##### 









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




---

Form 10-K/A

Amendment No. 1


to


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the fiscal year ended December 31,
    2002                                             
|  
|OR
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-25871




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INFORMATICA CORPORATION

(Exact name of registrant as specified in its
charter)


|                                                                                                |  |                                         
|----------------------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                                        |  | 77-0333710                              
|(State or other jurisdiction of
    incorporation or organization)                              |  | (I.R.S. Employer
    Identification No.)
|                                                                                               
|2100 Seaport Boulevard
    Redwood City, California(Address of principal executive
    offices) |  | 94063(Zip Code)                         

(650) 385-5000

(Registrants Telephone Number, Including
Area Code)


Securities Registered Pursuant to
Section 12(b) of the Act: None

Securities Registered Pursuant to
Section 12(g) of the Act:

Common Stock, par value $0.001 per
share

Preferred Share Purchase Rights, par value
$0.001 per share




---

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
(the Act) during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past
90 days.     Yes þ          No o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K.     þ

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Act).     Yes þ          No o

As of June 30, 2002, there were
approximately 79,392,800 shares of the registrants Common
Stock outstanding. The aggregate market value of the Common
Stock held by non-affiliates of the registrant (based on the
closing price for the Common Stock on the Nasdaq National Market
on June 28, 2002) was approximately $304,184,213. Shares of
the registrants Common Stock held by each executive
officer and director and by each entity that owns 5% or more of
the registrants Common Stock have been excluded in that
such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily a conclusive
determination for other purposes.

As of February 28, 2003, there were
approximately 80,158,097 shares of the registrants Common
Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrants Proxy Statement
for the registrants 2003 Annual Meeting of Stockholders
are incorporated by reference into Part III of this
Form 10-K to the extent stated herein.



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##### 



EXPLANATORY NOTE

The purpose of this Amendment No. 1 is to
revise certain pro forma information required by Statement of
Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation(SFAS 123) and SFAS No. 148,
Accounting for Stock-Based Compensation 
Transition and Disclosure(SFAS 148)
in Note 9 to the Consolidated Financial Statements of the
registrant filed as part of Item 8 of the registrants
Annual Report on Form 10-K for the fiscal year ended
December 31, 2002. Specifically, this amendment corrects
the pro forma numbers previously reported pursuant to
SFAS 123 and SFAS 148 for the total stock-based
compensation expense and the weighted-average fair value of
options and shares granted for the years ended December 31,
2002 and 2001 and revises the presentation of the
weighted-average expected life of the options.

THIS AMENDMENT DOES NOT CHANGE THE PREVIOUSLY
REPORTED CONSOLIDATED FINANCIAL STATEMENTS.

Item 8 Financial Statements and
Supplementary Data of Part II is hereby amended and
restated in its entirety to read as follows:



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##### 





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

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

|                                                      |  |      |   | 
|----------------------------------------------------- |  | ---- | - | 
|                                                      |  | Page
|                                                      |  |     
|Report of Ernst & Young LLP, Independent
    Auditors |  |      | 2 | 
|Consolidated Balance Sheets                           |  |      | 3 | 
|Consolidated Statements of Operations                 |  |      | 4 | 
|Consolidated Statements of Stockholders
    Equity   |  |      | 5 | 
|Consolidated Statements of Cash Flows                 |  |      | 6 | 
|Notes to Consolidated Financial Statements            |  |      | 7 | 

1



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##### 



REPORT OF ERNST & YOUNG LLP, INDEPENDENT
AUDITORS

The Board of Directors and Stockholders

Informatica Corporation


We have audited the accompanying consolidated
balance sheets of Informatica Corporation as of
December 31, 2002 and 2001, and the related consolidated
statements of operations, stockholders equity and cash
flows for each of the three years in the period ended
December 31, 2002. Our audits also included the financial
statement schedule listed in the Index at Item 15(a). These
consolidated financial statements and schedule are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements and schedule based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Informatica Corporation at
December 31, 2002 and 2001, and the consolidated results of
its operations and its cash flows for each of the three years in
the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States.
Also in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the
information set forth therein.



| |                      
| | ---------------------
| | /s/ ERNST & YOUNG LLP

Palo Alto, California

January 20, 2003


2



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##### 



INFORMATICA CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


|                                                        |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |         |         |         | 
|------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ------------------------------------------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | 
|                                                        |                                                                                                                                                                                                    |                     
|                                                        |                                                                                                                                                                                                    | December 31,        
|                                                        |                                                                                                                                                                                                    |                     
|                                                        |                                                                                                                                                                                                    | 2002                 |                                            | 2001   
|                                                        |                                                                                                                                                                                                    |                      |                                            |        
|ASSETS                                                 
|Current assets:                                         |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |        
|                                                        | Cash and cash equivalents                                                                                                                                                                          |                      | $                                          | 122,490 |         |         | $      | 131,264 |        
|                                                        | Short-term investments                                                                                                                                                                             |                      |                                            | 113,385 |         |         |        | 77,955  |        
|                                                        | Accounts receivable, net of allowances of $1,349
    and $2,295 in 2002 and 2001, respectively                                                                                                     |                      |                                            | 29,982  |         |         |        | 29,131  |        
|                                                        | Prepaid expenses and other current assets                                                                                                                                                          |                      |                                            | 8,680   |         |         |        | 7,061   |        
|                                                        |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |        
|                                                        |                                                                                                                                                                                                    | Total current assets |                                            |         | 274,537 |         |        |         | 245,411 |        
|Restricted cash                                         |                                                                                                                                                                                                    |                      | 12,166                                     |         |         |         | 12,166 |        
|Property and equipment, net                             |                                                                                                                                                                                                    |                      | 47,370                                     |         |         |         | 53,180 |        
|Goodwill, net                                           |                                                                                                                                                                                                    |                      | 30,274                                     |         |         |         | 29,564 |        
|Intangible assets, net                                  |                                                                                                                                                                                                    |                      | 517                                        |         |         |         | 1,657  |        
|Other assets                                            |                                                                                                                                                                                                    |                      | 330                                        |         |         |         | 925    |        
|                                                        |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |        
|                                                        |                                                                                                                                                                                                    |                      | Total assets                               |         | $       | 365,194 |        |         | $       | 342,903 | 
|                                                        |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |        
|LIABILITIES AND STOCKHOLDERS
    EQUITY               
|Current liabilities:                                    |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |        
|                                                        | Accounts payable                                                                                                                                                                                   |                      | $                                          | 2,269   |         |         | $      | 2,934   |        
|                                                        | Accrued liabilities                                                                                                                                                                                |                      |                                            | 24,384  |         |         |        | 14,953  |        
|                                                        | Accrued compensation and related expenses                                                                                                                                                          |                      |                                            | 12,666  |         |         |        | 15,848  |        
|                                                        | Income taxes payable                                                                                                                                                                               |                      |                                            | 2,064   |         |         |        | 2,874   |        
|                                                        | Accrued restructuring charges                                                                                                                                                                      |                      |                                            | 4,812   |         |         |        | 4,136   |        
|                                                        | Deferred revenue                                                                                                                                                                                   |                      |                                            | 51,702  |         |         |        | 36,554  |        
|                                                        |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |        
|                                                        |                                                                                                                                                                                                    |                      | Total current liabilities                  |         |         | 97,897  |        |         |         | 77,299  | 
|Accrued restructuring charges, less current
    portion |                                                                                                                                                                                                    |                      | 14,894                                     |         |         |         | 5,196  |        
|Commitments and contingencies                           |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |        
|Stockholders equity:                                   |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |        
|                                                        | Preferred stock, $0.001 par value; 2,000,000
    shares authorized of which 200,000 shares have been designated
    as Series A preferred stock, $0.001 par value, none issued
    and outstanding |                      |                                            |        |         |         |        |        |        
|                                                        | Common stock, $0.001 par value; 200,000,000
    shares authorized; 80,749,548 and 78,563,288 shares issued and
    outstanding at December 31, 2002 and 2001, respectively                         |                      |                                            | 348,631 |         |         |        | 342,335 |        
|                                                        | Deferred stock-based compensation                                                                                                                                                                  |                      |                                            | (74     | )       |         |        | (299    | )      
|                                                        | Accumulated deficit                                                                                                                                                                                |                      |                                            | (97,994 | )       |         |        | (82,380 | )      
|                                                        | Accumulated other comprehensive income                                                                                                                                                             |                      |                                            | 1,840   |         |         |        | 752     |        
|                                                        |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |        
|                                                        |                                                                                                                                                                                                    |                      | Total stockholders equity                 |         |         | 252,403 |        |         |         | 260,408 | 
|                                                        |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |        
|                                                        |                                                                                                                                                                                                    |                      | Total liabilities and stockholders equity |         | $       | 365,194 |        |         | $       | 342,903 | 
|                                                        |                                                                                                                                                                                                    |                      |                                            |         |         |         |        |        

See accompanying notes to consolidated financial
statements.

3



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##### 



INFORMATICA CORPORATION

CONSOLIDATED STATEMENTS OF
OPERATIONS

(in thousands, except per share
data)


|                                                  |                                                          |                          |         |        |         |      |         |         |         |   |         |         |         | 
|------------------------------------------------- | -------------------------------------------------------- | ------------------------ | ------- | ------ | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                  |                                                          |                         
|                                                  |                                                          | Year Ended December 31, 
|                                                  |                                                          |                         
|                                                  |                                                          | 2002                     |         | 2001   |         | 2000
|                                                  |                                                          |                          |         |        |         |     
|Revenues:                                         |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|                                                  | License                                                  |                          | $       | 99,943 |         |      | $       | 119,937 |         |   | $       | 101,649 |        
|                                                  | Service                                                  |                          |         | 95,498 |         |      |         | 80,208  |         |   |         | 54,953  |        
|                                                  |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|                                                  |                                                          | Total revenues           |         |        | 195,441 |      |         |         | 200,145 |   |         |         | 156,602 | 
|Cost of revenues:                                 |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|                                                  | License                                                  |                          |         | 6,185  |         |      |         | 4,500   |         |   |         | 2,034   |        
|                                                  | Service                                                  |                          |         | 39,246 |         |      |         | 42,539  |         |   |         | 31,009  |        
|                                                  |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|                                                  |                                                          | Total cost of revenues   |         |        | 45,431  |      |         |         | 47,039  |   |         |         | 33,043  | 
|                                                  |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|Gross profit                                      |                                                          |                          | 150,010 |        |         |      | 153,106 |         |         |   | 123,559 |        
|Operating expenses:                               |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|                                                  | Research and development                                 |                          |         | 45,631 |         |      |         | 46,271  |         |   |         | 26,493  |        
|                                                  | Sales and marketing                                      |                          |         | 86,760 |         |      |         | 99,334  |         |   |         | 75,034  |        
|                                                  | General and administrative                               |                          |         | 20,284 |         |      |         | 19,629  |         |   |         | 11,726  |        
|                                                  | Amortization of stock-based compensation                 |                          |         | 221    |         |      |         | 1,036   |         |   |         | 1,514   |        
|                                                  | Amortization of goodwill and other intangible
    assets |                          |         | 1,140  |         |      |         | 27,376  |         |   |         | 14,163  |        
|                                                  | Purchased in-process research and development            |                          |         |       |         |      |         |        |         |   |         | 8,648   |        
|                                                  | Restructuring charges                                    |                          |         | 17,030 |         |      |         | 12,096  |         |   |         |        |        
|                                                  |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|                                                  |                                                          | Total operating expenses |         |        | 171,066 |      |         |         | 205,742 |   |         |         | 137,578 | 
|                                                  |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|Loss from operations                              |                                                          |                          | (21,056 | )      |         |      | (52,636 | )       |         |   | (14,019 | )      
|Interest income and other, net                    |                                                          |                          | 6,420   |        |         |      | 8,971   |         |         |   | 4,306   |        
|Interest expense                                  |                                                          |                          | (57     | )      |         |      | (11     | )       |         |   | (458    | )      
|                                                  |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|Loss before income taxes                          |                                                          |                          | (14,693 | )      |         |      | (43,676 | )       |         |   | (10,171 | )      
|Income tax provision                              |                                                          |                          | 921     |        |         |      | 1,304   |         |         |   | 3,345   |        
|                                                  |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|Net loss                                          |                                                          | $                        | (15,614 | )      |         | $    | (44,980 | )       |         | $ | (13,516 | )      
|                                                  |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|Net loss per share:                               |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|                                                  | Basic and diluted                                        |                          | $       | (0.20  | )       |      | $       | (0.58   | )       |   | $       | (0.19   | )      
|                                                  |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|Shares used in calculation of net loss per share: |                                                          |                          |         |        |         |      |         |         |         |   |         |        
|                                                  | Basic and diluted                                        |                          |         | 79,753 |         |      |         | 77,599  |         |   |         | 69,758  |        
|                                                  |                                                          |                          |         |        |         |      |         |         |         |   |         |        

See accompanying notes to consolidated financial
statements.

4



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##### 



INFORMATICA CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

(in thousands, except share data)


