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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|    |  |                                                                                   
|--- |  | ----------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the Quarter Ended September 30, 2003

|     |  |                                                                                          
|---- |  | -----------------------------------------------------------------------------------------
|[  ] |  | 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 0-19395

SYBASE, INC.

(Exact Name of Registrant as Specified in Its Charter)


|                                |  |                                     
|------------------------------- |  | ------------------------------------
|Delaware                        |  | 94-2951005                          
|                                |  |                                     
|(State or Other Jurisdiction of |  | (I.R.S. Employer Identification No.)
|Incorporation or Organization)  |  |                                     

One Sybase Drive, Dublin, California 94568




(Address of Principal Executive Offices)


Registrants Telephone Number, Including Area Code: (925) 236-5000

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes
[X]   No [  ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes
[X]   No  [  ]

On October 31, 2003, XXXXXXXshares of the Registrants Common Stock, $.001 par
value, were outstanding.





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TABLE OF CONTENTS



|                              |                                                                                               |                                                      |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|FORWARD-LOOKING STATEMENTS   
|PART I: FINANCIAL INFORMATION
|                              | ITEM 1: FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                              | ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK                              
|                              | ITEM 4: CONTROLS AND PROCEDURES                                                              
|PART II: OTHER INFORMATION   
|                              | ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                   
|EXHIBIT INDEX                
|Exhibit 31.1                 
|Exhibit 31.2                 
|Exhibit 32                   



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SYBASE, INC.
FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2003

INDEX

|                              |                                                                                                                        |  |      |    | 
|----------------------------- | ---------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                              |                                                                                                                        |  | Page
|                              |                                                                                                                        |  |     
|Forward-Looking Statements    |                                                                                                                        |  | 3    |   
|Part I: Financial Information |                                                                                                                        |  |      |   
|                              | Item 1: Financial Statements (Unaudited)                                                                               |  |      |    | 
|                              | Condensed Consolidated Balance Sheets as of September 30, 2003 and
December 31, 2002                                   |  |      | 4  | 
|                              | Condensed Consolidated Statements of Operations for the three
months and nine months ended September 30, 2003 and
2002 |  |      | 5  | 
|                              | Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 2003 and 2002                  |  |      | 6  | 
|                              | Notes to Condensed Consolidated Financial Statements                                                                   |  |      | 7  | 
|                              | Item 2: Managements Discussion and Analysis of Financial Condition
and Results of Operations                          |  |      | 23 | 
|                              | Item 3: Quantitative and Qualitative Disclosures of Market Risk                                                        |  |      | 46 | 
|                              | Item 4: Controls and Procedures                                                                                        |  |      | 47 | 
|Part II: Other Information    |                                                                                                                        |  |      |   
|                              | Item 6: Exhibits and Reports on Form 8-K                                                                               |  |      | 47 | 
|Signatures                    |                                                                                                                        |  | 49   |   
|Exhibit Index                 |                                                                                                                        |  | 50   |   

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FORWARD-LOOKING STATEMENTS

This document contains forwardlooking statements that involve risk and
uncertainties that could cause the actual results of Sybase, Inc. and its
consolidated subsidiaries (Sybase, the Company, we or us) to differ
materially from those expressed or implied by such forward-looking statements.
These risks include continued weakness in the U.S. and global economies; global
political unrest, including acts of terrorism and the situation in the Middle
East; sales productivity; possible disruptive effects of organizational
changes; shifts in customer or market demand for our products and services;
public perception of Sybase, our technology vision and future prospects; rapid
technological changes; competitive factors; delays in scheduled product
availability dates (which could result from various occurrences including
development or testing difficulties, software errors, shortages in
appropriately skilled software engineers and project management problems);
interoperability of our products with other software products, risks inherent
in completing the acquisition of other companies, the ability to integrate
acquired companies into our business, and other risks detailed from time to
time in our Securities and Exchange Commission filings, including those
discussed in Managements Discussion and Analysis of Financial Condition and
Results of Operations  Future Operating Results, Part I, Item 2 of this
Quarterly Report on Form 10-Q.

