##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|           |  |                                                                                              
|---------- |  | ---------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                              
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31, 2004                                                  
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF
    THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to                                              

Commission file number 0-15325





Ascential Software Corporation


(formerly Informix Corporation)


(Exact name of registrant as specified in its charter)


|                                                                                 |  |                                         
|-------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                         |  | 94-3011736                              
|(State or other jurisdiction of
    incorporation or organization)               |  | (I.R.S. Employer
    Identification No.)
|                                                                                
|50 Washington Street,
    Westborough, MA(Address of principal executive office) |  | 01581(Zip Code)                         

(Registrants telephone number, including area code)


508-366-3888


Securities registered pursuant to Section 12(b) of the
Act:


None


Securities registered pursuant to Section 12(g) of the
Act:


Common Stock, $0.01 par value





þ o


o


þ o






DOCUMENTS INCORPORATED BY REFERENCE












---










ASCENTIAL SOFTWARE CORPORATION


ANNUAL REPORT ON FORM 10-K


TABLE OF CONTENTS


|                                                  |  |                                                                                                               |    |      |    | 
|------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                                  |  |                                                                                                               |    | Page |   
|                                                  |  |                                                                                                               |    |      |   
|PART I                                           
|Item 1.                                           |  | Business                                                                                                      |    |      | 2  | 
|Item 2.                                           |  | Properties                                                                                                    |    |      | 11 | 
|Item 3.                                           |  | Legal Proceedings                                                                                             |    |      | 12 | 
|Item 4.                                           |  | Submission of Matters to a Vote of Security
    Holders                                                       |    |      | 13 | 
|                                                 
|PART II                                          
|Item 5.                                           |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of
    Securities |    |      | 13 | 
|Item 6.                                           |  | Selected Financial Data                                                                                       |    |      | 14 | 
|Item 7.                                           |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                     |    |      | 15 | 
|Item 7A.                                          |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                |    |      | 48 | 
|Item 8.                                           |  | Financial Statements and Supplementary
    Data                                                               |    |      | 48 | 
|Item 9.                                           |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                      |    |      | 48 | 
|Item 9A.                                          |  | Controls and Procedures                                                                                       |    |      | 48 | 
|Item 9B.                                          |  | Other Information                                                                                             |    |      | 49 | 
|                                                 
|PART III                                         
|Item 10.                                          |  | Directors and Executive Officers of the
    Registrant                                                        |    |      | 49 | 
|Item 11.                                          |  | Executive Compensation                                                                                        |    |      | 50 | 
|Item 12.                                          |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters            |    |      | 50 | 
|Item 13.                                          |  | Certain Relationships and Related
    Transactions                                                            |    |      | 52 | 
|Item 14.                                          |  | Principal Accountant Fees and Services                                                                        |    |      | 52 | 
|                                                 
|PART IV                                          
|Item 15.                                          |  | Exhibits and Financial Statement
    Schedules                                                                |    |      | 53 | 
|Signatures                                        |  |                                                                                                               | 57 |     
|EX-10.31 Form of Notice of Restricted Stock Grant
|EX-21.1 Subsidiaries of the Registrant           
|EX-23.1 Consent of PricewaterhouseCoopers LLP    
|EX-23.2 Consent of KPMG LLP                      
|EX-31.1 Section 302 Certification of CEO         
|EX-31.2 Section 302 Certification of CFO         
|EX-32.1 Section 906 Certification of CEO         
|EX-32.2 Section 906 Certification of CFO         



Ascential, Ascential DataStage, Ascential QualityStage,
Ascential ProfileStage and Ascential Enterprise Integration
Suite are trademarks of Ascential Software Corporation or its
affiliates and may be registered in the United States or other
jurisdictions. Other marks are the property of the owners of
those marks.


1



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PART I


This report contains forward-looking statements that are
subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results or
anticipated results. These risks and uncertainties include, but
are not limited to, those set forth under
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Factors That May
Affect Future Results and elsewhere in, or incorporated by
reference into, this report. Readers of this report should
review carefully these factors as well as the description of
risks and uncertainties, which, together with other detailed
information about us, is contained in other documents and
periodic reports that we file from time to time with the
Securities and Exchange Commission. These forward-looking
statements reflect managements opinions only and only as
of the date of this report and we disclaim any obligation to
update or revise these statements.







|        |         
|------- | --------
|Item 1. | Business

Business Overview


Overview.






Industry Background.




2



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| |   |                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Substantial investments in enterprise applications often fail to
    realize expected returns on investment due to inadequately
    addressed data issues.                                                                                                                                                         
|
| |  | Rapidly expanding data volumes and increasing data complexity
    are straining the ability of in-house coding to satisfy demand.                                                                                                                                                                                  
|
| |  | Real time functionality is becoming a much more
    prevalent requirement, which in-house coding and most ETL tools
    may be less well-equipped to address.                                                                                                                                                    
|
| |  | Many in-house programming organizations do not have adequate
    expertise or resources to devote to the creation and maintenance
    of additional functionality such as data profiling, data quality
    enhancement, bi-directional meta data management and
    highly-scalable parallel processing technology.

Solution.








Products.




3



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| |                                                     
| | ----------------------------------------------------
| | Ascential ProfileStage  Source System
    Discovery





| |                                                            
| | -----------------------------------------------------------
| | Ascential QualityStage  Data Preparation and
    Cleansing





| |                                                              
| | -------------------------------------------------------------
| | Ascential DataStage  Data Transformation and
    Integration





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Services.






| |                              
| | -----------------------------
| |            Customer
    Care





| |                                    
| | -----------------------------------
| |            Consulting
    Services



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| |                                                
| | -----------------------------------------------
| |            Customer
    Education and Training



Strategy.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We have methodically executed our plan to build the
    industrys broadest and most scalable enterprise data
    integration platform. That plan included the expansion of our
    original ETL product offering through internal development and
    through external acquisitions to encompass broader connectivity,
    expanded support of industry standards such as web services,
    data profiling, data quality, rich meta data management and
    parallel processing technology. We currently offer end-to-end
    data integration functionality from a single vendor, which we
    believe is unique in the industry and may provide us with
    meaningful competitive differentiation.                                                                                                                                           
|
| |  | We have expanded our strategic alliances with IBM, SAP, business
    intelligence vendors and systems integrators, among others, to
    broaden our market reach. We also entered into new strategic OEM
    and reseller agreements with other application vendors,
    including Ariba, PeopleSoft, Sybase and Teradata. In 2004, the
    amount of our license revenue sold through partner relationships
    increased by approximately 9%, and represents approximately 33%
    of license revenue in 2004, compared to 36% in 2003. In
    addition, many of the sales made by our direct sales
    organization are positively influenced by our strategic partner
    relationships. As a result, we believe that in the aggregate, a
    majority of revenue from our license sales is influenced or
    generated directly by partners.
|
| |  | Our marketing and sales organizations seek to increase our
    visibility and brand awareness through an array of initiatives,
    including expanding our Customer Advisory Board, conducting our
    annual Ascential World global user conference, conducting
    proactive public relations activities, participating in major
    industry and partner events, actively maintaining industry
    analyst relations, conducting web-based seminars and direct
    email campaigns, communicating through our website and continual
    direct sales and account management contact with customers and
    prospects. In addition, we actively participate in several
    industry standards organizations such as OASIS, ACORD, SWIFT and
    WS-I.                                                                                          
|
| |  | We have dedicated substantial financial resources to broadening
    and deepening our enterprise data integration platform and
    promoting the benefits of its use, and our plan is to continue
    to utilize our resources in the future to continue building out
    a platform that can deliver a highly differentiated enterprise
    data integration capability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

Sales and Marketing




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Long-lived assets




Licensing




| |                   
| | ------------------
| | End-User Licensing



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| |                                                                
| | ---------------------------------------------------------------
| | Value-Added Reseller, Systems Integrators and OEM
    Licensing





| |                        
| | -----------------------
| | Maintenance and Support



Competition








| |   |                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Breadth and completeness of each product to meet or exceed the
    functional requirements of its specific market.                                                                                                 
|
| |  | The ability of products to interoperate synergistically
    together, providing an end-to-end solution for data integration
    tasks, accelerating time to market while reducing overall
    implementation costs.
|
| |  | The ability of each product to maximize investments in hardware
    and software, to achieve operational efficiencies, and to scale
    to handle extremely large data volumes.                                    
|
| |  | Reliability and serviceability of products.                                                                                                                                                                        

8



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| |   |                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------
| |  | Total cost of ownership.                                                                                                            
|
| |  | The desire of customers to reduce the number of vendors with
    whom they do business.                                             
|
| |  | Availability of a comprehensive services offering.                                                                                  
|
| |  | Vendor viability and commitment to the enterprise integration
    market.                                                           
|
| |  | The ability to develop, introduce and support innovative
    products and the markets acceptance of such technical
    innovations.

Product Development








| |   |                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Further evolving and enhancing the capabilities of our product
    set to support existing and emerging standards, including XML,
    JMS and Web Services.                                                                            
|
| |  | Exceptional performance and scalability capabilities that extend
    the reach of our solutions for high performance grid
    architectures and advanced 64-bit operating platforms.                                                   
|
| |  | Seamless and scalable advanced native connectivity across new
    versions of enterprise applications, relational database
    systems, enterprise service buses, messaging systems and
    mainframe source systems.                  
|
| |  | Enhancing the out of box experience for our
    customers and innovating in the development of next generation
    user interfaces for our products that are designed for an
    engaging, efficient, and productive user experience.
|
| |  | Advancing and extending the capabilities of our core
    service-oriented, highly modernized internal architecture.                                                                                                                    
|
| |  | Significantly expanding and extending the capabilities of our
    core meta data infrastructure.                                                                                                                                       
|
| |  | User-oriented functional and feature enhancements of our data
    profiling, data quality, data transformation, meta data and
    connectivity capabilities.                                                                           



Research and Development Expenditures




Intellectual Property




9



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Employees




Executive Officers




|               |  |     |  |                                                     
|-------------- |  | --- |  | ----------------------------------------------------
|Name           |  | Age |  | Position                                            
|               |  |     |  |                                                     
|Peter Gyenes   |  | 59  |  | Chief Executive Officer and Chairman of the Board   
|Peter Fiore    |  | 47  |  | President                                           
|Robert McBride |  | 60  |  | Vice President and Chief Financial Officer          
|Scott Semel    |  | 48  |  | Vice President, Legal, General Counsel and Secretary

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Peter Gyenes


Peter Fiore


Robert McBride


Scott Semel


Access to SEC Filings









|        |           
|------- | ----------
|Item 2. | Properties



11



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|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings





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|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders






PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities



|                                    |                |      |   |       |     |  |   |       | 
|----------------------------------- | -------------- | ---- | - | ----- | --- |  | - | ----- | 
|                                    |                | High |   |       | Low | 
|                                    |                |      |   |       |     | 
|Fiscal Year ended December 31, 2004 |                |      |   |       |     |  |   |      
|                                    | Fourth Quarter |      | $ | 16.50 |     |  | $ | 12.90 | 
|                                    | Third Quarter  |      |   | 16.02 |     |  |   | 11.13 | 
|                                    | Second Quarter |      |   | 24.01 |     |  |   | 14.51 | 
|                                    | First Quarter  |      |   | 28.00 |     |  |   | 19.80 | 
|Fiscal Year ended December 31, 2003 |                |      |   |       |     |  |   |      
|                                    | Fourth Quarter |      | $ | 26.50 |     |  |   | 18.33 | 
|                                    | Third Quarter  |      |   | 20.34 |     |  |   | 14.51 | 
|                                    | Second Quarter |      |   | 18.00 |     |  |   | 10.56 | 
|                                    | First Quarter  |      |   | 13.16 |     |  |   | 8.64  | 







|                         |  |                     |   |  |                   |                     |                  |                    |                     |                    |              |  |  |   |         | 
|------------------------ |  | ------------------- | - |  | ----------------- | ------------------- | ---------------- | ------------------ | ------------------- | ------------------ | ------------ |  |  | - | ------- | 
|                         |  |                     |   |  |                   |                     |                  | (d) Maximum        |                    
|                         |  |                     |   |  |                   |                     |                  | Number             |                    
|                         |  |                     |   |  |                   |                     |                  | (or Approximate    |                    
|                         |  |                     |   |  |                   | (c) Total Number of |                  |                    | Dollar Value) of    |                   
|                         |  |                     |   |  |                   | Shares Purchased as |                  |                    | Shares that May Yet |                   
|                         |  | (a) Total Number of |   |  |                   |                     | Part of Publicly |                    |                     | Be Purchased Under |             
|                         |  | Shares Purchased    |   |  | (b) Average Price |                     |                  | Announced Plans or |                     |                    | the Plans or | 
|                         |  | (1)                 |   |  | Paid per Share    |                     |                  | Programs           |                     |                    | Programs     | 
|                         |  |                     |   |  |                   |                     |                  |                    |                     |                    |              | 
|October 1 - October 31   |  |                     |  |  |                   |                     |                 |                    |                     |                    |             |  |  | $ | 101,207 | 
|November 1 - November 30 |  |                     |  |  |                   |                     |                 |                    |                     |                    |             |  |  | $ | 101,207 | 
|December 1 - December 31 |  |                     |  |  |                   |                     |                 |                    |                     |                    |             |  |  | $ | 101,207 | 
|Total                    |  |                     |  |  |                   |                     |                 |                    |                     |                    |             |  |  | $ | 101,207 | 






|    |                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We publicly announced a $100 million common stock
    repurchase program (the Program) on April 26,
    2001 under which our Board of Directors authorized the
    repurchase of common stock. We publicly

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | announced on July 2, 2001 that the Program was increased
    from $100 million to $350 million. Under the Program,
    we may repurchase outstanding shares of our common stock from
    time to time in the open market and through privately negotiated
    transactions. Unless terminated earlier by resolution of our
    Board of Directors, the Program will expire when we have
    utilized the full amount of funds authorized for repurchase of
    shares under the Program. As of December 31, 2004, the
    Company has repurchased 17.0 million shares under the
    program, at a total cost of $248.8 million.






|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

Financial Overview






| |                  
| | -----------------
| | Five-Year Summary

|                                                    |         |                                       |         |      |         |   |         |         |  |   |         |       |   |         |           |      |  |   |          |       |  
|--------------------------------------------------- | ------- | ------------------------------------- | ------- | ---- | ------- | - | ------- | ------- |  | - | ------- | ----- | - | ------- | --------- | ---- |  | - | -------- | ----- | -
|                                                    |         | Years Ended December 31,              |        
|                                                    |         |                                       |        
|                                                    |         | 2004(1)                               |         |      | 2003(2) |   |         | 2002(3) |  |   | 2001(4) |       |   | 2000(5) |          
|                                                    |         |                                       |         |      |         |   |         |         |  |   |         |       |   |         |          
|                                                    |         | (In thousands, except per share data) |        
|Net revenues                                        |         | $                                     | 271,879 |      |         | $ | 185,586 |         |  | $ | 113,018 |       |   | $       | 481,332   |      |  | $ | 929,319  |      
|Net income (loss)                                   |         |                                       | 14,951  |      |         |   | 15,805  |         |  |   | (63,573 | )     |   |         | 624,948   |      |  |   | (98,315  | )    
|Preferred stock dividend                            |         |                                       |        |      |         |   |        |         |  |   |        |       |   |         |          |      |  |   | (191     | )    
|Net income (loss) applicable to common stockholders |         |                                       | 14,951  |      |         |   | 15,805  |         |  |   | (63,573 | )     |   |         | 624,948   |      |  |   | (98,506  | )    
|Net income (loss) per common share:                 |         |                                       |         |      |         |   |         |         |  |   |         |       |   |         |           |      |  |   |          |      
|                                                    | Basic   |                                       |         | 0.25 |         |   |         | 0.27    |  |   |         | (1.03 | ) |         |           | 9.01 |  |   |          | (1.38 | )
|                                                    | Diluted |                                       |         | 0.25 |         |   |         | 0.26    |  |   |         | (1.03 | ) |         |           | 8.79 |  |   |          | (1.38 | )
|Total assets                                        |         |                                       | 935,073 |      |         |   | 966,079 |         |  |   | 906,250 |       |   |         | 1,079,740 |      |  |   | 655,881  |      
|Long-term liabilities                               |         |                                       | 709     |      |         |   | 558     |         |  |   |        |       |   |         | 28,710    |      |  |   | 787      |      
|Retained earnings (accumulated deficit)             |         |                                       | 232,999 |      |         |   | 218,048 |         |  |   | 202,243 |       |   |         | 265,816   |      |  |   | (359,132 | )    






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | During 2004, we recorded merger, realignment and other charges
    totaling $0.8 million. Also during 2004, we recorded a tax
    benefit of $2.4 million resulting from adjustments that
    were recorded to reflect the impact of closed tax audits and
    changes in estimates resulting from new or additional
    information related to certain tax accruals.                                                                                                                                                                              
|   
|(2) | During 2003, we recorded merger, realignment and other charges
    totaling $3.9 million. In connection with the acquisition
    of Mercator, we recorded a charge of $2.0 million for
    in-process research and development that had not yet reached
    technological feasibility and had no alternative future use.
    Also during 2003 we recorded a net tax benefit of
    $16.3 million. This amount includes a benefit of
    $25.2 million resulting from adjustments that were recorded
    to reflect the impact of closed tax audits,

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | expiring statutes of limitations for the assessment of tax, and
    changes in estimates resulting from additional or new
    information related to certain tax accruals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(3) | During 2002, we recorded merger, realignment and other charges
    of $23.7 million. In June 2002, we ceased efforts to find a
    buyer for our content management product line and recorded a
    $4.5 million charge as cost of software for the impairment
    of software costs previously capitalized (see Note 14 to
    the Consolidated Financial Statements). During the fourth
    quarter of 2002, we recorded impairment losses on long-term,
    publicly traded equity investments of $2.2 million. In
    connection with the Vality acquisition, we recorded a charge of
    $1.2 million for in-process research and development that
    had not yet reached technological feasibility and had no
    alternative future use. During 2002, we recorded
    $3.0 million of adjustments to the gain from the sale of
    database business (see Note 13 to the Consolidated
    Financial Statements). In 2002, we reversed expense accruals of
    $2.8 million and recorded $2.6 million of other income
    as a result of the $5.4 million favorable judgment rendered
    in a litigation matter. Effective January 1, 2002, we
    completed our adoption of Statement of Financial Accounting
    Standards No. 142, which required that goodwill and
    intangible assets with indefinite lives no longer be amortized,
    but instead be tested for impairment at least annually (see
    Note 11 to the Consolidated Financial Statements).
|   
|(4) | In July 2001, we sold the assets of our database business to IBM
    (see Note 13 to the Consolidated Financial Statements)
    which resulted in a gain of $865.7 million that was
    recorded in 2001. In 2001, we also recorded merger, realignment
    and other charges of $54.4 million. In connection with the
    Torrent acquisition, we recorded a charge of $5.5 million
    for in-process research and development that had not yet reached
    technological feasibility and had no alternative future use. In
    addition, during 2001, we recorded impairment losses on
    long-term investments of $10.2 million, which related to
    both publicly-traded and non-marketable investments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(5) | In 2000, we recorded merger, realignment and other charges of
    $126.8 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

The following Managements Discussion and Analysis of
Financial Condition and Results of Operations contains certain
forward-looking statements relating to future events or our
future financial performance which involve risks and
uncertainties. Such forward-looking statements address, for
example expansion of product offerings; expansion of worldwide
distribution through alliances with recognized industry leaders;
our ability to leverage our substantial customer base and the
completeness of our enterprise data integration offerings; our
ability to leverage our global professional services
organization to accelerate the adoption of our product offerings
and provide value-added services to existing customers; costs
associated with continued investment in research and development
and investment in sales and marketing and product support;
continued investments in property and equipment; sufficiency of
Cash (as defined below) and short-term investment balances to
meet working capital requirements, fund research, repurchases of
our common stock, potential acquisitions, facilities, severance,
obligations and restructuring initiatives; effects of exchange
rate fluctuation on future operating results; effects of
termination of relationship with IBM; allowances for doubtful
accounts; increase in prevalence of vendors offering solutions
for various aspects of data integration requirements; growth of
consulting maintenance and education revenue; increase in use of
internal consulting resources; completion of payment of
severance payments and related costs due to Mercator
acquisition; future charges relation to undiscounted Mercator
lease obligations; and facilities costs related to the IBM
transaction.. Our actual results could differ materially from
those anticipated in these forward-looking statements as a
result of certain factors, including those set forth under
Factors That May Affect Future Results, and
elsewhere in this Annual Report on Form 10-K. The following
discussion and analysis should be read in conjunction with our
consolidated financial statements and related Notes appearing
elsewhere in this report.


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Overview


Overview.














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Products and Services




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Critical Accounting Policies






| |                    
| | -------------------
| | Revenue Recognition

We derive revenues from two primary sources: Software Revenue Recognition,






| |                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) Perpetual licenses: software licensed on a perpetual
    basis to a fixed number of users with no right to return the
    licensed software; and                                      
|
| | (2) Enterprise licenses: software licensed on either a
    perpetual or term basis to a customer as opposed to a fixed
    number of users, with no right to return the licensed software.