|                                                                                                 |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   |         |         |  
|------------------------------------------------------------------------------------------------ | --------------------------------------- | ------------ | ---------- | ---------- |  | ------------ | ------- | ------------ |  | ------------- | --- | ------------- |  | ------ | ------ | - |  | - | ------- | ------- | - | - | ----- | --- |  | - | ------- | ------- | -
|                                                                                                 |                                         |              |            |            |  |              |         |              |  |               |     | Accumulated   |  |       
|                                                                                                 |                                         |              |            | Notes      |  |              |         |              |  | Other         |     |              
|                                                                                                 |                                         | Common Stock |            | Receivable |  | Deferred     |         |              |  | Comprehensive |     | Total        
|                                                                                                 |                                         |              |            | From       |  | Stock-Based  |         | Accumulated  |  | Income        |     | Stockholders
|                                                                                                 |                                         | Shares       |            | Amount     |  | Stockholders |         | Compensation |  | Deficit       |     | (Loss)        |  | Equity
|                                                                                                 |                                         |              |            |            |  |              |         |              |  |               |     |               |  |       
|Balances at December 31, 1999                                                                    |                                         |              | 63,997,236 |            |  | $            | 67,020  |              |  | $             | (40 | )             |  | $      | (2,888 | ) |  | $ | (23,884 | )       |   | $ | (84   | )   |  | $ | 40,124  |        
|Components of comprehensive loss:                                                                |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   |         |        
|                                                                                                 | Net loss                                |              |            |           |  |              |         |             |  |               |     |              |  |        |        |  |  |   |         | (13,516 | ) |   |       |    |  |   |         | (13,516 | )
|                                                                                                 | Foreign currency translation adjustment |              |            |           |  |              |         |             |  |               |     |              |  |        |        |  |  |   |         |        |   |   |       | 386 |  |   |         | 386     |  
|                                                                                                 |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   |         |        
|Comprehensive loss                                                                               |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   | (13,130 | )      
|Issuance of common stock in connection with
    secondary public offering, net of offering costs |                                         |              | 4,750,000  |            |  |              | 190,961 |              |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | 190,961 |        
|Issuance of common stock in connection with
    acquisitions                                     |                                         |              | 1,325,820  |            |  |              | 56,508  |              |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | 56,508  |        
|Repurchase of common stock                                                                       |                                         |              | (1,600     | )          |  |              | (3      | )            |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | (3      | )      
|Common stock options exercised                                                                   |                                         |              | 4,549,257  |            |  |              | 10,575  |              |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | 10,575  |        
|Common stock issued under employee stock purchase
    plan                                       |                                         |              | 967,472    |            |  |              | 3,908   |              |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | 3,908   |        
|Repayment of notes receivable from stockholders                                                  |                                         |              |           |            |  |              |        |              |  |               | 40  |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | 40      |        
|Deferred stock-based compensation                                                                |                                         |              |           |            |  |              | 2,073   |              |  |               |    |               |  |        | (2,073 | ) |  |   |        |         |   |   |      |     |  |   |        |        
|Amortization of stock-based compensation                                                         |                                         |              |           |            |  |              |        |              |  |               |    |               |  |        | 1,514  |   |  |   |        |         |   |   |      |     |  |   | 1,514   |        
|                                                                                                 |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   |         |        
|Balances at December 31, 2000                                                                    |                                         |              | 75,588,185 |            |  |              | 331,042 |              |  |               |    |               |  |        | (3,447 | ) |  |   | (37,400 | )       |   |   | 302   |     |  |   | 290,497 |        
|Components of comprehensive loss:                                                                |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   |         |        
|                                                                                                 | Net loss                                |              |            |           |  |              |         |             |  |               |     |              |  |        |        |  |  |   |         | (44,980 | ) |   |       |    |  |   |         | (44,980 | )
|                                                                                                 | Foreign currency translation adjustment |              |            |           |  |              |         |             |  |               |     |              |  |        |        |  |  |   |         |        |   |   |       | 32  |  |   |         | 32      |  
|                                                                                                 | Unrealized gains on investments         |              |            |           |  |              |         |             |  |               |     |              |  |        |        |  |  |   |         |        |   |   |       | 418 |  |   |         | 418     |  
|                                                                                                 |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   |         |        
|Comprehensive loss                                                                               |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   | (44,530 | )      
|Issuance of common stock in connection with
    acquisitions                                     |                                         |              | 93,704     |            |  |              | 2,359   |              |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | 2,359   |        
|Common stock options exercised                                                                   |                                         |              | 1,936,001  |            |  |              | 5,334   |              |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | 5,334   |        
|Common stock issued under employee stock purchase
    plan                                       |                                         |              | 945,398    |            |  |              | 5,712   |              |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | 5,712   |        
|Deferred stock-based compensation adjustments                                                    |                                         |              |           |            |  |              | (2,112  | )            |  |               |    |               |  |        | 2,112  |   |  |   |        |         |   |   |      |     |  |   |        |        
|Amortization of stock-based compensation                                                         |                                         |              |           |            |  |              |        |              |  |               |    |               |  |        | 1,036  |   |  |   |        |         |   |   |      |     |  |   | 1,036   |        
|                                                                                                 |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   |         |        
|Balances at December 31, 2001                                                                    |                                         |              | 78,563,288 |            |  |              | 342,335 |              |  |               |    |               |  |        | (299   | ) |  |   | (82,380 | )       |   |   | 752   |     |  |   | 260,408 |        
|Components of comprehensive loss:                                                                |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   |         |        
|                                                                                                 | Net loss                                |              |            |           |  |              |         |             |  |               |     |              |  |        |        |  |  |   |         | (15,614 | ) |   |       |    |  |   |         | (15,614 | )
|                                                                                                 | Foreign currency translation adjustment |              |            |           |  |              |         |             |  |               |     |              |  |        |        |  |  |   |         |        |   |   |       | 783 |  |   |         | 783     |  
|                                                                                                 | Unrealized gains on investments         |              |            |           |  |              |         |             |  |               |     |              |  |        |        |  |  |   |         |        |   |   |       | 305 |  |   |         | 305     |  
|                                                                                                 |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   |         |        
|Comprehensive loss                                                                               |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   | (14,526 | )      
|Common stock options exercised                                                                   |                                         |              | 1,591,321  |            |  |              | 2,130   |              |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | 2,130   |        
|Common stock issued under employee stock purchase
    plan                                       |                                         |              | 947,173    |            |  |              | 5,730   |              |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | 5,730   |        
|Compensation expense related to stock options                                                    |                                         |              |           |            |  |              | 190     |              |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | 190     |        
|Repurchase and retirement of common stock                                                        |                                         |              | (352,234   | )          |  |              | (1,750  | )            |  |               |    |               |  |        |       |   |  |   |        |         |   |   |      |     |  |   | (1,750  | )      
|Deferred stock-based compensation adjustments                                                    |                                         |              |           |            |  |              | (4      | )            |  |               |    |               |  |        | 4      |   |  |   |        |         |   |   |      |     |  |   |        |        
|Amortization of stock-based compensation                                                         |                                         |              |           |            |  |              |        |              |  |               |    |               |  |        | 221    |   |  |   |        |         |   |   |      |     |  |   | 221     |        
|                                                                                                 |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   |         |        
|Balances at December 31, 2002                                                                    |                                         |              | 80,749,548 |            |  | $            | 348,631 |              |  | $             |    |               |  | $      | (74    | ) |  | $ | (97,994 | )       |   | $ | 1,840 |     |  | $ | 252,403 |        
|                                                                                                 |                                         |              |            |            |  |              |         |              |  |               |     |               |  |        |        |   |  |   |         |         |   |   |       |     |  |   |         |        

See accompanying notes to consolidated financial
statements.

5



---



##### 



INFORMATICA CORPORATION

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(in thousands)


|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |        |         |         |  
|----------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | ------ | ------ | ------- | -------- | ------ | ------ | -------- | ------- | ------ | ------- | ------- | -
|                                                                                    |                                                                  |                                          
|                                                                                    |                                                                  | Year Ended December 31,                  
|                                                                                    |                                                                  |                                          
|                                                                                    |                                                                  | 2002                                      |                                           | 2001   |        | 2000   
|                                                                                    |                                                                  |                                           |                                           |        |        |        
|Operating activities                                                                |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|Net loss                                                                            |                                                                  | $                                         | (15,614                                   | )      |        | $       | (44,980  | )      |        | $        | (13,516 | )     
|Adjustments to reconcile net loss to net cash
    provided by operating activities: |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|                                                                                    | Depreciation and amortization                                    |                                           |                                           | 10,477 |        |         |          | 5,749  |        |          |         | 1,660  |        
|                                                                                    | Sales and returns allowances                                     |                                           |                                           | 1,181  |        |         |          | 1,186  |        |          |         | 2,506  |        
|                                                                                    | Provision for doubtful accounts                                  |                                           |                                           | 425    |        |         |          | 533    |        |          |         | 242    |        
|                                                                                    | Amortization of stock-based compensation                         |                                           |                                           | 221    |        |         |          | 1,036  |        |          |         | 1,514  |        
|                                                                                    | Amortization of goodwill and other intangible
    assets         |                                           |                                           | 1,140  |        |         |          | 27,376 |        |          |         | 14,163 |        
|                                                                                    | Purchased in-process research and development                    |                                           |                                           |       |        |         |          |       |        |          |         | 8,648  |        
|                                                                                    | Non-cash restructuring charges                                   |                                           |                                           | 1,887  |        |         |          | 1,497  |        |          |         |       |        
|                                                                                    | Gain on the sale of investments                                  |                                           |                                           | (154   | )      |         |          |       |        |          |         |       |        
|                                                                                    | Loss on disposal of property and equipment                       |                                           |                                           | 357    |        |         |          | 1,048  |        |          |         |       |        
|                                                                                    | Interest expense related to notes payable                        |                                           |                                           |       |        |         |          |       |        |          |         | 125    |        
|                                                                                    | Compensation expense related to stock options                    |                                           |                                           | 190    |        |         |          |       |        |          |         |       |        
|                                                                                    | Adjustment to acquisition allocation                             |                                           |                                           | (710   | )      |         |          |       |        |          |         |       |        
|                                                                                    | Changes in operating assets and liabilities:                     |                                           |                                           |        |        |         |          |        |        |          |         |        |        
|                                                                                    |                                                                  | Accounts receivable                       |                                           |        | (2,457 | )       |          |        | 899    |          |         |        | (24,739 | )      
|                                                                                    |                                                                  | Prepaid expenses and other current assets |                                           |        | (1,619 | )       |          |        | (3,973 | )        |         |        | (1,545  | )      
|                                                                                    |                                                                  | Other assets                              |                                           |        | 595    |         |          |        | 559    |          |         |        | (1,236  | )      
|                                                                                    |                                                                  | Accounts payable                          |                                           |        | (665   | )       |          |        | (1,419 | )        |         |        | (7,069  | )      
|                                                                                    |                                                                  | Accrued liabilities                       |                                           |        | 9,431  |         |          |        | 1,772  |          |         |        | 13,246  |        
|                                                                                    |                                                                  | Accrued compensation and related expenses |                                           |        | (3,182 | )       |          |        | 3,803  |          |         |        | 5,093   |        
|                                                                                    |                                                                  | Income taxes payable                      |                                           |        | (810   | )       |          |        | (1,245 | )        |         |        | 2,919   |        
|                                                                                    |                                                                  | Accrued restructuring charges             |                                           |        | 10,374 |         |          |        | 9,332  |          |         |        |        |        
|                                                                                    |                                                                  | Deferred revenue                          |                                           |        | 15,148 |         |          |        | 12,748 |          |         |        | 13,561  |        
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|                                                                                    |                                                                  |                                           | Net cash provided by operating activities |        |        | 26,215  |          |        |        | 15,921   |         |        |         | 15,572  |  
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|Investing activities                                                                |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|Purchase of property and equipment, net                                             |                                                                  |                                           | (6,911                                    | )      |        |         | (30,207  | )      |        |          | (30,854 | )     
|Purchases of investments                                                            |                                                                  |                                           | (230,084                                  | )      |        |         | (264,337 | )      |        |          |        |       
|Proceeds from the sale of investments                                               |                                                                  |                                           | 195,113                                   |        |        |         | 186,800  |        |        |          |        |       
|Acquisitions, net of cash acquired                                                  |                                                                  |                                           |                                          |        |        |         | (13,737  | )      |        |          | (6,318  | )     
|Transfer from (to) restricted cash                                                  |                                                                  |                                           |                                          |        |        |         | 8,116    |        |        |          | (20,282 | )     
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|                                                                                    |                                                                  |                                           | Net cash used in investing activities     |        |        | (41,882 | )        |        |        | (113,365 | )       |        |         | (57,454 | )
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|Financing activities                                                                |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|Proceeds from secondary public offering of common
    stock, net                    |                                                                  |                                           |                                          |        |        |         |         |        |        |          | 190,961 |       
|Proceeds from issuance of common stock, net of
    payments for repurchases         |                                                                  |                                           | 7,860                                     |        |        |         | 11,046   |        |        |          | 14,480  |       
|Repurchase and retirement of common stock                                           |                                                                  |                                           | (1,750                                    | )      |        |         |         |        |        |          |        |       
|Payments on notes payable to stockholders                                           |                                                                  |                                           |                                          |        |        |         |         |        |        |          | (3,572  | )     
|Payments on capital lease obligations                                               |                                                                  |                                           |                                          |        |        |         | (83      | )      |        |          | (221    | )     
|Repayment of notes receivable from stockholders                                     |                                                                  |                                           |                                          |        |        |         |         |        |        |          | 40      |       
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|                                                                                    |                                                                  |                                           | Net cash provided by financing activities |        |        | 6,110   |          |        |        | 10,963   |         |        |         | 201,688 |  
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|Effect of foreign currency translation on cash
    and cash equivalents             |                                                                  |                                           | 783                                       |        |        |         | 32       |        |        |          | 386     |       
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|Increase (decrease) in cash and cash
    equivalents                                |                                                                  |                                           | (8,774                                    | )      |        |         | (86,449  | )      |        |          | 160,192 |       
|Cash and cash equivalents at beginning of year                                      |                                                                  |                                           | 131,264                                   |        |        |         | 217,713  |        |        |          | 57,521  |       
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|Cash and cash equivalents at end of year                                            |                                                                  | $                                         | 122,490                                   |        |        | $       | 131,264  |        |        | $        | 217,713 |       
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|Supplemental disclosures:                                                           |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|                                                                                    | Interest paid                                                    |                                           | $                                         | 9      |        |         | $        | 3      |        |          | $       | 253    |        
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|                                                                                    | Income taxes paid                                                |                                           | $                                         | 1,943  |        |         | $        | 1,566  |        |          | $       | 163    |        
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|Supplemental disclosures of noncash investing
    and financing activities:         |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|                                                                                    | Deferred stock-based compensation related to
    options granted |                                           | $                                         | (4     | )      |         | $        | (2,112 | )      |          | $       | 2,073  |        
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|                                                                                    | Common stock issued for acquisitions                             |                                           | $                                         |       |        |         | $        | 2,359  |        |          | $       | 56,508 |        
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       
|                                                                                    | Unrealized gain on available-for-sale securities                 |                                           | $                                         | 305    |        |         | $        | 418    |        |          | $       |       |        
|                                                                                    |                                                                  |                                           |                                           |        |        |         |          |        |        |          |         |       

See accompanying notes to consolidated financial
statements.

6



---



##### 



INFORMATICA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

1.  Description of the Company and a
Summary of its Significant Accounting Policies



| |                           
| | --------------------------
| | Description of the Company

Informatica Corporation (the Company)
was incorporated in California in February 1993 and
reincorporated in Delaware in April 1999. The Company is a
leading provider of business analytics software that enables its
customers to automate the integration, analysis and delivery of
critical corporate information. Using the Companys
products, managers and executives gain valuable business insight
they can use to help improve operational performance and enhance
competitive advantage.



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

The Consolidated Financial Statements include the
accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been
eliminated.

The functional currency of the Companys
foreign subsidiaries is the local currency. The Company
translates all assets and liabilities of foreign subsidiaries to
U.S. dollars at the current exchange rates as of the applicable
balance sheet date. Revenue and expenses are translated at the
average exchange rate prevailing during the period. Gains and
losses resulting from the translation of the foreign
subsidiaries financial statements are reported as a
separate component of stockholders equity. Net gains and
losses resulting from foreign exchange transactions, amounting
to a gain (loss) of approximately $1.4 million,
$(0.2) million and $(0.6) million for the years ended
December 31, 2002, 2001 and 2000, respectively, are
included in interest income and other, net in the accompanying
Consolidated Statements of Operations.

Certain amounts in the Companys prior
years Consolidated Balance Sheets and Statements of
Operations were reclassified to conform with the current period
presentation. Reimbursements received for out-of-pocket expenses
have been reported as service revenues as a result of the
adoption of Financial Accounting Standards Board
(FASB) in Emerging Issues Task Force No. 01-14
(EITF 01-14), Income Statement
Characterization of Reimbursements Received for
Out-of-Pocket Expenses Incurred. In prior
periods, the out-of-pocket expenses were reported as a reduction
of cost of service revenues. As a result, the following amounts
were reclassified for 2001 and 2000 (in thousands):

|                                                 |  |              |        |              |  |   |        | 
|------------------------------------------------ |  | ------------ | ------ | ------------ |  | - | ------ | 
|                                                 |  | Year Ended   |        | Year Ended  
|                                                 |  | December 31, |        | December 31,
|                                                 |  | 2001         |        | 2000        
|                                                 |  |              |        |             
|Service revenues, as previously reported         |  | $            | 77,415 |              |  | $ | 52,409 | 
|Add: reimbursements for out-of-pocket expenses   |  |              | 2,793  |              |  |   | 2,544  | 
|                                                 |  |              |        |              |  |   |        | 
|Service revenues, reclassified                   |  | $            | 80,208 |              |  | $ | 54,953 | 
|                                                 |  |              |        |              |  |   |        | 
|Cost of service revenues, as previously reported |  | $            | 39,746 |              |  | $ | 28,465 | 
|Add: reimbursements for out-of-pocket expenses   |  |              | 2,793  |              |  |   | 2,544  | 
|                                                 |  |              |        |              |  |   |        | 
|Cost of service revenues, reclassified           |  | $            | 42,539 |              |  | $ | 31,009 | 
|                                                 |  |              |        |              |  |   |        | 

Long-term investments have been reclassified to
short-term investments to conform to the current period
presentation. In accordance with Statement of Financial
Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity
Securities, and based on the Companys intention
to have the marketable securities available to support its
current operations, the Company classifies all marketable
securities as available-for-sale and as short-term investments.

