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Sybase 2007 Second Quarter Results Exceed Consensus EPS

DUBLIN, Calif., July 25 /PRNewswire-FirstCall/ -- Sybase, Inc. (NYSE: SY), a leading provider of enterprise infrastructure and mobile software, today reported financial results for the second quarter ended June 30, 2007.

DUBLIN, Calif., July 25 /PRNewswire-FirstCall/ — Sybase, Inc. (NYSE: SY), a leading provider of enterprise infrastructure and mobile software, today reported financial results for the second quarter ended June 30, 2007.

Highlights: — Total revenue increased 14% year over year, led by Sybase 365 messaging unit — Operating income on non-GAAP basis up 14% year over year; GAAP up 10% — Non-GAAP operating margin of 20%; GAAP operating margin of 15% — Non-GAAP fully diluted EPS of $0.37; GAAP EPS of $0.28 — Cash flow from operations of $53.8 million; total cash and cash investments of $709.1 million — Management raises full-year non-GAAP EPS to $1.56 and GAAP EPS to $1.19 — Full-year cash flow guidance raised to range of $195 million to $205 million — Stock repurchases of $40.0 million

2007 Second Quarter Results

Total revenue increased 14% to $245.0 million from $215.6 million in the second quarter of 2006. The company reported license revenue of $77.4 million, services revenue of $135.2 million, and messaging revenue of $32.4 million.

Non-GAAP operating income for the quarter increased 14% year over year to $47.8 million, representing a 20% operating margin.

Non-GAAP net income for the quarter was $34.3 million, or earnings per diluted share (EPS) of $0.37. This compares with non-GAAP net income of $32.8 million, or EPS of $0.36 for the second quarter of 2006.

Operating income calculated in accordance with generally accepted accounting principles (GAAP) for the quarter increased 10% year over year to $35.6 million, representing a 15% operating margin.

GAAP net income was $26.0 million, or GAAP EPS of $0.28, for the quarter. This compares with GAAP net income of $26.3 million, or GAAP EPS of $0.29, for the 2006 second quarter. Included in the 2007 second quarter GAAP-based results is the impact of $2.8 million for the amortization of purchased intangibles related to the acquisition of Mobile 365.

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 second quarter.

"Our Unwired Enterprise efforts in the second quarter were marked by solid performance in the iAnywhere business, robust demand for our IQ analytics server, as well as overall strong operating results for Sybase 365," stated John Chen, chairman, CEO, and president of Sybase. "Additionally, we expanded consolidated operating margin for the fifth consecutive quarter, driven by margin expansion in each of the three business segments, and we delivered strong cash flow from operations.

"Based on healthy pipelines, strong market demand, and ongoing operating efficiencies across all of our business segments, we are raising our full-year outlook for operating margin, cash flow, and earnings per share," concluded Mr. Chen.

Balance Sheet and Other Data

At June 30, 2007, Sybase reported $709.1 million in cash and cash investments, including restricted cash of $6.0 million. In the second quarter, the company generated $53.8 million in cash flow from operations.

Sybase repurchased $40.0 million worth of its stock during the 2007 second quarter. As of June 30, 2007, $191.2 million remained authorized in the company's current share repurchase program.

Days sales outstanding (DSO) for the 2007 second quarter was 72.

Forward Guidance

For the third quarter ending September 30, 2007, management anticipates revenues in the range of $250.0 million to $255.0 million and non-GAAP fully diluted EPS of approximately $0.40. GAAP EPS for the third quarter is expected to be approximately $0.30, which includes $2.7 million for the amortization of intangibles related to the acquisition of Mobile 365 in November 2006.

For full-year 2007, management is raising guidance for fully diluted non- GAAP EPS to approximately $1.56 from prior guidance of $1.52. Management anticipates revenue in the range of $1.015 billion to $1.025 billion. Management is raising guidance for GAAP EPS to approximately $1.19 from prior guidance of $1.12, which includes $10.9 million for the amortization of intangibles related to the acquisition of Mobile 365.

