INFA-2014.09.30-10Q
Table of Contents

 
 
 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-Q
___________________
 
þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2014
or
¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 0-25871
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 94063
(Address of principal executive offices and zip code)
(650) 385-5000
(Registrant’s telephone number, including area code)

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 "Exchange 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 ¨
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  Yes þ   No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ    Accelerated filer ¨     Non-accelerated filer ¨     Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨  No þ
As of October 31, 2014, there were approximately 108,673,000 shares of the registrant’s Common Stock outstanding.


 
 
 
 
 



INFORMATICA CORPORATION
TABLE OF CONTENTS

 
 
 Page No. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2

Table of Contents


PART I: FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INFORMATICA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
 
September 30,
2014
 
December 31,
2013
 
(Unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
234,620

 
$
297,818

Short-term investments
420,021

 
379,616

Accounts receivable, net of allowances of $3,891 and $4,135, respectively
166,231

 
204,374

Deferred tax assets
47,330

 
32,898

Prepaid expenses and other current assets
30,203

 
34,541

Total current assets
898,405

 
949,247

Property and equipment, net
159,422

 
157,308

Goodwill
552,101

 
523,142

Other intangible assets, net
44,636

 
41,625

Long-term deferred tax assets
29,407

 
44,865

Other assets
12,154

 
6,834

Total assets
$
1,696,125

 
$
1,723,021

Liabilities and Stockholders' Equity
 
 
 
Current liabilities:
 

 
 

Accounts payable
$
12,298

 
$
10,124

Accrued liabilities
50,982

 
63,055

Accrued compensation and related expenses
52,189

 
71,314

Income taxes payable

 
14,184

Deferred revenues
280,988

 
285,184

Total current liabilities
396,457

 
443,861

Long-term deferred revenues
14,596

 
12,938

Long-term income taxes payable
31,946

 
29,878

Other liabilities
4,346

 
594

Total liabilities
447,345

 
487,271

Commitments and contingencies (Note 11)


 


Stockholders' equity:
 

 
 

Common stock, $0.001 par value; 200,000 shares authorized; 108,641 shares and
 
 
 
108,643 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively
109

 
109

Additional paid-in capital
765,462

 
805,728

Accumulated other comprehensive loss
(20,411
)
 
(3,212
)
Retained earnings
503,620

 
433,125

Total stockholders’ equity
1,248,780

 
1,235,750

Total liabilities and stockholders' equity
$
1,696,125

 
$
1,723,021

See accompanying notes to condensed consolidated financial statements.

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Table of Contents

INFORMATICA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Software
$
100,642

 
$
99,826

 
$
307,140

 
$
279,160

Service
149,758

 
135,568

 
437,070

 
392,973

Total revenues
250,400

 
235,394

 
744,210

 
672,133

Cost of revenues:
 

 
 

 
 

 
 
Software
3,357

 
2,710

 
8,926

 
7,353

Service
43,610

 
37,221

 
127,182

 
109,714

Amortization of acquired technology
3,113

 
5,625

 
10,384

 
16,970

Total cost of revenues
50,080

 
45,556

 
146,492

 
134,037

Gross profit
200,320

 
189,838

 
597,718

 
538,096

Operating expenses:
 

 
 

 
 

 
 
Research and development
49,283

 
42,167

 
143,818

 
123,358

Sales and marketing
95,490

 
94,160

 
283,858

 
267,727

General and administrative
20,535

 
23,159

 
60,607

 
60,827

Amortization of intangible assets
1,541

 
1,893

 
4,461

 
5,881

Acquisitions and other charges
66

 
1,253

 
926

 
2,467

Total operating expenses
166,915

 
162,632

 
493,670

 
460,260

Income from operations
33,405

 
27,206

 
104,048

 
77,836

Interest income
1,180

 
805

 
3,512

 
2,588

Interest expense
(129
)
 
(121
)
 
(422
)
 
(369
)
Other expense, net
(360
)
 
(295
)
 
(642
)
 
(754
)
Income before income taxes
34,096

 
27,595

 
106,496

 
79,301

Income tax provision
11,283

 
17,191

 
36,001

 
32,824

Net income
$
22,813

 
$
10,404

 
$
70,495

 
$
46,477

Basic net income per common share
$
0.21

 
$
0.10

 
$
0.64

 
$
0.43

Diluted net income per common share
$
0.21

 
$
0.09

 
$
0.63

 
$
0.42

Shares used in computing basic net income per common share
109,231

 
108,305

 
109,378

 
108,039

Shares used in computing diluted net income per common share
110,314

 
111,501

 
111,283

 
111,372

See accompanying notes to condensed consolidated financial statements.


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INFORMATICA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Net income
$
22,813

 
$
10,404

 
$
70,495

 
$
46,477

Other comprehensive income (loss):
 
 
 
 
 
 
 
Change in foreign currency translation adjustment, net of tax benefit (expense) of $876, $(317), $597 and $(74)
(18,172
)
 
7,370

 
(17,915
)
 
1,202

Available-for-sale investments:
 
 
 
 
 
 
 
Change in net unrealized gain (loss), net of tax benefit (expense) of $161, $(187), $27 and $183
(262
)
 
304

 
(44
)
 
(300
)
Less: reclassification adjustment for net (gain) loss included in net income, net of tax benefit (expense) of $(2), $12, $(4) and $22
(3
)
 
19

 
(7
)
 
36

Net change, net of tax benefit (expense) of $163, $(199), $31 and $161
(265
)
 
323

 
(51
)
 
(264
)
Cash flow hedges:
 
 
 
 
 
 
 
Change in unrealized gain (loss), net of tax benefit (expense) of $123, $455, $(677) and $1,149
(200
)
 
(744
)
 
1,104

 
(1,875
)
Less: reclassification adjustment for net (gain) loss included in net income, net of tax benefit (expense) of $(288), $349, $(207) and $398
(470
)
 
571

 
(337
)
 
651

Net change, net of tax benefit (expense) of $411, $106, $(470) and $751
(670
)
 
(173
)
 
767

 
(1,224
)
Total other comprehensive income (loss), net of tax effect
(19,107
)
 
7,520

 
(17,199
)
 
(286
)
Total comprehensive income, net of tax effect
$
3,706

 
$
17,924

 
$
53,296

 
$
46,191

See accompanying notes to condensed consolidated financial statements.




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INFORMATICA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Nine Months Ended
September 30,
 
2014
 
2013
Operating activities:
 
 
 
Net income
$
70,495

 
$
46,477

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 

Depreciation and amortization
14,151

 
10,773

Stock-based compensation
44,071

 
44,248

Deferred income taxes
(2,113
)
 
(4,730
)
Tax benefits from stock-based compensation
288

 
5,312

Excess tax benefits from stock-based compensation
(3,021
)
 
(6,982
)
Amortization of intangible assets and acquired technology
14,845

 
22,851

Other operating activities, net

 
(352
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
38,753

 
9,960

Prepaid expenses and other assets
147

 
2,893

Accounts payable and accrued liabilities
(24,262
)
 
(8,002
)
Income taxes payable
(6,163
)
 
4,588

Deferred revenues
(4,136
)
 
11,688

Net cash provided by operating activities
143,055

 
138,724

Investing activities:
 

 
 

Purchases of property and equipment
(15,866
)
 
(16,059
)
Purchases of investments
(226,572
)
 
(267,618
)
Investment in equity interest, net
(282
)
 
(2,001
)
Maturities of investments
172,172

 
193,581

Sales of investments
12,887

 
77,966

Business acquisitions, net of cash acquired
(54,614
)
 
(7,464
)
Net cash used in investing activities
(112,275
)
 
(21,595
)
Financing activities:
 

 
 

Net proceeds from issuance of common stock
50,902

 
46,661

Repurchases and retirement of common stock
(126,862
)
 
(63,936
)
Withholding taxes related to restricted stock units net share settlement
(6,772
)
 
(6,412
)
Payment of contingent consideration
(3,061
)
 
(3,670
)
Payment of issuance costs on credit facility
(891
)
 

Excess tax benefits from stock-based compensation
3,021

 
6,982

Purchase of acquiree stock

 
(6,365
)
Net cash used in financing activities
(83,663
)
 
(26,740
)
Effect of foreign exchange rate changes on cash and cash equivalents
(10,315
)
 
(161
)
Net increase (decrease) in cash and cash equivalents
(63,198
)
 
90,228

Cash and cash equivalents at beginning of period
297,818

 
190,127

Cash and cash equivalents at end of period
$
234,620

 
$
280,355

See accompanying notes to condensed consolidated financial statements.

