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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 1-16493
 SYBASE, INC.
  Delaware
    
    94-2951005(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)One Sybase Drive, Dublin, California
    
    94568(Address of principal executive offices)
    
    (Zip Code)
 
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, $.001 par value per share
    
    New York Stock Exchange
    þ o
 o þ
 þ o
 o
  Large accelerated filer þ

    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ
   Class
    
    Outstanding at February 13, 2009Common Stock, $.001 par value per share
    
    81,021,153 shares
 DOCUMENTS INCORPORATED BY REFERENCE
 Document
    
    Parts Into Which IncorporatedAnnual Report to Stockholders for the Fiscal
Year Ended December 31, 2008 (Annual Report)
    
    Parts I, II, and IVProxy Statement for the Annual Meeting of
Shareholders to be held April 14, 2009
(Proxy Statement)
    
    Part III




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1 (A): RISK FACTORSITEM 1 (B): UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESPART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF REGISTRANT AND CORPORATE GOVERNANCEITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSlITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCEITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESEXHIBIT INDEXEX-12EX-21EX-23.1EX-31.1EX-31.2EX-32    Table of Contents  FORWARD-LOOKING STATEMENTS
   www.sec.gov
 www.sybase.com
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PART I
 
 ITEM 1. BUSINESS
     Infrastructure Platform Group (IPG) ® ® ® ®
  iAnywhere Solutions (iAS) ® ®
  Sybase 365
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UNWIRED ENTERPRISE
   CUSTOMERS
  
    
    A large digital advertising network uses Sybase ASE Cluster Edition to ensure continuous
availability across high-demand systems and to provide cost-efficient consolidation of its
data center. Using Sybase ASE Cluster Edition, this customer can now easily manage its
environment using virtual resource management technology to provide expected service
levels.
    
    One of the worlds largest medical device companies developed a sales force automation
solution using Sybase. The company supplies thousands of field representatives with a
complete mobility solution that includes Sybases device management, security, mobile
database and data synchronization technology. The company chose Sybase to support the
daily operations requirements of the sales force and to enable it to scale this foundation
for future requirements.
    
    A global financial services company uses Sybase RAP  The Trading Edition to execute
its long-term strategic trading mission. To take this long-view, this bank gathers vast
amounts of trade data for ongoing analysis. With Sybase RAP  The Trading Edition, this
trading operation can process enough data in real-time to support its model development and
validation to make smart, profitable decisions.
    
    A bank-owned entity processing billions of credit card transactions uses Sybase IQ to
manage its massive data loads and to provide real-time performance insights to the
organization. With Sybase IQ, complex, ad hoc queries rapidly supply on-demand information
to users and houses more archive data cost-effectively.
    
    Indias leading power utility uses Sybase 365 SMS messaging service to offer two-way
mobile utility services to its customers, enhancing its CRM processes. Providing SMS
connectivity, Sybase empowers utility customers to take advantage of a variety of services
via SMS, including: receipt of their electricity bill, billing alerts, disconnection
alerts, and alerts of power shutdowns before they occur, and service issue tracking. The
utility now has a cost effective and efficient way to update its customers on any reported
faults, and to minimize inbound and outbound calls to its call center
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PRODUCTS AND SERVICES
  Infrastructure Platform Group (IPG)
 Sybase Adaptive Server Enterprise
 Sybase IQ
 Sybase RAP  The Trading Edition
 Sybase Replication Server®
 Sybase Mirror Activator
 Sybase PowerDesigner
 Sybase PowerBuilder
 Sybase Financial Fusion Banking Solutions
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iAnywhere Solutions (iAS)
 SQL Anywhere
 Advantage Database Server
 Afaria
 iAnywhere Mobile Office
 Sybase Unwired Platform
 RemoteWare®
 Standards-based SDKs ®
 Sybase 365
 Operator Services
 Enterprise Services
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mBanking Services
 AvantGo®
 WORLDWIDE SERVICES
 Technical Support.
  Standard Support
  Enterprise Support
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Consulting.
 Education.
 SALES AND DISTRIBUTION
 Licensing and Services Model.
 Distribution Method.
 International Business.
 INTELLECTUAL PROPERTY RIGHTS
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RESEARCH AND DEVELOPMENT
  COMPETITION
   Information Management Products.
 Financial Fusion Products:
  Mobile and Embedded Database Products
 Mobile Middleware and Device Management Products.
  Operator Services.
 Enterprise Services.
 mBanking
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AvantGo.
  EMPLOYEES
  
 ITEM 1 (A): RISK FACTORS
 Future Operating Results
  Significant variation in the timing and amount of our revenues may cause fluctuations in our
quarterly operating results and an accurate estimation of our revenues is difficult.
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Economic and credit market conditions in the U.S. and worldwide could adversely affect our
revenues.
  If we fail to maintain or expand our relationships with strategic partners and indirect
distribution channels our license revenues could decline.
   System failures, delays, insufficient capacity and other problems could harm our reputation and
business, cause us to lose customers and expose us to customer liability.
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Industry consolidation and other competitive pressures could affect prices or demand for our
products and services, and our business may be adversely affected.
   We may encounter difficulties in completing acquisitions or strategic relationships and we may
incur acquisition-related charges that could adversely affect our operating results.
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The ability to rapidly develop and bring to market advanced products and services that are
successful is crucial to maintaining our competitive position.
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If our existing customers cancel or fail to renew their technical support agreements, our technical
support revenues could be adversely affected.
  Pricing pressure in the mobile messaging market could adversely affect our operating results.
  Unanticipated delays or accelerations in our sales cycles could result in significant fluctuations
in our quarterly operating results.
  Our mobile messaging customer contracts may not continue to generate revenues and margins at or
near our historical levels of revenues and margins from these customers and we rely on a limited
number of customers for most of our messaging revenue.
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If we do not adapt to rapid technological change in the telecommunications industry, we could lose
customers or market share.
  Impairments in our investment portfolio may result in temporary and/or realized losses.
   Restructuring activities and reorganizations in our sales model or business units may not succeed
in increasing revenues and operating results.
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Our results of operations may depend on the compatibility of our products with other software
developed by third parties.
  We are subject to risks arising from our international operations.
  We may not receive significant revenues from our current research and development efforts for
several years, if at all.
  We might experience significant errors or security flaws in our products and services.
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We are subject to risks related to the terms of our 1.75% Convertible Subordinated Notes.
     Unanticipated changes in our tax rates could affect our future financial results.
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We face exposure to adverse movements in foreign currency exchange rates.
    Growing market acceptance of open source software could cause a decline in our revenues and
operating margins.
  Insufficient protection for our intellectual property rights may have a material adverse effect on
our results of operations or our ability to compete.
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If third parties claim that we are in violation of their intellectual property rights, it could
have a negative impact on our results of operations or ability to compete.
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Laws and regulations affecting our customers and us and future laws and regulations to which they
or we may become subject may harm our business.
  Our key personnel are critical to our business, and we cannot assure that they will remain with us.
  Our sales to government clients subject us to risks including early termination, audits,
investigations, sanctions and penalties.
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Changes in accounting and legal standards could adversely affect our future operating results.
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The unfavorable outcome of litigation and other claims against us could have a material adverse
impact on our financial condition and results of operations.
  Our operations and financial results could be severely harmed by certain natural disasters.
  Provisions of our corporate documents have anti-takeover effects that could prevent a change in
control.
  
 ITEM 1 (B): UNRESOLVED STAFF COMMENTS
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ITEM 2. PROPERTIES
     
 ITEM 3. LEGAL PROCEEDINGS
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5.
    
    MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  High
    
    LowFiscal 2007Quarter ended March 31, 2007
    
    $
    26.28
    
    
    $
    24.01Quarter ended June 30, 2007
    
    $
    26.19
    
    
    $
    22.64Quarter ended September 30, 2007
    
    $
    25.08
    
    
    $
    22.07Quarter ended December 31, 2007
    
    $
    28.60
    
    
    $
    23.50Fiscal 2008Quarter ended March 31, 2008
    
    $
    28.59
    
    
    $
    24.95Quarter ended June 30, 2008
    
    $
    33.09
    
    
    $
    25.74Quarter ended September 30, 2008
    
    $
    36.53
    
    
    $
    28.50Quarter ended December 31, 2008
    
    $
    30.60
    
    
    $
    22.44
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Issuer Purchases of Equity Securities
  Number of Shares
    
    Avg. Price Paid PerPeriod
    
    Purchased
    
    ShareOctober 2008
    
    
    47,000
    
    
    $
    23.73November 2008
    
    
    184,080
    
    
    $
    23.13December 2008
    
    
    0
    
    
    
    0Total for Fourth Quarter 2008
    
    
    231,080
    
    
    $
    23.26
   PERFORMANCE GRAPHS
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*
    
    $100 invested on 12/31/03 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31. ©
 December, 312003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008Sybase, Inc.
    
    
    
    100
    
    
    
    
    96.94
    
    
    
    
    106.22
    
    
    
    
    120.02
    
    
    
    
    126.77
    
    
    
    
    120.36S&P 500
    
    
    
    100
    
    
    
    
    110.88
    
    
    
    
    116.33
    
    
    
    
    134.7
    
    
    
    
    142.1
    
    
    
    
    89.53S&P Systems Software
    
    
    
    100
    
    
    
    
    108.39
    
    
    
    
    103.52
    
    
    
    
    122.27
    
    
    
    
    146.54
    
    
    
    
    91.52
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*
    
    $ 100 invested on 12/31/98 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. ©
 December, 311998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006
    

    2007
    

    2008Sybase, Inc.
    
    
    
    100.00
    
    
    
    
    229.53
    
    
    
    
    267.51
    
    
    
    
    212.79
    
    
    
    
    180.93
    
    
    
    
    277.87
    
    
    
    
    269.37
    
    
    
    
    295.15
    
    
    
    
    333.50
    
    


    352.27
    
    
    
    
    334.44S&P 500
    
    
    
    100.00
    
    
    
    
    121.04
    
    
    
    
    110.02
    
    
    
    
    96.95
    
    
    
    
    75.52
    
    
    
    
    97.18
    
    
    
    
    107.76
    
    
    
    
    113.05
    
    
    
    
    130.91
    
    

    138.10
    
    
    
    
    87.01S&P Systems Software
    
    
    
    100.00
    
    
    
    
    187.59
    
    
    
    
    94.45
    
    
    
    
    99.32
    
    
    
    
    74.55
    
    
    
    
    86.99
    
    
    
    
    94.29
    
    
    
    
    90.05
    
    
    
    
    106.36
    
    


    127.47
    
    
    
    
    79.62
 
 ITEM 6. SELECTED FINANCIAL DATA
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Consolidated Statements of Operations Data
 (In thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Revenues:License fees
    
    $
    383,661
    
    
    $
    344,807
    
    
    $
    326,751
    
    
    $
    291,695
    
    
    $
    275,872Services
    
    
    572,090
    
    
    
    544,209
    
    
    
    531,172
    
    
    
    527,000
    
    
    
    512,664Messaging
    
    
    176,179
    
    
    
    136,514
    
    
    
    18,240
    
    
    
    
    
    
    
    Total revenues
    
    
    1,131,930
    
    
    
    1,025,530
    
    
    
    876,163
    
    
    
    818,695
    
    
    
    788,536Costs and expenses:Cost of license fees
    
    
    67,342
    
    
    
    53,114
    
    
    
    50,540
    
    
    
    51,556
    
    
    
    60,795Cost of services
    
    
    160,604
    
    
    
    157,790
    
    
    
    152,962
    
    
    
    156,325
    
    
    
    162,016Cost of messaging
    
    
    107,757
    
    
    
    82,598
    
    
    
    11,097
    
    
    
    
    
    
    
    Sales and marketing
    
    
    285,376
    
    
    
    266,995
    
    
    
    263,281
    
    
    
    250,003
    
    
    
    242,778Product development and engineering
    
    
    146,932
    
    
    
    152,571
    
    
    
    149,510
    
    
    
    139,011
    
    
    
    119,959General and administrative
    
    
    138,980
    
    
    
    129,319
    
    
    
    106,025
    
    
    
    92,106
    
    
    
    91,117Amortization of other purchased
intangibles
    
    
    14,716
    
    
    
    13,783
    
    
    
    7,331
    
    
    
    6,639
    
    
    
    5,139Reversal of AvantGo restructuring
accrual
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,677
    )Cost of restructuring
    
    
    167
    
    
    
    797
    
    
    
    1,653
    
    
    
    1,115
    
    
    
    20,017Total costs and expenses
    
    
    921,874
    
    
    
    856,967
    
    
    
    742,399
    
    
    
    696,755
    
    
    
    699,144Operating income
    
    
    210,056
    
    
    
    168,563
    
    
    
    133,764
    
    
    
    121,940
    
    
    
    89,392Interest income and expense, net
    
    
    (2,955
    )
    
    
    21,377
    
    
    
    27,634
    
    
    
    14,824
    
    
    
    11,574Minority interest
    
    
    51
    
    
    
    12
    
    
    
    (81
    )
    
    
    (49
    )
    
    
    Income before income taxes
    
    
    207,152
    
    
    
    189,952
    
    
    
    161,317
    
    
    
    136,715
    
    
    
    100,966Provision for income taxes
    
    
    68,581
    
    
    
    41,102
    
    
    
    66,253
    
    
    
    51,132
    
    
    
    33,016Net income
    
    $
    138,571
    
    
    $
    148,850
    
    
    $
    95,064
    
    
    $
    85,583
    
    
    $
    67,950Basic net income per share
    
    $
    1.69
    
    
    $
    1.65
    
    
    $
    1.06
    
    
    $
    0.95
    
    
    $
    0.71Shares used in computing basic net
income per share
    
    
    82,060
    
    
    
    90,019
    
    
    
    89,557
    
    
    
    90,307
    
    
    
    95,550Diluted net income per share
    
    $
    1.64
    
    
    $
    1.61
    
    
    $
    1.03
    
    
    $
    0.92
    
    
    $
    0.69Shares used in computing diluted net
income per share
    
    
    84,455
    
    
    
    92,598
    
    
    
    92,251
    
    
    
    93,257
    
    
    
    98,001
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Consolidated Balance Sheet Data
 (In thousands)
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004Cash, cash equivalents and
cash investments
    
    $
    635,566
    
    
    $
    734,907
    
    
    $
    637,696
    
    
    $
    859,936
    
    
    $
    513,632Working capital
    
    
    518,044
    
    
    
    604,728
    
    
    
    455,143
    
    
    
    573,247
    
    
    
    290,237Total assets
    
    
    1,835,417
    
    
    
    1,913,483
    
    
    
    1,787,550
    
    
    
    1,570,614
    
    
    
    1,183,522Long-term obligations
    
    
    548,768
    
    
    
    549,591
    
    
    
    518,876
    
    
    
    500,339
    
    
    
    33,121Stockholders equity
    
    
    817,173
    
    
    
    930,810
    
    
    
    843,131
    
    
    
    698,830
    
    
    
    756,556
 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  
    
    Executive Overview that discusses at a high level our operating
results and some of the trends that affect our business.
    
    Critical Accounting Policies that we believe are important to
understanding the assumptions and judgments underlying our financial
statements.
    
