SY Sybase, Inc.

GAAP Operating Income Grows 39% Year over Year DUBLIN, Calif., Oct. 25 /PRNewswire-FirstCall/ -- 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: * Total revenue increased 22% and license revenue up 12% year over year * Total database license revenues increased 18% year over year * Total iAnywhere revenues up 10% and license revenues up 16% year over year * Non-GAAP operating income up 40% year over year, non-GAAP operating margin of 22% * GAAP operating income up 39% year over year, GAAP operating margin of 17% * Non-GAAP EPS of $0.47; GAAP EPS of $0.37 * 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 * 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. 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. 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 http://www.fulldisclosure.com/ or Sybase's Website at http://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 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. 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: * 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. SYBASE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, (In thousands, except share and per 2007 2006 share data) ------------- ------------- (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 ============= ============= SYBASE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Nine Months Ended (In thousands, except September 30, September 30, 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 ========= ======== ======== ======== 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 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 ======== ========== SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 (UNAUDITED) (In thousands, except per share data) Infrastructure iAnywhere Consolidated Revenues: Platform Group Solutions Sybase 365 Eliminations Total -------------- --------- ---------- ------------ ------ 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 ====== SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 (UNAUDITED) (In thousands, except per share data) Infrastructure iAnywhere Consolidated Revenues: Platform Group Solutions Sybase 365 Eliminations Total -------------- --------- ---------- ---------- -------- 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 ======== 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 Infrastructure Platform iAnywhere Sybase Platform iAnywhere Sybase Group Solutions 365 Group Solutions 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 ============================================================================== 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. 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. DATASOURCE: Sybase, Inc. CONTACT: Financial Inquiries, Lynne Farris, Sybase Investor Relations, +1-925-236-8797, , or Charlie Chen, +1-925-236-6015, , or Press Inquiries, Crystal Lu, Sybase Public Relations, +1-925-236-6431, , all of Sybase, Inc. Web site: http://www.sybase.com/

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