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Table of Contents

INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements of Informatica Corporation (“Informatica,” or the “Company”) have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States of America. However, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the financial statements include all normal and recurring adjustments that are necessary to fairly present the results of the interim periods presented. All of the amounts included in this Quarterly Report on Form 10-Q related to the condensed consolidated financial statements and notes thereto as of and for the three and nine months ended September 30, 2014 and 2013 are unaudited. The interim results presented are not necessarily indicative of results for any subsequent interim period, the year ending December 31, 2014, or any other future period.
The preparation of the Company's condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions. The Company believes that the estimates, judgments, and assumptions upon which it relies are reasonable based on information available 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. Any material differences between these estimates and actual results will impact the Company's condensed consolidated financial statements. 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.
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated.
In November 2012, the Company acquired a majority interest in the shares of Heiler Software AG (“Heiler Software”) at the end of the initial acceptance period of the takeover offer. The squeeze-out of the remaining shareholders was effective in the second quarter of 2013, increasing the Company's ownership in Heiler Software to 100 percent. The Company consolidated the financial results of Heiler Software with its financial results beginning in November 2012. The noncontrolling interest in the Company's net income was not significant to consolidated results for the nine months ended September 30, 2013 and therefore has been included as a component of other income (expense), net in the condensed consolidated statements of income.
These unaudited, condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2013 included in the Company's Annual Report on Form 10-K filed with the SEC. The consolidated balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements of the Company. The Company's significant accounting policies are described in Note 2 to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.
Certain reclassifications have been made within the condensed consolidated statement of cash flows to conform to the current year presentation. A change was made to present redemptions by issuers of debt securities held by the Company as part of net cash provided by maturities of investments to reflect that these redemptions are an acceleration of the maturity of the debt investment. Redemptions were previously presented as part of net cash provided by sales of investments. This change in presentation did not affect total net cash used in investing activities and conforming changes have been made for all prior periods presented. Net cash provided by redemptions of $47.6 million was reclassified from sales of investments to maturities of investments for the nine months ended September 30, 2013.
Recent Accounting Pronouncements
In March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-05, Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. ASU 2013-05 clarifies that the cumulative translation adjustment (“CTA”) should be released into net income upon the occurrence of certain qualifying events. The Company adopted ASU 2013-05 prospectively as required on January 1, 2014. Adoption of ASU 2013-05 did not impact the Company's condensed consolidated financial statements and disclosures.

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INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which clarifies that an unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available or the tax law of the jurisdiction does not require, and the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The Company adopted ASU 2013-11 prospectively as required on January 1, 2014. Adoption of ASU 2013-11 did not impact the Company's condensed consolidated financial statements and disclosures.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those good and services. The standard will be effective for the Company in the first quarter of 2017. ASU 2014-09 allows for two methods of adoption: (a) "full retrospective" adoption, meaning the standard is applied to all periods presented, or (b) "modified retrospective" adoption, meaning the cumulative effect of applying ASU 2014-09 is recognized as an adjustment to the 2017 opening retained earnings balance. Early adoption is not permitted. The Company has not yet selected a transition method and is currently evaluating the impact of its pending adoption of ASU 2014-09 on its consolidated financial statements and disclosures.
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. ASU 2014-12 requires that a performance target that affects vesting and could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for the Company in its first quarter of 2016 with early adoption permitted. The Company does not expect its pending adoption of ASU 2014-12 to have a material impact on its consolidated financial statements and disclosures.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for the Company in the first quarter of 2017 with early adoption permitted. The Company does not expect its pending adoption of ASU 2014-15 to have an impact on the consolidated financial statements and disclosures.
There have been no other changes to the Company's significant accounting policies since the end of 2013.
Fair Value Measurement of Financial Assets and Liabilities
The following table summarizes financial assets and financial liabilities that the Company measures at fair value on a recurring basis as of September 30, 2014 (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Money market funds (i)
$
7,641

 
$
7,641

 
$

 
$

Time deposits (ii)
27,886

 
27,886

 

 

Marketable debt securities (ii)
392,135

 

 
392,135

 

Total money market funds, time deposits, and marketable debt securities
427,662

 
35,527

 
392,135

 

Foreign currency derivatives (iii)
973

 

 
973

 

Total assets
$
428,635

 
$
35,527

 
$
393,108

 
$

Liabilities:
 
 
 
 
 
 
 
Foreign currency derivatives (v)
$
353

 
$

 
$
353

 
$

Total liabilities
$
353

 
$

 
$
353

 
$


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Table of Contents
INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The following table summarizes financial assets and financial liabilities that the Company measures at fair value on a recurring basis as of December 31, 2013 (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
 
 
Significant
Other
Observable
Inputs
(Level 2)
 
 
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Money market funds (i)
$
21,893

 
$
21,893

 
$

 
$

Time deposits (ii)
21,585

 
21,585

 

 

Marketable debt securities (ii)
370,384

 

 
370,384

 

Total money market funds, time deposits, and marketable debt securities
413,862

 
43,478

 
370,384

 

Foreign currency derivatives (iii)
284

 

 
284

 

Total assets
$
414,146

 
$
43,478

 
$
370,668

 
$

Liabilities:
 

 
 

 
 

 
 

Foreign currency derivatives (iv)
$
1,024

 
$

 
$
1,024

 
$

Acquisition-related contingent consideration (iv)
3,071

 

 

 
3,071

Total liabilities
$
4,095

 
$

 
$
1,024

 
$
3,071

____________________
(i)
Included in cash and cash equivalents on the condensed consolidated balance sheets.
(ii)
Included in either cash and cash equivalents or short-term investments on the condensed consolidated balance sheets.
(iii)
Included in prepaid expenses and other current assets on the condensed consolidated balance sheets.
(iv)
Included in accrued liabilities on the condensed consolidated balance sheets.
(v)
Included in accrued liabilities and other liabilities on the condensed consolidated balance sheets.
Money Market Funds, Time Deposits, and Marketable Debt Securities
The Company uses a market approach for determining the fair value of all its Level 1 and Level 2 money market funds, time deposits, and marketable securities.
To value its money market funds and time deposits, the Company values the funds at $1 stable net asset value, which is the market pricing convention for identical assets that the Company has the ability to access.
The Company's marketable securities consist of certificates of deposit, commercial paper, corporate notes and bonds, municipal securities, and U.S. government and agency notes and bonds. To value its certificates of deposit and commercial paper, the Company uses mathematical calculations to arrive at fair value for these securities, which generally have short maturities and infrequent secondary market trades. For example, in the absence of any observable transactions, the Company may accrete from purchase price at purchase date to face value at maturity. In the event that a transaction is observed on the same security in the marketplace, and the price on that subsequent transaction clearly reflects the market price on that day, the Company will adjust the price in the system to the observed transaction price and follow a revised accretion schedule to determine the daily price.
To determine the fair value of its corporate notes and bonds, municipal securities, and U.S. government and agency notes and bonds, the Company uses a third party pricing source for each security. If the market price is not available from the third party source, pricing from the Company's investment custodian is used.
Foreign Currency Derivatives and Hedging Instruments
The Company uses the income approach to value the derivatives using observable Level 2 market inputs at the measurement date and standard valuation techniques to convert future amounts to a single present value amount, assuming that participants are motivated but not compelled to transact. Level 2 inputs are limited to quoted prices that are observable for the derivative assets and liabilities. The Company records its derivative assets and liabilities at gross in the condensed consolidated balance sheet and uses mid-market pricing as a practical expedient for fair value measurements. Key inputs for foreign currency derivatives are the