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Persuasive evidence of an arrangement exists: It is our
    customary practice to have a written contract, which is signed
    by both the customer and us, or a purchase order from those
    customers that have previously negotiated a standard end-user
    license arrangement or a purchase order with negotiated
    governing terms or volume purchase agreement, prior to
    recognizing revenue on an arrangement. Sales to resellers are
    evidenced by purchase orders submitted to us under a master
    agreement governing the terms of the relationship. Certain
    reseller arrangements are structured as royalty agreements in
    which royalties as a percent of either list price or net sales
    price are due to us upon product shipment to the end-user
    customer. Evidence of arrangement in these circumstances
    consists of request for shipment, or notification of shipment
    for resellers who ship duplicates directly to end-user customers
    from a master copy.                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Delivery has occurred: Software is delivered either through
    electronic delivery or physically on a compact disk using
    standard free-on-board shipping point terms in which title and
    risk of loss transfer to the customer upon shipment. For some
    existing customers, delivery may occur when the customer has
    been provided access codes if the newly purchased software is
    already contained on a previously delivered compact disk. It is
    uncommon for us to offer a specified upgrade to an existing
    product; however, in such instances, revenue is deferred until
    the upgrade is delivered. Our software solutions continue to be
    distributed primarily through our direct sales force; however,
    our indirect distribution channel continues to broaden through
    alliances with resellers and referral partners Revenue
    arrangements with resellers are recognized when we receive
    evidence that the reseller has an order from an end-user
    customer. This evidence may take a variety of forms, including
    (1) a copy of the purchase order or contract identifying an
    end-user customer, or (2) a royalty or sell-through report
    from the reseller, or other documented, objective evidence of
    product shipment. We do not typically offer our resellers
    contractual rights of return, stock balancing, or price
    protection.
|
| |  | The customers payment is deemed fixed or determinable: We
    assess whether fees are fixed or determinable and free of
    contingencies or significant uncertainties at the time of sale
    and recognize revenue if all other revenue recognition
    requirements are met. While our standard payment terms are net
    30 days, we have a practice of occasionally providing
    extended payment terms of less than one year on high-dollar
    sales to creditworthy customers. We have established a history
    of collection, without concessions, on these receivables.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Collection is probable: Likelihood of collection is assessed on
    a customer-by-customer basis. Both new and existing customers
    are subjected to a credit review process that evaluates the
    customers financial position and ultimately their
    respective ability to pay. If it is determined at the outset of
    the arrangement that collection is not probable based upon our
    credit review process, revenue is recognized on a cash-collected
    basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        





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Software Revenue Recognition with Respect to Certain
Transactions. Under the residual method, the fair value of the
undelivered elements (i.e., maintenance, consulting, and
education services) based on vendor specified objective evidence
(VSOE) is deferred and the remaining portion of the
arrangement fee is allocated to the delivered elements
(i.e., software license). If evidence of the fair value of
one or more of the undelivered elements does not exist, revenues
are deferred and recognized when delivery of those elements
occurs or the fair value can be established. We determine the
VSOE of fair value for professional services revenues based upon
our recent pricing for those services when sold separately. VSOE
of the fair value of maintenance services is typically based on
a substantive maintenance renewal clause, if any, within a
customer contract or based on our recent pricing for those
services when sold separately. Our current pricing practices are
influenced primarily by market conditions, product type,
purchase volume, maintenance term, and geography. Significant
incremental discounts offered in multiple element arrangements
that would be characterized as separate elements are infrequent
and are allocated to software license revenues under the
residual method.












| |                                
| | -------------------------------
| | Allowance for Doubtful Accounts



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| |                           
| | --------------------------
| | Software Development Costs

Accounting for the Costs of Computer Software to
Be Sold, Leased, or Otherwise Marketed








| |                      
| | ---------------------
| | Business Combinations

Business
Combinations




| |                               
| | ------------------------------
| | Goodwill and Intangible Assets



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Goodwill and Other Intangible
Assets








| |             
| | ------------
| | Income Taxes

Accounting for Income Taxes


22



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| |                                      
| | -------------------------------------
| | Merger, Realignment and Other Charges



Results of Operations






|   |                                                                                 
|-- | --------------------------------------------------------------------------------
|I. | Executive Overview of Results of Operations 
    Ascential Software Corporation



|                                                                                      |  |                          |       |   |      |   |       |      |  |   |       |   
|------------------------------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ----- | --
|                                                                                      |  | Years Ended December 31, |      
|                                                                                      |  |                          |      
|                                                                                      |  | 2004                     |       |   | 2003 |   |       | 2002 | 
|                                                                                      |  |                          |       |   |      |   |       |      | 
|License revenue (in millions)                                                         |  | $                        | 110.2 |   |      | $ | 92.6  |      |  | $ | 59.6  |   
|Total revenue (in millions)                                                           |  |                          | 271.9 |   |      |   | 185.6 |      |  |   | 113.0 |   
|Gross margin                                                                          |  |                          | 68    | % |      |   | 70    | %    |  |   | 54    | % 
|Services margin                                                                       |  |                          | 57    | % |      |   | 57    | %    |  |   | 38    | % 
|Operating margin                                                                      |  |                          | 2     | % |      |   | (7    | )%   |  |   | (90   | )%
|Ending headcount(5)                                                                   |  |                          | 970   |   |      |   | 856   |      |  |   | 639   |   
|Average license revenue per quota carrying sales representative
    (in thousands)(1) |  | $                        | 1,225 |   |      | $ | 1,381 |      |  | $ | 764   |   
|Revenue per employee (in thousands)(2)                                                |  | $                        | 297   |   |      | $ | 251   |      |  | $ | 163   |   
|Average license selling price (in thousands)(3)                                       |  | $                        | 148   |   |      | $ | 121   |      |  | $ | 98    |   
|Days sales outstanding(4)                                                             |  |                          | 65    |   |      |   | 59    |      |  |   | 72    |   






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Average license revenue per quota carrying sales representative
    is calculated for each quarterly period during the year using
    license revenue divided by the number of sales representatives
    with sales quotas at the end of the respective period. The sum
    of the four quarters calculations represents the total for the
    respective annual period.                                                                                                                                                                                      
|   
|(2) | Calculated using total revenue divided by average number of
    employees for the respective period.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(3) | Calculated as total license revenue from transactions greater
    than $25,000 in license revenue, divided by total number of
    those transactions for the period.                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(4) | Calculated by dividing net accounts receivable as of the balance
    sheet date, by the quotient determined by dividing the
    respective years fourth quarter revenue by ninety days.
    Accounts receivable and deferred revenue are reduced for certain
    amounts for which revenue has not been recognized. At
    December 31, 2004, accounts receivable has been reduced for
    amounts sold under a receivables purchase agreement as described
    in Liquidity and Capital Resources and Note 2
    to the Consolidated Financial Statements.

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | Headcount at December 31, 2003 includes approximately
    400 employees acquired from Mercator on September 12,
    2003 less approximately 150 terminations during the third
    and fourth quarters of 2003. The expense associated with these
    employees and their activities only impacted 15 weeks of
    the year ended December 31, 2003, therefore headcount at
    June 30, 2003 of 614 is used for comparison purposes in our
    analysis of expenses for the year ended December 31, 2003
    in the following discussion.







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|    |        
|--- | -------
|II. | Revenue



|                                              |                                  |                          |       |      |      |   |       |      |  |   |       |      | 
|--------------------------------------------- | -------------------------------- | ------------------------ | ----- | ---- | ---- | - | ----- | ---- |  | - | ----- | ---- | 
|                                              |                                  | Years Ended December 31, |      
|                                              |                                  |                          |      
|                                              |                                  | 2004                     |       |      | 2003 |   |       | 2002 | 
|                                              |                                  |                          |       |      |      |   |       |      | 
|License revenue                               |                                  | $                        | 110.2 |      |      | $ | 92.6  |      |  | $ | 59.6  |     
|                                              |                                  |                          |       |      |      |   |       |      | 
|Service revenue:                              |                                  |                          |       |      |      |   |       |      |  |   |       |     
|                                              | Maintenance revenue              |                          |       | 94.6 |      |   |       | 55.1 |  |   |       | 30.0 | 
|                                              | Consulting and education revenue |                          |       | 67.1 |      |   |       | 37.9 |  |   |       | 23.4 | 
|                                              |                                  |                          |       |      |      |   |       |      | 
|Total service revenue                         |                                  |                          | 161.7 |      |      |   | 93.0  |      |  |   | 53.4  |     
|                                              |                                  |                          |       |      |      |   |       |      | 
|Total revenue                                 |                                  | $                        | 271.9 |      |      | $ | 185.6 |      |  | $ | 113.0 |     
|                                              |                                  |                          |       |      |      |   |       |      | 
|License revenue as a percent of total revenue |                                  |                          | 41    | %    |      |   | 50    | %    |  |   | 53    | %   
|Service revenue as a percent of total revenue |                                  |                          | 59    | %    |      |   | 50    | %    |  |   | 47    | %   

License revenue.






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Service revenue.












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|     |                   
|---- | ------------------
|III. | Costs and Expenses



|                                      |  |                          |       |  |      |   |       |      |  |   |       | 
|------------------------------------- |  | ------------------------ | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                      |  | Years Ended December 31, |      
|                                      |  |                          |      
|                                      |  | 2004                     |       |  | 2003 |   |       | 2002 | 
|                                      |  |                          |       |  |      |   |       |      | 
|Cost of licenses                      |  | $                        | 16.8  |  |      | $ | 15.3  |      |  | $ | 18.3  | 
|Cost of services                      |  |                          | 70.1  |  |      |   | 40.1  |      |  |   | 33.1  | 
|Sales and marketing                   |  |                          | 110.6 |  |      |   | 79.9  |      |  |   | 73.1  | 
|Research and development              |  |                          | 39.3  |  |      |   | 27.5  |      |  |   | 24.0  | 
|General and administrative            |  |                          | 28.2  |  |      |   | 30.8  |      |  |   | 41.1  | 
|In-process research and development   |  |                          |      |  |      |   | 2.0   |      |  |   | 1.2   | 
|Merger, realignment and other charges |  |                          | 0.8   |  |      |   | 3.9   |      |  |   | 23.7  | 
|                                      |  |                          |       |  |      |   |       |      | 
|Total costs and expenses              |  | $                        | 265.8 |  |      | $ | 199.5 |      |  | $ | 214.5 | 
|                                      |  |                          |       |  |      |   |       |      | 

Cost of licenses.




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Cost of services.


|                                |  |              |    |   |      |  |    |      |  |  |    |   
|------------------------------- |  | ------------ | -- | - | ---- |  | -- | ---- |  |  | -- | --
|                                |  | Years Ended  |   
|                                |  | December 31, |   
|                                |  |              |   
|                                |  | 2004         |    |   | 2003 |  |    | 2002 | 
|                                |  |              |    |   |      |  |    |      | 
|Ascential Software              |  |              |    |   |      |  |    |      |  |  |    |   
|Total service margin            |  |              | 57 | % |      |  | 57 | %    |  |  | 38 | % 
|Maintenance margin              |  |              | 81 | % |      |  | 82 | %    |  |  | 73 | % 
|Consulting and education margin |  |              | 22 | % |      |  | 21 | %    |  |  | (7 | )%









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Sales and marketing expenses.




Research and development expenses.




29



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General and administrative expenses.




30



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Merger, realignment and other costs.


|                                            |                                              |              |      |      |      |   |     |      |  |   |      |      | 
|------------------------------------------- | -------------------------------------------- | ------------ | ---- | ---- | ---- | - | --- | ---- |  | - | ---- | ---- | 
|                                            |                                              | Years Ended  |     
|                                            |                                              | December 31, |     
|                                            |                                              |              |     
|                                            |                                              | 2004         |      |      | 2003 |   |     | 2002 | 
|                                            |                                              |              |      |      |      |   |     |      | 
|Severance and employment related costs:     |                                              |              |      |      |      |   |     |      |  |   |      |     
|Fourth quarter 2003 realignment             |                                              | $            |     |      |      | $ | 0.9 |      |  | $ |     |     
|Third quarter 2003 realignment              |                                              |              |     |      |      |   | 1.1 |      |  |   |     |     
|Third quarter 2002 realignment              |                                              |              |     |      |      |   |    |      |  |   | 6.8  |     
|Second quarter 2002 realignment             |                                              |              |     |      |      |   |    |      |  |   | 5.7  |     
|First quarter 2002 realignment              |                                              |              |     |      |      |   |    |      |  |   | 1.6  |     
|Third quarter 2001 realignment              |                                              |              |     |      |      |   |    |      |  |   | (0.4 | )   
|                                            |                                              |              |      |      |      |   |     |      | 
|                                            | Total severance and employment related costs |              |      |     |      |   |     | 2.0  |  |   |      | 13.7 | 
|                                            |                                              |              |      |      |      |   |     |      | 
|Facilities and equipment costs:             |                                              |              |      |      |      |   |     |      |  |   |      |     
|IBM Transaction                             |                                              |              | 1.0  |      |      |   | 1.9 |      |  |   | 4.3  |     
|Third quarter 2002 realignment              |                                              |              |     |      |      |   |    |      |  |   | 3.0  |     
|Second quarter 2002 realignment             |                                              |              |     |      |      |   |    |      |  |   | 1.2  |     
|First quarter 2002 realignment              |                                              |              |     |      |      |   |    |      |  |   | 0.8  |     
|2000 strategic realignment                  |                                              |              |     |      |      |   |    |      |  |   | 0.2  |     
|Other                                       |                                              |              |     |      |      |   |    |      |  |   | (0.3 | )   
|                                            |                                              |              |      |      |      |   |     |      | 
|                                            | Total facilities and equipment costs         |              |      | 1.0  |      |   |     | 1.9  |  |   |      | 9.2  | 
|                                            |                                              |              |      |      |      |   |     |      | 
|Other:                                      |                                              |              |      |      |      |   |     |      |  |   |      |     
|Professional fees                           |                                              |              |     |      |      |   |    |      |  |   | 0.4  |     
|Other exit costs                            |                                              |              | (0.2 | )    |      |   |    |      |  |   | 0.4  |     
|                                            |                                              |              |      |      |      |   |     |      | 
|                                            | Total other                                  |              |      | (0.2 | )    |   |     |     |  |   |      | 0.8  | 
|                                            |                                              |              |      |      |      |   |     |      | 
|Total merger, realignment and other charges |                                              | $            | 0.8  |      |      | $ | 3.9 |      |  | $ | 23.7 |     
|                                            |                                              |              |      |      |      |   |     |      | 









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.




Write-off of acquired in-process research and
development.






32



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|   |                       
|-- | ----------------------
|V. | Other Income (Expense)



|                                                      |  |                          |      |   |      |   |      |      |  |   |      |  
|----------------------------------------------------- |  | ------------------------ | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                                      |  | Years Ended December 31, |     
|                                                      |  |                          |     
|                                                      |  | 2004                     |      |   | 2003 |   |      | 2002 | 
|                                                      |  |                          |      |   |      |   |      |      | 
|Interest income                                       |  | $                        | 9.1  |   |      | $ | 11.1 |      |  | $ | 20.2 |  
|Interest expense                                      |  | $                        | (0.2 | ) |      | $ | (0.2 | )    |  | $ | (0.1 | )
|Gain on sale of database business, net of adjustments |  | $                        |     |   |      | $ |     |      |  | $ | 3.0  |  
|Impairment of long-term investments                   |  | $                        |     |   |      | $ |     |      |  | $ | (2.2 | )
|Other income, net                                     |  | $                        | 1.5  |   |      | $ | 2.5  |      |  | $ | (0.9 | )

Interest income  years ended December 31,
2004, 2003 and 2002.




Interest expense  years ended December 31,
2004, 2003 and 2002.


Gain on sale of database business, net of
adjustments  years ended December 31, 2004, 2003
and 2002.


Impairment of long-term investments  years ended
December 31, 2004, 2003 and 2002. Accounting for the Impairment or
Disposal of Long-Lived Assets




Other, net  years ended December 31, 2004,
2003 and 2002.


33



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VI. Income Taxes 
Ascential Software Corporation


|                                  |  |                          |      |   |      |   |       |      |  |   |       |  
|--------------------------------- |  | ------------------------ | ---- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                  |  | Years Ended December 31, |     
|                                  |  |                          |     
|                                  |  | 2004                     |      |   | 2003 |   |       | 2002 | 
|                                  |  |                          |      |   |      |   |       |      | 
|                                  |  | (In millions, other than |     
|                                  |  | percentages)             |     
|Income (loss) before income taxes |  | $                        | 16.5 |   |      | $ | (0.5  | )    |  | $ | (81.4 | )
|Income tax expense (benefit)      |  | $                        | 1.6  |   |      | $ | (16.3 | )    |  | $ | (17.8 | )
|Effective tax rate                |  |                          | 10   | % |      |   | *     |      |  |   | 21.9  | %






|  |                                                                                                   
|- | --------------------------------------------------------------------------------------------------
|* | Not meaningful as a result of the large benefit recorded in
    relation to the loss before taxes.







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Liquidity and Capital Resources  Ascential
Software Corporation














35



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|                                   |  |       |      |                        |        |   |      |       |  |     |       |  |         |       |      |  |  |   |      | 
|---------------------------------- |  | ----- | ---- | ---------------------- | ------ | - | ---- | ----- |  | --- | ----- |  | ------- | ----- | ---- |  |  | - | ---- | 
|                                   |  |       |      | Payments Due By Period |       
|                                   |  |       |      |                        |       
|                                   |  |       |      | Less Than              |        |   | 1-3  |       |  | 4-5 |       |  | After 5 |      
|Contractual Obligations            |  | Total |      |                        | 1 Year |   |      | Years |  |     | Years |  |         | Years |     
|                                   |  |       |      |                        |        |   |      |       |  |     |       |  |         |       |     
|Long-term debt                     |  | $     |     |                        |        | $ |     |       |  | $   |      |  |         | $     |     |  |  | $ |     | 
|Capital lease obligations          |  |       | 0.6  |                        |        |   | 0.5  |       |  |     | 0.1   |  |         |       |     |  |  |   |     | 
|Operating leases                   |  |       | 87.8 |                        |        |   | 19.4 |       |  |     | 28.8  |  |         |       | 16.2 |  |  |   | 23.4 | 
|Unconditional purchase obligations |  |       |     |                        |        |   |     |       |  |     |      |  |         |       |     |  |  |   |     | 
|Other long-term obligations        |  |       |     |                        |        |   |     |       |  |     |      |  |         |       |     |  |  |   |     | 
|                                   |  |       |      |                        |        |   |      |       |  |     |       |  |         |       |     
|Total contractual cash obligations |  | $     | 88.4 |                        |        | $ | 19.9 |       |  | $   | 28.9  |  |         | $     | 16.2 |  |  | $ | 23.4 | 





|                                   |  |       |      |                       |        |   |     |       |  |     |       |  |       |         |      |  |  |   |      | 
|---------------------------------- |  | ----- | ---- | --------------------- | ------ | - | --- | ----- |  | --- | ----- |  | ----- | ------- | ---- |  |  | - | ---- | 
|                                   |  |       |      | Amount of Commitment  |       
|                                   |  |       |      | Expiration Per Period |       
|                                   |  |       |      |                       |       
|                                   |  |       |      | Less Than             |        |   | 1-3 |       |  | 4-5 |       |  | After |        
|Other Commercial Commitments       |  | Total |      |                       | 1 Year |   |     | Years |  |     | Years |  |       | 5 Years |     
|                                   |  |       |      |                       |        |   |     |       |  |     |       |  |       |         |     
|Standby letters of credit          |  | $     | 4.1  |                       |        | $ |    |       |  | $   | 1.4   |  |       | $       |     |  |  | $ | 2.7  | 
|Guarantees                         |  |       | 48.7 |                       |        |   | 5.3 |       |  |     | 11.2  |  |       |         | 11.6 |  |  |   | 20.6 | 
|                                   |  |       |      |                       |        |   |     |       |  |     |       |  |       |         |     
|Total contractual cash obligations |  | $     | 52.8 |                       |        | $ | 5.3 |       |  | $   | 12.6  |  |       | $       | 11.6 |  |  | $ | 23.3 | 





Disclosures About Market
Rate Risk


Market Rate Risk.


36



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Interest Rate Risk.


Equity Security Price Risk.


Foreign Currency Exchange Rate Risk. Accounting for Derivative Instruments
and Hedging Activities






37



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Forward Contracts


|                                                 |                                           |                |        |        |          |  |  |         | 
|------------------------------------------------ | ----------------------------------------- | -------------- | ------ | ------ | -------- |  |  | ------- | 
|                                                 |                                           | Contract       |        |        | Contract | 
|At December 31, 2004                             |                                           | Amount         |        |        | Rate     | 
|                                                 |                                           |                |        |        |          | 
|                                                 |                                           | (In thousands) |       
|Forward currency to be sold under contract:      |                                           |                |        |        |          |  |  |        
|                                                 | Swiss Franc                               |                | $      | 4,374  |          |  |  | 1.1284  | 
|                                                 | Singapore Dollar                          |                |        | 1,651  |          |  |  | 1.6328  | 
|                                                 | Korean Won                                |                |        | 2,107  |          |  |  | 1039.00 | 
|                                                 | Norwegian Krone                           |                |        | 1,984  |          |  |  | 6.0228  | 
|                                                 | Brazilian Real                            |                |        | 1,399  |          |  |  | 2.7950  | 
|                                                 | Euro                                      |                |        | 3,874  |          |  |  | 1.363   | 
|                                                 | Czech Koruna                              |                |        | 1,984  |          |  |  | 22.352  | 
|                                                 |                                           |                |        |        |          | 
|Total                                            |                                           |                | 17,373 |        |          |  |  |        
|Forward currency to be purchased under contract: |                                           |                |        |        |          |  |  |        
|                                                 | British Pound                             |                |        | 20,141 |          |  |  | 1.91991 | 
|                                                 | British Pound                             |                |        | 19,111 |          |  |  | 1.91100 | 
|                                                 | Other (individually less than $1 million) |                |        | 1,814  |          |  |  |         | 
|                                                 |                                           |                |        |        |          | 
|Total                                            |                                           |                | 41,066 |        |          |  |  |        
|                                                 |                                           |                |        |        |          | 
|Grand Total                                      |                                           | $              | 58,439 |        |          |  |  |        
|                                                 |                                           |                |        |        |          | 

Recent Accounting Pronouncements




Subsequent Event






Factors That May Affect Future Results




| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | Changes in stock option accounting rules may have a
    significant adverse affect on our operating results.



