EX-99.1 2 f34873exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
For Financial Inquiries:
Sybase Investor Relations
Lynne Farris
(925) 236-8797
lynne.farris@sybase.com
Charlie Chen
(925) 236-6015
charles.chen@sybase.com
For Press Inquiries:
Sybase Public Relations
Crystal Lu
(925) 236-6431
crystal.lu@sybase.com
SYBASE 2007 THIRD QUARTER RESULTS EXCEED
FIRST CALL REVENUE AND EPS CONSENSUS
GAAP Operating Income Grows 39% Year over Year
Management Raises Full-Year EPS and Cash Flow Guidance
DUBLIN, Calif. — October 25, 2007 — Sybase, Inc. (NYSE: SY), a leading provider of enterprise infrastructure and mobile software, today reported financial results for the third quarter ended September 30, 2007.
Highlights:
w   Total revenue increased 22% and license revenue up 12% year over year
 
w   Total database license revenues increased 18% year over year
 
w   Total iAnywhere revenues up 10% and license revenues up 16% year over year
 
w   Non-GAAP operating income up 40% year over year, non-GAAP operating margin of 22%
 
w   GAAP operating income up 39% year over year, GAAP operating margin of 17%
 
w   Non-GAAP EPS of $0.47; GAAP EPS of $0.37
 
w   Management raises full-year non-GAAP EPS to range of $1.64 to $1.66 and GAAP EPS to range of $1.25 to $1.27
 
w   Full-year cash flow guidance raised to approximately $210 million
2007 Third Quarter Results
Total revenue increased 22% to $255.3 million from $209.1 million in the third quarter of 2006. License revenue increased 12% to $85.1 million from $76.3 million in the third

 


 

quarter of 2006. Services revenues were up slightly to $135.8 million, and messaging revenues were $34.3 million.
Non-GAAP operating income for the 2007 third quarter increased 40% year over year to $57.3 million, representing a 22% operating margin.
Non-GAAP net income for the quarter was $42.8 million, or earnings per diluted share (EPS) of $0.47. This compares with non-GAAP net income of $36.3 million, or EPS of $0.40 for the third quarter of 2006.
Operating income calculated in accordance with generally accepted accounting principles (GAAP) for the quarter increased 39% year over year to $44.6 million, representing a 17% operating margin.
GAAP net income was $34.1 million, or GAAP EPS of $0.37, for the quarter. This compares with GAAP net income of $25.1 million, or GAAP EPS of $0.27, for the 2006 third quarter.
Non-GAAP amounts exclude the amortization of certain purchased intangibles, stock-based compensation, and restructuring costs, and the tax effect of these and related items. Accompanying this release is a reconciliation from GAAP to non-GAAP amounts for the 2007 third quarter.
“We are extremely pleased with our performance in the third quarter, with strong contributions from each of our three business segments,” said John Chen, chairman, CEO, and president of Sybase. “Solid growth across all of our key product lines — data management, mobile middleware, and messaging services — demonstrates the growing market acceptance of our Unwired Enterprise platform.
“The strong revenue performance in each of our three business segments also demonstrates the leverage in our business model and growing cross-selling synergies in our enterprise customer base. This helped drive our sixth consecutive quarter of consolidated operating margin expansion. As a result, we are raising our outlook for full-year EPS and operating cash flow for the second time this year,” concluded Mr. Chen.
Balance Sheet and Other Data
At September 30, 2007, Sybase reported $717.3 million in cash and cash investments, including restricted cash of $6.1 million. In the third quarter, the company generated $47.1 million in cash flow from operations.

