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:

October 21, 2008
(Date of earliest event reported)

SYBASE, INC.

(Exact name of registrant as specified in its charter)

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

EX-99.1

 Item 2.02 Results of Operations and Financial Condition

       (a) On October 21, 2008, Sybase, Inc. issued a press release announcing its results for the three months ended September 30, 2008 (“Q3 2008 Release”), a copy of which is furnished as Exhibit 99.1 and incorporated herein by reference. As part of the Q3 2008 Release, Sybase presented certain financial information, including the following:

(1)	Condensed Consolidated Balance Sheets for September 30, 2008 (unaudited) and December 31, 2007
(2)	Condensed Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2008 and 2007, respectively
(3)	Reconciliation of Non-GAAP Results to GAAP Results for selected items for the three and nine months ended September 30, 2008 and 2007, respectively
(4)	Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2008 and 2007, respectively
(5)	Consolidated Statement of Operations by Segment for the three months ended September 30, 2008 (unaudited)
(6)	Consolidated Statement of Operations by Segment for the nine months ended September 30, 2008 (unaudited)
(7)	Reconciliation of Non-GAAP Results to GAAP Results for selected segment items for the three and nine months ended September 30, 2008
(8)	Reconciliation of GAAP-based EPS to Non-GAAP EPS for the three months ended December 31, 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 Non-GAAP and GAAP amounts, and provided Non-GAAP and GAAP financial guidance for the three months ending December 31, 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 Q3 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 Q3 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 October 21, 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: October 23, 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 October 21, 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 THIRD QUARTER RESULTS,
DRIVEN BY 11% REVENUE GROWTH
Database License Revenue Up 15% Year over Year
Messaging Revenue Up 30% Year over Year
Management Raises Full-Year Revenue, Earnings, and Cash Flow Guidance

DUBLIN, Calif. — October 21, 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 third quarter ended September 30, 2008.

Highlights:

w	Total revenue of $284.0 million, up 11% year over year
w	Database license revenue increased 15% year over year
w	Messaging revenue increased 30% year over year
w	GAAP operating margin of 19%, versus 17% a year ago; non-GAAP operating margin of 24%, versus 22% a year ago
w	GAAP net income of $34.7 million, up 2% year over year; GAAP EPS up 8% year over year
w	Non-GAAP net income of $47.2 million, up 10% year over year; non-GAAP EPS up 17% year over year
w	Cash flow from operations of $53.7 million, up 14% year over year
w	Management raises full-year guidance for revenue, earnings, and cash flow from operations

2008 Third Quarter Results

Total revenue for the third quarter of 2008 increased 11% to $284.0 million from $255.3 million in the third quarter of 2007. License revenue grew 9% to $92.9 million from $85.1 million in the third quarter of 2007. Services revenue increased 8% to $146.3 million from $135.8 million a year ago. Messaging revenue grew 30% to $44.7 million from $34.3 million a year ago.

For the third quarter, operating income calculated in accordance with generally accepted accounting principles (GAAP) increased 19% year over year to $52.9 million, representing an operating margin of 19%. This compares with GAAP operating income of $44.6 million and an operating margin of 17% a year ago.

GAAP net income increased 2% year over year to $34.7 million from $34.1 million a year ago. GAAP earnings per diluted share (EPS) increased 8% to $0.40 for the 2008 third quarter from $0.37 for the third quarter of 2007.

Non-GAAP operating income for the third quarter increased 18% year over year to $67.7 million, representing a 24% operating margin. This compares with non-GAAP operating income of $57.3 million, representing a 22% operating margin, in the 2007 third quarter.

Non-GAAP net income for the 2008 third quarter increased 10% to $47.2 million from $42.8 million for the third quarter of 2007. Non-GAAP EPS for the 2008 third quarter increased 17% to $0.55 from $0.47 for the third 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 third quarter of 2008.

“I am extremely pleased with our ongoing momentum in the market and our fourth consecutive quarter of record performance. Our success is attributable to strength in our core database products and messaging services, as well as our diverse business model,” stated John Chen, chairman, CEO and president of Sybase.

Added Mr. Chen, “Customers are responding well to our new productivity-enhancing solutions, such as risk analytics, enterprise mobile computing, mobile banking, and mobile commerce. Our Unwired Enterprise strategy is key to our strong competitive position and expanding market share in today’s macro-economic climate.

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“The company’s strong business pipeline, combined with our proven ability to execute, enable us to raise our 2008 financial targets for the third time this year,” concluded Mr. Chen.

Balance Sheet and Other Data

At September 30, 2008, Sybase reported $583.9 million in cash and cash investments, including long-term cash investments of $19.3 million and restricted cash of $3.3 million. In the third quarter, the company generated $53.7 million in cash flow from operations.