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INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


spot rates, forward rates, interest rates, and credit derivative market rates. The spot rate for each foreign currency is the same spot rate used for all balance sheet translations at the measurement date and is sourced from the Federal Reserve Bulletin. The following values are interpolated from commonly quoted intervals available from Bloomberg: forward points and the London Interbank Offered Rate (“LIBOR”) used to discount and determine the fair value of assets and liabilities. Credit default swap spread curves identified per counterparty at month end in Bloomberg are used to discount derivative assets for counterparty non-performance risk, all of which have terms of fifteen months or less. The Company discounts derivative liabilities to reflect the Company’s own potential non-performance risk to lenders and has used the spread over LIBOR on its most recent corporate borrowing rate.
The counterparties associated with the Company’s foreign currency forward contracts are large credit-worthy financial institutions, and the derivatives transacted with these entities are relatively short in duration; therefore, the Company does not consider counterparty concentration and non-performance to be material risks at this time. Both the Company and the counterparties are expected to perform under the contractual terms of the instruments.
There were no transfers between Level 1 and Level 2 categories during the three and nine months ended September 30, 2014 and 2013.
See Note 5. Accumulated Other Comprehensive Income (Loss), Note 6. Derivative Financial Instruments, and Note 11. Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements for a further discussion.
Acquisition-related Contingent Consideration
The Company estimated the fair value of the acquisition-related contingent consideration using a probability-weighted discounted cash flow model. This fair value measure was based on significant inputs not observed in the market and thus represented a Level 3 instrument. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect our own assumptions in measuring fair value. There were no transfers into or out of the Level 3 category during the three and nine months ended September 30, 2014 and 2013. The change in fair value of acquisition-related contingent consideration is included in acquisitions and other charges in the condensed consolidated statements of income.
The changes in the acquisition-related contingent consideration liability for the nine months ended September 30, 2014 consisted of the following (in thousands):
 
September 30,
2014
Beginning balance as of December 31, 2013
$
3,071

Change in fair value of contingent consideration
(10
)
Payment of contingent consideration
(3,061
)
Ending balance as of September 30, 2014
$


See Note 13. Acquisitions of Notes to Condensed Consolidated Financial Statements for a further discussion.

Note 2.  Cash, Cash Equivalents, and Short-Term Investments
The Company's short-term investments 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, net of tax. Realized gains or losses and other-than-temporary impairments, if any, on available-for-sale securities are reported in other income or expense as incurred. Realized gains recognized for the three and nine months ended September 30, 2014 and 2013 were negligible. The cost of securities sold was determined based on the specific identification method.

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INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The following table summarizes the Company’s cash, cash equivalents, and short-term investments as of September 30, 2014 (in thousands):
 
 
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
Cash
$
226,979

 
$

 
$

 
$
226,979

Cash equivalents:
 

 
 

 
 

 
 

Money market funds
7,641

 

 

 
7,641

Total cash equivalents
7,641

 

 

 
7,641

Total cash and cash equivalents
234,620

 

 

 
234,620

Short-term investments:
 

 
 

 
 

 
 

Certificates of deposit
1,920

 

 

 
1,920

Commercial paper
3,992

 

 

 
3,992

Corporate notes and bonds
221,515

 
188

 
(318
)
 
221,385

Federal agency notes and bonds
73,950

 
6

 
(89
)
 
73,867

Time deposits
27,886

 

 

 
27,886

Municipal notes and bonds
90,739

 
238

 
(6
)
 
90,971

Total short-term investments
420,002

 
432

 
(413
)
 
420,021

Total cash, cash equivalents, and short-term investments
$
654,622

 
$
432

 
$
(413
)
 
$
654,641


The following table summarizes the Company’s cash, cash equivalents, and short-term investments as of December 31, 2013 (in thousands):
 
 
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
Cash
$
263,572

 
$

 
$

 
$
263,572

Cash equivalents:
 

 
 

 
 

 
 

Money market funds
21,893

 

 

 
21,893

U.S. government notes and bonds
12,353

 

 

 
12,353

Total cash equivalents
34,246

 

 

 
34,246

Total cash and cash equivalents
297,818

 

 

 
297,818

Short-term investments:
 

 
 

 
 

 
 

Certificates of deposit
960

 

 

 
960

Commercial paper
12,738

 

 

 
12,738

Corporate notes and bonds
175,446

 
220

 
(220
)
 
175,446

Federal agency notes and bonds
64,863

 
31

 
(69
)
 
64,825

Time deposits
21,585

 

 

 
21,585

Municipal notes and bonds
103,923

 
153

 
(14
)
 
104,062

Total short-term investments
379,515

 
404

 
(303
)
 
379,616

Total cash, cash equivalents, and short-term investments
$
677,333

 
$
404

 
$
(303
)
 
$
677,434

See Note 1. Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements for further information regarding the fair value of the Company's financial instruments.

11

Table of Contents
INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The following table summarizes the fair value and gross unrealized losses related to the Company’s short-term investments, aggregated by investment category that have been in a continuous unrealized loss position for less than twelve months, at September 30, 2014 (in thousands):
 
Less Than 12 months
 
 
 
 
Fair
Value
 
Gross
Unrealized
Losses
Corporate notes and bonds
$
101,836

 
$
(318
)
Federal agency notes and bonds
56,067

 
(82
)
Municipal notes and bonds
8,349

 
(6
)
Total
$
166,252

 
$
(406
)
The following table summarizes the fair value and gross unrealized losses related to the Company’s short-term investments, aggregated by investment category that have been in a continuous unrealized loss position for greater than twelve months, at September 30, 2014 (in thousands):
 
Greater Than 12 months
 
 
 
 
Fair
Value
 
Gross
Unrealized
Losses
Federal agency notes and bonds
$
2,493

 
$
(7
)
Total
$
2,493

 
$
(7
)
The changes in value of these investments are primarily related to changes in interest rates and are considered to be temporary in nature.
The following table summarizes the cost and estimated fair value of the Company’s short-term investments by contractual maturity at September 30, 2014 (in thousands):
 
Cost
 
Fair
Value
Due within one year
$
178,287

 
$
178,430

Due in one year to two years
164,357

 
164,478

Due after two years
77,358

 
77,113

Total
$
420,002

 
$
420,021



12

Table of Contents
INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


Note 3.  Intangible Assets and Goodwill
The carrying amounts of the intangible assets other than goodwill as of September 30, 2014 and December 31, 2013 are as follows (in thousands, except years):
 
September 30, 2014
 
December 31, 2013
 
Weighted
Average
Useful Life
(Years)
 
Cost
 
Accumulated
Amortization
 
Net
 
Cost
 
Accumulated
Amortization
 
Net
 
Developed and core technology
$
144,612

 
$
(109,410
)
 
$
35,202

 
$
130,744

 
$
(99,026
)
 
$
31,718

 
6
Other Intangible Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
45,180

 
(38,443
)
 
6,737

 
41,683

 
(35,216
)
 
6,467

 
5
All other (i)
17,696

 
(14,999
)
 
2,697

 
17,205

 
(13,765
)
 
3,440

 
4-11
Total other intangible assets
62,876

 
(53,442
)
 
9,434

 
58,888

 
(48,981
)
 
9,907

 
 
Total intangible assets, net
$
207,488

 
$
(162,852
)
 
$
44,636

 
$
189,632

 
$
(148,007
)
 
$
41,625

 
 
