10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2009

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM   TO

COMMISSION FILE NUMBER: 1-16493

SYBASE, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

One Sybase Drive, Dublin, California 94568

(Address of principal executive offices)(Zip Code)

(925) 236-5000

(Registrant’s telephone number, including area code)

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

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes þ No o

          Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

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

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

On April 30, 2009, 83,153,110 shares of the Registrant’s Common Stock, $.001 par value, were outstanding.

SYBASE, INC.
FORM 10-Q

QUARTER ENDED MARCH 31, 2009

INDEX

	Page
Forward-Looking Statements		2
Part I: Financial Information
Item 1: Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008		3
Condensed Consolidated Statements of Operations for the three months ended March 31, 2009 and 2008		4
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008		5
Notes to Condensed Consolidated Financial Statements		6
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3: Quantitative and Qualitative Disclosures of Market Risk		28
Item 4: Controls and Procedures		28
Part II: Other Information
Item 1: Legal Proceedings		29
Item 1 (A) : Risk Factors		29
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds		39
Item 3: Defaults Upon Senior Securities		40
Item 4: Submission of Matters to a Vote of Security Holders		40
Item 5: Other Information		40
Item 6: Exhibits		40
Signatures		41
Exhibit Index		42
EX-3.2
EX-31.1
EX-31.2
EX-32

1

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve risk and uncertainties that could cause the actual results of Sybase, Inc. and its consolidated subsidiaries (“Sybase”, the “Company,” “we” or “us”) to differ materially from those expressed or implied by such forward-looking statements. These risks include the performance of the global economy and growth in software industry sales; market acceptance of the Company’s products and services; customer and industry analyst perception of the Company and its technology vision and future prospects; shifts in our business strategy; interoperability of our products with other software products; the success of certain business combinations engaged in by us or by competitors; political unrest or acts of war; possible disruptive effects of organizational or personnel changes; and other risks detailed from time to time in our Securities and Exchange Commission filings, including those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)- Overview,” and in the risk factors included in Part II, Item 1(A) of this Quarterly Report on Form 10-Q.

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

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

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

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

2

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

SYBASE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,
	2009			December 31,
(In thousands, except share and per share data)	(Unaudited)			2008 (1)
Current assets:
Cash and cash equivalents	$	675,939		$	611,364
Short-term cash investments		16,148			8,689
Total cash, cash equivalents and short-term cash investments		692,087			620,053
Restricted cash		2,657			2,773
Accounts receivable, net		230,639			270,400
Deferred income taxes		38,727			45,524
Prepaid income taxes		6,756			4,932
Prepaid expenses and other current assets		35,933			34,208
Total current assets		1,006,799			977,890
Long-term cash investments		13,714			15,513
Restricted long-term cash investments		39			41
Property, equipment and improvements, net		58,910			62,263
Deferred income taxes		20,173			17,794
Capitalized software, net		86,562			82,400
Goodwill		525,478			527,151
Other purchased intangibles, net		104,383			113,970
Other assets		27,859			29,300
Total assets	$	1,843,917		$	1,826,322
Current liabilities:
Accounts payable	$	21,362		$	26,300
Accrued compensation and related expenses		59,422			80,031
Accrued income taxes		20,024			17,562
Other accrued liabilities		106,042			124,050
Deferred revenue		240,375			211,903
Convertible subordinated notes		442,818			—
Total current liabilities		890,043			459,846
Other liabilities		43,081			44,788
Deferred income taxes		10,067			11,898
Long-term tax liability		37,030			32,082
Long-term deferred revenue		5,652			4,535
Convertible subordinated notes		—			438,299
Commitments and contingent liabilities
Stockholders’ equity:
Preferred stock, $0.001 par value, 8,000,000 shares authorized; none issued or outstanding		—			—
Common stock, $0.001 par value, 200,000,000 shares authorized; 105,337,362 shares issued and 80,108,927 outstanding (2008-105,337,362 shares issued and 79,571,991 outstanding)		105			105
Additional paid-in capital		1,111,803			1,103,685
Accumulated earnings		355,096			330,724
Accumulated other comprehensive income		22,151			36,912
Cost of 25,228,435 shares of treasury stock (2008-25,765,371 shares)		(636,222	)		(641,647	)
Total Sybase, Inc. stockholders’ equity		852,933			829,779
Noncontrolling interest		5,111			5,095
Total equity		858,044			834,874
Total liabilities and stockholders’ equity	$	1,843,917		$	1,826,322

⁽¹⁾ As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See “Note 1 – Basis of Presentation” and “Note 10 – Convertible Subordinated Notes.”

See accompanying notes.

3

SYBASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended
	March 31,
(Dollars in thousands, except per share data)	2009			2008 (1)
Revenues:
License fees	$	89,276		$	78,124
Services		134,974			139,397
Messaging		43,263			42,627
Total revenues		267,513			260,148
Costs and expenses:
Cost of license fees		12,281			14,537
Cost of services		36,829			40,880
Cost of messaging		26,973			25,108
Sales and marketing		64,214			68,293
Product development and engineering		34,744			35,562
General and administrative		31,862			36,061
Amortization of other purchased intangibles		3,723			3,516
Cost (Reversal) of restructure		(10	)		27
Total costs and expenses		210,616			223,984
Operating income		56,897			36,164
Interest income		2,176			7,913
Interest expense and other, net		(11,077	)		(8,616	)
Income before income taxes		47,996			35,461
Provision for income taxes		19,895			13,756
Net income	$	28,101		$	21,705
Less: Net income attributable to the noncontrolling interest		16			9
Net income attributable to Sybase, Inc.	$	28,085		$	21,696
Basic net income per share attributable to Sybase, Inc.	$	0.35		$	0.25
Shares used in computing basic net income per share attributable to Sybase, Inc.		79,809			87,672
Diluted net income per share attributable to Sybase, Inc.	$	0.33		$	0.24
Shares used in computing diluted net income per share attributable to Sybase, Inc.		84,451			90,778

⁽¹⁾ As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See “Note 1 – Basis of Presentation” and “Note 10 – Convertible Subordinated Notes.”

See accompanying notes.

4

SYBASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended
	March 31,
(Dollars in thousands)	2009			2008 (1)
Cash flows from operating activities:
Net income	$	28,101		$	21,705
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		22,491			24,289
(Gain) Loss on disposal of assets		19			(28	)
Impairment of investment in auction rate securities		1,799			3,270
Deferred income taxes		2,587			(2,533	)
Stock-based compensation — restricted stock		2,718			2,386
Stock-based compensation — all other		3,032			3,326
Tax benefit from stock-based compensation plans		2,368			—
Excess tax benefit from stock-based compensation plans		(2,453	)		(3,296	)
Imputed interest expense for convertible notes		4,519			4,310
Amortization of note issuance costs		396			400
Changes in assets and liabilities:
Accounts receivable		41,832			19,611
Prepaid income taxes		(1,824	)		14,767
Other current assets		(1,730	)		(7,950	)
Other assets — operating		1,054			50
Accounts payable		(4,941	)		3,819
Accrued compensation and related expenses		(20,610	)		(15,094	)
Accrued income taxes		7,412			(158	)
Other accrued liabilities		(18,285	)		(16,049	)
Deferred revenues		29,589			41,834
Other liabilities		(693	)		(90	)
Net cash provided by operating activities		97,381			94,569
Cash flows from investing activities:
(Increase) Decrease in restricted cash		118			(258	)
Purchases of cash investments		(8,273	)		(9,455	)
Maturities of cash investments		—			22,238
Sales of cash investments		807			80,982
Purchases of property, equipment and improvements		(4,436	)		(6,414	)
Proceeds from sale of property, equipment, and improvements		8			7
Capitalized software development costs		(12,816	)		(12,877	)
(Increase) Decrease in other assets — investing		(19	)		32
Net cash provided by (used for) investing activities		(24,611	)		74,255
Cash flows from financing activities:
Repayments of long-term obligations		(696	)		(389	)
Net proceeds from the issuance of common stock and reissuance of treasury stock		16,761			8,758
Purchases of treasury stock		(15,049	)		(273	)
Excess tax benefit from stock-based compensation plans		2,453			3,296
Net cash provided by financing activities		3,469			11,392
Effect of exchange rate changes on cash		(11,664	)		19,378
Net increase in cash and cash equivalents		64,575			199,594
Cash and cash equivalents, beginning of year		611,364			604,808
Cash and cash equivalents, end of period	$	675,939		$	804,402

⁽¹⁾ As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See “Note 1 – Basis of Presentation” and “Note 10 – Convertible Subordinated Notes.”

See accompanying notes.

5

Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation. The accompanying unaudited condensed consolidated financial statements include the accounts of Sybase, Inc. and its subsidiaries, and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments, except as described below) necessary to fairly state the Company’s consolidated financial position, results of operations, and cash flows as of and for the dates and periods presented. Except for the retrospective adjustments related to the adoption of FSP No. APB 14-1 “Accounting for Convertible Debt Instruments that May be Settled in Cash upon Conversion (Including Partial Cash Settlement)” and Statement of Financial Accounting Standard (“FAS”) No. 160, “NonControlling Interests in Consolidated Financial Statements” as discussed in further detail below, the condensed consolidated balance sheet as of December 31, 2008 has been prepared from the Company’s audited consolidated financial statements.

Certain information and footnote disclosures normally included in the annual financial statements have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. The results of operations for three months ended March 31, 2009 are not necessarily indicative of results for the entire fiscal year ending December 31, 2009.

Effective January 1, 2009, the Company adopted:

1.	FSP No. APB 14-1, “Accounting for Convertible Debt Instruments that May be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (FSP APB 14-1)
2.	FAS No. 160, “NonControlling Interests in Consolidated Financial Statements” (FAS 160)
3.	FAS No. 141 (Revised 2007), “Business Combinations” (FAS 141(R))
4.	FSP FAS No. 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies
5.	FSP FAS 142-3, “Determination of Useful Life of Intangible Assets” (FSP FAS 142-3)
6.	FSP No. FAS 157-2, “Effective Date of FASB Statement No. 157” (FSP 157-2)
7.	FAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (FAS 161)

FSP APB 14-1 requires issuers of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) to separately account for the liability and equity (conversion feature) components of the instruments. Retrospective adoption is required. As a result, interest expense for all periods presented is now imputed and recognized on the Company’s convertible subordinated notes (“Notes”) based on the 6.09 percent nonconvertible debt borrowing rate which would have applied to the Company in February of 2005 when it issued the Notes. Previously, interest expense was recognized based on the 1.75 percent stated rate. See Note 10 — Convertible Subordinated Notes.

In accordance with the transition provisions of FSP APB 14-1, the carrying amount of the Notes was retrospectively adjusted to reflect a discount of $85.0 million on the date of issuance, with an offsetting increase in additional paid-in capital of $51.0 million and a reduction to deferred tax asset of $34.0 million. Such discount is amortized to interest expense over a five year period ending February 22, 2010, the date on which holders of the Notes may first require the Company to repurchase all or a portion of their notes. The amortization is included in interest expense, other net in the Company’s statement of operations and totaled $4.5 million and $4.3 million for the three month periods ended March 31, 2009 and 2008, respectively. The impact on the Company’s financial position as of December 31, 2008 and results of operations and cash flows for the three months ended March 31, 2008 from the adoption of FSP APB 14-1 is presented in the table below.

FAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and deconsolidation of a subsidiary. FAS 160 changed the presentation of the Company’s noncontrolling interests in its balance sheet and statement of operations. Specifically, noncontrolling interests now appear as a separate component of the Company’s consolidated equity on the balance sheet rather than a “mezzanine” item between liabilities and equity. Further, earnings and other comprehensive income are now separately attributed to both the controlling and noncontrolling interests. Earnings per share continues to be calculated based on net income attributable to the Company’s controlling interest. The impact on the Company’s financial position as of December 31, 2008 and results of operations and cash flows for the three months ended March 31, 2008 from the adoption of FAS 160 is presented in the table below.

6

	December 31, 2008								December 31, 2008
	Consolidated Balance Sheet		Adjustments						Consolidated Balance Sheet
(In thousands)	As Previously Reported		FSP APB 14-1			FAS 160			Retrospectively Adjusted
Deferred income taxes		26,474		(8,680	)					17,794
Other assets		29,715		(415	)					29,300
Minority interest		5,095					(5,095	)		—
Convertible subordinated notes		460,000		(21,701	)					438,299
Additional paid-in capital		1,054,517		49,168						1,103,685
Accumulated earnings		367,286		(36,562	)					330,724
Noncontrolling interest		—					5,095			5,095

	March 31, 2008									March 31, 2008
	Consolidated Statement									Consolidated Statement
	Of Operations			Adjustments						Of Operations
(In thousands, except per share data)	As Previously Reported			FSP APB 14-1			FAS 160			Retrospectively Adjusted
Interest expense and other, net		(4,398	)		(4,218	)					(8,616	)
Minority interest		(9	)					9			—
Provision for income taxes		15,480			(1,724	)					13,756
Net income		24,190			(2,494	)		9			21,705
Less: Net income attributable to the noncontrolling interest		—						(9	)		(9	)
Net income attributable to Sybase, Inc.		—						21,696			21,696
Basic net income per share		0.28						(0.28	)		—
Diluted net income per share		0.27						(0.27	)		—
Basic net income per share attributable to Sybase, Inc.		—			(0.03	)		0.28			0.25
Diluted net income per share attributable to Sybase, Inc.		—			(0.03	)		0.27			0.24

	March 31, 2008									March 31, 2008
	Consolidated Statement									Consolidated Statement
	Of Cash Flows			Adjustments						Of Cash Flows
(In thousands)	As Previously Reported			FSP APB 14-1			FAS 160			Retrospectively Adjusted
Net income		24,190			(2,494	)		9			21,705
Minority interest		9						(9	)		—
Deferred income taxes		(809	)		(1,724	)					(2,533	)
Imputed interest expense for convertible notes		—			4,310						4,310
Amortization of note issuance costs		492			(92	)					400

7

FAS 141(R) establishes principles and requirements for how an acquirer in a business combination recognizes and measures the tangible and intangible assets acquired. FAS 141(R) results in a number of significant changes, including: expanding the definitions of a “business” and a “business combination” recognition of contingent considerations at fair value on the acquisition date and, for certain arrangements, recognition of changes in fair value in earnings until settlement; and charges to expense for acquisition-related transaction and restructuring costs rather than treated as part of the cost of the acquisition.

Except for certain income tax accounting, FAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009. Generally, the effects of FAS 141(R) will depend on future acquisitions. FAS 141(R) applies retrospectively to the Company’s deferred tax asset valuation allowance relating primarily to the acquired federal tax loss carryforwards. Under FAS 141(R), any tax benefit will now be credited to the Company’s operations. As of March 31, 2009, approximately $22 million of the Company’s valuation allowance related to acquired federal tax loss carryforwards. For the three months ending March 31, 2009, no valuation allowances were released.

Issued in April 2009, FSP FAS No. 141(R)-1 amends the provisions related to the initial recognition and measurement, subsequent measurement and disclosure of assets and liabilities arising from contingencies in a business combination under FAS No. 141(R), Business Combinations. The FSP will carry forward the requirements in FAS No. 141, Business Combinations, for acquired contingencies, thereby requiring that such contingencies be recognized at fair value on the acquisition date if fair value can be reasonably estimated during the allocation period. Otherwise, entities would typically account for the acquired contingencies in accordance with FAS No. 5, Accounting for Contingencies. The FSP is effective for the Company’s business combinations for which the acquisition date is on or after January 1, 2009. Generally, the effects of SFAS 141(R)-1 will depend on future acquisitions.