    Results of Operations that begins with an overview followed by a more
detailed discussion of our revenue and expenses.
    
    Liquidity and Capital Resources which discusses key aspects of our
statements of cash flows, changes in our balance sheets and our
financial commitments.
 Risk Factors, Future Operating Results
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Executive Overview
 Our Business
    Our Results
  ®
   - 31 -




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Business Trends
      - 32 -




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Critical Accounting Policies and Estimates
  
    
    Revenue RecognitionRevenue recognition rules for software and message services companies are very complex. We
follow specific and detailed guidance in measuring revenue, although certain judgments affect
the application of our revenue recognition policy. These judgments would include, for example,
the determination of a customers creditworthiness, whether two separate transactions with a
customer should be accounted for as a single transaction, reporting certain third party content
delivery revenues net as an agent versus gross as a principal, or whether included software
services are essential to the functionality of a product.
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License and Service RevenuesWe recognize software revenue in accordance with Statement of Position (SOP) 97-2, Software
Revenue Recognition, and SOP 98-9, and in certain instances in accordance with SOP 81-1,
Accounting for Performance of Construction-Type and Certain Production-Type Contracts or SEC
Staff Accounting Bulletin, or SAB, No. 104, Revenue Recognition. We license software under
non-cancelable license agreements. License fee revenues are recognized when (a) a non-cancelable
license agreement is in force, (b) the product has been delivered, (c) the license fee is fixed
or determinable, and (d) collection is reasonably assured. If the fee is not fixed or
determinable, revenue is recognized as payments become due from the customer and all other
revenue recognition criteria have been met.
 Residual Method Accounting
 Percentage of Completion Accounting
 Sublicense Revenues
 Service Revenues
 Message Revenues
 Revenue Arrangements with Multiple Deliverables Reporting Revenue Gross as a Principal Versus Net as an
Agent
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
    
    Impairment of Goodwill, Non-amortizable Intangible Assets and Other Purchased Intangible AssetsGoodwill and other non-amortizable intangible assets, such as tradenames, have generally
resulted from our business combinations accounted for as purchases. We are required to test
amounts recorded as goodwill or other non-amortizable intangible assets with indeterminate
lives, at least annually for impairment. The review of goodwill and indeterminate lived
intangibles for potential impairment is highly subjective and requires us to make numerous
estimates, using a discounted cash flow model, to determine the fair values of our reporting
units to which goodwill is assigned. For these purposes, our reporting units equate to our
reported segments. See Note Ten to Consolidated Financial Statements, Part II, Item 8,
incorporated here by reference. If the estimated fair value of a reporting unit is determined to
be less than its carrying value, we are required to perform an analysis similar to a purchase
price allocation for an acquired business in order to determine the amount of goodwill
impairment, if any. This analysis requires a valuation of certain other purchased intangible
assets with determinate and indeterminate useful lives including in-process research and
development, and developed technology. We performed our annual impairment analysis for each of
our historical operating units (IPG, iAS, and SY365) and for each indeterminate lived intangible
asset as of December 31, 2008. This analysis indicated that the estimated fair value of each
reporting unit or indeterminate lived intangible exceeded its carrying value. Therefore, we were
not required to recognize an impairment loss in 2008. As of December 31, 2008, our goodwill
balance totaled $527.2 million and our other non-amortizable purchased intangibles totaled $7.1
million. Changes in our internal business structure, increases in the applicable discount rate,
changes in our future revenue and expense forecasts, and certain other factors that directly
impact the valuation of our reporting units could result in a future impairment charge.We also continue to separately review our other purchased intangible assets (e.g., purchased
technology, customer lists and covenants not to compete) for indications of impairment whenever
events or changes in circumstances indicate the carrying amount of any such asset may not be
recoverable. For these purposes, recoverability of these assets is measured by comparing their
carrying values to the future undiscounted cash flows the assets are expected to generate. This
methodology requires us to estimate future cash flows associated with certain assets or groups
of assets. Changes in these estimates, technology obsolescence, customer terminations and other
factors could result in impairment losses associated with other intangible assets. In 2008, we
wrote off $4.5 million of certain purchased technologies.
    
    Valuation, Classification and Impairments of Investments
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The Meaning
of Other-Than-Temporary Impairment and its Application to Certain Investments (the FSPs). Accounting for Certain Investments in Debt and Equity Securities
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The fair values of the ARS as of December 31, 2008 are based on an estimation using a discounted
cash flow model for each of the six ARS using credit related discount rates and term to recovery
as key inputs. Changes in assumptions and other factors could result in additional realized
impairment losses. For example, if the assumed discount rate was increased by 100 basis points
for each ARS, then the total estimated fair value of the Companys ARS portfolio would decrease
$0.55 million and the impairment charge to earnings in the fourth quarter would have increased
by $0.55 million. Similarly, if the assumed term to recovery was increased by 1 year for each
ARS, then the total estimated fair value of the Companys ARS portfolio would decrease $1.2
million and the impairment charge to earnings in the fourth quarter would have increased by $1.2
million.Notwithstanding our valuation of the securities in accordance with FAS 157 and our determination
that these securities were other than temporarily impaired in accordance with FAS 115, we have
both the intent and ability to hold these securities until a reasonable market returns.
Accordingly, while the current valuation of these securities follows GAAP, management believes
that it is possible that the proceeds we receive on the ultimate liquidation of certain of these
securities may be higher than their current recorded value.
    
    Allowance for Doubtful AccountsWe maintain an allowance for doubtful accounts to reflect the expected non-collection of
accounts receivable. In determining the amount of the allowance we consider our historical
level of credit losses; judgments about the creditworthiness of significant customers; an
assessment of current economic and industry trends that might impact the level of credit losses
in the future; and other factors. Our allowances have generally been adequate to cover our
actual credit losses. However, since we cannot reliably predict future changes in the financial
stability of our customers, we cannot guarantee that our allowance will continue to be adequate.
For example, our allowance for doubtful accounts totaled $3.9 million at December 31, 2008. If
our allowance for doubtful accounts, including identified specific customer matters, changed by
10% our allowance for doubtful accounts and operating results would change by $0.4 million.
    
    Capitalized SoftwareWe capitalize certain software development costs after a product becomes technologically
feasible and before its general release to customers. Our net capitalized software totaled $82.4
million at December 31, 2008. Significant judgment is required in determining when a product
becomes technologically feasible. Capitalized development costs are then amortized over the
products estimated life beginning upon general release of the product. Quarterly, we compare a
products unamortized capitalized cost to the products net realizable value. To the extent
unamortized capitalized cost exceeds net realizable value based on the products estimated
future gross revenues (reduced by the estimated future costs of completing and selling the
product) the excess is written off. This analysis requires us to estimate future gross revenues
associated with certain products and the future costs of completing and selling certain
products. Changes in these estimates could result in write-offs of capitalized software costs.
Capitalized software amortization and write-off charges totaled $42.9 million in 2008.
Amortization of capitalized software cost included write-offs of $4.1 million in 2008. See Note
One to Consolidated Financial Statements, Part II, Item 8, incorporated here by reference.
    
    Income Taxes  Estimates of Effective Tax Rates, Deferred Taxes and Valuation AllowanceSignificant judgment is required in determining our worldwide income tax provision. In the
ordinary course of a global business, there are many transactions and calculations where the
ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of the
process of identifying items of revenues and expenses that qualify for preferential tax
treatment, and segregating foreign and domestic earnings and expenses to avoid double taxation,
and determining required intercompany revenue sharing, cost reimbursement and other transfer
pricing arrangements among related entities. Although we believe that our estimates are
reasonable, the final tax outcome of these matters could be different from that which is
reflected in our historical income tax provisions and accruals. Such differences could have a
material effect on our income tax provision and net income in the period in which such
determination is made.
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As part of our accounting for business combinations, some of the purchase price is allocated to
goodwill and intangible assets. Impairment charges associated with goodwill are generally not
tax deductible and will result in an increased effective income tax rate in the quarter any
impairment is recorded. Amortization expenses associated with acquired intangible assets are
generally not tax deductible pursuant to our existing tax structure; however, deferred taxes
have been recorded for non-deductible amortization expenses as a part of the purchase price
allocation process. We have taken into account the allocation of these identified intangibles
among different taxing jurisdictions, including those with nominal or zero percent tax rates, in
establishing the related deferred tax liabilities. Income tax contingencies existing as of the
acquisition dates of the acquired companies are evaluated quarterly and any adjustments are
recorded as adjustments to goodwill. Under FASB Statement No. 141R, any future adjustments will
be recorded as tax expense or benefit beginning with our three month period ending March 31,
2009.

On January 1, 2007, we adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109(FIN 48), which contains a two-step approach
to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax
return by determining if the weight of available evidence indicates that it is more likely than
not that the tax position will be sustained on audit assuming that all issues are audited and
resolution of any related appeals or litigation processes are considered. The second step is to
measure the tax benefit as the largest amount that is more than 50% likely to be realized upon
ultimate settlement. The adoption of FIN 48 did not have a material impact on the Companys
consolidated financial position. Although we believe we have adequately reserved for our
uncertain tax positions, no assurance can be given with respect to the final outcome of these
matters. We adjust reserves for our uncertain tax positions due to changing facts and
circumstances, such as the closing of a tax audit, expiration of statutes of limitation on
potential assessments or the refinement of an estimate. To the extent that the final outcome of
these matters is different than the amounts recorded, such differences will impact our provision
for income taxes in the period in which such a determination is made. Our provisions for income
taxes include the impact of reserve provisions and changes to reserves that are considered
appropriate and also include the related interest and penalties.
    
    Accounting for Stock-Based Compensation PlansEffective January 1, 2006, we adopted the fair value recognition provisions of SFAS 123(R),
Share-Based Payment,using the modified prospective transition method. Under that transition
method, compensation expense that we recognize beginning on that date includes: (a) period
compensation expense for all share-based payments granted prior to, but not yet vested as of,
January 1, 2006, based on the grant date fair value estimated in accordance with the original
provisions of SFAS 123, adjusted for estimated forfeitures, and (b) period compensation expense
for all stock-based payments granted on or after January 1, 2006, based on the grant date fair
value estimated in accordance with the provisions of SFAS 123(R). Because we elected to use the
modified prospective transition method, results for prior periods have not been restated.At December 31, 2008, there was $41.0 million of total unrecognized compensation cost before
income tax benefit related to non-vested stock-based compensation arrangements granted under all
equity compensation plans which we will amortize to expense in the future. Total unrecognized
compensation cost will be adjusted for future changes in estimated forfeitures. We expect to
recognize that cost over a weighted average period of 2.1 years.We estimate the fair value of options granted using the Black-Scholes option valuation model and
the assumptions shown in Note Seven to the Consolidated Financial Statements  Stockholders
Equity , Part II, Item 8. We estimated the expected term of options granted based on historical
exercise patterns. We estimated the volatility of our options and stock appreciation rights
considering both the
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historical volatility of our stock over the average expected life of our
options and the prices of publicly traded options, consistent with SFAS 123(R) and Securities
and Exchange Commission Staff Accounting Bulletin No. 107. We base the risk-free interest rate
that we use in the Black-Scholes option valuation model on the average of the 5 year treasury
rates as published by the Federal Reserve. We have never paid any cash dividends on our common
stock and we do not anticipate paying any cash dividends in the foreseeable future.
Consequently, we use an expected dividend yield of zero in the Black-Scholes option valuation
model. SFAS 123(R) requires us to estimate forfeitures at the time of grant and revise those
estimates in subsequent periods if actual forfeitures differ from those estimates. We use
historical data to estimate pre-vesting option forfeitures and record share-based compensation
expense only for those awards that are expected to vest. We amortize the fair value on a
ratable basis over the requisite service periods of the awards, which are generally the vesting
periods.Changes in the subjective input assumptions can materially affect the fair value estimates
determined under the Black-Scholes option valuation model. In the future, changes in the
assumptions under the Black-Scholes valuation model, or our election to use a different
valuation model, could result in a significantly different impact on our net income or loss.
    
    Purchase AccountingWe have made estimates of the fair values of purchased intangible and other assets acquired in
conjunction with our purchase of Mobile 365, Inc. as of November 8, 2006, and other acquired
companies after considering valuations prepared by independent third-party appraisers and
certain internally generated information.Purchased intangible assets, excluding goodwill, totaled $114.0 million at December 31, 2008.
If the subsequent actual and updated projections of the underlying business activity are less as
compared to the underlying assumptions and projections used to develop these values, then we
could experience impairment losses, as described above. In addition, we have estimated the
economic lives of certain of these assets and these lives were used to calculate depreciation
and amortization expense. If our estimates of the economic lives change, then additional
depreciation or amortization expense could be incurred on an annual basis. Historically, we have
not made any changes in these areas. If the estimates of the economic lives of the
definite-lived intangible assets acquired as part of our acquisition of Mobile 365 were reduced
by one year, our 2008 amortization expense would increase by approximately $1.7 million.
    
