10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
þ	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM       TO

COMMISSION FILE NUMBER: 1-16493

SYBASE, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Delaware	94-2951005
(State of Incorporation)	(I.R.S. Employer Identification No.)

One Sybase Drive, Dublin, California 94568

(Address of principal executive offices)(Zip Code)

(925) 236-5000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

    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 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 the filing requirements for at least the past 90 days. Yes x    No o

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.        Large accelerated filer x        Accelerated filer o        Non-accelerated filer o

    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

On July 31, 2007, 90,119,191 shares of the Registrant’s Common Stock, $.001 par value, were outstanding.

SYBASE, INC.
FORM 10-Q

QUARTER ENDED JUNE 30, 2007

INDEX

	Page
Forward-Looking Statements		2
Part I: Financial Information
Item 1: Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006		3
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2007 and 2006		4
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006		5
Notes to Condensed Consolidated Financial Statements		6
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3: Quantitative and Qualitative Disclosures of Market Risk		27
Item 4: Controls and Procedures		27
Part II: Other Information
Item 1: Legal Proceedings		28
Item 1 (A): Risk Factors		28
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 4: Submission of Matters to a Vote of Security Holders		37
Item 5: Other Information		37
Item 6: Exhibits		37
Signatures		38
Exhibit Index
EXHIBIT 3.1
EXHIBIT 3.2
EXHIBIT 12
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32

1

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve risk and uncertainties that could cause the actual results of Sybase, Inc. and its consolidated subsidiaries (“Sybase”, the “Company,” “we” or “us”) to differ materially from those expressed or implied by such forward-looking statements. These risks include the performance of the global economy and growth in software industry sales; market acceptance of the Company’s products and services; customer and industry analyst perception of the Company and its technology vision and future prospects; shifts in our business strategy; interoperability of our products with other software products; the success of certain business combinations engaged in by us or by competitors; political unrest or acts of war; possible disruptive effects of organizational or personnel changes; and other risks detailed from time to time in our Securities and Exchange Commission filings, including those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) — Overview,” and “MD&A — Future Operating Results,” Part I, Item 2 of this Quarterly Report on Form 10-Q.

Expectations, forecasts, and projections that may be contained in this report are by nature forward-looking statements, and future results cannot be guaranteed. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” and similar expressions in this document, as they relate to Sybase and our management, may identify forward-looking statements. Such statements reflect the current views of our management with respect to future events and are subject to risks, uncertainties and assumptions. Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false, or may vary materially from those described as anticipated, believed, estimated, intended or expected. We do not intend to update these forward-looking statements.

We file registration statements, periodic and current reports, proxy statements, and other materials with the Securities and Exchange Commission, or SEC. You may read and copy any materials we file with the SEC at the SEC’s Office of Public Reference at 450 Fifth Street, NW, Room 1300, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, including our filings.

We are headquartered at One Sybase Drive, Dublin, CA 94568, and the telephone number at that location is (925) 236-5000. Our internet address is www.sybase.com. We make available, free of charge, through the investor relations section of our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. The contents of our website are not incorporated into, or otherwise to be regarded as part of this Quarterly Report on Form 10-Q.

Sybase, Adaptive Server Enterprise, Afaria, Avaki, AvantGo, Dejima, Extended Systems, Financial Fusion, iAnywhere, iAnywhere Solutions, Information Anywhere Suite, Mobile 365, OneBridge, PowerBuilder, PowerDesigner, SQL Anywhere, Sybase 365 and XcelleNet, are trademarks of Sybase, Inc. or its subsidiaries. All other names may be trademarks of the companies with which they are associated.

2

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

SYBASE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,
	2007			December 31,
(In thousands, except share and per share data)	(Unaudited)			2006
Current assets:
Cash and cash equivalents	$	436,803		$	355,303
Short-term cash investments		220,955			269,612
Total cash, cash equivalents and short-term cash investments		657,758			624,915
Restricted cash		6,024			6,014
Accounts receivable, net		196,704			218,016
Deferred income taxes		6,242			6,224
Prepaid expenses and other current assets		32,857			16,392
Total current assets		899,585			871,561
Long-term cash investments		45,303			12,781
Property, equipment and improvements, net		64,639			66,458
Deferred income taxes		38,083			36,069
Capitalized software, net		72,006			71,179
Goodwill		540,709			540,303
Other purchased intangibles, net		138,538			149,648
Other assets		36,615			39,551
Total assets	$	1,835,478		$	1,787,550
Current liabilities:
Accounts payable	$	22,735		$	23,439
Accrued compensation and related expenses		50,403			59,748
Accrued income taxes		14,156			31,364
Other accrued liabilities		110,913			108,436
Deferred revenue		213,792			193,431
Total current liabilities		411,999			416,418
Other liabilities		44,082			44,428
Deferred income taxes		14,186			14,448
Long-term tax liability		25,797			—
Long-term deferred revenue		5,506			3,965
Minority interest		5,179			5,160
Convertible subordinated notes		460,000			460,000
Commitments and contingent liabilities
Stockholders’ equity:
Preferred stock, $0.001 par value, 8,000,000 shares authorized; none issued or outstanding		—			—
Common stock, $0.001 par value, 200,000,000 shares authorized; 105,337,362 shares issued and 90,048,943 outstanding (2006—105,337,362 shares issued and 91,281,805 outstanding)		105			105
Additional paid-in capital		990,046			977,672
Accumulated earnings		133,655			92,817
Accumulated other comprehensive income		53,418			40,850
Cost of 15,288,419 shares of treasury stock (2006—14,055,557 shares)		(308,495	)		(268,313	)
Total stockholders’ equity		868,729			843,131
Total liabilities and stockholders’ equity	$	1,835,478		$	1,787,550

See accompanying notes.

3

SYBASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands, except per share data)	2007			2006			2007			2006
Revenues:
License fees	$	77,435		$	83,141		$	146,800		$	150,029
Services		135,230			132,418			264,881			260,538
Messaging		32,358			—			63,379			—
Total revenues		245,023			215,559			475,060			410,567
Costs and expenses:
Cost of license fees		13,083			11,930			25,836			24,722
Cost of services		39,539			38,338			78,281			76,690
Cost of messaging		18,906			—			37,795			—
Sales and marketing		64,916			67,833			129,491			129,188
Product development and engineering		36,920			37,543			75,673			74,540
General and administrative		32,680			25,947			64,176			50,934
Amortization of other purchased intangibles		3,436			1,552			6,846			3,098
Cost (Reversal) of restructure		(51	)		66			(47	)		100
Total costs and expenses		209,429			183,209			418,051			359,272
Operating income		35,594			32,350			57,009			51,295
Interest income		8,526			10,190			15,909			18,792
Interest expense and other, net		(3,384	)		(2,973	)		(5,783	)		(5,517	)
Income before income taxes		40,736			39,567			67,135			64,570
Provision for income taxes		14,708			13,234			25,959			20,985
Net income	$	26,028		$	26,333		$	41,176		$	43,585
Basic net income per share	$	0.29		$	0.30		$	0.45		$	0.49
Shares used in computing basic net income per share		90,891			89,113			91,020			89,375
Diluted net income per share	$	0.28		$	0.29		$	0.44		$	0.48
Shares used in computing diluted net income per share		92,972			91,402			93,294			91,716

See accompanying notes.

4

SYBASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended
	June 30,
(Dollars in thousands)	2007			2006
Cash flows from operating activities:
Net income		41,176			43,585
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		43,238			34,895
Loss on disposal of assets		65			1,038
Deferred income taxes		(2,262	)		(7,682	)
Stock-based compensation — restricted stock		4,185			4,264
Stock-based compensation — all other		7,048			6,724
Excess tax benefit from stock-based compensation plans		(2,855	)		—
Amortization of note issuance costs		985			984
Changes in assets and liabilities:
Accounts receivable		22,522			33,431
Other current assets		(5,258	)		(2,787	)
Other assets — operating		2,572			(2,457	)
Accounts payable		(669	)		699
Accrued compensation and related expenses		(9,360	)		(5,317	)
Accrued income taxes		8,510			11,005
Other accrued liabilities		(7,786	)		(14,906	)
Deferred revenues		21,902			20,563
Other liabilities		(552	)		934
Net cash provided by operating activities		123,461			124,973
Cash flows from investing activities:
Increase in restricted cash		(10	)		(127	)
Purchases of available-for-sale cash investments		(165,136	)		(346,539	)
Maturities of available-for-sale cash investments		99,487			179,160
Sales of available-for-sale cash investments		81,984			160,571
Business combinations, net of cash acquired		(1,531	)		(3,794	)
Purchases of property, equipment and improvements		(11,225	)		(7,847	)
Proceeds from sale of property, equipment, and improvements		40			2
Capitalized software development costs		(17,228	)		(18,923	)
Increase in other assets — investing		(61	)		(7	)
Net cash used for investing activities		(13,680	)		(37,504	)
Cash flows from financing activities:
Repayments of long-term obligations		(33	)		(29	)
Payments on capital lease		(879	)		(159	)
Net proceeds from the issuance of common stock and reissuance of treasury stock		19,221			12,225
Purchases of treasury stock		(58,600	)		(45,280	)
Excess tax benefit from stock-based compensation plans		2,855			—
Net cash used for financing activities		(37,436	)		(33,243	)
Effect of exchange rate changes on cash		9,155			9,840
Net increase in cash and cash equivalents		81,500			64,066
Cash and cash equivalents, beginning of year	$	355,303		$	398,741
Cash and cash equivalents, end of period	$	436,803		$	462,807

See accompanying notes.

5

Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation. The accompanying unaudited condensed consolidated financial statements include the accounts of Sybase, Inc. and its subsidiaries, and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments, except as described below) necessary to fairly state the Company’s consolidated financial position, results of operations, and cash flows as of and for the dates and periods presented. The condensed consolidated balance sheet as of December 31, 2006 has been prepared from the Company’s audited consolidated financial statements.

Certain information and footnote disclosures normally included in the annual financial statements have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. The results of operations for three and six months ended June 30, 2007 are not necessarily indicative of results for the entire fiscal year ending December 31, 2007.

As discussed in Note 11 “Income Taxes”, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN 48”) on January 1, 2007. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position that an entity takes or expects to take in a tax return. Additionally, FIN 48 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Under FIN 48, an entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. Prior to January 1, 2007, the Company followed the guidance of FAS No. 5 in assessing uncertain tax positions. Under FAS No. 5, the Company accrued for uncertain tax positions based on whether an assessment was probable and also estimable. Both before and after the adoption of FIN 48, the Company classifies any interest and penalties associated with these tax positions as income taxes. As a result of adopting FIN 48, the Company did not record any cumulative effect adjustment to the opening balance of retained earnings and additional paid-in-capital.

2. Stock-Based Compensation. The Company currently grants stock options, restricted stock, and stock appreciation rights through the 2003 Stock Plan. At June 30, 2007, an aggregate of 12,132,574 shares of Common Stock have been reserved upon the exercise of options granted to qualified employees and consultants of the Company. The Board of Directors, directly or through committees, administers the 2003 Stock Plan and establishes the terms of option grants. Options and stock appreciation rights expire on terms set forth in the grant notice (generally 10 years from the grant date, and for options granted after May 25, 2005 not more than 7 years from the grant date, three months after termination of employment, two years after death, or one year after permanent disability). Options and stock appreciation rights are exercisable to the extent vested. Vesting occurs at various rates and over various time periods. Stock appreciation rights are settled by the Company in stock. In addition, the Company maintains an Employee Stock Purchase Plan and also had established FFI and iAS stock option plans. The 2003 Stock Plan, its predecessor plans, the Employee Stock Purchase Plan, and the FFI and iAS stock option plans are described more fully in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

Stock-Based Compensation Expense
The following table summarizes the total stock-based compensation expense for stock options, restricted option and stock grants, and stock appreciation rights that was recorded on the Company’s results of operations for the three and six months ended June 30, 2007 and 2006.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands, except per share data)	2007			2006			2007			2006
Cost of services	$	376		$	681		$	715		$	1,361
Cost of messaging		124			—			310			—
Sales and marketing		1,206			1,051			2,472			2,047
Product development and engineering		656			679			1,342			1,272
General and administrative		3,121			3,151			6,394			6,307
Stock-based compensation expense included in total costs and expenses		5,483			5,562			11,233			10,987
Tax benefit related to stock-based compensation expense		(1,572	)		(1,619	)		(3,037	)		(3,214	)
Stock-based compensation expense included in net income	$	3,911		$	3,943		$	8,196		$	7,773
Reduction of net income per share:
Basic	$	0.04		$	0.04		$	0.09		$	0.09
Diluted	$	0.04		$	0.04		$	0.09		$	0.08

As of June 30, 2007, there was $41.2 million of total unrecognized compensation cost before income tax benefit related to non-vested stock-based compensation arrangements granted under all equity compensation plans. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. The Company expects to recognize that cost over a weighted average period of 2.3 years.

6

3. Net income per share. Shares used in computing basic and diluted net income per share are based on the weighted average shares outstanding in each period, excluding treasury stock. Basic net income per share excludes any dilutive effects of stock options and vested restricted stock. Diluted net income per share includes the dilutive effect of the assumed exercise of stock options, restricted stock, and stock appreciation rights using the treasury stock method. The following table shows the computation of basic and diluted net income per share:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands, except per share data)	2007		2006		2007		2006
Net income	$	26,028	$	26,333	$	41,176	$	43,585
Basic net income per share	$	0.29	$	0.30	$	0.45	$	0.49
Shares used in computing basic net income per share		90,891		89,113		91,020		89,375
Diluted net income per share	$	0.28	$	0.29	$	0.44	$	0.48
Shares used in computing basic net income per share		90,891		89,113		91,020		89,375
Dilutive effect of stock options, restricted stock and stock appreciation rights		2,081		2,289		2,274		2,341
Shares used in computing diluted net income per share		92,972		91,402		93,294		91,716

The anti-dilutive weighted average shares that were excluded from the shares used in computing diluted net income per share were 3.8 million and 6.2 million for the three month periods ended June 30, 2007 and 2006, respectively, and were 3.7 million and 5.9 million for the six months ended June 30, 2007 and 2006, respectively. The Company excludes shares with combined exercise prices and unamortized fair values that are greater than the average market price for the Company’s common stock from the calculation of diluted net income per share because their effect is anti-dilutive. Shares that may be issued to holders of the Company’s convertible subordinated debt due to the appreciation of the Company’s stock price generally would be included in periods in which the average price of the Company’s common stock exceeds $25.22 per share, the initial conversion price. The computation of diluted net income per share excludes the impact of a conversion value excess as the conversion requirements have not yet been met. See Note 10 — Convertible Subordinated Notes.

4. Comprehensive Income. The following table sets forth the calculation of comprehensive income for all periods presented:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2007			2006			2007		2006
Net income	$	26,028		$	26,333		$	41,176	$	43,585
Foreign currency translation gains		9,372			8,790			12,449		10,772
Unrealized gains/(losses) on marketable securities		(26	)		(215	)		118		(588	)
Comprehensive income	$	35,374		$	34,908		$	53,743	$	53,769

The Company’s foreign currency translation gains(losses) primarily arise from its substantial net assets denominated in certain European currencies. Translation losses generally occur when the dollar strengthens against these currencies while translation gains arise when the dollar weakens against these currencies. The Company has classified all of its debt and equity securities as available-for-sale pursuant to SFAS 115. Such securities are recorded at fair value and unrealized holding gains and losses, net of the related tax effect, if any, are not reflected in earnings but are reported as a separate component of other comprehensive income until realized.

5. Segment Information. Through the third quarter of 2006, the Company was organized into two separate reportable business segments each of which focused on one of two key market segments: Infrastructure Platform Group (IPG), which principally focuses on enterprise class database servers, integration and development products; and iAnywhere Solutions, Inc. (iAS), which provides mobile database and mobile enterprise solutions. On November 8, 2006, the Company acquired Mobile 365, Inc. which provides mobile messaging and content delivery services, including short message services or SMS and multimedia messaging services or MMS. Beginning in the fourth quarter of 2006, the results of Mobile 365, Inc. were included in the Company’s new reportable business segment Sybase 365 (SY365). There were no changes to the IPG and iAS segments.

The Company’s chief operating decision maker is the President and Chief Executive Officer (CEO). While the CEO is apprised of a variety of financial metrics and information, the Company’s business is principally managed on a segment basis, with the CEO evaluating performance based upon segment operating profit or loss that includes an allocation of common expenses, but excludes certain unallocated expenses, primarily stock based compensation expense. The CEO does not view segment results below operating profit (loss) before unallocated costs, and therefore unallocated expenses or savings; interest income, interest expense and other, net; and the provision for income taxes are not broken out by segment. The Company does not account for, or report to the CEO, assets or capital expenditures by segment.

Certain common costs and expenses are allocated based on measurable drivers of expense. Unallocated expenses or savings represent corporate activities (expenditures or cost savings) that are not specifically allocated to the segments including stock-based

7

compensation expenses and reversals of restructuring expenses associated with restructuring activities undertaken prior to 2003. Unallocated costs for the three and six month periods ended June 30, 2007 and 2006 consisted primarily of stock-based compensation expenses.

Segment license and service revenues include transactions between iAS and IPG, The most common instance relates to the sale of iAS products and services to third parties by IPG. In the case of such a transaction, IPG records the revenue on the sale with a corresponding inter-company expense on the transaction, with corresponding inter-company revenue recorded by iAS together with costs of providing the product or service. The excess of revenues over inter-company expense recognized by IPG is intended to reflect the costs incurred by IPG to complete the sales transaction. Total transactions between the segments are captured in “Eliminations.”

