EX-99.1 2 f13652exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
For Financial Inquiries, Contact:
Lynne Farris
Sybase Investor Relations
lfarris@sybase.com
(925) 236-8797
For Press Inquiries, Contact:
Heather Peterson
Sybase Public Relations
heatherp@sybase.com
(925) 236-6517
SYBASE REPORTS 2005 THIRD QUARTER RESULTS,
EXCEEDING FIRST CALL EPS CONSENSUS ESTIMATES
¨ Mobile & Wireless Business Grows 12%
¨ Company Revises Full-Year EPS Upward
DUBLIN, Calif. – October 20, 2005 – Sybase, Inc. (NYSE: SY), a leading provider of enterprise infrastructure and wireless software, today reported financial results for the 2005 third quarter ended September 30, 2005. Pro forma net income for the third quarter reached $30.1 million, or earnings of $0.33 per share on a diluted basis (EPS). This compares with pro forma net income of $27.4 million, or EPS of $0.29 for the 2004 third quarter.
     GAAP net income for the 2005 third quarter was $28.0 million, or EPS of $0.30. This compares with GAAP net income of $17.8 million, or EPS of $0.19 for the third quarter of 2004.
     Pro forma amounts exclude amortization of certain expenses including certain purchased intangibles, unearned stock-based compensation, and restructuring costs. Accompanying this release is a reconciliation of pro forma and GAAP amounts for the 2005 third quarter.
     Total revenues for the third quarter were $199.3 million compared with $198.7 million for the third quarter of 2004. License revenues were $69.7 million for the 2005 third quarter compared with $70.4 million for the same quarter a year ago.

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     Pro forma operating income for the 2005 third quarter was $36.2 million, representing 18% operating margin, compared with pro forma operating income of $36.3 million, or 18% operating margin, for the third quarter of 2004.
     Operating income for the 2005 third quarter calculated in accordance with generally accepted accounting principles (GAAP) was $30.2 million, representing 15% operating margin, compared with operating income of $21.5 million, or 11% operating margin for the third quarter of 2004.
     “We’re pleased with our performance this quarter, as we delivered solid results against tough comparables from the third quarter of last year. We beat our expectations on the bottom line, generated solid cash flow from operations, and increased mobile and wireless revenues by 12% year-over-year,” said John Chen, chairman, CEO and president of Sybase. “Additionally, we successfully launched a major upgrade to our flagship database, Adaptive Server Enterprise 15.0, which will drive future revenue growth.
     “We are confident in the strength of Sybase’s business fundamentals and our ability to achieve year-end targets. Based on our progress to date, we are revising upward our full-year pro forma EPS from around $1.11 to a range of $1.16 to $1.20 on a fully diluted basis. We’re also raising our GAAP EPS from around $0.76 to a range of $0.89 to $0.93 on a fully diluted basis,” concluded Mr. Chen.
Balance Sheet and Other Data
     At September 30, 2005, Sybase reported $926.5 million in cash and cash investments, including restricted cash of $7.7 million. The company generated $14.7 million in cash flow from operations in the third quarter.
     Sybase repurchased approximately $9.6 million worth of its stock during the 2005 third quarter. Approximately $84.1 million remains authorized in the company’s current share repurchase program.
     Days sales outstanding for the second quarter was 52 days.

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Conference Call and Webcast Information
     The Sybase 2005 third quarter conference call and simultaneous Webcast is scheduled to begin at 7:30 a.m., Pacific Time/10:30 a.m. Eastern Time, on Thursday, October 20, 2005. To access the live Webcast, please visit www.fulldisclosure.com or Sybase’s Website at www.sybase.com at least 20 minutes prior to the call to download any necessary audio or plug-in software. A telephone replay will be available approximately two hours after the conference call ends and will be available until 10 p.m. Pacific Time on October 27, 2005. To access the replay, please dial (888) 203-1112 for domestic access and (719) 457-0820 for international callers; the access code for the telephone replay is #4904033. Additionally, the archived Webcast will be available for 60 days, through December 20, 2005.
About Sybase, Inc.
     Sybase is the largest global enterprise software company exclusively focused on managing and mobilizing information from the data center to the point of action. Sybase provides open, cross-platform solutions that securely deliver information anytime, anywhere, enabling customers to create an information edge. The world’s most critical data in commerce, finance, government, healthcare, and defense runs on Sybase. For more information, visit the Sybase Website: http://www.sybase.com.
Forward-Looking Statements
     Certain statements in this release concerning Sybase, Inc. and its prospects and future growth are forward-looking and involve a number of uncertainties and risks. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to, the performance of the global economy and growth in software industry sales; possible disruptive effects of organizational or personnel changes; the success of certain business combinations engaged in by the company or by competitors; political unrest or acts of

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war; market acceptance of the company’s products and services; customer and industry analyst perception of the company and its technology vision and future prospects; and other factors described in Sybase, Inc.’s reports filed with the U.S. Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2004 and its most recent quarterly report on Form 10-Q for the three-month period ended June 30, 2005.