Certain identifiable intangible assets with
indefinite lives have been reclassified to goodwill to conform
to the current period presentation.

7



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                 
| | ----------------
| | Use of Estimates

The Companys Consolidated Financial
Statements are prepared in accordance with accounting principles
generally accepted in the United States (GAAP).
These accounting principles require us to make certain
estimates, judgments and assumptions. The Company believes that
the estimates, judgments and assumptions upon which we rely are
reasonable based upon information available to us at the time
that these estimates, judgments and assumptions are made. These
estimates, judgments and assumptions can affect the reported
amounts of assets and liabilities as of the date of the
financial statements as well as the reported amounts of revenues
and expenses during the periods presented. To the extent there
are material differences between these estimates and actual
results, our financial statements would have been affected. In
many cases, the accounting treatment of a particular transaction
is specifically dictated by GAAP and does not require
managements judgment in its application. There are also
areas in which managements judgment in selecting any
available alternative would not produce a materially different
result.



| |                                                  
| | -------------------------------------------------
| | Cash and Cash Equivalents and Restricted
    Cash

The Company considers highly liquid investment
securities with maturities, at date of purchase, of ninety days
or less to be cash equivalents. Cash and cash equivalents, which
primarily consist of money market funds and government
securities with insignificant interest rate risk, are stated at
cost, which approximates fair value. Restricted cash consists of
amounts held in deposits that are required as collateral under
facilities lease agreements.



| |            
| | -----------
| | Investments

Investments are comprised of marketable
securities, which consist primarily of commercial paper,
government notes and bonds, corporate bonds and municipal
securities with original maturities beyond ninety days. All
marketable securities are held in the Companys name and
custodied with three major financial institutions. The
Companys marketable securities are reported at fair value,
with unrealized gains and losses, net of tax, recorded in
stockholders equity. The Company classifies all
available-for-sale marketable securities as short-term
investments. Realized gains or losses and permanent declines in
value, if any, on available-for-sale securities will be reported
in other income or expense as incurred.



| |                       
| | ----------------------
| | Property and Equipment

Property and equipment is stated at cost less
accumulated depreciation. Depreciation is provided using the
straight-line method over the estimated useful lives of the
related assets, generally three to five years. Leasehold
improvements are amortized using the straight-line method over
the shorter of the lease term or the estimated useful life of
the related asset.



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

The Company accounts for software development
costs in accordance with SFAS No. 86, Accounting
for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed,under which certain software
development costs incurred subsequent to the establishment of
technological feasibility are capitalized and amortized over the
estimated lives of the related products. Technological
feasibility is established upon completion of a working model.
Through December 31, 2002, costs incurred subsequent to the
establishment of technological feasibility have not been
significant and all software development costs have been charged
to research and development expense in the accompanying
Consolidated Statements of Operations.

Pursuant to AICPA Statement of Position
(SOP) No. 98-1, Accounting for Costs
of Computer Software Developed or Obtained for Internal
Use,the Company capitalizes certain costs relating to
software acquired, developed or modified solely to meet the
Companys internal requirements and for which there are

8



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

no substantive plans to market the software.
Costs capitalized relating to software developed to meet
internal requirements were $4.4 million and
$6.0 million for the years ended December 31, 2002 and
2001, respectively, and are included in property and equipment.



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

The FASB issued SFAS No. 141 (SFAS
141), Business Combinationsand SFAS
No. 142 (SFAS 142), Goodwill and Other
Intangible Assetsin July 2001. SFAS 141 requires that
all business combinations be accounted for using the purchase
method, thereby prohibiting the pooling-of-interests method.
SFAS 141 also specifies criteria for recognizing and reporting
intangible assets apart from goodwill; however, assembled
workforce must be recognized and reported in goodwill. SFAS 142
requires that intangible assets with an indefinite life should
not be amortized until their life is determined to be finite,
and all other intangible assets must be amortized over their
useful life. SFAS 142 also requires that goodwill not be
amortized but instead tested for impairment in accordance with
the provisions of SFAS 142 at least annually and more frequently
upon the occurrence of certain events (see Impairment
of Long-Lived Assetsbelow).

The Company adopted certain provisions of these
pronouncements effective July 1, 2001, as required for
goodwill and intangible assets acquired in purchase business
combinations consummated after June 30, 2001. The Company
adopted the remaining provisions of SFAS 141 and SFAS 142
effective January 1, 2002. There was not a cumulative
transition adjustment upon adoption as of July 1, 2001 or
January 1, 2002. SFAS 141 and SFAS 142 required the Company
to perform the following as of January 1, 2002:
(i) review goodwill and intangible assets for possible
reclassifications; (ii) reassess the lives of intangible
assets; and (iii) perform a transitional goodwill
impairment test. The Company reviewed the balances of goodwill
and identifiable intangibles and reclassified $0.8 million
relating to the carrying value of assembled workforce from
identified intangibles to goodwill. The Company has also
reviewed the useful lives of its identifiable intangible assets
and determined that the original estimated lives remain
appropriate. The Company completed the transitional goodwill
impairment test and has determined that the Company did not have
an impairment of goodwill.

As required by SFAS 142, the Company has not
amortized goodwill associated with acquisitions completed after
June 30, 2001, for any period presented, and ceased
amortization of goodwill associated with acquisitions completed
prior to July 1, 2001, effective January 1, 2002.
Prior to January 1, 2002, the Company amortized goodwill
associated with the pre-July 1, 2001 acquisitions over two
years using the straight-line method. Identifiable intangible
assets (acquired technology and patents) are currently amortized
over two to three years using the straight-line method. See
Note 2 and Note 6 for a further discussion of the
Companys goodwill and other intangible assets.



| |                                    
| | -----------------------------------
| | Impairment of Long-Lived
    Assets

The Company assessed goodwill for impairment in
accordance with SFAS 142, which requires that goodwill be tested
for impairment at the reporting unit level
(Reporting Unit) at least annually and more
frequently upon the occurrence of certain events, as defined by
SFAS 142. Consistent with the Companys determination that
it has only one reporting segment, the Company has determined
that it has only one Reporting Unit, specifically the license,
implementation and support of our software applications.
Goodwill was tested for impairment on the adoption of
SFAS 142 on January 1, 2002 and in the annual
impairment test on October 31, 2002 using the two-step
process required by SFAS 142. First, the Company reviewed
the carrying amount of its Reporting Unit compared to the
fair value of the Reporting Unit based on quoted
market prices of the Companys common stock and the
discounted cash flows based on analyses prepared by the Company
and with the assistance of third-party analysts. The
Companys cash flow forecasts were based on assumptions
that are consistent with the plans and estimates being used to
manage the underlying assumptions. An excess carrying value
compared to fair value would indicate that goodwill may be
impaired. Second, if the Company determines that goodwill may be
impaired, the Company compares the implied fair

9



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

value of the goodwill, as defined by
SFAS 142, to its carrying amount to determine the
impairment loss, if any. The Company completed the annual
impairment test as of October 31, 2002, which did not
result in any impairment charge.

On January 1, 2002, the Company adopted SFAS
No. 144 (SFAS 144), Accounting
for the Impairment or Disposal of Long-Lived Assetswhich supersedes certain provisions of APB Opinion
No. 30 Reporting the Results of
Operations  Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactionsand
supersedes SFAS No. 121 Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of.There was not a cumulative transition
adjustment upon adoption. In accordance with SFAS 144, the
Company evaluates long-lived assets, other than goodwill, for
impairment whenever events or changes in circumstances indicate
that the carrying value of an asset may not be recoverable based
on expected undiscounted cash flows attributable to that asset.
The amount of any impairment is measured as the difference
between the carrying value and the fair value of the impaired
asset.



| |                                                         
| | --------------------------------------------------------
| | Concentrations of Credit Risk and Credit
    Evaluations

Financial instruments, which subject the Company
to concentrations of credit risk, consist primarily of cash and
cash equivalents, investments in marketable securities and trade
accounts receivable. The Company maintains its cash and cash
equivalents and investments with high quality financial
institutions. The Company performs ongoing credit evaluations of
its customers, which are primarily located in the U.S., Europe
and Canada, and generally does not require collateral.
Allowances for credit risks and for estimated future returns are
provided upon shipment. Returns to date have not been material.
Actual credit losses and returns may differ from the
Companys estimates and such differences could be material
to the financial statements.



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

The Company generates revenues from sales of
software licenses and services, which consist of maintenance,
consulting and training. The Companys license revenues are
derived from its business analytics software, which consists of
data integration products and, to a lesser extent, data
warehouse modules, business intelligence platform and analytic
application suites. The Company receives software license
revenues from licensing its products directly to end users and
indirectly through resellers, distributors and OEMs. The Company
receives service revenues from maintenance contracts, consulting
services and training that it performs for customers that
license its products either directly from the Company or
indirectly through resellers, distributors and OEMs.

The Company recognizes revenue in accordance with
SOP 97-2 Software Revenue Recognition,as
amended and modified by SOP 98-9, Modification of SOP
97-2, Software Revenue Recognition, With Respect to Certain
Transactions.The Company recognizes license revenues
when a noncancelable license agreement has been signed, the
product has been shipped, the fees are fixed or determinable,
collectibility is probable and vendor-specific objective
evidence of fair value exists to allocate the fee to the
undelivered elements of the arrangement. Vendor-specific
objective evidence is based on the price charged when an element
is sold separately. In the case of an element not yet sold
separately, the price is established by the Companys
authorized management. If an acceptance period is required, the
Company recognizes revenue upon customer acceptance or the
expiration of the acceptance period. Credit-worthiness and
collectibility for end users are first assessed on a country
level and then, for those customers in countries deemed to have
sufficient timely payment history, customers are assessed based
on payment history and credit profile. For the data integration
products, data warehouse modules and business intelligence
platform sold directly to end users, the Company recognizes
revenue upon shipment when collectibility is probable. When a
customer is not deemed credit-worthy, revenue is recognized upon
cash receipt. For the Companys analytic application
suites, it recognizes both the license and maintenance revenue
ratably over the maintenance period, generally one

10



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

year. Support for the analytic application suites
for the first year is never sold separately and in consideration
of the complexities of the implementation the customer is
entitled to receive support services that are different than the
standard annual support services of the Companys other
products. The Companys standard agreements do not contain
product return rights.

The Company also enters into reseller and
distributor arrangements that typically provide for sublicense
or end user license fees based on a percentage of list prices.
Revenue arrangements with resellers and distributors require
evidence of sell-through, that is, persuasive evidence that the
products have been sold to an identified end user. For data
integration products, data warehouse modules and business
intelligence platform sold indirectly through the Companys
resellers and distributors, the Company recognizes revenue upon
shipment and receipt of evidence of sell-through if the reseller
or distributor has been deemed credit-worthy. Credit-worthiness
and collectibility for resellers and distributors are first
assessed on a country level and then, for those resellers and
distributors in countries deemed to have sufficient timely
payment history, resellers and distributors are assessed based
on established credit history consisting of sales of at least
one million dollars and with timely payment history, generally
for the last twelve months. When resellers and distributors are
not deemed credit-worthy, revenue is recognized upon cash
receipt.

The Company also enters into OEM arrangements
that provide for license fees based on inclusion of the
Companys products in the OEMs products. These arrangements
provide for fixed, irrevocable royalty payments.
Credit-worthiness and collectibility for OEMs are first assessed
on a country level and then, for those OEMs in countries deemed
to have sufficient timely payment history, OEMs are assessed
based on established credit history consisting of sales of at
least one million dollars and with timely payment history,
generally for the last twelve months. For credit-worthy OEMs,
royalty payments are recognized when due. When OEMs are not
deemed credit-worthy, revenue is recognized upon cash receipt.

The Company recognizes maintenance revenues,
which consist of fees for ongoing support and product updates,
ratably over the term of the contract, typically one year.
Consulting revenues are primarily related to implementation
services and product enhancements performed on a
time-and-materials basis or, on a very infrequent basis, a fixed
fee arrangement under separate service arrangements related to
the installation and implementation of our software products.
Training revenues are generated from classes offered at the
Companys headquarters, sales offices and customer
locations. Revenues from consulting and training services are
recognized as the services are performed. When a contract
includes both license and service elements, the license fee is
recognized on delivery of the software or cash collections,
provided services do not include significant customization or
modification of the base product, and are not otherwise
essential to the functionality of the software and the payment
terms for licenses are not dependent on additional acceptance
criteria.

Deferred revenue includes deferred license,
maintenance, consulting and training revenue. Deferred revenue
amounts do not include items that are both deferred and
unbilled. The Companys practice is to net unpaid deferred
items against the related receivables balances from those OEMs,
specific resellers, distributors and specific international
customers for which we defer revenue until payment is received.



| |                            
| | ---------------------------
| | Shipping and Handling Costs

Shipping and handling costs in connection with
our packaged software products are not material and are expensed
as incurred and included in cost of license revenues in the
Companys results of operations.



| |                    
| | -------------------
| | Advertising Expense

Advertising costs are expensed as incurred.
Advertising expense was $0.3 million, $0.5 million and
$1.5 million for the years ended December 31, 2002,
2001 and 2000, respectively.

11



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                         
| | ------------------------
| | Stock-Based Compensation

The Company accounts for stock issued to
employees in accordance with Accounting Principles Board Opinion
No. 25 (APB 25), Accounting for Stock
Issued to Employeesand complies with the disclosure
provisions of SFAS No. 123 (SFAS 123),
Accounting for Stock-Based Compensationand
SFAS No. 148 (SFAS 148), Accounting
for Stock-Based Compensation  Transition and
Disclosure.Under APB 25, compensation expense of
fixed stock options is based on the difference, if any, on the
date of the grant between the fair value of the Companys
stock and the exercise price of the option. See Note 9 for
the pro forma disclosure required under SFAS 148. The Company
accounts for stock issued to non-employees in accordance with
the provisions of SFAS 123 and EITF No. 96-18,
Accounting for Equity Instruments That are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services.



| |                   
| | ------------------
| | Net Loss Per Share

Under the provisions of SFAS No. 128,
Earnings per Share,basic net loss per share
is computed using the weighted-average number of common shares
outstanding during the period. Diluted earnings per share
reflects the potential dilution of securities by adding other
common stock equivalents, including stock options, warrants and
convertible preferred stock, to the weighted-average number of
common shares outstanding during the period, if dilutive.
Potentially dilutive securities have been excluded from the
computation of diluted net loss per share for all periods, as
their inclusion would be antidilutive.

The calculation of basic and diluted net loss per
share is as follows:

|                                                                                                                        |  |                                       |         |      |  |      |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                                                                                        |  |                                      
|                                                                                                                        |  | Year Ended December 31,              
|                                                                                                                        |  |                                      
|                                                                                                                        |  | 2002                                  |         | 2001 |  | 2000
|                                                                                                                        |  |                                       |         |      |  |     
|                                                                                                                        |  |                                      
|                                                                                                                        |  | (in thousands, except per share data)
|Net loss                                                                                                                |  | $                                     | (15,614 | )    |  | $    | (44,980 | ) |  | $ | (13,516 | )
|                                                                                                                        |  |                                       |         |      |  |      |         |   |  |   |         |  
|Weighted-average shares of common stock
    outstanding used in calculation of basic and diluted net loss
    per share |  |                                       | 79,753  |      |  |      | 77,599  |   |  |   | 69,758  |  
|                                                                                                                        |  |                                       |         |      |  |      |         |   |  |   |         |  
|Basic and diluted net loss per share                                                                                    |  | $                                     | (0.20   | )    |  | $    | (0.58   | ) |  | $ | (0.19   | )
|                                                                                                                        |  |                                       |         |      |  |      |         |   |  |   |         |  

If the Company had reported net income, the
calculation of diluted earnings per share would have included
the shares used in the computation of basic net loss per share
as well as an additional 3,245,000, 5,121,000 and 10,654,000
common equivalent shares related to outstanding stock options
and warrants not included in the calculations above (determined
using the treasury stock method) for the years ended
December 31, 2002, 2001 and 2000, respectively.



| |                            
| | ---------------------------
| | Comprehensive Income (Loss)

The Company reports comprehensive income or loss
in accordance with the provisions of SFAS No. 130,
Reporting Comprehensive Income, which
establishes standards for reporting comprehensive income and its
components in the financial statements. The components of other
comprehensive income (loss) consist of unrealized gains and
losses on available-for-sale securities and cumulative
translation adjustments. Total comprehensive loss and the
components of accumulated other comprehensive income are
presented in the accompanying Consolidated Statements of
Stockholders Equity. Tax effects of other comprehensive
income (loss) are not material for any period presented.