Management is raising guidance for full-year 2007 cash flow from operations to $195 million to $205 million, compared with prior guidance ranging from $190 million to $200 million.

Accompanying this release is a reconciliation from projected GAAP to non- GAAP amounts for the 2007 third quarter and full year.

2007 Second Quarter Company Highlights — Expanded partnership with Red Hat, Inc., the world's leading provider of open source solutions, to include the first database appliance based on Sybase ASE 15.0 and Red Hat Enterprise Linux 5. — Sybase 365 and IQ selected by China Mobile and Agricultural Bank of China to meet more challenging global competition and customer demands. — Released embedded extract, transform and load (ETL) capabilities in Sybase IQ 12.7 analytics server. — Launched the AvantGo(R) client for BlackBerry(R) smart phones, allowing access to customized content on mobile Web sites anytime, anywhere. — Launched Sybase 365 securePay, a cardholder verification system enabling mobile phones to be used to authenticate a transaction at the absence of the card or cardholder; partnered with UK's Telsecure to offer securePay to customers of financial institutions. — Partnered with Just Dial Services and Spanco Telesystems to expand Sybase 365's footprint in India and expand SMS services to more enterprises and mobile subscribers. — Announced a new toolkit on the Information Anywhere Suite platform to create mobile forms for field inspection and survey applications. — Sybase Adaptive Server Enterprise (ASE) won the Enterprise Open Source Magazine's Readers' Choice Award for the third year; voted "Best Linux Database" by the open source community. — Twenty-one Sybase customers and partners were named 2007 Computerworld Honors Laureates.

Conference Call and Webcast Information

The Sybase 2007 second quarter conference call and simultaneous Webcast is scheduled to begin at 7:30 a.m. Pacific Time/10:30 a.m. Eastern Time on Wednesday, July 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 August 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 4613045. Additionally, the archived Webcast will be available through October 24, 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, 2006 and Form 10-Q for the quarter ended March 31, 2007.

