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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission File Number 0-25871

Informatica Corporation

(650) 385-5000

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

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

Common Stock, 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, 2003, there were 80,023,167 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 30, 2003) was $526,455,622. Shares of the registrant’s Common Stock held by each executive officer and director 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 27, 2004, there were 85,332,386 shares of the registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant’s Proxy Statement for the registrant’s 2004 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K to the extent stated herein. The Proxy Statement will be filed within 120 days of registrant’s fiscal year ended December 31, 2003.

INFORMATICA CORPORATION

ANNUAL REPORT ON FORM 10-K

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PART I

Overview

      Informatica Corporation is a leading provider of data integration and business intelligence software. Using Informatica products and services, Global 2000 large to mid-size companies can integrate and transform enterprise data from any system into timely, accurate business insight for improving business performance, increasing customer lifetime value, streamlining supply chain operations and proactively managing regulatory compliance. Our products are designed to help our customers gain valuable insight into their business, which they can use to help improve business performance, increase customer satisfaction and enhance competitive advantage.

      Over the last two decades, companies have made significant investments in a variety of transactional applications — including Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and Supply Chain Management (SCM) software — to automate specific business functions, including general ledger, human resources, customer relationships, and the supply chain. The ultimate goal of deploying these applications is to make businesses more efficient through automation. However, these transactional applications generate massive volumes of information in disparate software systems that typically do not talk to each other or share data. Organizations are now finding that the strategic value of information technology goes beyond process automation. Companies are realizing that, to make better business decisions, they need to have one unified and complete view of all of the information about their customers, suppliers and operations. When armed with one comprehensive view of their business, IT and decision makers can use that information to collaborate internally or externally with their customers, suppliers and partners to improve performance and productivity.

      We address this need with the Informatica platform: a unified data integration and business intelligence software solution. Our products are designed to integrate data from the enterprise’s various systems for the delivery of insight to business users across the entire organization, helping them to make better decisions — ultimately turning information into competitive advantage. The Informatica platform handles a broad range of enterprise-wide integration projects including: business intelligence/ data warehousing, legacy migration, data synchronization, consolidation, reconciled single view/ reference hub and real-time Business Activity Monitoring (BAM). The Informatica platform helps enable and accelerate data integration, metadata management and business intelligence initiatives, allowing enterprises to improve strategic aspects of their business performance, including direct and indirect sales, marketing, customer service, operations, finance, human resources, procurement, manufacturing, and supply chain.

      We recently acquired Striva Corporation, a provider of mainframe integration solutions with whom we have had an OEM relationship for over two years. Striva’s patented technology, which includes mainframe solutions for high-speed bulk data movement and real-time change capture, can help companies more effectively access the vast amounts of enterprise data on mainframes for mission-critical business decisions. The acquisition of Striva will permit us to fully incorporate Striva’s hi-speed mainframe data movement technology into our existing software products. We expect this combination to allow us to extend the reach of our enterprise data integration and business intelligence products in order to meet the growing customer demand for mainframe data integration across transactional, operational and analytical systems.

      We have over 1,900 customers from a wide variety of industries ranging from high technology to manufacturing, and from financial services to telecommunications. We market and sell our software and services through our direct sales force in the United States as well as Belgium, Canada, France, Germany, the Netherlands, Switzerland and the United Kingdom. We maintain relationships with a variety of strategic partners to jointly develop, market, sell and/or implement our solutions. We also have relationships with distributors in various regions, including Asia-Pacific, Australia, Europe, Japan and Latin America, who sublicense our products and provide service and support within their territories. More than 40 independent software vendors, including several of our strategic partners, have licensed our technology for inclusion in their products.

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      We began selling our first products in 1996. To date, substantially all of our revenues have been derived from our data integration products such as PowerCenter, PowerMart, PowerConnect and related services, and to a much lesser extent, business intelligence products and related services. We have incurred significant net losses since our inception, including net losses of $15.6 million and $45.0 million in 2002 and 2001, respectively. Although we were profitable in 2003, we may not consistently achieve profitability in the future. See “Risk Factors — We have a limited operating history and a history of losses, which makes it difficult to evaluate our operations, products and prospects for the future.” As of December 31, 2003, we had an accumulated deficit of $90.7 million.