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

The Company accounts for income taxes in
accordance with SFAS No. 109, Accounting for
Income Taxes,which requires the use of the liability
method in accounting for income taxes. Under this method,

12



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

deferred tax assets and liabilities are measured
using enacted tax rates and laws that will be in effect when the
differences are expected to reverse. Valuation allowances are
established, when necessary, to reduce the deferred tax assets
to the amounts expected to be realized.



| |                                     
| | ------------------------------------
| | Recent Accounting
    Pronouncements

In July 2002, the FASB issued SFAS No. 146
(SFAS 146), Accounting for Costs
Associated with Exit or Disposal Activities.SFAS 146 addresses financial accounting and reporting
for costs associated with an exit or disposal activity and
requires such costs to be recognized when the liability is
incurred. Previous guidance in EITF No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (Certain Costs
Incurred in a Restructuring)required that a liability
for an exit cost be recognized at the date of a companys
commitment to an exit plan. The provisions of SFAS 146 are
effective for exit or disposal activities that are initiated by
a company after December 31, 2002. The adoption of
SFAS 146 is not expected to have a material effect on the
Companys financial position or results of operations.

In December 2002, the FASB issued SFAS
No. 148 (SFAS 148), Accounting
for Stock-Based Compensation -Transition and
Disclosure. SFAS 148 amends SFAS 123 to
provide alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based
employee compensation. In addition, SFAS 148 amends the
disclosure requirements of SFAS 123 to require prominent
disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee
compensation and the effect of the method used on reported
results. The transition guidance and annual disclosure
provisions of SFAS 148 are effective for fiscal years
ending after December 15, 2002. The interim disclosure
provisions are effective for financial reports containing
financial statements for interim periods beginning after
December 15, 2002. The adoption of SFAS 148 is not
expected to have a material effect on the Companys
financial position and results of operations.

In December 2002, the FASB issued Interpretation
No. 45 (FIN 45), Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others.FIN 45 elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about
its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. The Company has
adopted the disclosure requirements of FIN 45 as of
December 31, 2002. In addition, the Company is required to
adopt the initial recognition and measurement of the fair value
of the obligation undertaken in issuing the guarantee on a
prospective basis to guarantees issued or modified after
December 31, 2002. As permitted under SFAS 148, the
Company adopted on the disclosure provisions of the accounting
standard in the Consolidated Financial Statements. The Company
does not believe FIN 45 will have a material effect on its
financial position or results of operations.

In January 2003, the FASB issued Interpretation
No. 46 (FIN 46), Consolidation of
Variable Interest Entities,an interpretation of
Accounting Research Bulletin (ARB) No. 51,
Consolidated Financial Statements.
FIN 46 establishes accounting guidance for consolidation of
a variable interest entity (VIE), formerly referred
to as special purpose entities. FIN 46 applies to any
business enterprise, both public and private, that has a
controlling interest, contractual relationship or other business
relationship with a VIE. FIN 46 provides guidance for
determining when an entity, the Primary Beneficiary, should
consolidate another entity, a VIE, that functions to support the
activities of the Primary Beneficiary. We currently have no
contractual relationship or other business relationship with a
VIE and do not have any such plans and therefore the adoption
will not have an effect on our consolidated financial position
or results of operations.

13



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

2.  Business Combinations

In January 2001, the Company acquired syn-T-sys
B.V. and syn-T-sys N.V. (syn-T-sys), distributors of
Informatica products in the Netherlands and Belgium,
respectively. The agreement was structured as a share purchase
and accounted for as a purchase transaction. Under the terms of
the agreement, the Company issued 44,161 shares of the
Companys common stock, valued at approximately
$1.5 million, and paid cash consideration of approximately
$5.8 million in exchange for the outstanding shares of
capital stock of syn-T-sys. The purchase price of the
transaction, including related expenses, was approximately
$7.5 million, which was allocated to the acquired assets
and liabilities based on the estimated fair values as of the
date of the acquisition. Amounts allocated to goodwill of
$6.8 million were being amortized on a straight-line basis
over a two-year period. In accordance with SFAS 142, goodwill
will no longer be amortized after December 2001. The results of
operations of syn-T-sys have been included in the Companys
results of operations since the acquisition date. Pro forma
results of operations have not been presented since the effects
of the acquisition were not material to the Companys
consolidated financial position, results of operations or cash
flows for the periods presented.

In June 2001, the Company acquired Informatica
Partners, a distributor of Informatica products in France. The
agreement was structured as a share purchase and accounted for
as a purchase transaction. Under the terms of the agreement, the
Company issued 49,543 shares of the Companys common stock,
valued at approximately $0.9 million, and paid cash
consideration of approximately $4.0 million in exchange for
the outstanding shares of capital stock of Informatica Partners.
As part of the agreement, 6,907 of the shares issued pursuant to
the acquisition were placed in escrow contingent on the
continued employment of certain employees and were not included
in the purchase price. In 2002, these 6,907 shares were released
from escrow. The purchase price of the transaction, including
related expenses, was approximately $5.0 million, which was
allocated to the acquired assets and liabilities based on the
estimated fair values as of the date of the acquisition. Amounts
allocated to goodwill of $4.8 million were being amortized
on a straight-line basis over a two-year period. In accordance
with SFAS 142, goodwill will no longer be amortized after
December 2001. The results of operations of Informatica Partners
have been included in the Companys results of operations
since the acquisition date.

The following unaudited pro forma adjusted
summary reflects the Companys condensed consolidated
results of operations for the year ended December 31, 2001
and 2000, assuming Informatica Partners had been acquired on
January 1, 2000 and is not intended to be indicative of
future results:

|                                                              |  |                           |         |      |  |   |         |  
|------------------------------------------------------------- |  | ------------------------- | ------- | ---- |  | - | ------- | -
|                                                              |  |                          
|                                                              |  | Year ended December 31,  
|                                                              |  |                          
|                                                              |  | 2001                      |         | 2000
|                                                              |  |                           |         |     
|                                                              |  |                          
|                                                              |  | (in thousands, except per
|                                                              |  | share data)              
|Pro forma adjusted total revenue                              |  | $                         | 200,624 |      |  | $ | 159,317 |  
|Pro forma adjusted net loss                                   |  | $                         | (46,604 | )    |  | $ | (15,076 | )
|Pro forma adjusted net loss per share 
    basic and diluted |  | $                         | (0.60   | )    |  | $ | (0.22   | )

In February 2000, the Company acquired Delphi
Solutions AG (Delphi), a distributor of Informatica
products in Switzerland. The agreement was structured as a share
purchase and accounted for as a purchase transaction. The
estimated purchase price of $9.2 million included payments
associated with 1999 revenues and projections for 2000 revenues.
The first payment of approximately $3.6 million was paid in
February 2000, and the second payment of approximately
$4.3 million was paid in January 2001. In June 2001, we
paid the final payment under the share purchase agreement. As a
result, the purchase price and related goodwill were reduced by
$0.6 million. Following the final payment in June 2001, the
Company is no longer required to hold a certificate of deposit
for $8.1 million, which was classified as restricted cash
on the Companys Consolidated Balance Sheet until July
2001. The purchase price of the transaction was allocated to the
acquired assets and liabilities based on the estimated fair
values as of the date of the acquisition. Amounts allocated to
goodwill of

14



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

$8.4 million, net of the $0.6 million
reduction, were being amortized on a straight-line basis over a
two-year period. In accordance with SFAS 142, goodwill will
no longer be amortized after December 2001. As part of this
agreement, the Company is required to hold a certificate of
deposit for $8.1 million that was classified as restricted
cash on the Companys balance sheet until July 2001. The
results of operations of Delphi have been included in the
Companys results of operations since the acquisition date.
Pro forma results of operations have not been presented since
the impact of Delphis January 2000 results were not
material to the Companys actual results of operations for
the periods presented.

In August 2000, the Company completed the
acquisition of Zimba, a leading provider of e-business analytic
solutions that enable mobile professionals with real-time access
to corporate and external information through wireless devices,
voice recognition technology and the Internet. The transaction
was accounted for as a purchase transaction. Under the terms of
the agreement, the Company issued 507,544 shares of common stock
in exchange for the outstanding shares of common stock of Zimba.
In addition, all the outstanding options to purchase Zimba
common stock were automatically converted into options to
purchase the Companys common stock based on the conversion
ratio in the agreement with a corresponding adjustment to their
respective exercise prices. The total purchase price, including
assumed liabilities and related expenses, was
$26.0 million, of which $2.1 million was allocated to
identifiable intangible assets, including core technology of
$1.4 million, acquired workforce of $0.4 million and
patents of $0.3 million, $0.6 million was allocated to
assumed liabilities and related expenses, and the balance of
$18.2 million was allocated to goodwill. Goodwill and other
intangible assets were being amortized on a straight-line basis
over two years for the acquired workforce and over three years
for the core technology, patents and goodwill. In accordance
with SFAS 142, goodwill will no longer be amortized after
December 2001. Purchased in-process research and development of
$5.1 million was expensed in the third quarter of 2000
because the in-process technology had not reached technological
feasibility and had no alternative uses. The value of the
purchased in-process research and development was computed using
a discounted cash flow analysis based on managements
estimates of future revenues, cost of revenues and operating
expenses related to the products and technologies acquired from
Zimba. All assumed options of Zimba were valued at fair value
and included in the purchase price, net of the intrinsic value
of any unvested options, which were included in deferred
stock-based compensation as a component of stockholders
equity and are being amortized over the remaining vesting
period. The results of operations of Zimba have been included in
the Companys results of operations since the acquisition
date.

The following unaudited pro forma adjusted
summary reflects the condensed consolidated results of
operations for the year ended December 31, 2000, assuming
Zimba had been acquired on January 1, 2000 and is not
intended to be indicative of future results:

|                                                              |  |                       |         |  
|------------------------------------------------------------- |  | --------------------- | ------- | -
|                                                              |  | Year Ended           
|                                                              |  | December 31, 2000    
|                                                              |  |                      
|                                                              |  | (in thousands, except
|                                                              |  | per share data)      
|Pro forma adjusted total revenue                              |  | $                     | 156,602 |  
|Pro forma adjusted net loss                                   |  | $                     | (15,322 | )
|Pro forma adjusted net loss per share 
    basic and diluted |  | $                     | (0.22   | )

3.  Asset Acquisitions

In April 2000, the Company announced a strategic
alliance with PricewaterhouseCoopers (PwC) to
jointly develop, market, sell and support analytic application
suites. In connection with the agreement relating to the
strategic alliance, PwC received 818,276 shares of the
Companys common stock. The total purchase price, including
related expenses, was approximately $31.8 million, which was
allocated to goodwill and various identifiable intangible
assets, including goodwill of $22.9 million, core
technology of $1.7 million and acquired workforce and
consultants of $5.0 million. Goodwill and other
identifiable intangible assets were

15



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

being amortized on a straight-line basis over two
years for the acquired workforce and consultants and over three
years for the core technology and goodwill. In accordance with
SFAS 142, goodwill will no longer be amortized after
December 2001. Purchased in-process research and development of
$2.2 million was expensed in the second quarter of 2000
because the in-process technology had not reached technological
feasibility and had no alternative uses. The value of the
purchased in-process research and development was computed using
a discounted cash flow analysis based on managements
estimates of future revenues, cost of revenues and operating
expenses related to the products and technologies acquired from
PwC.

In November 2000, the Company completed an
intellectual property transfer agreement with certain
individuals (QRB Developers). The acquisition was
accounted for as a purchase transaction. The total purchase
price, including related expenses, was approximately
$4.1 million, of which $0.1 million was allocated to
the acquired workforce and $2.7 million was allocated to
goodwill. Goodwill and other identifiable intangible assets were
being amortized on a straight-line basis over three years for
goodwill and over two years for the acquired workforce. In
accordance with SFAS 142, goodwill will no longer be
amortized after December 2001. Purchased in-process research and
development of $1.3 million was expensed in the fourth
quarter of 2000 because the in-process technology had not
reached technological feasibility and had no alternative uses.
The value of the purchased in-process research and development
was computed using a discounted cash flow analysis based on
managements estimates of future revenues, cost of revenues
and operating expenses related to the technologies acquired from
QRB Developers.

4.  Investments

The Companys marketable securities are
classified as available-for-sale as of the balance sheet date
and are reported at fair value with unrealized gains and losses
reported as a separate component of accumulated other
comprehensive income in stockholders equity. Realized
gains and losses and permanent declines in value, if any, on
available-for-sale securities will be reported in other income
or expense as incurred. The Company reported a realized gain of
$0.2 million for the year ended December 31, 2002. No
realized gains and losses were reported for the years ended
December 31, 2001 and 2000. The cost of securities sold was
determined based on the specific identification method.

The available-for-sale securities consist of the
following as of December 31, 2002:

|                                |  |                |         |            |  |            |     |            |  |   |   |  |  |   |         | 
|------------------------------- |  | -------------- | ------- | ---------- |  | ---------- | --- | ---------- |  | - | - |  |  | - | ------- | 
|                                |  |                |         | Gross      |  | Gross      |     |           
|                                |  | Amortized      |         | Unrealized |  | Unrealized |     |           
|                                |  | Cost           |         | Gains      |  | Losses     |     | Fair Value
|                                |  |                |         |            |  |            |     |           
|                                |  |               
|                                |  | (in thousands)
|Money market funds              |  | $              | 47,239  |            |  | $          |    |            |  | $ |  |  |  | $ | 47,239  | 
|Corporate notes and bonds       |  |                | 32,218  |            |  |            | 320 |            |  |   |  |  |  |   | 32,538  | 
|Municipal securities            |  |                | 26,200  |            |  |            |    |            |  |   |  |  |  |   | 26,200  | 
|U.S. Government notes and bonds |  |                | 74,144  |            |  |            | 403 |            |  |   |  |  |  |   | 74,547  | 
|                                |  |                |         |            |  |            |     |            |  |   |   |  |  |   |         | 
|                                |  | $              | 179,801 |            |  | $          | 723 |            |  | $ |  |  |  | $ | 180,524 | 
|                                |  |                |         |            |  |            |     |            |  |   |   |  |  |   |         | 

16



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The available-for-sale securities consist of the
following as of December 31, 2001:

|                                |  |                |         |            |  |            |     |            |  |   |     |   |  |   |         | 
|------------------------------- |  | -------------- | ------- | ---------- |  | ---------- | --- | ---------- |  | - | --- | - |  | - | ------- | 
|                                |  |                |         | Gross      |  | Gross      |     |           
|                                |  | Amortized      |         | Unrealized |  | Unrealized |     |           
|                                |  | Cost           |         | Gains      |  | Losses     |     | Fair Value
|                                |  |                |         |            |  |            |     |           
|                                |  |               
|                                |  | (in thousands)
|Money market funds              |  | $              | 86,343  |            |  | $          |    |            |  | $ |    |   |  | $ | 86,343  | 
|Corporate notes and bonds       |  |                | 20,086  |            |  |            | 303 |            |  |   | (8  | ) |  |   | 20,381  | 
|Municipal securities            |  |                | 11,600  |            |  |            |    |            |  |   |    |   |  |   | 11,600  | 
|U.S. Government notes and bonds |  |                | 57,451  |            |  |            | 129 |            |  |   | (6  | ) |  |   | 57,574  | 
|                                |  |                |         |            |  |            |     |            |  |   |     |   |  |   |         | 
|                                |  | $              | 175,480 |            |  | $          | 432 |            |  | $ | (14 | ) |  | $ | 175,898 | 
|                                |  |                |         |            |  |            |     |            |  |   |     |   |  |   |         | 

As of December 31, 2002, investments of
$67.1 million are classified as cash and cash equivalents,
$28.2 million are classified as short-term investments due
within one year and $85.2 million are classified as
short-term due within two years.