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Sybase repurchased $32.8 million worth of its stock during the 2007 third quarter. As of September 30, 2007, $158.4 million remained authorized in the company’s current share repurchase program.
Days sales outstanding (DSO) for the 2007 third quarter was 75.
Management Changes
Upon filing the Form 10-Q for the 2007 third quarter, senior vice president and chief financial officer Pieter Van der Vorst will become senior vice president and general manager of the EMEA Region, reporting to Steve Capelli, president of Worldwide Field Operations. In this position, Mr. Van der Vorst will be headquartered in London with responsibility for field and business operations in the EMEA region. Mr. Van der Vorst has been with Sybase since 1991 and served as the company’s chief financial officer for the past eight years.
Jeff Ross will be promoted to senior vice president and chief financial officer of Sybase from his current role as vice president and corporate controller, a position he has held for three years at Sybase. Mr. Ross joined Sybase in 1997 as group director of tax and corporate accounting, with responsibility for the worldwide tax function and internal financial reporting. Previously, he spent 10 years at Price Waterhouse in various positions of increasing responsibility. A Certified Public Accountant, Mr. Ross earned a B.A. in business administration from University of California at Berkeley.
“Pieter has been an invaluable partner of mine over the last eight years. Given his thorough knowledge of our customer base, product lines, and business strategy, this new opportunity will allow Pieter to further expand his contribution to Sybase,” stated Mr. Chen.
“We are very pleased to promote Jeff, a 10-year veteran of the Sybase finance organization. Jeff’s promotion allows us to maintain operational continuity and demonstrates Sybase’s depth of management,” concluded Mr. Chen.
Forward Guidance
For the fourth quarter ending December 31, 2007, management anticipates non-GAAP fully diluted EPS in the range of $0.54 to $0.56 and total revenue in the range of $280.0 million to $290.0 million. GAAP EPS for the fourth quarter is expected to range from $0.44 to $0.46.
For full-year 2007, management is raising guidance for fully diluted non-GAAP EPS to a range of $1.64 to $1.66 from prior guidance of approximately $1.56. Management anticipates total revenue for 2007 will range from $1.01 billion to $1.02 billion.

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Management is raising guidance for GAAP EPS to a range of $1.25 to $1.27 from prior guidance of approximately $1.19.
Management is raising guidance for full-year 2007 cash flow from operations to approximately $210 million, compared with prior guidance of $195 million to $205 million.
Accompanying this release is a reconciliation from projected GAAP to non-GAAP amounts for the 2007 fourth quarter and full year.
Conference Call and Webcast Information
The Sybase 2007 third quarter conference call and simultaneous Webcast is scheduled to begin at 7:30 a.m. Pacific Time/10:30 a.m. Eastern Time on Thursday, October 25, 2007. To access the live Webcast, please visit www.fulldisclosure.com or Sybase’s Website at www.sybase.com at least 20 minutes prior to the call to download any necessary audio or plug-in software. A telephone replay will be available approximately two hours after the conference call ends and will be available until 10:00 p.m. Pacific Time on November 1, 2007. To access the replay, please dial (888) 203-1112 for domestic access and (719) 457-0820 for international callers; the access code for the telephone replay is #6471670. Additionally, the archived Webcast will be available through January 24, 2008 at http://www.sybase.com/about_sybase/investorrelations.
About Sybase, Inc.
Sybase is the largest global enterprise software company exclusively focused on managing and mobilizing information from the data center to the point of action. Sybase provides open, cross-platform solutions that securely deliver information anytime, anywhere, enabling customers to create an information edge. The world’s most critical data in commerce, finance, government, healthcare, and defense runs on Sybase. For more information, visit the Sybase Website at http://www.sybase.com.
Forward-Looking Statements
Certain statements in this release concerning Sybase, Inc. and its prospects and future growth are forward-looking and involve a number of uncertainties and risks. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to, the performance of the global economy and growth in software industry sales; market acceptance of the company’s products and services; customer and industry analyst perception of the company and its technology vision and future prospects; the success of certain business combinations engaged in by the company or by competitors; political unrest or acts of war; possible disruptive effects of organizational or personnel changes; and other factors described in Sybase, Inc.’s reports filed with the U.S. Securities and Exchange