      Our corporate headquarters are located at 2100 Seaport Boulevard, Redwood City, California 94063, and our telephone number at that location is (650) 385-5000. We can also be reached at our Web site at www.informatica.com; however, the information in, or that can be accessed through, our Web site is not part of this report. We were incorporated in California in February 1993 and reincorporated in Delaware in April 1999.

      A copy of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934, as amended (the “Exchange Act”) are available, free of charge, on our Web site as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission, or the SEC.

Our Products

      Our products help our customers to better manage information complexity in their organization. Our adaptive software provides improved data integrity and greater visibility of enterprise data and processes.

      Our data integration products feature an adaptive, high performance and scalable architecture designed to accommodate the demanding requirements of large and growing global organizations. Our data integration products access and transform data from a large variety of systems and deliver it to other transactional systems, data warehouses and analytic applications. PowerCenter 7 is the latest release of our data integration platform and features several innovations that facilitate team-based development, data profiling, web services and grid computing in a highly secure environment. In addition, with the acquisition of Striva, we strengthened our PowerExchange product family to enable organizations to access batch and changed data from complex mainframe, legacy and relational systems and deliver that data at the frequency demanded by the business.

      Our business intelligence software, PowerAnalyzer, is an Internet-centric product designed to meet our customers’ overall business intelligence requirements, including dashboards, scorecarding, query and analysis, reporting and advanced analytics. PowerAnalyzer is designed to give IT staff and end users intuitive access to critical, personalized data at the point of work. PowerAnalyzer allows users to be alerted to, navigate through and interact with key business metrics such as sales trends, customer order records and supplier scorecards on a real-time basis.

      The Informatica platform also includes Informatica SuperGlue. Introduced in 2003, SuperGlue is an enterprise metadata management solution that integrates metadata from disparate systems and offers visualization and analysis capabilities for enhanced understanding of an organization’s IT environment. Using SuperGlue, IT staff and business decision makers gain cross-system visibility that helps enable rapid impact assessment as changes occur in the business, investigate the origins of the data driving business decisions and identify information asset redundancies. With SuperGlue, organizations can benefit from enhanced corporate agility, greater confidence in their data, and increased cost savings.

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      Products included in the Informatica platform are summarized in the table below:

Services

      We offer a comprehensive set of professional services, including product-related customer support, consulting services and training. Through our technical support centers in the United States, the United Kingdom and the Netherlands, we offer technical support on a global basis to customers and partners over the phone, via e-mail and online via Informatica’s Customer Portal. Our consulting services range from designing and deploying our products to data transformation and performance tuning. Our consulting strategy is to provide specialized expertise regarding our products to enable our end user customers and systems integrator partners to successfully implement our integration products. We also offer a comprehensive curriculum of product-related training to help our customers and strategic partners build proficiency in using our products. In 2001, we established the Informatica Certification Program to create a database of expert professionals with verifiable skills in the design and administration of Informatica-based systems.

      In addition to our comprehensive services offering, our professional services consultants use a standard methodology/framework — Informatica Velocity — for the implementation of our data integration projects. Informatica Velocity covers each of the major project phases, including Manage, Architect, Design, Build, Deploy, and Operate. Where applicable, Velocity includes best practices and techniques culled from our collective experience, assisting our clients in thousands of implementations. Informatica Velocity represents our goal of bringing Informatica Professional Services field experience to bear in ensuring successful implementations of our products.

