SY Sybase, Inc.

DUBLIN, Calif., Jan. 25 /PRNewswire-FirstCall/ -- Sybase, Inc. (NYSE:SY), a leading provider of enterprise infrastructure and mobile software, today reported financial results for the fourth quarter and year ended December 31, 2006. Financial Highlights: * Q406 total revenue increases 15%; license revenue rises 10% * Q406 operating margins reach record highs of 20% (GAAP) and 25% (pro forma) * 2006 full-year GAAP EPS increases 12%; pro forma EPS increases 21% * Annual cash flow from operations increases 26% to record high of $214.3 million 2006 Fourth Quarter Results Total revenue increased 15% year over year to $256.5 million from $223.0 million in the fourth quarter of 2005. Total license revenue increased 10% to $100.4 million, and services revenue grew 5% to $137.8 million. Messaging revenue related to the acquisition of Mobile 365 was $18.2 million, covering the period from November 8, 2006 through December 31, 2006. Pro forma operating income for the quarter increased 26% to $63.4 million, representing a 25% operating margin. This compares with pro forma operating income of $50.2 million, or a 23% operating margin, in the 2005 fourth quarter. Pro forma net income for the quarter increased 15% to $48.4 million, or earnings per diluted share (EPS) of $0.52. This compares with pro forma net income of $42.0 million, or EPS of $0.45 for the fourth quarter of 2005. Operating income calculated in accordance with generally accepted accounting principles (GAAP) for the quarter increased 16% to $50.2 million, representing a 20% operating margin. GAAP net income was $26.4 million, or GAAP EPS of $0.28, for the quarter. This compares with GAAP net income of $28.4 million, or GAAP EPS of $0.31, for the 2005 fourth quarter. Included in the 2006 fourth quarter GAAP-based results is an increase in the company's effective tax rate to 53%, up from 40% in the fourth quarter of 2005. The increase in the effective tax rate is associated with acquisition-related, one-time effects from the liquidation of foreign entities and the effect of stock compensation deductions. In addition, 2006 fourth quarter GAAP-based results include the impact of $3.7 million associated with implementation of FAS 123R and $1.6 million for amortization of purchased intangibles related to the acquisition of Mobile 365. Full-year 2006 Results Total revenues increased 7% to $876.2 million, and license revenues rose 12% to $326.8 million. Pro forma operating income increased 17% to $174.6 million, representing a 20% operating margin. Pro forma net income increased 19% to $140.3 million, or EPS of $1.52. This compares with pro forma net income of $117.8 million, or EPS of $1.26, for 2005. GAAP operating income for the year increased 10% to $133.8 million, representing a 15% operating margin. GAAP net income increased 11% to $95.1 million, or GAAP EPS of $1.03, compared with GAAP net income of $85.6 million, or GAAP EPS of $0.92, for 2005. Included in the 2006 GAAP-based results is an increase in the company's effective tax rate to 41%, up from 37% in 2005. In addition, 2006 GAAP-based results include the impact of $13.6 million associated with implementation of FAS 123R and $1.6 million for amortization of purchased intangibles related to the acquisition of Mobile 365. Pro forma 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 of pro forma and GAAP amounts for the 2006 fourth quarter and 12-month period ended December 31, 2006. "We are pleased to complete our strongest year since I have been at Sybase," stated John Chen, chairman, CEO, and president of Sybase. "We exceeded our targets for revenue and EPS, reached our highest-ever full-year net income, and achieved record annual cash flow from operations. "Growth was driven largely by robust demand for our flagship ASE database and IQ analytics server, which grew 30% and 22%, respectively, over the same quarter a year ago." Added Mr. Chen, "We released Information Anywhere Suite in December, and early market feedback is extremely positive. This Suite integrates Afaria with OneBridge to deliver the most complete enterprise mobility platform. We are confident the features and functionality of this Suite will enable our mobile segment to grow faster than the overall mobility market. "With the addition of our newly acquired mobile messaging business, Sybase 365, we are now the world's largest mobile enterprise software and services provider. Sybase is strongly positioned to exceed our one-billion-dollar revenue target in 2007," concluded Mr. Chen. Balance Sheet and Other Data At December 31, 2006, Sybase reported $643.7 million in cash and cash investments, including restricted cash of $6.0 million. In the fourth quarter, the company generated $50.4 