
and its ability to obtain new customers. Defending such litigation will likely
result in a diversion of management's time and attention away from business
operations, which could have a material adverse effect on the Company's results
of operations. Such litigation may also have the effect of discouraging
potential acquirors from bidding for the Company or reducing the consideration
such acquirors would otherwise be willing to pay in connection with an
acquisition.

DEPENDENCE ON KEY PERSONNEL; PERSONNEL CHANGES; ABILITY TO RECRUIT PERSONNEL

The Company's future performance will depend to a significant extent on its
ability to attract and retain highly skilled technical, sales, consulting,
marketing and management personnel. In particular, the Company is dependent upon
a number of key management and technical personnel, including Robert J.
Finocchio, Jr., the Company's Chairman, President and Chief Executive Officer,
Jean-Yves F. Dexmier, the Company's Executive Vice President and Chief Financial
Officer, and Myron (Mike) Saranga, the Company's Senior Vice President, Product
Management and Development. Mr. Finocchio and Mr. Dexmier have only recently
joined the Company, and of the officers and key employees, only Mr. Finocchio is
bound by an employment agreement, the terms of which are nonetheless at-will.
The loss of the services of one or more of the Company's executive officers or
key employees could have a material adverse effect on the Company's business,
results of operations and financial condition.

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Since the beginning of 1997, a number of senior management personnel and
other key employees have departed the Company, and to date, the Company has been
able to replace only some of the positions that have been vacated. Since the
first quarter of 1997, the Company has experienced a significant number of
voluntary resignations and has taken selective actions to reduce the number of
employees in certain functional areas. The Company had approximately 3,745
regular employees at September 28, 1997, compared to approximately 4,491 at
December 31, 1996. Voluntary attrition has remained high since September 1997
across all functional areas. In particular, the Company has experienced high
attrition rates in its product development group and has experienced difficulty
attracting replacement development personnel. The competition for employees in
the software industry is intense, and the Company expects that such competition
will continue for the foreseeable future. The Company has experienced difficulty
in locating candidates with appropriate qualifications and believes that recent
financial and business developments at the Company have made recruitment more
difficult. In November 1997, the Company implemented an option repricing program
in an effort to retain existing employees and, following further declines in the
price of its Common Stock, announced a second repricing in December 1997 to be
effective in January 1998. There can be no assurance that such programs will be
effective. There can be no assurance that the Company will be successful in
attracting, training and retaining qualified personnel, and the failure to do
so, particularly in key functional areas such as product development and sales,
could have a material adverse effect on the Company's business, results of
operations and financial condition. In addition, new employees hired by the
Company generally require substantial training in the use and implementation of
the Company's products and in the Company's procedures. As a result, substantial
employee turnover could have an adverse effect on results of operations in
future quarters.

RISKS ASSOCIATED WITH PREFERRED STOCK FINANCINGS

In August 1997, the Company raised net proceeds of $37.2 million through the
issuance of a newly designated Series A Convertible Preferred Stock (the "Series
A Preferred"). In November 1997, the Company raised an additional $48.8 million
in net proceeds through the issuance of the Series B Preferred. Simultaneously
with the closing of the Series B Preferred, the holders of the Series A
Preferred exchanged all their outstanding shares of Series A Preferred for a
newly designated Series A-1 Convertible Preferred Stock (the "Series A-1
Preferred"), having substantially similar rights, preferences and privileges as
the Series A Preferred with the exception of certain amendments, including
revisions to the terms under which such shares become mandatorily redeemable.

While the issuance of the Preferred Stock in these transactions provided the
Company with additional working capital required to fund the Company's
continuing operations, the Company's agreements with the purchasers of the
Series A-1 Preferred and the Series B Preferred contain covenants that could
impair the Company's ability to engage in various corporate transactions in the
future, including financing transactions and certain transactions involving a
change-in-control or acquisition of the Company, or that could otherwise
disadvantage the Company and the holders of its Common Stock. In particular,
acquisitions of the Company may not be affected without the consent of the
holders of the outstanding Preferred Stock or without requiring the acquiring
entity to assume the Preferred Stock or cause such Preferred Stock to be
redeemed. These provisions are likely to make an acquisition of the Company more
difficult and expensive and could discourage potential acquirors. Certain
covenants of the Company, made in connection with the issuance of the Preferred
Stock, may also have the effect of limiting the Company's ability to obtain
additional financing by, for example, providing the holders of Preferred Stock
certain rights of first offer and prohibiting the Company from issuing
additional Preferred Stock without the consent of such holders.

The terms of the financing agreements pursuant to which the Preferred Stock
was issued also include certain penalty provisions that are triggered in the
event the Company fails to satisfy certain obligations. In particular, the
holders of the Series A-1 Preferred will become entitled to an annual dividend
of $6.0 million, payable quarterly in cash, in the event the Company fails to
satisfy certain covenants, including the failure to have a registration
statement covering the Common Stock issuable upon conversion of the Series A-1
Preferred declared effective by the Commission within 180 days of a registration

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request from the holders of Series A-1 Preferred; the failure to obtain
stockholder approval of the issuance of the Common Stock issuable upon
conversion of the Series A-1 Preferred in the event that such approval becomes
required by the rules of the Nasdaq National Market; and the failure to redeem
any shares of Series A-1 Preferred held by a holder of Series A-1 Preferred who
objects to a change-in-control transaction, if the transaction does not satisfy
certain financial thresholds relating to the market capitalization and trading
volume of any acquiring entity. In the event the Company becomes obligated to
pay such dividends, the holders of the Series A-1 Preferred will become
immediately entitled to designate a number of members of the Company's Board of
Directors corresponding, as a percentage of the total number of members, to the
percentage of the Company's outstanding Common Stock held by such holders
(assuming the conversion into Common Stock of the outstanding Series A-1
Preferred). The holders of the Series B Preferred are entitled to receive a
cumulative dividend at an annual rate of 5% of the face value of each share of
Series B Preferred, resulting in an aggregate annual dividend of $2.5 million.
The dividend is generally payable upon the conversion of the Series B Preferred
or redemption of the Series B Preferred and may be paid in cash or, at the
Company's election and subject to certain conditions, in shares of Common Stock.
In the event the holders of Preferred Stock become entitled to receive cash
dividends or to have their Preferred Stock redeemed, there can be no assurances
that the Company will be able to fund such a payment or redemption, and even if
funding is available, substantial dividend payments could have a material
adverse effect on the Company's business and financial condition. See "--Need
for Additional Financing; Customer Financing," "--Antitakeover Protection," and
"Description of Capital Stock-- Preferred Stock."

Both the Series A-1 Preferred and the Series B Preferred are convertible
into shares of the Company's Common Stock based on the trading prices of the
Common Stock during future periods that are described in the respective
financing agreements. The number of shares of Common Stock that may ultimately
be issued upon conversion is therefore presently indeterminate. If, in
accordance with the terms of the financing agreements, the conversion price of
the Preferred Stock is determined during a period when the trading price of the
Common Stock is low, the resulting number of shares of Common Stock issuable
upon conversion of the Preferred Stock could result in substantial dilution to
the holders of Common Stock. In addition, the Company issued to the holders of
the Series A-1 Preferred a warrant to acquire up to an addition $35.0 million of
the Series A-1 Preferred (the "Series A-1 Warrant"). The Company is also
obligated to issue upon conversion of the Series B Preferred additional warrants
to acquire shares of Common Stock equal to 20% of the total number of shares of
Common Stock into which the Series B Preferred converts (the "Warrants"). The
Series A-1 Warrant and the Warrants, if exercised, will have a further dilutive
effect. See "Description of Capital Stock--Preferred Stock."

COMPETITION; PRICING RISKS

The Company faces intense competition in the market for RDBMS software
products. Competitors in the relational database software market compete
primarily on the basis of product price and performance characteristics, product
function and features, name recognition, technical support, product training and
services. The market for the Company's products is subject to rapid
technological change and frequent new product introductions and enhancements,
and the Company's competitors in the market include several large vendors that
develop and market databases, applications, development tools or decision
support products. The Company's principal competitors include Computers
Associates International, Inc., International Business Machines Corporation
("IBM"), Microsoft Corporation, Oracle Corporation ("Oracle") and Sybase, Inc.
("Sybase"). Several of the Company's competitors have significantly greater
financial, technical, marketing and other resources than the Company. As a
result, they may be able to respond more quickly to new or emerging technologies
and changes in customer requirements or to devote greater resources to the
development, promotion and sale of their products than the Company. Any failure
by the Company to compete successfully with its existing competitors or future
competitors could have a material adverse effect on the Company's business,
results of operations and financial condition.

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Several of the Company's competitors have announced the development of
enhanced versions of their principal database products that are intended to
improve the performance or expand the capabilities of their existing products.
New or enhanced products by existing competitors or new competitors could result
in greater price pressure on the Company's products. In addition, the industry
movement to new operating systems, like Windows NT, access through low-end
desktop computers, and access to data through the Internet may cause downward
pressure on prices of database software and related products. The bundling of
software products for promotional purposes or as a long-term pricing strategy by
certain of the Company's competitors could also result in reductions in the
price the Company may charge for its products. In addition, the Company's own
practices of bundling its software products for enterprise licenses or for
promotional purposes with the Company's partners also could result in reduction
in the price the Company may charge for its products. If such downward pressure
on prices were to occur, the Company's operating margins would be adversely
affected. 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.

UNCERTAIN GROWTH RATES; TECHNOLOGICAL CHANGE AND NEW PRODUCTS

Over the last several years, the RDBMS industry has expanded at significant
growth rates, due in part to the continuing development of new technologies and
products responsive to customer requirements. In recent months, however, both
industry analysts and competitors have predicted that such high growth rates
will not be maintained in future periods. Recent instability in the
Asian-Pacific economies and financial markets, which had previously been cited
as a potentially strong source of revenue growth for relational database
software companies, has introduced additional uncertainty concerning industry
growth rates. In the event industry growth rates should decline for any reason,
the markets for the Company's products would likely be adversely affected, which
would have a negative impact on the Company's business, results of operations,
financial condition and cash flows. See "--Fluctuations in Quarterly Results;
Seasonality" and "International Operations; Currency Fluctuations."

In addition, the market for the Company's products and services is
characterized by rapidly changing technology, changing customer needs, frequent
new product introductions and evolving industry standards that may render
existing products and services obsolete. The life cycles of the Company's
products are difficult to estimate. The Company's growth and future financial
performance 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's product development efforts are expected to
continue to require substantial investments by the Company, and there can be no
assurance that the Company will have sufficient resources to make the necessary
investments. The Company has experienced product development delays in the past
and may experience delays in the future. In particular, the Company has
experienced high attrition in its product development group in recent months and
has had difficulty attracting qualified replacement development personnel, which
could have an adverse effect on the Company's ability to develop new products or
product enhancements that respond to changing market requirements. 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

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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 operate 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. See "Uncertain Impact of
Restatement of Financial Statements," "--Need for Additional Financing; Customer
Financing," "--Working Capital Deficit" and "--Dependence on Key Personnel;
Personnel Changes; Ability to Recruit Personnel."

In recent years, the types and quantities of data required to be stored and
managed has grown increasingly complex and includes, in addition to conventional
character data, audio, video, text, and three-dimensional graphics in a
high-performance scalable environment. During 1996, the Company invested
substantial resources in developing its ORDBMS product line. The market for
products offering object-relational database functionality is new and evolving,
and its growth depends upon a growing need to store and manage complex data and
on broader market acceptance of the Company's products as a solution for this
need. As a result, there can be no assurance that organizations will choose to
make the transition from conventional RDBMS to ORDBMS. Delays in market
acceptance of object-relational database management products offered by the
Company could have an adverse effect on the Company's results of operations and
financial condition. See "Business--Products" and "--Product Development."

INTERNATIONAL OPERATIONS; CURRENCY FLUCTUATIONS

International sales represented approximately 52.7% and 53.7% of the
Company's total revenues for the nine months ended September 28, 1997 and
September 29, 1996, respectively, and 53.8% and 54.5% of total revenues for the
years ended December 31, 1996 and 1995, respectively. The Company's
international 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, political and
economic circumstances, as well as by other factors associated with
international activities. In particular, recent instability in the Asian-Pacific
economies and financial markets, which accounted for approximately 12.6% and
12.9% of the Company's total revenues in the nine months ended September 28,
1997 and the year ended December 31, 1996, respectively, could have an adverse
effect on the Company's operating results in future quarters. Most of the
Company's international revenue and expenses are denominated in local
currencies. Due to the substantial volatility of currency exchange rates, among
other factors, the Company cannot predict the effect of exchange rate
fluctuations on future operating results. Although the Company takes into
account changes in exchange rates over time in its pricing strategy, it does so
only on an annual basis, resulting in substantial pricing exposure as a result
of foreign exchange volatility during the period between annual pricing reviews.
In addition, the sales cycles for the Company's products is relatively long,
depending on a number of factors including the level of competition and the size
of the transaction. Foreign currency fluctuations could, therefore, result in
substantial changes in the financial impact of a specific transaction between
the time of initial customer contact and revenue recognition. As a result of the
foregoing factors, the Company's business, results of operations and financial
condition could be materially and adversely affected by fluctuations in foreign
currency exchange rates. See "--Fluctuations in Quarterly Results; Seasonality."

The Company has implemented a foreign exchange hedging program consisting
principally of the purchase of forward foreign exchange contracts, which is
intended 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

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<PAGE>
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 because there are limited forward currency exchange
markets in these currencies. The Company does not attempt to hedge the
translation to United States dollars of foreign denominated revenues and
expenses not yet earned or incurred. Notwithstanding the Company's efforts to
manage foreign exchange risk, there can be no assurances that the Company's
hedging activities will adequately protect the Company against the risks
associated with foreign currency fluctuations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

YEAR 2000 IMPACT ON INFORMATION TECHNOLOGY BUDGETS

Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, in less than two years, computer systems and/or
software used by many companies may need to be upgraded to comply with such
"Year 2000" requirements. Significant uncertainty exists in the software
industry concerning the potential effects associated with such compliance.

In addition, the purchasing patterns of customers and potential customers
may be affected by Year 2000 issues. Many companies are expending significant
resources to correct their current software systems for Year 2000 compliance.
These expenditures may result in reduced funds available to purchase software
products such as those offered by the Company, which could have an adverse
effect on the Company's business, results of operations and financial condition.

DEPENDENCE ON THIRD-PARTY TECHNOLOGY PROVIDERS

The Company's products use certain products and technologies of various
third-party software developers, including both complete products offered as
extensions of the Company's product lines and technology used in the enhancement
of internally developed products. Such products and technologies are obtained
from third-party technology providers under contractual license agreements,
which in some cases are for limited time periods and in some cases provide that
such licenses may be terminated under certain circumstances. There can be no
assurance that the Company will be able to maintain adequate relations with
these third-party providers, that these third-party providers will commit
adequate development resources to maintain these products or that the license
agreements that are for limited time periods will be renewed upon termination.
In such circumstances, the Company's inability to obtain or develop substitute
technology could adversely affect the Company's business, results of operations
and financial condition.

DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISKS OF INFRINGEMENT

The Company's success depends on proprietary technology. To protect its
proprietary rights, the Company relies primarily on a combination of patent,
copyright and trademark laws, trade secrets, confidentiality procedures,
contractual provisions contained in its license agreements and technical
measures. The Company seeks to protect its software, documentation and other
written materials under trade secret and copyright laws, which provide only
limited protection. The Company holds one United States patent and several
pending applications. There can be no assurance that any other patents covering
the Company's inventions will issue or that any patent, if issued, will provide
sufficiently broad protection or will prove enforceable in actions against
alleged infringers.

16
<PAGE>
package. Despite such precautions, it may be possible for unauthorized third
parties to copy aspects of its current or future products or to obtain and use
information that the Company regards as proprietary. In particular, the Company
has licensed the source code of its products to certain customers under certain
circumstances and for restricted uses. The Company has also entered source code
escrow agreements with a number of its customers that generally require release
of source code to the customer in the event of the Company's bankruptcy,
liquidation or otherwise ceasing to conduct business. There can be no assurance
that the Company's means of protecting its proprietary rights will be adequate
or that the Company's competitors will not independently develop similar or
superior technology. Policing unauthorized use of the Company's software is
difficult, and while the Company is unable to determine the extent to which
piracy of its software products exists, software piracy can be expected to be a
persistent problem. In addition, the laws of some foreign countries do not
protect the Company's proprietary rights to the same extent as do the laws of
the United States, and "shrink-wrap" licenses may be wholly or partially
unenforceable under the laws of certain jurisdictions. Litigation may be
necessary in the future to enforce the Company's intellectual property rights,
to protect the Company's trade secrets or to determine the validity and scope of
the proprietary rights of others. Such litigation could result in substantial
costs and diversion of resources and mangement attention and could have a
material adverse effect on the Company's business, results of operations and
financial condition.

The Company is not aware that any of its software product offerings
infringes the proprietary rights of third parties. There can be no assurance,
however, that third parties will not claim infringement by the Company with
respect to its current or future products. The Company expects that software
product developers will increasingly be subject to infringement claims as the
number of products and competitors in the Company's industry segment grows and
the functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment delays or require the Company to enter into
royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms acceptable to the Company or at all,
which could have a material adverse effect on the Company's business, results of
operations and financial condition. See "Business--Intellectual Property."

PRODUCT LIABILITY

The Company's license agreements with its customers typically contain
provisions designed to limit the Company's exposure to potential product
liability claims. It is possible, however, that the limitation of liability
provisions contained in the Company's license agreements may not be effective
under the laws of certain jurisdictions. Although the Company has not
experienced any product liability claims to date, the sale and support of
products by the Company may entail the risk of such claims, and there can be no
assurance that the Company will not be subject to such claims in the future. A
product liability claim brought against the Company could have a material
adverse effect on the Company's business, operating results and financial
condition.

ANTITAKEOVER PROTECTIONS

The Company is authorized to issue 5,000,000 shares of undesignated
Preferred Stock, of which 440,000 shares have been designated Series A
Preferred, none of which is outstanding; of which 440,000 shares have been
designated Series A-1 Preferred, of which 160,000 shares are outstanding and of
which 140,000 shares are issuable upon exercise of the Series A-1 Warrant; and
of which 50,000 shares have been designated Series B Preferred, of which 50,000
shares are outstanding. Subject to the prior consent of the holders of the
Series A-1 Preferred and the Series B Preferred, the Board of Directors has the
authority to issue additional shares of Preferred Stock in one or more series
and to fix the price, rights, preferences, privileges and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation preferences and the number
of shares constituting a series or the designation of such series, without any
further vote or action by the Company's

17
<PAGE>
stockholders. To date, the Company has used its ability to designate and issue
new series of Preferred Stock in transactions intended to raise additional
capital for the Company. The ability to issue additional shares of Preferred
Stock, however, also provides desirable flexibility in connection with possible
acquisitions and other corporate purposes but could also have the effect of
delaying, deferring or preventing a change in control of the Company without
further action by the stockholders and may adversely affect the market price of
the Common Stock and the voting and other rights of the holders of Common Stock.
The issuance of Preferred Stock with voting and conversion rights may adversely
affect the voting power of the holders of Common Stock, including the loss of
voting control to others. In particular, certain rights, preferences and
privileges of the Series A-1 Preferred and Series B Preferred could have the
effect of preventing or discouraging potential bids to acquire the Company
unless the terms of such acquisition are approved by such stockholders. See
"--Risks Associated with Convertible Preferred Stock Financings" and
"Description of Capital Stock--Preferred Stock."

Certain provisions of the Company's Amended and Restated Certificate of
Incorporation and Bylaws eliminate the right of stockholders to act by written
consent without a meeting and specify certain procedures for nominating
directors and submitting proposals for consideration at stockholder meetings.
The Board of Directors of the Company is divided into three classes, with each
class standing for election once every three years. Such provisions are intended
to enhance the likelihood of continuity and stability in the composition of the
Board of Directors and in the policies formulated by the Board of Directors and
to discourage certain types of transactions which may involve an actual or
threatened change of control of the Company. Such provisions are designed to
reduce the vulnerability of the Company to an unsolicited acquisition proposal
and, accordingly, could discourage potential acquisition proposals and could
delay or prevent a change in control of the Company. Such provisions are also
intended to discourage certain tactics that may be used in proxy fights but
could, however, have the effect of discouraging others from making tender offers
for the Company's shares and, consequently, may also inhibit fluctuations in the
market price of the Company's Common Stock that could result from actual or
rumored takeover attempts. These provisions may also have the effect of
preventing changes in the management of the Company. In addition, the Company
has adopted a Rights Agreement (the "Rights Agreement"), commonly referred to as
a "poison pill," which could also discourage potential acquirors. See
"Description of Capital Stock-- Antitakeover Effects of Provision of Certificate
of Incorporation and Bylaws; Rights Agreement."

The Company is subject to Section 203 of the Delaware General Corporation
Law (the "Antitakeover Law"), which regulates corporate acquisitions. The
Antitakeover Law prevents certain Delaware corporations, including those whose
securities are listed for trading on the Nasdaq National Market, from engaging,
under certain circumstances, in a "business combination" with any "interested
stockholder" for three years following the date that such stockholder became an
interested stockholder. For purposes of the Antitakeover Law, a "business
combination" includes, among other things, a merger or consolidation involving
the Company and the interested stockholder and the sale of more than 10% of the
Company's assets. In general, the Antitakeover Law defines an "interested
stockholder" as any entity or person beneficially owning 15% or more of the
outstanding voting stock of the Company and any entity or person affiliated with
or controlling or controlled by such entity or person. A Delaware corporation
may "opt out" of the Antitakeover Law with an express provision in its original
certificate of incorporation or an express provision in its certificate of
incorporation or bylaws resulting from amendments approved by the holders of at
least a majority of the company's outstanding voting shares. The Company has not
"opted out" of the provisions of the Antitakeover Law. See "Description of
Capital Stock."

STOCK PRICE VOLATILITY

The market price of the Company's Common Stock has in the past been highly
volatile and is expected to continue to be subject to significant price and
volume fluctuations in the future based on a number of factors, including market
uncertainty about the Company's financial condition or business prospects or the
prospects for the RDBMS market in general; shortfalls in the revenues or results
of

18
<PAGE>
operations of the Company or its principal competitors from revenues or results
of operations expected by securities analysts; announcements of new products by
the Company or its competitors; quarterly fluctuations in the Company's
financial results or the results of other software companies, including those of
direct competitors of the Company; changes in analysts' estimates of the
Company's financial performance, the financial performance of competitors, or
the financial performance of software companies in general; the introduction of
new products or product enhancements by the Company or its competitors; general
conditions in the software industry; changes in prices for the Company's
products or competitors' products; changes in revenue growth rates for the
Company, its competitors or the RDBMS market in general; changes in the mix of
revenues attributable to domestic and international sales; and seasonal trends
in technology purchases and other general economic conditions. In addition, the
stock market may from time to time experience extreme price and volume
fluctuations, which particularly affect the market for the securities of many
technology companies and which have often been unrelated to the operating
performance of the specific companies. There can be no assurance that the market
price of the Company's Common Stock will not experience significant fluctuations
in the future. See "--Uncertain Impact of Restatement of Financial Statements,"
"--Need for Additional Financing; Customer Financing," and "--Fluctuations in
Quarterly Results; Seasonality."

19
<PAGE>
USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the shares of
Common Stock offered by the Selling Stockholders.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its Common Stock.
The Company expects to retain future earnings, if any, for use in the operation
of its business and does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future. The holders of the Series B Preferred are
entitled to receive a cumulative dividend at an annual rate of 5% of the face
value of each share of Series B Preferred, resulting in an aggregate annual
dividend accrual of $2.5 million. The dividend is generally payable upon the
conversion or redemption of the Series B Preferred and may be paid in cash or,
at the Company's election and subject to certain conditions, in shares of Common
Stock. In addition, the Certificate of Designation of the Series B Preferred
prohibits the Company from paying any dividend or other distribution on any
security ranking junior to the Series B Preferred. The Series A-1 Preferred is
senior to Series B Preferred. In the event the Company fails to satisfy certain
contractual obligations under the agreements pursuant to which the Series A-1
Preferred was issued, the holders of the Series A-1 Preferred are entitled to a
15% annual dividend, which would result in an aggregate annual dividend of $6.0
million, payable quarterly in cash for so long as the Company is in breach of
such obligations. In the event the Series A-1 Warrant is exercised, the Company
would be obligated to pay an additional $5.3 million in dividends annually. See
"Risk Factors--Risks Associated with Convertible Preferred Stock Financings" and
"Description of Capital Stock--Preferred Stock."

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is quoted on the Nasdaq National Market under the
symbol "IFMX." The following table lists the high and low closing sales prices
of the Company's Common Stock for the periods indicated.

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
FISCAL YEAR ENDING DECEMBER 31, 1998:
First Quarter (through January 8, 1998)...................................................... $ 5.63 $ 5.28
FISCAL YEAR ENDING DECEMBER 31, 1997:
Fourth Quarter............................................................................... $ 8.03 $ 4.06
Third Quarter................................................................................ 12.20 6.28
Second Quarter............................................................................... 11.38 6.78
First Quarter................................................................................ 24.00 15.13
FISCAL YEAR ENDED DECEMBER 31, 1996:
Fourth Quarter............................................................................... $ 28.63 $ 17.63
Third Quarter................................................................................ 30.25 20.31
Second Quarter............................................................................... 26.88 18.38
First Quarter................................................................................ 35.88 26.38
FISCAL YEAR ENDED DECEMBER 31, 1995:
Fourth Quarter............................................................................... $ 33.00 $ 24.13
Third Quarter................................................................................ 34.00 25.25
Second Quarter............................................................................... 25.94 17.06
First Quarter................................................................................ 19.63 14.63
</TABLE>

On January 8, 1998, the closing price of the Company's Common Stock as
reported by the Nasdaq National Market was $5.28125 per share. There were
approximately 3,400 holders of record of the Company's Common Stock as of
September 28, 1997.

20
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company at
September 28, 1997. The capitalization information set forth in the table below
is qualified by, and should be read in conjunction with, the more detailed
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 28, 1997
-----------------------------------------
PRO FORMA
ACTUAL(1)(2) PRO FORMA(2)(3) ADJUSTED(4)
----------- --------------- -----------
<S> <C> <C> <C>
Capital lease obligations, net of current portion...................... $ 5,750 $ 5,750 $ 5,750
----------- --------------- -----------
Series A convertible redeemable preferred stock, $0.01 par value,
160,000 shares issued and outstanding at September 28, 1997; none
issued and outstanding pro forma..................................... 37,200 -- --
----------- --------------- -----------
Stockholders' equity (deficit):
Preferred stock, $0.01 par value, 5,000,000 shares authorized, none
issued and outstanding at September 28, 1997; 160,000 shares of
Series A-1 Preferred issued and outstanding pro forma; aggregate
liquidation preference of $40,000,000.............................. -- 2 2
Common stock, $0.01 par value, 500,000,000 shares authorized,
152,429,000 shares issued and outstanding at September 28, 1997 and
pro forma; 165,029,000 shares issued and outstanding pro forma
adjusted........................................................... 1,524 1,524 1,650
Additional paid-in capital............................................. 252,558 289,756 338,430
Accumulated deficit.................................................... (287,338) (287,338) (287,338)
Unrealized loss on available-for-sale securities, net of tax........... (433) (433) (433)
Foreign currency translation adjustment................................ (10,188) (10,188) (10,188)
----------- --------------- -----------
Total stockholders' equity (deficit)................................. (43,877) (6,677) 42,123
----------- --------------- -----------
Total capitalization (deficit)....................................... $ (927) $ (927) $ 47,873
----------- --------------- -----------
----------- --------------- -----------
</TABLE>

- ------------------------------

(1) Based upon shares outstanding as of September 28, 1997. Excludes an
indeterminate number of shares of Common Stock issuable upon conversion of
the outstanding Series A Preferred and upon conversion of additional shares
of Series A Preferred issuable upon exercise of a warrant outstanding at
September 28, 1997 to acquire an additional 140,000 shares of Series A
Preferred. See Note 6 of Notes to Consolidated Financial Statements.

(2) Excludes (i) 19,292,160 shares of Common Stock issuable upon exercise of
options outstanding at September 28, 1997 under the Company's 1986 Employee
Stock Option Plan, 1994 Stock Option and Award Plan, the 1992 Illustra Stock
Option Plan and 1989 Outside Director Option Plan at a weighted average
exercise price of $15.33 (without giving effect to an option repricing
program effected in November 1997) and (ii) 9,149,321 shares of Common Stock
reserved at September 28, 1997 for future issuance under the 1994 Stock
Option and Award Plan, the 1989 Outside Director Option Plan, and the 1997
Employee Stock Purchase Plan. See "Management--Stock Plans," "Description of
Capital Stock" and Note 7 of Notes to Consolidated Financial Statements.

(3) Pro forma to give effect to the exchange in November 1997 of all the
Company's outstanding Series A Preferred for the Series A-1 Preferred.
Excludes 140,000 shares of Series A-1 Preferred issuable upon exercise of
the Series A-1 Warrant at a per share exercise price of $250. The rights,
preferences, and privileges of the Series A-1 Preferred are substantially
identical to those of the previously outstanding Series A Preferred, except
that the mandatory redemption terms and certain other provisions differ. As
a result of these differences, the Series A Preferred was excluded from
stockholders' equity on the Company's consolidated balance sheet, while the
Series A-1 Preferred is included in stockholders' equity. See "Management's
Discussion and Analysis of Financial Condition and Results of Operation and
Financial Condition--Liquidity and Capital Resources," "Description of
Capital Stock--Preferred Stock," "Certain Transactions" and Note 6 of Notes
to Consolidated Financial Statements.

(4) Pro forma adjusted to give effect to (i) the exchange in November 1997 of
all the Company's outstanding Series A Preferred for the Series A-1
Preferred and (ii) the issuance of 50,000 shares of Series B Preferred in
November 1997 with an aggregate liquidation preference of $50,000,000. As
adjusted to give effect to (i) the conversion of the Series B Preferred at
an assumed conversion price of $4.00 per share into 12,500,000 shares of
Common Stock and Warrants to acquire 2,700,000 shares of Common Stock,
assuming no exercise of the Warrants and (ii) the issuance of 100,000 shares
of Common Stock to a financial advisor to the Company in connection with the
issuance of the Series B Preferred. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations and Financial
Condition--Liquidity and Capital Resources," "Description of Capital
Stock--Preferred Stock," "Certain Transactions" and Note 6 of Notes to
Consolidated Financial Statements.

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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data of the Company presented
below as of December 31, 1996, 1995, 1994, 1993, and 1992, and for each of the
years in the five-year period ended December 31, 1996, are derived from the
consolidated financial statements of Informix Corporation and its subsidiaries,
which financial statements have been audited by Ernst & Young LLP, independent
auditors. The Consolidated Financial Statements as of December 31, 1996 and 1995
and for each of the years in the three-year period ended December 31, 1996 and
the report thereon of Ernst & Young LLP, independent auditors, are included
elsewhere in this Registration Statement. The consolidated statement of
operations data for the nine-month periods ended September 28, 1997 and
September 29, 1996 and the consolidated financial data presented as of September
28, 1997 are derived from unaudited consolidated financial statements that
include, in the opinion of management, all adjustments, consisting only of
normal recurring adjustments, that the Company considers necessary for a fair
presentation of the financial information included therein. The historical
results stated below and results for the nine months ended September 28, 1997
are not necessarily indicative of the results for any future period. The
selected consolidated financial data set forth below is qualified in its
entirety by, and should be read in conjunction with, the Consolidated Financial
Statements and Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------- YEAR ENDED DECEMBER 31,
SEPTEMBER 28, -----------------------------------------------------------
1997 SEPTEMBER 29, 1996 1995 1994 1993 1992
------------- 1996 ----------- ----------- ----------- --------- ---------
-------------
(RESTATED) (RESTATED) (RESTATED)
(RESTATED)(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:

Net revenues:
Licenses............................ $ 271,614 $ 346,215 $ 496,039 $ 458,284 $ 346,518 $ 284,338 $ 237,407
Services............................ 209,532 164,786 231,810 174,486 105,451 68,577 46,187
------------- ------------- ----------- ----------- ----------- --------- ---------
Total net revenues.............. 481,146 511,001 727,849 632,770 451,969 353,115 283,594

Costs and expenses:
Costs of software distribution........ 52,860 34,629 46,786 37,593 24,494 20,077 21,483
Cost of services...................... 128,197 104,828 144,850 91,540 46,798 33,094 26,777
Sales and marketing................... 347,906 292,539 413,689 301,932 203,815 137,772 100,418
Research and development.............. 108,420 87,539 120,211 85,643 64,264 44,503 28,807
General and administrative............ 72,110 47,356 64,416 51,114 35,369 33,744 32,214
Write-off of goodwill and other
long-term assets.................... 30,473 -- -- -- -- -- --
Write-off of acquired research and
development......................... 7,000 -- -- -- -- -- --
Restructuring charges................. 109,356 -- -- -- -- -- --
Expenses related to Illustra merger... -- 5,914 5,914 -- -- -- --
------------- ------------- ----------- ----------- ----------- --------- ---------
Total costs and expenses........ 856,322 572,805 795,866 567,822 374,740 269,190 209,699
------------- ------------- ----------- ----------- ----------- --------- ---------
Operating income (loss)................. (375,176) (61,804) (68,017) 64,948 77,229 83,925 73,895
Litigation settlement................. -- -- -- -- -- -- (10,500)
Interest income....................... 3,691 6,671 9,868 8,148 3,970 3,967 2,018
Interest expense...................... (5,372) (4,073) (5,784) (2,522) (551) (371) (2,253)
Other income (expense), net........... 17,596 1,821 2,899 120 (3,105) (1,282) (1,448)
------------- ------------- ----------- ----------- ----------- --------- ---------
Income (loss) before income taxes..... (359,261) (57,385) (61,034) 70,694 77,543 86,239 61,712
Income taxes.......................... 6,800 9,170 12,531 32,094 29,250 31,250 13,930
------------- ------------- ----------- ----------- ----------- --------- ---------
Net income (loss)..................... $(366,061) $ (66,555) $ (73,565) $ 38,600 $ 48,293 $ 54,989 $ 47,782
------------- ------------- ----------- ----------- ----------- --------- ---------
------------- ------------- ----------- ----------- ----------- --------- ---------
Net income (loss) per share........... $ (2.41) $ (0.45) $ (0.49) $ 0.26 $ 0.34 $ 0.40 $ 0.38
------------- ------------- ----------- ----------- ----------- --------- ---------
------------- ------------- ----------- ----------- ----------- --------- ---------
Weighted average number of common and
common equivalent shares
outstanding......................... 151,708 149,194 149,310 150,627 142,782 137,827 125,742
</TABLE>

22
<PAGE>

<TABLE>
<CAPTION>
SEPTEMBER 28, 1997 DECEMBER 31,
------------------------ -----------------------------------------------------------
ACTUAL PRO FORMA(1) 1996 1995 1994 1993 1992
--------- ------------- ----------- ----------- ----------- --------- ---------
(RESTATED) (RESTATED) (RESTATED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments.............................. $ 95,470 $ 95,470 $ 261,020 $ 253,209 $ 194,153 $ 144,383 $ 119,454
Working capital (deficit).................. (254,893) (254,893) 3,137 163,594 184,867 157,017 98,686
Total assets............................... 587,598 587,598 881,998 682,445 447,769 328,001 231,459
Stockholders' equity (deficit)............. (43,877) (6,677) 325,304 357,747 269,400 207,581 132,652
</TABLE>

- ------------------------------

(1) Pro forma to give effect to the exchange in November 1997 of all the
Company's outstanding Series A Preferred for the Series A-1 Preferred.
Excludes 140,000 shares of Series A-1 Preferred issuable upon exercise of
the Series A-1 Warrant at a per share exercise price of $250. The rights,
preferences, and privileges of the Series A-1 Preferred are substantially
identical to those of the previously outstanding Series A Preferred, except
that the mandatory redemption terms and certain other provisions differ. As
a result of these differences, the Series A Preferred Stock was excluded
from stockholders' equity on the Company's consolidated balance sheet, while
the Series A-1 Preferred is included in stockholders' equity. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Description of Capital
Stock--Preferred Stock," "Certain Transactions" and Note 6 of Notes to
Consolidated Financial Statements.

