8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report:

July 23, 2008
(Date of earliest event reported)

SYBASE, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-16493	94-2951005
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		Identification Number)

One Sybase Drive
Dublin, CA 94568
(Address of principal executive offices)

Registrant’s telephone number, including area code: (925) 236-5000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EXHIBIT 99.1

Item 2.02 Results of Operations and Financial Condition

     (a) On July 23, 2008, Sybase, Inc. issued a press release announcing its results for the three months ended June 30, 2008 (“Q2 2008 Release”), a copy of which is furnished as Exhibit 99.1 and incorporated herein by reference. As part of the Q2 2008 Release, Sybase presented certain financial information, including the following:

(1)	Condensed Consolidated Balance Sheets for June 30, 2008 (unaudited) and December 31, 2007
(2)	Condensed Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2008 and 2007, respectively
(3)	Reconciliation of Non-GAAP Results to GAAP Results for selected items for the three and six months ended June 30, 2008 and 2007, respectively
(4)	Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2008 and 2007, respectively
(5)	Consolidated Statement of Operations by Segment for the three months ended June 30, 2008 (unaudited)
(6)	Consolidated Statement of Operations by Segment for the six months ended June 30, 2008 (unaudited)
(7)	Reconciliation of Non-GAAP Results to GAAP Results for selected segment items for the three and six months ended June 30, 2008 and 2007, respectively
(8)	Reconciliation of GAAP-based EPS to Non-GAAP EPS for the three months ended September 30, 2008 (unaudited)
(9)	Reconciliation of GAAP-based EPS to Non-GAAP EPS for the twelve months ended December 31, 2008 (unaudited)

     (b) On the same date, the Company orally disclosed certain of the above-referenced pro forma and GAAP amounts, and provided pro forma and GAAP financial guidance for the three months ending September 30, 2008 and twelve months ending December 31, 2008 during a webcast and conference call meeting all of the following requirements:

(1)	The information was provided as part of a presentation that was complementary to and occurred within 48 hours of publication of the Q2 2008 Release;
(2)	The presentation was broadly accessible to the public by dial-in conference call and webcast;
(3)	The financial and other statistical information contained in the presentation was available on the Company’s external website together with information required under Section 244.100 of Regulation G at the time of the conference call and webcast; and
(4)	The presentation was announced by widely disseminated press release that included instructions as to when and how to access the presentation and the location on the Company’s website where the information would be available.

     (c) In accordance with General Instruction B.2 of Form 8-K, the information included the Q2 2008 Release (other than the tables referenced in Item 2.02(a)(1), (2), (4), (5) and (6)) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

     (c) Exhibits

Exhibit No.	Description
99.1	Press Release of Sybase, Inc. issued July 23, 2008

SIGNATURE

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

	SYBASE, INC.
Date: July 24, 2008	By:	/s/ DANIEL R. CARL
		Name:	Daniel R. Carl
		Title:	Vice President and General Counsel

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of Sybase, Inc. issued July 23, 2008

EX-99.1

Exhibit 99.1

For Financial Inquiries:
Sybase Investor Relations
Charlie Chen
(925) 236-6015
charlie@sybase.com
Lynne Farris
(925) 236-8797
lynne.farris@sybase.com

For Press Inquiries:
Sybase Public Relations
Crystal Lu
(925) 236-6431
crystal.lu@sybase.com

SYBASE REPORTS RECORD SECOND QUARTER RESULTS, DRIVEN BY 15% REVENUE GROWTH
Database License Revenue Up 38% Year over Year
Messaging Revenue Up 41% Year over Year
Management Raises Full-Year Revenue, Earnings, and Cash Flow Guidance

DUBLIN, Calif. — July 23, 2008— Sybase, Inc. (NYSE: SY), the largest enterprise software and services company exclusively focused on managing and mobilizing information, today reported financial results for the second quarter ended June 30, 2008.

