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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 9, 1999
REGISTRATION NO. 333-________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
INFORMIX CORPORATION
(Exact name of Registrant as specified in its charter)
--------------------------
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<S> <C> <C>
4100 BOHANNON DRIVE
MENLO PARK, CALIFORNIA 94025
DELAWARE (650) 926-6300 94-3011736
(State or other jurisdiction of (Address, including zip code, and (I.R.S. Employer
incorporation or organization) telephone number, including area Identification Number)
code, of Registrant's principal
executive offices)
</TABLE>
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JEAN-YVES DEXMIER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
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.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
--------------------------
Approximate date of commencement of proposed sale to the public: Sales to the
public under this Registration Statement will commence as soon as practicable
after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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, 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value........ 9,582,947 shares $8.0630 $77,267,301.66 $21,480.31
</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 November 2, 1999.
--------------------------
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
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<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION)
Dated November 9, 1999
9,582,947 SHARES
INFORMIX CORPORATION
COMMON STOCK
------------------
These shares may be offered and sold from time to time by certain
stockholders of Informix identified in this prospectus. See "Selling
Stockholders." The selling stockholders acquired the shares on October 8, 1999
in connection with Informix's acquisition of Cloudscape, Inc.
The selling stockholders will receive all of the net proceeds from the sale
of the shares. Informix will not receive any proceeds from the sale of the
shares.
Informix's common stock is quoted on the Nasdaq National Market under the
symbol "IFMX." On November 8, 1999, the last reported sale price of the common
stock was $8.875 per share.
------------------------
INVESTING IN SHARES OF INFORMIX'S COMMON STOCK MAY CARRY A HIGH DEGREE OF
RISK. SEE "RISK FACTORS," BEGINNING ON PAGE 6 OF THIS PROSPECTUS BEFORE
PURCHASING ANY OF THE COMMON STOCK OFFERED HEREBY.
---------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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November , 1999
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TABLE OF CONTENTS
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PAGE
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WHERE TO FIND ADDITIONAL INFORMATION ABOUT INFORMIX......... 3
INFORMATION INCORPORATED BY REFERENCE....................... 3
SUMMARY BUSINESS DESCRIPTION OF INFORMIX.................... 4
FORWARD-LOOKING STATEMENTS.................................. 5
RISK FACTORS................................................ 6
USE OF PROCEEDS............................................. 21
SELLING STOCKHOLDERS........................................ 22
PLAN OF DISTRIBUTION........................................ 26
LEGAL MATTERS............................................... 27
EXPERTS..................................................... 27
</TABLE>
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell, and
seeking offers to buy, shares of Informix common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of the shares.
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WHERE TO FIND ADDITIONAL INFORMATION ABOUT INFORMIX
We file annual, quarterly, and special reports, proxy statements, and other
information with the SEC. You may read and copy any document that we file at the
SEC's public reference rooms at 450 Fifth Street, N.W., Washington D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms, including locations of regional offices. Our SEC filings are
also available to the public from our Web site at http://www.informix.com or at
the SEC's Web site at http:// www.sec.gov. Information on our Web site does not
constitute part of this prospectus.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information that we file with the SEC
will automatically update and supercede this information. We incorporate by
reference by the documents listed below, any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, until the selling
stockholders sell all the shares. This prospectus is part of a registration
statement we filed with the SEC. The documents we incorporate by reference are:
- Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998.
- Our 1998 Annual Report to stockholders.
- Our Proxy Statement for 1999 annual meeting of stockholders.
- Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
- Our Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
- Our Current Report on Form 8-K filed on June 18, 1999 (relating to the
settlement of pending private securities and related litigation).
- Our Current Report on Form 8-K filed on October 15, 1999 (relating to our
acquisition of Cloudscape in 1999).
- Our Current Report on Form 8-K filed on November 9, 1999 (relating to the
supplemental financial statements giving retroactive effect to our pooling
of interests with Cloudscape).
- Our Form 8-A, filed on January 21, 1987 (regarding the description of
Informix Common Stock) (incorporated by reference and not included
herewith).
- Our Form 8-A, filed on September 19, 1991, as subsequently amended on
May 27, 1992, August 11, 1995 and September 3, 1997 (regarding our
stockholders' rights plan) (incorporated by reference and not included
herewith).
You may request a copy of these filings and any subsequent filing
incorporated be reference into this prospectus, at no cost, by writing or
telephoning us at the following address: Legal Department of Informix
Corporation, 4100 Bohannon Drive, Menlo Park, California, 94025, and our
telephone number at that location is (650) 926-6300.
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SUMMARY BUSINESS DESCRIPTION OF INFORMIX
We are a leading supplier of information management software and solutions
to governments and enterprises worldwide. We design, develop, manufacture,
market and support-
- Relational database management systems, or RDBMS;
- Connectivity interfaces and gateways; and
- Graphical and character-based application development tools for building
database applications that allow customers to access, retrieve and
manipulate business data.
We also offer complete solutions, which include our database management
software, our own and third party software, and our consulting services, to help
customers design and deploy data warehousing, Web-based enterprise repository
and electronic commerce applications.
We believe 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 audio, video, text and three dimensional graphics in
addition to conventional character data. Since 1996, we have devoted substantial
resources to the development of object-relational database management systems,
or ORDBMS, which provide RDBMS functionality for complex data such as images,
video, audio and spatial data, and tools for applications in multimedia and
entertainment, digital media publishing and financial services.
Organizations employ RDBMS and ORDBMS software for use in storing, managing
and retrieving the large amounts of data necessary to support four types of
systems:
- Internal management information systems, such as accounting, human
resources and manufacturing
- Mission-critical on-line transaction processing systems that process
business information from a large number of locations or users
- Data warehousing/data mart systems that aggregate data from multiple
sources and perform sophisticated analyses to support business decisions
- Internet applications, including dynamic site publishing, information
retrieval and electronic commerce
In October 1999, we acquired Cloudscape and expanded our capability to
deliver a client database with a small footprint, pure Java, fully
synchronizable technology. In December 1998, we expanded our ability to deliver
data warehousing solutions by acquiring Red Brick Systems. We are integrating
Red Brick's data mart technology into our suite of products that form the core
of our data warehousing solution.
RDBMS and increasingly ORDBMS software also is being used to drive Internet
applications, from site publishing and information retrieval to electronic
commerce.
We market our products to end-users on a worldwide basis directly through
our sales force and indirectly through applications resellers, original
equipment manufacturers and distributors. The principal geographic markets for
our products are North America, Europe, the Asia/Pacific region and Latin
America. In recent years, approximately half of our total revenues have been
generated outside North America. Our 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.
Our corporate headquarters are located at 4100 Bohannon Drive, Menlo Park,
California, 94025. Our telephone number at that address is (650) 926-6300.
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FORWARD-LOOKING STATEMENTS
This prospectus including the information incorporated by reference herein,
contains forward-looking statements within the meaning of section 27A of the
Securities Act and section 21E of the Exchange Act. These forward-looking
statements include, but are not limited to, statements about our plans,
objectives, expectations and intentions and other statements contained in the
prospectus that are not historical facts. When used in this prospectus, the
words "expects," "anticipates," "estimates" and similar expressions are intended
to identify forward-looking statements. Because these forward-looking statements
involve risks and uncertainties, there are important facts that could cause
actual results to differ materially from those expressed or implied by these
forward-looking statements, including statements under the captions "Risk
Factors." Our actual results could differ materially from those projected in the
forward-looking statements as a result of the risk factors set forth above. In
particular, please review the discussions set forth under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in our
annual report on Form 10-K for the fiscal year ended December 31, 1998 and in
our quarterly reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999, which reports are incorporated herein by reference and such
section of any subsequently filed Exchange Act reports. In connection with
forward-looking statements which appear in these disclosures, prospective
purchasers of the shares of Informix common stock offered hereby should
carefully consider the factors set forth in this prospectus under "Risk
Factors."
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RISK FACTORS
PROSPECTIVE INVESTORS ARE CAUTIONED THAT THE STATEMENTS IN THIS PROSPECTUS
OR IN DOCUMENTS INCORPORATED BY REFERENCE HEREIN THAT ARE NOT DESCRIPTIONS OF
HISTORICAL FACTS MAY BE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO RISKS AND
UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE CURRENTLY
ANTICIPATED BECAUSE OF A NUMBER OF FACTORS, INCLUDING THOSE IDENTIFIED HEREIN
UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS OR IN DOCUMENTS
INCORPORATED BY REFERENCE HEREIN.
NEW PRODUCT INTRODUCTIONS AND PRICING STRATEGIES OF OUR COMPETITORS COULD
ADVERSELY AFFECT OUR ABILITY TO SELL OUR PRODUCTS OR GROW OUR BUSINESS.
We may not be able to compete successfully against current and/or future
competitors and such inability could impair our ability to sell our products.
The market for our products is highly competitive, diverse and will be subject
to rapid change as the Internet is embraced by businesses around the world.
Moreover, we expect that the technology for database products generally, and, in
particular, the technology underlying database solutions and products for the
Internet and data warehousing products will continue to change rapidly. New
products are introduced frequently, and existing products are enhanced
continually. Competition may also result in changes in our pricing policies or
those of our competitors which could adversely affect our ability to sell our
products and could adversely affect our margins. We currently face competition
from a number of sources, including several large vendors that develop and
market databases, applications, development tools, decision support products,
consulting services and/or complete database-driven solutions for the Internet.
Our principal competitors include Computer Associates, IBM, Microsoft,
NCR/Teradata, Oracle and Sybase. Additionally, as we expand our business in the
markets of data warehousing and Web/e-commerce, we expect to compete with a
different group of companies, including small, highly focused companies offering
single products or services that we include as part of an overall solution. A
number of our competitors have significantly greater financial, technical,
marketing and other resources than we have. As a result, they may be able to
respond more quickly to new or emerging technologies, evolving markets and
changes in customer requirements or to devote greater resources to the
development, promotion and sale of their products than we can.