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| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | Failure to maintain effective internal controls could have
    a material adverse effect on our business, operating results and
    stock price.





| |                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we do not make effective use of the proceeds of our
    substantial cash resources, our financial results could suffer
    and the value of our common stock could decline.





| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to increase revenue from, and expand the
    market share of, our products, our financial results will be
    materially adversely affected.



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| |                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If the enterprise data integration market declines or does
    not grow, we may sell fewer products and services and our
    business may be unable to sustain its current level of
    operations.





| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | Intense competition could adversely affect our ability to
    sell our products and services.







| |                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | Competition may affect the pricing of our products or
    services and changes in product mix may occur, either of which
    may reduce our profit margins.



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| |                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our current strategy contemplates possible future
    acquisitions, which will require us to incur substantial costs
    for which we may never realize the anticipated benefits.







| |                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our financial results are subject to fluctuations caused
    by many factors that could result in our failing to achieve
    anticipated financial results.





| |   |                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Changes in demand for our products and services, including
    changes in growth rates in the software industry as a whole and
    in the enterprise data integration market,
|
| |  | The size, timing and contractual terms of large orders for our
    software products and services,                                                                           
|
| |  | Possible delays in or inability to recognize revenue as the
    result of revenue recognition rules,                                                                         
|
| |  | 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 services,                                                            
|
| |  | Unexpected needs for capital expenditures or other unanticipated
    expenses,                                                                                               
|
| |  | Changes in the mix of revenues attributable to domestic and
    international sales, and                                                                                     
|
| |  | Seasonal fluctuations in buying patterns.                                                                                                                                    

41



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| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our recognition of deferred revenue is subject to future
    performance obligations and may not be representative of
    revenues for succeeding periods.





| |                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our common stock has been and likely will continue to be
    subject to substantial price and volume fluctuations that may
    prevent stockholders from reselling their shares at or above the
    prices at which they purchased their shares.





| |   |                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------
| |  | Market uncertainty about our business prospects or the prospects
    for the enterprise data integration market,                       
|
| |  | Revenues or results of operations that do not meet or exceed
    analysts and investors expectations,                                
|
| |  | The introduction of new products or product enhancements by us
    or our competitors,                                                 
|
| |  | Any challenges integrating people, operations or products
    associated with recent acquisitions,                                     
|
| |  | General business conditions in the software industry, the
    technology sector, or in the domestic or international
    economies, and
|
| |  | Uncertainty and economic instability resulting from terrorist
    acts and other acts of violence or war.                              



| |                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------
| | Our financial success depends upon our ability to maintain
    and leverage relationships with strategic partners.



42



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##### Table of Contents





| |                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may not be able to retain our key personnel and attract
    and retain the new personnel necessary to grow our businesses,
    which could materially adversely affect our ability to develop
    and sell our products, support our business operations and grow
    our business.





| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Fluctuations in the value of foreign currencies could
    result in currency transaction losses.







| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | A portion of our product development is outsourced
    offshore, which poses significant risks.





| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | difficulties in managing, operating, and staffing offshore
    operations;                       
|
| |  | difficulties in obtaining or maintaining regulatory approvals or
    complying with foreign laws;
|
| |  | reduced or less certain protection for intellectual property
    rights;                         
|
| |  | differing technological advances, preferences or requirements;                                   

43



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##### Table of Contents





| |   |                               
| | - | ------------------------------
| |  | trade restrictions; and       
|
| |  | foreign currency fluctuations.



| |                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, revenues from our products
    and solutions may decline.







| |                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 our service agreements.





| |                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Seasonal trends in sales of our software products could
    adversely affect our quarterly operating results, and our
    lengthy sales cycles for products makes our revenues susceptible
    to fluctuations.





44



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##### Table of Contents





| |                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The success of our international operations is dependent
    upon many factors that could adversely affect our ability to
    sell our products internationally and could affect our
    profitability.





| |   |                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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, economic and
    environmental circumstances,                                                                                          
|
| |  | Recessionary environments in domestic or foreign
    economies and                                                                                                                    
|
| |  | Increases in tariffs, duties, price controls or other
    restrictions on foreign currencies or trade barriers imposed by
    countries, and other changes in applicable foreign laws.



| |                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we fail to protect our intellectual property rights,
    competitors may be able to use our technology or trademarks
    which would weaken our competitive position, reduce our revenue
    and increase costs.







| |   |                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Competitors may independently develop similar or superior
    technology,                                                                                                                                                         
|
| |  | Policing unauthorized use of software is difficult,                                                                                                                                                                               
|
| |  | The laws of some foreign countries do not protect proprietary
    rights in software 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 intellectual property rights, to protect
    trade secrets, or to determine the validity and scope of the
    proprietary rights of others could result in substantial costs
    and diversion of resources.

45



---



##### Table of Contents





| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Our software may have defects and errors, which may lead
    to a loss of revenue or product liability claims.





| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | Claims by others that we infringe their intellectual
    property rights could harm our business and financial
    condition.





| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | The loss of our rights to use software licensed to us by
    third parties could harm our business.





| |                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have substantial real estate lease commitments for
    unoccupied space and restoration obligations, and if we are
    unable to sublet this space on acceptable terms our operating
    results and financial condition could be adversely
    affected.





46



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##### Table of Contents







| |                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Provisions in our charter documents may discourage
    potential acquisition bids and prevent changes in our management
    that our stockholders may favor. This could adversely affect the
    market price for our common stock.





| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | 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.    







| |                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------
| | Provisions in our charter documents with respect to
    undesignated preferred stock may discourage potential
    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.



47



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##### Table of Contents







| |                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Terrorist attacks, such as the attacks that occurred in
    New York and Washington, D.C. on September 11, 2001,
    and other acts of violence or war, may affect the markets in
    which we operate, our operations and our profitability.










|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk








|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures.


48



---



##### Table of Contents







Changes in Internal Control over Financial Reporting.






| |   |                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------
| |  | Completed review of all cumulative vesting data included in the
    pro forma stock compensation calculations    
|
| |  | Formalized policy with respect to the method utilized to
    calculate the after tax pro forma stock compensation
|
| |  | Expanded review and analysis of assumptions used in the
    calculation                                          
|
| |  | Tested arithmetic accuracy of the calculations                                                                   





| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Formalized tax payment reporting by foreign subsidiaries to the
    Corporate Tax Manager                                                          
|
| |  | Expanded tax reporting packages submitted by foreign
    subsidiaries to the US                                                                    
|
| |  | Improved communication and reporting of differences between
    estimated tax provisions and actual tax obligations when tax
    returns are filed.








|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III









|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



49



---



##### Table of Contents








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters



| |                                     
| | ------------------------------------
| | Equity Compensation Plan Information



|                                                           |  |                      |            |  |                   |                      |                         |                       |  |  |           |    
|---------------------------------------------------------- |  | -------------------- | ---------- |  | ----------------- | -------------------- | ----------------------- | --------------------- |  |  | --------- | ---
|                                                           |  | (a)                  |            |  | (b)               |                      |                         | (c)                   | 
|                                                           |  |                      |            |  |                   |                      |                         |                       | 
|                                                           |  |                      |            |  |                   | Number of Securities |                        
|                                                           |  | Number of Securities |            |  |                   |                      | Remaining Available for |                      
|                                                           |  | to Be Issued Upon    |            |  | Weighted Average  |                      |                         | Future Issuance under | 
|                                                           |  | Exercise of          |            |  | Exercise Price of |                      |                         | Equity Compensation   | 
|                                                           |  | Outstanding Options, |            |  | Outstanding       |                      |                         | Plans (Excluding      | 
|                                                           |  | Warrants and         |            |  | Options, Warrants |                      |                         | Securities Reflected  | 
|Plan Category                                              |  | Rights(1)            |            |  | and Rights        |                      |                         | in Column (a))(2)     | 
|                                                           |  |                      |            |  |                   |                      |                         |                       | 
|Equity compensation plans approved by security holders     |  |                      | 4,405,801  |  |                   | $                    | 22.04                   |                       |  |  | 3,790,587 | (3)
|Equity compensation plans not approved by security holders |  |                      | 5,655,215  |  |                   | $                    | 16.51                   |                       |  |  | 2,587,426 |    
|                                                           |  |                      |            |  |                   |                      |                         |                       | 
|Total                                                      |  |                      | 10,061,016 |  |                   | $                    | 18.93                   |                       |  |  | 6,378,013 |    
|                                                           |  |                      |            |  |                   |                      |                         |                       | 






|    |                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This table excludes an aggregate of 1,588,242 shares
    issuable upon exercise of outstanding options that were assumed
    in connection with various acquisition transactions. The
    weighted-average exercise price of the excluded options is
    $23.45.
|   
|(2) | In addition to being available for future issuance upon exercise
    of options that may be granted after December 31, 2004,
    1,650,000 shares under the 1994 Plan and 1,625,000 under
    the 1998 Plan may be used for the award of restricted stock.      
|   
|(3) | Includes 1,169,854 shares issuable under our 1997 Employee
    Stock Purchase Plan as of December 31, 2004.                                                                                                                                                     

Equity Compensation Plans Not Approved by Stockholders




1997 Non-Statutory Stock Option Plan




| |        
| | -------
| | General



50



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##### Table of Contents









| |            
| | -----------
| | Eligibility





| |                          
| | -------------------------
| | Amendment and Termination





| |                             
| | ----------------------------
| | Changes in Capital Structure





Amended and Restated 1998 Non-Statutory Stock Option and
Award Plan




| |        
| | -------
| | General





51



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| |            
| | -----------
| | Eligibility





| |                          
| | -------------------------
| | Amendment and Termination





| |                             
| | ----------------------------
| | Changes in Capital Structure












|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



52



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##### Table of Contents






PART IV







|         |                                            
|-------- | -------------------------------------------
|Item 15. | Exhibits, and Financial Statement Schedules





|       |                     
|------ | --------------------
|(a)(1) | Financial Statements

|                                                                                         |  |      |      | 
|---------------------------------------------------------------------------------------- |  | ---- | ---- | 
|                                                                                         |  | Page |     
|                                                                                         |  |      |     
|Managements Report on Internal Control Over Financial Reporting                          |  |      | F-2  | 
|Report of Independent Registered Public Accounting
    Firm  PricewaterhouseCoopers LLP |  |      | F-3  | 
|Report of Independent Registered Public Accounting
    Firm  KPMG LLP                   |  |      | F-5  | 
|Consolidated Balance Sheets                                                              |  |      | F-6  | 
|Consolidated Statements of Operations                                                    |  |      | F-7  | 
|Consolidated Statements of Cash Flows                                                    |  |      | F-8  | 
|Consolidated Statements of Stockholders Equity                                          |  |      | F-9  | 
|Consolidated Statements of Comprehensive Income (Loss)                                   |  |      | F-10 | 
|Notes to Consolidated Financial Statements                                               |  |      | F-11 | 



|       |                               
|------ | ------------------------------
|(a)(2) | Financial Statements Schedules



(a)(3) Exhibits


| |    |          |  |                                                                                                                                                                                                         
| | -- | -------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2  | .1(2)    |  | Agreement and Plan of Merger, dated as of August 2, 2003,
    by and among Ascential Software Corporation, Greek Acquisition
    Corporation and Mercator Software, Inc.                                
| | 2  | .2(14)   |  | Merger Agreement, dated as of March 12, 2002, among the
    Registrant, Venus Acquisition Corporation and Vality Technology
    Incorporated                                                            
| | 2  | .3(24)   |  | Agreement and Plan of Merger, dated as of March 13, 2005,
    among International Business Machines Corporation, Ironbridge
    Acquisition Corp., and Ascential Software Corporation                   
| | 3  | .1(3)    |  | Restated Certificate of Incorporation, as amended                                                                                                                                                       
| | 3  | .2(22)   |  | Certificate of Amendment to Restated Certificate of
    Incorporation, as amended                                                                                                                       
| | 3  | .3(4)    |  | Second Amended and Restated Bylaws of Ascential Software
    Corporation                                                                                                                                
| | 3  | .4(5)    |  | Certificate of Designation of Series B Convertible
    Preferred Stock                                                                                                                                  
| | 4  | .1(6)    |  | First Amended and Restated Rights Agreement, dated as of
    August 12, 1997, between the Registrant and BankBoston
    N.A., including the form of Rights Certificate attached thereto
    as Exhibit A
| | 4  | .2(6)    |  | Amendment, dated as of November 17, 1997, to the First
    Amended and Restated Rights Agreement between the Registrant and
    BankBoston, N.A.                                                        
| | 4  | .3(7)    |  | Amendment No. 2 to the First Amended and Restated Rights
    Agreement, dated as of April 26, 2002, between the
    Registrant and EquiServe Trust Company, N.A.                                        
| | 4  | .4(25)   |  | Amendment No. 3 to the First Amended and Restated Rights
    Agreement, dated March 13, 2005, between the Registrant and
    EquiServe Trust Company, N.A.                                              
| | 10 | .1(4)() |  | Change in Control Agreement, dated as of April 22, 2003,
    between the Registrant and Peter Gyenes                                                                                                    
| | 10 | .2(4)() |  | Change in Control Agreement, dated as of April 22, 2003,
    between the Registrant and Peter Fiore                                                                                                     
| | 10 | .3(4)() |  | Change in Control Agreement, dated as of April 22, 2003,
    between the Registrant and Scott N. Semel                                                                                                  

53



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| |    |            |  |                                                                                                                                                                                                                                                          
| | -- | ---------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10 | .4(4)()   |  | Change in Control Agreement, dated as of April 22, 2003,
    between the Registrant and Robert C. McBride                                                                                                                                                
| | 10 | .5(8)()   |  | Form of Indemnity Agreement to which the Registrant is a party
    with each of its directors and executive officers                                                                                                                                     
| | 10 | .6(9)()   |  | Part-Time Employment and Transition Agreement between the
    Registrant and Peter Gyenes                                                                                                                                                                
| | 10 | .7(10)()  |  | Offer of Employment Letter, dated July 31, 2000, between
    the Registrant and Peter Gyenes                                                                                                                                                             
| | 10 | .8(11)     |  | Settlement Agreement, effective January 11, 2000, between
    the Registrant and the Securities and Exchange Commission                                                                                                                                  
| | 10 | .9(12)()  |  | Offer of Employment Letter, dated June 13, 2001, between
    the Registrant and Robert C. McBride                                                                                                                                                        
| | 10 | .10(12)() |  | Offer of Employment Letter, effective July 25, 2001,
    between the Registrant and Scott Semel                                                                                                                                                          
| | 10 | .11(12)() |  | Form of Offer of Employment Letter for officers of the Registrant                                                                                                                                                                                        
| | 10 | .12(13)    |  | Master Purchase Agreement, dated as of April 24, 2001,
    among Informix Corporation, Informix Software, Inc. and
    International Business Machines Corporation                                                                                       
| | 10 | .13(12)    |  | Lease, dated May 3, 1994, between VMark Software, Inc. and
    50 Washington Street Associates L.P. for office space at 50
    Washington Street, Westborough, Massachusetts                                                                             
| | 10 | .14(12)    |  | Amendment of Lease, dated March 27, 1998, between Ardent
    Software, Inc. (formerly VMark Software, Inc.) and Fifty
    Washington Street Limited Partnership for office space at 50
    Washington Street, Westborough, Massachusetts                 
| | 10 | .15(12)    |  | Agreement, dated March 12, 2001, among the Registrant,
    Informix Software, Inc., Ascential Software, Inc. and Fifty
    Washington Street Limited Partnership regarding Lease for office
    space at 50 Washington Street, Westborough, Massachusetts
| | 10 | .16(15)() |  | Second Restated 1994 Stock Option and Award Plan                                                                                                                                                                                                         
| | 10 | .17(15)() |  | Second Restated 1989 Outside Directors Stock Option Plan                                                                                                                                                                                                 
| | 10 | .18(15)() |  | Second Restated 1997 Employee Stock Purchase Plan                                                                                                                                                                                                        
| | 10 | .19(15)() |  | Amended and Restated 1998 Non-Statutory Stock Option and Award
    Plan                                                                                                                                                                                  
| | 10 | .20(18)() |  | 1997 Non-Statutory Stock Option Plan                                                                                                                                                                                                                     
| | 10 | .21(20)() |  | Amendment to 1997 Non-Statutory Stock Option Plan                                                                                                                                                                                                        
| | 10 | .22(17)() |  | TSI International Software Inc. 1993 Stock Option Plan                                                                                                                                                                                                   
| | 10 | .23(17)() |  | 1996 Novera Software Inc. Stock Option Plan                                                                                                                                                                                                              
| | 10 | .24(17)() |  | Mercator Software, Inc. 1997 Equity Incentive Plan                                                                                                                                                                                                       
| | 10 | .25(21)() |  | Amended and Restated Change of Control and Severance Agreement,
    dated as of May 1, 2002, between the Registrant and Peter
    Gyenes                                                                                                                 
| | 10 | .26(21)() |  | Amended and Restated Change of Control and Severance Agreement,
    dated as of May 1, 2002, between the Registrant and Peter
    Fiore                                                                                                                  
| | 10 | .27(21)() |  | Amended and Restated Change of Control and Severance Agreement,
    dated as of March 8, 2002, between the Registrant and
    Robert C. McBride                                                                                                          
| | 10 | .28(23)() |  | Form of Stock Option Agreement pursuant to Second Restated 1994
    Stock Option and Award Plan                                                                                                                                                          
| | 10 | .29(23)() |  | Form of Nonqualified Stock Option Agreement pursuant to Second
    Restated 1989 Outside Directors Stock Option Plan                                                                                                                                     
| | 10 | .30(23)() |  | Form of Stock Option Agreement pursuant to Amended and Restated
    1998 Non-Statutory Stock Option and Award Plan                                                                                                                                       
| | 10 | .31(1)()  |  | Form of Notice of Restricted Stock Grant                                                                                                                                                                                                                 
| | 21 | .1(1)      |  | Subsidiaries of the Registrant                                                                                                                                                                                                                           
| | 23 | .1(1)      |  | Consent of PricewaterhouseCoopers LLP                                                                                                                                                                                                                    
| | 23 | .2(1)      |  | Consent of KPMG LLP                                                                                                                                                                                                                                      
| | 24 | .1         |  | Power of Attorney (set forth on signature page)                                                                                                                                                                                                          

54



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| |    |        |  |                                                                                                                                                                                                                                               
| | -- | ------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 31 | .1(1)  |  | Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange
    Act of 1934, as amended                                                                                                 
| | 31 | .2(1)  |  | Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange
    Act of 1934, as amended                                                                                                 
| | 32 | .1(1)  |  | Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                     
| | 32 | .2(1)  |  | Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                     
| | 99 | .1(16) |  | Stock Tender Agreement, dated as of August 2, 2003, by and
    among Ascential Software Corporation, Greek Acquisition
    Corporation and certain directors and executive and other
    officers of Mercator Software, Inc. set forth therein
| | 99 | .2(16) |  | Common Stock Option Agreement, dated as of August 2, 2003,
    by and among Ascential Software Corporation, Greek Acquisition
    Corporation and Mercator Software, Inc.                                                                     






| |     |                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Filed herewith.                                                                                                                                                                                                    
|
| | (2) | Incorporated by reference to exhibit filed with the
    Registrants current report on Form 8-K filed with the
    Securities and Exchange Commission (the Commission)
    on August 5, 2003 (File No. 000-15325)
|
| | (3) | Incorporated by reference to exhibit filed with the
    Registrants quarterly report on Form 10-Q filed with
    the Commission on August 14, 2003 (File No. 000-15325)                                           
|
| | (4) | Incorporated by reference to exhibit filed with the
    Registrants quarterly report on Form 10-Q filed with
    the Commission on May 15, 2003 (File No. 000-15325)                                              
|
| | (5) | Incorporated by reference to exhibit filed with the
    Registrants current report on Form 8-K filed with the
    Commission on December 4, 1997 (File No. 000-15325)                                             
|
| | (6) | Incorporated by reference to exhibit filed with the amendment to
    the Registrants registration statement on Form 8-A/ A
    filed with the Commission on September 3, 1997 (File
    No. 000-15325)            
|
| | (7) | Incorporated by reference to exhibit filed with Amendment
    No. 5 to the Registrants registration statement on
    Form 8-A/ A filed with the Commission on May 1, 2002
    (File No. 000-15325)                
|
| | (8) | Incorporated by reference to exhibit filed with the
    Registrants annual report on Form 10-K filed with the
    Commission on March 27, 2003 (File No. 000-15325)                                               
|
| | (9) | Incorporated by reference to exhibit filed with the
    Registrants quarterly report on Form 10-Q filed with
    the Commission on May 15, 2000 (File No. 000-15325)                                              



|     |                                                                                                                                                                                      
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference to exhibit filed with the
    Registrants quarterly report on Form 10-Q filed with
    the Commission on November 14, 2000 (File
    No. 000-15325)       
|    
|(11) | Incorporated by reference to exhibit filed with the
    Registrants current report on Form 8-K filed with the
    Commission on January 19, 2000 (File No. 000-15325)               
|    
|(12) | Incorporated by reference to exhibit filed with the
    Registrants annual report on Form 10-K filed with the
    Commission on April 1, 2002 (File No. 000-15325)                  
|    
|(13) | Incorporated by reference to Annex A to the
    Registrants Definitive Proxy Statement on
    Schedule 14A filed with the Commission on May 10, 2001
    (File No. 000-15325)       
|    
|(14) | Incorporated by reference to exhibit filed with the
    Registrants quarterly report on Form 10-Q filed with
    the Commission on May 15, 2002 (File No. 000-15325)                
|    
|(15) | Incorporated by reference to exhibit filed with the
    Registrants registration statement on Form S-8 filed
    with the Commission on December 5, 2003 (File
    No. 333-110970)  
|    
|(16) | Incorporated by reference to exhibit filed with the
    Registrants current report on Form 8-K filed with the
    Commission on August 5, 2003 (File No. 000-15325)                 
|    
|(17) | Incorporated by reference to exhibit filed with the
    Registrants Registration Statement on Form S-8 filed
    with the Commission on September 12, 2003 (File
    No. 333-108782)

55



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##### Table of Contents





|     |                                                                                                                                                                                                      
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(18) | Incorporated by reference to exhibit filed with the
    Registrants annual report on Form 10-K filed with the
    Commission on March 31, 1998 (File No. 000-15325)                                 
|    
|(19) | Incorporated by reference to exhibit filed with the
    Registrants current report on Form 8-K filed with the
    Commission on April 3, 2003 (File No. 000-15325)                                  
|    
|(20) | Incorporated by reference to exhibit filed with the
    Registrants annual report on Form 10-K filed with the
    Commission on March 16, 2004 (File No. 000-15325)                                 
|    
|(21) | Incorporated by reference to exhibit filed with the
    Registrants quarterly report on Form 10-Q filed with
    the Commission on August 14, 2002 (File No. 000-15325)                             
|    
|(22) | Incorporated by reference to exhibit filed with the
    Companys quarterly report on Form 10-Q filed with the
    Commission on August 9, 2004 (File No. 000-15325)                                 
|    
|(23) | Incorporated by reference to exhibit filed with the
    Companys quarterly report on Form 10-Q filed with the
    Commission on November 9, 2004 (File No. 000-15325)                               
|    
|(24) | Incorporated by reference to exhibit filed with the
    Registrants current report on Form 8-K filed with the
    Commission on March 14, 2005 (File No. 000-15325)                                 
|    
|(25) | Incorporated by reference to exhibit filed with Amendment
    No. 6 to the Registrants registration statement on
    Form 8-A/A filed with the Commission on March 14, 2005
    (File No. 000-15325)



|    |  |                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------
|() |  | Management contract or compensation plan or arrangement required
    to be filed as an exhibit pursuant to Item 15(c) of
    Form 10-K

56



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##### Table of Contents






SIGNATURES






| |                                   
| | ----------------------------------
| | Ascential Software
    Corporation



| |     |                 
| | --- | ----------------
| | By: | /s/ Peter Gyenes

| |                                   
| | ----------------------------------
| |                                   
| | Peter Gyenes                      
| | Chief Executive Officer and       
| | Chairman of the Board of Directors



POWER OF ATTORNEY


KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints Peter
Gyenes and Robert McBride and each one of them, acting
individually and without the other, as his attorney-in-fact,
each with full power of substitution, for him in any and all
capacities, to sign any and all amendments to this Annual Report
on Form 10-K and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities
and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his substitute or
substitutes may do or cause to be done by virtue hereof.


Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, this Annual Report on Form 10-K has
been signed on behalf of the Registrant and in the capacities
and on the dates indicated.


|                                                 |  |                                                                                                               |  |                |  | 
|------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                        |  | Title                                                                                                         |  | Date          
|                                                 |  |                                                                                                               |  |               
|                                                
|/s/ Peter GyenesPeter
    Gyenes                 |  | Chief Executive Officer and Chairman of the Board of Directors
    (Principal Executive Officer)              |  | March 16, 2005
|                                                
|/s/ Robert C. McBrideRobert
    C. McBride       |  | Vice President and Chief Financial Officer (Principal Financial
    Officer and Principal Accounting Officer) |  | March 16, 2005
|                                                
|/s/ Robert M. MorrillRobert
    M. Morrill       |  | Director                                                                                                      |  | March 16, 2005
|                                                
|/s/ John J. Gavin, Jr.John
    J. Gavin, Jr.     |  | Director                                                                                                      |  | March 16, 2005
|                                                
|/s/ David J. EllenbergerDavid
    J. Ellenberger |  | Director                                                                                                      |  | March 16, 2005
|                                                
|/s/ William J. WeyandWilliam
    J. Weyand       |  | Director                                                                                                      |  | March 16, 2005

57



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ASCENTIAL SOFTWARE CORPORATION


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                     
|-- | --------------------
|1. | Financial Statements

|                                                                             |  |      |      | 
|---------------------------------------------------------------------------- |  | ---- | ---- | 
|                                                                             |  | Page |     
|                                                                             |  |      |     
|Managements Report on Internal
    Control Over Financial Reporting         |  |      | F-2  | 
|Report of Registered Public Accounting
    Firm  PricewaterhouseCoopers LLP |  |      | F-3  | 
|Report of Registered Public Accounting
    Firm  KPMG LLP                   |  |      | F-5  | 
|Consolidated Balance Sheets                                                  |  |      | F-6  | 
|Consolidated Statements of Operations                                        |  |      | F-7  | 
|Consolidated Statements of Cash Flows                                        |  |      | F-8  | 
|Consolidated Statements of
    Stockholders Equity                          |  |      | F-9  | 
|Consolidated Statements of Comprehensive
    Income (Loss)                   |  |      | F-10 | 
|Notes to Consolidated Financial
    Statements                               |  |      | F-11 | 

F-1



---



##### Table of Contents






MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING




Internal Control  Integrated
Framework.




F-2



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








Consolidated Financial Statements




Internal Control Over Financial Reporting


Internal Control  Integrated Framework Internal Control  Integrated Framework




F-3



---



##### Table of Contents









| |                               
| | ------------------------------
| | /s/ PRICEWATERHOUSECOOPERS LLP





F-4



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












Goodwill and Other Intangible Assets.




| |             
| | ------------
| | /s/ KPMG LLP





F-5



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


CONSOLIDATED BALANCE SHEETS





|                                       |                                                                                                                                                                                                                              |                            |                                            |          |         |         |         |         |         |         | 
|-------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | -------- | ------- | ------- | ------- | ------- | ------- | ------- | 
|                                       |                                                                                                                                                                                                                              | December 31,               |                                           
|                                       |                                                                                                                                                                                                                              |                            |                                           
|                                       |                                                                                                                                                                                                                              | 2004                       |                                            |          | 2003    |        
|                                       |                                                                                                                                                                                                                              |                            |                                            |          |         |        
|                                       |                                                                                                                                                                                                                              | (In thousands, except      |                                           
|                                       |                                                                                                                                                                                                                              | share and per share data)  |                                           
|ASSETS                                
|Current assets                         |                                                                                                                                                                                                                              |                            |                                            |          |         |         |         |        
|                                       | Cash and cash equivalents                                                                                                                                                                                                    |                            | $                                          | 166,355  |         |         | $       | 198,668 |        
|                                       | Short-term investments                                                                                                                                                                                                       |                            |                                            | 314,351  |         |         |         | 317,581 |        
|                                       | Accounts receivable, net                                                                                                                                                                                                     |                            |                                            | 56,607   |         |         |         | 42,034  |        
|                                       | Recoverable income taxes                                                                                                                                                                                                     |                            |                                            | 3,642    |         |         |         | 1,276   |        
|                                       | Deferred income taxes                                                                                                                                                                                                        |                            |                                            | 732      |         |         |         |        |        
|                                       | Other current assets                                                                                                                                                                                                         |                            |                                            | 16,035   |         |         |         | 22,035  |        
|                                       |                                                                                                                                                                                                                              |                            |                                            |          |         |        
|                                       |                                                                                                                                                                                                                              | Total current assets       |                                            |          | 557,722 |         |         |         | 581,594 |        
|Property and equipment, net            |                                                                                                                                                                                                                              |                            | 10,009                                     |          |         |         | 11,186  |        
|Software development costs, net        |                                                                                                                                                                                                                              |                            | 16,542                                     |          |         |         | 14,794  |        
|Long-term investments                  |                                                                                                                                                                                                                              |                            | 3,314                                      |          |         |         | 2,301   |        
|Goodwill                               |                                                                                                                                                                                                                              |                            | 325,457                                    |          |         |         | 324,327 |        
|Intangible assets, net                 |                                                                                                                                                                                                                              |                            | 11,453                                     |          |         |         | 19,863  |        
|Deferred income taxes                  |                                                                                                                                                                                                                              |                            |                                           |          |         |         | 1,392   |        
|Other assets                           |                                                                                                                                                                                                                              |                            | 10,576                                     |          |         |         | 10,622  |        
|                                       |                                                                                                                                                                                                                              |                            |                                            |          |         |        
|                                       |                                                                                                                                                                                                                              | Total assets               |                                            | $        | 935,073 |         |         | $       | 966,079 |        
|                                       |                                                                                                                                                                                                                              |                            |                                            |          |         |        
|                                      
|LIABILITIES AND STOCKHOLDERS EQUITY  
|Current liabilities                    |                                                                                                                                                                                                                              |                            |                                            |          |         |         |         |        
|                                       | Accounts payable                                                                                                                                                                                                             |                            | $                                          | 10,715   |         |         | $       | 16,878  |        
|                                       | Accrued expenses                                                                                                                                                                                                             |                            |                                            | 22,474   |         |         |         | 14,433  |        
|                                       | Accrued employee compensation                                                                                                                                                                                                |                            |                                            | 21,322   |         |         |         | 24,207  |        
|                                       | Income taxes payable                                                                                                                                                                                                         |                            |                                            | 48,405   |         |         |         | 62,327  |        
|                                       | Deferred revenue                                                                                                                                                                                                             |                            |                                            | 45,295   |         |         |         | 41,106  |        
|                                       | Accrued merger, realignment and other charges                                                                                                                                                                                |                            |                                            | 32,856   |         |         |         | 46,705  |        
|                                       | Deferred income taxes                                                                                                                                                                                                        |                            |                                            |         |         |         |         | 594     |        
|                                       | Other current liabilities                                                                                                                                                                                                    |                            |                                            | 2,224    |         |         |         | 1,585   |        
|                                       |                                                                                                                                                                                                                              |                            |                                            |          |         |        
|                                       |                                                                                                                                                                                                                              | Total current liabilities  |                                            |          | 183,291 |         |         |         | 207,835 |        
|Other long term liabilities            |                                                                                                                                                                                                                              |                            | 709                                        |          |         |         | 558     |        
|                                       |                                                                                                                                                                                                                              |                            |                                            |          |         |        
|                                       |                                                                                                                                                                                                                              | Total liabilities          |                                            |          | 184,000 |         |         |         | 208,393 |        
|                                       |                                                                                                                                                                                                                              |                            |                                            |          |         |        
|Commitments and contingencies (Note 8) |                                                                                                                                                                                                                              |                            |                                            |          |         |         |         |        
|Stockholders equity                   |                                                                                                                                                                                                                              |                            |                                            |          |         |         |         |        
|                                       | Preferred stock, par value $.01 per share 
    5,000,000 shares authorized; no shares issued or
    outstanding at both December 31, 2004 and December 31,
    2003                                                         |                            |                                            |         |         |         |         |        |        
|                                       | Common stock, par value $.01 per share 
    125,000,000 shares authorized; 69,078,000 and
    68,478,000 shares issued and 58,820,000 and
    60,085,000 shares outstanding at December 31, 2004 and
    2003, respectively |                            |                                            | 691      |         |         |         | 685     |        
|                                       | Additional paid-in capital                                                                                                                                                                                                   |                            |                                            | 655,764  |         |         |         | 647,199 |        
|                                       | Treasury stock, 10,258,000 and 8,393,000 shares at
    December 31, 2004 and 2003, respectively, at cost                                                                                                                     |                            |                                            | (130,069 | )       |         |         | (98,454 | )      
|                                       | Retained earnings                                                                                                                                                                                                            |                            |                                            | 232,999  |         |         |         | 218,048 |        
|                                       | Deferred compensation                                                                                                                                                                                                        |                            |                                            | (361     | )       |         |         | (1,779  | )      
|                                       | Accumulated other comprehensive loss                                                                                                                                                                                         |                            |                                            | (7,951   | )       |         |         | (8,013  | )      
|                                       |                                                                                                                                                                                                                              |                            |                                            |          |         |        
|                                       |                                                                                                                                                                                                                              | Total stockholders equity |                                            |          | 751,073 |         |         |         | 757,686 |        
|                                       |                                                                                                                                                                                                                              |                            |                                            |          |         |        
|                                       |                                                                                                                                                                                                                              |                            | Total liabilities and stockholders equity |          | $       | 935,073 |         |         | $       | 966,079 | 
|                                       |                                                                                                                                                                                                                              |                            |                                            |          |         |        



F-6



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


CONSOLIDATED STATEMENTS OF OPERATIONS





|                                      |                                   |                                                           |         |        |         |   |         |         |         |   |         |          |         |  
|------------------------------------- | --------------------------------- | --------------------------------------------------------- | ------- | ------ | ------- | - | ------- | ------- | ------- | - | ------- | -------- | ------- | -
|                                      |                                   | Years Ended December 31,                                  |        
|                                      |                                   |                                                           |        
|                                      |                                   | 2004                                                      |         |        | 2003    |   |         | 2002    |        
|                                      |                                   |                                                           |         |        |         |   |         |         |        
|                                      |                                   | (In thousands, except per share data)                     |        
|Net revenues                          |                                   |                                                           |         |        |         |   |         |         |         |   |         |         
|                                      |                                   | Licenses                                                  |         | $      | 110,241 |   |         | $       | 92,550  |   |         | $        | 59,611  |  
|                                      |                                   | Services                                                  |         |        | 161,638 |   |         |         | 93,036  |   |         |          | 53,407  |  
|                                      |                                   |                                                           |         |        |         |   |         |         |        
|                                      |                                   |                                                           | 271,879 |        |         |   | 185,586 |         |         |   | 113,018 |         
|                                      |                                   |                                                           |         |        |         |   |         |         |        
|Costs and expenses                    |                                   |                                                           |         |        |         |   |         |         |         |   |         |         
|                                      |                                   | Cost of licenses                                          |         |        | 16,833  |   |         |         | 15,291  |   |         |          | 18,350  |  
|                                      |                                   | Cost of services                                          |         |        | 70,098  |   |         |         | 40,050  |   |         |          | 33,089  |  
|                                      |                                   | Sales and marketing                                       |         |        | 110,646 |   |         |         | 79,950  |   |         |          | 73,080  |  
|                                      |                                   | Research and development                                  |         |        | 39,259  |   |         |         | 27,515  |   |         |          | 24,044  |  
|                                      |                                   | General and administrative                                |         |        | 28,168  |   |         |         | 30,838  |   |         |          | 41,054  |  
|                                      |                                   | Write-off of acquired in-process research and development |         |        |        |   |         |         | 2,000   |   |         |          | 1,170   |  
|                                      |                                   | Merger, realignment and other charges                     |         |        | 823     |   |         |         | 3,857   |   |         |          | 23,669  |  
|                                      |                                   |                                                           |         |        |         |   |         |         |        
|                                      |                                   |                                                           | 265,827 |        |         |   | 199,501 |         |         |   | 214,456 |         
|                                      |                                   |                                                           |         |        |         |   |         |         |        
|                                      | Operating income (loss)           |                                                           |         | 6,052  |         |   |         | (13,915 | )       |   |         | (101,438 | )      
|Other income (expense)                |                                   |                                                           |         |        |         |   |         |         |         |   |         |         
|                                      |                                   | Interest income                                           |         |        | 9,124   |   |         |         | 11,129  |   |         |          | 20,194  |  
|                                      |                                   | Interest expense                                          |         |        | (169    | ) |         |         | (207    | ) |         |          | (84     | )
|                                      |                                   | Gain on sale of database business                         |         |        |        |   |         |         |        |   |         |          | 3,040   |  
|                                      |                                   | Impairment of long-term investments                       |         |        |        |   |         |         |        |   |         |          | (2,187  | )
|                                      |                                   | Other, net                                                |         |        | 1,514   |   |         |         | 2,502   |   |         |          | (929    | )
|                                      |                                   |                                                           |         |        |         |   |         |         |        
|                                      | Income (loss) before income taxes |                                                           |         | 16,521 |         |   |         | (491    | )       |   |         | (81,404  | )      
|                                      |                                   | Income tax expense (benefit)                              |         |        | 1,570   |   |         |         | (16,296 | ) |         |          | (17,831 | )
|                                      |                                   |                                                           |         |        |         |   |         |         |        
|                                      | Net income (loss)                 |                                                           | $       | 14,951 |         |   | $       | 15,805  |         |   | $       | (63,573  | )      
|                                      |                                   |                                                           |         |        |         |   |         |         |        
|Net income (loss) per common share    |                                   |                                                           |         |        |         |   |         |         |         |   |         |         
|                                      |                                   | Basic                                                     |         | $      | 0.25    |   |         | $       | 0.27    |   |         | $        | (1.03   | )
|                                      |                                   |                                                           |         |        |         |   |         |         |        
|                                      |                                   | Diluted                                                   |         | $      | 0.25    |   |         | $       | 0.26    |   |         | $        | (1.03   | )
|                                      |                                   |                                                           |         |        |         |   |         |         |        
|Shares used in per share calculations |                                   |                                                           |         |        |         |   |         |         |         |   |         |         
|                                      |                                   | Basic                                                     |         |        | 59,208  |   |         |         | 58,409  |   |         |          | 61,931  |  
|                                      |                                   |                                                           |         |        |         |   |         |         |        
|                                      |                                   | Diluted                                                   |         |        | 60,633  |   |         |         | 59,703  |   |         |          | 61,931  |  
|                                      |                                   |                                                           |         |        |         |   |         |         |        



F-7



---



##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


CONSOLIDATED STATEMENTS OF CASH FLOWS





|                                                                                                                        |                                                           |                                                                              |         |          |         |   |         |          |         |   |          |          |          |  
|----------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ---------------------------------------------------------------------------- | ------- | -------- | ------- | - | ------- | -------- | ------- | - | -------- | -------- | -------- | -
|                                                                                                                        |                                                           | Years Ended December 31,                                                     |        
|                                                                                                                        |                                                           |                                                                              |        
|                                                                                                                        |                                                           | 2004                                                                         |         |          | 2003    |   |         | 2002     |        
|                                                                                                                        |                                                           |                                                                              |         |          |         |   |         |          |        
|                                                                                                                        |                                                           | (In thousands)                                                               |        
|Cash flows from operating activities                                                                                    |                                                           |                                                                              |         |          |         |   |         |          |         |   |          |         
|Net income (loss)                                                                                                       |                                                           | $                                                                            | 14,951  |          |         | $ | 15,805  |          |         | $ | (63,573  | )       
|Adjustments to reconcile net income (loss) to cash and cash
    equivalents provided by (used in) operating activities: |                                                           |                                                                              |         |          |         |   |         |          |         |   |          |         
|                                                                                                                        | Depreciation and amortization                             |                                                                              |         | 14,327   |         |   |         | 10,008   |         |   |          | 10,013   |         
|                                                                                                                        | Amortization of capitalized software development costs    |                                                                              |         | 7,815    |         |   |         | 7,109    |         |   |          | 6,557    |         
|                                                                                                                        | Write-off of long-term investments                        |                                                                              |         |         |         |   |         |         |         |   |          | 2,188    |         
|                                                                                                                        | Write-off of capitalized software development costs       |                                                                              |         |         |         |   |         |         |         |   |          | 5,200    |         
|                                                                                                                        | Write-off of acquired in process research and development |                                                                              |         |         |         |   |         | 2,000    |         |   |          | 1,170    |         
|                                                                                                                        | Foreign currency transaction (gains) losses               |                                                                              |         | 2,940    |         |   |         | (1,242   | )       |   |          | 1,561    |         
|                                                                                                                        | Gain on sales of available for sale securities            |                                                                              |         | (387     | )       |   |         | (1,884   | )       |   |          |         |         
|                                                                                                                        | (Gain) loss on disposal of property and equipment         |                                                                              |         | (8       | )       |   |         | 49       |         |   |          | 800      |         
|                                                                                                                        | Provisions (recoveries) for losses on accounts receivable |                                                                              |         | (364     | )       |   |         | 971      |         |   |          | 2,426    |         
|                                                                                                                        | Merger, realignment and other charges                     |                                                                              |         | 823      |         |   |         | 3,857    |         |   |          | 23,669   |         
|                                                                                                                        | Gain on sale of database business                         |                                                                              |         |         |         |   |         |         |         |   |          | (3,040   | )       
|                                                                                                                        | Stock-based employee compensation                         |                                                                              |         | 907      |         |   |         | 1,045    |         |   |          | 245      |         
|Changes in operating assets and liabilities, net of impact of
    acquisitions and disposals:                           |                                                           |                                                                              |         |          |         |   |         |          |         |   |          |         
|                                                                                                                        | Accounts receivable                                       |                                                                              |         | (12,140  | )       |   |         | (2,370   | )       |   |          | 396      |         
|                                                                                                                        | Other assets                                              |                                                                              |         | (512     | )       |   |         | 3,282    |         |   |          | 7,513    |         
|                                                                                                                        | Accounts payable, accrued expenses and other liabilities  |                                                                              |         | (31,069  | )       |   |         | (51,236  | )       |   |          | (81,025  | )       
|                                                                                                                        | Deferred income taxes                                     |                                                                              |         | (2,192   | )       |   |         | (4,283   | )       |   |          | (6,252   | )       
|                                                                                                                        | Deferred revenue                                          |                                                                              |         | 2,392    |         |   |         | 2,121    |         |   |          | 1,662    |         
|                                                                                                                        |                                                           |                                                                              |         |          |         |   |         |          |        
|                                                                                                                        |                                                           | Net cash and cash equivalents used in operating activities                   |         |          | (2,517  | ) |         |          | (14,768 | ) |          |          | (90,490  | )
|                                                                                                                        |                                                           |                                                                              |         |          |         |   |         |          |        
|Cash flows from investing activities                                                                                    |                                                           |                                                                              |         |          |         |   |         |          |         |   |          |         
|Investments of excess cash:                                                                                             |                                                           |                                                                              |         |          |         |   |         |          |         |   |          |         
|                                                                                                                        | Purchases of available-for-sale securities                |                                                                              |         | (718,151 | )       |   |         | (958,091 | )       |   |          | (552,994 | )       
|                                                                                                                        | Maturities of available-for-sale securities               |                                                                              |         | 463,856  |         |   |         | 571,314  |         |   |          | 341,364  |         
|                                                                                                                        | Sales of available-for-sale securities                    |                                                                              |         | 255,621  |         |   |         | 357,013  |         |   |          | 195,965  |         
|Purchases of long term investments                                                                                      |                                                           |                                                                              | (1,125  | )        |         |   | (1,375  | )        |         |   |         |         
|Purchases of property and equipment                                                                                     |                                                           |                                                                              | (4,639  | )        |         |   | (3,549  | )        |         |   | (2,950   | )       
|Proceeds from sale of a product line and the database business                                                          |                                                           |                                                                              | 6,800   |          |         |   | 109,328 |          |         |   | 11,000   |         
|Additions to software development costs                                                                                 |                                                           |                                                                              | (9,563  | )        |         |   | (7,779  | )        |         |   | (10,962  | )       
|Business combinations, net of cash acquired                                                                             |                                                           |                                                                              | (478    | )        |         |   | (94,947 | )        |         |   | (100,473 | )       
|                                                                                                                        |                                                           |                                                                              |         |          |         |   |         |          |        
|                                                                                                                        |                                                           | Net cash and cash equivalents used in investing activities                   |         |          | (7,679  | ) |         |          | (28,086 | ) |          |          | (119,050 | )
|                                                                                                                        |                                                           |                                                                              |         |          |         |   |         |          |        
|Cash flows from financing activities                                                                                    |                                                           |                                                                              |         |          |         |   |         |          |         |   |          |         
|Proceeds from issuance of common stock, net                                                                             |                                                           |                                                                              | 6,550   |          |         |   | 27,737  |          |         |   | 2,638    |         
|Acquisition of common stock                                                                                             |                                                           |                                                                              | (31,615 | )        |         |   |        |          |         |   | (74,162  | )       
|Extinguishment of debt                                                                                                  |                                                           |                                                                              |        |          |         |   | (9,081  | )        |         |   |         |         
|Fees paid to execute one-for-four reverse stock split                                                                   |                                                           |                                                                              |        |          |         |   | (203    | )        |         |   |         |         
|Principal payments on capital leases                                                                                    |                                                           |                                                                              | (593    | )        |         |   | (389    | )        |         |   |         |         
|                                                                                                                        |                                                           |                                                                              |         |          |         |   |         |          |        
|                                                                                                                        |                                                           | Net cash and cash equivalents provided by (used in) financing
    activities |         |          | (25,658 | ) |         |          | 18,064  |   |          |          | (71,524  | )
|                                                                                                                        |                                                           |                                                                              |         |          |         |   |         |          |        
|Effect of exchange rate changes on cash and cash equivalents                                                            |                                                           |                                                                              | 3,541   |          |         |   | 6,907   |          |         |   | 8,308    |         
|                                                                                                                        |                                                           |                                                                              |         |          |         |   |         |          |        
|Decrease in cash and cash equivalents                                                                                   |                                                           |                                                                              | (32,313 | )        |         |   | (17,883 | )        |         |   | (272,756 | )       
|Cash and cash equivalents at beginning of year                                                                          |                                                           |                                                                              | 198,668 |          |         |   | 216,551 |          |         |   | 489,307  |         
|                                                                                                                        |                                                           |                                                                              |         |          |         |   |         |          |        
|Cash and cash equivalents at end of year                                                                                |                                                           | $                                                                            | 166,355 |          |         | $ | 198,668 |          |         | $ | 216,551  |         
|                                                                                                                        |                                                           |                                                                              |         |          |         |   |         |          |        