Sybase, Adaptive Server Enterprise (ASE), AvantGo, 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 June 30, December 31, (In thousands, except share and 2007 2006 per share data) ———– ———– (Unaudited) Current assets: Cash and cash equivalents $436,803 $355,303 Short-term investments 220,955 269,612 ———– ———– Total cash, cash equivalents and short-term cash investments 657,758 624,915 Restricted cash 6,024 6,014 Accounts receivable, net 196,704 218,016 Deferred income taxes 6,242 6,224 Other current assets 32,857 16,392 ———– ———– Total current assets 899,585 871,561 Long-term cash investments 45,303 12,781 Property, equipment and improvements, net 64,639 66,458 Deferred income taxes 38,083 36,069 Capitalized software, net 72,006 71,179 Goodwill, net 540,709 540,303 Other purchased intangibles, net 138,538 149,648 Other assets 36,615 39,551 ———– ———– Total assets $1,835,478 $1,787,550 =========== =========== Current liabilities: Accounts payable $22,735 $23,439 Accrued compensation and related expenses 50,403 59,748 Accrued income taxes 14,156 31,364 Other accrued liabilities 110,913 108,436 Deferred revenue 213,792 193,431 ———– ———– Total current liabilities 411,999 416,418 Other liabilities 44,082 44,428 Deferred income taxes 14,186 14,448 Long-term tax liability 25,797 — Long-term deferred revenue 5,506 3,965 Minority interest 5,179 5,160 Convertible subordinated notes 460,000 460,000 Total stockholders' equity 868,729 843,131 ———– ———– Total liabilities and stockholders' equity $1,835,478 $1,787,550 =========== =========== SYBASE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, —————— —————— (In thousands, except per share data) 2007 2006 2007 2006 ——- ——- ——- ——- Revenues: License fees $77,435 $83,141 $146,800 $150,029 Services 135,230 132,418 264,881 260,538 Messaging 32,358 — 63,379 — ——- ——- ——- ——- Total revenues 245,023 215,559 475,060 410,567 Costs and expenses: Cost of license fees 13,083 11,930 25,836 24,722 Cost of services 39,539 38,338 78,281 76,690 Cost of messaging 18,906 — 37,795 — Sales and marketing 64,916 67,833 129,491 129,188 Product development and engineering 36,920 37,543 75,673 74,540 General and administrative 32,680 25,947 64,176 50,934 Amortization of other purchased intangibles 3,436 1,552 6,846 3,098 Cost (Reversal) of restructure (51) 66 (47) 100 ——- ——- ——- ——- Total costs and expenses 209,429 183,209 418,051 359,272 ——- ——- ——- ——- Operating income 35,594 32,350 57,009 51,295 Interest income and expense and other, net 5,142 7,217 10,146 13,275 Minority interest — — (20) — ——- ——- ——- ——- Income before income taxes 40,736 39,567 67,135 64,570 Provision for income taxes 14,708 13,234 25,959 20,985 ——- ——- ——- ——- Net income $26,028 $26,333 $41,176 $43,585 ======= ======= ======= ======= Basic net income per share $0.29 $0.30 $0.45 $0.49 ======= ======= ======= ======= Shares used in computing basic net income per share 90,891 89,113 91,020 89,375 ======= ======= ======= ======= Diluted net income per share $0.28 $0.29 $0.44 $0.48 ======= ======= ======= ======= Shares used in computing diluted net income per share 92,972 91,402 93,294 91,716 ======= ======= ======= ======= 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 Six Months Ended June 30, June 30, ———————————————————————— 2007 2006 2007 2006 ———————————————————————— Operating Income GAAP operating income 35,594 32,350 57,009 51,295 Plus: Amortization of acquisition-related intangible assets 6,773 3,855 13,504 7,848 Stock-based compensation expense 5,483 5,562 11,233 10,987 Cost (Reversal) of restructure (51) 66 (47) 100 ———————————————————————— Non-GAAP operating income $47,799 $41,833 $81,699 $70,230 ———————————————————————— Net Income GAAP net income 26,028 26,333 41,176 43,585 Plus: Amortization of acquisition-related intangible assets 6,773 3,855 13,504 7,848 Stock-based compensation expense 5,483 5,562 11,233 10,987 Cost (Reversal) of restructure (51) 66 (47) 100 Less: Incremental income taxes associated with certain Non-GAAP items (3,983) (3,025) (6,731) (6,989) ———————————————————————— Non-GAAP net income $34,250 $32,791 $59,135 $55,531 ———————————————————————— Net Income Per Diluted Share GAAP net income per diluted share $0.28 $0.29 $0.44 $0.48 Plus: Amortization of acquisition-related intangible assets 0.07 0.04 0.14 0.09 Stock-based compensation expense 0.06 0.06 0.12 0.12 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) (0.07) (0.08) ———————————————————————– Non-GAAP net income per diluted share $0.37 $0.36 $0.63 $0.61 ———————————————————————— Shares