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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, 2009
 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 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 12, 2010Common Stock, $.001 par value per share
    
    82,368,556 shares
 DOCUMENTS INCORPORATED BY REFERENCE
 Document
    
    Parts Into Which IncorporatedAnnual Report to Stockholders for the Fiscal
Year Ended December 31, 2009 (Annual Report)
    
    Parts I, II, and IVProxy Statement for the Annual Meeting of
Shareholders to be held May 13, 2010 (Proxy
Statement)
    
    Part III




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##### 



Part I
    
    
    4ITEM 1. BUSINESS
    
    
    4ITEM 1 (A): RISK FACTORS
    
    
    10ITEM 1 (B): UNRESOLVED STAFF COMMENTS
    
    
    23ITEM 2. PROPERTIES
    
    
    23ITEM 3. LEGAL PROCEEDINGS
    
    
    24ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    25PART II
    
    
    25ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
    
    
    25ITEM 6. SELECTED FINANCIAL DATA
    
    
    28ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    31ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    64ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    65ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    115ITEM 9A. CONTROLS AND PROCEDURES
    
    
    115PART III
    
    
    116ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF REGISTRANT AND CORPORATE GOVERNANCE
    
    
    116ITEM 11. EXECUTIVE COMPENSATION
    
    
    117ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
    
    
    117ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    117ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    117PART IV
    
    
    117ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    117SIGNATURES
    
    
    119EXHIBIT INDEX
    
    
    120EX-12EX-21EX-23.1EX-31.1EX-31.2EX-32




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FORWARD-LOOKING STATEMENTS
   www.sec.gov
 www.sybase.com
  - 3 -




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PART I
 
 ITEM 1. BUSINESS
     Infrastructure Platform Group (IPG) ® ® ® ®
 iAnywhere Solutions (iAS) ® ®
 Sybase 365
  - 4 -




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UNWIRED ENTERPRISE
   CUSTOMERS
  
    
    A Fortune 500 global telecommunications company uses Sybase IQ and PowerDesigner for its
performance management and reporting infrastructure. Supporting worldwide business units,
the efficient system provides trend analysis, and network and services reporting via
desktop or browser-based access. The Sybase solution provides a cost-effective way to get
critical insight into business unit performance at multiple levels.
    
    Exemplifying the Unwired Enterprise, a financial services customer uses Sybase data
management and analytics solutions, recently purchasing ASE Cluster Edition, to assure high
availability for its global trading system. Using complementary Sybase enterprise mobility
solutions, the banks management team accesses critical internal applications via iPhones.
    
    A world leader in the manufacture of consumer goods leverages the Sybase Unwired
Platform (SUP) software to expand mobile applications throughout the organization. The
Sybase solution provides a unified enterprise mobility platform that reduces the cost of
development, deployment, and management to an affordable level. The company is also able to
satisfy more internal and external customers by providing increased device flexibility and
access to a greater number of enterprise applications.
    
    A leading wireless carrier partnered with Sybase to provide a managed mobility service
to simplify the deployment and ongoing support of mobile workforces. Utilizing Sybases
enterprise device management platform, this service is a single solution to support all
mobile carriers and wireless services. It enables enterprises to control telecommunication
operating costs while ensuring compliance with corporate security mandates, management
directives and telecommunications policies.
    
    A global leader in money transfer uses Sybase 365 mobile messaging and mCommerce
services to provide money transfer confirmations and send promotional offers and coupons
via SMS. Available across multiple countries, the services allow the company to
inexpensively expand to a large population of under-served customers.
 - 5 -




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PRODUCTS AND SERVICES
  Infrastructure Platform Group (IPG)
 Sybase Adaptive Server Enterprise (ASE) .
 Sybase IQ
 Sybase RAP  The Trading Edition
 Sybase Replication Server
 Sybase PowerDesigner
 Sybase PowerBuilder
 iAnywhere Solutions (iAS)
 Sybase Unwired Platform
 - 6 -




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SQL Anywhere
 Afaria
 iAnywhere Mobile Office
 Advantage Database
 Mobile Device Solutions
 Sybase 365
 Operator Services
 Enterprise Services
 mCommerce Services
 WORLDWIDE SERVICES
 Technical Support.
 - 7 -




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Standard Support
 Enterprise Support
   Consulting.
 Education.
 SALES AND DISTRIBUTION
 Licensing and Services Model.
 Distribution Method.
 International Business.
 - 8 -




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INTELLECTUAL PROPERTY RIGHTS
  RESEARCH AND DEVELOPMENT
  COMPETITION
    Mobile and Embedded Database Products
 Mobile Middleware and Device Management Products.
  - 9 -




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Operator Services.
 Enterprise Services.
 mCommerce Services
  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.
   - 10 -




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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.
    - 12 -




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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.
  - 13 -




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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.
  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 mos of our messaging revenue.
  Unanticipated delays or accelerations in our sales cycles could result in significant fluctuations
in our quarterly operating results.
  If we do not adapt to rapid technological change in the telecommunications industry, we could lose
customers or market share.
 - 14 -




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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.
   - 15 -




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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.
  
    
    changes in IT spending;
    
    the imposition of government controls;
    
    changes or limitations in trade protection laws;
    
    unfavorable changes in tax treaties or laws;
    
    natural disasters, public health risks, labor unrest, earnings expatriation
restrictions, misappropriation of intellectual property and/or weak intellectual
property protection;
    
    acts of terrorism, continued unrest and war in the Middle East and other factors,
   We may not receive significant revenues from our current research and development efforts for
several years, if at all.
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We might experience significant errors or security flaws in our products and services.
  We are subject to risks related to the terms of our 1.75% Convertible Subordinated Notes and our
3.50% Convertible Senior Notes
       - 17 -




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Unanticipated changes in our tax rates could affect our future financial results.
   We face exposure to adverse movements in foreign currency exchange rates.
   - 18 -




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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.
  - 19 -




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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.
   - 20 -




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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.
  - 21 -




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Changes in accounting and legal standards could adversely affect our future operating results.
     - 22 -




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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.
  We are investing resources in updating and improving our internal information technology systems.
Should our investments not succeed, or if delays or other issues with a new internal technology
system disrupt our operations, our business could be harmed.
  
 ITEM 1 (B): UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
   - 23 -




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ITEM 3. LEGAL PROCEEDINGS
    - 24 -




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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
  - 25 -




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Fiscal 2008
    
    High
    
    
    LowQuarter 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
    
    
    $
    22.44Fiscal 2009Quarter ended March 31, 2009
    
    $
    31.38
    
    
    $
    23.95Quarter ended June 30, 2009
    
    $
    34.47
    
    
    $
    29.75Quarter ended September 30, 2009
    
    $
    38.90
    
    
    $
    29.74Quarter ended December 31, 2009
    
    $
    44.06
    
    
    $
    37.98
   Issuer Purchases of Equity Securities
  Avg. PriceNumber of Shares
    
    Paid PerPeriod
    
    Purchased
    
    ShareOctober 2009
    
    
    0
    
    
    
    0November 2009
    
    
    226,318
    
    
    $
    40.10December 2009
    
    
    0
    
    
    
    0Total for Fourth Quarter 2009
    
    
    226,318
    
    
    $
    40.10
   PERFORMANCE GRAPHS
  - 26 -




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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN *
 
 
 *
    
    $100 invested on 12/31/04 in stock or index, including
reinvestment of dividends.
Fiscal year ending December 31.Copyright© 2010 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved. December 31,2004
    
    
    
    2005
    
    
    
    2006
    
    
    
    2007
    
    
    
    2008
    
    
    
    2009Sybase, Inc.
    
    
    $
    100
    
    
    
    $
    109.57
    
    
    
    $
    123.81
    
    
    
    $
    130.78
    
    
    
    $
    124.16
    
    
    
    $
    217.54S&P500
    
    
    $
    100
    
    
    
    $
    104.91
    
    
    
    $
    121.48
    
    
    
    $
    128.16
    
    
    
    $
    80.74
    
    
    
    $
    102.11S&P Systems Software
    
    
    $
    100
    
    
    
    $
    95.50
    
    
    
    $
    112.81
    
    
    
    $
    135.20
    
    
    
    $
    84.44
    
    
    
    $
    127.57
 - 27 -




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COMPARISON
OF 10 YEAR CUMULATIVE TOTAL RETURN *
 
 
 *
    
    $100 invested on 12/31/04 in stock or index, including
reinvestment of dividends.
Fiscal year ending December 31.Copyright© 2010 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved. December 31,1999
    
    
    
    2000
    
    
    
    2001
    
    
    
    2002
    
    
    
    2003
    
    
    
    2004
    
    
    
    2005
    
    
    
    2006
    
    
    
    2007
    
    
    
    2008
    
    
    
    2009Sybase, Inc.
    
    
    $
    100.00
    
    
    
    $
    116.54
    
    
    
    $
    92.71
    
    
    
    $
    78.82
    
    
    
    $
    121.06
    
    
    
    $
    117.35
    
    
    
    $
    128.59
    
    
    
    $
    145.29
    
    
    
    $
    153.47
    
    
    
    $
    145.71
    
    
    
    $
    255.29S&P500
    
    
    $
    100.00
    
    
    
    $
    90.89
    
    
    
    $
    80.09
    
    
    
    $
    62.39
    
    
    
    $
    80.29
    
    
    
    $
    89.02
    
    
    
    $
    93.40
    
    
    
    $
    108.15
    
    
    
    $
    114.09
    
    
    
    $
    71.88
    
    
    
    $
    90.90S&P Systems Software
    
    
    $
    100.00
    
    
    
    $
    50.35
    
    
    
    $
    52.94
    
    
    
    $
    39.74
    
    
    
    $
    46.37
    
    
    
    $
    50.26
    
    
    
    $
    48.00
    
    
    
    $
    56.70
    
    
    
    $
    67.95
    
    
    
    $
    42.44
    
    
    
    $
    64.12
 
 ITEM 6. SELECTED FINANCIAL DATA
   - 28 -




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Consolidated Statements of Operations Data
 (In thousands, except per share data)
    
    2009
    
    
    2008 (1)
    
    
    2007 (1)
    
    
    2006 (1)
    
    
    2005 (1)Revenues:License fees
    
    $
    402,779
    
    
    $
    383,661
    
    
    $
    344,807
    
    
    $
    326,751
    
    
    $
    291,695Services
    
    
    571,198
    
    
    
    572,090
    
    
    
    544,209
    
    
    
    531,172
    
    
    
    527,000Messaging
    
    
    196,592
    
    
    
    176,179
    
    
    
    136,514
    
    
    
    18,240
    
    
    
    Total revenues
    
    
    1,170,569
    
    
    
    1,131,930
    
    
    
    1,025,530
    
    
    
    876,163
    
    
    
    818,695Costs and expenses:Cost of license fees
    
    
    58,692
    
    
    
    67,342
    
    
    
    53,114
    
    
    
    50,540
    
    
    
    51,556Cost of services
    
    
    153,112
    
    
    
    160,604
    
    
    
    157,790
    
    
    
    152,962
    
    
    
    156,325Cost of messaging
    
    
    128,423
    
    
    
    107,757
    
    
    
    82,598
    
    
    
    11,097
    
    
    
    Sales and marketing
    
    
    252,972
    
    
    
    285,376
    
    
    
    266,995
    
    
    
    263,281
    
    
    
    250,003Product development and engineering
    
    
    138,140
    
    
    
    146,932
    
    
    
    152,571
    
    
    
    149,510
    
    
    
    139,011General and administrative
    
    
    133,235
    
    
    
    138,980
    
    
    
    129,319
    
    
    
    106,025
    
    
    
    92,106Amortization of other purchased intangibles
    
    
    15,142
    
    
    
    14,716
    
    
    
    13,783
    
    
    
    7,331
    
    
    
    6,639Cost of restructuring
    
    
    1,144
    
    
    
    167
    
    
    
    797
    
    
    
    1,653
    
    
    
    1,115Total costs and expenses
    
    
    880,860
    
    
    
    921,874
    
    
    
    856,967
    
    
    
    742,399
    
    
    
    696,755Operating income
    
    
    289,709
    
    
    
    210,056
    
    
    
    168,563
    
    
    
    133,764
    
    
    
    121,940Interest income, interest expense and other,
net, and total other-than-temporary
impairment losses recognized in earnings
    
    
    (37,650
    )
    
    
    (20,418
    )
    
    
    4,952
    
    
    
    12,187
    
    
    
    2,296Income before income taxes
    
    
    252,059
    
    
    
    189,638
    
    
    
    173,515
    
    
    
    145,951
    
    
    
    124,236Provision for income taxes
    
    
    88,000
    
    
    
    61,451
    
    
    
    34,388
    
    
    
    59,930
    
    
    
    45,998Net income
    
    $
    164,059
    
    
    $
    128,187
    
    
    $
    139,127
    
    
    $
    86,021
    
    
    $
    78,238Less: Net income (loss) attributable to the
noncontrolling interest
    
    
    42
    
    
    
    (51
    )
    
    
    (12
    )
    
    
    81
    
    
    
    49Net income attributable to Sybase, Inc.
    
    $
    164,017
    
    
    $
    128,238
    
    
    $
    139,139
    
    
    $
    85,940
    
    
    $
    78,189Basic net income per share attributable to
Sybase Inc. common stockholders
    
    $
    2.01
    
    
    $
    1.54
    
    
    $
    1.52
    
    
    $
    0.94
    
    
    $
    0.85Shares used in computing basic net
income per share attributable to Sybase,
Inc. common stockholders
    
    
    80,118
    
    
    
    82,060
    
    
    
    90,019
    
    
    
    89,557
    
    
    
    90,307Diluted net income per share attributable to
Sybase, Inc. common stockholders
    
    $
    1.86
    
    
    $
    1.46
    
    
    $
    1.49
    
    
    $
    0.92
    
    
    $
    0.83Shares used in computing diluted net
income per share attributable to Sybase,
Inc. common stockholders
    
    
    86,981
    
    
    
    86,264
    
    
    
    91,717
    
    
    
    91,409
    
    
    
    92,731
 
 (1)
    
    As adjusted due to the adoption of amendments to existing guidance on
convertible debt, noncontrolling interests, and earnings per share computations. See Note One to
Consolidated Financial Statements  Summary of Significant Accounting Policies and Note Eight to
Consolidated Financial Statements  Convertible Notes, Part II, Item 8. - 30 -




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Consolidated
Balance Sheet Data
 (In thousands)
    

2009
    
    
    2008 (1)
    
    
    2007 (1)
    
    
    2006 (1)
    
    
    2005 (1)Cash, cash equivalents and cash investments
    
    $
    1,272,475
    
    
    $
    635,566
    
    
    $
    734,907
    
    
    $
    637,696
    
    
    $
    859,936Working capital
    
    
    640,632
    
    
    
    518,044
    
    
    
    604,728
    
    
    
    455,143
    
    
    
    573,247Total assets
    
    
    2,467,884
    
    
    
    1,826,322
    
    
    
    1,902,670
    
    
    
    1,763,890
    
    
    
    1,540,270Long-term obligations
    
    
    480,154
    
    
    
    527,067
    
    
    
    515,839
    
    
    
    462,566
    
    
    
    428,221Sybase, Inc. stockholders equity
    
    
    1,054,066
    
    
    
    829,779
    
    
    
    953,750
    
    
    
    875,781
    
    
    
    740,604
 
 (1)
    
    As adjusted due to the adoption of amendments to existing guidance on
convertible debt. See Note One to Consolidated Financial Statements  Summary of Significant
Accounting Policies, Part II, Item 8. 
 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
    - 31 -