____________________
(i)
All other includes vendor relationships, trade names, covenants not to compete, and patents.
Total amortization expense related to intangible assets was $4.7 million and $7.5 million for the three months ended September 30, 2014 and 2013, respectively, and $14.8 million and $22.9 million for the nine months ended September 30, 2014 and 2013, respectively. Certain intangible assets were recorded in foreign currencies; and therefore, the gross carrying amount and accumulated amortization are subject to foreign currency translation adjustments.
As of September 30, 2014, the amortization expense related to identifiable intangible assets in future periods is expected to be as follows (in thousands):
 
 
 
Acquired
Technology
 
Other
Intangible
Assets
 
Total
Intangible
Assets
Remaining 2014
$
2,740

 
$
1,482

 
$
4,222

2015
9,985

 
4,012

 
13,997

2016
8,545

 
2,160

 
10,705

2017
6,603

 
862

 
7,465

2018
4,580

 
439

 
5,019

Thereafter
2,749

 
479

 
3,228

Total expected amortization expense
$
35,202

 
$
9,434

 
$
44,636

The changes in the carrying amount of goodwill for the nine months ended September 30, 2014 are as follows (in thousands):
 
September 30,
2014
Beginning balance as of December 31, 2013
$
523,142

Goodwill from acquisition
36,116

Subsequent goodwill adjustments
(7,157
)
Ending balance as of September 30, 2014
$
552,101


13

Table of Contents
INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


During the nine months ended September 30, 2014, the Company recorded subsequent goodwill net reductions of $7.2 million primarily related to foreign currency translation adjustments. The goodwill is partially deductible for tax purposes. See Note 13. Acquisitions for a further discussion of goodwill from acquisitions.
Note 4.  Borrowings
Credit Agreement
On September 26, 2014, the Company entered into a Credit Agreement (the “Credit Agreement”) that matures on September 26, 2019. This Credit Agreement replaces the former agreement that matured on September 29, 2014. The Credit Agreement provides for an unsecured revolving credit facility in an amount of up to $220.0 million, with an option for the Company to request to increase the revolving loan commitments or to enter into tranches of term loans in an aggregate amount of up to $30.0 million, for a total credit facility of up to $250.0 million. The revolving credit facility has sublimits for swingline loans available on a same day basis of up to $10.0 million and for the issuance of standby letters of credit in a face amount up to $20.0 million. No amounts were outstanding under the Credit Agreement as of September 30, 2014, and a total of $220.0 million remained available for borrowing.
Revolving loans accrue interest at a per annum rate based on either, at the Company's election, (i) the base rate plus a margin ranging from 0.50% to 1.00% depending on the Company's consolidated leverage ratio, or (ii) the LIBO rate (based on 1-, 2-, 3-, or 6-month interest periods) plus a margin ranging from 1.50% to 2.00% depending on the Company's consolidated leverage ratio. The base rate is equal to the highest of (i) JPMorgan Chase Bank, N.A.'s prime rate, (ii) the federal funds rate plus a margin equal to 0.50%, and (iii) LIBO rate for a 1-month interest period plus a margin equal to 1.00%. Swingline loans accrue interest at a per annum rate based on the base rate plus the applicable margin for base rate loans. Revolving loans may be borrowed, repaid and reborrowed until September 26, 2019, at which time all amounts borrowed must be repaid. Swingline loans shall be repaid on the 15th day of a calendar month, or the last day of a calendar month, or September 26, 2019, whichever is earlier.
Accrued interest on the revolving loans is payable (i) quarterly in arrears with respect to base rate loans, (ii) at the end of each interest rate period (or at each 3- month interval in the case of loans with interest periods greater than 3 months) with respect to LIBO rate loans, and (iii) the day that the borrowing is required to be repaid with respect to swingline loans. The Company is also obligated to pay other customary closing fees, arrangement fees, administrative fees, commitment fees, and letter of credit fees. A quarterly commitment fee is applied to the average daily unborrowed amount under the credit facility at a per annum rate ranging from 0.225% to 0.35% depending on the Company's consolidated leverage ratio. The Company may prepay the loans or terminate or reduce the commitments in whole or in part at any time, without premium or penalty, subject to certain conditions including minimum amounts in the case of commitment reductions and reimbursement of certain costs in the case of prepayments of LIBO rate loans.
The Credit Agreement contains customary representations and warranties, covenants, and events of default, including the requirement to maintain a maximum consolidated leverage ratio of 2.75 to 1.00 and a minimum consolidated interest coverage ratio of 3.50 to 1.00. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement. Under certain circumstances, a default interest rate will apply on all obligations during the existence of a payment default under the Credit Agreement at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.00% above the rate applicable to base rate loans for any other overdue amounts. The Company was in compliance with all covenants under the Credit Agreement as of September 30, 2014.


14

Table of Contents
INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


Note 5.  Accumulated Other Comprehensive Income (Loss)
The following table summarizes the changes in accumulated balances for each component of other comprehensive income (loss) for the three months ended September 30, 2014, net of taxes (in thousands):
 
 
Cumulative
Translation
Adjustments
 
Net Unrealized
Gain (Loss) on
Available-for-Sale
Investments
 
Net Unrealized
Gain (Loss) on
Cash Flow Hedges
 
Total
Accumulated other comprehensive income (loss) as of June 30, 2014
 
$
(2,622
)
 
$
277

 
$
1,041

 
$
(1,304
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications, net of tax benefit of $876, $161 and $123
 
(18,172
)
 
(262
)
 
(200
)
 
(18,634
)
Net gain reclassified from accumulated other comprehensive income (loss), net of tax expense of $ —, $(2) and $(288)
 

 
(3
)
(i) 
(470
)
(ii) 
(473
)
Total other comprehensive income (loss), net of tax effect (iii)
 
(18,172
)
 
(265
)
 
(670
)
 
(19,107
)
Accumulated other comprehensive income (loss) as of September 30, 2014
 
$
(20,794
)
 
$
12

 
$
371

 
$
(20,411
)
____________________
(i)
The before-tax gain of $5 was included in other expense, net on the condensed consolidated statements of income.
(ii)
The before-tax gain of $184 and $574 were included in cost of service revenues and operating expenses, primarily research and development expense, respectively on the condensed consolidated statements of income.
(iii)
The tax expense related to the net gain reclassified from accumulated other comprehensive income (loss) was included in income tax provision on the condensed consolidated statements of income.


15

Table of Contents
INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The following table summarizes the changes in accumulated balances for each component of other comprehensive income (loss) for the three months ended September 30, 2013, net of taxes (in thousands):
 
 
Cumulative
Translation
Adjustments
 
Net Unrealized
Gain (Loss) on
Available-for-Sale
Investments
 
Net Unrealized
Loss on
Cash Flow Hedges
 
Total
Accumulated other comprehensive loss as of June 30, 2013
 
$
(14,180
)
 
$
(345
)
 
$
(1,311
)
 
$
(15,836
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications, net of tax benefit (expense) of $(317), $(187) and $455
 
7,370

 
304

 
(744
)
 
6,930

Net loss reclassified from accumulated other comprehensive income (loss), net of tax benefit of $ —, $12 and $349
 

 
19

(i) 
571

(ii) 
590

Total other comprehensive income (loss), net of tax effect (iii)
 
7,370

 
323

 
(173
)
 
7,520

Accumulated other comprehensive loss as of September 30, 2013
 
$
(6,810
)
 
$
(22
)
 
$
(1,484
)
 
$
(8,316
)
____________________
(i)
The before-tax loss of $31 was included in other expense, net on the condensed consolidated statements of income.
(ii)
The before-tax losses of $216 and $704 were included in cost of service revenues and operating expenses, primarily research and development expense, respectively on the condensed consolidated statements of income.
(iii)
The tax benefit related to the net loss reclassified from accumulated other comprehensive income (loss) was included in income tax provision on the condensed consolidated statements of income.