million in cash flow from operations, an increase of 31% compared to the fourth quarter of 2005. Full-year 2006 cash flow from operations increased 26% to $214.3 million, an historical high, compared with $170.0 million in 2005. Sybase repurchased $14.5 million worth of its stock during the 2006 fourth quarter. Stock repurchased in 2006 totaled $59.8 million. As of December 31, 2006, $249.8 million remained authorized in the company's current share repurchase program. Days sales outstanding (DSO) for the 2006 fourth quarter was 77. Excluding the impact of Sybase 365, DSO for the 2006 fourth quarter was 58. Forward Guidance For the first quarter ending March 31, 2007, management anticipates revenues ranging from $230.0 million to $235.0 million. Pro forma fully diluted EPS for the first quarter is expected to range from $0.25 to $0.26. GAAP EPS for the first quarter is estimated to range from $0.16 to $0.17, which includes an estimate of $2.7 million for amortization of intangibles related to the acquisition of Mobile 365 in November 2006. For full-year 2007, management estimates revenues of approximately $1.025 billion. Fully diluted pro forma EPS is estimated at approximately $1.52. GAAP EPS is estimated at approximately $1.12, which includes an estimate of $10.8 million for amortization of intangibles related to the acquisition of Mobile 365. Management anticipates full-year 2007 cash flow from operations to range from $190 million to $200 million. Accompanying this release is a reconciliation of projected pro forma and GAAP amounts for the 2007 first quarter and full year. 2006 Fourth Quarter Company Highlights * Completed acquisition of Mobile 365, creating a new subsidiary Sybase 365, now headed by president Marty Beard. * Delivered two new versions of core components of the newly released Information Anywhere Suite: OneBridge 5.5, which extends enterprise email and applications to mobile workers; and Afaria 5.5, interoperable with the OneBridge release, supporting more than 130 mobile devices, simplifying the evaluation process for businesses and providing administrators and users with enhanced security, management and email capabilities. * Acquired iFoundry Systems to enhance Sybase's mobile leadership in short-range wireless interconnect protocol stacks and providing professional engineering services to mobile device OEMs, ODMs and chipset manufacturers to enable these technologies on their platforms. * Sybase 365 announced deployment of France's first and largest Multimedia Messaging Service (MMS) loyalty program for Air France, in partnership with BETC EuroRSCG, France's premier advertising agency, and French mobile marketing agency, MobileTrend. * Announced the general availability of the Data Integration Suite 1.0, a flexible and scalable solution that combines essential data integration techniques. * Delivered Sybase(R) Risk Analytics Platform 3.0, an enhanced solution for capital markets with an operations console that manages data workflows, synchronizes data and the presentation of the data to users and improves system management, monitoring and performance. * Released Sybase iAnywhere Advantage Database Server 8.1, further strengthening its database portfolio and providing a high- performance embedded client/server data management system. Conference Call and Webcast Information The Sybase 2006 fourth 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, January 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 February 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 #3335634. Additionally, the archived Webcast will be available through April 25, 2007 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, 2005 and Form 10-Q for the quarters ended March 31, 2006, June 30, 2006, and September 30, 2006. NOTE: Sybase, Adaptive Server Enterprise (ASE), Sybase IQ, [Sybase 365], Afaria, OneBridge, Information Anywhere Suite, Sybase Risk Analytics, iAnywhere Advantage Database, and Financial Fusion are trademarks of Sybase, Inc. or its subsidiaries. All other names may be trademarks of the companies with which they are associated. SYBASE, INC. RECONCILIATION TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) (UNAUDITED) (In thousands, except per share data) Three Months Ended Three Months Ended December 31, 2006 December 31, 2005 -------------------------- -------------------------- Pro forma Pro forma Adjustments Pro Adjustments Pro GAAP (2) forma GAAP (2) forma -------------------------- -------------------------- Revenues: License fees $100,383 -- $100,383 $91,333 -- $91,333 Services 137,841 -- 137,841 131,715 -- 131,715 Messaging 18,240 -- 18,240 -- -- -- ---------------- -------- ---------------- -------- Total revenues 256,464 -- 256,464 223,048 -- 