23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS RELATING TO FUTURE
EVENTS OR THE FUTURE FINANCIAL PERFORMANCE OF THE COMPANY, WHICH INVOLVE RISKS
AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS," "BUSINESS" AND
ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

The Company is a leading multinational supplier of information management
software. It derives license revenues principally from licensing its RDBMS
software and derives service revenues from providing technical product and
consulting and training services to customers. The Company's products are sold
directly to end-users and indirectly through application resellers, OEM's and
distributors. For the fiscal year ended December 31, 1996, relative to prior
periods, distributors and OEM channels represented a lower and decreasing
percentage of total license revenues relative to end-users and application
vendor channels. During 1996, however, the Company refocused its marketing
strategy to place relatively greater emphasis on reseller channels, including
forming 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. As a
result, licenses to resellers represented an increasing proportion of total
sales during 1996.

In the quarter ended March 30, 1997, as a result, in part, of adverse market
conditions and slowing growth in demand for RDBMS products, the Company
experienced a substantial shortfall in anticipated license revenues, resulting
in a substantial net loss for the quarter. Subsequently, the Company became
aware of accounting errors and irregularities that affected the timing and
dollar amount of reported earned revenues from license transactions for all
periods in the three years ended December 31, 1996. The Company concluded that
informal or otherwise undisclosed arrangements with a number of resellers have
resulted or could result in significant concessions or allowances that were not
accounted for when revenue was originally reported as earned. As a result, in
August 1997, the Company announced that it would restate its financial results
for fiscal 1996 and 1995. The financial review undertaken by the Company to
determine the extent of the restatement ultimately resulted in the restatement
of the Company's financial results for the fiscal years ended December 31, 1996,
1995 and 1994 and for the quarter ended March 30, 1997. The Company publicly
disclosed the results of the restatement in November 1997.

As a result of the restatement, total revenues were reduced from amounts
previously reported by $211.5 million, $81.5 million and $18.1 million for each
of the three years ended December 31, 1996, 1995 and 1994, respectively. The
restatement also resulted in an increase in revenues for the quarter ended March
30, 1997 from $133.7 million to $149.2 million. In addition, the restatement
resulted in the Company's reporting a net loss of $73.6 million for 1996,
compared to net income of $97.8 million as originally reported, and substantial
reductions in net income for 1995 and 1994, compared to amounts originally
reported. The restatement had a material adverse effect on the Company's
financial condition, most notably evidenced by substantial reductions in
retained earnings and working capital. At December 31, 1996, after giving effect
to the restatement, the Company's working capital totaled $3.1 million, compared
to $258.4 million as originally reported. At September 28, 1997, the Company had
a working capital deficit of $254.9 million. The substantial reductions in
working capital at September 28, 1997 and December 31, 1996 reflect substantial
operating losses and the addition of "advances on unearned license revenue" as a
current liability on the Company's balance sheet. Such advances totaled $210.3
million at September 28, 1997 and $239.5 million at December 31, 1996.

As a result of the shortfall in anticipated license revenues in the first
quarter of 1997, the Company also initiated an internal restructuring intended
to reduce operating expenses and improve the Company's

24
<PAGE>
financial condition. The restructuring included selective reductions in
headcount and leased facilities, the termination of the Company's planned
"Information SuperStore" marketing strategy, the sale of certain real property
acquired in the first quarter of 1997 and intended for the construction of a new
headquarters facility, and the issuance of newly designated series of Preferred
Stock in two financing transactions which resulted in aggregate net proceeds of
$86.0 million to the Company. In addition, in the fourth quarter of 1997, the
Company entered into a senior secured credit facility agreement with available
proceeds of up to $75.0 million. Costs associated with the restructuring totaled
approximately $109.4 million and had a material adverse effect on the Company's
results of operations in the quarters ended September 28, 1997 and June 29,
1997.

The Company's public announcement of the pending restatement, delays in
reporting operating results for the quarter ended June 29, 1997 and September
29, 1997 while the restatement was being compiled, threatened de-listing of the
Company's Common Stock from the Nasdaq National Market as a result of the
Company's failure to satisfy its public reporting obligations, corporate actions
to restructure operations and reduce operating expenses, and customer
uncertainty regarding the Company's financial condition have adversely affected
the Company's ability to sell its products. In addition, since the beginning of
1997, the Company and its competitors in the RDBMS industry have experienced
substantially slower growth in the market for RDBMS products. For the nine
months ended September 28, 1997, total revenues were $481.1 million, compared to
$511.0 million for the nine months ended September 29, 1996. The financial
restatement has now been completed, its results have been publicly disclosed,
and the Company is current with respect to its public reporting obligations.
However, adverse market conditions, including slower growth rates in the
Company's markets and ongoing customer uncertainty about the Company's financial
condition and business prospects, may continue to have an adverse effect on the
Company's results of operations.

25
<PAGE>
RESULTS OF OPERATIONS--NINE MONTH PERIOD COMPARISON

The following table sets forth operating results as a percentage of net
revenue for the nine-month periods ended September 28, 1997 and September 29,
1996, respectively, and the percent change in the operating results for the
nine-month periods ended September 28, 1997 and September 29, 1996.

<TABLE>
<CAPTION>
PERCENT OF NET REVENUES
--------------------------------------------
NINE MONTHS ENDED PERIOD TO PERIOD
-------------------------------------------- PERCENT INCREASE
SEPTEMBER 28, 1997 (DECREASE)
--------------------- SEPTEMBER 29, 1996 -------------------
---------------------
(RESTATED)
<S> <C> <C> <C>
Net revenues:
Licenses.............................................. 56% 68% (22)%
Services.............................................. 44 32 27
--- --- -----
Total net revenues.................................. 100 100 (6)
Cost and expenses:
Cost of software distribution......................... 11 7 53
Cost of services...................................... 27 21 22
Sales and marketing................................... 72 57 19
Research and development.............................. 23 17 24
General and administrative............................ 15 9 53
Write-off of goodwill and long-term assets............ 6 -- N.M.
Write-off of acquired research and development........ 1 -- N.M.
Restructuring costs................................... 23 -- N.M.
Expenses related to Illustra merger................... -- 1 N.M.
--- --- -----
Total expenses...................................... 178 112 49
--- --- -----
Operating loss........................................ (78) (12) 507
Interest income....................................... 1 1 (45)
Interest expense...................................... (1) (1) 32
Other income (expense), net........................... 3 1 866
--- --- -----
Loss before income taxes.............................. (75) (11) 526
Income taxes.......................................... 1 2 (26)
--- --- -----
Net loss.............................................. (76)% (13)% 450%
--- --- -----
--- --- -----
</TABLE>

- ------------------------

N.M. = Not meaningful.

Informix's operating results for the nine months ended September 28, 1997,
were significantly below the same period of the prior year due to decreases in
revenue and increases in costs and expenses. Revenue declined 6% for the nine
months ended September 28, 1997, in comparison to September 29, 1996. Revenue
declined 4%, 8% and 13% in North America, Asia/Pacific and Europe, respectively,
partially offset by increased revenue of 27% in Latin America. The increase in
operating expenses include charges of $30.5 million related to the Company's
Japanese operations, $109.4 million for restructuring charges and a write-off of
acquired research and development costs of $7.0 million during the period. These
lower revenues combined with increased operating costs resulted in an operating
loss of $375.2 million.

REVENUES

Net revenues decreased 6% to $481.1 million for the nine months ended
September 28, 1997 from $511.0 million for the same period in 1996, primarily as
a result of a substantial decrease in license revenues partially offset by an
increase in service revenues. The Company derives revenues principally from
licensing its software and providing technical product support and updates to
customers. License

26
<PAGE>
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.

License sales declined by 22% to $271.6 million for the nine months ended
September 28, 1997 from $346.2 million for the nine months ended September 29,
1996. The Company's products are sold directly to end-user customers or through
resellers including OEM's, distributors, and VAR's. In 1996, the Company
increased the focus on its reseller channels to establish partnerships with
hardware and application vendors in order to utilize their sales force, obtain
access to their installed base of customers and benefit from their consulting
and systems integration organizations. This increased focus on reseller channels
resulted in a significant build-up of licenses that have not been resold or
utilized by such resellers. These unsold licenses representing $210.3 million
have not been recognized as earned revenue as of September 28, 1997. License
revenue declined primarily as a result of a 26% decrease in sales in both North
America and Europe for the nine months ended September 28, 1997. In the first
quarter, total license revenues decreased 25% which represented 26% and 32%
decreases in North America and Europe 1997 compared to 1996, respectively. This
decrease in the first quarter was due in part to a slowdown in the Company's
markets. License revenue increased slightly in the second quarter and decreased
in the third quarter. The third quarter decrease of 40% in total license
revenues represented 50% and 42% decreases in North America and Europe license
revenues quarter over quarter, 1997 compared to 1996, respectively. The
decreases in the third quarter were attributable principally to a continuing
market slowdown and customer uncertainties resulting from the Company's
announced restatement and restructuring activities.

Service revenues increased 27% to $209.5 million for the nine months ended
September 28, 1997 from $164.8 million for the nine months ended September 29,
1996. The dollar increase in service revenues resulted from the Company's larger
installed base. The increase in services revenue as a percentage of total
revenue was the combination of the increase in service revenues and the decrease
in license fees. The Company continues to emphasize support services as a source
of revenue and the growth achieved in absolute dollars reflects the growth in
the Company's installed base and strategic focus on providing consulting
services for its customers. Support revenues increased by 21% for the nine
months ended September 28, 1997 versus the prior year period, while consulting
and training revenues increased by 40% for the comparable periods.

Foreign revenues decreased 8% to $253.7 million for the nine months ended
September 28, 1997 from $274.3 million for the same period in 1996. The
Company's revenue as a percentage of total net revenues was 47%, 33%, 13% and 7%
for North America, Europe, Asia/Pacific and Latin America for the nine months
ended September 28, 1997, respectively, compared to 46%, 36%, 13% and 5% for the
same period in 1996. The decline in foreign revenues was due to reduced sales in
Europe and Asia/Pacific which decreased $23.0 million and $4.9 million,
respectively, in 1997 compared to 1996. Revenues in Europe decreased in the
first and third quarter of 1997 and were relatively unchanged in the second
quarter. The market slowdown and customer uncertainties were the principal
factors causing the decrease in the respective quarters. The decrease in
Asia/Pacific was primarily related to the Company's activities in Japan.

Substantially all of the Company's Latin American revenue is denominated in
U.S. dollars. In Europe and Asia/Pacific, most revenues and expenses are
denominated in local currencies. The U.S. dollar strengthened in the nine months
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 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 as a percentage of total revenues
in the future.

27
<PAGE>
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. 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.

The restatement significantly changed the recorded value of the Company's
foreign currency denominated accounts receivable and accounts payable, primarily
intercompany balances. As a result, the hedging activities for the nine months
ended September 28, 1997 were not effective in hedging the accounting exposure
to changes in foreign currency exchange rates. This unhedged exposure resulted
in a net foreign currency transaction gain of $14.6 million for the nine months
ended September 28, 1997.

COST OF SOFTWARE DISTRIBUTION

<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------------------
SEPTEMBER 28, 1997 CHANGE
------------------- -----------
SEPTEMBER 29, 1996
-------------------
(RESTATED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Manufactured cost of software distribution....................... $ 22.2 $ 23.8 (7%)
Percentage of license revenue.................................... 8% 7%
Amortization of capitalized software............................. $ 16.0 $ 10.8 48%
Percentage of license revenue.................................... 6% 3%
Write-down to net realizable value............................... $ 14.7 $ -- 100%
Percentage of license revenue.................................... 5% n/a
Cost of software distribution.................................... $ 52.9 $ 34.6 53%
Percentage of license revenue.................................... 19% 10%
</TABLE>

The cost of software distribution increased 53% to $52.9 million for the
nine months ended September 28, 1997 from $34.6 million for the nine months
ended September 29, 1996. Software distribution costs consist primarily of (i)
manufacturing and related costs such as media, documentation, product assembly
and purchasing costs, freight, customs, and third party royalty and (ii)
amortization of previously capitalized software development costs and any
write-offs of previously capitalized software. Manufacturing costs for software
distribution did not fluctuate significantly due to the fact that these costs
are mainly labor and overhead expenses and are consequently fairly fixed in
nature.

Amortization of capitalized software costs commences the quarter following
product introduction. Capitalized software amortization increased 48% to $16.0
million for the nine months ended September 28, 1997 from $10.8 million for the
nine months ended September 29, 1996. The increase of amortization of
capitalized software in absolute dollars and as a percentage of net revenues is
due to the release of the Company's Universal Server products after September
29, 1996. The absolute value of amortization of capitalized software will vary
slightly period to period as new products are released and other products become
fully amortized.

The write-down to net realizable value of $14.7 million during the nine
months ended September 28, 1997 was due to the Company's acquisition of
Centerview and the related announcements of its revised tool strategy. 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 was performed on certain of the Company's
tool products and resulted in a write-down of $14.7 million of previously
capitalized software costs.

28
<PAGE>
COST OF SERVICES

Cost of services consists primarily of maintenance, consulting and training
expenses. Cost of services increased 22% to $128.2 million for the nine months
ended September 28, 1997 from $104.8 million for the nine months ended September
29, 1996. The overall growth in cost of services is consistent with the 27%
growth in service revenues over the prior year period. Cost of services
decreased as a percentage of service revenues to 61% for the nine months ended
September 28, 1997 compared to 64% for the same period in 1996. During 1997,
gross margins have increased relative to both support revenue and
consulting/training revenue, particularly in the third quarter of 1997. Overall,
the increased margins during 1997 reflect a combination of cost containment and
improved business processes for delivering service offerings.

SALES AND MARKETING EXPENSES

Sales and marketing expenses increased 19% to $347.9 million for the nine
months ended September 28, 1997 from $292.5 million for the nine months ended
September 29, 1996. A significant portion of this increase was incurred in the
first six months of fiscal 1997 due to increases in sales and marketing
personnel. In addition, the Company's Information SuperStore program, which was
launched in fiscal 1996 and through the first half of 1997, resulted in
increased depreciation expense due to the fixed asset purchases related to the
program. Due to the significant revenue shortfall in the first quarter of fiscal
1997, the Company executed an internal restructuring plan. Under this plan,
headcount levels were reduced, facilities and operations were consolidated and
the Information SuperStores were downsized, eliminated or converted into
solution labs managed by the Company's consulting practice.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses represent software development costs.
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.

Research and development expenses increased 24% to $108.4 million for the
nine months ended September 28, 1997 from $87.5 million for the nine months
ended September 29, 1996. Research and development expenses also increased as a
percentage of total net revenues due in part to the decrease in total net
revenues for the nine months ended September 28, 1997 compared to the same
period for 1996. The increase in absolute dollars for research and development
was due to the increase in incurred product development expenditures offset by
the decrease in capitalized software development costs. Incurred product
development increased 17% to $126.7 million for the nine months ended September
28, 1997 from $108.5 million for the same period in 1996. A significant portion
of this increase was due to increased headcount and the resulting personnel
expenses and depreciation related to capital assets used in the research and
development process.

The absolute dollars and the proportion of expenditures capitalized for the
nine months ended September 28, 1997 decreased in comparison to the same period
in 1996 due to the fact that there were a

29
<PAGE>
number of projects that had reached technological feasibility in the first nine
months of fiscal 1996 and were therefore capitalized.

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

General and administrative expenses increased 53% to $72.1 million for the
nine months ended September 28, 1997 compared to $47.4 million for the same
period in 1996. The increase in general and administrative expenses in absolute
dollars and as a percentage of net revenue was primarily the result of higher
bad debt expense, professional fees, fluctuations in headcount and other
miscellaneous charges.

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.

In the first quarter of 1997, the Company's Japanese subsidiary experienced
a significant shortfall in business activity compared to historical levels. This
fact, coupled with continuing competitive pressures in the Japanese market,
resulted in the Company adjusting its forecasts of future cash flows and further
led the Company to evaluate the recoverability of the subsidiary's long-lived
assets, including computer and other equipment and goodwill. As a result of this
evaluation, the Company determined that the carrying value of these long-lived
assets had been impaired and, accordingly, recorded a charge in the first
quarter of $30.5 million to write-down the assets' carrying value to their
estimated fair value. Fair value was determined using estimated future
discounted cash flows of the subsidiary and/or resale market quotes as
appropriate.

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 $7.0 million of
purchased research and development which has been charged to operations in the
period the acquisition was consummated, which was the first quarter of 1997.

RESTRUCTURING CHARGES

In June and September 1997, the Company approved a plan to restructure its
operations to bring expenses in line with forecasted revenues. In connection
with the restructurings, the Company substantially reduced its worldwide
headcount and consolidated facilities and operations to improve efficiency. The

30
<PAGE>
following analysis sets forth the significant components of the restructuring
charges included in other accrued liabilities at September 28, 1997:

<TABLE>
<CAPTION>
ACCRUAL
BALANCE AT
RESTRUCTURING NON-CASH SEPTEMBER 28,
EXPENSE COSTS CASH PAYMENTS 1997
------------- ----------- --------------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Severance and benefits....................... $ 21.9 $ -- $ 14.7 $ 7.2
Write-off of assets.......................... 48.2 30.3 -- 17.9
Facility charges............................. 35.9 -- 3.0 32.9
Other........................................ 3.4 2.2 -- 1.2
------ ----- ----- -----
$ 109.4 $ 32.5 $ 17.7 $ 59.2
------ ----- ----- -----
------ ----- ----- -----
</TABLE>

Severance and related costs represented the reduction of approximately 750
employees on a worldwide basis, primarily impacting sales and marketing.
Temporary employees and contractors were also reduced. Asset charges included a
write-off or write-down of equipment as a result of the decision to reduce the
Information SuperStore program, as well as write-off of equipment associated
with headcount reductions. Facility charges included early termination costs
associated with the closing of certain domestic and international sales offices.

The Company expects to complete most of the actions associated with
restructuring by the end of the first quarter of fiscal 1998.

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.

INTEREST INCOME

Interest income decreased to $3.7 million for the nine months ended
September 28, 1997 from $6.7 million as of September 29, 1996, due to the
decrease in cash, cash equivalents and short term investment balances over the
nine months ended September 28, 1997. The average cash, cash equivalents and
short term investments balance has decreased to $106.7 million for the three
quarters ended September 28, 1997 from $251.8 million for the same period in
1996.

INTEREST EXPENSE

Interest expense increased to $5.4 million for the nine months ended
September 28, 1997 from $4.1 million at September 29, 1996, due to the
amortization of the discount associated with the sale of receivables. The
Company increased its customer accounts receivable financing activities in 1996.
These financing costs are expensed ratably over the term of the financing
arrangement.

OTHER INCOME (EXPENSE)

Other income (expense), net, increased to $17.6 million for the nine months
ended September 28, 1997 from $1.8 million at September 29, 1996. A significant
portion of this increase, $14.6 million, is due to foreign currency transaction
gains. The remainder represented gains on the sale of strategic equity
investment in the nine months ended September 28, 1997.

31
<PAGE>
The Company enters into forward foreign exchange contracts primarily to
hedge the value of accounts receivable or accounts payable denominated in
foreign currencies against fluctuation in exchange rates until such receivables
are collected or payables disbursed. The purpose of the Company's foreign
exchange exposure management policy and practices is to attempt to minimize the
impact of exchange rate fluctuation on the value of foreign currency denominated
assets and liabilities being hedged. The receivables and payables being hedged
are primarily intercompany transactions related to internal distribution of the
Company's product under formal agreements between the Company's various
subsidiaries. Due to the restatement of revenues and the related cost of these
sales, the Company also restated its intercompany receivable and payable
accounts. The restatement of the intercompany accounts effectively modified the
hedging positions taken and resulted in a foreign exchange gain of $14.6 million
during the nine months ended September 28, 1997.

INCOME TAXES

Income tax expense for the nine months ended September 28, 1997 resulted
from taxable earnings and withholding taxes in certain foreign jurisdictions.

FISCAL YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

The following table sets forth operating results as a percentage of net
revenues for the three years ended December 31, 1996, respectively, and the
percentage change from year to year.
<TABLE>
<CAPTION>
PERCENT OF NET REVENUE
-------------------------------------
% INCREASE
YEARS ENDED DECEMBER 31, (DECREASE)
-------------------
------------------------------------- 1996
1996 1995 1994 COMPARED TO 1995
----- ----- ----- -------------------
<S> <C> <C> <C> <C>
Net revenues:
Licenses............................................. 68% 72% 77% 8%
Services............................................. 32 28 23 33
--- --- --- -----
Total net revenues................................. 100 100 100 15
Cost and expenses:
Cost of software distribution........................ 6 6 6 24
Cost of services..................................... 20 14 10 58
Sales and marketing.................................. 57 48 45 37
Research and development............................. 16 14 14 40
General and administrative........................... 9 8 8 26
Merger expenses...................................... 1 -- -- N.M.
--- --- --- -----
Total expenses..................................... 109 90 83 41
--- --- --- -----
Operating income (loss)................................ (9) 10 17 N.M.
--- --- --- -----
--- --- --- -----
Net income (loss)...................................... (10)% 6% 11% (291)%

1995
COMPARED TO 1994
-------------------
<S> <C>
Net revenues:
Licenses............................................. 32%
Services............................................. 65
---
Total net revenues................................. 40
Cost and expenses:
Cost of software distribution........................ 53
Cost of services..................................... 96
Sales and marketing.................................. 48
Research and development............................. 33
General and administrative........................... 45
Merger expenses...................................... --
---
Total expenses..................................... 51
---
Operating income (loss)................................ (16)
---
---
Net income (loss)...................................... (20)%
</TABLE>

Informix's operating results were affected negatively in 1996 as a result of
operating expenses growing more rapidly than revenues. Informix continued to
invest heavily in personnel in the areas of sales, marketing and customer
service, and research and development and incurred integration expenses and fees
associated with the acquisition in February 1996 of Illustra Information
Technologies, Inc. ("Illustra"). This acquisition was accounted for as a pooling
of interests. In December 1996, Informix began shipping its Universal Server
product. Informix incurred significant marketing expenses in connection with the
initial announcement and launch of the Universal Server in 1996. These
development, integration and marketing expenses and the relatively low operating
margins of Illustra have adversely affected Informix's operating margins in
1996.

32
<PAGE>
REVENUES

Principally during 1996, the Company entered into software license
agreements with certain computer and service vendors where the Company
concurrently committed to acquire goods and services. These concurrent
transactions for 1996 included license agreements of approximately $170 million
and commitments to acquire goods and services in the aggregate of approximately
$130 million. $31 million was recognized as earned revenue by the Company in the
restated 1996 financial statements. The Company disclosed in its original 1996
annual report that $55 million of revenue was recognized from concurrent
transactions in that year. This disclosure represented revenue (before the
restatement) arising from specific license agreements where the Company acquired
goods and services in approximately the same dollar amount and is included in
the $170 million of 1996 concurrent transactions. See Notes 1 and 3 of Notes to
Consolidated Financial Statements.

The Company's license sales transactions can be relatively large in size and
difficult to forecast both in timing and dollar value. As a result, these
transactions have caused fluctuations in net revenues and net income because of
the relatively high gross margin on such revenues. As is common in the industry,
a disproportional amount of the Company's license revenue is derived from
transactions that close in the last weeks of a quarter. The timing of closing
large license agreements also increases the risk of quarter-to-quarter
fluctuations. The Company expects that these types of transactions and the
resulting fluctuations will continue.

The overall revenue growth in 1996 compared to 1995 primarily reflects
continued acceptance of the Company's server products. The relational database
management systems industry has benefited from trends to downsize from large
proprietary computer systems and market acceptance of UNIX, Windows, Windows NT
and other open operating environments.

Informix's current server product line debuted in the fall of 1994 with
OnLine Dynamic Server for Sequent (DSA) and was expanded to a wide array of
Unix-based multi-processor systems in December 1994. This product accounts for a
majority of the Company's server sales and is now available on Windows/NT
operating systems. In the spring of 1996, the Company introduced a workgroup
version of this product named OnLine Workgroup Server. In fall 1996, the Company
released Online Extended Parallel Server 8.1, designed for very high end use in
"loosely-coupled" computer architectures. In late 1996, the first version of
Universal Server was released which was the combination of the OnLine Dynamic
Server product with the Illustra server product. At the end of December 1997,
the Company simplified its product line so that it now offers a single server,
OnLine Dynamic Server (now referred to as the Informix Dynamic Server), in five
different configurations. See "Business--Products."

The license revenue growth in 1996 compared to 1995 reflects increases in
the Company's server products, particularly the Company's flagship database
server, OnLine Dynamic Server. The Company believes that the license revenues
derived from its database tool products declined from 1995 to 1996 primarily as
a result of competitive product offerings from other companies.

The increase in service revenue was primarily attributable to the continued
growth of the Company's installed customer base, and resulting renewal of
maintenance contracts and increased consulting revenue. The Company continues to
emphasize support services as a source of revenue. As the Company's products
become more complex, more support services will be required. The Company intends
to satisfy this requirement through internal support, third-party services and
OEM support. The contribution margin on service revenue decreased from 48% in
1995 to 38% in 1996. The decrease resulted from increased costs incurred to
expand the support function due to sales increases and the continuing complexity
of the products.

Approximately 54%, 55% and 43% of Informix's net revenues were derived from
sales to foreign customers in 1996, 1995 and 1994, respectively. Informix
expects that foreign revenues will continue to provide a significant portion of
total revenues. However, changes in foreign currency exchange rates, the

33
<PAGE>
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. In
Europe, Asia/Pacific, and Japan, most revenues and expenses are now denominated
in local currencies. The U.S. dollar strengthened in the fourth quarter and for
the year 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 periods. The Company has also increased its direct
presence in Latin America, although a significant percentage of this region's
revenue is still denominated in U.S. dollars. Although the effect was not
significant in 1996, the Company has experienced significant currency
fluctuations in Mexico, and to a lesser extent, other Latin American countries,
and expects such fluctuations may occur in the future. 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.

The Company's distribution markets are organized into three general markets:
North America; Europe, which includes the Middle East and Africa; and the
Intercontinental Group, consisting of Latin America, Japan, and the Asia/Pacific
region. The North America, Europe, and Intercontinental Group organizations
contributed 46%, 34% and 20% of the Company's net revenues, respectively, in
1996, compared to 45%, 36% and 19%, respectively, in 1995, and 57%, 35% and 8%,
respectively, in 1994.

In November 1997, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 97-2, "Software Revenue Recognition." The
Company will be required to adopt the provisions of the SOP as of January 1,
1998. The Company is evaluating the SOP in relation to its current revenue
recognition policy. Adoption of the SOP may affect the revenue recognition
practices of the Company.

COST OF SOFTWARE DISTRIBUTION

<TABLE>
<CAPTION>
1996 CHANGE 1995 CHANGE 1994
--------- ---------- --------- ---------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Manufactured cost of software distribution............................ $ 32.2 26% $ 25.6 54% $ 16.7
Percentage of license revenue......................................... 6% 6% 5%
Amortization of capitalized software.................................. $ 14.6 21% $ 12.0 53% $ 7.8
Percentage of license revenue......................................... 3% 3% 2%
Cost of software distribution......................................... $ 46.8 24% $ 37.6 53% $ 24.5
Percentage of license revenue......................................... 9% 8% 7%
</TABLE>

Cost of software distribution increased to $46.8 million from $37.6 million
and $24.5 million for the years ended December 31, 1996, 1995 and 1994,
respectively. 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 costs that are no longer
realizable.

Excluding amortization of previously capitalized software development costs,
cost of software distribution as a percentage of license revenue was 6% for both
1996 and 1995. In the future, the cost of software distribution as a percentage
of revenue may vary depending upon whether the product is reproduced by the
Company or by its customers.

Amortization of capitalized software increased 21% in 1996 compared to 1995
due to the release of several products in the latter half of 1995 and 1996. The
absolute value of amortization of capitalized software will vary from quarter to
quarter as new products are released and other product development costs become
fully amortized.

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<PAGE>
COST OF SERVICES

Cost of services increased to $144.9 million from $91.5 million and $46.8
million for the years ended December 31, 1996, 1995 and 1994, respectively. Cost
of services consists primarily of maintenance, consulting and training expenses.
The increase in cost of services in 1996 in absolute dollars and as a percentage
of net revenues compared to the prior year is primarily due to the Company's
expansion of consulting and support service capabilities as products have become
more complex. The increase in cost of services as a percentage of net service
revenue is due to increases in support personnel in anticipation of additional
consulting revenue as more customers utilize the Company's products in more
complex applications. The Company has also subcontracted certain service
projects which reduces margins.

SALES AND MARKETING EXPENSES

Sales and marketing expenses increased to $413.7 million from $301.9 million
and $203.8 million for the years ended December 31, 1996, 1995 and 1994,
respectively. The increase in sales and marketing expenses in 1996 in absolute
dollars compared to 1995 was a result of the addition of new sales offices and
sales personnel worldwide as the Company expanded its worldwide direct sales
organization, the opening of new subsidiaries, higher commission expense
associated with the increase in revenues, and increased marketing programs
associated with new product launches. As a percentage of net revenues, sales and
marketing expenses increased to 57% in 1996 from 48% in 1995.

RESEARCH AND DEVELOPMENT EXPENSES

<TABLE>
<CAPTION>
1996 CHANGE 1995 CHANGE 1994
--------- ---------- --------- ---------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Incurred product development expenditures.......................... $ 148.6 44% $ 103.1 32% $ 77.9
Expenditures capitalized........................................... 28.4 62% 17.5 29% 13.6
Research and development expenses.................................. $ 120.2 40% $ 85.6 33% $ 64.3
Expenditures capitalized as a percentage of incurred............... 19% 17% 17%
</TABLE>

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 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, including the Company's latest product
INFORMIX-Universal Server.

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.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased to $64.4 million from $51.1
million and $35.4 million for the years ended December 31, 1996, 1995 and 1994,
respectively. General and administrative expenses increased in absolute dollars
in 1996 compared to 1995 as a result of the continued expansion of the Company's
international operations. 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.

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<PAGE>
MERGER EXPENSES

In the first quarter of 1996, the Company recorded 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.

INTEREST INCOME

Interest income increased to $9.9 million from $8.1 million and $4.0 million
for the years ended December 31, 1996, 1995 and 1994, respectively. The increase
in absolute dollars from 1995 to 1996 and 1994 to 1995 results from higher
balances of cash and cash equivalents and short-term investments, offset by
slightly lower interest rates.

INTEREST EXPENSE

Interest expense increased to $5.8 million from $2.5 million and $0.6
million for the years ended December 31, 1996, 1995 and 1994, respectively.
Interest expense principally relates to interest charges incurred in connection
with financing of customer accounts receivable and has increased from 1995 to
1996 and 1994 to 1995 as the Company has increased its customer accounts
receivable financing activities. These financing costs are expensed ratably over
the term of the financing arrangement.

INCOME TAXES

In 1996, income tax expense resulted from an increase in the valuation
allowance for deferred tax assets attributable to foreign net operating loss
carryforwards, foreign withholding taxes and taxable earnings in certain foreign
jurisdictions. The Company has provided a valuation allowance for net deferred
tax assets in excess of amounts recoverable through carryback of net operating
losses. Accordingly, realization of the net deferred tax asset at December 31,
1996 of $26.9 million is not dependent on future taxable income.