Highlights:

w	Total revenue of $282.7 million, up 15% year over year
w	License revenue increased 17% year over year
w	Services revenue increased 8% year over year
w	Database license revenue increased 38% year over year
w	Messaging revenue increased 41% year over year
w	GAAP operating margin of 18%, versus 15% a year ago; non-GAAP operating margin of 23%, versus 20% a year ago
w	GAAP net income of $32.4 million, up 24% year over year; GAAP EPS up 31% year over year
w	Non-GAAP net income of $43.0 million, up 26% year over year; non-GAAP EPS up 33% year over year
w	Cash flow from operations of $62.7 million, up 16% year over year
w	Management raises full-year guidance for revenue, earnings, and cash flow from operations

2008 Second Quarter Results

Total revenue for the second quarter of 2008 increased 15% to $282.7 million from $245.0 million in the second quarter of 2007. License revenue grew 17% to $90.5 million from $77.4 million in the second quarter of 2007. Services revenue increased 8% to $146.6 million from $135.2 million a year ago. Messaging revenue grew 41% to $45.6 million from $32.4 million a year ago.

For the second quarter, operating income calculated in accordance with generally accepted accounting principles (GAAP) increased 44% year over year to $51.1 million, representing an operating margin of 18%. This compares with GAAP operating income of $35.6 million and an operating margin of 15% a year ago.

GAAP net income increased 24% year over year to $32.4 million from $26.0 million a year ago. GAAP earnings per diluted share (EPS) increased 31% to $0.37 for the 2008 second quarter from $0.28 for the second quarter of 2007.

Non-GAAP operating income for the second quarter increased 33% year over year to $63.7 million, representing a 23% operating margin. This compares with non-GAAP operating income of $47.8 million, representing a 20% operating margin, in the 2007 second quarter.

Non-GAAP net income for the 2008 second quarter increased 26% to $43.0 million from $34.3 million for the second quarter of 2007. Non-GAAP EPS for the 2008 second quarter increased 33% to $0.49 from $0.37 for the second quarter of 2007.

Non-GAAP amounts exclude the amortization of certain purchased intangibles, stock-based compensation, restructuring costs, charges related to the impairment of auction rate securities, and the tax effect of these and related items. Accompanying this release is a reconciliation from GAAP to non-GAAP amounts for the second quarter of 2008.

“I am extremely pleased with our strong performance in the second quarter of 2008,” stated John Chen, chairman, CEO and president of Sybase. “We have now delivered three consecutive record quarters, four consecutive quarters exceeding Street consensus revenue, and 16 consecutive quarters exceeding consensus earnings.”

Added Mr. Chen, “Our ongoing success is attributable to growing market acceptance of our Unwired Enterprise strategy. We are excited about our prospects for continued growth, driven by our flagship enterprise database, IQ analytics server, mobile middleware, and mobile messaging. Additional growth catalysts expected to enhance

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our momentum include new offerings such as risk analytics, data clustering, Mobile Office, mobile banking, and next-generation mobile messaging.

“Notwithstanding the macro-economic cross-currents, our business pipeline remains healthy, and we are confident in our team’s ability to execute. As a result, we are again raising our 2008 revenue, earnings, and cash flow targets, which put us on track to deliver yet another record full-year performance,” concluded Mr. Chen.

Balance Sheet and Other Data

At June 30, 2008, Sybase reported $606.4 million in cash and cash investments, including long-term cash investments of $22.7 million and restricted cash of $3.7 million. In the second quarter, the company generated $62.7 million in cash flow from operations.

There remains $82.9 million authorized under the company’s current share repurchase program.

Days sales outstanding (DSO) for the second quarter was 75.

Guidance

For the third quarter ending September 30, 2008, management anticipates total revenue in the range of $270 million to $275 million. Management anticipates non-GAAP fully diluted EPS in the range of $0.48 to $0.50 and GAAP EPS in the range of $0.38 to $0.40.

Management is raising guidance for full-year 2008 revenue, earnings, and cash flow from operations due to the company’s stronger-than-expected performance in the second quarter of 2008. Management now anticipates total revenue of approximately $1.11 billion. Non-GAAP EPS is now anticipated in the range of $1.98 to $2.00, and GAAP EPS is anticipated in the range of $1.53 to $1.55. Management now anticipates cash flow from operations of approximately $250 million.