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Sybase Third Quarter 2005 Selected Highlights
Sybase announcements during the third quarter of 2005 expanded upon the company’s leadership in the relational database market with the launch of ASE 15 and the mobile enterprise computing market, with particular focus on the extension of new product offerings. Additionally, Sybase continued to increase its leadership in the mobile applications market with the proposed acquisition of Extended Systems.
Mobile Enterprise Computing:
- Announced Unwired Accelerator 7.0 and Unwired Orchestrator 5.0 to further enhance enterprise customers’ ability to quickly create composite applications and then easily extend them to their mobile workforce: http://www.sybase.com/detail?id=1037147
- Unveiled the Carrier Edition of Sybase® mFolio, a dynamic Web content mobilization data service offering: http://www.sybase.com/detail?id=1037689
- Launched the next generation of iAnywhere’s RFID software platform, RFID Anywhere™ 2.0, enabling the development and management of robust, highly distributed, scalable RFID solutions: http://www.ianywhere.com/press_releases/rfid_anywhere_2_0.html
- Introduced iAnywhere’s Sales Anywhere® for Salesforce.com, spotlighting leadership in providing easily deployable and maintainable hosted-service offerings for the mobile CRM community: http://www.sybase.com/detail?id=1037451
- Signed an agreement to acquire Extended Systems, a pioneer in mobile application software for the enterprise, which will be integrated into Sybase’s iAnywhere subsidiary: http://www.sybase.com/detail?id=1036884
- Announced that Sybase and Xiamen Xiangtone will pioneer a mobile search service on Answers Anywhere™ software, enabling cell phone users to access information via SMS or WAP: http://www.sybase.com/detail?id=1036905
- Unveiled Trade Lifecycle Monitor Solution for next-generation, real-time business process tracking: http://www.sybase.com/detail?id=1037383
- Showcased Unwired Enterprise Success at Annual Sybase Techwave Conference: http://www.sybase.com/detail?id=1037149
- Announced product support for Palm’s future Windows Mobile-Based Treo Smartphones, enabling companies to effectively manage and move critical data and content from the data center out to the front lines of business and back: http://www.ianywhere.com/press_releases/palm_treo_smartphones.html
Data Management Initiatives:
- Globally launched Sybase ASE 15 to meet the increasing demands of large databases and high transaction volumes, while providing a cost-effective RDBMS: http://www.sybase.com/detail?id=1037440
- Announced Sybase and IBM are bundling Sybase ASE with IBM OpenPower servers to provide customers with reduced cost and risk for managing their data on a Linux platform; also announced Sybase® IQ on OpenPower: http://www.sybase.com/detail?id=1036906

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- Announced a new partnership between Sybase and Charles River Development (Charles River), which will enable Charles River to develop its award-winning software suite for the institutional investment managers on Sybase’s high-performance ASE: http://www.sybase.com/detail?id=1037703
- Introduced early beta registration for iAnywhere’s SQL Anywhere® Jasper and revealed a few key product details: http://www.ianywhere.com/press_releases/sql_anywhere_beta.html
- Revealed new data management solutions customers, including ELMO ICT Solutions, Security Applications, Inc. (SAI), and Servoy BV, who have selected iAnywhere’s SQL Anywhere Studio® as the data management solution for applications utilizing the Linux platform: http://www.ianywhere.com/press_releases/sql_anywhere_linux.html
Developer Initiatives:
- Announced beta availability for PowerBuilder® 10.5, PowerDesigner® 12, PocketBuilder™ 2.0.3 and DataWindow® .NET 2.0 to enable customers to successfully initiate rapid design, development, and deployment for the types of applications needed to achieve an application edge over competitors: http://www.sybase.com/detail?id=1037148
- Launched Sybase’s iAnywhere RFID Insider Developer Program, a new Web-based resource center for RFID developers, demonstrating continued support of the developer community: http://www.sybase.com/detail?id=1037683
- Unveiled iAnywhere’s Answers Anywhere 4.0, a scalable middleware platform for building easy-to-use application interfaces that feature powerful context understanding and natural language capabilities, spotlighting leadership in the mobile middleware market: http://www.ianywhere.com/press_releases/answers_anywhere_4_0.html
- Announced approval of the Sybase new Data Tools Platform (DTP) project proposal in conjunction with The Eclipse Foundation: http://www.sybase.com/detail?id=1037271
Industry Accolades:
- Presented iAnywhere’s fifth annual Innovator Awards to American Technology Corporation, ELMO ICT Solutions and Eleven Technology: http://www.sybase.com/detail?id=1037156
- Announced that Sybase ASE and Sybase IQ customers — including, Citadel, comScore Networks, GuangDong Telecom Co.Ltd., Health Insurance Review Agency and Nielsen Media Research — received a total of 26 Winter Corp. 2005 TopTen awards: http://www.sybase.com/detail?id=1037607
Sybase, Answers Anywhere, mFolio, Sales Anywhere, RFID Anywhere, SQL Anywhere Studio, PowerBuilder, Power Designer, PocketBuilder, and DataWindow are trademarks of Sybase, Inc. or its subsidiaries. All other names may be trademarks of the companies with which they are associated.