    RestructuringOur remaining restructuring accruals primarily relate to the estimated net costs to settle
certain lease obligations based on analysis of independent real estate consultants. While we do
not anticipate significant changes to these estimates in the future, the actual costs may differ
from estimates. For example, if we are able to negotiate more affordable termination fees, if
rental rates increase in the markets where the properties are located, or if we are able to
locate suitable sublease tenants more quickly than expected, the actual costs could be lower
than our estimates. In that case, we would reduce our restructuring accrual with a corresponding
credit to cost of restructuring or goodwill. Alternatively, if we are unable to negotiate
affordable termination fees, if rental rates decrease in the markets where the properties are
located, or if it takes us longer than expected to find suitable sublease tenants, the actual
costs could exceed our estimates See Note Thirteen to Consolidated Financial Statements
Restructuring Costs, Part II, Item 8.
 - 40 -




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
    
    Contingencies and LiabilitiesWe are involved from time to time in various proceedings, lawsuits and claims involving our
customers, products, intellectual property, stockholders and employees. We routinely review the
status of each significant matter and assess our potential financial exposure. When we
reasonably determine that a loss associated with any of these matters is probable, and can
reasonably estimate the loss, we record a reserve to provide for such loss contingencies. If we
are unable to record a reserve because we are not able to estimate the amount of a potential
loss in a matter, or if we determine that a loss is not probable, we are nevertheless required
to disclose certain information regarding such matter if we determine that there is a reasonable
possibility that a loss has been incurred. Because of the inherent uncertainties related to
these types of matters, we base our loss reserves on the best information available at the time.
As additional information becomes available, we may reevaluate our assessment regarding the
probability of a matter or its expected loss. Our financial position, results of operations or
cash flows could be materially and adversely affected by such revisions in our estimates. For
further discussion of contingencies and liabilities, see Risk Factors  Future Operating
Results, above.We currently believe that the ultimate liability, if any, for any pending claims of any type
(either alone or combined) will not materially affect our financial position, results of
operations or cash flows. We also believe that we would be able to obtain any necessary
licenses or other rights to disputed intellectual property rights on commercially reasonable
terms. However, the ultimate outcome of any litigation is uncertain and, regardless of outcome,
litigation can have an adverse impact on Sybase because of defense costs, negative publicity,
diversion of management resources and other factors. Our inability to obtain necessary license
or other legal rights, or litigation arising out of intellectual property claims could adversely
affect our business.
 Results of Operations
 Revenues
 2008
    
    
    Change
    
    
    2007
    
    
    Change
    
    
    2006License fees by segment:IPG
    
    $
    308.5
    
    
    
    12
    %
    
    $
    275.5
    
    
    
    6
    %
    
    $
    261.1iAS
    
    
    103.0
    
    
    
    3
    %
    
    
    100.3
    
    
    
    9
    %
    
    
    92.1SY365
    
    
    0.2
    
    
    
    *
    
    
    
    
    
    
    
    *
    
    
    
    Eliminations
    
    
    (28.1
    )
    
    
    (9
    %)
    
    
    (31.0
    )
    
    
    17
    %
    
    
    (26.4
    )Total license fees
    
    $
    383.6
    
    
    
    11
    %
    
    $
    344.8
    
    
    
    6
    %
    
    $
    326.8Percentage of total revenues
    
    
    34
    %
    
    
    
    
    
    
    34
    %
    
    
    
    
    
    
    37
    %Services by segment:IPG
    
    $
    528.1
    
    
    
    6
    %
    
    $
    496.6
    
    
    
    2
    %
    
    $
    485.4iAS
    
    
    75.7
    
    
    
    4
    %
    
    
    72.8
    
    
    
    3
    %
    
    
    70.9SY365
    
    
    1.7
    
    
    
    (60
    %)
    
    
    4.2
    
    
    
    250
    %
    
    
    1.2Eliminations
    
    
    (33.4
    )
    
    
    14
    %
    
    
    (29.4
    )
    
    
    12
    %
    
    
    (26.3
    )Total services
    
    $
    572.1
    
    
    
    5
    %
    
    $
    544.2
    
    
    
    2
    %
    
    $
    531.2Percentage of total revenues
    
    
    50
    %
    
    
    
    
    
    
    53
    %
    
    
    
    
    
    
    61
    %Messaging by segment:SY365
    
    $
    176.2
    
    
    
    29
    %
    
    $
    136.5
    
    
    
    650
    %
    
    $
    18.2Total messaging
    
    $
    176.2
    
    
    
    29
    %
    
    $
    136.5
    
    
    
    650
    %
    
    $
    18.2Percentage of total revenues
    
    
    16
    %
    
    
    
    
    
    
    13
    %
    
    
    
    
    
    
    2
    %Total revenues
    
    $
    1,131.9
    
    
    
    10
    %
    
    $
    1,025.5
    
    
    
    17
    %
    
    $
    876.2
 
 *
    
    Not meaningful - 41 -




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.
     - 42 -




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##### Table of Contents



Geographical Revenues
 2008
    
    Change
    
    2007
    
    Change
    
    2006North America
    
    $
    567.7
    
    
    
    7
    %
    
    $
    532.0
    
    
    
    12
    %
    
    $
    474.0Percentage of total revenues
    
    
    50
    %
    
    
    
    
    
    
    52
    %
    
    
    
    
    
    
    54
    %International:EMEA (Europe, Middle East and
Africa)
    
    $
    399.5
    
    
    
    17
    %
    
    $
    342.0
    
    
    
    22
    %
    
    $
    279.3Percentage of total revenues
    
    
    35
    %
    
    
    
    
    
    
    33
    %
    
    
    
    
    
    
    32
    %Intercontinental (Asia Pacific
and Latin America)
    
    $
    164.7
    
    
    
    9
    %
    
    $
    151.5
    
    
    
    23
    %
    
    $
    122.9Percentage of total revenues
    
    
    15
    %
    
    
    
    
    
    
    15
    %
    
    
    
    
    
    
    14
    %Total Outside North America
    
    $
    564.2
    
    
    
    14
    %
    
    $
    493.5
    
    
    
    23
    %
    
    $
    402.2Percentage of total revenues
    
    
    50
    %
    
    
    
    
    
    
    48
    %
    
    
    
    
    
    
    46
    %Total revenues
    
    $
    1,131.9
    
    
    
    10
    %
    
    $
    1,025.5
    
    
    
    17
    %
    
    $
    876.2
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Cost and Expenses
 2008
    
    Change
    
    2007
    
    Change
    
    2006Cost of license fees
    
    $
    67.3
    
    
    
    27
    %
    
    $
    53.1
    
    
    
    5
    %
    
    $
    50.5Percentage of license fee revenues
    
    
    18
    %
    
    
    
    
    
    
    15
    %
    
    
    
    
    
    
    15
    %Cost of services
    
    $
    160.6
    
    
    
    2
    %
    
    $
    157.8
    
    
    
    3
    %
    
    $
    153.0Percentage of services revenues
    
    
    28
    %
    
    
    
    
    
    
    29
    %
    
    
    
    
    
    
    29
    %Cost of messaging
    
    $
    107.8
    
    
    
    31
    %
    
    $
    82.6
    
    
    
    644
    %
    
    $
    11.1Percentage of messaging revenues
    
    
    61
    %
    
    
    
    
    
    
    61
    %
    
    
    
    
    
    
    61
    %Sales and marketing
    
    $
    285.4
    
    
    
    7
    %
    
    $
    267.0
    
    
    
    1
    %
    
    $
    263.3Percentage of total revenues
    
    
    25
    %
    
    
    
    
    
    
    26
    %
    
    
    
    
    
    
    30
    %Product development and engineering
    
    $
    146.9
    
    
    
    (4
    %)
    
    $
    152.6
    
    
    
    2
    %
    
    $
    149.5Percentage of total revenues
    
    
    13
    %
    
    
    
    
    
    
    15
    %
    
    
    
    
    
    
    17
    %General and administrative
    
    $
    139.0
    
    
    
    8
    %
    
    $
    129.3
    
    
    
    22
    %
    
    $
    106.0Percentage of total revenues
    
    
    12
    %
    
    
    
    
    
    
    13
    %
    
    
    
    
    
    
    12
    %Amortization of other purchased intangibles
    
    $
    14.7
    
    
    
    7
    %
    
    $
    13.8
    
    
    
    89
    %
    
    $
    7.3Percentage of total revenues
    
    
    1
    %
    
    
    
    
    
    
    1
    %
    
    
    
    
    
    
    1
    %Cost of restructuring
    
    $
    0.2
    
    
    
    (75
    %)
    
    $
    0.8
    
    
    
    (53
    %)
    
    $
    1.7Percentage of total revenues
    
    
    *
    
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    *
 
 *
    
    Not meaningful Cost of license fees
    Cost of services
  - 44 -




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Cost of messaging
  Sales and marketing
  Product development and engineering
     General and administrative
  - 45 -




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##### Table of Contents



Stock-based compensation expense
  (Amounts in thousands)
    
    2008
    
    2007
    
    2006Costs of services
    
    
    1,364
    
    
    
    1,544
    
    
    
    1,629Costs of messaging
    
    
    484
    
    
    
    544
    
    
    
    124Sales and marketing
    
    
    5,538
    
    
    
    5,304
    
    
    
    4,432Product development and engineering
    
    
    2,887
    
    
    
    2,982
    
    
    
    2,679General and administrative
    
    
    12,242
    
    
    
    13,670
    
    
    
    12,86122,515
    
    
    
    24,044
    
    
    
    21,725
  Amortization of other purchased intangibles
  - 46 -




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Restructuring Activities
   Operating income
 2008
    
    
    Change
    
    
    2007
    
    
    Change
    
    
    2006Operating income by segment:IPG
    
    $
    200.0
    
    
    
    19
    %
    
    $
    167.9
    
    
    
    17
    %
    
    $
    142.9IAS
    
    
    27.2
    
    
    
    1
    %
    
    
    27.0
    
    
    
    71
    %
    
    
    15.8SY365
    
    
    5.3
    
    
    
    *
    
    
    
    (0.5
    )
    
    
    (58
    %)
    
    
    (1.2
    )Unallocated costs
    
    
    (22.4
    )
    
    
    (13
    %)
    
    
    (25.8
    )
    
    
    9
    %
    
    
    (23.7
    )Total operating income
    
    $
    210.1
    
    
    
    25
    %
    
    $
    168.6
    
    
    
    26
    %
    
    $
    133.8Percentage of total revenues
    
    
    19
    %
    
    
    
    
    
    
    16
    %
    
    
    
    
    
    
    15
    %
 
 *
    
    Not meaningful        - 47 -




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##### Table of Contents



Other income (expense), net
 2008
    
    Change
    
    2007
    
    Change
    
    2006Interest income
    
    $
    23.8
    
    
    
    (29
    %)
    
    $
    33.5
    
    
    
    (13
    %)
    
    $
    38.7Percentage of total revenues
    
    
    3
    %
    
    
    
    
    
    
    3
    %
    
    
    
    
    
    
    4
    %Interest expense and other, net
    
    $
    (26.8
    )
    
    
    121
    %
    
    $
    (12.1
    )
    
    
    10
    %
    
    $
    (11.0
    )Percentage of total revenues
    
    
    (1
    %)
    
    
    
    
    
    
    (1
    %)
    
    
    
    
    
    
    (1
    %)Minority interest
    
    $
    0.1
    
    
    
    *
    
    
    
    *
    
    
    
    *
    
    
    $
    (0.1
    )Percentage of total revenues
    
    
    *
    
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    *
 
 *
    
    Not meaningful      - 48 -




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##### Table of Contents



Provision for Income Taxes
 2008
    
    Change
    
    2007
    
    Change
    
    2006Provision for income taxes
    
    $
    68.6
    
    
    
    67
    %
    
    $
    41.1
    
    
    
    (38
    %)
    
    $
    66.3
       - 49 -




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##### Table of Contents



Net income per share
 2008
    
    Change
    
    2007
    
    Change
    
    2006Net income
    
    $
    138.6
    
    
    
    (7
    %)
    
    $
    148.9
    
    
    
    57
    %
    
    $
    95.1Percentage of total revenues
    
    
    12
    %
    
    
    
    
    
    
    15
    %
    
    
    
    
    
    
    11
    %Basic:Net income per share
    
    $
    1.69
    
    
    
    2
    %
    
    $
    1.65
    
    
    
    56
    %
    
    $
    1.06Shares used in computing
basic net income per share
    
    
    82.1
    
    
    
    (9
    %)
    
    
    90.0
    
    
    
    *
    
    
    
    89.6Diluted:Net income per share
    
    $
    1.64
    
    
    
    2
    %
    
    $
    1.61
    
    
    
    56
    %
    
    $
    1.03Shares used in computing
diluted net income per
share
    
    
    84.5
    
    
    
    (9
    %)
    
    
    92.6
    
    
    
    *
    
    
    
    92.3
 
 *
    
    Not meaningful    Liquidity and capital resources
 2008
    
    Change
    
    2007
    
    Change
    
    2006Working capital
    
    $
    518.0
    
    
    
    (14
    %)
    
    $
    604.7
    
    
    
    33
    %
    
    $
    455.1Cash and cash equivalents
    
    $
    611.4
    
    
    
    1
    %
    
    $
    604.8
    
    
    
    70
    %
    
    $
    355.3Net cash provided by operating activities
    
    $
    295.5
    
    
    
    16
    %
    
    $
    254.0
    
    
    
    18
    %
    
    $
    214.6Net cash provided by (used for)
investing activities
    
    $
    (14.6
    )
    
    
    *
    
    
    $
    86.7
    
    
    
    *
    
    
    $
    (276.3
    )Net cash provided by (used for)
financing activities
    
    $
    (245.9
    )
    
    
    118
    %
    
    $
    (112.6
    )
    
    
    *
    
    
    $
    (0.1
    )
 
 *
    
    Not meaningful - 50 -




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Working Capital
  - 51 -




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Cash Flow
         - 52 -




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##### Table of Contents



Cash and Cash Equivalents
  Short-term and Long-term Cash Investments and Auction-Rate Securities
   Contractual Obligations
  Payments Due by Period(Dollars in Millions)
    
    
    
    
    
    2009
    
    2010-2011
    
    2012-2013Contractual Obligations
    
    Total
    
    Commitments
    
    Commitments
    
    Commitments
    
    After 2013Operating leases
    
    $
    229.9
    
    
    $
    46.7
    
    
    $
    68.9
    
    
    $
    48.3
    
    
    $
    66.0Capital lease
    
    
    10.3
    
    
    
    1.0
    
    
    
    1.9
    
    
    
    1.9
    
    
    
    5.5Debt obligations:Sale-and-leaseback
    
    
    2.1
    
    
    
    0.4
    
    
    
    0.9
    
    
    
    0.8
    
    
    
    Note(s) payable
    
    
    2.7
    
    
    
    0.9
    
    
    
    0.4
    
    
    
    0.4
    
    
    
    1.0Convertible
subordinated notes
    
    
    472.1
    
    
    
    8.1
    
    
    
    464.0
    
    
    
    
    
    
    
    Purchase Obligations
    
    
    17.3
    
    
    
    13.2
    
    
    
    4.1
    
    
    
    
    
    
    
    Accrued income taxes
    
    
    17.6
    
    
    
    17.6
    
    
    
    
    
    
    
    
    
    
    
    Total commitments
    
    $
    752.0
    
    
    $
    87.9
    
    
    $
    540.2
    
    
    $
    51.4
    
    
    $
    72.5
 - 53 -




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##### Table of Contents



New Accounting Pronouncements
 FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon
Conversion
  - 54 -




---



##### Table of Contents



SFAS 141(R), Business Combinations"
  FSP FAS 142-3, Determination of the Useful Life of Intangible Assets"
  FSP FAS 157-2, Effective Date of FASB Statement No. 157"
  - 55 -




---



##### Table of Contents



SFAS 160, NonControlling Interests in Consolidated Financial Statements
 NonControlling Interests in Consolidated Financial
Statements
 SFAS 161, Disclosures about Derivative Instruments and Hedging Activities"
 Disclosures about Derivative Instruments and Hedging
Activities.
 EITF No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entitys Own Stock"
  EITF No. 08-3, Accounting by Lessees for Maintenance Deposits"
  EITF No. 08-4, Transition Guidance for Conforming Changes to Issue No. 98-5"
  - 56 -




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##### Table of Contents



Financial Risk Management
 Foreign Exchange Risk
 .
   - 57 -




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##### Table of Contents



US $
    
    
    AverageForward Contracts - As of December 31, 2008
    
    Notional amount
    
    
    Contract rateContracts for the sale of US Dollars and purchase of:Canadian Dollars
    
    $
    1,473
    
    
    
    0.8183Euro
    
    $
    18,294
    
    
    
    1.3965Mexican Pesos
    
    $
    1,278
    
    
    
    13.9255Indian Rupee
    
    $
    2,016
    
    
    
    48.6000Contracts for the sale of GBP and purchase of:South African Rand
    
    $
    8,943
    
    
    
    13.7971Contracts for the purchase of US Dollars and sale of:British Pound
    
    $
    1,161
    
    
    
    0.6889Singapore Dollar
    
    $
    1,386
    
    
    
    0.6931Contracts for the purchase of Euros and sale of:Swedish Krona
    
    $
    1,332
    
    
    