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Commission, including its annual report on Form 10-K for the year ended December 31, 2006 and Form 10-Q for the quarters ended March 31, 2007 and June 30, 2007.
Sybase, Information Anywhere, and Sybase 365 are trademarks of Sybase, Inc., or its subsidiaries. All other names may be trademarks of the companies with which they are associated.
Note Regarding Non-GAAP Financial Measures
In addition to our GAAP results, Sybase discloses adjusted operating income, net income and net income per share, referred to respectively as “non-GAAP operating income”, “non-GAAP net income”, and “non-GAAP net income per diluted share”. These items, which are collectively referred to as “Non-GAAP Measures”, exclude the impact of stock-based compensation, the amortization of acquisition-related intangible assets, restructuring costs and related tax effects. From time to time, subject to the review and approval of the audit committee of the Board of Directors, we may make other adjustments for expenses and gains that we do not consider reflective of core operating performance in a particular period and may modify the Non-GAAP Measures by excluding these expenses and gains. There were no such expenses or gains during the periods presented.
We define our core operating performance to be the revenues recorded in a particular period and the expenses incurred within that period which management has the capability of directly affecting in order to drive operating income. Non-cash stock-based compensation, amortization of acquisition-related intangible assets and restructuring charges are excluded from our core operating performance because the decisions which gave rise to these expenses were not made to drive revenue in a particular period, but rather were made for our long-term benefit over multiple periods. While strategic decisions, such as the decisions to issue stock-based compensation, to acquire a company or to restructure the organization, are made to further our long-term strategic objectives and do impact our income statement under GAAP, these items affect multiple periods and management is not able to change or affect these items within any particular period. As such, supplementing GAAP disclosure with non-GAAP disclosure using the Non-GAAP Measures provides management with an additional view of operational performance by excluding expenses that are not directly related to performance in any particular period. Therefore, we exclude these impacts in our planning, monitoring, evaluation and reporting of our underlying revenue-generating operations for a particular period.
Prior to the adoption of Financial Accounting Standards Board Statement 123 Revised “Share-based Payment” (“FAS 123R”) on January 1, 2006, our practice was to exclude stock-based compensation internally to evaluate performance and we presented investors with certain Non-GAAP Measures. With the adoption of FAS 123R, we continue to believe that Non-GAAP Measures can provide relevant disclosure to investors as contemplated by Staff Accounting Bulletin 107 (“SAB 107”) and we have presented Non-GAAP Measures that exclude stock-based compensation, amortization of acquisition-related intangible assets, restructuring costs and the related tax effects. While these items (other than restructuring) are recurring and affect GAAP net income, we do not use them to assess our operational performance for any particular period because (a) these items affect multiple periods and are unrelated to business performance in a particular period; (b) we are not able to change these items in any particular period; and (c) these items do not contribute to the operational performance of our business for any particular period.

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We also use Non-GAAP Measures to operate the business because the excluded expenses are not under the control of, and accordingly are not used in evaluating the performance of, operations personnel within their respective areas of responsibility. In the case of stock-based compensation expense, the award of stock options is governed by the stock committee of the Board of Directors and, in the case of acquisition-related intangible assets; acquisitions arise from strategic decisions which are not the responsibility of most levels of operational management. The restructuring charges, like our stock-based compensation charges and amortization of acquisition-related intangible assets, are excluded in management’s internal evaluations of our operating results and are not considered for management compensation purposes.
In the case of stock-based compensation, our compensation strategy is to use stock-based compensation to attract and retain key employees and executives. It is principally aimed at long term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational performance in any particular period. We use annual cash incentive payouts for executives and other employees to motivate and reward the achievement of short-term operational objectives.
We view amortization of acquisition-related intangible assets, such as the amortization of an acquired company’s research and development efforts, customer lists and customer relationships, as items arising from pre-acquisition activities. These are costs that are determined at the time of an acquisition. While it is continually viewed for impairment, amortization of the cost is a static expense, one that is typically not affected by operations during any particular period and does not contribute to operational performance for any particular period.
The cost of restructure charges are excluded in our Non-GAAP Measures because they are significantly different in magnitude and character from routine personnel and facility adjustments that management makes when monitoring and conducting the Company’s core operations during any particular period. We have not undertaken restructuring since 2004 and amounts included in cost of restructure in 2006 and subsequently reflect lease termination costs from previously announced restructuring efforts. Our previous restructuring activities and related expenses were not related to operating performance for any particular period, and were not subject to change by management in any particular period. Instead, the prior restructuring was intended to align our business model and expense structure to our position in the market.
Our historical non-GAAP effective tax rates differ from our GAAP effective tax rates because of (i) the exclusion of the amortization of acquisition-related intangible assets, stock-based compensation expenses and restructuring costs described above, (ii) the exclusion of certain acquired tax attributes, and (iii) the resulting impact on the realization of the Company’s other tax assets. We exclude the impact of these discrete tax items from our non-GAAP income tax provision or benefit because management believes that they are not indicative of our ongoing business operations.
Because the Non-GAAP Measures are not calculated in accordance with GAAP, they are used by our management as a supplement to, and not an alternative to, or superior to, financial measures calculated in accordance with GAAP. There are a number of limitations on the Non-GAAP Measures, including the following:

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  These Non-GAAP Measures do not have standardized meanings and may not be comparable to similar non-GAAP measures used or reported by other software or technology companies.
 
  The Non-GAAP Measures do not reflect all costs associated with our operations determined in accordance with GAAP. For example:
Non-GAAP operating margin performance and non-GAAP net income do not include stock compensation expense related to equity awards granted to our workforce. Our stock incentive plans are important components of our employee incentive compensation arrangements and are reflected as expenses in our GAAP results under FAS 123R. While we include the dilutive impact of such equity awards in weighted average shares outstanding, the expense associated with stock-based awards is excluded from our non-GAAP measures.
Although amortization of acquisition-related intangible assets does not directly impact our current cash position, such expense represents the declining value of the technology or other intangible assets that we have acquired. These assets are amortized over their respective expected economic lives or impaired, if appropriate. The expense associated with this decline in value is excluded from our non-GAAP measures and therefore non-GAAP measures do not include the costs of acquired intangible assets that supplement our research and development.
Restructuring charges in 2006 and subsequently primarily represent lease termination costs associated with restructuring activities that commenced in 2004 and before. Most of the charges are cash expenditures, which are excluded from our Non-GAAP Measures.
    Excluded expenses for stock-based compensation and amortization of acquisition-related intangible assets will continue to recur and impact the Company’s GAAP results. While restructuring costs are non-recurring activities, their occasional occurrence will impact GAAP results. As such, the Non-GAAP Measures should not be construed as an inference that the excluded items are unusual, infrequent or non-recurring.
Management compensates for theses limitations by relying on these Non-GAAP Measures only as a supplement to the Company’s GAAP results.

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SYBASE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    September 30,     December 31,  
(In thousands, except share and per share data)   2007     2006  
    (Unaudited)          
Current assets:
               
Cash and cash equivalents
  $ 453,094     $ 355,303  
Short-term investments
    238,802       269,612  
 
           
Total cash, cash equivalents and short-term cash investments
    691,896       624,915  
 
               
Restricted cash
    6,109       6,014  
Accounts receivable, net
    211,398       218,016  
Deferred income taxes
    6,283       6,224  
Other current assets
    29,151       16,392  
 
           
 
               
Total current assets
    944,837       871,561  
 
               
Long-term cash investments
    19,253       12,781  
Property, equipment and improvements, net
    64,283       66,458  
Deferred income taxes
    39,502       36,069  
Capitalized software, net
    74,273       71,179  
Goodwill, net
    544,401       540,303  
Other purchased intangibles, net
    136,547       149,648  
Other assets
    36,172       39,551  
 
           
 
               
Total assets
  $ 1,859,268     $ 1,787,550  
 
           
 
               
Current liabilities:
               
Accounts payable
  $ 30,079     $ 23,439  
Accrued compensation and related expenses
    59,462       59,748  
Accrued income taxes
    19,543       31,364  
Other accrued liabilities
    103,415       108,436  
Deferred revenue
    194,427       193,431  
 