COMPETITION MAY AFFECT THE PRICING OF OUR PRODUCTS OR SERVICES WHICH COULD
ADVERSELY AFFECT OUR ABILITY TO SELL OUR PRODUCTS AND MAY REDUCE OUR MARGINS.
Existing and future competition or changes in our product or service pricing
structure or product or service offerings could result in an immediate reduction
in the prices of our products or services. If significant price reductions in
our products or services were to occur and not be offset by increases in sales
volume, our operating margins would be adversely affected. Several of our
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 our products. In addition, the following factors could affect the pricing of
RDBMS products and related products:
- The industry movement to new operating systems, like Windows NT;
- Access to RDBMS products through low-end desktop computers;
- Access to database-driven solutions, including ORDBMS products, through
the Internet;
- The bundling of software products for promotional purposes or as a
long-term pricing strategy by certain of our competitors; and
- Our own practice of bundling our software products for enterprise licenses
or for promotional purposes with our partners.
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In particular, the pricing strategies of competitors in the industry have
historically been characterized by aggressive price discounting to encourage
volume purchasing by customers. We may not be able to compete effectively
against competitors who continue to aggressively discount the prices of their
products.
IF WE DO NOT RESPOND ADEQUATELY TO OUR INDUSTRY'S EVOLVING TECHNOLOGY STANDARDS
OR DO NOT CONTINUE TO MEET THE SOPHISTICATED NEEDS OF OUR CUSTOMERS, SALES OF
OUR PRODUCTS MAY DECLINE.
Our future success will depend on our ability to address the increasingly
sophisticated needs of our customers by supporting existing and emerging
hardware, software, database and networking platforms. If we do not enhance our
products to meet these evolving needs, this could adversely affect our ability
to remain competitive and sell our products. We will have to develop and
introduce enhancements to our existing products and solutions on a timely basis
to keep pace with technological developments, evolving industry standards and
changing customer requirements. We expect that we will have to respond quickly
to:
- Rapid technological change;
- Emerging new markets;
- Changing customer needs;
- Frequent new product introductions; and
- Evolving industry standards that may render existing products and services
obsolete.
As a result, our position in existing, emerging or potential markets could
be eroded rapidly by product advances. The life cycles of our products are
difficult to estimate. Our growth and future financial performance will depend
on our ability to:
- Continue to enhance our existing products and solutions;
- Develop and introduce new products and solutions that keep pace with
technological advances on a timely and cost-effective basis;
- Meet changing customer requirements; and
- Match or exceed the product deliveries of our competitors.
Our product development efforts will continue to require substantial
investments. We may not have sufficient resources to make the necessary
investments or to be able to attract and retain qualified software development
engineers. In addition, it is unlikely that we will be able to internally
develop new products or solutions quickly enough to respond to market forces. As
a result, we will have to acquire technology or access to products or solutions
through mergers and acquisitions, investments and partnering arrangements. We
may not have sufficient cash, access to funding, or available equity to engage
in such transactions. Moreover, we may not be able to forge partnering
arrangements or strategic alliances on satisfactory terms, or at all, with
companies of our choice.
WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE CLOUDSCAPE'S BUSINESS WITH OURS AND
WE MAY NOT BE ABLE TO REALIZE THE POTENTIAL FINANCIAL AND STRATEGIC BENEFITS OF
THE ACQUISITION.
We recently completed our acquisition of Cloudscape. We believe that the
acquisition will further our strategy to provide customers with a complete
database management software solution. Achieving the anticipated benefits of the
acquisition will depend in part upon whether the integration of Cloudscape's
business with ours is achieved in an efficient and effective manner, and this
may not occur. Failure to effectively accomplish the integration of the two
companies' operations could adversely affect our ability to enhance our product
offerings, may divert key employees' attention from achieving other
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business objectives and may adversely affect our other operations. This
integration may not be accomplished on a timely basis, or at all. The
difficulties of such integration may be increased by the necessity of
consolidating separated organizations in order to achieve economies of scale.
The integration of certain operations will require the dedication of management
resources which may distract attention from the day-to-day business of the
combined company. In addition, we may not be able to effectively market and
distribute the current Cloudscape products or develop the Cloudscape technology
so as to produce new or enhanced products that will be accepted by the
marketplace. In addition, even if we can effectively develop and sell Cloudscape
products, these product offerings may not compete effectively with competitors'
product offerings. Further, any such sales may not result in increased revenue
for us or establish or enhance our current ability to offer distributed database
management products for use on the Internet. The failure to generate revenue
from sales of Cloudscape products or to derive a strategic advantage in the
delivery of database management products for use on the Internet could have an
adverse impact on our ability to increase product sales and grow our business.
We could also lose certain key Cloudscape employees. The loss of a substantial
portion of Cloudscape's developers or system engineers could have an adverse
effect on our business. The decision of one or more of such key employees to
join a competitor or otherwise compete directly or indirectly with the combined
company could have an adverse effect on the our ability to develop, market and
sell new product offerings incorporating the Cloudscape technology.
WE MAY EXPERIENCE DIFFICULTY IN REALIZING THE POTENTIAL FINANCIAL OR STRATEGIC
BENEFITS OF FUTURE BUSINESS ACQUISITIONS WHICH COULD HURT OUR ABILITY TO GROW
OUR BUSINESS AND SELL OUR PRODUCTS.
In the future we may acquire or invest in other businesses that offer
products, services and technologies that we believe would help us expand or
enhance our products and services or help us expand our distribution channels.
If we were to make such an acquisition or investment, the risks described below
could impair our ability to grow our business and develop new products and
ultimately could impair or ability to sell our products. Any future acquisition
or investment would present risks commonly encountered in acquisitions of or
investments in other businesses. The following are examples of such risks, one
or more of which may apply to any such acquisition or investment:
- Difficulty in combining the technology, operations or work force of the
acquired business;
- Disruption of our on-going businesses;
- Difficulty in realizing the potential financial or strategic benefits of
the transaction;
- Difficulty in maintaining uniform standards, controls, procedures and
policies; and
- Possible impairment of relationships with employees and customers as a
result of any integration of new businesses and management personnel.
The consideration for any future acquisition could be paid in cash, shares
of our common stock, or a combination of cash and our common stock. If the
consideration is paid in our common stock, this would further dilute existing
stockholders. Any amortization of goodwill or other assets resulting from any
acquisition could materially adversely affect our operating results and
financial condition.
UNANTICIPATED FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS DUE TO SUCH
FACTORS AS A CHANGE IN THE DEMAND FOR OUR PRODUCTS, OR ORDBMS PRODUCTS
GENERALLY, COULD ADVERSELY AFFECT OUR STOCK PRICE.
We believe that quarter-to-quarter comparisons of our financial results are
not necessarily meaningful, and potential investors should not rely on them as
an indication of our future performance. Our quarterly operating results have
varied greatly in the past and may vary greatly in the future depending
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upon a number of factors described below and elsewhere in this "Risk Factors"
section, including many that are beyond our control. These factors include:
- Changes in demand for our products and services, including changes in
industry growth rates;
- The size, timing and contractual terms of large orders for our software
products;
- The budgeting cycles of our customers and potential customers;
- Any downturn in our customers' businesses, in the domestic economy or in
international economies where our customers do substantial business;
- Changes in our pricing policies resulting from competitive pressures, such
as aggressive price discounting by our competitors or other factors;
- Our ability to develop and introduce on a timely basis new or enhanced
versions of our products and solutions;
- Changes in the mix of revenues attributable to domestic and international
sales; and
- Seasonal buying patterns which tend to peak in the fourth quarter.
POTENTIAL CHANGES IN THE MIX OF OUR LICENSE AND SERVICE REVENUE COULD ADVERSELY
AFFECT OUR PROFIT MARGINS.
A significant change in the mix of software products and services we sell,
including the mix between higher margin software and maintenance products and
lower margin consulting and training, could materially adversely affect our
operating results for future quarters. Historically, a majority of our revenue
has been attributable to the licensing of our software products. Over the past
few years, however, the percentage of our revenue derived from services has
increased. For the nine months ended September 30, 1999, we derived revenue
evenly from licensing of software products and sales of services.
ANY CANCELLATIONS OR DELAYS IN PLANNED CUSTOMER PURCHASES OF OUR PRODUCTS OR
SERVICES COULD MATERIALLY ADVERSELY AFFECT OUR NET INCOME AND COULD
SUBSTANTIALLY REDUCE QUARTERLY REVENUES.
Because we do not know when, or if, our potential customers will place
orders and finalize contracts, we cannot accurately predict our revenue and
operating results for future quarters. If there is a downturn in potential
customers' businesses, the domestic economy in general, or in international
economies where we derive substantial revenue, potential customers may defer or
cancel planned purchases of our products. Because our operating expenses are
based on anticipated revenue levels and because a high percentage of our
expenses are relatively fixed, delays in the recognition of revenues from even a
limited number of product license transactions could cause significant
variations in operating results from quarter to quarter, which could cause our
net income to fall significantly short of anticipated levels.
IF A LARGE NUMBER OF THE ORDERS THAT ARE TYPICALLY BOOKED AT THE END OF A
QUARTER ARE NOT BOOKED, OUR NET INCOME FOR THAT QUARTER COULD BE SUBSTANTIALLY
REDUCED.
Our software license revenue in any quarter depends on orders booked and
shipped in the last month, weeks or days of that quarter. At the end of each
quarter, we typically have either minimal or no backlog of orders for the
subsequent quarter. If a large number of orders or several large orders do not
occur or are deferred, our revenue in that quarter could be substantially
reduced.