Guidance

For the fourth quarter ending December 31, 2008, management anticipates total revenue in the range of $295 million to $305 million. Management anticipates non-GAAP fully diluted EPS in the range of $0.60 to $0.62 and GAAP EPS in the range of $0.51 to $0.53.

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 third quarter of 2008. Management now anticipates total revenue in the range of $1.122 billion to $1.132 billion. Non-GAAP EPS is now anticipated in the range of $2.02 to $2.04, and GAAP EPS is anticipated in the range of $1.54 to $1.56. Management now anticipates cash flow from operations to exceed $250 million.

The company’s updated guidance also accounts for an adverse foreign currency impact based on current exchange rates compared to exchange rates at the time the company previously provided full-year guidance on July 23, 2008.

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

Conference Call and Webcast Information

The Sybase 2008 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 Tuesday, October 21, 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 October 28, 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 2021094. Additionally, the archived Webcast will be available through January 21, 2009 at http://www.sybase.com/about_sybase/investorrelations.

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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 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 reports on Form 10-Q for the periods ended March 31, 2008 and June 30, 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 Q3 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

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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. 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.

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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 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.

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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:

• 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

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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

	September 30,		December 31,
	2008		2007
(In thousands, except share and per share data)	(Unaudited)
Current assets:
Cash and cash equivalents	$	558,699	$	604,808
Short-term investments		2,537		93,462
Total cash, cash equivalents and short-term cash investments		561,236		698,270
Restricted cash		3,341		3,424
Accounts receivable, net		234,298		245,267
Deferred income taxes		41,778		37,979
Prepaid income taxes		—		17,604
Other current assets		33,061		25,182
Total current assets		873,714		1,027,726
Long-term cash investments		19,348		36,637
Property, equipment and improvements, net		67,123		64,841
Deferred income taxes		2,558		10,038
Capitalized software, net		81,210		74,278
Goodwill, net		541,548		533,339
Other purchased intangibles, net		120,866		130,608
Other assets		33,638		36,016
Total assets	$	1,740,005	$	1,913,483
Current liabilities:
Accounts payable	$	31,273	$	30,290
Accrued compensation and related expenses		63,640		63,852
Accrued income taxes		14,166		273
Other accrued liabilities		114,170		124,849
Deferred revenue		199,051		203,734
Total current liabilities		422,300		422,998
Other liabilities		45,506		44,669
Deferred income taxes		11,863		14,115
Long-term tax liability		30,807		30,807
Long-term deferred revenue		3,344		4,937
Minority interest		5,140		5,147
Convertible subordinated notes		460,000		460,000
Total stockholders’ equity		761,045		930,810
Total liabilities and stockholders’ equity	$	1,740,005	$	1,913,483

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

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands, except per share data)	2008			2007		2008		2007
Revenues:
License fees	$	92,939		$	85,141	$	261,578	$	231,941
Services		146,295			135,838		432,286		400,719
Messaging		44,744			34,287		132,975		97,666
Total revenues		283,978			255,266		826,839		730,326
Costs and expenses:
Cost of license fees		18,151			12,667		47,818		38,503
Cost of services		40,225			38,684		122,185		116,965
Cost of messaging		28,107			21,428		80,618		59,223
Sales and marketing		70,347			64,415		212,912		193,906
Product development and engineering		37,451			38,739		109,059		114,412
General and administrative		32,831			31,231		102,969		95,407
Amortization of other purchased intangibles		3,920			3,445		11,009		10,291
Cost (Reversal) of restructure		39			17		58		(30	)
Total costs and expenses		231,071			210,626		686,628		628,677
Operating income		52,907			44,640		140,211		101,649
Interest income and expense and other, net		(285	)		5,710		2,354		15,857
Minority interest		(21	)		—		7		(20	)
Income before income taxes		52,601			50,350		142,572		117,486
Provision for income taxes		17,864			16,220		51,291		42,180
Net income	$	34,737		$	34,130	$	91,281	$	75,306
Basic net income per share	$	0.44		$	0.38	$	1.10	$	0.83
Shares used in computing basic net income per share		79,245			89,655		82,868		90,565
Diluted net income per share	$	0.40		$	0.37	$	1.01	$	0.81
Shares used in computing diluted net income per share		86,488			91,714		89,972		92,749