LIQUIDITY AND CAPITAL RESOURCES

<TABLE>
<CAPTION>
AS OF OR FOR AS OF OR FOR THE
THE NINE YEAR ENDED
MONTHS ENDED ----------------------------------
SEPTEMBER 28, DECEMBER 31,
1997 1996 1995 1994
------------- --------- ------------ ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Cash, cash equivalents and short-term investments............... $ 95.5 $ 261.0 $ 253.2 $ 191.5
Working capital (deficit)....................................... (254.9) 3.1 163.6 184.9
Cash and cash equivalents provided by (used by) operations...... (150.6) (29.4) 59.3 80.9
Cash and cash equivalents used for investment activities........ (76.6) (145.3) (157.7) (40.6)
Cash and cash equivalents provided by financing activities...... 66.7 228.7 136.8 26.7
</TABLE>

OPERATING

Cash used by operations increased significantly to $150.6 million for the
nine months ended September 28, 1997 from $61.8 million for the same period in
1996 due to operating expenses in excess of revenues. Cash from operations did
not provide sufficient resources to fund the Company's operations through the
first nine months of 1997 and for fiscal 1996, although, it did provide
sufficient resources in 1995 and 1994.

The reported net loss of $366.1 million for the nine months ended September
28, 1997, included a number of non-cash transactions. These non-cash
transactions included write-downs of long term assets, goodwill and acquired
research and development, gain on sale of a strategic investment and
restructuring charges which partially offset the net loss resulting in net cash
used by operations of $150.6 million.

36
<PAGE>
Net accounts receivable decreased by $57.3 million to $137.2 million as of
September 28, 1997 from December 31, 1996. This decrease was driven by a
decrease in revenue of $66.9 million partially offset by a reduction in its
financing programs with third-party financial institutions in fiscal 1997. Cash
received from customers and third-party financial institutions in advance of
revenue being recognized is recorded as advances on unearned license revenue.

INVESTING

Net cash and cash equivalents used in investing activities decreased for the
nine months ended September 28, 1997 compared with the same period in 1996. The
decrease was due in large part to lower investments of excess cash due to the
significant decline in cash balances over the nine months ended September 28,
1997. Significant investing activities, excluding the investment of excess cash,
in the nine months ended September 28, 1997 included additions to software
costs, the sale of strategic investments and available-for-sale securities,
purchase of the Santa Clara property and capital equipment and the purchase of
Centerview.

The Company sold its investment in a significant strategic investment during
the nine months ended September 28, 1997 which resulted in a cash inflow. The
Company also sold a number of its available-for-sale securities in order to
generate cash for the business.

The Company planned on relocating its corporate headquarters to Santa Clara,
California, approximately 15 miles to the south of the Company's headquarters.
In January 1997, the Company entered into a two year lease for 27 acres of
undeveloped commercial real estate which required a pledge of $61.5 million in
cash into a non-interest bearing collateral account controlled by an affiliate
of the lessor. In April 1997, the Company exercised its option to purchase the
land for $61.5 million with the intent to arrange for the sale of the parcels to
unrelated third parties. The $61.5 million is reflected in the "purchases of
property and equipment" line of the cash flow statement. The land sales closed
in the fourth quarter of fiscal 1997.

In addition, in the nine months ended September 28, 1997, the Company
acquired $34.1 million of capital equipment consisting primarily of computer
equipment, computer software and office equipment. The increase of capital
equipment purchases was primarily the result of the Company's expected expansion
in fiscal 1997.

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 $7.0 million of purchased
research and development which has been charged to operations in the period the
acquisition was consummated--the first quarter of 1997.

FINANCING

Net cash and cash equivalents provided by financing activities in the nine
months ended September 28, 1997 decreased in comparison to the same period in
1996. A significant portion of the decrease was the decline in advances on
unearned license revenue, offset in part by the proceeds from issuances of
preferred and common stock.

Proceeds from common stock represent stock options exercised and purchases
under the employee stock purchase plan.

In August of 1997, the Company sold 160,000 shares of newly issued Series A
Preferred with a face value of $250 per share to a private investor for
aggregate net proceeds of $37.2 million.

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<PAGE>
RECENT DEVELOPMENTS

On November 17, 1997, the Company issued 160,000 shares of its Series A-1
Preferred, in exchange for a like number of shares of the Company's Series A
Preferred which had been previously issued in August 1997.

In November of 1997, the Company sold 50,000 shares of newly issued Series B
Preferred with a face value of $1,000 per share to certain investors for
aggregate net proceeds of $48.8 million.

In the fourth quarter of 1997, the Company divided the Santa Clara
headquarters land into two parcels and sold the land to two unrelated third
parties for net proceeds of $58.1 million.

In the fourth quarter of 1997, the Company also assigned its leasehold
interest and its related obligations under the office space lease adjacent to
the Santa Clara property discussed above to an unrelated third party in the
fourth quarter of fiscal 1997. The lease term was for fifteen years and minimum
lease payments amount to $96.0 million over the term.

In December 1997, Informix Software, Inc., a Delaware corporation and the
Company's principal operating subsidiary ("Informix Software"), entered into a
Senior Secured Credit Agreement with a syndicate of commercial banks, including
BankBoston, N.A. as administrative agent and Canadian Imperial Bank of
Commercial as syndication agent, providing for a revolving credit facility of up
to $75 million (the "Credit Facility"). The actual amount available under the
Credit Facility, for either direct borrowings or issuances of letters of credit,
is based on eligibility criteria for certain accounts receivable, which are
measured on a revolving basis. As a result, the aggregate amount available under
the Credit Facility will vary from time to time based on the amount and
eligibility of the Company's receivables. As of the date of this Prospectus, no
borrowings were outstanding under the Credit Facility, and the Company had not
yet determined the actual amount available, although it believes, based on
accounts receivable at December 31, 1997, that its borrowing base would have
been substantially less than $75 million. The purpose of the Credit Facility is
to provide the Company working capital and finance general corporate purposes.
The term of the Credit Facility is two years. Amounts outstanding under the
Credit Facility bear interest at a premium over one of two alternative variable
rates selected by the Company. The "Base Rate" equals the greater of (i) the
rate of interest announced by BankBoston, N.A. as its "base rate" and (ii) the
Federal Funds Effective Rate plus 1/2 of 1% per year. The "Adjusted LIBOR Rate"
equals (i) the London Interbank Offered Rate divided by (ii) one minus the
applicable reserve requirement under Regulation D of the Federal Reserve Board.
The maximum premium over the Base Rate is 1.25%, and the maximum premium over
the LIBOR Rate is 2.50%, subject to downward adjustment based on the Company's
realizing certain financial thresholds. The Credit Facility is secured by all of
the assets of Informix Software and the capital stock of the Company's
subsidiaries that are domiciled in the United States, including Informix
Software. The availability of the Credit Facility is also subject to the
Company's compliance with certain covenants, including financial covenants
relating to financial ratios and minimum thresholds for quarterly revenues,
operating profits, and cashflows.

In October 1997, the Company entered into an agreement to sell substantially
all of its partnership interest in its Lenexa, Kansas facility for approximately
$8.4 million. Under the terms of the agreement, the purchaser of the Company's
partnership interest holds an option to purchase the Company's remaining DE
MINIMIS interest in the partnership.

RECENT ACCOUNTING PRONOUNCEMENTS

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 adoption of FAS 128
would not change the computation of net loss per common share for the nine
months ended September 28, 1997 and September 29, 1996.

38
<PAGE>
BUSINESS

THE FOLLOWING BUSINESS SECTION CONTAINS FORWARD-LOOKING STATEMENTS RELATING
TO FUTURE EVENTS OR THE FUTURE FINANCIAL PERFORMANCE OF THE COMPANY, WHICH
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" AND
ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

The Company is a leading multinational supplier of information management
software. The Company designs, develops, manufactures, markets and supports
relational database management systems ("RDBMS"), connectivity interfaces and
gateways and application development tools for graphical and character-based
software applications as part of an RDBMS. Database management software permits
multiple individual users, employing different application software, to access
and manage the same data concurrently without corrupting the underlying
database. RDBMS software extends the functionality and utility of non-relational
database management software by simplifying the data retrieval process for end-
users, who do not require specific knowledge about the structure of the database
but need only to specify the data to be retrieved. Companies commonly employ
RDBMS software for use in storing, managing and retrieving the large amounts of
data necessary to support internal management information and decision-support
systems as well as mission-critical data processing applications.

The Company believes that technological advances, including the development
and commercialization of the Internet, will lead to increasingly sophisticated
customer requirements for data storage and management beyond the functionality
offered by conventional RDBMS products. In recent years, the types and
quantities of data required to be stored and managed has grown increasingly
complex and includes, in addition to conventional character data, audio, video,
text and three dimensional graphics. In 1996, the Company devoted substantial
resources in the development of object-relational database management systems
("ORDBMS") and tools for applications in multimedia and entertainment, digital
media publishing and financial services.

The Company markets its products to end-users on a worldwide basis directly
through its sales force and indirectly through application resellers, OEMs and
distributors. The principal geographic markets for the Company's products are
North America, Europe, the Asia/Pacific region, and Latin America. In recent
years, approximately half of the Company's total revenues have been generated
outside North America. The Company's principal customers include businesses
ranging from small corporations to Fortune 1000 companies, principally in the
manufacturing, financial services, telecommunications, media, retail/wholesale,
hospitality and government services sectors.

PRODUCTS

INFORMIX DYNAMIC SERVER

Informix--Dynamic Server is a high performance, enterprise capable online
transaction processing database server. This product is based on Informix's
Dynamic Scalable Architecture and features parallel data processing capability,
replication and connectivity options built into its core. Informix Dynamic
Server is available in a variety of configurations based upon adding one or more
of the configuration options described below.

Informix also provides a version of Informix Dynamic Server called the
Workgroup Edition, which has been adapted specifically for workgroup
environments.

SERVER CONFIGURATION OPTIONS

Informix makes available five server configuration options, which are
integrated in various combinations along with Informix Dynamic Server to meet
specific customer requirements.

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<PAGE>
The Informix Advanced Decision Support Option extends Informix Dynamic
Server with a variety of decision support functions including summarization,
sampling, and "top-N."

The Informix Extended Parallel Option adapts Informix Dynamic Server to work
within loosely coupled, share-nothing computing architectures, including
clusters of symmetric multiprocessing systems and parallel processing systems.

The Informix Universal Data Option extends Informix Dynamic Server with
support for extensibility and SQL3. Extensibility includes the ability to add
new objects and data types, business specific procedures and logic, and new
indexing search methods to the server, as well as support for DataBlade modules,
which can include a related set of data types, functions and indexes for a
specific purpose.

The Informix MetaCube ROLAP Option adds an on-line analytical processing
engine to Informix Dynamic Server that automatically preconsolidates data and
provides a multidimensional view of data without the constraints of two
dimensional (row and table) data model. This option also includes MetaCube
Explorer; MetaCube Scheduler for batch processing; MetaCube Queryback for
running queries in the background; MetaCube Aggregator for creating and
maintaining aggregates in a data warehouse; MetaCube for Excel which enables
data Warehouse analysis in an Excel spreadsheet environment; and MetaCube for
the Web which brings MetaCube analysis capabilities to intranets.

Finally, the Informix Web Integration Option provides connectivity between
Web servers and Informix Dynamic Server. This option enables developers to
create intelligent web applications based upon database information that deliver
multimedia, tailored Web pages to users.

DATABLADE MODULES

DataBlade modules combine new data types, new functions or methods, and new
indexing operations, which taken together extend Informix Dynamic Server. The
DataBlade modules are used in conjunction with the Universal Data Option.
Informix sells the following DataBlade modules, and others are available through
Informix's partners:

The Informix Video Foundation DataBlade module provides an open and scalable
software architecture that allows strategic third-party development partners to
incorporate specific video technologies such as video servers, external control
devices, compression codes or cataloging tools into database management
applications with the Informix Dynamic Server. In addition, the video data types
and data model allow customers to explore new ways to manipulate video and
associated metadata, or information about the video.

The Informix TimeSeries DataBlade module expands the functionality of the
database by adding support for the management of time-series and temporal data.
The TimeSeries DataBlade module supports a regular or irregular repeating
time-stamped series of any datatype supported by Informix Dynamic Server or any
structure or combination of these. For example, a set of open, high, low, and
close currency values can be used to record a time-based series of stock prices.
The granularity of time recording can be adjusted to suit the unique
requirements of the application. The TimeSeries DataBlade module provides
support for three new datatypes, time-series, calendar and calendar pattern, and
over 80 functions to manage them. The time-series type stores sequences of
time-stamped information, and a related calendar allows access to specific
portions of the time series for update, analysis, display or other uses.

The Informix Geodetic DataBlade module provides geo-spatial datatypes and
functions supporting two-dimensional representation of the earth's surface based
on a geodetic (longitude, latitude and datum) coordinate system. In addition to
two-dimensional geographic feature support, the Geodetic DataBlade Module allows
an altitude range and a time range to be specified.

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<PAGE>
CONNECTIVITY PRODUCTS

The Company's principal connectivity products include the following:

Informix-Enterprise Gateway Manager is a connectivity tool allowing
applications running on various operating systems to access data sources via
loadable gateway drivers. The Company also offers gateway drivers for Oracle and
Sybase databases. Drivers for additional data sources are available from various
third parties.

Informix-Enterprise Gateway with DRDA is 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 access and modify information in
Distributed Relational Database Architecture compliant database management
systems.

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

Informix-CLI is a library of low level functions that provide high
performance direct access to Informix databases from applications built in C or
other third generation languages. Informix-CLI is compliant with Microsoft's
ODBC specifications.

DATABASE TOOLS

The Company offers a variety of database application development tools
designed to allow users to build applications. The Company's principal database
tools include:

Informix Data Director for Java is a drag-and-drop Java development
component that allows developers to build database-aware Java applets for the
Informix Dynamic Server. Data Director for Java (formerly known as
INFORMIX-JWorks) supports the new SQL3 standard, to permit organizations to use
worldwide Internet or corporate intranet applications to provide access to
corporate data. Data Director for Java can be used in conjunction with any
Java-based Web development environment to automatically generate Java, so that
developers can Web-enable applications without writing any code.

Informix Data Director for Visual Basic enables developers to prototype,
build, and extend workgroup and enterprise applications. Data Director for
Visual Basic reduces the amount of application code necessary for writing
client/server solutions by automating the data access operations for the client
application. This automation eliminates the time consuming task of writing data
access code, allows developers to incorporate sophisticated functionality
without having to be SQL experts, and enables project teams to improve their
time to market with scalable applications. Data Director enables developers to
create applications that support user defined data types, including images, Web
pages and spatial data.

Informix-NewEra is 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
Windows and OSF Motif.

Informix-4GL is a character-based development environment, which includes a
fourth generation programming language with 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 Systems and Informix-4GL interactive Debugger.

Informix-SQL is 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 building and an interactive schema
editor.

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<PAGE>
SERVICES, CONSULTING AND CUSTOMER SUPPORT

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.

The Company provides post-sales support to its customers on an optional
basis for annual fees which generally range from 10% to 18% of the license fees
paid by the customer. These support services usually include product updates.

During 1996 and the first quarter of 1997, as part of its sales and
marketing strategy, the Company launched a series of "Information SuperStores."
The superstores were intended to demonstrate and offer the Company's software
products to customers on actual hardware platforms used by those customers,
thereby permitting the end-user to evaluate and monitor the performance and
functionality of the Company's products prior to purchase. In addition, the
superstores offered application tools from leading third-party tools and
application vendors installed on a variety of platforms, including Data General,
Hewlett-Packard, IBM, NCR, Pyramid, Silicon Graphics and Sun. In connection with
the Company's restructuring announced in the second quarter of 1997, the Company
scaled back its original plans and repositioned its remaining sites as solution
labs managed by the Company's consulting practice. The decision to scale back
the superstores resulted in a charge to operating income during fiscal 1997.

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 September 28, 1997, the Company's sales, marketing and support staff
totaled 1,084 employees in the North America region; 115 employees in the Latin
America region; 755 employees in the Europe; Middle East and Africa regions; 330
employees in the Asia/Pacific region; and 35 employees in Japan.

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 database management system products,
based on standard operating systems and the SQL database language, helps it 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

42
<PAGE>
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 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 are 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. Distributors are used to
supplement the Company's direct sales force and enable the Company to sell its
products and services in countries where the Company has not established a
direct sales force.

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. 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.

The Company's current product development efforts are focused on (i)
improving and enhancing current products and new products, with particular
emphasis on parallel computer architecture, user-defined database extensions,
Web technology integration, graphical desk top and system administration; (ii)
improving the Company's products to provide greater speed and support for larger
numbers of concurrent users; and (iii) adapting new products to the broad range
of computer brands and operating systems the Company currently supports and
adapting current products to new brands of computers and operating systems which
represent attractive market opportunities for the Company's products.

As of September 28, 1997, the Company had 932 employees engaged in research
and development. In recent months, the Company has experienced high attrition in
its product development group and has had difficulty attracting qualified
replacement development personnel. Any failure to attract and retain a
sufficient number of qualified development personnel would have a material
adverse effect on the Company's business, results of operations and financial
condition.

The Company's research and development expenditures for the years ended
December 31, 1996, 1995 and 1994 were $120.2 million, $85.6 million and $64.3
million, respectively, representing approximately 17%, 14% and 14% of net
revenues for the respective periods. For the nine months ended September 29,
1997 and September 28, 1996, research and development expenditures totaled
$108.4 and $87.5, respectively, representing 23% and 17% of net revenues for the
respective periods. In addition, during the years ended December 31, 1996, 1995
and 1994, the Company capitalized research and development costs of $28.4
million, $17.5 million and $13.6 million, respectively, in accordance with
Statement of Financial

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<PAGE>
Accounting Standards No. 86. Capitalized research and development costs totaled
$18.3 million and $21.0 million for the nine months ended September 28, 1997 and
September 29, 1996, respectively. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

The market for the Company's products and services is characterized by
rapidly changing technology, changing customer needs, frequent new product
introductions and evolving industry standards that may render existing products
and services obsolete. The life cycles of the Company's products are difficult
to estimate. The Company's growth and future financial performance will depend
upon its ability to enhance its existing products and to introduce new products
on a timely and cost-effective bassi and 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's product development efforts are expected to continue to
require substantial investments by the Company, and there can be no assurance
that the Company will have sufficient resources to make the necessary
investments. The Company has experienced product development 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, including as a
result of recent attrition in the Company's product development group, 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 operate and perform well with
existing and future leading, industry-standard application software products
intended to be used with RDBMS. Failure to meet existing or future
interoperability and performance requirements of certain independent vendors
marketing such applications in a time 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
accept consumer perception.

In recent years, the types and quantities of data required to be stored and
managed has grown increasingly complex and includes, in addition to conventional
character data, audio, video, text, and three dimensional graphics. In 1996, the
Company devoted substantial resources in developing the Company's ORDBMS product
line. The market for the products offering object-relational database
functionality is new and evolving, and its growth depends upon a growing need to
store and manage complex data and on broader market acceptance of the Company's
products as a solution for this need. There can be no assurance that
organizations will chose to make the transition from conventional RDBMS to
ORDBMS. Delays in market acceptance of object-relational database management
products offered by the Company could have an adverse effect on the Company's
results of operations and financial condition.

COMPETITION

The Company faces intense competition in the market for RDBMS software
products. The market for the Company's products is subject to rapid
technological change and frequent new product introductions and enhancements,
and the Company's competitors in the market include several large vendors that
develop and market databases, applications, development tools or decision
support products. The Company's principal competitors include Computer
Associates International, Inc., IBM, Microsoft Corporation, Oracle and Sybase.
Several of the Company's competitors have significantly greater financial,
technical, marketing and other resources than the Company. As a result, they may
be able to respond more quickly to new or emerging technologies and changes in
customer requirements or to devote greater

44
<PAGE>
resources to the development, promotion and sale of their products than the
Company. Any failure by the Company to compete successfully with its existing
competitors or future competitors could have a material adverse effect on the
Company's business, results of operations and financial condition.

Several of the Company's competitors have announced the development of
enhanced versions of their principal database products that are intended to
improve the performance or expand the capabilities of their existing products.
New or enhanced products by existing competitors or new competitors could result
in greater price pressure on the Company's products. In addition, the industry
movement to new operating systems, like Windows NT, access through low-end
desktop computers, and access to data through the Internet may cause downward
pressure on prices of database software and related products. The bundling of
software products for promotional purposes or as a long-term pricing strategy by
certain of the Company's competitors could also result in reductions in the
price the Company may charge for its products. If such downward pressure on
prices were to occur, the Company's operating margins would be adversely
affected. 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 operation 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.

Competitors in the relational database software market compete primarily on
the basis of product price and performance characteristics, name recognition,
technical product support, product training and services. With respect to
product performance, the Company believes that the principal competitive factors
include (i) application development productivity (I.E., the speed with which
applications can be built); (ii) database performance (I.E., the speed at which
database storage and retrieval functions are executed); (iii) product function
and features; (iv) the ability to support large warehouses of information; (v)
reliability, availability and serviceability; (vi) the distribution of software
applications and data across networks of computers from multiple suppliers; and
increasingly (vii) the ability to manage complex data and solve more complex
business problems based on such data. Although the Company believes that it
currently competes favorably with respect to such factors, there can be no
assurance that the Company can maintain its competitive position against current
and potential competitors, especially those with greater financial, marketing,
service, support, technical and other resources than the Company.

In addition, the Company's public announcement in August 1997 of the pending
restatement of its financial statements, delays in reporting operating results
for the quarters ended June 30, 1997 and September 29, 1997 while the
restatement was being compiled, threatened de-listing of the Company's Common
Stock as a result of the Company's failure to satisfy its public reporting
obligations, corporate actions to restructure operations and reduce operating
expenses and customer uncertainty regarding the Company's financial condition
have adversely affected the Company's ability to sell its products. In addition,
since the beginning of 1997, the Company and its competitors in the RDBMS
industry have experienced substantially slower growth in the market for RDBMS
products. The financial restatement has now been completed, its results have
been publicly disclosed, and the Company is current with respect to its public
reporting obligations. Nevertheless, there can be no assurance that
uncertainties resulting from the restatement, including ongoing customer concern
about the Company's financial condition, will not continue to have a materially
adverse effect on the Company's competitive position and its results of
operations.

INTELLECTUAL PROPERTY

The Company's success depends on proprietary technology. To protect its
proprietary rights, the Company relies primarily on a combination of patent,
copyright and trademark laws, trade secrets,

45
<PAGE>
confidentiality procedures, contractual provisions contained in its license
agreements and technical measures. The Company seeks to protect its software,
documentation and other written materials under trade secret and copyright laws,
which provide only limited protection. The Company holds one United States
patent and several pending applications. There can be no assurance that any
other patents covering the Company's inventions will issue or that any patent,
if issued, will provide sufficiently broad protection or will prove enforceable
in actions against alleged infringers.

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. The Company also relies
on "shrink wrap" licenses, which include a 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. Despite such precautions, it
may be possible for unauthorized third parties to copy aspects of its current or
future products or to obtain and use information that the Company regards as
proprietary. In particular, the Company has licensed the source code of its
products to certain customers under certain circumstances and for restricted
uses. The Company has also entered source code escrow agreements with a number
of its customers that generally require release of source code to the customer
in the event of the Company's bankruptcy, liquidation or otherwise ceasing to
conduct business. There can be no assurance that the Company's means of
protecting its proprietary rights will be adequate or that the Company's
competitors will not independently develop similar or superior technology.
Policing unauthorized use of the Company's software is difficult, and while the
Company is unable to determine the extent to which piracy of its software
products exists, software piracy can be expected to be a persistent problem. In
addition, the laws of some foreign countries do not protect the Company's
proprietary rights to the same extent as do the laws of the United States, and
"shrink-wrap" licenses may be wholly or partially unenforceable under the laws
of certain jurisdictions. Litigation may be necessary in the future to enforce
the Company's intellectual property rights, to protect the Company's trade
secrets or to determine the validity and scope of the proprietary rights of
others. Such litigation could result in substantial costs and diversion of
resources and management attention and could have a material adverse effect on
the Company's business, results of operations and financial condition.

The Company is not aware that any of its software product offerings infringe
the proprietary rights of third parties. There can be no assurance, however,
that third parties will not claim infringement by the Company with respect to
its current or future products. The Company expects that software product
developers will increasingly be subject to infringement claims as the number of
products and competitors in the Company's industry segment grows and the
functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment delays or require the Company to enter into
royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms acceptable to the Company or at all,
which could have a material adverse effect on the Company's business, results of
operations and financial condition.

LEGAL PROCEEDINGS

Stockholder derivative actions, purportedly on behalf of the Company and
naming virtually the same individual defendants and the Company's independent
auditors, were also filed, commencing in

46
<PAGE>
August 1997, in California state court. While these actions allege various
violations of state law, any monetary judgments in these derivative actions
would accrue to the benefit of the Company.

The Company is also party to certain commercial disputes with a number of
its customers, several of which have proceeded to litigation, relating to
amounts paid under license agreements with the Company. Although the Company is
vigorously defending such disputes, there can be no assurance that the outcome
of any current or future disputes will not have a material adverse effect on the
Company's financial condition, results of operations and cash flows. In
addition, the Company is unable to predict the extent to which legal action
under the Company's various contracts, licenses and business relationships may
result from the restatement. See "Risk Factors--Uncertain Impact of Restatement
of Financial Statements and --Need for Additional Financing; Customer
Financing."

FACILITIES

The Company's headquarters and its principal marketing, finance, sales,
administration, customer service and research and development operations are
located in five buildings in a corporate office park in Menlo Park, California.
The Company currently leases approximately 214,000 square feet of space in these
buildings. The leases for spaces in three of the buildings expire in March 1998
and may be renewed for up to two additional five year terms at 95% of their fair
market rental value at the time of renewal. The leases for space in the
remaining buildings expire in September 2001.

In addition, certain of the Company's research and development facilities, a
portion of its customer service organization, its principal domestic
manufacturing facility and its telemarketing organization are located in a
134,000 square foot facility in Lenexa, Kansas. The buildings are leased to the
Company under a lease expiring in March 1998, subject to renewal for up to two
additional five year terms. The rent under

47
<PAGE>
the lease agreement remains fixed through the initial term and is subject to
adjustment based on then-prevailing rental rates in the event the lease is
extended. The Company also leases office space, principally for sales and
support offices, in a number of facilities in the United States, Canada and
outside North America. The Company believes that its current facilities are
adequate to meet its needs through the next twelve months.

In December 1996, the Company announced plans to relocate its corporate
headquarters from the Menlo Park facilities to a new corporate campus in Santa
Clara, California. In January 1997, the Company entered into a two-year lease
for 27 acres of undeveloped commercial real estate in Santa Clara, which was
intended to be used for construction of the new headquarters facility. The
Company also obtained an option to purchase the land for $61.5 million. In order
to secure performance of its obligations under the lease, the Company pledged
$61.5 million in cash collateral to the lessor. In April 1997, the Company
exercised its option to purchase the land, and in December 1997 completed the
sale of the real estate for net proceeds of approximately $58.1 million. In
addition, in November 1996, the Company had leased approximately 200,000 square
feet of office space in Santa Clara on property located adjacent to the 27 acre
undeveloped parcel. In December 1997, the Company assigned its rights under such
lease agreement to an unrelated third party.

EMPLOYEES

As of September 28, 1997, the Company and its subsidiaries employed 3,745
employees worldwide, including 2,319 in sales, marketing and support, 932 in
research and development, 87 in operations and 407 in administration and
finance. Of the Company's total employees at September 28, 1997, approximately
1,522 were located outside North America. None of the Company's employees
located in the United States are represented by a labor union. A small number of
employees located outside the United States are represented by labor unions, and
the degree and scope of representation varies from country to country. The
Company has not experienced any work stoppages either domestically or
internationally.

48
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the Company's
executive officers and directors as of the date of this Prospectus.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Robert J. Finocchio, Jr.............................. 46 Chairman, President and Chief Executive Officer
Jean-Yves F. Dexmier................................. 46 Executive Vice President, Finance, Chief Financial
Officer and Secretary
Karen Blasing........................................ 41 Vice President and Corporate Controller
James F. Engle....................................... 51 Vice President and Treasurer
J.F. Hendrickson, Jr................................. 58 Vice President, Customer Services, and Lenexa
(Kansas) Site General Manager
Stephen E. Hill...................................... 39 Vice President, Advanced Technology
Wesley Raffel........................................ 42 Vice President, North American Field Operations
Myron (Mike) Saranga................................. 60 Senior Vice President, Product Management and
Development
Michael R. Stonebraker............................... 54 Vice President and Chief Technology Officer
Leslie G. Denend..................................... 56 Director
Albert F. Knorp, Jr. (2)(3).......................... 62 Assistant Secretary and Director
James L. Koch (1)(2)................................. 53 Director
Thomas A. McDonnell (1)(2)(3)........................ 52 Director
Cyril J. Yansouni (1)(2)............................. 55 Director
</TABLE>

- ------------------------

(1) Member of Compensation Committee

(2) Member of Audit Committee

(3) Member of Nominating Committee

ROBERT J. FINOCCHIO, JR. has served as Chairman, President and Chief
Executive Officer since July 1997. From December 1988 until May 1997, Mr.
Finocchio was employed with 3Com Corporation ("3Com"), a global data networking
company, where he held various positions, most recently serving as President,
3Com Systems. Prior to his employment with 3Com, Mr. Finocchio held various
executive positions in sales and service with Rolm Communications, a
telecommunications and networking company, most recently as Vice President of
Rolm Systems Marketing. Mr. Finocchio also serves as a director of Latitude
Communications, a teleconferencing company. Mr. Finocchio is also a Regent of
Santa Clara University. Mr. Finocchio holds a B.A. in economics from Santa Clara
University and an M.B.A. from the Harvard Business School.

JEAN-YVES F. DEXMIER has served as the Company's Executive Vice President,
Finance, Chief Financial Officer and Secretary since October 1997. Mr. Dexmier
served as a consultant to the Company from February 1997 to September 1997. From
November 1995 until February 1997, Mr. Dexmier served as Senior Vice President
and Chief Financial Officer of Octel Communications Corporation, a provider of
voice messaging systems ("Octel"). From April 1995 to October 1995, Mr. Dexmier
served as Chief Financial Officer for Kenetech Corporation, a wind energy
company. From May 1994 to March 1995, Mr. Dexmier served as Chief Financial
Officer for Air Liquide America Corporation, a U.S. subsidiary of the
French-based group Air Liquide, a worldwide producer of industrial gases. From
January 1991 to January 1994, Mr. Dexmier served as Chief Financial Officer for
Thomson Consumer Electronics, Inc., a subsidiary of Thomson SA, a worldwide
electronics manufacturer. Mr. Dexmier holds a B.S. in mathematics from Lycee
Pasteur, a Ph.D. in electronics from the Ecole Nationale Superieure de
l'Aeronautique et

49
<PAGE>
de l'Espace and an M.B.A. in economics and finance from the Ecole Polytechnique.
In addition, he
attended the executive management program at the University of Michigan School
of Business Administration.

KAREN BLASING has served as the Company's Vice President and Corporate
Controller since June 1996. Ms. Blasing joined the Company in November 1992 as
its Director of Financial Planning and Analysis. From January 1989 to October
1992, Ms. Blasing was a Senior Financial Manager at Oracle Corporation, a
provider of information management software and services. Ms. Blasing holds a
B.S. in both economics and business from the University of Montana and an M.B.A.
from the University of Washington.

JAMES F. ENGLE has served as the Company's Vice President and Treasurer
since December 1997. From 1991 until December 1997, Mr. Engle served as a Vice
President and the Corporate Treasurer of Octel. Mr. Engle holds a B.A. in
economics from the University of Missouri and an M.B.A. in international
business and corporate finance from the Columbia University Graduate School of
Business.

J.F. HENDRICKSON, JR. has served as the Company's Vice President, Customer
Services since July 1992 and as its Lenexa (Kansas) Site General Manager since
February 1995. From 1991 until the time he joined the Company, Mr. Hendrickson
was Senior Vice President of Marketing at Image Business Systems, a developer of
document image management software for client/server systems. Mr. Hendrickson
holds a B.S. in mechanical engineering from Stanford University and an M.B.A.
from the University of California, Los Angeles.

STEPHEN E. HILL has served as the Company's Vice President, Advanced
Technology since December 1995. Mr. Hill has been employed with the Company
since 1985 and has served in various strategic planning and marketing positions.
Prior to joining the Company, Mr. Hill held various product development
positions at General Electric Company, a diversified electronics and
manufacturing company, Software Publishing Corporation, a supplier of business
productivity software, and Human Edge Software, a business software company. Mr.
Hill holds a B.S. in electrical engineering from the University of Vermont.

WESLEY RAFFEL has served as the Company's Vice President, North American
Field Operations since September 1997. From January 1996 to January 1997, Mr.
Raffel served as Senior Vice President, Sales and Marketing, and was the acting
Chief Executive Officer of AssureNet Pathways, Inc., a network security company.
From October 1992 to September 1995, Mr. Raffel was Vice President, Sales, of
Global Village Communication, Inc., a designer of integrated communications
products for personal computers ("Global Village"). Prior to joining Global
Village, Mr. Raffel held a variety of positions at 3Com, most recently as its
Vice President, Intercontinental Operations. Mr. Raffel holds a B.A. in general
studies from Harvard University and an M.B.A. from the University of Chicago
Graduate School of Business.

MYRON (MIKE) SARANGA has served as the Company's Senior Vice President,
Product Management and Development, since May 1993. Prior to joining the
Company, Mr. Saranga was employed by IBM for 30 years, where he held various
positions, most recently as Assistant General Manager of Programming Systems.
Mr. Saranga holds a B.A. in economics from Northeastern University.

MICHAEL A. STONEBRAKER has served as the Company's Vice President and Chief
Technology Officer since February 1996. Dr. Stonebraker co-founded Illustra and
served in a consulting capacity with Illustra as its Chief Technology Officer
until February 1996. Dr. Stonebraker is the professor emeritus of Electrical
Engineering and Computer Sciences at the University of California, Berkeley,
where he joined the faculty in 1971. Dr. Stonebraker holds a B.S. in electrical
engineering from Princeton University and an M.S. and Ph.D. in computer
information and control engineering from the University of Michigan.