223,048 Costs and expenses: Cost of license fees 13,658 (2,935)a 10,723 14,583 (2,753)a 11,830 Cost of services 38,591 (409)b 38,182 38,077 (88)b 37,989 Cost of messaging 11,097 (124)b 10,973 -- -- b -- Sales and marketing 72,074 (1,274)b 70,800 65,410 (95)b 65,315 Product development and engineering 37,643 (714)b 36,929 36,247 (12)b 36,235 General and administrative 28,988 (3,523)b 25,465 22,923 (1,443)b 21,480 Amortization of other purchased intangibles 2,660 (2,660)a -- 1,608 (1,608)a -- Cost of restructure 1,514 (1,514)c -- 813 (813)c -- ---------------- -------- ---------------- -------- Total costs and expenses 206,225 (13,153) 193,072 179,661 (6,812) 172,849 ---------------- -------- ---------------- -------- Operating income 50,239 13,153 63,392 43,387 6,812 50,199 Interest income and expense and other, net 6,423 -- 6,423 4,204 -- 4,204 Minority interest (81) -- (81) (49) -- (49) ---------------- -------- ---------------- -------- Income before income taxes 56,581 13,153 69,734 47,542 6,812 54,354 Provision for income taxes 30,187 (8,864)d 21,323 19,147 (6,799)d 12,348 ---------------- -------- ---------------- -------- Net income $26,394 $22,017 $48,411 $28,395 $13,611 $42,006 ================ ======== ================ ======== Basic net income per share $0.29 $0.25 $0.54 $0.32 $0.15 $0.47 ================ ======== ================ ======== Shares used in computing basic net income per share 90,421 90,421 90,421 90,020 90,020 90,020 ================ ======== ================ ======== Diluted net income per share $0.28 $0.24 $0.52 $0.31 $0.14 $0.45 ================ ======== ================ ======== Shares used in computing diluted net income per share 93,344 93,344 93,344 93,021 93,021 93,021 ================ ======== ================ ======== (1) Use of Pro Forma Financial Information To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), Sybase uses pro forma measures of operating results, net income and earnings per share, which are adjusted from GAAP-based results to exclude certain costs and expenses. These pro forma adjustments are provided to enhance an overall understanding of our current financial performance and our prospects for the future, and are one of the primary indicators management uses for planning and forecasting future periods. We have excluded such items, including purchase accounting adjustments in connection with acquisitions, stock-based compensation, the cost of restructuring, and the tax effects of these items because we do not believe they are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions and restructurings) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP. (2) Proforma adjustments Proforma adjustments include the following: (a) amortization of purchased intangibles; (b) stock-based compensation expense; (c) cost of restructuring charges; (d) income tax effect of proforma adjustments. SYBASE, INC. RECONCILIATION TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) (UNAUDITED) (In thousands, except per share data) Twelve Months Ended Twelve Months Ended December 31, 2006 December 31, 2005 -------------------------- -------------------------- Pro forma Pro forma Adjustments Pro Adjustments Pro GAAP (2) forma GAAP (2) forma -------------------------- -------------------------- Revenues: License fees $326,751 -- $326,751 $291,695 -- $291,695 Services 531,172 -- 531,172 527,000 -- 527,000 Messaging 18,240 -- 18,240 -- -- -- ---------------- -------- ---------------- -------- Total revenues 876,163 -- 876,163 818,695 -- 818,695 Costs and expenses: Cost of license fees 50,540 (10,080)a 40,460 51,556 (11,850)a 39,706 Cost of services 152,962 (1,629)b 151,333 156,325 (380)b 155,945 Cost of messaging 11,097 (124)b 10,973 -- -- b -- Sales and marketing 263,281 (4,432)b 258,849 250,003 (302)b 249,701 Product development and engineering 149,510 (2,679)b 146,831 139,011 (38)b 138,973 General and administrative 106,025 (12,861)b 93,164 92,106 (6,586)b 85,520 Amortization of other purchased intangibles 7,331 (7,331)a -- 6,639 (6,639)a -- Cost of restructure 1,653 (1,653)c -- 1,115 (1,115)c -- ---------------- -------- ---------------- -------- Total costs and expenses 742,399 (40,789) 701,610 696,755 (26,910) 669,845 ---------------- -------- ---------------- -------- Operating income 133,764 40,789 174,553 121,940 26,910 148,850 Interest income and expense and other, net 27,634 -- 27,634 14,824 -- 14,824 Minority interest (81) -- (81) (49) -- (49) ---------------- -------- ---------------- -------- Income before income taxes 161,317 40,789 202,106 136,715 26,910 163,625 Provision for income taxes 66,253 (4,409)d 61,844 51,132 (5,317)d 45,815 ---------------- -------- ---------------- -------- Net income $95,064 $45,198 $140,262 $85,583 $32,227 $117,810 ================ ======== ================ ======== Basic net income per share $1.06 $0.51 $1.57 $0.95 $0.35 $1.30 ================ ======== ================ ======== Shares used in computing basic net income per share 89,557 89,557 89,557 90,307 90,307 90,307 ================ ======== ================ ======== Diluted net income per share $1.03 $0.49 $1.52 $0.92 $0.34 $1.26 ================ ======== ================ ======== Shares used in computing diluted net income per share 92,251 92,251 92,251 93,257 93,257 93,257 ================ ======== ================ ======== (1) Use of Pro Forma Financial Information To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), Sybase uses pro forma measures of operating results, net income and earnings per share, which are adjusted from GAAP-based results to exclude certain costs and expenses. These pro forma adjustments are provided to enhance an overall understanding of our current financial performance and our prospects for the future, and are one of the primary indicators management uses for planning and forecasting future periods. We have excluded such items, including purchase accounting adjustments in connection with acquisitions, stock-based compensation, the cost of restructuring, and the tax effects of these items because we do not believe they are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions and restructurings) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP. (2) Proforma adjustments Proforma adjustments include the following: (a) amortization of purchased intangibles; (b) stock-based compensation expense; (c) cost of restructuring charges; (d) income tax effect of proforma adjustments. SYBASE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS December 31, December 31, (In thousands, except share and per share data) 2006 2005 ---------- ---------- (Unaudited) Current assets: Cash and cash equivalents $355,303 $398,741 Short-term investments 269,612 342,247 ---------- ---------- Total cash, cash equivalents and short-term cash investments 624,915 740,988 Restricted cash 6,014 2,773 Accounts receivable, net 218,274 167,790 Deferred income taxes 6,224 5,523 Other current assets 16,708 16,876 ---------- ---------- Total current assets 872,135 933,950 Long-term cash investments 12,781 118,948 Restricted long-term cash investments -- 2,600 Property, equipment and improvements, net 66,458 59,178 Deferred income taxes 21,621 24,879 Capitalized software, net 71,179 65,911 Goodwill, net 538,816 238,864 Other purchased intangibles, net 149,648 87,562 Other assets 39,958 38,722 ---------- ---------- Total assets $1,772,596 $1,570,614 ========== ========== Current liabilities: Accounts payable $23,439 $10,353 Accrued compensation and related expenses 59,748 51,983 Accrued income taxes 31,364 31,398 Other accrued liabilities 107,930 78,040 Deferred revenue 193,431 188,929 ---------- ---------- Total current liabilities 415,912 360,703 Other liabilities 44,428 40,339 Long-term deferred revenue 3,965 5,663 Minority interest 5,160 5,079 Convertible subordinated notes 460,000 460,000 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 (2005 - 105,337,362) 105 105 Additional paid-in capital 977,672 953,771 Accumulated earnings 92,817 16,195 Other comprehensive income 40,850 19,231 Less: Cost of treasury stock (14,055,557 shares and 2005 - 14,806,217) (268,313) (277,510) Unearned compensation -- (12,962) ---------- ---------- Total stockholders' equity 843,131 698,830 ---------- ---------- Total liabilities and stockholders' equity $1,772,596 $1,570,614 ========== ========== NOTE: Certain balance sheet items associated with our acquisition of Mobile 365 may change pending the finalization of the Company's purchase accounting analysis. SYBASE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME PROFORMA WITHOUT PURCHASE ACCOUNTING, COST OF RESTRUCTURE, AND STOCK COMPENSATION EXPENSE (UNAUDITED) (In thousands, except Three Months Ended Twelve Months Ended per share data) December 31, December 31, -------------------- ------------------- 2006 2005 2006 2005 Revenues: --------- --------- --------- --------- License fees $100,383 $91,333 $326,751 $291,695 Services 137,841 131,715 531,172 527,000 Messaging 18,240 -- 18,240 -- --------- --------- --------- --------- Total revenues 256,464 223,048 876,163 818,695 Costs and expenses: Cost of license fees 10,723 11,830 40,460 39,706 Cost of services 38,182 37,989 151,333 155,945 Cost of messaging 10,973 -- 10,973 -- Sales and marketing 70,800 65,315 258,849 249,701 Product development and engineering 36,929 36,235 146,831 138,973 General and administrative 25,465 21,480 93,164 85,520 --------- --------- --------- --------- Total costs and expenses 193,072 