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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						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
Operating Income
GAAP operating income		52,907			44,640			140,211			101,649
Plus:
Amortization of acquisition-related intangible assets		8,979			6,859			23,204			20,363
Stock-based compensation expense		5,752			5,788			16,845			17,021
Cost (Reversal) of restructure		39			17			58			(30	)
Non-GAAP operating income	$	67,677		$	57,304		$	180,318		$	139,003
Net Income
GAAP net income		34,737			34,130			91,281			75,306
Plus:
Amortization of acquisition-related intangible assets		8,979			6,859			23,204			20,363
Stock-based compensation expense		5,752			5,788			16,845			17,021
Cost (Reversal) of restructure		39			17			58			(30	)
Impairment loss on auction rate securities		3,267			—			9,552			—
Less:
Incremental income taxes associated with certain Non-GAAP items		(5,006	)		(3,984	)		(14,797	)		(10,714	)
Credit received on purchased assets		(555	)		—			(555	)		—
Non-GAAP net income	$	47,213		$	42,810		$	125,588		$	101,946
Net Income Per Diluted Share
GAAP net income per diluted share	$	0.40		$	0.37		$	1.01		$	0.81
Plus:
Amortization of acquisition-related intangible assets		0.10			0.07			0.26			0.22
Stock-based compensation expense		0.07			0.06			0.19			0.18
Cost (Reversal) of restructure		0.00			0.00			0.00			(0.00	)
Impairment loss on auction rate securities		0.04			—			0.11			—
Less:
Incremental income taxes associated with certain Non-GAAP items		(0.06	)		(0.04	)		(0.16	)		(0.12	)
Credit received on purchased assets		(0.01	)		—			(0.01	)		—
Non-GAAP net income per diluted share	$	0.55		$	0.47		$	1.40		$	1.10
Shares used in computing diluted net income per share		86,488			91,714			89,972			92,749

CLASSIFICATION OF STOCK-BASED COMPENSATION EXPENSE

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2008		2007		2008		2007
Cost of services		347		400		1,012		1,115
Cost of messaging		132		121		350		431
Sales and marketing		1,429		1,346		4,145		3,818
Product development and engineering		746		763		2,143		2,105
General and administrative		3,098		3,158		9,195		9,552
Total	$	5,752	$	5,788	$	16,845	$	17,021

CLASSIFICATION OF AMORTIZATION OF PURCHASED INTANGIBLES

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2008		2007		2008		2007
Cost of license fees		3,997		2,477		9,113		7,288
Cost of messaging		1,062		937		3,082		2,784
Amortization of other purchased intangibles		3,920		3,445		11,009		10,291
Total	$	8,979	$	6,859	$	23,204	$	20,363

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SYBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Nine Months Ended
	September 30,
(Dollars in thousands)	2008			2007
Cash flows from operating activities:
Net income	$	91,281		$	75,306
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		77,341			64,802
Minority interest in income of subsidiaries		(7	)		20
Loss on disposal of assets		5			20
Impairment of investment in auction rate securities		9,552			—
Deferred income taxes		1,429			(3,541	)
Stock-based compensation — restricted stock		7,583			6,554
Stock-based compensation — all other		9,262			10,467
Excess tax benefit from stock-based compensation plans		(8,970	)		(3,171	)
Amortization of note issuance costs		1,477			1,477
Changes in assets and liabilities:
Accounts receivable		11,003			11,956
Prepaid income taxes		17,604			—
Other current assets		(3,814	)		(3,846	)
Other assets — operating		805			2,635
Accounts payable		983			6,573
Accrued compensation and related expenses		(212	)		(301	)
Accrued income taxes		13,335			13,313
Other accrued liabilities		(13,290	)		(13,027	)
Deferred revenues		(6,276	)		1,857
Other liabilities		1,899			(541	)
Net cash provided by operating activities		210,990			170,553
Cash flows from investing activities:
(Increase) Decrease in restricted cash		83			(95	)
Purchases of available-for-sale cash investments		(16,332	)		(231,304	)
Maturities of available-for-sale cash investments		35,870			136,462
Sales of available-for-sale cash investments		80,982			119,735
Business combinations, net of cash acquired		(27,372	)		(6,502	)
Purchases of property, equipment and improvements		(26,013	)		(16,533	)
Proceeds from sale of property, equipment, and improvements		22			44
Capitalized software development costs		(38,885	)		(27,474	)
(Increase) Decrease in other assets — investing		91			(184	)
Net cash provided by (used for) investing activities		8,446			(25,851	)
Cash flows from financing activities:
Repayments of long-term obligations		(397	)		(136	)
Payments on capital lease		(394	)		(1,276	)
Net proceeds from the issuance of common stock and reissuance of treasury stock		47,711			23,096
Purchases of treasury stock		(300,737	)		(91,421	)
Excess tax benefit from stock-based compensation plans		8,970			3,171
Net cash used for financing activities		(244,847	)		(66,566	)
Effect of exchange rate changes on cash		(20,698	)		19,655
Net increase (decrease) in cash and cash equivalents		(46,109	)		97,791
Cash and cash equivalents, beginning of year		604,808			355,303
Cash and cash equivalents, end of period	$	558,699		$	453,094