LESLIE G. DENEND has served as a member of the Company's Board of Directors
since December 1997. Since December 1997, Mr. Denend has served as President of
Network Associates, Inc., a provider of network security and management
software, that resulted from the merger of McAfee Associates, Inc. and Network
General Corporation ("Network General"). From June 1993 to December 1997, Mr.
Denend

50
<PAGE>
served as President and Chief Executive Officer of Network General. He also
served as Network General's Senior Vice President of Products from February 1993
to June 1993. From November 1990 to December 1992, he was President of Vitalink
Communications, a manufacturer of networking products. From January 1989 to
October 1990, Mr. Denend served in a variety of positions at 3Com, most recently
as Executive Vice President for Product Operations. Mr. Denend is also a
director of Rational Software Inc., a provider of component-based development
software systems, and Proxim, Inc., a designer of wireless local area networking
products. Mr. Denend is a graduate of the United States Air Force Academy and
holds an M.B.A. and Ph.D. in economics, public policy and business from Stanford
University. Mr. Denend was also a Fulbright Scholar in economics at Bonn
University.

ALBERT F. KNORP, JR. has served as a member of the Company's Board of
Directors since 1984 and as its Assistant Secretary since 1985. Mr. Knorp is a
general partner in Seaport Ventures, a venture capital firm. Since November
1994, Mr. Knorp has been of counsel to the law firm of Gray Cary Ware &
Freidenrich. He had previously been a partner in the law firm of Lewis, Knorp,
Walsh & Kavalaris. Mr. Knorp holds a B.A. from Stanford University and an L.L.B.
from Santa Clara University.

JAMES L. KOCH has served as a member of the Company's Board of Directors
since May 1991. Since July 1990, Mr. Koch has served in various positions at
Santa Clara University. Since February 1997, Mr. Koch has been its Director of
the Center for Science, Technology and Society and, since July 1990, a Professor
of Management and Corporate Strategy. In addition, from July 1990 to July 1996,
Mr. Koch served as Dean of the Leavey School of Business & Administration at
Santa Clara University. Mr. Koch holds a B.A. in business administration from
San Francisco State University and an M.B.A. and Ph.D. in business
administration from the University of California, Los Angeles.

THOMAS A. MCDONNELL has served as a member of the Company's Board of
Directors since February 1988. Since 1971, Mr. McDonnell has served as Chief
Executive Officer of DST Systems, Inc. ("DST"), a transfer agent for mutual
funds, stocks and bonds, and since October 1984 as a director of DST. Mr.
McDonnell is also President of DST, a position he has held since 1973; Mr.
McDonnell also served as Treasurer of DST from 1973 to September 1995. From
August 1983 to November 1995, Mr. McDonnell was Executive Vice President and a
director of Kansas City Southern Industries, Inc., a holding company and the
former parent of DST. Mr. McDonnell is also director of BHA Group, Inc., a
manufacturer of pollution control devices, Cerner Corporation, a provider of
software and technology to the health care industry, Computer Sciences
Corporation, an information technology company, Euronet Services, Inc., an
operator of automatic teller machines, Janus Capital Corporation, a registered
investment advisor and Nellcor-Puritan-Bennett Corporation, a medical device
company. Mr. McDonnell holds a B.S.B.A. in accounting from Rockhust College and
an M.B.A. from the Wharton School of the University of Pennsylvania.

CYRIL J. YANSOUNI has served as a member of the Company's Board of Directors
since May 1991. Since March 1991, Mr. Yansouni has been the Chief Executive
Officer and Chairman of the Board of Directors of Read-Rite Corporation, a
manufacturer of thin film magnetic recording heads. He also is a member of the
Advisory Board of both the Leavey School of Business Administration at Santa
Clara University and the San Jose State University School of Engineering. Mr.
Yansouni is a director of PeopleSoft, Inc., a provider of client/server business
software, Raychem Corporation, an international manufacturer and marketer of
products for electronics, industrial and telecommunications applications, and
ActivCard, a French company that develops authentication communication software.
Mr. Yansouni holds a B.S. degree in electrical and mechanical engineering from
the University of Louvain, Belgium and an M.S. degree in electrical engineering
from Stanford University. In addition, he attended the executive management
program at Stanford University.

51
<PAGE>
DIRECTOR COMPENSATION

Employee directors do not receive any additional compensation for serving as
a director. For the fiscal year ended December 31, 1996, the Company paid each
non-employee director a quarterly fee of $2,000 and an additional fee of $1,000
for each Board meeting attended. In addition, members of the Audit and
Compensation Committees received $500 for each committee meeting attended. For
the year ending December 31, 1997, the outside directors will continue to
receive the same compensation as they received in 1996. The Company reimburses
each member of the Company's Board of Directors, whether or not an employee, for
out-of-pocket expenses, including travel expenses, incurred in connection with
attending Board meetings. In addition, from time to time, the Company invites
the directors' spouses to accompany the directors to board meetings, and, when
invited, the Company also pays the travel expenses incurred by the spouses. In
1996, these spousal travel expenses were less than $10,000 per director.

The Company's 1989 Outside Directors Stock Option Plan (the "Director Plan")
provides for the grant of options to non-employee directors pursuant to an
automatic, nondiscretionary grant mechanism. Each non-employee director is
automatically granted an option to purchase 15,000 shares of Common Stock upon
initial election to the Board of Directors and an additional option to purchase
15,000 shares upon re-election. The Company has a staggered board, with each
director serving for a three year term. Each such option is granted at the fair
market value of Common Stock on the date of grant. Options granted under the
Director Plan become exercisable over three years with one-third of the shares
vesting on each anniversary of the grant date. See "Stock Plans--1989 Outside
Director Stock Option Plan."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is responsible for determining salaries,
incentives and other forms of compensation for directors, the Chief Executive
Officer, other officers and certain key employees of the Company. The
Compensation Committee also administers the Company's 1994 Stock Option and
Award Plan and in this capacity approves employee stock option grants and
awards. The Compensation Committee consists of directors James L. Koch, Thomas
A. McDonnell and Cyril J. Yansouni. Robert J. Finocchio, Jr., Chairman,
President and Chief Executive Officer of the Company, participates in all
discussions and decisions regarding the compensation of all officers of the
Company but is excluded from discussions regarding his own salary and incentive
compensation. No interlocking relationship exists between any member of the
Company's Compensation Committee and any member of any other company's board of
directors or compensation committee.

52
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth in summary form information concerning the
compensation awarded to, earned by, or paid for services rendered to the Company
in all capacities during the fiscal years ended December 31, 1996, 1995 and 1994
by (i) the Company's Chairman, President and Chief Executive Officer, (ii) the
Company's Executive Vice President, Finance, Chief Financial Officer and
Secretary and (iii) the Company's former President and Chief Executive Officer
and the Company's next four most highly compensated executive officers whose
salary and bonus for fiscal 1996 exceeded $100,000 (collectively, the "Named
Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
(1) SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS OPTIONS(#) COMPENSATION
- ----------------------------------------------------- ----------- --------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
CURRENT EXECUTIVE OFFICERS
Robert J. Finocchio, Jr.(2) ....................... 1996 -- -- -- --
Chairman, President and Chief Executive Officer 1995 -- -- -- --
1994 -- -- -- --

Jean-Yves F. Dexmier(3) ........................... 1996 -- -- -- --
Executive Vice President, Finance, 1995 -- -- -- --
Chief Financial Officer and Secretary 1994 -- -- -- --

Myron (Mike) Saranga(4) ........................... 1996 245,667 -- 100,000 45,875(10)
Senior Vice President, Product Management and 1995 229,333 168,000 130,000 5,525
Development 1994 212,000 150,000 40,000 3,844

FORMER EXECUTIVE OFFICERS

Phillip E. White(5) ............................... 1996 461,667 -- 200,000 4,484(11)
Chairman, President and Chief Executive Officer 1995 421,667 400,000 250,000 4,256
1994 387,000 300,000 100,000 3,000

D. Kenneth Coulter(6) ............................. 1996 283,235 174,985 195,000 83,045(12)
Executive Vice President, 1995 227,100 194,102 60,000 29,617
Worldwide Field Operations 1994 210,082 128,622 35,000 25,494

Ronald M. Alvarez(7) .............................. 1996 205,625 74,546 75,000 3,537(13)
Vice President, Americas Sales 1995 148,333 185,914 40,000 3,160
1994 100,067 127,688 20,000 2,018

Howard H. Graham(8) ............................... 1996 261,333 -- 100,000 3,566(14)
Senior Vice President, Finance, and Chief 1995 244,333 200,000 120,000 3,363
Financial Officer 1994 226,667 130,000 50,000 2,406

Edwin C. Winder(9) ................................ 1996 219,375 13,656 30,000 3,566(15)
Senior Vice President, Japan Operations 1995 206,667 145,725 50,000 3,363
1994 193,750 126,142 30,000 2,406
</TABLE>

- ------------------------------

(1) Other than the salary and bonus described herein, the Company did not pay
any executive officer named in the Summary Compensation Table any fringe
benefits, perquisites or other compensation in excess of 10% of such
executive officer's salary and bonus during fiscal 1996, 1995 or 1994.

53
<PAGE>
(2) Mr. Finocchio became Chairman, President and Chief Executive Officer in July
1997. Accordingly, he received no reportable income from the Company for
fiscal 1996, 1995 or 1994. Pursuant to his employment agreement with the
Company, Mr. Finocchio will receive an annual salary of $460,000 and be
eligible to participate in the Company's executive compensation plan. In
July 1997, in connection with his employment agreement, the Company granted
Mr. Finocchio an option to acquire 1,000,000 shares of Common Stock of the
Company under the 1994 Plan, subject to vesting in equal annual installments
over four years. In addition, the Company granted Mr. Finocchio an option
outside the 1994 Plan to acquire 500,000 shares of Common Stock, also
subject to vesting in equal annual installments over four years. In January
1998, the Company granted Mr. Finocchio an additional option under the 1994
Plan to acquire 250,000 shares of Common Stock, subject to vesting in equal
annual installments over four years. In addition, the Company issued Mr.
Finocchio 100,000 performance shares under the 1994 Plan, subject to vesting
over three years if the Company achieves certain identified financial
targets. See "Executive Compensation--Employment Agreements and Change in
Control Arrangements."

(3) Mr. Dexmier became Executive Vice President, Finance, Chief Financial
Officer and Secretary in October 1997. Accordingly, he received no
reportable income from the Company for fiscal 1996, 1995 or 1994. Pursuant
to his offer letter, Mr. Dexmier will receive an annual salary of $350,000
and will be eligible to participate in the Company's executive compensation
plan. In October 1997, in connection with his employment with the Company,
the Company granted Mr. Dexmier an option to acquire 500,000 shares of
Common Stock under the 1994 Plan, subject to vesting in equal annual
installments over four years. See "Executive Compensation--Employment
Agreements and Change in Control Arrangements."

(4) Mr. Saranga became Senior Vice President, Product Management and Development
in May 1993. In June 1997, the Board of Directors granted Mr. Saranga an
option to purchase up to 100,000 shares of Common Stock under the 1994 Plan
subject to vesting in equal annual installments over four years. In
September 1997, the Company granted Mr. Saranga an additional option to
purchase up to 100,000 shares of the Common Stock of the Company under the
1994 Plan. Such option will become vested on December 31, 2000 if Mr.
Saranga remains an employee of the Company on such date. Moreover, in
September 1997, the Company granted Mr. Saranga the right to receive 35,000
performance shares of Common Stock annually under the 1994 Plan, contingent
upon the satisfaction of certain financial milestones as of January 1, 1998,
1999 and 2000. See "--Option Repricing" and "Stock Plans--1994 Stock Option
and Award Plan."

(5) Mr. White resigned as Chairman, President and Chief Executive Officer in
July 1997.

(6) Mr. Coulter resigned as Executive Vice President, Worldwide Field
Operations, in July 1997. Prior to November 1996, the Company employed Mr.
Coulter in the United Kingdom. Accordingly, compensation data for Mr.
Coulter has been adjusted to U.S. dollar equivalents based on applicable
foreign exchange rates on December 31, 1996, 1995 and 1994, respectively.

(7) Mr. Alvarez resigned as Vice President, American Sales, in April 1997.

(8) Mr. Graham resigned as Senior Vice President, Finance, and Chief Financial
Officer in December 1996.

(9) Mr. Winder resigned as Senior Vice President, Japan Operations, in April
1997.

(10) Represents $4,050, $3,525 and $2,344 in group life insurance paid by the
Company in fiscal 1996, 1995 and 1994, respectively and $2,000, $2,000 and
$1,500 in matching contributions under the Company's 401(k) plan paid by the
Company in fiscal 1996, 1995 and 1994, respectively. Includes for fiscal
1996 $39,825 in forgiveness by the Company of outstanding principal and
accrued interest (such figure includes a gross up to satisfy certain tax
obligations) under a promissory note delivered by Mr. Saranga to the
Company. See "Certain Transactions."

(11) Represents $2,484, $2,256 and $1,500 in group life insurance paid by the
Company in fiscal 1996, 1995 and 1994, respectively; and $2,000, $2,000 and
$1,500 in matching contributions under the Company's 401(k) plan paid by the
Company in fiscal 1996, 1995 and 1994, respectively.

(12) Represents $1,829 and $969 in group life insurance paid by the Company in
fiscal 1996 and 1995, respectively, and $81,216, $28,648 and $25,494 paid by
the Company into a pension plan established for employees of the Company's
United Kingdom subsidiary pursuant to certain requirements of United Kingdom
law in fiscal 1996, 1995 and 1994, respectively.

(13) Represents $1,537, $1,160 and $518 in group life insurance paid by the
Company in fiscal 1996, 1995 and 1994, respectively, and $2,000, $2,000 and
$1,500 in matching contributions under the Company's 401(k) plan paid by the
Company in fiscal 1996, 1995 and 1994, respectively.

(14) Represents $1,566, $1,363 and $906 in group life insurance paid by the
Company in fiscal 1996, 1995 and 1994, respectively and $2,000, $2,000 and
$1,500 in matching contributions under the Company's 401(k) plan paid by the
Company in fiscal 1996, 1995 and 1994, respectively.

(15) Represents $1,566, $1,363 and $906 in group life insurance paid by the
Company in fiscal 1996, 1995 and 1994, respectively, and $2,000, $2,000 and
$1,500 in matching contributions under the Company's 401(k) plan paid by the
Company in fiscal 1996, 1995 and 1994, respectively.

54
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1996

The following table sets forth certain information relating to stock options
awarded to each of the Named Executive Officers during the fiscal year ended
December 31, 1996.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------- VALUES AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTIONS TERM(1)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------------
GRANTED FISCAL 1996(2) SHARE(3) DATE(4) 5% 10%
----------- ----------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CURRENT EXECUTIVE OFFICERS
Robert J. Finocchio, Jr. (5)... -- --% $ -- -- $ -- $ --

Jean-Yves F. Dexmier (6)....... -- -- -- -- -- --

Myron (Mike) Saranga (7)....... 100,000 1.75 24.125 05/16/2006 1,517,208 3,844,904

FORMER EXECUTIVE OFFICERS
Phillip E. White (8)........... 200,000 3.50 24.125 05/16/2006 3,034,417 7,689,807

D. Kenneth Coulter (9)......... 40,000 0.70 33.375 01/31/2006 839,574 2,127,646
35,000 0.61 24.125 05/16/2006 531,023 1,345,716
120,000 2.10 20.875 11/08/2006 1,575,381 3,992,325

Ronald M. Alvarez (10)......... 50,000 0.87 33.375 01/31/2006 1,049,468 2,659,558
25,000 0.44 24.125 05/16/2006 379,302 961,226

Howard H. Graham (11).......... 100,000 1.75 24.125 05/16/2006 1,517,208 3,844,904

Edwin C. Winder (12)........... 30,000 0.52 24.125 05/16/2006 455,162 1,153,471
</TABLE>

- ------------------------------

(1) Potential realizable value is based on the assumption that the Common Stock
of the Company appreciates at the annual rate shown (compounded annually)
from the date of grant until the expiration of the ten year option term.
These numbers are calculated based on the requirements promulgated by the
Commission and do not reflect the Company's estimate of future stock price
growth.

(2) Based on options to acquire 5,698,094 shares granted under the 1994 Plan,
the 1986 Stock Option Plan for Employees, the Director Plan and the
Illustra 1992 Equity Incentive Plan during fiscal 1996. All options granted
to the Named Executive Officers during fiscal 1996 are governed by the 1994
Plan.

(3) Options were granted at an exercise price equal to not less than the fair
market value of the Company's Common Stock on the date of grant as reported
by the Nasdaq National Stock Market. The exercise price may be paid in
cash, check, by delivery of already-owned shares of the Company's Common
Stock subject to certain conditions, or pursuant to a cashless exercise
procedure under which the optionee provides irrevocable instructions to a
brokerage firm to sell the purchased shares and to remit to the Company,
out of the sale proceeds, an amount equal to the exercise price plus all
applicable withholding taxes.

(4) Twenty-five percent (25%) of the shares issuable upon exercise of options
granted under the 1994 Stock Plan become vested on the first anniversary of
the date of grant, and the remaining shares vest over three years at the
rate of 25% of the shares subject to option vesting on each successive
anniversary of the option grant date.

(5) Mr. Finocchio became Chairman, President and Chief Executive Officer in
July 1997. In connection with his employment agreement, the Company granted
Mr. Finocchio an option to acquire 1,000,000 shares of Common Stock of the
Company under the 1994 Plan, subject to vesting in equal annual
installments over four years. In addition, the Company granted Mr.
Finocchio an option outside the 1994 Plan to acquire 500,000 shares of
Common Stock, subject to vesting in equal annual installments over four
years. In January 1998, the Company granted Mr. Finocchio an additional
option under the 1994 Plan to acquire 250,000 shares of Common Stock,
subject to vesting in equal annual installments over four years. In
addition, the Company issued Mr. Finocchio 100,000 performance shares under
the 1994 Plan, subject to vesting over three years if the Company achieves
certain identified financial targets. See "Executive
Compensation--Employment Agreements and Change in Control Arrangements"

(6) Mr. Dexmier became Executive Vice President, Finance, Chief Financial
Officer and Secretary in October 1997. In October 1997, the Company also
granted Mr. Dexmier an option to acquire 500,000 shares of Common Stock
under the 1994 Plan, subject to vesting in equal annual installments over
four years.

(7) In June 1997, the Board of Directors granted Mr. Saranga an option to
purchase up to 100,000 shares of Common Stock under the 1994 Plan, subject
to vesting in equal annual installments over four years. In September 1997,
the Company granted Mr. Saranga an additional option to purchase up to
100,000 shares of the Common Stock of the Company under the 1994 Plan. Such
option will become vested on December 31, 2000 if Mr. Saranga remains an
employee of the Company on such date. Moreover, in September 1997 the
Company also granted Mr. Saranga the right to receive 35,000 performance
shares of Common Stock annually under the 1994 Plan to be issued if certain
personal and financial milestones are met as of January 1, 1998, 1999 and
2000. See "--Option Repricing" and "Stock Plans--1994 Stock Option and
Award Plan."

(8) Mr. White resigned as Chairman, President and Chief Executive Officer in
July 1997.

(9) Mr. Coulter resigned as Executive Vice President, Worldwide Field
Operations, in July 1997.

(10) Mr. Alvarez resigned as Vice President, American Sales, in April 1997.

(11) Mr. Graham resigned as Senior Vice President, Finance, and Chief Financial
Officer in December 1996.

(12) Mr. Winder resigned as Senior Vice President, Japan Operations, in April
1997.

55
<PAGE>
AGGREGATE OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

The following table sets forth certain information regarding stock options
exercised during the fiscal year ended December 31, 1996 and held as of December
31, 1996 by the Named Executive Officers.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS
SHARES 1996 AT DECEMBER 31, 1996(2)
ACQUIRED OR VALUE -------------------------- ---------------------------
EXERCISED REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT EXECUTIVE OFFICERS

Robert J. Finocchio, Jr.
(3)........................ -- $ -- -- -- $ -- $ --

Jean-Yves F. Dexmier (4)..... -- -- -- -- -- --

Myron (Mike) Saranga......... 65,000 899,842 67,500 217,500 439,842 1,569,684

FORMER EXECUTIVE OFFICERS

Phillip E. White (5)......... 140,000 3,219,368 1,037,500 382,500 14,669,971 2,802,188

D. Kenneth Coulter (6)....... 50,000 1,111,560 207,500 105,000 2,748,199 840,000

Ronald M. Alvarez (7)........ 52,000 754,562 10,000 50,000 36,250 355,000

Howard H. Graham (8)......... 125,000 2,187,310 60,000 -- 506,250 --

Edwin C. Winder (9).......... 30,000 543,100 242,500 87,500 3,995,617 700,938
</TABLE>

- --------------------------

(1) Market value at the time of exercise less the applicable exercise price

(2) Market value of underlying securities as of December 31, 1996 as reported on
the Nasdaq National Stock Market minus the exercise price.

(3) Mr. Finocchio became Chairman, President and Chief Executive Officer in July
1997.

(4) Mr. Dexmier became Executive Vice President, Finance, Chief Financial
Officer and Secretary in October 1997.

(5) Mr. White resigned as Chairman, President and Chief Executive Officer of the
Company in July 1997.

(6) Mr. Coulter resigned as Executive Vice President, Worldwide Field
Operations, in July 1997.

(7) Mr. Alvarez resigned as Vice President, American Sales, in April 1997.

(8) Mr. Graham resigned as Senior Vice President, Finance, and Chief Financial
Officer in December 1996.

(9) Mr. Winder resigned as Senior Vice President, Japan Operations, in April
1997.

OPTION REPRICING

In September 1997, the Company's Board of Directors authorized the repricing
of outstanding options to purchase Common Stock under the Company's stock option
plans. Employees were eligible to participate only if they remained actively
employed at the effective date of the repricing and were only permitted to
exchange options outstanding prior to May 1, 1997. The repricing/option exchange
was effective November 21, 1997 (the "Repricing Effective Date"). The repricing
program offered eligible employees the opportunity to exchange eligible
outstanding options with exercise prices in excess of the closing sales price of
the Company's Common Stock on the Repricing Effective Date for a new option with
an exercise price equal to such price. Other than the exercise price, each new
option issued upon exchange has terms substantially equivalent to the
surrendered option, including with respect to the number of shares, vesting
terms and expiration. Options issued in connection with the exchange may not be
exercised for a period of one year from the Repricing Effective Date, however.
In addition, officers of the Company participating in the option exchange were
required to forfeit 20% of the shares subject to each option

56
<PAGE>
being surrendered. The exercise price for repriced options was $7.1563, the
closing sales price of the Company's Common Stock on the Repricing Effective
Date.

Of the Named Executive Officers, only Myron (Mike) Saranga, the Company's
Senior Vice President, Product Management and Development, was eligible to have
any options repriced. As of the Repricing Effective Date, Mr. Saranga held
options to acquire 755,000 shares of Common Stock, all of which had been granted
under the 1994 Plan and the 1986 Stock Option Plan. Mr. Saranga chose to reprice
options to purchase up to 230,000 shares, of which options to purchase 100,000
shares had an exercise price of $24.125 per share and of which options to
purchase 130,000 shares had an exercise price of $18.25 per share. As a result
of such repricing, Mr. Saranga forfeited his right to purchase 46,000 shares. Of
the options to purchase up to 230,000 shares that Mr. Saranga chose to reprice,
options to purchase up to 90,000 shares were vested at the time Mr. Saranga made
his election.

In December 1997, the Company's Board of Directors authorized a second
option repricing to be effective January 9, 1998 (the "Second Repricing
Effective Date") based upon the closing sales price of the Company's Common
Stock as of the Second Repricing Effective Date. Under the terms of the second
repricing, each employee, excluding officers and directors of the Company, may
exchange any option outstanding as of May 1, 1997 for a new option with an
exercise price equal to the closing sales price on the Second Repricing
Effective Date. Options exchanged in the second repricing may not be exercised
for a period of one year from the Second Repricing Effective Date.

STOCK PLANS

1994 STOCK OPTION AND AWARD PLAN. The Company's 1994 Stock Option and Award
Plan, as amended (the "1994 Plan"), provides for the grant to employees of
either options to purchase shares of Common Stock or the award of performance
shares of Common Stock to be paid to employees upon the achievement of certain
performance goals set for such employees. Options granted under the 1994 Plan
may be either "incentive stock options" as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or nonqualified stock
options. Stock options or performance awards granted under the 1994 Plan shall
be referred to herein as "Awards." The 1994 Plan became effective in March 1994.
The 1994 Plan replaced the Company's 1986 Stock Option Plan for Employees (the
"Prior Plan"). Options previously issued under the Prior Plan continue to be
exercisable according to their terms. Unless terminated sooner, without contrary
action by the Company's stockholders, the 1994 Plan will terminate automatically
in March 2004. A total of 16,000,000 shares of Common Stock had been reserved
for issuance under the 1994 Plan at September 28, 1997, with a maximum of
800,000 of those shares available for award as performance shares.

The 1994 Plan may be administered by a committee of the Board of Directors
(the "Committee"), which shall be comprised solely of directors who are both
"disinterested persons" under Rule 16b-3 of the Exchange Act and "outside
directors" under Section 162(m) of the Code. The 1994 Plan is currently
administered by the Compensation Committee of the Board of Directors. The
Committee has the power, among other things, to determine which employees shall
be granted Awards, to prescribe the terms and conditions of the Awards and to
interpret the 1994 Plan and Awards. In addition, the Committee has the authority
to amend, suspend or terminate the 1994 Plan, provided that no such action may
adversely affect any Award previously granted under the 1994 Plan. In addition,
in May 1997, the Company's stockholders approved an increase by 8,000,000 shares
in the number of shares reserved for issuance under the 1994 Plan, provided that
options to acquire such additional shares may not be repriced without
stockholder approval.

Options granted under the 1994 Plan are not generally transferable by the
optionee, and each option is generally exercisable during the lifetime of the
optionee only by such optionee. Options granted under the 1994 Plan must
generally be exercised within three months of the termination of optionee's
status as an employee of the Company or within 12 months after such employee's
termination by death or disability,

57
<PAGE>
but in no event later than the expiration of ten-years from the date of grant of
such option. The Committee has the discretion to extend or accelerate the
exercisability of options following a termination of the optionee's employment
but in no event for more than ten years after the date of grant of such option.
The exercise price of nonstatutory stock options granted under the 1994 Plan
must at least be equal to the fair market value of the Common Stock on the date
of grant. The exercise price of all incentive stock options granted under the
1994 Plan must generally be at least equal to the fair market value of the
Common Stock on the date of grant. In the event of certain transactions
specified in Section 424(d) of the Code where the Company is assuming stock
options granted to an employee by such employee's previous employer, the
Committee may grant substitute options under the 1994 Plan with an exercise
price less than fair market value. The term of all other options granted under
the 1994 Plan may not exceed ten years. Notwithstanding the foregoing, with
respect to any participant who owns stock possessing more than ten percent of
the voting power of all classes of the Company's outstanding capital stock, the
exercise price of any incentive stock option granted must equal at least 110% of
the fair market value on the grant date and the term of such incentive stock
option must not exceed five years.

No employee shall be granted in any fiscal year options to purchase more
than 500,000 shares, except that new employees and newly appointed executive
officers may be granted options under the 1994 Plan to purchase up to 1,000,000
shares in the fiscal year of their hire or appointment. Generally, options
granted under the 1994 Plan are not exercisable until one year after the date of
grant, with 25% vesting on the first year anniversary and 25% vesting on the
second, third and fourth anniversaries of the option grant date. Options which
are unexercisable at the time of an employee's death or disability but which
would otherwise become exercisable within one year of such date will
automatically accelerate to the date of the employee's death or disability. The
consideration to be paid upon exercise of an option may be cash, other shares
(with certain restrictions) or such other form of consideration as may be
acceptable to the Committee.

No employee shall receive more than 200,000 shares pursuant to a performance
award in any fiscal year. In all cases, the performance period relating to a
performance award grant shall exceed six months in duration. Such performance
may be qualified as "performance based compensation" under Section 162(m) of the
Code in the Committee's discretion and may be based on the achievement of goals
relating to Company revenue, return on stockholders' equity and/or earnings per
share. Shares of Common Stock of the Company will be paid out to employees based
on his or her achievement of certain performance milestones. The 1994 Plan
provides that in the event of a merger or consolidation of the Company with or
into another corporation, a sale of substantially all of the Company's assets or
certain other changes in control of the Company, the number of shares
purchasable under options granted under the 1994 Plan and the corresponding
exercise price will be adjusted in connection with such corporate restructuring
and that, with regard to the performance shares outstanding, the Committee shall
determine the appropriate actions to prevent the dilution or diminishment of the
awards.

As of September 28, 1997, 33,105,759 shares of Common Stock had been issued
upon exercise of options outstanding under the Prior Plan and 148,970 shares of
Common Stock had been issued upon exercise of options outstanding under the 1994
Plan. Options to purchase 6,582,787 shares of Common Stock at a weighted average
exercise price of $6.60 were outstanding under the Prior Plan, and options to
purchase 11,361,709 shares of Common Stock at a weighted average exercise price
of $20.59 were outstanding under the 1994 Plan (without giving effect to an
option repricing effected in November 1997). Additionally, 105,000 shares of
Common Stock have been awarded in connection with performance shares awards
under the 1994 Plan but have not yet been issued. Moreover, as of September 28,
1997, options to purchase 1,070,664 shares of Common Stock of the Company
assumed in connection with the acquisition of Illustra were outstanding with a
weighted average exercise price of $1.76 and are exercisable according to their
terms (without giving effect to an option repricing effected in November 1997).
As of September 28, 1997, 4,489,321 shares remained available for issuance under
the 1994 Plan, including 695,000 shares available for issuance as performance
shares.

58
<PAGE>
1997 EMPLOYEE STOCK PURCHASE PLAN. The Company's 1997 Employee Stock
Purchase Plan (the "1997 Purchase Plan") became effective in July 1997 and shall
continue in effect until terminated by the Company. The 1997 Purchase Plan
replaces the Corporation's Employee Stock Purchase Plan which expired on July 1,
1997. A total of 4,000,000 shares of Common Stock has been reserved for issuance
under the 1997 Purchase Plan, all of which remained available for issuance under
the 1997 Purchase Plan at September 28, 1997. The 1997 Purchase Plan, which is
intended to qualify under Section 423 of the Internal Revenue Code, has four
three-month offering periods each year beginning on the first trading day on or
after July 1, October 1, January 1 and April 1. The 1997 Purchase Plan is
administered by the Board of Directors or by a committee appointed by the Board
(the "Committee"). The 1997 Purchase Plan is currently administered by the
Compensation Committee. Employees are eligible to participate if they are
customarily employed by the Company for more than 20 hours per week and more
than five months during a calendar year and have completed a two year service
period with the Company. Moreover, employees are not eligible to participate in
the 1997 Purchase Plan if they possess or have the right to acquire five percent
(5%) or more of the voting stock of the Company or any of its subsidiaries. The
1997 Purchase Plan permits participants to purchase Common Stock through payroll
deductions of up to 15% of an employee's compensation, including commissions,
overtime and bonuses. The price of Common Stock purchased under the 1997
Purchase Plan is 85% of the lower of the fair market value of the Common Stock
at the beginning or at the end of each offering period as reported on the Nasdaq
National Stock Market for the day in question. Employees may not purchase more
than 500 shares of Common Stock during any three month offering period. In
addition, employees will not be granted the right to purchase shares of Common
Stock under the 1997 Purchase Plan at a rate which accrues in excess of $25,000
of fair market value at the applicable grant dates of such shares. Employees may
end participation at any time during an offering period, and they will be paid
their payroll deductions to date. Participation ends automatically upon
termination of employment with the Company.

Rights granted under the 1997 Purchase Plan are not transferable by a
participant other than by will, the laws of descent and distribution or as
otherwise provided under the 1997 Purchase Plan. The 1997 Purchase Plan provides
that, in the event of a merger of the Company with or into another corporation
or a sale of substantially all of the Company's assets, the Board of Directors
may make such adjustment, if any, as it deems appropriate in the number, kind
and purchase price of the shares available for purchase under the 1997 Purchase
Plan and in the maximum number of shares subject to any option under the 1997
Purchase Plan. The Board of Directors has the authority to amend or terminate
the 1997 Purchase Plan. If the 1997 Purchase Plan is terminated, the Board may
elect to terminate all outstanding options either immediately or upon completion
of the purchase of shares on the next purchase date or may elect to permit
options to expire in accordance with their terms.

1989 OUTSIDE DIRECTORS STOCK OPTION PLAN. Outside directors are entitled to
participate in the 1989 Outside Directors Stock Option Plan, as amended, (the
"Director Plan"). The Director Plan has a term of 20 years, unless terminated
sooner by the Board. A total of 1,600,000 shares of Common Stock has been
reserved for issuance under the Director Plan. The Director Plan provides for
the automatic grant of 15,000 shares of Common Stock to each eligible outside
director on the date such person first is elected as a director. In addition,
outside directors shall automatically be granted an option to purchase 15,000
shares at each time such outside director is re-elected to the Board of
Directors. Each option granted under the Director Plan shall have a term of ten
years and the shares subject to the option shall vest over three years with
one-third of the shares vesting on each of the first three anniversaries of the
grant date. The exercise prices of the options granted under the Director Plan
shall be 100% of the fair market value per share of the Common Stock, generally
determined with reference to the closing price of the Common Stock as reported
on the Nasdaq National Market on the date of grant. In the event of a change of
control of the Company, each option granted under the Director Plan shall become
fully vested and exercisable. Options granted under the Director Plan must be
exercised within one month of the end of the optionee's tenure as a director of
the Company, or within 12 months after such director's termination by death or
disability, but in no event later than the expiration of the option's ten-year
term. No option granted under the Director

59
<PAGE>
Plan is transferable by the optionee other than by will or the laws of descent
and distribution, and each option is exercisable, during the lifetime of the
optionee, only by such optionee.