8

A summary of the segment financial information reported to the CEO for the three months ended June 30, 2007 is presented below:

												Consolidated
(In thousands)	IPG			iAS		SY365			Elimination			Total
Revenues:
License fees
Infrastructure	$	52,572		$	346	$	3			—		$	52,921
Mobile and Embedded		7,789			16,725		—			—			24,514
Subtotal license fees		60,361			17,071		3			—			77,435
Intersegment license revenues		207			6,495		—		$	(6,702	)		—
Total license fees		60,568			23,566		3			(6,702	)		77,435
Services
Direct service revenue		123,446			11,784		—			—			135,230
Intersegment service revenues		147			7,275		—			(7,422	)		—
Total services		123,593			19,059		—			(7,422	)		135,230
Messaging		—			—		32,358			—			32,358
Total revenues		184,161			42,625		32,361			(14,124	)		245,023
Total allocated costs and expenses before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		146,545			34,402		29,718			(14,124	)		196,541
Operating income before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		37,616			8,223		2,643			—			48,482
Amortization of other purchased intangibles		527			1,046		1,863			—			3,436
Amortization of purchased technology		403			2,003		931			—			3,337
Operating income (loss) before cost of restructure and unallocated costs		36,686			5,174		(151	)		—			41,709
Reversal of restructure — 2007 Activity		(51	)		—		—			—			(51	)
Operating income (loss) before unallocated costs		36,737			5,174		(151	)		—			41,760
Unallocated costs													6,166
Operating income													35,594
Interest income, interest expense and other, net													5,142
Income before income taxes												$	40,736

A summary of the segment financial information reported to the CEO for the three months ended June 30, 2006 is presented below:

								Consolidated
(In thousands)	IPG		iAS		Elimination			Total
Revenues:
License fees
Infrastructure	$	59,105	$	26		—		$	59,131
Mobile and Embedded		7,605		16,405		—			24,010
Subtotal license fees		66,710		16,431		—			83,141
Intersegment license revenues		22		6,338	$	(6,360	)		—
Total license fees		66,732		22,769		(6,360	)		83,141
Services
Direct service revenue		121,183		11,235		—			132,418
Intersegment service revenues		52		6,055		(6,107	)		—
Total services		121,235		17,290		(6,107	)		132,418
Total revenues		187,967		40,059		(12,467	)		215,559
Total allocated costs and expenses before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		151,248		34,445		(12,467	)		173,226
Operating income before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		36,719		5,614		—			42,333
Amortization of other purchased intangibles		506		1,046		—			1,552
Amortization of purchased technology		339		1,964		—			2,303
Operating income before cost of restructure and unallocated costs		35,874		2,604		—			38,478
Cost of restructure — 2006 Activity		66		—		—			66
Operating income before unallocated costs		35,808		2,604		—			38,412
Unallocated costs									6,062
Operating income									32,350
Interest income, interest expense and other, net									7,217
Income before income taxes								$	39,567

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A summary of the segment financial information reported to the CEO for the six months ended June 30, 2007 is presented below:

												Consolidated
(In thousands)	IPG			iAS		SY365			Elimination			Total
Revenues:
License fees
Infrastructure	$	100,887		$	367	$	17			—		$	101,271
Mobile and Embedded		14,428			31,101		—			—			45,529
Subtotal license fees		115,315			31,468		17			—			146,800
Intersegment license revenues		239			12,031		—		$	(12,270	)		—
Total license fees		115,554			43,499		17			(12,270	)		146,800
Services
Direct service revenue		241,829			23,052		—			—			264,881
Intersegment service revenues		174			14,058		—			(14,232	)		—
Total services		242,003			37,110		—			(14,232	)		264,881
Messaging		—			—		63,379			—			63,379
Total revenues		357,557			80,609		63,396			(26,502	)		475,060
Total allocated costs and expenses before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		290,663			68,512		59,695			(26,502	)		392,368
Operating income before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		66,894			12,097		3,701			—			82,692
Amortization of other purchased intangibles		1,054			2,092		3,700			—			6,846
Amortization of purchased technology		805			4,006		1,847			—			6,658
Operating income (loss) before cost of restructure and unallocated costs		65,035			5,999		(1,846	)		—			69,188
Reversal of restructure — 2007 Activity		(47	)		—		—			—			(47	)
Operating income (loss) before unallocated costs		65,082			5,999		(1,846	)		—			69,235
Unallocated costs													12,226
Operating income													57,009
Interest income, interest expense and other, net													10,126
Income before income taxes												$	67,135

A summary of the segment financial information reported to the CEO for the six months ended June 30, 2006 is presented below:

								Consolidated
(In thousands)	IPG		iAS		Elimination			Total
Revenues:
License fees
Infrastructure	$	103,280	$	66		—		$	103,346
Mobile and Embedded		12,858		33,825		—			46,683
Subtotal license fees		116,138		33,891		—			150,029
Intersegment license revenues		43		10,686	$	(10,729	)		—
Total license fees		116,181		44,577		(10,729	)		150,029
Services
Direct service revenue		238,020		22,518		—			260,538
Intersegment service revenues		102		12,192		(12,294	)		—
Total services		238,122		34,710		(12,294	)		260,538
Total revenues		354,303		79,287		(23,023	)		410,567
Total allocated costs and expenses before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		294,960		68,580		(23,023	)		340,517
Operating income before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		59,343		10,707		—			70,050
Amortization of other purchased intangibles		1,006		2,092		—			3,098
Amortization of purchased technology		822		3,928		—			4,750
Operating income before cost of restructure and unallocated cost savings		57,515		4,687		—			62,202
Cost of restructure — 2006 Activity		100		—		—			100
Operating income before unallocated costs		57,415		4,687		—			62,102
Unallocated costs									10,807
Operating income									51,295
Interest income, interest expense and other, net									13,275
Income before income taxes								$	64,570

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6. Goodwill and Intangible Assets.

The following table reflects the changes in the carrying amount of goodwill (including assembled workforce) by reporting unit.

							Consolidated
(In thousands)	IPG		iAS		SY365		Total
Balance at January 1, 2007	$	96,186	$	110,408	$	333,709	$	540,303
Addition in goodwill recorded on Mobile 365 acquisition		—		—		106		106
Foreign currency translation adjustments & other		299		1		—		300
Balance at June 30, 2007	$	96,485	$	110,409	$	333,815	$	540,709

On November 8, 2006, the Company completed its acquisition of Mobile 365, Inc, a privately held mobile messaging and content delivery company for $416.0 million in cash and $2.3 million in additional purchase related costs.

The estimated excess of the purchase price over the fair value of the net tangible assets acquired was $411.1 million. Of the estimated $411.1 million excess, $25.2 million was allocated to developed existing technology, $50.7 million was allocated to customer contracts and relationships, and $335.2 million was initially allocated to goodwill. These amounts are subject to change pending the final analysis of the fair values of the assets acquired and the liabilities assumed, including the valuation of certain tax assets acquired that are dependent on the filing of Mobile 365’s pre-acquisition tax returns and the resolution of on going legal matters (see Note 7, Litigation).

The following table reflects the carrying amount and accumulated amortization of intangible assets:

	June 30, 2007							December 31, 2006
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
(In thousands)	Amount		Amortization			Amount		Amount		Amortization			Amount
Purchased technology	$	164,256	$	(101,877	)	$	62,379	$	163,333	$	(95,193	)	$	68,140
AvantGo tradenames		3,100		—			3,100		3,100		—			3,100
XcelleNet tradenames		4,000		—			4,000		4,000		—			4,000
Covenant not to compete		319		(112	)		207		319		(59	)		260
Customer lists		99,828		(30,976	)		68,852		98,289		(24,141	)		74,148
Totals	$	271,503	$	(132,965	)	$	138,538	$	269,041	$	(119,393	)	$	149,648

The amortization expense on these intangible assets for the three months ended June 30, 2007 was $6.8 million, of which $2.4 million was included within “cost of license fees” and $0.9 million was included within “cost of messaging” on the Company’s income statement for the three months ended June 30, 2007. The amortization expense on these intangible assets for the six months ended June 30, 2007 was $13.5 million, of which $4.8 million was included within “cost of license fees” and $1.8 million was included within “cost of messaging” on the Company’s income statement for the six months ended June 30, 2007. Estimated amortization expense for each of the next five years ending December 31, is as follows (dollars in thousands):

2007	$	26,865
2008		26,663
2009		26,271
2010		23,836
2011		18,326

The AvantGo and XcelleNet tradenames were assigned an indefinite life and will not be amortized but instead tested for impairment in the same manner as goodwill. At June 30, 2007 the weighted average amortization period of the gross carrying value of other purchased intangible assets was 7.1 years. At June 30, 2007 the weighted average amortization period of the gross carrying value of purchased technology and customer lists were 6.6 years and 7.5 years, respectively.

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7. Litigation

A former employee, who was terminated as part of position elimination in February 2003, filed a civil action in the Superior Court for the State of California, Alameda County, alleging discrimination on the basis of gender, national origin, and race. The former employee also alleged retaliation for discussing her working conditions with senior managers. The parties were not able to settle the matter and trial commenced on August 27, 2004. Sybase’s motion for non-suit on the retaliation claim was granted and that claim was dismissed. On October 5, 2004, the jury found in favor of the plaintiff on the remaining claims and awarded her $1,845,000 in damages. Sybase filed a motion to set aside the jury verdict or, in the alternative, for a new trial. The motion also asked the judge to set aside the punitive damage part of the award in the amount of $500,000. On December 7, 2004, the judge issued a decision denying the motion to set the verdict aside and order a new trial, but he did grant that part of the motion asking to set aside the $500,000 punitive damage award, reducing the damage amount to $1,345,000. Additional awards for legal fees and costs amounted to $750,000. Sybase filed a notice of appeal of the $1,345,000 jury verdict, as well as the fee and cost awards. Sybase filed its opening brief in the appeal on January 27, 2006. Plaintiff filed their reply brief in April 2006, responding to Sybase’s appeal and appealing the non-suit judgment on the retaliation claim and the judge’s decision to grant Sybase’s motion setting aside the $500,000 punitive damages award. All briefs have been filed in the appeal and the parties have petitioned the court to schedule oral arguments.

On July 13, 2006, Telecommunications Systems, Inc. (“TCS”), a wireless services provider, filed a complaint for patent infringement in the U.S. District Court for the Eastern District of Virginia, alleging that Mobile 365 infringes U.S. Patent 6,985,748 (the “'748 patent”). The matter was tried before a jury beginning on May 14, 2007. On May 25, 2007, the jury rendered its verdict, finding that Mobile 365 willfully infringed the “'748 patent, and awarded TCS a total amount of $12.1 million. TCS has filed post-trial motions for enhanced damages and attorneys’ fees, for an award of prejudgment interest, and for entry of a permanent injunction (although it has requested that any injunction be stayed pending the outcome on appeal). Sybase 365 has filed post-trial motions for a judgment in its favor as a matter of law, for reduction of the jury award, and for entry of judgment in its favor based on TCS’s inequitable conduct before the Patent and Trademark Office in obtaining the patent. The court has not yet ruled on these post-trial motions. If the jury verdict stands after the court rules on the post-trial motions and enters judgment, Sybase 365 intends to appeal.

The November 2006 merger agreement between Sybase and Mobile 365 established an escrow which provides for indemnification of Sybase by Mobile 365’s former stockholders for certain losses related to the TCS litigation. Of the $12.1 million awarded by the jury, should judgment be entered at that amount and should Sybase 365’s post trial motions and appeal not prevail, it is expected that Sybase would bear responsibility for approximately $1.5 million after reflecting the merger indemnification rights. Sybase believes that the escrow established by the merger agreement will be adequate to address the substantial majority of losses, if any, related to this litigation.

Since the jury’s verdict, Sybase 365 has developed a design-around so that its service for intercarrier wireless text messaging can operate in a way that avoids the infringement as found by the jury. Sybase 365 is in the process of implementing the design-around.

For a discussion of risks related to intellectual property rights and certain pending intellectual property disputes, see “Future Operating Results — If third parties claim that we are in violation of their intellectual property rights, it could have a negative impact on our results of operations or ability to compete,” Part II, Item 1(A).

Sybase is a party to various other legal disputes and proceedings arising in the ordinary course of business. In the opinion of management, resolution of these matters, including the above mentioned legal matters, is not expected to have a material adverse effect on our consolidated financial position or results of operations as the Company believes it has either adequately accrued or has adequate indemnification rights for these matters at June 30, 2007. However, depending on the amount and timing of such resolution, an unfavorable resolution of some or all of these matters could materially affect our future results of operations or cash flows in a particular period.

8. Stock Repurchase Plan. Beginning in 1998, the Board of Directors authorized the Company to repurchase the Company’s outstanding common stock from time to time, subject to price and other conditions. On April 26, 2006 the Board of Directors of the Company approved a $250 million increase to the Company’s stock repurchase program. During the first six months of 2007, the Company repurchased 2.4 million shares at a cost of approximately $58.6 million under the stock repurchase program. From the program’s inception through June 30, 2007, the Company has used an aggregate total of $658.8 million under the stock repurchase program (of the total $850 million authorized) to repurchase an aggregate total of 38.4 million shares.

9. Restructuring.

The Company embarked on restructuring activities in 2004, 2003, 2002 and 2001 (the 2004, 2003, 2002 and 2001 Plans, respectively) as a means of managing its operating expenses. In addition, the company recognized certain restructuring liabilities as part of its Mobile 365 acquisition in 2006 and its AvantGo acquisition in 2003. For descriptions of each restructuring plan, see Note 13 to Consolidated Financial Statements, Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, which information is incorporated here by reference.

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The following table summarizes the activity associated with the accrued restructuring charges related to the Company’s restructuring plans:

(Dollars in millions)	Lease Cancellations / Commitments and Other
Restructuring plan	2004			2003			2002			2001			AvantGo			Mobile 365
Accrued liabilities at December 31, 2006	$	4.2		$	0.2		$	8.3		$	2.0		$	0.9		$	1.3
Amounts paid		(0.6	)		(0.1	)		(1.6	)		(0.4	)		(0.5	)		(0.1	)
Amounts reversed					(0.1	)
Accrued liabilities at June 30, 2007	$	3.6		$	—		$	6.7		$	1.6		$	0.4		$	1.2

10. Convertible Subordinated Notes. On February 22, 2005, the Company issued through a private offering to qualified institutional buyers in the U.S. $460 million of convertible subordinated notes (“Notes”) pursuant to exemptions from registration afforded by the Securities Act of 1933, as amended. These notes have an interest rate of 1.75 percent and are subordinated to all of the Company’s future senior indebtedness. The notes mature on February 22, 2025 unless earlier redeemed by the Company at its option, or converted or put to the Company at the option of the holders.

The Company may redeem all or a portion of the notes at par on and after March 1, 2010. The holders may require that the Company repurchase notes at par on February 22, 2010, February 22, 2015 and February 22, 2020.

The holders may convert the notes into the right to receive the conversion value (i) when the Company’s stock price exceeds 130% of the $25.22 per share initial conversion price for a specified time, (ii) in certain change in control transactions, (iii) if the notes are redeemed by the Company, (iv) in certain specified corporate transactions, and (v) when the trading price of the notes does not exceed a minimum price level. For each $1,000 principal amount of notes, the conversion value represents the amount equal to 39.6511 shares multiplied by the per share price of the Company’s common stock at the time of conversion. If the conversion value exceeds $1,000 per $1,000 in principal of notes, the Company will pay $1,000 in cash and may pay the amount exceeding $1,000 in cash, stock or a combination of cash and stock, at the Company’s election.

Interest is payable semi-annually in arrears on February 22 and August 22 of each year, commencing on August 22, 2005. The Company recognized interest expense of $2.0 million for the three months ended June 30, 2007 and 2006, excluding amortization of debt issuance costs totaling $0.5 million for the three months ended June 30, 2007 and 2006. The Company recognized interest expense of $4.0 million for the six months ended June 30, 2007 and 2006, excluding amortization of debt issuance costs totaling $1.0 million for the six months ended June 30, 2007 and 2006.

The Company has recorded these notes as long-term debt. Offering fees and expenses associated with the debt offering were approximately $9.8 million and are included in “other assets” in the Company’s consolidated Balance Sheets at June 30, 2007. This asset will be amortized into interest expense on a straight-line basis over a five-year period which corresponds to the earliest put date. This approximates the effective interest method. Unamortized offering fees and expenses were $5.2 million and $6.1 million at June 30, 2007 and December 31, 2006, respectively.

11. Income Taxes. The Company adopted FIN No. 48, “Accounting for Uncertainty in Income Taxes,” on January 1, 2007. As of that date, the Company had $44 million of unrecognized tax benefits, $43 million of which, if recognized, would affect the Company’s effective tax rate if the tax benefits are subsequently realized. As of January 1, 2007, the Company had $3 million of accrued interest included in the $44 million of unrecognized tax benefits.

Although unrecognized tax benefits for individual tax positions may increase or decrease during 2007, the Company believes none have a reasonable possibility of significantly increasing or decreasing the total amount of unrecognized tax benefits during 2007 or for the next 12 months.

Sybase, Inc. or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for years before 2002. The Company is no longer subject to Canadian income tax examination for years before 1999. Income tax returns filed in certain state and foreign jurisdictions are under examination.

12. Recent Accounting Pronouncements.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. The

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provisions of FAS 157 are effective for the fiscal year beginning January 1, 2008. The Company is currently evaluating the impact of the provisions of FAS 157.

In February 2007 the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”). FAS 159 provides companies with an option to report selected financial assets and liabilities at fair value. The standard’s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. The standard requires companies to provide additional information that will help investors and other users of financial statements to more easily understand the effect of the company’s choice to use fair value on its earnings. It also requires companies to display the fair value of those assets and liabilities for which the company has chosen to use fair value on the face of the balance sheet. The new standard does not eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in SFAS 157, “Fair Value Measurements,” and SFAS 107, “Disclosures about Fair Value of Financial Instruments.” FAS 159 is effective as of the start of fiscal years beginning after November 15, 2007. Early adoption is permitted. We are in the process of evaluating this standard and therefore have not yet determined the impact that the adoption of FAS 159 will have on our financial position, results of operations or cash flows.

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) includes the following sections:

• Executive Overview that discusses at a high level our operating results and some of the trends that affect our business.

• Significant changes since our most recent Annual Report on Form 10-K in the Critical Accounting Policies and Estimates as we believe it is important to understanding the assumptions and judgments underlying our financial statements.

• Results of Operations that begins with an overview followed by a more detailed discussion of our revenue and expenses.

• Liquidity and Capital Resources which discusses key aspects of our statements of cash flows, changes in our balance sheets and our financial commitments.

You should note that this MD&A discussion contains forward-looking statements that involve risks and uncertainties. Please see Item 1A in Part II of this Quarterly Report on Form 10-Q for important information to consider when evaluating such statements.

You should read this MD&A in conjunction with the Consolidated Financial Statements and related Notes in Item 1 and our Annual Report on Form 10-K for the year ended December 31, 2006.