F-8



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##### Table of Contents






ASCENTIAL SOFTWARE CORPORATION


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


|                                                                                                                        |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------ | - | ---------- | - | --- | -------------- |  | - | ------------ | - | ----- | -------- | ------- | ------------- | -------- | - | -------- | ------------ |  | - | ------- | - |  | ------ | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                                                                                        |  |                |        |   |            |   |     | Retained       |  |   |              |   | Other |          |         |              
|                                                                                                                        |  | Common Stock   |        |   | Additional |   |     | Treasury Stock |  |   | Earnings     |   |       |          |         | Comprehensive |          |   |         
|                                                                                                                        |  |                |        |   | Paid-In    |   |     |                |  |   | (Accumulated |   |       | Deferred |         |               | Income   |   |          |             
|                                                                                                                        |  | Shares         |        |   | Amount     |   |     | Capital        |  |   | Shares       |   |       | Amount   |         |               | Deficit) |   |          | Compensation |  |   | (Loss)  |   |  | Totals |       
|                                                                                                                        |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |       
|                                                                                                                        |  | (In thousands) |       
|Balance at December 31, 2001                                                                                            |  |                | 65,948 |   |            | $ | 659 |                |  | $ | 598,307      |   |       |          | (1,860  | )             |          | $ | (25,464  | )            |  | $ | 265,816 |   |  | $      | (549   | ) |  | $ | (18,973 | ) |  | $ | 819,796 |  
|Net loss                                                                                                                |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   | (63,573 | ) |  |        |        |   |  |   |         |   |  |   | (63,573 | )
|Amortization of deferred compensation                                                                                   |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        | 314    |   |  |   |         |   |  |   | 314     |  
|Other comprehensive income                                                                                              |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   | 7,600   |   |  |   | 7,600   |  
|Exercise of stock options                                                                                               |  |                | 148    |   |            |   | 2   |                |  |   | 1,247        |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 1,249   |  
|Common stock issued under employee stock purchase plan                                                                  |  |                | 190    |   |            |   | 2   |                |  |   | 1,384        |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 1,386   |  
|Tax benefit from issuances under employee stock benefit plans                                                           |  |                |        |   |            |   |     |                |  |   | 586          |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 586     |  
|Stock issued to former Vality Chief Executive Officer under
    restricted stock agreement                              |  |                | 75     |   |            |   | 1   |                |  |   | 989          |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 990     |  
|Repurchase of common stock                                                                                              |  |                |        |   |            |   |     |                |  |   |              |   |       |          | (6,633  | )             |          |   | (74,162  | )            |  |   |         |   |  |        |        |   |  |   |         |   |  |   | (74,162 | )
|                                                                                                                        |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |       
|Balance at December 31, 2002                                                                                            |  |                | 66,361 |   |            | $ | 664 |                |  | $ | 602,513      |   |       |          | (8,493  | )             |          | $ | (99,626  | )            |  | $ | 202,243 |   |  | $      | (235   | ) |  | $ | (11,373 | ) |  | $ | 694,186 |  
|Net income                                                                                                              |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   | 15,805  |   |  |        |        |   |  |   |         |   |  |   | 15,805  |  
|Other comprehensive income                                                                                              |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   | 3,360   |   |  |   | 3,360   |  
|Exercise of stock options                                                                                               |  |                | 2,054  |   |            |   | 20  |                |  |   | 25,869       |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 25,889  |  
|Common stock issued under employee stock purchase plan                                                                  |  |                | 164    |   |            |   | 2   |                |  |   | 1,846        |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 1,848   |  
|Stock based compensation                                                                                                |  |                |        |   |            |   |     |                |  |   | 690          |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 690     |  
|Tax benefit from issuances under employee stock benefit plans                                                           |  |                |        |   |            |   |     |                |  |   | 1,952        |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 1,952   |  
|Adjustment associated with one-for-four reverse stock split,
    cost of execution, and repurchase of fractional shares |  |                | (1     | ) |            |   |     |                |  |   | (203         | ) |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | (203    | )
|Deferred compensation as a result of the Mercator acquisition                                                           |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        | (2,421 | ) |  |   |         |   |  |   | (2,421  | )
|Fair value of stock options exchanged in Mercator acquisition                                                           |  |                |        |   |            |   |     |                |  |   | 15,703       |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 15,703  |  
|Amortization of deferred compensation                                                                                   |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        | 827    |   |  |   |         |   |  |   | 827     |  
|Adjustment to deferred compensation as a result of employee
    terminations                                            |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        | 50     |   |  |   |         |   |  |   | 50      |  
|Retirement of treasury stock at average cost                                                                            |  |                | (100   | ) |            |   | (1  | )              |  |   | (1,171       | ) |       |          | 100     |               |          |   | 1,172    |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   |        |  
|                                                                                                                        |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |       
|Balance at December 31, 2003                                                                                            |  |                | 68,478 |   |            | $ | 685 |                |  | $ | 647,199      |   |       |          | (8,393  | )             |          | $ | (98,454  | )            |  | $ | 218,048 |   |  | $      | (1,779 | ) |  | $ | (8,013  | ) |  | $ | 757,686 |  
|Net income                                                                                                              |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   | 14,951  |   |  |        |        |   |  |   |         |   |  |   | 14,951  |  
|Other comprehensive income                                                                                              |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   | 62      |   |  |   | 62      |  
|Exercise of stock options                                                                                               |  |                | 394    |   |            |   | 4   |                |  |   | 3,712        |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 3,716   |  
|Common stock issued under employee stock purchase plan                                                                  |  |                | 206    |   |            |   | 2   |                |  |   | 2,832        |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 2,834   |  
|Tax benefit from issuances under employee stock benefit plans                                                           |  |                |        |   |            |   |     |                |  |   | 2,242        |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |        |   |  |   |         |   |  |   | 2,242   |  
|Amortization of deferred compensation                                                                                   |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        | 907    |   |  |   |         |   |  |   | 907     |  
|Adjustment to deferred compensation as a result of employee
    terminations                                            |  |                |        |   |            |   |     |                |  |   | (221         | ) |       |          |         |               |          |   |          |              |  |   |         |   |  |        | 511    |   |  |   |         |   |  |   | 290     |  
|Repurchase of common stock                                                                                              |  |                |        |   |            |   |     |                |  |   |              |   |       |          | (1,865  | )             |          |   | (31,615  | )            |  |   |         |   |  |        |        |   |  |   |         |   |  |   | (31,615 | )
|                                                                                                                        |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |       
|Balance at December 31, 2004                                                                                            |  |                | 69,078 |   |            | $ | 691 |                |  | $ | 655,764      |   |       |          | (10,258 | )             |          | $ | (130,069 | )            |  | $ | 232,999 |   |  | $      | (361   | ) |  | $ | (7,951  | ) |  | $ | 751,073 |  
|                                                                                                                        |  |                |        |   |            |   |     |                |  |   |              |   |       |          |         |               |          |   |          |              |  |   |         |   |  |        |       



F-9



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##### Table of Contents






ASCENTIAL SOFTWARE CORPORATION


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


|                                                                                                                                                                                                                                              |  |                          |        |   |      |   |        |      |  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                                                                                                                                                                                                              |  | Years Ended December 31, |       
|                                                                                                                                                                                                                                              |  |                          |       
|                                                                                                                                                                                                                                              |  | 2004                     |        |   | 2003 |   |        | 2002 | 
|                                                                                                                                                                                                                                              |  |                          |        |   |      |   |        |      | 
|                                                                                                                                                                                                                                              |  | (In thousands)           |       
|Net income (loss)                                                                                                                                                                                                                             |  | $                        | 14,951 |   |      | $ | 15,805 |      |  | $ | (63,573 | )
|                                                                                                                                                                                                                                              |  |                          |        |   |      |   |        |      | 
|Other comprehensive income (loss):                                                                                                                                                                                                            |  |                          |        |   |      |   |        |      |  |   |         |  
|Unrealized gains (losses) on available-for-sale securities, net
    of tax benefit of $197, tax benefit of $169, and tax expense of
    $1,119 for the years ended December 31, 2004, 2003 and
    2002, respectively                         |  |                          | (1,819 | ) |      |   | (253   | )    |  |   | 1,366   |  
|Reclassification adjustment for realized (gains) losses
    included in net income (loss), net of tax expense of $122, tax
    expense of $753 and tax benefit of $641 for the years ended
    December 31, 2004, 2003 and 2002, respectively |  |                          | (387   | ) |      |   | (1,131 | )    |  |   | 1,602   |  
|Change in cumulative foreign currency exchange translation
    adjustment                                                                                                                                                                     |  |                          | 2,268  |   |      |   | 4,744  |      |  |   | 4,632   |  
|                                                                                                                                                                                                                                              |  |                          |        |   |      |   |        |      | 
|Other comprehensive income                                                                                                                                                                                                                    |  |                          | 62     |   |      |   | 3,360  |      |  |   | 7,600   |  
|                                                                                                                                                                                                                                              |  |                          |        |   |      |   |        |      | 
|Comprehensive income (loss)                                                                                                                                                                                                                   |  | $                        | 15,013 |   |      | $ | 19,165 |      |  | $ | (55,973 | )
|                                                                                                                                                                                                                                              |  |                          |        |   |      |   |        |      | 



F-10



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##### Table of Contents






ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|         |                                                                          
|-------- | -------------------------------------------------------------------------
|Note 1  | Background of Business and Summary of Significant Accounting
    Policies



| |                             
| | ----------------------------
| | Organization and Operations.









| |                       
| | ----------------------
| | Basis of Presentation.

Reverse Stock Split.


Auction Rate Securities.


Use of Estimates.


F-11



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Principles of Consolidation.


Foreign Currency Translation.




Derivative Financial Instruments. Accounting for Derivative Instruments and Hedging
Activities




Revenue Recognition. Software Revenue Recognition Modification of SOP 97-2, Software
Revenue Recognition with Respect to Certain Transactions Revenue Recognition in Financial Statements


F-12



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














F-13



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












Allowance for Doubtful Accounts.


Software Development Costs. Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed


F-14



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use


Property and Equipment.


Businesses Acquired. Business Combinations




Impairment of Long-Lived Assets. Goodwill and Other Intangible
Assets


F-15



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Accounting for the Impairment or
Disposal of Long-Lived Assets


Income Taxes. Accounting for Income
Taxes


Stock-Based Compensation. Accounting for Stock-Based
Compensation  Transition and Disclosure Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees




F-16



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                        |  |         |     |   |      |  |     |      |  |  |      |   |  |      |      |   |      |  |      |   |  |  |      |  
|----------------------- |  | ------- | --- | - | ---- |  | --- | ---- |  |  | ---- | - |  | ---- | ---- | - | ---- |  | ---- | - |  |  | ---- | -
|                        |  | Options |     |   | ESPP | 
|                        |  |         |     |   |      | 
|                        |  | 2004    |     |   | 2003 |  |     | 2002 |  |  | 2004 |   |  | 2003 |      |   | 2002 | 
|                        |  |         |     |   |      |  |     |      |  |  |      |   |  |      |      |   |      | 
|Dividend rate           |  |         |    |   |      |  |    |      |  |  |     |   |  |      |     |   |      |  |     |   |  |  |     |  
|Expected life (years)   |  |         | 4.5 |   |      |  | 4.5 |      |  |  | 4.5  |   |  |      | 0.25 |   |      |  | 0.25 |   |  |  | 0.25 |  
|Expected volatility     |  |         | 78  | % |      |  | 81  | %    |  |  | 85   | % |  |      | 57   | % |      |  | 82   | % |  |  | 85   | %
|Risk-free interest rate |  |         | 3.4 | % |      |  | 3.0 | %    |  |  | 3.5  | % |  |      | 1.4  | % |      |  | 1.0  | % |  |  | 1.4  | %



|                                    |                                                                                         |                                                                                                                                             |         |       |         |   |        |       |         |   |         |       |         |  
|----------------------------------- | --------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | ------- | ----- | ------- | - | ------ | ----- | ------- | - | ------- | ----- | ------- | -
|                                    |                                                                                         | Years Ended December 31,                                                                                                                    |        
|                                    |                                                                                         |                                                                                                                                             |        
|                                    |                                                                                         | 2004                                                                                                                                        |         |       | 2003    |   |        | 2002  |        
|                                    |                                                                                         |                                                                                                                                             |         |       |         |   |        |       |        
|                                    |                                                                                         | (In thousands except for per share                                                                                                          |        
|                                    |                                                                                         | information)                                                                                                                                |        
|Net income (loss) as reported       |                                                                                         | $                                                                                                                                           | 14,951  |       |         | $ | 15,805 |       |         | $ | (63,573 | )    
|Add:                                |                                                                                         |                                                                                                                                             |         |       |         |   |        |       |         |   |         |      
|                                    | Stock based compensation recognized in net income (loss), net of
    related tax effect |                                                                                                                                             |         | 689   |         |   |        | 732   |         |   |         | 245   |        
|Deduct:                             |                                                                                         |                                                                                                                                             |         |       |         |   |        |       |         |   |         |      
|                                    |                                                                                         | Total stock-based employee compensation expense determined under
    fair value based method for all awards, net of related tax
    effects |         |       | (26,315 | ) |        |       | (22,303 | ) |         |       | (28,811 | )
|                                    |                                                                                         |                                                                                                                                             |         |       |         |   |        |       |        
|Pro forma net loss                  |                                                                                         | $                                                                                                                                           | (10,675 | )     |         | $ | (5,766 | )     |         | $ | (92,139 | )    
|                                    |                                                                                         |                                                                                                                                             |         |       |         |   |        |       |        
|Net income (loss) per common share: |                                                                                         |                                                                                                                                             |         |       |         |   |        |       |         |   |         |      
|                                    | Basic, as reported                                                                      |                                                                                                                                             | $       | 0.25  |         |   | $      | 0.27  |         |   | $       | (1.03 | )      
|                                    | Basic, pro forma                                                                        |                                                                                                                                             | $       | (0.18 | )       |   | $      | (0.10 | )       |   | $       | (1.49 | )      
|                                    | Diluted, as reported                                                                    |                                                                                                                                             | $       | 0.25  |         |   | $      | 0.26  |         |   | $       | (1.03 | )      
|                                    | Diluted, pro forma                                                                      |                                                                                                                                             | $       | (0.18 | )       |   | $      | (0.10 | )       |   | $       | (1.49 | )      



F-17



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Concentration of Credit Risk.


Cash, Cash Equivalents, Short-Term Investments, and Long-Term
Investments.








F-18



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Fair Value of Financial Instruments.


Reclassifications.


Supplemental Cash Flow Data.






| |                               
| | ------------------------------
| | New Accounting Pronouncements.

Accounting for Stock-Based
Compensation Accounting for Stock Issued to Employees. Stock-Based
Compensation


Accounting and Disclosure Guidance for the Foreign
Earnings Repatriation Provision within the American Jobs
Creation Act of 2004 Accounting for Income Taxes


The
Meaning of Other-Than-Temporary Impairment and Its Application
to Certain Investments


F-19



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                         
|-------- | ------------------------
|Note 2  | Balance Sheet Components

|                                      |                                                            |                |        |         |      |   |        |         |  
|------------------------------------- | ---------------------------------------------------------- | -------------- | ------ | ------- | ---- | - | ------ | ------- | -
|                                      |                                                            | December 31,   |       
|                                      |                                                            |                |       
|                                      |                                                            | 2004           |        |         | 2003 |  
|                                      |                                                            |                |        |         |      |  
|                                      |                                                            | (In thousands) |       
|Accounts receivable, net:             |                                                            |                |        |         |      |   |        |        
|                                      | Receivables                                                |                | $      | 59,863  |      |   | $      | 46,751  |  
|                                      | Less: allowance for doubtful accounts                      |                |        | (3,256  | )    |   |        | (4,717  | )
|                                      |                                                            |                |        |         |      |  
|                                      |                                                            | $              | 56,607 |         |      | $ | 42,034 |        
|                                      |                                                            |                |        |         |      |  
|Property and equipment, net:          |                                                            |                |        |         |      |   |        |        
|                                      | Computer equipment                                         |                | $      | 25,408  |      |   | $      | 23,120  |  
|                                      | Furniture and fixtures                                     |                |        | 6,993   |      |   |        | 8,037   |  
|                                      | Assets under capital leases                                |                |        | 2,916   |      |   |        | 3,410   |  
|                                      | Leasehold improvements                                     |                |        | 7,562   |      |   |        | 7,801   |  
|                                      |                                                            |                |        |         |      |  
|                                      |                                                            |                | 42,879 |         |      |   | 42,368 |        
|                                      | Less: accumulated depreciation                             |                |        | (30,849 | )    |   |        | (29,485 | )
|                                      | Less: accumulated amortization on capital leases           |                |        | (2,021  | )    |   |        | (1,697  | )
|                                      |                                                            |                |        |         |      |  
|                                      |                                                            | $              | 10,009 |         |      | $ | 11,186 |        
|                                      |                                                            |                |        |         |      |  
|Software development costs, net:      |                                                            |                |        |         |      |   |        |        
|                                      | Capitalized software development costs                     |                | $      | 47,258  |      |   | $      | 37,695  |  
|                                      | Less: accumulated amortization                             |                |        | (30,716 | )    |   |        | (22,901 | )
|                                      |                                                            |                |        |         |      |  
|                                      |                                                            | $              | 16,542 |         |      | $ | 14,794 |        
|                                      |                                                            |                |        |         |      |  
|Accumulated other comprehensive loss: |                                                            |                |        |         |      |   |        |        
|                                      | Cumulative foreign exchange translation adjustment         |                | $      | (6,040  | )    |   | $      | (8,308  | )
|                                      | Unrealized gains (losses) on available-for-sale securities |                |        | (1,911  | )    |   |        | 295     |  
|                                      |                                                            |                |        |         |      |  
|                                      |                                                            | $              | (7,951 | )       |      | $ | (8,013 | )      
|                                      |                                                            |                |        |         |      |  

Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities




F-20



---



##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                             |  |                |       |  |            |   |       |            |  |   |            |  |  |         |        |   |         |   |       |   |  |   |       | 
|---------------------------- |  | -------------- | ----- |  | ---------- | - | ----- | ---------- |  | - | ---------- |  |  | ------- | ------ | - | ------- | - | ----- | - |  | - | ----- | 
|                             |  | Balance at     |       |  | Charged to |   |       |            |  |   |            |  |  | Balance |       
|                             |  | Beginning      |       |  | Costs and  |   |       | Charged to |  |   |            |  |  |         | at End |  
|                             |  | of Year        |       |  | Expenses   |   |       | Revenues   |  |   | Write Offs |  |  | Other   |        |   | of Year |  
|                             |  |                |       |  |            |   |       |            |  |   |            |  |  |         |        |   |         |  
|                             |  | (In thousands) |      
|Year ended December 31, 2004 |  | $              | 4,717 |  |            | $ | (364  | )          |  | $ | 304        |  |  | $       | (1,320 | ) |         | $ | (81   | ) |  | $ | 3,256 | 
|Year ended December 31, 2003 |  | $              | 3,758 |  |            | $ | 971   |            |  | $ |           |  |  | $       | (1,948 | ) |         | $ | 1,936 |   |  | $ | 4,717 | 
|Year ended December 31, 2002 |  | $              | 8,451 |  |            | $ | 2,426 |            |  | $ | 47         |  |  | $       | (7,166 | ) |         | $ |      |   |  | $ | 3,758 | 



|         |                      
|-------- | ---------------------
|Note 3  | Financial Instruments



|                                                        |  |      |         |                    |       |   |            |        |  |           |            |   |  |   |         | 
|------------------------------------------------------- |  | ---- | ------- | ------------------ | ----- | - | ---------- | ------ |  | --------- | ---------- | - |  | - | ------- | 
|                                                        |  |      |         | Available-for-Sale |       |   |           
|                                                        |  |      |         | Securities         |       |   |           
|                                                        |  |      |         |                    |       |   |           
|                                                        |  |      |         | Gross              |       |   | Gross      |        |  |          
|                                                        |  |      |         | Unrealized         |       |   | Unrealized |        |  | Estimated |           
|                                                        |  | Cost |         |                    | Gains |   |            | Losses |  |           | Fair Value |  
|                                                        |  |      |         |                    |       |   |            |        |  |           |            |  
|                                                        |  |      |         | (In thousands)     |       |   |           
|December 31, 2004                                       |  |      |         |                    |       |   |            |        |  |           |            |   |  |   |         | 
|U.S. treasury securities                                |  | $    | 41,252  |                    |       | $ |           |        |  | $         | (391       | ) |  | $ | 40,861  | 
|Euro dollar Time Deposit                                |  |      | 2,352   |                    |       |   |           |        |  |           |           |   |  |   | 2,352   | 
|Commercial paper, corporate bonds and medium-term notes |  |      | 190,746 |                    |       |   | 63         |        |  |           | (910       | ) |  |   | 189,899 | 
|U.S. government agency bonds                            |  |      | 165,622 |                    |       |   | 4          |        |  |           | (677       | ) |  |   | 164,949 | 
|Money Market Funds                                      |  |      | 3,007   |                    |       |   |           |        |  |           |           |   |  |   | 3,007   | 
|Marketable equity securities                            |  |      | 63      |                    |       |   |           |        |  |           |           |   |  |   | 63      | 
|                                                        |  |      |         |                    |       |   |            |        |  |           |            |  
|                                                        |  | $    | 403,042 |                    |       | $ | 67         |        |  | $         | (1,978     | ) |  | $ | 401,131 | 
|                                                        |  |      |         |                    |       |   |            |        |  |           |            |  
|Amounts included in cash and cash equivalents           |  |      | 86,655  |                    |       |   | 63         |        |  |           | (1         | ) |  |   | 86,717  | 
|Amounts included in short-term investments              |  |      | 316,324 |                    |       |   | 4          |        |  |           | (1,977     | ) |  |   | 314,351 | 
|Amounts included in long-term investments               |  |      | 63      |                    |       |   |           |        |  |           |            |   |  |   | 63      | 
|                                                        |  |      |         |                    |       |   |            |        |  |           |            |  
|                                                        |  | $    | 403,042 |                    |       | $ | 67         |        |  | $         | (1,978     | ) |  | $ | 401,131 | 
|                                                        |  |      |         |                    |       |   |            |        |  |           |            |  

F-21



---



##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                        |  |      |         |                    |       |   |            |        |  |           |            |   |  |   |         | 
|------------------------------------------------------- |  | ---- | ------- | ------------------ | ----- | - | ---------- | ------ |  | --------- | ---------- | - |  | - | ------- | 
|                                                        |  |      |         | Available-for-Sale |       |   |           
|                                                        |  |      |         | Securities         |       |   |           
|                                                        |  |      |         |                    |       |   |           
|                                                        |  |      |         | Gross              |       |   | Gross      |        |  |          
|                                                        |  |      |         | Unrealized         |       |   | Unrealized |        |  | Estimated |           
|                                                        |  | Cost |         |                    | Gains |   |            | Losses |  |           | Fair Value |  
|                                                        |  |      |         |                    |       |   |            |        |  |           |            |  
|                                                        |  |      |         | (In thousands)     |       |   |           
|December 31, 2003                                       |  |      |         |                    |       |   |            |        |  |           |            |   |  |   |         | 
|U.S. treasury securities                                |  | $    | 31,958  |                    |       | $ | 10         |        |  | $         | (175       | ) |  | $ | 31,793  | 
|Money market mutual funds                               |  |      | 75,241  |                    |       |   |           |        |  |           |           |   |  |   | 75,241  | 
|Commercial paper, corporate bonds and medium-term notes |  |      | 162,070 |                    |       |   | 674        |        |  |           |           |   |  |   | 162,744 | 
|U.S. government agency bonds                            |  |      | 138,796 |                    |       |   | 25         |        |  |           | (122       | ) |  |   | 138,699 | 
|Euro dollar time deposits                               |  |      | 2,593   |                    |       |   |           |        |  |           |           |   |  |   | 2,593   | 
|Marketable equity securities                            |  |      | 97      |                    |       |   | 79         |        |  |           |           |   |  |   | 176     | 
|                                                        |  |      |         |                    |       |   |            |        |  |           |            |  
|                                                        |  | $    | 410,755 |                    |       | $ | 788        |        |  | $         | (297       | ) |  | $ | 411,246 | 
|                                                        |  |      |         |                    |       |   |            |        |  |           |            |  
|Amounts included in cash and cash equivalents           |  | $    | 93,489  |                    |       | $ |           |        |  | $         |           |   |  | $ | 93,489  | 
|Amounts included in short-term investments              |  |      | 317,169 |                    |       |   | 709        |        |  |           | (297       | ) |  |   | 317,581 | 
|Amounts included in long-term investments               |  |      | 97      |                    |       |   | 79         |        |  |           |           |   |  |   | 176     | 
|                                                        |  |      |         |                    |       |   |            |        |  |           |            |  
|                                                        |  | $    | 410,755 |                    |       | $ | 788        |        |  | $         | (297       | ) |  | $ | 411,246 | 
|                                                        |  |      |         |                    |       |   |            |        |  |           |            |  



|                                         |  |   |         | 
|---------------------------------------- |  | - | ------- | 
|Mature in one year or less               |  | $ | 137,360 | 
|Mature after one year through five years |  |   | 263,771 | 
|                                         |  |   |        
|                                         |  | $ | 401,131 | 



|         |                                 
|-------- | --------------------------------
|Note 4  | Derivative Financial Instruments





F-22



---



##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                 |                                           |                |        |        | 
|------------------------------------------------ | ----------------------------------------- | -------------- | ------ | ------ | 
|                                                 |                                           | Contract       |       
|                                                 |                                           | Amount         |       
|                                                 |                                           |                |       
|                                                 |                                           | (In thousands) |       
|At December 31, 2004                             |                                           |                |        |       
|Forward currency to be sold under contract:      |                                           |                |        |       
|                                                 | Swiss Franc                               |                | $      | 4,374  | 
|                                                 | Euro                                      |                |        | 3,874  | 
|                                                 | Korean Won                                |                |        | 2,107  | 
|                                                 | Norwegian Krone                           |                |        | 1,984  | 
|                                                 | Czech Koruna                              |                |        | 1,984  | 
|                                                 | Singapore Dollar                          |                |        | 1,651  | 
|                                                 | Brazilian Real                            |                |        | 1,399  | 
|                                                 |                                           |                |       
|                                                 |                                           |                | 17,373 |       
|                                                 |                                           |                |       
|Forward currency to be purchased under contract: |                                           |                |        |       
|                                                 | British Pound                             |                |        | 39,252 | 
|                                                 | Other (individually less than $1 million) |                |        | 1,814  | 
|                                                 |                                           |                |       
|                                                 |                                           |                | 41,066 |       
|                                                 |                                           |                |       
|Total                                            |                                           | $              | 58,439 |       
|                                                 |                                           |                |       
|At December 31, 2003                             |                                           |                |        |       
|Forward currency to be sold under contract:      |                                           |                |        |       
|                                                 | Swiss Franc                               |                | $      | 3,603  | 
|                                                 | Singapore Dollar                          |                |        | 2,059  | 
|                                                 | Korean Won                                |                |        | 2,052  | 
|                                                 | Norwegian Krone                           |                |        | 1,697  | 
|                                                 | Brazilian Real                            |                |        | 1,662  | 
|                                                 | Australian Dollar                         |                |        | 1,412  | 
|                                                 | Slovak Koruna                             |                |        | 1,244  | 
|                                                 | Other (individually less than $1 million) |                |        | 2,101  | 
|                                                 |                                           |                |       
|                                                 |                                           |                | 15,830 |       
|                                                 |                                           |                |       
|Forward currency to be purchased under contract: |                                           |                |        |       
|                                                 | British Pound                             |                |        | 44,056 | 
|                                                 | Euro                                      |                |        | 1,740  | 
|                                                 | Other (individually less than $1 million) |                |        | 2,571  | 
|                                                 |                                           |                |       
|                                                 |                                           |                | 48,367 |       
|                                                 |                                           |                |       
|Total                                            |                                           | $              | 64,197 |       
|                                                 |                                           |                |       



F-23



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|         |                     
|-------- | --------------------
|Note 5  | Stockholders Equity



| |                
| | ---------------
| | Preferred Stock





| |             
| | ------------
| | Common Stock





| |         
| | --------
| | Warrants



F-24



---



##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                                   
|-------- | ----------------------------------
|Note 6  | Net Income (Loss) Per Common Share



|                                           |                                                                                                                               |                                       |      |        |       |   |      |        |       |   |       |         |   | 
|------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | ---- | ------ | ----- | - | ---- | ------ | ----- | - | ----- | ------- | - | 
|                                           |                                                                                                                               | 2004                                  |      |        | 2003  |   |      | 2002   |      
|                                           |                                                                                                                               |                                       |      |        |       |   |      |        |      
|                                           |                                                                                                                               | (In thousands, except per share data) |     
|Numerator:                                 |                                                                                                                               |                                       |      |        |       |   |      |        |       |   |       |        
|                                           | Net income (loss)                                                                                                             |                                       | $    | 14,951 |       |   | $    | 15,805 |       |   | $     | (63,573 | )
|                                           |                                                                                                                               |                                       |      |        |       |   |      |        |      
|Denominator:                               |                                                                                                                               |                                       |      |        |       |   |      |        |       |   |       |        
|                                           | Denominator for basic net income (loss) per common
    share  Weighted-average shares outstanding                            |                                       |      | 59,208 |       |   |      | 58,409 |       |   |       | 61,931  |  
|                                           | Effect of dilutive securities:                                                                                                |                                       |      |        |       |   |      |        |       |   |       |         |  
|                                           |                                                                                                                               | Employee stock options                |      |        | 1,425 |   |      |        | 1,294 |   |       |         |  | 
|                                           |                                                                                                                               |                                       |      |        |       |   |      |        |      
|                                           | Denominator for diluted net income (loss) per common
    share  adjusted weighted-average shares and assumed
    conversions |                                       |      | 60,633 |       |   |      | 59,703 |       |   |       | 61,931  |  
|                                           |                                                                                                                               |                                       |      |        |       |   |      |        |      
|Basic net income (loss) per common share   |                                                                                                                               | $                                     | 0.25 |        |       | $ | 0.27 |        |       | $ | (1.03 | )      
|                                           |                                                                                                                               |                                       |      |        |       |   |      |        |      
|Diluted net income (loss) per common share |                                                                                                                               | $                                     | 0.25 |        |       | $ | 0.26 |        |       | $ | (1.03 | )      
|                                           |                                                                                                                               |                                       |      |        |       |   |      |        |      





|                                 |                          |              |   |                |      |  |   |               |  |  |   |               | 
|-------------------------------- | ------------------------ | ------------ | - | -------------- | ---- |  | - | ------------- |  |  | - | ------------- | 
|                                 |                          | December 31, |  
|                                 |                          |              |  
|                                 |                          | 2004         |   |                | 2003 |  |   | 2002          | 
|                                 |                          |              |   |                |      |  |   |               | 
|                                 |                          |              |   | (In thousands) |      |  |  
|Potentially dilutive securities: |                          |              |   |                |      |  |   |               |  |  |   |              
|                                 | Stock options            |              |   | 5,774          |      |  |   | 3,744         |  |  |   | 7,200         | 
|                                 | Range of exercise prices |              | $ | 17.14-$233.29  |      |  | $ | 16.76-$341.58 |  |  | $ | 0.20-$89.00   | 
|                                 | Expiring through         |              |   | April 2014     |      |  |   | December 2013 |  |  |   | December 2012 | 
|                                
|                                 | Warrants                 |              |   | 108            |      |  |   | 185           |  |  |   |              | 
|                                 | Range of exercise prices |              | $ | 40.00-$50.03   |      |  | $ | 22.28-$50.03  |  |  |   |              | 
|                                 | Expiring through         |              |   | December 2008  |      |  |   | December 2008 |  |  |   |              | 



F-25



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                       
|-------- | ----------------------
|Note 7  | Employee Benefit Plans



| |             
| | ------------
| | Option Plans











F-26



---



##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                 |  |           |            |          |                |   |       | 
|-------------------------------- |  | --------- | ---------- | -------- | -------------- | - | ----- | 
|                                 |  |           |            | Weighted |               
|                                 |  | Number of |            |          | Average        |  
|                                 |  | Shares    |            |          | Exercise Price |  
|                                 |  |           |            |          |                |  
|Outstanding at December 31, 2001 |  |           | 10,532,038 |          |                | $ | 22.64 | 
|Options granted                  |  |           | 2,392,498  |          |                |   | 11.08 | 
|Options exercised                |  |           | (147,670   | )        |                |   | 8.40  | 
|Options canceled                 |  |           | (5,576,872 | )        |                |   | 24.72 | 
|                                 |  |           |            |          |                |  
|Outstanding at December 31, 2002 |  |           | 7,199,994  |          |                |   | 17.48 | 
|Options assumed                  |  |           | 1,832,760  |          |                |   | 23.34 | 
|Options granted                  |  |           | 1,963,943  |          |                |   | 16.65 | 
|Options exercised                |  |           | (2,054,193 | )        |                |   | 12.60 | 
|Options canceled                 |  |           | (645,109   | )        |                |   | 26.65 | 
|                                 |  |           |            |          |                |  
|Outstanding at December 31, 2003 |  |           | 8,297,395  |          |                |   | 19.07 | 
|Options granted                  |  |           | 4,777,183  |          |                |   | 21.65 | 
|Options exercised                |  |           | (373,821   | )        |                |   | 9.93  | 
|Options canceled                 |  |           | (1,051,499 | )        |                |   | 28.76 | 
|                                 |  |           |            |          |                |  
|Outstanding at December 31, 2004 |  |           | 11,649,258 |          |                |   | 19.55 | 
|                                 |  |           |            |          |                |  



|                         |  |                     |            |  |                     |  |      |          |  |        |              |  |  |          |           |  |  |   |        | 
|------------------------ |  | ------------------- | ---------- |  | ------------------- |  | ---- | -------- |  | ------ | ------------ |  |  | -------- | --------- |  |  | - | ------ | 
|                         |  | Options Outstanding |            |  | Options Exercisable | 
|                         |  |                     |            |  |                     | 
|                         |  | Number              |            |  | Weighted            |  |      |          |  | Number |              |  | 
|                         |  | Outstanding         |            |  | Average             |  |      | Weighted |  |        | Exercisable  |  |  | Weighted |          
|                         |  | as of               |            |  | Remaining           |  |      | Average  |  |        | as of        |  |  | Average  |          
|                         |  | December 31,        |            |  | Contractual         |  |      | Exercise |  |        | December 31, |  |  | Exercise |          
|Range of Exercise Prices |  | 2004                |            |  | Life                |  |      | Price    |  |        | 2004         |  |  | Price    |          
|                         |  |                     |            |  |                     |  |      |          |  |        |              |  |  |          |          
|$0.19 to $2.18           |  |                     | 11,272     |  |                     |  | 2.53 |          |  | $      | 0.21         |  |  |          | 11,272    |  |  | $ | 0.21   | 
|$3.23 to $4.62           |  |                     | 19,322     |  |                     |  | 5.48 |          |  |        | 4.53         |  |  |          | 18,283    |  |  |   | 4.53   | 
|$5.24 to $7.74           |  |                     | 284,351    |  |                     |  | 6.99 |          |  |        | 6.42         |  |  |          | 196,842   |  |  |   | 6.44   | 
|$7.91 to $11.64          |  |                     | 2,042,015  |  |                     |  | 6.94 |          |  |        | 10.39        |  |  |          | 1,115,659 |  |  |   | 10.47  | 
|$11.88 to $17.48         |  |                     | 3,701,303  |  |                     |  | 8.35 |          |  |        | 15.12        |  |  |          | 1,218,833 |  |  |   | 15.20  | 
|$18.00 to $27.88         |  |                     | 5,078,356  |  |                     |  | 7.74 |          |  |        | 23.60        |  |  |          | 1,973,995 |  |  |   | 20.41  | 
|$28.21 to $38.17         |  |                     | 216,207    |  |                     |  | 4.76 |          |  |        | 34.48        |  |  |          | 216,039   |  |  |   | 34.49  | 
|$42.25 to $57.86         |  |                     | 148,350    |  |                     |  | 6.27 |          |  |        | 50.38        |  |  |          | 148,327   |  |  |   | 50.38  | 
|$67.03 to $95.23         |  |                     | 114,299    |  |                     |  | 5.32 |          |  |        | 69.88        |  |  |          | 114,299   |  |  |   | 69.88  | 
|$115.60 to $169.92       |  |                     | 15,834     |  |                     |  | 4.58 |          |  |        | 119.77       |  |  |          | 15,834    |  |  |   | 119.77 | 
|$217.62 to $233.29       |  |                     | 17,949     |  |                     |  | 5.39 |          |  |        | 221.54       |  |  |          | 17,949    |  |  |   | 221.54 | 
|                         |  |                     |            |  |                     |  |      |          |  |        |              |  |  |          |          
|Total                    |  |                     | 11,649,258 |  |                     |  | 7.66 |          |  | $      | 19.55        |  |  |          | 5,047,332 |  |  | $ | 19.94  | 
|                         |  |                     |            |  |                     |  |      |          |  |        |              |  |  |          |          



F-27



---



##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                        
| | -----------------------
| | Restricted Stock Awards





| |            
| | -----------
| | 401(k) Plan





| |                       
| | ----------------------
| | Other Retirement Plans



Accounting for Purchases of Life Insurance.


F-28



---



##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|         |                              
|-------- | -----------------------------
|Note 8  | Commitments and Contingencies

Operating and Capital Leases.




|                        |                                      |                  |        |       |                |   |     |    | 
|----------------------- | ------------------------------------ | ---------------- | ------ | ----- | -------------- | - | --- | -- | 
|Year Ending December 31 |                                      | Operating Leases |        |       | Capital Leases |  
|                        |                                      |                  |        |       |                |  
|2005                    |                                      |                  | 19,373 |       |                | $ | 504 |   
|2006                    |                                      |                  | 15,706 |       |                |   | 143 |   
|2007                    |                                      |                  | 13,086 |       |                |   |    |   
|2008                    |                                      |                  | 10,386 |       |                |   |    |   
|2009                    |                                      |                  | 5,835  |       |                |   |    |   
|Thereafter              |                                      |                  | 23,375 |       |                |   |    |   
|                        |                                      |                  |        |       |                |  
|Total payments          |                                      |                  | 87,761 |       |                |   | 647 |   
|                        | Less: Non-cancelable sublease income |                  |        | 3,699 |                |   |     |   | 
|                        | Less: Amount representing interest   |                  |        |      |                |   |     | 81 | 
|                        |                                      |                  |        |       |                |  
|Total payments, net     |                                      |                  | 84,062 |       |                | $ | 566 |   
|                        |                                      |                  |        |       |                |  



Guarantees. Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, an interpretation of FASB
Statements No. 5, 57, and 107 and rescission of FASB
Interpretation No. 34.