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Executive Overview
 Our Business
    Our Results
  ®
 - 32 -




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Business Trends
    - 33 -




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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
 - 34 -




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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.
 - 35 -




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License and Service RevenuesWe recognize software revenue in accordance with FASB guidance on software revenue recognition,
and, in certain instances, in accordance with FASB guidance on accounting for performance of
construction-type and certain production-type contracts or in accordance with SEC Staff guidance
pertaining to revenue recognition. We license software under non-cancellable 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 probable. 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. In software arrangements that include multiple elements
(e.g., license rights and technical support services), we allocate the total fees among each of
the elements using the residual method of accounting. Under this method, revenue allocated to
undelivered elements is based on vendor-specific objective evidence of fair value of such
undelivered elements, and the residual revenue is allocated to the delivered elements. Vendor
specific objective evidence of fair value for such undelivered elements is based upon the price
we charge for such product or service when it is sold separately. We may modify our pricing
practices in the future, which could result in changes to our vendor specific objective evidence
of fair value for such undelivered elements. As a result, the timing of revenue recognition
associated with multiple element arrangements could differ significantly from our historical
results.Sublicense Revenues. We recognize sublicense fees as reported to us by our
licensees. License fees for certain application development and data access tools are recognized
upon direct shipment by us to the end user or upon direct shipment to the reseller for resale to
the end user. If collection is not reasonably assured in advance, revenue is recognized only
when sublicense fees are actually collected and all other revenue recognition criteria have been
met.Service Revenues. Technical support revenues are recognized ratably over the term
of the related support agreement, which in most cases is one year. Revenues from consulting
services under time and materials contracts, and for education, are recognized as services are
performed. Revenues from fixed price consulting agreements are generally recognized based on the
proportional performance of the project, with performance measured based on hours of work
performed.Message RevenuesWe recognize message revenue in accordance with SEC Staff guidance and FASB guidance pertaining
to multiple-element arrangements and, where applicable, to guidance pertaining to gross
recognition as a principal versus net as an agent. We recognize revenue when (a) there is
persuasive evidence of an arrangement; (b) the service has been provided to the customer; (c)
the amount of the fees to be paid by the customer is fixed and determinable; and (d) the
collection of the fees is reasonable assured.We generate a significant portion of our message revenue from per message transaction fees and
to a lesser extent, from fixed price messaging arrangements providing for the delivery of an
unlimited number of messages for a specified period of time, and revenue share agreements
related to the delivery of third party content. We recognize revenue from transaction fees
based upon the number of messages successfully processed by our platforms and delivered in
accordance with the terms of our arrangements. We recognize revenue from the fixed price
messaging arrangements ratably over the period of time specified in the agreement.In some instances third party content providers and other enterprises enter into revenue sharing
arrangements with us. Under a standard revenue sharing transaction we deliver content from a
third party provider to the cell phone of a mobile operators subscriber. Third party content
includes, among others, ringtones, wallpapers, interactive games, competitions, directory
inquiry services, and information services. The subscriber is invoiced by their mobile
operator, who upon receipt of payment, remits a portion of the charge to us. Upon payment from
the mobile operator, we generally remit payment to the third party content provider. We have
determined that we act as an agent under
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these revenue sharing arrangements and accordingly, record as revenue the net amount retained by
us. The net amount retained by us reflects the gross amount billed to the operator less amounts
due to the content provider.
    
    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 Twelve  Segment and Geographical Information in the Notes to the
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, 2009. This
analysis indicated that the estimated fair value of each reporting unit substantially exceeded
its carrying value. In addition, the estimated fair value of each indeterminate-lived
intangible exceeded its carrying value. Therefore, we were not required to recognize an
impairment loss in 2009. As of December 31, 2009, our goodwill balance totaled $532.4 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, the discontinuance of certain
products, customer terminations and other factors could result in impairment losses associated
with other intangible assets. In 2009, we wrote off $1.2 million of certain purchased
technologies.
    
    Valuation, Classification and Impairments of InvestmentsIn accordance with FASB guidance on accounting for certain investments in debt and equity
securities, management determines the appropriate classification of debt and equity securities
at the time of purchase and re-evaluates such designation as of each balance sheet date. At
December 31, 2009, we have classified short-term bank deposits, corporate notes and bonds, U.S.
government obligations, and auction rate securities (ARS) as available-for-sale. In addition,
the Company has classified $11.9 million invested in mutual funds as directed by participants of
a Rabbi Trust related to a deferred compensation plan as trading securities.Investments classified as available for sale and trading securities are recorded at fair value.
Actively traded available-for-sale and trading securities are stated at fair value as determined
by the securitys most recently traded price. If securities are not actively traded, fair value
is determined using other valuation techniques. Realized gains and losses are reflected in
income and are determined on the specific identification method. Trading securities unrealized
gains and
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losses and realized gains and losses are included in our earnings. Changes in fair
values of available for sale securities are accounted for based on the nature of the change in
value:
 (1)
    
    Temporary;(2)
    
    Credit related other-than-temporary impairments (OTTI); or(3)
    
    Noncredit related OTTI.
 Temporary Changes in Fair ValueTemporary changes in fair values are recorded as unrealized gains and losses. Unrealized gains
and losses are not reflected in earnings but are reported as a separate component of other
comprehensive income (loss) (OCI).Credit and Noncredit OTTIOn April 1, 2009, we adopted FASB amendments pertaining to how to determine and measure credit
and noncredit OTTI of debt securities as well as how to determine whether an impairment for
investments in debt securities is other-than-temporary.
 
    
    If a debt securitys market value is below amortized cost and we either intend to sell
the security or it is more likely than not that we will be required to sell the security
before its anticipated recovery, we would record an OTTI charge to earnings for the entire
amount of the impairment.
    
    For the remaining debt securities, if an OTTI exists, we would separate the OTTI into
two portions:
 
    
    Credit Loss Portion: The credit loss portion is the amount that our best
estimate of the present value of cash flows expected to be collected from the security
falls below the amortized cost of the security. The credit loss portion is recorded as
a charge to earnings.
    
    NonCredit Loss Portion: The noncredit loss portion is the residual amount of
the OTTI, and is recorded as a separate component of other comprehensive income (loss).
 When assessing whether a decline in fair values is temporary or OTTI, we consider various
factors including: the significance of the decline in value compared to the cost basis; how long
the fair value of the security has been less than its cost basis; the quality and estimated
value of the investments held by the trust/issuer; the financial condition and credit rating of
the trust, issuer, sponsors, and insurers; in the case of auction rate securities, the frequency
of the auction function failing; the expected market volatility and the market and economy in
general; analyst reports and forecasts; views of external investment managers; news or financial
information that has been released specific to the investee; and the outlook for the overall
industry in which the investee operates.When calculating the present value of expected cash flows to determine the credit loss portion
of the OTTI, we estimate the amount and timing of projected cash flows, the probability of
default and the timing and amount of recoveries on a security-by-security basis. These
calculations consider an analysis of observable market data, such as credit default swap
spreads, historical default and recovery statistics, rating agency data, credit ratings and
other data relevant to the collectability of the security. The amortized cost basis of a debt
security is adjusted for any credit loss portion of the impairment recorded to earnings.Prior to April 1, 2009, the entire OTTI charge was recognized in earnings for all debt
securities.On December 31, 2009, long-term investments include $13.3 million of ARS with an aggregate par
value of $28.9 million. ARS are floating rate securities with longer-term maturities which were
marketed by financial institutions with auction reset dates at 28 day intervals to provide short
term liquidity. Beginning in August 2007 and into September 2007, each of the ARS auctions
began to fail due to a lack of market for these securities.Through March 31, 2009, we recorded $15.2 million of OTTI to earnings for the ARS. Upon the
April 1, 2009 adoption of the FASB amendments, we recorded a cumulative accounting change to
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reclassify the noncredit portion of OTTI previously recorded in earnings from retained earnings
to accumulated other comprehensive income in the amount of $6.7 million.The fair values of the ARS are determined using a discounted cash flow model for each ARS as of
December 31, 2009. These models utilized credit related discount rates and term to recovery as
key inputs. Changes in these inputs or other factors could result in additional realized
impairment losses. For example, if the assumed discount rate was increased 100 basis points for
each ARS due to credit-related factors, the total estimated fair value of the Companys ARS
portfolio would decrease $0.5 million and be charged to earnings. Similarly, if the assumed
term to recovery was increased by one year for each ARS due to non-credit factors, then the
total estimated fair value of the Companys ARS portfolio would decrease $0.8 million and be
charged to other comprehensive income.
    
    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 specific 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 $4.3 million at December 31, 2009. If
our allowance for doubtful accounts, 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 $86.9
million at December 31, 2009. 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. Significant judgment is required in determining when a product becomes
technologically feasible and its net realizable value. Changes in these estimates could result
in write-offs of capitalized software costs. Capitalized software amortization and write-off
charges totaled $41.5 million in 2009. Amortization of capitalized software cost included
write-offs of $3.2 million in 2009. See Note One  Summary of Significant Accounting Policies
in the Notes to the Consolidated Financial Statements, Part II, Item 8, incorporated here by
reference.
    
    Bifurcation of Convertible Debt InstrumentsFASB guidance pertaining to convertible debt instruments with cash conversion provisions
requires that we bifurcate the liability and equity components of our convertible debt
instruments. As a result, interest expense related to our 2009 Notes is imputed and recognized
based on the borrowing rate of a similar liability that does not have an associated equity
component (the pure debt borrowing rate) in August, 2009. The carrying amount of the 2009 Notes
was established to reflect a discount of $75.5 million on the date of issuance, with an
offsetting increase in additional paid-in capital of $45.7 million and a deferred tax asset
reduction of $29.8 million. If the pure debt borrowing rate were 100 basis points higher, the
debt discount would have been $14.0 million greater, resulting in $14.0 million more interest
expense over the five year period from the notes issuance to the date it may first be put to us
by the holders.
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
    
    Income Taxes  Estimates of Effective Tax Rates, Deferred Taxes and Valuation AllowanceSignificant judgment is required in determining our worldwide income tax provision. We are
subject to income taxes in both the United States and foreign jurisdictions and we use estimates
in determining our provision for income taxes. 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 the segregation of foreign and domestic
earnings and expenses to avoid double taxation. Compliance with income tax regulations requires
us to make decisions relating to the transfer pricing of revenue and expenses between our legal
entities that are located in a variety of tax jurisdictions. Our determinations include many
decisions based on our knowledge of the underlying assets of the business and the beneficial
ownership of these assets. 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.Deferred tax assets, related valuation allowances and deferred tax liabilities are determined
separately by tax jurisdiction. This process involves estimating actual current tax liabilities
together with assessing temporary differences of items for tax and accounting purposes. These
differences result in deferred tax assets and liabilities which are recorded on the balance
sheet. Our deferred tax assets consist primarily of net operating loss and tax credit carry
forwards and temporary differences related to intangible assets and accrued expenses.We record a valuation allowance to reduce our deferred tax assets to the amount that is more
likely than not (a likelihood of more than 50 percent) to be realized. In order for us to
realize our deferred tax assets, we must be able to generate sufficient taxable income in those
jurisdictions where the deferred tax assets are located. Our valuation allowance relates
primarily to US federal tax loss carryfowards and State credit carryforwards. We evaluate our
valuation allowance each quarter based on factors such as the mix of earnings in the
jurisdictions in which we operate, prudent and feasible tax planning strategies, current taxable
income and forecasted taxable income. Forecasts of future taxable income are further refined as
a result of each years corporate budget and goal setting process, which generally occurs in the
fourth quarter. Based on our evaluation of these factors, we reduced our valuation allowances
in 2009, 2008 and 2007. The portion credited to Statements of Operations was approximately $2.6
million, $6.7 million, and $26.4 million, respectively. In the event we were to determine that
we would not be able to realize all or part of our net deferred tax assets in the future, an
adjustment to the deferred tax assets valuation allowance would be charged to earnings in the
period in which we make such a determination. Likewise, if we later determine that it is more
likely than not that the net deferred tax assets would be realized, we would reverse the
applicable portion of the previously provided valuation allowance.For years 2008 and 2007, we credited to goodwill releases of our valuation allowances relating
primarily to our US federal tax loss carryforwards acquired in business acquisitions. Under
applicable accounting rules, beginning in 2009 releases of our valuation allowances relating to
these tax loss carryforwards are now credited to Statement of Operations.Our effective tax rate includes the impact of certain undistributed foreign earnings for which
no U.S. taxes have been provided because such earnings are planned to be indefinitely reinvested
outside the United States. Remittances of foreign earnings to the U.S. are planned based on
projected cash flow, working capital and investment needs of our foreign and domestic
operations. Based on these assumptions, we estimate the amount that will be distributed to the
U.S. and provide U.S. federal taxes on these amounts. Material changes in our estimates or tax
legislation that limits or restricts the amount of undistributed foreign earnings that we
consider indefinitely reinvested outside the United States could impact our effective tax rate.The calculation of our tax liabilities involves dealing with uncertainties in the application of
complex tax regulations in multiple tax jurisdictions. The amount of income tax we pay is
subject to ongoing audits by federal, state and foreign tax authorities. These audits include
questions regarding the
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timing and amount of deductions and the allocation of income among
various tax jurisdictions. Our estimate of the potential outcome for any uncertain tax issue is
highly judgmental. We account for our uncertain tax issues using a two-step approach to
recognize and measure uncertain tax positions taken or expected to be taken in a tax return. The
first step is to determine if the weight of available evidence
indicates that it is more likely than not (a likelihood of more than 50 percent) that the tax
position will be sustained on audit, including resolution of any related appeals or litigation
processes. In this step, we assume that the tax position will be examined by the relevant
taxing authority that has full knowledge of all relevant information. 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. 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, refinement of estimates or realization of earnings or deductions
that differ from our estimates. 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.Through 2008, income tax contingencies that existed as of the acquisition date for an acquired
company were evaluated quarterly and any changes would have been recorded as adjustments to
goodwill. FASB amendments to existing business combination guidance went into effect January 1,
2009. Under the new guidance, we now make our best estimate of income tax contingencies assumed
from acquisitions. Subsequent to the measurement period, adjustments to these income tax
contingencies will affect our provision for income taxes in our consolidated statement of
operations and could have a material impact on our statement of operations and financial
position.As a 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 period that 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.
    
    Accounting for Stock-Based Compensation PlansAt December 31, 2009, there was $44.1 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 the cost for stock options and stock appreciation rights over a weighted average
period of 2.3 years and the cost for restricted stock over a weighted average period of 1.2
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 historical volatility of our stock over the average expected life of our
options and the prices of publicly traded options, consistent with the amended FASB and SEC
Staff guidance on stock-based compensation. 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. The amended FASB
guidance on stock-based compensation
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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 companies after considering valuations prepared by independent
third-party appraisers and certain internally generated information.Purchased intangible assets, excluding goodwill, totaled $88.0 million at December 31, 2009. 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 remaining economic lives of the definite-lived
intangible assets acquired as part of our acquisition of Mobile 365 were reduced by one year as
of December 31, 2008, our 2009 amortization expense would have been approximately $2.9 million
higher.
    
    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 Seven  Restructuring Costs in the Notes to the
Consolidated Financial Statements, Part II, Item 8.
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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.
    