On November 8, 2006 we acquired Mobile 365, Inc. (which we renamed Sybase 365, Inc.), a privately held mobile messaging and content delivery company for approximately $418.3 million. Total revenues of Sybase 365 for the three and six month periods ended June 30, 2007, were $32.3 million and $63.4 million, respectively. Operating loss for this business segment during the three and six month periods ended June 30, 2007 was $0.2 million and $1.8 million, respectively.

Executive Overview

Our Business
Sybase is a global enterprise software and services company exclusively focused on managing and mobilizing information from the data-center to the point of action. We provide open, cross-platform solutions that securely deliver information anytime, anywhere, enabling customers to create an information edge.

Our value proposition involves enabling the Unwired Enterprise through integrated applications and solutions designed to manage information across the enterprise, allowing customers to extract more value from their information technology (IT) investments. We deliver a full range of solutions to ensure that customer information is securely managed and mobilized to the point of action, including enterprise and mobile databases, middleware, synchronization, encryption and device management software, and mobile messaging services.

During the fourth quarter of 2006 we expanded our reach by acquiring Mobile 365, a privately-held global provider of mobile messaging services and premium content delivery. Mobile 365 extends our Unwired Enterprise strategy with the addition of two new enterprise channels—leading mobile operators and content providers—and an extensive, operator-grade network with connections to approximately 700 mobile operators around the world. Through Mobile 365’s global footprint, Sybase enables enterprises to deliver data and applications to over 70% of the world’s mobile subscriber population. Mobile 365 operates as a separate business unit, renamed Sybase 365.

Our business is organized into three business segments: IPG, which principally focuses on enterprise class database servers, integration and development products; iAS, which provides mobile database and mobile enterprise solutions; and Sybase 365, which provides global services for mobile messaging interoperability and the management and distribution of mobile content. For further discussion of our business segments, see Condensed Consolidated Financial Statements, Note Five — Segment Information, Part I, Item 1.

Our Results

We reported total revenues of $245.0 million for the three months ended June 30, 2007, which represented a $29.5 million (14 percent) increase from total revenues of $215.6 million for the same period last year. The year-over-year increase in revenues for the

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three-month period was primarily attributable to the mobile messaging services of Sybase 365 which contributed revenue of $32.4 million in the quarter. A $2.6 million (6 percent) increase in iAS revenues also contributed to the overall increase offset by a $3.8 million (2 percent) decline to total IPG revenues.

The increase in iAS revenues was attributable to a 10 percent increase in service revenue and a 4 percent increase in license revenue. The increase in service revenue was primarily attributable to an increase in technical services revenue, while the increase in license revenue was primarily attributed to a 19 percent increase in license revenues from our mobile and embedded database product. Going forward, we believe our iAS revenues will be aided by momentum from our Unwired Enterprise initiative.

The decline in IPG revenue was largely attributable to a 9 percent decline in license revenue offset somewhat by a 2 percent increase in services revenue. The overall decline in license revenue was primarily attributable to an 11 percent decline in license revenues from our enterprise database products. Our license revenues from enterprise database products were especially strong during the second quarter of 2006 and overall we expect this segment to be aided by the momentum from our IQ analytics server.

With respect to Sybase 365, we continue to see strong growth in messaging volume including triple digit percentage increases in multi-media messaging traffic, and we believe this growth in messaging traffic will continue to benefit our Sybase 365 messaging segment.

For the first six months of fiscal 2007, our total revenues were $475.1 million compared to $410.6 million for the same six month period in 2006. This overall increase was attributable to revenues from our Sybase 365 segment.

We reported net income of $26.0 million for the second quarter of 2007, compared to net income of $26.3 million for the same period last year. The decline in net income was associated with a reduction in interest income attributable to the cash used in the purchase of Mobile 365 and an increase in the income tax provision offsetting a 10 percent increase in operating income. Our operating margin for the second quarter of 2007 was 14.5 percent compared to 15.0 percent for the same period in 2006. Before inclusion of the results of Sybase 365 our operating margin for the second quarter of 2007 was 15.8 percent compared to 15.0 percent for the same period in 2006.

Our overall financial position remains strong. During the first quarter we generated net cash from operating activities of $53.8 million, and had $709.1 million in cash, cash equivalents and cash investments (including restricted cash) at June 30, 2007. Our days sales outstanding in accounts receivable was 72 days for the quarter ended June 30, 2007 compared to 56 days for the quarter ended June 30, 2006. The increase in days sales outstanding at June 30, 2007 was attributable to the Mobile 365 business purchased in the fourth quarter of 2006. Due to the nature of its business and certain net revenue models under which receivable balances are generated without corresponding revenue, the Sybase 365 segment has, and is expected to retain, a higher DSO than those of the historical Sybase business. Before consideration of the Sybase 365 business, DSO would have been 57 days.

For a discussion of certain factors that may impact our business and financial results, see “Risk Factors — Future Operating Results,”.

Business Trends

Overall, the IT spending patterns we are witnessing support our view that fiscally cautious customers generally are continuing to purchase products and services based more on present need and less on fulfilling anticipated future needs. We do, however, see a growing pipeline associated with extending enterprise level data to handheld devices. We believe this development supports and validates our Unwired Enterprise initiative.

The environment for new sales of enterprise infrastructure software primarily sold by our IPG segment is limited by a maturing enterprise infrastructure software market which moderates the growth potential for this segment. We have noted, however, an improving pipeline for enterprise infrastructure products especially continued high demand for our Adaptive Server^® Enterprise (ASE) 15.0, which was released in the third quarter of 2005. During the quarter we added 272 new ASE customers.

We continue to see greater customer willingness to invest resources on new data integration initiatives and analytic solutions. These solutions contributed to a year over year increases of 35 percent in license revenue from these products during the second quarter. Our Replication Server product delivers operational data across complex and broadly distributed heterogeneous data infrastructures in near real time to ensure continuous data availability, operational synchronization and timely reporting. Our IQ product offers a highly optimized analytic engine specifically designed to deliver dramatically faster results for business intelligence, analytic and reporting solutions.

With respect to the market for mobility and integration products primarily sold by our iAS segment, we believe these products are gaining market acceptance and will provide us with growth opportunities in the future. We believe that for the remainder of 2007 we are beginning a strong product cycle with our refreshed iAnywhere product platform that will lead to future growth in the iAS segment.

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With respect to the market for messaging services sold by our Sybase 365 segment, we believe that our inter-carrier messaging business will see revenue driven by continuing growth in Short Messaging Services (SMS) and Multimedia Messaging Services (MMS) traffic levels and the acquisition of new carriers, especially in new territories. We also believe that enterprises, brands and content providers will focus more of their business towards mobile messaging as an inexpensive means of interacting with their customers on a real time basis. This in turn will drive further growth in the application messaging industry. To handle this demand, we plan to expand our data center capacity and disaster-recovery capabilities, add connectors from our new customers to our network and develop new services.

Moving forward we will continue to manage our operating margin, pursue synergies between our software and messaging businesses, and aggressively pursue our Unwired Enterprise initiative and strategic alliances with key partners.

Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with U.S. generally accepted accounting principles (GAAP). These accounting principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of our financial statements. We also are required to make certain judgments that affect the reported amounts of revenues and expenses during each reporting period. We believe that the estimates, assumptions and judgments involved in the accounting policies described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2006 have the greatest potential impact on our financial statements, so we consider them to be our critical accounting policies and estimates. Except as discussed in “Accounting for Income Taxes” below, we believe that during the first six months of 2007 there were no significant changes in those critical accounting policies and estimates. Senior management has reviewed the development and selection of our critical accounting policies and estimates and their disclosure in this Quarterly Report on Form 10-Q with the Audit Committee of our Board of Directors.

• Accounting for Income Taxes

As discussed in Note 11 “Income Taxes”, we adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN 48”) on January 1, 2007. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position that an entity takes or expects to take in a tax return. Additionally, FIN 48 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Under FIN 48, an entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. Prior to January 1, 2007, we followed the guidance of FAS No. 5 in assessing uncertain tax positions. Under FAS No. 5, we accrued for uncertain tax positions based on whether an assessment was probable and also estimable. Both before and after the adoption of FIN 48, we classify any interest and penalties associated with these tax positions as income taxes. As a result of adopting FIN 48, we did not record any cumulative effect adjustment to the opening balance of retained earnings and additional paid-in-capital. As of January 1, 2007 we had $44 million of unrecognized tax benefits, $43 million of which, if recognized, would affect our effective tax rate if the tax benefits are subsequently realized. As of January 1, 2007, we had $3 million of accrued interest included in the $44 million of unrecognized tax benefits.

Although unrecognized tax benefits for individual tax positions may increase or decrease during 2007, we believe none have a reasonable possibility of significantly increasing or decreasing the total amount of unrecognized tax benefits during 2007 or for the next 12 months.

A discussion of each of our other critical accounting policies is included in our annual report on Form 10-K for the year ended December 31, 2006.

Recent Accounting Pronouncements

SFAS 157, “Fair Value Measurements”
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of FAS 157 are effective for the fiscal year beginning June 1, 2008. We are currently evaluating the impact of the provisions of FAS 157.

SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities”
In February 2007 the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”). FAS 159 provides companies with an option to report selected financial assets and liabilities at fair value. The standard’s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. The standard requires companies to provide additional

17

information that will help investors and other users of financial statements to more easily understand the effect of the company’s choice to use fair value on its earnings. It also requires companies to display the fair value of those assets and liabilities for which the company has chosen to use fair value on the face of the balance sheet. The new standard does not eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in FAS 157, “Fair Value Measurements,” and FAS 107, “Disclosures about Fair Value of Financial Instruments.” FAS 159 is effective as of the start of fiscal years beginning after November 15, 2007. Early adoption is permitted. We are in the process of evaluating this standard and therefore have not yet determined the impact that the adoption of FAS 159 will have on our financial position, results of operations or cash flows.

18

Results of Operations

Revenues
(Dollars in millions)

	Three Months ended June 30,									Six Months ended June 30,
							Percent									Percent
	2007			2006			Change			2007			2006			Change
License fees by segment:
IPG	$	60.6		$	66.7			(9	%)	$	115.6		$	116.2			(1	%)
IAS		23.5			22.8			3	%		43.5			44.5			(2	%)
SY365		0.0			—			*			0.0			—			*
Eliminations		(6.7	)		(6.4	)		5	%		(12.3	)		(10.7	)		15	%
Total license fees	$	77.4		$	83.1			(7	%)	$	146.8		$	150.0			(2	%)
Percentage of total revenues		32	%		39	%					31	%		37	%
Services by segment:
IPG	$	123.6		$	121.3			2	%	$	242.0		$	238.2			2	%
IAS		19.0			17.3			10	%		37.1			34.7			7	%
Eliminations		(7.4	)		(6.1	)		21	%		(14.2	)		(12.3	)		15	%
Total services	$	135.2		$	132.5			2	%	$	264.9		$	260.6			2	%
Percentage of total revenues		55	%		61	%					56	%		63	%
Messaging by segment:
SY365	$	32.4			—			*		$	63.4			—			*
Total messaging	$	32.4			—			*		$	63.4			—			*
Percentage of total revenues		13	%		—			*			13	%		—			*
Total revenues	$	245.0		$	215.6			14	%	$	475.1		$	410.6			16	%

* Not meaningful

License revenues decreased 7 percent for the three months ended June 30, 2007 compared to the same period last year. The decrease in license revenues during the quarter was primarily attributable to a $6.1 million (9 percent) decrease in IPG license revenues offset by a $0.7 million (3 percent) increase in iAS license revenues. The decrease in IPG license revenues was driven by a 25 percent decrease in revenues from our Adaptive Server Enterprise product line offset by an 80 percent increase in the IQ datawarehouse. The increase in iAS license revenues was largely attributable to a 25 percent increase in revenue associated with our SQL Anywhere^® product.

License revenues declined 2 percent for the six months ended June 30, 2007 compared to the same period last year. The decrease in license revenues was primarily attributable to a $0.6 million (1 percent) decrease in IPG license revenues along with a $1.1 million (2 percent) decrease in iAS license revenues. The decrease in IPG license fees was driven by a 10 percent decrease in revenues from our Adaptive Server Enterprise product line, offset by an increase of 86 percent in our IQ analytic server product. The decline in iAS license revenues was largely attributable to the decrease in revenue from mobility solutions including a 16 percent decrease in revenue from our Afaria product, offset by increases in our mobile database products.

Segment license and service revenues include transactions between the segments. The most common instance relates to the sale of iAS products and services to third parties by IPG. In the case of such a transaction, IPG records the revenue on the sale with a corresponding inter-company expense on the transaction. iAS then records intercompany revenue and continues to bear the cost of providing the product or service. The excess of the revenues over inter-company expense recognized by IPG is intended to reflect the costs incurred by IPG to complete the sales transaction. The total transfers between the segments are captured in “Eliminations.”

Total services revenues (which include technical support, professional services and education) increased $2.7 million (2 percent) and $4.3 million (2 percent) for the three and six months ended June 30, 2007, respectively, compared to the same periods in 2006. For the three months ended June 30 2007 the increase in services revenues was primarily due to a $2.3 million (2 percent) increase in IPG service revenues and a $1.7 million (10 percent) increase in iAS service revenues, primarily technical support revenues. These increases were partially offset by declines in professional services revenues. For the six months ended June 30, 2007 the increase in service revenues was primarily due to a $3.8 million (2 percent) increase in IPG service revenues and a $2.4 million (7 percent) increase in iAS service revenues. These increases were primarily in technical support revenues, offset by declines in professional services revenues.

Total technical support revenues increased $4.0 million (4 percent) and $6.3 million (3 percent) for the three and six months ended June 30, 2007, respectively, compared to the same periods in 2006. Technical support revenues comprised approximately 78 and 79 percent of total services revenues for the three and six months ended June 30, 2007, respectively compared to 77 percent of total

19

service revenues for both the three and six months ended June 30, 2006. Deferred revenues relate principally to technical support revenues and declined $16.9 million (7 percent) from March 31 to June 30, 2007 and increased $21.9 (11 percent) from December 31, 2006 to June 30, 2007. This is comparable to a $16.6 million (7 percent) decline and a $20.6 million (11 percent) increase for the same three and six month periods in 2006 and follows seasonal patterns.

Professional services and education revenues decreased 2 percent during the three and six month periods ended June 30, 2007 compared to the same period in 2006. This decrease was primarily attributable to a $0.7 (3 percent) and $1.1 million (2 percent) decline in IPG professional services revenues for the three and six month periods ended June 30, 2007, respectively.

Messaging revenues earned in the three and six months ended June 30, 2007 were $32.4 and $63.4 million resulting from the acquisition of Mobile 365 in November 2006. Messaging fees consist primarily of revenues earned from the provision of inter-carrier messaging (SMS and MMS), premium content delivery and settlement, and enterprise messaging services to wireless operators, brands, content providers and enterprises.

Geographical Revenues
(Dollars in millions)

	Three Months ended June 30,									Six Months ended June 30,
							Percent									Percent
	2007			2006			Change			2007			2006			Change
North American	$	130.8		$	118.4			10	%	$	254.9		$	231.6			10	%
Percentage of total revenues		53	%		55	%					54	%		56	%
Total Outside North America	$	114.2		$	97.2			17	%	$	220.2		$	179.0			23	%
Percentage of total revenues		47	%		45	%					46	%		44	%
International: EMEA (Europe, Middle East and Africa)	$	77.6		$	66.7			16	%	$	149.5		$	121.9			23	%
Percentage of total revenues		32	%		31	%					31	%		30	%
Intercontinental: (Asia Pacific and Latin America)	$	36.6		$	30.5			20	%	$	70.7		$	57.1			24	%
Percentage of total revenues		15	%		14	%					15	%		14	%
Total revenues	$	245.0		$	215.6			14	%	$	475.1		$	410.6			16	%

North American revenues (United States, Canada and Mexico) increased $12.4 million (10 percent) for the three months ended June 30, 2007 compared to the same period last year. The increase was primarily due to the $10.5 million inclusion of Sybase 365’s messaging revenues and a $2.0 million (20 percent) increase in license revenues from products in the iAS segment. For the six months ended June 30, 2006, North American revenues increased $20.9 million (9 percent) compared to the same period last year. This was primarily due to the $21.6 million inclusion of Sybase 365’s messaging revenues.

International revenues comprised 47 percent and 45 percent of total revenues for the three months ended June 30, 2007 and 2006, respectively. For the six months ended June 30, 2007 international revenues comprised 46 percent and 44 percent of total revenues compared to the same period last year.

EMEA (Europe, Middle East and Africa) revenues for the three months ended June 30, 2007 increased $10.9 million (16 percent) compared to the three months ended March 31, 2006. The increase was primarily due to the $17.7 million inclusion of Sybase 365’s messaging revenues and a $2.4 million (7 percent) increase in service revenues. Messaging revenues in France, Spain and UK and service revenue increases in France contributed most to the overall increase in the second quarter of 2007. This was partially offset by declines in license revenues in Germany and the UK. Revenues for the six months ended June 30, 2007 increased $27.6 million (23 percent) compared to the six months ended June 30, 2007. The increase was primarily due to the inclusion of Sybase 365’s messaging revenues of $33.4 million and a $4.5 million (6 percent) increase in service revenues. Messaging revenues in France, Spain and UK contributed most to this increase. This was partially offset by declines in license revenues in the UK, France and Italy

Intercontinental (Asia Pacific and Latin America) revenues for the three months ended June 30, 2007 increased $6.1 million (20 percent) compared to the three months ended June 30, 2006. The increase was primarily attributable to the $4.2 million inclusion of Sybase 365’s messaging revenues, a $1.3 million (8 percent) increase in service revenues and a $0.7 million (4 percent) increase in license revenues. IPG license revenue increases in China and Korea and messaging revenues in Singapore and Australia contributed most to the overall increase in the first quarter of 2007. For the six months ended June 30, 2007, intercontinental revenues increased $13.6 million (24 percent) compared to the same period in 2006. Messaging revenues of $8.4 million contributed most to the increase, in addition, license revenues increased $4.3 million (13 percent) and service revenues increased $1.1 million (4 percent). Messaging revenues in Singapore and Australia and IPG license revenue increases in India and Brazil contributed most to the overall increase in the six months ended June 30, 2007.

In EMEA and the Intercontinental regions, most revenues and expenses are denominated in local currencies. During the three months ended June 30, 2007, foreign currency exchange rate changes from the same period last year resulted in a $4.9 million (2 percent)

20

increase in our revenues and a $3.4 million (2 percent) increase in our operating expenses. During the six months ended June 30, 2007, foreign currency exchange rate changes from the same period last year resulted in a $10.4 million (3 percent) increase in our revenues and a $6.9 million (2 percent) increase in our operating expenses. The change for the comparable periods was primarily due to the weakness in the U.S. dollar against certain European and Intercontinental currencies.