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ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














F-30



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Litigation.




|         |                  
|-------- | -----------------
|Note 9  | Business Segments



|     |                                                   |           |   |         |          |  |   |         |   |  |   |          |  
|---- | ------------------------------------------------- | --------- | - | ------- | -------- |  | - | ------- | - |  | - | -------- | -
|     |                                                   | Ascential |   |         | Informix |  |   |        
|     |                                                   | Software  |   |         | Software |  |   | Total   |  
|     |                                                   |           |   |         |          |  |   |         |  
|2004 |                                                   |           |   |         |          |  |   |         |   |  |   |         
|     | Net revenues from unaffiliated customers          |           | $ | 271,879 |          |  | $ |        |   |  | $ | 271,879  |  
|     | Operating income (loss)                           |           |   | 6,912   |          |  |   | (860    | ) |  |   | 6,052    |  
|     | Income (loss) before income taxes                 |           |   | 16,743  |          |  |   | (222    | ) |  |   | 16,521   |  
|     | Depreciation and amortization                     |           |   | 14,327  |          |  |   |        |   |  |   | 14,327   |  
|     | Identifiable tangible assets at December 31, 2004 |           |   | 581,621 |          |  |   |        |   |  |   | 581,621  |  
|     | Capital expenditures                              |           |   | 4,639   |          |  |   |        |   |  |   | 4,639    |  
|2003 |                                                   |           |   |         |          |  |   |         |   |  |   |         
|     | Net revenues from unaffiliated customers          |           | $ | 185,586 |          |  | $ |        |   |  | $ | 185,586  |  
|     | Operating loss                                    |           |   | (8,815  | )        |  |   | (5,100  | ) |  |   | (13,915  | )
|     | Income (loss) before income taxes                 |           |   | 2,620   |          |  |   | (3,111  | ) |  |   | (491     | )
|     | Depreciation and amortization                     |           |   | 10,008  |          |  |   |        |   |  |   | 10,008   |  
|     | Identifiable tangible assets at December 31, 2003 |           |   | 607,095 |          |  |   |        |   |  |   | 607,095  |  
|     | Capital expenditures                              |           |   | 3,549   |          |  |   |        |   |  |   | 3,549    |  
|2002 |                                                   |           |   |         |          |  |   |         |   |  |   |         
|     | Net revenues from unaffiliated customers          |           | $ | 113,018 |          |  | $ |        |   |  | $ | 113,018  |  
|     | Operating loss                                    |           |   | (78,522 | )        |  |   | (22,916 | ) |  |   | (101,438 | )
|     | Loss before income taxes                          |           |   | (64,032 | )        |  |   | (17,372 | ) |  |   | (81,404  | )
|     | Depreciation and amortization                     |           |   | 10,013  |          |  |   |        |   |  |   | 10,013   |  
|     | Identifiable tangible assets at December 31, 2002 |           |   | 718,386 |          |  |   |        |   |  |   | 718,386  |  
|     | Capital expenditures                              |           |   | 2,950   |          |  |   |        |   |  |   | 2,950    |  

F-31



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                 |               |                     |        |        |        |   |        |        |        | 
|-------------------------------- | ------------- | ------------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                 |               | December 31,        |       
|                                 |               |                     |       
|                                 |               | 2004                |        |        | 2003   |  
|                                 |               |                     |        |        |        |  
|                                 |               | (In thousands)      |       
|Tangible long-lived assets:      |               |                     |        |        |        |   |        |       
|North America                    |               |                     |        |        |        |   |        |       
|                                 | United States |                     | $      | 20,609 |        |   | $      | 20,952 |       
|                                 | Other         |                     |        | 21     |        |   |        | 16     |       
|                                 |               |                     |        |        |        |  
|                                 |               | North America Total |        |        | 20,630 |   |        |        | 20,968 | 
|Europe                           |               |                     | 1,597  |        |        |   | 1,993  |       
|Asia/ Pacific                    |               |                     | 1,672  |        |        |   | 1,148  |       
|                                 |               |                     |        |        |        |  
|Total tangible long-lived assets |               | $                   | 23,899 |        |        | $ | 24,109 |       
|                                 |               |                     |        |        |        |  

|                                          |                     |                          |         |         |      |   |         |         |  |   |         |        | 
|----------------------------------------- | ------------------- | ------------------------ | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------ | 
|                                          |                     | Years Ended December 31, |        
|                                          |                     |                          |        
|                                          |                     | 2004                     |         |         | 2003 |   |         | 2002    | 
|                                          |                     |                          |         |         |      |   |         |         | 
|                                          |                     | (In thousands)           |        
|Revenue from unaffiliated customers(1)    |                     |                          |         |         |      |   |         |         |  |   |         |       
|North America                             |                     |                          |         |         |      |   |         |         |  |   |         |       
|                                          | United States       |                          | $       | 127,945 |      |   | $       | 99,842  |  |   | $       | 60,801 | 
|                                          | Other               |                          |         | 9,091   |      |   |         | 1,675   |  |   |         | 1,050  | 
|                                          |                     |                          |         |         |      |   |         |         | 
|                                          | North America Total |                          |         | 137,036 |      |   |         | 101,517 |  |   |         | 61,851 | 
|Europe                                    |                     |                          | 106,594 |         |      |   | 65,272  |         |  |   | 33,908  |       
|Asia/ Pacific                             |                     |                          | 28,249  |         |      |   | 18,797  |         |  |   | 13,520  |       
|Latin America(2)                          |                     |                          |        |         |      |   |        |         |  |   | 3,739   |       
|                                          |                     |                          |         |         |      |   |         |         | 
|Total revenue from unaffiliated customers |                     | $                        | 271,879 |         |      | $ | 185,586 |         |  | $ | 113,018 |       
|                                          |                     |                          |         |         |      |   |         |         | 






|    |                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For those customer contracts entered into by the United States,
    the Company allocates revenue to the geographic territories
    where the license is installed or the service is delivered.    
|   
|(2) | In late 2002, the Company closed its operations in Latin
    America. During 2003 and 2004, all Latin sales activity was
    managed by sales professionals in North America through
    resellers.



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|          |             
|--------- | ------------
|Note 10  | Income Taxes



|                                                                                                    |         |                          |        |        |      |   |         |         |   |   |         |         |  
|--------------------------------------------------------------------------------------------------- | ------- | ------------------------ | ------ | ------ | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                                    |         | Years Ended December 31, |       
|                                                                                                    |         |                          |       
|                                                                                                    |         | 2004                     |        |        | 2003 |   |         | 2002    |  
|                                                                                                    |         |                          |        |        |      |   |         |         |  
|                                                                                                    |         | (In thousands)           |       
|Currently payable (receivable):                                                                     |         |                          |        |        |      |   |         |         |   |   |         |        
|                                                                                                    | Federal |                          | $      | (58    | )    |   | $       | (18,965 | ) |   | $       | (13,656 | )
|                                                                                                    | State   |                          |        | (814   | )    |   |         | 2,200   |   |   |         | 120     |  
|                                                                                                    | Foreign |                          |        | 828    |      |   |         | 1,860   |   |   |         | 1,341   |  
|                                                                                                    |         |                          |        |        |      |   |         |         |  
|                                                                                                    |         |                          | (44    | )      |      |   | (14,905 | )       |   |   | (12,195 | )      
|                                                                                                    |         |                          |        |        |      |   |         |         |  
|Reduction in goodwill for the tax benefit from utilization of
    acquired companys tax attributes |         |                          | 1,028  |        |      |   | 990     |         |   |   | 30      |        
|                                                                                                    |         |                          |        |        |      |   |         |         |  
|Charge equivalent to the federal and state tax benefit related
    to employee stock options        |         |                          | 2,778  |        |      |   | 1,952   |         |   |   | 586     |        
|                                                                                                    |         |                          |        |        |      |   |         |         |  
|Deferred:                                                                                           |         |                          |        |        |      |   |         |         |   |   |         |        
|                                                                                                    | Federal |                          |        | (1,770 | )    |   |         | (3,500  | ) |   |         | (1,530  | )
|                                                                                                    | State   |                          |        | (422   | )    |   |         | (833    | ) |   |         | (4,722  | )
|                                                                                                    | Foreign |                          |        |       |      |   |         |        |   |   |         |        |  
|                                                                                                    |         |                          |        |        |      |   |         |         |  
|                                                                                                    |         |                          | (2,192 | )      |      |   | (4,333  | )       |   |   | (6,252  | )      
|                                                                                                    |         |                          |        |        |      |   |         |         |  
|                                                                                                    |         | $                        | 1,570  |        |      | $ | (16,296 | )       |   | $ | (17,831 | )      
|                                                                                                    |         |                          |        |        |      |   |         |         |  



|         |  |                          |        |   |      |   |        |      |  |   |         |  
|-------- |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|         |  | Years Ended December 31, |       
|         |  |                          |       
|         |  | 2004                     |        |   | 2003 |   |        | 2002 | 
|         |  |                          |        |   |      |   |        |      | 
|         |  | (In thousands)           |       
|Domestic |  | $                        | 18,306 |   |      | $ | (8,660 | )    |  | $ | (51,019 | )
|Foreign  |  |                          | (1,785 | ) |      |   | 8,169  |      |  |   | (30,385 | )
|         |  |                          |        |   |      |   |        |      | 
|         |  | $                        | 16,521 |   |      | $ | (491   | )    |  | $ | (81,404 | )
|         |  |                          |        |   |      |   |        |      | 



|                             |  |            |         |            |           |   |            |             |  |            |           |   |  |            |        |   |  |   |         | 
|---------------------------- |  | ---------- | ------- | ---------- | --------- | - | ---------- | ----------- |  | ---------- | --------- | - |  | ---------- | ------ | - |  | - | ------- | 
|                             |  |            |         | Charges to |           |   | (Credits)/ |             |  | Credits to |           |   | 
|                             |  | Balance at |         |            | Income    |   |            | Charges to  |  |            | Income    |   |  | Balance at |       
|                             |  | Beginning  |         |            | Tax       |   |            | Other       |  |            | Tax       |   |  | End of     |       
|                             |  | of Year    |         |            | Provision |   |            | Accounts(1) |  |            | Provision |   |  | Year       |       
|                             |  |            |         |            |           |   |            |             |  |            |           |   |  |            |       
|Year ended December 31, 2004 |  | $          | 167,411 |            |           | $ | 19,596     |             |  | $          | (2,799    | ) |  | $          | (7,954 | ) |  | $ | 176,254 | 
|Year ended December 31, 2003 |  | $          | 97,125  |            |           | $ | 20,415     |             |  | $          | 59,737    |   |  | $          | (9,866 | ) |  | $ | 167,411 | 






|    |                                                                                     
|--- | ------------------------------------------------------------------------------------
|(1) | Amount represents valuation allowance activity related to
    business combinations.

F-33



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ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                         |                                    |                          |        |       |      |   |         |         |   |   |         |         |  
|-------------------------------------------------------- | ---------------------------------- | ------------------------ | ------ | ----- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                         |                                    | Years Ended December 31, |       
|                                                         |                                    |                          |       
|                                                         |                                    | 2004                     |        |       | 2003 |   |         | 2002    |  
|                                                         |                                    |                          |        |       |      |   |         |         |  
|                                                         |                                    | (In thousands)           |       
|Computed tax expense (benefit) at federal statutory rate |                                    | $                        | 5,783  |       |      | $ | (172    | )       |   | $ | (28,492 | )      
|Valuation allowance                                      |                                    |                          | 1,785  |       |      |   | 5,076   |         |   |   | 26,945  |        
|State income taxes, net of federal tax benefit           |                                    |                          | 275    |       |      |   | 4,572   |         |   |   | (4,571  | )      
|Foreign withholding taxes not currently creditable       |                                    |                          |       |       |      |   |        |         |   |   | 977     |        
|Foreign tax credits                                      |                                    |                          |       |       |      |   | (235    | )       |   |   |        |        
|Foreign taxes, net                                       |                                    |                          | (3,206 | )     |      |   | (1,358  | )       |   |   | (1,958  | )      
|Non-deductible charges                                   |                                    |                          |       |       |      |   | 1,346   |         |   |   |        |        
|Prior year tax benefits utilized                         |                                    |                          |       |       |      |   |        |         |   |   | (17,533 | )      
|Reserve adjustment                                       |                                    |                          | (2,885 | )     |      |   | (25,157 | )       |   |   | 4,925   |        
|Other, net                                               |                                    |                          | (182   | )     |      |   | (368    | )       |   |   | 1,876   |        
|                                                         |                                    |                          |        |       |      |   |         |         |  
|                                                         | Total income tax expense (benefit) |                          | $      | 1,570 |      |   | $       | (16,296 | ) |   | $       | (17,831 | )
|                                                         |                                    |                          |        |       |      |   |         |         |  





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ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                               |                                                 |                |         |          |      |   |         |          |  
|------------------------------ | ----------------------------------------------- | -------------- | ------- | -------- | ---- | - | ------- | -------- | -
|                               |                                                 | December 31,   |        
|                               |                                                 |                |        
|                               |                                                 | 2004           |         |          | 2003 |  
|                               |                                                 |                |         |          |      |  
|                               |                                                 | (In thousands) |        
|Deferred Tax Assets:           |                                                 |                |         |          |      |   |         |         
|                               | Reserves and accrued expenses                   |                | $       | 2,934    |      |   | $       | 4,290    |  
|                               | Deferred revenue                                |                |         | 287      |      |   |         | 610      |  
|                               | Foreign net operating loss carryforwards        |                |         | 31,680   |      |   |         | 33,501   |  
|                               | Domestic net operating loss carryforwards       |                |         | 94,718   |      |   |         | 90,590   |  
|                               | Tax credit carryforwards                        |                |         | 49,753   |      |   |         | 39,732   |  
|                               | Acquisition and restructuring reserves          |                |         | 7,497    |      |   |         | 16,388   |  
|                               | Other                                           |                |         | 1,864    |      |   |         | 1,211    |  
|                               |                                                 |                |         |          |      |  
|                               | Total deferred tax assets                       |                |         | 188,733  |      |   |         | 186,322  |  
|                               | Valuation allowance for deferred tax assets     |                |         | (176,254 | )    |   |         | (167,411 | )
|                               |                                                 |                |         |          |      |  
|                               | Deferred tax assets, net of valuation allowance |                |         | 12,479   |      |   |         | 18,911   |  
|                               |                                                 |                |         |          |      |  
|Deferred Tax Liabilities:      |                                                 |                |         |          |      |   |         |         
|                               | Capitalized software development costs          |                |         | (7,206   | )    |   |         | (6,506   | )
|                               | Acquisition reserves                            |                |         | (4,750   | )    |   |         | (8,660   | )
|                               | Deferred income                                 |                |         | (136     | )    |   |         | (2,947   | )
|                               |                                                 |                |         |          |      |  
|Total deferred tax liabilities |                                                 |                | (12,092 | )        |      |   | (18,113 | )       
|                               |                                                 |                |         |          |      |  
|Net deferred tax assets        |                                                 | $              | 387     |          |      | $ | 798     |         
|                               |                                                 |                |         |          |      |  







|                                                 |  |   |         | 
|------------------------------------------------ |  | - | ------- | 
|Income tax benefit from continuing operations    |  | $ | 78,136  | 
|Goodwill and other non-current intangible assets |  |   | 98,118  | 
|                                                 |  |   |        
|Total                                            |  | $ | 176,254 | 
|                                                 |  |   |        

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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|          |                                     
|--------- | ------------------------------------
|Note 11  | Goodwill and Other Intangible Assets



|                            |  |      |         |  |      |   |         |  
|--------------------------- |  | ---- | ------- |  | ---- | - | ------- | -
|                            |  | 2004 |         |  | 2003 |  
|                            |  |      |         |  |      |  
|Balance beginning of year   |  | $    | 324,327 |  |      | $ | 162,670 |  
|Additions from acquisitions |  |      | 263     |  |      |   | 162,810 |  
|Adjustments                 |  |      | 867     |  |      |   | (1,153  | )
|                            |  |      |         |  |      |  
|Balance end of year         |  | $    | 325,457 |  |      | $ | 324,327 |  
|                            |  |      |         |  |      |  







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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                    |  |              |        | 
|----------------------------------- |  | ------------ | ------ | 
|                                    |  | Amortization |       
|Year                                |  | Expense      |       
|                                    |  |              |       
|2005                                |  | $            | 3,831  | 
|2006                                |  |              | 2,916  | 
|2007                                |  |              | 2,800  | 
|2008                                |  |              | 1,906  | 
|2009                                |  |              |       | 
|                                    |  |              |       
|Estimated total future amortization |  | $            | 11,453 | 
|                                    |  |              |       



|          |                      
|--------- | ---------------------
|Note 12  | Business Combinations









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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                      |       |   |      |       | 
|--------------------------------------------------------------------- | ----- | - | ---- | ----- | 
|Cash paid to acquire stock, net of cash acquired of
    $14.4 million |       | $ | 94.9 |      
|Cash paid and accrued for transaction costs                           |       |   | 5.0  |      
|Stock options exchanged                                               |       |   | 13.3 |      
|Accrued merger, restructuring and other expenses                      |       |   | 36.2 |      
|                                                                      |       |   |     
|                                                                      | Total |   | $    | 149.4 | 
|                                                                      |       |   |     



|                                              |                            |                         |       |       |       | 
|--------------------------------------------- | -------------------------- | ----------------------- | ----- | ----- | ----- | 
|Accounts receivable                           |                            | $                       | 11.2  |      
|Net fixed assets                              |                            |                         | 5.0   |      
|Other assets                                  |                            |                         | 4.1   |      
|                                              |                            |                         |      
|                                              | Total assets acquired      |                         |       | 20.3  |      
|                                              |                            |                         |      
|Current liabilities                           |                            |                         | (30.4 | )    
|Deferred revenue                              |                            |                         | (19.0 | )    
|Long term liabilities                         |                            |                         | (12.5 | )    
|                                              |                            |                         |      
|                                              | Total liabilities acquired |                         |       | (61.9 | )    
|                                              |                            |                         |      
|Net liabilities assumed, net of cash acquired |                            |                         | (41.6 | )    
|Assets held for sale                          |                            |                         | 6.8   |      
|Deferred income taxes                         |                            |                         | 4.2   |      
|Intangible assets:                            |                            |                         |       |      
|                                              | Existing technology        |                         |       | 7.0   |      
|                                              | Covenants not to compete   |                         |       | 1.2   |      
|                                              | Customer relationships     |                         |       | 7.0   |      
|                                              | Goodwill                   |                         |       | 162.8 |      
|                                              |                            |                         |      
|                                              |                            | Total intangible assets |       |       | 178.0 | 
|In-process research and development           |                            |                         | 2.0   |      
|                                              |                            |                         |      
|                                              | Total                      |                         | $     | 149.4 |      
|                                              |                            |                         |      





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ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












F-39



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                |  |   |      | 
|------------------------------------------------------------------------------- |  | - | ---- | 
|Cash paid to acquire stock and options (less cash acquired of
    $7.0 million) |  | $ | 91.7 | 
|Cash paid for transaction costs                                                 |  |   | 2.8  | 
|Accrued merger costs                                                            |  |   | 3.8  | 
|                                                                                |  |   |     
|Total                                                                           |  | $ | 98.3 | 
|                                                                                |  |   |     



|                                              |                         |   |      |       | 
|--------------------------------------------- | ----------------------- | - | ---- | ----- | 
|Net liabilities assumed, net of cash acquired |                         | $ | (2.9 | )    
|Deferred income taxes                         |                         |   | (1.9 | )    
|Intangible assets:                            |                         |   |      |      
|                                              | Existing technology     |   |      | 8.2   | 
|                                              | Covenant not to compete |   |      | 0.3   | 
|                                              | Goodwill                |   |      | 93.4  | 
|                                              |                         |   |     
|                                              | Total intangible assets |   |      | 101.9 | 
|In-process research and development           |                         |   | 1.2  |      
|                                              |                         |   |     
|Total                                         |                         | $ | 98.3 |      
|                                              |                         |   |     





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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                    |  |                           |         |   |      |   |         |  
|----------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------- | -
|                                    |  | Years Ended               |        
|                                    |  | December 31,              |        
|                                    |  |                           |        
|                                    |  | 2003                      |         |   | 2002 |  
|                                    |  |                           |         |   |      |  
|                                    |  | (In thousands, except for |        
|                                    |  | per share data)           |        
|Net revenues                        |  | $                         | 244,111 |   |      | $ | 228,898 |  
|Net income (loss)                   |  | $                         | (4,572  | ) |      | $ | (89,557 | )
|Diluted net income (loss) per share |  | $                         | (0.08   | ) |      | $ | (1.45   | )



|          |                                     
|--------- | ------------------------------------
|Note 13  | Sale of the Database Business Assets

Holdback.


Working Capital Adjustment.




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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Gain Adjustment.