FSP FAS 142-3 amends the disclosure of the factors considered in developing the renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FAS 142, “Goodwill and Other Intangible Assets.” The adoption of FSP FAS 142-3 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

FSP 157-2 deferred the effective date of FAS 157 for certain nonfinancial assets and nonfinancial liabilities, to the Company’s fiscal year beginning January 1, 2009. The adoption of FSP FAS 157-2 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

FAS 161 amended the disclosure requirements related to derivative instruments and hedging activities. The Statement requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The adoption of FAS 161 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

2. Stock-Based Compensation. The Company may grant stock options, restricted stock, and stock appreciation rights through the 2003 Stock Plan. At March 31, 2009, an aggregate of 12,145,538 shares of Common Stock have been reserved upon the exercise of options granted to qualified employees and consultants of the Company. The Board of Directors, directly or through committees, administers the 2003 Stock Plan and establishes the terms of option grants. Options and stock appreciation rights expire on terms set forth in the grant notice (generally 10 years from the grant date, and for options granted after May 25, 2005 not more than 7 years from the grant date, three months after termination of employment, two years after death, or one year after permanent disability). Options and stock appreciation rights are exercisable to the extent vested. Vesting occurs at various rates and over various time periods. Stock appreciation rights are settled by the Company in stock. In addition, the Company maintains an Employee Stock Purchase Plan. The 2003 Stock Plan, its predecessor plans, and the Employee Stock Purchase Plan are described more fully in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

The following table summarizes the total stock-based compensation expense for stock options, restricted option and stock grants, and stock appreciation rights that was recorded in the Company’s results of operations for the three months ended March 31, 2009 and 2008.

	Three Months Ended
	March 31,
(In thousands, except per share data)	2009			2008
Cost of services	$	342		$	359
Cost of messaging		138			91
Sales and marketing		1,400			1,356
Product development and engineering		718			664
General and administrative		3,152			3,241
Stock-based compensation expense included in total costs and expenses		5,750			5,711
Tax benefit related to stock-based compensation expense		(1,605	)		(1,625	)
Stock-based compensation expense included in net income	$	4,145		$	4,086
Reduction of net income per share:
Basic	$	0.05		$	0.05
Diluted	$	0.05		$	0.05

8

As of March 31, 2009, there was $48.4 million of total unrecognized compensation cost before income tax benefit related to non-vested stock-based compensation arrangements granted under all equity compensation plans. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. The Company expects to recognize the cost for stock options and stock appreciation rights over a weighted average period of 2.5 years. The Company expects to recognize the cost for restricted stock over a weighted average period of 1.7 years.

3. Net income per share attributable to Sybase, Inc.

Shares used in computing basic and diluted net income per share attributable to Sybase, Inc. are based on the weighted average shares outstanding in each period, excluding treasury stock. Basic net income per share excludes any dilutive effects of stock options, unvested restricted stock, stock appreciation rights and the Company’s convertible subordinated debt. Diluted net income per share includes the dilutive effect of the assumed exercise of stock options, vesting of restricted stock, and stock appreciation rights using the treasury stock method. The computation of diluted earnings per share includes the dilutive effects of the Company’s convertible subordinated debt due to the appreciation of the Company’s stock price, if any. Such computation includes computing the excess, if any, of the average price of the Company’s common stock over the conversion price of $24.99 per share. The Company calculates the average stock price in accordance with the terms of the debt agreement. The Company has consistently applied this policy to all periods in which the convertible debt had a dilutive effect on earnings per share. See Note 10 — Convertible Subordinated Notes. The following table shows the computation of basic and diluted net income per share:

	Three Months Ended
	March 31,
(In thousands, except per share data)	2009		2008 (1)
Net income attributable to Sybase, Inc.	$	28,085	$	21,696
Basic net income per share attributable to Sybase, Inc.	$	0.35	$	0.25
Shares used in computing basic net income per share attributable to Sybase, Inc.		79,809		87,672
Diluted net income per share attributable to Sybase, Inc.	$	0.33	$	0.24
Shares used in computing basic net income per share attributable to Sybase, Inc.		79,809		87,672
Dilutive effect of stock options, restricted stock and stock appreciation rights		2,008		2,156
Dilutive effect of convertible subordinated debt		2,634		950
Shares used in computing diluted net income per share attributable to Sybase, Inc.		84,451		90,778

⁽¹⁾ As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See “Note 1 – Basis of Presentation” and “Note 10 – Convertible Subordinated Notes.”

The anti-dilutive weighted average shares that were excluded from the shares used in computing diluted net income per share were 2.6 million and 2.7 million for the three month periods ended March 31, 2009 and 2008, respectively. The Company excludes shares with combined exercise prices and unamortized fair values that are greater than the average market price for the Company’s common stock from the calculation of diluted net income per share because their effect is anti-dilutive.

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

	Three Months Ended
	March 31,
(In thousands)	2009			2008 (1)
Net income	$	28,101		$	21,705
Foreign currency translation gains (losses)		(14,756	)		19,881
Change in unrealized losses on marketable securities		(5	)		(176	)
Comprehensive income		13,340			41,410
Less: Comprehensive income attributable to noncontrolling interest		16			9
Comprehensive income attributable to Sybase, Inc.	$	13,324		$	41,401

⁽¹⁾ As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See “Note 1 – Basis of Presentation” and “Note 10 – Convertible Subordinated Notes.”

The Company’s foreign currency translation gains (losses) primarily arise from its substantial net assets denominated in certain European currencies. Translation losses generally occur when the dollar strengthens against these currencies while translation gains arise when the dollar weakens against these currencies. The Company has classified all of its debt and equity securities as available-for-sale pursuant to FAS 115 except those trading securities that are invested as directed by participants of a Rabbi Trust related to the Company’s deferred compensation plan. Securities classified as available-for-sale are recorded at fair value and unrealized holding

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gains and losses, excluding other-than-temporary impairments, net of the related tax effect, if any, are not reflected in earnings but are reported as a separate component of other comprehensive income until realized. See Note 13 – Fair Value Measurements.

5. Segment Information. The Company was organized into three separate reportable business segments each of which focused on one of three key market segments: Infrastructure Platform Group (IPG), which principally focuses on enterprise class database servers, integration and development products; iAnywhere Solutions, Inc. (iAS), which provides mobile database and mobile enterprise solutions; and Sybase 365 (SY365), which provides application services that allows customers to easily deliver and financially settle mobile data and messages, including short message services or SMS and multimedia messaging services or MMS.

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

Certain common costs and expenses are allocated based on measurable drivers of expense. Unallocated expenses or savings represent corporate activities (expenditures or cost savings) that are not specifically allocated to the segments including stock-based compensation expenses and reversals of restructuring expenses associated with restructuring activities undertaken prior to 2003. Unallocated costs for the three month periods ended March 31, 2009 and 2008 consisted primarily of stock-based compensation expenses.

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

A summary of the segment financial information reported to the CEO for the three months ended March 31, 2009 is presented below:

											Consolidated
(In thousands)	IPG			iAS		SY365		Elimination			Total
Revenues:
License fees
Infrastructure	$	65,384		$	13	$	372		—		$	65,769
Mobile and Embedded		10,305			13,192		10		—			23,507
Subtotal license fees		75,689			13,205		382		—			89,276
Intersegment license revenues		29			8,585		9	$	(8,623	)		—
Total license fees		75,718			21,790		391		(8,623	)		89,276
Services
Direct service revenue		125,129			9,478		367		—			134,974
Intersegment service revenues		—			7,531		—		(7,531	)		—
Total services		125,129			17,009		367		(7,531	)		134,974
Messaging		—			—		43,263		—			43,263
Total revenues		200,847			38,799		44,021		(16,154	)		267,513
Total allocated costs and expenses before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		144,216			30,437		40,153		(16,154	)		198,652
Operating income before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		56,631			8,362		3,868		—			68,861
Amortization of other purchased intangibles		527			1,023		2,173		—			3,723
Amortization of purchased technology		78			2,010		1,113		—			3,201
Operating income before cost of restructure and unallocated costs		56,026			5,329		582		—			61,937
Reversal of restructure - 2009 Activity		(10	)		—		—		—			(10	)
Operating income before unallocated costs		56,036			5,329		582		—			61,947
Unallocated costs												5,050
Operating income												56,897
Interest income, interest expense and other, net												(8,901	)
Income before income taxes											$	47,996

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A summary of the segment financial information reported to the CEO for the three months ended March 31, 2008 is presented below:

										Consolidated
(In thousands)	IPG		iAS		SY365		Elimination			Total (1)
Revenues:
License fees
Infrastructure	$	56,379	$	59	$	12		—		$	56,450
Mobile and Embedded		6,237		15,437		—		—			21,674
Subtotal license fees		62,616		15,496		12		—			78,124
Intersegment license revenues		62		5,198		—	$	(5,260	)		—
Total license fees		62,678		20,694		12		(5,260	)		78,124
Services
Direct service revenue		128,134		10,692		571		—			139,397
Intersegment service revenues		5		8,125		—		(8,130	)		—
Total services		128,139		18,817		571		(8,130	)		139,397
Messaging		8		—		42,619		—			42,627
Total revenues		190,825		39,511		43,202		(13,390	)		260,148
Total allocated costs and expenses before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		150,864		34,646		39,063		(13,390	)		211,183
Operating income before amortization of other purchased intangibles, purchased technology, cost of restructure and unallocated costs		39,961		4,865		4,139		—			48,965
Amortization of other purchased intangibles		527		1,023		1,966		—			3,516
Amortization of purchased technology		403		2,151		993		—			3,547
Operating income before cost of restructure and unallocated costs		39,031		1,691		1,180		—			41,902
Cost of restructure - 2008 Activity		27		—		—		—			27
Operating income before unallocated costs		39,004		1,691		1,180		—			41,875
Unallocated costs											5,711
Operating income											36,164
Interest income, interest expense and other, net											(703	)
Income before income taxes										$	35,461

⁽¹⁾ As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See “Note 1 – Basis of Presentation” and “Note 10 – Convertible Subordinated Notes.”

6. Goodwill and Intangible Assets.

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

										Consolidated
(In thousands)	IPG			iAS			SY365			Total
Balance at January 1, 2009	$	73,885		$	102,788		$	350,478		$	527,151
Reduction in goodwill recorded on Paybox acquisition		—			—			(27	)		(27	)
Foreign currency translation adjustments & other		(340	)		(213	)		(1,093	)		(1,646	)
Balance at March 31, 2009	$	73,545		$	102,575		$	349,358		$	525,478

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

	March 31, 2009							December 31, 2008
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
(In thousands)	Amount		Amortization			Amount		Amount		Amortization			Amount
Purchased technology	$	168,550	$	(128,169	)	$	40,381	$	169,758	$	(125,265	)	$	44,493
AvantGo tradenames		3,100		—			3,100		3,100		—			3,100
XcelleNet tradenames		4,000		—			4,000		4,000		—			4,000
Covenant not to compete		319		(298	)		21		319		(271	)		48
Customer lists		112,390		(55,509	)		56,881		114,632		(52,303	)		62,329
Totals	$	288,359	$	(183,976	)	$	104,383	$	291,809	$	(177,839	)	$	113,970

Gross and net carrying amounts vary from quarter to quarter due to currency translation of non-dollar denominated balances and amortization. The amortization expense on these intangible assets for the three months ended March 31, 2009 was $6.9 million, of which $2.1 million was included within “cost of license fees” and $1.1 million was included within “cost of messaging”. Estimated amortization expense for each of the next five years ending December 31, is as follows (dollars in thousands):

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2009	$	27,514
2010		25,537
2011		20,227
2012		13,659
2013		11,683

The AvantGo and XcelleNet tradenames were assigned an indefinite life and will not be amortized but instead tested for impairment in the same manner as goodwill. At March 31, 2009 the weighted average amortization period of the gross carrying value of other purchased intangible assets was 7.3 years.

7. Litigation.

On July 13, 2006, Telecommunications Systems, Inc. (“TCS”), a wireless services provider, filed a complaint for patent infringement in the U.S. District Court for the Eastern District of Virginia, alleging that Mobile 365 infringes U.S. Patent 6,985,748 (the “‘748 patent”). The matter was tried before a jury beginning on May 14, 2007. On May 25, 2007, the jury rendered its verdict, finding that Mobile 365 willfully infringed the ‘748 patent, and awarded TCS a total amount of $12.1 million. TCS filed post-trial motions for enhanced damages and attorneys’ fees, for an award of prejudgment interest, and for entry of a permanent injunction (although it requested that any injunction be stayed pending the outcome on appeal), but subsequently withdrew its request for enhanced damages for the time period prior to the verdict. Sybase 365 filed post-trial motions for a judgment in its favor as a matter of law, for reduction of the jury award, and for entry of judgment in its favor based on TCS’s inequitable conduct before the Patent and Trademark Office in obtaining the patent. The court has made the following rulings: i) granted TCS’s motion for an injunction but stayed it pending the outcome on appeal, ii) granted TCS’s motion for pre-judgment interest, at the rate of prime plus 1%, compounded quarterly, iii) granted Sybase 365’s motion for remittitur, reducing the pre-issuance damages portion of the jury award by $2.2 million, iv) denied Sybase 365’s motions for judgment as a matter of law, for reduction of the jury award, and for entry of judgment based on inequitable conduct, and v) denied TCS’s motion for attorneys’ fees. The court entered an agreed form of judgment in the matter on March 31, 2009 in the amount of $12.1 million. The Court also entered an injunction against use or sale of the SMS Exchange 1.0 and SMS Exchange 1.01 text messaging systems or any other systems not more than colorably different therefrom that provides phone-number-only text message routing by using a database associating subscriber phone numbers with routing carriers and a database associating carriers with routing syntax to route digital message packets. However, the Court stayed the injunction pending appeal. The Court also ordered that a $15 million escrow may be established in lieu of a bond to secure the final judgment pending appeal. Sybase 365 has established the escrow. Sybase 365 has filed an appeal of the judgment.

In addition, the court issued a ruling in favor of Sybase 365 on a motion it filed 1) holding TCS in contempt of court for violating the protective order when it filed confidential Sybase 365 documents with the Patent & Trademark Office; 2) awarding Sybase 365 the full attorneys’ fees and costs it had incurred in seeking protection for those documents and in bringing the contempt motion, in the amount of $0.3 million and 3) barring TCS’s patent prosecution attorney, William Bollman, and his firm from substantive involvement in the preparation or prosecution of TCS patent applications in the area of intercarrier or other text, SMS or multi-media messaging during the pendency of this litigation (including appeals) and for a period of 12 months thereafter.

The November 2006 merger agreement between Sybase and Mobile 365 established an escrow which provides for indemnification of Sybase by Mobile 365’s former stockholders for certain losses related to the TCS litigation. Sybase believes that the escrow established by the merger agreement will be adequate to address the substantial majority of losses, if any, related to this litigation.

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

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

Sybase is a party to various other legal disputes and proceedings arising in the ordinary course of business. In the opinion of management, resolution of these matters, including the above mentioned legal matter, is not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations as the Company believes it has either adequately accrued or has adequate indemnification rights for these matters at March 31, 2009. However, depending on the amount and timing of such resolution, an unfavorable resolution of some or all of these matters could materially affect the Company’s future results of operations or cash flows in a particular period.

8. Stock Repurchase Plan. Beginning in 1998, the Board of Directors authorized the Company to repurchase the Company’s outstanding common stock from time to time, subject to price and other conditions. On April 26, 2006 the Board of Directors of the Company approved a $250 million increase to the Company’s stock repurchase program. From the program’s inception through

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March 31, 2009, the Company has used an aggregate total of $787.5 million under the stock repurchase program (of the total $850 million authorized) to repurchase an aggregate total of 43.4 million shares.

9. Restructuring.

     The Company embarked on restructuring activities in 2004, 2002 and 2001 (the 2004, 2002 and 2001 Plans, respectively) as a means of managing its operating expenses. For descriptions of each restructuring plan, see Note 13 to Consolidated Financial Statements, Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, which information is incorporated here by reference.