Our business and results of operations could be materially and adversely affected by fluctuations in foreign currency exchange rates, even though we take into account changes in exchange rates over time in our pricing strategy. Additionally, changes in foreign currency exchange rates, the strength of local economies, and the general volatility of worldwide software markets could result in a higher or lower proportion of international revenues as a percentage of total revenues in the future. For additional risks associated with currency fluctuations, see “Quantitative and Qualitative Disclosures of Market Risk,” Part I, Item 3 and “Future Operating Results,” Part II, Item 1(A).

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Costs and Expenses
(Dollars in millions)

	Three Months ended June 30,									Six Months ended June 30,
							Percent									Percent
	2007			2006			Change			2007			2006			Change
Cost of license fees	$	13.1		$	11.9			10	%	$	25.8		$	24.7			4	%
Percentage of license fees revenues		17	%		14	%					18	%		16	%
Cost of services	$	39.5		$	38.3			3	%	$	78.3		$	76.7			2	%
Percentage of services revenues		29	%		29	%					30	%		29	%
Cost of messaging	$	18.9			—			*		$	37.8			—			*
Percentage of messaging revenues		58	%		—						60	%		—
Sales and marketing	$	64.9		$	67.8			(4	%)	$	129.5		$	129.2			*
Percentage of total revenues		26	%		31	%					27	%		31	%
Product development and engineering	$	36.9		$	37.5			(2	%)	$	75.7		$	74.5			2	%
Percentage of total revenues		15	%		17	%					16	%		18	%
General and administrative	$	32.7		$	25.9			26	%	$	64.2		$	50.9			26	%
Percentage of total revenues		13	%		12	%					14	%		12	%
Amortization of other purchased intangibles	$	3.4		$	1.6			113	%	$	6.8		$	3.1			119	%
Percentage of total revenues		1	%		1	%					1	%		1	%
Cost of restructure	$	(0.1	)	$	0.1			*		$	(0.0	)	$	0.1			*
Percentage of total revenues		*			*						*			*

* Not meaningful

Cost of License Fees. Cost of license fees consists primarily of product costs (media and documentation), amortization of capitalized software development costs and purchased technology, and third party royalty costs. These costs were $13.1 million and $25.8 million for the three and six months ended June 30, 2007, up from $11.9 million and $24.7 million for the three and six months ended June 30, 2006, respectively. Such costs were 17 percent and 18 percent of license revenues for the three and six months ended June 30, 2007, respectively, as compared to 14 percent and 16 percent for the same periods in 2006. The increase in the cost of license fees for the three and six months ended June 30, 2007 was primarily due to an increase in amortization of capitalized software development costs and increases in third party royalty expenses. The amortization of capitalized software costs was $8.1 million and $16.3 million for the three and six months ended June 30, 2007, respectively, compared to $7.4 million and $15.7 million for the three and six month periods ended June 30, 2006. The increase in capitalized software amortization for the three and six months ended June 30, 2007 was due to SQL Anywhere 10.0, Workspace and ASE 15.0.1. The amortization of purchased technology was $2.4 million and $4.8 million for the three and six months ended June 30, 2007, respectively, compared to $2.3 million and $4.7 million for the three and six months ended June 30, 2006, respectively. The increase in amortization of purchased technology for the three and six months ended June 30, 2007 was not significant.

Cost of Services. Cost of services consists primarily of the fully burdened cost of our personnel who provide technical support, professional services and education. These costs were $39.5 million and $78.3 million for the three and six months ended June 30, 2007, respectively, as compared to $38.3 million and $76.7 million for the same periods in 2006. These costs were 29 percent and 30 percent of services revenues for the three and six months ended June 30, 2007, respectively, as compared to 29 percent of service revenues for same periods in 2006. The increase in cost of services in absolute dollars for the three and six months ended June 30, 2007 is primarily due to an increase in payroll and related costs associated with increases in technical support and professional services headcount. The headcount reflected in this expense category was approximately 4 percent higher at June 30, 2007 compared to June 30, 2006. This was partially offset by a decrease in stock compensation expense for the three and six month periods ended June 31, 2007 of $0.3 million and $0.6 million, respectively compared to the same periods in the prior year.

Cost of Messaging. Costs of messaging consist primarily of (1) fees payable to non-domestic wireless operators for delivering traffic into their networks; (2) fully burdened cost of personnel who manage and monitor network datacenters; (3) depreciation, fees and other costs associated with the network datacenters; and (4) amortization of purchased technology used internally by the Sybase 365 segment. Costs of messaging for the three and six months ended June 30, 2007 totaled $18.9 million and $37.8 million, respectively. The amortization of purchased technology was $0.9 million and $1.8 million for the three and six months ended June 30, 2007, respectively,

Sales and Marketing. Sales and marketing expenses were $64.9 million and $129.5 million for the three and six months ended June 30, 2007, respectively, as compared to $67.8 million and $129.2 million for the same periods last year. These costs were 26 percent and 27 percent of total revenues for the three and six month periods ended June 30, 2007 as compared to 31 percent of total revenues for the three and six month periods ended June 30, 2006. The decrease in sales and marketing expenses in absolute dollars and the decrease in costs as a percentage of revenues for the three months ended June 30, 2007 were primarily due a decrease in allocated costs along with a decline in payroll and related costs associated with decreases in sales and marketing headcount. The headcount in this category was 2 percent lower at June 30, 2007 compared to June 30, 2006.

22

Product Development and Engineering. Product development and engineering expenses (net of capitalized software development costs) were $36.9 million and $75.7 million for the three and six months ended June 30, 2007, respectively, as compared to $37.5 million and $74.5 million for the same periods last year. These costs were 15 percent and 16 percent of total revenues for the three and six months ended June 30, 2007, respectively, as compared to 17 percent and 18 percent for the three and six month periods ended June 30, 2006. The decrease in product development and engineering costs in absolute dollars for the three months ended June 30, 2007 is primarily due to a decrease in allocated costs partially offset by a decrease in capitalized software costs and an increase in payroll and related costs associated with increases in engineering headcount. The increase in product development and engineering costs in absolute dollars for the six months ended June 30, 2007 is primarily due to a decrease in capitalized software costs and an increase in payroll and related costs associated with increases in engineering headcount, partially offset by a decrease in allocated costs. The capitalized software costs decreased in both the three and six month periods due to the completion of the SQL Anywhere 10.0 project during the third quarter of 2006. An increase in payroll and related costs associated with headcount from the acquisition of Mobile 365 also contributed to the increase spending. The decrease in costs as a percentage of revenues was primarily due to the inclusion of Mobile 365 revenues and product development expenses.

We capitalized approximately $8.8 million and $17.1 million of software development costs for the three and six months ended June 30, 2007 compared to $10.3 million and $18.8 million for the three and six months ended June 30, 2006. For the three and six months ended June 30, 2007, capitalized software costs included costs incurred for efforts associated with Adaptive Server Enterprise 15.0.2 and 15.1, SQL Anywhere 10.0, and PowerDesigner^® 12.5, DIS 1.1.

We believe product development and engineering expenditures are essential to technology and product leadership and expect product development and engineering expenditures to continue to be significant, both in absolute dollars and as a percentage of total revenues.

General and Administrative. General and administrative expenses, which include IT, legal, business operations, finance, human resources and administrative functions, were $32.7 million and $64.2 million for the three and six months ended June 30, 2007, respectively, as compared to $25.9 million and $50.9 million for the three and six months ended June 30, 2006. These costs represented 13 percent and 14 percent for the three and six months ended June 30, 2007 as compared to 12 percent for the three and six months ended June 30, 2006. The increase in general and administrative expenses in absolute dollars and as a percentage of revenues for the three and six months ended June 30, 2007 was primarily attributable to our acquisition of Mobile 365.

Amortization of Other Purchased Intangibles. Amortization of other purchased intangibles primarily reflects the amortization of the established customer lists associated with the acquisition in 2000 of Home Financial Network, Inc, the amortization of the established customer list and covenant not to compete associated with our acquisition of XcelleNet in 2004, the amortization of the established customer lists and other intangible assets associated with our acquisition of Extended Systems in 2005 and the amortization of the established customer lists associated with our acquisition of Mobile 365 in 2006. The increases in amortization of other purchased intangibles for the three and six month periods ended June 30, 2007 compared to the same periods in the prior year are primarily due to the inclusion of amortization related to the intangible assets recognized as part of the acquisition of Mobile 365.

Cost of Restructure. We undertook restructuring activities in 2004, 2003, 2002 and 2001 as a means of managing our operating expenses, and recorded acquisition related liabilities when we acquired Mobile 365 and AvantGo. See Note 9 to Condensed Consolidated Financial Statements

Operating Income
(Dollars in millions)

	Three Months ended June 30,									Six Months ended June 30,
							Percent									Percent
	2007			2006			Change			2007			2006			Change
Operating income by segment:
IPG	$	36.7		$	35.8			3	%	$	65.1		$	57.4			13	%
IAS		5.2			2.6			100	%		6.0			4.7			28	%
SY365		(0.1	)		—			*			(1.9	)		—			*
Unallocated costs		(6.2	)		(6.0	)		3	%		(12.2	)		(10.8	)		13	%
Total operating income:	$	35.6		$	32.4			10	%	$	57.0		$	51.3			11	%
Percentage of total revenues		15	%		15	%					12	%		12	%

* Not meaningful

Operating income was $35.6 million and $57.0 million for the three and six months ended June 30, 2007, respectively, compared to operating income of $32.4 million and $51.3 million for the three and six months ended June 30, 2006, respectively. The increase in

23

operating income for the three and six months ended June 30, 2007 is primarily due to the various factors discussed under “Revenues”, “Geographical Revenues” and “Costs and Expenses,” above.

Consolidated operating margins, when compared to comparable periods in the prior year, remained constant. For the three month periods ended June 30, 2007 and 2006 the consolidated operating margin was 15 percent. For the six month periods ended June 30, 2007 and 2006 the consolidated operating margin was 12 percent. The consolidated operating margin reflects the net change in operating margins for the IPG and iAS segments together with the inclusion of the new Sybase 365 segment. The inclusion of the Sybase 365 segment decreased overall operating margins 100 basis points for both the three and six month periods ended June 30, 2007. Before inclusion of the results of Sybase 365 our operating margin was 16 percent and 13 percent for the three and six months ended June 30, 2007, compared to 15 percent and 12 percent for the same periods in 2006.

The operating margin for the IPG segment was 20 percent and 18 percent for the three and six months ended June 30, 2007 compared to 19 percent and 16 percent for the three and six months ended June 30, 2006, computed on a before allocation of common costs basis. The increase in operating margin in the IPG segment for the three months ended June 30, 2007 was primarily due to a decrease in operating expenses partially offset by a decrease in revenues. Operating expense decreases were primarily related to declines in sales and marketing expenses. The decrease in revenue for the three and six months ended June 30, 2007 is primarily due to the various factors discussed under “Revenues”, “Geographical Revenues” and “Costs and Expenses,” above. The increase in the IPG segment operating margin for the six months ended June 30, 2007 was primarily due to an increase in revenues combined with a decrease in operating expenses. Operating expense decreases for the three and six month periods were primarily related to declines in sales and marketing expenses. The changes in revenues for the three and six month periods were primarily due to the various factors discussed under “Revenues” and “Geographical Revenues” above.

The operating margin for the iAS segment, computed on a before allocation of common costs basis, was 12 percent and 7 percent for the three and six months ended June 30, 2007 compared to 7 percent and 6 percent for the same period in 2006. The increase in the iAS segment operating margin was primarily due to an increase in total revenues of 6 percent and 2 percent for the three and six months periods ending June 30, 2007. The increases in revenues for the three and six month periods were primarily due to the various factors discussed under “Revenues” and “Geographical Revenues” above.

The operating loss for the Sybase 365 segment for the three and six month periods was $0.2 million and $1.9 million, respectively.

Certain common costs and expenses are allocated to the various segments based on measurable drivers of expense. Unallocated expenses represent stock compensation expense and other corporate expenditures or cost savings that are not specifically allocated to the segments including reversals or restructuring expenses associated with restructuring activities undertaken prior to 2003. Unallocated costs for the three month period ended June 30, 2007 consisted primarily of stock-based compensation expenses

During the three and six months ended June 30, 2007, foreign currency exchange rate changes from the same period last year resulted in a $4.9 million (2 percent) increase and a $10.4 million (3 percent) increase in our revenues and a $3.4 million (2 percent) increase and $6.9 million (2 percent) increase in our operating expenses.

Other Income (Expense), Net
(Dollars in millions)

	Three Months ended June 30,									Six Months ended June 30,
							Percent									Percent
	2007			2006			Change			2007			2006			Change
Interest income	$	8.5		$	10.2			(17	%)	$	15.9		$	18.8			(15	%)
Percentage of total revenues		3	%		5	%					3	%		5	%
Interest expense and other, net	$	(3.4	)	$	(3.0	)		13	%	$	(5.8	)	$	(5.5	)		5	%
Percentage of total revenues		(1	%)		(1	%)					(1	%)		(1	%)

Interest income decreased to $8.5 million and $15.9 million for the three and six months ended June 30, 2007, respectively, compared to $10.2 million and $18.8 million for the same period last year. Interest income consists primarily of interest earned on our investments. The decrease in interest income in the three and six month periods in 2007 is primarily due to the decrease in the cash balances invested partially offset by an increase in the effective interest rates. Our invested cash balances decreased as a result of cash used in our purchase of Mobile 365 in November of 2006.

Interest expense and other, net, primarily includes: interest expense on convertible subordinated notes which bear interest at 1.75 percent; amortization of deferred offering expenses associated with these notes; net gains and losses resulting from foreign currency transactions and the related hedging activities; the cost of hedging foreign currency exposures; bank fees; and gains from the

24

disposition of certain real estate and investments. Interest expense and other, net was an expense of $3.4 million and $5.8 million for the three and six months ended June 30, 2007, respectively, as compared to $3.0 million and $5.5 million or the three and six months ended June 30, 2006.

Provision for Income Taxes
(Dollars in millions)

	Three Months ended June 30,							Six Months ended June 30,
					Percent							Percent
	2007		2006		Change			2007		2006		Change
Provision for income taxes	$	14.7	$	13.2		11	%	$	26.0	$	21.0		24	%

We recorded an income tax provision for the second quarter of 2007 equal to approximately 36 percent of pre-tax book income. Our rate for the six month period ended June 30, 2007 was 38.7 percent. The decrease in the tax rate for the second quarter was largely attributable to a tax reserve recorded in the first quarter relating to the deductibility of certain expenses resulting from liquidating several foreign subsidiaries. These rates compare to a tax rate of approximately 33.5 percent and 32.5 percent for the comparable three and six month periods in 2006, respectively.

Our effective tax rate for the quarter and year differs from the statutory rate of 35 percent primarily due to the impact of state taxes and the addition of tax reserves relating mainly to foreign transfer pricing exposures and the deductibility of certain expenses offset somewhat by the deferral of certain low-tax foreign source earnings and the expected utilization during 2007 of foreign tax credits and research credits which previously carried a valuation allowance. In 2006, our effective tax rate differed from the statutory rate of 35 percent primarily due to the utilization of foreign tax credits which previously carried a valuation allowance, and the deferral of certain low-tax foreign source earnings offset somewhat by the impact of state taxes and the addition of tax reserves relating mainly to foreign transfer pricing exposures. See Condensed Consolidated Financial Statements, Note 11 — Income Taxes.

Net Income Per Share
(Dollars and shares in millions, except per share data)

	Three Months ended June 30,									Six Months ended June 30,
							Percent									Percent
	2007			2006			Change			2007			2006			Change
Net income	$	26.0		$	26.3			(1	%)	$	41.2		$	43.6			(6	%)
Percentage of total revenues		11	%		12	%					9	%		11	%
Basic net income per share	$	0.29		$	0.30			(3	%)	$	0.45		$	0.49			(8	%)
Diluted net income per share	$	0.28		$	0.29			(3	%)	$	0.44		$	0.48			(8	%)
Shares used in computing basic net income per share		90.9			89.1			2	%		91.0			89.4			2	%
Shares used in computing diluted net income per share		93.0			91.4			2	%		93.3			91.7			2	%

We reported net income of $26.0 million and $41.2 million for the three and six months ended June 30, 2007, respectively, compared to net income of $26.3 million and $43.6 million for the same periods last year. The decrease in net income for the three and six months ended June 30, 2007 is due to the various factors discussed above.

Basic net income per share was $0.29 and $0.45 for the three and six months ended June 30, 2007, respectively, as compared to $0.30 and $0.49 for the same periods in 2006. Diluted net income per share was $0.28 and $0.44 for the three and six months ended June 30, 2007, respectively, as compared to $0.29 and $0.48 for the same periods in 2006.

Shares used in computing basic and diluted net income per share increased 2 percent for the three and six months ended June 30, 2007 as compared to the same period in 2006. The increases were due primarily to the exercises of employee stock options offset by shares repurchased under our stock repurchase program.

Shares that may be issued to holders of our convertible subordinated debt due to the appreciation of our stock price are included in the calculation of diluted earnings per share using the if converted method, if their inclusion is dilutive to earnings per share. Generally, such shares would be included in periods in which the average price of our common stock exceeds $25.22 per share, the initial conversion price. For the three and six month periods ended June 30, 2006 and 2007 our average share price did not exceed $25.22 and accordingly such shares are not included in the calculation of diluted earnings per share. If such shares were dilutive and included in the shares used in computing the dilutive earnings per share, our diluted shares would be greater and our earnings per share amounts could be less. For example, if during the three month period ended June 30, 2007 our average share price was $26.22, or $1.00 greater than the $25.22 initial conversion amount, our diluted shares outstanding would have increased by .7 million which would not have caused a change in our reported diluted earnings per share for the three months ended June 30, 2007. See Condensed Consolidated Financial Statements, Note 10 — Convertible Subordinated Notes.