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SYBASE, INC.
RECONCILIATION TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(UNAUDITED)
                                                                 
    Three Months Ended September 30, 2005     Three Months Ended September 30, 2004  
            Pro forma                           Pro forma            
(In thousands, except per share data)   GAAP   Adjustments (2)           Pro forma     GAAP   Adjustments (2)           Pro forma  
             
Revenues:
                                                                
License fees
   $ 69,739       —             $ 69,739     $ 70,380       —             $ 70,380  
Services
     129,588       —               129,588       128,338       —               128,338  
                                     
Total revenues
     199,327       —               199,327       198,718       —               198,718  
 
                                                                
Costs and expenses:
                                                                
Cost of license fees
     10,993       (2,046 )     a       8,947       15,566       (4,710 )     a       10,856  
Cost of services
     37,980       (126 )     b       37,854       39,757       (16 )     b       39,741  
Sales and marketing
     59,655       17       b       59,672       59,254       (83 )     b       59,171  
Product development and engineering
     34,932       (10 )     b       34,922       29,114       (19 )     b       29,095  
General and administrative
     23,873       (2,152 )     b       21,721       24,034       (508 )     b       23,526  
Amortization of other purchased intangibles
     1,677       (1,677 )     a       —       1,677       (1,677 )     a       —  
Reversal of purchase accounting accrual
     —       —       c       —       (2,677 )     2,677       c       —  
Cost of restructure
     21       (21 )     d       —       10,479       (10,479 )     d       —  
                                     
 
                                                                
Total costs and expenses
     169,131       (6,015 )             163,116       177,204       (14,815 )             162,389  
                                     
 
                                                                
Operating income
     30,196       6,015               36,211       21,514       14,815               36,329  
 
                                                                
Interest income and expense and other, net
     3,881       —               3,881       2,518       —               2,518  
                                     
 
                                                                
Income before income taxes
     34,077       6,015               40,092       24,032       14,815               38,847  
 
                                                                
Provision for income taxes
     6,090       3,856       e       9,946       6,201       5,186       e       11,387  
                                     
 
                                                                
Net income
   $ 27,987     $ 2,159             $ 30,146     $ 17,831     $ 9,629             $ 27,460  
                                     
 
                                                                
Basic net income per share
   $ 0.31     $ 0.03             $ 0.34     $ 0.19     $ 0.10             $ 0.29  
                                     
 
                                                                
Shares used in computing basic net income per share
     89,634       89,634               89,634       94,500       94,500               94,500  
                                     
 
                                                                
Diluted net income per share
   $ 0.30     $ 0.03             $ 0.33     $ 0.19     $ 0.10             $ 0.29  
                                     
 
                                                                
Shares used in computing diluted net income per share
     92,431       92,431               92,431       95,961       95,961               95,961  
                                     
 
(1)   Use of Pro Forma Financial Information
 
    To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), Sybase uses pro forma measures of operating results, net income and earnings per share, which are adjusted from GAAP-based results to exclude certain costs and expenses. These pro forma adjustments are provided to enhance an overall understanding of our current financial performance and our prospects for the future, and are one of the primary indicators management uses for planning and forecasting future periods. We have excluded such items, including purchase accounting adjustments in connection with acquisitions, and the cost of restructuring because we do not believe they are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions and restructurings) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP.
 
(2)   Proforma adjustments
 
    Proforma adjustments include the following: (a) amortization of purchased intangibles; (b) amortization of unearned stock compensation; (c) reversal of purchase accounting accrual; (d) cost of restructuring charges; (e) income tax effect of proforma adjustments.