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

(Dollars in thousands)	2004			2002			2001
Restructuring plan
Accrued liabilities at December 31, 2008	$	2,254		$	3,391		$	713
Amounts paid		(296	)		(679	)		(89	)
Amounts added/(reversed)		(10	)
Accrued liabilities at March 31, 2009	$	1,948		$	2,712		$	624

10. Convertible Subordinated Notes. On February 22, 2005, the Company issued through a private offering to qualified institutional buyers in the U.S. $460 million of convertible subordinated notes (“notes”) pursuant to exemptions from registration afforded by the Securities Act of 1933, as amended. These notes have imputed and stated interest rates of 6.09 percent and 1.75 percent, respectively, and are subordinated to all of the Company’s future senior indebtedness. The notes mature on February 22, 2025 unless earlier redeemed by the Company at its option, or converted or put to the Company at the option of the holders.

The Company may redeem all or a portion of the notes at par on and after March 1, 2010. The holders may require that the Company repurchase notes at par on February 22, 2010, February 22, 2015 and February 22, 2020. During the quarter ended March 31, 2009 the Company reclassified the outstanding balance related to the notes from long term liabilities to short term debt as the holders of the notes may require the Company to repurchase all or a portion of their notes on February 22, 2010.

The holders may convert the notes into the right to receive the conversion value (i) when the Company’s stock price exceeds 130% of the $24.99 per share adjusted conversion price (equal to $32.49 per share) for a specified time, (ii) in certain change in control transactions, (iii) if the notes are redeemed by the Company, (iv) in certain specified corporate transactions, and (v) when the trading price of the notes does not exceed a minimum price level. During the three months ended March 31, 2009, the Company’s stock price did not exceed 130% of the $24.99 per share adjusted conversion price for the required specified time. For each $1,000 principal amount of notes, the conversion value represents the amount equal to 40.02 shares multiplied by the per share price of the Company’s common stock at the time of conversion. If the conversion value exceeds $1,000 per $1,000 in principal of notes, the Company will pay $1,000 in cash and may pay the amount exceeding $1,000 in cash, stock or a combination of cash and stock, at the Company’s election.

As a result of the completion of a self tender offer on April 15, 2008, the conversion rate for the notes has been adjusted from 39.6511 shares of the Company’s common Stock per $1,000 principal amount of notes to 40.02 shares of the Company’s common stock per $1,000 principal amount of the notes.

Interest is payable semi-annually in arrears on February 22 and August 22 of each year, commencing on August 22, 2005. The Company recognized interest expense of $6.5 million and $6.3 million for the three months ended March 31, 2009 and 2008, respectively, which includes $4.5 million and $4.3 million of amortization of debt discount for each of the three month periods, respectively (see Note 1 – Basis of Presentation). The Company also amortized of debt issuance costs totaling $0.4 million for the three months ended March 31, 2009 and 2008, respectively.

Offering fees and expenses associated with the debt offering were approximately $9.8 million when the notes were issued.

As a result of the adoption of FSP APB 14-1 (see Note 1 – Basis of Presentation), the carrying amount of the notes was retrospectively adjusted to reflect a discount of $85.0 million on the date of issuance, with an offsetting increase in additional paid-in capital of $51.0 million and reduction of deferred tax asset of $34.0 million. Such discount is amortized to interest expense over a five year period ending February 22, 2010, the date on which holders of the notes may first require the Company to repurchase all or a portion of their notes. The amortization is included in interest expense and other, net in the Company’s condensed consolidated statement of operations and totaled $4.5 million and $4.3 million for the three month periods ended March 31, 2009 and 2008, respectively. In addition, the debt issuance costs have been restated to $8.0 million at time of issuance with the remaining $1.8 million difference

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allocated to additional paid-in capital. The debt issuance costs and related amortization have been restated for all prior periods presented. The unamortized balance of debt issuance costs is included in “other assets” in the Company’s condensed consolidated balance sheets at March 31, 2009 and December 31, 2008. This asset will be amortized into interest expense on a straight-line basis over a five-year period which corresponds to the earliest put date. This approximates the effective interest method. The remaining unamortized debt issuance costs were $1.4 million and $1.8 million at March 31, 2009 and December 31, 2008, respectively.

The carrying amount of the equity component of the notes and the principal amount, unamortized discount and net carrying amount of the liability component of the notes as of March 31, 2009 and December 31, 2008 were as follows:

	As of
	March 31,			December 31,
	2009			2008
				As Adjusted
	(In millions)
Gross equity component of notes	$	85.0		$	85.0
Deferred tax asset reduction		(34.0	)		(34.0	)
Equity issuance costs		(1.8	)		(1.8	)
Equity component of notes	$	49.2		$	49.2
Principal amount of notes	$	460.0		$	460.0
Unamortized discount of notes		(17.2	)		(21.7	)
Liability component of notes	$	442.8		$	438.3

Although the notes were not convertible on March 31, 2009, the amount by which the notes’ if-converted value on that date exceeded its principal amount was $60.7 million.

11. Income Taxes. The effective tax rate for the periods presented is the result of the mix of income projected to be earned in various tax jurisdictions that apply a broad range of income tax rates. A change in the mix of pretax income from these various tax jurisdictions can have a significant impact on the Company’s periodic effective tax rate.

Our effective tax rate was approximately 41.5 percent and 38.8 percent for the three months ending March 31, 2009 and March 31, 2008, respectively. Our effective tax rate for both years differ from the statutory rate of 35 percent primarily due to the impact of state taxes, the addition of a valuation allowance for the expected non-deductibility of securities impairment losses due to capital loss limitations, and for 2009, a non-recurring tax charge recorded for a reduction in our state net deferred tax assets as a result of a California tax law enacted during the three months ending March 31, 2009. These increases were partially offset by earnings in lower tax jurisdictions. The amount of tax recorded increased primarily because of an increase in our earnings for the same comparative periods.

Sybase, Inc. or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for years before 2005. The Company is under U.S. federal tax examination for the years 2006 and 2007. Income tax returns filed in certain other foreign jurisdictions and states are under examination.

As of December 31, 2008, the total amount of our unrecognized tax benefits was $64.7 million of which $63 million would impact our effective tax rate if recognized. There was no material change to these amounts during the three months ended March 31, 2009. During the next 12 months, it is reasonably possible that the total amounts of unrecognized tax benefits will decrease by between $7 million to $16 million due to tax settlement payments and the expiration of statute of limitations. The Company believes that it has adequately provided for any reasonably foreseeable outcomes related to its tax audits and that any settlement will not have a material adverse effect on its consolidated financial position or results of operations. However, if the Company’s estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result.

We recognize interest and penalties related to unrecognized tax benefits within the provision for income taxes. At December 31, 2008, we had accrued $3.7 million for the payment of interest and had no accruals for the payment of penalties. The amount of interest and penalties recognized during the three months ended March 31, 2009 was not significant.

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12. Fair Value Measurements.

On January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under SFAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under SFAS 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The three levels are as follows:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The adoption of this statement did not have a material impact on the Company’s consolidated results of operations and financial condition.

Effective January 1, 2008, the Company adopted SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for specified financial assets and liabilities on a contract-by-contract basis. The Company did not elect to adopt the fair value option under this Statement.

Effective September 30, 2008, the Company adopted FSP 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active.” This statement clarifies the application of SFAS 157 in a market that is not active.

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of March 31, 2009 (in thousands):  

	Level 1		Level 2		Level 3		Total
Money market funds	$	529,698		—		—	$	529,698
Trading securities		8,619		—		—		8,619
Available-for-sale cash investments		87,373		—	$	13,714		101,087
Total	$	625,690		—	$	13,714	$	639,404

Money market funds are included in cash and cash equivalents on the Company’s condensed consolidated balance sheet. Level 1 available-for-sale cash investments consist of short-term bank deposits and debt securities with maturities less than one year. These cash investments are included in cash and cash equivalents and short-term cash investments on the Company’s condensed consolidated balance sheet. Level 1 trading securities are the defined set of mutual funds that are invested as directed by participants of the Rabbi Trust established related to the Company’s deferred compensation plan. The trading securities are included in short-term cash investments on the Company’s consolidated balance sheet. Level 3 assets consist of six auction rate securities (ARS).

ARS are floating rate securities with longer-term maturities which were marketed by financial institutions with auction reset dates at 28 day intervals to provide short term liquidity. The underlying collateral of the ARS held by the Company consist primarily of commercial paper, debt instruments issued by governmental agencies and governmental sponsored entities, Euro dollar deposits, banker acceptances, repurchase agreements, money funds, auction rate securities, collateralized debt obligations, and similar assets. Certain of the ARS may have limited direct or indirect investments in mortgages, mortgage related securities, or credit default swaps. The credit ratings for five of the ARS were AAA and for one of the ARS was AA at the time of purchase. Beginning in August 2007 and into September 2007, each of the ARS auctions began to fail due to a lack of market for these securities. As of March 31, 2009, the credit ratings of four of the ARS were Baa1, the credit rating on a fifth ARS was Baa2, and the credit rating on a sixth ARS was

15

B3. In addition the investments currently lack short-term liquidity. The Company will not be able to access these funds until a future auction for the ARS investments is successful or until the Company sells the securities in a secondary market which currently does not exist.

Through March 31, 2009, the Company has recorded charges to earnings for other than temporary impairment losses totaling $15.2 million for the six ARS. The determination of whether each ARS is other than temporarily impaired is based on a variety of factors including (i) the quality and estimated value of the investments held by the trust/issuer; (ii) the financial condition and credit rating of the trust, issuer, sponsors, and insurers; and, (iii) the frequency of the auction function failing. Changes in these and other factors could result in additional realized impairment losses. Based on the Company’s cash, cash equivalents and cash investment balances of $705.8 million as of March 31, 2009 and expected operating cash flows, the Company does not anticipate that the lack of liquidity for the ARS will adversely affect its ability to conduct business.

The fair values of the ARS as of March 31, 2009 are based on an estimation employing a discounted cash flow model for each of the six ARS using credit related discount rates and term to recovery as key inputs. The ARS are included in long-term cash investments on the Company’s condensed consolidated balance sheet. The following table provides a summary of changes in fair value of the Company’s Level 3 financial assets as of March 31, 2009 (in thousands):  

	Auction Rate
	Securities
Balance at December 31, 2008	$	15,513
Impairment loss included in interest expense and other, net		(1,799	)
Balance at March 31, 2009	$	13,714

As of March 31, 2009, the Company does not have liabilities that are measured at fair value on a recurring basis.

13. Recent Accounting Pronouncements.

FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”

In April 2009, the Financial Accounting Standards Board (“FASB”) issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides guidance on determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms Statement 157 which states the objective of fair value measurement—to reflect how much an asset would be sold for in an orderly transaction (as opposed to a distressed or forced transaction) at the date of the financial statements under current market conditions. Specifically, this staff position reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. FSP FAS 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. The Company is currently evaluating the potential impact of the provisions of FSP FAS 157-4.

FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments”

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments”(FSP FAS 115-2 and FAS 124-2). FSP FAS 115-2 and FAS 124-2 focuses on other-than-temporary impairments. FSP FAS 115-2 and FAS 124-2 provides guidance on how to bring greater consistency to the timing of impairment recognition, and provides greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. FSP FAS 115-2 and FAS 124-2 also requires increased and more timely disclosures sought by investors regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods ending after June 15, 2009. The Company is currently evaluating the potential impact of the provisions of FSP FAS 115-2 and FAS 124-2.

FSP FAS 107-1 and APB 28-1 “Interim Disclosures About Fair Value of Financial Instruments”

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1 “Interim Disclosures About Fair Value of Financial Instruments” (FSP FAS 107-1 and APB 28-1).  The FSP amends SFAS No. 107 “Disclosures about Fair Value of Financial Instruments” to require an entity to provide disclosures about fair value of financial instruments in interim financial information. This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009. The Company is currently evaluating the potential impact of the provisions of FSP FAS 107-1 and APB 28-1.

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

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

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

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

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

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

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

You should read this MD&A in conjunction with the Consolidated Financial Statements and related Notes in Item 1 and our Annual Report on Form 10-K for the year ended December 31, 2008.

Effective January 1, 2009, we adopted FSP No. APB 14-1, “Accounting for Convertible Debt Instruments that May be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (FSP APB 14-1). FSP APB 14-1 requires certain issuers of convertible debt instruments to separately account for the liability and equity (conversion feature) components of the instruments. Retrospective adoption is required. As a result, interest expense for all periods presented is now imputed and recognized on the Company’s convertible subordinated notes based on the 6.09 percent nonconvertible debt borrowing rate which would have applied to the Company in February of 2005 when it issued the Notes. Previously interest expense was recognized based on the 1.75 percent stated rate. In accordance with the transition provisions of FSP APB 14-1, the carrying amount of the Notes was retrospectively adjusted to reflect a discount of $85.0 million on the date of issuance, with an offsetting increase in additional paid-in capital of $51.0 million and deferred tax asset reduction of $34.0 million See Notes 1 and 10 to Condensed Consolidated Financial Statements – Basis of Presentation and Convertible Subordinated Notes, respectively, Part I, Item I.

Executive Overview

Our Business

Sybase is a global enterprise software and services company exclusively focused on managing and mobilizing information from the data center to the point of action. We provide open, cross platform solutions that securely deliver information anytime, anywhere, providing decision-ready information to the right people at the right time.

Our value proposition involves enabling the Unwired Enterprise by allowing enterprises to extend their information securely and make it useful for people anywhere using any device. We deliver a full range of solutions to ensure that customer information is securely managed and mobilized to the point of action, including enterprise and mobile databases, middleware, synchronization, encryption and device management software, and mobile messaging services.

Our business is organized into three business segments: IPG, which principally focuses on enterprise class database servers, integration and development products; iAS, which provides mobile database and mobile enterprise solutions; and Sybase 365, which provides global services for mobile messaging interoperability and the management and distribution of mobile content. For further discussion of our business segments, see Condensed Consolidated Financial Statements, Note 5 — Segment Information, Part I, Item 1.

Our Results

We reported total revenues of $267.5 million for the three months ended March 31, 2009, which represented a $7.4 million (3 percent) increase from total revenues of $260.1 million for the same period last year. The increase in total revenues was attributable to a 14 percent increase in our license revenues, partially offset by a 3 percent decrease in our services revenue. Our IPG segment saw a $10.0 million (5 percent) increase in revenues, Sybase 365 grew revenues $0.8 million (2 percent) and iAS experienced a $0.7 million (2 percent) decrease in revenues. The year-over-year revenue impact resulting from foreign exchange differences was a reduction of approximately 6 percent.

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The increase in IPG revenues was driven by a 21 percent increase in license revenue. The growth in IPG license revenues was primarily attributed to a 32 percent increase in database revenues, namely our Adaptive Server^® Enterprise (ASE), IQ Analytic Server, and Risk Analytics Platform (RAP) products. This increase was partially offset by an 8 percent decline in revenues from professional services. Sybase 365 messaging revenues increased 1 percent. The Sybase 365 segment was disproportionately impacted by currency exchange (approximately 10 percent ) because 64 percent of its revenues comes from outside the U.S. The decrease in iAS revenues was driven by a 10 percent decrease in service revenue partially offset by a 5 percent increase in license revenues.

We reported net income of $28.1 million for the quarter ended March 31, 2009, compared to $21.7 million for the same period last year. For the quarter ended March 31, 2009 our operating income was $56.9 million (21 percent operating margin) compared to $36.2 million (14 percent operating margin) for the same period in 2008. The increase in operating income was primarily attributable to the IPG segment’s $17.0 million increase in operating income representing both their revenue growth and operating margin expansion.

The first quarter is traditionally our strongest quarter for cash generation, and during the three months ended March 31, 2009, we generated net cash from operating activities of $97.4 million. Our days sales outstanding in accounts receivable was 78 days for the quarter ended March 31, 2009 compared to 76 days for the quarter ended March 31, 2008.