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Liquidity and Capital Resources
(Dollars in millions)

	Six Months Ended June 30,
					Percent
	2007		2006		Change
Working capital	$	487.6	$	635.2		(23	%)
Cash and cash equivalents	$	436.8	$	462.8		(6	%)
Net cash provided by operating activities	$	123.5	$	125.0		(1	%)
Net cash used for investing activities	$	13.7	$	37.5		(63	%)
Net cash used for financing activities	$	37.4	$	33.2		13	%

At June 30, 2007 our cash, cash equivalents and cash investments, excluding restricted cash totaled $703.1 million, a $65 million increase from December 31, 2006. We generated $123.5 million in cash from operations during that period. Our days sales outstanding in accounts receivable was 72 days for the quarter ended June 30, 2007 compared to 56 days for the quarter ended June 30, 2006. The increase in days sales outstanding was primarily attributable to the Mobile 365 business purchased in the fourth quarter of 2006. We expect the Mobile 365 business to continue to cause increases in our days sales outstanding in the future largely due to the recognition of certain revenues on a net basis related to the delivery of third party content.

Net cash used for investing activities was $13.7 million for the three months ended June 30, 2007 compared to a $37.5 million use of cash for the six months ended June 30, 2006. The decrease in net cash used for investing activities is primarily due to lower purchases of cash investments during the six months ended June 30, 2007.

Net cash used for financing activities was to $37.4 million for the six months ended June 30, 2007 compared to $33.2 million for the six months ended June 30, 2006. The increase in cash used for financing activities is primarily due to a $13.3 million increase in the purchase of treasury stock to $58.6 million in the six month period ending June 30, 2007 compared to $45.3 million for the same period in 2006. This was partially offset by a $7.0 million increase in the net proceeds from the issuance of common stock related to the exercise of employee stock options.

Our Board of Directors has authorized the repurchase of our outstanding common stock from time to time, subject to price and other conditions (Stock Repurchase Program). Through June 30, 2007, aggregate amounts purchased under the Stock Repurchase Program totaled $783.8 million. During the six months ended June 30, 2007, we repurchased 2.4 million shares at a cost of $58.6 million compared to 2.1 million shares at a cost of $45.3 million during the six months ended June 30, 2006.

On April 26, 2006 our Board of Directors approved a $250 million increase to our Stock Repurchase Program. Approximately $191.2 million remained available in the Stock Repurchase Program at June 30, 2007.

Liabilities for uncertain tax positions totaled $25.8 million at June 30, 2007. These liabilities have been classified as non-current as we do not reasonably estimate payment of these liabilities, if at all, within one year. Other than this one year period, however, we cannot make reasonably reliable estimates of the period of payment if any.

There have been no significant changes to the other contractual obligations we disclosed in our Annual Report on Form 10-K for the year ended December 31, 2006.

At June 30, 2007 we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

We evaluate, on an ongoing basis, the merits of acquiring technology or businesses, or establishing strategic relationships with and investing in other companies. We may decide to use cash and cash equivalents and investments to fund such activities in the future.

We engage in global business operations and are therefore exposed to foreign currency fluctuations. As of June 30, 2007, we had identifiable net assets totaling $206.7 million associated with our European operations and $98.3 million associated with our Asia and Latin American operations. We experience foreign exchange transaction exposure on our net assets and liabilities denominated in currencies other than the US dollar. The related foreign currency translation gains and losses are reflected in “Accumulated other comprehensive income/ (loss)” under “Stockholders’ equity” on the balance sheet. We also experience foreign exchange translation exposure from certain balances that are denominated in a currency other than the functional currency of the entity on whose books the balance resides. We hedge certain of these short-term exposures under a plan approved by the Board of Directors (see “Qualitative and Quantitative Disclosure of Market Risk,” Part I, Item 3).

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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

The following discussion about our risk management activities includes forward-looking statements that involve risks and uncertainties, as more fully described on Page 2 of this Report.

Foreign Exchange Risk

The functional currency of our international operating subsidiaries is the local currency. Assets and liabilities of our foreign subsidiaries are translated at the exchange rate in effect on the balance sheet date. Revenue, costs and expenses are translated at average rates of exchange in effect during the period. We report translation gains and losses as a separate component of stockholders’ equity. We include net gains and losses resulting from foreign exchange transactions in our statement of operations.

As a global concern, we face exposure to adverse movements in foreign currency exchange rates. These exposures may change over time as business practices evolve and could have a material adverse impact on our financial position and results of operations. Historically, our primary exposures have related to non dollar-denominated sales and expenses in Europe, Asia Pacific, and Latin America. In order to reduce the effect of foreign currency fluctuations, we utilize foreign currency forward exchange contracts (forward contracts) to hedge certain foreign currency transaction exposures outstanding during the period (approximately 30 days). The gains and losses on the forward contracts mitigate the gains and losses on our outstanding foreign currency transactions. We do not enter into forward contracts for trading purposes. We do not currently enter into forward contracts or other similar instruments to hedge against foreign exchange exposures created by intercompany messaging revenues and expenses associated with the business of Mobile 365. All foreign currency transactions and all outstanding forward contracts are marked-to-market at the end of the period with unrealized gains and losses included in interest expense and other, net. The unrealized gain (loss) on the outstanding forward contracts as of June 30, 2007 was immaterial to our consolidated financial statements. Although the impact of currency fluctuations on our financial results has generally been immaterial in the past, there can be no guarantee the impact of currency fluctuations related to our intercompany messaging revenues and expenses and other activities will not be material in the future.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates to our investment portfolio, which consists of taxable, short-term money market instruments and debt securities with maturities between 90 days and three years. We do not use derivative financial instruments in our investment portfolio. We place our investments with high-credit quality issuers and, by policy, we limit the amount of credit exposure to any one issuer.

We mitigate default risk by investing in only the safe and high-credit quality securities and by monitoring the credit rating of investment issuers. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity. These securities are generally classified as available for sale, and consequently, are recorded on the balance sheet at fair value with unrealized gains or losses reported, as a separate component of stockholders’ equity, net of tax. Losses realized from the less than temporary decline in the value of specific marketable securities are recorded in interest expenses and other, net on the income statement. Neither realized nor unrealized gains and losses at June 30, 2007 were material.

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and participation of our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures at June 30, 2007 were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the timeframe specified in Securities and Exchange Commission rules and forms. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during our second quarter of 2007 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II: OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

The material set forth in Note 7 of Notes to Condensed Financial Statements in Part I, Item 1 of the Form 10-Q is incorporated herein by reference.

ITEM 1 (A): RISK FACTORS

   Future Operating Results

Our future operating results may vary substantially from period to period due to a variety of significant risks, some of which are discussed below and elsewhere in this report on Form 10-Q. We strongly urge current and prospective investors to carefully consider the cautionary statements and risks contained in this report including those regarding forward-looking statements described on page 2.

Significant variation in the timing and amount of our revenues may cause fluctuations in our quarterly operating results and an accurate estimation of our revenues is difficult.

Our operating results have varied from quarter to quarter in the past and may vary in the future depending upon a number of factors described below, including many that are beyond our control. Our revenues, and particularly our new software license revenues, are difficult to forecast, and as a result our quarterly operating results can fluctuate substantially. As a result, we believe that quarter-to-quarter comparisons of our financial results should not be relied on to indicate our future performance. We operate with little or no backlog, and quarterly license revenues for our IPG and iAS businesses depend largely on orders booked and shipped in a quarter. Historically, we have recorded a majority of our quarterly license revenues in the last month of each quarter, particularly during the final two weeks. In the past we have experienced fluctuations in the purchasing patterns of our customers. For example, during 2003 and the first half of 2004, we experienced an overall increase in the volume of license revenue transactions but an overall decrease in the average dollar value of these transactions. Although many of our customers are larger enterprises, an apparent trend toward more conservative IT spending could result in fewer of these customers making substantial investments in our products and services in any given period. Therefore, if one or more significant orders do not close in a particular quarter, our results of operations could be materially and adversely affected, as was the case in the first and second quarters of 2004.

Our operating expenses are based on projected annual and quarterly revenue levels, and are generally incurred ratably throughout each quarter. Since our operating expenses are relatively fixed in the short term, failure to realize projected revenues for a specified period could adversely impact operating results, reducing net income or causing an operating loss for that period. The deferral or non-occurrence of such revenues would materially adversely affect our operating results for that quarter and could impair our business in future periods. Because we do not know when, or if, our potential customers will place orders and finalize contracts, we cannot accurately predict our revenue and operating results for future quarters.

In addition to the above factors, the timing and amount of our revenues are subject to a number of factors that make it difficult to accurately estimate revenues and operating results on a quarterly or annual basis. Our financial forecasts are based on aggregated internal sales forecasts which may incorrectly assess our ability to complete sales within the forecast period, due to competitive pressures, economic conditions or reduced information technology spending. In our experience IPG and iAS revenues in the fourth quarter benefit from large enterprise customers placing orders before the expiration of budgets tied to the calendar year. As a result, revenues from license fees tend to decline from the fourth quarter of one year to the first quarter of the next year. In the past, this seasonality has contributed to lower total revenues and earnings in the first quarter compared to the prior fourth quarter. We cannot assure you that estimates of our revenues and operating results can be made with certain accuracy or predictability. Fluctuations in our operating results may contribute to volatility in our stock price.

We may encounter difficulties in integrating our Mobile 365 acquisition, other acquisitions or strategic relationships and we may incur acquisition-related charges that could adversely affect our operating results.

We regularly explore possible acquisitions and other strategic ventures to expand and enhance our business. We have recently acquired a number of companies.

For example, on November 8, 2006 we acquired Mobile 365, Inc., a Delaware company, in an all cash transaction. The purchase price of $418.3 million is comprised of $416.0 million in cash and $2.3 million in additional purchase related costs and is subject to adjustment based on Mobile 365’s final working capital as of the closing date. Net of acquired cash, the transaction was valued at approximately $394.9 million.

In addition, we acquired AvantGo in 2003 and XcelleNet^® and certain assets of Dejima in April 2004. In April 2005 we acquired ISDD and the assets of Avaki Corporation, both privately-held companies. In October 2005 we acquired Extended Systems

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Incorporated, a NASDAQ listed company. In June 2006 we acquired Solonde AG, a privately-held company and in October 2006 we acquired certain assets of iFoundry, a privately-held company. We expect to continue to pursue acquisitions of complimentary or strategic business product lines, assets and technologies.

We may not achieve the desired benefits of our Mobile 365 or other acquisitions and investments. Acquisitions may not further our business strategy or we may pay more for acquired companies or assets than they may prove to be worth. Further, such companies may have limited infrastructure and systems of internal controls. In addition, for portions of the first year after acquisition, acquired companies may not be subject to our established system of internal control or subject to internal control testing by internal and external auditors.

We may be unable to successfully assimilate an acquired company’s management team, employees, business infrastructure or data centers and related systems, capacity requirements, customer mandated requirements, and third party communication provider relationships or implement and maintain effective internal controls. Our acquisition due diligence may not identify technical, legal, financial, internal control or other problems associated with an acquired entity and our ability to seek indemnification may be limited by the acquisition structure or agreement. Also, dedication of additional resources to execute acquisitions and handle integration tasks and management changes accompanying acquisitions could divert attention from other important business. Acquisitions may also result in costs, liabilities, additional expenses or internal control weaknesses that could harm our results of operations, financial condition or internal control assessment. In addition, we may not be able to maintain customer, supplier, employee or other favorable business relationships of ours, or of our acquired operations, or be able to terminate or restructure unfavorable relationships, any of which might reduce our revenue or limit the benefits of an acquisition.

Under Statement of Financial Accounting Standard No. 142 we do not amortize goodwill but evaluate goodwill recorded in connection with acquisitions at least annually for impairment. As of June 30, 2007, we had approximately $540.7 million of goodwill recorded on our balance sheet, none of which was determined to be impaired as of that date. Goodwill impairments are based on the value of our reporting units, and reporting units that previously recognized impairment charges are prone to additional impairment charges if future revenue and expense forecasts or market conditions worsen after an impairment is recognized. We test the impairment of goodwill annually in our fourth fiscal quarter or more frequently if indicators of impairment arise. The timing of the formal annual test may result in charges to our statement of operations in our fourth fiscal quarter that could not have been reasonably foreseen in prior periods. New acquisitions, and any impairment of the value of purchased assets, could have a significant negative impact on our future operating results.

Acquisitions may also result in other charges, including stock-based compensation charges for assumed stock awards, restructuring charges and charges related to in process research and development. The timing and amount of such charges will be dependent on future acquisition and integration activities.

With respect to our investments in other companies, we may not realize a return on our investments, or the value of our investments may decline if the businesses in which we invest are not successful. Future acquisitions may also result in dilutive issuances of equity securities, the incurrence of debt, restructuring charges relating to the consolidation of operations and the creation of other intangible assets that could result in amortization expense or impairment charges, any of which could adversely affect our operating results.

Economic conditions in the U.S. and worldwide could adversely affect our revenues.

Our revenues and operating results depend on the overall demand for our products and services. In part due to improvements in the worldwide economy, as well as our acquisition of Mobile 365, our revenues for the quarter ending June 30, 2007 exceeded revenues for the quarter ending June 30, 2006. If the U.S. and worldwide economies do not continue their growth patterns, or if these economies weaken, either alone or in tandem with other factors beyond our control (including war, political unrest, shifts in market demand for our products, actions by competitors, etc.), we may not be able to maintain or expand our recent revenue growth.

If we fail to maintain or expand our relationships with strategic partners and indirect distribution channels our license revenues could decline.

We currently derive a significant portion of our license revenues from sales of our IPG and iAS products and services through non-exclusive distribution channels, including strategic partners, systems integrators (SIs), original equipment manufacturers (OEMs) and value-added resellers (VARs). We generally anticipate that sales of our products through these channels will account for a substantial portion of our software license revenues in the foreseeable future. Because most of our channel relationships are non-exclusive, there is a risk that some or all of them could promote or sell our competitors’ products instead of ours, or that they will be unwilling or unable to effectively sell new products that we may introduce. Additionally, if we are unable to expand our indirect channels, or these indirect channels fail to generate significant revenues in the future, our business could be harmed.

Our development, marketing and distribution strategies also depend in part on our ability to form strategic relationships with other technology companies. If these companies change their business focus, enter into strategic alliances with other companies or are

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acquired by our competitors or others, support for our products could be reduced or eliminated, which could have a material adverse effect on our business and financial condition.

System failures, delays and other problems could harm our reputation and business, cause us to lose customers and expose us to customer liability.

The success of Sybase 365 is highly dependent on its ability to provide reliable services to customers. These operations could be interrupted by any damage to or failure of our or our customers, or suppliers, computer software, hardware or networks, and our connections and outsourced service arrangements with third parties.

Sybase 365’s systems and operations are also vulnerable to damage or interruption from power loss, transmission cable cuts and other telecommunications failures, natural disasters, interruption of service due to potential facility migrations, computer viruses or software defects, physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events and errors by our employees or third-party service providers.

Because many of our services play a mission-critical role for our customers, any damage to or failure of the infrastructure we rely on, including that of our customers and vendors, could disrupt the operation of our network and the provision of our services, result in the loss of current and potential customers and expose us to potential customer liability.

Industry consolidation and other competitive pressures could affect prices or demand for our products and services, and our business may be adversely affected.

The IT industry and the market for our core database infrastructure products and services is becoming increasingly competitive due to a variety of factors including a maturing enterprise infrastructure software market and changes in customer IT spending habits. There is also a growing trend toward consolidation in the software industry. Continued consolidation within the software industry could create opportunities for larger software companies, such as IBM, Microsoft and Oracle, to increase their market share through the acquisition of companies that dominate certain lucrative market niches or that have loyal installed customer bases. Continued consolidation activity could pose a significant competitive disadvantage to us.

The significant purchasing and market power of larger companies may also subject us to increased pricing pressures. Many of our competitors have greater financial, technical, sales and marketing resources, and a larger installed customer base than us. In addition, our competitors’ advertising and marketing efforts could overshadow our own and/or adversely influence customer perception of our products and services, and harm our business and prospects as a result. To remain competitive, we must develop and promote new products and solutions, enhance existing products and retain competitive pricing policies, all in a timely manner. Our failure to compete successfully with new or existing competitors in these and other areas could have a material adverse impact on our ability to generate new revenues or sustain existing revenue levels.

The ability to rapidly develop and bring to market advanced products and services that are successful is crucial to maintaining our competitive position.

Widespread use of the Internet and fast-growing market demand for mobile and wireless solutions may significantly alter the manner in which business is conducted in the future. In light of these developments, our ability to timely meet the demand for new or enhanced products and services to support wireless and mobile business operations at competitive prices could significantly impact our ability to generate future revenues. We acquired XcelleNet and certain assets of Dejima in April 2004, to enhance our mobile, wireless and embedded solutions that form the foundation of our Unwired Enterprise initiative. In October 2005 we acquired Extended Systems Incorporated, in June 2006 we acquired Solonde AG, and in October 2006 we acquired certain assets of iFoundry in part to strengthen our Unwired Enterprise effort. In November 2006 we acquired Mobile 365, to extend our Unwired Enterprise effort with the addition of two new enterprise channels — wireless carriers and global content providers. If the market for unwired solutions does not continue to develop as we anticipate, if our solutions and services do not successfully compete in the relevant markets, or our new products are not widely adopted and successful, our competitive position and our operating results could be adversely affected.

If our existing customers cancel or fail to renew their technical support agreements, our technical support revenues could be adversely affected.

We currently derive a significant portion of our overall revenues from technical support services, which are included in service revenues. The terms of our standard software license arrangements provide for the payment of license fees and prepayment of first-year technical support fees. Support is renewable annually at the option of the end user. We have recently been experiencing increasing pricing pressure from customers when purchasing or renewing technical support agreements and this pressure may result in our reducing support fees or in lost support fees if we refuse to reduce our pricing, either of which could result in reduced revenue. If our existing customers cancel or fail to renew their technical support agreements, or if we are unable to generate additional support

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fees through the license of new products to existing or new customers, our business and future operating results could be adversely affected.

Pricing pressure in the mobile messaging market could adversely affect our operating results.

Competition and industry consolidation in the mobile messaging market have resulted in pricing pressure, which we expect to continue in the future. This pricing pressure could cause large reductions in the selling price of our services. For example, consolidation in the wireless services industry could give our customers increased transaction volume leverage in pricing negotiations. Our competitors or our customers’ in-house solutions may also provide services at a lower cost, significantly increasing pricing pressures on us. While historically pricing pressure has been largely offset by volume increases and the introduction of new services, in the future we may not be able to offset the effects of any price reductions.