5.  Property and Equipment

Property and equipment consists of the following:

|                                               |  |                |         |      |  |   |        |  
|---------------------------------------------- |  | -------------- | ------- | ---- |  | - | ------ | -
|                                               |  |               
|                                               |  | December 31,  
|                                               |  |               
|                                               |  | 2002           |         | 2001
|                                               |  |                |         |     
|                                               |  |               
|                                               |  | (in thousands)
|Computer and office equipment                  |  | $              | 24,081  |      |  | $ | 12,811 |  
|Furniture and fixtures                         |  |                | 6,700   |      |  |   | 6,675  |  
|Leasehold improvements                         |  |                | 32,551  |      |  |   | 33,994 |  
|Capital work-in-progress                       |  |                | 187     |      |  |   | 6,032  |  
|                                               |  |                |         |      |  |   |        |  
|                                               |  |                | 63,519  |      |  |   | 59,512 |  
|Less accumulated depreciation and amortization |  |                | (16,149 | )    |  |   | (6,332 | )
|                                               |  |                |         |      |  |   |        |  
|                                               |  | $              | 47,370  |      |  | $ | 53,180 |  
|                                               |  |                |         |      |  |   |        |  

Included in property and equipment are assets
acquired under capital lease obligations with an original cost
of approximately $0.9 million. As of December 31, 2002 and
2001, accumulated amortization of these assets was
$0.9 million. The related amortization is included with
depreciation expense.

The Company recorded a charge of
$1.9 million and $1.5 million related to the write-off
of leasehold improvements and furniture and fixtures at excess
facilities during the year ended December 31, 2002 and
2001, respectively. See Note 8. Capital work-in-progress
consists of capitalized costs relating to software acquired,
developed or modified solely to meet the Companys internal
requirements, pursuant to SOP No. 98-1. For the year ended
December 31, 2002, the Company placed in service
$6.0 million from capital work-in-progress as of
December 31, 2001 to computer and office equipment and
began amortization.

17



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

6.  Goodwill and Other Intangible
Assets

Intangible assets consist of the following (in
thousands):

|                        |  |                   |       |                   |  |            |        |          |  |              |     |            |  |   |       |  |  |   |        |   |  |   |       | 
|----------------------- |  | ----------------- | ----- | ----------------- |  | ---------- | ------ | -------- |  | ------------ | --- | ---------- |  | - | ----- |  |  | - | ------ | - |  | - | ----- | 
|                        |  |                   |       |                  
|                        |  | December 31, 2002 |       | December 31, 2001
|                        |  |                   |       |                  
|                        |  | Gross             |       |                   |  | Net        |        | Gross    |  |              |     | Net       
|                        |  | Carrying          |       | Accumulated       |  | Intangible |        | Carrying |  | Accumulated  |     | Intangible
|                        |  | Amount            |       | Amortization      |  | Assets     |        | Amount   |  | Amortization |     | Assets    
|                        |  |                   |       |                   |  |            |        |          |  |              |     |           
|Core technology         |  | $                 | 3,122 |                   |  | $          | (2,670 | )        |  | $            | 452 |            |  | $ | 3,122 |  |  | $ | (1,630 | ) |  | $ | 1,492 | 
|Patents                 |  |                   | 297   |                   |  |            | (232   | )        |  |              | 65  |            |  |   | 297   |  |  |   | (132   | ) |  |   | 165   | 
|                        |  |                   |       |                   |  |            |        |          |  |              |     |            |  |   |       |  |  |   |        |   |  |   |       | 
|Total intangible assets |  | $                 | 3,419 |                   |  | $          | (2,902 | )        |  | $            | 517 |            |  | $ | 3,419 |  |  | $ | (1,762 | ) |  | $ | 1,657 | 
|                        |  |                   |       |                   |  |            |        |          |  |              |     |            |  |   |       |  |  |   |        |   |  |   |       | 

Amortization expense of intangible assets was
approximately $1.1 million, $1.1 million and
$0.6 million for the years ended December 31, 2002,
2001, and 2000, respectively. The amortization expense related
to identifiable intangible assets as of December 31, 2002
is expected to be $0.5 million for the year ended
December 31, 2003.

As required by SFAS 142, the results for years
ended December 31, 2001 and 2000 have not been restated.
The following table discloses the effect on net income
(loss) and basic and diluted net income (loss) per
share as if the Company had not amortized its goodwill and
assembled workforce under SFAS 142 for all periods presented (in
thousands, except per share data):

|                                      |                                                               |                         |         |       |   |      |         |        |   |   |         |        |  
|------------------------------------- | ------------------------------------------------------------- | ----------------------- | ------- | ----- | - | ---- | ------- | ------ | - | - | ------- | ------ | -
|                                      |                                                               |                        
|                                      |                                                               | Year Ended December 31,
|                                      |                                                               |                        
|                                      |                                                               | 2002                    |         | 2001  |   | 2000
|                                      |                                                               |                         |         |       |   |     
|Reported net loss                     |                                                               | $                       | (15,614 | )     |   | $    | (44,980 | )      |   | $ | (13,516 | )     
|Add:                                  |                                                               |                         |         |       |   |      |         |        |   |   |         |       
|                                      | Goodwill and assembled workforce amortization,
    net of tax |                         |         |      |   |      |         | 26,237 |   |   |         | 13,540 |  
|                                      |                                                               |                         |         |       |   |      |         |        |   |   |         |       
|Adjusted net income (loss)            |                                                               | $                       | (15,614 | )     |   | $    | (18,743 | )      |   | $ | 24      |       
|                                      |                                                               |                         |         |       |   |      |         |        |   |   |         |       
|Basic and diluted net loss per share: |                                                               |                         |         |       |   |      |         |        |   |   |         |       
|                                      | Reported net income (loss) per share                          |                         | $       | (0.20 | ) |      | $       | (0.58  | ) |   | $       | (0.19  | )
|Add:                                  |                                                               |                         |         |       |   |      |         |        |   |   |         |       
|                                      | Goodwill and assembled workforce amortization,
    net of tax |                         |         |      |   |      |         | 0.34   |   |   |         | 0.19   |  
|                                      |                                                               |                         |         |       |   |      |         |        |   |   |         |       
|                                      | Adjusted basic and diluted net income
    (loss) per share    |                         | $       | (0.20 | ) |      | $       | (0.24  | ) |   | $       | 0.00   |  
|                                      |                                                               |                         |         |       |   |      |         |        |   |   |         |       

In 2002, the Company recorded an increase in
goodwill of $0.7 million related to acquisitions to reflect
an adjustment to the purchase price allocation.

7.  Lease Obligations

In February 2000, the Company entered into two
lease agreements for new corporate headquarters in Redwood City,
California. The Company occupied the new corporate headquarters
in August 2001. The lease expires in July 2013. The Company paid
for tenant improvements, primarily related to the exercise of
build-to-suit options under the facility lease agreement. The
total cost of leasehold improvements for this facility through
its completion in June 2002 was approximately
$33.4 million. As part of these agreements, the Company
purchased certificates of deposit totaling $12.2 million as a
security deposit for lease payments until certain financial
covenants are met. These certificates of deposit are classified
as long-term restricted cash on the Companys Consolidated
Balance Sheet.

The Company leases certain office facilities
under various noncancelable operating leases, including those
described above, which expire at various dates through 2013 and
require the Company to pay operating costs,

18



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

including property taxes, insurance and
maintenance. Rent expense was $16.2 million,
$15.8 million and $4.8 million for the years ended
December 31, 2002, 2001 and 2000, respectively. Operating
lease payments in the table below include approximately
$16.9 million, net of anticipated sublease income, for
operating lease commitments for facilities that are included in
restructuring charges. See Note 8 for a further discussion.

Future minimum lease payments as of
December 31, 2002 under noncancelable operating leases with
original terms in excess of one year are summarized as follows:

|                             |      |                |         |        | 
|---------------------------- | ---- | -------------- | ------- | ------ | 
|                             |      | Operating     
|                             |      | Leases        
|                             |      |               
|                             |      | (in thousands)
|Years ending December 31:    |      |                |         |       
|                             | 2003 |                | $       | 17,334 | 
|                             | 2004 |                |         | 17,897 | 
|                             | 2005 |                |         | 18,062 | 
|                             | 2006 |                |         | 17,969 | 
|                             | 2007 |                |         | 16,774 | 
|Thereafter                   |      |                | 93,847  |       
|                             |      |                |         |       
|Total minimum lease payments |      | $              | 181,883 |       
|                             |      |                |         |       

During 2002, the Company signed sublease
agreements for leased office space in Palo Alto, California and
Carrollton, Texas. Under the sublease agreements, the Company
received $0.1 million sublease income for the year ended
December 31, 2002 and will receive sublease income of
$0.6 million, $0.6 million, $0.5 million and $39,000
for the years ended December 31, 2003, 2004, 2005 and 2006,
respectively.

8.  Restructuring Charges

During 2001, the Company announced a
restructuring plan and recorded restructuring charges of
approximately $12.1 million, consisting of $1.5 million in
leasehold improvement and asset write-offs and
$10.6 million related to the consolidation of excess leased
facilities in the San Francisco Bay Area and Texas.

During 2002, the Company recorded additional
restructuring charges of approximately $17.0 million,
consisting of $15.1 million related to estimated facility
lease losses and $1.9 million in leasehold improvement and
asset write-offs related to the consolidation of excess leased
facilities in the San Francisco Bay Area and Texas as a result
of continued deterioration of the commercial real estate market
in these areas. These charges represent adjustments to the
original assumptions including, the time period that the
buildings will be vacant, expected sublease rates, expected
sublease terms and the estimated time to sublease. The Company
calculated the estimated costs for the additional restructuring
charges with the assistance of current market information and
trend analysis provided by a commercial real estate brokerage
firm retained by the Company.

Net cash payments for 2002 related to the
consolidation of excess facilities amounted to
$4.8 million. Actual future cash requirements may differ
from the restructuring liability balances as of
December 31, 2002 if the Company continues to be unable to
sublease the excess leased facilities, there are changes to the
time period that facilities are vacant, or the actual sublease
income is different from current estimates. As of
December 31, 2002, $19.7 million of lease termination
costs, net of related costs and anticipated sublease income
related to facilities to be subleased, remains accrued and is
expected to be utilized by 2007. If the Company is unable to
sublease any of the available vacant facilities during the
remaining lease terms from the fourth quarter of 2004 through
2007, restructuring charges could increase by approximately
$3.2 million. If the Company does not occupy certain
available vacant facilities during the remaining lease terms
from 2008 through 2013, restructuring charges could increase by
approximately an additional $15.5 million.

19



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

A summary of the activity of the accrued
restructuring charges for the year ended December 31, 2002
is as follows (in thousands):

|                                  |  |               |       |             |  |          |        |          |  |               |        |   |  |   |        |   |  |   |        | 
|--------------------------------- |  | ------------- | ----- | ----------- |  | -------- | ------ | -------- |  | ------------- | ------ | - |  | - | ------ | - |  | - | ------ | 
|                                  |  | Accrued       |       |             |  |          |        |          |  | Accrued      
|                                  |  | Restructuring |       |             |  |          |        |          |  | Restructuring
|                                  |  | Charges at    |       |             |  |          |        |          |  | Charges at   
|                                  |  | December      |       |             |  | Cash     |        | Non-Cash |  | December     
|                                  |  | 31, 2001      |       | Adjustments |  | Payments |        | Charges  |  | 31, 2002     
|                                  |  |               |       |             |  |          |        |          |  |              
|Property and equipment write-offs |  | $             |      |             |  | $        | 1,887  |          |  | $             |       |   |  | $ | (1,887 | ) |  | $ |       | 
|Excess leased facilities          |  |               | 9,332 |             |  |          | 15,143 |          |  |               | (4,769 | ) |  |   |       |   |  |   | 19,706 | 
|                                  |  |               |       |             |  |          |        |          |  |               |        |   |  |   |        |   |  |   |        | 
|                                  |  | $             | 9,332 |             |  | $        | 17,030 |          |  | $             | (4,769 | ) |  | $ | (1,887 | ) |  | $ | 19,706 | 
|                                  |  |               |       |             |  |          |        |          |  |               |        |   |  |   |        |   |  |   |        | 

A summary of the activity of the accrued
restructuring charges for the year ended December 31, 2001
is as follows (in thousands):

|                                  |  |               |   |           |  |          |        |          |  |               |        |   |  |   |        |   |  |   |       | 
|--------------------------------- |  | ------------- | - | --------- |  | -------- | ------ | -------- |  | ------------- | ------ | - |  | - | ------ | - |  | - | ----- | 
|                                  |  | Accrued       |   |           |  |          |        |          |  | Accrued      
|                                  |  | Restructuring |   |           |  |          |        |          |  | Restructuring
|                                  |  | Charges at    |   |           |  |          |        |          |  | Charges at   
|                                  |  | December      |   |           |  | Cash     |        | Non-Cash |  | December     
|                                  |  | 31, 2000      |   | Additions |  | Payments |        | Charges  |  | 31, 2001     
|                                  |  |               |   |           |  |          |        |          |  |              
|Property and equipment write-offs |  | $             |  |           |  | $        | 1,497  |          |  | $             |       |   |  | $ | (1,497 | ) |  | $ |      | 
|Excess leased facilities          |  |               |  |           |  |          | 10,599 |          |  |               | (1,267 | ) |  |   |       |   |  |   | 9,332 | 
|                                  |  |               |   |           |  |          |        |          |  |               |        |   |  |   |        |   |  |   |       | 
|                                  |  | $             |  |           |  | $        | 12,096 |          |  | $             | (1,267 | ) |  | $ | (1,497 | ) |  | $ | 9,332 | 
|                                  |  |               |   |           |  |          |        |          |  |               |        |   |  |   |        |   |  |   |       | 

As of December 31, 2002, $4.8 million
of the $19.7 million accrued restructuring charges was
classified as current liabilities and the remaining
$14.9 million was classified as noncurrent liabilities.

9.  Stockholders
Equity



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

On October 3, 2000, the Company completed a
follow-on public offering in which it sold 4,750,000 shares of
common stock, including 750,000 shares in connection with the
exercise of the underwriters over-allotment option, at
$42.50 per share. The Company received $191.0 million in
cash, net of underwriting discounts, commissions and other
offering costs.



| |             
| | ------------
| | Stock Splits

On each of February 18, 2000 and
November 29, 2000, the Company effected a two-for-one split
of its common stock to be effected in the form of a stock
dividend. The stock split was effected by distribution of one
share of the Companys common stock for each share of
common stock held by each stockholder of record. All references
in the financial statements to number of shares and per share
amounts of the Companys common stock have been restated
for the effect of the stock splits.



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

1993
and 1996 Flexible Stock Incentive Plans

The Companys 1993 and 1996 Flexible Stock
Incentive Plans (the Stock Plans), in effect through
our initial public offering, authorized the granting of
16,909,000 incentive and non-qualified common stock options to
employees, directors, and consultants at exercise prices no less
than 100% and 85%, respectively, of the fair market value of the
common stock on the grant date, as determined by the Board of
Directors. Options granted are exercisable over a maximum term
of ten years and generally vest over a period of up to four
years. In the event option holders cease to be employed by the
Company, all unvested options are forfeited and all

20



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

vested options may be exercised within a
90 day period after termination; under the restricted
portion of the plans, the Company also has the right to
repurchase at the original purchase price any unvested shares if
the holder is no longer employed by the Company. As of
December 31, 2002, no outstanding common shares were
subject to such repurchase rights. Options that are canceled
under the 1996 Stock Plan are available for future grants under
the 1999 Stock Incentive Plan. There were no shares available
for option grants under the 1996 Stock Plan at December 31,
2002.