Expectations, forecasts, and projections that may be contained in this report
are by nature forward-looking statements, and future results cannot be
guaranteed. The words anticipate, believe, estimate, expect, intend,
will, and similar expressions in this document, as they relate to Sybase and
our management, may identify forward-looking statements. Such statements
reflect the current views of our management with respect to future events and
are subject to risks, uncertainties and assumptions. Forward-looking statements
that were true at the time made may ultimately prove to be incorrect or false,
or may vary materially from those described as anticipated, believed,
estimated, intended or expected. We do not intend to update these
forward-looking statements.

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PART I: FINANCIAL INFORMATION




ITEM 1: FINANCIAL STATEMENTS




SYBASE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                        |                                                                                                                                                                                 |                                                              |         |               |           |              |         |          |         | 
|------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ------- | ------------- | --------- | ------------ | ------- | -------- | ------- | 
|                                                        |                                                                                                                                                                                 |                                                              |         | September 30, |           |              |         |         
|                                                        |                                                                                                                                                                                 |                                                              |         | 2003          |           | December 31,
|(Dollars in thousands, except share and per share data) |                                                                                                                                                                                 | (Unaudited)                                                  |         | 2002         
|                                                        |                                                                                                                                                                                 |                                                              |         |              
|Current assets:                                         |                                                                                                                                                                                 |                                                              |         |               |           |              |         |         
|                                                        | Cash and cash equivalents                                                                                                                                                       |                                                              | $       | 339,296       |           |              | $       | 231,267  |        
|                                                        | Short-term cash investments                                                                                                                                                     |                                                              |         | 75,645        |           |              |         | 63,740   |        
|                                                        |                                                                                                                                                                                 |                                                              |         |               |           |              |         |          |        
|                                                        |                                                                                                                                                                                 | Total cash, cash equivalents and short-term cash investments |         |               | 414,941   |              |         |          | 295,007 | 
|                                                        | Restricted cash                                                                                                                                                                 |                                                              |         | 4,450         |           |              |         | 5,653    |        
|                                                        | Accounts receivable, net                                                                                                                                                        |                                                              |         | 109,060       |           |              |         | 169,193  |        
|                                                        | Deferred income taxes                                                                                                                                                           |                                                              |         | 20,153        |           |              |         | 20,097   |        
|                                                        | Other current assets                                                                                                                                                            |                                                              |         | 16,559        |           |              |         | 14,669   |        
|                                                        |                                                                                                                                                                                 |                                                              |         |               |           |              |         |          |        
|                                                        |                                                                                                                                                                                 | Total current assets                                         |         |               | 565,163   |              |         |          | 504,619 | 
|Long-term cash investments                              |                                                                                                                                                                                 |                                                              | 83,224  |               |           |              | 92,173  |         
|Restricted long-term cash investments                   |                                                                                                                                                                                 |                                                              | 3,400   |               |           |              |        |         
|Property, equipment and improvements, net               |                                                                                                                                                                                 |                                                              | 63,610  |               |           |              | 70,402  |         
|Deferred income taxes                                   |                                                                                                                                                                                 |                                                              | 49,215  |               |           |              | 46,295  |         
|Capitalized software, net                               |                                                                                                                                                                                 |                                                              | 63,247  |               |           |              | 62,266  |         
|Goodwill, net                                           |                                                                                                                                                                                 |                                                              | 151,802 |               |           |              | 136,826 |         
|Other purchased intangibles, net                        |                                                                                                                                                                                 |                                                              | 43,046  |               |           |              | 50,473  |         