A reconciliation from the company’s previous full-year 2008 EPS guidance range to the current guidance range is as follows:

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Reconciliation of 2008 EPS Guidance Range

	GAAP						Non-GAAP
2008 EPS guidance range on April 24, 2008	$	1.51		$	1.56		$	1.94		$	1.99
Increase due to operations		0.09			0.06			0.09			0.06
Decrease due to auction rate securities		(0.03	)		(0.03	)		0.00			0.00
Decrease due to convert dilution from higher share price		(0.04	)		(0.04	)		(0.05	)		(0.05	)
2008 EPS guidance range on July 23, 2008	$	1.53		$	1.55		$	1.98		$	2.00

Please see “Note Regarding Non-GAAP Financial Measures” for important information regarding Non-GAAP Financial Measures.

Accompanying this release is a reconciliation from projected GAAP to non-GAAP amounts for the estimated 2008 third quarter and full year results.

Conference Call and Webcast Information

The Sybase 2008 second quarter conference call and simultaneous Webcast is scheduled to begin at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time on Wednesday, July 23, 2008. 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 10:00 p.m. Pacific Time on July 30, 2008. 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 2984621. Additionally, the archived Webcast will be available through October 23, 2008 at http://www.sybase.com/about_sybase/investorrelations.

About Sybase, Inc.

Sybase is the largest enterprise software and services company exclusively focused on managing and mobilizing information. With our global solutions, enterprises can extend their information securely and make it useful for people anywhere using any device. The world’s most critical data in commerce, finance, government, and healthcare runs on Sybase. For more information, visit the Sybase Website at 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

4

these forward-looking statements include, but are not limited to, 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; the success of certain business combinations engaged in by the company or by competitors; political unrest or acts of war; possible disruptive effects of organizational or personnel changes; 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, 2007 and its quarterly report on Form 10-Q for the period ended March 31, 2008.

Note Regarding Non-GAAP Financial Measures

In addition to our GAAP results, Sybase discloses adjusted operating income, net income and net income per share, referred to respectively as “non-GAAP operating income”, “non-GAAP net income”, and “non-GAAP net income per diluted share”. These items, which are collectively referred to as “Non-GAAP Measures”, exclude the impact of stock-based compensation, the amortization of acquisition-related intangible assets, restructuring costs, non-cash charges related to the impairment of auction rate securities (“ARS”), and the tax effect of these and related items. From time to time, subject to the review and approval of the audit committee of the Board of Directors, we may make other adjustments for expenses and gains that we do not consider reflective of core operating performance in a particular period and may modify the Non-GAAP Measures by excluding these expenses and gains. The Non-GAAP Measures for our Q2 2008 results and full-year 2008 guidance exclude impairment charges for reductions in the carrying value of our auction rate securities.

We define our core operating performance to be the revenues recorded in a particular period and the expenses incurred within that period which management has the capability of directly affecting in order to drive operating income. Non-cash stock-based compensation, amortization of acquisition-related intangible assets, restructuring charges and impairment charges to our ARS are excluded from our core operating performance because the decisions which gave rise to these expenses were not made to drive revenue in a particular period, but rather were made for our long-term benefit over multiple periods. While strategic decisions, such as the decisions to issue stock-based compensation, to acquire a company or to restructure the organization, are made to further our long-term strategic objectives and do impact our income statement under GAAP, these items affect multiple periods and management is not able to change or affect these items within any particular period. As such, supplementing GAAP disclosure with non-GAAP disclosure using the Non-GAAP Measures provides management with an additional view of operational performance by excluding expenses that are not directly related to performance in any particular period.

5

Therefore, we exclude these impacts in our planning, monitoring, evaluation and reporting of our underlying revenue-generating operations for a particular period.