1999
Stock Incentive Plan

The Companys stockholders approved the 1999
Stock Incentive Plan (the 1999 Incentive Plan) in
April 1999 under which 2,600,000 shares have been reserved for
issuance. In addition, any shares not issued under the 1996
Stock Plan are also available for grant. The number of shares
reserved under the Incentive Plan automatically increases
annually beginning on January 1, 2000 by the lesser of
16,000,000 shares or 5% of the total amount of fully diluted
shares of common stock outstanding as of such date. Under the
1999 Incentive Plan, eligible employees may purchase stock
options, stock appreciation rights, restricted shares and stock
units. The exercise price for incentive stock options and
non-qualified options may not be less than 100% and 85%,
respectively, of the fair value of common stock at the option
grant date. Options granted are exercisable over a maximum term
of ten years from the date of the grant and generally vest over
a period of four years. As of December 31, 2002, the
Company had 7,864,220 shares available for future issuance under
the 1999 Incentive Plan.

1999
Non-Employee Director Stock Incentive Plan

The Companys stockholders adopted the 1999
Non-Employee Director Stock Option Incentive Plan (the
Directors Plan) in April 1999 under which 1,000,000
shares have been reserved for issuance. Each non-employee
joining the Board of Directors following the completion of the
initial public offering will automatically receive options to
purchase 100,000 shares of common stock at an exercise price per
share equal to the fair market value of the common stock. These
options are exercisable over a maximum term of five years and
will vest in four equal annual installments on each yearly
anniversary from the date of the grant. In addition, each
non-employee director, who has been a member of the Board for at
least six months prior to each annual stockholders meeting, will
automatically receive options to purchase 20,000 shares of
common stock at each such meeting. Each option will have an
exercise price equal to the fair value of the common stock on
the automatic grant date, a maximum term of five years and will
vest on the first anniversary of the grant date. There were no
automatic annual options granted in 2002 under the Directors
Plan. As of December 31, 2002, the Company has 720,000
shares available for future issuance under the Directors Plan.

2000
Employee Stock Incentive Plan

In January 2000, the Board of Directors approved
the 2000 Employee Stock Incentive Plan (the 2000 Incentive
Plan) under which 1,600,000 shares have been reserved for
issuance. Under the 2000 Incentive Plan, eligible employees and
consultants may purchase stock options, stock appreciation
rights, restricted shares and stock units. The exercise price
for non-qualified options may not be less than 85% of the fair
value of common stock at the option grant date. Options granted
are exercisable over a maximum term of ten years from the date
of the grant and generally vest over a period of four years from
the date of the grant. As of December 31, 2002, the Company
had 492,249 shares available for future issuance under the 2000
Incentive Plan.

Influence
1996 Incentive Stock Option Plan

In connection with the acquisition of Influence
in 1999, the Company converted options to purchase shares of
Influence common stock into options to purchase 574,104 shares
of the Companys common stock.

21



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The number of shares of the Companys common
stock issuable under each option and the exercise price for each
grant were adjusted by an exchange ratio. The Company assumed
the Influence Stock Incentive Plan (Influence Plan)
under which the options had been originally granted, however, no
further options will be granted under the Influence Plan. The
converted options continue to be subject to the terms of the
Influence Plan. The Influence Plan provided for the granting of
incentive stock options and non-qualified stock options. The
exercise price of all options granted prior to the acquisition
were determined by the Influence Board of Directors and were not
less than the fair market value on the date of the grant. The
options generally expire seven years from the date of the grant
and vest over a period of four years from the date of the grant.

Zimba
1999 Stock Option Plan

In connection with the acquisition of Zimba, as
discussed in Note 2, the Company converted options to purchase
shares of Zimba common stock into options to purchase 91,176
shares of the Companys common stock. The number of shares
of the Companys common stock issuable under each option
and the exercise price for each grant were adjusted by an
exchange ratio. The Company assumed the Zimba 1999 Stock Option
Plan (Zimba Plan) under which the options had been
originally granted, however, no further options will be granted
under the Zimba Plan. The converted options continue to be
subject to the terms of the Zimba Plan. The Zimba Plan provided
for the granting of incentive stock options and non-qualified
stock options. The exercise price of all options granted prior
to the acquisition were determined by the Zimba Board of
Directors and were not less than the fair market value on the
date of the grant. Generally, options granted were immediately
exercisable and such resulting shares issued under the Zimba
Plan were subject to certain repurchase rights, also assumed by
the Company. As of December 31, 2002, there were no shares
of the Companys common stock issued pursuant to the Zimba
Plan that were subject to repurchase by the Company. These
repurchase rights generally lapse over a four-year period from
the date of grant. The options generally expire ten years from
the date of the grant.

Stock Option
Plan Activity

A summary of the Companys stock option
activity under all plans is set forth below:

|                                 |           |           |            |                |   |   |       |       | 
|-------------------------------- | --------- | --------- | ---------- | -------------- | - | - | ----- | ----- | 
|                                 |           |           |            | Weighted      
|                                 |           |           |            | Average       
|                                 |           | Number of |            | Exercise Price
|                                 |           | Shares    |            | per Share     
|                                 |           |           |            |               
|Outstanding at December 31, 1999 |           |           | 16,413,318 |                |   | $ | 5.60  |      
|                                 | Granted   |           |            | 6,680,460      |   |   |       | 34.34 | 
|                                 | Exercised |           |            | (4,549,257     | ) |   |       | 2.32  | 
|                                 | Canceled  |           |            | (2,725,723     | ) |   |       | 11.15 | 
|                                 |           |           |            |                |   |   |       |      
|Outstanding at December 31, 2000 |           |           | 15,818,798 |                |   |   | 17.73 |      
|                                 | Granted   |           |            | 3,847,350      |   |   |       | 17.75 | 
|                                 | Exercised |           |            | (1,936,001     | ) |   |       | 2.76  | 
|                                 | Canceled  |           |            | (9,995,709     | ) |   |       | 28.19 | 
|                                 |           |           |            |                |   |   |       |      
|Outstanding at December 31, 2001 |           |           | 7,734,438  |                |   |   | 7.96  |      
|                                 | Granted   |           |            | 11,848,462     |   |   |       | 7.58  | 
|                                 | Exercised |           |            | (1,591,321     | ) |   |       | 1.34  | 
|                                 | Canceled  |           |            | (3,074,259     | ) |   |       | 10.65 | 
|                                 |           |           |            |                |   |   |       |      
|Outstanding at December 31, 2002 |           |           | 14,917,320 |                |   | $ | 7.81  |      
|                                 |           |           |            |                |   |   |       |      

22



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table summarizes information
concerning currently outstanding and exercisable options as of
December 31, 2002:

|                |                 |                     |  |                     |            |                |  |        |      |                |  |   |       |  |  |  |           |  |  |   |       | 
|--------------- | --------------- | ------------------- |  | ------------------- | ---------- | -------------- |  | ------ | ---- | -------------- |  | - | ----- |  |  |  | --------- |  |  | - | ----- | 
|                |                 |                     |  |                    
|                |                 | Options Outstanding |  | Options Exercisable
|                |                 |                     |  |                    
|                |                 |                     |  | Weighted Average    |            | Weighted       |  |        |      | Weighted      
|                |                 |                     |  | Remaining           |            | Average        |  |        |      | Average       
|Range of        |                 |                     |  | Contractual         |            | Exercise Price |  |        |      | Exercise Price
|Exercise Prices |                 | Number              |  | Life (Years)        |            | per Share      |  | Number |      | per Share     
|                |                 |                     |  |                     |            |                |  |        |      |               
|                | $ 0.06  $ 1.63 |                     |  |                     | 1,622,877  |                |  |        | 4.67 |                |  | $ | 0.75  |  |  |  | 1,612,660 |  |  | $ | 0.74  | 
|                | $ 1.75  $ 3.10 |                     |  |                     | 1,234,604  |                |  |        | 6.15 |                |  | $ | 2.60  |  |  |  | 1,158,152 |  |  | $ | 2.58  | 
|                | $ 3.23  $ 7.15 |                     |  |                     | 1,637,814  |                |  |        | 9.46 |                |  | $ | 4.95  |  |  |  | 155,414   |  |  | $ | 5.40  | 
|                | $ 7.21  $ 7.90 |                     |  |                     | 6,352,176  |                |  |        | 7.47 |                |  | $ | 7.90  |  |  |  | 3,849,981 |  |  | $ | 7.90  | 
|                | $ 7.91  $ 8.06 |                     |  |                     | 1,885,545  |                |  |        | 9.21 |                |  | $ | 8.06  |  |  |  | 423,498   |  |  | $ | 8.06  | 
|                | $ 8.07  $18.07 |                     |  |                     | 1,512,157  |                |  |        | 7.64 |                |  | $ | 13.98 |  |  |  | 762,808   |  |  | $ | 14.18 | 
|                | $18.22  $48.63 |                     |  |                     | 672,147    |                |  |        | 6.78 |                |  | $ | 25.97 |  |  |  | 534,397   |  |  | $ | 25.94 | 
|                |                 |                     |  |                     |            |                |  |        |      |                |  |   |       |  |  |  |           |  |  |   |       | 
|                |                 |                     |  |                     | 14,917,320 |                |  |        | 7.48 |                |  | $ | 7.81  |  |  |  | 8,496,910 |  |  | $ | 7.48  | 
|                |                 |                     |  |                     |            |                |  |        |      |                |  |   |       |  |  |  |           |  |  |   |       | 

Stock-Based
Compensation

In connection with the grant of certain stock
options to employees, the Company recorded deferred stock-based
compensation of $0.8 million in 1999 prior to the
Companys initial public offering and $2.8 million in
2000, representing the difference between the deemed fair value
of the Companys common stock and the option exercise price
at the date of grant. This deferred stock-based compensation is
being amortized to operations over a four-year vesting period
using the graded vesting method. The Company also recorded
deferred stock-based compensation of $0.3 million in 2000
relating to the issuance of options to consultants. This amount
was computed using the Black-Scholes option valuation model, and
the related amortization is being charged to operations over the
related term of these consulting agreements. In 1999 and 2000,
the Company recorded a total of $1.9 million of deferred
stock-based compensation in conjunction with the assumption of
certain stock options in the acquisitions of Influence and
Zimba, which is being amortized over four years. In 2001, we
recorded a reduction for deferred stock-based compensation of
$2.1 million of which $1.9 million was in connection
with a cancelled bonus agreement related to cancelled stock
options. During 2002, the Company charged $0.2 million of
stock-based compensation to operations related to the
modification of stock option vesting. Deferred stock-based
compensation is presented as a reduction of stockholders
equity. Amortization of stock-based compensation amounted to
$0.2 million, $1.0 million and $1.5 million in 2002,
2001 and 2000, respectively.

1999 Employee
Stock Purchase Plan

The stockholders adopted the 1999 Employee Stock
Purchase Plan (the Purchase Plan) in April 1999
under which 1,600,000 shares have been reserved for issuance.
The number of shares reserved under the Purchase Plan
automatically increases beginning on January 1 of each year
by the lesser of 6,400,000 shares or 2% of the total amount of
fully diluted common stock shares outstanding on such date.
Under the Purchase Plan, eligible employees may purchase common
stock in an amount not to exceed 10% of the employees cash
compensation. The purchase price per share will be 85% of the
lesser of the common stock fair market value either at the
beginning of a rolling two-year offering period or at the end of
each six-month purchase period within the two-year offering
period. During 2002, there were 947,173 shares issued under the
Purchase Plan at a weighted-average price of $6.05 per share. As
of December 31, 2002, the Company has 3,632,802 shares
available for future issuance under the Purchase Plan.

23



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Pro Forma
Effect of Stock-based Compensation

Pro forma information regarding results of
operations and net loss per share is required by SFAS 123,
which also requires that the information be determined as if the
Company had accounted for its employee stock options under the
fair value method of SFAS 123.

For all grants that were granted prior to the
Companys initial public offering in April 1999, the fair
value of these options was estimated at the date of the grant
using a Black-Scholes option pricing model with the following
weighed-average assumptions: a risk-free interest rate of 5.5%
and 5.0% for 1999 and 1998, respectively; no dividend yield or
volatility factors of the expected market price of the
Companys common stock; and a weighted-average expected
life of the option of five years. The fair value for the options
granted subsequent to the Companys initial public offering
was estimated at the date of grant using a Black-Scholes option
pricing model using the following weighted-average assumptions:
a risk-free interest rate of 3.8%, 4.6% and 6.2% for 2002, 2001
and 2000, respectively; a volatility factor of the expected
market price of the Companys common stock of 97% for 2002,
127% for 2001 and 100% for 2000; no dividend yield; and a
weighted-average expected life of the option of 2.4 years
for 2002, 3.3 years for 2001 and 3.4 years for 2000.

The fair value of the shares granted under the
Purchase Plan is estimated using the Black-Scholes option
pricing model with the following weighted-average assumptions: a
risk-free interest rate of 3.8%, 4.6% and 6.2% for 2002, 2001
and 2000, respectively; a volatility factor of the expected
market price of the Companys common stock of 97% for 2002,
127% for 2001 and 100% for 2000; no dividend yield and a
weighted-average expected life of approximately six months for
2002, 2001 and 2000.

The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options
that have no vesting restrictions and are fully transferable.
The Black-Scholes model requires the input of highly subjective
assumptions. Because the Companys stock-based awards have
characteristics significantly different from those in traded
options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in
managements opinion, the existing models do not
necessarily provide a reliable single measure of the fair value
of its stock-based awards.

Had compensation cost for the Companys
stock-based compensation plans been determined using the fair
value at the grant dates for awards under those plans calculated
using the minimum value method of SFAS 123, the
Companys net loss and basic and diluted net loss per share
would have been increased to the pro forma amounts indicated
below:

|                                                                                                                                     |  |                                       |         |      |  |      |          |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------- | ------- | ---- |  | ---- | -------- | - |  | - | ------- | -
|                                                                                                                                     |  |                                      
|                                                                                                                                     |  | Year Ended December 31,              
|                                                                                                                                     |  |                                      
|                                                                                                                                     |  | 2002                                  |         | 2001 |  | 2000
|                                                                                                                                     |  |                                       |         |      |  |     
|                                                                                                                                     |  |                                      
|                                                                                                                                     |  | (in thousands, except per share data)
|Net loss, as reported                                                                                                                |  | $                                     | (15,614 | )    |  | $    | (44,980  | ) |  | $ | (13,516 | )
|Add: stock-based compensation expense included in
    reported net loss, net of related tax effects                                  |  |                                       | 411     |      |  |      | 1,036    |   |  |   | 1,514   |  
|Deduct: total stock-based compensation expense
    determined under fair value method for all awards, net of
    related tax effects |  |                                       | (47,442 | )    |  |      | (87,485  | ) |  |   | (66,889 | )
|                                                                                                                                     |  |                                       |         |      |  |      |          |   |  |   |         |  
|Net loss, pro forma                                                                                                                  |  | $                                     | (62,645 | )    |  | $    | (131,429 | ) |  | $ | (78,891 | )
|                                                                                                                                     |  |                                       |         |      |  |      |          |   |  |   |         |  
|Basic and diluted net loss per share, as reported                                                                                    |  | $                                     | (0.20   | )    |  | $    | (0.58    | ) |  | $ | (0.19   | )
|                                                                                                                                     |  |                                       |         |      |  |      |          |   |  |   |         |  
|Basic and diluted net loss per share, pro forma                                                                                      |  | $                                     | (0.79   | )    |  | $    | (1.69    | ) |  | $ | (1.13   | )
|                                                                                                                                     |  |                                       |         |      |  |      |          |   |  |   |         |  

These pro forma amounts may not be representative
of the effects on reported income (loss) for future years
as options vest over several years and additional awards are
generally made each year. The weighted average fair value of
options granted, which is the value assigned to the options
under SFAS 123, was $9.29, $13.32 and $23.23 for options
granted during 2002, 2001 and 2000, respectively. The
weighted-average fair value of shares granted issued under the
Purchase Plan was $3.35, $4.53 and $2.44 for 2002, 2001 and
2000, respectively.