    Net Income Per ShareShares used in computing basic and diluted net income per share attributable to Sybase, Inc.
common stockholders are based on the weighted average shares outstanding in each period,
excluding treasury stock. Shares used in computing basic net income per share excludes any
dilutive effects of stock options, unvested restricted stock, stock appreciation rights and our
convertible debt. Basic and diluted earnings per share are computed pursuant to the two-class
method. Under this method, we attribute net income to two classes, common stock and unvested
restricted stock awards, according to their respective participation rights in undistributed
earnings. Unvested restricted stock awards granted to employees prior to September 17, 2009 are
considered participating securities as they receive non-forfeitable rights to cash dividends at
the same rate as common stock.Diluted net income per share is calculated using the more dilutive of the following two
approaches. Under both approaches exercise of stock options and stock appreciation rights are
assumed using the treasury stock method. The assumption of vesting of restricted stock,
however, differs:
 1.
    
    Assume vesting of restricted stock using the treasury stock method.2.
    
    Assume unvested restricted stock awards are not vested, and allocate earnings to common
shares and unvested restricted stock awards using the two-class method.
 Under both methods, the computation of diluted earnings per share also includes the dilutive
effects, if any, of our convertible debt due to the appreciation of our stock price. Such
computations include computing the excess, if any, of the average price of our common stock over
the conversion price of $24.99 per share for our 2005 Notes and over the conversion price of
$47.88 per share for our 2009 Notes. We calculate the average stock price in accordance with the
terms of the debt agreements. We have consistently applied this policy to all periods in which
either convertible debt had a dilutive effect on earnings per share.
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Results of Operations
 Revenues (Dollars in millions)2009
    
    
    Change
    
    
    2008
    
    
    Change
    
    
    2007License fees by segment:IPG
    
    $
    337.4
    
    
    
    9
    %
    
    $
    308.5
    
    
    
    12
    %
    
    $
    275.5iAS
    
    
    101.4
    
    
    
    (2
    %)
    
    
    103.0
    
    
    
    3
    %
    
    
    100.3SY365
    
    
    1.3
    
    
    
    550
    %
    
    
    0.2
    
    
    
    *
    
    
    
    Eliminations
    
    
    (37.3
    )
    
    
    
    
    
    
    (28.1
    )
    
    
    
    
    
    
    (31.0
    )Total license fees
    
    $
    402.8
    
    
    
    5
    %
    
    $
    383.6
    
    
    
    11
    %
    
    $
    344.8Percentage of total revenues
    
    
    34
    %
    
    
    
    
    
    
    34
    %
    
    
    
    
    
    
    34
    %Services by segment:IPG
    
    $
    531.2
    
    
    
    1
    %
    
    $
    528.1
    
    
    
    6
    %
    
    $
    496.6iAS
    
    
    68.6
    
    
    
    (9
    %)
    
    
    75.7
    
    
    
    4
    %
    
    
    72.8SY365
    
    
    2.4
    
    
    
    41
    %
    
    
    1.7
    
    
    
    (60
    %)
    
    
    4.2Eliminations
    
    
    (31.0
    )
    
    
    
    
    
    
    (33.4
    )
    
    
    
    
    
    
    (29.4
    )Total services
    
    $
    571.2
    
    
    
    *
    
    
    $
    572.1
    
    
    
    5
    %
    
    $
    544.2Percentage of total revenues
    
    
    49
    %
    
    
    
    
    
    
    50
    %
    
    
    
    
    
    
    53
    %Messaging by segment:SY365
    
    $
    196.6
    
    
    
    12
    %
    
    $
    176.2
    
    
    
    29
    %
    
    $
    136.5Total messaging
    
    $
    196.6
    
    
    
    12
    %
    
    $
    176.2
    
    
    
    29
    %
    
    $
    136.5Percentage of total revenues
    
    
    17
    %
    
    
    
    
    
    
    16
    %
    
    
    
    
    
    
    13
    %Total revenues
    
    $
    1,170.6
    
    
    
    3
    %
    
    $
    1,131.9
    
    
    
    10
    %
    
    $
    1,025.5
 
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Geographical Revenues(Dollars in millions)
    
    2009
    
    Change
    
    2008
    
    Change
    
    2007North America
    
    $
    604.4
    
    
    
    6
    %
    
    $
    567.7
    
    
    
    7
    %
    
    $
    532.0Percentage of total revenues
    
    
    52
    %
    
    
    
    
    
    
    50
    %
    
    
    
    
    
    
    52
    %International:EMEA
(Europe, Middle East and Africa)
    
    $
    397.9
    
    
    
    *
    
    
    $
    399.5
    
    
    
    17
    %
    
    $
    342.0Percentage of total revenues
    
    
    34
    %
    
    
    
    
    
    
    35
    %
    
    
    
    
    
    
    33
    %Intercontinental (Asia Pacific and Latin America)
    
    $
    168.3
    
    
    
    2
    %
    
    $
    164.7
    
    
    
    9
    %
    
    $
    151.5Percentage of total revenues
    
    
    14
    %
    
    
    
    
    
    
    15
    %
    
    
    
    
    
    
    15
    %Total Outside North America
    
    $
    566.2
    
    
    
    *
    
    
    $
    564.2
    
    
    
    14
    %
    
    $
    493.5Percentage of total revenues
    
    
    48
    %
    
    
    
    
    
    
    50
    %
    
    
    
    
    
    
    48
    %Total revenues
    
    $
    1,170.6
    
    
    
    3
    %
    
    $
    1,131.9
    
    
    
    10
    %
    
    $
    1,025.5
 
 *
    
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---



##### Table of Contents



Cost and Expenses(Dollars in millions)
    
    2009
    
    Change
    
    2008
    
    Change
    
    2007Cost of license fees
    
    $
    58.7
    
    
    
    (13
    %)
    
    $
    67.3
    
    
    
    27
    %
    
    $
    53.1Percentage of license fee revenues
    
    
    15
    %
    
    
    
    
    
    
    18
    %
    
    
    
    
    
    
    15
    %Cost of services
    
    $
    153.1
    
    
    
    (5
    %)
    
    $
    160.6
    
    
    
    2
    %
    
    $
    157.8Percentage of services revenues
    
    
    27
    %
    
    
    
    
    
    
    28
    %
    
    
    
    
    
    
    29
    %Cost of messaging
    
    $
    128.4
    
    
    
    19
    %
    
    $
    107.8
    
    
    
    31
    %
    
    $
    82.6Percentage of messaging revenues
    
    
    65
    %
    
    
    
    
    
    
    61
    %
    
    
    
    
    
    
    61
    %Sales and marketing
    
    $
    253.0
    
    
    
    (11
    %)
    
    $
    285.4
    
    
    
    7
    %
    
    $
    267.0Percentage of total revenues
    
    
    22
    %
    
    
    
    
    
    
    25
    %
    
    
    
    
    
    
    26
    %Product development and engineering
    
    $
    138.1
    
    
    
    (6
    %)
    
    $
    146.9
    
    
    
    (4
    %)
    
    $
    152.6Percentage of total revenues
    
    
    12
    %
    
    
    
    
    
    
    13
    %
    
    
    
    
    
    
    15
    %General and administrative
    
    $
    133.2
    
    
    
    (4
    %)
    
    $
    139.0
    
    
    
    8
    %
    
    $
    129.3Percentage of total revenues
    
    
    11
    %
    
    
    
    
    
    
    12
    %
    
    
    
    
    
    
    13
    %Amortization of other purchased intangibles
    
    $
    15.1
    
    
    
    3
    %
    
    $
    14.7
    
    
    
    7
    %
    
    $
    13.8Percentage of total revenues
    
    
    1
    %
    
    
    
    
    
    
    1
    %
    
    
    
    
    
    
    1
    %Cost of restructuring
    
    $
    1.1
    
    
    
    450
    %
    
    $
    0.2
    
    
    
    (75
    %)
    
    $
    0.8Percentage of total revenues
    
    
    *
    
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    *
 
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    Not meaningful - 47 -




---



##### Table of Contents



Cost
of license fees
    Cost of services
  Cost of messaging
   - 48 -




---



##### Table of Contents



Sales and marketing
  Product development and engineering
      General and administrative
   Stock-based compensation expense
  - 49 -




---



##### Table of Contents



(Amounts in thousands)
    
    2009
    
    
    2008
    
    
    2007Costs of services
    
    
    1,540
    
    
    
    1,364
    
    
    
    1,544Costs of messaging
    
    
    582
    
    
    
    484
    
    
    
    544Sales and marketing
    
    
    6,240
    
    
    
    5,538
    
    
    
    5,304Product development and engineering
    
    
    3,220
    
    
    
    2,887
    
    
    
    2,982General and administrative
    
    
    14,814
    
    
    
    12,242
    
    
    
    13,67026,396
    
    
    
    22,515
    
    
    
    24,044
  Amortization of other purchased intangibles
  Restructuring Activities
   Operating income(Dollars in millions)
    
    2009
    
    
    Change
    
    
    2008
    
    
    Change
    
    
    2007Operating income by segment:IPG
    
    $
    270.7
    
    
    
    35
    %
    
    $
    200.0
    
    
    
    19
    %
    
    $
    167.9IAS
    
    
    39.7
    
    
    
    46
    %
    
    
    27.2
    
    
    
    1
    %
    
    
    27.0SY365
    
    
    8.2
    
    
    
    55
    %
    
    
    5.3
    
    
    
    *
    
    
    
    (0.5
    )Unallocated costs
    
    
    (28.9
    )
    
    
    29
    %
    
    
    (22.4
    )
    
    
    (13
    %)
    
    
    (25.8
    )Total operating income
    
    $
    289.7
    
    
    
    38
    %
    
    $
    210.1
    
    
    
    25
    %
    
    $
    168.6Percentage of total revenues
    
    
    25
    %
    
    
    
    
    
    
    19
    %
    
    
    
    
    
    
    16
    %
 
 *
    
    Not meaningful   - 50 -




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##### Table of Contents



Other income (expense), net(Dollars in millions)
    
    2009
    
    Change
    
    2008 (1)
    
    Change
    
    2007 (1)Interest income
    
    $
    7.9
    
    
    
    (67
    %)
    
    $
    23.8
    
    
    
    (29
    %)
    
    $
    33.5Percentage of total revenues
    
    
    1
    %
    
    
    
    
    
    
    2
    %
    
    
    
    
    
    
    3
    %Interest expense and other, net
    
    $
    (39.6
    )
    
    
    29
    %
    
    $
    (30.8
    )
    
    
    8
    %
    
    $
    (28.6
    )Percentage of total revenues
    
    
    (3
    %)
    
    
    
    
    
    
    (3
    )%
    
    
    
    
    
    
    (3
    %)Impairment
losses recognized in earnings
    
    $
    (6.0
    )
    
    
    (55
    %)
    
    $
    (13.4
    )
    
    
    *
    
    
    
    *Percentage of total revenues
    
    
    (1
    %)
    
    
    
    
    
    
    (1
    )%
    
    
    
    
    
    
    *
 
 (1)
    
    As adjusted due to the adoption of amendments to existing guidance on
convertible debt, noncontrolling interests, and other-than-temporary impairment determinations of
investments. See Note One to Consolidated Financial Statements  Summary of Significant
Accounting Policies and Note Eight  Convertible Notes in the Notes to the Consolidated
Financial Statements, Part II, Item 8.*
    
    Not meaningful - 51 -




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##### Table of Contents



Provision for income taxes(Dollars in millions)
    
    2009
    
    Change
    
    2008 (1)
    
    Change
    
    2007 (1)Provision for income taxes
    
    $
    88.0
    
    
    
    43
    %
    
    $
    61.5
    
    
    
    79
    %
    
    $
    34.4
 
 (1)
   - 52 -




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- 53 -




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##### Table of Contents



Net income per share(Dollars and shares in millions)
    
    2009
    
    Change
    
    2008 (1)
    
    Change
    
    2007 (1)Net income attributable to Sybase, Inc.
    
    $
    164.0
    
    
    
    28
    %
    
    $
    128.2
    
    
    
    (8
    %)
    
    $
    139.1Percentage of total revenues
    
    
    14
    %
    
    
    
    
    
    
    11
    %
    
    
    
    
    
    
    14
    %Basic:Net income
per share attributable to Sybase, Inc. common stockholders
    
    $
    2.01
    
    
    
    31
    %
    
    $
    1.54
    
    
    
    1
    %
    
    $
    1.52Shares used in computing basic net
income per share attributable to
Sybase Inc. common stockholders
    
    
    80.1
    
    
    
    (2
    %)
    
    
    82.1
    
    
    
    (9
    %)
    
    
    90.0Diluted:Net income
per share attributable to Sybase, Inc. common stockholders
    
    $
    1.86
    
    
    
    27
    %
    
    $
    1.46
    
    
    
    2
    %
    
    $
    1.49Shares used
in computing diluted net income per share attributable to
Sybase Inc. common stockholders
    
    
    87.0
    
    
    
    1
    %
    
    
    86.3
    
    
    
    (6
    %)
    
    
    91.7
 
 (1)
    (In thousands, except per share data)
    
    2009
    
    
    2008 (1)
    
    
    2007 (1)Basic:Net income attributable to Sybase, Inc.
    
    $
    164,017
    
    
    $
    128,238
    
    
    $
    139,139Less: Net income allocated to participating securities
    
    
    (2,810
    )
    
    
    (1,990
    )
    
    
    (2,133
    )Net income attributable to Sybase, Inc. common stockholders  basic
    
    $
    161,207
    
    
    $
    126,248
    
    
    $
    137,006Basic net income per share attributable to Sybase, Inc. common stockholders
    
    $
    2.01
    
    
    $
    1.54
    
    
    $
    1.52Shares used in computing basic net income per share attributable to
Sybase, Inc. common stockholders
    
    
    80,118
    
    
    
    82,060
    
    
    
    90,019Diluted:Net income attributable to Sybase, Inc.
    