    11.0047Swiss Franc
    
    $
    2,804
    
    
    
    1.4951UK Pound
    
    $
    17,709
    
    
    
    0.9621Norwegian Krone
    
    $
    1,407
    
    
    
    9.7286Singapore Dollars
    
    $
    4,369
    
    
    
    2.0138South African Rand
    
    $
    9,710
    
    
    
    13.2743Total
    
    $
    71,882
  US $
    
    
    AverageForward Contracts - As of December 31, 2007
    
    Notional amount
    
    
    Contract rateContracts for the sale of US Dollars and purchase of:Canadian Dollars
    
    $
    18,438
    
    
    
    1.0130Euro
    
    $
    15,056
    
    
    
    1.4618Singapore Dollars
    
    $
    2,018
    
    
    
    0.6957Contracts for the sale of GBP and purchase of:South African Rand
    
    $
    1,299
    
    
    
    13.7194Contracts for the purchase of US Dollars and sale of:Japanese Yen
    
    $
    16,899
    
    
    
    111.8400British Pound
    
    $
    5,544
    
    
    
    0.5051Korean Won
    
    $
    1,814
    
    
    
    937.2000Contracts for the purchase of Euros and sale of:Swedish Krona
    
    $
    524
    
    
    
    9.4842Swiss Franc
    
    $
    2,292
    
    
    
    1.6572UK Pound
    
    $
    19,585
    
    
    
    0.7384Norwegian Krone
    
    $
    3,388
    
    
    
    7.9763Australian Dollars
    
    $
    2,621
    
    
    
    1.6718Hong Kong Dollars
    
    $
    1,667
    
    
    
    11.3904South African Rand
    
    $
    2,466
    
    
    
    10.1288Malaysian Ringits
    
    $
    908
    
    
    
    4.8268Total
    
    $
    94,519
 - 58 -




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##### Table of Contents



Interest Income Rate and Investment Level Risk
     Amortized
    
    
    Weighted Average(Dollars in Thousands)
    
    Principal Amount
    
    
    Interest RateCash and cash equivalents
    
    $
    611,364Cash investments
    
    
    15,606Trading securities
    
    
    8,638Total
    
    $
    635,608
    
    
    
    3.14
    %
 Default Risk
  Failed Auction Securities
  - 59 -




---



##### Table of Contents



Interest Expense Rate Risk
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  - 60 -




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  PageReport of Management on Internal Controls over Financial Reporting
    
    
    62Report of Independent Registered Public Accounting Firm on Internal Controls over
Financial Reporting
    
    
    63Report of Independent Registered Public Accounting Firm
    
    
    64Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    65Consolidated Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006
    
    
    66Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2008,
2007 and 2006
    
    
    67Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006
    
    
    68Notes to Consolidated Financial Statements
    
    
    69
 - 61 -




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Report of Management on Internal Controls over Financial Reporting
    - 62 -




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm on Internal Control Over Financial
Reporting
        /s/ ERNST & YOUNG LLP
 
 - 63 -




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
      /s/ ERNST & YOUNG LLP
 
 - 64 -




---



##### Table of Contents



Consolidated Balance Sheets
 December 31(Dollars in thousands, except share and per share data)
    
    2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    611,364
    
    
    $
    604,808Short-term cash investments
    
    
    8,689
    
    
    
    93,462Total cash, cash equivalents and short-term cash investments
    
    
    620,053
    
    
    
    698,270Restricted cash
    
    
    2,773
    
    
    
    3,424Accounts receivable, less allowance for doubtful accounts of $3,888
(2007 - $3,735)
    
    
    270,400
    
    
    
    245,267Deferred income taxes
    
    
    45,524
    
    
    
    37,979Prepaid income taxes
    
    
    4,932
    
    
    
    17,604Prepaid expenses and other current assets
    
    
    34,208
    
    
    
    25,182Total current assets
    
    
    977,890
    
    
    
    1,027,726Long-term cash investments
    
    
    15,513
    
    
    
    36,637Restricted long-term cash investments
    
    
    41
    
    
    
    Property, equipment and improvements, net
    
    
    62,263
    
    
    
    64,841Deferred income taxes
    
    
    26,474
    
    
    
    10,038Capitalized software, net
    
    
    82,400
    
    
    
    74,278Goodwill
    
    
    527,151
    
    
    
    533,339Other purchased intangibles, less accumulated amortization of $177,839
(2007  $147,311)
    
    
    113,970
    
    
    
    130,608Other assets
    
    
    29,715
    
    
    
    36,016Total assets
    
    $
    1,835,417
    
    
    $
    1,913,483Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    26,300
    
    
    $
    30,290Accrued compensation and related expenses
    
    
    80,031
    
    
    
    63,852Accrued income taxes
    
    
    17,562
    
    
    
    273Other accrued liabilities
    
    
    124,050
    
    
    
    124,849Deferred revenue
    
    
    211,903
    
    
    
    203,734Total current liabilities
    
    
    459,846
    
    
    
    422,998Other liabilities
    
    
    44,788
    
    
    
    44,669Deferred income taxes
    
    
    11,898
    
    
    
    14,115Long-term tax liability
    
    
    32,082
    
    
    
    30,807Long-term deferred revenue
    
    
    4,535
    
    
    
    4,937Minority interest
    
    
    5,095
    
    
    
    5,147Convertible subordinated notes
    
    
    460,000
    
    
    
    460,000Commitments and contingent liabilitiesStockholders 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 and 79,571,991 shares outstanding (2007 
105,337,362 shares issued and 87,210,339 shares outstanding)
    
    
    105
    
    
    
    105Additional paid-in capital
    
    
    1,054,517
    
    
    
    1,019,930Accumulated earnings
    
    
    367,286
    
    
    
    241,329Accumulated other comprehensive income
    
    
    36,912
    
    
    
    66,954Cost of 25,765,371 shares of treasury stock (2007  18,127,023 shares)
    
    
    (641,647
    )
    
    
    (397,508
    )Total stockholders equity
    
    
    817,173
    
    
    
    930,810Total liabilities and stockholders equity
    
    $
    1,835,417
    
    
    $
    1,913,483
 See accompanying notes.
 - 65 -




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##### Table of Contents



Consolidated Statements of Operations
 For the years ended December 31(In thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2006Revenues:License fees
    
    $
    383,661
    
    
    $
    344,807
    
    
    $
    326,751Services
    
    
    572,090
    
    
    
    544,209
    
    
    
    531,172Messaging
    
    
    176,179
    
    
    
    136,514
    
    
    
    18,240Total revenues
    
    
    1,131,930
    
    
    
    1,025,530
    
    
    
    876,163Costs and expenses:Cost of license fees
    
    
    67,342
    
    
    
    53,114
    
    
    
    50,540Cost of services
    
    
    160,604
    
    
    
    157,790
    
    
    
    152,962Cost of messaging
    
    
    107,757
    
    
    
    82,598
    
    
    
    11,097Sales and marketing
    
    
    285,376
    
    
    
    266,995
    
    
    
    263,281Product development and engineering
    
    
    146,932
    
    
    
    152,571
    
    
    
    149,510General and administrative
    
    
    138,980
    
    
    
    129,319
    
    
    
    106,025Amortization of other purchased intangibles
    
    
    14,716
    
    
    
    13,783
    
    
    
    7,331Cost of restructuring
    
    
    167
    
    
    
    797
    
    
    
    1,653Total costs and expenses
    
    
    921,874
    
    
    
    856,967
    
    
    
    742,399Operating income
    
    
    210,056
    
    
    
    168,563
    
    
    
    133,764Interest income
    
    
    23,813
    
    
    
    33,521
    
    
    
    38,662Interest expense and other income, net
    
    
    (26,768
    )
    
    
    (12,144
    )
    
    
    (11,028
    )Minority interest
    
    
    51
    
    
    
    12
    
    
    
    (81
    )Income before income taxes
    
    
    207,152
    
    
    
    189,952
    
    
    
    161,317Provision for income taxes
    
    
    68,581
    
    
    
    41,102
    
    
    
    66,253Net income
    
    $
    138,571
    
    
    $
    148,850
    
    
    $
    95,064Basic net income per share
    
    $
    1.69
    
    
    $
    1.65
    
    
    $
    1.06Shares used in computing basic net income
per share
    
    
    82,060
    
    
    
    90,019
    
    
    
    89,557Diluted net income per share
    
    $
    1.64
    
    
    $
    1.61
    
    
    $
    1.03Shares used in computing diluted net income
per share
    
    
    84,455
    
    
    
    92,598
    
    
    
    92,251
 See accompanying notes.
 - 66 -




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##### Table of Contents



Consolidated Statements of Stockholders Equity
 Three years ended December 31, 2008AccumulatedCommon stock
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    UnearnedOutstanding
    
    
    Par
    
    
    paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockShares
    
    
    Value
    
    
    capital
    
    
    Earnings/
    
    
    Income/(Loss)
    
    
    Stock
    
    
    Compensation
    
    
    Total(Dollars and shares in thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Deficit)Balances at December 31, 2005
    
    
    90,531
    
    
    $
    105
    
    
    $
    953,771
    
    
    $
    16,195
    
    
    $
    19,231
    
    
    $
    (277,510
    )
    
    $
    (12,962
    )
    
    $
    698,830Common stock issued and
treasury stock reissued under stock option, stock purchase plans and other
    
    
    3,467
    
    
    
    
    
    
    
    
    
    
    
    (18,744
    )
    
    
    
    
    
    
    69,317
    
    
    
    
    
    
    
    50,573Treasury stock repurchased due to Forfeiture in restricted stock option plan
    
    
    (23
    )
    
    
    
    
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    (305
    )
    
    
    
    
    
    
    (3
    )Acquisition of treasury stock
    
    
    (2,693
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59,815
    )
    
    
    
    
    
    
    (59,815
    )Reclassification of unearned stock compensation balance upon adoption of SFAS 123(R)
    
    
    
    
    
    
    
    
    
    
    (12,962
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,962
    
    
    
    Stock-based compensation  restricted Stock
    
    
    
    
    
    
    
    
    
    
    8,141
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,141Stock-based compensation  all other
    
    
    
    
    
    
    
    
    
    
    13,585
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,585Tax benefit from stock-based compensation plans
    
    
    
    
    
    
    
    
    
    
    15,137
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,137Subtotal
    
    
    91,282
    
    
    
    105
    
    
    
    977,672
    
    
    
    (2,247
    )
    
    
    19,231
    
    
    
    (268,313
    )
    
    
    
    
    
    
    726,448Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,064Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,521
    
    
    
    
    
    
    
    
    
    
    
    21,521Unrealized gains on marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    98Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116,683Balances at December 31, 2006
    
    
    91,282
    
    
    $
    105
    
    
    $
    977,672
    
    
    $
    92,817
    
    
    $
    40,850
    
    
    $
    (268,313
    )
    
    $
    
    
    
    $
    843,131Common stock issued and treasury stock reissued under stock option, stock purchase plans and other
    
    
    2,514
    
    
    
    
    
    
    
    3,985
    
    
    
    (338
    )
    
    
    
    
    
    
    37,543
    
    
    
    
    
    
    
    41,190Acquisition of treasury stock
    
    
    (6,586
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (166,738
    )
    
    
    
    
    
    
    (166,738
    )Stock-based compensation  restricted Stock
    
    
    
    
    
    
    
    
    
    
    10,155
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,155Stock-based compensation  all other
    
    
    
    
    
    
    
    
    
    
    13,889
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,889Tax benefit from stock-based compensation plans
    
    
    
    
    
    
    
    
    
    
    14,229
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,229Subtotal
    
    
    87,210
    
    
    
    105
    
    
    
    1,019,930
    
    
    
    92,479
    
    
    
    40,850
    
    
    
    (397,508
    )
    
    
    
    
    
    
    755,856Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148,850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148,850Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,881
    
    
    
    
    
    
    
    
    
    
    
    26,881Unrealized losses on marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (540
    )
    
    
    
    
    
    
    
    
    
    
    (540
    )Adjustment to apply FASB Statement No. 158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (237
    )
    
    
    
    
    
    
    
    
    
    
    (237
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    174,954Balances at December 31, 2007
    
    
    87,210
    
    
    $
    105
    
    
    $
    1,019,930
    
    
    $
    241,329
    
    
    $
    66,954
    
    
    $
    (397,508
    )
    
    $
    
    
    
    $
    930,810Common stock issued and treasury stock reissued under stock option, stock purchase plans and other
    
    
    3,313
    
    
    
    
    
    
    
    594
    
    
    
    (12,614
    )
    
    
    
    
    
    
    61,972
    
    
    
    
    
    
    
    49,952Acquisition of treasury stock
    
    
    (10,951
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (306,111
    )
    
    
    
    
    
    
    (306,111
    )Stock-based compensation  restricted Stock
    
    
    
    
    
    
    
    
    
    
    10,236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,236Stock-based compensation  all other
    
    
    
    
    
    
    
    
    
    
    12,279
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,279Tax benefit from stock-based compensation plans
    
    
    
    
    
    
    
    
    
    
    11,478
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,478Subtotal
    
    
    79,572
    
    
    
    105
    
    
    
    1,054,517
    
    
    
    228,715
    
    
    
    66,954
    
    
    
    (641,647
    )
    
    
    
    
    
    
    708,644Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    138,571
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    138,571Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,877
    )
    
    
    
    
    
    
    
    
    
    
    (30,877
    )Unrealized gains on marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    835
    
    
    
    
    
    
    
    
    
    
    
    835Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,529Balances at December 31, 2008
    
    
    79,572
    
    
    $
    105
    
    
    $
    1,054,517
    
    
    $
    367,286
    
    
    $
    36,912
    
    
    $
    (641,647
    )
    
    $
    
    
    
    $
    817,173
 See accompanying notes.