24



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Stock Option
Exchange Program

In July 2001, the Company adopted a voluntary
stock option exchange program for its employees. Under the
program, the Companys employees were given the option to
cancel outstanding stock options previously granted in exchange
for a new non-qualified stock option grant for an equal number
of shares to be granted at a future date, at least six months
and one day from the cancellation date of the exchanged options,
which was September 14, 2001. Under the exchange program,
options to purchase approximately 7.9 million shares of the
Companys common stock were tendered and cancelled. On
March 15, 2002, replacement options were granted to
participating employees under the exchange program for
approximately 7.7 million shares of common stock. Each
participant received a one-for-one replacement option for each
option included in the exchange at an exercise price of $7.90
per share, which was the fair market value of the Companys
common stock on March 15, 2002. The new options have terms
and conditions that are substantially the same as those of the
cancelled options. The exchange program did not result in any
additional compensation charges or variable plan accounting.

Stockholders
Rights Plan

In October 2001, the Board of Directors adopted
the Stockholder Rights Plan and declared a dividend distribution
of one common stock purchase right for each outstanding share of
common stock held on November 12, 2001. Each right entitles
the holder to purchase 1/1000th of a share of Series A
Preferred Stock of the Company, par value $0.001, at an exercise
price of $90 per share. The rights become exercisable in certain
circumstances and are redeemable at the Companys option,
at an exercise price of $0.001 per right. The rights expire on
the earlier of November 12, 2011 or on the date of their
redemption or exchange. The Company may also exchange the rights
for shares of common stock under certain circumstances. The
Stockholders Rights Plan was adopted to protect
stockholders from unfair or coercive takeover practices.

Stock
Repurchase Plan

In September 2002, the Companys Board of
Directors authorized a one-year stock repurchase program for up
to five million shares of the Companys common stock.
Purchases will be made from time to time in the open market and
will be funded from available working capital. The number of
shares to be purchased and the timing of purchases will be based
on the level of the Companys cash balances, general
business and market conditions, and other factors, including
alternative investment opportunities. In 2002, the Company
purchased 352,234 shares at a cost of $1.8 million. These
shares were retired and reclassified as authorized and unissued
shares of common stock.

10.     Accumulated
Other Comprehensive Income (Loss)

The components of accumulated other comprehensive
income (loss) as of December 31, 2002 and 2001, as
presented in the Consolidated Statements of Stockholders
Equity, are as follows (in thousands):

|                                        |  |              |       |              |  |   |     | 
|--------------------------------------- |  | ------------ | ----- | ------------ |  | - | --- | 
|                                        |  | December 31, |       | December 31,
|                                        |  | 2002         |       | 2001        
|                                        |  |              |       |             
|Unrealized gain on investments          |  | $            | 723   |              |  | $ | 418 | 
|Foreign currency translation adjustment |  |              | 1,117 |              |  |   | 334 | 
|                                        |  |              |       |              |  |   |     | 
|Accumulated other comprehensive income  |  | $            | 1,840 |              |  | $ | 752 | 
|                                        |  |              |       |              |  |   |     | 

25



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

11.     Income
Taxes

The federal, state and foreign income tax
provisions for the years ended December 31, 2002, 2001 and
2001 are summarized as follows:

|         |         |                         |     |      |  |      |       |       |  |   |       |       | 
|-------- | ------- | ----------------------- | --- | ---- |  | ---- | ----- | ----- |  | - | ----- | ----- | 
|         |         |                        
|         |         | Year Ended December 31,
|         |         |                        
|         |         | 2002                    |     | 2001 |  | 2000
|         |         |                         |     |      |  |     
|         |         |                        
|         |         | (in thousands)         
|Current: |         |                         |     |      |  |      |       |       |  |   |       |      
|         | Federal |                         | $   |     |  |      | $     | 76    |  |   | $     | 2,111 | 
|         | State   |                         |     | 50   |  |      |       | 55    |  |   |       | 101   | 
|         | Foreign |                         |     | 871  |  |      |       | 1,173 |  |   |       | 1,133 | 
|         |         |                         |     |      |  |      |       |       |  |   |       |      
|         |         | $                       | 921 |      |  | $    | 1,304 |       |  | $ | 3,345 |      
|         |         |                         |     |      |  |      |       |       |  |   |       |      

The foreign income tax provision for
December 31, 2002 of $0.9 million included a benefit
of approximately $0.5 million attributable to the reversal
of foreign income taxes accrued in prior periods due to a change
in estimate.

The components of income (loss) before
income taxes attributable to domestic and foreign operations are
as follows:

|         |  |                         |         |      |  |      |         |   |  |   |         |  
|-------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|         |  |                        
|         |  | Year Ended December 31,
|         |  |                        
|         |  | 2002                    |         | 2001 |  | 2000
|         |  |                         |         |      |  |     
|         |  |                        
|         |  | (in thousands)         
|Domestic |  | $                       | (8,218  | )    |  | $    | (36,103 | ) |  | $ | (12,745 | )
|Foreign  |  |                         | (6,475  | )    |  |      | (7,573  | ) |  |   | 2,574   |  
|         |  |                         |         |      |  |      |         |   |  |   |         |  
|         |  | $                       | (14,693 | )    |  | $    | (43,676 | ) |  | $ | (10,171 | )
|         |  |                         |         |      |  |      |         |   |  |   |         |  

A reconciliation of the provision computed at the
statutory federal income tax rate to the Companys income
tax provision is as follows:

|                                              |  |                         |        |      |  |      |         |   |  |   |        |  
|--------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------- | - |  | - | ------ | -
|                                              |  |                        
|                                              |  | Year Ended December 31,
|                                              |  |                        
|                                              |  | 2002                    |        | 2001 |  | 2000
|                                              |  |                         |        |      |  |     
|                                              |  |                        
|                                              |  | (in thousands)         
|Income tax benefit computed at statutory rate |  | $                       | (5,143 | )    |  | $    | (15,286 | ) |  | $ | (3,560 | )
|Federal alternative minimum taxes             |  |                         |       |      |  |      | 76      |   |  |   | 2,794  |  
|State taxes                                   |  |                         | 33     |      |  |      | 36      |   |  |   | 65     |  
|Foreign income tax                            |  |                         | 871    |      |  |      | 1,173   |   |  |   | 1,133  |  
|Non-deductible purchased technology           |  |                         |       |      |  |      | 5,506   |   |  |   | 1,791  |  
|Non-deductible merger costs                   |  |                         |       |      |  |      |        |   |  |   | 797    |  
|Amortization of deferred stock compensation   |  |                         | 77     |      |  |      | 363     |   |  |   |       |  
|Valuation allowance                           |  |                         | 4,861  |      |  |      | 8,724   |   |  |   |       |  
|Other                                         |  |                         | 222    |      |  |      | 712     |   |  |   | 325    |  
|                                              |  |                         |        |      |  |      |         |   |  |   |        |  
|                                              |  | $                       | 921    |      |  | $    | 1,304   |   |  | $ | 3,345  |  
|                                              |  |                         |        |      |  |      |         |   |  |   |        |  

26



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Significant components of the Companys
deferred tax assets are as follows:

|                                |                                                         |                |        |         |   |   |        |         |  
|------------------------------- | ------------------------------------------------------- | -------------- | ------ | ------- | - | - | ------ | ------- | -
|                                |                                                         |               
|                                |                                                         | December 31,  
|                                |                                                         |               
|                                |                                                         | 2002           |        | 2001   
|                                |                                                         |                |        |        
|                                |                                                         |               
|                                |                                                         | (in thousands)
|Deferred tax assets:            |                                                         |                |        |         |   |   |        |        
|                                | Net operating loss carryforwards                        |                | $      | 24,075  |   |   | $      | 27,783  |  
|                                | Tax credit carryforwards                                |                |        | 8,831   |   |   |        | 5,180   |  
|                                | Deferred revenue                                        |                |        | 12,588  |   |   |        | 2,860   |  
|                                | Reserves and accrued costs not currently
    deductible |                |        | 9,024   |   |   |        | 10,932  |  
|                                | Amortization of intangibles                             |                |        | 2,967   |   |   |        | 1,979   |  
|                                | Capitalized research and development                    |                |        | 1,494   |   |   |        | 1,309   |  
|                                |                                                         |                |        |         |   |   |        |        
|Total gross deferred tax assets |                                                         |                | 58,979 |         |   |   | 50,043 |        
|                                | Valuation allowance                                     |                |        | (58,979 | ) |   |        | (50,043 | )
|                                |                                                         |                |        |         |   |   |        |        
|Net deferred tax assets         |                                                         | $              |       |         |   | $ |       |        
|                                |                                                         |                |        |         |   |   |        |        

SFAS 109 provides for the recognition of
deferred tax assets if realization of such assets is more likely
than not. Based upon the weight of available evidence, which
includes the Companys historical operating performance and
the reported cumulative net losses in all prior years, the
Company has provided a full valuation allowance against its net
deferred tax assets. The valuation allowance increased by
$8.9 million, $11.7 million and 25.8 million
during the years ended December 31, 2002, 2001, and 2000
respectively.

As of December 31, 2002, approximately
$38.2 million of the valuation allowance reflected above
relates to the tax benefits of stock option deductions, which
will be credited to equity when realized.

As of December 31, 2002, the Company has
federal and state net operating loss carryforwards of
approximately $67.6 million and $6.9 million,
respectively. The Company also had federal and state research
and development tax credit carryforwards of approximately
$4.2 million and $4.1 million, respectively and
foreign tax credits of approximately $2.0 million. The net
operating loss carryforwards and tax credit carryforwards will
expire at various times beginning in 2009, if not utilized.

Utilization of net operating loss and tax credit
carryforwards may be subject to a substantial annual limitation
due to the ownership change limitations provided by the Internal
Revenue Code and similar state provisions. The annual limitation
may result in the expiration of the net operating loss and
credit carryforwards before utilization.

12.     Employee
401(K) Plan

The Companys employee savings and
retirement plan is qualified under Section 401 of the
Internal Revenue Code. The Plan is available to all regular
employees on the Companys U.S. payroll and provides
employees with tax deferred salary deductions and alternative
investment options. Employees may contribute up to 25% of their
salary up to the statutory prescribed annual limit. The Company
matches 50% per dollar contributed by eligible employees who
participate in the plan, up to a maximum of $1,500 per calendar
year. The Companys match was suspended for calender year
2002. The Company expensed $0, $0.8 million and
$0.6 million in 2002, 2001 and 2000, respectively, for its
matching contributions to the Plan. Contributions made by the
Company vest 100% upon contribution. In addition, the Plan
provides for discretionary contributions at the discretion of
the Board of Directors. No discretionary contributions have been
made by the Company to date.

27



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

13.     Segment
Information

The Company has adopted SFAS No. 131
(SFAS 131), Disclosure About Segments of
an Enterprise and Related Information. The Company
operates solely in one segment, the development and marketing of
enterprise analytics software.

The Company markets its products and services in
the United States and in foreign countries through its direct
sales force and indirect distribution channels. No customer
accounted for more than 10% of revenue in 2002, 2001 or 2000.
Net revenue from international customers accounted for 26%, 28%
and 20% of total net revenue in 2002, 2001 and 2000,
respectively. There were no significant long-lived assets held
outside the United States.

Revenue was derived from customers in the
following geographic areas:

|              |  |                         |         |      |  |      |         |  |  |   |         | 
|------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|              |  |                        
|              |  | Year Ended December 31,
|              |  |                        
|              |  | 2002                    |         | 2001 |  | 2000
|              |  |                         |         |      |  |     
|              |  |                        
|              |  | (in thousands)         
|North America |  | $                       | 145,178 |      |  | $    | 143,614 |  |  | $ | 124,785 | 
|Europe        |  |                         | 46,132  |      |  |      | 52,252  |  |  |   | 30,851  | 
|Other         |  |                         | 4,131   |      |  |      | 4,279   |  |  |   | 966     | 
|              |  |                         |         |      |  |      |         |  |  |   |         | 
|              |  | $                       | 195,441 |      |  | $    | 200,145 |  |  | $ | 156,602 | 
|              |  |                         |         |      |  |      |         |  |  |   |         | 

14.     Warranties

The Company generally provides a warranty for its
software products and services to its customers for a period of
three to six months and accounts for its warranties under the
FASBs SFAS No. 5, Accounting for
Contingencies.The Companys software
products media are generally warranted to be free of
defects in materials and workmanship under normal use and the
products are also generally warranted to substantially perform
as described in certain Company documentation. The
Companys services are generally warranted to be performed
in a professional manner and to materially conform to the
specifications set forth in a customers signed contract.
In the event there is a failure of such warranties, the Company
generally will correct or provide a reasonable work around or
replacement product. The Company has provided a warranty accrual
of $0.2 million as of December 31, 2002 and 2001. To
date, the Companys product warranty expense has not been
significant.

15.     Related Party
Transaction

Mark A. Bertelsen, a director of Informatica
since September 2002, serves as a member of Wilson Sonsini
Goodrich & Rosati (WGSR), our principal outside legal
counsel. Fees paid by the Company to WSGR for legal services
rendered for the years ended December 31, 2002, 2001 and
2000 were $0.2 million, $0.2 million and $0,
respectively. The Company believes that the services rendered by
WSGR were provided on terms no more or less favorable than those
with unrelated parties.

16.     Litigation

On November 8, 2001, a purported securities
class action complaint was filed in the United States District
Court for the Southern District of New York. The case is now
captioned as In re Informatica Corporation Initial Public
Offering Securities Litigation, Civ. No. 01-9922 (SAS)
(S.D.N.Y.), related to In re Initial Public Offering Securities
Litigation, 21 MC 92 (SAS) (S.D.N.Y.).

On or about April 19, 2002, plaintiffs
electronically served an amended complaint. The amended
complaint is brought purportedly on behalf of all persons who
purchased the Companys common stock from

28



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

April 29, 1999 through December 6,
2000. It names as defendants the Company, one of the
Companys current officers; one of the Companys
former officers; and several investment banking firms that
served as underwriters of the Companys April 29, 1999
initial public offering and September 28, 2000 secondary
public offering. The amended complaint alleges liability as to
all defendants under Sections 11 and 15 of the Securities
Act of 1933 and Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, on the grounds that the registration
statement for the offerings did not disclose that: (1) the
underwriters had agreed to allow certain customers to purchase
shares in the offerings in exchange for excess commissions paid
to the underwriters; and (2) the underwriters had arranged
for certain customers to purchase additional shares in the
aftermarket at predetermined prices. The amended complaint also
alleges that false analyst reports were issued. No specific
damages are claimed.