    $
    164,017
    
    
    $
    128,238
    
    
    $
    139,139Less: Net income allocated to participating securities
    
    
    (2,592
    )
    
    
    (1,895
    )
    
    
    (2,094
    )Net income attributable to Sybase, Inc. common stockholders  diluted
    
    $
    161,425
    
    
    $
    126,343
    
    
    $
    137,045Diluted net income per share attributable to Sybase, Inc. common stockholders
    
    $
    1.86
    
    
    $
    1.46
    
    
    $
    1.49Shares used in computing basic net income per share attributable to Sybase,
Inc. common stockholders
    
    
    80,118
    
    
    
    82,060
    
    
    
    90,019Dilutive
effect of stock options, restricted stock and stock appreciation rights
    
    
    2,670
    
    
    
    2,395
    
    
    
    2,258Dilutive effect of 2005 Notes
    
    
    4,898
    
    
    
    2,436
    
    
    
    117Shares used in computing diluted net income per share attributable to Sybase,
Inc. common stockholders under treasury stock method
    
    
    87,686
    
    
    
    86,891
    
    
    
    92,394Participating securities excluded under two-class method
    
    
    (705
    )
    
    
    (627
    )
    
    
    (677
    )Shares used in computing diluted net income per share attributable to Sybase,
Inc. common stockholders under two-class method
    
    
    86,981
    
    
    
    86,264
    
    
    
    91,717
 - 54 -




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##### Table of Contents



(1)
      Liquidity and capital resources(Dollars in millions)
    
    2009
    
    Change
    
    2008
    
    Change
    
    2007Working capital
    
    $
    640.6
    
    
    
    24
    %
    
    $
    518.0
    
    
    
    (14
    %)
    
    $
    604.7Cash and cash equivalents
    
    $
    947.2
    
    
    
    55
    %
    
    $
    611.4
    
    
    
    1
    %
    
    $
    604.8Net cash provided by operating activities
    
    $
    384.1
    
    
    
    30
    %
    
    $
    295.5
    
    
    
    16
    %
    
    $
    254.0Net cash
provided by (used for) investing activities
    
    $
    (383.8
    )
    
    
    2,529
    %
    
    $
    (14.6
    )
    
    
    *
    
    
    $
    86.7Net cash
provided by (used for) financing activities
    
    $
    320.7
    
    
    
    *
    
    
    $
    (245.9
    )
    
    
    118
    %
    
    $
    (112.6
    )
 
 *
    
    Not meaningful  - 55 -




---



##### Table of Contents



2009 Note Issuance
   2005 Note Retirements
     Liquidity
   - 56 -




---



##### Table of Contents



Working Capital
  Cash Flow
     - 57 -




---



##### Table of Contents



Contractual Obligations
  Payments Due by Period(Dollars in Millions)
    
    
    
    
    
    2010
    
    
    2011-2012
    
    
    2013-2014Contractual Obligations
    
    Total
    
    
    Commitments
    
    
    Commitments
    
    
    Commitments
    
    
    After 2014Operating leases
    
    $
    203.1
    
    
    $
    43.2
    
    
    $
    64.1
    
    
    $
    47.3
    
    
    $
    48.5Capital lease
    
    
    10.8
    
    
    
    1.1
    
    
    
    2.2
    
    
    
    2.2
    
    
    
    5.3Debt obligations:Sale-and-leaseback
    
    
    1.7
    
    
    
    0.5
    
    
    
    0.9
    
    
    
    0.3
    
    
    
    Note(s) payable
    
    
    2.0
    
    
    
    0.2
    
    
    
    0.4
    
    
    
    0.4
    
    
    
    1.0Convertible notes
    
    
    894.0
    
    
    
    438.0
    
    
    
    28.0
    
    
    
    428.0
    
    
    
    Purchase Obligations
    
    
    20.3
    
    
    
    10.5
    
    
    
    6.5
    
    
    
    3.3
    
    
    
    Accrued income taxes
    
    
    24.5
    
    
    
    24.5
    
    
    
    
    
    
    
    
    
    
    
    Total commitments
    
    $
    1,156.4
    
    
    $
    518.0
    
    
    $
    102.1
    
    
    $
    481.5
    
    
    $
    54.8
 - 58 -




---



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- 59 -




---



##### Table of Contents



New Accounting Pronouncements
    Financial Risk Management
 Foreign Exchange Risk
  - 60 -




---



##### Table of Contents



.
   - 61 -




---



##### Table of Contents



US $
    
    
    AverageForward Contracts - As of December 31, 2009
    
    Notional amount
    
    
    Contract rateContracts for the sale of US Dollars and purchase of:Mexican Pesos
    
    $
    1,021
    
    
    
    13.1225Contracts for the sale of GBP and purchase of:South African Rand
    
    $
    349
    
    
    
    12.0249Contracts for the purchase of US Dollars and sale of:Singapore Dollar
    
    $
    10,153
    
    
    
    0.7100Canadian Dollar
    
    $
    381
    
    
    
    0.9050Brazilian Real
    
    $
    1,420
    
    
    
    0.5680Contracts for the purchase of Euros and sale of:US Dollars
    
    $
    19,000
    
    
    
    0.6974Swedish Krona
    
    $
    2,647
    
    
    
    10.2372Swiss Franc
    
    $
    2,024
    
    
    
    1.4877UK Pound
    
    $
    13,241
    
    
    
    0.8880Norwegian Krone
    
    $
    3,821
    
    
    
    8.3307New Zealand Dollar
    
    $
    580
    
    
    
    1.9792South African Rand
    
    $
    1,826
    
    
    
    10.6783Contracts for the sale of Euros and purchase of:Chinese Yuan Renminbi
    
    $
    571
    
    
    
    9.7878Total
    
    $
    57,034
  Forward Contracts - As of December 31, 2008
    
    US $Notional amount
    
    
    AverageContract 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
 - 62 -




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##### Table of Contents



Interest Income Rate and Investment Level Risk
     Amortized
    
    
    2009 Weighted Average(Dollars in Thousands)
    
    Principal Amount
    
    
    Interest RateCash and cash equivalents
    
    $
    947,152Investments
    
    
    313,379Trading securities
    
    
    11,944Total
    
    $
    1,272,475
    
    
    
    0.70
    %
 Default Risk
  Failed Auction Securities
  - 63 -




---



##### Table of Contents



Interest Expense Rate Risk
  
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  - 64 -




---



##### Table of Contents



ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  PageReport of Management on Internal Controls over Financial Reporting
    
    66Report of Independent Registered Public Accounting Firm on Internal Controls over
Financial Reporting
    
    67Report of Independent Registered Public Accounting Firm
    
    68Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    69Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007
    
    70Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2009,
2008 and 2007
    
    71Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007
    
    72Notes to Consolidated Financial Statements
    
    73
 - 65 -




---



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Report of Management on Internal Controls over Financial Reporting
    - 66 -




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm on Internal Control over Financial
Reporting
        /s/ ERNST & YOUNG LLP 
 - 67 -




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
       /s/ ERNST & YOUNG LLP 
 - 68 -




---



##### Table of Contents



Consolidated Balance Sheets
 December 31(Dollars in thousands, except share and per share data)
    
    2009
    
    
    2008 (1)AssetsCurrent assets:Cash and cash equivalents
    
    $
    947,152
    
    
    $
    611,364Short-term investments
    
    
    239,232
    
    
    
    8,689Total cash, cash equivalents and short-term investments
    
    
    1,186,384
    
    
    
    620,053Restricted cash
    
    
    17,983
    
    
    
    2,773Accounts receivable, less allowance for doubtful accounts of $4,347
(2008  $3,888)
    
    
    273,457
    
    
    
    270,400Deferred income taxes
    
    
    58,494
    
    
    
    45,524Prepaid income taxes
    
    
    5,754
    
    
    
    4,932Prepaid expenses and other current assets
    
    
    18,685
    
    
    
    34,208Total current assets
    
    
    1,560,757
    
    
    
    977,890Long-term investments
    
    
    86,091
    
    
    
    15,513Property, equipment and improvements, net
    
    
    67,863
    
    
    
    62,263Deferred income taxes
    
    
    7,188
    
    
    
    17,794Capitalized software, net
    
    
    86,866
    
    
    
    82,400Goodwill
    
    
    532,375
    
    
    
    527,151Other purchased intangibles, less accumulated amortization of $207,647
(2008  $177,839)
    
    
    88,012
    
    
    
    113,970Other assets
    
    
    38,732
    
    
    
    29,341Total assets
    
    $
    2,467,884
    
    
    $
    1,826,322Liabilities and equityCurrent liabilities:Accounts payable
    
    $
    20,202
    
    
    $
    26,300Accrued compensation and related expenses
    
    
    84,426
    
    
    
    80,031Accrued income taxes
    
    
    24,484
    
    
    
    17,562Other accrued liabilities
    
    
    138,931
    
    
    
    124,050Deferred revenue
    
    
    234,761
    
    
    
    211,903Convertible subordinated notes
    
    
    417,321
    
    
    
    Total current liabilities
    
    
    920,125
    
    
    
    459,846Other liabilities
    
    
    42,628
    
    
    
    44,788Deferred income taxes
    
    
    49,611
    
    
    
    11,898Long-term tax liability
    
    
    58,350
    
    
    
    32,082Long-term deferred revenue
    
    
    5,855
    
    
    
    4,535Convertible subordinated notes
    
    
    
    
    
    
    438,299Convertible senior notes
    
    
    329,565
    
    
    
    Temporary equity  convertible subordinated notes
    
    
    2,547
    
    
    
    Commitments and contingent liabilitiesSybase, Inc. stockholders equity:Preferred stock, $0.001 par value, 8,000,000 shares authorized; none
Issued or outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 200,000,000 shares authorized;
105,337,362 shares issued and 80,426,337 shares outstanding (2008 
105,337,362 shares issued and 79,571,991 shares outstanding)
    
    
    105
    
    
    
    105Additional paid-in capital
    
    
    1,175,206
    
    
    
    1,103,685Accumulated earnings
    
    
    497,728
    
    
    
    330,724Accumulated other comprehensive income
    
    
    49,302
    
    
    
    36,912Cost of 24,911,025 shares of treasury stock (2008  25,765,371 shares)
    
    
    (668,275
    )
    
    
    (641,647
    )Total Sybase, Inc. stockholders equity
    
    
    1,054,066
    
    
    
    829,779Noncontrolling interest
    
    
    5,137
    
    
    
    5,095Total equity
    
    
    1,059,203
    
    
    
    834,874Total liabilities and equity
    
    $
    2,467,884
    
    
    $
    1,826,322
 
 (1)
    
    As adjusted to reflect the adoption Financial Accounting Standards Board
(FASB) amendments to existing guidance on convertible debt and noncontrolling interests. See Note
One  Summary of Significant Accounting Policies and Note Eight  Convertible Notes.. See accompanying notes.
 - 69 -




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##### Table of Contents



Consolidated Statements of Operations
 For the years ended December 31(In thousands, except per share data)
    
    2009
    
    
    2008 (1)
    
    
    2007 (1)Revenues:License fees
    
    $
    402,779
    
    
    $
    383,661
    
    
    $
    344,807Services
    
    
    571,198
    
    
    
    572,090
    
    
    
    544,209Messaging
    
    
    196,592
    
    
    
    176,179
    
    
    
    136,514Total revenues
    
    
    1,170,569
    
    
    
    1,131,930
    
    
    
    1,025,530Costs and expenses:Cost of license fees
    
    
    58,692
    
    
    
    67,342
    
    
    
    53,114Cost of services
    
    
    153,112
    
    
    
    160,604
    
    
    
    157,790Cost of messaging
    
    
    128,423
    
    
    
    107,757
    
    
    
    82,598Sales and marketing
    
    
    252,972
    
    
    
    285,376
    
    
    
    266,995Product development and engineering
    
    
    138,140
    
    
    
    146,932
    
    
    
    152,571General and administrative
    
    
    133,235
    
    
    
    138,980
    
    
    
    129,319Amortization of other purchased intangibles
    
    
    15,142
    
    
    
    14,716
    
    
    
    13,783Cost of restructuring
    
    
    1,144
    
    
    
    167
    
    
    
    797Total costs and expenses
    
    
    880,860
    
    
    
    921,874
    
    
    
    856,967Operating income
    
    
    289,709
    
    
    
    210,056
    
    
    
    168,563Interest income
    
    
    7,902
    
    
    
    23,813
    
    
    
    33,521Interest expense and other income, net
    
    
    (39,602
    )
    
    
    (30,844
    )
    
    
    (28,569
    )Total other-than-temporary impairment losses
    
    
    (3,609
    )
    
    
    (13,387
    )
    
    
    Losses recognized in (reclassified from)
other comprehensive income
    
    
    (2,341
    )
    
    
    
    
    
    
    Total other-than-temporary impairment
losses recognized in earnings
    
    
    (5,950
    )
    
    
    (13,387
    )
    
    
    Income before income taxes
    
    
    252,059
    
    
    
    189,638
    
    
    
    173,515Provision for income taxes
    
    
    88,000
    
    
    
    61,451
    
    
    
    34,388Net income
    
    $
    164,059
    
    
    $
    128,187
    
    
    $
    139,127Less: Net income (loss) attributable to the
noncontrolling interest
    
    
    42
    
    
    
    (51
    )
    
    
    (12
    )Net income attributable to Sybase, Inc.
    
    $
    164,017
    
    
    $
    128,238
    
    
    $
    139,139Basic net income per share attributable to
Sybase, Inc. common stockholders
    
    $
    2.01
    
    
    $
    1.54
    
    
    $
    1.52Shares used in computing basic net income
per share attributable to Sybase, Inc.
common stockholders
    
    
    80,118
    
    
    
    82,060
    
    
    
    90,019Diluted net income per share attributable
to Sybase, Inc. common stockholders
    
    $
    1.86
    
    
    $
    1.46
    
    
    $
    1.49Shares used in computing diluted net income
per share attributable to Sybase, Inc.
common stockholders
    
    
    86,981
    
    
    
    86,264
    
    
    
    91,717
 
 (1)
    
    As adjusted due to the adoption of FASB amendments to existing guidance on
convertible debt, noncontrolling interests, and earnings per share computations. See Note One 
Summary of Significant Accounting Policies and Note Eight  Convertible Notes.  - 70 -




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##### Table of Contents



Consolidated Statements of Stockholders Equity
 Three years ended December 31, 2009AccumulatedCommon stock
    
    Additional
    
    Accumulated
    
    OtherOutstanding
    
    Par
    
    paid-in
    
    Earnings/
    
    Comprehensive
    
    Treasury
    
    Noncontrolling(Dollars and shares in thousands)
    
    Shares
    
    Value
    
    Capital (1)
    
    (Deficit) (1)
    
    Income/(Loss)
    
    Stock
    
    Interest (1)
    
    TotalBalances at December 31, 2006
    
    
    91,282
    
    
    $
    105
    
    
    $
    1,026,840
    
    
    $
    76,299
    
    
    $
    40,850
    
    
    $
    (268,313
    )
    
    $
    5,158
    
    
    $
    880,939Common 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
    
    
    
    1,069,098
    
    
    
    75,961
    
    
    
    40,850
    
    
    
    (397,508
    )
    
    
    5,158
    
    
    
    793,664Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139,139
    
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    139,127Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,881
    
    
    
    
    
    
    
    
    
    
    
    26,881Unrealized losses on
marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (540
    )
    
    
    
    
    
    
    
    
    
    
    (540
    )Pension liability adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (237
    )
    
    
    
    
    
    
    
    
    
    
    (237
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165,231Balances at December 31, 2007
    
    
    87,210
    
    
    $
    105
    
    
    $
    1,069,098
    
    
    $
    215,100
    
    
    $
    66,954
    
    
    $
    (397,508
    )
    
    $
    5,146
    
    
    $
    958,895Common 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
    
    
    
    1,103,685
    
    
    
    202,486
    
    
    
    66,954
    
    
    
    (641,647
    )
    
    
    5,146
    
    
    
    736,729Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,238
    
    
    
    
    
    
    
    
    
    
    
    (51
    )
    
    
    128,187Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,877
    )
    
    
    
    
    
    
    
    
    
    
    (30,877
    )Unrealized gains on
marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    835
    
    
    
    
    
    
    
    
    
    
    
    835Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98,145Balances at December 31, 2008
    
    
    79,572
    
    
    $
    105
    
    
    $
    1,103,685
    
    
    $
    330,724
    
    
    $
    36,912
    
    
    $
    (641,647
    )
    
    $
    5,095
    
    
    $
    834,874Common stock issued and treasury
stock reissued under stock option,
stock purchase plans and other
    
    
    3,613
    
    
    
    
    
    
    
    4,209
    
    
    
    (3,713
    )
    
    
    
    
    
    
    67,496
    
    
    
    
    
    
    
    67,992Acquisition of treasury stock
    
    
    (2,759
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (94,124
    )
    
    
    
    
    
    
    (94,124
    )Stock-based compensation  restricted
Stock
    
    
    
    
    
    
    
    
    
    
    13,788
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,788Stock-based compensation  all other
    
    
    
    
    
    
    
    
    
    
    12,608
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,608Tax benefit from stock-based
Compensation plans
    
    
    
    
    
    
    
    
    
    
    17,678
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,678Cumulative accounting change to
reclassify noncredit impairments
previously recognized in earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,700
    
    
    
    (6,700
    )
    
    
    
    
    
    
    
    
    
    
    Issuance of convertible senior notes
    
    
    
    
    
    
    
    
    
    
    44,487
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,487Extinguishment and conversion of
convertible subordinated notes
    
    
    
    
    
    
    
    
    