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SYBASE, INC.
RECONCILIATION TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(UNAUDITED)
                                                 
    Nine Months Ended September 30, 2005     Nine Months Ended September 30, 2004  
            Pro forma                     Pro forma        
(In thousands, except per share data)   GAAP     Adjustments (2)     Pro forma     GAAP     Adjustments (2)     Pro forma  
Revenues:
                                                
License fees
   $ 200,362       —     $ 200,362     $ 188,713       —     $ 188,713  
Services
     395,284       —       395,284       381,195       —       381,195  
                         
Total revenues
     595,646       —       595,646       569,908       —       569,908  
 
                                                
Costs and expenses:
                                                
Cost of license fees
     36,973       (9,097 )a     27,876       44,704       (13,108 )a     31,596  
Cost of services
     118,248       (292 )b     117,956       122,903       (123 )b     122,780  
Sales and marketing
     184,593       (207 )b     184,386       179,688       (279 )b     179,409  
Product development and engineering
     102,764       (26 )b     102,738       88,922       (58 )b     88,864  
General and administrative
     69,183       (5,143 )b     64,040       67,612       (3,012 )b     64,600  
Amortization of other purchased intangibles
     5,031       (5,031 )a     —       3,462       (3,462 )a     —  
Reversal of purchase accounting accrual
     —       — c     —       (2,677 )     2,677 c     —  
Cost of restructure
     302       (302 )d     —       10,351       (10,351 )d     —  
                         
 
                                                
Total costs and expenses
     517,094       (20,098 )     496,996       514,965       (27,716 )     487,249  
                         
 
                                                
Operating income
     78,552       20,098       98,650       54,943       27,716       82,659  
 
                                                
Interest income and expense and other, net
     10,620       —       10,620       8,495       —       8,495  
                         
Income before income taxes
     89,172       20,098       109,270       63,438       27,716       91,154  
 
                                                
Provision for income taxes
     31,984       1,483 e     33,467       19,599       8,526 e     28,125  
                         
 
                                                
Net income
   $ 57,188     $ 18,615     $ 75,803     $ 43,839     $ 19,190     $ 63,029  
                       
 
                                                
Basic net income per share
   $ 0.63     $ 0.21     $ 0.84     $ 0.46     $ 0.20     $ 0.66  
                       
 
                                                
Shares used in computing basic net income per share
     90,403       90,403       90,403       95,973       95,973       95,973  
                       
 
                                                
Diluted net income per share
   $ 0.62     $ 0.20     $ 0.82     $ 0.44     $ 0.20     $ 0.64  
                       
 
                                                
Shares used in computing diluted net income per share
     92,961       92,961       92,961       98,522       98,522       98,522  
                       
 
(1)   Use of Pro Forma Financial Information
 
    To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), Sybase uses pro forma measures of operating results, net income and earnings per share, which are adjusted from GAAP-based results to exclude certain costs and expenses. These pro forma adjustments are provided to enhance an overall understanding of our current financial performance and our prospects for the future, and are one of the primary indicators management uses for planning and forecasting future periods. We have excluded such items, including purchase accounting adjustments in connection with acquisitions, and the cost of restructuring because we do not believe they are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions and restructurings) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP.
 
(2)   Proforma adjustments
 
    Proforma adjustments include the following: (a) amortization of purchased intangibles; (b) amortization of unearned stock compensation; (c) reversal of purchase accounting accrual; (d) cost of restructuring charges; (e) income tax effect of proforma adjustments.

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SYBASE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    September 30,     December 31,  
(In thousands, except share and per share data)   2005     2004  
    (Unaudited)          
Current assets:
                
Cash and cash equivalents
   $ 412,463     $ 321,417  
Short-term investments
     371,261       158,217  
 
            
Total cash, cash equivalents and short-term cash investments
     783,724       479,634  
 
                
Restricted cash
     5,073       5,356  
Accounts receivable, net
     116,189       157,897  
Deferred income taxes
     8,697       11,205  
Other current assets
     18,762       14,790  
 
            
 
                
Total current assets
     932,445       668,882  
 
                
Long-term cash investments
     135,125       33,998  
Restricted long-term cash investments
     2,600       2,600  
Property, equipment and improvements, net
     56,787       64,371  
Deferred income taxes
     44,660       39,440  
Capitalized software, net
     66,909       61,771  
Goodwill, net
     208,412       214,110  
Other purchased intangibles, net
     60,660       67,208  
Other assets
     37,698       31,142  
 
            
 
                
Total assets
   $ 1,545,296     $ 1,183,522  
 
            
 
                
Current liabilities:
                
Accounts payable
   $ 9,750     $ 11,962  
Accrued compensation and related expenses
     43,882       43,632  
Accrued income taxes
     49,966       32,595  
Other accrued liabilities
     69,270       81,715  
Deferred revenue
     181,244       208,741  
 
            
 
                
Total current liabilities
     354,112       378,645  
 
                
Other liabilities
     34,874       33,121  
Long-term deferred revenue
     4,959       10,170  
Minority interest
     5,030       5,030  
Long-term convertible debt
     460,000       —  
 
                
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 (2004 - 105,337,362)
     105       105  
Additional paid-in capital
     955,421       940,806  
Accumulated deficit
     (10,873 )     (66,690 )
Other comprehensive income
     20,469       49,356  
Less: Cost of treasury stock (14,232,638 shares and 2004 - 9,818,385)
     (262,551 )     (159,617 )
Unearned compensation
     (16,250 )     (7,404 )
 