16

Table of Contents
INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The following table summarizes the changes in accumulated balances for each component of other comprehensive income (loss) for the nine months ended September 30, 2014, net of taxes (in thousands):
 
 
Cumulative
Translation
Adjustments
 
Net Unrealized
Gain (Loss) on
Available-for-Sale
Investments
 
Net Unrealized
Gain (Loss) on
Cash Flow Hedges
 
Total
Accumulated other comprehensive income (loss) as of December 31, 2013
 
$
(2,879
)
 
$
63

 
$
(396
)
 
$
(3,212
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Other comprehensive income before reclassifications, net of tax benefit (expense) of $597, $27 and $(677)
 
(17,915
)
 
(44
)
 
1,104

 
(16,855
)
Net gain reclassified from accumulated other comprehensive income (loss), net of tax expense of $ —, $(4) and $(207)
 

 
(7
)
(i) 
(337
)
(ii) 
(344
)
Total other comprehensive income, net of tax effect (iii)
 
(17,915
)
 
(51
)
 
767

 
(17,199
)
Accumulated other comprehensive income (loss) as of September 30, 2014
 
$
(20,794
)
 
$
12

 
$
371

 
$
(20,411
)
____________________
(i)
The before-tax gain of $11 was included in other expense, net on the condensed consolidated statements of income.
(ii)
The before-tax gain of $130 and $414 were included in cost of service revenues and operating expenses, primarily research and development expense, respectively on the condensed consolidated statements of income.
(iii)
The tax expense related to the net gain reclassified from accumulated other comprehensive income (loss) was included in income tax provision on the condensed consolidated statements of income.

17

Table of Contents
INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The following table summarizes the changes in accumulated balances for each component of other comprehensive income (loss) for the nine months ended September 30, 2013, net of taxes (in thousands):
 
 
Cumulative
Translation
Adjustments
 
Net Unrealized
Gain (Loss) on
Available-for-Sale
Investments
 
Net Unrealized
Loss on
Cash Flow Hedges
 
Total
Accumulated other comprehensive income (loss) as of December 31, 2012
 
$
(8,012
)
 
$
242

 
$
(260
)
 
$
(8,030
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications, net of tax benefit (expense) of $(74), $183 and $1,149
 
1,202

 
(300
)
 
(1,875
)
 
(973
)
Net loss reclassified from accumulated other comprehensive income (loss), net of tax benefit of $ —, $22 and $398
 

 
36

(i) 
651

(ii) 
687

Total other comprehensive income (loss), net of tax effect (iii)
 
1,202

 
(264
)
 
(1,224
)
 
(286
)
Accumulated other comprehensive loss as of September 30, 2013
 
$
(6,810
)
 
$
(22
)
 
$
(1,484
)
 
$
(8,316
)
____________________
(i)
The before-tax loss of $58 was included in other expense, net on the condensed consolidated statements of income.
(ii)
The before-tax losses of $247 and $802 were included in cost of service revenues and operating expenses, primarily research and development expense, respectively on the condensed consolidated statements of income.
(iii)
The tax benefit related to the net loss reclassified from accumulated other comprehensive income (loss) was included in income tax provision on the condensed consolidated statements of income.
The Company did not have any other-than-temporary impairment recognized in accumulated other comprehensive income (loss) as of September 30, 2014 and December 31, 2013.
The Company determines the basis of the cost of a security sold and the amount reclassified out of other comprehensive income into statement of income based on specific identification.
See Note 1. Summary of Significant Accounting Policies, Note 6. Derivative Financial Instruments, and Note 11. Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements for a further discussion.

Note 6.  Derivative Financial Instruments
The Company’s earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. The Company uses derivative instruments to manage its exposures to fluctuations in certain foreign currency exchange rates which exist as part of ongoing business operations. The Company and its subsidiaries do not enter into derivative contracts for speculative purposes.
Cash Flow Hedges
The Company enters into certain cash flow hedge programs in an attempt to reduce the impact of certain foreign currency fluctuations. These contracts are designated and documented as cash flow hedges. The purpose of these programs is to reduce the volatility of identified cash flow and expenses caused by movement in certain foreign currency exchange rates, in particular, the Indian rupee. The Company is currently using foreign exchange forward contracts to hedge the foreign currency anticipated expenses of its subsidiary in India.

18

Table of Contents
INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The Company releases the amounts accumulated in other comprehensive income into earnings in the same period or periods during which the forecasted hedge transaction affects earnings. As of September 30, 2014, the effective portion of the Company’s cash flow hedges before tax effect was a net gain of $0.6 million, of which $0.5 million is expected to be reclassified from accumulated other comprehensive income into earnings within the next 12 months.
The Company has forecasted the amount of its anticipated foreign currency expenses based on its historical performance and its projected financial plan. As of September 30, 2014, the remaining open foreign exchange contracts, carried at fair value, are hedging Indian rupee expenses and have a maturity of fifteen months or less. These foreign exchange contracts mature monthly as the foreign currency denominated expenses are paid and any gain or loss is offset against operating expense. Once the hedged item is recognized, the cash flow hedge is de-designated and subsequent changes in value are recognized in other income (expense) to offset changes in the value of the resulting non-functional currency monetary assets or liabilities.
The notional amounts of these foreign exchange forward contracts in U.S. dollar equivalents were to buy $55.7 million and $30.1 million of Indian rupees as of September 30, 2014 and December 31, 2013, respectively.
Balance Sheet Hedges
Balance Sheet hedges consist of cash flow hedge contracts that have been de-designated and non-designated balance sheet hedges. These foreign exchange contracts are carried at fair value and either did not or no longer qualify for hedge accounting treatment and are not designated as hedging instruments. Changes in the value of the foreign exchange contracts are recognized in other income (expense) and offset the foreign currency gain or loss on the underlying net monetary assets or liabilities. The notional amounts of foreign currency contracts open at period end in US dollar equivalents were to buy $2.6 million of Indian rupees at both September 30, 2014 and December 31, 2013.
The following table reflects the fair value amounts for the foreign exchange contracts designated and not designated as hedging instruments at September 30, 2014 and December 31, 2013 (in thousands):
 
September 30, 2014
 
December 31, 2013
 
Fair Value
Derivative
Assets(i)
 
Fair Value
Derivative
Liabilities(iii)
 
Fair Value
Derivative
Assets(i)
 
Fair Value
Derivative
Liabilities(ii)
Derivatives designated as hedging instruments
$
753

 
$
353

 
$
284

 
$
830

Derivatives not designated as hedging instruments
220

 

 

 
194

Total fair value of derivative instruments
$
973

 
$
353

 
$
284

 
$
1,024

____________________
(i)
Included in prepaid expenses and other current assets on the condensed consolidated balance sheets.
(ii)
Included in accrued liabilities on the condensed consolidated balance sheets.
(iii)
Included in accrued liabilities and other liabilities on the condensed consolidated balance sheets.
The Company presents its derivative assets and derivative liabilities at gross fair values in the condensed consolidated balance sheets. However, under the master netting agreements with the respective counterparties of the foreign exchange contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. The derivatives held by the Company are not subject to any credit contingent features negotiated with its counterparties. The Company is not required to pledge nor is entitled to receive cash collateral related to the above contracts.