           
 
               
Total current liabilities
    406,926       416,418  
 
               
Other liabilities
    44,560       44,428  
Deferred income taxes
    14,368       14,448  
Long-term tax liability
    25,796        
Long-term deferred revenue
    4,826       3,965  
Minority interest
    5,179       5,160  
Convertible subordinated notes
    460,000       460,000  
 
               
Total stockholders’ equity
    897,613       843,131  
 
           
 
               
Total liabilities and stockholders’ equity
  $ 1,859,268     $ 1,787,550  
 
           

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SYBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
(In thousands, except per share data)   2007     2006     2007     2006  
 
                               
Revenues:
                               
License fees
  $ 85,141     $ 76,338     $ 231,941     $ 226,367  
Services
    135,838       132,794       400,719       393,332  
Messaging
    34,287             97,666        
 
                       
 
                               
Total revenues
    255,266       209,132       730,326       619,699  
 
                               
Costs and expenses:
                               
Cost of license fees
    12,667       12,160       38,503       36,882  
Cost of services
    38,684       37,681       116,965       114,371  
Cost of messaging
    21,428             59,223        
Sales and marketing
    64,415       62,019       193,906       191,207  
Product development and engineering
    38,739       37,327       114,412       111,867  
General and administrative
    31,231       26,103       95,407       77,037  
Amortization of other purchased intangibles
    3,445       1,573       10,291       4,671  
Cost (Reversal) of restructure
    17       39       (30 )     139  
 
                       
 
                               
Total costs and expenses
    210,626       176,902       628,677       536,174  
 
                       
 
                               
Operating income
    44,640       32,230       101,649       83,525  
 
                               
Interest income and expense and other, net
    5,710       7,936       15,857       21,211  
Minority interest
                (20 )      
 
                       
 
                               
Income before income taxes
    50,350       40,166       117,486       104,736  
 
                               
Provision for income taxes
    16,220       15,081       42,180       36,066  
 
                       
 
                               
Net income
  $ 34,130     $ 25,085     $ 75,306     $ 68,670  
 
                       
 
                               
Basic net income per share
  $ 0.38     $ 0.28     $ 0.83     $ 0.77  
 
                       
 
                               
Shares used in computing basic net income per share
    89,655       89,056       90,565       89,269  
 
                       
 
                               
Diluted net income per share
  $ 0.37     $ 0.27     $ 0.81     $ 0.75  
 
                       
 
                               
Shares used in computing diluted net income per share
    91,714       91,498       92,749       91,636  
 
                       

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NON-GAAP RESULTS RECONCILED TO GAAP RESULTS
The following tables reflect selected Sybase non-GAAP results reconciled
to GAAP results (in 000s except percentage and per share amounts) :
                                 
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
    2007   2006   2007   2006
 
Operating Income
                               
 
                               
GAAP operating income
    44,640       32,230       101,649       83,525  
Plus:
                               
Amortization of acquisition-related intangible assets
    6,859       3,968       20,363       11,816  
Stock-based compensation expense
    5,788       4,694       17,021       15,681  
Cost (Reversal) of restructure
    17       39       (30 )     139  
 
                               
 
 
                               
Non-GAAP operating income
  $ 57,304     $ 40,931     $ 139,003     $ 111,161  
 
 
                               
Net Income
                               
 
                               
GAAP net income
    34,130       25,085       75,306       68,670  
Plus:
                               
Amortization of acquisition-related intangible assets
    6,859       3,968       20,363       11,816  
Stock-based compensation expense
    5,788       4,694       17,021       15,681  
Cost (Reversal) of restructure
    17       39       (30 )     139  
Less:
                               
Incremental income taxes associated with certain Non-GAAP items
    (3,984 )     2,534       (10,714 )     (4,455 )
 
                               
 
 
                               
Non-GAAP net income
  $ 42,810     $ 36,320     $ 101,946     $ 91,851  
 
 
                               