            
 
                
Total stockholders’ equity
     686,321       756,556  
 
            
 
                
Total liabilities and stockholders’ equity
   $ 1,545,296     $ 1,183,522  
 
            

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SYBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
PROFORMA WITHOUT PURCHASE ACCOUNTING, COST OF RESTRUCTURE, AND STOCK COMPENSATION EXPENSE
(UNAUDITED)
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
(In thousands, except per share data)   2005     2004     2005     2004  
Revenues:
                                
License fees
   $ 69,739     $ 70,380     $ 200,362     $ 188,713  
Services
     129,588       128,338       395,284       381,195  
 
                        
 
                                
Total revenues
     199,327       198,718       595,646       569,908  
 
                                
Costs and expenses:
                                
Cost of license fees
     8,947       10,856       27,876       31,596  
Cost of services
     37,854       39,741       117,956       122,780  
Sales and marketing
     59,672       59,171       184,386       179,409  
Product development and engineering
     34,922       29,095       102,738       88,864  
General and administrative
     21,721       23,526       64,040       64,600  
 
                        
 
                                
Total costs and expenses
     163,116       162,389       496,996       487,249  
 
                        
 
                                
Operating income
     36,211       36,329       98,650       82,659  
 
                                
Interest income and expense and other, net
     3,881       2,518       10,620       8,495  
 
                        
 
                                
Income before income taxes
     40,092       38,847       109,270       91,154  
 
                                
Provision for income taxes
     9,946       11,387       33,467       28,125  
 
                        
 
                                
Net income
   $ 30,146     $ 27,460     $ 75,803     $ 63,029  
 
                        
 
                                
Basic net income per share
   $ 0.34     $ 0.29     $ 0.84     $ 0.66  
 
                        
 
                                
Shares used in computing basic net income per share
     89,634       94,500       90,403       95,973  
 
                        
 
                                
Diluted net income per share
   $ 0.33     $ 0.29     $ 0.82     $ 0.64  
 
                        
 
                                
Shares used in computing diluted net income per share
     92,431       95,961       92,961       98,522  
 
                        
 
                                
Note: The pro forma statement of operations is intended to present the Company’s operating results excluding purchase accounting adjustments associated with the acquisitions of Home Financial Network, Inc., New Era of Networks, Inc., AvantGo Inc., Dejima, Inc., XcelleNet, Inc., Avaki, Inc., and ISDD Ltd. and other purchased intangibles. Such purchase accounting adjustments would include amortization of developed technology, amortization of intangibles, goodwill impairment loss, in-process research and development costs, and related adjustments for income tax provision. The pro forma statement of operations also excludes stock compensation expense, restructuring costs, and cumulative effect of an accounting change which we do not believe are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions and restructurings) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP.

- 10 -

 

SYBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
(In thousands, except per share data)   2005     2004     2005     2004  
Revenues:
                                
License fees
   $ 69,739     $ 70,380     $ 200,362     $ 188,713  
Services
     129,588       128,338       395,284       381,195  
 
                        
 
                                
Total revenues
     199,327       198,718       595,646       569,908  
 
                                
Costs and expenses:
                                
Cost of license fees
     10,993       15,566       36,973       44,704  
Cost of services
     37,980       39,757       118,248       122,903  
Sales and marketing
     59,655       59,254       184,593       179,688  
Product development and engineering
     34,932       29,114       102,764       88,922  
General and administrative
     23,873       24,034       69,183       67,612  
Amortization of other purchased intangibles
     1,677       1,677       5,031       3,462  
Reversal of purchase accounting accrual
     —       (2,677 )     —       (2,677 )
Cost (Reversal) of restructure
     21       10,479       302       10,351  
 
                        
 
                                
Total costs and expenses
     169,131       177,204       517,094       514,965  
 
                        
 
                                
Operating income
     30,196       21,514       78,552       54,943  
 
                                
Interest income and expense and other, net
     3,881       2,518       10,620       8,495  
 
                        
 
                                
Income before income taxes
     34,077       24,032       89,172       63,438  
 
                                
Provision for income taxes
     6,090       6,201       31,984       19,599  
 
                        
 
                                
Net income
   $ 27,987     $ 17,831     $ 57,188     $ 43,839  
 
                        
 
                                
Basic net income per share
   $ 0.31     $ 0.19     $ 0.63     $ 0.46  
 
                        
 
                                
Shares used in computing basic net income per share
     89,634       94,500       90,403       95,973  
 
                        
 
                                
Diluted net income per share
   $ 0.30     $ 0.19     $ 0.62     $ 0.44  
 
                        
 