|Other assets                                            |                                                                                                                                                                                 |                                                              | 36,234  |               |           |              | 29,695  |         
|                                                        |                                                                                                                                                                                 |                                                              |         |               |           |              |         |          |        
|                                                        |                                                                                                                                                                                 | Total assets                                                 |         | $             | 1,058,941 |              |         | $        | 992,749 | 
|                                                        |                                                                                                                                                                                 |                                                              |         |               |           |              |         |          |        
|Current liabilities:                                    |                                                                                                                                                                                 |                                                              |         |               |           |              |         |         
|                                                        | Accounts payable                                                                                                                                                                |                                                              | $       | 11,831        |           |              | $       | 13,085   |        
|                                                        | Accrued compensation and related expenses                                                                                                                                       |                                                              |         | 31,667        |           |              |         | 36,671   |        
|                                                        | Accrued income taxes                                                                                                                                                            |                                                              |         | 42,413        |           |              |         | 34,023   |        
|                                                        | Other accrued liabilities                                                                                                                                                       |                                                              |         | 94,225        |           |              |         | 112,468  |        
|                                                        | Deferred revenue                                                                                                                                                                |                                                              |         | 192,983       |           |              |         | 200,458  |        
|                                                        |                                                                                                                                                                                 |                                                              |         |               |           |              |         |          |        
|                                                        |                                                                                                                                                                                 | Total current liabilities                                    |         |               | 373,119   |              |         |          | 396,705 | 
|Other liabilities                                       |                                                                                                                                                                                 |                                                              | 14,004  |               |           |              | 10,641  |         
|Minority interest                                       |                                                                                                                                                                                 |                                                              | 5,029   |               |           |              | 5,029   |         
|Commitments and contingent liabilities                  |                                                                                                                                                                                 |                                                              |         |               |           |              |         |         
|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 96,697,157
outstanding (2002-105,337,362 shares issued and 94,660,056
outstanding) |                                                              |         | 105           |           |              |         | 105      |        
|                                                        | Additional paid-in capital                                                                                                                                                      |                                                              |         | 933,657       |           |              |         | 929,064  |        
|                                                        | Accumulated deficit                                                                                                                                                             |                                                              |         | (160,402      | )         |              |         | (189,936 | )      
|                                                        | Accumulated other comprehensive income/(loss)                                                                                                                                   |                                                              |         | 13,289        |           |              |         | (8,673   | )      
|                                                        | Cost of 8,640,205 shares of treasury stock (2002-10,677,306 shares)                                                                                                             |                                                              |         | (113,976      | )         |              |         | (146,816 | )      
|                                                        | Unearned compensation                                                                                                                                                           |                                                              |         | (5,884        | )         |              |         | (3,370   | )      
|                                                        |                                                                                                                                                                                 |                                                              |         |               |           |              |         |          |        
|                                                        |                                                                                                                                                                                 | Total stockholders equity                                   |         |               | 666,789   |              |         |          | 580,374 | 
|                                                        |                                                                                                                                                                                 |                                                              |         |               |           |              |         |          |        
|                                                        |                                                                                                                                                                                 | Total liabilities and stockholders equity                   |         | $             | 1,058,941 |              |         | $        | 992,749 | 
|                                                        |                                                                                                                                                                                 |                                                              |         |               |           |              |         |         