    
    (18,702
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,702
    )Temporary equity  convertible
subordinated notes
    
    
    
    
    
    
    
    
    
    
    (2,547
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,547
    )Subtotal
    
    
    80,426
    
    
    
    105
    
    
    
    1,175,206
    
    
    
    333,711
    
    
    
    30,212
    
    
    
    (668,275
    )
    
    
    5,095
    
    
    
    876,054Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164,017
    
    
    
    
    
    
    
    
    
    
    
    42
    
    
    
    164,059Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,694
    
    
    
    
    
    
    
    
    
    
    
    15,694Decrease in noncredit other-than-
temporary impairment losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,410
    
    
    
    
    
    
    
    
    
    
    
    1,410Losses recognized in (reclassified from)
other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,341
    
    
    
    
    
    
    
    
    
    
    
    2,341Unrealized gains on all other
marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    62Pension liability adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (417
    )
    
    
    
    
    
    
    
    
    
    
    (417
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183,149Balances at December 31, 2009
    
    
    80,426
    
    
    $
    105
    
    
    $
    1,175,206
    
    
    $
    497,728
    
    
    $
    49,302
    
    
    $
    (668,275
    )
    
    $
    5,137
    
    
    $
    1,059,203
 
 (1)
    
    As adjusted to reflect the adoption FASB amendments to existing guidance on
convertible debt and noncontrolling interests. See Note One  Summary of Significant Accounting
Policies and Note Eight  Convertible Notes. See accompanying notes.
 - 71 -




---



##### Table of Contents



Consolidated Statements of Cash Flows
 For the years ended December 31(Dollars in thousands)
    
    2009
    
    
    2008 (1)
    
    
    2007 (1)Cash flows from operating activities:Net income
    
    $
    164,059
    
    
    $
    128,187
    
    
    $
    139,127Adjustments to reconcile net income to net cash
Provided by operating activities:Depreciation and amortization
    
    
    98,700
    
    
    
    105,915
    
    
    
    87,923Loss on disposal of assets
    
    
    87
    
    
    
    2,498
    
    
    
    37Impairment of investment in auction rate securities
    
    
    5,950
    
    
    
    13,387
    
    
    
    Deferred income taxes
    
    
    7,762
    
    
    
    (12,733
    )
    
    
    (20,722
    )Stock-based compensation  restricted stock
    
    
    13,788
    
    
    
    10,236
    
    
    
    10,155Stock-based compensation  all other
    
    
    12,608
    
    
    
    12,279
    
    
    
    13,889Tax benefit from stock-based compensation plans
    
    
    17,678
    
    
    
    11,478
    
    
    
    14,229Excess tax benefit from stock-based compensation plans
    
    
    (17,015
    )
    
    
    (11,182
    )
    
    
    (14,485
    )Imputed interest expense for convertible notes
    
    
    23,316
    
    
    
    17,823
    
    
    
    16,786Amortization of note issuance costs
    
    
    2,331
    
    
    
    1,609
    
    
    
    1,608Changes in assets and liabilities:Accounts receivable
    
    
    (2,335
    )
    
    
    (25,985
    )
    
    
    (23,232
    )Prepaid income taxes
    
    
    (822
    )
    
    
    12,672
    
    
    
    (17,604
    )Other current assets
    
    
    421
    
    
    
    (8,963
    )
    
    
    372Other assets  operating
    
    
    (3,267
    )
    
    
    4,218
    
    
    
    2,202Accounts payable
    
    
    (6,101
    )
    
    
    (4,740
    )
    
    
    6,784Accrued compensation and related expenses
    
    
    3,978
    
    
    
    7,508
    
    
    
    3,708Accrued income taxes
    
    
    30,363
    
    
    
    27,509
    
    
    
    12,852Other accrued liabilities
    
    
    10,462
    
    
    
    (5,706
    )
    
    
    9,617Deferred revenues
    
    
    24,178
    
    
    
    7,767
    
    
    
    11,288Other liabilities
    
    
    (2,041
    )
    
    
    1,737
    
    
    
    (520
    )Net cash provided by operating activities
    
    
    384,100
    
    
    
    295,514
    
    
    
    254,014Cash flows from investing activities:(Increase) Decrease in restricted cash
    
    
    (169
    )
    
    
    610
    
    
    
    2,590Purchases of investments
    
    
    (396,126
    )
    
    
    (16,275
    )
    
    
    (280,632
    )Maturities of investments
    
    
    91,608
    
    
    
    38,299
    
    
    
    241,292Sales of investments
    
    
    1,261
    
    
    
    80,982
    
    
    
    190,778Business combinations, net of cash acquired
    
    
    
    
    
    
    (35,368
    )
    
    
    (6,848
    )Purchases of property, equipment and improvements
    
    
    (34,201
    )
    
    
    (32,320
    )
    
    
    (23,839
    )Capitalized software development costs
    
    
    (46,211
    )
    
    
    (50,706
    )
    
    
    (36,431
    )(Increase) Decrease in other assets  investing
    
    
    20
    
    
    
    138
    
    
    
    (188
    )Net cash provided by (used for) investing activities
    
    
    (383,818
    )
    
    
    (14,640
    )
    
    
    86,722Cash flows from financing activities:Proceeds from the issuance of convertible senior notes, net of
issuance costs
    
    
    389,379
    
    
    
    
    
    
    
    Extinguishment and conversion of convertible subordinated notes
    
    
    (58,430
    )
    
    
    
    
    
    
    Repayments of long-term obligations
    
    
    (1,177
    )
    
    
    (910
    )
    
    
    (1,582
    )Net proceeds from the issuance of common stock and
reissuance of treasury stock
    
    
    67,992
    
    
    
    49,953
    
    
    
    41,190Purchases of treasury stock
    
    
    (94,124
    )
    
    
    (306,111
    )
    
    
    (166,738
    )Excess tax benefit from stock-based compensation plans
    
    
    17,015
    
    
    
    11,182
    
    
    
    14,485Net cash provided by (used for) financing activities
    
    
    320,655
    
    
    
    (245,886
    )
    
    
    (112,645
    )Effect of exchange rate changes on cash
    
    
    14,851
    
    
    
    (28,432
    )
    
    
    21,414Net increase in cash and cash equivalents
    
    
    335,788
    
    
    
    6,556
    
    
    
    249,505Cash and cash equivalents, beginning of year
    
    
    611,364
    
    
    
    604,808
    
    
    
    355,303Cash and cash equivalents, end of year
    
    $
    947,152
    
    
    $
    611,364
    
    
    $
    604,808Supplemental disclosures:Interest paid
    
    $
    9,320
    
    
    $
    9,543
    
    
    $
    9,663Income taxes paid, net of refunds
    
    $
    24,494
    
    
    $
    25,643
    
    
    $
    43,345
 
 (1)
    
    As adjusted to reflect the adoption FASB amendments to existing guidance on
convertible debt and noncontrolling interests. See Note One  Summary of Significant Accounting
Policies and Note Eight  Convertible Notes. See accompanying notes.
 - 72 -




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##### Table of Contents



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
  - 73 -




---



##### Table of Contents



Concentration of Credit Risk
    Capitalized Software
   Property, Equipment and Improvements
   - 74 -




---



##### Table of Contents



Goodwill and Other Purchased Intangible Assets
   Impairment of Long-Lived Assets
  Revenue Recognition
  License and Services Revenues
    - 75 -




---



##### Table of Contents



Message Revenues
    Foreign Currencies
   - 76 -




---



##### Table of Contents



Income Taxes
    - 77 -




---



##### Table of Contents



Stock-Based Compensation
   Net Income Per Share
       (In thousands, except per share data)
    
    2009
    
    
    2008 (1)
    
    
    2007 (1)Basic:Net income attributable to Sybase, Inc.
    
    $
    164,017
    
    
    $
    128,238
    
    
    $
    139,139Less: Net income allocated to participating securities
    
    
    (2,810
    )
    
    
    (1,990
    )
    
    
    (2,133
    )Net income attributable to Sybase, Inc. common stockholders  basic
    
    $
    161,207
    
    
    $
    126,248
    
    
    $
    137,006Basic net income per share attributable to Sybase, Inc. common stockholders
    
    $
    2.01
    
    
    $
    1.54
    
    
    $
    1.52Shares used in computing basic net income per share attributable to
Sybase, Inc. common stockholders
    
    
    80,118
    
    
    
    82,060
    
    
    
    90,019
 - 78 -




---



##### Table of Contents



(In thousands, except per share data)
    
    2009
    
    
    2008 (1)
    
    
    2007 (1)Diluted:Net income attributable to Sybase, Inc.
    
    $
    164,017
    
    
    $
    128,238
    
    
    $
    139,139Less: Net income allocated to participating securities
    
    
    (2,592
    )
    
    
    (1,895
    )
    
    
    (2,094
    )Net income attributable to Sybase, Inc. common stockholders  diluted
    
    $
    161,425
    
    
    $
    126,343
    
    
    $
    137,045Diluted net income per share attributable to Sybase, Inc. common stockholders
    
    $
    1.86
    
    
    $
    1.46
    
    
    $
    1.49Shares used in computing basic net income per share attributable to Sybase,
Inc. common stockholders
    
    
    80,118
    
    
    
    82,060
    
    
    
    90,019Dilutive effect of stock options, restricted stock and stock appreciation rights
    
    
    2,670
    
    
    
    2,395
    
    
    
    2,258Dilutive effect of 2005 Notes
    
    
    4,898
    
    
    
    2,436
    
    
    
    117Shares used in computing diluted net income per share attributable to Sybase,
Inc. common stockholders under treasury stock method
    
    
    87,686
    
    
    
    86,891
    
    
    
    92,394Participating securities excluded under two-class method
    
    
    (705
    )
    
    
    (627
    )
    
    
    (677
    )Shares used in computing diluted net income per share attributable to Sybase,
Inc. common stockholders under two-class method
    
    
    86,981
    
    
    
    86,264
    
    
    
    91,717
 
 (1)
    
    As adjusted to reflect the adoption of FASB amendments to existing guidance on
convertible debt and noncontrolling interests, and earnings per share computations. See Note Eight
 Convertible Notes.  Comprehensive Income
  2009
    
    
    2008Foreign currency translation
    
    $
    52,843
    
    
    $
    37,149Noncredit other-than-temporary impairment net of income taxes
    
    
    (2,949
    )
    
    
    Net unrealized gains on other marketable securities, net of income taxes
    
    
    62
    
    
    
    Pension liability adjustments
    
    
    (654
    )
    
    
    (237
    )$
    49,302
    
    
    $
    36,912
 Advertising
  Adopted Accounting Pronouncements
  1.
    
    Convertible debt2.
    
    Noncontrolling interests3.
    
    Earnings per share computations4.
    
    Business Combinations5.
    
    Assets acquired and liabilities assumed in a business combination that arise from
contingencies6.
    
    The determination of the useful life of intangible assets7.
    
    The effective date for application of fair value accounting standards to non-financial assets
and liabilities8.
    
    Disclosures about derivative instruments and hedging activities
 - 79 -




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##### Table of Contents



Convertible debt
   Noncontrolling interests
  Earnings per share computations
  December 31, 2008
    
    
    
    
    
    
    
    
    
    
    December 31, 2008Consolidated Balance
    
    
    
    
    
    
    
    
    
    
    Consolidated BalanceSheet
    
    
    Adjustments
    
    
    SheetAs Previously
    
    
    Convertible
    
    
    Noncontrolling
    
    
    Retrospectively(In thousands)
    
    Reported
    
    
    Subordinated Debt
    
    
    Interests
    
    
    AdjustedDeferred income taxes
    
    $
    26,474
    
    
    $
    (8,680
    )
    
    
    
    
    
    $
    17,794Other assets
    
    $
    29,756
    
    
    $
    (415
    )
    
    
    
    
    
    $
    29,341Minority interest
    
    $
    5,095
    
    
    
    
    
    
    $
    (5,095
    )
    
    
    Convertible subordinated
notes
    
    $
    460,000
    
    
    $
    (21,701
    )
    
    
    
    
    
    $
    438,299Additional paid-in capital
    
    $
    1,054,517
    
    
    $
    49,168
    
    
    
    
    
    
    $
    1,103,685Accumulated earnings
    
    $
    367,286
    
    
    $
    (36,562
    )
    
    
    
    
    
    $
    330,724Noncontrolling interest
    
    
    
    
    
    
    
    
    
    $
    5,095
    
    
    $
    5,095
 - 80 -




---



##### Table of Contents



December 31, 2008
    
    
    
    
    
    
    December 31, 2007As
    
    
    Effect of
    
    
    
    
    
    
    
    
    
    
    Effect of(In thousands, except per share amounts)
    
    As Adjusted
    
    
    Reported
    
    
    Change
    
    
    As Adjusted
    
    As Reported
    
    ChangeInterest expense and other, net and net
impairment losses recognized in earnings
    
    $
    (44,231
    )
    
    $
    (26,768
    )
    
    $
    (17,463
    )
    
    $
    (28,569
    )
    
    $
    (12,144
    )
    
    $
    (16,425
    )Minority interest
    
    
    
    
    
    $
    51
    
    
    $
    (51
    )
    
    
    
    
    
    $
    12
    
    
    $
    (12
    )Income before income taxes
    
    $
    189,638
    
    
    $
    207,152
    
    
    $
    (17,514
    )
    
    $
    173,515
    
    
    $
    189,952
    
    
    $
    (16,437
    )Provision for income taxes
    
    $
    61,451
    
    
    $
    68,581
    
    
    $
    (7,130
    )
    
    $
    34,388
    
    
    $
    41,102
    
    
    $
    (6,714
    )Net income
    
    $
    128,187
    
    
    $
    138,571
    
    
    $
    (10,384
    )
    
    $
    139,127
    
    
    $
    148,850
    
    
    $
    (9,723
    )Net loss attributable to the noncontrolling
interest
    
    $
    51
    
    
    
    
    
    
    $
    51
    
    
    $
    12
    
    
    
    
    
    
    $
    12Net income attributable to Sybase, Inc.
    