172,849 701,610 669,845 --------- --------- --------- --------- Operating income 63,392 50,199 174,553 148,850 Interest income and expense and other, net 6,423 4,204 27,634 14,824 Minority interest (81) (49) (81) (49) --------- --------- --------- --------- Income before income taxes 69,734 54,354 202,106 163,625 Provision for income taxes 21,323 12,348 61,844 45,815 --------- --------- --------- --------- Net income $48,411 $42,006 $140,262 $117,810 ========= ========= ========= ========= Basic net income per share $0.54 $0.47 $1.57 $1.30 ========= ========= ========= ========= Shares used in computing basic net income per share 90,421 90,020 89,557 90,307 ========= ========= ========= ========= Diluted net income per share $0.52 $0.45 $1.52 $1.26 ========= ========= ========= ========= Shares used in computing diluted net income per share 93,344 93,021 92,251 93,257 ========= ========= ========= ========= Note: The pro forma statement of operations is intended to present the Company's operating results excluding purchase accounting adjustments associated with the acquisitions of Home Financial Network, Inc., New Era of Networks, Inc., AvantGo Inc., Dejima, Inc., XcelleNet, Inc., Avaki, Inc., ISDD Ltd., Extended Systems, Inc., Solonde Solutions AG, and Mobile 365, Inc. and other purchased intangibles. Such purchase accounting adjustments would include amortization of developed technology, amortization of intangibles, goodwill impairment loss, in-process research and development costs, and related adjustments for income tax provision. The pro forma statement of operations also excludes stock compensation expense, restructuring costs, and cumulative effect of an accounting change which we do not believe are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions and restructurings) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP. SYBASE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except Three Months Ended Twelve Months Ended per share data) December 31, December 31, ------------------ ------------------ 2006 2005 2006 2005 Revenues: --------- -------- -------- -------- License fees $100,383 $91,333 $326,751 $291,695 Services 137,841 131,715 531,172 527,000 Messaging 18,240 -- 18,240 -- --------- -------- -------- -------- Total revenues 256,464 223,048 876,163 818,695 Costs and expenses: Cost of license fees 13,658 14,583 50,540 51,556 Cost of services 38,591 38,077 152,962 156,325 Cost of messaging 11,097 -- 11,097 -- Sales and marketing 72,074 65,410 263,281 250,003 Product development and engineering 37,643 36,247 149,510 139,011 General and administrative 28,988 22,923 106,025 92,106 Amortization of other purchased intangibles 2,660 1,608 7,331 6,639 Cost of restructure 1,514 813 1,653 1,115 --------- -------- -------- -------- Total costs and expenses 206,225 179,661 742,399 696,755 --------- -------- -------- -------- Operating income 50,239 43,387 133,764 121,940 Interest income and expense and other, net 6,423 4,204 27,634 14,824 Minority interest (81) (49) (81) (49) --------- -------- -------- -------- Income before income taxes 56,581 47,542 161,317 136,715 Provision for income taxes 30,187 19,147 66,253 51,132 --------- -------- -------- -------- Net income $26,394 $28,395 $95,064 $85,583 ========= ======== ======== ======== Basic net income per share $0.29 $0.32 $1.06 $0.95 ========= ======== ======== ======== Shares used in computing basic net income per share 90,421 90,020 89,557 90,307 ========= ======== ======== ======== Diluted net income per share $0.28 $0.31 $1.03 $0.92 ========= ======== ======== ======== Shares used in computing diluted net income per share 93,344 93,021 92,251 93,257 ========= ======== ======== ======== SYBASE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Twelve Months Ended December 31, ------------------- (Dollars in thousands) 2006 2005 --------------------------------------------------- -------- -------- Cash and cash equivalents, beginning of year $398,741 $321,417 Cash flows from operating activities: Net income 95,064 85,583 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 72,803 73,600 Minority interest in income of subsidiaries 81 49 Loss on disposal of assets 811 528 Deferred income taxes (1,306) 8,928 Stock-based compensation - restricted stock 8,141 7,306 Stock-based compensation - all other 13,585 -- Tax benefit from stock-based compensation plans 15,137 -- Excess tax benefit from stock-based compensation plans (9,569) -- Amortization of note issuance costs 1,969 1,671 Changes in assets and liabilities: Accounts receivable 6,005 (1,914) Other current assets 3,236 (1,298) Other assets - operating (2,406) 651 Accounts payable (7,838) (2,410) Accrued compensation and related expenses 2,427 7,072 Accrued