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SEASONAL TRENDS IN SALES OF OUR SOFTWARE PRODUCTS COULD ADVERSELY AFFECT OUR
QUARTERLY OPERATING RESULTS.
Our sales of software products have been affected by seasonal purchasing
trends that materially affect our quarter-to-quarter operating results. We
expect these seasonal trends to continue in the future. Revenue and operating
results in our quarter ending December 31 are typically higher relative to our
other quarters, because many customers make purchase decisions based on their
calendar year-end budgeting requirements and because we measure our sales
incentive plans for sales personnel on a calendar year basis. As a result, we
have historically experienced a substantial decline in revenue in the first
quarter of each fiscal year relative to the preceding quarter.
THE LENGTHY SALES CYCLE FOR OUR PRODUCTS MAKES OUR REVENUES SUSCEPTIBLE TO
FLUCTUATIONS.
Any delay in the sales cycle of a large transaction or a number of smaller
transactions could result in significant fluctuations in our quarterly operating
results. Our sales cycle typically takes many months to complete and varies
depending on the product, service or solution that we are selling. The length of
the sales cycle may vary depending on a number of factors over which we may have
little or no control, including the size of a potential transaction and the
level of competition that we encounter in our selling activities. Our sales
cycle can be further extended for sales made through third party distributors.
OUR FUTURE REVENUE AND OUR ABILITY TO MAKE INVESTMENTS IN DEVELOPING OUR
PRODUCTS IS SUBSTANTIALLY DEPENDENT UPON OUR INSTALLED CUSTOMER BASE CONTINUING
TO LICENSE OUR PRODUCTS AND RENEW THEIR SERVICE AGREEMENTS WITH US.
We depend on our installed customer base for future revenue from services
and licenses of additional products. If our customers fail to renew their
maintenance agreements, this could materially adversely affect our business and
future quarterly and annual operating results. The maintenance agreements are
generally renewable annually at the option of the customers and there are no
minimum payment obligations or obligations to license additional software.
Therefore, our current customers may not necessarily generate significant
maintenance revenue in future periods. In addition, our customers may not
necessarily purchase additional products or services. Our services revenue and
maintenance revenue are also dependent upon the continued use of these services
by our installed customer base. Any downturn in our software license revenue
could adversely affect the growth of our services revenue in future quarters.
Moreover, our ability to continue to invest in product development and to
acquire technology from or make investments in other companies is dependent on
both license and service revenues. If either license revenue or revenue from
services declines, we may not have sufficient cash to finance investments or
enter into such arrangements.
SLOWER GROWTH IN THE RDBMS MARKET WOULD ADVERSELY AFFECT OUR ABILITY TO SELL OUR
PRODUCTS.
If RDBMS industry growth rates decline for any reason, the markets for our
products will be adversely affected, which would have a negative impact on our
business, results of operations, financial condition and cash flows. Prior to
fiscal 1997, the RDBMS industry grew significantly, due in part to the
continuing development of new technologies and products responsive to customer
requirements. In fiscal 1997 and 1998, however, growth rates throughout the
industry slowed. We are unable to predict the future growth rate of the RDBMS
market.
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IF THE ORDBMS MARKET DOES NOT EVOLVE AS WE ANTICIPATE, OUR ABILITY TO GROW OUR
BUSINESS WILL BE ADVERSELY AFFECTED.
Delays in market acceptance of our ORDBMS products could adversely affect
our results of operations and financial condition. 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.
Since 1996, we have invested substantial resources in developing our ORDBMS
product line. The market for ORDBMS products is new and evolving, and its growth
depends upon a growing need to store and manage complex data and upon broader
market acceptance of our products as a solution for this need. Organizations may
not choose to make the transition from conventional RDBMS products to ORDBMS
products.
IF THE INTERNET DOES NOT CONTINUE TO DEVELOP AS WE ANTICIPATE, OR IF OUR PRODUCT
OFFERINGS ARE NOT ACCEPTED IN THIS MARKET, OUR BUSINESS COULD BE ADVERSELY
AFFECTED.
The Internet is a rapidly evolving market. We are unable to predict whether
and to what extent Internet computing and electronic commerce will be embraced
by consumers and traditional businesses. Our successful introduction of
database-driven products and solutions for the Internet market will depend in
large measure on:
- The commitment by hardware and software vendors to manufacture, promote
and distribute Internet access appliances;
- The lower cost of ownership of Internet computing relative to
client/server architecture; and
- The ease of use and administration relative to client/server architecture.
In addition, if a sufficient number of vendors do not undertake a commitment
to the market, the market may not accept Internet computing or Internet
computing may not generate significant revenues for our business. In addition,
standards for network protocols, as well as other industry-adopted and de facto
standards for the Internet, are evolving rapidly. There can be no assurance that
standards we have chosen will position our products to compete effectively for
business opportunities as they arise on the Internet.
The widespread acceptance and adoption of the Internet by traditional
businesses for conducting business and exchanging information is likely only if
the Internet provides these businesses with greater efficiencies and
improvements. The failure of the Internet to continue to develop as a commercial
or business medium could materially adversely affect our business.
Even if the Internet and electronic commerce are widely accepted and adopted
by consumers and businesses, our database products and database-driven solutions
for the Internet may not succeed. We recently announced our intention to focus a
substantial part of our product development and sales efforts on developing and
selling technology and services for the Internet market. This market is new to
our product development, marketing and sales organizations. We may not be able
to market and sell products and solutions in this market. In addition, our
database products and database-driven solutions for the Internet may not compete
effectively with our competitors' products and solutions. Further, we may not
generate significant revenue and/or margin in this market. Any of these events
could materially, adversely affect our business, operating results and financial
condition.
IF THE DATA WAREHOUSE MARKET DOES NOT CONTINUE TO GROW, OR IF OUR PRODUCT
OFFERINGS IN THIS MARKET ARE NOT ACCEPTED, OUR ABILITY TO SELL OUR PRODUCTS AND
GROW OUR BUSINESS COULD BE ADVERSELY AFFECTED.
The data warehouse market may not continue to grow, or may not grow rapidly,
and our customers may not expand their use of data warehouses. In addition, we
may not be able to market and sell
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our products and solutions in this market or otherwise compete effectively and
generate significant revenue. Although demand for data warehouse software has
grown in recent years, the market is still emerging. Our future financial
performance in this area will depend to a large extent on:
- Continued growth in the number of organizations adopting data warehouses;
- Our success in developing partnering arrangements with developers of
software tools and applications for the data warehouse market; and
- Existing customers expanding their use of data warehouses.
RECENT ORGANIZATIONAL CHANGES COULD DISRUPT OUR BUSINESS OPERATIONS AND COULD
ADVERSELY AFFECT THE SALES OF OUR PRODUCTS.
On October 1, 1999, we reorganized our operating business divisions into
four new business groups: the TransAct Business Group, which is responsible for
delivering on-line transaction processing products; the i.Foundation Business
Group, which is responsible for delivering products that provide the
technological foundation for Internet-based electronic commerce solutions; the
i.Informix Business Group, which is responsible for delivering Internet-based
solutions for electronic commerce; and the i.Intelligence Business Group, which
is responsible for delivering Internet-based data warehouse products and
solutions. We may not achieve the anticipated benefits of this reorganization.
In addition, the reorganization could disrupt our current business operations,
including our product development and sales efforts. Further, any such
disruption or other operational difficulty encountered while implementing the
reorganization could distract our management team and cause uncertainty and
confusion among our customers.
THE DEPARTURE OF OUR SENIOR EXECUTIVE OFFICERS AND CERTAIN KEY PERSONNEL WOULD
HURT OUR ABILITY TO GROW OUR BUSINESS.
The loss of the services of one or more of our current senior executive
officers or key employees could harm our business and could affect our ability
to successfully implement our business objectives. Our future success will
depend to a significant extent on the continued service of our current senior
executives and certain other key employees, including certain sales, consulting,
technical and marketing personnel. If we were to lose the services of one or
more of our current senior executives or key employees this could adversely
affect our ability to grow our business and achieve our business objectives,
particularly if one or more of those executives or key employees decided to join
a competitor or otherwise compete directly or indirectly with us. Of our senior
executive officers and key employees, only Mr. Finocchio, Chairman of the Board,
and our former President and Chief Executive Officer, is bound by an employment
agreement, the terms of which are nonetheless at-will. In addition, we do not
maintain key man life insurance on our employees and have no plans to do so.
We recently announced changes to our senior management with the appointment
of Jean-Yves F. Dexmier as a member of our Board and to the position of
President and Chief Executive Officer, effective July 16, 1999. Also effective
July 16, 1999, Mr. Finocchio resigned his position as President and Chief
Executive Officer, but he will continue to be actively involved in our
management in his capacity as the Chairman of the Board. Although we anticipate
a smooth transition, the change could disrupt our business, management team and
operating results. In the summer of 1999, four of our senior executive officers
resigned. We cannot predict whether other senior executive officers will also
resign.
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OUR EXECUTIVE TEAM MAY NOT BE ABLE TO SUCCESSFULLY WORK TOGETHER TO MEET OUR
BUSINESS OBJECTIVES.
Since the beginning of 1998 we have expanded our ability to deliver products
and solutions for the Internet, including e-commerce solutions, and business
intelligence solutions driven by our data warehouse technology. Our management
team has not worked together for a significant length of time and may not be
able to successfully implement this strategy. If the management team is unable
to accomplish our business objectives, it could materially adversely affect our
ability to grow our business. As noted above, Mr. Dexmier was appointed as our
President and Chief Executive Officer in July 1999, and Howard A. Bain III
joined us as our Executive Vice President, Finance and Chief Financial Officer
in January 1999. In addition, two new executive officers, our Vice President and
Treasurer and our Vice President, i.Intelligence Business Group, joined us in
July 1999 and our Vice President, Human Resources, joined us in October 1999.