    $
    128,238
    
    
    
    
    
    
    $
    128,238
    
    
    $
    139,139
    
    
    
    
    
    
    $
    139,139Basic net income per share
    
    
    
    
    
    $
    1.69
    
    
    
    
    
    
    
    
    
    
    $
    1.65Diluted net income per share
    
    
    
    
    
    $
    1.59
    
    
    
    
    
    
    
    
    
    
    $
    1.61Basic net income per share attributable to
Sybase, Inc. common stockholders
    
    $
    1.54
    
    
    
    
    
    
    
    
    
    
    $
    1.52
    
    
    
    Diluted net income per share attributable to
Sybase, Inc. common stockholders
    
    $
    1.46
    
    
    
    
    
    
    
    
    
    
    $
    1.49
    
    
    
    
 December 31, 2008
    
    
    
    
    
    
    
    
    
    
    December 31, 2008Consolidated Statement
    
    
    
    
    
    
    
    
    
    
    Consolidated StatementOf Cash Flows
    
    
    Retrospective Adjustments
    
    
    Of Cash FlowsConvertible
    
    
    Noncontrolling(In thousands)
    
    As Previously Reported
    
    
    Subordinated Debt
    
    
    Interests
    
    
    Retrospectively AdjustedNet income
    
    $
    138,571
    
    
    $
    (10,333
    )
    
    $
    (51
    )
    
    $
    128,187Minority interest
    
    $
    (51
    )
    
    
    
    
    
    $
    51
    
    
    
    Deferred income taxes
    
    $
    (5,603
    )
    
    $
    (7,130
    )
    
    
    
    
    
    $
    (12,733
    )Imputed interest
expense for
convertible notes
    
    
    
    
    
    $
    17,823
    
    
    
    
    
    
    $
    17,823Amortization of note
issuance costs
    
    $
    1,969
    
    
    $
    (360
    )
    
    
    
    
    
    $
    1,609
 December 31, 2007
    
    
    
    
    
    
    
    
    
    
    December 31, 2007Consolidated Statement
    
    
    
    
    
    
    
    
    
    
    Consolidated StatementOf Cash Flows
    
    
    Retrospective Adjustments
    
    
    Of Cash FlowsConvertible
    
    
    Noncontrolling(In thousands)
    
    As Previously Reported
    
    
    Subordinated Debt
    
    
    Interests
    
    
    Retrospectively AdjustedNet income
    
    $
    148,850
    
    
    $
    (9,711
    )
    
    $
    (12
    )
    
    $
    139,127Minority interest
    
    $
    (12
    )
    
    
    
    
    
    $
    12
    
    
    
    Deferred income taxes
    
    $
    (14,008
    )
    
    $
    (6,714
    )
    
    
    
    
    
    $
    (20,722
    )Imputed interest
expense for
convertible notes
    
    
    
    
    
    $
    16,786
    
    
    
    
    
    
    $
    16,786Amortization of note
issuance costs
    
    $
    1,969
    
    
    $
    (361
    )
    
    
    
    
    
    $
    1,608
 - 81 -




---



##### Table of Contents



Business Combinations
   Assets acquired and liabilities assumed in a business combination that arise from contingencies
  The determination of the useful life of intangible assets
  The effective date for application of fair value accounting standards to non-financial assets
and liabilities
  - 82 -




---



##### Table of Contents



Disclosures about derivative instruments and hedging activities
   1.
    
    Determination of fair value when the volume and level of activity for an asset or liability
have significantly decreased and identifying transactions that are not orderly2.
    
    Recognition and presentation of other-than-temporary impairments3.
    
    Disclosures about fair value of financial instruments4.
    
    Subsequent events
 Determination of fair value when the volume and level of activity for an asset or liability
have significantly decreased and identifying transactions that are not orderly
  Recognition and presentation of other-than-temporary impairments
  Disclosures about fair value of financial instruments
  Subsequent events
  - 83 -




---



##### Table of Contents



.
  Recent Accounting Pronouncements
   Note Two: Financial Instruments
 Cash, Cash Equivalents, and Short and Long-term Investments
 Cash and Cash Equivalents
  Short and Long-Term Investments
  - 84 -




---



##### Table of Contents



Temporary Changes in Fair Value
  Credit and Noncredit OTTI
  
    
    If a debt securitys market value is below amortized cost and the Company either intends to
sell the security or it is more likely than not that the Company will be required to sell the
security before its anticipated recovery, the Company records an OTTI charge to earnings for
the entire amount of the impairment.
    
    For the remaining debt securities, if an OTTI exists, the Company separates the OTTI into
two portions:
 o
    
    Credit Loss Portion: The credit loss portion is the amount that the Companys best
estimate of the present value of cash flows expected to be collected from the security
falls below the amortized cost of the security. The credit loss portion is recorded as a
charge to earnings.o
    
    NonCredit Loss Portion: The noncredit loss portion is the residual amount of the OTTI,
and is recorded as a separate component of other comprehensive income (loss).
   - 85 -




---



##### Table of Contents



Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    OTTI
    
    
    Fair Market(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    In OCI
    
    
    ValueDecember 31, 2009:Cash and cash equivalents
    
    $
    947,155
    
    
    $
    2
    
    
    $
    (5
    )
    
    $
    
    
    
    $
    947,152Short-term bank deposits (maturities of one year or less)
    
    
    43,512
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,512Short-term corporate notes and bonds (maturities of one year or less)
    
    
    119,616
    
    
    
    82
    
    
    
    (29
    )
    
    
    
    
    
    
    119,669Short-term U.S. government obligations (maturities of one year or less)
    
    
    64,071
    
    
    
    43
    
    
    
    (7
    )
    
    
    
    
    
    
    64,107Trading securities
    
    
    11,944
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,944Long-term corporate notes and bonds (maturities over one year)
    
    
    18,783
    
    
    
    
    
    
    
    (5
    )
    
    
    (2,949
    )
    
    
    15,829Long-term U.S. government obligations (maturities over one year)
    
    
    70,179
    
    
    
    11
    
    
    
    (31
    )
    
    
    
    
    
    
    70,159Long-term equity security
    
    
    103
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103$
    1,275,363
    
    
    $
    138
    
    
    $
    (77
    )
    
    $
    (2,949
    )
    
    $
    1,272,475December 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
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    635,566
  In a Loss Position for
    
    
    In a Loss Position forLess Than 12 Months
    
    
    Greater Than 12 MonthsGross Unrealized
    
    
    
    
    
    
    Gross Unrealized(In thousands)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesCorporate notes and
bonds 1
    
    $
    65,951
    
    
    $
    (39
    )
    
    $
    13,210
    
    
    $
    (2,949
    )U.S government
obligations
    
    
    70,538
    
    
    
    (38
    )
    
    
    
    
    
    
    Totals
    
    $
    136,489
    
    
    $
    (77
    )
    
    $
    13,210
    
    
    $
    (2,949
    )
 - 86 -




---



##### Table of Contents



1
    
    The unrealized losses shown in the Greater-than-12-Months column were recognized in
earnings in prior periods. Upon the April 1, 2009 adoption of the FASB amendments to
other-than-temporary impairment guidance, the Company reclassified the noncredit related
other-than-temporary impairment charges from retained earnings to other comprehensive income. See
Note One  Summary of Significant Accounting Policies.     Cumulative
    
    
    
    
    
    
    
    
    
    
    TotalAmortized
    
    
    OTTI in
    
    
    Unrealized
    
    
    OTTI loss
    
    
    accumulate(In thousands)
    
    Cost
    
    
    earnings
    
    
    (gain) loss
    
    
    in OCI
    
    
    d OCIBalance at April 1, 2009
    
    
    20,311
    
    
    
    3,589
    
    
    
    
    
    
    
    6,699
    
    
    
    6,699Unrealized gain
    
    
    
    
    
    
    
    
    
    
    (996
    )
    
    
    
    
    
    
    (996
    )Reclassification to earnings
    
    
    (388
    )
    
    
    388
    
    
    
    
    
    
    
    (388
    )
    
    
    (388
    )Balance at June 30, 2009
    
    
    19,923
    
    
    
    3,977
    
    
    
    (996
    )
    
    
    6,311
    
    
    
    5,315Unrealized gain
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )OTTI recognized
    
    
    (1,441
    )
    
    
    1,441
    
    
    
    
    
    
    
    371
    
    
    
    371Reclassification to earnings
    
    
    (2,289
    )
    
    
    2,289
    
    
    
    
    
    
    
    (2,289
    )
    
    
    (2,289
    )Balance at September 30, 2009
    
    
    16,193
    
    
    
    7,707
    
    
    
    (997
    )
    
    
    4,393
    
    
    
    3,396Unrealized gain
    
    
    
    
    
    
    
    
    
    
    (413
    )
    
    
    
    
    
    
    (413
    )OTTI recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reclassification to earnings
    
    
    (34
    )
    
    
    34
    
    
    
    
    
    
    
    (34
    )
    
    
    (34
    )Balance at December 31, 2009
    
    
    16,159
    
    
    
    7,741
    
    
    
    (1,410
    )
    
    
    4,359
    
    
    
    2,949
 - 87 -




---



##### Table of Contents



Restricted Cash
  Foreign Currency Forward Exchange Contracts
  Fair Value Measurements
  
    
    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.
    - 88 -




---



##### Table of Contents



December 31, 2009:
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalMoney market funds
    
    $
    629,162
    
    
    
    
    
    
    
    
    
    
    $
    629,162Trading securities
    
    
    11,944
    
    
    
    
    
    
    
    
    
    
    
    11,944Available-for-sale investments
    
    
    366,194
    
    
    
    
    
    
    $
    13,313
    
    
    
    379,507Total
    
    $
    1,007,300
    
    
    
    
    
    
    $
    13,313
    
    
    $
    1,020,613
 December 31, 2008:
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalMoney market funds
    
    $
    493,113
    
    
    
    
    
    
    
    
    
    
    $
    493,113Trading securities
    
    $
    8,638
    
    
    
    
    
    
    
    
    
    
    
    8,638Available-for-sale investments
    
    
    63,573
    
    
    
    
    
    
    $
    15,513
    
    
    
    79,086Total
    
    $
    565,324
    
    
    
    
    
    
    $
    15,513
    
    
    $
    580,837
   Auction RateSecuritiesBalance at December 31, 2008
    
    $
    15,513Impairment loss included in net
impairment losses recognized in earnings
    
    
    (5,950
    )Change in total other-than-temporary
impairment recognized in accumulated
other comprehensive income
    
    
    3,750Balance at December 31, 2009
    
    $
    13,313
  - 89 -




---



##### Table of Contents



Note Three: Property, Equipment and Improvements
 Estimated useful(In thousands)
    
    2009
    
    
    2008
    
    
    livesComputer equipment and software
    
    $
    270,936
    
    
    $
    241,684
    
    
    
    3 to 5 yearsFurniture and fixtures
    
    
    59,550
    
    
    
    58,603
    
    
    
    5 to 10 yearsLeasehold improvements and real property
    
    
    83,732
    
    
    
    77,188
    
    
    Improvements over shorter of 5 years or lease term; property over 7 to 40 years414,218
    
    
    
    377,475Less accumulated depreciation
    
    
    (346,355
    )
    
    
    (315,212
    )Net property, equipment and improvements
    
    $
    67,863
    
    
    $
    62,263
  Note Four: Goodwill and Other Purchased Intangibles
  (In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Consolidated TotalBalance at January 1, 2008
    
    $
    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
    
    
    $
    527,151Addition to goodwill recorded for Cable &
Wireless acquisition earnout payment
    
    
    
    
    
    
    
    
    
    
    1,053
    
    
    
    1,053Addition to goodwill recorded for Paybox
acquisition earnout payment
    
    
    
    
    
    
    
    
    
    
    3,290
    
    
    
    3,290Foreign currency translation adjustments and other
    
    
    494
    
    
    
    103
    
    
    
    284
    
    
    
    881Balance at December 31, 2009
    
    $
    74,379
    
    
    $
    102,891
    
    
    $
    355,105
    
    
    $
    532,375
 - 90 -




---



##### Table of Contents



Gross
    
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Net Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    Amount(In thousands)
    
    12/31/09
    
    
    12/31/09
    
    
    12/31/09
    
    
    12/31/08
    
    
    12/31/08
    
    
    12/31/08Purchased technology
    
    $
    172,511
    
    
    $
    (139,522
    )
    
    $
    32,989
    
    
    $
    169,758
    
    
    $
    (125,265
    )
    
    $
    44,493AvantGo tradenames
    
    
    3,100
    
    
    
    
    
    
    
    3,100
    
    
    
    3,100
    
    
    
    
    
    
    
    3,100Afaria tradenames
    
    
    4,000
    
    
    
    
    
    
    
    4,000
    
    
    
    4,000
    
    
    
    
    
    
    
    4,000Covenant not to compete
    
    
    319
    
    
    
    (319
    )
    
    
    
    
    
    
    319
    
    
    
    (271
    )
    
    
    48Customer lists
    
    
    115,729
    
    
    
    (67,806
    )
    
    
    47,923
    
    
    
    114,632
    
    
    
    (52,303
    )
    
    
    62,329Totals
    
    $
    295,659
    
    
    $
    (207,647
    )
    
    $
    88,012
    
    
    $
    291,809
    
    
    $
    (177,839
    )
    
    $
    113,970
    2010
    
    
    25,7462011
    
    
    20,4362012
    
    
    13,8302013
    
    
    11,8442014
    
    
    1,744
 Note Five: Other Assets
  2009
    
    
    2008 (1)Deposits
    
    $
    25,004
    
    
    $
    23,693Other
    
    
    13,728
    
    
    
    5,648$
    38,732
    
    
    $
    29,341
 
 (1)
    
    As adjusted to reflect the adoption of the FASB amendment to existing guidance
on convertible debt. See Note One  Summary of Significant Accounting Policies. - 91 -




---



##### Table of Contents



Note Six: Lease Obligations, Other Liabilities, Commitments and Guarantees
 Capital Lease
    2010
    
    $
    1,1062011
    
    
    1,1062012
    
    
    1,1062013
    
    
    1,1062014
    
    
    1,106Thereafter
    
    
    5,299Sub-total
    
    
    10,829Less amount representing interest
    
    
    3,575Total minimum lease payments
    
    $
    7,254
 Sale-and-Leaseback
   - 92 -




---



##### Table of Contents



Leasehold Improvements Note
  Operating leases and Commitments
   2010
    
    $
    43,1502011
    
    
    33,7762012
    
    
    30,3132013
    
    
    24,2942014
    
    
    23,027Thereafter
    
    
    48,495Total minimum lease payments*
    
    $
    203,055
 
 *
    
    Minimum payments have not been reduced by minimum sublease rentals of $2.9 million due in the
future under non-cancelable subleases.  Year ending December 31,2009
    
    
    2008
    
    
    2007Rent expense
    
    $
    47,990
    
    
    $
    46,852
    
    
    $
    47,913Less: sublease rentals
    
    
    3,496
    
    
    
    3,401
    
    
    
    4,011$
    44,494
    
    
    $
    43,451
    
    
    $
    43,902
 Guarantees
  - 93 -




---



##### Table of Contents



Note Seven: Restructuring Costs
   Accrued Liabilities
    
    
    
    
    
    
    
    
    
    
    Accrued Liabilitiesat
    
    
    Amounts
    
    
    Amounts Accrued
    
    
    at12/31/08
    
    
    Paid
    
    
    (Reversed)
    
    
    12/31/092004 Plan
    
    
    2.3
    
    
    
    (1.2
    )
    
    
    1.2
    
    
    
    2.32002 Plan
    
    
    3.4
    
    
    
    (2.6
    )
    
    
    (0.1
    )
    
    
    0.72001 Plan
    
    
    0.7
    
    
    
    (0.5
    )
    
    
    
    
    
    
    0.2
     - 94 -




---



##### Table of Contents



Note Eight: Convertible Notes
 Convertible Senior Notes Issued in 2009
    Conversion Events and Conversion Value
      - 95 -




---



##### Table of Contents



As ofDecember 31,2009(In millions)Gross equity component of 2009 Notes
    
    $
    75.5Deferred tax asset reduction
    
    
    (29.0
    )Equity issuance costs
    
    
    (2.0
    )Equity component of 2009 Notes
    
    $
    44.5Principal amount of 2009 Notes
    
    $
    400.0Unamortized discount of 2009 Notes
    
    
    (70.4
    )Long term liability component of 2009 Notes
    
    $
    329.6
 Convertible Subordinated Notes Issued in 2005
     Conversion Value
  - 96 -




---



##### Table of Contents



Partial Extinguishment
  As ofDecember 31,
    
    
    December 31,2009
    
    
    2008 (1)(In millions)Gross equity component of 2005 Notes
    
    $
    85.0
    
    
    $
    85.0Early extinguishment
    
    
    (15.8
    )
    
    
    Conversion
    
    
    (3.2
    )
    
    
    Temporary equity
    
    
    (2.5
    )
    
    
    Deferred tax asset reduction
    
    
    (33.7
    )
    
    
    (34.0
    )Equity issuance costs
    
    
    (1.8
    )
    