Prior to the adoption of Financial Accounting Standards Board Statement 123 Revised “Share-based Payment” (“FAS 123R”) on January 1, 2006, our practice was to exclude stock-based compensation internally to evaluate performance and we presented investors with certain Non-GAAP Measures. With the adoption of FAS 123R, we continue to believe that Non-GAAP Measures can provide relevant disclosure to investors as contemplated by Staff Accounting Bulletin 107 (“SAB 107”) and we have presented Non-GAAP Measures that exclude stock-based compensation, amortization of acquisition-related intangible assets, impairment charges to ARS, restructuring costs and the related tax effects. While these items (other than restructuring) are recurring and affect GAAP net income, we do not use them to assess our operational performance for any particular period because (a) these items affect multiple periods and are unrelated to business performance in a particular period; (b) we are not able to change these items in any particular period; and (c) these items do not contribute to the operational performance of our business for any particular period.

We also use Non-GAAP Measures to operate the business because the excluded expenses are not under the control of, and accordingly are not used in evaluating the performance of, operations personnel within their respective areas of responsibility. In the case of stock-based compensation expense, the award of stock options is governed by the stock committee of the Board of Directors and, in the case of acquisition-related intangible assets; acquisitions arise from strategic decisions which are not the responsibility of most levels of operational management. The restructuring charges, like our stock-based compensation charges, amortization of acquisition-related intangible assets and write-downs to ARS, are excluded in management’s internal evaluations of our operating results and are not considered for management compensation purposes.

In the case of stock-based compensation, our compensation strategy is to use stock-based compensation to attract and retain key employees and executives. It is principally aimed at long term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational performance in any particular period. We use annual cash incentive payouts for executives and other employees to motivate and reward the achievement of short-term operational objectives.

We view amortization of acquisition-related intangible assets, such as the amortization of an acquired company’s research and development efforts, customer lists and customer relationships, as items arising from pre-acquisition activities. These are costs

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that are determined at the time of an acquisition. While it is continually viewed for impairment, amortization of the cost is a static expense, one that is typically not affected by operations during any particular period and does not contribute to operational performance for any particular period.

The cost of restructure charges are excluded in our Non-GAAP Measures because they are significantly different in magnitude and character from routine personnel and facility adjustments that management makes when monitoring and conducting the Company’s core operations during any particular period. We have not undertaken restructuring since 2004 and amounts included in cost of restructure in 2006 and subsequently reflect lease termination costs from previously announced restructuring efforts. Our previous restructuring activities and related expenses were not related to operating performance for any particular period, and were not subject to change by management in any particular period. Instead, the prior restructuring was intended to align our business model and expense structure to our position in the market.

The liquidity and fair value of our investments in marketable securities, including auction rate securities, have been negatively impacted by the uncertainty in the credit markets and failed auctions due to a lack of marketability of these securities. As a result, we recorded impairment charges to reduce the carrying value of our ARS investments. The impairment charges related to our ARS investments have been excluded from our non-GAAP results of operations. These impairment charges are excluded from management’s assessment of our operating performance because management believes that they are not indicative of our ongoing business operations. We believe that the exclusion of these unique charges provide investors an enhanced view of our operations and facilitates comparisons with the results of other periods that do not reflect such charges.

Our historical non-GAAP effective tax rates differ from our GAAP effective tax rates because of (i) the exclusion of the amortization of acquisition-related intangible assets, stock-based compensation expenses and restructuring costs described above, (ii) the exclusion of certain acquired tax attributes, and (iii) the resulting impact on the realization of the Company’s other tax assets. We exclude the impact of these discrete tax items from our non-GAAP income tax provision or benefit because management believes that they are not indicative of our ongoing business operations.

Because the Non-GAAP Measures are not calculated in accordance with GAAP, they are used by our management as a supplement to, and not an alternative to, or superior to, financial measures calculated in accordance with GAAP. There are a number of limitations on the Non-GAAP Measures, including the following:

7

• These Non-GAAP Measures do not have standardized meanings and may not be comparable to similar non-GAAP measures used or reported by other software or technology companies.