Net Income Per Diluted Share
                               
 
                               
GAAP net income per diluted share
  $ 0.37     $ 0.27     $ 0.81     $ 0.75  
Plus:
                               
Amortization of acquisition-related intangible assets
    0.07       0.04       0.22       0.13  
Stock-based compensation expense
    0.06       0.05       0.18       0.17  
Cost of restructure
    0.00       0.00       (0.00 )     0.00  
Less:
                               
Incremental income taxes associated with certain Non-GAAP items
    (0.04 )     0.03       (0.12 )     (0.05 )
 
                               
 
 
                               
Non-GAAP net income per diluted share
  $ 0.47     $ 0.40     $ 1.10     $ 1.00  
 
 
                               
Shares used in computing diluted net income per share
    91,714       91,498       92,749       91,636  
CLASSIFICATION OF STOCK-BASED COMPENSATION EXPENSE
The following table shows the classification of stock-based compensation expense:
                                 
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
    2007   2006   2007   2006
 
 
    ($000 )             ($000 )        
Cost of services
    400       (141 )     1,115       1,220  
Cost of messaging
    121       0       431       0  
Sales and marketing
    1,346       1,111       3,818       3,158  
Product development and engineering
    763       693       2,105       1,965  
General and administrative
    3,158       3,031       9,552       9,338  
 
                               
 
 
                               
Total
  $ 5,788     $ 4,694     $ 17,021     $ 15,681  
CLASSIFICATION OF AMORTIZATION OF PURCHASED INTANGIBLES
The following table shows the classification of amortization of purchased intangibles expense:
                                 
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
    2007   2006   2007   2006
 
 
    ($000 )             ($000 )        
Cost of license fees
    2,477       2,395       7,288       7,145  
Cost of messaging
    937       0       2,784       0  
Amortization of other purchased intangibles
    3,445       1,573       10,291       4,671  
 
                               
 
                               
 
 
                               
Total
  $ 6,859     $ 3,968     $ 20,363     $ 11,816  

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SYBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                 
    Nine Months Ended  
    September 30,  
(Dollars in thousands)   2007     2006  
Cash and cash equivalents, beginning of year
  $ 355,303     $ 398,741  
Cash flows from operating activities:
               
Net income
    75,306       68,670  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    64,802       52,258  
Minority interest in income of subsidiaries
    20        
Loss on disposal of assets
    20       829  
Deferred income taxes
    (3,541 )     (11,377 )
Stock-based compensation – restricted stock
    6,554       5,833  
Stock-based compensation – all other
    10,467       9,849  
Excess tax benefit from stock-based compensation plans
    (3,171 )      
Amortization of note issuance costs
    1,477       1,477  
Changes in assets and liabilities:
               
Accounts receivable
    11,956       38,481  
Other current assets
    (3,846 )     (2,055 )
Other assets — operating
    2,635       (2,600 )
Accounts payable
    6,573       3,806  
Accrued compensation and related expenses
    (301 )     (1,203 )
Accrued income taxes
    13,313       20,219  
Other accrued liabilities
    (13,027 )     (19,043 )
Deferred revenues
    1,857       (3,125 )
Other liabilities
    (541 )     1,863  
 
           
Net cash provided by operating activities
    170,553       163,882  
Cash flows from investing activities:
               
Increase in restricted cash
    (95 )     (193 )
Purchases of available-for-sale cash investments
    (231,304 )     (364,397 )
Maturities of available-for-sale cash investments
    136,462       205,807  
Sales of available-for-sale cash investments
    119,735       237,255  
Business combinations, net of cash acquired
    (6,502 )     (4,334 )
Purchases of property, equipment and improvements
    (16,533 )     (13,162 )
Proceeds from sale of property, equipment, and improvements
    44       4  
Capitalized software development costs
    (27,474 )     (29,171 )
Increase in other assets — investing
    (184 )     (7 )
 
           
Net cash provided by (used for) investing activities
    (25,851 )     31,802  
Cash flows from financing activities:
               