                                
Shares used in computing diluted net income per share
     92,431       95,961       92,961       98,522  
 
                        

- 11 -

 

SYBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                 
    Nine Months Ended  
    September 30,  
(Dollars in thousands)   2005     2004  
Cash and cash equivalents, beginning of year
   $ 321,417     $ 315,404  
Cash flows from operating activities:
                
Net income
     57,188       43,839  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     54,847       63,340  
Write-off of assets in restructuring
     —       6,908  
Loss on disposal of assets
     703       575  
Reversal of purchase accounting accrual
     —       (2,677 )
Deferred income taxes
     (4,603 )     (4,208 )
Amortization of deferred stock-based compensation
     5,667       3,472  
Amortization of note issuance costs
     1,180       —  
Changes in assets and liabilities:
                
Accounts receivable
     39,628       24,308  
Other current assets
     (3,968 )     1,117  
Other assets — operating
     2,050       3,441  
Accounts payable
     (2,215 )     3,707  
Accrued compensation and related expenses
     253       (5,041 )
Accrued income taxes
     24,636       (150 )
Other accrued liabilities
     (12,635 )     (27,984 )
Deferred revenues
     (32,917 )     (9,036 )
Other liabilities
     1,664       6,481  
 
            
Net cash provided by operating activities
     131,478       108,092  
Cash flows from investing activities:
                
(Increase) Decrease in restricted cash
     284       (65 )
Purchases of available-for-sale cash investments
     (704,001 )     (161,095 )
Maturities of available-for-sale cash investments
     307,524       107,822  
Sales of available-for-sale cash investments
     81,381       108,738  
Business combinations, net of cash acquired
     (6,928 )     (81,272 )
Purchases of property, equipment and improvements
     (12,007 )     (20,106 )
Proceeds from sale of fixed assets
     25       193  
Capitalized software development costs
     (26,336 )     (27,918 )
(Increase) Decrease in other assets — investing
     (5 )     2  
 
            
Net cash used for investing activities
     (360,063 )     (73,701 )
Cash flows from financing activities:
                
Proceeds from the issuance of convertible subordinated notes, net of issuance costs
     450,238       —  
Repayments of long-term obligations
     (997 )     (22,173 )
Payments on capital lease
     (201 )     —  
Net proceeds from the issuance of common stock and reissuance of treasury stock
     40,326       26,761  
Purchases of treasury stock
     (144,529 )     (109,491 )
 
            
Net cash provided by (used for) financing activities
     344,837       (104,903 )
Effect of exchange rate changes on cash
     (25,206 )     (1,338 )
 
            
Net increase (decrease) in cash and cash equivalents
     91,046       (71,850 )
 
            
Cash and cash equivalents, end of period
     412,463       243,554  
Cash investments, end of period
     506,386       201,946  
 
            
Total cash, cash equivalents and cash investments, end of period
   $ 918,849     $ 445,500  
 
            

- 12 -

 

SYBASE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT
PROFORMA WITHOUT PURCHASE ACCOUNTING, COST OF RESTRUCTURE, AND STOCK COMPENSATION EXPENSE
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005
(UNAUDITED)
                                 
    Infrastructure     iAnywhere             Consolidated  
(In thousands, except per share data)   Platform Group     Solutions     Eliminations     Total  
Revenues:
                                
License fees
                                
Infrastructure
   $ 49,126     $ 21     $ —     $ 49,147  
Mobile and Embedded
     9,869       9,849       —       19,718  
Financial Fusion products
     874       —       —       874  
 
                        
Subtotal license fees
     59,869       9,870       —       69,739  
Intersegment license revenues
     21       8,225       (8,246 )     —  
 
                        
Total license fees
     59,890       18,095       (8,246 )     69,739  
 
                                
Services
                                
Direct service revenue
     114,547       8,963       —       123,510  
Financial Fusion services
     6,078       —       —       6,078  
Intersegment service revenues
     7       6,981       (6,988 )     —  
 
                        
Total services
     120,632       15,944       (6,988 )     129,588  
 
                                
Total revenues
     180,522       34,039       (15,234 )     199,327  
 
                                
Total allocated costs and expenses
     153,844       26,846       (15,234 )     165,456  
 
                        
 
                                
Operating income before unallocated costs
   $ 26,678     $ 7,193     $ —     $ 33,871  
 
                                
Other unallocated cost savings
                             (2,340 )
 
                                
 
                              
Operating income after unallocated expenses
                             36,211  
 
                                
Interest income and expense and other, net
                             3,881  
 
                                
 
                              
Income before income taxes
                             40,092  
 
                                
Provision for income taxes
                             9,946  
 
                              
 
                                
Net income
                           $ 30,146  
 
                              
 
                                
Basic net income per share
                           $ 0.34  
 
                              
 
                                
Shares used in computing basic net income per share
                             89,634  
 