income taxes 13,237 24,724 Other accrued liabilities (828) (10,570) Deferred revenues 928 (26,436) Other liabilities 2,817 2,508 -------- -------- Net cash provided by operating activities 214,294 169,992 Cash flows from investing activities: (Increase) Decrease in restricted cash (641) 2,583 Purchases of available-for-sale cash investments (468,518) (837,237) Maturities of available-for-sale cash investments 282,403 439,737 Sales of available-for-sale cash investments 365,962 127,648 Business combinations, net of cash acquired (399,360) (71,890) Purchases of property, equipment and improvements (18,356) (16,366) Proceeds from sale of property, equipment, and improvements 9 25 Capitalized software development costs (37,531) (33,906) Decrease in other assets - investing 13 2 -------- -------- Net cash used for investing activities (276,019) (389,404) Cash flows from financing activities: Proceeds from the issuance of convertible subordinated notes, net of issuance costs -- 450,234 Repayments of long-term obligations (60) (1,012) Payments on capital lease (343) (274) Net proceeds from the issuance of common stock and reissuance of treasury stock 50,570 48,564 Purchases of treasury stock (59,815) (169,053) Excess tax benefit from stock-based compensation plans 9,569 -- -------- -------- Net cash provided by (used for) financing activities (79) 328,459 Effect of exchange rate changes on cash 18,366 (31,723) -------- -------- Net increase (decrease) in cash and cash equivalents (43,438) 77,324 -------- -------- Cash and cash equivalents, end of period 355,303 398,741 Cash investments, end of period 282,393 461,195 -------- -------- Total cash, cash equivalents and cash investments, end of period $637,696 $859,936 ======== ======== SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT PROFORMA WITHOUT PURCHASE ACCOUNTING, COST OF RESTRUCTURE, AND STOCK COMPENSATION EXPENSE FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) (In thousands, except per share data) Infrastructure Consoli- Platform iAnywhere Sybase Elimina- dated Revenues: Group Solutions 365 tions Total -------- -------- -------- -------- -------- License fees Infrastructure $72,890 $83 $-- $-- $72,973 Mobile and Embedded 10,507 16,903 -- -- 27,410 -------- -------- -------- -------- -------- Subtotal license fees 83,397 16,986 -- -- 100,383 Intersegment license revenues 21 8,766 -- (8,787) -- -------- -------- -------- -------- -------- Total license fees 83,418 25,752 -- (8,787) 100,383 Services Direct service revenue 126,189 11,652 -- -- 137,841 Intersegment service revenues 156 7,023 -- (7,179) -- -------- -------- -------- -------- -------- Total services 126,345 18,675 -- (7,179) 137,841 Messaging -- -- 18,240 -- 18,240 -------- -------- -------- -------- -------- Total revenues 209,763 44,427 18,240 (15,966) 256,464 Total allocated costs and expenses 155,695 34,986 17,596 (15,966) 192,311 -------- -------- -------- -------- -------- Operating income before unallocated costs $54,068 $9,441 $644 $-- $64,153 Other unallocated costs 761 -------- Operating income after unallocated expenses 63,392 Interest income and expense and other, net 6,423 Minority interest (81) -------- Income before income taxes 69,734 Provision for income taxes 21,323 -------- Net income $48,411 ======== Basic net income per share $0.54 ======== Shares used in computing basic net income per share 90,421 ======== Diluted net income per share $0.52 ======== Shares used in computing diluted net income per share 93,344 ======== Note: The pro forma statement of operations is intended to present the Company's operating results excluding purchase accounting adjustments associated with the acquisitions of Home Financial Network, Inc., New Era of Networks, Inc., AvantGo Inc., Dejima, Inc., XcelleNet, Inc., Avaki, Inc., ISDD Ltd., Extended Systems, Inc., Solonde Solutions AG, and Mobile 365, Inc. and other purchased intangibles. Such purchase accounting adjustments would include amortization of developed technology, amortization of intangibles, goodwill impairment loss, in- process research and development costs, and related adjustments for income tax provision. The pro forma statement of operations also excludes stock compensation expense, restructuring costs, and cumulative effect of an accounting change which we do not believe are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions and restructurings) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP. SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT PROFORMA WITHOUT PURCHASE ACCOUNTING, COST OF RESTRUCTURE, AND STOCK COMPENSATION EXPENSE FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) (In thousands, except per share data) Infrastructure Consoli- Platform iAnywhere