Unanticipated delays or accelerations in our sales cycles could result in significant fluctuations in our quarterly operating results.

The length of our sales cycles varies significantly from product to product. The sales cycle for some of our IPG and iAS products can take up to 18 months to complete. Any delay or unanticipated acceleration in the closing of a large license or a number of smaller licenses could result in significant fluctuations in our quarterly operating results. For example, in the second quarter of 2004, the license revenue in IPG declined 15% from the prior year period, in part due to larger sales being delayed and a lengthening sales cycle. The length of the sales cycle may vary depending on a number of factors over which we may have little or no control, including the size and complexity of a potential transaction, the level of competition that we encounter in our selling activities and our potential customers’ internal budgeting process. Our sales cycle can be further extended for product sales made through third party distributors. As a result of the lengthy sales cycle, we may expend significant efforts over a long period of time in an attempt to obtain an order, but ultimately not complete the sale, or the order ultimately received may be smaller than anticipated.

Our mobile messaging customer contracts may not continue to generate revenues at or near our historical levels of revenues from these customers.

If our customers decide for any reason not to continue to purchase services from us at current levels or at current prices, to terminate their contracts with us or not to renew their contracts with us, our revenues would decline.

If we do not adapt to rapid technological change in the telecommunications industry, we could lose customers or market share.

The mobile market is characterized by rapid technological change, frequent new service introductions and changing customer demands. Significant technological changes could make our technology and services obsolete. Our success depends in part on our ability to adapt to our rapidly changing market by continually improving the features, functionality, reliability and responsiveness of our existing services and by successfully developing, introducing and marketing new features, services and applications to meet changing customer needs. We cannot assure you that we will be able to adapt to these challenges or respond successfully or in a cost-effective way to adequately meet them. Our failure to do so would impair our ability to compete, retain customers or maintain our financial performance. Our future revenues and profits will depend, in part, on our ability to sell to new market participants.

Restructuring activities and reorganizations in our sales model or business units may not succeed in increasing revenues and operating results.

Since 2000, we have implemented several restructuring plans in an effort to align our expense structure to our expected revenue. As a result of these restructuring activities, we have recorded gross restructuring charges totaling approximately $119 million through June 30, 2007. Our ability to significantly reduce our current cost structure in any material respects through future restructurings may be difficult without fundamentally changing elements of our current business. If we are unable to generate increased revenues or control our operating expenses going forward, our results of operations will be adversely affected.

Our sales model has evolved significantly during the past few years to keep pace with new and developing markets and changing business environments. If we have overestimated demand for our products and services in our target markets, or if we are unable to coordinate our sales efforts in a focused and efficient way, our business and prospects could be materially and adversely affected. For example, in the second quarter of 2005, our FFI business was integrated into IPG in an effort to better support the FFI product line and promote synergies between FFI and IPG technical resources. In the second quarter of 2006 IPG’s International and North American sales organizations were combined to form Worldwide Field Operations. Starting in January 2007, our corporate, product and field marketing operations were consolidated into a new Worldwide Marketing Operations organization. Other organizational changes in our sales or divisional model could have a direct effect on our results of operations depending on whether and how quickly and effectively our employees and management are able to adapt to and maximize the advantages these changes are intended to create. We cannot assure that these or other organizational changes in our sales or divisional model will result in any increase in revenues or profitability, and they could adversely affect our business.

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Our results of operations may depend on the compatibility of our products with other software developed by third parties.

Our future results may be affected if our products cannot interoperate and perform well with software products of other companies. Certain leading applications currently are not, and may never be, interoperable with our products. In addition, many of our principal products are designed for use with products offered by competitors. In the future, vendors of non-Sybase products may become less willing to provide us with access to their products, technical information, and marketing and sales support, which could harm our business and prospects.

We are subject to risks arising from our international operations.

We derive a substantial portion of our revenues from our international operations, and we plan to continue expanding our business in international markets in the future. In the second quarter of 2007, revenues outside North America represented 47 percent of our total revenues. As a result of our international operations, we are affected by economic, regulatory and political conditions in foreign countries, including changes in IT spending generally, the imposition of government controls, changes or limitations in trade protection laws, unfavorable changes in tax treaties or laws, natural disasters, labor unrest, earnings expatriation restrictions, misappropriation of intellectual property, acts of terrorism, continued unrest and war in the Middle East and other factors, which could have a material impact on our international revenues and operations. Our revenues outside North America could also fluctuate due to the relative immaturity of some markets, rapid growth in other markets, the strength of local economies, the general volatility of worldwide software markets and organizational changes we have made to accommodate these conditions.

We may not receive significant revenues from our current research and development efforts for several years, if at all.

Developing and localizing software is expensive and the investment in product development often involves a long payback cycle. We have and expect to continue making significant investments in software research and development and related product opportunities. Accelerated product introductions and short product life cycles require high levels of expenditures for research and development that could adversely affect our operating results if not offset by revenue increases. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position. Revenues may not be realized from particular research and development expenditures and revenues which are generated may occur significantly later than when the associated research and development costs were incurred.

We might experience significant errors or security flaws in our products and services.

Despite testing prior to their release, software products may contain errors or security flaws, particularly when first introduced or when new versions are released. Errors in our software products could affect the ability of our products to work with other hardware or software products, could delay the development or release of new products or new versions of products and could adversely affect market acceptance of our products. If we experience errors or delays in releasing new products or new versions of products, we could lose revenues. Our customers rely on our products and services for critical parts of their businesses and they may have a greater sensitivity to product errors and security vulnerabilities than customers for software products generally. Software product errors and security flaws in our products or services could expose us to product liability, performance and/or warranty claims as well as harm our reputation, which could impact our future sales of products and services. The detection and correction of any security flaws can be time consuming and costly.

Unanticipated changes in our tax rates could affect our future financial results.

Our future effective tax rates could be favorably or unfavorably affected by unanticipated changes in the valuation of our deferred tax assets and liabilities, the geographic mix of our revenue, or by changes in tax laws or their interpretation. In addition, we are subject to the continuous examination of our income tax returns by tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse effect on our operating results and financial condition.

We face exposure to adverse movements in foreign currency exchange rates.

We experience foreign exchange translation exposure on our net assets and transactions denominated in currencies other than the U.S. dollar. We do not utilize foreign currency hedging contracts to smooth the impact of converting non-U.S. dollar denominated revenues into U.S. dollars for financial reporting. Because we do not anticipate entering into currency hedges for non-U.S. dollar revenues, our future results will fluctuate based on the appreciation or depreciation of the U.S. dollar against major foreign currencies.

Due to the significance of our business conducted in currencies other than the U.S. dollar, our results of operations could be materially and adversely affected by fluctuations in foreign currency exchange rates, even though we take into account changes in exchange rates over time in our pricing strategy.

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As of June 30, 2007, we had identified net assets totaling $206.7 million associated with our EMEA operations, and $98.3 million associated with our Asia Pacific and Latin America operations. Accordingly, we may experience fluctuations in operating results as a result of translation gains and losses associated with these asset and liability values. In order to reduce the effect of foreign currency fluctuations on our and certain of our subsidiaries’ balance sheets, we utilize foreign currency forward exchange contracts (forward contracts) to hedge certain foreign currency transaction exposures. Specifically, we enter into forward contracts with a maturity of approximately 30 days to hedge against the foreign exchange exposure created by certain balances that are denominated in a currency other than the principal reporting currency of the entity recording the transaction. The gains and losses on the forward contracts are intended to mitigate the gains and losses on these outstanding foreign currency transactions and we do not enter into forward contracts for trading purposes. However, our efforts to manage these risks may not be successful. Failure to adequately manage our currency exchange rate exposure could adversely impact our financial condition and results of operations.

Growing market acceptance of “open source” software could cause a decline in our revenues and operating margins.

Growing market acceptance of open source software has presented both benefits and challenges to the commercial software industry in recent years. “Open source” software is made widely available by its authors and is licensed “as is” without charge for the license itself (there may be a charge for related services or rights). We have developed certain products to operate on the Linux platform, which has created additional sources of revenues. Additionally, we have incorporated other types of open source software into our products, allowing us to enhance certain solutions without incurring substantial additional research and development costs. Thus far, we have encountered no unanticipated material problems arising from our use of open source software. However, as the use of open source software becomes more widespread, certain open source technology could become competitive with our proprietary technology, which could cause sales of our products to decline or force us to reduce the fees we charge for our products, which could have a material adverse impact on our revenues and operating margins.

Insufficient protection for our intellectual property rights may have a material adverse affect on our results of operations or our ability to compete.

We attempt to protect our intellectual property rights in the United States and in selected foreign countries through a combination of reliance on intellectual property laws (including copyright, patent, trademark and trade secret laws) and registrations of selected patent, trademark and copyright rights in selected jurisdictions, as well as licensing and other agreements preventing the unauthorized disclosure and use of our intellectual property. We cannot assure you that these protections will be adequate to prevent third parties from copying or reverse engineering our products, from engaging in other unauthorized use of our technology, or from independently developing and marketing products or services that are substantially equivalent to or superior to our own. Moreover, third parties may be able to successfully challenge, oppose, invalidate or circumvent our patents, trademarks, copyrights and trade secret rights. We may elect or be unable to obtain or maintain certain protections for certain of our intellectual property in certain jurisdictions, and our intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States because of the differences in foreign laws concerning intellectual property rights. Lack of protection of certain intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition. Moreover, monitoring and protecting our intellectual property rights is difficult and costly. From time to time, we may be required to initiate litigation or other action to enforce our intellectual property rights or to establish their validity. Such action could result in substantial cost and diversion of resources and management attention and we cannot assure you that any such action will be successful.

If third parties claim that we are in violation of their intellectual property rights, it could have a negative impact on our results of operations or ability to compete.

Patent litigation involving software and telecom companies has increased significantly in recent years as the number of software and telecom patents has increased and as the number of patent holding companies has increased. We face the risk of claims that products or services that we provide have infringed the intellectual property rights of third parties. We are currently litigating with different parties regarding claims that our products or services violate their patents, we have in the past received similar claims and it is likely that such claims will be asserted in the future. See Footnote 7 in the Notes to the Condensed Consolidated Financial Statements for a discussion of our patent litigation with Telecommunications Systems, Inc. Also, in May 2005, we received a claim from TeliaSonera alleging that iAnywhere’s product now known as Answers Anywhere Mobile Edition infringes a TeliaSonera patent issued in Finland. We are currently involved in litigation in Finland regarding the ownership of the patent. No trial date has been set. Additionally, in February 2006, two Financial Fusion product customers received claims from a patent licensing company, Ablaise, Ltd., alleging that the customers’ websites are infringing. The customers’ websites are based on our products and the customers tendered defense of the claims to us under their contractual indemnification provisions. We are currently involved in litigation in the U.S. Federal courts regarding infringement and validity of the patents. No trial date has been set. We believe that our positions in each of the matters noted above are meritorious and we intend to pursue our positions vigorously.

Regardless of whether patent or other intellectual property claims have merit, they can be time consuming and expensive to defend or settle, and can harm our business and reputation. In particular, such claims may cause us to redesign our products or services, if

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feasible, or cause us to enter into royalty or licensing agreements in order to obtain the right to use the necessary intellectual property. Patent claimants may seek to obtain injunctions or other permanent or temporary remedies that prevent us from offering our products or services, and such injunctions could be granted by a court before the final resolution of the merits of a claim. Our competitors in both the U.S. and foreign countries, many of which have substantially greater resources than we have and have made substantial investments in competing technologies, may have applied for or obtained, or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make and sell our products and services. We have not conducted an independent review of patents issued to third parties. The large number of patents, the rapid rate of new patent issuances, the complexities of the technology involved and uncertainty of results and expense of potential litigation increase the risk of business assets and management’s attention being diverted to patent issues.

Laws and regulations affecting our customers and us and future laws and regulations to which they or we may become subject may harm our business.

When Sybase 365 delivers mobile messages on behalf of content owners into our network of wireless carriers, we are subject to legal, regulatory and wireless carrier requirements governing, among other things, the nature of content delivered, as well as necessary notice and disclosure to, and consent from, consumers receiving mobile messages. If we are unable to effectively prevent or detect violations of legal, regulatory or wireless carrier requirements, or otherwise unable to mitigate the effect of these violations, we may be subject to fines or the suspension or termination of some or all of our wireless carrier connections in one or more territories which could materially and adversely affect our business and results of operation. Also, we cannot predict when, or upon what terms and conditions, future regulation might occur or the effect regulation may have on our business or our markets.

Our key personnel are critical to our business, and we cannot assure that they will remain with us.

Our success depends on the continued service of our executive officers and other key personnel. In recent years, we have made additions and changes to our executive management team. For example, in August 2006, Thomas Volk, our Executive Vice President of International Field Operations, left us to pursue an opportunity in Germany and Steve Capelli, formerly Senior Vice President and General Manager North America Operations, was named President of Worldwide Field Operations. In connection with our acquisition of Mobile 365, Marty Beard was appointed to be the President of Sybase 365 in November 2006. In January 2007, Raj Nathan, formerly the head of IPG was named our Chief Marketing Officer, Billy Ho was promoted to head IPG’s technology operations and Mark Westover was promoted to head Corporate Development. Further changes involving executives and managers resulting from acquisitions, mergers and other events could increase the current rate of employee turnover, particularly in consulting, engineering and sales. We cannot be certain that we will retain our officers and key employees. In particular, if we are unable to hire and retain qualified technical, managerial, sales, finance and other employees it could adversely affect our product development and sales efforts, other aspects of our operations, and our financial results. Competition for highly skilled personnel in the software industry is intense. Our financial and stock price performance relative to the companies with whom we compete for employees, and the high cost of living in the San Francisco Bay Area, where our headquarters is located, could also impact the degree of future employee turnover.

Our sales to government clients subject us to risks including early termination, audits, investigations, sanctions and penalties.

We derive revenues from contracts with the United States government, state and local governments and their respective agencies, which may terminate most of these contracts at any time, without cause. Federal Government contracts may be affected by political pressure to reduce government spending. Our federal government contracts are subject to the approval of appropriations being made by the United States Congress to fund the expenditures under these contracts. Similarly, our contracts at the state and local levels are subject to government funding authorizations.

Additionally, government contracts are generally subject to audits and investigations which could result in various civil and criminal penalties and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business.

Changes in accounting and legal standards could adversely affect our future operating results.

During the past several years, various accounting guidance has been issued with respect to revenue recognition rules in the software industry. However, much of this guidance addresses software revenue recognition primarily from a conceptual level, and is silent as to specific implementation requirements. As a consequence, we have been required to make assumptions and judgments, in certain circumstances, regarding application of the rules to transactions not addressed by the existing rules. We believe our current business arrangements and contract terms have been properly reported under the current rules. However, if final interpretations of, or changes to, these rules necessitate a change in our current revenue recognition practices, our results of operations, financial condition and business could be materially and adversely affected.

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We adopted Share-Based Payment Statement 123(R), or SFAS 123(R) requiring companies to measure compensation cost for all share-based payments at fair value beginning January 1, 2006. This resulted in $9.8 million of share-based compensation expense net of income tax benefit for stock options and stock appreciation rights recorded during 2006. The actual effects of SFAS 123(R) depend on numerous factors including the assumptions used for the Black Scholes value model including expected volatility, term, and forfeiture rates, and the timing and amount of future share-based payments to employees.

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes: An Interpretation of FASB Statement No. 109, or FIN No. 48. FIN 48 prescribes a recognition and measurement threshold for a tax position taken or expected to be taken in a tax return. We adopted FIN No. 48 on January 1, 2007. It had no material effect on our financial statements.

In addition to the changes discussed above, the U.S. Congress enacted the Sarbanes-Oxley Act of 2002 in July 2002, providing for or mandating the implementation of extensive corporate governance reforms relating to public company financial reporting, internal controls, corporate ethics, and oversight of the accounting profession, among other areas. We are also subject to additional rules and regulations, including those enacted by the New York Stock Exchange where our common stock is traded. Compliance with existing or new rules that influence significant adjustments to our business practices and procedures could result in significant expense and may adversely affect our results of operations. Failure to comply with these rules could result in delayed financial statements and might adversely impact the price of our common stock.

In July 2007 the FASB Staff discussed (1) issues regarding the accounting for convertible debt instruments that may be settled in cash upon conversion (including partial settlement and (2) possible alternatives to address those issues through the issuance of an FASB Staff Position (FSP). Our current accounting and reporting related to our convertible debt instruments are in accordance with current accounting rules. If final interpretations of, or changes to, these rules necessitate a change in our current practices, our results of operations could be adversely affected.

The unfavorable outcome of litigation and other claims against us could have a material adverse impact on our financial condition and results of operations.

We are subject to a variety of claims and lawsuits from time to time, some of which arise in the ordinary course of our business. Adverse outcomes in some or all of such pending cases may result in significant monetary damages or injunctive relief against us. While management currently believes that resolution of these matters, individually or in the aggregate, will not have a material adverse impact on our financial position or results of operations, the ultimate outcome of litigation and other claims are subject to inherent uncertainties, and management’s view of these matters may change in the future. It is possible that our financial condition and results of operations could be materially adversely affected in any period in which the effect of an unfavorable final outcome becomes probable and reasonably estimable.

Our operations and financial results could be severely harmed by certain natural disasters.

Our headquarters, some of our offices, and some of our major customers’ facilities are located near major earthquake faults. We have not been able to maintain earthquake insurance coverage at reasonable costs. Instead, we rely on self-insurance and preventative safety measures. We currently ship most of our products from our Dublin, California facility near the site of our corporate headquarters. If a major earthquake or other natural disaster occurs, disruption of operations at that facility could directly harm our ability to record revenues for such quarter. This could, in turn, have an adverse impact on operating results.

Provisions of our corporate documents have anti-takeover effects that could prevent a change in control.

Provisions of our certificate of incorporation, bylaws, stockholder rights plan and Delaware law could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. These provisions include authorizing the issuance of preferred stock without stockholder approval, prohibiting cumulative voting in the election of directors, prohibiting the stockholders from calling stockholders meetings and prohibiting stockholder actions by written consent.