Almost all of the rest of our executive officers have joined the company since
the beginning of fiscal 1998. Since joining us, the new management team, except
for our most recent additions, has devoted substantial efforts to restructuring
our sales, marketing and finance organizations after the announcement of the
restatement of our financial results for fiscal 1994, 1995 and 1996 and the
first quarter of fiscal 1997 as a result of errors and irregularities identified
with our revenue recognition practices during these periods.
WE MAY BE UNABLE TO RECRUIT AND RETAIN THE PERSONNEL WE NEED TO ACHIEVE OUR
BUSINESS OBJECTIVES.
We may be unable to attract, train and retain qualified personnel, and the
failure to do so, particularly in key functional areas such as product
development and sales, could materially adversely affect our ability to achieve
our business objectives, including our ability to sell our products. Our future
success will likely depend in large part on our ability to attract and retain
additional experienced sales, technical, marketing and management personnel.
Competition for such personnel in the computer software industry is intense, and
in the past we have experienced difficulty in recruiting qualified personnel,
especially developers and sales personnel. We expect competition for qualified
personnel to remain intense, and we may not succeed in attracting or retaining
such personnel. In addition, new employees generally require substantial
training in the use of our products. This training will require substantial
resources and management attention.
PENDING SETTLEMENT OF SECURITIES CLASS ACTION LITIGATION COULD FURTHER DILUTE
EXISTING STOCKHOLDERS.
We recently entered into a settlement agreement with respect to several
federal and state securities lawsuits. As a result of the settlement agreement
we will have to issue at least 9,000,000 shares of our common stock which would
further dilute the stockholdings of our existing stockholders. Since April 16,
1997, various holders of our common stock have filed over 20 separate lawsuits
against us, Ernst & Young (who served as our independent auditors), and certain
of our current and former officers and directors. We entered into a settlement
agreement to settle the pending private securities litigation with the exception
of several small lawsuits. Pursuant to the proposed settlement, (which has
received final approval with respect to the federal class action and is expected
to receive final approval with respect to the state class action in
November 1999), we will issue at least 9,000,000 shares of our common stock to
the plaintiffs and their lawyers. When issued, these shares will dilute the
stockholdings of our current stockholders. In addition, pursuant to the proposed
settlement, the total value of the shares of our common stock to be issued must
total at least $91,000,000. Depending on our stock price, we may have to issue
more than the 9,000,000 shares described above.
THE PENDING SEC INVESTIGATION COULD HARM OUR BUSINESS.
In July 1997, the SEC issued a formal order of investigation of us and
certain unidentified individuals associated within our company. Any action by
the SEC against us as a result of the investigation could materially adversely
affect our business. The investigation relates to non-specified accounting
matters, financial reports, other public disclosures and trading activity in
Informix common stock.
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THE SUCCESS OF OUR INTERNATIONAL OPERATIONS IS DEPENDENT UPON MANY FACTORS WHICH
COULD ADVERSELY AFFECT OUR ABILITY TO SELL OUR PRODUCTS INTERNATIONALLY AND
COULD AFFECT OUR PROFITABILITY.
International sales represented approximately 50% of our total revenue
during the nine months ended September 30, 1999. Our international operations
are, and any expanded international operations will be, subject to a variety of
risks associated with conducting business internationally that could adversely
affect our ability to sell our products internationally which would affect our
profitability, including the following:
- Difficulties in staffing and managing international operations;
- Problems in collecting accounts receivable;
- Longer payment cycles;
- Fluctuations in currency exchange rates;
- Seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world;
- Uncertainties relative to regional, political and economic circumstances;
- Recessionary environments in foreign economies; and
- Increases in tariffs, duties, price controls or other restrictions on
foreign currencies or trade barriers imposed by foreign countries.
In particular, instability in the Asian-Pacific and Latin American economies
and financial markets, which combined accounted for approximately 20% of our
total net revenues during the nine months ended September 30, 1999 could
adversely affect our ability to sell our products internationally.
FLUCTUATIONS IN THE VALUE OF FOREIGN CURRENCIES COULD RESULT IN CURRENCY
TRANSACTION LOSSES.
Despite our efforts to manage foreign exchange risk, our hedging activities
may not adequately protect us against the risks associated with foreign currency
fluctuations. As a consequence, we may incur losses in connection with
fluctuations in foreign currency exchange rates. Most of our international
revenue and expenses are denominated in local currencies. Due to the substantial
volatility of currency exchange rates, among other factors, we cannot predict
the effect of exchange rate fluctuations on our future operating results.
Although we take into account changes in exchange rates over time in our pricing
strategy, we do so only on an annual basis, resulting in substantial pricing
exposure as a result of foreign exchange volatility during the period between
annual pricing reviews. In addition, as noted previously, the sales cycles for
our products are relatively long. Foreign currency fluctuations could,
therefore, result in substantial changes in the financial impact of a specific
transaction between the time of initial customer contact and revenue
recognition.
In addition to the hedging program described above, we have implemented a
foreign exchange hedging program consisting principally of the purchase of
forward foreign exchange contracts, which program is intended to hedge the value
of intercompany accounts receivable or intercompany accounts payable denominated
in foreign currencies against fluctuations in exchange rates until such
receivables are collected or payables are disbursed. This program involves the
use of forward contracts in the primary European and Asian currencies.
Uncertainties related to the Euro conversion could adversely affect our hedging
activities.
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FAILURE TO CONTINUE TO STRENGTHEN OUR INTERNAL ACCOUNTING CONTROLS COULD
ADVERSELY AFFECT OUR ABILITY TO ACCURATELY FORECAST AND REPORT OUR FINANCIAL
RESULTS WHICH COULD RESULT IN REDUCED CUSTOMER CONFIDENCE AND ADVERSELY AFFECT
OUR ABILITY TO SELL OUR PRODUCTS.
Although we have made significant progress in our efforts to strengthen our
accounting controls and processes, we may not be able to hire and retain enough
finance personnel to continue to do so. If we are unable to continue to
strengthen our accounting controls and processes, that inability could adversely
affect our ability to accurately forecast and report our financial results. Any
customer uncertainty about our internal accounting controls could have an
adverse effect on our ability to sell our products. In connection with their
audit of our consolidated financial statements for the year ended December 31,
1998, KPMG LLP, our current independent auditors, notified us that they had
identified certain conditions which, collectively, represented a continuing
material weakness in our internal accounting controls during the year ended
December 31, 1998. The identified conditions were significant turnover and a
lack of adequate resources in the accounting and finance departments, a failure
to have timely and complete account analyses and reconciliations at the end of
each financial reporting period, the absence of a formal budgeting process, and
a lack of up-to-date formal written accounting policies and procedures. We have
taken, and continue to take, actions to strengthen our internal accounting
controls. We have added a significant number of experienced accounting and
finance personnel; we have improved our account reconciliation and review
processes; we have created a 1999 revenue and operating expense budget by
quarter that was approved by our Board of Directors; and our internal audit
department engaged in a comprehensive review of our accounting policies and
procedures, as well as our compliance with our existing accounting policies and
procedures. We have made significant progress toward addressing each of the
identified conditions. Our independent auditors have informed us that the
existence of the identified conditions did not affect their report on our
consolidated financial statements for the year ended December 31, 1998. In
addition, it is our conclusion that the existence of the identified conditions
for the year ended December 31, 1998, had no effect on our reported financial
results for the quarters ended March 31, 1999, June 30, 1999 and September 30,
1999. Moreover, based on the existing personnel, policies and procedures,
monthly financial statement review, account reconciliations and general business
processes, including forecasting, it is our conclusion that during the quarters
ended March 31, 1999, June 30, 1999 and September 30, 1999, we maintained, and
we continue to maintain, effective internal control over financial reporting.
Moreover, in our annual report on Form 10-K for the year ended December 31,
1997, we stated that Ernst & Young LLP, our former independent auditors, had
issued a letter identifying certain material weaknesses in our internal
accounting controls for the year ended December 31, 1997. During fiscal year
1998, we devoted substantial effort and expense to addressing those material
weaknesses.
THE RIGHTS OF OUR SERIES B PREFERRED STOCKHOLDERS MAY ADVERSELY AFFECT THE
RIGHTS OF OUR COMMON STOCKHOLDERS.
Holders of the series B preferred shares have certain rights that may
adversely affect holders of our common stock. At September 30, 1999, 19,000
shares of our series B preferred stock remained outstanding.
RIGHTS TO CONSENT TO CORPORATE TRANSACTIONS. Our agreements with the
purchasers of our series B preferred stock contain covenants that could impair
our ability to engage in various corporate transactions in the future, including
financing transactions and certain transactions involving a change-in-control or
acquisition of our assets or equity, or that could otherwise be disadvantageous
to us and the holders of our common stock. In particular, an acquisition of our
assets or equity may not be affected without the consent of the holders of the
outstanding series B preferred stock or without requiring the acquiring entity
to assume the series B preferred stock or cause the series B preferred stock to
be redeemed. These provisions are likely to make an acquisition more difficult
and expensive and could discourage potential acquirors. We made certain
covenants in connection with the issuance of the
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series B preferred stock which could limit our ability to obtain additional
financing by, for example, providing the holders of the series B preferred stock
certain rights of first offer and prohibiting us from issuing additional
preferred stock without the consent of the series B preferred stockholders.