• The Non-GAAP Measures do not reflect all costs associated with our operations determined in accordance with GAAP. For example:

Non-GAAP operating margin performance and non-GAAP net income do not include stock compensation expense related to equity awards granted to our workforce. Our stock incentive plans are important components of our employee incentive compensation arrangements and are reflected as expenses in our GAAP results under FAS 123R. While we include the dilutive impact of such equity awards in weighted average shares outstanding, the expense associated with stock-based awards is excluded from our non-GAAP measures.

Although amortization of acquisition-related intangible assets does not directly impact our current cash position, such expense represents the declining value of the technology or other intangible assets that we have acquired. These assets are amortized over their respective expected economic lives or impaired, if appropriate. The expense associated with this decline in value is excluded from our non-GAAP measures and therefore non-GAAP measures do not include the costs of acquired intangible assets that supplement our research and development.

Restructuring charges in 2006 and subsequently primarily represent lease termination costs associated with restructuring activities that commenced in 2004 and before. Most of the charges are cash expenditures, which are excluded from our Non-GAAP Measures.

• Excluded expenses for stock-based compensation and amortization of acquisition-related intangible assets will continue to recur and impact the Company’s GAAP results. While restructuring costs are non-recurring activities, their occasional occurrence will impact GAAP results. As such, the Non-GAAP Measures should not be construed as an inference that the excluded items are unusual, infrequent or non-recurring.

Management compensates for these limitations by relying on these Non-GAAP Measures only as a supplement to the Company’s GAAP results.

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SYBASE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,		December 31,
(In thousands, except share and per share data)	2008		2007
	(Unaudited)
Current assets:
Cash and cash equivalents	$	575,148	$	604,808
Short-term investments		4,815		93,462
Total cash, cash equivalents and short-term cash investments		579,963		698,270
Restricted cash		3,733		3,424
Accounts receivable, net		234,447		245,267
Deferred income taxes		42,088		37,979
Prepaid income taxes		—		17,604
Other current assets		32,145		25,182
Total current assets		892,376		1,027,726
Long-term cash investments		22,674		36,637
Property, equipment and improvements, net		66,186		64,841
Deferred income taxes		5,475		10,038
Capitalized software, net		81,496		74,278
Goodwill, net		534,110		533,339
Other purchased intangibles, net		119,606		130,608
Other assets		35,648		36,016
Total assets	$	1,757,571	$	1,913,483
Current liabilities:
Accounts payable	$	33,947	$	30,290
Accrued compensation and related expenses		58,338		63,852
Accrued income taxes		7,284		273
Other accrued liabilities		118,654		124,849
Deferred revenue		225,944		203,734
Total current liabilities		444,167		422,998
Other liabilities		46,471		44,669
Deferred income taxes		13,920		14,115
Long-term tax liability		30,807		30,807
Long-term deferred revenue		4,716		4,937
Minority interest		5,119		5,147
Convertible subordinated notes		460,000		460,000
Total stockholders’ equity		752,371		930,810
Total liabilities and stockholders’ equity	$	1,757,571	$	1,913,483

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SYBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share data)	2008			2007			2008		2007
Revenues:
License fees	$	90,515		$	77,435		$	168,639	$	146,800
Services		146,594			135,230			285,991		264,881
Messaging		45,604			32,358			88,231		63,379
Total revenues		282,713			245,023			542,861		475,060
Costs and expenses:
Cost of license fees		15,129			13,083			29,666		25,836
Cost of services		41,080			39,539			81,960		78,281
Cost of messaging		27,403			18,906			52,511		37,795
Sales and marketing		74,272			64,916			142,565		129,491
Product development and engineering		36,046			36,920			71,608		75,673
General and administrative		34,077			32,680			70,138		64,176
Amortization of other purchased intangibles		3,573			3,436			7,089		6,846
Cost (Reversal) of restructure		(8	)		(51	)		19		(47	)
Total costs and expenses		231,572			209,429			455,556		418,051
Operating income		51,141			35,594			87,305		57,009
Interest income and expense and other, net		(876	)		5,142			2,639		10,146
Minority interest		37			—			28		(20	)
Income before income taxes		50,302			40,736			89,972		67,135
Provision for income taxes		17,948			14,708			33,427		25,959
Net income	$	32,354		$	26,028		$	56,545	$	41,176
Basic net income per share	$	0.40		$	0.29		$	0.67	$	0.45
Shares used in computing basic net income per share		81,688			90,891			84,680		91,020
Diluted net income per share	$	0.37		$	0.28		$	0.62	$	0.44
Shares used in computing diluted net income per share		88,033			92,972			90,977		93,294