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ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     (e) Purchases of Equity Securities by the Issuer and Affiliated Purchasers

During the quarter ended June 30, 2007, the Company made the following repurchases of its Common Stock:

ISSUER PURCHASES OF EQUITY SECURITIES

							(d) Maximum
					(c) Total		Number (or
					Number of		Approximate
					Shares (or		Dollar Value)
					Units)		of Shares (or
	(a) Total				Purchased as		Units) that May
	Number of		(b) Average		Part of Publicly		Yet Be
	Shares (or		Price Paid per		Announced		Purchased
Period	Units)		Share (or Unit)		Plans or		Under the Plans
(2006)	Purchased (#)		($)		Programs (#)		or Programs ($)
April 1 — 30		233,200	$	24.23		233,200	$	225,556,000
May 1 — 31		1,467,791		23.41		1,467,791		191,195,000
June 1 — 30		—		—		—		—
Total		1,700,991	$	23.52		1,700,991	$	191,195,000

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ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our Annual Meeting of Stockholders was held on May 29, 2007. At the Annual Meeting, the following matters were submitted to a vote of stockholders and were approved, with the votes cast on each matter indicated:

1.	Election of three Class III directors, each to serve a three-year term expiring at the 2010 Annual Meeting of Stockholders or until a successor is duly elected and qualified. Cecilia Claudio, L. William Krause and Robert P. Wayman were the only nominees, and each was elected (79,879,578 votes were cast for the election of Ms. Claudio and 5,887,433 were withheld; 77,594,820 votes were cast for the election of Mr. Krause and 8,172,191 were withheld; and 83,293,570 votes were cast for the election of Mr. Wayman and 2,473,441 were withheld). There were no abstentions or broker non-votes. In addition to these directors, our board’s other incumbent directors (John Chen, Alan B. Salisbury, Richard C. Alberding, Jack E. Sum and Linda K. Yates) had terms that continued after the 2007 Annual Meeting. In June 2007 Michael Daniels was appointed to our Board of Directors to serve until the 2008 Annual Meeting.
2.	Ratification of the appointment of Ernst & Young LLP as independent auditors for the year ending December 31, 2007 (82,927,625 for; 2,804,266 against; 57,464 abstentions and no broker non-votes).
3.	Approval of amendments to the Certificate of Incorporation to reorganize the Board of Directors into a single class (84,791,192 for; 897,517 against; 100,643 abstentions and no broker non-votes).
4.	Approval of amendments to the 2003 Stock Plan that among other matters increase the share reserve by 4,000,000 shares (60,019,618 for; 18,276,127 against; 115,008 abstentions and no broker non-votes).

ITEM 5: OTHER INFORMATION

none.

ITEM 6: EXHIBITS

     (a) Exhibits furnished pursuant to Section 601 of Regulation S-K

The information required by this item is incorporated here by reference to the “Exhibit Index” attached to this Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

August 9, 2007	SYBASE, INC.
	By	/s/ PIETER VAN DER VORST
		Pieter Van der Vorst Senior Vice President and Chief Financial Officer (Principal Financial Officer)
	By	/s/ JEFFREY G. ROSS
		Jeffrey G. Ross Vice President and Corporate Controller (Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Description
3.1	Amended and Restate Certificate of Incorporation of Sybase, Inc. and Amended and Restated Certificate of Designation, Rights, Preferences and Privileges of Series A Participating Preferred Stock of Sybase, Inc.
3.2	Bylaws of the Company, as amended and restated on June 11, 2007
12	Computation of Ratio of Earnings to Fixed Charges
31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14 or 15d-14, as adopted pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14 or 15d-14, as adopted pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EX-3.1

EXHIBIT 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

SYBASE, INC.

     Sybase, Inc., a corporation organized and existing under the laws of the State of Delaware, does hereby certify:

     1. The name of the corporation is Sybase, Inc. Sybase, Inc. was originally incorporated under the same name, and the original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on May 6, 1991, a Restated Certificate of Incorporation was filed on June 12, 1991 which was further amended thereafter and a further Restated Certificate of Incorporation was filed on August 20, 1991 which was further amended thereafter.

     2. Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, the amendments to Article Eleventh of the Amended and Restated Certificate of Incorporation have been duly approved by the Board of Directors and stockholders of Sybase, Inc. All other provisions of the corporation’s prior Restated Certificate of Incorporation, as amended and the Corporation’s Amended and Restated Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock originally filed on August 5, 2002 are restated but not amended in this Amended and Restated Certificate of Incorporation.

     3. Pursuant to Section 242 of the General Corporation Law of the State of Delaware, this Amended and Restated Certificate of Incorporation amends and restates and integrates and further amends the provisions of the Restated Certificate of Incorporation of this corporation.

     4. The text of the Restated Certificate of Incorporation as is hereby restated and further amended to read in its entirety as follows:

FIRST:	The name of the Corporation is Sybase, Inc. (the “Corporation”).
SECOND:	The address of the Corporation’s registered office in the State of Delaware is The Prentice-Hall Corporation System, Inc., 2711 Centerville Road, Suite 400, City of Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc.
THIRD:	The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

FOURTH:	A. The total number of shares which the Corporation shall have authority to issue is two hundred eight million (208,000,000) shares of capital stock.
	B. Of such authorized shares, two hundred million (200,000,000) shares shall be designated “Common Stock”, and have a par value of $.001.
	C. Of such authorized shares, eight million (8,000,000) shares shall be designated “Preferred Stock”, and have a par value of $.001. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation is authorized to determine or alter the powers, preferences and rights and the qualifications, limitations or restrictions granted to or imposed upon any wholly unissued series of Preferred Stock, and within the limitations or restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any such series subsequent to the issuance of shares of that series, to determine the designation of any series, and to fix the number of shares of any series. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.
FIFTH:	The name and mailing address of the incorporator is as follows:

NAME	MAILING ADDRESS
Robert T. Clarkson	Wilson, Sonsini, Goodrich & Rosati Two Palo Alto Square Suite 900 Palo Alto, California 94306

SIXTH:	The Corporation is to have perpetual existence.
SEVENTH:	Elections of directors need not be by written ballot unless a stockholder demands election by written ballot at the meeting and before voting begins.
EIGHTH:	The number of directors which constitute the whole Board of Directors of the Corporation shall be designated in the Bylaws of the Corporation.
NINTH:	In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation.
TENTH:	To the fullest extent permitted by the Delaware General Corporation Law as the same exists or as it may hereafter be amended, no director of the Corporation

	shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.
	Neither any amendment nor repeal of this Article, nor the adoption of any provision of this Amended and Restated Certificate of Incorporation inconsistent with this Article, shall eliminate or reduce the effect of this Article in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.
ELEVENTH:	Section 1. At each annual meeting of stockholders, directors of the Corporation shall be elected to hold office until their successors have been duly elected and qualified at the next annual meeting of stockholders; except that if any such election shall not be so held, such election shall take place at a stockholders’ meeting called and held in accordance with the Delaware General Corporation Law. Notwithstanding the foregoing, each director elected prior to the 2008 Annual Meeting of Stockholders shall hold office until the expiration of the applicable three year term for which such director was elected and shall not become subject to election until the expiration of such director’s existing term.
	Section 2. The number of directors which constitute the whole Board of Directors of the Corporation shall be designated in the Bylaws of the Corporation.
	Section 3. Vacancies occurring on the Board of Directors for any reason may be filled by vote of a majority of the remaining members of the Board of Directors, although less than a quorum, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy shall hold office until the next succeeding annual meeting of stockholders of the Corporation and until his or her successor shall have been duly elected and qualified.
TWELFTH:	Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.
THIRTEENTH:	Effective upon the closing of the Corporation’s initial public offering of securities pursuant to a registration statement filed under the Securities Act of 1933, as amended, stockholders of the Corporation may not take action by written consent in lieu of a meeting but must take any actions at a duly called annual or special meeting.
FOURTEENTH:	Notwithstanding any other provisions of this Restated Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of the capital stock required by law or this Restated Certificate of Incorporation, the

affirmative vote of the holders of at least two-thirds (2/3) of the combined voting power of all of the then-outstanding shares of the Corporation entitled to vote shall be required to alter, amend or repeal Articles ELEVENTH, THIRTEENTH or FOURTEENTH or any provision thereof, unless such amendment shall be approved by a majority of the directors of the Corporation not affiliated or associated with any person or entity holding (or which has announced an intention to obtain) 26% or more of the voting power of the Corporation’s outstanding capital stock.

FIFTEENTH:

The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

     THE UNDERSIGNED, being the President, does make this certificate, hereby declaring and certifying that this is his act and deed and the facts herein stated are true, and accordingly, has hereunto set his hand this 11th day of June, 2007.

Sybase, Inc.
 

/s/ JOHN CHEN  

John Chen, Chairman, Chief Executive Officer 

and President 

Attest:
 

/s/ Dan Carl  

Dan Carl, Secretary 

AMENDED AND RESTATED CERTIFICATE OF DESIGNATION OF RIGHTS,
PREFERENCES AND PRIVILEGES OF
SERIES A PARTICIPATING PREFERRED STOCK OF SYBASE, INC.

          The undersigned, Daniel R. Carl, does hereby certify:

1. That he/she is duly elected and acting Secretary of Sybase, Inc., a Delaware corporation (the “Corporation”).

2. That pursuant to the authority conferred upon the Board of Directors by the Restated Certificate of Incorporation of the said Corporation, the said Board of Directors of the Corporation on July 31, 2002 adopted the following set forth below creating a series of 200,000 shares of Preferred Stock designated as Series A Participating Preferred Stock.

3. Pursuant to Section 242 of the General Corporation Law of the State of Delaware, On June 11^th 2007, the Corporation Amended and Restated its Certificate of Incorporation pursuant to approval of the Board of Directors and stockholders of Sybase, Inc.

4. Pursuant to Section 242 of the General Corporation Law of the State of Delaware, the Amended and Restated Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock of Sybase, Inc. is amended and restated as follows:

          “RESOLVED, that pursuant to the authority vested in the Board of Directors of the corporation by the Amended and Restated Certificate of Incorporation, the Board of Directors does hereby provide for the issue of a series of Preferred Stock of the Corporation and does hereby fix and herein state and express the designations, powers, preferences and relative and other special rights and the qualifications, limitations and restrictions of such series of Preferred Stock as follows:

          Section 1. Designation and Amount. The shares of such series shall be designated as “Series A Participating Preferred Stock.” The Series A Participating Preferred Stock shall have a par value of $0.001 per share, and the number of shares constituting such series shall be 200,000.

          Section 2. Proportional Adjustment. In the event that the Corporation shall at any time after the issuance of any share or shares of Series A Participating Preferred Stock (i) declare any dividend on Common Stock of the Corporation (“Common Stock”) payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Corporation shall simultaneously effect a proportional adjustment to the number of outstanding shares of Series A Participating Preferred Stock.

          Section 3. Dividends and Distributions.

               (a) Subject to the prior and superior right of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Participating Preferred Stock with respect to dividends, the holders of shares of Series A Participating Preferred Stock shall be entitled to receive when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the last day of January, April, July, and October in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Participating Preferred Stock.

               (b) The Corporation shall declare a dividend or distribution on the Series A Participating Preferred Stock as provided in paragraph (a) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock).

               (c) Dividends shall begin to accrue on outstanding shares of Series A Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof.

          Section 4. Voting Rights. The holders of shares of Series A Participating Preferred Stock shall have the following voting rights:

               (a) Each share of Series A Participating Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation.

               (b) Except as otherwise provided herein or by law, the holders of shares of Series A Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

               (c) Except as required by law, the holders of Series A Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent that they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

          Section 5. Certain Restrictions.

               (a) The Corporation shall not declare any dividend on, make any distribution on, or redeem or purchase or otherwise acquire for consideration any shares of Common Stock after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock unless concurrently therewith it shall declare a dividend on the Series A Participating Preferred Stock as required by Section 3 hereof.

               (b) Whenever quarterly dividends or other dividends or distributions payable on the Series A Participating Preferred Stock as provided in Section 3 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not

                    (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock;

                    (ii) declare or pay dividends on, or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock, except dividends paid ratably on the Series A Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

                    (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Participating Preferred Stock;

                    (iv) purchase or otherwise acquire for consideration any shares of Series A Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend

rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

               (c) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (a) of this Section 5, purchase or otherwise acquire such shares at such time and in such manner.

          Section 6. Reacquired Shares. Any shares of Series A Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein and in the Restated Certificate of Incorporation, as then amended.

          Section 7. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, the holders of shares of Series A Participating Preferred Stock shall be entitled to receive an aggregate amount per share equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock plus an amount equal to any accrued and unpaid dividends on such shares of Series A Participating Preferred Stock.

          Section 8. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged.

          Section 9. No Redemption. The shares of Series A Participating Preferred Stock shall not be redeemable.

          Section 10. Ranking. The Series A Participating Preferred Stock shall rank junior to all other series of the Corporation’s Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise.

          Section 11. Amendment. The Amended and Restated Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preference or special rights of the Series A Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority of the outstanding shares of Series A Participating Preferred Stock, voting separately as a series.

          Section 12. Fractional Shares. Series A Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Participating Preferred Stock.

          RESOLVED FURTHER, that the President, Chief Executive Officer or any Vice President and the Secretary or any Assistant Secretary of this corporation be, and they hereby are, authorized and directed to prepare and file a Certificate of Designation of Rights, Preferences and Privileges in accordance with the foregoing resolution and the provisions of Delaware law and to take such actions as they may deem necessary or appropriate to carry out the intent of the foregoing resolution.”

          I further declare under penalty of perjury that the matters set forth in the foregoing Amended and Restated Certificate of Designation are true and correct of my own knowledge.

          Executed at Dublin, California on June 11^th, 2007.

/s/ DANIEL R. CARL  

NAME: Daniel R. Carl 

TITLE: Vice President, General Counsel and Secretary 

EX-3.2

EXHIBIT 3.2

AMENDED AND RESTATED BYLAWS

OF

SYBASE, INC.
(as amended June 11, 2007)

TABLE OF CONTENTS

			Page
ARTICLE I CORPORATE OFFICES				1
	1.1	REGISTERED OFFICE		1
	1.2	OTHER OFFICES		1
ARTICLE II MEETINGS OF STOCKHOLDERS				1
	2.1	PLACE OF MEETINGS		1
	2.2	ANNUAL MEETING		2
	2.3	SPECIAL MEETINGS		2
	2.4	NOTICE OF STOCKHOLDERS’ MEETINGS		2
	2.5	ADVANCE NOTICE OF STOCKHOLDER BUSINESS		2
	2.6	MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE		4
	2.7	QUORUM		4
	2.8	ADJOURNED MEETING; NOTICE		4
	2.9	VOTING		5
	2.10	WAIVER OF NOTICE		5
	2.11	STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING		5
	2.12	RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS		5
	2.13	PROXIES		6
	2.14	LIST OF STOCKHOLDERS ENTITLED TO VOTE		6
	2.15	INSPECTORS OF ELECTION		7
	2.16	CONDUCT OF BUSINESS		8
ARTICLE III DIRECTORS				8
	3.1	POWERS		8
	3.2	NUMBER OF DIRECTORS		8
	3.3	ELECTION QUALIFICATION AND TERM OF OFFICE OF DIRECTORS		8
	3.4	RESIGNATION AND VACANCIES		8
	3.5	PLACE OF MEETINGS; MEETINGS BY TELEPHONE		9
	3.6	FIRST MEETINGS		9
	3.7	REGULAR MEETINGS		10
	3.8	SPECIAL MEETINGS; NOTICE		10
	3.9	QUORUM		10
	3.10	WAIVER OF NOTICE		11
	3.11	ADJOURNED MEETING; NOTICE		11
	3.12	CONDUCT OF BUSINESS		11
	3.13	BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING		11
	3.14	FEES AND COMPENSATION OF DIRECTORS		12

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TABLE OF CONTENTS

			Page
	3.15	APPROVAL OF LOANS TO OFFICERS		12
	3.16	REMOVAL OF DIRECTORS		12
ARTICLE IV COMMITTEES				12
	4.1	COMMITTEES OF DIRECTORS		12
	4.2	COMMITTEE MINUTES		13
	4.3	MEETINGS AND ACTION OF COMMITTEES		13
ARTICLE V OFFICERS				14
	5.1	OFFICERS		14
	5.2	APPOINTMENT OF OFFICERS		14
	5.3	SUBORDINATE OFFICERS		14
	5.4	REMOVAL AND RESIGNATION OF OFFICERS		14
	5.5	VACANCIES IN OFFICES		15
	5.6	REPRESENTATION OF SHARES OF OTHER CORPORATIONS		15
	5.7	AUTHORITY AND DUTIES OF OFFICERS		15
ARTICLE VI INDEMNITY				15
	6.1	INDEMNIFICATION OF DIRECTORS AND OFFICERS		15
	6.2	INDEMNIFICATION OF OTHERS		15
	6.3	INSURANCE		16
ARTICLE VII RECORDS AND REPORTS				16
	7.1	MAINTENANCE AND INSPECTION OF RECORDS		16
	7.2	INSPECTION BY DIRECTORS		17
ARTICLE VIII GENERAL MATTERS				17
	8.1	STOCK CERTIFICATES; PARTLY PAID SHARES		17
	8.2	LOST CERTIFICATES		18
	8.3	CONSTRUCTION; DEFINITIONS		18
	8.4	DIVIDENDS		18
	8.5	FISCAL YEAR		18
	8.6	SEAL		18
	8.7	TRANSFER OF STOCK		18
	8.8	STOCK TRANSFER AGREEMENTS		19
	8.9	REGISTERED STOCKHOLDERS		19

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TABLE OF CONTENTS

			Page
ARTICLE IX AMENDMENTS				19
ARTICLE X DISSOLUTION				20
ARTICLE XI CUSTODIAN				20
	11.1	APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES		20
	11.2	DUTIES OF CUSTODIAN		21
ARTICLE XII NOTICE BY ELECTRONIC TRANSMISSION				21
	12.1	NOTICE BY ELECTRONIC TRANSMISSION		21
	12.2	DEFINITION OF ELECTRONIC TRANSMISSION		22
	12.3	INAPPLICABILITY		22

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BYLAWS

OF

SYBASE, INC.
(as amended June 11, 2007)

ARTICLE I

CORPORATE OFFICES

1.1 REGISTERED OFFICE

     The registered office of the corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the corporation at such location is The Prentice-Hall Corporation System, Inc.

1.2 OTHER OFFICES

     The board of directors may at any time establish other offices at any place or places where the corporation is qualified to do business.

ARTICLE II

MEETINGS OF STOCKHOLDERS

2.1 PLACE OF MEETINGS

     Meetings of stockholders shall be held at the principal executive offices of the corporation, or at any other place, within or outside the State of Delaware, designated by the board of directors. The board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the corporation’s principal executive office.