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##### Table of Contents



Consolidated Statements of Cash Flows
 For the years ended December 31(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    138,571
    
    
    $
    148,850
    
    
    $
    95,064Adjustments to reconcile net income to net cashProvided by operating activities:Depreciation and amortization
    
    
    105,915
    
    
    
    87,923
    
    
    
    72,803Minority interest in income of subsidiaries
    
    
    (51
    )
    
    
    (12
    )
    
    
    81Loss on disposal of assets
    
    
    2,498
    
    
    
    37
    
    
    
    811Impairment of investment in auction rate securities
    
    
    13,387
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    (5,603
    )
    
    
    (14,008
    )
    
    
    (1,306
    )Stock-based compensation  restricted stock
    
    
    10,236
    
    
    
    10,155
    
    
    
    8,141Stock-based compensation  all other
    
    
    12,279
    
    
    
    13,889
    
    
    
    13,585Tax benefit from stock-based compensation plans
    
    
    11,478
    
    
    
    14,229
    
    
    
    15,137Excess tax benefit from stock-based compensation plans
    
    
    (11,182
    )
    
    
    (14,485
    )
    
    
    (9,569
    )Amortization of note issuance costs
    
    
    1,969
    
    
    
    1,969
    
    
    
    1,969Changes in assets and liabilities:Accounts receivable
    
    
    (25,985
    )
    
    
    (23,232
    )
    
    
    6,005Prepaid income taxes
    
    
    12,672
    
    
    
    (17,604
    )
    
    
    Other current assets
    
    
    (8,963
    )
    
    
    372
    
    
    
    3,552Other assets  operating
    
    
    4,218
    
    
    
    2,202
    
    
    
    (2,406
    )Accounts payable
    
    
    (4,740
    )
    
    
    6,784
    
    
    
    (7,838
    )Accrued compensation and related expenses
    
    
    7,508
    
    
    
    3,708
    
    
    
    2,427Accrued income taxes
    
    
    27,509
    
    
    
    12,852
    
    
    
    13,237Other accrued liabilities
    
    
    (5,706
    )
    
    
    9,617
    
    
    
    (828
    )Deferred revenues
    
    
    7,767
    
    
    
    11,288
    
    
    
    928Other liabilities
    
    
    1,737
    
    
    
    (520
    )
    
    
    2,817Net cash provided by operating activities
    
    
    295,514
    
    
    
    254,014
    
    
    
    214,610Cash flows from investing activities:(Increase) Decrease in restricted cash
    
    
    610
    
    
    
    2,590
    
    
    
    (641
    )Purchases of cash investments
    
    
    (16,275
    )
    
    
    (280,632
    )
    
    
    (468,518
    )Maturities of cash investments
    
    
    38,299
    
    
    
    241,292
    
    
    
    282,403Sales of cash investments
    
    
    80,982
    
    
    
    190,778
    
    
    
    365,962Business combinations, net of cash acquired
    
    
    (35,368
    )
    
    
    (6,848
    )
    
    
    (399,676
    )Purchases of property, equipment and improvements
    
    
    (32,320
    )
    
    
    (23,839
    )
    
    
    (18,347
    )Capitalized software development costs
    
    
    (50,706
    )
    
    
    (36,431
    )
    
    
    (37,531
    )(Increase) Decrease in other assets  investing
    
    
    138
    
    
    
    (188
    )
    
    
    13Net cash provided by (used for) investing activities
    
    
    (14,640
    )
    
    
    86,722
    
    
    
    (276,335
    )Cash flows from financing activities:Repayments of long-term obligations
    
    
    (910
    )
    
    
    (1,582
    )
    
    
    (403
    )Net proceeds from the issuance of common stock and
reissuance of treasury stock
    
    
    49,953
    
    
    
    41,190
    
    
    
    50,570Purchases of treasury stock
    
    
    (306,111
    )
    
    
    (166,738
    )
    
    
    (59,815
    )Excess tax benefit from stock-based compensation plans
    
    
    11,182
    
    
    
    14,485
    
    
    
    9,569Net cash used for financing activities
    
    
    (245,886
    )
    
    
    (112,645
    )
    
    
    (79
    )Effect of exchange rate changes on cash
    
    
    (28,432
    )
    
    
    21,414
    
    
    
    18,366Net increase (decrease) in cash and cash equivalents
    
    
    6,556
    
    
    
    249,505
    
    
    
    (43,438
    )Cash and cash equivalents, beginning of year
    
    
    604,808
    
    
    
    355,303
    
    
    
    398,741Cash and cash equivalents, end of year
    
    $
    611,364
    
    
    $
    604,808
    
    
    $
    355,303Supplemental disclosures:Interest paid
    
    $
    9,543
    
    
    $
    9,663
    
    
    $
    9,516Income taxes paid, net of refunds
    
    $
    25,643
    
    
    $
    43,345
    
    
    $
    34,442
 See accompanying notes.
 - 68 -




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Notes to Consolidated Financial Statements
 Note One: Summary of Significant Accounting Policies
 The Company
   Principles of Consolidation
  Use of Estimates
  Accounts Receivable and Allowance for Doubtful Accounts
  Concentration of Credit Risk
  - 69 -




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Capitalized Software
   Property, Equipment and Improvements
   Goodwill and Other Purchased Intangible Assets
  - 70 -




---



##### Table of Contents



Impairment of Long-Lived Assets
  Revenue Recognition
  License and Services Revenues
    - 71 -




---



##### Table of Contents



Message Revenues
 Revenue Arrangements with Multiple Deliverables Reporting Revenue Gross as a Principal Versus Net as an Agent
   Foreign Currencies
   - 72 -




---



##### Table of Contents



Income Taxes
  Stock-Based Compensation
   Net Income Per Share
  - 73 -




---



##### Table of Contents



(In thousands, except per share data)
    
    2008
    
    2007
    
    2006Net income
    
    $
    138,571
    
    
    $
    148,850
    
    
    $
    95,064Shares used in computing basic net income
Per share
    
    
    82,060
    
    
    
    90,019
    
    
    
    89,557Dilutive effect of stock options, restricted
stock, and stock appreciation rights
    
    
    2,395
    
    
    
    2,109
    
    
    
    2,694Dilutive effect of convertible subordinated debt
    
    
    
    
    
    
    470
    
    
    
    Shares used in computing diluted net income
Per share
    
    
    84,455
    
    
    
    92,598
    
    
    
    92,251Basic net income per share
    
    $
    1.69
    
    
    $
    1.65
    
    
    $
    1.06Diluted net income per share
    
    $
    1.64
    
    
    $
    1.61
    
    
    $
    1.03
  Comprehensive Income
  Advertising
  Recent Accounting Pronouncements
 FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon
Conversion
  - 74 -




---



##### Table of Contents



SFAS 141(R), Business Combinations
  FSP FAS 142-3, Determination of the Useful Life of Intangible Assets
  FSP FAS 157-2, Effective Date of FASB Statement No. 157
  SFAS 160, NonControlling Interests in Consolidated Financial Statements
 NonControlling Interests in Consolidated Financial
Statements
 - 75 -




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SFAS 161, Disclosures about Derivative Instruments and Hedging Activities
 Disclosures about Derivative Instruments and Hedging
Activities.
 EITF No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entitys Own Stock
  EITF No. 08-3, Accounting by Lessees for Maintenance Deposits
  EITF No. 08-4, Transition Guidance for Conforming Changes to Issue No. 98-5
  Note Two: Financial Instruments
 Cash, Cash Equivalents and Cash Investments
  - 76 -




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- 77 -




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##### Table of Contents



Amortized
    
    Unrealized
    
    Unrealized
    
    Fair Market(In thousands)
    
    Cost
    
    Gains
    
    Losses
    
    ValueDecember 31, 2008:Cash and cash equivalents
    
    $
    611,364
    
    
    $
    
    
    
    $
    
    
    
    $
    611,364Short-term bank deposits
(maturities of one year or less)
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    51Trading securities
    
    
    8,638
    
    
    
    
    
    
    
    
    
    
    
    8,638Long-term corporate notes and bonds
(maturities over one year)
    
    
    15,513
    
    
    
    
    
    
    
    
    
    
    
    15,513$
    635,566
    
    
    $
    
    
    
    $
    
    
    
    $
    635,566December 31, 2007:Cash and cash equivalents
    
    $
    604,808
    
    
    $
    
    
    
    $
    
    
    
    $
    604,808Short-term corporate notes and bonds
(maturities of one year or less)
    
    
    42,201
    
    
    
    69
    
    
    
    (17
    )
    
    
    42,253Short-term government obligations
(maturities of one year or less)
    
    
    26,468
    
    
    
    8
    
    
    
    (6
    )
    
    
    26,470Short-term government sponsored enterprise
obligations (maturities of one year or less)
    
    
    24,696
    
    
    
    43
    
    
    
    
    
    
    
    24,739Long-term corporate notes and bonds
(maturities over one year)
    
    
    33,064
    
    
    
    50
    
    
    
    (1,536
    )
    
    
    31,578Long-term government obligations
(maturities over one year)
    
    
    5,063
    
    
    
    
    
    
    
    (4
    )
    
    
    5,059$
    736,300
    
    
    $
    170
    
    
    $
    (1,563
    )
    
    $
    734,907
    - 78 -




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##### Table of Contents



In a Loss Position for
    
    
    In a Loss Position forLess Than 12 Months
    
    
    12 Months or More
    
    
    Total In a Loss PositionGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized(In thousands)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesCorporate notes and bonds
    
    
    31,323
    
    
    
    (1,546
    )
    
    
    1,956
    
    
    
    (7
    )
    
    
    33,279
    
    
    
    (1,553
    )Government obligations
    
    
    25,183
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    25,183
    
    
    
    (10
    )Totals
    
    $
    56,506
    
    
    $
    (1,556
    )
    
    $
    1,956
    
    
    $
    (7
    )
    
    $
    58,462
    
    
    $
    (1,563
    )
 Restricted Cash
  Foreign Currency Forward Exchange Contracts
  Fair Value Measurements
  - 79 -




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##### Table of Contents




    
    Level 1  Quoted prices in active markets for identical assets or liabilities.
    
    Level 2  Inputs other than Level 1 that are observable, either
directly or indirectly, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable market
data for substantially the full term of the assets or liabilities.
    
    Level 3  Unobservable inputs that are supported by little or no
market activity and that are significant to the fair value of the
assets or liabilities.
    
 Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalMoney market funds
    
    $
    493,113
    
    
    
    
    
    
    
    
    
    
    $
    493,113Trading securities
    
    $
    8,638
    
    
    
    
    
    
    
    
    
    
    
    8,638Available-for-sale cash investments
    
    
    63,573
    
    
    
    
    
    
    $
    15,513
    
    
    
    79,086Total
    
    $
    565,324
    
    
    
    
    
    
    $
    15,513
    
    
    $
    580,837
  - 80 -




---



##### Table of Contents



Auction RateSecuritiesBalance at December 31, 2007
    
    $
    27,364Reversal of unrealized loss in accumulated other comprehensive income
    
    
    1,536Impairment loss included in interest expense and other, net
    
    
    (13,387
    )Balance at December 31, 2008
    
    $
    15,513
 - 81 -




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##### Table of Contents



Note Three: Property, Equipment and Improvements
 Estimated useful(In thousands)
    
    2008
    
    
    2007
    
    
    livesComputer equipment and software
    
    $
    241,684
    
    
    $
    228,474
    
    
    
    3 to 5 yearsFurniture and fixtures
    
    
    58,603
    
    
    
    62,185
    
    
    
    5 to 10 yearsLeasehold improvements and real property
    
    
    77,188
    
    
    
    78,578
    
    
    Improvementsover shorter of 5 yearsor lease term;property over 7 to40 years377,475
    
    
    
    369,237Less accumulated depreciation
    
    
    (315,212
    )
    
    
    (304,396
    )Net property, equipment and improvements
    
    $
    62,263
    
    
    $
    64,841
  Note Four: Goodwill and Other Purchased Intangibles
  (In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Consolidated TotalBalance at January 1, 2007
    
    $
    96,186
    
    
    $
    110,408
    
    
    $
    333,709
    
    
    $
    540,303Goodwill recorded on CoboPlan acquisition
    
    
    
    
    
    
    3,510
    
    
    
    
    
    
    
    3,510Addition in goodwill recorded on Mobile 365
acquisition
    
    
    
    
    
    
    
    
    
    
    2,829
    
    
    
    2,829Reduction for utilization of acquired tax assets
    
    
    (4,901
    )
    
    
    (3,699
    )
    
    
    (5,783
    )
    
    
    (14,383
    )Foreign currency translation adjustments and other
    
    
    907
    
    
    
    173
    
    
    
    
    
    
    
    1,080Balance at December 31, 2007
    
    $
    92,192
    
    
    $
    110,392
    
    
    $
    330,755
    
    
    $
    533,339Goodwill recorded on Cable & Wireless acquisition
    
    
    
    
    
    
    
    
    
    
    12,457
    
    
    
    12,457Goodwill recorded on Paybox acquisition
    
    
    
    
    
    
    
    
    
    
    8,872
    
    
    
    8,872Reduction in goodwill recorded on Mobile 365
acquisition
    
    
    
    
    
    
    
    
    
    
    (155
    )
    
    
    (155
    )Reduction for utilization of acquired tax assets
    
    
    (17,149
    )
    
    
    (7,367
    )
    
    
    (937
    )
    
    
    (25,453
    )Foreign currency translation adjustments and other
    
    
    (1,158
    )
    
    
    (237
    )
    
    
    (514
    )
    
    
    (1,909
    )Balance at December 31, 2008
    
    $
    73,885
    
    
    $
    102,788
    
    
    $
    350,478
    
    
    $
    527,151
 - 82 -




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Gross
    
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Net Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    Amount(In thousands)
    
    12/31/08
    
    
    12/31/08
    
    
    12/31/08
    
    
    12/31/07
    
    
    12/31/07
    
    
    12/31/07Purchased technology
    
    $
    169,758
    
    
    $
    (125,265
    )
    
    $
    44,493
    
    
    $
    168,436
    
    
    $
    (108,997
    )
    
    $
    59,439AvantGo tradenames
    
    
    3,100
    
    
    
    
    
    
    
    3,100
    
    
    
    3,100
    
    
    
    
    
    
    
    3,100XcelleNet tradenames
    
    
    4,000
    
    
    
    
    
    
    
    4,000
    
    
    
    4,000
    
    
    
    
    
    
    
    4,000Covenant not to compete
    
    
    319
    
    
    
    (271
    )
    
    
    48
    
    
    
    319
    
    
    
    (165
    )
    
    
    154Customer lists
    
    
    114,632
    
    
    
    (52,303
    )
    
    
    62,329
    
    
    
    102,064
    
    
    
    (38,149
    )
    
    
    63,915Totals
    
    $
    291,809
    
    
    $
    (177,839
    )
    
    $
    113,970
    
    
    $
    277,919
    
    
    $
    (147,311
    )
    
    $
    130,608
    2009
    
    
    27,5402010
    
    
    25,5372011
    
    
    20,2272012
    
    
    13,6592013
    
    
    11,683
 Note Five: Other Assets
  2008
    
    
    2007Deposits
    
    $
    23,693
    
    
    $
    28,021Other
    
    
    6,022
    
    
    
    7,995$
    29,715
    
    
    $
    36,016
 - 83 -




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##### Table of Contents



Note Six: Lease Obligations, Other Liabilities and Commitments
 Capital Lease
    2009
    
    $
    1,0002010
    
    
    9502011
    
    
    9502012
    
    
    9502013
    
    
    950Thereafter
    
    
    5,500Sub-total
    
    
    10,300Less amount representing interest
    
    
    3,634Total minimum lease payments
    
    $
    6,666
 Sale-and-Leaseback
   Leasehold Improvements Note
  - 84 -




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##### Table of Contents



Operating leases and Commitments
   2009
    
    $
    46,6922010
    
    
    39,1522011
    
    
    29,7682012
    
    
    26,6032013
    
    
    21,746Thereafter
    
    
    65,959Total minimum lease payments*
    
    $
    229,920
 
 *
    
    Minimum payments have not been reduced by minimum sublease rentals of $6.0 million due in the
future under non-cancelable subleases.  Year ending December 31,2008
    
    
    2007
    
    
    2006Rent expense
    
    $
    46,852
    
    
    $
    47,913
    
    
    $
    46,051Less: sublease rentals
    
    
    3,401
    
    
    
    4,011
    
    
    