Repayments of long-term obligations
    (136 )     (45 )
Payments on capital lease
    (1,276 )     (243 )
Net proceeds from the issuance of common stock and reissuance of treasury stock
    23,096       32,675  
Purchases of treasury stock
    (91,421 )     (45,280 )
Excess tax benefit from stock-based compensation plans
    3,171        
 
           
Net cash used for financing activities
    (66,566 )     (12,893 )
Effect of exchange rate changes on cash
    19,655       9,085  
 
           
Net increase in cash and cash equivalents
    97,791       191,876  
 
           
Cash and cash equivalents, end of period
  $ 453,094     $ 590,617  
 
           

11


 

SYBASE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
                                         
    Infrastructure     iAnywhere                     Consolidated  
(In thousands, except per share data)   Platform Group     Solutions     Sybase 365     Eliminations     Total  
Revenues:
                                       
License fees
                                       
Infrastructure
  $ 58,096     $ 106     $     $     $ 58,202  
Mobile and Embedded
    10,451       16,488                   26,939  
 
                             
Subtotal license fees
    68,547       16,594                   85,141  
Intersegment license revenues
    44       8,709             (8,753 )      
 
                             
Total license fees
    68,591       25,303             (8,753 )     85,141  
 
                                       
Services
                                       
Direct service revenue
    123,985       11,853                   135,838  
Intersegment service revenues
    44       7,222             (7,266 )      
 
                             
Total services
    124,029       19,075             (7,266 )     135,838  
 
                                       
Messaging
                34,287             34,287  
 
                                       
 
                             
Total revenues
    192,620       44,378       34,287       (16,019 )     255,266  
 
                                       
Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology
    148,602       35,058       30,321       (16,019 )     197,962  
 
                             
 
                                       
Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology
    44,018       9,320       3,966             57,304  
 
                                       
Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology as a percentage of total revenue
    23 %     21 %     12 %     0 %     22 %
 
                                       
Cost of restructure - 2007 Activity
    17                         17  
Amortization of other purchased intangibles
    527       1,046       1,872             3,445  
Amortization of purchased technology
    403       2,074       937             3,414  
 
                             
 
                                       
Operating income before unallocated costs
  $ 43,071     $ 6,200     $ 1,157     $     $ 50,428  
 
                                       
Other unallocated costs
                                    5,788  
 
                                     
Operating income after unallocated costs
                                    44,640  
 
                                       
Interest income and expense and other, net
                                    5,710  
 
                                     
 
                                       
Income before income taxes
                                    50,350  
 
                                       
Provision for income taxes
                                    16,220  
 
                                     
 
                                       
Net income
                                  $ 34,130  
 
                                     
 
                                       
Basic net income per share
                                  $ 0.38  
 
                                     
 
                                       
Shares used in computing basic net income per share
                                    89,655  
 
                                     
 
                                       
Diluted net income per share
                                  $ 0.37  
 
                                     
 
                                       
Shares used in computing diluted net income per share
                                    91,714  
 
                                     

12


 

SYBASE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
                                         
    Infrastructure     iAnywhere                     Consolidated  
(In thousands, except per share data)   Platform Group     Solutions     Sybase 365     Eliminations     Total  
Revenues:
                                       
License fees
                                       
Infrastructure
  $ 158,983     $ 473     $ 17     $     $ 159,473  
Mobile and Embedded
    24,879       47,589                   72,468  
 
                             
Subtotal license fees
    183,862       48,062       17             231,941  
Intersegment license revenues
    283       20,740             (21,023 )      
 
                             
Total license fees
    184,145       68,802       17       (21,023 )     231,941  
 
                                       
Services
                                       
Direct service revenue
    365,814       34,905                   400,719  
Intersegment service revenues
    218       21,280             (21,498 )      
 
                             
Total services
    366,032       56,185             (21,498 )     400,719  
 
                                       
Messaging
                97,666             97,666  
 
                                       
 
                             
Total revenues
    550,177       124,987       97,683       (42,521 )     730,326  
 