401(K) PLAN. The Company has adopted a tax-qualified employee savings and
retirement plan (the "401(k) Plan"). All U.S. employees except temporary
employees, leased employees, non-resident alien employees with no U.S.-source
income, union employees and employees of an affiliated employer not authorized
to participate in the 401(k) Plan are eligible to participate as of their date
of hire. Eligible employees may elect to defer between one percent (1%) and
fifteen percent (15%) of their compensation in the 401(k) Plan, subject to the
statutorily prescribed annual limit. The Company may make matching contributions
on behalf of all participants in the 401(k) Plan in an amount determined by the
Company's Board of Directors. The matching contribution for the year ended
December 31, 1996 was 50% of employee deferrals, up to a maximum of $2,000 per
employee. The Company may also make additional discretionary profit sharing
contributions in such amounts as determined by the Board of Directors, subject
to statutory limitations on contributions made by employees and employers under
such plans. Matching contributions are subject to a vesting schedule; all other
contributions are at all times fully vested. Employees may borrow from the
401(k) Plan, and may request withdrawal from their account in the case of
hardship or on attainment of age 59 1/2. The 401(k) Plan is intended to qualify
under Sections 401 and 501 of the Internal Revenue Code of 1986, as amended, so
that contributions by employees or by the Company to the 401(k) Plan, and income
earned on plan contributions, are not taxable to employees until withdrawn from
the 401(k) Plan, and so that contributions by the Company, if any, will be
deductible by the Company when made. The trustee under the 401(k) Plan, at the
direction of each participant, invests the assets of the 401(k) Plan in any of a
number of investment options.

EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS

On July 18, 1997, the Company entered into an at-will employment agreement
with Mr. Finocchio, the Company's Chairman, President and Chief Executive
Officer. The agreement provides for an annual base salary of $460,000, subject
to annual review concerning increases. Pursuant to the agreement, the Company
granted Mr. Finocchio an option to purchase 1,000,000 shares of Common Stock
under the 1994 Plan at an exercise price per share of $10.8125, subject to
vesting in equal annual installments over four years. In addition, the Company
granted Mr. Finocchio an option outside the 1994 Plan to acquire an additional
500,000 shares of Common Stock at an exercise price of $10.8125, subject to
vesting under the same terms as the grant under the 1994 Plan. In the event of a
merger or change in control of the Company within six months after the date of
the agreement, the exercisability of Mr. Finocchio's options will accelerate as
to two year's additional vesting. If such change of control takes place after
such six month period, the exercisability of Mr. Finocchio's options will
accelerate so as to become fully vested.

On September 24, 1997, the Company entered into an at-will employment letter
agreement with Jean-Yves F. Dexmier, the Company's Executive Vice President,
Finance, Chief Financial Officer and Secretary, which provides for an annual
base salary of $350,000 and an annual cash bonus based on the achievement of
individual and Company performance objectives. In the event Mr. Dexmier is
terminated without cause within the first twelve months of his employment with
the Company, he will be entitled to receive severance in an amount equal to one
year of base salary plus any bonus he would have been entitled to receive under
the Company's executive compensation plan. If such termination occurs after Mr.
Dexmier's first twelve months with the Company, he shall be entitled to receive
as severance an amount equal to six months base salary. If there is a change in
control of the Company within the first twelve months Mr. Dexmier is employed
with the Company, Mr. Dexmier will be entitled to receive $1,000,000 less any
stock option profit realized upon the change in ownership. In connection with
his employment, the Company granted Mr. Dexmier an option under the 1994 Plan to
acquire 500,000 shares of Common Stock at an exercise price of $6.8125, subject
to vesting in equal annual installments over four years.

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<PAGE>
On September 18, 1997, the Company entered into an at-will employment letter
agreement with Wesley Raffel, the Company's Vice President, North American Field
Operations, which provides for an annual base salary of $250,000 and an annual
cash bonus based on the achievement of individual and Company performance
objectives. In the event of a change in the Chief Executive Officer or a change
in ownership of the Company, Mr. Raffel will be entitled to receive severance in
an amount equal to one year of base salary. In connection with his employment,
the Company granted Mr. Raffel an option under the 1994 Plan to acquire 325,000
shares of Common Stock at an exercise price of $7.3438, subject to vesting in
equal annual installments over four years.

In October 1997, the Company entered into Change of Control Agreements (the
"Change of Control Agreements") with Messrs. Dexmier and Raffel, Myron (Mike)
Saranga, the Company's Senior Vice President, Product Management and
Development, and Karen Blasing, the Company's Vice President and Corporate
Controller. The Change of Control Agreements, which are substantially similar
for each executive officer, provide that in the event a change in control of the
Company occurs prior to January 18, 1998, the exercisability of each executive
officers' stock options will accelerate as to two years additional vesting. If a
change of control occurs after such date, the exercisability of each executive
officer's options will accelerate so as to become fully vested.

Other than the employment arrangements described above, the Company does not
have employment agreements with any other current executive officer or director.

In April 1997, the Company entered into Separation Agreements with Ronald M.
Alvarez, the Company's former Vice President, American Sales, and Edwin C.
Winder, the Company's former Vice President, Japan Operations, in connection
with their resignations as executive officers of the Company. Under the terms of
their respective Separation Agreements, Mr. Alvarez and Mr. Winder received
payments for six months additional salary from the time of their resignations at
the rate of $17,083.33 and $18,250.00 per month, respectively. In addition, Mr.
Alvarez received a bonus in the amount of $7,686.00 for his services during the
Company's first fiscal quarter of 1997. As part of his Separation Agreement,
options to purchase 11,250 shares of Common Stock of the Company held by Mr.
Alvarez continued to vest during the six months subsequent to his resignation
date. The Company also agreed to pay both Mr. Alvarez and Mr. Winder additional
fees for outplacement services and legal fees incurred in connection with the
negotiation of their respective Separation Agreements.

In connection with D. Kenneth Coulter's resignation as Executive Vice
President, Worldwide Field Operations in July 1997, and pursuant to an
Employment Agreement the Company previously entered with Mr. Coulter, the
Company will pay Mr. Coulter an aggregate of $106,954 over the five month period
ending December 31, 1997.

In connection with Philip E. White's resignation as Chairman, President and
Chief Executive Officer in July 1997, and pursuant to his employment agreement
with the Company, the Company is obligated to pay Mr. White six months salary at
a rate of $39,583.34 per month from the time of his resignation.

The Company has entered into severance arrangements with additional former
executive officers of the Company. See "Certain Transactions."

The Company has also adopted a Rights Agreement, commonly referred to as a
poison pill. See "Description of Capital Stock--Rights Agreement."

LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS

The Company has adopted provisions in its Amended and Restated Certificate
of Incorporation that eliminate to the fullest extent permissible under Delaware
law the liability of its directors to the Company for monetary damages. Such
limitation of liability does not affect the availability of equitable remedies
such as injunctive relief or rescission. The Company's Bylaws provide that the
Company shall indemnify its directors and officers to the fullest extent
permitted by Delaware law, including in circumstances in which

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<PAGE>
indemnification is otherwise discretionary under Delaware law. The Company has
entered into indemnification agreements with its officers and directors
containing provisions which may require the Company, among other things, to
indemnify the officers and directors against certain liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature), and to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified. See "Business--Legal Proceedings."

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<PAGE>
CERTAIN TRANSACTIONS

In June 1993, the Company made a loan in the principal amount of $150,000 to
Myron (Mike) Saranga, the Company's Senior Vice President, Product Management
and Development, in connection with his accepting employment by the Company. The
loan is secured by a second deed of trust on residential real property acquired
by Mr. Saranga in California and was originally due and payable in full on the
earliest of June 2, 1995, the date Mr. Saranga sold certain residential real
property located in Connecticut or the date Mr. Saranga's employment with the
Company was terminated. In June 1995, Mr. Saranga and the Company amended the
loan to increase the interest rate of 3.56% per annum to 6.55% per annum and to
provide that $30,000 of principal, and accrued interest, would be forgiven on
June 2, 1996 and each anniversary thereafter until the loan is no longer
outstanding, provided that Mr. Saranga remains an employee of the Company. The
loan continues to provide that the full amount of unpaid principal and accrued
interest will become immediately due and payable on the date Mr. Saranga's
employment with the Company is terminated for any reason. In June 1996 and June
1997 the Company forgave $39,825 and $37,860 of principal and interest loan
under the promissory note, respectively (such figures include a gross up to
satisfy certain tax obligations). As of September 28, 1997, outstanding
principal under the note totaled $90,000.

The Company has entered into employment and change of control agreements
with certain executive officers of the Company. See "Management--Employment
Agreements and Change in Control Arrangements."

In connection with Frank J. Bergandi's resignation as Vice President, North
American Sales, in December 1995, the Company entered into a Separation
Agreement with Mr. Bergandi whereby the Company agreed to pay Mr. Bergandi six
months salary at a rate of $15,833.33 per month during a six month transition
period. The Company also agreed that options to purchase up to an aggregate of
95,000 shares of Common Stock of the Company held by Mr. Bergandi would continue
to vest during such transition period.

In connection with Richard H. Williams' resignation as Senior Vice
President, Business Units, in September 1996, the Company entered into a
Separation Agreement with Mr. Williams whereby the Company agreed to pay Mr.
Williams $132,500 in a lump sum payment, which represented six months of Mr.
Williams' base salary. Moreover, the Company agreed that certain additional
unvested restricted stock to purchase up to 77,283 shares of Common Stock of the
Company held by Mr. Williams would continue to vest during the five month period
following his resignation from the Company. The Company also agreed to pay Mr.
Williams $1,000 for each day that he performed consulting services for the
Company during the five months following his resignation; however, Mr. Williams
did not perform any consulting services for the Company during such period. In
addition, under the terms of a restricted stock purchase agreement the Company
previously entered into with Mr. Williams, in connection with Mr. Williams'
resignation, the Company purchased 128,804 shares of restricted stock that had
been held by Mr. Williams for $24,999.81.

In connection with Richard Blass' resignation as Vice President, Americas
Finance, in November 1996, the Company entered into a Separation Agreement with
Mr. Blass whereby it agreed to pay Mr. Blass five and one-half months salary at
a rate of $11,500.00 per month following his resignation. The Company also
agreed to pay Mr. Blass an additional six months salary, at the same rate of
$11,500.00 per month, either in a lump sum payment or over six months following
such five and one-half month transition period. Under his Separation Agreement,
the Company also agreed to pay Mr. Blass up to $5,000 for outplacement services.

In January 1997, the Company made a loan in the principal amount of $150,000
to Alan Henricks, the Company's former Executive Vice President and Chief
Financial Officer, at an interest rate of seven percent (7.0%) per annum in
connection with his appointment as Chief Financial Officer. Under the terms of
the loan, $50,000 of principal would be forgiven on December 20 of each year
that Mr. Henricks remained an employee of the Company. In connection with Mr.
Henricks' resignation in April 1997, the

63
<PAGE>
Company entered into a Separation Agreement with Mr. Henricks whereby the
Company agreed to pay Mr. Henricks nine months salary at a rate of $25,000.00
per month following his resignation. In addition, Mr. Henricks agreed to repay
the outstanding principal and interest under the note in equal monthly
installments of $17,156.00 through deductions from Mr. Henricks' monthly
severance payments described above.

In connection with David H. Stanley's resignation as Vice President, Legal,
and General Counsel in October 1997, the Company entered into a Separation
Agreement with Mr. Stanley whereby the Company agreed to pay Mr. Stanley six
months salary at a rate of $16,666.67 per month following his resignation. In
addition, the Company agreed that unvested options to purchase up to an
aggregate of 150,000 shares of Common Stock of the Company held by Mr. Stanley
would continue to vest during a one month transition period. Under the
Separation Agreement the Company also agreed to pay Mr. Stanley up to $5,000 for
outplacement services.

In January 1989, the Company entered into an Employment Agreement with
Philip E. White, the Company's former Chairman, President and Chief Executive
Officer which provided for certain severance arrangements in the event Mr. White
left the Company. In addition, in connection with their resignation from their
respective positions with the Company in fiscal 1997, Ronald M. Alvarez, the
Company's former Vice President, American Sales, Edwin C. Winder, the Company's
former Vice President, Japan Operations, and D. Kenneth Coulter, the Company's
former Vice President, Worldwide Field Operations, entered into Separation
Agreements with the Company. For a description of the Company's severance
obligations to Messrs. White, Alvarez and Coulter under their respective
agreements with the Company, see "Management--Employment Agreements on Change in
Control Arrangements."

Albert F. Knorp, a director of the Company, is of counsel to the law firm of
Gray Cary Ware & Freidenrich, which provided legal services to the Company in
1996 in connection with certain corporate, licensing and trademark matters.

On November 17, 1997, the Company issued 160,000 shares of Series A-1
Preferred in cancellation of and exchange for all of the outstanding Series A
Preferred previously issued in connection with a Subscription Agreement, dated
August 12, 1997, between Fletcher International Limited and the Company. The
issuance of the Series A-1 Preferred in exchange for the Series A Preferred was
effected in reliance on the exemption under Section 3(a)(9) of the Securities
Act. See "Description of Capital Stock-- Preferred Stock."

In connection with the issuance of the Series B Preferred in November 1997,
the Company paid The Shemano Group, Inc. ("Shemano") a fee of $1,000,000 for
financial advisory services provided in connection with such financing. In
addition, the Company issued Shemano 100,000 shares of its Common Stock, which
are being registered and offered for resale pursuant to this Prospectus. The
Company also agreed to issue Shemano a warrant to purchase up to an additional
50,000 shares of Common Stock in the event that, as of April 17, 1998, the
trading price of the Company's Common Stock is less than $12.50.

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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding equity securities as of September 28,
1997, after giving effect to the conversion of all of the Company's Series B
Preferred Stock into 12,500,000 shares of Common Stock based upon an assumed
conversion price of $4.00 per share and the Warrants to acquire an aggregate of
2,700,000 shares of Common Stock and the issuance of 100,000 shares of Common
Stock of the Company to Shemano in connection with the Company's sale of the
Series B Preferred, by (i) each person or entity who is known by the Company to
own beneficially 5% or more of the Company's outstanding Common Stock or Series
A-1 Preferred Stock; (ii) each director of the Company; (iii) each of the Named
Executive Officers; (iv) all current directors and executive officers of the
Company as a group; and (v) each Selling Stockholder. Both the Series A-1
Preferred and the Series B Preferred are non-voting equity securities. See
"Description of Capital Stock--Preferred Stock."

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING (2) AFTER OFFERING (2)
------------------------ NUMBER OF ------------------------
PERCENT OF SHARES PERCENT OF
NAME AND ADDRESS OF STOCKHOLDER(1) NUMBER CLASS OFFERED NUMBER CLASS
- ------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
COMMON STOCK

5% STOCKHOLDERS
The Equitable Companies Incorporated (3).................. 13,192,382 8.0% -- 13,192,382 8.0%
787 Seventh Avenue
New York, New York 10019

DIRECTORS AND CURRENT EXECUTIVE OFFICERS
Leslie G. Denend (4)...................................... -- -- -- --
Jean-Yves F. Dexmier (5).................................. -- -- -- -- --
Robert J. Finocchio, Jr. (6).............................. 100 -- 100 *
Albert F. Knorp, Jr. (7).................................. 153,868 * -- 153,868 *
James L. Koch (8)......................................... 84,000 * -- 84,000 *
Thomas A. McDonnell (9)................................... 130,000 * -- 130,000 *
Myron (Mike) Saranga (10)................................. 226,760 * -- 226,760 *
Cyril J. Yansouni (11).................................... 40,000 * -- 40,000 *
All current directors and executive officers as a group
(14 persons) (12)....................................... 1,747,179 1.1% -- 1,747,179 1.1%

FORMER EXECUTIVE OFFICERS
Ronald M. Alvarez (13).................................... 38,750 * -- 38,750 *
D. Kenneth Coulter (14)................................... 292,701 * -- 292,701 *
Howard H. Graham (15)..................................... 5,098 * -- 5,098 *
Phillip E. White (16)..................................... 1,307,819 * -- 1,307,891 *
Edwin C. Winder (17)...................................... 311,605 * -- 311,605 *

SELLING STOCKHOLDERS
CC Investments, LDC (18)(19).............................. 3,800,000 2.3% 3,800,000 -- --
Proprietary Convertible Investment Group Inc. (18)(20).... 6,080,000 3.7% 6,080,000 -- --
Capital Ventures International (18)(21)................... 5,320,000 3.2% 5,320,000 -- --
The Shemano Group Inc. (22)............................... 100,000 * 100,000 -- --

SERIES A-1 PREFERRED STOCK

5% STOCKHOLDERS
Fletcher International Limited (23)....................... 300,000 100.0% -- 300,000 100.0%
c/o Midland Bank Trust Corporation (Cayman) Limited
P.O. Box 1109, Mary Street
Grand Cayman, Cayman Islands
British West Indies
</TABLE>

- --------------------------

* Less than 1%.

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<PAGE>
(1) Unless otherwise indicated, the address for each listed stockholder, other
than the Selling Stockholders, is c/o Informix Corporation, 4100 Bohannon
Drive, Menlo Park, California 94025. Except as otherwise indicated, and
subject to applicable community property laws, the persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock held by them.

(2) For figures related to holdings of Common Stock, applicable percentage
ownership is based on 165,028,733 shares of Common Stock outstanding as of
September 28, 1997, together with applicable options or warrants for such
stockholder. Such outstanding Common Stock share figure assumes (i) the
conversion of the outstanding Series B Preferred into 12,500,000 shares of
Common Stock based on an assumed conversion price of $4.00 per share and
(ii) the issuance of 100,000 shares of Common Stock to Shemano in
connection with the Company's sale of the Series B Preferred. Beneficial
ownership is determined in accordance with the rules of the Commission and
generally includes voting or investment power with respect to securities,
subject to community property laws, where applicable. Shares of Common
Stock or Series A-1 Preferred subject to options or warrants that are
presently exercisable or exercisable within 60 days of September 28, 1997
are deemed to be beneficially owned by the person holding such options or
warrants for the purpose of computing the percentage of ownership of such
person but are not treated as outstanding for the purpose of computing the
percentage of any other person. To the extent that any shares are issued
upon exercise of options, warrants or other rights to acquire the Company's
capital stock that are presently outstanding or granted in the future or
reserved for future issuance under the Company's stock plans, there will be
further dilution to new public investors.

(3) Based solely on a Schedule 13G, dated February 13, 1997, filed with the
Commission, indicating beneficial ownership as of December 31, 1996.

(4) Mr. Denend is a member of the Company's Board of Directors.

(5) Mr. Dexmier is the Company's Executive Vice President, Finance, Chief
Financial Officer and Secretary. See "Management--Employment Agreements and
Change-in-Control Arrangements."

(6) Mr. Finocchio is the Chairman and Chief Executive Officer. See
"Management--Employment Agreements and Change-in-Control Arrangements."

(7) Includes 25,000 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of September 28, 1997. Mr. Knorp is a member of
the Company's Board of Directors.

(8) Includes 82,000 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of September 28, 1997. Mr. Koch is a member of
the Company's Board of Directors.

(9) Includes 85,000 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of September 28, 1997. Mr. McDonnell is a member
of the Company's Board of Directors.

(10) Includes 225,000 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of September 28, 1997. Mr. Saranga is the
Company's Senior Vice President, Product Management and Development. Mr.
Saranga forfeited options to aquire 46,000 shares of Common Stock in
connection with an option repricing in November 1997; certain of those
forfeited options are indicated as beneficially owned by Mr. Saranga. See
"Management--Option Repricing."

(11) Includes 40,000 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of September 28, 1997. Mr. Yansouni is a member
of the Company's Board of Directors.

(12) Includes 923,500 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of September 28, 1997.

(13) Includes 38,750 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of September 28, 1997. Mr. Alvarez resigned as
Vice President, American Sales, in April 1997. In connection with Mr.
Alvarez's resignation, the Company agreed to pay Mr. Alvarez an additional
six months salary following his resignation date pursuant to a Separation
Agreement entered into with Mr. Alvarez; consequently, Mr. Alvarez's
outstanding options remain exercisable until the three months from the end
of his severance period. See "Employment Agreements and Change in Control
Arrangements."

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<PAGE>
(14) Includes 283,750 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of September 28, 1997. Mr. Coulter resigned as
Executive Vice President, Worldwide Field Operations, in July 1997. In
connection with Mr. Coulter's resignation, the Company is paying Mr.
Coulter severance through December 31, 1997 pursuant to an Employment
Agreement previously entered into with Mr. Coulter; consequently Mr.
Coulter's outstanding options remain exercisable until three months from
the end of his severance period. See "Certain Transactions."

(15) Mr. Graham resigned as Senior Vice President, Finance, and Chief Financial
Officer in December 1996. Such share figure is based solely on a Form 4 for
Mr. Graham filed with the Commission on March 10, 1997, indicating
beneficial ownership as of February 28, 1997.

(16) Includes 1,295,000 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of September 28, 1997. Mr. White resigned as
Chairman of the Board of Directors, President and Chief Executive Officer
in July 1997. In connection with Mr. White's resignation, the Company is
paying Mr. White an additional six months salary following his resignation
date pursuant to an Employment Agreement previously entered into with Mr.
White; consequently Mr. White's outstanding options remain exercisable
until three months from the end of his severance period. See "Employment
Agreements and Change in Control Arrangements" and "Certain Transactions."

(17) Includes 297,500 shares of Common Stock issuable upon exercise of
outstanding options which are presently exercisable or will become
exercisable within 60 days of September 28, 1997. Mr. Winder resigned as
Senior Vice President, Japan Operations, in April 1997. In connection with
Mr. Winder's resignation, the Company agreed to pay Mr. Winder an
additional six months salary following his resignation date pursuant to a
Separation Agreement entered into with Mr. Winder; consequently, Mr.
Winder's outstanding options remain exercisable until three months from the
end of his severance period. See "Employment Agreements and Change in
Control Arrangements."

(18) Assumes (i) the conversion of all of such Selling Stockholder's Series B
Preferred into shares of Common Stock based on an assumed conversion price
of $4.00 per share and, upon conversion of the Series B Preferred, (ii) the
issuance and immediate exercisability of the Warrants based on the $4.00
per share conversion price. For a description of the terms of conversion of
the Series B Preferred, see "Description of Capital Stock--Preferred
Stock."

(19) Includes 675,000 shares of Common Stock issuable upon exercise of Warrants
held by such Selling Stockholder. Prior to the assumed conversion Series B
Preferred, such Selling Stockholder held 12,500 shares of Series B
Preferred, representing 25.0% of the Series B Preferred outstanding as of
the date of this Prospectus.

(20) Includes 1,080,000 shares of Common Stock issuable upon exercise of
Warrants held by such Selling Stockholder. Prior to the assumed conversion
Series B Preferred, such Selling Stockholder held 20,000 shares of Series B
Preferred, representing 40.0% of the Series B Preferred outstanding as of
the date of this Prospectus.

(21) Includes 945,000 shares of Common Stock issuable upon exercise of Warrants
held by such Selling Stockholder. Prior to the assumed conversion Series B
Preferred, such Selling Stockholder held 17,500 shares of Series B
Preferred, representing 35.0% of the Series B Preferred outstanding as of
the date of this Prospectus.

(22) Such shares were issued in connection with the sale of the Series B
Preferred. See "Certain Transactions."

(23) Includes 140,000 shares of Series A-1 Preferred issuable upon exercise of
the Series A-1 Warrant, which is presently exercisable. Based upon the
assumed exercise of the Series A-1 Warrant and an assumed Series A-1
Preferred conversion price of $4.00 per share, the maximum number of shares
of Common Stock of the Company that could be issued upon conversion of the
Series A-1 Preferred is 13,674,500 shares of Common Stock, which would
represent 7.7% of the outstanding Common Stock of the Company prior to the
offering. See "Description of Capital Stock--Preferred Stock."

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company is authorized to issue 500,000,000 shares of Common Stock, $0.01
par value, and 5,000,000 shares of Preferred Stock, $0.01 par value. Of the
Preferred Stock, 440,000 shares have been designated Series A Convertible
Preferred Stock, none of which are outstanding; 440,000 shares have been
designated Series A-1 Convertible Preferred Stock, of which 160,000 shares are
outstanding and of which 140,000 shares are issuable upon exercise of an
outstanding warrant; and 50,000 shares of Series B Convertible Preferred Stock,
all of which are outstanding. As of September 28, 1997, the Company had an
aggregate of 152,428,733 shares of Common Stock outstanding (not including (i)
shares of Common Stock issuable upon conversion of the Series A-1 Preferred or
the Series B Preferred and (ii) 100,000 shares of Common Stock issued to Shemano
in connection with the Company's sale of the Series B Preferred), and an
additional 19,292,160 shares of Common Stock were issuable upon exercise of
outstanding options, of which 8,152,335 shares were vested and exercisable.

The following description of the Company's capital stock does not purport to
be complete and is subject to and qualified in its entirety by the Company's
Amended and Restated Certificate of Incorporation and Bylaws, by the Company's
Certificates of Designation of Series A Convertible Preferred Stock, Series A-1
Convertible Preferred Stock and Series B Convertible Preferred Stock, by the
Rights Agreement and by the applicable provisions of Delaware law.

The Amended and Restated Certificate of Incorporation and Bylaws as well as
the Rights Agreement contain certain provisions that are intended to enhance the
likelihood of continuity and stability in the composition of the Board of
Directors and which may have the effect of delaying, deferring or preventing a
future takeover or change in control of the Company unless such takeover or
change in control is approved by the Board of Directors. In addition,
acquisitions of the Company and certain other change-in-control transactions may
not be effected without the consent of the holders of the outstanding Preferred
Stock or without requiring the acquiring entity to assume the Preferred Stock or
cause such Preferred Stock to be redeemed. These provisions are likely to make
an acquisition of the Company more difficult and expensive and could discourage
potential acquirors.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on all matters to
be voted upon by the stockholders. Holders of Common Stock do not have
cumulative voting rights, and, therefore, holders of a majority of the shares
voting for the election of directors can elect all of the directors. In such
event, the holders of the remaining shares will not be able to elect any
directors.

Holders of the Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor, subject to the terms of any existing or future agreements
between the Company and its debtholders. The Company has never declared or paid
cash dividends on its capital stock, expects to retain future earnings, if any,
for use in the operation and expansion of its business, and does not anticipate
paying any cash dividends in the foreseeable future. In the event of the
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets legally available for
distribution after payment of all debts and other liabilities and subject to the
prior rights of any holders of Preferred Stock then outstanding.

PREFERRED STOCK

The Company is authorized to issue 5,000,000 shares of Preferred Stock. The
Board of Directors has the authority to issue the Preferred Stock in one or more
series and to fix the price, rights, preferences, privileges and restrictions
thereof, including dividend rights, dividend rates, conversion rights, voting

68
<PAGE>
rights, terms of redemption, redemption prices, liquidation preferences and the
number of shares constituting a series or the designation of such series,
without any further vote or action by the Company's stockholders. To date, the
Company has used its ability to designate new series of Preferred Stock in
transactions intended to raise additional capital for the Company. The ability
to issue additional shares of Preferred Stock, however, also provides desirable
flexibility in connection with possible acquisitions and other corporate
purposes but could also have the effect of delaying, deferring or preventing a
change in control of the Company without further action by the stockholders and
may adversely affect the market price of, and the voting and other rights of,
the holders of Common Stock. The issuance of Preferred Stock with voting and
conversion rights may adversely affect the voting power of the holders of Common
Stock, including the loss of voting control to others.

On August 12, 1997, the Company issued 160,000 shares of Series A Preferred
to Fletcher International Limited ("Fletcher") for net proceeds of $37.2
million. In addition, the Company granted Fletcher a warrant to acquire up to an
additional 140,000 shares of Series A Preferred for a purchase price per share
of $250. On November 17, 1997, the Company issued 160,000 shares of the Series
A-1 Preferred in cancellation of and exchange for all of the outstanding Series
A Preferred previously issued to Fletcher. In connection with such cancellation
and exchange, the Company and Fletcher also agreed to cancel the previously
granted warrant to acquire Series A Preferred for the Series A-1 Warrant. The
rights, preferences and privileges of the Series A-1 Preferred are substantially
identical to those of the previously outstanding Series A Preferred, except that
the mandatory redemption terms and certain other provisions differ. In
particular, the holders of Series A Preferred could require the Company to
redeem the Series A Preferred in the event certain conditions were not met in
connection with a third party acquiring the Company or substantially all of its
assets. Under the terms of the Series A-1 Preferred, however, the Company, not
the holders of the Series A-1 Preferred, may make an election to redeem the
Series A-1 Preferred in the event of such a change of control transaction. As a
result of these differences, the Series A Preferred was excluded from
stockholders' equity in the Company's consolidated balance sheet, while the
Series A-1 Preferred is included in stockholders' equity.

The Series A-1 Preferred is convertible into shares of Common Stock at any
time after issuance. At the holder's option, each share of Series A-1 Preferred,
which has a face value of $250, is convertible into Common Stock at a per share
price equal to 101% of the average price of the Common Stock for the 30 trading
days ending five trading days prior to the conversion, but not greater than the
lesser of (i) 105% of the Common Stock average price of the first five trading
days of such thirty day period or (ii) $12. The number of shares of Common Stock
to be issued upon conversion will vary based on future stock price movements.
Holders of the Series A-1 Preferred will not be entitled to convert the Series
A-1 Preferred into more than 13,674,500 shares of Common Stock without first
giving the Company 65 days prior notice. Holders of the A-1 Preferred will be
entitled to a 15% annual dividend, payable quarterly in cash, in the event of
(i) the Company's failure to obtain stockholder approval within 90 days
following any date when the number of shares of Common Stock issuable or issued
upon conversion of the A-1 Preferred would have exceeded 19.9% of the Company's
outstanding Common Stock or (ii) the failure of the Company to have a
registration statement declared effective by the Commission under the Securities
Act within 180 days following the request of the holders of the Series A-1
Preferred. Such dividend rights will continue to accrue until such default has
been cured or the shares have been converted or redeemed. See "--Registration
Rights." In the event holders of the Series A-1 Preferred object to the terms of
a proposed acquisition of the Company, the Company may redeem shares of the
Series A-1 Preferred at a price of $250 per share, plus any accrued but unpaid
dividends. In the event the Company fails to redeem such shares, such failure
will be deemed a default and the Company will be obligated to pay a 15% annual
dividend (payable quarterly in cash) on such shares until redeemed or converted.
In the event the Company defaults on the payment of any required dividend, the
holders of Series A-1 Preferred will be entitled, voting separately as a class,
to appoint and elect a number of directors (not less than one) to the Company's
Board of Directors such that, following such election, such new directors will
represent a percentage of the total members of the Board that most nearly
approximates the percentage of ownership

69
<PAGE>
of the Company held by the holders of the Series A-1 Preferred on a
fully-diluted basis. The Series A-1 Preferred will automatically convert into
Common Stock 18 months following the date of its issuance by the Company;
however, in the event the Company defaults on the payment of a required dividend
other than as a result of a failure to redeem in connection with certain
acquisitions, the automatic conversion date of the Series A-1 Preferred will be
extended for a one-year period beginning on the date the default is first cured.
The automatic conversion date may also be extended for additional periods under
other circumstances. See "Risk Factors--Risks Associated with Convertible
Preferred Stock Financings."

The Series B Preferred is convertible at the election of the holder into
shares of Common Stock beginning on the date six months after issuance, and at
any time prior to such date upon the occurrence of certain events, including
merger and similar transactions which would result in a change of control of the
Company. The currently outstanding Series B Preferred was originally issued on
November 17, 1997. The Series B Preferred will automatically convert into Common
Stock three years following the date of its issuance by the Company. Each share
of Series B Preferred, which has a face value of $1,000, is convertible into (i)
shares of Common Stock at a per share price equal to the lowest of (A) the
average of the closing bid prices for the Common Stock for the 22 trading days
immediately prior to the 180th day following the initial issuance date of the
Series B Preferred, (B) 101% of the average of the closing bid prices for the
Common Stock for the 22 trading days ending five trading days prior to the date
of actual conversion, or (C) 101% of the lowest closing bid price for the Common
Stock during the five trading days immediately prior to the date of actual
conversion and (ii) Warrants to acquire that number of shares of Common Stock
equal to 20% of the shares determined pursuant to item (i). The exercise price
for the Warrants will be equal to 110% of the lesser of (A) the average of the
closing bid price for the Common Stock on the five trading days prior to
November 17, 1997 and (B) the average of the closing bid price for the Common
Stock on the five trading days occurring immediately prior to the date six
months after November 17, 1997. The conversion price of the Series B Preferred
is subject to modification and adjustment upon the occurrence of specified
events. The Series B Preferred accrues cumulative dividends at an annual rate of
5% of the face value of each share of Series B Preferred. The dividend is
generally payable upon the conversion or redemption of the Series B Preferred,
and may be paid in cash or, at the Company's election subject to certain
conditions, in shares of Common Stock. The Series B Preferred is junior to the
Company's outstanding Series A-1 Convertible Preferred Stock in respect of
liquidation preference and the right to receive dividend payments. See "Risk
Factors--Risks Associated with Convertible Preferred Stock Financings".

In connection with the issuance of the Series B Preferred in November 1997,
the Company paid Shemano a fee of $1,000,000 for financial advisory services
provided in connection with such financing. In addition, the Company issued
Shemano 100,000 shares of its Common Stock, which are being registered and
offered for resale pursuant to this Prospectus. The Company also agreed to issue
Shemano a warrant to purchase up to an additional 50,000 shares of Common Stock
in the event that, as of April 17, 1998, the trading price of the Company's
Common Stock is less than $12.50.