    
    (1.8
    )Equity component of Notes
    
    $
    28.0
    
    
    $
    49.2Principal amount of 2005 Notes
    
    $
    419.8
    
    
    $
    460.0Unamortized discount of 2005 Notes
    
    
    (2.5
    )
    
    
    (21.7
    )Liability component of 2005 Notes
    
    $
    417.3
    
    
    $
    438.3
 
 (1) As adjusted to reflect the adoption of FASB amendments to prior guidance on
convertible debt. See Note One  Summary of Significant Accounting Policies. - 97 -




---



##### Table of Contents



Note Nine: Stockholders Equity
 Preferred Stock Rights
  Restricted Stock Grants
  Stock Repurchase Program
   - 98 -




---



##### Table of Contents



Employee Stock Purchase Plans
   Stock Option Plans
    Stock-Based Compensation Expense
  Year EndedDecember 31,In thousands, except per share data
    
    2009
    
    
    2008
    
    
    2007Cost of services
    
    $
    1,540
    
    
    $
    1,364
    
    
    $
    1,544Cost of messaging
    
    
    582
    
    
    
    484
    
    
    
    544Sales and marketing
    
    
    6,240
    
    
    
    5,538
    
    
    
    5,304Product development and engineering
    
    
    3,220
    
    
    
    2,887
    
    
    
    2,982General and administrative
    
    
    14,814
    
    
    
    12,242
    
    
    
    13,670Stock-based compensation expense included in total costs and expenses
    
    
    26,396
    
    
    
    22,515
    
    
    
    24,044Tax benefit related to stock-based compensation expense
    
    
    (7,670
    )
    
    
    (6,194
    )
    
    
    (6,775
    )Stock-based compensation expense included in net income
    
    $
    18,726
    
    
    $
    16,321
    
    
    $
    17,269Reduction of net income per share:Basic
    
    $
    0.23
    
    
    $
    0.20
    
    
    $
    0.19Diluted
    
    $
    0.21
    
    
    $
    0.19
    
    
    $
    0.19
 - 99 -




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##### Table of Contents



Determining Fair Value
 Valuation and Amortization Method.
 Expected Term
 Expected Volatility
 Risk-Free Interest Rate.
 Dividends.
 Forfeitures.
  2009
    
    
    2008
    
    
    2007Expected volatility
    
    
    39.33
    %
    
    
    28.33
    %
    
    
    25.84
    %Risk-free interest rates
    
    
    2.09
    %
    
    
    2.84
    %
    
    
    4.51
    %Expected lives (years)
    
    
    5.00
    
    
    
    5.00
    
    
    
    4.52Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
 - 100 -




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##### Table of Contents



Equity Compensation Plans
  Outstanding Optionsand Stock Appreciation
    
    
    Weighted AverageRights
    
    
    Exercise Price(Number of Shares)
    
    
    Per ShareBalance at December 31, 2006
    
    
    12,447,141
    
    
    $
    18.30Granted
    
    
    1,705,588
    
    
    
    24.61Exercised
    
    
    (2,390,625
    )
    
    
    15.96Forfeited or expired
    
    
    (592,940
    )
    
    
    18.39Balance at December 31, 2007
    
    
    11,169,164
    
    
    $
    19.76Granted
    
    
    1,549,327
    
    
    
    29.18Exercised
    
    
    (2,623,985
    )
    
    
    18.04Forfeited or expired
    
    
    (352,369
    )
    
    
    22.06Balance at December 31, 2008
    
    
    9,742,137
    
    
    $
    21.63Granted
    
    
    1,102,736
    
    
    
    30.20Exercised
    
    
    (3,187,550
    )
    
    
    21.06Forfeited or expired
    
    
    (200,106
    )
    
    
    24.37Balance at December 31, 2009
    
    
    7,457,217
    
    
    $
    23.07
   - 101 -




---



##### Table of Contents



Options & Stock Appreciation Rights Outstanding
    
    
    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$1.25 to $15.52
    
    
    1,299,357
    
    
    
    2.97
    
    
    $
    13.16
    
    
    $
    39,292,643
    
    
    
    1,297,865
    
    
    
    2.97
    
    
    $
    13.17
    
    
    $
    39,236,737$15.55 to $21.25
    
    
    1,356,704
    
    
    
    3.17
    
    
    $
    19.96
    
    
    
    31,795,167
    
    
    
    1,256,009
    
    
    
    3.14
    
    
    $
    19.86
    
    
    
    29,561,119$21.26 to $24.26
    
    
    1,700,227
    
    
    
    3.53
    
    
    $
    22.90
    
    
    
    34,849,367
    
    
    
    1,200,888
    
    
    
    3.17
    
    
    $
    22.51
    
    
    
    25,082,178$24.44 to $28.22
    
    
    1,372,138
    
    
    
    3.90
    
    
    $
    25.93
    
    
    
    23,970,969
    
    
    
    821,841
    
    
    
    3.16
    
    
    $
    25.69
    
    
    
    14,553,868$28.37 to $30.70
    
    
    1,287,270
    
    
    
    5.91
    
    
    $
    29.64
    
    
    
    17,710,215
    
    
    
    294,550
    
    
    
    5.64
    
    
    $
    29.23
    
    
    
    4,174,296$30.79 to $42.62
    
    
    441,521
    
    
    
    5.72
    
    
    $
    34.36
    
    
    
    3,989,243
    
    
    
    104,360
    
    
    
    5.56
    
    
    $
    34.38
    
    
    
    941,531$1.25 to $42.62
    
    
    7,457,217
    
    
    
    3.98
    
    
    $
    23.07
    
    
    $
    151,607,604
    
    
    
    4,975,513
    
    
    
    3.31
    
    
    $
    20.58
    
    
    $
    113,549,729
   Weighted-averagegrant date fairShares

    
    
    value per shareNonvested at December 31, 2008
    
    
    1,244,466
    
    
    $
    24.74Granted
    
    
    615,687
    
    
    
    28.84Vested
    
    
    (396,813
    )
    
    
    21.51Forfeited
    
    
    (31,317
    )
    
    
    25.56Nonvested at December 31, 2008
    
    
    1,432,023
    
    
    $
    27.38
  - 102 -




---



##### Table of Contents



Other Stock Option Plans
 FFI Stock Option Plans
   iAS Stock Option Plan
  - 103 -




---



##### Table of Contents



FFI Stock Plans
    
    
    iAS PlanWeighted average
    
    
    
    
    
    
    Weighted averageOutstanding options
    
    
    Exercise price
    
    
    Outstanding options
    
    
    Exercise pricenumber of shares
    
    
    Per share
    
    
    number of shares
    
    
    Per shareBalance 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
    
    
    $
    2.51Forfeited or expired
    
    
    (111,728
    )
    
    
    2.16
    
    
    
    (415,353
    )
    
    
    2.51Balance at December 31, 2009
    
    
    1,938,938
    
    
    $
    2.94
    
    
    
    8,199,524
    
    
    $
    2.51
  Options Outstanding and Options ExercisableWeighted-Average
    
    
    Weighted-Remaining
    
    
    AverageRanges of
    
    
    
    
    
    Contractual
    
    
    ExerciseExercisable prices
    
    Shares
    
    
    Life
    
    
    Price$0.75
    
    
    486,000
    
    
    
    3.08
    
    
    $
    0.75$0.78
    
    
    458,000
    
    
    
    3.67
    
    
    $
    0.78$5.00
    
    
    994,938
    
    
    
    0.73
    
    
    $
    5.00$0.75 to $5.00
    
    
    1,938,938
    
    
    
    2.01
    
    
    $
    2.94
   Note Ten: Income Taxes
  2009
    
    
    2008
    
    
    2007United States
    
    $
    140,909
    
    
    $
    86,642
    
    
    $
    102,218Foreign
    
    
    111,150
    
    
    
    102,996
    
    
    
    71,297Total
    
    $
    252,059
    
    
    $
    189,638
    
    
    $
    173,515
 - 104 -




---



##### Table of Contents



2009
    
    
    2008
    
    
    2007FederalCurrent
    
    $
    42,753
    
    
    $
    12,185
    
    
    $
    5,005Deferred
    
    
    11,491
    
    
    
    15,818
    
    
    
    5,49154,244
    
    
    
    28,003
    
    
    
    10,496StateCurrent
    
    $
    8,649
    
    
    $
    5,886
    
    
    $
    2,572Deferred
    
    
    2,618
    
    
    
    (4,979
    )
    
    
    2,82011,267
    
    
    
    907
    
    
    
    5,392ForeignCurrent
    
    $
    30,966
    
    
    $
    35,199
    
    
    $
    21,417Deferred
    
    
    (8,477
    )
    
    
    (2,657
    )
    
    
    (2,917
    )22,489
    
    
    
    32,542
    
    
    
    18,500Total
    
    $
    88,000
    
    
    $
    61,452
    
    
    $
    34,388
  2009
    
    
    2008
    
    
    2007Tax (credit) at U.S. statutory rate
    
    $
    88,221
    
    
    $
    66,250
    
    
    $
    60,608State tax, net of federal benefit
    
    
    8,230
    
    
    
    5,852
    
    
    
    3,871Reduction in purchase price paid for Mobile 365 Inc.
    
    
    (5,094
    )
    
    
    0
    
    
    
    0Valuation allowances added for unused capital losses
    
    
    0
    
    
    
    4,685
    
    
    
    0Valuation allowances released due to change in
judgment
    
    
    (2,573
    )
    
    
    (6,675
    )
    
    
    (26,428
    )Effect of foreign operations
    
    
    (1,168
    )
    
    
    (9,081
    )
    
    
    (1,677
    )Other
    
    
    384
    
    
    
    421
    
    
    
    (1,986
    )Total
    
    $
    88,000
    
    
    $
    61,452
    
    
    $
    34,388
   2009
    
    
    2008Depreciation
    
    $
    12,632
    
    
    $
    10,932Deferred revenue
    
    
    6,881
    
    
    
    2,644Accrued expenses
    
    
    43,890
    
    
    
    35,550Tax loss and credit carryforwards
    
    
    88,190
    
    
    
    116,555Intangible assets
    
    
    26,713
    
    
    
    36,137Stock-based compensation
    
    
    13,174
    
    
    
    11,012Other assets
    
    
    13,911
    
    
    
    10,832Gross deferred tax asset
    
    
    205,391
    
    
    
    223,662Unremitted foreign earnings
    
    
    (50,555
    )
    
    
    (35,359
    )Acquired Intangibles
    
    
    (25,070
    )
    
    
    (34,663
    )
 - 105 -




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##### Table of Contents



2009
    
    
    2008Capitalized Software
    
    
    (34,225
    )
    
    
    (32,960
    )Convertible Debt Discount
    
    
    (28,750
    )
    
    
    (8,680
    )Gross deferred tax liability
    
    
    (138,600
    )
    
    
    (111,662
    )Total before valuation allowance
    
    
    66,791
    
    
    
    112,000Valuation allowance
    
    
    (50,720
    )
    
    
    (60,580
    )Net deferred tax assets
    
    $
    16,071
    
    
    $
    51,420Recorded as:Current deferred tax assets
    
    $
    58,494
    
    
    $
    45,524Noncurrent deferred tax assets
    
    
    7,188
    
    
    
    17,794Noncurrent deferred tax liabilities
    
    
    (49,611
    )
    
    
    (11,898
    )$
    16,071
    
    
    $
    51,420
  Valuation allowances associated with deferred tax assets used during the year
    
    $
    (9,922
    )Valuation allowances associated with tax loss and credit carryforwards
projected to be used in future years
    
    
    (2,573
    )Valuation allowance associated with current year losses incurred and credits
earned
    
    
    2,635$
    (9,860
    )
    - 106 -




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##### Table of Contents



Year Ended December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007Gross unrecognized tax benefits as of January 1
    
    $
    64,680
    
    
    $
    50,182
    
    
    $
    44,447Increases for tax positions from prior years
    
    
    5,263
    
    
    
    4,623
    
    
    
    1,678Decreases for tax positions from prior years
    
    
    
    
    
    
    (2,672
    )
    
    
    Increases for tax positions taken during the current year
    
    
    16,841
    
    
    
    18,176
    
    
    
    9,608Settlements with tax authorities
    
    
    (303
    )
    
    
    (786
    )
    
    
    Lapses of statutes of limitation
    
    
    (5,229
    )
    
    
    (4,843
    )
    
    
    (5,551
    )Gross unrecognized tax benefits as of December 31
    
    $
    81,253
    
    
    $
    64,680
    
    
    $
    50,182
    Note Eleven: Benefit Plans
 401(k) Defined Contribution Retirement Plan
  - 107 -




---



##### Table of Contents



Deferred Compensation Plan
  Note Twelve: Segment and Geographical Information
     - 108 -




---



##### Table of Contents



Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    
    TotalRevenues:License feesInfrastructure
    
    $
    292,782
    
    
    $
    101
    
    
    $
    1,298
    
    
    $
    
    
    
    $
    294,181Mobile and Embedded
    
    
    44,485
    
    
    
    64,103
    
    
    
    10
    
    
    
    
    
    
    
    108,598Subtotal license fees
    
    
    337,267
    
    
    
    64,204
    
    
    
    1,308
    
    
    
    
    
    
    
    402,779Intersegment license revenues
    
    
    122
    
    
    
    37,193
    
    
    
    34
    
    
    
    (37,349
    )
    
    
    Total license fees
    
    
    337,389
    
    
    
    101,397
    
    
    
    1,342
    
    
    
    (37,349
    )
    
    
    402,779ServicesDirect service revenue
    
    
    531,246
    
    
    
    37,546
    
    
    
    2,406
    
    
    
    
    
    
    
    571,198Intersegment service revenues
    
    
    
    
    
    
    31,076
    
    
    
    
    
    
    
    (31,076
    )
    
    
    Total services
    
    
    531,246
    
    
    
    68,622
    
    
    
    2,406
    
    
    
    (31,076
    )
    
    
    571,198MessagingDirect messaging revenue
    
    
    6
    
    
    
    
    
    
    
    196,586
    
    
    
    
    
    
    
    196,592Intersegment messaging revenues
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    (5
    )
    
    
    Total messaging
    
    
    6
    
    
    
    
    
    
    
    196,591
    
    
    
    (5
    )
    
    
    196,592Total revenues
    
    
    868,641
    
    
    
    170,019
    
    
    
    200,339
    
    
    
    (68,430
    )
    
    
    1,170,569Total allocated costs and expenses before
amortization of other purchased
intangibles, purchased technology, cost of
restructure, and unallocated costs
    
    
    593,187
    
    
    
    118,336
    
    
    
    178,472
    
    
    
    (68,430
    )
    
    
    821,565Operating income before amortization of
other purchased intangibles, purchased
technology, cost of restructure, and
unallocated costs
    
    
    275,454
    
    
    
    51,683
    
    
    
    21,867
    
    
    
    
    
    
    
    349,004Amortization of other purchased intangibles
    
    
    2,048
    
    
    
    4,094
    
    
    
    9,000
    
    
    
    
    
    
    
    15,142Amortization of purchased technology
    
    
    1,464
    
    
    
    7,852
    
    
    
    4,684
    
    
    
    
    
    
    
    14,000Operating income before cost of
restructure and unallocated costs
    
    
    271,942
    
    
    
    39,737
    
    
    
    8,183
    
    
    
    
    
    
    
    319,862Cost of restructure  2009 Activity
    
    
    1,274
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,274Operating income before unallocated costs
    
    
    270,668
    
    
    
    39,737
    
    
    
    8,183
    
    
    
    
    
    
    
