Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 1999 and 1998 are as follows:

At December 31, 1999, the Company had approximately $66.5 million, $209.1 million and $209.1 million of foreign, federal and state net operating loss carryforwards, respectively. The foreign and state net operating loss carry-forwards expire at various dates beginning in 1999. The federal net operating loss carryforwards expire at various dates beginning in 2007. Income taxes paid amounted to $10.0 million, $4.7 million and $11.3 million in 1999, 1998 and 1997, respectively. The valuation allowance for deferred tax assets decreased by $12.7 million in 1999 and $17.4 million in 1998 and increased by $133.4 million in 1997. The net deferred tax asset of $5.5 million at December 31, 1999 represents the tax effect of net operating loss carryforwards existing in certain foreign jurisdictions that the Company believes are more likely than not to be realized, based on the earnings in those jurisdictions.

Subsequently recognized tax benefits relating to the valuation allowance for deferred tax assets at December 31, 1999 will be as follows:

On November 30, 1999, the Company reached a definitive agreement (the “Ardent Agreement”) to acquire Ardent Software, Inc. (“Ardent”), the leading provider of data integration infrastructure software for data warehouse, business intelligence, and e-business applications. In accordance with the Ardent Agreement, 3.5 shares of the Company’s common stock will be exchanged for each outstanding Ardent share and the Company will assume all outstanding Ardent options. The transaction is expected to be accounted for as a pooling of interests and completion of the transaction, which is subject to the approval of stockholders of both companies, is expected to occur in the first quarter of 2000.

On October 8, 1999, the Company completed its acquisition of Cloudscape, a privately-held provider of synchronized database solutions for the remote and occasionally connected workforce. In the acquisition, the former shareholders of Cloudscape received shares of the Company’s Common Stock in exchange for their shares of Cloudscape at the rate of approximately 0.56 shares of Informix Common Stock for each share of Cloudscape Common Stock (the “Merger”). An aggregate of 9,583,000 shares of Informix Common Stock were issued pursuant to the Merger, and an aggregate of 417,000 options and warrants to purchase Cloudscape Common Stock were assumed by Informix.