REGISTRATION RIGHTS

The Company has agreed that if the Commission imposes a holding period for
securities issued in reliance on the exemption from registration set forth in
Regulation S under the Securities Act longer than the 40 day period currently in
effect or materially restricts the ability of the holders of the Series A-1
Preferred to sell or otherwise dispose of such securities pursuant to Regulation
S, upon the request of the Series A-1 Preferred holders, the Company will file
with the Commission a registration statement under the Securities Act covering
that number of shares of the Company's Common Stock issued or issuable to such
holders upon conversion of the Series A-1 Preferred, and thereafter to use its
best efforts to cause such registration statement to become effective. The
Company has agreed to use its best efforts to keep any such registration
effective until the earlier of the date at which time all applicable securities
have been

70
<PAGE>
sold, the second anniversary of the issuance of the Series A Preferred shares or
at such time that such securities may otherwise be sold to the public absent
registration.

The Company also agreed to file with the Commission within 45 days following
the sale of the Series B Preferred a registration statement under the Securities
Act covering not less than 150% of that number of shares of Common Stock
issuable to the Series B Preferred holders upon conversion of the Series B
Preferred and upon exercise of the Warrants at the time of filing, and
thereafter to use its best efforts to cause such registration statement to
become effective. If the Commission has not declared the registration statement
filed in connection with the Series B Preferred effective prior to the 150th day
after the sale of such securities, the Company will be obligated to pay certain
damages to the Series B Preferred holders. The Company has agreed to maintain
the effectiveness of the registration statement filed in connection with the
Series B Preferred until the earlier to occur of the date on which all of the
applicable securities have been sold thereunder or such time that such
securities may be sold to the public without registration. In addition, the
Company has granted "piggyback" registration rights to holders of the Series B
Preferred, which permit such holders to include shares of Common Stock issuable
upon conversion of the Series B Preferred and upon exercise of the Warrants in
certain registration statements which may be filed by the Company covering the
sale of shares of Common Stock for the account of the Company.

ANTITAKEOVER EFFECTS OF PROVISIONS OF CERTIFICATE OF INCORPORATION AND BYLAWS;
RIGHTS AGREEMENT

The Company's Amended and Restated Certificate of Incorporation provides
that all stockholder actions must be effected at a duly called annual or special
meeting and may not be effected by written consent. The Company's Bylaws provide
that, except as otherwise required by law, special meetings of the stockholders
can only be called by the Board of Directors, the Chairman of the Board of
Directors, the Chief Executive Officer of the Company or stockholders holding
shares in the aggregate entitled to cast not less than 10% of the votes at such
meeting. In addition, the Company's Bylaws establish an advance notice procedure
for stockholder proposals to be brought before an annual meeting of
stockholders, including proposed nominations of persons for election to the
Board. Stockholders at an annual meeting may only consider proposals or
nominations specified in the notice of meeting or brought before the meeting by
or at the direction of the Board of Directors or by a stockholder who was a
stockholder of record on the record date for the meeting, who is entitled to
vote at the meeting and who has delivered timely written notice in proper form
to the Company's Secretary of the stockholder's intention to bring such business
before the meeting.

The Company's Board of Directors has declared a dividend of one Purchase
Right (a "Right") under the Company's Rights Agreement for each share of the
Company's Common Stock outstanding on September 17, 1991 or thereafter issued.
When exercisable, each Right initially entitles the holder to purchase one share
of Common Stock at a specified price. The Rights become exercisable on the
earlier of: (i) the tenth day (or such later date as may be determined by a
majority of the Company's Directors not affiliated with the acquiring person or
group (the "Continuing Directors")) after a person or group has acquired, or
obtained the right to acquire, beneficial ownership of 20% of more of the
Company's outstanding Common Stock or (ii) the tenth business day (or such later
date as may be determined by a majority of the Continuing Directors) following
the commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in beneficial ownership by
a person or group of 20% or more of the Company's outstanding Common Stock. If
an acquiror obtains 20% or more of the Company's outstanding Common Stock (other
than in certain permitted transactions), and unless the Rights are earlier
redeemed, the holder of each unexercised Right will have the right to receive
shares of the Company's Common Stock having a value equal to two times the
purchase price. Similarly, unless the Rights are earlier redeemed, after the
tenth day following certain acquisition transactions, proper provision must be
made so that holders of Rights (other than those beneficially owned by an
acquiring person, which will thereafter be void) will thereafter have the right
to receive, upon exercise, shares of common stock of the acquiring company
having a value equal to two times the purchase

71
<PAGE>
price. The Rights Agreement has been amended so as to prevent holders of the
Series A-1 Preferred and the holders of the Series B Preferred from being deemed
acquiring persons under the Rights Agreement by virtue of their beneficial
ownership of securities issued or issuable in connection with the sale and
issuance of Preferred Stock. The Rights expire on July 25, 2005 or on their
earlier exchange, redemption or expiration in connection with certain permitted
transactions. See "Executive Compensation--Employment Agreements and Change in
Control Arrangements."

The foregoing provisions of the Company's Amended and Restated Certificate
of Incorporation Bylaws and the Rights Agreement are intended to enhance the
likelihood of continuity and stability in the composition of the Board of
Directors and in the policies formulated by the Board of Directors and to
discourage certain types of transactions which may involve an actual or
threatened change of control of the Company. Such provisions are designed to
reduce the vulnerability of the Company to an unsolicited acquisition proposal
and, accordingly, could discourage potential acquisition proposals and could
delay or prevent a change in control of the Company. Such provisions are also
intended to discourage certain tactics that may be used in proxy fights but
could, however, have the effect of discouraging others from making tender offers
for the Company's shares and, consequently, may also inhibit fluctuations in the
market price of the Company's shares that could result from actual or rumored
takeover attempts. These provisions may also have the effect of preventing
changes in the management of the Company. In addition, acquisitions of the
Company and certain other change-in-control transactions may not be effected
without the consent of the holders of the outstanding Preferred Stock or without
requiring the acquiring entity to assume the Preferred Stock or cause such
Preferred Stock to be redeemed. These provisions are likely to make an
acquisition of the Company more difficult and expensive and could discourage
potential acquirors. See "Risk Factors--Risks Associated with Convertible
Preferred Stock Financings" and "--Effect of Certain Charter Provisions;
Limitation of Liability of Directors; Antitakeover Effects of Delaware Law."

EFFECT OF DELAWARE ANTITAKEOVER STATUTE

The Company is subject to Section 203 of the Delaware General Corporation
Law (the "Antitakeover Law"), which regulates corporate acquisitions. The
Antitakeover Law prevents certain Delaware corporations, including those whose
securities are listed for trading on the Nasdaq National Market, from engaging,
under certain circumstances in a "business combination" with any "interested
stockholder" for three years following the date that such stockholder became an
interested stockholder. For purposes of the Antitakeover Law, a "business
combination" includes, among other things, a merger or consolidation involving
the Company and the interested shareholder and the sale of more than ten percent
(10%) of the Company's assets. In general, the Antitakeover Law defines an
"interested stockholder" as any entity or person beneficially owning 15% or more
the outstanding voting stock of the Company and any entity or person affiliated
with or controlling or controlled by such entity or person. A Delaware
corporation may "opt out" of the Antitakeover Law with an express provision in
its original certificate of incorporation or an express provision in its
certificate of incorporation or bylaws resulting from amendments approved by the
holders of at least a majority of the Company's outstanding voting shares. The
Company has not "opted out" of the provisions of the Antitakeover Law. See "Risk
Factors--Effect of Certain Charter Provisions; Limitation of Liability of
Directors; Antitakeover Effects of Delaware Law."

TRANSFER AGENT

The Transfer Agent and Registrar for the Common Stock is Boston Equiserve
LP.

72
<PAGE>
PLAN OF DISTRIBUTION

The Company will not receive any proceeds from the sale of the Shares. The
Shares are being offered on behalf of the Selling Stockholders. The Shares may
be sold or distributed from time to time by the Selling Stockholders, or by
pledgees, donees or transferees of, or other successors in interest to, the
Selling Stockholders, directly to one or more purchasers (including pledgees) or
through brokers, dealers or underwriters who may act solely as agents or may
acquire Shares as principals, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices, at negotiated prices, or at
fixed prices, which may be changed. The sale of the Shares may be effected in
one or more of the following methods: (i) ordinary brokers' transactions, which
may include long or short sales; (ii) transactions involving cross or block
trades or otherwise on the Nasdaq National Stock Market; (iii) purchases by
brokers, dealers or underwriters as principal and resale by such purchasers for
their own accounts pursuant to this Prospectus; (iv) "at the market" to or
through market makers or into an existing market for the Shares; (v) in other
ways not involving market makers or established trading markets, including
direct sales to purchases or sales effected through agents; (vi) through
transactions in options, swaps or other derivatives (whether exchange-listed or
otherwise); or (vii) any combination of the foregoing, or by any other legally
available means. In addition, the Selling Stockholders or their successors in
interest may enter into hedging transactions with broker-dealers who may engage
in short sales of Shares in the course of hedging the positions they assume with
the Selling Stockholders. The Selling Stockholders or their successors in
interest may also enter into option or other transactions with broker-dealers
that require the delivery by such broker-dealers of the Shares, which Shares may
be resold thereafter pursuant to this Prospectus.

Brokers, dealers, underwriters or agents participating in the distribution
of the Shares as agents may receive compensation in the form of commissions,
discounts or concessions from the Selling Stockholders and/or purchasers of the
Shares for whom such broker-dealers may act as agent, or to whom they may sell
as principal, or both (which compensation as to a particular broker-dealer may
be less than or in excess of customary commissions). The Selling Stockholders
and any broker-dealers who act in connection with the sale of Shares hereunder
may be deemed to be "Underwriters" within the meaning of the Securities Act, and
any commissions they receive and proceeds of any sale of Shares may be deemed to
be underwriting discounts and commissions under the Securities Act. Neither the
Company nor any Selling Stockholder can presently estimate the amount of such
compensation. The Company knows of no existing arrangements between any Selling
Stockholder, any other stockholder, broker, dealer, underwriter or agent
relating to the sale or distribution of the Shares.

To the extent required, the specific shares of Common Stock to be sold, the
names of the Selling Stockholders, purchase price, public offering price, the
names of any such agent, dealer or underwriter and any applicable commission or
discount with respect to a particular offering will be set forth in an
accompanying Prospectus Supplement.

The Company has agreed to bear certain expenses of registration of the
Common Stock under the federal and state securities laws and of any offering and
sale hereunder not including certain expenses such as commissions or discounts
of underwriters, dealers or agents and fees attributable to the sale of the
Shares. The Company has agreed to indemnify the Selling Stockholders against
certain liabilities, including certain potential liabilities under the
Securities Act, or to contribute to payments the Selling Stockholders may be
required to make in respect thereof. See "Description of Capital
Stock--Registration Rights."

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company,
the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

73
<PAGE>
LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California.

EXPERTS

The consolidated financial statements of Informix Corporation at December
31, 1996, 1995 and for each of the three years in the period ended December 31,
1996, appearing in this Prospectus and Registration Statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.

74
<PAGE>
INFORMIX CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Informix Corporation Consolidated Financial Statements:

Report of Independent Auditors........................................................................... F-2

Consolidated Balance Sheets.............................................................................. F-3

Consolidated Statements of Operations.................................................................... F-4

Consolidated Statement of Stockholders' Equity (Deficit)................................................. F-5

Consolidated Statements of Cash Flows.................................................................... F-6

Notes to Consolidated Financial Statements............................................................... F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

BOARD OF DIRECTORS AND STOCKHOLDERS--INFORMIX CORPORATION

We have audited the accompanying consolidated balance sheets of Informix
Corporation as of December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for
each of the three years in the period ended December 31, 1996 (as restated).
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with 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.

Since the date of completion of our audit of the accompanying financial
statements and initial issuance of our report thereon dated February 3, 1997,
the Company, as discussed in Note 2, has experienced a substantial reduction in
revenues and operating losses that adversely affect the Company's current
results of operations and liquidity. Note 2 describes management's plans to
address these issues.

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, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

San Jose, California
February 3, 1997, except as to Notes 1, 2, 3 and 12,
as to which the date is November 16, 1997.

F-2
<PAGE>
INFORMIX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER-SHARE AMOUNTS)

<TABLE>
<CAPTION>
RESTATED--SEE NOTE 1
----------------------------
DECEMBER 31, DECEMBER 31,
1996 1995
SEPTEMBER 28, PRO FORMA ------------- -------------
1997 (NOTE 6)
------------- SEPTEMBER 28,
1997
(UNAUDITED) -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................... $ 78,935 $ 226,508 $ 164,305
Short-term investments.............................. 16,535 34,512 88,904
Accounts receivable, less allowance for doubtful
accounts of $29,541 at September 28, 1997 and
$21,429 in 1996 and $12,584 in 1995............... 137,223 194,499 166,716
Deferred taxes...................................... 50,655 42,133 24,536
Other current assets................................ 25,022 35,662 28,155
------------- ------------- -------------
Total current assets.............................. 308,370 533,314 472,616
------------- ------------- -------------
Property and equipment, at cost
Land................................................ 59,258 -- --
Computer equipment.................................. 206,421 225,336 103,650
Office equipment and leasehold improvements......... 76,756 67,982 49,292
Less accumulated depreciation and amortization...... (154,228) (106,591) (71,310)
------------- ------------- -------------
188,207 186,727 81,632
Software costs, less accumulated amortization of
$25,508 at September 28, 1997 and $41,559 in 1996
and $18,980 in 1995................................. 42,246 54,486 36,866
Deferred taxes........................................ 10,542 10,542 21,021
Long-term investments................................. 11,726 6,639 9,781
Intangible assets..................................... 8,297 34,693 40,730
Other assets.......................................... 18,210 55,597 19,799
------------- ------------- -------------
Total assets.......................................... $ 587,598 $ 881,998 $ 682,445
------------- ------------- -------------
------------- ------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable.................................... $ 46,610 $ 65,446 $ 29,646
Accrued expenses.................................... 69,290 59,723 35,480
Accrued employee compensation....................... 70,931 57,626 49,911
Income taxes payable................................ 6,896 7,369 34,392
Deferred maintenance revenue........................ 99,782 94,981 66,792
Advances on unearned license revenue................ 210,269 239,506 83,553
Other liabilities................................... 59,485 5,526 9,248
------------- ------------- -------------
Total current liabilities......................... 563,263 530,177 309,022
Other liabilities..................................... 6,927 2,359 2,846
Deferred taxes........................................ 24,085 24,158 12,830
Commitments and contingencies
Series A Convertible Redeemable Preferred stock, par
value $.01 per share, 160,000 issued and outstanding
at September 28, 1997, aggregate liquidation
preference of $40,000, none issued and outstanding
pro forma........................................... 37,200 $ -- -- --
Stockholders' Equity (Deficit):
Preferred stock, par value $.01 per share--5,000,000
shares authorized, none issued and outstanding at
September 28, 1997; 160,000 Series A-1 shares issued
and outstanding pro forma, aggregate liquidation
preference of $40,000............................... -- 2 -- --
Common stock, par value $.01 per share - 500,000,000
shares authorized, issued 152,429,000 at September
28, 1997, 150,782,000 and 147,984,000 in 1996 and
1995, respectively.................................. 1,524 1,524 1,508 1,480
Additional paid-in capital............................ 252,558 289,756 243,564 204,448
Retained earnings (accumulated deficit)............... (287,338) (287,338) 78,723 154,098
Unrealized gain (loss) on available-for-sale
securities, net of tax.............................. (433) (433) 11,690 4,064
Foreign currency translation adjustment............... (10,188) (10,188) (10,181) (6,343)
------------- ------------- ------------- -------------
Total stockholders' equity (deficit).............. (43,877) $ (6,677) 325,304 357,747
------------- ------------- ------------- -------------
-------------
Total Liabilities and Stockholders' Equity...... $ 587,598 $ 881,998 $ 682,445
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

See Notes to Consolidated Financial Statements.

F-3
<PAGE>
INFORMIX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)

<TABLE>
<CAPTION>
RESTATED--SEE NOTE 1
----------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
NINE MONTHS ENDED ---------- ---------- ----------
----------------------------
SEPTEMBER 28, SEPTEMBER 29,
1997 1996
------------- -------------
(UNAUDITED) (UNAUDITED)
(RESTATED)
<S> <C> <C> <C> <C> <C>
Net revenues:
Licenses..................................... $ 271,614 $ 346,215 $ 496,039 $ 458,284 $ 346,518
Services..................................... 209,532 164,786 231,810 174,486 105,451
------------- ------------- ---------- ---------- ----------
481,146 511,001 727,849 632,770 451,969
Costs and expenses:
Cost of software distribution................ 52,860 34,629 46,786 37,593 24,494
Cost of services............................. 128,197 104,828 144,850 91,540 46,798
Sales and marketing.......................... 347,906 292,539 413,689 301,932 203,815
Research and development..................... 108,420 87,539 120,211 85,643 64,264
General and administrative................... 72,110 47,356 64,416 51,114 35,369
Write-off of goodwill and other long-term
assets..................................... 30,473 -- -- -- --
Write-off of acquired research &
development................................ 7,000 -- -- -- --
Restructuring charges........................ 109,356 -- -- -- --
Expenses related to Illustra merger.......... -- 5,914 5,914 -- --
------------- ------------- ---------- ---------- ----------
856,322 572,805 795,866 567,822 374,740
------------- ------------- ---------- ---------- ----------
Operating income (loss)...................... (375,176) (61,804) (68,017) 64,948 77,229
Interest income................................ 3,691 6,671 9,868 8,148 3,970
Interest expense............................... (5,372) (4,073) (5,784) (2,522) (551)
Other income (expense), net.................... 17,596 1,821 2,899 120 (3,105)
------------- ------------- ---------- ---------- ----------
Income (loss) before income taxes.............. (359,261) (57,385) (61,034) 70,694 77,543
Income taxes................................... 6,800 9,170 12,531 32,094 29,250
------------- ------------- ---------- ---------- ----------
Net income (loss).............................. $ (366,061) $ (66,555) $ (73,565) $ 38,600 $ 48,293
------------- ------------- ---------- ---------- ----------
------------- ------------- ---------- ---------- ----------
Net income (loss) per share.................... $ (2.41) $ (0.45) $ (0.49) $ 0.26 $ 0.34
------------- ------------- ---------- ---------- ----------
------------- ------------- ---------- ---------- ----------
Weighted average number of common and common
equivalent shares outstanding................ 151,708 149,194 149,310 150,627 142,782
</TABLE>

See Notes to Consolidated Financial Statements.

F-4
<PAGE>
INFORMIX CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(RESTATED--SEE NOTE 1)
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS)
RETAINED ON
COMMON STOCK ADDITIONAL TREASURY STOCK EARNINGS AVAILABLE-
---------------------- PAID-IN -------------------- (ACCUMULATED FOR-SALE
SHARES AMOUNT CAPITAL SHARES AMOUNT DEFICIT) SECURITIES
--------- ----------- ----------- --------- --------- ------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993.............. 133,286 $ 1,333 $ 127,176 (266) $ (2,431) $ 84,030 $ --
Exercise of stock options............... 1,170 11 3,557
Sale of stock to employees under
employee stock purchase plan.......... 90 1 1,052
Issuance of stock, net of costs......... 5,608 55 11,499
Tax benefits related to stock options... 10,062
Foreign currency translation
adjustment............................
Acquisition of treasury stock........... (3) (2,723) (22,139)
Reissuance of treasury stock............ 2,989 24,570 (16,655)
Unrealized gain on available-for-sale
securities, net of tax................ 665
Net income (restated)................... 48,293
--------- ----------- ----------- --------- --------- ------------ -----------
Balance, December 31, 1994.............. 140,154 1,400 153,343 -- -- 115,668 665
Exercise of stock options............... 4,377 44 13,712
Sale of stock to employees under
employee stock purchase plan.......... 349 3 6,603
Issuance of stock, net of costs......... 2,571 28 7,508
Tax benefits related to stock options... 21,291
Acquisition of STG...................... 533 5 1,991 (170)
Foreign currency translation
adjustment............................
Unrealized gain on available-for-sale
securities, net of tax................ 3,399
Net income (restated)................... 38,600
--------- ----------- ----------- --------- --------- ------------ -----------
Balance, December 31, 1995.............. 147,984 1,480 204,448 -- -- 154,098 4,064
Exercise of stock options............... 2,182 22 13,343
Sale of stock to employees under
employee stock purchase plan.......... 616 6 10,986
Acquisition of treasury stock........... (100) (2,388)
Reissuance of treasury stock............ 100 2,388 (1,810)
Tax benefits related to stock options... 14,787
Foreign currency translation
adjustment............................
Unrealized gain on available-for-sale
securities, net of tax................ 7,626
Net loss (restated)..................... (73,565)
--------- ----------- ----------- --------- --------- ------------ -----------
Balance at December 31, 1996............ 150,782 1,508 243,564 -- -- 78,723 11,690
Exercise of stock options
(unaudited)........................... 1,088 11 3,335
Sale of stock to employees under
employee stock purchase plan
(unaudited)........................... 559 5 5,659
Foreign currency translation adjustment
(unaudited)...........................
Change in unrealized gain (loss) on
available-for-sale securities
(unaudited)........................... (12,123)
Net loss (unaudited).................... (366,061)
--------- ----------- ----------- --------- --------- ------------ -----------
Balance at September 28, 1997
(unaudited)........................... 152,429 $ 1,524 $ 252,558 -- $ -- $ (287,338) $ (433)
--------- ----------- ----------- --------- --------- ------------ -----------
--------- ----------- ----------- --------- --------- ------------ -----------

FOREIGN
CURRENCY
TRANSLATION
ADJUSTMENT TOTALS
----------- ----------

<S> <C> <C>
Balance, December 31, 1993.............. $ (2,527) $ 207,581
Exercise of stock options............... 3,568
Sale of stock to employees under
employee stock purchase plan.......... 1,053
Issuance of stock, net of costs......... 11,554
Tax benefits related to stock options... 10,062
Foreign currency translation
adjustment............................ 851 851
Acquisition of treasury stock........... (22,142)
Reissuance of treasury stock............ 7,915
Unrealized gain on available-for-sale
securities, net of tax................ 665
Net income (restated)................... 48,293
----------- ----------
Balance, December 31, 1994.............. (1,676) 269,400
Exercise of stock options............... 13,756
Sale of stock to employees under
employee stock purchase plan.......... 6,606
Issuance of stock, net of costs......... 7,536
Tax benefits related to stock options... 21,291
Acquisition of STG...................... 1,826
Foreign currency translation
adjustment............................ (4,667) (4,667)
Unrealized gain on available-for-sale
securities, net of tax................ 3,399
Net income (restated)................... 38,600
----------- ----------
Balance, December 31, 1995.............. (6,343) 357,747
Exercise of stock options............... 13,365
Sale of stock to employees under
employee stock purchase plan.......... 10,992
Acquisition of treasury stock........... (2,388)
Reissuance of treasury stock............ 578
Tax benefits related to stock options... 14,787
Foreign currency translation
adjustment............................ (3,838) (3,838)
Unrealized gain on available-for-sale
securities, net of tax................ 7,626
Net loss (restated)..................... (73,565)
----------- ----------
Balance at December 31, 1996............ (10,181) 325,304
Exercise of stock options
(unaudited)........................... 3,346
Sale of stock to employees under
employee stock purchase plan
(unaudited)........................... 5,664
Foreign currency translation adjustment
(unaudited)........................... (7) (7)
Change in unrealized gain (loss) on
available-for-sale securities
(unaudited)........................... (12,123)
Net loss (unaudited).................... (366,061)
----------- ----------
Balance at September 28, 1997
(unaudited)........................... $ (10,188) $ (43,877)
----------- ----------
----------- ----------
</TABLE>

See Notes to Consolidated Financial Statements.

F-5
<PAGE>
INFORMIX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
RESTATED - SEE NOTE 1
-------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
NINE MONTHS ENDED --------- --------- ---------
----------------------------
SEPTEMBER 28, SEPTEMBER 29,
1997 1996
------------- -------------
(UNAUDITED) (UNAUDITED)
(RESTATED)
<S> <C> <C> <C> <C> <C>
Cash flow from operating activities:
Net income (loss)......................................... $(366,061) $ (66,555) $ (73,565) $ 38,600 $ 48,293
Adjustments to reconcile net income (loss) to cash,
provided by (used in) operating activities:
License revenue paid in advance (see contra)............ (51,025) (40,867) (58,206) (34,237) (8,140)
Depreciation and amortization........................... 47,790 31,954 47,207 28,949 16,575
Amortization and write-off of capitalized software...... 30,672 10,802 14,626 12,041 7,848
Deferred tax expense.................................... -- (3,519) (3,965) (16,577) (4,103)
Provisions for losses on accounts receivable............ 12,962 479 14,983 8,508 3,837
Write-off of goodwill and other long-term assets........ 30,473 -- -- -- --
Write-off of acquired research & development............ 7,000 -- -- -- --
Foreign currency transaction gain....................... (4,229) (2,805) (5,349) (4,609) (1,323)
Gain on sales of strategic investments.................. (8,231) (1,867) (3,856) -- --
Provisions for losses on strategic investments.......... 3,786 -- -- -- --
Loss on disposal of property and equipment.............. 10,889 1,139 2,393 605 --
Restructuring charges................................... 94,228 -- -- -- --
Changes in operating assets and liabilities:
Accounts receivable..................................... 34,618 (38,187) (45,426) (47,045) (23,249)
Other current assets.................................... (6,529) (3,706) 89 (8,441) (2,025)
Accounts payable and accrued expenses................... 5,679 35,828 52,077 64,294 31,528
Deferred maintenance revenue............................ 7,361 15,553 29,590 17,197 11,613
------------- ------------- --------- --------- ---------
Total cash provided by (used in) operating activities....... (150,617) (61,751) (29,402) 59,285 80,854
------------- ------------- --------- --------- ---------
INVESTING ACTIVITIES
Investments of excess cash:
Purchases of held-to-maturity securities.................. -- -- -- (144,517) (124,102)
Purchases of available-for-sale securities................ (24,534) (123,160) (152,179) (4,303) (111,923)
Maturities of held-to-maturity securities................. -- -- -- 83,159 106,513
Maturities of available-for-sale securities............... 18,489 86,217 126,137 6,104 --
Purchases of strategic investments.......................... (2,250) (3,750) (12,737) (1,000) (1,623)
Proceeds from sales of strategic investments................ 10,002 5,085 7,299 -- --
Proceeds from sales of available-for-sale securities........ 30,676 25,703 83,696 27,261 140,866
Purchases of property and equipment......................... (95,592) (96,116) (148,270) (56,500) (25,747)
Proceeds from disposal of property and equipment............ 2,644 1,821 1,929 288 --
Additions to software costs................................. (17,188) (21,138) (32,381) (23,977) (15,048)
Business combinations, net of cash acquired................. (8,807) (1,840) (4,340) (38,413) (8,799)
Other....................................................... 9,918 (9,729) (14,434) (5,757) (721)
------------- ------------- --------- --------- ---------
Net cash and cash equivalents used in investing
activities................................................ (76,642) (136,907) (145,280) (157,655) (40,584)
------------- ------------- --------- --------- ---------
FINANCING ACTIVITIES
Advances on unearned license revenue (see contra)........... 21,787 156,963 207,218 109,338 26,380
Proceeds from issuance of common stock, net................. 9,011 14,761 24,357 27,898 15,836
Proceeds from issuance of preferred stock................... 37,200 -- -- -- --
Principal payments on capital leases........................ (1,268) (749) (1,025) (442) (1,342)
Acquisition of common stock................................. -- -- (2,388) -- (22,141)
Reissuance of treasury stock................................ -- -- 578 -- 7,915
------------- ------------- --------- --------- ---------
Net cash and cash equivalents provided by financing
activities................................................ 66,730 170,975 228,740 136,794 26,648
------------- ------------- --------- --------- ---------
Effect of exchange rate changes on cash and cash
equivalents............................................... 12,956 7,170 8,145 (6,402) 554
------------- ------------- --------- --------- ---------
Increase (decrease) in cash and cash equivalents............ (147,573) (20,513) 62,203 32,022 67,472
Cash and cash equivalents at beginning of period............ 226,508 164,305 164,305 132,283 64,811
------------- ------------- --------- --------- ---------
Cash and cash equivalents at end of year.................... $ 78,935 $ 143,792 $ 226,508 $ 164,305 $ 132,283
------------- ------------- --------- --------- ---------
------------- ------------- --------- --------- ---------
</TABLE>

See Notes to Consolidated Financial Statements

F-6
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994
(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 1--RESTATEMENT OF FINANCIAL STATEMENTS

Subsequent to the filing of its Annual Report on Form 10-K for the year
ended December 31, 1996 with the Securities and Exchange Commission, the Company
became aware of errors and irregularities that ultimately affected the timing
and dollar amount of reported earned revenues from license transactions in 1996,
1995 and 1994. The irregularities took numerous forms and were primarily the
result of lack of compliance with or circumvention of the Company's procedures
and controls.

The Company undertook and completed extended procedures related to license
transactions recorded in each year of the three-year period. As a result of
these findings and other relevant information now known or disclosed, the
Company has determined that a significant number and dollar amount of license
transactions were improperly reported as earned revenue in 1996, 1995 and 1994.

Because of the pervasiveness of the aforementioned irregularities, the
Company has concluded that the earnings process for a significant number of
original license agreements with resellers (original equipment manufacturers,
distributors and value added resellers) was not complete at the time of delivery
of the master copy of the software to the reseller. Further, the Company has
learned that informal or otherwise undisclosed arrangements with a number of
resellers have resulted or could result in significant concessions or allowances
that were not accounted for when the revenue was originally reported as earned.
Accordingly, the Company has determined that this revenue is earned when the
licenses are resold or utilized by the reseller and after any related
obligations have been satisfied, i.e. when there are no longer any significant
remaining uncertainties related to the earnings process. This revised
application of accounting policy has been followed for all transactions with
resellers, other than those licenses sold and billed on a per-copy basis, for
1996, 1995 and 1994.

Accordingly, such financial statements have been restated as follows (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
NINE MONTHS ENDED
SEPTEMBER 29, 1996 1996 1995 1994
---------------------- ---------------------- ---------------------- ----------------------
AS REPORTED RESTATED AS REPORTED RESTATED AS REPORTED RESTATED AS REPORTED RESTATED
----------- --------- ----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues
Licenses................... $ 501,223 $ 346,215 $ 708,035 $ 496,039 $ 539,733 $ 458,284 $ 364,661 $ 346,518
Services................... 167,260 164,786 231,276 231,810 174,486 174,486 105,451 105,451
----------- --------- ----------- --------- ----------- --------- ----------- ---------
668,483 511,001 939,311 727,849 714,219 632,770 470,112 451,969

Operating income (loss)...... 91,865 (61,804) 137,344 (68,017) 145,826 64,948 95,091 77,229
Income taxes................. 34,300 9,170 50,391 12,531 55,164 32,094 34,074 29,250
Net income (loss)............ 63,700 (66,555) 97,818 (73,565) 97,644 38,600 61,948 48,293
Net income (loss) per
share...................... 0.41 (0.45) 0.63 (0.49) 0.65 0.26 0.43 0.34
Retained earnings............ 288,687 27,532 322,805 78,723 226,797 154,098 129,323 115,668
Advances on unearned license
revenue.................... -- 199,649 -- 239,506 -- 83,553 -- 18,556
</TABLE>

F-7
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994
(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 2--MANAGEMENT PLANS TO ADDRESS OPERATIONAL ISSUES AND LIQUIDITY

The consolidated financial statements have been prepared assuming that the
Company will continue as a going concern. The Company incurred losses in 1996
and anticipates that it will continue to incur losses and report reduced
revenues through at least 1997. In addition, the Company anticipates that its
cash and working capital requirements in the short term cannot be met entirely
from funds generated internally from operations.

Management's operational and financing plans to address the above issues
include (1) continued cost containment measures to bring spending levels in line
with planned revenue; (2) sale of non-essential assets including an undeveloped
land site (see Note 14 to the Consolidated Financial Statements); (3) obtaining
additional equity and debt financing; (4) modifying long-term lease arrangements
for new offices; and (5) resolution of stockholder class action litigation (see
Note 12 to the Consolidated Financial Statements). There can be no assurance
that management will be successful in accomplishing these objectives. The 1996
consolidated financial statements do not include any adjustments that might
result from the outcome of these liquidity uncertainties.

NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND OPERATIONS. The Company is a multinational supplier of
high-performance, parallel processing database technology for open systems. The
Company's products also include application 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.

PRESENTATION OF INTERIM FINANCIAL STATEMENTS (UNAUDITED). The accompanying
consolidated financial statements as of September 28, 1997 and September 29,
1996 and for the nine months periods then ended and related footnote information
are unaudited. Such financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by

F-8
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994
(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine-month period ended September 28, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997.

RESTATEMENT OF PRIOR YEAR DATA AS A RESULT OF A BUSINESS COMBINATION. As
more fully described in Note 11, in February 1996, Illustra Information
Technologies, Inc. (Illustra) merged with a wholly-owned subsidiary of the
Company. The merger has been accounted for as a pooling of interests and the
historical consolidated financial statements of the Company for all periods
prior to the merger have been restated to include the financial position,
results of operations, and cash flows of Illustra. Costs of the merger are
included in the consolidated results of operations in 1996.

FOREIGN CURRENCY TRANSLATION. For foreign operations with the local
currency as the functional currency, assets and liabilities are translated at
year-end exchange rates, and statements of operations are translated at the
average exchange rates during the year. Exchange gains or losses arising from
translation of foreign entity financial statements are included as a component
of stockholders' equity.