                              
 
                                
Diluted net income per share
                           $ 0.33  
 
                              
 
                                
Shares used in computing diluted net income per share
                             92,431  
 
                              
Note: The pro forma statement of operations is intended to present the Company’s operating results excluding purchase accounting adjustments associated with the acquisitions of Home Financial Network, Inc., New Era of Networks, Inc., AvantGo Inc., Dejima, Inc., XcelleNet, Inc., Avaki, Inc., and ISDD Ltd. and other purchased intangibles. Such purchase accounting adjustments would include amortization of developed technology, amortization of intangibles, goodwill impairment loss, in-process research and development costs, and related adjustments for income tax provision. The pro forma statement of operations also excludes stock compensation expense, restructuring costs, and cumulative effect of an accounting change which we do not believe are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions and restructurings) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP.

- 13 -

 

SYBASE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT
PROFORMA WITHOUT PURCHASE ACCOUNTING, COST OF RESTRUCTURE, AND STOCK COMPENSATION EXPENSE
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(UNAUDITED)
                                 
    Infrastructure     iAnywhere             Consolidated  
(In thousands, except per share data)   Platform Group     Solutions     Eliminations     Total  
Revenues:
                                
License fees
                                
Infrastructure
   $ 142,598     $ 69     $ —     $ 142,667  
Mobile and Embedded
     22,448       32,736       —       55,184  
Financial Fusion products
     2,511       —       —       2,511  
 
                        
Subtotal license fees
     167,557       32,805       —       200,362  
Intersegment license revenues
     64       18,691       (18,755 )     —  
 
                        
Total license fees
     167,621       51,496       (18,755 )     200,362  
 
                                
Services
                                
Direct service revenue
     347,426       27,402       —       374,828  
Financial Fusion services
     20,456       —       —       20,456  
Intersegment service revenues
     13       20,269       (20,282 )     —  
 
                        
Total services
     367,895       47,671       (20,282 )     395,284  
 
                                
 
                        
Total revenues
     535,516       99,167       (39,037 )     595,646  
 
                                
Total allocated costs and expenses
     458,893       82,403       (39,037 )     502,259  
 
                        
 
                                
Operating income before unallocated costs
   $ 76,623     $ 16,764     $ —     $ 93,387  
 
                                
Other unallocated cost savings
                             (5,263 )
 
                                
 
                              
Operating income after unallocated expenses
                             98,650  
 
                                
Interest income and expense and other, net
                             10,620  
 
                                
 
                              
Income before income taxes
                             109,270  
 
                                
Provision for income taxes
                             33,467  
 
                              
 
                                
Net income
                           $ 75,803  
 
                              
 
                                
Basic net income per share
                           $ 0.84  
 
                              
 
                                
Shares used in computing basic net income per share
                             90,403  
 
                              
 
                                
Diluted net income per share
                           $ 0.82  
 
                              
 
                                
Shares used in computing diluted net income per share
                             92,961  
 
                              
Note: The pro forma statement of operations is intended to present the Company’s operating results excluding purchase accounting adjustments associated with the acquisitions of Home Financial Network, Inc., New Era of Networks, Inc., AvantGo Inc., Dejima, Inc., XcelleNet, Inc., Avaki, Inc., and ISDD Ltd. and other purchased intangibles. Such purchase accounting adjustments would include amortization of developed technology, amortization of intangibles, goodwill impairment loss, in-process research and development costs, and related adjustments for income tax provision. The pro forma statement of operations also excludes stock compensation expense, restructuring costs, and cumulative effect of an accounting change which we do not believe are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions and restructurings) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP.

- 14 -

 

SYBASE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005
(UNAUDITED)
                                 
    Infrastructure     iAnywhere             Consolidated  
(In thousands, except per share data)   Platform Group     Solutions     Eliminations     Total  
Revenues:
                                
License fees
                                
Infrastructure
   $ 49,126     $ 21     $ —     $ 49,147  
Mobile and Embedded
     9,869       9,849       —       19,718  
Financial Fusion products
     874       —       —       874  
 
                        
Subtotal license fees
     59,869       9,870       —       69,739  
Intersegment license revenues
     21       8,225       (8,246 )     —  
 
                        
Total license fees
     59,890       18,095       (8,246 )     69,739  
 
                                
Services
                                
Direct service revenue
     114,547       8,963       —       123,510  
Financial Fusion services
     6,078       —       —       6,078  
Intersegment service revenues
     7       6,981       (6,988 )     —  
 
                        
Total services
     120,632       15,944       (6,988 )     129,588  
 
                                
 
                        
Total revenues
     180,522       34,039       (15,234 )     199,327  
 
                                
Total allocated costs and expenses before cost of restructure and amortization of customer lists, covenant not to compete, and purchased technology
     153,844       26,846       (15,234 )     165,456  
 
