Sybase Inc - Current report filing (8-K)
February 21 2008 - 8:49AM
Edgar (US Regulatory)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
February 15, 2008
(Date of earliest event reported)
SYBASE, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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1-16493
(Commission File Number)
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94-2951005
(I.R.S. Employer
Identification Number)
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One Sybase Drive
Dublin, CA 94568
(Address of principal executive offices)
Registrants telephone number, including area code: (925) 236-5000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
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TABLE OF CONTENTS
Item 7.01. Regulation FD Disclosure
Item 8.01. Other Events
Following Sybase, Inc.s (the Company or Sybase) fourth quarter and fiscal year 2007 which
were the best in its 23-year history and included historical highs in total revenue, operating
margin, operating income, net income, earnings per share, and cash flow from operations the
Company reaffirmed its commitment to its goals of creating sustainable value for all of its
shareholders and commented on its repurchase strategy.
On February 15
th
and February 20
th
, 2008, representatives of the Company
participated in calls with representatives of Sandell Asset Management Corp. (Sandell), a 6%
stockholder of the Company, to discuss Sandells previously stated concerns with the Companys
strategic direction and, in particular, Sybases balance sheet and cash position. In these calls,
as in prior calls with Sandell, the Company explained to Sandell that the Companys Board
continually evaluates the Companys financial position to optimize its capitalization, including
maintaining a well-balanced approach to leverage and return of capital. The Company believes it is
important to preserve an appropriate level of cash, especially given the current macroeconomic
uncertainty and as valuations become more attractive on potential strategic acquisitions necessary
to pursue the Companys strategy.
Sybases current worldwide cash balance is approximately $735 million. However, of that
amount, restricted cash and long-term investments, which are not immediately available to the
Company, constitute approximately $35 million, thereby reducing the Companys available cash
balance to approximately $700 million. 50% (or $350 million) of this cash is in the US, and the
remaining 50% is held overseas by 39 different foreign entities controlled by the Company. The
Company estimates that its working capital needs for 2008 are expected to be approximately $85
million in the US and $115 million outside of the US. After providing for expected working
capital needs, the Company therefore has approximately $265 million in US cash and $235 million in
foreign cash. Of the foreign cash, $50 million cannot be repatriated due to foreign governmental
and regulatory controls and dividend restrictions based on local earnings and profits, and the
remainder is subject to taxes on repatriation.
As a result of these restrictions and in light of the current environment, as well as the Companys
obligation to repay in cash the principal amount of its $460 million convertible debt facility, the
Company believes that it is also prudent to retain cash from operations to (i) allow the business
to respond to market conditions, (ii) scale to address market opportunities, and (iii) maintain
financial flexibility. Based upon all of these factors the Company believes that it currently has
freely available cash of between $225-$250 million.
Sandell has previously indicated its intention to nominate three directors for election at the
Companys 2008 annual meeting and also urged the Company to, among other things, incur debt to
conduct a larger stock buyback. While the Company remains committed to communication with its
stockholder base, the Company believes Sandells proposal for taking on additional debt to support
a larger stock buyback, a separation of its mobility and database businesses or auction of the
Company are short-sighted, inadvisable and ill-timed, in light of the current economic environment
the Companys proven track record which includes repurchases of a total of $511 million of common
stock since 2004 and 14 consecutive quarters of EPS that have exceeded Wall Street consensus
estimates.
The Company remains committed to its goals of creating sustainable value and continuing to act in
the best interest of the Company and all Sybase shareholders. Sybase regularly evaluates the
strategic direction that will best position the Company to continue to drive and enhance
stockholder value with the assistance of its independent advisors. This assessment includes an
evaluation of the Companys operational and strategic plans, capital structure optimization,
potential acquisitions, and other possible strategic opportunities.
Forward-Looking Statements
Certain statements in this release concerning Sybase, Inc. and its prospects, future growth and
expectations, including statements regarding anticipated working capital needs, possible
acquisitions and the tax impact of repatriation of foreign cash, 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, changes in regulatory restrictions relating to cash outside the U.S.; the performance of the
global economy and growth in software industry sales; market acceptance of the companys 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, June 30, 2007, and September
30, 2007.
Additional Information and Where to Find it
Sybase and its directors and executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of Sybase in connection with the election of
directors and other matters proposed at Sybases 2008 Annual Meeting of Stockholders. Information
regarding the interests, if any, of these directors and executive officers in these matters is set
forth in the filing made by Sybase pursuant to Rule 14a-12 of the Securities Exchange Act on
January 24, 2008.
In connection with its 2008 Annual Meeting of Stockholders, Sybase will distribute a definitive
proxy statement to stockholders. In addition, Sybase files annual, quarterly and special reports,
proxy and information statements, and other information with the Securities and Exchange Commission
(the SEC). You are urged to read the proxy statement and other information when they become
available because they contain important information about Sybase and the proposals presented at
the 2008 Annual Meeting of Stockholders. These documents are available free of charge at the SECs
web site at
www.sec.gov
or from Sybase at
www.sybase.com
.
Note Regarding Disclosures Contained Herein
The aforementioned calls with Sandell were conducted pursuant to an agreement between the Company
and Sandell to maintain the confidentiality of the disclosed information until 9:00 am EST on
February 21, 2008.
SIGNATURE
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 hereunto duly authorized.
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SYBASE, INC.
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Date: February 20, 2008
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By:
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/s/ Daniel R. Carl
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Name:
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Daniel R. Carl
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Title:
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Vice President, General Counsel and
Secretary
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