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

Business Trends

We are encouraged by the strength of our pipeline and the general health of our business. We believe, however, that the overall spending environment will be very challenging in 2009, due to the global recession and reductions in capital expenditures on information technology. While our short-term pipeline is strong, it is more difficult than in the past to predict the overall buying environment in the second half of the year. Additionally, in 2009 we expect that our year-over-year revenue and net margin comparisons will be adversely impacted by a significant strengthening of the U.S. dollar against various foreign currencies, most specifically the Euro and other European currencies.

Our customers are focused on IT projects that reduce cost and generate a quick return on investment. Within this framework we continue to see spending strength on mission critical applications where enterprise data volumes continue to grow. This has resulted in strong demand for our ASE 15.0 product, for which we added 218 new customers during the first quarter.

We also benefit from strong demand for new capabilities like business analytics and risk management. We added 43 new customers for our IQ Analytic Server product and 5 new customers for our Risk Analytics Platform (RAP) product. IQ offers a highly optimized analytic engine specifically designed to deliver dramatically faster results for business intelligence, analytic and reporting solutions. Our RAP product, which is built on IQ, is targeted to the financial service industry for risk, trading and compliance analytics. The pipeline for RAP, which was launched in the first half of 2008, continues to build and provides what we believe, will be a future growth engine for our IQ product.

In contrast, we believe spending on discretionary projects and solutions requiring long professional services engagements will be weak during 2009. In the first quarter we saw a decline of approximately 12 percent in our professional services business, and expect continued year-over-year declines in this business throughout the year

With respect to the market for mobility and integration products we believe these products continue to gain market acceptance and will provide us with growth opportunities in the future. In the first quarter we announced an important business partnership with SAP which will leverage the new Sybase Unwired Platform to extend SAP Business Suite functionality to all major device platforms. With over 40 million licensed users, the SAP installed base provides us with significant opportunities to expand our enterprise mobility footprint in the future.

In messaging services, we expect continued growth in worldwide Short Messaging Services (SMS) and Multimedia Messaging Services (MMS) traffic and expanding demand for mobile data roaming (GRX) services. Additionally, we continue to see growth in enterprise adoption of mobile messaging as a cost effective channel for real-time customer interaction. Offsetting to some extent the growth in message volume has been continued price compression and declines in mobile advertising and content delivery. Our future plans call for offering new value added services such as hosted analytics and mobile commerce solutions. We believe these offerings will allow us to demonstrate service differentiation and provide us with the opportunity to expand margins for the messaging business.

In 2009 we will aggressively maintain cost controls to improve margins. One area of focus will be to drive cost and revenue synergies between our operating segments by eliminating research and development overlap, combining marketing efforts, integrating back office functions and streamlining business operations. With this focus we believe we can improve operating results and maintain our strong cash flow in an uncertain environment.

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Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with U.S. generally accepted accounting principles (GAAP). These accounting principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of our financial statements. We also are required to make certain judgments that affect the reported amounts of revenues and expenses during each reporting period. We believe that the estimates, assumptions and judgments involved in the accounting policies described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2008 have the greatest potential impact on our financial statements, so we consider them to be our critical accounting policies and estimates. Except for changes to convertible debt accounting as described in Note 1 to the Condensed Consolidated Financial Statements, Part 1, Item 1 of the Form 10-Q, we believe that during the first three months of 2009 there were no significant changes in those critical accounting policies and estimates. Senior management has reviewed the development and selection of our critical accounting policies and estimates and their disclosure in this Quarterly Report on Form 10-Q with the Audit Committee of our Board of Directors.

A discussion of each of our other critical accounting policies is included in our annual report on Form 10-K for the year ended December 31, 2008.

Recent Accounting Pronouncements

FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”

In April 2009, the Financial Accounting Standards Board (“FASB”) issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides guidance on determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms Statement 157 which states the objective of fair value measurement—to reflect how much an asset would be sold for in an orderly transaction (as opposed to a distressed or forced transaction) at the date of the financial statements under current market conditions. Specifically, this staff position reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. FSP FAS 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. We are currently evaluating the potential impact of the provisions of FSP FAS 157-4.

FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments”

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments”(FSP FAS 115-2 and FAS 124-2). FSP FAS 115-2 and FAS 124-2 focuses on other-than-temporary impairments. FSP FAS 115-2 and FAS 124-2 provides guidance on how to bring greater consistency to the timing of impairment recognition, and provides greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. FSP FAS 115-2 and FAS 124-2 also requires increased and more timely disclosures sought by investors regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods ending after June 15, 2009. We are currently evaluating the potential impact of the provisions of FSP FAS 115-2 and FAS 124-2.

FSP FAS 107-1 and APB 28-1 “Interim Disclosures About Fair Value of Financial Instruments”

In April 2009, the FASB issued FSP FAS 107-1 APB 28-1 “Interim Disclosures About Fair Value of Financial Instruments” (FSP FAS 107-1 and APB 28-1).  FSP FAS 107-1 and APB 28-1 addresses fair value disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value. Prior to the issuance of FSP FAS 107-1 and APB 28-1, fair values for these assets and liabilities were only disclosed once a year. This FSP now requires these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value. FSP FAS 107-1 and APB 28-1 is effective for interim reporting periods ending after June 15, 2009. We are currently evaluating the potential impact of the provisions of FSP FAS 107-1 and APB 28-1.

FAS No. 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies. FSP SFAS No. 141(R)-1”

In April 2009, FASB issued FSP SFAS No. 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies. FSP FAS No. 141(R)-1 will amend the provisions related to the initial recognition and measurement, subsequent measurement and disclosure of assets and liabilities arising from contingencies in a business combination under FAS No. 141(R), Business Combinations. The FSP will carry forward the requirements in FAS No. 141, Business Combinations, for acquired contingencies, thereby requiring that such contingencies be recognized at fair value on the acquisition date if fair value can be reasonably estimated during the allocation period. Otherwise, entities would typically account for the acquired contingencies in accordance with FAS No. 5, Accounting for Contingencies. The FSP will have the same effective date as FAS No. 141(R), and is therefore effective for our business combinations for which the acquisition date is on or after January 1, 2009. Generally, the effects of FAS 141(R)-1 will depend on future acquisitions.

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Results of Operations

Revenues
(Dollars in millions)

	Three Months ended March 31,
							Percent
	2009			2008			Change
License fees by segment:
IPG	$	75.7		$	62.7			21	%
IAS		21.8			20.7			5	%
SY365		0.4			0.0			*
Eliminations		(8.6	)		(5.3	)		62	%
Total license fees	$	89.3		$	78.1			14	%
Percentage of total revenues		33	%		30	%
Services by segment:
IPG	$	125.1		$	128.1			(2	%)
IAS		17.0			18.8			(10	%)
SY365		0.4			0.6			(33	%)
Eliminations		(7.5	)		(8.1	)		(7	%)
Total services	$	135.0		$	139.4			(3	%)
Percentage of total revenues		51	%		54	%
SY365 messaging revenue	$	43.2		$	42.6			1	%
SY 365 messaging as percentage of total revenues		16	%		16	%
Total revenues	$	267.5		$	260.1			3	%

* Not meaningful

License revenues increased $11.2 million (14 percent) for the three months ended March 31, 2009 compared to the same period last year. The increase in license revenues during the quarter was primarily attributable to a $13.0 million (21 percent) increase in IPG license revenues and a $1.1 million (5 percent) increase in iAS license revenues. The increase in IPG license revenues was driven by a 32 percent increase in database license revenues, namely our Adaptive Server^® Enterprise (ASE), IQ Analytic Server, and Risk Analytics Platform (RAP) products. The increase in iAS license revenues was largely attributable to a 13 percent increase in our small-footprint database products.

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

Total services revenues (which include technical support, professional services and education) decreased $4.4 million (3 percent) for the three months ended March 31, 2009 compared to the same period in 2008 primarily due to a $3.0 million (2 percent) decrease in IPG service revenues and a $1.8 million (10 percent) decrease in iAS service revenues. The decrease in IPG service revenues was largely due to a decrease in professional services of $1.8 million and in education revenues of $0.7 million. The decrease in iAS service revenues was mostly due to a decrease in technical support of $1.3 million and in professional services of $0.5 million. Unfavorable currency exchange rates largely contributed to the decline in technical support revenues.

Total technical support revenues decreased $0.9 million (1 percent) for the three months ended March 31, 2009 compared to the same period in 2008. Technical support revenues comprised approximately 81 percent of total services revenues for the three month period ended March 31, 2009 and 79 percent for the same period in 2008. The 1 percent decrease was due to a 5 percent growth in constant currency offset by negative currency exchange impact of 6 percent. Current and long-term deferred revenue balances in the balance sheet relate principally to technical support contracts and decreased $4.5 million (2 percent) from March 31, 2008.

Services revenues other than technical support decreased $3.5 million (12 percent) for the three months ended March 31, 2009 compared to the same period in 2008. The decrease was primarily related to a $2.3 million (9 percent) decrease in professional services, and a $0.8 million (32 percent) decrease in education revenue. These declines primarily reflect negative currency exchange impact.

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Messaging revenues increased $0.6 million (1 percent) for the three months ended March 31, 2009 compared to the same period in 2008. Messaging revenue growth is pressured by recent changes in currency rates. On a constant currency basis, messaging revenue growth was 11 percent compared to the same period in 2008 and includes new revenue from GRX and MMX services in the 2009 period.

Geographical Revenues
(Dollars in millions)

	Three Months ended March 31,
							Percent
	2009			2008			Change
North American	$	139.8		$	132.0			6	%
Percentage of total revenues		52	%		51	%
Total Outside North America	$	127.7		$	128.1			*
Percentage of total revenues		48	%		49	%
International: EMEA (Europe, Middle East and Africa)	$	89.1		$	91.9			(3	%)
Percentage of total revenues		33	%		35	%
Intercontinental: (Asia Pacific and Latin America)	$	38.6		$	36.2			7	%
Percentage of total revenues		15	%		14	%
Total revenues	$	267.5		$	260.1			3	%

* Not meaningful

North American revenues (United States, Canada and Mexico) increased $7.8 million (6 percent) for the three months ended March 31, 2009 compared to the same period last year. The increase was primarily due to the $4.7 million (12 percent) increase in license revenues, $1.8 million (13 percent) increase in messaging revenues, and a $1.3 million (2 percent) increase in service revenues compared to the same period in 2008.

International revenues comprised 48 percent and 49 percent of total revenues for the three months ended March 31, 2009 and 2008, respectively.

EMEA (Europe, Middle East and Africa) revenues for the three months ended March 31, 2009 decreased $2.8 million (3 percent) compared to the three months ended March 31, 2008. The decrease was due primarily to a $5.3 million (13 percent) decrease in service revenues, offset by a $2.5 million (9 percent) increase in license revenues. The decrease in service revenues was mostly due to the negative 12 percent currency exchange impact of a stronger dollar and the negative 18 percent impact of weaker sales of more discretionary professional and education services.

Intercontinental (Asia Pacific and Latin America) revenues for the three months ended March 31, 2009 increased $2.4 million (7 percent) compared to the three months ended March 31, 2008. The increase was primarily attributable to a $4.0 million (28 percent) increase in license revenues, offset by a $1.2 million (26 percent) decrease in messaging revenues and a $0.3 million (2 percent) decrease in services revenues. These increases were primarily driven by license revenue increases in Japan of $5.2 million and in China of $0.9 million. The decrease in messaging revenue primarily resulted from a $1.0 million decline in messaging revenue in Singapore.

In EMEA and the Intercontinental regions, most revenues and expenses are denominated in local currencies. During the three months ended March 31, 2009, foreign currency exchange rate changes from the same period last year resulted in a decrease of $17.7 million (6 percent) in our revenues and a decrease of $15.3 million (7 percent) in our operating expenses. The change for the comparable period was primarily due to a stronger U.S. dollar against the Euro and British Pound, and to a lesser extent the strengthening of the U.S. dollar against the Korean Won, Australian Dollar and Brazilian Real.

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

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Costs and Expenses
(Dollars in millions)

	Three Months ended March 31,
							Percent
	2009			2008			Change
Cost of license fees	$	12.3		$	14.5			(15	%)
Percentage of license fees revenues		14	%		19	%
Cost of services	$	36.8		$	40.9			(10	%)
Percentage of services revenues		27	%		29	%
Cost of messaging	$	27.0		$	25.1			8	%
Percentage of messaging revenues		62	%		59	%
Sales and marketing	$	64.2		$	68.3			(6	%)
Percentage of total revenues		24	%		26	%
Product development and engineering	$	34.7		$	35.6			(3	%)
Percentage of total revenues		13	%		14	%
General and administrative	$	31.9		$	36.1			(12	%)
Percentage of total revenues		12	%		14	%
Amortization of other purchased intangibles	$	3.7		$	3.5			6	%
Percentage of total revenues		1	%		1	%

Cost of License Fees. Cost of license fees consists primarily of product costs (media and documentation), amortization of capitalized software development costs and purchased technology, and third party royalty costs. Cost of license fees were $12.3 million for the three months ended March 31, 2009, a decrease of $2.2 million (15%) compared to the three months ended March 31, 2008. Such costs were 14% of license revenue for the three months ended March 31, 2009 as compared with 19% of license revenue for the same period last year. The decrease in the cost of license fees of $2.2 million was primarily due to a $1.2 million decrease in amortization of capitalized software development costs related to certain releases of ASE and DI Suite, and $0.5 million decreases in both royalty expense and purchase technology amortization.

Cost of Services. Cost of services consists primarily of the fully burdened cost of our personnel who provide technical support, professional services and education. Cost of services were $36.8 million for the three months ended March 31, 2009, a decrease of $4.1 million (10 percent) as compared to the same period in 2008. These costs were 27 percent and 29 percent of services revenues for the three months ended March 31, 2009 and 2008, respectively. The $4.1 million decrease was primarily due to a $2.2 million decrease in compensation costs related to the foreign currency impact of a stronger dollar and a decrease in headcount.

Cost of Messaging. Costs of messaging consist primarily of (1) fees payable to non-domestic wireless operators for delivering traffic into their networks; (2) fully burdened cost of personnel who manage and monitor network datacenters; (3) depreciation, fees and other costs associated with the network datacenters; and (4) amortization of purchased technology used internally by the Sybase 365 segment. Costs of messaging for the three months ended March 31, 2009 were $27.0 million, up $1.9 million (8 percent) compared to the same period in 2008. Cost of messaging has increased in absolute dollars and as a percentage of revenue primarily due to increased investment in operations of $1.0 million (2 percent of revenue), a shift in traffic mix to higher cost services of $0.4 million (1 percent of revenue), and to some extent, the costs associated with new GRX and MMX services in 2009.

Sales and Marketing. Sales and marketing expenses were $64.2 million for the three months ended March 31, 2009, down $4.1 million (6 percent) as compared to the same period last year. These costs were 24 percent of total revenues for the three months ended March 31, 2009 as compared to 26 percent same period ended last year. The decrease in sales and marketing expenses in absolute dollars for the three months ended March 31, 2009 is primarily due to a $4.1 million decrease in commissions and salaries attributable to the foreign currency impact of a stronger dollar, and $1.6 million decrease in discretionary spending.

Product Development and Engineering. Product development and engineering expenses (net of capitalized software development costs) were $34.7 million for the three months ended March 31, 2009, down $0.9 million (3 percent) as compared to the same period last year. These costs were 13 percent of total revenues for the three months ending March 31, 2009 as compared to 14 percent of total revenues for the same period in 2008. The decrease in product development and engineering costs in absolute dollars for the three months ended March 31, 2009 is primarily due to lower compensation costs related to reduced headcount levels.