Our Strategic Partners

      Our strategic partners include industry leaders in enterprise software, computer hardware and systems integration. We offer a comprehensive strategic partner program for major companies in these areas so that they can provide sales and marketing leverage, have access to required technology and provide complementary products and services to our joint customers. Our systems integrator partners that generated over $1,000,000

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      Additionally, in 2003 we expanded our existing relationship with IBM whereby the two companies will jointly integrate, market and sell advanced business intelligence solutions worldwide. The relationship will help us more tightly integrate our entire product line with key IBM hardware and software platforms, enabling customers to significantly speed development, increase effectiveness and reduce the cost of their integration and business intelligence environments.

Our Customers

      Our customers include leading companies from a wide range of industries and major governmental and educational institutions. A representative sampling of our customers who have each purchased at least $750,000 of our software and related services since January 1999 includes:

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Our Market Positioning

      Comprehensive Data Integration Platform. Our strategy is to provide our customers with a comprehensive data integration platform to help them quickly and cost effectively implement data integration and business intelligence solutions to maximize their information assets and improve their IT performance and business effectiveness. The combination of our products PowerCenter, SuperGlue, PowerAnalyzer and PowerExchange provide our customers with a comprehensive data integration platform, offering low total cost of ownership, fast time to value and low risk to business changes.

      Real-Time, Highly Scalable and Flexible Data Integration, Metadata Management and Insight. Our products are designed to support the needs of large global enterprises using our highly scalable and adaptable architecture. This year we introduced the incorporation of team-based development, data profiling, web services and grid computing in a highly secure environment into our data integration product offering.

      In addition, our products are developed to interoperate with major software applications, tools and technologies. The open architecture design of our products helps enable our customers to leverage their existing investment in computing platforms, applications and data sources, and provide the flexibility to adapt to future standards. Our metadata management capabilities help enable cross-system visibility for rapid impact assessment as changes occur in enterprises, and provide the audit trail necessary to deliver confidence in data lineage to IT and the business.

      Our ability to access bulk and changed data from complex mainframe, legacy, and distributed RDBMSs and combine it with near real-time data movement capabilities enables our products to keep disparate databases and systems synchronized and maintain one view of the truth among different applications. Our business intelligence software is built with modern, intuitive dashboards, scorecards and guided analysis tools and can be pushed out to a variety of mobile devices.

      Significant Installed Customer Base and Community of Developers. We have an installed customer base that spans a wide range of industries. As of December 31, 2003, over 1,900 customers around the world and 83% of the Fortune 100 companies have licensed our products. The Informatica Developer Network, created in 2001, has grown to over 12,000 members in eighty countries using Informatica’s products to build

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      Strong Base of Leading Strategic Partners. We have alliances and strategic partnerships with leading enterprise software providers, systems integrators and hardware vendors. These alliances provide sales and marketing leverage and access to required technology, while also providing complementary products and services to our joint customers. More than 40 companies now OEM our core products. In sum, more than 300 companies market and resell our products around the world.

Research and Development

      As of December 31, 2003, we employed 250 people in our research and development organization. This team is responsible for the design, development and release of our products. The group is organized into four disciplines: development, quality assurance, documentation and program management. Members from each discipline, along with a product-marketing manager from our marketing department, form separate product teams that work closely with sales, marketing, services, customers and prospects to better understand market needs and user requirements. These product teams utilize a well-defined software development methodology that we believe enables us to deliver products that satisfy real business needs for the global market while also meeting commercial quality expectations.

      When appropriate, we also utilize third parties to expand the capacity and technical expertise of our internal research and development team. On occasion, we have licensed third-party technology. We believe this approach shortens time-to-market without compromising competitive position or product quality, and we plan to continue to draw on third-party resources as needed in the future.

      In 2003, Informatica continued to make use of a small offshore development team based in the Netherlands for work on portions of our business intelligence platform. Also in 2003 we expanded our offshore development to India to do quality assurance and development on our data integration and business intelligence platforms. This offshore development is intended to increase development productivity. Our research and development expenditures were $47.3 million in 2003, $45.6 million in 2002, and $46.3 million in 2001.

Sales, Marketing and Distribution

      We market and sell software and services through both our direct sales force and indirect channel partners in the United States as well as Belgium, Canada, France, Germany, the Netherlands, Switzerland and the United Kingdom, and also through various regions around the world. As of December 31, 2003, we employed 267 people in our sales and marketing organization worldwide.