    4,289$
    43,451
    
    
    $
    43,902
    
    
    $
    41,762
 Note Seven: Stockholders Equity
 Preferred Stock Rights
  - 85 -




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##### Table of Contents



Restricted Stock Grants
  Stock Repurchase Program
   Employee Stock Purchase Plans
   - 86 -




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##### Table of Contents



Stock Option Plans
    Stock-Based Compensation Expense
  Year EndedDecember 31,In thousands, except per share data
    
    2008
    
    
    2007
    
    
    2006Cost of services
    
    $
    1,364
    
    
    $
    1,544
    
    
    $
    1,629Cost of messaging
    
    
    484
    
    
    
    544
    
    
    
    124Sales and marketing
    
    
    5,538
    
    
    
    5,304
    
    
    
    4,432Product development and engineering
    
    
    2,887
    
    
    
    2,982
    
    
    
    2,679General and administrative
    
    
    12,242
    
    
    
    13,670
    
    
    
    12,861Stock-based compensation expense included in total costs and expenses
    
    
    22,515
    
    
    
    24,044
    
    
    
    21,725Tax benefit related to stock-based compensation expense
    
    
    (6,194
    )
    
    
    (6,775
    )
    
    
    (5,730
    )Stock-based compensation expense included in net income
    
    $
    16,321
    
    
    $
    17,269
    
    
    $
    15,995Reduction of net income per share:Basic
    
    $
    0.20
    
    
    $
    0.19
    
    
    $
    0.18Diluted
    
    $
    0.19
    
    
    $
    0.19
    
    
    $
    0.17
  Determining Fair Value
 Valuation and Amortization Method.
 - 87 -




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##### Table of Contents



Expected Term
 Expected Volatility
 Risk-Free Interest Rate.
 Dividends.
 Forfeitures.
  2008
    
    2007
    
    2006Expected volatility
    
    
    28.33
    %
    
    
    25.84
    %
    
    
    27.73
    %Risk-free interest rates
    
    
    2.84
    %
    
    
    4.51
    %
    
    
    4.71
    %Expected lives (years)
    
    
    5.00
    
    
    
    4.52
    
    
    
    3.98Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
 - 88 -




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##### Table of Contents



Equity Compensation Plans
  Outstanding Options,Stock AppreciationRights and Restricted
    
    Weighted AverageStock
    
    Exercise Price(Number of Shares)
    
    Per ShareBalance at December 31, 2005
    
    
    14,762,614
    
    
    $
    15.59Granted
    
    
    3,413,093
    
    
    
    17.15Exercised
    
    
    (3,380,478
    )
    
    
    13.92Forfeited or expired
    
    
    (794,710
    )
    
    
    17.26Balance at December 31, 2006
    
    
    14,000,519
    
    
    $
    16.26Granted
    
    
    2,268,607
    
    
    
    18.60Exercised
    
    
    (2,952,576
    )
    
    
    12.94Forfeited or expired
    
    
    (630,646
    )
    
    
    17.13Balance at December 31, 2007
    
    
    12,685,904
    
    
    $
    17.41Granted
    
    
    1,924,587
    
    
    
    23.49Exercised
    
    
    (3,212,985
    )
    
    
    14.74Forfeited or expired
    
    
    (414,370
    )
    
    
    19.46Balance at December 31, 2008
    
    
    10,983,136
    
    
    $
    19.18
   - 89 -




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##### Table of Contents



Options, Restricted Stock, & Stock Appreciation RightsOutstanding
    
    Options & Stock Appreciation Rights ExercisableWeighted-
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted-Average
    
    Weighted-
    
    
    
    
    
    
    
    
    
    Average
    
    Weighted-Remaining
    
    Average
    
    Aggregate
    
    
    
    
    
    Remaining
    
    Average
    
    AggregateRanges of
    
    
    
    
    
    Contractual
    
    Exercise
    
    Intrinsic
    
    
    
    
    
    Contractual
    
    Exercise
    
    IntrinsicExercisable Prices
    
    Shares
    
    Life
    
    Price
    
    Value
    
    Shares
    
    Life
    
    Price
    
    Value$0.00 to $12.81
    
    
    1,915,052
    
    
    
    4.49
    
    
    $
    3.33
    
    
    $
    41,065,157
    
    
    
    634,403
    
    
    
    2.91
    
    
    $
    9.71
    
    
    $
    9,556,575$12.90 to $19.46
    
    
    1,846,305
    
    
    
    4.27
    
    
    $
    15.80
    
    
    
    16,555,314
    
    
    
    1,833,743
    
    
    
    4.26
    
    
    $
    15.78
    
    
    
    16,486,938$19.51 to $21.59
    
    
    2,176,712
    
    
    
    3.84
    
    
    $
    20.76
    
    
    
    8,720,033
    
    
    
    1,574,128
    
    
    
    3.69
    
    
    $
    20.65
    
    
    
    6,488,727$21.60 to $24.26
    
    
    2,178,566
    
    
    
    3.75
    
    
    $
    23.52
    
    
    
    2,724,239
    
    
    
    1,312,305
    
    
    
    2.69
    
    
    $
    23.29
    
    
    
    1,946,741$24.44 to $26.63
    
    
    1,889,864
    
    
    
    4.21
    
    
    $
    25.60
    
    
    
    30,000
    
    
    
    1,138,112
    
    
    
    3.08
    
    
    $
    25.42
    
    
    
    15,753$27.38 to $36.13
    
    
    976,637
    
    
    
    6.19
    
    
    $
    31.03
    
    
    
    0
    
    
    
    131,886
    
    
    
    5.24
    
    
    $
    28.34
    
    
    
    0$0.00 to $36.13
    
    
    10,983,136
    
    
    
    4.28
    
    
    $
    19.18
    
    
    $
    69,094,743
    
    
    
    6,624,577
    
    
    
    3.50
    
    
    $
    19.75
    
    
    $
    34,494,734
   Weighted-averagegrant date fairShares
    
    value per shareNonvested at December 31, 2007
    
    
    1,505,326
    
    
    $
    21.64Granted
    
    
    375,260
    
    
    
    27.55Vested
    
    
    (589,000
    )
    
    
    18.70Forfeited
    
    
    (47,120
    )
    
    
    23.69Nonvested at December 31, 2008
    
    
    1,244,466
    
    
    $
    24.74
  - 90 -




---



##### Table of Contents



Other Stock Option Plans
 FFI Stock Option Plans
   iAS Stock Option Plan
  - 91 -




---



##### Table of Contents



FFI Stock Plans
    
    iAS PlanOutstanding
    
    Weighted
    
    Outstanding
    
    Weightedoptions
    
    average
    
    options
    
    averagenumber of
    
    Exercise price
    
    number of
    
    Exercise priceshares
    
    Per share
    
    shares
    
    Per shareBalance at December 31, 2005
    
    
    7,752,506
    
    
    $
    3.37
    
    
    
    11,516,699
    
    
    $
    2.51Forfeited or expired
    
    
    (4,574,138
    )
    
    
    3.51
    
    
    
    (1,283,359
    )
    
    
    2.51Balance at December 31, 2006
    
    
    3,178,368
    
    
    $
    3.22
    
    
    
    10,233,340
    
    
    $
    2.51Forfeited or expired
    
    
    (876,078
    )
    
    
    1.98
    
    
    
    (1,079,021
    )
    
    
    2.51Balance at December 31, 2007
    
    
    2,302,290
    
    
    $
    2.83
    
    
    
    9,154,319
    
    
    $
    2.51Forfeited or expired
    
    
    (251,624
    )
    
    
    2.31
    
    
    
    (539,442
    )
    
    
    2.51Balance at December 31, 2008
    
    
    2,050,666
    
    
    $
    2.90
    
    
    
    8,614,877
    
    
    $
    2.51
   Options Outstanding and OptionsExercisableWeighted-Average
    
    Weighted-Remaining
    
    AverageRanges of
    
    
    
    
    
    Contractual
    
    ExerciseExercisable prices
    
    Shares
    
    Life
    
    Price$ 0.75
    
    
    518,500
    
    
    
    3.93
    
    
    $
    0.75$ 0.78
    
    
    500,500
    
    
    
    4.51
    
    
    $
    0.78$ 5.00
    
    
    1,031,666
    
    
    
    1.73
    
    
    $
    5.00$ 0.75 to $5.00
    
    
    2,050,666
    
    
    
    2.97
    
    
    $
    2.90
   Note Eight: Income Taxes
   2008
    
    
    2007
    
    
    2006United States
    
    $
    104,156
    
    
    $
    118,655
    
    
    $
    51,110Foreign
    
    
    102,996
    
    
    
    71,297
    
    
    
    110,207Total
    
    $
    207,152
    
    
    $
    189,252
    
    
    $
    161,317
 - 92 -




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006FederalCurrent
    
    $
    12,185
    
    
    $
    5,005
    
    
    $
    1,898Deferred
    
    
    22,056
    
    
    
    11,366
    
    
    
    20,12234,241
    
    
    
    16,371
    
    
    
    22,020StateCurrent
    
    $
    5,886
    
    
    $
    2,572
    
    
    $
    218Deferred
    
    
    (4,088
    )
    
    
    3,659
    
    
    
    4,8011,798
    
    
    
    6,231
    
    
    
    5,019ForeignCurrent
    
    $
    35,199
    
    
    $
    21,417
    
    
    $
    36,904Deferred
    
    
    (2,657
    )
    
    
    (2,917
    )
    
    
    2,31032,542
    
    
    
    18,500
    
    
    
    39,214Total
    
    $
    68,581
    
    
    $
    41,102
    
    
    $
    66,253
    - 93 -




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006Tax (credit) at U.S. statutory rate
    
    $
    72,488
    
    
    $
    66,483
    
    
    $
    56,461State tax, net of federal benefit
    
    
    6,743
    
    
    
    4,710
    
    
    
    5,019Federal research credit
    
    
    (1,019
    )
    
    
    (1,925
    )
    
    
    0Domestic production activities deduction
    
    
    (2,925
    )
    
    
    (1,848
    )
    
    
    0Valuation allowances added for unused capital losses
    
    
    4,685
    
    
    
    0
    
    
    
    0Valuation allowances released
    
    
    (6,675
    )
    
    
    (26,428
    )
    
    
    0Difference between estimated amounts recorded and
actual liabilities resulting from the filing of
prior years tax return
    
    
    
    
    
    
    
    
    
    
    (2,806
    )Effect of foreign operations
    
    
    (9,081
    )
    
    
    (1,677
    )
    
    
    4,070Stock-based compensation
    
    
    2,608
    
    
    
    2,660
    
    
    
    3,012Other
    
    
    1,757
    
    
    
    (873
    )
    
    
    497Total
    
    $
    68,581
    
    
    $
    41,102
    
    
    $
    66,253
  2008
    
    
    2007Depreciation
    
    $
    10,932
    
    
    $
    9,960Deferred revenue
    
    
    2,644
    
    
    
    1,865Accrued expenses
    
    
    35,550
    
    
    
    28,039Tax loss and tax credit carryforwards
    
    
    116,555
    
    
    
    128,371Intangible assets
    
    
    36,137
    
    
    
    46,357Stock-based compensation
    
    
    11,012
    
    
    
    11,450Other assets
    
    
    10,832
    
    
    
    2,623Gross deferred tax asset
    
    
    223,662
    
    
    
    228,665Unremitted foreign earnings
    
    
    (35,359
    )
    
    
    (29,701
    )Acquired Intangibles
    
    
    (34,663
    )
    
    
    (43,590
    )Capitalized Software
    
    
    (32,960
    )
    
    
    (29,711
    )Gross deferred tax liability
    
    
    (102,982
    )
    
    
    (103,002
    )Total before valuation allowance
    
    
    120,680
    
    
    
    125,663Valuation allowance
    
    
    (60,580
    )
    
    
    (91,761
    )Net deferred tax assets
    
    $
    60,100
    
    
    $
    33,902Recorded as:Current deferred tax assets
    
    $
    45,524
    
    
    $
    37,979Noncurrent deferred tax assets
    
    
    26,474
    
    
    
    10,038Noncurrent deferred tax liabilities
    
    
    (11,898
    )
    
    
    (14,115
    )$
    60,100
    
    
    $
    33,902
  - 94 -




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##### Table of Contents



Valuation allowances associated with deferred tax assets used during
the year
    
    $
    (10,021
    )Valuation allowances associated with tax loss and credit
carryforwards projected to be used in future years
    
    
    (28,185
    )Valuation allowance associated with capital and other losses incurred
    
    
    7,025$
    (31,181
    )
     Unrecognized tax benefits balance at January 1, 2007
    
    $
    44,447Gross increases for tax positions of prior years
    
    
    1,678Gross increases for tax positions of the year 2007
    
    
    9,608Settlements of audits in 2007
    
    
    0Reductions as a result of a lapse of the applicable statute of limitations
    
    
    (5,551
    )Unrecognized tax benefits balance at January 1, 2008
    
    $
    50,182Gross increases for tax positions of prior years
    
    
    4,623Gross decreases for tax positions of prior years
    
    
    (2,672
    )Gross increases for tax positions of the current year
    
    
    18,176Settlements of audits
    
    
    (786
    )Reductions as a result of a lapse of the applicable statute of limitations
    
    
    (4,843
    )Unrecognized tax benefits balance at December 31, 2008
    
    $
    64,680
 - 95 -




---



##### Table of Contents



Note Nine: Benefit Plans
 401(k) Defined Contribution Retirement Plan
  Deferred Compensation Plan
  - 96 -




---



##### Table of Contents



Note Ten: Segment and Geographical Information
     - 97 -




---



##### Table of Contents



Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    
    TotalRevenues:License feesInfrastructure
    
    $
    274,937
    
    
    $
    353
    
    
    $
    214
    
    
    $
    
    
    
    $
    275,504Mobile and Embedded
    
    
    33,066
    
    
    
    75,069
    
    
    
    22
    
    
    
    
    
    
    
    108,157Subtotal license fees
    
    
    308,003
    
    
    
    75,422
    
    
    
    236
    
    
    
    
    
    
    
    383,661Intersegment license revenues
    
    
    508
    
    
    
    27,566
    
    
    
    
    
    
    
    (28,074
    )
    
    
    Total license fees
    
    
    308,511
    
    
    
    102,988
    
    
    
    236
    
    
    
    (28,074
    )
    
    
    383,661ServicesDirect service revenue
    
    
    527,956
    
    
    
    42,485
    
    
    
    1,649
    
    
    
    
    
    
    
    572,090Intersegment service revenues
    
    
    185
    
    
    
    33,250
    
    
    
    
    
    
    
    (33,435
    )
    
    
    Total services
    
    
    528,141
    
    
    
    75,735
    
    
    
    1,649
    
    
    
    (33,435
    )
    
    
    572,090
 - 98 -




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##### Table of Contents



Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    
    TotalMessagingDirect messaging revenue
    
    
    41
    
    
    
    
    
    
    
    176,138
    
    
    
    
    
    
    
    176,179Intersegment messaging revenues
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    (34
    )
    
    
    Total messaging
    
    
    41
    
    
    
    
    
    
    
    176,172
    
    
    
    (34
    )
    
    
    176,179Total revenues
    
    
    836,693
    
    
    