19

Table of Contents
INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The following table sets forth the offsetting of derivative assets as of September 30, 2014 and December 31, 2013 (in thousands):
 
 
 
 
 
 
 
Gross Amounts Not Offset
in the Condensed Consolidated
Balance Sheets
 
 
 
Gross
Amounts of
Recognized
Assets
 
Gross
Amounts Offset
in the Condensed
Consolidated
Balance Sheets
 
Net Amounts
of Assets
Presented
in the Condensed
Consolidated
Balance Sheets
 
 
Financial
Instruments(i)
 

Cash
Collateral
Pledged
 
Net
Amount
As of September 30,
 
 
 
 
 
 
 
 
 
 
 
2014:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
973

 
$

 
$
973

 
$
(44
)
 
$

 
$
929

As of December 31,
 
 
 
 
 
 
 
 
 
 
 
2013:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
284

 
$

 
$
284

 
$
(268
)
 
$

 
$
16

____________________
(i)
The balances at September 30, 2014 and December 31, 2013 were related to derivative liabilities which are allowed to be net settled against derivative assets in accordance with the master netting agreements.
The following table sets forth the offsetting of derivative liabilities as of September 30, 2014 and December 31, 2013 (in thousands):
 
 
 
 
 
 
 
Gross Amounts Not Offset
in the Condensed Consolidated
Balance Sheets
 
 
 
Gross
Amounts of
Recognized
Liabilities
 
Gross
Amounts Offset
in the Condensed
Consolidated
Balance Sheets
 
Net Amounts
of Liabilities
Presented
in the Condensed
Consolidated
Balance Sheets
 

Financial
Instruments(ii)
 

Cash
Collateral
Pledged
 
Net
Amount
As of September 30,
 
 
 
 
 
 
 
 
 
 
 
2014:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
353

 
$

 
$
353

 
$
(44
)
 
$

 
$
309

As of December 31,
 
 
 
 
 
 
 
 
 
 
 
2013:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
1,024

 
$

 
$
1,024

 
$
(268
)
 
$

 
$
756

____________________
(ii)
The balances at September 30, 2014 and December 31, 2013 were related to derivative assets which are allowed to be net settled against derivative liabilities in accordance with the master netting agreements.

20

Table of Contents
INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The Company evaluates prospectively as well as retrospectively the effectiveness of its hedge programs using statistical analysis. Prospective testing is performed at the inception of the hedge relationship and quarterly thereafter. Retrospective testing is performed on a quarterly basis. In October 2013, the Company changed its effectiveness assessment method from the spot to spot price method to include time value in the assessment. Prospectively, the Company includes all changes in value that are effective including changes in time value to accumulated other comprehensive income. The Company no longer records amounts as an excluded component of the hedge relationship.  
The before-tax effects of derivative instruments designated as cash flow hedges on the accumulated other comprehensive income (loss) and condensed consolidated statements of income for the three and nine months ended September 30, 2014 and 2013 are as follows (in thousands):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Amount of gain (loss) recognized in other comprehensive income (effective portion)
$
(323
)
 
$
(1,199
)
 
$
1,781

 
$
(3,024
)
Amount of gain (loss) reclassified from accumulated other comprehensive income to cost of service revenues and operating expenses (effective portion)
$
758

 
$
(920
)
 
$
544

 
$
(1,049
)
Amount of gain recognized in income on derivatives for the amount excluded from effectiveness testing located in operating expenses
$

 
$
151

 
$

 
$
728

Amount of loss on derivatives due to hedge ineffectiveness recognized in cost of service revenues and operating expenses
$
(199
)
 
$

 
$
(199
)
 
$

The before-tax loss recognized in other expense, net for non-designated foreign currency forward contracts for the three and nine months ended September 30, 2014 and 2013 are as follows (in thousands):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
2014
 
2013
 
2014
 
2013
Loss recognized in other expense, net
$
(69
)
 
$
(46
)
 
$

 
$
(237
)
See Note 1. Summary of Significant Accounting Policies, Note 5. Accumulated Other Comprehensive Income (Loss), and Note 11. Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements for a further discussion.

Note 7.  Stock Repurchase Program
The Company's Board of Directors has approved a stock repurchase program for the Company to repurchase its common stock. The primary purpose of the program is to enhance shareholder value, including partially offsetting the dilutive impact of stock based incentive plans. The number of shares to be purchased and the timing of the purchases are based on several factors, including the price of the Company's common stock, the Company's liquidity and working capital needs, general business and market conditions, and other investment opportunities. These purchases can be made from time to time in the open market and are funded from the Company’s available working capital. In January 2014, the Board of Directors approved the repurchase of up to an additional $100.0 million of the Company's outstanding common stock. In July 2014, the Board of Directors approved, for the second time in 2014, the repurchase of up to an additional $100.0 million of the Company's outstanding common stock. As of September 30, 2014, $77.1 million remained available for share repurchases under this program. In October 2014, the Company announced that the Board of Directors approved, for the third time in 2014, the repurchase of up to an additional $100.0 million of the Company's outstanding common stock.
This repurchase program does not have an expiration date. Repurchased shares are retired and reclassified as authorized and unissued shares of common stock. The Company may continue to repurchase shares from time to time, as determined by management under programs approved by the Board of Directors.
During the three and nine months ended September 30, 2014, the Company repurchased approximately 2,191,000 shares of its common stock at a cost of $71.0 million and approximately 3,669,000 shares of its common stock at a cost of $126.9 million,

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INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


respectively. During the three and nine months ended September 30, 2013, the Company repurchased approximately 557,000 shares of its common stock at a cost of $21.0 million and approximately 1,761,000 shares of its common stock at a cost of $63.9 million, respectively.
Note 8.  Stock-Based Compensation
The Company grants stock options, restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”) under its 2009 Equity Incentive Plan. Eligible employees may elect to purchase shares of common stock through the Employee Stock Purchase Plan ("ESPP"). The fair value of each option award and ESPP share is estimated on the date of grant using the Black-Scholes-Merton option pricing model that uses the assumptions in the following table. The Company has consistently used a blend of average historical and market-based implied volatilities for calculating the expected volatilities for employee stock options, and uses market-based implied volatilities for its ESPP. The expected term of employee stock options granted is derived from historical exercise patterns of the options, and the expected term of ESPP is based on the contractual terms. The expected term of options granted to employees is derived from the historical option exercises, post-vesting cancellations, and estimates concerning future exercises and cancellations for vested and unvested options that remain outstanding. The risk-free interest rate for the expected term of the option and ESPP is based on the U.S. Treasury yield curve in effect at the time of grant. The Company recognizes its stock-based compensation related to options using a straight-line method over the vesting term of the awards. The Company recognizes its stock-based compensation related to ESPP using a straight-line method over the offering period, which is six months.
The fair value of RSUs and PRSUs is the grant date closing price of our common stock. The Company recognizes expense related to RSUs using a straight-line method over the vesting term of the awards. The Company recognizes expense for PRSUs based on the probability of achieving certain performance criteria, as defined in the PRSU agreements, and uses the graded vesting attribution method over the requisite service period.

The Company records stock-based compensation for options, RSUs and PRSUs granted net of estimated forfeiture rates. ASC 718, Stock Compensation, requires the Company to estimate forfeiture rates at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical forfeitures to estimate its future forfeiture rates.

The fair value of the Company’s share-based awards was estimated based on the following assumptions:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Option grants:
 
 
 
 
 
 
 
Expected volatility
37
%
 
41
%
 
37 - 40%

 
41 - 43%

Expected dividends

 

 

 

Expected term of options (in years)
3.5

 
3.3

 
3.5

 
3.3

Risk-free interest rate
1.3
%
 
1.1
%
 
1.1
%
 
0.7
%
ESPP: (i)
 
 
 
 
 
 
 
Expected volatility
30
%
 
37
%
 
30 - 36%

 
37 - 42%

Expected dividends

 

 

 

Expected term of ESPP (in years)
0.5

 
0.5

 
0.5

 
0.5

Risk-free interest rate
0.1
%
 
0.1
%
 
0.1
%
 
0.1
%
____________________
(i)
ESPP purchases are made on the last day of January and July of each year.