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NON-GAAP RESULTS RECONCILED TO GAAP RESULTS

The following tables reflect selected Sybase non-GAAP results reconciled to GAAP results (in 000s except percentage and per share amounts) :

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2008			2007			2008			2007
Operating Income
GAAP operating income			51,141			35,594			87,305			57,009
Plus:
Amortization of acquisition-related intangible assets			7,162			6,773			14,225			13,504
Stock-based compensation expense			5,382			5,483			11,093			11,233
Cost (Reversal) of restructure			(8	)		(51	)		19			(47	)
Non-GAAP operating income		$	63,677		$	47,799		$	112,642		$	81,699
Net Income
GAAP net income			32,354			26,028			56,545			41,176
Plus:
Amortization of acquisition-related intangible assets			7,162			6,773			14,225			13,504
Stock-based compensation expense			5,382			5,483			11,093			11,233
Cost (Reversal) of restructure			(8	)		(51	)		19			(47	)
Impairment loss on auction rate securities			3,015			0			6,285			0
Less:
Incremental income taxes associated with certain Non-GAAP items			(4,868	)		(3,983	)		(9,792	)		(6,731	)
Non-GAAP net income		$	43,037		$	34,250		$	78,375		$	59,135
Net Income Per Diluted Share
GAAP net income per diluted share		$	0.37		$	0.28		$	0.62		$	0.44
Plus:
Amortization of acquisition-related intangible assets		$	0.08			0.07			0.16			0.14
Stock-based compensation expense		$	0.06			0.06			0.12			0.12
Cost (Reversal) of restructure	(	$	0.00	)		(0.00	)		0.00			(0.00	)
Impairment loss on auction rate securities		$	0.03			—			0.07			—
Less:
Incremental income taxes associated with certain Non-GAAP items	(	$	0.06	)		(0.04	)		(0.11	)		(0.07	)
Non-GAAP net income per diluted share		$	0.49		$	0.37		$	0.86		$	0.63
Shares used in computing diluted net income per share			88,033			92,972			90,977			93,294

CLASSIFICATION OF STOCK-BASED COMPENSATION EXPENSE

The following table shows the classification of stock-based compensation expense (in 000s):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
Cost of services		306		376		665		715
Cost of messaging		127		124		218		310
Sales and marketing		1,360		1,206		2,716		2,472
Product development and engineering		733		656		1,397		1,342
General and administrative		2,856		3,121		6,097		6,394
Total	$	5,382	$	5,483	$	11,093	$	11,233

CLASSIFICATION OF AMORTIZATION OF PURCHASED INTANGIBLES

The following table shows the classification of amortization of purchased intangibles expense (in 000s):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
Cost of license fees		2,562		2,406		5,116		4,811
Cost of messaging		1,027		931		2,020		1,847
Amortization of other purchased intangibles		3,573		3,436		7,089		6,846
Total	$	7,162	$	6,773	$	14,225	$	13,504