We capitalized approximately $11.9 million of software development costs for the three months ended March 31, 2009 compared to $12.9 million for the same period in 2008. For the three months ended March 31, 2009, capitalized software costs included costs incurred for efforts associated with ASE, Replication Server, Power Builder, SUP, and Sybase IQ.

We believe product development and engineering expenditures are essential to technology and product leadership and expect product development and engineering expenditures to continue to be significant, both in absolute dollars and as a percentage of total revenues. Based on current development plans, it is expected that software capitalization costs will be marginally lower in the remaining

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quarters of 2009 compared to the first quarter, leading to an increase in product development and engineering both in absolute terms and as a percentage of revenue.

General and Administrative. General and administrative expenses, which include IT, legal, business operations, finance, human resources and administrative functions, were $31.9 million for the three months ended March 31, 2009 as compared to $36.1 million for the three months ended March 31, 2008. These costs represented 12 percent and 14 percent of total revenues for the three months ended March 31, 2009 and 2008, respectively. The decrease in general and administrative expenses of $4.2 million for the three months ended March 31, 2009 was primarily due to reduced legal and other professional fees of $2.0 million, decreases in compensation costs related to reduced headcount and the currency impact of a stronger dollar of $1.0 million.

Amortization of Other Purchased Intangibles. Amortization of other purchased intangibles primarily reflects the amortization of the established customer lists associated with the acquisition in 2000 of Home Financial Network, Inc, of XcelleNet in 2004, of Extended Systems in 2005, of Mobile 365 in 2006, and of Cable & Wireless businesses 2008. The changes in amortization of other purchased intangibles for the three month period ended March 31, 2009 compared to the same period in the prior year are insignificant.

Operating Income
(Dollars in millions)

	Three Months ended March 31,
							Percent
	2009			2008			Change
Operating income by segment:
IPG	$	56.0		$	39.0			44	%
IAS		5.3			1.7			212	%
SY365		0.6			1.2			(50	%)
Unallocated costs		(5.0	)		(5.7	)		(12	%)
Total operating income:	$	56.9		$	36.2			57	%
Percentage of total revenues		21	%		14	%

Operating income was $56.9 million for the three months ended March 31, 2009 compared to operating income of $36.2 million for the three months ended March 31, 2008. The increase in operating income for the three months ended March 31, 2009 is primarily due to the various factors discussed under “Revenues”, “Geographical Revenues” and “Costs and Expenses” above. Segment operating income includes the revenues and expenses described in Note 5 to the Condensed Consolidated Financial Statements — Segment Information, Part I, Item I. During the three months ended March 31, 2009, foreign currency exchange rate changes from the same period last year resulted in $2.4 million decline in operating profits.

Consolidated operating margins improved to 21 percent for the three month period ended March 31, 2009 from 14 percent for the same period in the prior year. The increase in operating margin are primarily due to improvements in operating margins for the IPG and iAS segments partially offset by a margin decline in the SY 365 segment as discussed below.

The operating margin for the IPG segment was 28 percent for the three months ended March 31, 2009 compared to 20 percent for the three months ended March 31, 2008. The increase in operating margin in the IPG segment resulted from a 5 percent increase in revenues and a 4 percent decrease in expenses. The increase in revenue for the three months ended March 31, 2009 is primarily due to the various factors discussed under “Revenues” and “Geographical Revenues” above.

The operating margin for the iAS segment was 14 percent for the three months ended March 31, 2009 compared to 4 percent for the same period in 2008. The increase in iAS segment operating margin was primarily due to lower operating expenses during the three months ended March 31, 2009 compared with the same period in 2008.

The operating margin for the SY 365 segment for the three month period ended March 31, 2009 was 1 percent compared to 3 percent for the same period in 2008. The decrease in the SY 365 segment operating margin is primarily due to adverse currency impact and our continued investment in the segment’s operations.

Certain common costs and expenses are allocated to the various segments based on measurable drivers of expense. Unallocated expenses represent stock compensation expense and changes in value of assets in deferred compensation plans.

During the three months ended March 31, 2009, foreign currency exchange rate changes from the same period last year resulted in $2.4 million decline in operating profits.

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

	Three Months ended March 31,
							Percent
	2009			2008 (1)			Change
Interest income	$	2.2		$	7.9			(72	%)
Percentage of total revenues		1	%		3	%
Interest expense and other, net	$	(11.1	)	$	(8.6	)		29	%
Percentage of total revenues		(4	%)		(3	%)

⁽¹⁾ As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See “Note 1 – Basis of Presentation” and “Note 10 – Convertible Subordinated Notes.”

Interest income decreased to $2.2 million for the three months ended March 31, 2009 compared to $7.9 million for the same period last year. Interest income consists primarily of interest earned on our investments. The decrease in interest income in the three month period in 2009 is primarily due to a significant decrease in the effective interest rates earned on cash balances along with a reduction in the cash balances invested. The effective interest rates earned on cash balances fell from approximately 3.8 percent for the three months ended March 31, 2008 to 0.9 percent for the three months ended March 31, 2009. Our invested cash balances decreased as a result of our $300 million repurchase of 10.7 million shares of common stock during April, 2008 offset by cash provided from operations.

Interest expense and other, net, primarily includes: impairment charges related to investments in auction-rate securities (ARS); interest expense on our convertible subordinated notes with stated and imputed interest rates of 1.75 percent and 6.09 percent, respectively; amortization of deferred offering expenses associated with these notes; net gains and losses resulting from foreign currency transactions and the related hedging activities; increases and decreases in carrying values of mutual funds that are invested as directed by participants of a Rabbi Trust established in accordance with a deferred compensation plan; and bank fees.

Interest expense and other, net increased to $11.1 million for the three months ended March 31, 2009 compared to $8.6 million for the same period in 2008. The increase in interest expense and other, net is primarily due to losses resulting from foreign currency transactions and the related hedging activities of $1.2 million for the three months ended March 31, 2009 compared with a net gain of $1.3 million in the same period in 2008; and losses on trading securities that are invested as directed by participants of a Rabbi Trust related to our deferred compensation plan for the three months ended March 31, 2009; offset by reduced ARS impairment charges. Impairment charges related to ARS for the three months ended March 31, 2009 and 2008 were $1.8 million and $3.3 million, respectively. The ARS investments currently lack short-term liquidity and we will not be able to access these funds until a future auction for the ARS investments is successful or until we sell the securities in a reasonable secondary market which currently does not exist. In addition, further impairments to the ARS investments, if any, may result in additional charges to earnings (See Note 12 to Condensed Consolidated Financial Statements – Recent Accounting Pronouncements, Part I, Item I).

Recent changes in applicable accounting rules for convertible notes require interest expense to be imputed at fair value as of the debt issuance date. See Note 1 to Condensed Consolidated Financial Statements – Basis of Presentation, , Part I, Item I FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion”. Financial results for the three months ended March 31, 2008 has been adjusted to reflect interest expense at the imputed interest rate.

Provision for Income Taxes
(Dollars in millions)

	Three Months ended March 31,
					Percent
	2009		2008 (1)		Change
Provision for income taxes	$	19.9	$	13.8		44	%

⁽¹⁾ As adjusted due to the implementation of FSP APB 14-1. See “Note 1 – Basis of Presentation” and “Note 10 – Convertible Subordinated Notes.”

Our effective tax rate was approximately 41.5 percent and 38.8 percent for the three months ending March 31, 2009 and March 31, 2008, respectively. Our effective tax rate for both years differ from the statutory rate of 35 percent primarily due to the impact of state taxes, the addition of a valuation allowance for the expected non-deductibility of securities impairment losses due to capital loss limitations, and a non-recurring tax charge recorded for a reduction in our state net deferred tax assets as a result of a California tax law enacted during the three months ending March 31, 2009. These increases were partially offset by earnings in lower tax jurisdictions. The amount of tax increased primarily because of an increase in our earnings for the same comparative periods.

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As discussed in Note 1 to Condensed Consolidated Financial Statements – Basis of Presentation, Part I, Item I., during the three months ending March 31, 2009, we adopted Statement of Financial Accounting Standards (“FAS”) No. 141 (Revised 2007), “Business Combinations” (“FAS 141(R)”). FAS 141(R) applies to our deferred tax asset valuation allowance relating primarily to our acquired federal tax loss carryforwards. When realization of these tax loss carryforwards is evaluated as being more likely than not, the valuation allowance is released for the associated deferred tax asset. In prior years, the tax benefit from this valuation release was credited to goodwill. For our three month ending March 31, 2009 and future periods, any tax benefit will now be credited to our operations. As of March 31, 2009, approximately $22 million of our valuation allowance related to acquired federal tax loss carryforwards. For the three months ending March 31, 2009, no valuation allowances were released.

Net Income Per Share Attributable to Sybase, Inc.
(Dollars and shares in millions, except per share data)

	Three Months ended March 31,
							Percent
	2009			2008 (1)			Change
Net income attributable to Sybase, Inc.	$	28.1		$	21.7			29	%
Percentage of total revenues		10	%		8	%
Basic net income per share attributable to Sybase, Inc.	$	0.35		$	0.25			40	%
Diluted net income per share attributable to Sybase, Inc.	$	0.33		$	0.24			38	%
Shares used in computing basic net income per share attributable to Sybase, Inc.		79.8			87.7			(9	%)
Shares used in computing diluted net income per share attributable to Sybase, Inc.		84.5			90.8			(7	%)

⁽¹⁾ As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See “Note 1 – Basis of Presentation” and “Note 10 – Convertible Subordinated Notes.”

We reported net income of $28.1 million for the three months ended March 31, 2009 compared to net income of $21.7 million for the same period last year. The increase in net income for the three months ended March 31, 2009 is due to the various factors discussed above.

Basic net income per share was $0.35 for the three months ended March 31, 2009 as compared to $0.25 for the same period in 2008. Diluted net income per share was $0.33 for the three months ended March 31, 2009 as compared to $0.24 for the same period in 2008.

Shares used in computing basic and diluted net income per share decreased 9 percent and 7 percent, respectively, for the three months ended March 31, 2009 as compared to the same period in 2008. The decreases were due primarily to shares repurchased in accordance with a self-tender offer to repurchase $300 million of common stock offset somewhat by the exercises of employee stock options and an increase in shares that may be issued to holders of our convertible debt.

Shares that may be issued to holders of our convertible subordinated debt due to the appreciation of our stock price are included in the calculation of diluted earnings per share if their inclusion is dilutive to earnings per share. Generally, such shares would be included in period in which the average price of our common stock exceeds $24.99 per share, the adjusted conversion price. In the first quarter of 2009, the average of the high closing prices during a specified number of trading days exceeded the $24.99 threshold. As a result, approximately 2.6 million shares were assumed to be converted and included in the calculation of the fully diluted shares outstanding, resulting in an impact of approximately two cents to our diluted earnings per share. See Note 3 and 10 to Condensed Consolidated Financial Statements — Net income per share attributable to Sybase, Inc , and Convertible Subordinated Notes, respectively; Part I, Item I.

Liquidity and Capital Resources
(Dollars in millions)

	Three Months Ended
	March 31,					Percent
	2009			2008		Change
Working capital	$	116.8		$	674.4		(83	%)
Cash and cash equivalents	$	675.9		$	804.4		(16	%)
Net cash provided by operating activities	$	97.4		$	94.6		3	%
Net cash provided by (used for) investing activities	$	(24.6	)	$	74.3		*
Net cash provided by financing activities	$	3.5		$	11.4		(69	%)

* Not meaningful

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Our primary source of cash is collections from our customers following the purchase of our products and services. Our business activity and cash generation was strong in the three months ended March 31, 2009. While we are aware of concerns regarding the macro economic environment, we have not noted a meaningful impact on the cash flows generated by our business to date.

Our only significant debt is a $460 million convertible debt instrument which may be put to us or called by us in February 2010. See Note 10 to Condensed Consolidated Financial Statements, Part I, Item 1 of this Quarterly Report on Form 10-Q. Though it may be somewhat dependent upon the actions of our noteholders (if some or all of them decide to put the convertible note to us), it is our current expectation that this instrument will be repaid by February 2010, possibly through the issuance of another debt instrument. At this time, we believe our cash and cash equivalents of $675.9 million and future cash flow from operations is sufficient to pay the notes if they are redeemed. We note any premium resulting from the notes’ convertible features may be repaid in either cash, stock or a mix of cash and stock at our election. That said, such repayment could, require us to repatriate certain funds held outside the US which could result in the payment of additional US taxes.

Our primary use of cash is payment of our operating costs, which consist primarily of compensation, benefits and other employee-related expenses, as well as other operating expenses for marketing, facilities and overhead costs. In addition to operating expenses, we also use cash to invest in our growth initiatives, which include acquisitions of products, technology and businesses, to fund our stock repurchase program and to meet our convertible debt obligations.

As a result of recent volatile conditions in global capital markets, general liquidity in short-term credit markets has been constrained despite several pro-active intervention measures undertaken by the U.S. government. At March 31, 2009, our principal sources of liquidity were cash (excluding long-term cash investments), cash equivalents and short-term marketable securities totaling $692.1 million and accounts receivable of $230.6 million.

At March 31, 2009, we had $675.9 million invested in money market funds, commercial paper, bank time deposits, savings accounts and checking accounts. Our short-term investments totaling $16.1 million consisted principally of marketable securities held in a Rabbi Trust under non-qualified deferred compensation plans and debt securities. See Note 12 to Condensed Consolidated Financial Statements — Fair Value Measurements; Part I, Item I. Approximately 40 percent of our cash is held outside the U.S.  Approximately $50 million of these funds are considered permanently reinvested in our foreign operations. Management may, from time to time, revise its estimates of foreign subsidiaries’ earnings permanently reinvested depending on US cash needs. Such changes will correspondingly affect US taxable income. In addition, management periodically evaluates whether funds not permanently reinvested can be repatriated based on local country operating needs, foreign governmental and regulatory controls and/or dividend restrictions and any additional U.S. or foreign taxes when repatriated.

At March 31, 2009, long-term cash investments included auction rate securities with an estimated fair value of $13.7 million and a par value of $28.9 million. These investments have failed to settle at auction since August 2007 due to a lack of market. At this time, these investments are not liquid. Based on our current cash, investment balances and expected operating cash flows, we do not anticipate that the lack of ARS liquidity to adversely affect our ability to conduct business.

Working Capital

Working capital decreased $557.6 million (83 percent) from March 31, 2009 compared with March 31, 2008. The decrease was primarily due to reclassification of $442.8 million of our convertible subordinated notes from long term to short term liabilities in the current quarter consistent with the key terms of the borrowing agreement and a net use of $300 million to fund stock buybacks in April 2008; partially offset by net cash flows provided from operations.

Cash Flow

Net cash provided by operating activities was $97.4 million for the three months ended March 31, 2009 compared to $94.6 for the three months ended March 31, 2008. The 3 percent increase was primarily due to a $6.4 million increase in net income partially offset by the net effect of largely seasonal changes in accounts receivable, compensation accruals, prepaid income tax balances, and deferred revenues. Our days sales outstanding in accounts receivable was 78 days for the three months ended March 31, 2009 compared to 76 days for the three months ended March 31, 2008.

Net cash used for investing activities was $24.6 million for the three months ended March 31, 2009 compared to a $74.3 million source of cash in the same period in 2008. For the three months ended March 31, 2009 the primary uses of cash for investing activities were for capitalized software development, purchases of cash investments, and purchases of property, equipment and improvements. For the three months ended March 31, 2008 net cash provided by investing activities were from sales and maturities of cash investments, partially offset by capitalized software development, purchases of cash investments, and purchases of property, equipment and improvements. The sharp decline in cash provided from sales and maturities of investments during the three month

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period ended March 31, 2009 as compared to the three month period ended March 31,2008 resulted from the sale in the first quarter of 2008 of certain longer term investments in anticipation of the $300 million self-tender described below.