For foreign operations with the U.S. dollar as the functional currency,
certain assets and liabilities are remeasured at the year-end or historical
exchange rates as appropriate. Statements of operations are remeasured at the
average exchange rates during the year. Gains and losses resulting from the
remeasurement of the entity's financial statements and other foreign currency
transaction gains and losses 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 operates, on a limited basis, in certain
countries in Latin America, Eastern Europe, and Asia Pacific where there are
limited forward currency exchange markets and thus the Company has limited
unhedged transaction exposures 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 recorded 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 5 to the Consolidated Financial Statements).

REVENUE RECOGNITION

LICENSE REVENUE. The Company recognizes revenue from sales of software
licenses to end-users upon delivery of the software product to a customer when
there are no significant post-delivery obligations and collection of the license
fee is considered probable. However, as previously discussed in Note 1, because
the Company is unable to estimate the amount of allowances for transactions
entered into with resellers, revenue from license agreements with resellers,
except for those licenses sold and billed on a per-copy basis, is recognized as
earned when the licenses are resold or utilized by the reseller and all related
obligations have been satisfied. The Company provides for all other sales
allowances on an estimated basis.

F-9
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994
(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SERVICE REVENUE. 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.

ADVANCES ON UNEARNED LICENSE REVENUE. At September 28, 1997 and December
31, 1996 and 1995, "advances on unearned license revenue" in the Company's
restated consolidated balance sheets reflect amounts received from customers and
third-party financial institutions in advance of revenue being recognized. As a
result of the Company's aforementioned revised application of its revenue
recognition accounting policy for reseller transactions, the Company may receive
cash, either from the customer, or from a financing entity to whom the customer
payment streams are sold, prior to the time the license fee is recognized as
earned revenue.

The Company's license agreements with customers provide contractually for a
non-refundable fee payable by the customer in single or multiple installment(s)
at the initiation or over the term of the license arrangement. If the Company
fails to comply with the contractual terms of a specific license agreement, the
Company could be required to refund to the customer or the financial institution
the amount(s) received.

The Company's arrangements for financing of license contracts with customers
frequently take the form of a non-recourse sale of the future payment streams.
When such customer contracts are sold to a third-party financing entity, they
are typically sold at a discount which represents the financing cost. Such
discounts are charged to expense immediately in cases where the license has been
recorded as a sale. For transactions where the financing is received prior to
the recognition of revenue, the financing discount has been charged to interest
expense over the financing period based on the contractual terms on a straight-
line basis, which approximates the "interest method."

In 1997, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 97-2, "Software Revenue Recognition." The Company
will be required to adopt the provisions of the SOP as of January 1, 1998. The
Company is evaluating the SOP in relation to its current revenue recognition
policy. Adoption of the SOP may affect the future revenue recognition practices
of the Company.

CONCURRENT TRANSACTIONS. Principally during 1996, the Company entered into
software license agreements with certain computer and service vendors where the
Company concurrently committed to acquire goods and services. These concurrent
transactions for 1996 included license agreements of approximately $170 million
and commitments to acquire goods and services in the aggregate of approximately
$130 million. $31 million was recognized as earned revenue by the Company in the
restated 1996 financial statements. The Company disclosed in its original 1996
annual report that $55 million of revenue was recognized from concurrent
transactions in that year. This disclosure represented revenue (before the
restatement) arising from specific license agreements where the Company acquired
goods and services in approximately the same dollar amount and is included in
the $170 million of 1996 concurrent transactions. See Notes 1 and 3 of Notes to
Consolidated Financial Statements.

F-10
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994
(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 $14.6 million, $12.0 million,
and $7.8 million of software costs in 1996, 1995 and 1994, 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 applicable lease term or three-to-seven years for
financial reporting purposes.

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 adoption of Statement
128 would not change the computation of net loss per common share for the nine
months ended September 28, 1997 and September 29, 1996.

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

F-11
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994
(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
intangible assets in 1996, 1995 or 1994. As of December 31, 1996 and 1995, the
Company had $50.6 million and $48.4 million of intangible assets, with
accumulated amortization of $15.9 million and $7.7 million, respectively, as a
result of these acquisitions.

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.

In the normal course of business, the Company often arranges for
non-recourse financing through the sale of customer accounts receivable. Such
financing arrangements are offered by a number of financial institutions. The
Company has traditionally relied on a limited number of these financial
institutions for most of the customer financing it arranges. Future advances and
cash flows of the Company would be negatively impacted if the Company's
financing resources were to discontinue their services for any reason.

No single customer accounted for 10% or more of the consolidated revenues of
the Company in 1996, 1995 or 1994.

CASH, CASH EQUIVALENTS, SHORT-TERM INVESTMENTS, AND LONG-TERM
INVESTMENTS. The Company considers liquid investments purchased with a maturity
of three months or less to be cash equivalents. The Company considers
investments with a 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 classified as available-for-sale and are carried at fair value.
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

F-12
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994
(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.

FAIR VALUE OF FINANCIAL INSTRUMENTS. Fair values of cash, cash equivalents,
short and long term investments, other assets, and currency forward contracts
are based on quoted market prices.

NOTE 4--FINANCIAL INSTRUMENTS

The following is a summary of available-for-sale debt and equity securities:

<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
DECEMBER 31, 1996 COST GAINS LOSSES FAIR VALUE
- ----------------------------------------------------------------- ---------- ----------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. treasury securities......................................... $ 61,308 $ -- $ (20) $ 61,288
Commercial paper................................................. 15,872 14 (2) 15,884
Municipal bonds.................................................. 27,317 10 (48) 27,279
Auctioned preferred stock........................................ 4,504 -- (4) 4,500
---------- ----------- ----- ----------
Total debt securities.......................................... 109,001 24 (74) 108,951
U.S. equity securities........................................... 15,404 18,490 -- 33,894
---------- ----------- ----- ----------
$ 124,405 $ 18,514 $ (74) $ 142,845
---------- ----------- ----- ----------
---------- ----------- ----- ----------
Amounts included in cash and cash equivalents.................... $ 67,806 $ -- $ (6) $ 67,800
Amounts included in short-term investments....................... 34,548 19 (55) 34,512
Amounts included in long-term investments........................ 6,647 5 (13) 6,639
Amounts included in other assets................................. 15,404 18,490 -- 33,894
---------- ----------- ----- ----------
$ 124,405 $ 18,514 $ (74) $ 142,845
---------- ----------- ----- ----------
---------- ----------- ----- ----------
</TABLE>

F-13
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995, AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 4--FINANCIAL INSTRUMENTS (CONTINUED)

The maturity dates of the financial instruments included in long-term
investments vary from 1998 to 2026.

<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
DECEMBER 31, 1995 COST GAINS LOSSES FAIR VALUE
- ----------------------------------------------------------------- ---------- ----------- ----------- ----------
(IN THOUSANDS)
<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>

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 5--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. The Company's practice is to settle all foreign exchange contracts
within ten calendar days of year end and thus there is no material difference
between the contract value and the fair value of the contracts at December 31,
1996 and 1995. At December 31, 1996 and 1995, the Company had approximately
$168.6 million and $77.2 million of forward foreign currency exchange contracts
outstanding, respectively. The table below summarizes by currency the
contractual amounts of the Company's forward foreign exchange contracts at
December 31, 1996 and December 31, 1995.

F-14
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995, AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 5--DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
The restatement of the 1996, 1995 and 1994 financial statements resulted in
a change in the Company's foreign currency denominated intercompany accounts
payable and accounts receivable balances. As a result, certain foreign currency
transaction gains and losses realized due to fluctuation in the related asset
and liability currency exchange rates were not offset by underlying gains and
losses on forward foreign currency exchange contracts used to hedge those
foreign currency exposures.

FORWARD CONTRACTS

<TABLE>
<CAPTION>
UNREALIZED
AT DECEMBER 31, 1996 FACE VALUE GAIN/(LOSS)
- ----------------------------------------------------------------------------------------- ---------- -------------
(IN THOUSANDS)
<S> <C> <C>
Forward currency contracts sold:
Deutsche Mark.......................................................................... $ 55,815 $ (24)
Japanese Yen........................................................................... 41,384 (143)
British Pound.......................................................................... 16,051 (12)
French Franc........................................................................... 8,252
Malaysian Ringgit...................................................................... 5,914 1
Taiwanese NT........................................................................... 5,609 (2)
Italian Lira........................................................................... 4,555 (9)
Singapore Dollar....................................................................... 3,600 (8)
Dutch Guilder.......................................................................... 3,558 1
Sweden Krona........................................................................... 2,246 1
Swiss Franc............................................................................ 1,622 1
Portuguese Escudo...................................................................... 1,574
Other (under $1 million)............................................................... 2,240 (1)
---------- -----
Total.................................................................................... 152,420 (195)
Forward currency contracts purchased:
British Pound.......................................................................... 10,501 (192)
Deutsche Mark.......................................................................... 4,198 6
Other (under $1 million)............................................................... 1,472 (7)
---------- -----
Total.................................................................................... 16,171 (193)
---------- -----
Grand Total.............................................................................. $ 168,591 $ (388)
---------- -----
---------- -----
</TABLE>

F-15
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995, AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 5--DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
FORWARD CONTRACTS

<TABLE>
<CAPTION>
UNREALIZED
AT DECEMBER 31, 1995 FACE VALUE GAIN/(LOSS)
- ----------------------------------------------------------------------------------------- ----------- -----------
(IN THOUSANDS)
<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>

Other than the use of forward foreign exchange contracts as discussed
immediately above as of December 31, 1996, the Company does not currently invest
in or hold any other financial instruments defined as derivative financial
instruments by FAS 119.

NOTE 6--PREFERRED STOCK (UNAUDITED)

In August 1997, the Company sold 160,000 shares of newly issued Series A
Convertible Preferred Stock, face value $250 per share, to a private investor
for aggregate net proceeds of $37.2 million and issued a warrant to the same
investor to purchase up to an additional 140,000 shares of Series A Convertible
Preferred Stock at an aggregate purchase price of up to $35 million. In November
1997, the Company canceled the Series A Convertible Preferred Stock in exchange
for the same number of shares of a substantially identical Series A-1
Convertible Stock issued to the same investor, with a corresponding change to
the warrant shares. The warrant may be exercised from August 13, 1997 through
April 15, 1999.

The Series A-1 Convertible Preferred shares are convertible into common
shares at any time, at the holder's option, at a per share price equal to 101%
of the average price of the Company's common stock for the 30 days ending five
trading days prior to conversion, but not greater than the lesser of (i) 105% of
the common stock's average price of the first five trading days of such thirty
day period, or (ii) $12 per share. If not converted prior, the Series A-1
Convertible Preferred Stock will automatically convert into common shares
eighteen months after their issuance, subject to extension of the automatic
conversion date in certain defined circumstances of default. However, if at the
time of conversion, the aggregate number of shares of common stock already
issued and to be issued as a result of the conversion of the shares of the

F-16
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995, AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 6--PREFERRED STOCK (UNAUDITED) (CONTINUED)
Series A-1 Convertible Preferred Stock were to exceed 19.9% of the total number
of shares of then outstanding common stock, then such excess does not convert
unless or until stockholder approval is obtained.

The mandatory redemption provisions of the new Series A-1 Convertible
Preferred (the "A-1 Preferred") differ from the Series A Convertible Preferred
Stock. The redemption provisions in the A-1 Preferred effectively preclude the
Company from having to redeem the preferred stock except by actions solely
within its control. Accordingly, the Pro Forma September 28, 1997 Consolidated
Balance Sheet reflects the A-1 Preferred under stockholder's equity (deficit).

In November 1997, the Company sold 50,000 shares of newly issued Series B
Convertible Preferred Stock ("Series B Preferred"), face value $1,000 per share,
to private investors for aggregate net proceeds of $48.8 million. In connection
with the sale, the Company also agreed to issue a warrant to such investors upon
conversion of such Series B Preferred to purchase 20% of the shares of Common
Stock but no less than 1,500,000 shares at a per share exercise price which is
presently indeterminable and will depend on the trading price of the Common
Stock of the Company in the period prior to the conversion of the Series B
Preferred. The Company also agreed to issue additional warrants to purchase up
to an aggregate of 200,000 shares at a per share exercise price which is
presently indeterminable and will depend on the trading price of the Common
Stock of the Company in the period prior to the conversion of the Series B
Preferred. The Series B Preferred is convertible at the election of the holder
into shares of Common Stock beginning six months after issuance, and upon the
occurrence of certain events, including a merger. The Series B Preferred will
automatically convert into Common Stock three years following the date of its
issuance. Each Series B Preferred share is convertible into the number of shares
of Common Stock at a per share price equal to the lowest of (i) the average of
the closing prices for the Common Stock for the 22 days immediately prior to the
180th day following the initial issuance date, (ii) 101% of the average closing
price for the 22 trading days prior to the date of actual conversions, or (iii)
101% of the lowest closing price for the Common Stock during the five trading
days immediately prior to the date of actual conversion. The conversion price of
the Series B Preferred is subject to modification and adjustment upon the
occurrence of certain events. The Series B Preferred accrues cumulative
dividends at an annual rate of 5% of per share face value. The dividend is
generally payable upon the conversion or redemption of the Series B Preferred,
and may be paid in cash or, at the holder's election, in shares of Common Stock.
The Series B is junior to the Company's outstanding Series A-1 Preferred in
respect to the right to receive dividend payments and liquidation preferences.

NOTE 7--STOCK-BASED BENEFIT PLANS

OPTION 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 under the 1986 Plan
expired on July 29, 1996, which was 10 years after the date of grant.

F-17
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 7--STOCK-BASED BENEFIT PLANS (CONTINUED)

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. At December 31, 1996, 675,000 shares were available
for grant under this Plan.

In April 1994, the Company adopted the 1994 Stock Option and Award Plan;
8,000,000 shares were authorized for grant under this 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, 1996, 788,783 shares were available for grant under this Plan.

In May 1997, the Company's stockholders approved an additional 8,000,000
shares to be reserved for issuance under the Company's 1994 Stock Option and
Award Plan.

In February 1996, on acquisition of Illustra, all of Illustra's outstanding
options were converted into options to purchase 2.3 million shares of Informix
common stock. All stock options were restated to include Illustra's options
under the pooling-of-interests method. There were 172,677 shares available for
grant under this Plan at December 31, 1996.

Following is a summary of activity for all stock option plans for the three
years ended December 31, 1996:
<TABLE>
<CAPTION>
NUMBER OPTIONS
OF SHARES PRICE PER SHARE
------------ -----------------
<S> <C> <C>
Outstanding at December 31, 1993............................. 15,739,957 $ 0.06 to $13.13
Options granted.............................................. 4,029,815 0.19 to 14.44
Options exercised............................................ (3,627,468) 0.06 to 12.75
Options canceled............................................. (1,128,532) 0.06 to 11.88
------------ -----------------
Outstanding at December 31, 1994............................. 15,013,772 0.06 to 14.44
Options granted and assumed.................................. 5,456,927 0.19 to 34.00
Options exercised............................................ (3,852,697) 0.19 to 13.88
Options canceled............................................. (864,920) 0.06 to 32.75
------------ -----------------
Outstanding at December 31, 1995............................. 15,753,082 $ 0.06 to $34.00

NUMBER WEIGHTED
OF SHARES AVERAGE PRICE
------------ -----------------
<S> <C> <C>
Options granted and assumed.................................. 5,850,225 $ 24.3456
Options exercised............................................ (2,927,260) 4.6069
Options canceled............................................. (1,561,800) 17.1483
------------ -----------------
Outstanding at December 31, 1996............................. 17,114,247 $ 13.4495
------------ -----------------
------------ -----------------
</TABLE>

F-18
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 7--STOCK-BASED BENEFIT PLANS (CONTINUED)
The following table summarizes information about options outstanding at
December 31, 1996:

<TABLE>
<CAPTION>
WEIGHTED NUMBER
NUMBER AVERAGE WEIGHTED EXERCISABLE WEIGHTED
OUTSTANDING AT REMAINING AVERAGE AT AVERAGE
DECEMBER 31, CONTRACTUAL EXERCISE DECEMBER 31, EXERCISE
RANGE OF EXERCISE PRICES 1996 LIFE PRICE 1996 PRICE
- ---------------------------- -------------- --------------- ------------- ------------- ---------------
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
<S> <C> <C> <C> <C> <C>
$0.0700 - $0.6719........... 2,304,968 6.63 $ 0.3911 2,304,968 $ 0.3911
$0.6875 - $0.7500........... 380,100 4.38 $ 0.7447 380,100 $ 0.7447
$0.7656 - $3.5938........... 1,731,085 5.08 $ 3.2936 1,730,236 $ 3.2943
$3.7188 - $7.5000........... 1,888,065 6.88 $ 6.7008 1,087,165 $ 6.1130
$7.5938 - $8.6250........... 1,871,601 6.26 $ 8.6012 1,286,801 $ 8.6017
$8.6875 - $10.7813.......... 420,675 6.79 $ 10.0854 184,300 $ 10.1559
$10.8750 - $18.2500......... 2,761,139 8.24 $ 17.8675 723,415 $ 17.6530
$18.3750 - $23.1250......... 2,001,650 9.74 $ 22.1668 37,750 $ 20.9894
$23.2500 - $24.1250......... 2,766,288 9.33 $ 24.0838 59,116 $ 23.8057
$24.2500 - $34.7500......... 988,676 9.08 $ 30.3152 194,325 $ 28.4078
-------------- --- ------------- ------------- ---------------
$0.0700 - $34.7500.......... 17,114,247 7.61 $ 13.4495 7,988,176 $ 5.8788
-------------- --- ------------- ------------- ---------------
-------------- --- ------------- ------------- ---------------
</TABLE>

In connection with all stock option plans, 18,750,708 shares of Common Stock
were reserved for issuance as of December 31, 1996. At December 31, 1995,
4,898,537 options were exercisable. At September 28, 1997 24,913,000 shares of
Common Stock were reserved for issuance, and 8,149,000 options were exercisable.

EMPLOYEE STOCK PURCHASE PLAN

The Company also has a qualified Employee Stock Purchase Plan (ESPP) 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, through
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 1996, 1995, and 1994 the Company issued 616,128 shares,
347,743 shares, and 484,756 shares, respectively, under this Plan. In connection
with the Employee Stock Purchase Plan, 650,587 shares were reserved for issuance
as of December 31, 1996.

In May 1997, the Company's stockholders approved the 1997 Employee Stock
Purchase Plan (the "1997 ESPP"). The Company has reserved 4,000,000 shares of
Common Stock for issuance under the 1997 ESPP. The 1997 ESPP permits
participants to purchase Common Stock through payroll deductions of up to 15
percent of an employee's compensation, including commissions, overtime, bonuses
and other incentive compensation. The price of Common Stock purchased under the
1997 ESPP is equal to 85 percent of the

F-19
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 7--STOCK-BASED BENEFIT PLANS (CONTINUED)
lower of the fair market value of the Common Stock at the beginning or at the
end of each three-month offering period. The Plan qualifies as an employee stock
purchase plan under Section 423 of the Internal Revenue Code of 1986, as
amended. As of September 28, 1997, the Company has not issued any shares of
Common Stock under the 1997 ESPP.

STOCK REPURCHASE AUTHORIZATION

The Board of Directors had 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 under a stock repurchase plan. In 1996,
the Company rescinded the stock repurchase authorization.

STOCK BASED COMPENSATION

As permitted under FASB Statement No. 123, "Accounting for Stock-Based
Compensation" (FASB 123), the Company has elected to continue to follow
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25) in accounting for stock-based awards to employees. Under APB
25, the Company generally recognizes no compensation expense with respect to
such awards.

Pro forma information regarding the net income (loss) and earnings per share
(loss) is required by FASB 123 for awards granted or modified after December 31,
1994 as if the Company had accounted for its stock based awards to employees
under the fair value method of FASB 123. The fair value of the Company's
stock-based awards to employees was estimated using a Black-Scholes option
pricing model. The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, the Black-Scholes model requires the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's stock-based awards to employees have
characteristics significantly different from those of traded options, and
because changes in the subjective assumptions can materially affect the fair
value estimate, in management's opinion, the existing models do not necessarily
provide a reasonable single measure of the fair value of its stock-based awards
to employees.

The fair value of the Company's stock-based awards was estimated assuming no
expected dividends and the following weighted-average assumptions:

<TABLE>
<CAPTION>
OPTIONS ESPP
------------------------------ ------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Expected life (years).......................... 4.5 year 4.5 year .25 year .25 year
Expected volatility (percent).................. .5822 - .6327 .5642 - .6239 .5765 - .9662 .4170 - .7295
Risk-free interest rate (percent).............. 5.20 - 6.09 5.82 - 7.72 5.01 - 5.85 5.49 - 6.07
</TABLE>

For pro forma purposes, the estimated fair value of the Company's stock
based awards is amortized over the award's vesting period (for options) and the
three month purchase period (for stock purchases

F-20
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 7--STOCK-BASED BENEFIT PLANS (CONTINUED)
under the ESPP). The Company's pro forma information follows, (in thousands
except for per share information):

<TABLE>
<CAPTION>
1996 1995
RESTATED RESTATED
----------- ---------
<S> <C> <C> <C>
Net income (loss)..................................... As reported $ (73,565) $ 38,600
Pro forma (94,196) 28,652

Net income (loss) per share........................... As reported $ (0.49) $ 0.26
Pro forma (0.63) 0.19
</TABLE>

FASB 123 is applicable only to awards granted subsequent to December 31,
1994. Therefore, its pro forma effect will not be fully reflected until
approximately 1998.

Calculated under FASB 123, the weighted-average fair value of the options
granted during 1996 and 1995 was $13.04 and $10.39 per share, respectively. The
weighted average fair value of employee stock purchase rights granted under the
ESPP during 1996 and 1995 were $7.47 and $5.27, respectively.

401(K) PLAN

The Company has a 401(k) plan covering substantially all of its U.S.
employees. Under this plan, participating employees may defer up to 15 percent
of their pre-tax earnings, subject to the Internal Revenue Service annual
contribution limit ($9,500 for 1996). In 1996, 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 1996, 1995 and 1994 were $3.8 million,
$2.5 million and $1.4 million, respectively.

NOTE 8--COMMITMENTS

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:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
Computer equipment............................................... $ 8,825 $ 7,924
Office equipment................................................. 2,474 1,636
------------ ------
11,299 9,560
Less: accumulated amortization................................... 8,985 7,716
------------ ------
$ 2,314 $ 1,844
------------ ------
------------ ------
</TABLE>

F-21
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 8--COMMITMENTS (CONTINUED)
During 1996 and 1995, the Company financed approximately $1,800,000 and
$1,677,000, respectively, of equipment purchases under capital lease
arrangements. Amortization with respect to leased equipment is included in
depreciation expense.

The Company leases certain of its office facilities and equipment under
non-cancelable operating leases and total rent expense was $42.4 million, $19.7
million and $17.3 million in 1996, 1995 and 1994, respectively.

The Company planned on relocating its corporate headquarters to Santa Clara,
California approximately 15 miles to the south of the Company's current
headquarters. To facilitate the move, in January 1997, the Company entered into
a two year lease for twenty seven acres of undeveloped commercial real estate.
Upon termination of the lease term, the Company would have had the option to
purchase the land, or if such purchase option was not exercised, arrange for the
sale of the parcels to an unrelated third party. In the event the later option
was exercised, the Company was 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 collateral account controlled by an
affiliate of the lessor. 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 real
estate lease also included certain financial performance criteria which must be
met by the Company during the lease term.

Purchase and Sale of Santa Clara Real Estate. In April 1997, the Company
exercised its option to purchase the 27 acres of real estate in Santa Clara,
California so that alternative financing or a third party sale could be pursued.
In the second quarter of 1997, the Company wrote down the carrying value of this
real estate asset to its estimated fair market value (based on a current
independent appraisal) less estimated selling costs, of approximately $58
million. The Company has entered into agreements to sell the land in two
separate transactions. Both sales are expected to be consummated in the fourth
quarter of 1997. See Note 15 to Consolidated Financial Statements.

In November 1996, the Company leased approximately 200,000 square feet of
office space in Santa Clara adjacent to the twenty seven acres described above.
The lease term is for fifteen years and minimum lease payments amount to $96.0
million over the term. The minimum lease payments increase within a contractual
range based on changes in the Consumer Price Index. See Note 15 of Notes to
Consolidated Financial Statements. In the fourth quarter of 1997, the Company
assigned the lease to an unrelated third party. See Note 15 of Notes to
Consolidation Financial Statements.

As of December 31, 1996, the Company was contractually obligated to purchase
approximately $45 million of various computer equipment related to its
SuperStores.

F-22
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE

NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 8--COMMITMENTS (CONTINUED)

Future minimum payments, by year and in the aggregate, under the capital and
non-cancelable operating leases as of December 31, 1996, are as follows:

<TABLE>
<CAPTION>
CAPITAL NON-CANCELABLE
YEAR ENDING DECEMBER 31 LEASES OPERATING LEASES
- ------------------------------------------------------------------ --------- ----------------
(IN THOUSANDS)
<S> <C> <C>
1997.............................................................. $ 1,265 $ 45,941
1998.............................................................. 803 44,591
1999.............................................................. 386 41,244
2000.............................................................. 153 23,438
2001.............................................................. -- 16,396
Thereafter........................................................ -- 88,904
--------- --------
Total payments.................................................... 2,607 $ 260,514
--------
--------
Less: amount representing interest................................ 279
---------
Present value of minimum lease payments........................... 2,328
Less current portion.............................................. 866
---------
$ 1,462
---------
---------
</TABLE>

NOTE 9--GEOGRAPHIC INFORMATION

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

<TABLE>
<CAPTION>
UNITED
STATES EUROPE INTERCONTINENTAL ELIMINATIONS TOTAL
------------ ---------- --------------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996:
Net revenues.............................. $ 410,549 $ 229,588 $ 144,451 $ (56,741) $ 727,847
Operating income (loss)................... (38,331) (24,156) (6,883) 1,353 (68,017)
Identifiable assets....................... 734,852 218,196 146,006 (217,058) 881,996

1995:
Net revenues.............................. $ 365,647 $ 199,711 $ 120,216 $ (52,804) $ 632,770
Operating income (loss)................... 69,245 (2,588) (960) (749) 64,948
Identifiable assets....................... 579,306 216,530 110,776 (224,699) 681,913

1994:
Net revenues.............................. $ 267,795 $ 131,605 $ 67,649 $ (15,079) $ 451,970
Operating income (loss)................... 85,224 (50,527) 41,637 895 77,229
Identifiable assets....................... 419,006 110,195 37,448 (118,880) 447,769
</TABLE>

F-23
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE

NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 9--GEOGRAPHIC INFORMATION (CONTINUED)
Sales and transfers between geographic areas are accounted for at prices
which the Company believes are arm's length prices, and 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:

<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Canada....................................................... $ 7,521 $ 6,299 $ 5,100
Latin America................................................ 6,556 6,817 6,641
Asia/Pacific................................................. 3,391 5,887 32,820
Other........................................................ 3,437 1,301 3,015
--------- --------- ---------
Total........................................................ $ 20,905 $ 20,304 $ 47,576
--------- --------- ---------
--------- --------- ---------
</TABLE>

NOTE 10--INCOME TAXES

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

<TABLE>
<CAPTION>
1996 1995 1994
--------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable:
Federal................................................... $ 1,540 $ 40,582 $ 26,754
State..................................................... 565 6,463 4,482
Foreign................................................... 6,216 9,325 5,277
--------- ---------- ---------
$ 8,321 $ 56,370 $ 36,513
--------- ---------- ---------
--------- ---------- ---------

Deferred:
Federal................................................... $ (1,748) $ (13,747) $ (2,736)
State..................................................... (2,983) (1,204) (61)
Foreign................................................... 8,941 (9,325) (4,466)
--------- ---------- ---------
4,210 (24,276) (7,263)
--------- ---------- ---------
$ 12,531 $ 32,094 $ 29,250
--------- ---------- ---------
--------- ---------- ---------
</TABLE>

In 1996, 1995 and 1994, the Company recognized tax benefits related to stock
option plans of $14.8 million, $21.3 million and $10.1 million, respectively.
Such benefits were recorded as an increase to additional paid-in capital.

F-24
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995, AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE

NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 10--INCOME TAXES (CONTINUED)

Income before income taxes consists of the following:

<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic................................................... $ (26,510) $ 83,937 $ 81,508
Foreign.................................................... (34,524) (13,243) (3,965)
---------- ---------- ---------
$ (61,034) $ 70,694 $ 77,543
---------- ---------- ---------
---------- ---------- ---------
</TABLE>

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

<TABLE>
<CAPTION>
1996 1995 1994
--------------------- ---------------------- ----------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
---------- --------- --------- ----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Computed tax at federal statutory rate........... $ (21,362) (35.0)% $ 24,743 35.0% $ 27,140 35.0%
Valuation allowance.............................. 41,192 67.5% 4,239 6.0% 908 1.2%
Research and development credits................. (1,457) (2.4)% (935) (1.3)% (1,241) (1.6)%
State income taxes, net of federal tax benefit... (1,572) (2.6)% 3,418 4.8% 2,874 3.7%
Benefit from net earnings of foreign subsidiaries
considered to be permanently reinvested in
non-U.S. operations -- -- -- -- -- --
Other, net....................................... (4,270) (7.0)% 629 0.9% (431) (0.6)%
---------- --------- --------- ----- --------- -----
$ 12,531 N.M. $ 32,094 45.4% $ 29,250 37.7%
---------- --------- --------- ----- --------- -----
---------- --------- --------- ----- --------- -----
</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

F-25
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995, AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE

NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 10--INCOME TAXES (CONTINUED)
purposes. Significant components of the Company's deferred tax assets and
liabilities as of December 31, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
1996 1995
---------- ---------
(IN THOUSANDS)
<S> <C> <C>
DEFERRED TAX ASSETS:
Reserves and accrued expenses.......................................... $ 7,703 $ 8,600
Deferred revenue....................................................... 33,875 15,290
Foreign net operating loss carryforwards............................... 38,067 11,701
Domestic net operating loss carryforwards.............................. 9,800 7,984
Foreign taxes in excess of taxes at U.S. rate.......................... 9,014 6,483
Other.................................................................. 555 646
---------- ---------
Total deferred tax assets.............................................. 99,014 50,704
Valuation allowance for deferred tax assets............................ (46,339) (5,147)
---------- ---------
Deferred tax assets, net of valuation allowance........................ 52,675 45,557

DEFERRED TAX LIABILITIES:
Capitalized software................................................... 17,704 10,329
Revenue recognition.................................................... 1,612 1,612
Taxes on unremitted foreign earnings Valuation of investment
portfolio............................................................ 6,454 2,501
---------- ---------
Total deferred tax liabilities......................................... 25,770 14,442
---------- ---------
Net deferred tax assets................................................ $ 26,905 $ 31,115
---------- ---------
---------- ---------
</TABLE>

At December 31, 1996, the Company had approximately $98.1 million, $21.0
million and $10.5 million of foreign, federal and state net operating loss
carryforwards. The foreign and state net operating loss carryovers expire at
various dates beginning in 1998. The federal net operating loss carryovers
expire at various dates beginning in 2008. Income taxes paid amounted to $22.7
million, $18.6 million and $22.5 million in 1996, 1995 and 1994, respectively.
The valuation allowance for deferred tax assets increased by $41.2 million, $4.2
million and $0.9 million in 1996, 1995 and 1994, respectively.

NOTE 11--BUSINESS COMBINATIONS

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
acquisition was recorded as a purchase. The

F-26
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995, AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE

NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 11--BUSINESS COMBINATIONS (CONTINUED)
Company has acquired the remaining 20 percent in January 1997 for approximately
$1 million. The initial purchase price of this business was approximately $4.6
million, and was increased by approximately $3.0 million in January 1997 due to
performance incentives outlined in the agreement, of which approximately $7.0
million has been allocated to intangible assets acquired.

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.

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 stock options and warrants. The
transaction has been accounted for as a pooling of interests, and accordingly,
the consolidated financial statements for all prior periods presented have been
restated to include the accounts and operations of Illustra as if the merger was
consummated at the beginning of the earliest period presented. Merger fees of
approximately $5.9 million were recorded in the first quarter of 1996. The
following table presents the separate operating results for Informix Corporation
and Illustra for the periods prior to the acquisition date (because the
operating results of Illustra for the period January 1, 1996 to the effective
date of the merger were immaterial to the combined Company, for the purposes of
this table an acquisition date of January 1, 1996 is assumed).

<TABLE>
<CAPTION>
1995 1994
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Income Statement
Net revenues
Informix............................................................ $ 627,536 $ 450,554
Illustra............................................................ 5,234 1,415
---------- ----------
Combined............................................................ $ 632,770 $ 451,969
---------- ----------
---------- ----------
Net income (loss)
Informix............................................................ $ 46,289 $ 52,541
Illustra............................................................ (7,689) (4,248)
---------- ----------
Combined............................................................ $ 38,600 $ 48,293
---------- ----------
---------- ----------
</TABLE>

F-27
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995, AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE

NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 11--BUSINESS COMBINATIONS (CONTINUED)
In February 1997, the Company acquired all of the outstanding capital stock
of Centerview Software, Inc. ("Centerview"), a privately-owned company which
develops and sells software application development tools. The aggregate
purchase price paid was approximately $8.7 million, which included cash plus
direct costs of acquisition. The transaction has been accounted for as a
purchase and, based on an independent appraisal of the assets acquired and
liabilities assumed, the purchase price has been allocated to the net tangible
and intangible assets acquired including approximately $7 million of research
and development, which has been charged to operations in the period the
acquisition was consummated (the first quarter of 1997).

NOTE 12--LITIGATION

Stockholder derivative actions, purportedly on behalf of the Company and
naming virtually the same individual defendants and the Company's independent
auditors, were also filed, commencing in August 1997, in California state court.
While these actions allege various violations of state law, any monetary
judgments in these derivative actions would accrue to the benefit of the
Company.