CONVERSION RIGHTS. The shares of series B preferred stock are convertible
into shares of our common stock based on the trading prices of the our common
stock during future periods. We are also obligated to issue upon conversion of
the series B preferred stock additional warrants to acquire shares of our common
stock equal to 20% of the total number of shares of our common stock into which
the series B preferred stock converts. The exercise of these warrants will have
further dilutive effect to the holders of our common stock. Any conversion of
series B preferred stock into our common stock will dilute the existing common
stockholders. At September 30, 1999, 19,000 shares of series B preferred stock
remained outstanding and assuming a $4.00 per share conversion price, were
convertible into 4,750,000 shares of our common stock and, assuming such
conversion, warrants to purchase an aggregate of 950,000 additional shares of
our common stock would become issuable upon such conversion. If the conversion
price of the series B preferred stock is determined during a period when the
trading price of our common stock is low, the resulting number of shares of our
common stock issuable upon conversion of the series B preferred stock could
result in greater dilution to the holders of our common stock. As of
September 30, 1999, series B preferred stockholders had converted an aggregate
of 31,000 shares of series B preferred stock into 7,098,040 shares of our common
stock and warrants to purchase an aggregate of 1,619,595 shares of our common
stock.
PENALTY PROVISION. The terms of the series B preferred financing agreements
also include certain penalty provisions that are triggered if we fail to satisfy
certain obligations. For instance, we must keep a registration statement in
effect for the resale of shares of our common stock issued or issuable upon
conversion of the series B preferred shares and upon exercise of the warrants.
IF WE FAIL TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, COMPETITORS MAY BE ABLE
TO USE OUR TECHNOLOGY OR TRADEMARKS AND THIS WOULD WEAKEN OUR COMPETITIVE
POSITION, REDUCE OUR REVENUE AND INCREASE COSTS.
Our success will continue to be heavily dependent upon proprietary
technology. We rely primarily on a combination of patent, copyright and
trademark laws, trade secrets, confidentiality procedures and contractual
provisions to protect our proprietary rights. These means of protecting our
proprietary rights may not be adequate, and our inability to protect our
intellectual property rights may adversely affect our business and/or financial
condition. We currently hold eight United States patents and several pending
applications. There can be no assurance that any other patents covering our
inventions will issue or that any patent, if issued, will provide sufficiently
broad protection or will prove enforceable in actions against alleged
infringers. Our ability to sell our products and prevent competitors from
misappropriating our proprietary technology and trade names is dependent upon
protecting our intellectual property.
Our products are generally licensed to end-users on a "right-to-use" basis
under a license that restricts the use of the products for the customer's
internal business purposes. We also rely on "shrink-wrap" and "click-wrap"
licenses, which include a notice informing the end-user that by opening the
product packaging, or in the case of a click-wrap license by clicking on an
acceptance icon and downloading the product, the end-user agrees to be bound by
our license agreement. Despite such precautions, it may be possible for
unauthorized third parties to copy aspects of our current or future products or
to obtain and use information that we regard as proprietary. In addition, we
have licensed the source code of our products to certain customers under certain
circumstances and for restricted uses. We have also entered into source code
escrow agreements with a number of our customers that generally require release
of source code to the customer in the event we enter bankruptcy or liquidation
proceedings or otherwise cease to conduct business.
We may also be unable to protect our technology because:
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- Our competitors may independently develop similar or superior technology;
- Policing unauthorized use of our software is difficult;
- The laws of some foreign countries do not protect our proprietary rights
to the same extent as do the laws of the United States;
- "Shrink-wrap" and/or "click-wrap" licenses may be wholly or partially
unenforceable under the laws of certain jurisdictions; and
- Litigation to enforce our intellectual property rights, to protect our
trade secrets, or to determine the validity and scope of the proprietary
rights of others could result in substantial costs and diversion of
resources.
THIRD PARTIES IN THE FUTURE FOR COMPETITIVE OR OTHER REASONS COULD ASSERT THAT
OUR PRODUCTS INFRINGE THEIR INTELLECTUAL PROPERTY RIGHTS. SUCH CLAIMS COULD HARM
OUR REPUTATION AND ADVERSELY AFFECT OUR ABILITY TO SELL OUR PRODUCTS.
Third parties may claim that our current or future products infringe their
proprietary rights. These claims, with or without merit, could harm our business
by increasing our costs and by adversely affecting our ability to sell our
products. Any claim of this type could affect our relationships with existing
customers and prevent future customers from licensing our products. Any such
claim, with or without merit, could be time consuming, result in costly
litigation, cause product shipment delays or require us to enter into royalty or
licensing agreements. Royalty or license agreements may not be available on
acceptable terms or at all. We expect that software product developers will
increasingly be subject to infringement claims as the number of products and
competitors in the software industry segment grows and the functionality of
products in different industry segments overlaps.
ERRORS IN OUR PRODUCTS OR THE FAILURE OF OUR PRODUCTS TO CONFORM TO CUSTOMER
SPECIFICATIONS OR EXPECTATIONS COULD RESULT IN OUR CUSTOMERS DEMANDING REFUNDS
FROM US OR ASSERTING CLAIMS FOR DAMAGES OR IN DECREASED SALES OF OUR PRODUCTS.
Because our software products are complex, they often contain errors or
"bugs" that can be detected at any point in a product's life cycle. While we
continually test our products for errors and work with customers through our
customer support services to identify and correct bugs in our software, we
expect that errors in our products will continue to be found in the future.
Although many of these errors may prove to be immaterial, certain of these
errors could be significant. Detection of any significant errors may result in,
among other things, loss of, or delay in, market acceptance and sales of our
products, diversion of development resources, injury to our reputation, or
increased service and warranty costs.
THE FAILURE OF OUR PRODUCTS TO CONFORM TO CUSTOMER SPECIFICATIONS OR
EXPECTATIONS COULD RESULT IN DECREASED SALES OF OUR PRODUCTS.
A key determinative factor in our future success will continue to be the
ability of our products to operate and perform well with existing and future
leading, industry-standard application software products intended to be used in
connection with RDBMS or ORDBMS products. Failure to meet in a timely manner
existing or future interoperability and performance requirements of certain
independent vendors could adversely affect the market for our products.
Commercial acceptance of our 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 about us, our products,
or business or by the advertising or marketing efforts of competitors, or other
factors that could adversely affect consumer perception.
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WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS THAT COULD RESULT IN SIGNIFICANT
COSTS TO US.
We may be subject to claims for damages related to product errors in the
future. A material product liability claim could materially adversely affect our
business because of the costs of defending against these types of lawsuits,
diversion of key employees' time and attention from the business and potential
damage to our reputation. Although we have not experienced any product liability
claims to date, the sale and support of our products entail the risk of such
claims. While we carry insurance policies covering this type of liability, these
policies may not provide sufficient protection should a claim be asserted. Our
license agreements with our customers typically contain provisions designed to
limit exposure to potential product liability claims. Such limitation of
liability provisions may not be effective under the laws of certain
jurisdictions to the extent local laws treat certain warranty exclusions as
unenforceable. In addition, issues relating to year 2000 compliance have
increased awareness of the potential adverse effects of software defects and
malfunctions.
POTENTIAL YEAR 2000 PROBLEMS MAY OCCUR IN OUR THIRD PARTY EQUIPMENT OR SOFTWARE,
WHICH COULD RESULT IN SIGNIFICANT COSTS.
We may incur large costs and the disruption of our business if any key
systems fail as a result of year 2000 problems. We use third party equipment and
software that may not be year 2000 compliant. If this third party equipment or
software does not operate properly with regard to the year 2000, we may incur
unexpected expenses to remedy any problems. These costs could materially
adversely affect our business. In addition, if our key systems, or a significant
number of our systems, were to fail as a result of year 2000 problems we could
incur substantial costs and disruption of our business. To the extent we rely on
the products of other vendors to resolve year 2000 issues, we may experience
delays in implementing the products. The failure to correct a significant year
2000 problem could result in an interruption in, or a failure of, certain normal
business activities or operations which could harm our business. In addition, we
may not have enough available personnel to implement and complete in a timely
manner our efforts to ensure that our systems and products are year 2000
compliant.
IF CUSTOMERS DELAY PURCHASES OF OUR PRODUCTS TO AVOID YEAR 2000 PROBLEMS, OUR
REVENUE WILL BE LOWER.
Prior to the end of 1999 and continuing into 2000, existing or potential
customers may choose to defer new software product purchases as a result of year
2000 concerns resulting in lower revenues for us during these periods. Many
companies are spending significant resources to correct their current software
systems for year 2000 compliance. Customers with limited IT budgets who face
material year 2000 issues may increasingly spend their limited resources
remediating these year 2000 problems instead of investing in more general IT
management products such as our products.
YEAR 2000 PROBLEMS WITH OUR PRODUCTS COULD RESULT IN THIRD PARTY CLAIMS WHICH
COULD RESULT IN SIGNIFICANT COSTS TO US, COULD INJURE OUR REPUTATION AND COULD
ADVERSELY AFFECT OUR ABILITY TO SELL OUR PRODUCTS.
If any of our licensees experience year 2000 problems as a result of their
use of our software products, those licensees could assert claims for damages
which, if successful, could result in significant costs to us. Such problems
could also damage our reputation and adversely affect our ability to sell our
products. In the ordinary course of our business, we test and evaluate our
software products. We believe that our software products are generally year 2000
compliant, meaning that the use or occurrence of dates on or after January 1,
2000 will not adversely affect the performance of our products with respect to
four-digit year dates or the ability of our products to correctly create, store,
process and output information related to such date data, including leap year
calculations. However, it is possible that certain of our software products do
not contain all necessary software routines and codes necessary for the accurate
calculation, display, storage and manipulation of such date data. In addition,
in certain cases, we have warranted that the use or occurrence of dates on or
after January 1, 2000 will not
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adversely affect the performance of our products with respect to four digit date
dependent data or the ability to create, store, process and output information
related to such data.