Accrued IBM Transaction Costs.


|                                                                               |  |              |     |  |             |   |          |  |            |              |      |   |  |   |     | 
|------------------------------------------------------------------------------ |  | ------------ | --- |  | ----------- | - | -------- |  | ---------- | ------------ | ---- | - |  | - | --- | 
|                                                                               |  | Accrual      |     |  |             |   |          |  | Accrual    |             
|                                                                               |  | Balance at   |     |  |             |   |          |  | Balance at |             
|                                                                               |  | December 31, |     |  | Charges and |   | Cash     |  |            | December 31, |     
|                                                                               |  | 2003         |     |  | Adjustments |   | Payments |  |            | 2004         |     
|                                                                               |  |              |     |  |             |   |          |  |            |              |     
|Professional fees                                                              |  | $            | 0.5 |  |             | $ |         |  |            | $            | (0.2 | ) |  | $ | 0.3 | 
|Severance and employment-related costs                                         |  |              | 1.4 |  |             |   |         |  |            |              |     |   |  |   | 1.4 | 
|                                                                               |  |              |     |  |             |   |          |  |            |              |      |  
|Accrued Transaction costs and related charges included in
    accrued expenses |  | $            | 1.9 |  |             | $ |         |  |            | $            | (0.2 | ) |  | $ | 1.7 | 
|                                                                               |  |              |     |  |             |   |          |  |            |              |      |  

|                                                                               |  |              |     |  |             |   |      |          |            |   |              |   |  |   |     | 
|------------------------------------------------------------------------------ |  | ------------ | --- |  | ----------- | - | ---- | -------- | ---------- | - | ------------ | - |  | - | --- | 
|                                                                               |  | Accrual      |     |  |             |   |      |          | Accrual    |  
|                                                                               |  | Balance at   |     |  |             |   |      |          | Balance at |  
|                                                                               |  | December 31, |     |  | Charges and |   |      | Cash     |            |   | December 31, |  
|                                                                               |  | 2002         |     |  | Adjustments |   |      | Payments |            |   | 2003         |  
|                                                                               |  |              |     |  |             |   |      |          |            |   |              |  
|Professional fees                                                              |  | $            | 1.2 |  |             | $ |     |          |            | $ | (0.7         | ) |  | $ | 0.5 | 
|Severance and employment-related costs                                         |  |              | 4.4 |  |             |   | (1.7 | )        |            |   | (1.3         | ) |  |   | 1.4 | 
|                                                                               |  |              |     |  |             |   |      |          |            |   |              |  
|Accrued Transaction costs and related charges included in
    accrued expenses |  | $            | 5.6 |  |             | $ | (1.7 | )        |            | $ | (2.0         | ) |  | $ | 1.9 | 
|                                                                               |  |              |     |  |             |   |      |          |            |   |              |  

|                                                                               |  |              |      |  |             |   |      |          |         |   |              |   |  |   |     | 
|------------------------------------------------------------------------------ |  | ------------ | ---- |  | ----------- | - | ---- | -------- | ------- | - | ------------ | - |  | - | --- | 
|                                                                               |  | Accrual      |      |  |             |   |      |          | Accrual |  
|                                                                               |  | Balance      |      |  |             |   |      |          | Balance |  
|                                                                               |  | December 31, |      |  | Charges/    |   |      | Cash     |         |   | December 31, |  
|                                                                               |  | 2001         |      |  | Adjustments |   |      | Payments |         |   | 2002         |  
|                                                                               |  |              |      |  |             |   |      |          |         |   |              |  
|Professional fees                                                              |  | $            | 3.0  |  |             | $ | 2.1  |          |         | $ | (3.9         | ) |  | $ | 1.2 | 
|Severance and employment-related costs                                         |  |              | 10.3 |  |             |   | (0.9 | )        |         |   | (5.0         | ) |  |   | 4.4 | 
|Other Charges                                                                  |  |              | 0.7  |  |             |   | (0.3 | )        |         |   | (0.4         | ) |  |   |    | 
|                                                                               |  |              |      |  |             |   |      |          |         |   |              |  
|Accrued transaction costs and related charges included in
    accrued expenses |  | $            | 14.0 |  |             | $ | 0.9  |          |         | $ | (9.3         | ) |  | $ | 5.6 | 
|                                                                               |  |              |      |  |             |   |      |          |         |   |              |  



F-42



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Transition Services and Other.






|          |                                                   
|--------- | --------------------------------------------------
|Note 14  | Termination of the Content Management Product Line



F-43



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|          |                                              
|--------- | ---------------------------------------------
|Note 15  | Accrued Merger, Realignment and Other Charges



|                                                                                  |  |              |      |  |              |   |      | 
|--------------------------------------------------------------------------------- |  | ------------ | ---- |  | ------------ | - | ---- | 
|                                                                                  |  | December 31, |      |  | December 31, |  
|                                                                                  |  | 2004         |      |  | 2003         |  
|                                                                                  |  |              |      |  |              |  
|Facility and equipment charges resulting from the
    IBM Transaction             |  | $            | 6.7  |  |              | $ | 8.8  | 
|Facility, severance, and other accruals arising from the
    Mercator acquisition |  |              | 26.1 |  |              |   | 36.9 | 
|Other accrued merger and realignment charges                                      |  |              | 0.1  |  |              |   | 1.0  | 
|                                                                                  |  |              |      |  |              |  
|Total accrued merger, realignment and other charges                               |  | $            | 32.9 |  |              | $ | 46.7 | 
|                                                                                  |  |              |      |  |              |  









| |                                                                  
| | -----------------------------------------------------------------
| | Facility and Equipment Charges resulting from IBM
    Transaction



|                             |  |                 |      |  |             |   |     |          |                 |   |         |   |  |   |      | 
|---------------------------- |  | --------------- | ---- |  | ----------- | - | --- | -------- | --------------- | - | ------- | - |  | - | ---- | 
|                             |  | Accrual Balance |      |  |             |   |     |          | Accrual Balance |  
|                             |  | at Beginning    |      |  | Charges/    |   |     | Cash     |                 |   | at End  |  
|                             |  | of Year         |      |  | Adjustments |   |     | Payments |                 |   | of Year |  
|                             |  |                 |      |  |             |   |     |          |                 |   |         |  
|Year Ended December 31, 2004 |  | $               | 8.8  |  |             | $ | 1.3 |          |                 | $ | (3.4    | ) |  | $ | 6.7  | 
|Year Ended December 31, 2003 |  | $               | 13.0 |  |             | $ | 2.4 |          |                 | $ | (6.6    | ) |  | $ | 8.8  | 
|Year Ended December 31, 2002 |  | $               | 25.0 |  |             | $ | 4.3 |          |                 | $ | (16.3   | ) |  | $ | 13.0 | 





F-44



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                               |  |              |      |  
|---------------------------------------------------------------------------------------------- |  | ------------ | ---- | -
|                                                                                               |  | Year Ended   |     
|                                                                                               |  | December 31, |     
|                                                                                               |  | 2002         |     
|                                                                                               |  |              |     
|Release of lease obligations                                                                   |  | $            | (7.0 | )
|Additional assumed lease obligations                                                           |  |              | 2.0  |  
|Revision of assumptions to reflect current market conditions and
    negotiated
    exit costs |  |              | 9.3  |  
|                                                                                               |  |              |     
|Net charge                                                                                     |  | $            | 4.3  |  
|                                                                                               |  |              |     







| |                                                                                  
| | ---------------------------------------------------------------------------------
| | Facility, severance, and other accruals arising from the
    Mercator acquisition





F-45



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                           |  |              |      |  |             |   |     |          |            |   |              |   |  |   |      | 
|-------------------------- |  | ------------ | ---- |  | ----------- | - | --- | -------- | ---------- | - | ------------ | - |  | - | ---- | 
|                           |  | Accrual      |      |  |             |   |     |          | Accrual    |  
|                           |  | Balance at   |      |  |             |   |     |          | Balance at |  
|                           |  | December 31, |      |  | Charges and |   |     | Cash     |            |   | December 31, |  
|                           |  | 2003         |      |  | Adjustments |   |     | Payments |            |   | 2004         |  
|                           |  |              |      |  |             |   |     |          |            |   |              |  
|Residual lease obligations |  | $            | 28.4 |  |             | $ | 2.9 |          |            | $ | (5.7         | ) |  | $ | 25.6 | 
|Severance costs            |  |              | 8.4  |  |             |   | 0.7 |          |            |   | (8.8         | ) |  |   | 0.3  | 
|Other exit costs           |  |              | 0.1  |  |             |   | 0.1 |          |            |   |             |   |  |   | 0.2  | 
|                           |  |              |      |  |             |   |     |          |            |   |              |  
|Total                      |  | $            | 36.9 |  |             | $ | 3.7 |          |            | $ | (14.5        | ) |  | $ | 26.1 | 
|                           |  |              |      |  |             |   |     |          |            |   |              |  

|                           |  |               |      |  |             |   |      |          |            |   |              |   |  |   |      | 
|-------------------------- |  | ------------- | ---- |  | ----------- | - | ---- | -------- | ---------- | - | ------------ | - |  | - | ---- | 
|                           |  | Accrued in    |      |  |             |   |      |          |           
|                           |  | Purchase      |      |  |             |   |      |          | Accrual    |  
|                           |  | Accounting    |      |  |             |   |      |          | Balance at |  
|                           |  | September 12, |      |  | Charges and |   |      | Cash     |            |   | December 31, |  
|                           |  | 2003          |      |  | Adjustments |   |      | Payments |            |   | 2003         |  
|                           |  |               |      |  |             |   |      |          |            |   |              |  
|Residual lease obligations |  | $             | 27.9 |  |             | $ | 1.8  |          |            | $ | (1.3         | ) |  | $ | 28.4 | 
|Severance costs            |  |               | 14.4 |  |             |   | 0.6  |          |            |   | (6.6         | ) |  |   | 8.4  | 
|Other exit costs           |  |               | 2.0  |  |             |   | (1.0 | )        |            |   | (0.9         | ) |  |   | 0.1  | 
|                           |  |               |      |  |             |   |      |          |            |   |              |  
|Total                      |  | $             | 44.3 |  |             | $ | 1.4  |          |            | $ | (8.8         | ) |  | $ | 36.9 | 
|                           |  |               |      |  |             |   |      |          |            |   |              |  





F-46



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                         
| | --------------------------------------------------------
| | Other accrued Merger, realignment, and other
    charges





|                                                          |  |              |     |  |             |   |      |          |            |   |              |   |  |   |     | 
|--------------------------------------------------------- |  | ------------ | --- |  | ----------- | - | ---- | -------- | ---------- | - | ------------ | - |  | - | --- | 
|                                                          |  | Accrual      |     |  |             |   |      |          | Accrual    |  
|                                                          |  | Balance at   |     |  |             |   |      |          | Balance at |  
|                                                          |  | December 31, |     |  | Charges/    |   |      | Cash     |            |   | December 31, |  
|                                                          |  | 2003         |     |  | Adjustments |   |      | Payments |            |   | 2004         |  
|                                                          |  |              |     |  |             |   |      |          |            |   |              |  
|Third Quarter 2003 Realignment                            |  |              |     |  |             |   |      |          |            |   |              |   |  |   |     | 
|Severance and employment costs                            |  | $            | 0.8 |  |             | $ |     |          |            | $ | (0.7         | ) |  | $ | 0.1 | 
|Third Quarter 2002 Realignment                            |  |              |     |  |             |   |      |          |            |   |              |   |  |   |     | 
|Severance and employment costs                            |  |              | 0.1 |  |             |   | (0.1 | )        |            |   |             |   |  |   | 0.0 | 
|Other exit costs                                          |  |              | 0.1 |  |             |   | (0.1 | )        |            |   |             |   |  |   | 0.0 | 
|                                                          |  |              |     |  |             |   |      |          |            |   |              |  
|                                                          |  |              | 0.2 |  |             |   | (0.2 | )        |            |   |             |   |  |   | 0.0 | 
|                                                          |  |              |     |  |             |   |      |          |            |   |              |  
|Total accrued other merger, realignment and other charges |  | $            | 1.0 |  |             | $ | (0.2 | )        |            | $ | (0.7         | ) |  | $ | 0.1 | 
|                                                          |  |              |     |  |             |   |      |          |            |   |              |  





|                                                          |  |              |     |  |             |   |      |          |  |   |            |   |  |              |      |   |  |   |     | 
|--------------------------------------------------------- |  | ------------ | --- |  | ----------- | - | ---- | -------- |  | - | ---------- | - |  | ------------ | ---- | - |  | - | --- | 
|                                                          |  | Accrual      |     |  |             |   |      |          |  |   | Accrual    |  
|                                                          |  | Balance at   |     |  |             |   |      |          |  |   | Balance at |  
|                                                          |  | December 31, |     |  | Charges/    |   |      | Non-Cash |  |   | Cash       |   |  | December 31, |     
|                                                          |  | 2002         |     |  | Adjustments |   |      | Charges  |  |   | Payments   |   |  | 2003         |     
|                                                          |  |              |     |  |             |   |      |          |  |   |            |   |  |              |     
|Third Quarter 2003 Realignment                            |  |              |     |  |             |   |      |          |  |   |            |   |  |              |      |   |  |   |     | 
|Severance and employment costs                            |  | $            |    |  |             | $ | 2.0  |          |  | $ | (0.6       | ) |  | $            | (0.6 | ) |  | $ | 0.8 | 
|Third Quarter 2002 Realignment                            |  |              |     |  |             |   |      |          |  |   |            |   |  |              |      |   |  |   |     | 
|Severance and employment costs                            |  |              | 1.3 |  |             |   |     |          |  |   |           |   |  |              | (1.2 | ) |  |   | 0.1 | 
|Other exit costs                                          |  |              | 0.2 |  |             |   |     |          |  |   |           |   |  |              | (0.1 | ) |  |   | 0.1 | 
|                                                          |  |              |     |  |             |   |      |          |  |   |            |   |  |              |     
|                                                          |  |              | 1.5 |  |             |   |     |          |  |   |           |   |  |              | (1.3 | ) |  |   | 0.2 | 
|                                                          |  |              |     |  |             |   |      |          |  |   |            |   |  |              |     
|2000 Strategic Realignment                                |  |              |     |  |             |   |      |          |  |   |            |   |  |              |      |   |  |   |     | 
|Facilities and equipment costs                            |  |              | 0.7 |  |             |   | (0.1 | )        |  |   |           |   |  |              | (0.6 | ) |  |   |    | 
|Ardent Merger & Other                                     |  |              |     |  |             |   |      |          |  |   |            |   |  |              |      |   |  |   |     | 
|Facilities lease costs                                    |  |              | 0.5 |  |             |   | (0.2 | )        |  |   |           |   |  |              | (0.3 | ) |  |   |    | 
|                                                          |  |              |     |  |             |   |      |          |  |   |            |   |  |              |     
|Total accrued other merger, realignment and other charges |  | $            | 2.7 |  |             | $ | 1.7  |          |  | $ | (0.6       | ) |  | $            | (2.8 | ) |  | $ | 1.0 | 
|                                                          |  |              |     |  |             |   |      |          |  |   |            |   |  |              |     

F-47



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##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |       |   |  |   |     | 
|--------------------------------------------------------- |  | ------------ | ---- |  | ----------- | - | ---- | -------- |  | - | ---------- | - |  | ------------ | ----- | - |  | - | --- | 
|                                                          |  | Accrual      |      |  |             |   |      |          |  |   | Accrued    |  
|                                                          |  | Balance at   |      |  |             |   |      |          |  |   | Balance at |  
|                                                          |  | December 31, |      |  | Charges/    |   |      | Non-Cash |  |   | Cash       |   |  | December 31, |      
|                                                          |  | 2001         |      |  | Adjustments |   |      | Charges  |  |   | Payments   |   |  | 2002         |      
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|Third Quarter 2002 Realignment                            |  |              |      |  |             |   |      |          |  |   |            |   |  |              |       |   |  |   |     | 
|Severance and employment costs                            |  | $            |     |  |             | $ | 6.8  |          |  | $ |           |   |  | $            | (5.5  | ) |  | $ | 1.3 | 
|Facility lease costs                                      |  |              |     |  |             |   | 0.3  |          |  |   | (0.1       | ) |  |              | (0.2  | ) |  |   |    | 
|Other exit costs                                          |  |              |     |  |             |   | 0.3  |          |  |   |           |   |  |              | (0.1  | ) |  |   | 0.2 | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|Total accrued merger realignment and other charges        |  |              |     |  |             |   | 7.4  |          |  |   | (0.1       | ) |  |              | (5.8  | ) |  |   | 1.5 | 
|Abandoned fixed assets                                    |  |              |     |  |             |   | 2.7  |          |  |   | (2.7       | ) |  |              |      |   |  |   |    | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|                                                          |  |              |     |  |             |   | 10.1 |          |  |   | (2.8       | ) |  |              | (5.8  | ) |  |   | 1.5 | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|Second Quarter 2002 Realignment                           |  |              |      |  |             |   |      |          |  |   |            |   |  |              |       |   |  |   |     | 
|Severance and employment costs                            |  |              |     |  |             |   | 5.7  |          |  |   |           |   |  |              | (5.7  | ) |  |   |    | 
|Write-off computer equipment                              |  |              |     |  |             |   | 0.8  |          |  |   | (0.8       | ) |  |              |      |   |  |   |    | 
|Facility lease costs                                      |  |              |     |  |             |   | 0.4  |          |  |   |           |   |  |              | (0.4  | ) |  |   |    | 
|Professional fees                                         |  |              |     |  |             |   | 0.4  |          |  |   |           |   |  |              | (0.4  | ) |  |   |    | 
|Other exit costs                                          |  |              |     |  |             |   | 0.4  |          |  |   |           |   |  |              | (0.4  | ) |  |   |    | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|                                                          |  |              |     |  |             |   | 7.7  |          |  |   | (0.8       | ) |  |              | (6.9  | ) |  |   |    | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|First Quarter 2002 Realignment                            |  |              |      |  |             |   |      |          |  |   |            |   |  |              |       |   |  |   |     | 
|Severance and employment costs                            |  |              |     |  |             |   | 1.6  |          |  |   |           |   |  |              | (1.6  | ) |  |   |    | 
|Facility lease costs                                      |  |              |     |  |             |   | 0.8  |          |  |   |           |   |  |              | (0.8  | ) |  |   |    | 
|Other exit costs                                          |  |              |     |  |             |   | 0.1  |          |  |   |           |   |  |              | (0.1  | ) |  |   |    | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|                                                          |  |              |     |  |             |   | 2.5  |          |  |   |           |   |  |              | (2.5  | ) |  |   |    | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|Third Quarter 2001 Realignment                            |  |              |      |  |             |   |      |          |  |   |            |   |  |              |       |   |  |   |     | 
|Severance and employment costs                            |  |              | 3.8  |  |             |   | (0.4 | )        |  |   |           |   |  |              | (3.4  | ) |  |   |    | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|2000 Strategic Realignment                                |  |              |      |  |             |   |      |          |  |   |            |   |  |              |       |   |  |   |     | 
|Severance and employment-related costs                    |  |              | 0.1  |  |             |   |     |          |  |   |           |   |  |              | (0.1  | ) |  |   |    | 
|Facilities and equipment costs                            |  |              | 2.1  |  |             |   | 0.2  |          |  |   |           |   |  |              | (1.6  | ) |  |   | 0.7 | 
|Costs to exit various commitments and programs            |  |              | 3.0  |  |             |   |     |          |  |   |           |   |  |              | (3.0  | ) |  |   |    | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|                                                          |  |              | 5.2  |  |             |   | 0.2  |          |  |   |           |   |  |              | (4.7  | ) |  |   | 0.7 | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|Ardent Merger and Other                                   |  |              | 1.1  |  |             |   | (0.4 | )        |  |   |           |   |  |              | (0.2  | ) |  |   | 0.5 | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      
|Total other accrued merger, realignment and other charges |  | $            | 10.1 |  |             | $ | 19.7 |          |  | $ | (3.6       | ) |  | $            | (23.5 | ) |  | $ | 2.7 | 
|                                                          |  |              |      |  |             |   |      |          |  |   |            |   |  |              |      



| |                               
| | ------------------------------
| | Third Quarter 2003 Realignment



F-48



---



##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                               
| | ------------------------------
| | Third Quarter 2002 Realignment





| |                                
| | -------------------------------
| | Second Quarter 2002 Realignment



F-49



---



##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                               
| | ------------------------------
| | First Quarter 2002 Realignment





| |                               
| | ------------------------------
| | Third Quarter 2001 Realignment







| |                           
| | --------------------------
| | 2000 Strategic Realignment





| |                        
| | -----------------------
| | Ardent Merger and Other



F-50



---



##### Table of Contents



ASCENTIAL SOFTWARE CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|          |                                        
|--------- | ---------------------------------------
|Note 16  | Quarterly Operating Results (unaudited)

|                                       |         |                                       |        |       |         |   |        |         |  |   |         |       |   |   |        |      | 
|-------------------------------------- | ------- | ------------------------------------- | ------ | ----- | ------- | - | ------ | ------- |  | - | ------- | ----- | - | - | ------ | ---- | 
|                                       |         | First                                 |        |       | Second  |   |        | Third   |  |   | Fourth  |      
|                                       |         | Quarter                               |        |       | Quarter |   |        | Quarter |  |   | Quarter |      
|                                       |         |                                       |        |       |         |   |        |         |  |   |         |      
|                                       |         | (In thousands, except per share data) |       
|Year ended December 31, 2004           |         |                                       |        |       |         |   |        |         |  |   |         |       |   |   |        |     
|Net revenues                           |         | $                                     | 61,389 |       |         | $ | 64,734 |         |  | $ | 67,593  |       |   | $ | 78,163 |     
|Gross profit                           |         |                                       | 42,409 |       |         |   | 43,333 |         |  |   | 45,232  |       |   |   | 53,974 |     
|Net income                             |         | $                                     | 2,392  |       |         | $ | 1,212  |         |  | $ | 2,323   |       |   | $ | 9,024  |     
|Net income per common share(1):        |         |                                       |        |       |         |   |        |         |  |   |         |       |   |   |        |     
|                                       | Basic   |                                       | $      | 0.04  |         |   | $      | 0.02    |  |   | $       | 0.04  |   |   | $      | 0.15 | 
|                                       | Diluted |                                       | $      | 0.04  |         |   | $      | 0.02    |  |   | $       | 0.04  |   |   | $      | 0.15 | 
|Year ended December 31, 2003           |         |                                       |        |       |         |   |        |         |  |   |         |       |   |   |        |     
|Net revenues                           |         | $                                     | 35,296 |       |         | $ | 39,929 |         |  | $ | 45,889  |       |   | $ | 64,472 |     
|Gross profit                           |         |                                       | 24,448 |       |         |   | 27,748 |         |  |   | 31,684  |       |   |   | 46,365 |     
|Net income (loss)                      |         | $                                     | (534   | )     |         | $ | 695    |         |  | $ | (1,699  | )     |   | $ | 17,343 |     
|Net income (loss) per common share(1): |         |                                       |        |       |         |   |        |         |  |   |         |       |   |   |        |     
|                                       | Basic   |                                       | $      | (0.01 | )       |   | $      | 0.01    |  |   | $       | (0.03 | ) |   | $      | 0.29 | 
|                                       | Diluted |                                       | $      | (0.01 | )       |   | $      | 0.01    |  |   | $       | (0.03 | ) |   | $      | 0.28 | 






|    |                                                     
|--- | ----------------------------------------------------
|(1) | Amounts may vary from annual totals due to rounding.

Note 17  Subsequent Event






F-51