See accompanying notes.

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SYBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |         |         |  
|------------------------------------------------------------------------ | ------------------------------------------- | ------------------------ | ------ | ------------------ | ------- | ----------------- | ------ | ------- | ------- | - | ------ | ------- | ------- | - | -------- | ------- | ------- | -
|                                                                         |                                             |                          |        | Three Months Ended |         | Nine Months Ended
|                                                                         |                                             |                          |        | September 30       |         | September 30     
|                                                                         |                                             |                          |        |                    |         |                  
|(In thousands, except per share data)                                    |                                             | 2003                     |        | 2002               |         | 2003              |        | 2002   
|                                                                         |                                             |                          |        |                    |         |                   |        |        
|Revenues:                                                                |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|                                                                         | License fees                                |                          | $      | 68,481             |         |                   | $      | 78,754  |         |   | $      | 193,252 |         |   | $        | 240,051 |        
|                                                                         | Services                                    |                          |        | 125,349            |         |                   |        | 124,255 |         |   |        | 374,157 |         |   |          | 379,257 |        
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|                                                                         |                                             | Total revenues           |        |                    | 193,830 |                   |        |         | 203,009 |   |        |         | 567,409 |   |          |         | 619,308 |  
|Costs and expenses:                                                      |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|                                                                         | Cost of license fees                        |                          |        | 15,537             |         |                   |        | 12,766  |         |   |        | 44,055  |         |   |          | 37,455  |        
|                                                                         | Cost of services                            |                          |        | 40,652             |         |                   |        | 46,524  |         |   |        | 120,526 |         |   |          | 146,953 |        
|                                                                         | Sales and marketing                         |                          |        | 59,270             |         |                   |        | 65,865  |         |   |        | 177,432 |         |   |          | 203,714 |        
|                                                                         | Product development and engineering         |                          |        | 29,045             |         |                   |        | 28,046  |         |   |        | 88,311  |         |   |          | 87,515  |        
|                                                                         | General and administrative                  |                          |        | 20,280             |         |                   |        | 20,819  |         |   |        | 62,851  |         |   |          | 63,510  |        
|                                                                         | Amortization of other purchased intangibles |                          |        | 500                |         |                   |        | 500     |         |   |        | 1,500   |         |   |          | 1,500   |        
|                                                                         | Stock compensation expense                  |                          |        | 695                |         |                   |        | 497     |         |   |        | 2,083   |         |   |          | 1,491   |        
|                                                                         | Cost (reversal) of restructure              |                          |        | 1,270              |         |                   |        | 6,334   |         |   |        | 9,018   |         |   |          | 5,424   |        
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|                                                                         |                                             | Total costs and expenses |        |                    | 167,249 |                   |        |         | 181,351 |   |        |         | 505,776 |   |          |         | 547,562 |  
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|Operating income                                                         |                                             |                          | 26,581 |                    |         |                   | 21,658 |         |         |   | 61,633 |         |         |   | 71,746   |        
|Interest income                                                          |                                             |                          | 2,749  |                    |         |                   | 2,981  |         |         |   | 8,448  |         |         |   | 8,811    |        
|Interest expense and other, net                                          |                                             |                          | 3,521  |                    |         |                   | 269    |         |         |   | 3,789  |         |         |   | 2,878    |        
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|Income before income taxes and cumulative effect
of an accounting change |                                             |                          | 32,851 |                    |         |                   | 24,908 |         |         |   | 73,870 |         |         |   | 83,435   |        
|Provision for income taxes                                               |                                             |                          | 10,841 |                    |         |                   | 13,561 |         |         |   | 24,327 |         |         |   | 35,877   |        
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|Income before cumulative effect of an accounting change                  |                                             |                          | 22,010 |                    |         |                   | 11,347 |         |         |   | 49,543 |         |         |   | 47,558   |        
|Cumulative effect of an accounting change to adopt SFAS 142              |                                             |                          |       |                    |         |                   |       |         |         |   |       |         |         |   | (132,450 | )      
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|                                                                         |                                             | Net income (loss)        |        | $                  | 22,010  |                   |        | $       | 11,347  |   |        | $       | 49,543  |   |          | $       | (84,892 | )
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|Income per share before cumulative effect of an
Accounting change        |                                             | $                        | 0.23   |                    |         | $                 | 0.12   |         |         | $ | 0.53   |         |         | $ | 0.49     |        
|Cumulative effect of an accounting change                                |                                             |                          |       |                    |         |                   |       |         |         |   |       |         |         |   | (1.36    | )      
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|Basic net income (loss) per share                                        |                                             | $                        | 0.23   |                    |         | $                 | 0.12   |         |         | $ | 0.53   |         |         | $ | (0.87    | )      
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|Shares used in computing basic net income (loss) per share               |                                             |                          | 94,525 |                    |         |                   | 96,292 |         |         |   | 94,223 |         |         |   | 97,651   |        
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|Income per share before cumulative effect of an
Accounting change        |                                             | $                        | 0.23   |                    |         | $                 | 0.12   |         |         | $ | 0.51   |         |         | $ | 0.47     |        
|Cumulative effect of an accounting change                                |                                             |                          |       |                    |         |                   |       |         |         |   |       |         |         |   | (1.31    | )      
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|Diluted net income (loss) per share                                      |                                             | $                        | 0.23   |                    |         | $                 | 0.12   |         |         | $ | 0.51   |         |         | $ | (0.84    | )      
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        
|Shares used in computing diluted net income (loss) per share             |                                             |                          | 97,437 |                    |         |                   | 98,432 |         |         |   | 96,694 |         |         |   | 100,488  |        
|                                                                         |                                             |                          |        |                    |         |                   |        |         |         |   |        |         |         |   |          |        

See accompanying notes.