    318,588Unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,879Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    289,709Interest income, interest expense and
other, net, and total other-than-temporary
impairment losses recognized in earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,650
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    252,059
 (1)
 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
    )
    
    
    
 - 109 -




---



##### Table of Contents



Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    
    TotalTotal 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
    )
    
    
    572,090MessagingDirect 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, and total other-than-temporary
impairment losses recognized in earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,418
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    189,638
 
 (1)
    
    As adjusted to reflect the adoption FASB amendments to existing guidance on
convertible debt and noncontrolling interests. See Note One  Summary of Significant Accounting
Policies and Note Eight  Convertible Notes. (1)
 (In thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedIPG
    
    
    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
    )
    
    
    1,025,530
 - 110 -




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##### Table of Contents



Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    
    TotalTotal 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
    )
    
    
    803,759Operating 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, and total other-than-temporary impairment
losses recognized in earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,952Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    173,515
 
 (1)
    
    As adjusted to reflect the adoption FASB amendments to existing guidance on
convertible debt and noncontrolling interests. See Note One  Summary of Significant Accounting
Policies and Note Eight  Convertible Notes.   2009
    
    

2008
(1)
    
    

2007
(1)Revenues:Unaffiliated customers:United States
    
    $
    575,432
    
    
    $
    533,238
    
    
    $
    499,815Europe
    
    
    397,851
    
    
    
    399,477
    
    
    
    342,029Other
    
    
    197,286
    
    
    
    199,215
    
    
    
    183,686Total
    
    $
    1,170,569
    
    
    $
    1,131,930
    
    
    $
    1,025,530Long-lived assets, net:United States
    
    $
    782,662
    
    
    $
    708,467
    
    
    $
    769,435Europe
    
    
    90,140
    
    
    
    91,528
    
    
    
    59,380Other
    
    
    27,137
    
    
    
    30,643
    
    
    
    46,129Total
    
    $
    899,939
    
    
    $
    830,638
    
    
    $
    874,944
 
 (1)
    
    As adjusted to reflect the adoption FASB amendments to existing guidance
on convertible debt. See Note One  Summary of Significant Accounting Policies and Note Eight 
Convertible Notes. Note Thirteen: Business Combinations
  - 111 -




---



##### Table of Contents



Note Fourteen: Litigation
     - 112 -




---



##### Table of Contents



Note Fifteen: Subsequent Events
  - 113 -




---



##### 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)
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009Revenues:License fees
    
    $
    89,276
    
    
    $
    94,126
    
    
    $
    96,175
    
    
    $
    123,202
    
    
    $
    402,779Services
    
    
    134,974
    
    
    
    139,587
    
    
    
    144,400
    
    
    
    152,237
    
    
    
    571,198Messaging
    
    
    43,263
    
    
    
    44,243
    
    
    
    52,844
    
    
    
    56,242
    
    
    
    196,592Total revenues:
    
    
    267,513
    
    
    
    277,956
    
    
    
    293,419
    
    
    
    331,681
    
    
    
    1,170,569Costs and expenses:Cost of license fees
    
    
    12,281
    
    
    
    14,184
    
    
    
    18,206
    
    
    
    14,021
    
    
    
    58,692Cost of services
    
    
    36,829
    
    
    
    38,837
    
    
    
    38,078
    
    
    
    39,368
    
    
    
    153,112Cost of messaging
    
    
    26,973
    
    
    
    27,611
    
    
    
    35,619
    
    
    
    38,220
    
    
    
    128,423Sales and marketing
    
    
    64,214
    
    
    
    62,278
    
    
    
    60,606
    
    
    
    65,874
    
    
    
    252,972Product development and engineering
    
    
    34,744
    
    
    
    35,935
    
    
    
    33,508
    
    
    
    33,953
    
    
    
    138,140General and administrative
    
    
    31,862
    
    
    
    32,092
    
    
    
    32,667
    
    
    
    36,614
    
    
    
    133,235Amortization of other purchased
intangibles
    
    
    3,723
    
    
    
    3,756
    
    
    
    3,804
    
    
    
    3,859
    
    
    
    15,142Cost (reversal) of restructure
    
    
    (10
    )
    
    
    11
    
    
    
    17
    
    
    
    1,126
    
    
    
    1,144Total costs and expenses
    
    
    210,616
    
    
    
    214,704
    
    
    
    222,505
    
    
    
    233,035
    
    
    
    880,860Operating income
    
    
    56,897
    
    
    
    63,252
    
    
    
    70,914
    
    
    
    98,646
    
    
    
    289,709Interest income, interest expense and
other, net, and total
other-than-temporary impairment losses
recognized in earnings
    
    
    (8,901
    )
    
    
    (4,072
    )
    
    
    (11,731
    )
    
    
    (12,946
    )
    
    
    (37,650
    )Income before income taxes
    
    
    47,996
    
    
    
    59,180
    
    
    
    59,183
    
    
    
    85,700
    
    
    
    252,059Provision for income taxes
    
    
    19,895
    
    
    
    21,548
    
    
    
    20,686
    
    
    
    25,871
    
    
    
    88,000Net income
    
    $
    28,101
    
    
    $
    37,632
    
    
    $
    38,497
    
    
    $
    59,829
    
    
    $
    164,059Less: Net income (loss) attributable to
the noncontrolling interest
    
    
    16
    
    
    
    40
    
    
    
    (20
    )
    
    
    6
    
    
    
    42Net income attributable to Sybase, Inc.
    
    $
    28,085
    
    
    $
    37,592
    
    
    $
    38,517
    
    
    $
    59,823
    
    
    $
    164,017Basic net income per share attributable
to Sybase, Inc. common stockholders
    
    $
    0.35
    
    
    $
    0.46
    
    
    $
    0.47
    
    
    $
    0.73
    
    
    $
    2.01Diluted net income per share attributable
to Sybase, Inc. common stockholders
    
    $
    0.33
    
    
    $
    0.43
    
    
    $
    0.43
    
    
    $
    0.66
    
    
    $
    1.86
 Three months ended (in thousands,
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31
    
    
    Totalexcept per share and stock price data)
    

2008
(1)
    
    

2008
(1)
    
    

2008
(1)
    
    

2008
(1)
    
    

2008
(1)Revenues: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, interest expense and
other, net, and total
other-than-temporary impairment losses
recognized in earnings
    
    
    (703
    )
    
    
    (5,210
    )
    
    
    (4,722
    )
    
    
    (9,783
    )
    
    
    (20,418
    )Income before income taxes
    
    
    35,461
    
    
    
    45,931
    
    
    
    48,185
    
    
    
    60,061
    
    
    
    189,638Provision for income taxes
    
    
    13,756
    
    
    
    16,177
    
    
    
    16,054
    
    
    
    15,464a
    )
    
    
    61,451
 - 114 -




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##### Table of Contents



Three months ended (in thousands,
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31
    
    
    Totalexcept per share and stock price data)
    

2008
(1)
    
    
    2008 (1)
    
    
    2008 (1)
    
    
    2008 (1)
    
    
    2008 (1)Net income
    
    $
    21,705
    
    
    $
    29,754
    
    
    $
    32,131
    
    
    $
    44,597
    
    
    $
    128,187Less: Net income (loss) attributable to
the noncontrolling interest
    
    
    9
    
    
    
    (37
    )
    
    
    21
    
    
    
    (44
    )
    
    
    (51
    )Net income attributable to Sybase, Inc.
    
    $
    21,696
    
    
    $
    29,791
    
    
    $
    32,110
    
    
    $
    44,641
    
    
    $
    128,238Basic net income per share attributable
to Sybase, Inc. common stockholders
    
    $
    0.24
    
    
    $
    0.36
    
    
    $
    0.40
    
    
    $
    0.55
    
    
    $
    1.54Diluted net income per share
attributable to Sybase, Inc. common
stockholders
    
    $
    0.24
    
    
    $
    0.33
    
    
    $
    0.37
    
    
    $
    0.54
    
    
    $
    1.46
 
 (1)
    
    As adjusted due to the adoption of FASB amendments to existing guidance
on convertible debt, noncontrolling interests, and earnings per share computations. See Note One 
Summary of Significant Accounting Policies and Note Eight  Convertible Notes.  
 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
  - 115 -




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##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS OF REGISTRANT AND CORPORATE GOVERNANCE
 Current Executive Officers
  Identification of Directors
  Compliance with Section 16(a) of the Exchange Act
  Audit Committee Financial Expert
  Standing Audit Committee
  Corporate Governance Guidelines
  Certifications
  Code of Ethics
  
 - 116 -




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##### Table of Contents



ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 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
 (c)
    
    Schedules.
    
    Form 10-KPageII Valuation and Qualifying Accounts
    
    

118
  - 117 -




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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, 2009:Allowance for doubtful accounts
    
    $
    3,888
    
    
    $
    1,050
    
    
    $
    (772
    )
    
    $
    181
    
    
    $
    4,347Year 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
    
    
    $
    3,735
 
 A
    
    Sales returns and credit memos allowancesB
    
    Uncollectible accounts written off and recoveries  - 118 -




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##### Table of Contents



SIGNATURES
  SYBASE, INC.By:
    /S/      JOHN S. CHENFebruary 26, 2010
    
    John S. ChenChairman of the Board, Chief
Executive Officer and President POWER OF ATTORNEY
  Signature
    
    Title
    
    Date/S/ JOHN S. CHEN
    
    Chairman of the Board, Chief
    
    February 26, 2010(John S. Chen)
    
    Executive Officer (Principal Executive
Officer), President and Director/S/ JEFFREY G ROSS
    
    Senior Vice President and
    
    February 26, 2010(Jeffrey G. Ross)
    
    Chief Financial Officer (Principal
Financial Officer)/S/ KEITH F. JENSEN
    
    Vice President and Corporate
    
    February 26, 2010(Keith Jensen)
    
    Controller (Principal Accounting
Officer)/S/ RICHARD C. ALBERDING
    
    Director
    
    February 26, 2010(Richard C. Alberding)/S/ CECILIA CLAUDIO
    
    Director
    
    February 26, 2010(Cecilia Claudio)/S/ MICHAEL A. DANIELS
    
    Director
    
    February 26, 2010(Michael A. Daniels)/S/ L. WILLIAM KRAUSE
    
    Director
    
    February 26, 2010(L. William Krause)/S/ ALAN B. SALISBURY
    
    Director
    
    February 26, 2010(Alan B. Salisbury)/S/ JACK E. SUM
    
    Director
    
    February 26, 2010(Jack E. Sum)/S/ ROBERT P. WAYMAN
    
    Director
    
    February 26, 2010(Robert P. Wayman)
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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 May 6, 2009.4.1 (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.4.5 (27)
    
    Indenture dated as of August 4, 2009 between the Company and U.S. Bank National
Association, as Trustee (including form of 3.50% Convertible Senior Notes due
2029).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 (10)*
    
    1988 Stock Option Plan and Forms of Incentive Stock Option Agreements and
Nonstatutory Stock Option Agreements, as amended.10.4 (26)*
    
    Form of Notice of Stock Option Grant and Agreement.10.5 (22)*
    
    Sybase, Inc. 401(k) Plan, as amended.10.6 (22)*
    
    Amendment No. 2 to the Sybase, Inc. 401(k) Plan dated December 22, 2005.
 - 120 -




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##### Table of Contents



Exhibit No.
    
    Description10.7 (14)*
    
    Sybase, Inc. 1992 Director Stock Option Plan, as amended.10.8 (9)*
    
    Sybase, Inc. 2001 Director Stock Option Plan.10.9 (5)*
    
    Executive Deferred Compensation Plan, as amended December 5, 2003.10.10 (22)*
    
    Amendment No. 1 to the Executive Deferred Compensation Plan, dated November 3, 2005.10.11 (9)*
    
    Sybase, Inc. 1996 Stock Plan, as amended.10.12 (21) *
    
    Form of Indemnification Agreement10.13 (13)*
    
    Form of Amended and Restated Change of Control Agreement (standard version).10.14 (13)*
    
    Form of Amended and Restated Change of Control Agreement (enhanced version).10. 15(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, 2005.10.15 (13)*
    
    Second Amended and Restated Employment Agreement between the Company and John S.
Chen dated as of December 18, 2007.10.17 (13)*
    
    Amended and Restated Change of Control Agreement between the Company and John Chen
dated December 18, 2007.10.18 (18)*
    
    Amended and Restated Sybase, Inc. 1999 Nonstatutory Stock Plan.10.19 (16)*
    
    InphoMatch, Inc. 2000 Equity Incentive Plan, Mobile 365, Inc. 2004 Equity Incentive
Plan and MobileWay, Inc. 2000 Stock Option Plan.10.20 (17)
    
    Corporate Headquarters Lease, dated January 28, 2000, between the Company and
WDS-Dublin, LLC, as amended on November 29, 2000, and December 13, 2001.10.21 (14)
    
    Amendment to Corporate Headquarters Lease, dated December 13, 2001, between the
Company and WDS-Dublin, LLC.10.22 (17)
    
    Trust Agreement dated May 1, 2000 between Fidelity Management Trust Company and the
Company for administration of the Sybase Executive Deferred Compensation Plan.10.23 (5)
    
    First Amendment to Trust Agreement between Fidelity Management Trust Company and
the Company for administration of Sybase Executive Deferred Compensation Plan.
 - 121 -




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##### Table of Contents



Exhibit No.
    
    Description10.24 (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, 2005.10.25 (5)
    
    November 17, 2003 Letter Agreement between Fidelity Management Trust Company and
Sybase, Inc. for administration of the Sybase Executive Deferred Compensation Plan.10.26 (17)*
    
    Financial Fusion, Inc. 2000 Stock Option Plan.10.27 (14)*
    
    Financial Fusion, Inc. 2001 Stock Option Plan.10.28 (14)*
    
    iAnywhere Solutions, Inc. Stock Option Plan.10.29 (26)*
    
    Form of Notice of Grant and Restricted Stock Purchase Agreement.10.30 (23)*
    
    Letter dated February 10, 2010 to John S. Chen regarding 2010 compensation.10.31 (26)*
    
    Executive Tax Preparation, Financial Planning and Legal Services Program for
Section 16 Officers, effective as of February 20, 2008.10.32 (5)*
    
    Summary Plan Description for Sabbatical Leave Plan of Sybase, Inc., as Amended and
Restated as of May 1, 2003.10.33 (28)*
    
    Amended and Restated Sybase, Inc. 2003 Stock Plan.10.34 (23)*
    
    Letter dated February 9, 2010 to Jeffrey Ross regarding 2010 compensation.10.35 (23)*
    
    Letter dated February 9, 2010 to Marty Beard regarding 2010 compensation.10.36 (23)*
    
    Letter dated February 9, 2010 to Raj Nathan regarding 2010 compensation.10.37 (23)*
    
    Letter dated February 9, 2010 to Steve Capelli regarding 2010 compensation.10.38 (23)*
    
    Summary of Vesting Terms for 2010 Grants to Chen, Ross, Beard, Nathan and Capelli.10.39 (21)
    
    Purchase Agreement, dated February 15, 2005 between the Company and Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Lehman Brothers Inc.10.40 (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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##### Table of Contents



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 Quarterly Report on Form 10-Q for the quarter
ended March 31, 2009.(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 12, 2010.(24)
    
    Incorporated by reference to the signature page of this Report on Form 10-K. - 123 -




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##### Table of Contents



(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.(27)
    
    Incorporated by reference to the Exhibits filed with the Companys Report on Form 8-K filed
on August 4, 2009.(28)
    
    Incorporated by reference to the Exhibits filed with the Companys Quarterly Report on Form
10-Q for the quarter ended September 30, 2009 - 124 -