    178,723
    
    
    
    178,057
    
    
    
    (61,543
    )
    
    
    1,131,930Total allocated costs and expenses before
amortization of other purchased intangibles,
purchased technology, cost of restructure,
and unallocated costs
    
    
    629,642
    
    
    
    137,526
    
    
    
    160,216
    
    
    
    (61,543
    )
    
    
    865,841Operating income before amortization of other
purchased intangibles, purchased technology,
cost of restructure, and unallocated costs
    
    
    207,051
    
    
    
    41,197
    
    
    
    17,841
    
    
    
    
    
    
    
    266,089Amortization of other purchased intangibles
    
    
    2,108
    
    
    
    4,092
    
    
    
    8,516
    
    
    
    
    
    
    
    14,716Amortization of purchased technology
    
    
    4,645
    
    
    
    8,948
    
    
    
    4,042
    
    
    
    
    
    
    
    18,635Operating income before cost of restructure and
unallocated costs
    
    
    200,298
    
    
    
    27,157
    
    
    
    5,283
    
    
    
    
    
    
    
    232,738Cost of restructure - 2008 Activity
    
    
    315
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    315Operating income before unallocated costs
    
    
    199,983
    
    
    
    27,157
    
    
    
    5,283
    
    
    
    
    
    
    
    232,423Unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,367Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210,056Interest income, interest expense and other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,955
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    207,152
  Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    
    TotalRevenues:License feesInfrastructure
    
    $
    238,336
    
    
    $
    511
    
    
    $
    22
    
    
    $
    
    
    
    $
    238,869Mobile and Embedded
    
    
    36,744
    
    
    
    69,194
    
    
    
    
    
    
    
    
    
    
    
    105,938Subtotal license fees
    
    
    275,080
    
    
    
    69,705
    
    
    
    22
    
    
    
    
    
    
    
    344,807Intersegment license revenues
    
    
    384
    
    
    
    30,627
    
    
    
    
    
    
    
    (31,011
    )
    
    
    Total license fees
    
    
    275,464
    
    
    
    100,332
    
    
    
    22
    
    
    
    (31,011
    )
    
    
    344,807ServicesDirect service revenue
    
    
    496,198
    
    
    
    43,826
    
    
    
    4,185
    
    
    
    
    
    
    
    544,209Intersegment service revenues
    
    
    445
    
    
    
    29,002
    
    
    
    
    
    
    
    (29,447
    )
    
    
    Total services
    
    
    496,643
    
    
    
    72,828
    
    
    
    4,185
    
    
    
    (29,447
    )
    
    
    544,209Messaging
    
    
    
    
    
    
    
    
    
    
    136,514
    
    
    
    
    
    
    
    136,514Total revenues
    
    
    772,107
    
    
    
    173,160
    
    
    
    140,721
    
    
    
    (60,458
    )
    
    
    1,025,530Total allocated costs and expenses before
amortization of other purchased intangibles,
purchased technology, cost of restructure,
and unallocated costs
    
    
    600,462
    
    
    
    133,758
    
    
    
    129,997
    
    
    
    (60,458
    )
    
    
    803,759
 - 99 -




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##### Table of Contents



Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    
    TotalOperating income before amortization of other
purchased intangibles, purchased technology,
cost of restructure, and unallocated costs
    
    
    171,645
    
    
    
    39,402
    
    
    
    10,724
    
    
    
    
    
    
    
    221,771Amortization of other purchased intangibles
    
    
    2,108
    
    
    
    4,168
    
    
    
    7,507
    
    
    
    
    
    
    
    13,783Amortization of purchased technology
    
    
    1,611
    
    
    
    8,222
    
    
    
    3,758
    
    
    
    
    
    
    
    13,591Operating income (loss) before cost of
restructure and unallocated costs
    
    
    167,926
    
    
    
    27,012
    
    
    
    (541
    )
    
    
    
    
    
    
    194,397Cost of restructure - 2007 Activity
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13
    )Operating income (loss) before unallocated costs
    
    
    167,939
    
    
    
    27,012
    
    
    
    (541
    )
    
    
    
    
    
    
    194,410Unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,847Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    168,563Interest income, interest expense and other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,377Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    189,952
 - 100 -




---



##### Table of Contents



Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    
    TotalRevenues:License feesInfrastructure
    
    $
    229,376
    
    
    $
    235
    
    
    $
    
    
    
    $
    
    
    
    $
    229,611Mobile and Embedded
    
    
    31,621
    
    
    
    65,519
    
    
    
    
    
    
    
    
    
    
    
    97,140Subtotal license fees
    
    
    260,997
    
    
    
    65,754
    
    
    
    
    
    
    
    
    
    
    
    326,751Intersegment license revenues
    
    
    86
    
    
    
    26,333
    
    
    
    
    
    
    
    (26,419
    )
    
    
    Total license fees
    
    
    261,083
    
    
    
    92,087
    
    
    
    
    
    
    
    (26,419
    )
    
    
    326,751ServicesDirect service revenue
    
    
    485,016
    
    
    
    45,019
    
    
    
    1,137
    
    
    
    
    
    
    
    531,172Intersegment service revenues
    
    
    367
    
    
    
    25,905
    
    
    
    
    
    
    
    (26,272
    )
    
    
    Total services
    
    
    485,383
    
    
    
    70,924
    
    
    
    1,137
    
    
    
    (26,272
    )
    
    
    531,172Messaging
    
    
    
    
    
    
    
    
    
    
    18,240
    
    
    
    
    
    
    
    18,240Total revenues
    
    
    746,466
    
    
    
    163,011
    
    
    
    19,377
    
    
    
    (52,691
    )
    
    
    876,163Total allocated costs and expenses before
amortization of other purchased intangibles,
purchased technology, cost of restructure,
and unallocated costs
    
    
    598,864
    
    
    
    135,188
    
    
    
    18,908
    
    
    
    (52,691
    )
    
    
    700,269Operating income before amortization of other
purchased intangibles, purchased technology,
cost of restructure, and unallocated costs
    
    
    147,602
    
    
    
    27,823
    
    
    
    469
    
    
    
    
    
    
    
    175,894Amortization of other purchased intangibles
    
    
    2,060
    
    
    
    4,184
    
    
    
    1,087
    
    
    
    
    
    
    
    7,331Amortization of purchased technology
    
    
    1,654
    
    
    
    7,883
    
    
    
    543
    
    
    
    
    
    
    
    10,080Operating income (loss) before cost of
restructure and unallocated costs
    
    
    143,888
    
    
    
    15,756
    
    
    
    (1,161
    )
    
    
    
    
    
    
    158,483Cost of restructure - 2006 Activity
    
    
    961
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    961Operating income (loss) before unallocated costs
    
    
    142,927
    
    
    
    15,756
    
    
    
    (1,161
    )
    
    
    
    
    
    
    157,522Unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,758Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    133,764Interest income, interest expense and other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,634Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (81
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    161,317
 - 101 -




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##### Table of Contents



2008
    
    
    2007
    
    
    2006Revenues:Unaffiliated customers:United States
    
    $
    533,238
    
    
    $
    499,815
    
    
    $
    442,432Europe
    
    
    399,477
    
    
    
    342,029
    
    
    
    279,306Other
    
    
    199,215
    
    
    
    183,686
    
    
    
    154,425Total
    
    $
    1,131,930
    
    
    $
    1,025,530
    
    
    $
    876,163Long-lived assets, net:United States
    
    $
    708,882
    
    
    $
    770,210
    
    
    $
    788,052Europe
    
    
    91,528
    
    
    
    59,380
    
    
    
    60,086Other
    
    
    30,643
    
    
    
    46,129
    
    
    
    31,782Total
    
    $
    831,053
    
    
    $
    875,719
    
    
    $
    879,920
 Note Eleven: Business Combinations
   - 102 -




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##### Table of Contents



Note Twelve: Litigation
     - 103 -




---



##### Table of Contents



Note Thirteen: Restructuring Costs
   Accrued
    
    
    
    
    
    
    
    
    
    AccruedLiabilities
    
    
    
    
    
    Amounts
    
    Liabilitiesat
    
    Amounts
    
    Accrued
    
    at12/31/07
    
    Paid
    
    (Reversed)
    
    12/31/082004 Plan
    
    
    3.1
    
    
    
    (1.1
    )
    
    
    0.3
    
    
    
    2.32002 Plan
    
    
    6.0
    
    
    
    (2.6
    )
    
    
    
    
    
    
    3.42001 Plan
    
    
    1.3
    
    
    
    (0.5
    )
    
    
    (0.1
    )
    
    
    0.7Mobile 365
    
    
    0.8
    
    
    
    (0.7
    )
    
    
    (0.1
    )
    
    
    
     - 104 -




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##### Table of Contents



Note Fourteen: Guarantees
  - 105 -




---



##### Table of Contents



Note Fifteen: Convertible Subordinated Notes
      - 106 -




---



##### Table of Contents



Quarterly Financial Information (Unaudited)
 Three months ended (in thousands,
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31
    
    
    Totalexcept per share and stock price data)
    
    2008
    
    
    2008
    
    
    2008
    
    
    2008
    
    
    2008Revenues:License fees
    
    $
    78,124
    
    
    $
    90,515
    
    
    $
    92,939
    
    
    $
    122,083
    
    
    $
    383,661Services
    
    
    139,397
    
    
    
    146,594
    
    
    
    146,295
    
    
    
    139,804
    
    
    
    572,090Messaging
    
    
    42,627
    
    
    
    45,604
    
    
    
    44,744
    
    
    
    43,204
    
    
    
    176,179Total revenues:
    
    
    260,148
    
    
    
    282,713
    
    
    
    283,978
    
    
    
    305,091
    
    
    
    1,131,930Costs and expenses:Cost of license fees
    
    
    14,537
    
    
    
    15,129
    
    
    
    18,151
    
    
    
    19,525
    
    
    
    67,342Cost of services
    
    
    40,880
    
    
    
    41,080
    
    
    
    40,225
    
    
    
    38,419
    
    
    
    160,604Cost of messaging
    
    
    25,108
    
    
    
    27,403
    
    
    
    28,107
    
    
    
    27,139
    
    
    
    107,757Sales and marketing
    
    
    68,293
    
    
    
    74,272
    
    
    
    70,347
    
    
    
    72,464
    
    
    
    285,376Product development and engineering
    
    
    35,562
    
    
    
    36,046
    
    
    
    37,451
    
    
    
    37,873
    
    
    
    146,932General and administrative
    
    
    36,061
    
    
    
    34,077
    
    
    
    32,831
    
    
    
    36,011
    
    
    
    138,980Amortization of other purchased
intangibles
    
    
    3,516
    
    
    
    3,573
    
    
    
    3,920
    
    
    
    3,707
    
    
    
    14,716Cost (reversal) of restructure
    
    
    27
    
    
    
    (8
    )
    
    
    39
    
    
    
    109
    
    
    
    167Total costs and expenses
    
    
    223,984
    
    
    
    231,572
    
    
    
    231,071
    
    
    
    235,247
    
    
    
    921,874Operating income
    
    
    36,164
    
    
    
    51,141
    
    
    
    52,907
    
    
    
    69,844
    
    
    
    210,056Interest income, expense, and other, net
    
    
    3,515
    
    
    
    (876
    )
    
    
    (285
    )
    
    
    (5,309
    )
    
    
    (2,955
    )Minority interest
    
    
    (9
    )
    
    
    37
    
    
    
    (21
    )
    
    
    44
    
    
    
    51Income before income taxes
    
    
    39,670
    
    
    
    50,302
    
    
    
    52,601
    
    
    
    64,579
    
    
    
    207,152Provision for income taxes
    
    
    15,480
    
    
    
    17,948
    
    
    
    17,864
    
    
    
    17,289
    (a)
    
    
    68,581Net income
    
    $
    24,190
    
    
    $
    32,354
    
    
    $
    34,737
    
    
    $
    47,290
    
    
    $
    138,571Basic net income per share
    
    $
    0.28
    
    
    $
    0.40
    
    
    $
    0.44
    
    
    $
    0.59
    
    
    $
    1.69Diluted net income per share
    
    $
    0.27
    
    
    $
    0.37
    
    
    $
    0.40
    
    
    $
    0.58
    
    
    $
    1.64
 
 [a]
    
    In connection with re-evaluating our valuation allowances for our deferred tax assets, we
recorded a $6.7 million tax benefit in the fourth quarter of 2008. For further information, see
Note Eight: Income Taxes in the Notes to Consolidated Financial Statements. Three months ended (in thousands,
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31
    
    
    Totalexcept per share and stock price data)
    
    2007
    
    
    2007
    
    
    2007
    
    
    2007
    
    
    2007Revenues:License fees
    
    $
    69,365
    
    
    $
    77,435
    
    
    $
    85,141
    
    
    $
    112,866
    
    
    $
    344,807Services
    
    
    129,651
    
    
    
    135,230
    
    
    
    135,838
    
    
    
    143,490
    
    
    
    544,209Messaging
    
    
    31,021
    
    
    
    32,358
    
    
    
    34,287
    
    
    
    38,848
    
    
    
    136,514Total revenues:
    
    
    230,037
    
    
    
    245,023
    
    
    
    255,266
    
    
    
    295,204
    
    
    
    1,025,530Costs and expenses:Cost of license fees
    
    
    12,753
    
    
    
    13,083
    
    
    
    12,667
    
    
    
    14,611
    
    
    
    53,114Cost of services
    
    
    38,742
    
    
    
    39,539
    
    
    
    38,684
    
    
    
    40,825
    
    
    
    157,790Cost of messaging
    
    
    18,889
    
    
    
    18,906
    
    
    
    21,428
    
    
    
    23,375
    
    
    
    82,598Sales and marketing
    
    
    64,575
    
    
    
    64,916
    
    
    
    64,415
    
    
    
    73,089
    
    
    
    266,995Product development and engineering
    
    
    38,753
    
    
    
    36,920
    
    
    
    38,739
    
    
    
    38,159
    
    
    
    152,571General and administrative
    
    
    31,496
    
    
    
    32,680
    
    
    
    31,231
    
    
    
    33,912
    
    
    
    129,319Amortization of other purchased
intangibles
    
    
    3,410
    
    
    
    3,436
    
    
    
    3,445
    
    
    
    3,492
    
    
    
    13,783Cost (reversal) of restructure
    
    
    4
    
    
    
    (51
    )
    
    
    17
    
    
    
    827
    
    
    
    797Total costs and expenses
    
    
    208,622
    
    
    
    209,429
    
    
    
    210,626
    
    
    
    228,290
    
    
    
    856,967Operating income
    
    
    21,415
    
    
    
    35,594
    
    
    
    44,640
    
    
    
    66,914
    
    
    
    168,563Interest income, expense, and other, net
    
    
    5,005
    
    
    
    5,142
    
    
    
    5,710
    
    
    
    5,520
    
    
    
    21,377Minority interest
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    12Income before income taxes
    
    
    26,400
    
    
    
    40,736
    
    
    
    50,350
    
    
    
    72,466
    
    
    
    189,952Provision for income taxes
    
    
    11,252
    
    
    
    14,708
    
    
    
    16,220
    
    
    