POSSIBLE EURO CONVERSION PROBLEMS WITH OUR PRODUCTS COULD RESULT IN THIRD PARTY
CLAIMS WHICH COULD RESULT IN SIGNIFICANT COSTS TO US.
If any of our licensees experience problems with Euro conversion issues as a
result of their use of our software products, those licensees could assert
claims for damages which, if successful, could result in significant costs to
us. We have reviewed the effect of the conversion to the Euro on the prices of
our products in the affected countries. As a result, we have made some
adjustments to our prices to attempt to eliminate differentials that were
identified. We have not completed our review of the impact of conversion to the
Euro on our business, but it is possible that costs associated with ensuring
that our products and internal operating systems are able to effectively work
with the Euro conversion, or price adjustments resulting from the Euro
conversion, could be material to our business.
PROVISIONS IN OUR CHARTER DOCUMENTS WITH RESPECT TO UNDESIGNATED PREFERRED STOCK
MAY DISCOURAGE POTENTIAL ACQUISITION BIDS FOR INFORMIX.
Our board is authorized to issue up to 5,000,000 shares of undesignated
preferred stock in one or more series. Of the 5,000,000 shares of preferred
stock, 440,000 shares have been designated series A preferred, none of which is
outstanding; 440,000 shares have been designated series A-1 preferred, none of
which is outstanding; 50,000 shares have been designated series B preferred, of
which 19,000 shares remained outstanding as of September 30, 1999. Subject to
the prior consent of the holders of the series B preferred stock, our board can
fix the price, rights, preferences, privileges and restrictions of such
preferred stock without any further vote or action by our stockholders. However,
the issuance of shares of preferred stock may delay or prevent a change in
control transaction without further action by our stockholders. As a result, the
market price of our common stock and the voting and other rights of the holders
of our common stock may be adversely affected. The issuance of preferred stock
with voting and conversion rights may adversely affect the voting power of the
holders of our common stock, including the loss of voting control to others.
OTHER PROVISIONS IN OUR CHARTER DOCUMENTS WITH RESPECT TO UNDESIGNATED PREFERRED
STOCK MAY DISCOURAGE POTENTIAL ACQUISITION BIDS FOR INFORMIX AND PREVENT CHANGES
IN OUR MANAGEMENT WHICH OUR STOCKHOLDERS MAY FAVOR.
Other provisions in our charter documents could discourage potential
acquisition proposals and could delay or prevent a change in control transaction
that our stockholders may favor. The provisions include:
- Elimination of the right of stockholders to act without holding a meeting;
- Certain procedures for nominating directors and submitting proposals for
consideration at stockholder meetings; and
- A board of directors divided into three classes, with each class standing
for election once every three years.
These provisions are intended to enhance the likelihood of continuity and
stability in the composition of the board of directors and in the policies
formulated by the board of directors and to discourage certain types of
transactions involving an actual or threatened change of control. These
provisions are designed to reduce our vulnerability to an unsolicited
acquisition proposal and, accordingly, could discourage potential acquisition
proposals and could delay or prevent a change in control. Such provisions are
also intended to discourage certain tactics that may be used in proxy fights but
could, however, have the effect of discouraging others from making tender offers
for shares of our common
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stock and, consequently, may also inhibit fluctuations in the market price of
our common stock that could result from actual or rumored takeover attempts.
These provisions may also have the effect of preventing changes in our
management. In addition, we have adopted a rights agreement, commonly referred
to as a "poison pill," that grants holders of our common stock preferential
rights in the event of an unsolicited takeover attempt. These rights are denied
to any stockholder involved in the takeover attempt and this has the effect of
requiring cooperation with our board of directors. This may also prevent an
increase in the market price of our common stock resulting from actual or
rumored takeover attempts. The rights agreement could also discourage potential
acquirors from making unsolicited acquisition bids.
DELAWARE LAW MAY INHIBIT POTENTIAL ACQUISITION BIDS WHICH MAY ADVERSELY AFFECT
THE MARKET PRICE FOR OUR COMMON STOCK AND PREVENT CHANGES IN OUR MANAGEMENT THAT
OUR STOCKHOLDERS MAY FAVOR.
We are incorporated in Delaware and are subject to the antitakeover
provisions of the Delaware General Corporation Law, which regulates corporate
acquisitions. Delaware law prevents certain Delaware corporations, including
those corporations, such as Informix, whose securities are listed for trading on
the Nasdaq National Market, from engaging, under certain circumstances, in a
"business combination" with any "interested stockholder" for three years
following the date that the stockholder became an interested stockholder. For
purposes of Delaware law, a "business combination" would include, among other
things, a merger or consolidation involving us and an interested stockholder and
the sale of more than 10% of our assets. In general, Delaware law defines an
"interested stockholder" as any entity or person beneficially owning 15% or more
of the outstanding voting stock of a corporation and any entity or person
affiliated with or controlling or controlled by such entity or person. Under
Delaware law, a Delaware corporation may "opt out" of the antitakeover
provisions. We do not intend to "opt out" of these antitakeover provisions of
Delaware Law.
OUR COMMON STOCK LIKELY WILL BE SUBJECT TO SUBSTANTIAL PRICE AND VOLUME
FLUCTUATIONS WHICH MAY PREVENT STOCKHOLDERS FROM RESELLING THEIR SHARES AT OR
ABOVE THE PRICE AT WHICH THEY PURCHASED THEIR SHARES.
Fluctuations in the price and trading volume of our common stock may prevent
stockholders from reselling their shares above the price at which they purchased
their shares. Stock prices and trading volumes for many software companies
fluctuate widely for a number of reasons, including some reasons which may be
unrelated to their businesses or results of operations. This market volatility,
as well as general domestic or international economic, market and political
conditions, could materially adversely affect the market price of our common
stock without regard to our operating performance. In addition, our operating
results may be below the expectations of public market analysts and investors.
If this were to occur, the market price of our common stock would likely
decrease significantly. The market price of our common stock has fluctuated
significantly in the past and may continue to fluctuate significantly because
of:
- Market uncertainty about our business prospects or the prospects for the
RDBMS and ORDBMS markets in general;
- Revenues or results of operations that do not match analysts'
expectations;
- The introduction of new products or product enhancements by us or our
competitors;
- General business conditions in the software industry;
- Changes in the mix of revenues attributable to domestic and international
sales; and
- Seasonal trends in technology purchases and other general economic
conditions.
20
<PAGE>
USE OF PROCEEDS
Informix will not receive any proceeds from the sale of the shares by the
selling stockholders. All net proceeds from the sale of our common stock will go
to the stockholders who offer and sell their shares.
21
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information with respect to the number of
shares of common stock owned by the selling stockholders named below and as
adjusted to give effect to the sale of the shares offered hereby. The
information in the table below is current as of the date of this prospectus. The
shares are being registered to permit public secondary trading of the shares,
and the selling stockholders may offer the shares for resale from time to time.
The shares being offered by the selling stockholders were acquired in
connection with our acquisition of Cloudscape. In the acquisition, the shares of
common stock were issued pursuant to an exemption from the registration
requirements of the Securities Act. In connection with the acquisition, we
agreed to register the shares of our common stock received by the former
shareholders of Cloudscape on the registration statement, of which this
prospectus is part. Under the terms of the acquisition agreement, ten percent of
the shares of beneficially held by each selling stockholder issued in connection
with the acquisition are currently being held in escrow to satisfy losses or
claims we may occur that arise out of any inaccuracy, breach or failure to
comply with the representations, warranties or covenants made or delivered by
Cloudscape in connection with the acquisition. Until those shares are released
from escrow, those shares will not be available for resale in this offering.
Shares of common stock subject to options that are currently exercisable or
exercisable as of December 30, 1999 are treated as outstanding and to be
beneficially owned by the person holding the options for the purpose of
computing the percentage ownership of the person and are listed below under the
"Number of Shares Underlying Options" column below, but these options are not
treated as outstanding for the purpose of computing the percentage ownership of
any other person.