used in computing diluted net income per share 92,972 91,402 93,294 91,716 CLASSIFICATION OF STOCK-BASED COMPENSATION EXPENSE The following table shows the classification of stock-based compensation expense: Three Months Ended Six Months Ended June 30, June 30, ———————————————————————— 2007 2006 2007 2006 ———————————————————————— ($000) ($000) Cost of services 376 681 715 1,361 Cost of messaging 124 0 310 0 Sales and marketing 1,206 1,051 2,472 2,047 Product development and engineering 656 679 1,342 1,272 General and administrative 3,121 3,151 6,394 6,307 ———————————————————————— ———————————————————————— Total $5,483 $5,562 $11,233 $10,987 CLASSIFICATION OF AMORTIZATION OF PURCHASED INTANGIBLES The following table shows the classification of amortization of purchased intangibles expense: Three Months Ended Six Months Ended June 30, June 30, ———————————————————————– 2007 2006 2007 2006 ———————————————————————— ($000) ($000) Cost of license fees 2,406 2,303 4,811 4,750 Cost of messaging 931 0 1,847 0 Amortization of other purchased intangibles 3,436 1,552 6,846 3,098 ———————————————————————— Total $6,773 $3,855 $13,504 $7,848 SYBASE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, ———————- (Dollars in thousands) 2007 2006 ——————————————– ——– ——– Cash and cash equivalents, beginning of year $355,303 $398,741 Cash flows from operating activities: Net income 41,176 43,585 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 43,238 34,895 Minority interest in income of subsidiaries 20 — Loss on disposal of assets 45 1,038 Deferred income taxes (2,262) (7,682) Stock-based compensation – restricted stock 4,185 4,264 Stock-based compensation – all other 7,048 6,724 Excess tax benefit from stock-based compensation plans (2,855) — Amortization of note issuance costs 985 984 Changes in assets and liabilities: Accounts receivable 22,522 33,431 Other current assets (5,258) (2,787) Other assets – operating 2,572 (2,457) Accounts payable (669) 699 Accrued compensation and related expenses (9,360) (5,317) Accrued income taxes 8,510 11,005 Other accrued liabilities (7,786) (14,906) Deferred revenues 21,902 20,563 Other liabilities (552) 934 ——– ——– Net cash provided by operating activities 123,461 124,973 Cash flows from investing activities: Increase in restricted cash (10) (127) Purchases of available-for-sale cash investments (165,136) (346,539) Maturities of available-for-sale cash investments 99,487 179,160 Sales of available-for-sale cash investments 81,984 160,571 Business combinations, net of cash acquired (1,531) (3,794) Purchases of property, equipment and improvements (11,225) (7,847) Proceeds from sale of property, equipment, and improvements 40 2 Capitalized software development costs (17,228) (18,923) Increase in other assets – investing (61) (7) ——– ——– Net cash used for investing activities (13,680) (37,504) Cash flows from financing activities: Repayments of long-term obligations (33) (29) Payments on capital lease (879) (159) Net proceeds from the issuance of common stock and reissuance of treasury stock 19,221 12,225 Purchases of treasury stock (58,600) (45,280) Excess tax benefit from stock-based compensation plans 2,855 — ——– ——– Net cash used for financing activities (37,436) (33,243) Effect of exchange rate changes on cash 9,155 9,840 ——– ——– Net increase in cash and cash equivalents 81,500 64,066 ——– ——– Cash and cash equivalents, end of period $436,803 $462,807 ======== ======== SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT FOR THE THREE MONTHS ENDED JUNE 30, 2007 (UNAUDITED) (In thousands, except per share data) Infrastructure Revenues: Platform iAnywhere Sybase Consolidated Group Solutions 365 Eliminations Total ——— ——— ——— ——— ——— License fees Infrastructure $52,572 $346 $3 $– $52,921 Mobile and Embedded 7,789 16,725 — — 24,514 ——— ——— ——— ——— ——— Subtotal license fees 60,361 17,071 3 — 77,435 Intersegment license revenues 207 6,495 — (6,702) — ——— ——— ——— ——— ——— Total license fees 60,568 23,566 3 (6,702) 77,435 Services Direct service revenue 123,446 11,784 — — 135,230 Intersegment service revenues 147 7,275 — (7,422) — ——— ——— ——— ——— ——— Total services 123,593 19,059 — (7,422) 135,230 Messaging — — 32,358 — 32,358 ——— ——— ——— ——— ——— Total revenues 184,161 42,625 32,361 (14,124) 245,023 Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology 146,545 34,402 29,718 (14,124) 196,541 ——— ——— ——— ——— ——— Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology 37,616 8,223 2,643 — 48,482 Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology as a percentage of total revenue 20% 19% 8% 0% 20% Cost of restructure – 2007 Activity (51) — — — (51) Amortization of other purchased intangibles 527 1,046 1,863 — 3,436 Amortization of purchased technology 403 2,003 931 — 3,337 ——— ——— ——— ——— ——— Operating income (loss) before unallocated costs $36,737 $5,174 $(151) $– $41,760 Other unallocated costs 6,166 ——— Operating income after unallocated costs 35,594 Interest income and expense and other, net 5,142 ——— Income before income taxes 40,736 Provision for income taxes 14,708 ——— Net income $26,028 ========= Basic net income per share $0.29 ========= Shares used in computing basic net income per share 90,891 ========= Diluted net income per share $0.28 ========= Shares used in computing diluted net income per share 92,972 ========= SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT FOR THE SIX MONTHS ENDED JUNE 30, 2007 (UNAUDITED) (In thousands, except per share data) Infrastructure Platform iAnywhere Sybase Consolidated Group Solutions 365 Eliminations Total ——— ——— ——— ——— ——— Revenues: License fees Infrastructure $100,887 $367 $17 $– $101,271 Mobile and Embedded 14,428 31,101 — — 45,529 ——— ——— ——— ——— ——— Subtotal license fees 115,315 31,468 17 — 146,800 Intersegment license revenues 239 12,031 — (12,270) — ——— ——— ——— ——— ——— Total license fees 115,554 43,499 17 (12,270) 146,800 Services Direct service revenue 241,829 23,052 — — 264,881 Intersegment service revenues 174 14,058 — (14,232) — ——— ——— ——— ——— ——— Total services 242,003 37,110 — (14,232) 264,881 Messaging — — 63,379 — 63,379 ——— ——— ——— ——— ——— Total revenues 357,557 80,609 63,396 (26,502) 475,060 Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology 290,663 68,512 59,695 (26,502) 392,368 ——— ——— ——— ——— ——— Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology 66,894 12,097 3,701 — 82,692 Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology as a percentage of total revenue 19% 15% 6% 0% 17% Cost of restructure – 2007 Activity (47) — — — (47) Amortization of other purchased intangibles 1,054 2,092 3,700 — 6,846 Amortization of purchased technology 805 4,006 1,847 — 6,658 ——— ——— ——— ——— ——— Operating income (loss) before unallocated costs $65,082 $5,999 $(1,846) $– $69,235 Other unallocated costs 12,226 ——— Operating income after unallocated expenses 57,009 Interest income and expense and other, net 10,146 Minority interest (20) ——— Income before income taxes 67,135 Provision for income taxes 25,959 ——— Net income $41,176 ========= Basic net income per share $0.45 ========= Shares used in computing basic net income per share 91,020 ========= Diluted net income per share $0.44 ========= Shares used in computing diluted net income per share 93,294 ========= 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 June 30, 2007 ————————————————————————- Infrastructure iAnywhere Platform Group Solutions Sybase 365 ————————————————————————- Operating Income Before Unallocated Costs GAAP operating income (loss) before unallocated costs 36,737 5,174 (151) Plus: Amortization of acquisition-related intangible assets 930 3,049 2,794 Cost (Reversal) of restructure (51) 0 0 ————————————————————————- Non-GAAP operating income before unallocated costs $37,616 $8,223 $2,643 ————————————————————————- Six Months Ended June 30, 2007 ————————————————————————- Infrastructure iAnywhere Platform Group Solutions Sybase 365 ————————————————————————- Operating Income Before Unallocated Costs GAAP operating income (loss) before unallocated costs 65,082 5,999 (1,846) Plus: Amortization of acquisition-related intangible assets 1,859 6,098 5,547 Cost (Reversal) of restructure (47) 0 0 ————————————————————————- Non-GAAP operating income before unallocated costs $66,894 $12,097 $3,701 ————————————————————————- SYBASE, INC. Reconciliation of GAAP-based EPS to Non-GAAP EPS for the three months ended September 30, 2007 (unaudited) GAAP – based EPS $0.30 Amortization of purchased intangibles 0.08 Amortization of stock compensation expense 0.06 Income tax effect of above adjustments (0.04) ———- Non-GAAP EPS $0.40 ========== 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 $1.19 Amortization of purchased intangibles 0.29 Amortization of stock compensation expense 0.25 Income tax effect of above adjustments (0.20) Income tax effect 0.03 ———- Non-GAAP EPS $1.56 ========== Please see "Note Regarding Non-GAAP Financial Measures" for important information regarding Non-GAAP Financial Measures.

SOURCE Sybase, Inc.

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