      Marketing programs are focused on creating awareness as well as lead generation and customer references for our products. These programs are targeted at key executives such as chief executive officers, chief information officers, other information technology managers and vice presidents of specific functional areas, such as marketing, sales, service, finance, human resources, manufacturing, distribution and procurement. Our marketing personnel engage in a variety of activities, including positioning our software products and services, conducting public relations programs, establishing and maintaining relationships with industry analysts, producing product collateral and generating qualified sales leads.

      Our sales process consists of several phases: lead generation, opportunity qualification, needs assessment, product demonstration, proposal generation and contract negotiation. Although the typical sales cycle requires three to six months, some sales cycles in the past have lasted substantially longer. In a number of instances, our relationships with systems integrators and other strategic partners have reduced sales cycles by generating qualified sales leads, making initial customer contacts and assessing needs prior to our introduction to the customer. Also, partners have assisted in the creation of presentations and demonstrations, which we believe enhances our overall value proposition and competitive position.

      In addition to our direct sales efforts, we distribute our products through systems integrators, resellers, distributors and OEM partners in the United States and internationally. Systems integrators typically have

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Intellectual Property and Other Proprietary Rights

      Our success depends upon our proprietary technology. We rely on a combination of patent, copyright, trademark and trade secret rights, confidentiality procedures and licensing arrangements to establish and protect our proprietary rights. As part of our confidentiality procedures, we generally enter into non-disclosure agreements with our employees, distributors and corporate partners and into license agreements with respect to our software, documentation and other proprietary information. In addition, we have seven patents granted in the U.S., 17 patent applications pending in the U.S., and 40 corresponding international patent applications pending.

Competition

      The market for our products is highly competitive, quickly evolving and subject to rapidly changing technology. Our competition consists of hand-coded, custom-built data integration solutions developed in-house by various companies in the industry segments that we target, as well as other vendors of integration software products, including Ascential Software, Embarcadero Technologies, Group 1 Software and certain privately-held companies. In addition, we compete against business intelligence vendors that currently offer, or may develop, products with functionalities that compete with our products, such as Business Objects, Cognos, Hyperion Solutions, MicroStrategy and certain privately-held companies. We also compete against certain database and enterprise application vendors, which offer products that typically operate specifically with these competitors’ proprietary databases. Such potential competitors include IBM, Microsoft, Oracle, PeopleSoft, SAP and Siebel Systems.

      We currently compete more on the basis of our products’ functionality than on the basis of price. Additionally, we compete on the basis of certain other factors, including:

	•	product capabilities including openness, standards, performance, scalability, ease of use and reliability;
	•	low total cost of ownership encompassing reusability, reduced training, pricing, low maintenance and productivity gains;
	•	time to market;
	•	services and support;
	•	relationships with strategic partners that can help market and sell our products; and
	•	proven success and experience.

      We believe that we currently compete favorably with respect to the above factors. For a further discussion of our competition, see “Risk Factors — If we do not compete effectively with companies selling data integration and business intelligence products, our revenues may not grow and could decline.”

Employees

      As of December 31, 2003, we had a total of 800 employees, including 250 people in research and development, 267 people in sales and marketing, 181 people in consulting, customer support and training and 102 people in general and administrative services. None of our employees is represented by a labor union. We have not experienced any work stoppages, and we consider employee relations to be good.

      Our headquarters are located in two buildings at the Pacific Shores Center in Redwood City, California. These buildings comprise 290,300 square feet of office space and are leased through July 2013. We also lease

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      In addition, we lease excess office space in Palo Alto, California, Carrolton, Texas and San Francisco, California. We lease 30,000 square feet in Palo Alto, California under a lease that expires in July 2007, of which 23,000 square feet is subleased under two separate subleases from October 2002 through September 2005. In November 2002, we subleased the entire 29,000 square feet in Carrollton, Texas for the remainder of the lease term through January 2006. In San Francisco, California we lease approximately 19,200 square feet under a lease that expires in March 2007, which is entirely subleased through the remainder of the lease term. In Redwood City, California, 4,000 square feet is subleased from November 2003 to May 2005. We are still attempting to sublease our surplus properties for the remaining lease terms. See Notes 6 and 7 of the notes to the consolidated financial statements in Item 8.