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INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The allocations of the stock-based compensation, net of estimated income tax benefit, for the three and nine months ended September 30, 2014 and 2013 are as follows (in thousands):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Cost of service revenues
$
1,496

 
$
1,283

 
$
4,414

 
$
4,046

Research and development
5,088

 
5,347

 
14,964

 
14,765

Sales and marketing
4,443

 
5,002

 
14,286

 
15,377

General and administrative
3,437

 
3,237

 
10,407

 
10,060

Total stock-based compensation
14,464

 
14,869

 
44,071

 
44,248

Estimated tax benefit of stock-based compensation
(3,784
)
 
(4,238
)
 
(11,835
)
 
(12,190
)
Total stock-based compensation, net of estimated tax benefit
$
10,680

 
$
10,631

 
$
32,236

 
$
32,058

Stock Option Activity
A summary of stock option activity through September 30, 2014 is presented below (in thousands, except per share amounts):
 
 
 
 
 
 
 
Number of
Shares
 
Weighted-
Average
Exercise Price
Per Share
 
Weighted
Average
Remaining
Contractual
Term (Years)
 
Aggregate
Intrinsic
Value
Outstanding at December 31, 2013
9,424

 
$
29.05

 
3.48
 
$
127,697

Granted
1,518

 
$
37.16

 
 
 
 
Exercised
(2,557
)
 
$
12.05

 
 
 
 
Forfeited or expired
(876
)
 
$
40.56

 
 
 
 
Outstanding at September 30, 2014
7,509

 
$
35.14

 
4.26
 
$
26,193

Exercisable at September 30, 2014
4,363

 
$
33.47

 
3.27
 
$
23,711

Restricted Stock Unit Activity
A summary of RSU activity, excluding PRSUs, through September 30, 2014 is presented below (in thousands, except per share amounts):
 
 
 
Number of
Shares
 
Weighted-
Average
Grant Date
Fair Value
Outstanding at December 31, 2013
1,793

 

Awarded
1,501

 
$
35.87

Released
(502
)
 
$
35.32

Forfeited
(250
)
 
$
38.06

Outstanding at September 30, 2014
2,542

 

Performance-Based Restricted Stock Unit Activity
During the first quarter of 2014, the Company granted approximately 224,000 target PRSUs. The performance period for the PRSUs granted in 2014 is the 2014 fiscal year. If certain performance goals are met, PRSUs would become eligible to vest, and vest ratably over two or four years on the annual anniversary dates of the grant, contingent upon the recipient’s continued service to the company. Certain participants have the ability to receive up to 125% to 150% of the target number of shares originally granted. The Compensation Committee of the Board of Directors will certify actual performance achievement for these PRSUs in the first quarter of 2015. The weighted-average grant date fair value of 2014 PRSUs was $38.25 per share.

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INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The performance period for the 649,900 target number of PRSUs granted in 2013 was the 2013 fiscal year. In the first quarter of 2014, the Compensation Committee of the Board of Directors certified actual performance achievement for PRSUs granted in 2013, and as a result, 507,000 shares became eligible to vest. The achieved PRSUs vest ratably over four years on the annual anniversary dates of the grant, contingent upon the recipient's continued service to the Company. The weighted-average grant date fair value of 2013 PRSUs was $37.42 per share.
A summary of PRSU activity based upon PRSUs granted in 2013, certified and actually achieved through September 30, 2014 is presented below (in thousands):
 
 Number of
Shares
Outstanding at December 31, 2013

Achieved
507

Released
(127
)
Forfeited
(71
)
Outstanding at September 30, 2014
309


Note 9.  Income Taxes
The Company's effective tax rates were 33% and 62% for the three months ended September 30, 2014 and 2013, respectively, and 34% and 41% for the nine months ended September 30, 2014 and 2013, respectively. The rates for the three and nine months ended September 30, 2014 were lower than the federal statutory rate of 35% primarily due to the benefits of foreign earnings in lower-tax jurisdictions and the domestic manufacturing deduction, partially offset by nondeductible stock-based compensation, state income taxes, and the accrual of reserves related to uncertain tax positions. The higher tax rates for the three and nine months ended September 30, 2013 were primarily attributable to acquisition integration-related income tax expenses.
The Company is a U.S.-based multinational corporation subject to tax in various U.S. and foreign tax jurisdictions. This fact causes the Company's effective tax rate to be sensitive to its geographic mix of earnings. The geographic mix of earnings is impacted by the fluctuation in currency exchange rates between the U.S. dollar and the functional currencies of the Company's foreign subsidiaries. The Company's results of operations will continue to be adversely affected to the extent that its geographic mix of earnings becomes more weighted toward jurisdictions with higher tax rates, and will be favorably affected to the extent the relative geographic mix shifts to lower tax jurisdictions. As of September 30, 2014, the Company has not provided for residual U.S. taxes in any of these lower-tax jurisdictions since it intends to indefinitely reinvest the net undistributed earnings of its foreign subsidiaries offshore.
 ASC 740, Income Taxes, provides for the recognition of deferred tax assets if realization of such assets is more likely than not. In assessing the need for any additional valuation allowance in the quarter ended September 30, 2014, the Company considered all available evidence both positive and negative, including historical levels of income, legislative developments, expectations and risks associated with estimates of future taxable income, and ongoing prudent and feasible tax planning strategies.
As a result of this analysis for the quarter ended September 30, 2014, consistent with prior periods, it was considered more likely than not that the Company's non-stock-based payments related deferred tax assets would be realized except for any increase to the deferred tax asset related to the California research and development credit and certain operating losses incurred outside of the United States. A valuation allowance has been recorded against this portion of the credit, even though this attribute has an indefinite life. In addition, the Company recorded a valuation allowance related to the deferred tax asset that is attributable to certain operating losses incurred outside of the United States.
The unrecognized tax benefits related to ASC 740, if recognized, would impact the income tax provision by $27.6 million and $21.6 million as of September 30, 2014 and 2013, respectively. The Company has elected to include interest and penalties as a component of income tax expenses. Accrued interest and penalties as of September 30, 2014 and 2013 were approximately $3.5 million and $2.8 million, respectively. As of September 30, 2014, the gross unrecognized tax benefit was approximately $31.7 million.
The Company files U.S. federal income tax returns as well as income tax returns in various states and foreign jurisdictions. The Company has been informed by certain state and foreign taxing authorities that it was selected for examination. Most state and foreign jurisdictions have three to six open tax years at any point in time. The field work for certain state and foreign audits have commenced and are at various stages of completion as of September 30, 2014.

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INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


Although the outcome of any tax audit is uncertain, the Company believes that it has adequately provided in its financial statements for any additional taxes that it may be required to pay as a result of these examinations. The Company regularly assesses the likelihood of outcomes resulting from these examinations to determine the adequacy of its provision for income taxes, and believes its current reserve to be reasonable. If tax payments ultimately prove to be unnecessary, the reversal of these tax liabilities would result in tax benefits in the period that the Company had determined such liabilities were no longer necessary. However, if an ultimate tax assessment exceeds its estimate of tax liabilities, an additional tax provision might be required.