The shares offered by this prospectus may be offered from time to time by
the selling stockholders named below:
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED PRIOR
TO THE OFFERING
------------------------- NUMBER OF
NUMBER OF SHARES
SHARES NUMBER OF BENEFICIALLY
NUMBER OF UNDERLYING SHARES BEING OWNED AFTER
NAME OF SELLING STOCKHOLDER SHARES HELD OPTIONS OFFERED THE OFFERING
- --------------------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Accel V L.P.................................... 1,681,123 -- 1,681,123 --
Accel Investors '96 L.P........................ 100,116 -- 100,116 --
Accel Internet/Strategic Technology Fund
L.P.......................................... 225,262 -- 225,262 --
Accel Keiretsu V L.P........................... 33,372 -- 33,372 --
Berry, James A. and Sue Berry TTEE The Berry
Family Trust................................. 4,449 3,893 4,449 3,893
Bram, Alan..................................... 22,248 811 22,248 811
Brenner, Jerold and Dianne, as Community
Property..................................... 19,467 -- 19,467 --
Brentwood Affiliates Fund...................... 69,525 -- 69,525 --
Brentwood Associates VII, L.P.................. 2,210,906 -- 2,210,906 --
Brilando, Joseph F............................. 15,017 -- 15,017 --
Butler, Michael E.............................. 4,171 -- 4,171 --
Carlson, Amelia-Ann Louise and Brad Douglas
Carlson...................................... 102,897 4,172 102,897 4,172
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED PRIOR
TO THE OFFERING
------------------------- NUMBER OF
NUMBER OF SHARES
SHARES NUMBER OF BENEFICIALLY
NUMBER OF UNDERLYING SHARES BEING OWNED AFTER
NAME OF SELLING STOCKHOLDER SHARES HELD OPTIONS OFFERED THE OFFERING
- --------------------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Coffey, Marina M............................... 278 -- 278 --
Crothers, John H. and Lynn A. Friedman, Joint
Tenants...................................... 16,686 -- 16,686 --
Debrunner, Daniel and Cynthia Wall Debrunner,
Community.................................... 12,339 21,610 12,339 21,610
Devine & Virnig, Inc........................... 8,343 -- 8,343 --
Drechsler, Richard............................. 27,810 2,781 27,810 2,781
Ellmore C. Patterson Partners.................. 45,886 -- 45,886 --
The Entreprenuers' Fund, L.P................... 66,744 -- 66,744 --
Falk, Bennett and Margaret Moreland, as
Community Property........................... 16,686 1,390 16,686 1,390
Fish, Rachael and Loxie Hoshino, Joint
Tenants...................................... 8,343 -- 8,343 --
F&W Investments 1996-II........................ 16,686 -- 16,686 --
Grooms, Elizabeth.............................. 278 -- 278 --
Haggin, Thomas................................. 27,810 -- 27,810 --
Haggin, Thomas P. and Victoria K. Haggin TTEE
Haggin Trust................................. 2,346 -- 2,346 --
Hammer, Gary L and Xenia M. Hammer, Trust...... 834 -- 834 --
Hart, Jennifer L. and Robert L. Moxley, Joint
Tenants...................................... 5,642 -- 5,642 --
Hartman, Hyman and Beulah M. Hartman, Trustees,
Hartman Trust................................ 2,346 -- 2,346 --
Henn Family Trust, Thomas W. Henn and Lisa Z.
Henn, Trustees............................... 505,624 -- 505,624 --
Hillegas, Richard N., Intervivos Trust......... 22,248 -- 22,248 --
Holgerson, Kreg and Wilma, as Community
Property..................................... 22,248 608 22,248 608
Jeker, Donna L. and James M. Kunigenas, as
Community.................................... 5,097 -- 5,097 --
Jordan, Stephen A.............................. 7,230 -- 7,230 --
Keleher, Todd B. and Jennifer F. Keleher, as
Community Property........................... 834 -- 834 --
Knoche, Craig F................................ 4,171 -- 4,171 --
Ku, Siu Ling and Kenneth Hui, as Community
Property..................................... 22,248 926 22,248 926
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED PRIOR
TO THE OFFERING
------------------------- NUMBER OF
NUMBER OF SHARES
SHARES NUMBER OF BENEFICIALLY
NUMBER OF UNDERLYING SHARES BEING OWNED AFTER
NAME OF SELLING STOCKHOLDER SHARES HELD OPTIONS OFFERED THE OFFERING
- --------------------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Landay, Mark J................................. 3,893 -- 3,893 --
Lauridsen, Robert A. and Patricia Lauridsen, as
Community Property........................... 7,230 -- 7,230 --
Livingston, Glen............................... 150,007 -- 150,007 --
Martin, Jameison Bear and Dorothy B. Brown
Martin, Community............................ 19,467 -- 19,467 --
Matrigali, Mike................................ 22,248 608 22,248 608
Meier Mitchell & Company....................... 0 -- 0 --
Mohr, Davidow Ventures V, L.P.................. 1,293,171 -- 1,293,171 --
Mohr, Davidow Ventures V, L.P. as nominee for
MDV Entrepreneures........................... 97,335 -- 97,335 --
Nee, Ga-Lin Charlene........................... 2,781 196 2,781 196
Nierenberg, Nicolas and Caroline Nierenberg,
Joint Tenants................................ 33,372 -- 33,372 --
Oana, Jill..................................... 4,866 -- 4,866 --
Orsini, Francois and Sylvie, as Community
Property..................................... 2,259 -- 2,259 --
Paul, Christian A. and Suzanne Roth Paul, as
Community Property........................... 97,335 -- 97,335 --
Paul, Suzanne Roth as Custodian for Austin A.
Paul under CUTMA............................. 27,671 -- 27,671 --
Plume, Stephen K............................... 4,171 -- 4,171 --
Quaglietti, Rocco and Lisa Quaglietti, Joint
Tenants...................................... 58,401 -- 58,401 --
RBW Investments, LLC........................... 16,686 -- 16,686 --
Resnick, Howard A.............................. 8,343 -- 8,343 --
Satoor, Mamta A. and Amit Satoor, as Community
Property..................................... 13,905 -- 13,905 --
Saunders, Kathy and Craig Saunders, as
Community Property........................... 6,674 -- 6,674 --
Schroedl, Jason M.............................. 556 -- 556 --
Schuster Revocable Trust, Stewart Schuster as
Trustee...................................... 69,525 -- 69,525 --
Sill - The Trust of Igor M. Sill and Cynthia M.
Sill......................................... 20,373 -- 20,373 --
Silverman, Stuart P. and Terry K. Silverman,
Trustees..................................... 16,686 -- 16,686 --
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED PRIOR
TO THE OFFERING
------------------------- NUMBER OF
NUMBER OF SHARES
SHARES NUMBER OF BENEFICIALLY
NUMBER OF UNDERLYING SHARES BEING OWNED AFTER
NAME OF SELLING STOCKHOLDER SHARES HELD OPTIONS OFFERED THE OFFERING
- --------------------------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Sippl, Roger J................................. 27,810 -- 27,810 --
Sowell, Judy K................................. 5,562 -- 5,562 --
St. Paul Venture Capital Affiliates Fund I,
LLC.......................................... 11,089 -- 11,089 --
St. Paul Venture Capital IV, LLC............... 392,158 -- 392,158 --
Stephens, Janet................................ 4,866 2,808 4,866 2,808
Strellis, Eric and Barbara J. Banks, Joint
Tenants...................................... 41,715 -- 41,715 --
Swilling, Timothy Keith and Beth Ann Swilling,
as Community................................. 11,124 -- 11,124 --
Ten Kroode, Rob and Annelies Ten............... 12,236 -- 12,236 --
Terry, James................................... 1,506 -- 1,506 --
Thorpe, Robert S............................... 3,337 -- 3,337 --
Torf - The Ira Torf Trust, Howard Torf and
Clara Siu-Wai Lai as Trustees................ 139,050 -- 139,050 --
Torf - The Howard Torf and Claria Lai Trust.... 556,203 -- 556,203 --
Torf - The Ryan Torf Trust, Howard Torf and
Clara Siu-Wai Lai as Trustees................ 139,050 -- 139,050 --
Trainer, Susan J. and Thomas O. Trainer,
Community Property........................... 16,925 -- 16,925 --
Van Capelle, Bert and J. Brinkhuis, as
Community Property........................... 12,236 -- 12,236 --
Waldron, Martin O. and Roxane C. Shelly
Waldron, Community........................... 11,124 -- 11,124 --
Wall, Shannon.................................. 1,390 -- 1,390 --
Webber, Jeffrey T. and Judith L. Webber, Webber
Living Trust................................. 15,017 -- 15,017 --
Wilder, Ronald E............................... 556 -- 556 --
Worsencraft, Kim............................... 486 -- 486 --
Wright, John W................................. 4,519 -- 4,519 --
Wyatt, Nathaniel............................... 834,304 -- 834,304 --
Yenigalla, Satya and Sita, as Community
Property..................................... 15,295 -- 15,295 --
Zhou, Yvonne, Y................................ 11,124 -- 11,124 --
</TABLE>
25
<PAGE>
PLAN OF DISTRIBUTION
Informix will not receive any proceeds from the sale of the shares. Each of
the selling stockholders may sell its shares directly or through broker-dealers
or underwriters who may act solely as agents, or who may acquire shares as
principals. The distribution of the shares may be effected in one or more
transactions that may take place through the Nasdaq National Market, including
block trades or ordinary broker's transactions, or through privately negotiated
transactions, or through a combination of any such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the selling stockholders
in connection with such sales.
The aggregate proceeds to the selling stockholders from the sale of the
shares will be the purchase price of the common stock sold less the aggregate
agents' commissions if any, and other expenses of issuance and distribution not
borne by Informix. The selling stockholders and any dealers or agents that
participate in the distribution of the shares may be deemed to be "underwriters"
within the meaning of the Securities Act, and any profit on the sale of the
shares by them and any commissions received by any such dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
The selling stockholders may effect transactions by selling the shares
directly or through broker-dealers acting either as principal or as agent, and
such broker-dealers may receive compensation in the form of usual and customary
or specifically negotiated underwriting discounts, concessions, or commissions
from the selling stockholders.
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.
Informix 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 of dealers or
agents, and fees attributable to the sale of the shares. Informix has agreed to
indemnify the selling stockholders against certain liabilities, including
certain potential liabilities under the Securities Act.
Informix may suspend the use of this prospectus for a discrete period of
time, not exceeding 60 days in the aggregate, not longer than 30 days as to any
single delay and not more than two times in any three month period, if, in the
reasonable judgment of Informix, a development has occurred or condition exists
as a result of which the Registration Statement or the prospectus does not
contain material non-public information which is in the reasonable judgment of
Informix is required to be included in the Registration Statement or the
prospectus for sales of the shares to be made hereunder and the immediate
disclosure of such information would be seriously detrimental to Informix. This
offering will terminate on the earlier of September 15, 2000 or the date on
which all shares offered hereby have been sold by the selling stockholders.
Any securities covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under that Rule rather than
pursuant to this prospectus.
There can be no assurance that the selling stockholders will sell any or all
of the shares of common stock offered by it hereunder.
26
<PAGE>
LEGAL MATTERS
The validity of the shares of common stock offered hereby has been passed
upon for Informix by Wilson Sonsini Goodrich & Rosati, Professional Corporation,
Palo Alto, California.