The Company is aware that similar allegations
have been made in other lawsuits filed in the Southern District
of New York challenging over 300 other initial public offerings
and secondary offerings conducted in 1999 and 2000. Those cases
have been consolidated for pretrial purposes before the
Honorable Judge Shira A. Scheindlin. On July 15, 2002, the
Company and its affiliated individual defendants (as well as all
other issuer defendants) filed a motion to dismiss the
complaint. On February 19, 2003, the Court ruled on the
motions to dismiss. The Court denied the motions to dismiss
claims under the Securities Act of 1933 in all but ten of the
cases, including the case involving the Company. The Court
denied the motion to dismiss the claim under Section 10(a)
of the Securities Exchange Act of 1934 against the Company and
184 other issuer defendants, on the basis that the respective
amended complaints alleged that the issuers had acquired
companies or conducted follow-on offerings after their initial
public offerings. The Court denied the motion to dismiss the
claims under Section 10(a) and 20(a) of the Securities
Exchange Act of 1934 against the Informatica individual
defendants and sixty-two other individual defendants, on the
basis that the respective amended complaints alleged that the
individuals sold stock. The Company believes that it has
meritorious defenses to the claims against it, and intends to
defend itself vigorously.

On July 15, 2002, the Company filed a patent
infringement action in U.S. District Court in Northern
California against Acta Technology, Inc. (Acta),
asserting that certain Acta products infringe on three of the
Companys patents: U.S. Patent No. 6,014,670, entitled
Apparatus and Method for Performing Data Transformations
in Data Warehousing; U.S. Patent No. 6,339,775, entitled
Apparatus and Method for Performing Data Transformations
in Data Warehousing (this patent is a continuation-in-part
of and claims the benefit of U.S. Patent No. 6,014,670);
and U.S. Patent No. 6,208,990, entitled Method and
Architecture for Automated Optimization of ETL Throughput in
Data Warehousing Applications. On July 17, 2002, the
Company filed an amended complaint alleging that Acta products
also infringe on one additional Company patent: U.S. Patent
No. 6,044,374, entitled Object References for Sharing
Metadata in Data Marts. In the suit, the Company is
seeking an injunction against future sales of the infringing
Acta products, as well as damages for past sales of the
infringing products. The Company has asserted that Actas
infringement of the Informatica patents was willful and
deliberate. Acta answered the complaint on September 5,
2002, and filed counterclaims against the Company seeking a
declaration that each patent asserted is not infringed and is
invalid and unenforceable. Acta did not make any claims for
monetary relief against the Company. The case is currently in
the claim construction and discovery phase.

The Company is aware that a putative class action
complaint titled Lui v. Credit Suisse First Boston
Corporation et al, No. 03-20459, has been filed in the
United States District Court, Southern District of Florida. The
complaint purports to allege securities fraud, fraud, and
negligent misrepresentation claims against: (1) Credit
Suisse First Boston; (2) numerous companies whose initial
public offerings were underwritten by Credit Suisse First
Boston, including the Company; and (3) certain officers or
directors of those companies, including two individuals
affiliated with the Company at the time of the initial public
offering. No specific amount of damages is claimed.

29



---



##### 



INFORMATICA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Company is also party to various legal
proceedings and claims, either asserted or unasserted, arising
from the normal course of business activities.

In managements opinion, resolution of these
matters is not expected to have a material adverse impact on the
Companys results of operations, cash flows or its
financial position. However, depending on the amount and timing,
an unfavorable resolution of any of these matters could
materially and adversely affect the Companys future
results of operations, cash flows or financial position in a
particular period.



|    |                                                               
|--- | --------------------------------------------------------------
|17. | Selected Quarterly Consolidated Financial Data
    (Unaudited)

|                                                               |                   |                                       |        |          |   |               |         |              |   |   |         |        |   |   |         |        |  
|-------------------------------------------------------------- | ----------------- | ------------------------------------- | ------ | -------- | - | ------------- | ------- | ------------ | - | - | ------- | ------ | - | - | ------- | ------ | -
|                                                               |                   |                                      
|                                                               |                   | Three Months Ended                   
|                                                               |                   |                                      
|                                                               |                   | March 31,                             |        | June 30, |   | September 30, |         | December 31,
|                                                               |                   |                                       |        |          |   |               |         |             
|                                                               |                   |                                      
|                                                               |                   | (in thousands, except per share data)
|2002 :                                                         |                   |                                       |        |          |   |               |         |              |   |   |         |        |   |   |         |       
|Total revenues                                                 |                   | $                                     | 48,527 |          |   | $             | 49,146  |              |   | $ | 47,645  |        |   | $ | 50,123  |       
|Gross profit                                                   |                   |                                       | 37,270 |          |   |               | 37,699  |              |   |   | 36,504  |        |   |   | 38,537  |       
|Amortization of stock-based compensation                       |                   |                                       | 73     |          |   |               | 65      |              |   |   | 52      |        |   |   | 31      |       
|Amortization of other intangible assets                        |                   |                                       | 285    |          |   |               | 285     |              |   |   | 285     |        |   |   | 285     |       
|Restructuring charges                                          |                   |                                       |       |          |   |               |        |              |   |   | 17,030  |        |   |   |        |       
|Income (loss) from operations                                  |                   |                                       | (1,556 | )        |   |               | (1,482  | )            |   |   | (18,392 | )      |   |   | 374     |       
|Net income (loss)                                              |                   |                                       | (254   | )        |   |               | 434     |              |   |   | (17,280 | )      |   |   | 1,486   |       
|Net income (loss) per share:                                   |                   |                                       |        |          |   |               |         |              |   |   |         |        |   |   |         |       
|                                                               | Basic and diluted |                                       | $      | (0.00    | ) |               | $       | 0.01         |   |   | $       | (0.22  | ) |   | $       | 0.02   |  
|Shares used in calculation of net income
    (loss) per share: |                   |                                       |        |          |   |               |         |              |   |   |         |        |   |   |         |       
|                                                               | Basic             |                                       |        | 78,963   |   |               |         | 79,308       |   |   |         | 79,999 |   |   |         | 80,720 |  
|                                                               | Diluted           |                                       |        | 78,963   |   |               |         | 82,796       |   |   |         | 79,999 |   |   |         | 83,082 |  
|                                                              
|2001:                                                          |                   |                                       |        |          |   |               |         |              |   |   |         |        |   |   |         |       
|Total revenues(1)                                              |                   | $                                     | 54,898 |          |   | $             | 47,824  |              |   | $ | 47,093  |        |   | $ | 50,330  |       
|Gross profit                                                   |                   |                                       | 43,323 |          |   |               | 36,547  |              |   |   | 34,968  |        |   |   | 38,268  |       
|Amortization of stock-based compensation                       |                   |                                       | 356    |          |   |               | 316     |              |   |   | 277     |        |   |   | 87      |       
|Amortization of goodwill and other intangible
    assets       |                   |                                       | 6,594  |          |   |               | 6,795   |              |   |   | 6,994   |        |   |   | 6,993   |       
|Restructuring charges                                          |                   |                                       |       |          |   |               |        |              |   |   | 12,096  |        |   |   |        |       
|Loss from operations                                           |                   |                                       | (2,939 | )        |   |               | (10,129 | )            |   |   | (29,321 | )      |   |   | (10,247 | )     
|Net loss                                                       |                   |                                       | (1,913 | )        |   |               | (7,542  | )            |   |   | (26,983 | )      |   |   | (8,542  | )     
|Net loss per share:                                            |                   |                                       |        |          |   |               |         |              |   |   |         |        |   |   |         |       
|                                                               | Basic and diluted |                                       | $      | (0.02    | ) |               | $       | (0.10        | ) |   | $       | (0.35  | ) |   | $       | (0.11  | )
|Shares used in calculation of net loss per share:              |                   |                                       |        |          |   |               |         |              |   |   |         |        |   |   |         |       
|                                                               | Basic and diluted |                                       |        | 76,628   |   |               |         | 77,307       |   |   |         | 78,038 |   |   |         | 78,400 |  



---



|    |                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Services revenues and cost of service revenues
    have been reclassified for 2001 to reflect out-of-pocket
    expenses billed to customers as revenue rather than a reduction
    of the related expense. See Note 1 of Notes to Consolidated
    Financial Statements.

30



---



##### 



SIGNATURE

Pursuant to the requirements of section 13 or
15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| |                        
| | -----------------------
| | INFORMATICA CORPORATION



| |     |                
| | --- | ---------------
| | By: | /s/ EARL E. FRY

| |                                                                 
| | ----------------------------------------------------------------
| |                                                                 
| | Earl E. Fry                                                     
| | Chief Financial Officer, Senior Vice President
    and Secretary

Dated: May 14, 2003

31



---



##### 



CERTIFICATIONS

I, Gaurav S. Dhillon, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K, as amended, of Informatica Corporation;                                                                                                                                                                                                                                                
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report;                       
|
| | 4. | The registrants other certifying officer
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                        



| |    |                                                                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this annual report is being prepared;
|
| | b) | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) | presented in this annual report our conclusions
    about the effectiveness of the disclosure controls and
    procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |    |                                                                                                                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officer
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent functions):



| |    |                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | all significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                    



| |    |                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officer
    and I have indicated in this annual report whether or not there
    were significant changes in internal controls or in other
    factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.



| |                                          
| | -----------------------------------------
| | /s/ GAURAV S. DHILLON                    
| |                                          
| | Gaurav S. Dhillon                        
| | Chief Executive Officer and
    President

Dated: May 14, 2003

32



---



##### 



I, Earl E. Fry, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K, as amended, of Informatica Corporation;                                                                                                                                                                                                                                                
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report;                       
|
| | 4. | The registrants other certifying officer
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                        



| |    |                                                                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this annual report is being prepared;
|
| | b) | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) | presented in this annual report our conclusions
    about the effectiveness of the disclosure controls and
    procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |    |                                                                                                                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officer
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent functions):



| |    |                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | all significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                    



| |    |                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officer
    and I have indicated in this annual report whether or not there
    were significant changes in internal controls or in other
    factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.



| |                                                      
| | -----------------------------------------------------
| | /s/ EARL E. FRY                                      
| |                                                      
| | Earl E. Fry                                          
| | Chief Financial Officer and Senior Vice
    President

Dated: May 14, 2003

33



---



##### 



EXHIBIT INDEX

|        |       |    |  |          |  |                                                                                                                                                                                                                                                        
|------- | ----- | -- |  | -------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |    |  |         
|Number  |       |    |  | Document
|        |       |    |  |         
|        | 3.1   |    |  |          |  | Amended and Restated Certificate of Incorporation
    of Informatica Corporation.(1)                                                                                                                                                                   
|        | 3.2   |    |  |          |  | Bylaws, as amended, of Informatica Corporation.(1)                                                                                                                                                                                                     
|        | 3.4   |    |  |          |  | Certificate of Amendment to the Companys
    Amended and Restated Certificate of Incorporation to increase
    the aggregate number of shares of the Companys common
    stock authorized for issuance from 100,000,000 to 200,000,000
    shares.(2)
|        | 3.5   |    |  |          |  | Certificate of Designation of the Rights,
    Preferences and Privileges of Series A Participating
    Preferred Stock of Informatica Corporation.(3)                                                                                                  
|        | 4.1   |    |  |          |  | Reference is made to Exhibits 3.1 and 3.2.                                                                                                                                                                                                             
|        | 4.2   |    |  |          |  | Preferred Stock Rights Agreement, dated as of
    October 17, 2001, between Informatica Corporation and
    American Stock Transfer & Trust Company.(3)                                                                                                
|        | 10.1  | *  |  |          |  | Companys 2000 Employee Stock Incentive
    Plan, as amended.(4)                                                                                                                                                                                       
|        | 10.6  | *  |  |          |  | Form of Indemnification Agreement between the
    Company and each of its executive officers and directors.(1)                                                                                                                                         
|        | 10.10 | *  |  |          |  | Companys 1996 Flexible Stock Incentive
    Plan, including forms of agreements thereunder.(5)                                                                                                                                                         
|        | 10.11 | *  |  |          |  | Companys 1999 Stock Incentive Plan, as
    amended.(6)                                                                                                                                                                                                
|        | 10.12 | *  |  |          |  | Companys 1999 Employee Stock Purchase Plan,
    as amended, including forms of agreements thereunder.(7)                                                                                                                                              
|        | 10.13 | *  |  |          |  | Companys 1999 Non-Employee Director Stock
    Incentive Plan.(1)                                                                                                                                                                                      
|        | 10.14 |    |  |          |  | Lease Agreement regarding Building 1 Lease, dated
    as of February 22, 2000, by and among the Company and
    Pacific Shores Center LLC.(8)                                                                                                          
|        | 10.15 |    |  |          |  | Lease Agreement regarding Building 2 Lease, dated
    as of February 22, 2000, by and among the Company and
    Pacific Shores Center LLC.(8)                                                                                                          
|        | 10.16 | *  |  |          |  | Offer Letter, dated as of July 2, 2001, by
    and among the Company and Kyle L. Bowker. (9)                                                                                                                                                           
|        | 10.17 | *  |  |          |  | Severance Agreement and Mutual Release, dated as
    of July 29, 2002, by and among the Company and Diaz H.
    Nesamoney. (10)                                                                                                                        
|        | 10.18 | *  |  |          |  | Severance Agreement and Mutual Release, dated as
    of July 31, 2002, by and among the Company and Kyle L.
    Bowker. (10)                                                                                                                           
|        | 10.19 | *  |  |          |  | Offer Letter, dated as of August 6, 2002, by
    and among the Company and Clive A. Harrison. (10)                                                                                                                                                     
|        | 10.20 | *  |  |          |  | Description of management arrangement with Earl
    E. Fry. (8)                                                                                                                                                                                        
|        | 21.1  | ** |  |          |  | List of Subsidiaries.                                                                                                                                                                                                                                  
|        | 23.2  |    |  |          |  | Consent of Ernst & Young LLP, Independent
    Auditors.                                                                                                                                                                                                
|        | 99.1  |    |  |          |  | Certification of Chief Executive Officer and
    Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.                                                             

34



---



##### 





---



|    |                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to the identically
    numbered exhibit to Amendment No. 1 of the Companys
    Registration Statement on Form S-1 (Commission File
    No. 333-72677) filed with the Securities and  Exchange
    Commission on April 8, 1999.
|   
|(2) | Incorporated by reference to the identically
    numbered exhibit to the Companys Quarterly Report on
    Form 10-Q filed with the Securities and Exchange Commission
    on August 14, 2000.                                                           
|   
|(3) | Incorporated by reference to the identically
    numbered exhibit to the Companys Registration Statement on
    Form 8-A filed with the Securities and Exchange Commission
    on November 6, 2001.                                                     
|   
|(4) | Incorporated by reference to the identically
    numbered exhibit to the Companys Quarterly Report on
    Form 10-Q filed with the Securities and Exchange Commission
    on August 8, 2001.                                                            
|   
|(5) | Incorporated by reference to the identically
    numbered exhibit to the Companys Registration Statement on
    Form S-1 (Commission File No. 333-72677) filed with the
    Securities and Exchange Commission on February 19, 1999.                    
|   
|(6) | Incorporated by reference to exhibit 4.3 to the
    Companys Registration Statement on Form S-8 filed
    with the Securities and Exchange Commission on August 3,
    2001.                                                                            
|   
|(7) | Incorporated by reference to exhibit 4.4 to the
    Companys Registration Statement on Form S-8 filed
    with the Securities and Exchange Commission on August 3,
    2001.                                                                            
|   
|(8) | Incorporated by reference to the identically
    numbered exhibit to the Annual Report on Form 10-K filed
    with the Securities and Exchange Commission on March 30,
    2000.                                                                         
|   
|(9) | Incorporated by reference to the identically
    numbered exhibit to the Annual Report on Form 10-K filed
    with the Securities and Exchange Commission on March 18,
    2002.                                                                         



|     |                                                                                                                                                                                                 
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference to the identically
    numbered exhibit to the Companys Quarterly Report on
    Form 10-Q filed with the Securities and Exchange Commission
    on November 13, 2002.



|   |                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*  | Indicates management contract or compensatory
    plan or arrangement.                                                                                                                                           
|  
|** | Incorporated by reference to the identically
    numbered exhibit to the Annual Report on Form 10-K filed
    with the Securities and Exchange Commission on March 19,
    2002, to which this amendment applies.

35