Sybase Elimina- dated Revenues: Group Solutions 365 tions Total -------- -------- -------- -------- -------- License fees Infrastructure $229,376 $235 $-- $-- $229,611 Mobile and Embedded 31,621 65,519 -- -- 97,140 -------- -------- -------- -------- -------- Subtotal license fees 260,997 65,754 -- -- 326,751 Intersegment license revenues 86 26,333 -- (26,419) -- -------- -------- -------- -------- -------- Total license fees 261,083 92,087 -- (26,419) 326,751 Services Direct service revenue 485,016 46,156 -- -- 531,172 Intersegment service revenues 367 25,905 -- (26,272) -- -------- -------- -------- -------- -------- Total services 485,383 72,061 -- (26,272) 531,172 Messaging -- -- 18,240 -- 18,240 -------- -------- -------- -------- -------- Total revenues 746,466 164,148 18,240 (52,691) 876,163 Total allocated costs and expenses 598,864 136,500 17,596 (52,691) 700,269 -------- -------- -------- -------- -------- Operating income before unallocated costs $147,602 $27,648 $644 $-- $175,894 Other unallocated costs 1,341 -------- Operating income after unallocated expenses 174,553 Interest income and expense and other, net 27,634 Minority interest (81) -------- Income before income taxes 202,106 Provision for income taxes 61,844 -------- Net income $140,262 ======== Basic net income per share $1.57 ======== Shares used in computing basic net income per share 89,557 ======== Diluted net income per share $1.52 ======== Shares used in computing diluted net income per share 92,251 ======== Note: The pro forma statement of operations is intended to present the Company's operating results excluding purchase accounting adjustments associated with the acquisitions of Home Financial Network, Inc., New Era of Networks, Inc., AvantGo Inc., Dejima, Inc., XcelleNet, Inc., Avaki, Inc., ISDD Ltd., Extended Systems, Inc., Solonde Solutions AG, and Mobile 365, Inc. and other purchased intangibles. Such purchase accounting adjustments would include amortization of developed technology, amortization of intangibles, goodwill impairment loss, in- process research and development costs, and related adjustments for income tax provision. The pro forma statement of operations also excludes stock compensation expense, restructuring costs, and cumulative effect of an accounting change which we do not believe are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions and restructurings) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP. SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) (In thousands, except per share data) Infrastructure Consoli- Platform iAnywhere Sybase Elimina- dated Revenues: Group Solutions 365 tions Total -------- -------- -------- -------- -------- License fees Infrastructure $72,890 $83 $-- $-- $72,973 Mobile and Embedded 10,507 16,903 -- -- 27,410 -------- -------- -------- -------- -------- Subtotal license fees 83,397 16,986 -- -- 100,383 Intersegment license revenues 21 8,766 -- (8,787) -- -------- -------- -------- -------- -------- Total license fees 83,418 25,752 -- (8,787) 100,383 Services Direct service revenue 126,189 11,652 -- -- 137,841 Intersegment service revenues 156 7,023 -- (7,179) -- -------- -------- -------- -------- -------- Total services 126,345 18,675 -- (7,179) 137,841 Messaging -- -- 18,240 -- 18,240 -------- -------- -------- -------- -------- Total revenues 209,763 44,427 18,240 (15,966) 256,464 Total allocated costs and expenses before cost of restructure and amortization of customer lists, covenant not to compete and purchased technology 155,695 34,986 17,596 (15,966) 192,311 -------- -------- -------- -------- -------- Operating income before cost of restructure and amortization of customer lists, covenant not to compete, and purchased technology 54,068 9,441 644 -- 64,153 Cost of restructure - 2006 Activity 816 -- -- -- 816 Amortization of customer lists 500 1,046 1,087 -- 2,633 Amortization of covenant not to compete 27 -- -- -- 27 Amortization of purchased technology 402 1,990 543 -- 2,935 -------- -------- -------- -------- -------- Operating income (loss) before unallocated costs $52,323 $6,405 $(986) $-- $57,742 Other unallocated costs 7,503 -------- Operating income after unallocated expenses 50,239 Interest income and expense and other, net 6,423 Minority interest (81) -------- Income before income taxes 56,581 Provision for income taxes 30,187 -------- Net income $26,394 ======== Basic net income per share $0.29 ======== Shares used in computing basic net income per share 90,421 ======== Diluted net income per share $0.28 ======== Shares used in computing diluted net income per share 93,344 ======== SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) (In thousands, except per share data) Infrastructure Consoli- Platform