Net cash provided by financing activities was $3.5 million for the three months ended March 31, 2009 compared to a $11.4 million source of cash for the three months ended March 31, 2008. The decrease in cash provided by financing activities is primarily due to a $14.8 million increase in the purchase of treasury stock and offset by an $8.0 million increase issuance of common stock and reissuance of treasury stock for the three months ended March 31, 2008 compared with the three months ended March 31, 2009.

Revaluation of cash denominated in currencies other than US dollars had a negative impact on cash of $11.7 million for the three months ended March 31, 2009.

Our Board of Directors has authorized the repurchase of our outstanding common stock from time to time, subject to price and other conditions (Stock Repurchase Program). Through March 31, 2009, aggregate amounts purchased under the Stock Repurchase Program totaled $787.5 million. For the three months ended March 31, 2009 and 2008 we repurchased 0.6 million shares and six thousand shares at a cost of $15.0 million and $0.1 million, respectively. Approximately $62.5 million remained available in the Stock Repurchase Program at March 31, 2009.

In response to the uncertain economic climate and the constrained short-term credit market, in the fourth quarter of 2008 we reassessed and tightened our credit extension policy. The impact of the reassessment has resulted in the deferral of revenue in certain cases.

At March 31, 2009 we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

We evaluate, on an ongoing basis, the merits of acquiring technology or businesses, or establishing strategic relationships with and investing in other companies. For example, in July 2008 we acquired certain businesses from Cable and Wireless and in December 2008 we acquired Paybox Solutions AG. We may decide to use cash and cash equivalents and investments or incur additional debt to fund such activities in the future. Additionally, in order to fund such investment we may decide to repatriate certain funds held outside the U.S. The repatriation of such funds could result in the payment of additional U.S. taxes.

We engage in global business operations and are therefore exposed to foreign currency fluctuations. As of March 31, 2009, we had identifiable net assets totaling $321.6 million associated with our foreign operations. We experience foreign exchange translation exposure on our net assets and liabilities denominated in currencies other than the U.S. dollar. The related foreign currency translation gains and losses are reflected in “Accumulated other comprehensive income/ (loss)” under “Stockholders’ equity” on the balance sheet. We also experience foreign exchange transaction exposure from certain balances that are denominated in a currency other than the functional currency of the entity on whose books the balance resides. We hedge certain of these short-term exposures under a plan approved by the Board of Directors. The principal currencies hedged during the three months ended March 31, 2009 were the Euro, and British Pound. For a further discussion of the effect of foreign currency fluctuations on our financial condition, see “Financial Risk Management – Foreign Exchange Risk,” below.

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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

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

Foreign Exchange Risk

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

As a global concern, we face exposure to adverse movements in foreign currency exchange rates. These exposures may change over time as business practices evolve and could have a material adverse impact on our financial position and results of operations. Historically, our primary exposures have related to non dollar-denominated sales and expenses in Europe, Asia Pacific, and Latin America. In order to reduce the effect of foreign currency fluctuations, we utilize foreign currency forward exchange contracts (forward contracts) to hedge certain foreign currency transaction exposures outstanding during the period (approximately 30 days). The gains and losses on the forward contracts mitigate the gains and losses on our outstanding foreign currency transactions. We do not enter into forward contracts for trading purposes. All foreign currency transactions are re-measured at month-end and all forward contracts terminate at month-end with realized gains and losses included in interest expense and other, net. Forward contracts exist for a wide variety of currency pairs. The Company enters such contracts only once a month on the last day of the month. As such, there were no unrealized gains or losses on the outstanding forward contracts as of March 31, 2009. Despite our efforts to mitigate foreign currency transaction fluctuations, there can be no guarantee the impact of currency fluctuations will not be material in the future.

Interest Rate Risk

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

We mitigate default risk by investing in only the safe and high-credit quality securities at the time of initial investment and by monitoring the credit rating of investment issuers. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity, with the exception of auction rate securities. These securities are generally classified as available for sale, and consequently, are recorded on the balance sheet at fair value with unrealized gains or losses reported, as a separate component of stockholders’ equity, net of tax. Losses realized from the other than temporary decline in the value of specific marketable securities are recorded in interest expenses and other, net on the income statement. Aside from a $1.8 million other than temporary impairment of auction securities, neither realized nor unrealized gains and losses at March 31, 2009 were material.

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and participation of our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures at March 31, 2009 were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the timeframe specified in Securities and Exchange Commission rules and forms. Our management, including our CEO and CFO, also concluded our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during our first quarter of 2009 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II: OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

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

ITEM 1 (A): RISK FACTORS

Future Operating Results

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

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

Our operating results have varied from quarter to quarter in the past and may vary in the future depending upon a number of factors described below, including many that are beyond our control. Our revenues, and particularly our new software license revenues, are difficult to forecast, and as a result our quarterly operating results can fluctuate substantially. As a result, we believe that quarter-to-quarter comparisons of our financial results should not be relied on to indicate our future performance. We operate with little or no software license backlog, and quarterly license revenues for our IPG and iAS businesses depend largely on orders booked and shipped in a quarter. Historically, we have recorded a majority of our quarterly license revenues in the last month of each quarter, particularly during the final two weeks. In the past we have experienced fluctuations in the purchasing patterns of our customers. Although many of our customers are larger enterprises, a trend toward more conservative IT spending and continued weakness in the economic and capital markets could result in fewer of these customers making substantial investments in our products and services in any given period. Therefore, if one or more significant orders do not close in a particular quarter, our results of operations could be materially and adversely affected, as was the case in the second quarter of 2007 when we refused to accept certain terms in a large transaction, which delayed the closing of this transaction from the second quarter of 2007 to the third quarter of 2007, but resulted in better terms for us.

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

In addition to the above factors, the timing and amount of our revenues are subject to a number of factors that make it difficult to accurately estimate revenues and operating results on a quarterly or annual basis. Our financial forecasts are based on aggregated internal sales forecasts which may incorrectly assess our ability to complete sales within the forecast period, due to competitive pressures, economic conditions or reduced information technology spending. In our past experience IPG and iAS revenues in the fourth quarter benefit from the annual renewal of contracts by large enterprise customers or such customers placing orders before the expiration of budgets tied to the calendar year. This typically results in revenues from license fees declining from the fourth quarter of one year to the first quarter of the next year. In the past, this seasonality has contributed to lower total revenues and earnings in the first quarter compared to the prior fourth quarter. In the fourth quarter of 2008 we experienced a minimal amount of transactions attributable to large enterprise customers placing orders before budgets expired. We cannot assure you that estimates of our revenues and operating results can be made with certain accuracy or predictability. Fluctuations in our operating results may contribute to volatility in our stock price.

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

Our revenues and operating results depend on the overall demand for our products and services. Our revenues for the quarter ending March 31, 2009 exceeded revenues for the quarter ending March 31, 2008 by 3 percent. If the U.S. and worldwide economies continue to weaken, either alone or in tandem with other factors beyond our control (including war, political unrest, shifts in market demand for our products, actions by competitors, etc.), we may not be able to maintain revenue growth. The ongoing worldwide recession, weakness in the credit markets and significant liquidity problems for the financial services industry may also impact our revenues. While we have not noted significant change in buying patterns by financial services customers, the financial services industry is one of

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the largest markets for our products and services and decreased demand from this industry, including from consolidation in the financial services industry, would adversely affect our revenues and operating results. In light of the difficult economic and business environment, we are acting to conservatively manage our expenses in an effort to maintain or expand our financial performance. If the worldwide recession continues or worsens, these efforts many not be successful and our financial results could be materially weaker than forecast.

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

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

Our development, marketing and distribution strategies also depend in part on our ability to form strategic relationships with other technology companies. If these companies change their business focus, enter into strategic alliances with other companies or are acquired by our competitors or others, support for our products could be reduced or eliminated, which could have a material adverse effect on our business and financial condition.

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

The success of Sybase 365 is highly dependent on its ability to provide reliable services to customers. These operations could be interrupted by any damage to or failure of, or insufficient capacity of, computer hardware, software or networks utilized or maintained by us, our customers, or suppliers. Additionally, the failure of, or insufficient capacity of our connections and outsourced service arrangements with third parties could interrupt our services and materially adversely impact our financial performance and relations with customers, including causing liability to our customers.

Sybase 365’s systems and operations may also be vulnerable to damage or interruption from power loss, transmission cable cuts and other telecommunications failures, natural disasters, interruption of service due to potential facility migrations, computer viruses or software defects, physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events and errors by our employees or third-party service providers. As use of Sybase 365’s services increases, we must continue to expand and upgrade our systems and operations. If we do not accurately project the need for expansions and upgrades to our operations and perform such expansions and upgrades in a timely manner, our services could fail or be interrupted.

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

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

The IT industry and the market for our core database infrastructure products and services is becoming increasingly competitive due to a variety of factors including a maturing enterprise infrastructure software market and changes in customer IT spending habits. There is also a growing trend toward consolidation in the software industry. Continued consolidation within the software industry could create opportunities for larger technology companies, such as IBM, Microsoft and Oracle, to increase their market share through the acquisition of companies that dominate certain lucrative market niches or that have loyal installed customer bases. Additionally, Oracle recently announced its plan to acquire Sun Microsystems, a large technology company which operates in the hardware and software industries. We do not believe that this transaction will have any immediate impact on us; however, we are still evaluating this proposed transaction and its long term impact on our business. This transaction or other future hardware or software acquisitions by larger technology companies could pose a significant competitive disadvantage to us. The significant purchasing and market power of larger companies may also subject us to increased pricing pressures. Many of our competitors have greater financial, technical, sales and marketing resources, and a larger installed customer base than us. In addition, our competitors’ advertising and marketing efforts could overshadow our own and/or adversely influence customer perception of our products and services, and harm our business and prospects as a result. To remain competitive, we must develop and promote new products and solutions, enhance existing products and retain competitive pricing policies, all in a timely manner. Our failure to compete successfully with new or existing competitors in these and other areas could have a material adverse impact on our ability to generate new revenues or sustain existing revenue levels.

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

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

For example, in December 2008 we acquired paybox Solutions AG, a mobile payments solutions provider. In July 2008 we acquired Cable & Wireless’ international inter-operator MMS hubbing service (MMX) and obtained the exclusive rights to market and sell mobile data roaming services. In November 2006 we acquired Mobile 365, Inc. In addition, in October 2005 we acquired Extended Systems Incorporated, a NASDAQ listed company. We expect to continue to pursue acquisitions of complimentary or strategic business product lines, assets and technologies.

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

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

Under Statement of Financial Accounting Standard No. 142 we do not amortize goodwill but evaluate goodwill recorded in connection with acquisitions at least annually for impairment. As of March 31, 2009, we had approximately $525.5 million of goodwill recorded on our balance sheet, none of which was determined to be impaired as of that date. Goodwill impairments are based on the value of our reporting units, and reporting units that previously recognized impairment charges are prone to additional impairment charges if future revenue and expense forecasts or market conditions worsen after an impairment is recognized. We test the impairment of goodwill annually in our fourth fiscal quarter or more frequently if indicators of impairment arise. The timing of the formal annual test may result in charges to our statement of operations in our fourth fiscal quarter that could not have been reasonably foreseen in prior periods. New acquisitions, and any impairment of the value of purchased assets, could have a significant negative impact on our future operating results.

Acquisitions may also result in other charges, including stock-based compensation charges for assumed stock awards, charges for transaction expenses, and restructuring charges. Additionally, changes in the value of contingent consideration, such as earn-outs, could impact our net income. The timing and amount of such charges will be dependent on future acquisition and integration activities.

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

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

Widespread use of the Internet and growing market demand for mobile and wireless solutions may significantly alter the manner in which business is conducted in the future. In light of these developments, our ability to timely meet the demand for new or enhanced products and services to support wireless and mobile business operations at competitive prices could significantly impact our ability to generate future revenues. If the market for unwired solutions does not continue to develop as we anticipate, if our solutions and services do not successfully compete in the relevant markets, or our new products, either internally developed or resulting from acquisitions, are not widely adopted and successful, our competitive position and our operating results could be adversely affected.

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

We currently derive a significant portion of our overall revenues from technical support services, which are included in service revenues. The terms of our standard software license arrangements provide for the payment of license fees and prepayment of first-year technical support fees. Support is renewable annually at the option of the end user. We have experienced increasing pricing pressure from customers when purchasing or renewing technical support agreements and the current economic and credit environment may cause further increased pricing pressure from customers. This pressure may result in our reducing support fees or in lost support fees if we refuse to reduce our pricing, either of which could result in reduced revenue. If our existing customers cancel or fail to renew their technical support agreements, or if we are unable to generate additional support fees through the license of new products to existing or new customers, our business and future operating results could be adversely affected.

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

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

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

The length of our sales cycles varies significantly from product to product. The sales cycle for some of our IPG and iAS products can take up to 18 months to complete. Any delay or unanticipated acceleration in the closing of a large license or a number of smaller licenses could result in significant fluctuations in our quarterly operating results. For example, in the second quarter of 2007 we refused to accept certain terms in a large transaction, which delayed the closing of this transaction from the second quarter of 2007 to the third quarter of 2007, but resulted in better terms for us. The length of the sales cycle may vary depending on a number of factors over which we may have little or no control, including the size and complexity of a potential transaction; our customers’ financial condition, liquidity or ability to access credit markets; the level of competition that we encounter in our selling activities; and our potential customers’ internal budgeting process. Our sales cycle can be further extended for product sales made through third party distributors. As a result of the lengthy sales cycle, we may expend significant efforts over a long period of time in an attempt to obtain an order, but ultimately not complete the sale, or the order ultimately received may be smaller than anticipated.

Our mobile messaging customer contracts may not continue to generate revenues and margins at or near our historical levels of revenues and margins from these customers and we rely on a limited number of customers for most of our messaging revenue.

If our customers decide for any reason not to continue to purchase services from us at current levels or at current prices, to terminate their contracts with us or not to renew their contracts with us, our messaging revenues and margins would decline. Additionally, a limited number of customers provide most of our messaging revenue and if they terminate their contracts with us, do not renew their contracts or renegotiate their contracts in a way that is unfavorable to us, our messaging revenue and/or margin could be adversely impacted.

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

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

Impairments in our investment portfolio may result in temporary and/or realized losses.

As of March 31, 2009 we had an aggregate par value of $28.9 million invested in six auction rate securities (ARS). The underlying collateral of the ARS we hold consists primarily of corporate bonds, commercial paper, debt instruments issued by the U.S. Treasury and governmental agencies, money market funds, asset backed securities, collateralized debt obligations, similar assets, and in one instance, preferred stock in a bond insurance company. Certain of the ARS may have direct or indirect investments in mortgages,

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mortgage related securities, or credit default swaps. As of March 31, 2009, the other-than-temporary impairment associated with these ARS totaled $15.2 million.

The credit and capital markets have significantly deteriorated in the past year and remain weak. If uncertainties in these markets continue, these markets deteriorate further or we experience any additional ratings downgrades on any investments in our portfolio (including on ARS), we may incur additional impairments to our investment portfolio, which could negatively affect our financial condition, cash flow and reported earnings.

In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides guidance on determining fair values when there is no active market or where the price inputs being used represent distressed sales. FSP FAS 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. We are currently evaluating the potential impact of the provisions of FSP FAS 157-4 and it is uncertain how they will impact results of operations.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments”(FSP FAS 115-2 and FAS 124-2). FSP FAS 115-2 and FAS 124-2 focuses on other-than-temporary impairments. FSP FAS 115-2 and FAS 124-2 provides guidance on how to bring greater consistency to the timing of impairment recognition, and provides greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. FSP FAS 115-2 and FAS 124-2 also requires increased and more timely disclosures sought by investors regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods ending after June 15, 2009. We are currently evaluating the potential impact of the provisions of FSP FAS 115-2 and FAS 124-2.