    (1,078
    )(b)
    
    
    41,102Net income
    
    $
    15,148
    
    
    $
    26,028
    
    
    $
    34,130
    
    
    $
    73,544
    
    
    $
    148,850Basic net income per share
    
    $
    0.17
    
    
    $
    0.29
    
    
    $
    0.38
    
    
    $
    0.83
    
    
    $
    1.65Diluted net income per share
    
    $
    0.16
    
    
    $
    0.28
    
    
    $
    0.37
    
    
    $
    0.81
    
    
    $
    1.61
 
 [b]
    
    In connection with re-evaluating our foreign cash needs and valuation allowances for our
deferred tax assets, we recorded a $13 million net tax benefit in the fourth quarter of 2007. For
further information, see Note Eight: Income Taxes in the Notes to Consolidated Financial
Statements. - 107 -




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##### Table of Contents



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Report of Management on Internal Controls over Financial Reporting
  Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF REGISTRANT AND CORPORATE GOVERNANCE
 Current Executive Officers
  - 108 -




---



##### Table of Contents



Identification of Directors
  Compliance with Section 16(a) of the Exchange Act
  Audit Committee Financial Expert
  Standing Audit Committee
  Corporate Governance Guidelines
 www.sybase.com
 Certifications
  Code of Ethics
 www.sybase.com
 
 
 ITEM 11. EXECUTIVE COMPENSATION
  - 109 -




---



##### Table of Contents



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
   
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  Financial Statements
 Financial Statement Schedules
 Exhibits
 Exhibits
  Form 10-K
PageII Valuation and Qualifying Accounts
    
    111
  - 110 -




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##### Table of Contents



TranslationBeginning
    
    
    Charged to
    
    
    
    
    
    
    Adjustments and(Dollars in thousands)
    
    Balance
    
    
    Operations (A)
    
    
    Write-offs (B)
    
    
    Other
    
    
    Ending BalanceYear ended December 31, 2008:Allowance for doubtful accounts
    
    $
    3,735
    
    
    $
    2,307
    
    
    $
    (1,989
    )
    
    $
    (165
    )
    
    $
    3,888Year ended December 31, 2007:Allowance for doubtful accounts
    
    $
    3,998
    
    
    $
    1,343
    
    
    $
    (1,951
    )
    
    $
    345
    
    
    $
    3,735Year ended December 31, 2006:Allowance for doubtful accounts
    
    $
    2,651
    
    
    $
    2,330
    
    
    $
    (1,277
    )
    
    $
    294
    
    
    $
    3,998
 
 
  - 111 -




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##### Table of Contents



SIGNATURES
  SYBASE, INC.February 27, 2009
    
    By:
    
    /S/ JOHN S. CHENJohn S. ChenChairman of the Board, ChiefExecutive Officer and President
 POWER OF ATTORNEY
  Signature
    
    Title
    
    Date/S/ JOHN S. CHEN

(John S. Chen)
    
    Chairman of the Board, Chief
Executive Officer (Principal Executive
Officer), President and Director
    
    February 27, 2009/S/ JEFFREY G ROSS

(Jeffrey G. Ross)
    
    Senior Vice President and
Chief Financial Officer (Principal
Financial Officer)
    
    February 27, 2009/S/ KEITH JENSEN

(Keith Jensen)
    
    Vice President and Corporate
Controller (Principal Accounting
Officer)
    
    February 27, 2009/S/ RICHARD C. ALBERDING

(Richard C. Alberding)
    
    Director
    
    February 27, 2009/S/ CECILIA CLAUDIO

(Cecilia Claudio)
    
    Director
    
    February 27, 2009/S/ MICHAEL A. DANIELS

(Michael A. Daniels)
    
    Director
    
    February 27, 2009/S/ L. WILLIAM KRAUSE

(L. William Krause)
    
    Director
    
    February 27, 2009/S/ ALAN B. SALISBURY

(Alan B. Salisbury)
    
    Director
    
    February 27, 2009/S/ JACK E. SUM

(Jack E. Sum)
    
    Director
    
    February 27, 2009/S/ ROBERT P. WAYMAN

(Robert P. Wayman)
    
    Director
    
    February 27, 2009/S/ LINDA K. YATES

(Linda K. Yates)
    
    Director
    
    February 27, 2009
 - 112 -




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description2.1 (1)
    
    Agreement and Plan of Reorganization dated as of November
29, 1999, among the Company, On-Line Financial Services, Inc., and Home
Financial Network, Inc.2.2 (2)
    
    Agreement and Plan of Merger dated as of February 20,
2001, among the Company, New Era of Networks, Inc., and Neel Acquisition Corp.2.3 (3)
    
    Agreement and Plan of Merger dated as of December 19,
2002, by and among the Company, Seurat Acquisition Corporation and AvantGo,
Inc.2.4 (12)
    
    Agreement and Plan of Merger dated as of July
28, 2005, by and among the Company, Ernst Acquisition Corporation and Extended
Systems Incorporated.2.5 (19)
    
    Agreement and Plan of Merger dated as of September 5,
2006, by and among Sybase, Inc., Monaco Acquisition Corporation, Mobile 365,
Inc., and with respect to Section 6.16(e), Article VIII and Article X only,
John Backus.3.1 (4)
    
    Amended and Restated Certificate of Incorporation of the
Company and Amended and Restated Certificate of Rights, Preferences &
Privileges of Series A Participating Preferred Stock of Sybase, Inc.3.2 (11)
    
    Amended and Restated Bylaws of the Company as of July 31, 2008.4.1 (6)
    
    Preferred Share Rights Agreement dated as of July 31, 2002
between the Company and American Stock Transfer and Trust Co.4.2 (7)
    
    Amendment No. 1 dated as of February 14, 2005 to the
Preferred Share Rights Agreement dated as of July 31, 2002 between the Company
and American Stock Transfer and Trust Co.4.3 (8)
    
    Indenture dated as of February 22, 2005 between the
Company and U.S. Bank National Association, as Trustee (including form of
1.75% Convertible Subordinated Notes due 2025).4.4 (8)
    
    Registration Rights Agreement dated as of February 22,
2005 between the Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Lehman Brothers Inc.10.1 (9)*
    
    New Era of Networks, Inc. Amended and Restated 1995 Stock
Option Plan.10.2 (9)*
    
    New Era of Networks, Inc. 1998 Nonstatutory Stock Option Plan.10.3 (9)*
    
    Convoy Corporation 1997 Stock Option Plan.10.4 (9)*
    
    Microscript, Inc. 1997 Stock Option Plan.10.5 (10)*
    
    1988 Stock Option Plan and Forms of Incentive Stock
Option Agreements and Nonstatutory Stock Option Agreements, as amended.10.6 (26)*
    
    Form of Notice of Stock Option Grant and Agreement.10.7 (22)*
    
    Sybase, Inc. 401(k) Plan, as amended.10.8 (22)*
    
    Amendment No. 2 to the Sybase, Inc. 401(k) Plan dated
December 22, 2005.10.9 (14)*
    
    Sybase, Inc. 1992 Director Stock Option Plan, as amended.
 - 113 -




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##### Table of Contents



Exhibit No.
    
    Description10.10 (9)*
    
    Sybase, Inc. 2001 Director Stock Option Plan.10.11 (5)*
    
    Executive Deferred Compensation Plan, as amended December 5, 2003.10.12 (22)*
    
    Amendment No. 1 to the Executive Deferred Compensation
Plan, dated November 3, 2005.10.13 (9)*
    
    Sybase, Inc. 1996 Stock Plan, as amended.10.14 (21) *
    
    Form of Indemnification Agreement10.15 (13)*
    
    Form of Amended and Restated Change of Control
Agreement (standard version).10.16 (13)*
    
    Form of Amended and Restated Change of Control
Agreement (enhanced version).10. 17(20) *
    
    Amended and Restated 1991 Employee Stock Purchase
Plan, as amended February 2, 2005 and Amended and Restated 1991 Foreign
Subsidiary Employee Stock Purchase Plan, as amended February 2, 2005.10.18 (13)*
    
    Second Amended and Restated Employment Agreement
between the Company and John S. Chen dated as of December 18, 2007.10.19 (13)*
    
    Amended and Restated Change of Control Agreement
between the Company and John Chen dated December 18, 2007.10.20 (18)*
    
    Amended and Restated Sybase, Inc. 1999 Nonstatutory
Stock Plan.10.21 (16)*
    
    InphoMatch, Inc. 2000 Equity Incentive Plan, Mobile
365, Inc. 2004 Equity Incentive Plan and MobileWay, Inc. 2000 Stock Option
Plan.10.22 (17)
    
    Corporate Headquarters Lease, dated January 28, 2000,
between the Company and WDS-Dublin, LLC, as amended on November 29, 2000, and
December 13, 2001.10.23 (14)
    
    Amendment to Corporate Headquarters Lease, dated December
13, 2001, between the Company and WDS-Dublin, LLC.10.24 (17)
    
    Trust Agreement dated May 1, 2000 between Fidelity
Management Trust Company and the Company for administration of the Sybase
Executive Deferred Compensation Plan.10.25 (5)
    
    First Amendment to Trust Agreement between Fidelity
Management Trust Company and the Company for administration of Sybase
Executive Deferred Compensation Plan.
 - 114 -




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##### Table of Contents



Exhibit No.
    
    Description10.26 (22)
    
    Second Amendment to May 1, 2000 Trust Agreement between
Fidelity Management Trust Company and the Company for administration of Sybase
Executive Deferred Compensation Plan, dated as of February 11, 2005.10.27 (5)
    
    November 17, 2003 Letter Agreement between Fidelity
Management Trust Company and Sybase, Inc. for administration of the Sybase
Executive Deferred Compensation Plan.10.28 (17)*
    
    Financial Fusion, Inc. 2000 Stock Option Plan.10.29 (14)*
    
    Financial Fusion, Inc. 2001 Stock Option Plan.10.30 (14)*
    
    iAnywhere Solutions, Inc. Stock Option Plan.10.31 (26)*
    
    Form of Notice of Grant and Restricted Stock Purchase Agreement.10.32 (23)*
    
    Letter dated February 5, 2009 to John S. Chen regarding
2009 compensation.10.33 (26)*
    
    Executive Tax Preparation, Financial Planning and Legal
Services Program for Section 16 Officers, effective as of February 20, 2008.10.34 (5)*
    
    Summary Plan Description for Sabbatical Leave Plan of
Sybase, Inc., as Amended and Restated as of May 1, 2003.10.35 (16)*
    
    Amended and Restated Sybase, Inc. 2003 Stock Plan.10.36 (23)*
    
    Letter dated February 5, 2009 to Jeffrey Ross regarding
2009 compensation.10.37 (23)*
    
    Letter dated February 5, 2009 to Marty Beard regarding
2009 compensation.10.38 (23)*
    
    Letter dated February 5, 2009 to Raj Nathan regarding
2009 compensation.10.39 (23)*
    
    Letter dated February 5, 2009 to Steve Capelli
regarding 2009 compensation.10.40 (23)*
    
    Summary of Vesting Terms for 2008 Grants to Chen, Ross,
Beard, Nathan and Capelli.10.41 (21)
    
    Purchase Agreement, dated February 15, 2005 between the
Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Lehman
Brothers Inc.10.42 (25)
    
    Agreement, dated February 25, 2008, between the Company
and Sandell Asset Management Corp. and its affiliated entities.12
    
    Computation of Ratio of Earnings to Fixed Charges21
    
    Subsidiaries of the Company23.1
    
    Consent of Independent Registered Public Accounting Firm24 (24)
    
    Powers of Attorney31.1
    
    Certification of Chief Executive Officer pursuant to Securities
Exchange Act Rule 13a-14 or 15d-14, as adopted pursuant to Section 302(a) of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Securities
Exchange Act Rule 13a-14 or 15d-14, as adopted pursuant to Section 302(a) of
the Sarbanes-Oxley Act of 2002.
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Exhibit No.
    
    Description32
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Indicates Management Contract or Compensatory Plan.(1)
    
    Incorporated by reference to Exhibit 2.1 to the Companys Registration Statement on Form S-3
filed on January 31, 2000.(2)
    
    Incorporated by reference to Exhibit 2(a) to the Companys Registration Statement on Form S-4
filed March 15, 2001.(3)
    
    Incorporated by reference to Exhibit 1 to the Companys Schedule 13D filed with the
Securities and Exchange Commission on December 30, 2002.(4)
    
    Incorporated by reference to the Exhibits filed with the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2007.(5)
    
    Incorporated by reference to the Exhibits filed with the Companys Annual Report on Form 10-K
for the year ended December 31, 2003.(6)
    
    Incorporated by reference to Exhibit 4.1 to the Companys Report on Form 8-K filed on August
5, 2002.(7)
    
    Incorporated by reference to Exhibit 4.2 to the Companys Report on Form 8-K filed on
February 17, 2005.(8)
    
    Incorporated by reference to the Exhibits filed with the Companys Report on Form 8-K filed
on February 22, 2005.(9)
    
    Incorporated by reference to the Companys Registration Statement on Form S-8 filed June 19,
2001.(10)
    
    Incorporated by reference to the Exhibits filed with the Companys Annual Report on Form 10-K
for the year ended December 31, 1997.(11)
    
    Incorporated by reference to the Companys Report on Form 8-K filed on August 6, 2008.(12)
    
    Incorporated by reference to the Exhibits filed with the Schedule 13D the Company filed
August 8, 2005.(13)
    
    Incorporated by reference to the Exhibits filed with the Companys Report on Form 8-K filed
on December 20, 2007.(14)
    
    Incorporated by reference to the Exhibits filed with the Companys Annual Report on Form 10-K
for the year ended December 31, 2001.(15)
    
    Incorporated by reference to the Companys Registration Statement on Form S-8 filed August
20, 1999.(16)
    
    Incorporated by reference to the Companys Registration Statement on Form S-8 filed on August
9, 2007.(17)
    
    Incorporated by reference to the Exhibits filed with the Companys Annual Report on Form 10-K
for the year ended December 31, 2000.(18)
    
    Incorporated by reference to the Exhibits filed with the Companys Registration Statement on
Form S-8 filed on August 25, 2004.(19)
    
    Incorporated by reference to the Exhibits filed with the Companys Report on Form 8-K filed
on September 9, 2006.(20)
    
    Incorporated by reference to the Exhibits filed with the Companys Registration Statement on
Form S-8 filed on July 29, 2005.(21)
    
    Incorporated by reference to the Exhibits filed with the Companys Annual Report on Form 10-K
for the year ended December 31, 2004.(22)
    
    Incorporated by reference to the Exhibits filed with the Companys Annual Report on Form 10-K
for the year ended December 31, 2005.(23)
    
    Incorporated by reference to the Exhibits filed with the Companys Report on Form 8-K filed
on February 10, 2009.(24)
    
    Incorporated by reference to the signature page of this Report on Form 10-K. - 116 -




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(25)
    
    Incorporated by reference to the Exhibits filed with the Companys Report on Form 8-K filed
on February 26, 2008.(26)
    
    Incorporated by reference to the Exhibits filed with the Companys Quarterly Report on Form
10-Q for the quarter ended March 31, 2008 - 117 -