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SYBASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended
	June 30,
(Dollars in thousands)	2008			2007
Cash flows from operating activities:
Net income	$	56,545		$	41,176
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		48,859			43,238
Minority interest in income of subsidiaries		(28	)		20
(Gain) Loss on disposal of assets		(18	)		45
Impairment of investment in auction rate securities		6,285			—
Deferred income taxes		259			(2,262	)
Stock-based compensation — restricted stock		4,835			4,185
Stock-based compensation — all other		6,258			7,048
Excess tax benefit from stock-based compensation plans		(6,233	)		(2,855	)
Amortization of note issuance costs		985			985
Changes in assets and liabilities:
Accounts receivable		6,315			22,522
Prepaid income taxes		17,604			—
Other current assets		(6,960	)		(5,258	)
Other assets — operating		(696	)		2,572
Accounts payable		3,657			(669	)
Accrued compensation and related expenses		(5,514	)		(9,360	)
Accrued income taxes		6,429			8,510
Other accrued liabilities		(5,704	)		(7,786	)
Deferred revenues		21,989			21,902
Other liabilities		2,385			(552	)
Net cash provided by operating activities		157,252			123,461
Cash flows from investing activities:
Increase in restricted cash		(309	)		(10	)
Purchases of available-for-sale cash investments		(14,767	)		(165,136	)
Maturities of available-for-sale cash investments		32,027			99,487
Sales of available-for-sale cash investments		80,982			81,984
Business combinations, net of cash acquired		—			(1,531	)
Purchases of property, equipment and improvements		(16,123	)		(11,225	)
Proceeds from sale of property, equipment, and improvements		7			40
Capitalized software development costs		(27,219	)		(17,228	)
(Increase) Decrease in other assets — investing		75			(61	)
Net cash provided by (used for) investing activities		54,673			(13,680	)
Cash flows from financing activities:
Repayments of long-term obligations		(378	)		(33	)
Payments on capital lease		(220	)		(879	)
Net proceeds from the issuance of common stock and reissuance of treasury stock		33,279			19,221
Purchases of treasury stock		(300,601	)		(58,600	)
Excess tax benefit from stock-based compensation plans		6,233			2,855
Net cash used for financing activities		(261,687	)		(37,436	)
Effect of exchange rate changes on cash		20,102			9,155
Net increase (decrease) in cash and cash equivalents		(29,660	)		81,500
Cash and cash equivalents, beginning of year		604,808			355,303
Cash and cash equivalents, end of period	$	575,148		$	436,803

12

SYBASE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED JUNE 30, 2008
(UNAUDITED)

	Infrastructure		iAnywhere							Consolidated
(In thousands, except per share data)	Platform Group		Solutions		Sybase 365		Eliminations			Total
Revenues:
License fees
Infrastructure	$	64,228	$	53	$	54	$	—		$	64,335
Mobile and Embedded		7,920		18,260		—		—			26,180
Subtotal license fees		72,148		18,313		54		—			90,515
Intersegment license revenues		103		6,600		—		(6,703	)		—
Total license fees		72,251		24,913		54		(6,703	)		90,515
Services
Direct service revenue		135,469		10,619		506		—			146,594
Intersegment service revenues		58		8,600		—		(8,658	)		—
Total services		135,527		19,219		506		(8,658	)		146,594
Messaging
Direct messaging revenue		6		—		45,598		—			45,604
Intersegment messaging revenues		—		—		12		(12	)		—
Total messaging		6		—		45,610		(12	)		45,604
Total revenues		207,784		44,132		46,170		(15,373	)		282,713
Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology		158,429		34,634		41,346		(15,373	)		219,036
Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology		49,355		9,498		4,824		—			63,677
Cost of restructure - 2008 Activity		33		—		—		—			33
Amortization of other purchased intangibles		527		1,023		2,023		—			3,573
Amortization of purchased technology		403		2,159		1,027		—			3,589
Operating income before unallocated costs	$	48,392	$	6,316	$	1,774	$	—		$	56,482
Other unallocated costs											5,341
Operating income after unallocated costs											51,141
Interest income and expense and other, net											(876	)
Minority interest											37
Income before income taxes											50,302
Provision for income taxes											17,948
Net income										$	32,354
Basic net income per share										$	0.40
Shares used in computing basic net income per share											81,688
Diluted net income per share										$	0.37
Shares used in computing diluted net income per share											88,033

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SYBASE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT
FOR THE SIX MONTHS ENDED JUNE 30, 2008
(UNAUDITED)