                        
 
                                
Operating income before cost of restructure and amortization of customer lists, covenant not to compete, and purchased technology
     26,678       7,193       —       33,871  
 
                                
Cost of restructure - 2005 Activity
     21       —       —       21  
Amortization of customer lists
     500       711       —       1,211  
Amortization of covenant not to compete
     —       466       —       466  
Amortization of purchased technology
     1,067       979       —       2,046  
 
                        
 
                                
Operating income before unallocated costs
   $ 25,090     $ 5,037     $ —     $ 30,127  
 
                                
Other unallocated cost savings
                             (69 )
 
                              
Operating income after unallocated expenses
                             30,196  
 
                                
Interest income and expense and other, net
                             3,881  
 
                                
 
                              
Income before income taxes
                             34,077  
 
                                
Provision for income taxes
                             6,090  
 
                              
 
                                
Net income
                           $ 27,987  
 
                              
 
                                
Basic net income per share
                           $ 0.31  
 
                              
 
                                
Shares used in computing basic net income per share
                             89,634  
 
                              
 
                                
Diluted net income per share
                           $ 0.30  
 
                              
 
                                
Shares used in computing diluted net income per share
                             92,431  
 
                              

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SYBASE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(UNAUDITED)
                                 
    Infrastructure     iAnywhere             Consolidated  
(In thousands, except per share data)   Platform Group     Solutions     Eliminations     Total  
Revenues:
                                
License fees
                                
Infrastructure
   $ 142,598     $ 69     $ —     $ 142,667  
Mobile and Embedded
     22,448       32,736       —       55,184  
Financial Fusion products
     2,511       —       —       2,511  
 
                        
Subtotal license fees
     167,557       32,805       —       200,362  
Intersegment license revenues
     64       18,691       (18,755 )     —  
 
                        
Total license fees
     167,621       51,496       (18,755 )     200,362  
 
                                
Services
                                
Direct service revenue
     347,426       27,402       —       374,828  
Financial Fusion services
     20,456       —       —       20,456  
Intersegment service revenues
     13       20,269       (20,282 )     —  
 
                        
Total services
     367,895       47,671       (20,282 )     395,284  
 
                                
 
                        
Total revenues
     535,516       99,167       (39,037 )     595,646  
 
                                
Total allocated costs and expenses before cost of restructure and amortization of customer lists, covenant not to compete, and purchased technology
     458,893       82,403       (39,037 )     502,259  
 
                        
 
                                
Operating income before cost of restructure and amortization of customer lists, covenant not to compete, and purchased technology
     76,623       16,764       —       93,387  
 
                                
Cost of restructure - 2005 Activity
     302       —       —       302  
Amortization of customer lists
     1,500       2,133       —       3,633  
Amortization of covenant not to compete
     —       1,398       —       1,398  
Amortization of purchased technology
     6,160       2,937       —       9,097  
 
                        
 
                                
Operating income before unallocated costs
   $ 68,661     $ 10,296     $ —     $ 78,957  
 
                                
Other unallocated costs
                             405  
 
                              
Operating income after unallocated expenses
                             78,552  
 
                                
Interest income and expense and other, net
                             10,620  
 
                                
 
                              
Income before income taxes
                             89,172  
 
                                
Provision for income taxes
                             31,984  
 
                              
 
                                
Net income
                           $ 57,188  
 
                              
 
                                
Basic net income per share
                           $ 0.63  
 
                              
 
                                
Shares used in computing basic net income per share
                             90,403  
 
                              
 
                                
Diluted net income per share
                           $ 0.62  
 
                              
 
                                
Shares used in computing diluted net income per share
                             92,961  
 
                              

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SYBASE, INC.
Reconciliation of GAAP-based EPS to pro forma EPS
for the twelve months ended December 31, 2005
(unaudited)
                 
    Low end     High end  
    of range     of range  
Pro forma EPS
   $ 1.16     $ 1.20  
Amortization of purchased intangibles
     (0.19 )     (0.19 )
Amortization of unearned stock compensation
     (0.09 )     (0.09 )
Income tax effect of above adjustments
     0.09       0.09  
Income tax effect primarily from utilization of foreign tax credits
     (0.08 )     (0.08 )
 
            
GAAP — based EPS
   $ 0.89     $ 0.93  
 
            
Use of Pro Forma Financial Information
To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), Sybase uses pro forma measures of operating results, net income and earnings per share, which are adjusted from GAAP-based results to exclude certain costs and expenses. These pro forma adjustments are provided to enhance an overall understanding of our current financial performance and our prospects for the future, and are one of the primary indicators management uses for planning and forecasting future periods. We have excluded such items, including purchase accounting adjustments in connection with acquisitions because we do not believe they are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP.

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