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2.2 ANNUAL MEETING

     An annual meeting of stockholders shall be held for the election of directors at such date, time and place, either within or without the State of Delaware, as may be designated by resolution of the board of directors from time to time. Any other proper business may be transacted at the annual meeting.

2.3 SPECIAL MEETINGS

     A special meeting of the stockholders may be called at any time by the board of directors, chairperson of the board, chief executive officer or president (in the absence of a chief executive officer), but such special meetings may not be called by any other person or persons.

     No business may be transacted at such special meeting other than the business specified in such notice to stockholders.

2.4 NOTICE OF STOCKHOLDERS’ MEETINGS

     All notices of meetings of stockholders shall be in writing and shall be sent or otherwise given in accordance with either Section 2.6 or Section 12.1 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

2.5 ADVANCE NOTICE OF STOCKHOLDER BUSINESS

     (i) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than one hundred twenty (120) calendar days before the one year anniversary of the date on which the corporation first mailed its proxy statement to stockholders in connection with the previous year’s annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date of the prior year’s meeting, notice by the stockholder to be timely must be so received not later than the close of business on the later of one hundred twenty (120) calendar days in advance of such annual meeting and ten (10) calendar days following the date on which public announcement of the date of the

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meeting is first made. A stockholder’s notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the corporation’s books, of the stockholder proposing such business, (c) the class and number of shares of the corporation that are beneficially owned by the stockholder, (d) any material interest of the stockholder in such business, and (e) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “1934 Act”), in his capacity as a proponent to a stockholder proposal. Notwithstanding the foregoing, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholder’s meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (i). The chairman of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this paragraph (i), and, if he should so determine, he shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted.

     (ii) Only persons who are nominated in accordance with the procedures set forth in this paragraph (ii) shall be eligible for election as directors. Nominations of persons for election to the board of directors of the corporation may be made at a meeting of stockholders by or at the direction of the board of directors or by any stockholder of the corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this paragraph (ii). Such nominations, other than those made by or at the direction of the board of directors, shall be made pursuant to timely notice in writing to the secretary of the corporation in accordance with the provisions of paragraph (i) of this Section 2.5. Such stockholder’s notice shall set forth (a) as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of the corporation that are beneficially owned by such person, (D) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, and (E) any other information relating to such person that is required to be disclosed in solicitations of proxies for elections of directors, or is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation such person’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and (b) as to such stockholder giving notice, the information required to be provided pursuant to paragraph (i) of this Section 2.5. At the request of the board of directors, any person nominated by a stockholder for election as a director shall furnish to the secretary of the corporation that information required to be set forth in the stockholder’s notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this paragraph (ii). The chairman of the meeting shall, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures prescribed by

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these bylaws, and if he should so determine, he shall so declare at the meeting, and the defective nomination shall be disregarded.

     These provisions shall not prevent the consideration and approval or disapproval at an annual meeting of reports of officers, directors and committees of the board of directors, but in connection therewith no new business shall be acted upon at any such meeting unless stated, filed and received as herein provided. Notwithstanding anything in these bylaws to the contrary, no business brought before a meeting by a stockholder shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 2.5.

2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

     Written notice of any meeting of stockholders shall be given:

     (i) if mailed, when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation; or

     (ii) if electronically transmitted as provided in Section 12.1 of these bylaws.

     An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

2.7 QUORUM

     The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairman of the meeting or (ii) the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

     When a quorum is present or represented at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provisions of the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of the question.

2.8 ADJOURNED MEETING; NOTICE

     When a meeting is adjourned to another time or place, unless these bylaws otherwise require,

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notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

2.9 VOTING

     The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.12 and Section 2.14 of these bylaws, subject to the provisions of Sections 217 and 218 of the DGCL (relating to voting rights of fiduciaries, pledgors and joint owners of stock and to voting trusts and other voting agreements).

     Except as may otherwise be provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.

2.10 WAIVER OF NOTICE

     Whenever notice is required to be given under any provision of the DGCL or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.

2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

     Subject to the rights of the holders of the shares of any series of Preferred Stock or any other class of stock or series thereof having a preference over the Common Stock as dividend or upon liquidation, any action required or permitted to be taken by the stockholders of the corporation must be effected at a duly called annual or special meeting of stockholders of the corporation and may not be effected by any consent in writing by such stockholders.

2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS

     In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to express consent or dissent to corporate action in writing without a meeting (if otherwise permitted by these bylaws and the corporation’s certificate of incorporation), or entitled to receive payment of any dividend or other

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distribution or allotment of any rights or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall be not more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action.

     If the board of directors does not so fix a record date, the fixing of such record date shall be governed by the provisions of Section 213 of the DGCL.

     A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

2.13 PROXIES

     Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by a written proxy, signed by the stockholder and filed with the secretary of the corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder’s name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholder’s attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(c) of the DGCL.

2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE

     The officer who has charge of the stock ledger of the corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the corporation’s principal executive office. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall

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presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

2.15 INSPECTORS OF ELECTION

     A written proxy may be in the form of a telegram, cablegram, or other means of electronic transmission which sets forth or is submitted with information from which it can be determined that the telegram, cablegram, or other means of electronic transmission was authorized by the person.

     Before any meeting of stockholders, the board of directors shall appoint an inspector or inspectors of election to act at the meeting or its adjournment. The number of inspectors shall be either one (1) or three (3). If any person appointed as inspector fails to appear or fails or refuses to act, then the chairperson of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy.

     Such inspectors shall:

          (i) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;

          (ii) receive votes, ballots or consents;

          (iii) hear and determine all challenges and questions in any way arising in connection with the right to vote;

          (iv) count and tabulate all votes or consents;

          (v) determine when the polls shall close;

          (vi) determine the result; and

          (vii) do any other acts that may be proper to conduct the election or vote with fairness to all stockholders.

     The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

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2.16 CONDUCT OF BUSINESS

     Meetings of stockholders shall be presided over by the chairman of the board, if any, or in his absence by the president, or in his absence by a vice president, or in the absence of the foregoing persons by a chairman designated by the board of directors, or in the absence of such designation by a chairman chosen at the meeting. The secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. The chairman of any meeting of stockholders shall determine the order of business and the procedures at the meeting, including such matters as the regulation of the manner of voting and conduct of business.

ARTICLE III

DIRECTORS

3.1 POWERS

     Subject to the provisions of the DGCL and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors.

3.2 NUMBER OF DIRECTORS

     The number of directors of the corporation is fixed at nine (9). No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

3.3 ELECTION QUALIFICATION AND TERM OF OFFICE OF DIRECTORS

     Each director shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws. Election of directors need not be by written ballot.

3.4 RESIGNATION AND VACANCIES

     Any director may resign at any time upon written notice to the corporation. Stockholders may remove directors only for cause. Any vacancy occurring in the board of directors with or without cause may be filled by a majority of the remaining members of the board of directors, although such majority is less than a quorum, or by a plurality of the votes cast at a meeting of stockholders, and each director so elected shall hold office until the expiration of the term of office of the director whom he has replaced.

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     Unless otherwise provided in the certificate of incorporation or these bylaws:

          (i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.

          (ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.

     If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the DGCL.

     If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10) percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.

3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE

     The board of directors of the corporation may hold meetings, both regular and special, either within or outside the State of Delaware.

     Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

3.6 FIRST MEETINGS

     The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting,

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provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors.

3.7 REGULAR MEETINGS

     Regular meetings of the board of directors may be held without notice at such time and at such place, within or without the State of Delaware, as shall from time to time be determined by the board.

3.8 SPECIAL MEETINGS; NOTICE

     Special meetings of the board of directors may be held at such time and at such place, within or without the State of Delaware, whenever called by the chairman of the board, by the president, by the secretary or by any two directors.

     When given by the chairman of the board, the president or the secretary, notice of the time and place of special meeting shall be delivered personally or by telephone or facsimile to each director at least 24 hours in advance of the date and time of the special meeting.

     When given by any two directors, notice of the time and place of the special meeting shall be delivered personally or by telephone or facsimile to each director or sent by first-class mail to them, charges prepaid addressed to each director at that director’s address as it is shown on the records of the Corporation. Such notice shall be given at least four days before the time of the holding of the meeting. If the notice is mailed, it shall be deposited in the United States mail at least six days before the time of the holding of the meeting. If the notice is delivered personally or by telephone, facsimile or by telegram, it shall be delivered personally or by telephone, facsimile or to the telegraph company at least four days before the time of the holding of the meeting.

     Any oral notice (when given by either the chairman, the president, the secretary or any two directors) given either personally or by telephone may be communicated either to the director or to a person at the office of the director whom the person giving the notice has reason to believe will promptly communicate it to the director. No notice need specify the place for the meeting if the meeting is to be held at the principal executive office of the Corporation.

3.9 QUORUM

     At all meetings of the board of directors, a majority of the number of authorized directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation.

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3.10 WAIVER OF NOTICE

     Whenever notice is required to be given under any provision of the DGCL or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.

3.11 ADJOURNED MEETING; NOTICE

     If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

3.12 CONDUCT OF BUSINESS

     Meetings of the board of directors shall be presided over by the chairman of the board, if any, or in his absence by the president, or in their absence by a chairman chosen at the meeting. The secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. The chairman of any meeting shall determine the order of business and the procedures at the meeting.

3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

     Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the board or committee.

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3.14 FEES AND COMPENSATION OF DIRECTORS

     Unless otherwise restricted by the certificate of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

3.15 APPROVAL OF LOANS TO OFFICERS

     Subject to any restrictions on loans to directors or executive officers under applicable law, including but not limited to Section 402 of the Sarbanes-Oxley Act of 2002, the corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in this section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.

3.16 REMOVAL OF DIRECTORS

     Any director may be removed from office by the stockholders of the corporation only for cause.

     No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

ARTICLE IV

COMMITTEES

4.1 COMMITTEES OF DIRECTORS

     The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, with each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of

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any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in the bylaws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the DGCL, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the DGCL, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, or (v) amend the bylaws of the corporation; and, unless the board resolution establishing the committee, the bylaws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the DGCL.

4.2 COMMITTEE MINUTES

     Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.

4.3 MEETINGS AND ACTION OF COMMITTEES

     Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these bylaws, Section 3.5 (place of meetings and meetings by telephone), Section 3.7 (regular meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of adjournment), Section 3.12 (conduct of business) and Section 3.13 (action without a meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may also be called by resolution of the board of directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

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ARTICLE V

OFFICERS

5.1 OFFICERS

     The officers of the corporation shall be a president and a secretary. The corporation may also have, at the discretion of the board of directors, a chairperson of the board, a vice chairperson of the board, a chief executive officer, a chief financial officer or treasurer, one or more vice presidents, one or more assistant vice presidents, one or more assistant treasurers, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.

5.2 APPOINTMENT OF OFFICERS

     The board of directors shall appoint the officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 and 5.5 of these bylaws, subject to the rights, if any, of an officer under any contract of employment.

5.3 SUBORDINATE OFFICERS

     The board of directors may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board may from time to time determine.

5.4 REMOVAL AND RESIGNATION OF OFFICERS

     Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board.

     Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

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5.5 VACANCIES IN OFFICES

     Any vacancy occurring in any office of the corporation shall be filled by the board of directors or as provided in Section 5.2.

5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS

     The chairperson of the board, the president, any vice president, the treasurer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

5.7 AUTHORITY AND DUTIES OF OFFICERS

     All officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors or the stockholders and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the board.

ARTICLE VI

INDEMNITY

6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS

     The corporation shall, to the maximum extent and in the manner permitted by the DGCL, indemnify each of its directors and officers against expenses (including attorneys’ fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.1, a “director” or “officer” of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, including, without limitation, any direct or indirect subsidiary of the corporation, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

6.2 INDEMNIFICATION OF OTHERS

     The corporation shall have the power, to the extent and in the manner permitted by the DGCL, to indemnify each of its employees and agents (other than directors and officers) against

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expenses (including attorneys’ fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.2, an “employee” or “agent” of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including, without limitation, any direct or indirect subsidiary of the corporation, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

6.3 INSURANCE

     The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of the DGCL.

ARTICLE VII

RECORDS AND REPORTS

7.1 MAINTENANCE AND INSPECTION OF RECORDS

     The corporation shall, either at its principal executive office or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records.

     Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business.

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7.2 INSPECTION BY DIRECTORS

     Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

ARTICLE VIII

GENERAL MATTERS

8.1 STOCK CERTIFICATES; PARTLY PAID SHARES

     The shares of a corporation shall be represented by certificates, provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and, upon request, every holder of uncertificated shares, shall be entitled to have a certificate signed by, or in the name of the corporation by the chairman or vice-chairman of the board of directors, or the president or vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

     The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

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8.2 LOST CERTIFICATES

     Except as provided in this Section 8.2, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnity it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

8.3 CONSTRUCTION; DEFINITIONS

     Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

8.4 DIVIDENDS

     The directors of the corporation, subject to any restrictions contained in the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock pursuant to the DGCL. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock.

     The directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve.

8.5 FISCAL YEAR

     The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors.

8.6 SEAL

     The corporation may adopt a corporate seal, which may be altered at pleasure, and may use the same by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

8.7 TRANSFER OF STOCK

     Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto,

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cancel the old certificate, and record the transaction in its books.

8.8 STOCK TRANSFER AGREEMENTS

     The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

8.9 REGISTERED STOCKHOLDERS

     The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE IX

AMENDMENTS

     These bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws.

     Notwithstanding any other provision of these bylaws or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of the capital stock required by law or by these bylaws, the affirmative vote of at least two-thirds (2/3) of the combined voting power of all of the then-outstanding shares of the corporation entitled to vote shall be required to alter, amend or repeal Article II, Section 2.9 or Section 2.11 of these bylaws or this Article IX or any provision thereof, or to add or amend any other bylaw in order to change or nullify the effect of such provisions, unless such amendment shall be approved by a majority of the directors of the corporation not affiliated or associated with any person or entity holding (or which has announced an intent to obtain) 26% or more of the voting power of the corporation’s outstanding capital stock.

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ARTICLE X

DISSOLUTION

     If it should be deemed advisable in the judgment of the board of directors of the corporation that the corporation should be dissolved, the board, after the adoption of a resolution to that effect by a majority of the whole board at any meeting called for that purpose, shall cause notice to be mailed to each stockholder entitled to vote thereon of the adoption of the resolution and of a meeting of stockholders to take action upon the resolution.

     At the meeting a vote shall be taken for and against the proposed dissolution. If a majority of the outstanding stock of the corporation entitled to vote thereon votes for the proposed dissolution, then a certificate stating that the dissolution has been authorized in accordance with the provisions of Section 275 of the DGCL and setting forth the names and residences of the directors and officers shall be executed, acknowledged, and filed and shall become effective in accordance with Section 103 of the DGCL. Upon such certificate’s becoming effective in accordance with Section 103 of the DGCL, the corporation shall be dissolved.

ARTICLE XI

CUSTODIAN

11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES

     The Court of Chancery, upon application of any stockholder, may appoint one or more persons to be custodians and, if the corporation is insolvent, to be receivers, of and for the corporation when:

     (i) at any meeting held for the election of directors the stockholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors; or

     (ii) the business of the corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the corporation that the required vote for action by the board of directors cannot be obtained and the stockholders are unable to terminate this division; or

     (iii) the corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets.

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11.2 DUTIES OF CUSTODIAN

     The custodian shall have all the powers and title of a receiver appointed under Section 291 of the DGCL, but the authority of the custodian shall be to continue the business of the corporation and not to liquidate its affairs and distribute its assets, except when the Court of Chancery otherwise orders and except in cases arising under Sections 226(a)(3) or 352(a)(2) of the DGCL.

ARTICLE XII

NOTICE BY ELECTRONIC TRANSMISSION

12.1 NOTICE BY ELECTRONIC TRANSMISSION

     Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any such consent shall be deemed revoked if:

     (i) the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent; and

     (ii) such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice.

However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

     Any notice given pursuant to the preceding paragraph shall be deemed given:

     (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

     (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;

     (iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

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     (iv) if by any other form of electronic transmission, when directed to the stockholder.

     An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

12.2 DEFINITION OF ELECTRONIC TRANSMISSION

     An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

12.3 INAPPLICABILITY

     Notice by a form of electronic transmission shall not apply to Sections 164, 296, 311, 312 or 324 of the DGCL.

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EX-12

Exhibit 12

Sybase, Inc.
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands, except for ratios)
(Full year for all periods except for six months June 30, 2007)

	Six months
	ended
	June 30,
	2007		2006		2005		2004		2003		2002
Earnings:
Income before income taxes and cumulative effect of an accounting change	$	67,135	$	161,318	$	136,714	$	100,966	$	118,095	$	71,209
Add: Fixed charges		10,907		21,699		20,233		11,988		13,204		14,556
Total Earnings, as defined		78,042		183,017		156,947		112,954		131,299		85,765
Fixed Charges
Interest Expense		4,749		9,516		8,116		308		62		198
Amortization of debt expense		985		1,969		1,671		—		—		—
Estimated interest portion on rental expense		5,173		10,214		10,446		11,680		13,142		14,358
Total Fixed Charges		10,907		21,699		20,233		11,988		13,204		14,556
Ratio of earnings to fixed charges		7.2		8.4		7.8		9.4		9.9		5.9

EX-31.1

Exhibit 31.1

CERTIFICATION

I, John S. Chen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sybase, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 9, 2007

/s/ JOHN S. CHEN

John S. Chen
Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Pieter A. Van der Vorst, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sybase, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 9, 2007

/s/ PIETER A. VAN DER VORST

Pieter A. Van der Vorst
Senior Vice President and
Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, John S. Chen, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Sybase, Inc. on Form 10-Q for the quarterly period ended June 30, 2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report fairly presents in all material respects the financial condition and results of operations of Sybase, Inc.

By:	/s/ JOHN S. CHEN
Name:	John S. Chen
Title:	Chief Executive Officer and President

I, Pieter A. Van der Vorst, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Sybase, Inc. on Form 10-Q for the quarterly period ended June 30, 2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report fairly presents in all material respects the financial condition and results of operations of Sybase, Inc.

By:	/s/ PIETER A. VAN DER VORST
Name:	Pieter A. Van der Vorst
Title:	Senior Vice President and Chief Financial Officer