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SYBASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                                                |                   |                                                                                 |                                                   |                                           |          |                   |         |        |          |         |         |  
|------------------------------------------------------------------------------- | ----------------- | ------------------------------------------------------------------------------- | ------------------------------------------------- | ----------------------------------------- | -------- | ----------------- | ------- | ------ | -------- | ------- | ------- | -
|                                                                                |                   |                                                                                 |                                                   |                                           |          | Nine Months Ended
|                                                                                |                   | September 30                                                                   
|(Dollars in thousands)                                                          |                   | 2003                                                                            |                                                   | 2002                                     
|                                                                                |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|Cash and cash equivalents, beginning of year                                    |                   | $                                                                               | 231,267                                           |                                           |          | $                 | 222,793 |       
|Cash flows from operating activities:                                           |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|                                                                                |                   | Net income (loss)                                                               |                                                   |                                           | 49,543   |                   |         |        | (84,892  | )      
|Adjustments to reconcile net loss to net cash provided by operating activities: |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|                                                                                |                   |                                                                                 | Depreciation and amortization                     |                                           |          | 63,208            |         |        |          | 61,070  |        
|                                                                                |                   |                                                                                 | Write-off of assets in restructuring              |                                           |          | 379               |         |        |          |        |        
|                                                                                |                   |                                                                                 | Gain on disposal of assets                        |                                           |          | (263              | )       |        |          | (3,126  | )      
|                                                                                |                   |                                                                                 | Cumulative effect of an accounting change         |                                           |          |                  |         |        |          | 132,450 |        
|                                                                                |                   |                                                                                 | Deferred income taxes                             |                                           |          | (3,959            | )       |        |          | (3,859  | )      
|                                                                                |                   |                                                                                 | Amortization of deferred stock-based compensation |                                           |          | 2,083             |         |        |          | 1,490   |        
|                                                                                |                   |                                                                                 | Changes in assets and liabilities:                |                                           |          |                   |         |        |          |         |        
|                                                                                |                   |                                                                                 |                                                   | Accounts receivable                       |          |                   | 67,593  |        |          |         | 58,562  |  
|                                                                                |                   |                                                                                 |                                                   | Other current assets                      |          |                   | 1,337   |        |          |         | 3,833   |  
|                                                                                |                   |                                                                                 |                                                   | Accounts payable                          |          |                   | (1,907  | )      |          |         | (34     | )
|                                                                                |                   |                                                                                 |                                                   | Accrued compensation and related expenses |          |                   | (5,960  | )      |          |         | (13,092 | )
|                                                                                |                   |                                                                                 |                                                   | Accrued income taxes                      |          |                   | 8,483   |        |          |         | 17,820  |  
|                                                                                |                   |                                                                                 |                                                   | Other accrued liabilities                 |          |                   | (28,663 | )      |          |         | (34,382 | )
|                                                                                |                   |                                                                                 |                                                   | Deferred revenues                         |          |                   | (8,276  | )      |          |         | (15,302 | )
|                                                                                |                   |                                                                                 |                                                   | Other liabilities                         |          |                   | 3,484   |        |          |         | 3,637   |  
|                                                                                |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|Net cash provided by operating activities                                       |                   |                                                                                 | 147,082                                           |                                           |          |                   | 124,175 |       
|Cash flows from investing activities:                                           |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|                                                                                |                   | (Increase) Decrease in restricted cash                                          |                                                   |                                           | 1,203    |                   |         |        | (496     | )      
|                                                                                |                   | Purchases of available-for-sale cash investments                                |                                                   |                                           | (186,129 | )                 |         |        | (174,584 | )      
|                                                                                |                   | Maturities of available-for-sale cash investments                               |                                                   |                                           | 137,907  |                   |         |        | 40,613   |        
|                                                                                |                   | Sales of available-for-sale cash investments                                    |                                                   |                                           | 45,162   |                   |         |        | 143,699  |        
|                                                                                |                   | Business combinations, net of cash acquired                                     |                                                   |                                           | (13,900  | )                 |         |        | (1,973   | )      
|                                                                                |                   | Purchases of property, equipment and improvements                               |                                                   |                                           | (26,043  | )                 |         |        | (33,805  | )      
|                                                                                |                   | Proceeds from sale of fixed assets                                              |                                                   |                                           | 152      |                   |         |        | 1,001    |        
|                                                                                |                   | Capitalized software development costs                                          |                                                   |                                           | (22,812  | )                 |         |        | (24,880  | )      
|                                                                                |                   | (Increase) Decrease in other assets                                             |                                                   |                                           | (184     | )                 |         |        | 1,212    |        
|                                                                                |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|Net cash used for investing activities                                          |                   |                                                                                 | (64,644                                           | )                                         |          |                   | (49,213 | )     
|Cash flows from financing activities:                                           |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|                                                                                |                   | Net proceeds from the issuance of common stock and
reissuance of treasury stock |                                                   |                                           | 33,315   |                   |         |        | 21,307   |        
|                                                                                |                   | Purchases of treasury stock                                                     |                                                   |                                           | (30,883  | )                 |         |        | (79,042  | )      
|                                                                                |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|Net cash provided by (used for) financing activities                            |                   |                                                                                 | 2,432                                             |                                           |          |                   | (57,735 | )     
|Effect of exchange rate changes on cash                                         |                   |                                                                                 | 23,159                                            |                                           |          |                   | 11,135  |       
|                                                                                |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|Net increase in cash and cash equivalents                                       |                   |                                                                                 | 108,029                                           |                                           |          |                   | 28,362  |       
|                                                                                |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|Cash and cash equivalents, end of period                                        |                   |                                                                                 | 339,296                                           |                                           |          |                   | 251,155 |       
|Cash investments, end of period                                                 |                   |                                                                                 | 158,869                                           |                                           |          |                   | 111,868 |       
|                                                                                |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|Total cash, cash equivalents and cash investments, end of period                |                   | $                                                                               | 498,165                                           |                                           |          | $                 | 363,023 |       
|                                                                                |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|Supplemental disclosures:                                                       |                   |                                                                                 |                                                   |                                           |          |                   |         |       
|                                                                                | Interest paid     |                                                                                 | $                                                 | 46                                        |          |                   | $       | 126    |         
|                                                                                | Income taxes paid |                                                                                 | $                                                 | 19,739                                    |          |                   | $       | 19,282 |         