	Infrastructure		iAnywhere							Consolidated
(In thousands, except per share data)	Platform Group		Solutions		Sybase 365		Eliminations			Total
Revenues:
License fees
Infrastructure	$	120,606	$	111	$	67	$	—		$	120,784
Mobile and Embedded		14,158		33,697		—		—			47,855
Subtotal license fees		134,764		33,808		67		—			168,639
Intersegment license revenues		165		11,799		—		(11,964	)		—
Total license fees		134,929		45,607		67		(11,964	)		168,639
Services
Direct service revenue		263,602		21,312		1,077		—			285,991
Intersegment service revenues		64		16,725		—		(16,789	)		—
Total services		263,666		38,037		1,077		(16,789	)		285,991
Messaging
Direct messaging revenue		14		—		88,217		—			88,231
Intersegment messaging revenues		—		—		12		(12	)		—
Total messaging		14		—		88,229		(12	)		88,231
Total revenues		398,609		83,644		89,373		(28,765)			542,861
Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology		309,293		69,281		80,410		(28,765	)		430,219
Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology		89,316		14,363		8,963		—			112,642
Cost of restructure - 2008 Activity		60		—		—		—			60
Amortization of other purchased intangibles		1,054		2,046		3,989		—			7,089
Amortization of purchased technology		806		4,310		2,020		—			7,136
Operating income before unallocated costs	$	87,396	$	8,007	$	2,954	$	—		$	98,357
Other unallocated costs											11,052
Operating income after unallocated costs											87,305
Interest income and expense and other, net											2,639
Minority interest											28
Income before income taxes											89,972
Provision for income taxes											33,427
Net income										$	56,545
Basic net income per share										$	0.67
Shares used in computing basic net income per share											84,680
Diluted net income per share										$	0.62
Shares used in computing diluted net income per share											90,977

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NON-GAAP RESULTS RECONCILED TO GAAP RESULTS — SEGMENTS

The following table reflects non-GAAP operating income before unallocated costs reconciled to GAAP results for each Sybase segment ( in 000s except percentage and per share amounts ) :

	Three Months Ended						Six Months Ended
	June 30, 2008						June 30, 2008
	Infrastructure		iAnywhere				Infrastructure		iAnywhere
	Platform Group		Solutions		Sybase 365		Platform Group		Solutions		Sybase 365
Operating Income Before Unallocated Costs
GAAP operating income before unallocated costs		48,392		6,316		1,774		87,396		8,007		2,954
Plus:
Amortization of acquisition-related intangible assets		930		3,182		3,050		1,860		6,356		6,009
Cost of restructure		33		0		0		60		0		0
Non-GAAP operating income before unallocated costs	$	49,355	$	9,498	$	4,824	$	89,316	$	14,363	$	8,963

15

SYBASE, INC.
Reconciliation of GAAP-based EPS to Non-GAAP EPS
for the three months ended September 30, 2008
(unaudited)

GAAP — based EPS	$	0.38		$	0.40
Amortization of purchased intangibles		0.09			0.09
Amortization of stock compensation expense		0.06			0.06
Income tax effect of above adjustments		(0.05	)		(0.05	)
Income tax effect due to differences between the GAAP and non-GAAP effective tax rate		0.00			0.00
Non-GAAP EPS	$	0.48		$	0.50

Please see “Note Regarding Non-GAAP Financial Measures” for important information regarding Non-GAAP Financial Measures.

SYBASE, INC.
Reconciliation of GAAP-based EPS to Non-GAAP EPS
for the twelve months ended December 31, 2008
(unaudited)

GAAP — based EPS	$	1.53		$	1.55
Amortization of purchased intangibles		0.35			0.35
Amortization of stock compensation expense		0.25			0.25
Impairment of Auction Rate Securities		0.07			0.07
Income tax effect of above adjustments		(0.20	)		(0.20	)
Income tax effect due to differences between the GAAP and non-GAAP effective tax rate		(0.02	)		(0.02	)
Non-GAAP EPS	$	1.98		$	2.00

Please see “Note Regarding Non-GAAP Financial Measures” for important information regarding Non-GAAP Financial Measures.

16