                                       
Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology
    439,265       103,570       90,016       (42,521 )     590,330  
 
                             
 
                                       
Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology
    110,912       21,417       7,667             139,996  
 
                                       
Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology as a percentage of total revenue
    20 %     17 %     8 %     0 %     19 %
 
                                       
Cost of restructure - 2007 Activity
    (30 )                       (30 )
Amortization of other purchased intangibles
    1,581       3,138       5,572             10,291  
Amortization of purchased technology
    1,208       6,080       2,784             10,072  
 
                             
 
                                       
Operating income (loss) before unallocated costs
  $ 108,153     $ 12,199     $ (689 )   $     $ 119,663  
 
                                       
Other unallocated costs
                                    18,014  
 
                                     
Operating income after unallocated costs
                                    101,649  
 
                                       
Interest income and expense and other, net
                                    15,857  
Minority interest
                                    (20 )
 
                                       
 
                                     
Income before income taxes
                                    117,486  
 
                                       
Provision for income taxes
                                    42,180  
 
                                     
 
                                       
Net income
                                  $ 75,306  
 
                                     
 
                                       
Basic net income per share
                                  $ 0.83  
 
                                     
 
                                       
Shares used in computing basic net income per share
                                    90,565  
 
                                     
 
                                       
Diluted net income per share
                                  $ 0.81  
 
                                     
 
                                       
Shares used in computing diluted net income per share
                                    92,749  
 
                                     

13


 

NON-GAAP RESULTS RECONCILED TO GAAP RESULTS — SEGMENTS
The following table reflects non-GAAP operating income before unallocated costs
reconciled to GAAP results for each Sybase segment ( in 000s except percentage
and per share amounts ) :
                                                 
    Three Months Ended   Nine Months Ended
    September 30, 2007   September 30, 2007
 
    Infrastructure   iAnywhere           Infrastructure   iAnywhere    
    Platform Group   Solutions   Sybase 365   Platform Group   Solutions   Sybase 365
 
Operating Income Before Unallocated Costs
                                               
 
                                               
GAAP operating income (loss) before unallocated costs
    43,071       6,200       1,157       108,153       12,199       (689 )
Plus:
                                               
Amortization of acquisition-related intangible assets
    930       3,120       2,809       2,789       9,218       8,356  
Cost (Reversal) of restructure
    17       0       0       (30 )     0       0  
 
                                               
 
Non-GAAP operating income before unallocated costs
  $ 44,018     $ 9,320     $ 3,966     $ 110,912     $ 21,417     $ 7,667  
 

14


 

SYBASE, INC.
Reconciliation of GAAP-based EPS to Non-GAAP EPS
for the three months ended December 31, 2007
(unaudited)
                 
GAAP — based EPS
  $ 0.44     $ 0.46  
 
Amortization of purchased intangibles
    0.07       0.07  
Amortization of stock compensation expense
    0.06       0.06  
Income tax effect of above adjustments
    (0.05 )     (0.05 )
Income tax effect due to differences between the GAAP and non-GAAP effective tax rate
    0.02       0.02  
 
 
           
Non-GAAP EPS
  $ 0.54     $ 0.56  
 
           
Please see “Note Regarding Non-GAAP Financial Measures” for important information regarding Non-GAAP Financial Measures.

15


 

SYBASE, INC.
Reconciliation of GAAP-based EPS to Non-GAAP EPS
for the twelve months ended December 31, 2007
(unaudited)
                 
GAAP — based EPS
  $ 1.25     $ 1.27  
 
Amortization of purchased intangibles
    0.29       0.29  
Amortization of stock compensation expense
    0.25       0.25  
Income tax effect of above adjustments
    (0.20 )     (0.20 )
Income tax effect due to differences between the GAAP and non-GAAP effective tax rate
    0.05       0.05  
 
 
           
Non-GAAP EPS
  $ 1.64     $ 1.66  
 
           
Please see “Note Regarding Non-GAAP Financial Measures” for important information regarding Non-GAAP Financial Measures.

16