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In December
1998, the AICPA issued Statement of Position 98-9 (“SOP 98-9”),
“Modification of SOP 97-2, Software Revenue Recognition with
Respect to Certain Transactions.” This amendment clarified
the specification of what was considered vendor specific objective
evidence of fair value for the various elements in a multiple
element arrangement. SOP 98-9 is effective for all transactions
entered into by us beginning in fiscal year 2000. The adoption
of this statement is not expected to have a material impact
on our operating results, financial position or cash flows.
Recent
Developments
On February
3, 2000, International Business Machines Corporation (“IBM”)
filed an action against us in the United States District Court
for the District of Delaware alleging infringement of six
United States patents owned by IBM. The Informix products
that IBM alleges infringe its patents are Informix Online
Dynamic Server versions 5, 6 and 7, Informix SE version 6,
Informix NewEra version 1, Informix NET, Informix STAR, Illustra
Visual Information Retrieval, and Illustra Visual Intelligence
Viewer. In its complaint, IBM seeks a permanent injunction
against further alleged infringement, unspecified compensatory
damages, unspecified treble damages, and interest, costs and
attorneys’ fees. We strongly believe that the allegations
in the complaint are without merit and intend to defend the
action vigorously and to assert such counterclaims against
IBM as may be appropriate.
FACTORS
THAT MAY AFFECT FUTURE RESULTS
Current
and potential stockholders should consider carefully each
of the following factors in making their investment decisions.
These factors should be considered together with the other
information included or incorporated by reference in this
annual report on Form 10-K.
Risk
Factors
Our
quarterly operating results are subject to fluctuations caused
by many factors, which could result in our failing to achieve
revenue or profitability expectations.
Our
quarterly and annual results of operations have varied significantly
in the past and are likely to continue to vary in the future
due to a number of factors described below and elsewhere in
this “Management’s Discussion and Analysis of Financial Conditions
and Results of Operations” section, many of which are beyond
our control. Any one or more of the factors listed below or
other factors could cause us to fail to achieve our revenue
or profitability expectations. In particular, the failure
to meet market expectations could cause a sharp drop in our
stock price. These factors include:
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Changes
in demand for our products and services, including changes
in industry growth rates, |
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The
size, timing and contractual terms of large orders for
our software products, |
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Adjustments
of delivery schedules to accommodate customer or regulatory
requirements, |
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The
budgeting cycles of our customers and potential customers,
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Any
downturn in our customers’ businesses, in the domestic
economy or in international economies where our customers
do substantial business, |
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Changes
in our pricing policies resulting from competitive pressures,
such as aggressive price discounting by our competitors
or other factors, |
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Our
ability to develop and introduce on a timely basis new
or enhanced versions of our products and solutions, |
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Changes
in the mix of revenues attributable to domestic and international
sales, and |
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Seasonal
buying patterns which tend to peak in the fourth quarter.
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