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

Since 2000, we have implemented several restructuring plans in an effort to align our expense structure to our expected revenue. As a result of these restructuring activities, we have recorded gross restructuring charges totaling approximately $120 million through March 31, 2009. Our ability to significantly reduce our current cost structure in any material respects through future restructurings may be difficult without fundamentally changing elements of our current business. If we are unable to generate increased revenues or control our operating expenses going forward, our results of operations will be adversely affected.

Our sales model has evolved significantly during the past few years to keep pace with new and developing markets and changing business environments. If we have overestimated demand for our products and services in our target markets, or if we are unable to coordinate our sales efforts in a focused and efficient way, our business and prospects could be materially and adversely affected. For example, in the second quarter of 2005, our FFI business was integrated into IPG in an effort to better support the FFI product line and promote synergies between FFI and IPG technical resources. In the second quarter of 2006 IPG’s International and North American sales organizations were combined to form Worldwide Field Operations. In January 2009 we integrated the product marketing groups for IPG, iAS and Sybase 365 into our Worldwide Marketing Operations under the leadership of Raj Nathan. At that time we commenced the integration of certain back office functions in order to reduce overlap between business operations. Other organizational changes in our sales or divisional model could have a direct effect on our results of operations depending on whether and how quickly and effectively our employees and management are able to adapt to and maximize the advantages these changes are intended to create. We cannot assure that these or other organizational changes in our sales or divisional model will result in any increase in revenues or profitability, and they could adversely affect our business.

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

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

We are subject to risks arising from our international operations.

We derive a substantial portion of our revenues from our international operations, and we plan to continue expanding our business in international markets in the future. In the first quarter of 2009, revenues outside North America represented 48 percent of our total revenues. As a result of our international operations, we are affected by economic, regulatory and political conditions in foreign countries, including changes in IT spending, the imposition of government controls, changes or limitations in trade protection laws, unfavorable changes in tax treaties or laws, natural disasters, public health risks, labor unrest, earnings expatriation restrictions, misappropriation of intellectual property and/or weak intellectual property protection, acts of terrorism, continued unrest and war in

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the Middle East and other factors, which could have a material impact on our international revenues and operations. Our revenues outside the United States could also fluctuate due to the relative immaturity of some markets, growth or contraction in other markets, the strength or weakness of local economies, the general volatility of worldwide software markets and organizational changes we have made to accommodate these conditions.

In addition, compliance with international and U.S. laws and regulations that apply to our international operations increases our cost of doing business in foreign jurisdictions. International laws and regulations include data privacy and protection requirements, labor laws, tax laws, anti-competition regulations, import and export requirements, the regulation of application messaging premium services and local laws which prohibit corrupt payments to governmental officials. U.S. laws and regulations applicable to international operations include the Foreign Corrupt Practices Act and export control laws. Our mobile commerce efforts, including our recent acquisition of Paybox Solutions AG present additional risks, including the potential for compliance with international banking and/or funds transfer regulations. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to offer our products and services in one or more countries, could delay or prevent potential acquisitions, and could also materially damage our reputation, our brand, our ability to attract and retain employees, our business and our operating results.

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

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

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

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

We are subject to risks related to the terms of our 1.75% Convertible Subordinated Notes.

In February 2005 we issued $460 million in convertible subordinated notes (“notes”) in a private offering to qualified institutional buyers. The notes bear a stated interest rate of 1.75% and are subordinated to all of our future senior indebtedness. The notes mature in February 2025 unless earlier redeemed by us at our option, or converted or put to us by the holders of the notes. We may redeem all or a portion of the notes at par on and after March 1, 2010. The holders may require that we repurchase notes at par on February 22, 2010, February 22, 2015 and February 22, 2020. Recent changes in applicable accounting rules for convertible notes require interest expense to be imputed at fair value as of the debt issuance date. This resulted in increases in previously reported and future interest expense and reductions in our net income in prior and future years. See Part I: Financial Information, Note 1 “Basis of Presentation” for discussion of the accounting rule changes and a table reconciling the previously reported results to the retrospectively adjusted results.

The holders may convert the notes into the right to receive the conversion value (described below) (i) when our stock price exceeds 130% of the $24.99 per share adjusted conversion price (equal to $32.49 per share) for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter, (ii) in certain change in control transactions, (iii) if the notes are redeemed by us, (iv) in certain specified corporate transactions, and (v) when the trading price of the notes does not exceed a minimum price level. During the three months ended March 31, 2009, our stock price did not exceed 130% of the $24.99 per share adjusted conversion price for the required specified time. As such, the notes did not become convertible during this period. For each $1,000 principal amount of notes, the conversion value represents the amount equal to 40.02 shares multiplied by the per share price of our common stock at the time of conversion. If the conversion value exceeds $1,000 per $1,000 in principal of notes, we will pay $1,000 in cash and may pay the amount exceeding $1,000 in cash, stock or a combination of cash and stock, at our election.

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If our stock price exceeds 130% of the $24.99 per share adjusted conversion price for the specified period in any subsequent fiscal quarter or the notes are otherwise convertible under the notes’ terms, and the holders of the notes elect to convert the notes, we will be required to repay up to all of the notes’ $460 million in principal amount in cash and must pay cash, stock or a combination of cash and stock, the amount by which the converted notes exceed the principal amount of the notes. At the time of such conversion we may have insufficient financial resources or may be unable to arrange financing to pay for the conversion value of all notes tendered for conversion. Additionally, if the holders of the notes exercise their right to have us repurchase the notes at par on February 22, 2010, at that time we may have insufficient financial resources or may be unable to arrange financing to pay for par value of all notes tendered for repurchase.

The conversion feature of the notes also serves to reduce our diluted net income per share. In periods when our stock price exceeds the notes’ $24.99 per share adjusted conversion price, we must include the shares that may be issued to the holders of the notes in the shares included in our diluted net income per share. The reduction in our diluted earnings per share attributable to shares associated with the conversion of the notes may adversely impact the market price of our common stock.

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

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

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

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

Due to the significance of our business conducted in currencies other than the U.S. dollar, our results of operations could be materially and adversely affected by fluctuations in foreign currency exchange rates, even though we take into account changes in exchange rates over time in our pricing strategy. Recently, in connection with disruptions in the worldwide credit markets, the U.S. dollar rapidly strengthened against certain currencies, including the Euro and British Pound. Continued rapid fluctuations in foreign currency exchange rates may materially and adversely affect our operating results.

As of March 31, 2009, we had identified net assets totaling $276.7 million associated with our EMEA operations, and $45.0 million associated with our Asia Pacific and Latin America operations. Accordingly, we may experience fluctuations in operating results as a result of translation gains and losses associated with these asset and liability values. In order to reduce the effect of foreign currency fluctuations on our and certain of our subsidiaries’ balance sheets, we utilize foreign currency forward exchange contracts (forward contracts) to hedge certain foreign currency transaction exposures. Specifically, we enter into forward contracts with a maturity of approximately 30 days to hedge against the foreign exchange exposure created by certain balances that are denominated in a currency other than the principal reporting currency of the entity recording the transaction. The gains and losses on the forward contracts are intended to mitigate the gains and losses on these outstanding foreign currency transactions and we do not enter into forward contracts for trading purposes. However, our efforts to manage these risks may not be successful. Failure to adequately manage our currency exchange rate exposure could adversely impact our financial condition and results of operations.

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

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

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

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We attempt to protect our intellectual property rights in the United States and in selected foreign countries through a combination of reliance on intellectual property laws (including copyright, patent, trademark and trade secret laws) and registrations of selected patent, trademark and copyright rights in selected jurisdictions, as well as licensing and other agreements preventing the unauthorized disclosure and use of our intellectual property. We cannot assure you that these protections will be adequate to prevent third parties from copying or reverse engineering our products, from engaging in other unauthorized use of our technology, or from independently developing and marketing products or services that are substantially equivalent to or superior to our own. Moreover, third parties may be able to successfully challenge, oppose, invalidate or circumvent our patents, trademarks, copyrights and trade secret rights. We may elect or be unable to obtain or maintain certain protections for certain of our intellectual property in certain jurisdictions, and our intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States because of the differences in foreign laws concerning intellectual property rights. Lack of protection of certain intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition. Moreover, monitoring and protecting our intellectual property rights is difficult and costly. From time to time, we may be required to initiate litigation or other action to enforce our intellectual property rights or to establish their validity. As an example, Sybase filed a complaint against Vertica Systems, Inc., on January 30, 2008 in the Eastern District of Texas, alleging infringement of Sybase’s patent #5,794,229 (“Database System with Methodology for Storing a Database Table by Vertically Partitioning All Columns of the Table”). Such action could result in substantial cost and diversion of resources and management attention and we cannot assure you that any such action will be successful.

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

Patent litigation involving software and telecom companies has increased significantly in recent years as the number of software and telecom patents has increased and as the number of patent holding companies has increased. We face the risk of claims that products or services that we provide have infringed the intellectual property rights of third parties. We are currently litigating with different parties regarding claims that our products or services violate their patents, we have in the past received similar claims and it is likely that such claims will be asserted in the future. See Note Twelve to Consolidated Financial Statements, Part II, Item 8, for a discussion of our patent litigation with Telecommunications Systems, Inc. In May 2005, we received a claim from TeliaSonera alleging that iAnywhere’s product now known as Answers Anywhere infringes a TeliaSonera patent issued in Finland. We are currently involved in litigation in Finland regarding the ownership of the technology underlying the patent. The matter was tried in March 2009, and a ruling is expected in May 2009. In February 2006, two Financial Fusion product customers received claims from a patent licensing company, Ablaise, Ltd., alleging that the customers’ websites are infringing (although Ablaise later withdrew that charge as to one of the two). Financial Fusion filed a declaratory judgment action against Ablaise in the Northern District of California which is ongoing. The customers’ websites are or were based in part on our products and the customers tendered defense of the claims to us under their contractual indemnification provisions. That matter has been stayed by the court until the first to occur of resolution of an ex parte reexamination proceeding in the Patent and Trademark Office, filed by an anonymous party that seeks to invalidate the disputed patent, or until the disputed patent is declared invalid by a District of Columbia court handling litigation of the same patent between Ablaise and Dow Jones. In August 2007 Sybase (along with 20 other defendants, including Microsoft and IBM) was sued by JuxtaComm Technologies, a Canadian company, for infringement of its US patent 6,195,662 (“System for Transforming and Exchanging Data Between Distributed Heterogeneous Computer Systems”). That matter was settled on March 31, 2009, for a confidential amount. In November 2008, Sybase was sued by Data Retrieval LLC, along with co-defendant Informatica Corporation, for alleged infringement by Sybase’s ETL component of Data Integration Suite of U.S. Patents number 6,026,392 and 6,631,382, both entitled “Data Retrieval Method and Apparatus with Multiple Source Capability.” In April 2009, Sybase and co-defendant Microsoft Corporation were sued by Implicit Networks, Inc. The complaint alleges that Sybase’s EAServer product and Microsoft’s Windows Server 2003 and 2008 products infringe US patents #6,324,685 (entitled “Applet Server That Provides Applets in Various Forms”) and # 6,976,248, entitled “Application Server Facilitating With Client’s Computer for Applets Along With Various Formats”. In April 2009, Backweb Technologies, Ltd. filed a first amended complaint adding Sybase and iAnywhere to a lawsuit already filed against Microsoft Corporation in March 2009. The complaint alleges that SQL Anywhere, the Sybase Unwired Enterprise Platform, Afaria and Mobile Office infringe Backweb’s U.S. patents #5,913,040, 6,317,789 and 6,539,429 (all entitled “Method and Apparatus for Transmitting and Displaying Information Between a Remote Network and a Local Computer”), and that Microsoft’s Background Intelligent Transfer Service (BITS) also infringe those patents, as well as a fourth patent. In addition, Sybase from time to time receives indemnity demands from customers involved in patent litigation.

Regardless of whether patent or other intellectual property claims have merit, they can be time consuming and expensive to defend or settle, and can harm our business and reputation. In particular, such claims may cause us to redesign our products or services, if feasible, or cause us to enter into royalty or licensing agreements in order to obtain the right to use the necessary intellectual property. Patent claimants may seek to obtain injunctions or other permanent or temporary remedies that prevent us from offering our products or services, and such injunctions could be granted by a court before the final resolution of the merits of a claim. Our competitors in both the U.S. and foreign countries, many of which have substantially greater resources than we have and have made substantial

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investments in competing technologies, may have applied for or obtained, or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make and sell our products and services. We have not conducted an independent review of patents issued to third parties. The large number of patents, the rapid rate of new patent issuances, the complexities of the technology involved, the uncertainty of results, and the expense of potential litigation increase the risk of business assets and management’s attention being diverted to patent issues.

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

When Sybase 365 delivers mobile messages on behalf of content owners into our network of wireless carriers, we are subject to legal, regulatory and wireless carrier requirements governing, among other things, the nature of content delivered, as well as necessary notice and disclosure to, and consent from, consumers receiving mobile messages. Even though we don’t create or control the content delivered over our network, if we are unable to effectively prevent or detect violations of legal, regulatory or wireless carrier requirements, or otherwise unable to mitigate the effect of these violations, we may be subject to fines or the suspension or termination of some or all of our wireless carrier connections or telecommunications licenses in one or more territories which could materially and adversely affect our business and results of operation. Such suspension or termination may also result in loss of current and potential customers and expose us to potential customer liability. Also, we cannot predict when, or upon what terms and conditions, future regulation might occur or the effect regulation may have on our business or our markets.

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

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

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

We derive revenues from contracts with the United States government, state and local governments and their respective agencies, which may terminate most of these contracts at any time, without cause. Federal Government contracts may be affected by political pressure to reduce government spending. Our federal government contracts are subject to the approval of appropriations being made by the United States Congress to fund the expenditures under these contracts. Similarly, our contracts at the state and local levels are subject to government funding authorizations.   Additionally, government contracts are generally subject to audits and investigations which could result in various civil and criminal penalties and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business.

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

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

In May 2008, the Financial Accounting Standards Board (“FASB”) issued FSP No. APB 14-1, “Accounting for Convertible Debt Instruments that May be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (FSP APB 14-1). FSP APB 14-1 requires issuers of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) to

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separately account for the liability and equity (conversion feature) components of the instruments and became effective January 1, 2009. Retrospective adoption is required. As a result, interest expense is retrospectively imputed and recognized based upon the issuer’s nonconvertible debt borrowing rate, which results in lower net income. Our convertible subordinated notes with a stated interest rate of 1.75 percent (“Notes”) due 2025 issued in February 2005 are subject to FSP APB 14-1. Prior to FSP APB 14-1, Accounting Principles Board Opinion No. 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants” (APB 14), provided that no portion of the proceeds from the issuance of the instruments should be attributable to the conversion feature. Upon adoption of FSP APB 14-1 on January 1, 2009, we recorded a debt discount, which is amortized to interest expense through February 22, 2010, representing the first date on which holders of the Notes may require us to repurchase all or a portion of their notes. In addition, we retrospectively recorded a non cash increase in interest expense for 2007 and 2008 of $16.8 million and $17.8 million, respectively. This resulted in a retrospective noncash after tax reduction in diluted earnings per common share of approximately $0.10 and $0.12 in 2007 and 2008, respectively. In addition, the carrying amount of the Notes have been retrospectively adjusted to reflect a discount of $85.0 million on the date of issuance, with an offsetting increase in additional paid-in capital of $51.0 million and deferred tax liability of $34.0 million.