      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 entitled 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.). Plaintiffs’ amended complaint was brought purportedly on behalf of all persons who purchased our common stock from April 29, 1999 through December 6, 2000. It names as defendants Informatica Corporation, one of our current officers, and one of our former officers (the “Informatica defendants”), and several investment banking firms that served as underwriters of our April 29, 1999 initial public offering and September 28, 2000 follow-on public offering. The complaint alleges liability as to all defendants under Sections 11 and/or 15 of the Securities Act of 1933 and Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934, on the grounds that the registration statements 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 complaint also alleges that false analyst reports were issued. No specific damages are claimed.

      Similar allegations were made in other lawsuits challenging over 300 other initial public offerings and follow-on offerings conducted in 1999 and 2000. The cases were consolidated for pretrial purposes. On February 19, 2003, the Court ruled on all defendants’ motions to dismiss. The Court denied the motions to dismiss the claims under the Securities Act of 1933. The Court denied the motion to dismiss the Section 10(b) claim against Informatica and 184 other issuer defendants. The Court denied the motion to dismiss the Section 10(b) and 20(a) claims against the Informatica defendants and 62 other individual defendants.

      We have decided to accept a settlement proposal presented to all issuer defendants. In this settlement, plaintiffs will dismiss and release all claims against the Informatica defendants, in exchange for a contingent payment by the insurance companies collectively responsible for insuring the issuers in all of the IPO cases, and for the assignment or surrender of control of certain claims we may have against the underwriters. The Informatica defendants will not be required to make any cash payments in the settlement, unless the pro rata amount paid by the insurers in the settlement exceeds the amount of the insurance coverage, a circumstance which we do not believe will occur. The settlement will require approval of the Court, which cannot be assured, after class members are given the opportunity to object to the settlement or opt out of the settlement.

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      On July 15, 2002, we filed a patent infringement action in U.S. District Court in Northern California against Acta Technology, Inc. (“Acta”), now known as Business Objects Data Integration, Inc. (“BODI”), asserting that certain Acta products infringe on three of our 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, we filed an amended complaint alleging that Acta products also infringe on one additional patent: U.S. Patent No. 6,044,374, entitled “Object References for Sharing Metadata in Data Marts.” In the suit, we are seeking an injunction against future sales of the infringing Acta/ BODI products, as well as damages for past sales of the infringing products. We have asserted that BODI’s infringement of our patents was willful and deliberate. On September 5, 2002, BODI answered the complaint and filed counterclaims against us seeking a declaration that each patent asserted is not infringed and is invalid and unenforceable. BODI did not make any claims for monetary relief against us. The parties presented their respective claim constructions to the Court on September 24, 2003 and are awaiting the Court’s ruling. The matter is currently in the discovery phase.

      We are also a 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 any of these matters is not expected to have a material adverse impact on the results of operations, cash flows or our financial position.

      Not Applicable.

Executive Officers of the Registrant

      The following table sets forth certain information concerning our executive officers as of March 1, 2004:

      Our executive officers are appointed by, and serve at the discretion of, the Board of Directors. Each executive officer is a full-time employee. There is no family relationship between any of our executive officers or directors.

      Mr. Dhillon is one of our co-founders and has been our Chief Executive Officer and a member of our Board of Directors since our inception. Mr. Dhillon was the Secretary through July 2002. Prior to co-founding Informatica in February 1993, Mr. Dhillon was employed by Sterling Software from December 1991 to November 1992, where his last position was Project Manager. Prior to that, he was a Systems Architect with Unisys Corporation. Mr. Dhillon holds a B.S. degree in electrical engineering from Punjab University, India.