iAnywhere Sybase Elimina- dated Revenues: Group Solutions 365 tions Total -------- -------- -------- -------- -------- License fees Infrastructure $229,376 $235 $-- $-- $229,611 Mobile and Embedded 31,621 65,519 -- -- 97,140 -------- -------- -------- -------- -------- Subtotal license fees 260,997 65,754 -- -- 326,751 Intersegment license revenues 86 26,333 -- (26,419) -- -------- -------- -------- -------- -------- Total license fees 261,083 92,087 -- (26,419) 326,751 Services Direct service revenue 485,016 46,156 -- -- 531,172 Intersegment service revenues 367 25,905 -- (26,272) -- -------- -------- -------- -------- -------- Total services 485,383 72,061 -- (26,272) 531,172 Messaging -- -- 18,240 -- 18,240 -------- -------- -------- -------- -------- Total revenues 746,466 164,148 18,240 (52,691) 876,163 Total allocated costs and expenses before cost of restructure and amortization of customer lists, covenant not to compete and purchased technology 598,864 136,500 17,596 (52,691) 700,269 -------- -------- -------- -------- -------- Operating income before cost of restructure and amortization of customer lists, covenant not to compete, and purchased technology 147,602 27,648 644 -- 175,894 Cost of restructure - 2006 Activity 961 -- -- -- 961 Amortization of customer lists 2,000 4,184 1,087 -- 7,271 Amortization of covenant not to compete 60 -- -- -- 60 Amortization of purchased technology 1,654 7,883 543 -- 10,080 -------- -------- -------- -------- -------- Operating income (loss) before unallocated costs $142,927 $15,581 $(986) $-- $157,522 Other unallocated costs 23,758 -------- Operating income after unallocated expenses 133,764 Interest income and expense and other, net 27,634 Minority interest (81) -------- Income before income taxes 161,317 Provision for income taxes 66,253 -------- Net income $95,064 ======== Basic net income per share $1.06 ======== Shares used in computing basic net income per share 89,557 ======== Diluted net income per share $1.03 ======== Shares used in computing diluted net income per share 92,251 ======== SYBASE, INC. Reconciliation of GAAP-based EPS to pro forma EPS for the three months ended March 31, 2007 (unaudited) Pro forma EPS $0.25 $0.26 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 (0.01) (0.01) ------- ------- GAAP - based EPS $0.16 $0.17 ======= ======= Use of Pro Forma Financial Information To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), Sybase uses pro forma measures of operating results, net income and earnings per share, which are adjusted from GAAP-based results to exclude certain costs and expenses. These pro forma adjustments are provided to enhance an overall understanding of our current financial performance and our prospects for the future, and are one of the primary indicators management uses for planning and forecasting future periods. We have excluded such items, including purchase accounting adjustments in connection with acquisitions because we do not believe they are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP. SYBASE, INC. Reconciliation of GAAP-based EPS to pro forma EPS for the twelve months ended December 31, 2007 (unaudited) Pro forma EPS $1.52 Amortization of purchased intangibles (0.28) Amortization of stock compensation expense (0.26) Income tax effect of above adjustments 0.19 Income tax effect (0.05) ------- GAAP - based EPS $1.12 ======= Use of Pro Forma Financial Information To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), Sybase uses pro forma measures of operating results, net income and earnings per share, which are adjusted from GAAP-based results to exclude certain costs and expenses. These pro forma adjustments are provided to enhance an overall understanding of our current financial performance and our prospects for the future, and are one of the primary indicators management uses for planning and forecasting future periods. We have excluded such items, including purchase accounting adjustments in connection with acquisitions because we do not believe they are indicative of our core business. Even though such items have recurred in the past and may recur in future periods, they are driven by events (such as acquisitions) that occur sporadically and are not directly related to our ongoing core business operations. Pro forma financial information is never intended to be considered in isolation from, or as a substitute for, financial results prepared in accordance with GAAP. DATASOURCE: Sybase, Inc. CONTACT: Investor Relations, Lynne Farris, +1-925-236-8797, or , or Charlie Chen, +1-925-236-6015, or , or Public Relations, Lorna Fernandes, +1-925-236-4107, or , all of Sybase, Inc. Web site: http://www.sybase.com/

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