In April 2009, the Financial FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides guidance on determining fair values when there is no active market or where the price inputs being used represent distressed sales. FSP FAS 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. We are currently evaluating the potential impact of FSP FAS 157-4 and it is uncertain how they will impact results of operations.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments”(FSP FAS 115-2 and FAS 124-2). FSP FAS 115-2 and FAS 124-2 focuses on other-than-temporary impairments. FSP FAS 115-2 and FAS 124-2 provides guidance on how to bring greater consistency to the timing of impairment recognition, and provides greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. FSP FAS 115-2 and FAS 124-2 also requires increased and more timely disclosures sought by investors regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods ending after June 15, 2009. We are currently evaluating the potential impact of the provisions of FSP FAS 115-2 and FAS 124-2.

In addition to the changes discussed above, we are also subject to additional rules and regulations, including the Sarbanes-Oxley Act of 2002 and those enacted by the New York Stock Exchange where our common stock is traded. Compliance with existing or new rules that influence significant adjustments to our business practices and procedures could result in significant expense and may adversely affect our results of operations. Failure to comply with these rules could result in delayed financial statements and might adversely impact the price of our common stock.

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

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

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

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

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

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

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

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

During the quarter ended March 31, 2009, we made the following repurchases of our Common Stock:

ISSUER PURCHASES OF EQUITY SECURITIES

							(d) Maximum
					(c) Total		Number (or
					Number of		Approximate
					Shares (or		Dollar Value)
					Units)		of Shares (or
	(a) Total				Purchased as		Units) that May
	Number of		(b) Average		Part of Publicly		Yet Be
	Shares (or		Price Paid per		Announced		Purchased
Period	Units)		Share (or Unit)		Plans or		Under the Plans
(2009)	Purchased (#)		($)		Programs (#)		or Programs ($)
January 1 - 31		—		—		—		—
February 1 – 28		228,400	$	27.33		228,400	$	71,297,000
March 1 – 31		330,700		26.53		330,700		62,523,000
Total		559,100	$	26.86		559,100	$	62,523,000

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ITEM 3: DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Our Annual Meeting of Stockholders was held on April 14, 2009. At the Annual Meeting, the following matters were submitted to a vote of stockholders and were approved, with the votes cast on each matter indicated:

1.	Election of five directors, each to serve a one-year terms expiring at the 2010 Annual Meeting of Stockholders or until a successor is duly elected and qualified. John S. Chen, Richard C. Alberding, Michael A. Daniels, Alan B. Salisbury and Jack E. Sum were the only nominees, and each was elected (71,939,522 votes were cast for the election of Mr. Chen and 1,891,952 were withheld; 69,159,599 votes were cast for the election of Mr. Alberding and 4,671,875 were withheld; 70,153,282 votes were cast for the election of Mr. Daniels and 3,678,192 were withheld; 69,185,143 votes were cast for the election of Mr. Salisbury and 4,646,331 were withheld; and 73,710,076 votes were cast for the election of Mr. Sum and 121,398 were withheld). There were no abstentions or broker non-votes. In addition to these directors, our board’s other incumbent directors (Cecilia Claudio, L. William Krause and Robert P. Wayman) had terms that continued after the 2009 Annual Meeting. Ms. Linda Yates term as a director ended at the 2009 Annual Meeting and Ms. Yates decided not to seek re-election to the Board.
2.	Ratification of the appointment of Ernst & Young LLP as independent auditors for the year ending December 31, 2009 (71,003,131 for; 2,810,354 against; 17,989 abstentions and no broker non-votes).
3.	Amendments to the Sybase, Inc. Amended and Restated 2003 Stock Plan, that among other matters, increase the share reserve by 5,000,000 shares and approve its material terms and performance goals for purposes of Internal Revenue Code Section 162(m) (57,762,509 for; 10,339,553 against; 265,478 abstentions and 5,463,954 broker non-votes).

ITEM 5: OTHER INFORMATION

On May 6, 2009 the Company’s Board of Directors approved amending Article 3.2 of the Company’s Bylaws to reduce the number of authorized members of the Board of Directors from nine to eight. The Amended and Restated Bylaws are filed as Exhibit 3.2 to this Form 10-Q.

ITEM 6: EXHIBITS

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

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

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SIGNATURES

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

May 8, 2009	SYBASE, INC.
	By	/s/ JEFFREY G. ROSS
		Jeffrey G. Ross
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)
	By	/s/ KEITH JENSEN
		Keith Jensen
		Vice President and Corporate Controller (Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Description
3.2	Amended and Restated Bylaws of Sybase, Inc. as of May 6, 2009
31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14 or 15d-14, as adopted pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14 or 15d-14, as adopted pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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EX-3.2

Exhibit 3.2

BYLAWS

OF

SYBASE, INC.
(as amended May 6, 2009)

TABLE OF CONTENTS

	Page
ARTICLE I CORPORATE OFFICES		1
1.1 REGISTERED OFFICE		1
1.2 OTHER OFFICES		1
ARTICLE II MEETINGS OF STOCKHOLDERS		1
2.1 PLACE OF MEETINGS		1
2.2 ANNUAL MEETING		2
2.3 SPECIAL MEETINGS		2
2.4 NOTICE OF STOCKHOLDERS’ MEETINGS		2
2.5 ADVANCE NOTICE OF STOCKHOLDER BUSINESS		2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE		5
2.7 QUORUM		5
2.8 ADJOURNED MEETING; NOTICE		6
2.9 VOTING		6
2.10 WAIVER OF NOTICE		6
2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING		6
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS		7
2.13 PROXIES		7
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE		7
2.15 INSPECTORS OF ELECTION		8
2.16 CONDUCT OF BUSINESS		9
ARTICLE III DIRECTORS		9
3.1 POWERS		9
3.2 NUMBER OF DIRECTORS		9
3.3 ELECTION QUALIFICATION AND TERM OF OFFICE OF DIRECTORS		9
3.4 RESIGNATION AND VACANCIES		9
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE		10
3.6 FIRST MEETINGS		11
3.7 REGULAR MEETINGS		11
3.8 SPECIAL MEETINGS; NOTICE		11
3.9 QUORUM		12
3.10 WAIVER OF NOTICE		12
3.11 ADJOURNED MEETING; NOTICE		12
3.12 CONDUCT OF BUSINESS		12
3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING		12
3.14 FEES AND COMPENSATION OF DIRECTORS		13

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TABLE OF CONTENTS

	Page
3.15 APPROVAL OF LOANS TO OFFICERS		13
3.16 REMOVAL OF DIRECTORS		13
ARTICLE IV COMMITTEES		13
4.1 COMMITTEES OF DIRECTORS		13
4.2 COMMITTEE MINUTES		14
4.3 MEETINGS AND ACTION OF COMMITTEES		14
ARTICLE V OFFICERS		15
5.1 OFFICERS		15
5.2 APPOINTMENT OF OFFICERS		15
5.3 SUBORDINATE OFFICERS		15
5.4 REMOVAL AND RESIGNATION OF OFFICERS		15
5.5 VACANCIES IN OFFICES		16
5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS		16
5.7 AUTHORITY AND DUTIES OF OFFICERS		16
ARTICLE VI INDEMNITY		16
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS		16
6.2 INDEMNIFICATION OF OTHERS		16
6.3 INSURANCE		17
ARTICLE VII RECORDS AND REPORTS		17
7.1 MAINTENANCE AND INSPECTION OF RECORDS		17
7.2 INSPECTION BY DIRECTORS		18
ARTICLE VIII GENERAL MATTERS		18
8.1 STOCK CERTIFICATES; PARTLY PAID SHARES		18
8.2 LOST CERTIFICATES		19
8.3 CONSTRUCTION; DEFINITIONS		19
8.4 DIVIDENDS		19
8.5 FISCAL YEAR		19
8.6 SEAL		19
8.7 TRANSFER OF STOCK		19
8.8 STOCK TRANSFER AGREEMENTS		20
8.9 REGISTERED STOCKHOLDERS		20

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TABLE OF CONTENTS

	Page
ARTICLE IX AMENDMENTS		20
ARTICLE X DISSOLUTION		21
ARTICLE XI CUSTODIAN		21
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES		21
11.2 DUTIES OF CUSTODIAN		22
ARTICLE XII NOTICE BY ELECTRONIC TRANSMISSION		22
12.1 NOTICE BY ELECTRONIC TRANSMISSION		22
12.2 DEFINITION OF ELECTRONIC TRANSMISSION		23
12.3 INAPPLICABILITY		23

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ARTICLE I  

CORPORATE OFFICES

1.1 REGISTERED OFFICE

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

1.2 OTHER OFFICES

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

ARTICLE II

MEETINGS OF STOCKHOLDERS

2.1 PLACE OF MEETINGS

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

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2.2 ANNUAL MEETING

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

2.3 SPECIAL MEETINGS

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

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

2.4 NOTICE OF STOCKHOLDERS’ MEETINGS

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

2.5 ADVANCE NOTICE OF STOCKHOLDER BUSINESS

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

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meeting is first made. A stockholder’s notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination (made pursuant to Section 2.5(ii)) or proposal is made (i) the name and address of such stockholder, as they appear on the corporation’s books, and of such beneficial owner, if any, (ii) (A) the class or series and number of shares of the corporation which are, directly or indirectly, owned beneficially and of record by such stockholder and such beneficial owner, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the corporation or with a value derived in whole or in part from the value of any class or series of shares of the corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the corporation or otherwise and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the corporation (a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of the company, (D) any short interest in any security of the company (for purposes of this bylaw a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of the corporation owned beneficially by such stockholder that are separated or separable from the underlying shares of the corporation, (F) any proportionate interest in shares of the corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner, or directly or indirectly, beneficially owns an interest in a general partner, and (G) any performance-related fees (other than an asset-based fee) that such stockholder is entitled to based on any increase or decrease in the value of shares of the corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interest held by members of such stockholder’s immediate family sharing the same household (which information for subsections (A) through (G) shall be supplemented by such stockholder and beneficial owner, if any, not later than 10 days after the record date for the meeting to disclose such ownership as of the record date), , (c) any material interest of the stockholder or beneficial owner on whose behalf the nomination or proposal is made in such business, (d) a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder, and (e) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “1934 Act”), in his capacity as a proponent to a stockholder proposal. Notwithstanding the foregoing, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholder’s meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at any annual meeting

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except in accordance with the procedures set forth in this paragraph (i). The chairman of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this paragraph (i), and, if he should so determine, he shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted.

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

     (iii) To be eligible to be a nominee for election or reelection as a director of the corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 2.5(i) to the secretary at the principal executive offices of the corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the secretary upon written request) and a written representation and agreement (in the form provided by the secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as

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a director of the corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the corporation, and comply with all applicable publicly disclosed corporate governance, conflict of interest, ethics, confidentiality and stock ownership and trading policies and guidelines of the corporation.

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

2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

     Written notice of any meeting of stockholders shall be given:

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

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

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

2.7 QUORUM

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

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

2.8 ADJOURNED MEETING; NOTICE

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

2.9 VOTING

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

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

2.10 WAIVER OF NOTICE

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

2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

     Subject to the rights of the holders of the shares of any series of Preferred Stock or any other class of stock or series thereof having a preference over the Common Stock as dividend or upon liquidation, any action required or permitted to be taken by the stockholders of the corporation must

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be effected at a duly called annual or special meeting of stockholders of the corporation and may not be effected by any consent in writing by such stockholders.

2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS

     In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to express consent or dissent to corporate action in writing without a meeting (if otherwise permitted by these bylaws and the corporation’s certificate of incorporation), or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall be not more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action.

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

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

2.13 PROXIES

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

2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE

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

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electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

2.15 INSPECTORS OF ELECTION

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

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

     Such inspectors shall:

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

          (ii) receive votes, ballots or consents;

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

          (iv) count and tabulate all votes or consents;

          (v) determine when the polls shall close;

          (vi) determine the result; and

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

     The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the

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decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

2.16 CONDUCT OF BUSINESS

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

ARTICLE III

DIRECTORS

3.1 POWERS

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

3.2 NUMBER OF DIRECTORS

     The number of directors of the corporation is fixed at eight (8). No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

3.3 ELECTION QUALIFICATION AND TERM OF OFFICE OF DIRECTORS

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

3.4 RESIGNATION AND VACANCIES

     Any director may resign at any time upon written notice to the corporation. Stockholders may remove directors only for cause. Any vacancy occurring in the board of directors with or without cause may be filled by a majority of the remaining members of the board of directors,

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although such majority is less than a quorum, or by a plurality of the votes cast at a meeting of stockholders, and each director so elected shall hold office until the expiration of the term of office of the director whom he has replaced.

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

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

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

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

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

3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE

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

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

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3.6 FIRST MEETINGS

     The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors.

3.7 REGULAR MEETINGS

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

3.8 SPECIAL MEETINGS; NOTICE

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

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

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

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

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3.9 QUORUM

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

3.10 WAIVER OF NOTICE

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

3.11 ADJOURNED MEETING; NOTICE

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

3.12 CONDUCT OF BUSINESS

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

3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

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

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3.14 FEES AND COMPENSATION OF DIRECTORS

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

3.15 APPROVAL OF LOANS TO OFFICERS

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

3.16 REMOVAL OF DIRECTORS

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

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

ARTICLE IV

COMMITTEES

4.1 COMMITTEES OF DIRECTORS

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

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

4.2 COMMITTEE MINUTES

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

4.3 MEETINGS AND ACTION OF COMMITTEES

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

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ARTICLE V

OFFICERS

5.1 OFFICERS

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

5.2 APPOINTMENT OF OFFICERS

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

5.3 SUBORDINATE OFFICERS

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

5.4 REMOVAL AND RESIGNATION OF OFFICERS 

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

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

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5.5 VACANCIES IN OFFICES

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

5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS 

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

5.7 AUTHORITY AND DUTIES OF OFFICERS

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

ARTICLE VI

INDEMNITY

6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS

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

6.2 INDEMNIFICATION OF OTHERS

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

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

6.3 INSURANCE

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

ARTICLE VII

RECORDS AND REPORTS

7.1 MAINTENANCE AND INSPECTION OF RECORDS

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

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

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7.2 INSPECTION BY DIRECTORS

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

ARTICLE VIII

GENERAL MATTERS

8.1 STOCK CERTIFICATES; PARTLY PAID SHARES

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

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

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8.2 LOST CERTIFICATES

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

8.3 CONSTRUCTION; DEFINITIONS

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

8.4 DIVIDENDS

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

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

8.5 FISCAL YEAR

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

8.6 SEAL

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

8.7 TRANSFER OF STOCK

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

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

8.8 STOCK TRANSFER AGREEMENTS

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

8.9 REGISTERED STOCKHOLDERS

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

ARTICLE IX

AMENDMENTS

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

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

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ARTICLE X

DISSOLUTION

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

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

ARTICLE XI

CUSTODIAN

11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES

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

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

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

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

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11.2 DUTIES OF CUSTODIAN

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

ARTICLE XII

NOTICE BY ELECTRONIC TRANSMISSION

12.1 NOTICE BY ELECTRONIC TRANSMISSION

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

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

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

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

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

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

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

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

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

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

12.2 DEFINITION OF ELECTRONIC TRANSMISSION

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

12.3 INAPPLICABILITY

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

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, John S. Chen, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 8, 2009

/s/ JOHN S. CHEN

John S. Chen

Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jeffrey G. Ross, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 8, 2009

/s/ JEFFREY G. ROSS

Jeffrey G. Ross

Senior Vice President and

Chief Financial Officer

EX-32

Exhibit 32

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

I, John S. Chen, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Sybase, Inc. on Form 10-Q for the quarterly period ended March 31, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report fairly presents in all material respects the financial condition and results of operations of Sybase, Inc.

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

I, Jeffrey G. Ross, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Sybase, Inc. on Form 10-Q for the quarterly period ended March 31, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report fairly presents in all material respects the financial condition and results of operations of Sybase, Inc.

By:	/s/ JEFFREY G. ROSS
Name: Jeffrey G. Ross
Title: Senior Vice President and Chief Financial
		Officer