      Mr. Fry joined us as the Chief Financial Officer and Senior Vice President in December 1999. In July 2002, Mr. Frye became the Secretary. In August 2003, Mr. Frye was promoted to Executive Vice President. From November 1995 to December 1999, Mr. Fry was Vice President and Chief Financial Officer at Omnicell Technologies, Inc. From July 1994 to November 1995, he was Vice President and Chief Financial Officer at

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      Mr. Harrison originally joined us as Senior Vice President, Sales in January 1996 and served as Executive Vice President, Worldwide Field Operations from January 1999 to August 2001. After a one-year hiatus, Mr. Harrison returned as Executive Vice President, Worldwide Field Operations in August 2002. Prior to joining Informatica, Mr. Harrison held sales management responsibilities at Oracle Corporation from June 1995 to January 1996. From September 1989 to June 1995, he was Regional Vice President of Sales at Information Resources, an enterprise decision support company. Mr. Harrison holds a B.S. degree in operational research and economics from Aston University in England.

      Mr. Pancha was an early employee of Informatica, serving in engineering management roles from November 1996 to October 1998. Mr. Pancha left in 1998 to co-found Zimba, a developer of mobile applications providing real-time access to corporate information via voice, wireless, and Web technologies. Upon Informatica’s acquisition of Zimba in August 2000, Mr. Pancha rejoined us as Vice President and General Manager of the Platform Business Unit. In August of 2002, he became Senior Vice President of Products, assuming responsibility for all products. In August 2003, Mr. Pancha was promoted to Executive Vice President. Prior to Informatica, Mr. Pancha spent eight years in various development and management positions at Oracle, including leading the development of Oracle’s query-building and business intelligence tools. Mr. Pancha holds a B.S. degree in electrical engineering from Stanford University and an M.S. degree in electrical engineering from the University of Pennsylvania.

      Mr. Albright, an early employee of Informatica, originally joined us in 1995 and served as Senior Vice President, Marketing and Channel Sales until 1998. From October 1998 to October 2002, Mr. Albright was the president and CEO of SeeCommerce, a provider of software for supply chain management. Mr. Albright served as an executive in residence at Greylock, a venture capital firm, from March 2003 to January 2004. He returned to Informatica in January 2004 as Executive Vice President and Chief Marketing Officer. Prior to 1995, Mr. Albright created and led Sybase’s industry solutions group. Before Sybase, he held executive sales and marketing positions at Tandem and at Unisys. He received a B.S. degree in information (computer) sciences from James Madison University.

PART II

Market Information

      Our common stock is listed on the Nasdaq National Market under the symbol “INFA.” Our initial public offering was April 29, 1999 at $4.00 per share (adjusted for stock splits in the form of stock dividends in February 2000 and November 2000). The price range per share in the table below reflects the highest and lowest sale prices for our stock as reported by the Nasdaq National Market during the last two fiscal years.

Holders of Common Stock

      As of February 27, 2004, there were approximately 204 stockholders of record of our common stock, and the closing price per share of our common stock was $9.61 Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.

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Dividends

      We have never declared or paid cash dividends on our common stock. Since we currently intend to retain all future earnings to finance future growth, we do not anticipate paying any cash dividends in the near future.

Recent Sales of Unregistered Securities

      On September 29, 2003, we acquired all of the capital stock of Striva Corporation, valued at $58.5 million, in exchange for 3,189,839 shares of our common stock, valued at $27.8 million, and $30.7 million in cash. In addition, we assumed all of Striva’s outstanding stock options, which became options to purchase 345,220 shares of our common stock. Of the cash and shares issued as part of the merger, approximately $5,116,878 and 531,750 shares of our common stock were placed into an escrow account to provide indemnity for certain losses we may incur in connection with the acquisition. The shares of our common stock issued in the acquisition were not registered under the Securities Act of 1933, as amended, in reliance upon the exemption provided by Section 4(2) under the Securities Act as a transaction not involving a public offering.

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