EXPERTS
The consolidated financial statements of Informix Corporation and
subsidiaries as of and for the year ended December 31, 1998, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The consolidated financial statements and supplemental consolidated
financial statements of Informix Corporation incorporated by reference in this
prospectus and registration statement have been audited by Ernst & Young LLP,
independent auditors, to the extent indicated in their report thereon
incorporated by reference herein. Such consolidated financial statements have
been incorporated herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
27
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, payable by Informix
in connection with the sale of common stock being registered. All amounts are
estimates except the SEC registration fee and the Nasdaq Market listing fee.
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
----------
<S> <C>
SEC registration fee........................................ $21,480.31
Nasdaq National Market additional shares listing fee........ 17,500.00
Printing expenses........................................... 15,000.00
Legal fees and expenses..................................... 15,000.00
Accounting fees and expenses................................ 10,000.00
Miscellaneous expenses...................................... 6,019.69
----------
Total................................................... $85,000.00
==========
</TABLE>
ITEM 15. 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 Informix's Amended and Restated Certificate of
Incorporation provides for the indemnification of directors to the fullest
extent permitted under Delaware law.
Article VI of Informix's Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of the corporation to the
fullest extent permitted under the General Corporation Law of Delaware.
Informix has entered into indemnification agreements with its directors and
executive officers, in addition to indemnification provided for in Informix's
Bylaws, and intends to enter into indemnification agreements with any new
directors and executive officers in the future.
In addition, pursuant to the terms of the Reorganization Agreement entered
into by Informix in connection with its acquisition of Cloudscape, Inc.,
Informix has agreed to fulfill and honor in all respects the obligations of
Cloudscape and to cause the surviving corporation to fulfill and honor in all
respects the obligations of Cloudscape, pursuant to certain indemnification
provisions set forth for certain indemnified parties of Cloudscape as of the
effective time of the merger under Cloudscape's Articles of Incorporation or
Bylaws as in effect immediately prior to the merger. Such provisions will not be
amended, repealed or otherwise modified for a period of six years from the
effective time of the acquisition in any manner that would adversely affect the
rights thereunder of individuals who, immediately prior to the effective time,
were directors, officers, employees, or agents of Cloudscape.
The Declaration of Registration Rights dated September 15, 1999, by Informix
made in connection with Informix's purchase of Cloudscape, Inc. provides that
Informix will indemnify the selling stockholders against certain liabilities,
including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, or persons controlling Informix
pursuant to the foregoing provisions, Informix has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
II-1
<PAGE>
At present and except as described in Informix's annual report on Form 10-K
and quarterly reports on Form 10-Q, there is no pending litigation or proceeding
involving a director, officer, employee, or other agent of Informix in which
indemnification is being sought, nor is Informix aware of any threatened
litigation that may result in a claim for indemnification by any director,
officer, employee, or other agent of Informix.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE DESCRIPTION
- --------------------- -------- -----------
<C> <S> <C>
4.1 (b) Declaration of Registration Rights, dated October 8, 1999,
by Informix to the former shareholders of
Cloudscape, Inc.
5.1 (a) Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation regarding legality of the securities of the
securities being registered
23.1 (a) Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1)
23.2 (a) Consent of KPMG LLP as Independent Auditors
23.3 (a) Consent of Ernst & Young LLP as Independent Auditors
24.1 (a) Power of Attorney (See page 11-5)
</TABLE>
- ------------------------
(a) Filed herewith.
(b) Incorporated by reference to exhibit filed with Informix's current report on
Form 8-K filed on October 15, 1999 (the Declaration of Registration Rights
is an exhibit to Exhibit 2.1 thereto).
ITEM 17. UNDERTAKINGS
Informix hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the Securities
Act;
(b) 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 thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement;
(c) 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;
provided, however, that paragraphs (a) and (b) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
2. That, for the purpose of determining any liability under the Securities Act,
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.
II-2
<PAGE>
3. To remove from registration by means of a post-effective amendment any of
the securities being registered that remain unsold at the termination of the
offering.
4. That, for the purpose of determining any liability under the Securities Act,
each filing of Informix's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration
Statement 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.
5. To deliver or cause to be delivered with the prospectus, to each person to
whom the prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the prospectus and furnished
pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under
the Exchange Act; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
6. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Informix
pursuant to the foregoing provisions, or otherwise, Informix has been
advised that in the opinion of the SEC 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 Informix of expenses incurred or paid
by a director, officer, or controlling person of Informix 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, Informix 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 issues.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Informix has duly caused this Registration Statement on Form S-3 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Menlo
Park, State of California, on this 8th day of November, 1999.
<TABLE>
<S> <C> <C>
INFORMIX CORPORATION
By: /s/ JEAN YVES F. DEXMIER
-----------------------------------------
Jean Yves F. Dexmier
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jean-Yves F. Dexmier and Howard A. Bain III and
each one of them, acting individually and without the other, as his or her
attorney-in-fact, each with full power of substitution, for him and his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that such attorneys-in-fact and
agents or any of them, or his or their substitute or substitutes, may lawfully
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 below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JEAN YVES F. DEXMIER President and Chief Executive
------------------------------------ Officer (Principal Executive November 8, 1999
Jean Yves F. Dexmier Officer) and Director
Executive Vice President and Chief
/s/ HOWARD A. BAIN III Financial Officer (Principal
------------------------------------ Financial and Accounting November 8, 1999
Howard A. Bain III Officer)
/s/ LESLIE G. DENEND
------------------------------------ Director November 8, 1999
Leslie G. Denend
/s/ ROBERT J. FINOCCHIO, JR.
------------------------------------ Chairman of the Board and Director November 8, 1999
Robert J. Finocchio, Jr.
/s/ JAMES L. KOCH
------------------------------------ Director November 8, 1999
James L. Koch
/s/ THOMAS A. MCDONNELL
------------------------------------ Director November 8, 1999
Thomas A. McDonnell
/s/ CYRIL J. YANSOUNI
------------------------------------ Director November 8, 1999
Cyril J. Yansouni
/s/ GEORGE REYES
------------------------------------ Director November 8, 1999
George Reyes
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE DESCRIPTION
- --------------------- -------- -----------
<S> <C> <C>
4.1 (b) Declaration of Registration Rights, dated October 8, 1999,
by Informix to the former shareholders of
Cloudscape, Inc.
5.1 (a) Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation regarding legality of the securities of the
securities being registered
23.1 (a) Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1)
23.2 (a) Consent of KPMG LLP as Independent Auditors
23.3 (a) Consent of Ernst & Young LLP as Independent Auditors
24.1 (a) Power of Attorney (See page II-4)
</TABLE>
- ------------------------
(a) Filed herewith.
(b) Incorporated by reference to exhibit filed with Informix's current report on
Form 8-K filed on October 15, 1999 (the Declaration of Registration Rights
is an exhibit to Exhibit 2.1 thereto).
II-5
<PAGE>
EXHIBIT 5.1
[Letterhead of Wilson Sonsini Goodrich & Rosati]
November 8, 1999
Informix Corporation
4100 Bohannon Drive
Menlo Park, California 94025
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on or about November 9, 1999 (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 9,582,947 shares of your Common Stock
(the "Shares"), all of which are authorized and have been previously issued to
the selling stockholders named therein in connection with the acquisition by
Informix Corporation of Cloudscape, Inc. The Shares are to be offered by the
selling stockholders for sale to the public as described in the Registration
Statement. As your legal counsel, we have examined the proceedings taken and are
familiar with the proceedings proposed to be taken by you in connection with the
sale and issuance of the Shares.
It is our opinion that, upon completion of the proceedings being taken or
contemplated to be taken prior to the registration of the Shares, including such
proceedings to be carried out in accordance with the securities laws of the
various states, where required, the Shares, when sold in the manner described in
the Registration Statement, will be legally and validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including any Prospectus constituting a part thereof,
and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI
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EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-3 of Informix Corporation of our report dated January 27, 1999
relating to the consolidated balance sheet of Informix Corporation and
subsidiaries as of December 31, 1998, and the related consolidated statements of
operations, stockholders' equity and cash flows for the year then ended, and the
related schedule as of and for the year ended December 31, 1998, which report
appears in the December 31, 1998 Annual Report on Form 10-K of Informix
Corporation.
We also consent to the incorporation by reference in the Registration
Statement on Form S-3 of Informix Corporation of our report dated November 5,
1999 relating to the supplemental consolidated balance sheet of Informix
Corporation and subsidiaries as of December 31, 1998 and the related
supplemental consolidated statements of operations, stockholders' equity and
cash flows for the year then ended and the related schedule as of and for the
year ended December 31, 1998, which report appears in a Form 8-K of Informix
Corporation filed on or about November 9, 1999. We also consent to reference of
our firm under the heading "Experts" in the Prospectus.
/s/ KPMG LLP
Mountain View, California
November 8, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG, LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333- ) and related Prospectus of
Informix Corporation for the registration of 9,582,947 shares of its common
stock and to the incorporation by reference therein of our report dated
March 2, 1998, with respect to the consolidated balance sheet of Informix
Corporation as of December 31, 1997, and the related consolidated statements of
operations, stockholders' equity, cash flows and financial statement schedule
for each of the two years in the period ended December 31, 1997, included in its
Annual Report on Form 10-K for the year ended December 31, 1998 and our report
dated March 2, 1998 with respect to the supplemental consolidated balance sheet
of Informix Corporation as of December 31, 1997 and the related supplemental
consolidated statements of operations, stockholders' equity, cash flows and
financial statement schedule, included in its Current Report on Form 8-K dated
November 9, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Jose, California
November 8, 1999