Note 10.  Net Income per Common Share
The following table sets forth the calculation of basic and diluted net income per share for the three and nine months ended September 30, 2014 and 2013 (in thousands, except per share amounts):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Net income
$
22,813

 
$
10,404

 
$
70,495

 
$
46,477

Weighted-average shares of common stock used to compute basic net income per share (excluding unvested restricted stock)
109,231

 
108,305

 
109,378

 
108,039

Effect of dilutive common stock equivalents:
 
 
 
 
 
 
 
Dilutive effect of unvested restricted stock units
411

 
312

 
541

 
305

Dilutive effect of employee stock options
672

 
2,884

 
1,364

 
3,028

Shares used in computing diluted net income per common share
110,314

 
111,501

 
111,283

 
111,372

Basic net income per common share
$
0.21

 
$
0.10

 
$
0.64

 
$
0.43

Diluted net income per common share
$
0.21

 
$
0.09

 
$
0.63

 
$
0.42

Weighted average stock options and restricted stock units excluded from calculation due to anti-dilutive effect
5,713

 
5,976

 
5,171

 
5,932


Note 11.  Commitments and Contingencies
Lease Obligations
The Company leases certain office facilities under various non-cancelable operating leases, which expire at various dates through 2024 and require the Company to pay operating costs, including property taxes, insurance, and maintenance.
Future minimum lease payments as of September 30, 2014 under non-cancelable operating leases with original terms in excess of one year are summarized as follows (in thousands):
 
 
Operating
Leases
Remaining 2014
$
2,841

2015
11,833

2016
8,855

2017
6,178

2018
4,793

Thereafter
11,736

Total future minimum operating lease payments
$
46,236

Warranties
The Company generally provides a warranty for its software products and services to its customers for a period of three to six months. The Company’s software products’ media are generally warranted to be free from defects in materials and workmanship under normal use, and the products are also generally warranted to substantially perform as described in certain Company documentation and the product specifications. The Company’s services are generally warranted to be performed in a professional

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INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


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. To date, the Company’s product warranty expense has not been significant. The warranty accrual as of September 30, 2014 and December 31, 2013 was not material.
Indemnification
The Company's software license agreements generally include certain provisions for indemnifying the customer against losses, expenses, liabilities, and damages that may be awarded against the customer in the event the Company’s software is found to infringe upon a patent, copyright, trademark, or other proprietary right of a third party. The agreements generally limit the scope of and remedies for such indemnification obligations in a variety of industry-standard respects, including but not limited to certain time and scope limitations and a right to replace an infringing product with a non-infringing product.
The Company believes its internal development processes and other policies and practices limit its exposure related to these indemnification provisions. In addition, the Company requires its employees to sign a proprietary information and inventions agreement, which assigns the rights to its employees’ development work to the Company. To date, the Company has not had to reimburse any of its customers for any losses related to these indemnification provisions, and no material claims against the Company are outstanding as of September 30, 2014. The Company cannot determine the maximum amount of potential future payments, if any, related to such indemnification provisions due to the limited and infrequent history of prior indemnification claims.
As permitted under Delaware law, the Company has agreements whereby the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was serving, at our request, in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has director and officer insurance coverage that reduces the Company's exposure and enables the Company to recover a portion of any future amounts paid. The Company believes the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.
The Company accrues for loss contingencies when available information indicates that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated in accordance with ASC 450, Contingencies.
Derivative Financial Instruments
The Company uses derivative instruments to manage its exposure to fluctuations in certain foreign currency exchange rates which exist as part of ongoing business operations. See Note 1. Summary of Significant Accounting Policies, Note 5. Accumulated Other Comprehensive Income (Loss), and Note 6. Derivative Financial Instruments of Notes to Condensed Consolidated Financial Statements for a further discussion.
Litigation
The Company is a party to various legal proceedings and claims arising from the normal course of its business activities, including proceedings and claims related to patents and other intellectual property related matters. The Company reviews the status of each matter and records a provision for a liability when it is considered both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed quarterly and adjusted as additional information becomes available. If both of the criteria are not met, the Company assesses whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a material loss may be incurred, the Company discloses the estimate of the possible loss, range of loss, or a statement that such an estimate cannot be made.
Litigation is subject to inherent uncertainties. Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on the Company's financial position and results of operation for the period in which the unfavorable outcome occurred, and potentially in future periods.


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INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


Note 12.  Significant Customer Information and Segment Information
The Company is organized and operates in a single segment:  the design, development, marketing, and sales of software solutions. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. 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 the three and nine months ended September 30, 2014 and 2013. At September 30, 2014 and December 31, 2013, no customer accounted for more than 10% of the accounts receivable balance. North America revenues include the United States and Canada. Revenue from international customers (defined as those customers outside of North America) accounted for 34% and 30% of total revenues in the third quarter of 2014 and 2013, respectively, and 36% and 32% of total revenues for the nine months ended September 30, 2014 and 2013, respectively.
Total revenue by geographic region is summarized as follows (in thousands):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
North America
$
165,385

 
$
164,930

 
$
479,202

 
$
453,866

Europe, the Middle East, and Africa
54,811

 
50,435

 
175,594

 
150,577

Other
30,204

 
20,029

 
89,414

 
67,690

Total revenues
$
250,400

 
$
235,394

 
$
744,210

 
$
672,133

Property and equipment, net by geographic region are summarized as follows (in thousands):
 
September 30,
2014
 
December 31,
2013
Property and equipment, net:
 
 
 
North America
$
144,110

 
$
147,460

Europe, the Middle East, and Africa
9,947

 
4,907

Other
5,365

 
4,941

Total property and equipment, net
$
159,422

 
$
157,308


Note 13.  Acquisitions
Acquisition in Fiscal Year 2014:
StrikeIron
In June 2014, the Company acquired all outstanding shares of StrikeIron, Inc. (“StrikeIron”), for aggregate consideration of approximately $54.6 million. StrikeIron provides cloud-based data-as-a-service for email and contact validation, and will enable the Company to enhance its cloud-based product portfolio. The goodwill is not deductible for tax purposes.
Approximately $8.3 million of the consideration otherwise payable to former StrikeIron stockholders was placed into an escrow fund and held as partial security for the indemnification obligations of the former StrikeIron stockholders. The escrow fund will remain in place until September 2015.
    

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INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The following table summarizes the fair value of assets acquired and liabilities assumed of $50.5 million and the acquiree's transaction related costs and debt settlement of $4.1 million, which were paid by the Company (in thousands):
Assumed liabilities, net of assets
$
(3,499
)
Identifiable intangible assets:
 
Developed and core technology
13,900

Customer relationships
3,500

Covenants not to compete
450

Trade names
40

Total identifiable net assets
14,391

Goodwill
36,116

Total assets acquired and liabilities assumed
50,507

Acquiree's transaction related costs and debt settlement
4,138

Total
$
54,645

Acquisitions in Fiscal Year 2013:
Active Endpoints
In February 2013, the Company acquired Active Endpoints, Inc. (“Active Endpoints”), a privately-held company, for approximately $10.0 million in cash. Active Endpoints designs, markets, and supports on-premise and cloud-based process automation software solutions. Total assets acquired and liabilities assumed were approximately $10.0 million of which approximately $7.1 million was allocated to goodwill, $3.8 million was allocated to identifiable intangible assets, and $0.9 million to net liabilities assumed. The goodwill is not deductible for tax purposes.
Approximately $1.5 million of the consideration otherwise payable to former Active Endpoints stockholders was placed into an escrow and held as partial security for certain indemnification obligations. The entire escrow fund was released in the second quarter of 2014.
Heiler Software AG
In November 2012, the Company acquired a majority interest in the shares of Heiler Software, a publicly-traded German company, at the end of the initial acceptance period of the takeover offer. The Company purchased the majority interest at a price of 7.04 Euro per share in cash, or approximately $101.9 million. Heiler Software provides enterprise product information management, master data management and procurement solutions that enable retailers, distributors and manufacturers to manage product information across channels and data sources. As of December 31, 2012, the Company held approximately 97.7% of the outstanding shares of Heiler Software. During December 2012 and the first half of 2013, the Company acquired other shareholders' interest in Heiler Software for approximately $6.8 million, which extinguished recorded liabilities to noncontrolling shareholders. Total cash consideration was approximately $108.7 million. The squeeze-out of the remaining shareholders was effective in the second quarter of 2013, increasing the Company's ownership in Heiler to 100 percent.
The fair value of the noncontrolling interest in Heiler Software at the acquisition date was $2.9 million. The valuation techniques and significant inputs used to measure the fair value of the noncontrolling interest included quoted market prices.

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INFORMATICA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The following table summarizes the fair value of assets acquired and liabilities assumed at the acquisition date (in thousands):
Net tangible assets
$
16,400

Identifiable intangible assets:
 
Developed and core technology
16,586