F-28
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 12--LITIGATION (CONTINUED)

NOTE 13--QUARTERLY INFORMATION
<TABLE>
<CAPTION>
FOURTH
FIRST QUARTER SECOND QUARTER THIRD QUARTER QUARTER
AS AS AS AS
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED REPORTED
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
1997
Net revenues....................... $ 133,664 $ 149,223 $ 182,012 $ 149,911
Gross profit....................... 63,185 78,937 123,527 97,625
Net income (loss).................. (140,107) (144,161) (111,377) (110,523)
Net income (loss) per share........ $ (0.93) $ (0.95) $ (0.73) $ (0.73)

1996
Net revenues....................... $ 204,021 $ 164,605 $ 226,282 $ 159,323 $ 238,180 $ 187,073 $ 270,828
Gross profit....................... 160,584 121,378 178,474 112,074 189,003 138,092 218,342
Net income (loss).................. 15,891 (15,377) 21,628 (34,083) 26,181 (17,095) 34,118
Net income (loss) per share........ $ 0.10 $ (0.10) $ 0.14 $ (0.23) $ 0.17 $ (0.11) $ 0.22

1995
Net revenues....................... $ 148,037 $ 146,120 $ 164,068 $ 141,175 $ 182,701 $ 166,929 $ 219,413
Gross profit....................... 121,893 120,138 134,042 111,226 150,183 136,595 178,396
Net income (loss).................. 17,646 16,177 20,184 (2,731) 23,896 7,759 35,918
Net income (loss) per share........ $ 0.12 $ 0.11 $ 0.14 $ (0.02) $ 0.16 $ 0.05 $ 0.23

RESTATED
----------

<S> <C>
1997
Net revenues.......................
Gross profit.......................
Net income (loss)..................
Net income (loss) per share........
1996
Net revenues....................... $ 216,848
Gross profit....................... 164,669
Net income (loss).................. (7,010)
Net income (loss) per share........ $ (0.05)
1995
Net revenues....................... $ 178,546
Gross profit....................... 137,678
Net income (loss).................. 17,372
Net income (loss) per share........ $ 0.11
</TABLE>

NOTE 14--NONRECURRING CHARGES

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
shortfall in business activity compared to historical levels. Accordingly,

F-29
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 14--NONRECURRING CHARGES (CONTINUED)
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.

In June and September 1997, the Company approved plans to restructure its
operations to bring expenses in line with forecasted revenues. In connection
with the restructurings, the Company substantially reduced its worldwide
headcount and consolidated facilities and operations to improve efficiency. The
following analysis sets forth the significant components of the restructuring
charge included in other accrued liabilities at September 28, 1997:

<TABLE>
<CAPTION>
ACCRUAL BALANCE
NON- AT
RESTRUCTURING CASH CASH SEPTEMBER 28,
EXPENSE COSTS PAYMENTS 1997
----------- --------- ----------- ---------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Severance and benefits............................. $ 21.9 $ -- $ 14.7 $ 7.2
Write-off of assets................................ 48.2 30.3 -- 17.9
Facility charges................................... 35.9 3.0 32.9
Other.............................................. 3.4 2.2 -- 1.2
----------- --------- ----- -----
$ 109.4 $ 32.5 $ 17.7 $ 59.2
----------- --------- ----- -----
----------- --------- ----- -----
</TABLE>

Severance and related costs represented the reduction of approximately 750
employees on a worldwide basis primarily impacting sales and marketing.
Temporary employees and contractors were also reduced. Asset charges included a
write-off or write-down of equipment as a result of the decision to reduce the
number of Superstores, as well as the write-off of equipment associated with
headcount reductions. Facility charges included early termination costs
associated with the closing of certain domestic and international sales offices.

The Company expects to complete most of the actions associated with its
restructuring by the end of the first quarter of fiscal 1998.

NOTE 15--SUBSEQUENT EVENTS (UNAUDITED)

SALE OF SANTA CLARA REAL ESTATE. In December 1997, the Company consummated
the sale of land originally intended to be the site of a new corporate
headquarters building for aggregate net proceeds of $58.1 million.

ASSIGNMENT OF LEASE. In November 1996, the Company leased approximately
200,000 square feet of office space adjacent to the Santa Clara land described
above. The lease term was for fifteen years and minimum lease payments amounted
to $96 million over the term. In December 1997, the Company assigned its
leasehold interested and its related obligations under the office space lease to
an unrelated third party.

F-30
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 15--SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
ISSUANCE OF CONVERTIBLE PREFERRED STOCK. In November 1997, the Company sold
50,000 shares of newly issued Series B Convertible Preferred Stock, face value
$1000 per share, to a private investor for aggregate net proceeds of $48.8
million.

REPRICING OF OPTIONS. In September 1997, the Compensation Committee of the
Board of Directors authorized the Company to reprice all options granted before
May 1, 1997. The Company repriced 4,099,573 options through cancellation of the
original option and grant of a new option with an exercise price of $7.1563, the
closing price of a share of Company common stock on November 21, 1997. Executive
officers were required to remit 20% of their designated repriced options to the
Company in order to receive repricing treatment. Non executive officers
participating in the repricing exchanged their options on a one for one bases.
Newly issued stock options have the same vesting status and term as the original
options and are subject to a one year exercise black out period from the
effective date.

In December 1997, the Compensation Committee of the Board of Directors
authorized a second option repricing to be effective January 9, 1998 (the
"Second Repricing Effective Date") based upon the closing sales price of the
Company's Common Stock as of the Second Repricing Effective Date. Under the
terms of the second repricing, each employee, excluding officers and directors
of the Company, may exchange any option outstanding as of May 1, 1997 for a new
option with an exercise price equal to the closing sales price on the Second
Repricing Effective Date. Options exchanged in the second repricing may not be
exercised for a period of one year from the Second Repricing Effective Date.

SENIOR SECURED CREDIT AGREEMENT. In December 1997, Informix Software, Inc.,
a Delaware corporation and the Company's principal operating subsidiary
("Informix Software"), entered into a Senior Secured Credit Agreement with a
syndicate of commercial banks, including BankBoston, N.A. as administrative
agent and Canadian Imperial Bank of Commercial as syndication agent, providing
for a revolving credit facility of up to $75 million (the "Credit Facility").
The actual amount available under the Credit Facility, for either direct
borrowings or issuances of letters of credit, is based on eligibility criteria
for certain accounts receivable, which are measured on a revolving basis. As a
result, the aggregate amount available under the Credit Facility will vary from
time to time based on the amount and eligibility of the Company's receivables.
As of the date of this Prospectus, no borrowings were outstanding under the
Credit Facility, and the Company had not yet determined the actual amount
available, although it believes, based on accounts receivable at December 31,
1997, that its borrowing base would have been substantially less than $75
million. The purpose of the Credit Facility is to provide the Company working
capital and finance general corporate purposes. The term of the Credit Facility
is two years. Amounts outstanding under the Credit Facility bear interest at a
premium over one of two alternative variable rates selected by the Company. The
"Base Rate" equals the greater of (i) the rate of interest announced by
BankBoston, N.A. as its "base rate" and (ii) the Federal Funds Effective Rate
plus 1/2 of 1% per year. The "Adjusted LIBOR Rate" equals (i) the London
Interbank Offered Rate divided by (ii) one minus the applicable reserve
requirement under Regulation D of the Federal Reserve Board. The maximum premium
over the Base Rate is 1.25%, and the maximum premium over the LIBOR Rate is
2.50%, subject to downward adjustment based on the Company's realizing certain
financial thresholds. The Credit Facility is secured by all of the assets of
Informix Software and the capital stock of the Company's subsidiaries that are

F-31
<PAGE>
INFORMIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 28, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 28, 1997 AND
SEPTEMBER 29, 1996 IS UNAUDITED)

NOTE 15--SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
domiciled in the United States, including Informix Software. The availability of
the Credit Facility is also subject to the Company's compliance with certain
covenants, including financial covenants relating to financial ratios and
minimum thresholds for quarterly revenues, operating profits, and cashflows.

SALE OF PARTNERSHIP INTEREST IN LENEXA, KANSAS FACILITY. In October 1997,
the Company entered into an agreement to sell substantially all of its
partnership interest in its Lenexa, Kansas facility for approximately $8.4
million. Under the terms of the agreement, the purchaser of the Company's
partnership interest holds an option to purchase the Company's remaining DE
MINIMIS interest in the partnership.

F-32
<PAGE>
INFORMIX CORPORATION

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

(RESTATED)
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONS
------------------------
CHARGED TO
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND ACCOUNTS DEDUCTIONS END OF
OF PERIOD EXPENSES (1) (2) PERIOD
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS

Nine months ended September 30, 1997................ $ 21,429 $ 12,962 $ -- $ 4,850 $ 29,541

Year ended December 31, 1996........................ $ 12,854 $ 15,329 $ (346) $ 6,408 $ 21,429

Year ended December 31, 1995........................ $ 6,049 $ 8,247 $ 261 $ 1,703 $ 12,854

Year ended December 31, 1994........................ $ 3,181 $ 1,937 $ 1,900 $ 969 $ 6,049
</TABLE>

- ------------------------

(1) Charged to net revenues

(2) Uncollectible accounts written off, net of recoveries

F-33
<PAGE>
[LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts, commissions and certain accountable expenses, payable by
the Company in connection with the sale of Common Stock being registered. All
amounts are estimates except the SEC registration fee and the NASD filing fee.

<TABLE>
<S> <C>
SEC Registration Fee.............................................. $ 35,255
Printing Fees and Expenses........................................ 28,000
Legal Fees and Expenses........................................... 50,000
Accounting Fees and Expenses...................................... 60,000
Transfer Agent and Registrar Fees................................. 2,500
Miscellaneous..................................................... 24,245
---------
Total......................................................... $ 200,000
---------
---------
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits a corporation to
include in its charter documents, and in agreements between the corporation and
its directors and officers, provisions expanding the scope of indemnification
beyond that specifically provided by the current law.

Article Eight of the Registrant's Amended and Restated Certificate of
Incorporation provides for the indemnification of directors to the fullest
extent permissible under Delaware law.

Article VI of the Registrant's Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of the corporation if
such person acted in good faith and in a manner reasonably believed to be in and
not opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his conduct was unlawful.

The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for in
the Registrant's Bylaws, and intends to enter into indemnification agreements
with any new directors and executive officers in the future.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since January 1, 1994, the Registrant has issued and sold the following
unregistered securities:

1. On August 12, 1997, pursuant to a Subscription Agreement dated the same
(the "Subscription Agreement"), the Registrant sold 160,000 shares of its Series
A Convertible Preferred Stock (the "Series A Preferred") for an aggregate of
$40,000,000 to Fletcher International Limited. The Series A Preferred is
convertible into shares of Common Stock at any time after issuance and will
automatically convert into Common Stock 18 months following the date of its
issuance by the Registrant. At the holder's option, each share of Series A
Preferred, which has a face value of $250, is convertible into Common Stock at a
per share price equal to 101% of the Common Stock average price for the thirty
trading days ending five trading days prior to the conversion, but not greater
than the lesser of (i) 105% of the Common Stock average price of the first five
trading days of such thirty day period, or (ii) $12. The number of shares of
Common Stock to be issued upon conversion will vary based on future stock price
movements. In connection with the sale of the Series A Preferred, the Registrant
issued a warrant to purchase up to 140,000 shares of its Series A Preferred (the
"Series A Warrant") with an aggregated purchase price of $35,000,000. The Series
A Warrant was generally exercisable from and after August 13, 1997 to and

II-1
<PAGE>
including February 15, 1998, with a provision for extension of the warrant
exercise period under certain circumstances.

2. On November 17, 1997, pursuant to an amendment to the Subscription
Agreement, the Registrant issued 160,000 shares of its Series A-1 Convertible
Preferred Stock (the "A-1 Preferred Stock") in exchange for the cancellation of
the Series A Preferred that had been issued in August 1997. For a description of
the Series A-1 Preferred see "Description of Capital Stock--Preferred Stock." In
connection with the issuance of the Series A-1 Preferred, the Registrant issued
a warrant to purchase up to 140,000 shares of its Series A-1 Preferred in
exchange for the cancellation of the Series A Warrant with an aggregated
purchase price of $35,000,000 (the "Series A-1 Warrant"). The Series A-1 Warrant
is generally exercisable from its date of issuance until April 15, 1999, with a
provision for extension of the warrant exercise period under certain
circumstances.

3. On November 19, 1997, pursuant to a Securities Purchase Agreement dated
November 17, 1997, the Registrant sold 50,000 shares of newly issued Series B
Convertible Preferred Stock (the "Series B Preferred") for an aggregate purchase
price of $50,000,000 to an investor group led by an affiliate of Credit Suisse
First Boston. In connection with the sale of the Series B Preferred, the Company
is required to issue a warrant to acquire a number of shares equal to 20% of the
shares of Common Stock issued upon the conversion of the Series B Preferred but
no less than 1,300,000 shares, together with an additional increment of warrants
to purchase 200,000 shares of Common Stock. The warrant may be exercised until
2002. For a description of the Series B Preferred and the warrant to be issued
in connection with the sale of the Series B Preferred see "Description of
Capital Stock--Preferred Stock."

The sales of the above securities were deemed to be exempt from registration
under the Securities Act in reliance on Regulation S under the Securities Act,
Section 4(2) of the Securities Act, Regulation D promulgated thereunder, Section
3(a)(9) of the Securities Act or Rule 701 promulgated under the Securities Act
as transactions by an issuer not involving a public offering or transactions
pursuant to compensatory benefit plans and contracts relating to compensation as
provided under such Rule 701. The recipients of securities in each such
transaction represented their intention to acquire the securities for investment
only and not with a view to or for sale in connection with any distribution
thereof and appropriate legends were affixed to the share certificates and
warrants issued in such transactions. All recipients had adequate access,
through their relationships with the Company, to information about the
Registrant.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT TITLE
- ------------- ---------------------------------------------------------------------------------------------
<C> <S>
10.3 (9) Form of Amended Indemnity Agreement
10.4 (10) 1989 Outside Directors Stock Option Plan
10.5 (11) Amendment to the 1989 Outside Directors Stock Option Plan
10.6 (1) Form of Nonqualified Stock Option Agreement under the Registrant's 1989 Outside Director's
Stock Option Plan
10.7 (12) 1986 Stock Option Plan, as amended
10.8 (13) 1994 Stock Option and Award Plan
10.9 (2) Form of Stock Option Agreement and Performance Award Agreement under the Registrant's 1994
Stock Option and Award Plan
10.10 (13) Form of Nonqualified Stock Option Agreement under the Registrant's 1994 Stock Option Plan
10.11 (14) 1997 Employee Stock Purchase Plan
10.12 (1) Enrollment/Change Form under the Registrant's 1997 Employee Stock Purchase Plan
10.13 (15) Employment Agreement, dated July 18, 1997, between the Registrant and Robert J. Finocchio,
Jr.
10.14 (15) Offer of Employment Letter, dated September 18, 1997, from the Registrant to Wes Raffel
10.15 (15) Offer of Employment Letter, dated September 24, 1997, from the Registrant to Jean-Yves
Dexmier
10.16 (1) Separation Agreement, dated April 18, 1987, between the Registrant and Ronald M. Alvarez
10.17 (1) Separation Agreement, dated May 12, 1997, between the Registrant and Edwin C. Winder
10.18 (16) Employment Agreement, dated January 1, 1989, between the Registrant and Phillip E. White
10.19 (1) Contract of Employment, dated December 5, 1996, between the Registrant and Kenneth Coulter
10.20 (1) Employment Letter Agreement, dated November 25, 1996, between the Registrant and Kenneth
Coulter
10.21 (4) Subscription Agreement, dated August 12, 1997, between the Company and Fletcher International
Limited
10.22 (17) Exchange Agreement, dated as of November 17, 1997, between the Company and Fletcher
International Limited
10.23 (17) Amendment No. 1 to Subscription Agreement, dated as of November 17, 1997, between the Company
and Fletcher International Limited
10.24 (5) Securities Purchase Agreement, dated as of November 17, 1997, between the Company and the
purchasers listed therein
10.25 (5) Registration Rights Agreement, dated as of November 17, 1997, between the Company and the
purchasers listed therein
10.26 (8) Menlo Oaks Corporate Center Standard Business Lease, dated May 16, 1985, between the
Registrant and Amarok Bredero Partners for office space at 4100 Bohannon Drive, Menlo Park,
California
10.27 (8) Lease Amendment #1, dated July 2, 1986, between the Registrant and Amarok Bredero Partners
for office space at 4100 Bohannon Drive, Menlo Park, California
10.28 (18) Second Amendment to Lease, dated November 7, 1986 between the Registrant and Amarok Bredero
Partners for office space at 4100 Bohannon Drive, Menlo Park, California
</TABLE>

II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT TITLE
- ------------- ---------------------------------------------------------------------------------------------
<C> <S>
10.29 (19) Third Amendment to Lease, dated June 18, 1991, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4100 Bohannon Drive, Menlo Park, California
10.30 (1) Fourth Amendment to Lease, dated June 30, 1997, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4100 Bohannon Drive, Menlo Park, California
10.31 (9) Menlo Oaks Corporate Center Standard Business Lease, dated September 4, 1987 between the
Registrant and Menlo Oaks Partners, L.P. for office space at 4300/4400 Bohannon Drive,
Menlo Park, California
10.32 (1) Side Letter Agreement, dated August 31, 1987, between the Registrant and Menlo Oaks Partners,
L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.33 (1) Side Letter Agreement, dated October 27, 1987, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.34 (19) First Amendment to Lease, dated June 18, 1991, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.35 (20) Second Amendment to Lease, dated July 17, 1992, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.36 (1) Third Amendment to Lease, dated June 8, 1993 between the Registrant and Menlo Oaks Partners,
L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.37 (21) Fourth Amendment to Lease, dated February 10, 1994, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.38 (1) Fifth Amendment to Lease, dated June 30, 1997 between the Registrant and Menlo Oaks Partners,
L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.39 (21) Menlo Oaks Corporate Center Standard Business Lease, dated February 10, 1994 between the
Registrant and Menlo Oaks Partners, L.P. for office space at 4600/4700 Bohannon Drive,
Menlo Park, California
10.40 (21) First Amendment to Lease, dated March 17, 1994, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4600/47000 Bohannon Drive, Menlo Park, California
10.41 (1) Second Amendment to Lease, dated September 22, 1994, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4600/47000 Bohannon Drive, Menlo Park, California
10.42 (1) Third Amendment to Lease, dated December 28, 1994, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4600/47000 Bohannon Drive, Menlo Park, California
10.43 (9) Office Lease, dated August 15, 1987, between the Registrant and Southlake Partners #1 for
office space at 15961 College Blvd. and 11170 Lakeview Avenue, Lenexa, Kansas
10.44 (1) First Amendment to Office Lease, dated April 15, 1988, between the Registrant and Southlake
Partners #1 for office space at 15901 College Blvd., Lenexa, Kansas
10.45 (1) Amendment to Office Lease, dated October 20, 1997, between the Registrant and Southlake
Partners #1 for office space at 15901 College Blvd. (now 16011 College Blvd) Lenexa, Kansas
</TABLE>

II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT TITLE
- ------------- ---------------------------------------------------------------------------------------------
<C> <S>
10.46 (1) Office Lease, dated October 20, 1997, between the Registrant and Southlake Partners #1 for
office space at 11170 Lakeview Avenue, Lenexa, Kansas
10.47 (1) Senior Secured Credit Agreement, dated December 31, 1997, among Informix Software, Inc.,
certain banks and other financial institutions that either now or in the future are parties
to the agreement, BankBoston, N.A. and Canadian Imperial Bank of Commerce
10.48 (1) Pledge Agreement, dated December 31, 1997, by and between the Registrant and BankBoston, N.A.
10.49 (1) Pledge and Security Agreement, dated as of December 31, 1997, between Informix Software, Inc.
and BankBoston, N.A.
10.50 (1) Continuing Guaranty, dated as of December 31, 1997, by the Registrant
11.1 (1) Schedule re: Computation of Net Income (Loss) Per Share
21.1 (23) Subsidiaries of the Registrant
23.1 (1) Consent of Ernst & Young LLP, Independent Auditors
24.1 (1) Power of Attorney (set forth on signature page)
24.2 (2) Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit
5.1)
27.1 (1) Financial Data Schedule
</TABLE>

- ------------------------

(1) Filed herewith

(2) To be filed by Amendment

(3) Incorporated by reference to exhibits filed with the Registrant's quarterly
report on Form 10-Q for the fiscal quarter ended July 2, 1995

(4) Incorporated by reference to exhibits filed with the Registrant's report on
Form 8-K filed with the Commission on August 25, 1997

(5) Incorporated by reference to exhibits filed with the Registrant's report on
Form 8-K filed with the Commission on December 4, 1997

(6) Incorporated by reference to exhibits filed with the amendment to the
Registrant's Registration Statement on Form 8-A/A (File No. 000-15325)
filed with the Commission on September 3, 1997

(7) Incorporated by reference to exhibits filed with the amendment to the
Registrant's Registration Statement on Form 8-A/A (File No. 000-15325)
filed with the Commission on December 3, 1997.

(8) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-1 (File No. 33-8006)

(9) Incorporated by reference to exhibit filed with the Registrant's annual
report on Form 10-K for the fiscal year ended December 31, 1988

(10) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-8 (File No. 33-31116)

(11) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-8 (File No. 33-50608)

(12) Incorporated by reference to exhibits filed with Registrant's Registration
Statements on Form S-8 (File Nos: 33-22862, 33-31117 and 33-506-10)

(13) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-8 (File No. 333-31369) filed with the
Commission on July 16, 1997.

II-5
<PAGE>
(14) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-8 (File No. 333-31371) filed with the
Commission on July 16, 1997

(15) Incorporated by reference to exhibits filed with the Registrant's
quarterly report on Form 10-Q for the fiscal quarter ended September 28,
1997

(16) Incorporated by reference to exhibits filed with Registrant's annual
report on Form 10-K for the fiscal year ended December 31, 1989

(17) Incorporated by reference to exhibits filed with Registrant's report on
Form 8-K filed with the Commission on December 2, 1997

(18) Incorporated by reference to exhibits filed with Registrant's annual
report on Form 10-K for the fiscal year ended December 31, 1986

(19) Incorporated by reference to exhibits filed with Registrant's annual
report on Form 10-K for the fiscal year ended December 31, 1991

(20) Incorporated by reference to exhibits filed with Registrant's annual
report on Form 10-K for the fiscal year ended December 31, 1992

(21) Incorporated by reference to exhibits filed with Registrant's annual
report on Form 10-K for the fiscal year ended December 31, 1993

(22) Incorporated by reference to exhibits filed with the Registrant's
amendment to its annual report on Form 10-K/A for the fiscal year ended
December 31, 1996 filed with the Commission on November 18, 1997

(23) Incorporated by reference to exhibits filed with the Registrant's annual
report on Form 10-K for the fiscal year ended December 31, 1996

(b) Financial Statement Schedule

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

Schedules not listed above have been omitted because the information
required to be set forth therein is not, applicable or is shown in the financial
statements or notes thereto.

II-6
<PAGE>
ITEM 17. UNDERTAKINGS

Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereto, which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement; and (iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of this offering.

(4) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

II-7
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Menlo Park, State of California, on the 9th day of January, 1998.

<TABLE>
<S> <C> <C>
INFORMIX CORPORATION

By: /s/ ROBERT J. FINOCCHIO, JR.
------------------------------------------
Robert J. Finocchio, Jr.
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
</TABLE>

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Jean-Yves Dexmier and Karen Blasing and
each one of them, acting individually and without the other, as his
attorney-in-fact, each with full power of substitution, for him in any and all
capacities, to sign any and all amendments to this Registration Statement
(including post-effective amendments), and to sign any registration statement
for the same offering covered by this Registration Statement that is to be
effective upon filing pursuant to Rule 462(b) promulgated under the Securities
Act of 1933, and all post-effective amendments thereto, 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 Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------

<C> <S> <C>
/s/ (ROBERT J. FINOCCHIO, Chairman, President and
JR.) Chief Executive Officer
- ------------------------------ (Principal Executive January 9, 1998
(Robert J. Finocchio, Jr.) Officer) and Director

Executive Vice President
/s/ (JEAN-YVES DEXMIER) and Chief Financial
- ------------------------------ Officer (Principal January 9, 1998
(Jean-Yves Dexmier) Financial Officer)

/s/ (LESLIE G. DENEND)
- ------------------------------ Director January 9, 1998
(Leslie G. Denend)

/s/ (ALBERT F. KNORP, JR.)
- ------------------------------ Director January 9, 1998
(Albert F. Knorp, Jr.)

/s/ (JAMES L. KOCH)
- ------------------------------ Director January 9, 1998
(James L. Koch)

/s/ (THOMAS A. MCDONNELL)
- ------------------------------ Director January 9, 1998
(Thomas A. McDonnell)

/s/ (CYRIL J. YANSOUNI)
- ------------------------------ Director January 9, 1998
(Cyril J. Yansouni)

Vice President and
/s/ (KAREN BLASING) Corporate Controller
- ------------------------------ (Principal Accounting January 9, 1998
(Karen Blasing) Officer)
</TABLE>

II-8
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT TITLE
- ------------- ---------------------------------------------------------------------------------------------
<C> <S>
3.1 (3) Certificate of Incorporation of the Registrant, as amended
3.2 (3) Bylaws of the Registrant, as amended
3.3 (4) Certificate of Designation of Series A Convertible Preferred Stock
3.4 (5) Certificate of Designation of Series A-1 Convertible Preferred Stock
3.5 (5) Certificate of Designation of Series B Convertible Preferred Stock
4.1 (6) First Amended and Restated Rights Agreement, dated as of August 12, 1997, between the
Registrant and BankBoston N.A., including the form of Rights Certificate attached thereto
as Exhibit A
4.2 (7) Amendment, dated as of November 17, 1997, to the First Amended and Restated Rights Agreement
between the Registrant and BankBoston, N.A.
5.1 (2) Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation regarding legality of
the securities being registered
10.1 (1) Form of Change of Control Agreement
10.2 (8) Form of Indemnity Agreement
10.3 (9) Form of Amended Indemnity Agreement
10.4 (10) 1989 Outside Directors Stock Option Plan
10.5 (11) Amendment to the 1989 Outside Directors Stock Option Plan
10.6 (1) Form of Nonqualified Stock Option Agreement under the Registrant's 1989 Outside Director's
Stock Option Plan
10.7 (12) 1986 Stock Option Plan, as amended
10.8 (13) 1994 Stock Option and Award Plan
10.9 (2) Form of Stock Option Agreement and Performance Award Agreement under the Registrant's 1994
Stock Option and Award Plan
10.10 (13) Form of Nonqualified Stock Option Agreement under the Registrant's 1994 Stock Option Plan
10.11 (14) 1997 Employee Stock Purchase Plan
10.12 (1) Enrollment/Change Form under the Registrant's 1997 Employee Stock Purchase Plan
10.13 (15) Employment Agreement, dated July 18, 1997, between the Registrant and Robert J. Finocchio,
Jr.
10.14 (15) Offer of Employment Letter, dated September 18, 1997, from the Registrant to Wes Raffel
10.15 (15) Offer of Employment Letter, dated September 24, 1997, from the Registrant to Jean-Yves
Dexmier
10.16 (1) Separation Agreement, dated April 18, 1987, between the Registrant and Ronald M. Alvarez
10.17 (1) Separation Agreement, dated May 12, 1997, between the Registrant and Edwin C. Winder
10.18 (16) Employment Agreement, dated January 1, 1989, between the Registrant and Phillip E. White
10.19 (1) Contract of Employment, dated December 5, 1996, between the Registrant and Kenneth Coulter
10.20 (1) Employment Letter Agreement, dated November 25, 1996, between the Registrant and Kenneth
Coulter
10.21 (4) Subscription Agreement, dated August 12, 1997, between the Company and Fletcher International
Limited
10.22 (17) Exchange Agreement, dated as of November 17, 1997, between the Company and Fletcher
International Limited
10.23 (17) Amendment No. 1 to Subscription Agreement, dated as of November 17, 1997, between the Company
and Fletcher International Limited
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT TITLE
- ------------- ---------------------------------------------------------------------------------------------
<C> <S>
10.24 (5) Securities Purchase Agreement, dated as of November 17, 1997, between the Company and the
purchasers listed therein
10.25 (5) Registration Rights Agreement, dated as of November 17, 1997, between the Company and the
purchasers listed therein
10.26 (8) Menlo Oaks Corporate Center Standard Business Lease, dated May 16, 1985, between the
Registrant and Amarok Bredero Partners for office space at 4100 Bohannon Drive, Menlo Park,
California
10.27 (8) Lease Amendment #1, dated July 2, 1986, between the Registrant and Amarok Bredero Partners
for office space at 4100 Bohannon Drive, Menlo Park, California
10.28 (18) Second Amendment to Lease, dated November 7, 1986 between the Registrant and Amarok Bredero
Partners for office space at 4100 Bohannon Drive, Menlo Park, California
10.29 (19) Third Amendment to Lease, dated June 18, 1991, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4100 Bohannon Drive, Menlo Park, California
10.30 (1) Fourth Amendment to Lease, dated June 30, 1997, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4100 Bohannon Drive, Menlo Park, California
10.31 (9) Menlo Oaks Corporate Center Standard Business Lease, dated September 4, 1987 between the
Registrant and Menlo Oaks Partners, L.P. for office space at 4300/4400 Bohannon Drive,
Menlo Park, California
10.32 (1) Side Letter Agreement, dated August 31, 1987, between the Registrant and Menlo Oaks Partners,
L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.33 (1) Side Letter Agreement, dated October 27, 1987, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.34 (19) First Amendment to Lease, dated June 18, 1991, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.35 (20) Second Amendment to Lease, dated July 17, 1992, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.36 (1) Third Amendment to Lease, dated June 8, 1993 between the Registrant and Menlo Oaks Partners,
L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.37 (21) Fourth Amendment to Lease, dated February 10, 1994, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.38 (1) Fifth Amendment to Lease, dated June 30, 1997 between the Registrant and Menlo Oaks Partners,
L.P. for office space at 4300/4400 Bohannon Drive, Menlo Park, California
10.39 (21) Menlo Oaks Corporate Center Standard Business Lease, dated February 10, 1994 between the
Registrant and Menlo Oaks Partners, L.P. for office space at 4600/4700 Bohannon Drive,
Menlo Park, California
10.40 (21) First Amendment to Lease, dated March 17, 1994, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4600/47000 Bohannon Drive, Menlo Park, California
10.41 (1) Second Amendment to Lease, dated September 22, 1994, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4600/47000 Bohannon Drive, Menlo Park, California
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT TITLE
- ------------- ---------------------------------------------------------------------------------------------
<C> <S>
10.42 (1) Third Amendment to Lease, dated December 28, 1994, between the Registrant and Menlo Oaks
Partners, L.P. for office space at 4600/47000 Bohannon Drive, Menlo Park, California
10.43 (9) Office Lease, dated August 15, 1987, between the Registrant and Southlake Partners #1 for
office space at 15961 College Blvd. and 11170 Lakeview Avenue, Lenexa, Kansas
10.44 (1) First Amendment to Office Lease, dated April 15, 1988, between the Registrant and Southlake
Partners #1 for office space at 15901 College Blvd., Lenexa, Kansas
10.45 (1) Amendment to Office Lease, dated October 20, 1997, between the Registrant and Southlake
Partners #1 for office space at 15901 College Blvd. (now 16011 College Blvd) Lenexa, Kansas
10.46 (1) Office Lease, dated October 20, 1997, between the Registrant and Southlake Partners #1 for
office space at 11170 Lakeview Avenue, Lenexa, Kansas
10.47 (1) Senior Secured Credit Agreement, dated December 31, 1997, among Informix Software, Inc.,
certain banks and other financial institutions that either now or in the future are parties
to the agreement, BankBoston, N.A. and Canadian Imperial Bank of Commerce
10.48 (1) Pledge Agreement, dated December 31, 1997, by and between the Registrant and BankBoston, N.A.
10.49 (1) Pledge and Security Agreement, dated as of December 31, 1997, between Informix Software, Inc.
and BankBoston, N.A.
10.50 (1) Continuing Guaranty, dated as of December 31, 1997, by the Registrant
11.1 (1) Schedule re: Computation of Net Income (Loss) Per Share
21.1 (23) Subsidiaries of the Registrant
23.1 (1) Consent of Ernst & Young LLP, Independent Auditors
24.1 (1) Power of Attorney (set forth on signature page)
24.2 (2) Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit
5.1)
27.1 (1) Financial Data Schedule
</TABLE>

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(1) Filed herewith

(2) To be filed by Amendment

(3) Incorporated by reference to exhibits filed with the Registrant's quarterly
report on Form 10-Q for the fiscal quarter ended July 2, 1995

(4) Incorporated by reference to exhibits filed with the Registrant's report on
Form 8-K filed with the Commission on August 25, 1997

(5) Incorporated by reference to exhibits filed with the Registrant's report on
Form 8-K filed with the Commission on December 4, 1997

(6) Incorporated by reference to exhibits filed with the amendment to the
Registrant's Registration Statement on Form 8-A/A (File No. 000-15325)
filed with the Commission on September 3, 1997

(7) Incorporated by reference to exhibits filed with the amendment to the
Registrant's Registration Statement on Form 8-A/A (File No. 000-15325)
filed with the Commission on December 3, 1997.

(8) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-1 (File No. 33-8006)

(9) Incorporated by reference to exhibit filed with the Registrant's annual
report on Form 10-K for the fiscal year ended December 31, 1988

(10) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-8 (File No. 33-31116)
<PAGE>
(11) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-8 (File No. 33-50608)

(12) Incorporated by reference to exhibits filed with Registrant's Registration
Statements on Form S-8 (File Nos: 33-22862, 33-31117 and 33-506-10)

(13) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-8 (File No. 333-31369) filed with the
Commission on July 16, 1997.

(14) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-8 (File No. 333-31371) filed with the
Commission on July 16, 1997