12

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

	Infrastructure		iAnywhere							Consolidated
(In thousands, except per share data)	Platform Group		Solutions		Sybase 365		Eliminations			Total
Revenues:
License fees
Infrastructure	$	67,432	$	165	$	5	$	—		$	67,602
Mobile and Embedded		9,501		15,836		—		—			25,337
Subtotal license fees		76,933		16,001		5		—			92,939
Intersegment license revenues		154		7,904		—		(8,058	)		—
Total license fees		77,087		23,905		5		(8,058	)		92,939
Services
Direct service revenue		135,115		10,873		307		—			146,295
Intersegment service revenues		121		8,435		—		(8,556	)		—
Total services		135,236		19,308		307		(8,556	)		146,295
Messaging
Direct messaging revenue		8		—		44,736		—			44,744
Intersegment messaging revenues		—		—		7		(7	)		—
Total messaging		8		—		44,743		(7	)		44,744
Total revenues		212,331		43,213		45,055		(16,621	)		283,978
Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology		158,548		33,876		40,498		(16,621	)		216,301
Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology		53,783		9,337		4,557		—			67,677
Cost of restructure - 2008 Activity		39		—		—		—			39
Amortization of other purchased intangibles		527		1,023		2,370		—			3,920
Amortization of purchased technology		403		3,594		1,062		—			5,059
Operating income before unallocated costs	$	52,814	$	4,720	$	1,125	$	—		$	58,659
Other unallocated costs											5,752
Operating income after unallocated costs											52,907
Interest income and expense and other, net											(285	)
Minority interest											(21	)
Income before income taxes											52,601
Provision for income taxes											17,864
Net income										$	34,737
Basic net income per share										$	0.44
Shares used in computing basic net income per share											79,245
Diluted net income per share										$	0.40
Shares used in computing diluted net income per share											86,488

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

	Infrastructure		iAnywhere							Consolidated
(In thousands, except per share data)	Platform Group		Solutions		Sybase 365		Eliminations			Total
Revenues:
License fees
Infrastructure	$	188,038	$	276	$	72	$	—		$	188,386
Mobile and Embedded		23,659		49,533		—		—			73,192
Subtotal license fees		211,697		49,809		72		—			261,578
Intersegment license revenues		319		19,703		—		(20,022	)		—
Total license fees		212,016		69,512		72		(20,022	)		261,578
Services
Direct service revenue		398,717		32,185		1,384		—			432,286
Intersegment service revenues		185		25,160		—		(25,345	)		—
Total services		398,902		57,345		1,384		(25,345	)		432,286
Messaging
Direct messaging revenue		22		—		132,953		—			132,975
Intersegment messaging revenues		—		—		19		(19	)		—
Total messaging		22		—		132,972		(19	)		132,975
Total revenues		610,940		126,857		134,428		(45,386	)		826,839
Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology		467,841		103,158		120,908		(45,386	)		646,521
Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology		143,099		23,699		13,520		—			180,318
Cost of restructure - 2008 Activity		99		—		—		—			99
Amortization of other purchased intangibles		1,581		3,069		6,359		—			11,009
Amortization of purchased technology		1,209		7,904		3,082		—			12,195
Operating income before unallocated costs	$	140,210	$	12,726	$	4,079	$	—		$	157,015
Other unallocated costs											16,804
Operating income after unallocated costs											140,211
Interest income and expense and other, net											2,354
Minority interest											7
Income before income taxes											142,572
Provision for income taxes											51,291
Net income										$	91,281
Basic net income per share										$	1.10
Shares used in computing basic net income per share											82,868
Diluted net income per share										$	1.01
Shares used in computing diluted net income per share											89,972

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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						Nine Months Ended
	September 30, 2008						September 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		52,814		4,720		1,125		140,210		12,726		4,079
Plus:
Amortization of acquisition-related intangible assets		930		4,617		3,432		2,790		10,973		9,441
Cost of restructure		39		—		—		99		—		—
Non-GAAP operating income before unallocated costs	$	53,783	$	9,337	$	4,557	$	143,099	$	23,699	$	13,520

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

GAAP-based EPS	$	0.51		$	0.53
Amortization of purchased intangibles		0.08			0.08
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	$	0.60		$	0.62

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	$	1.54		$	1.56
Amortization of purchased intangibles		0.34			0.34
Amortization of stock compensation expense		0.25			0.25
Impairment of Auction Rate Securities		0.11			0.11
Income tax effect of above adjustments		(0.21	)		(0.21	)
Income tax effect due to differences between the GAAP and non-GAAP effective tax rate		(0.01	)		(0.01	)
Non-GAAP EPS	$	2.02		$	2.04

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

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