See accompanying notes.

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.     Basis of Presentation. The accompanying unaudited condensed consolidated
financial statements include the accounts of Sybase, Inc. and its subsidiaries,
and, in the opinion of management, reflect all adjustments (consisting only of
normal recurring adjustments) necessary to fairly state the Companys
consolidated financial position, results of operations, and cash flows as of
and for the dates and periods presented. The condensed consolidated balance
sheet as of December 31, 2002 has been prepared from the Companys audited
consolidated financial statements.

Certain information and footnote disclosures normally included in the annual
financial statements have been condensed or omitted. These unaudited condensed
consolidated financial statements should be read in conjunction with our
audited consolidated financial statements included in the Companys Annual
Report on Form 10-K for the year ended December 31, 2002. The results of
operations for the three and nine months ended September 30, 2003 are not
necessarily indicative of results for the entire fiscal year ending December
31, 2003.

2     Stock-Based Compensation. SFAS 123, Accounting for Stock-Based
Compensation, encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair value.
Sybase has chosen to continue to account for stock-based employee compensation
using the intrinsic value method. Accordingly, compensation cost for stock
options granted to employees is measured as the excess, if any, of the quoted
market price of the Companys stock at the date of the grant over the amount an
employee must pay to acquire the stock.

Had compensation cost been charged to expense for grants to employees under the
Companys fixed stock option plans (including the Financial Fusion, Inc. (FFI)
and iAnywhere Solutions, Inc. (iAS) stock plans) and the Companys employee
stock purchase plan based on the fair value at the grant dates for awards under
those plans, consistent with the method encouraged by SFAS 123, the Companys
net income/(loss) and net income/(loss) per share would have been adjusted to
the pro forma amounts indicated below:

|                                                                                                              |             |         |        |         |  |         |        |         |  |        |         |      |  |   |          |       |   | 
|------------------------------------------------------------------------------------------------------------- | ----------- | ------- | ------ | ------- |  | ------- | ------ | ------- |  | ------ | ------- | ---- |  | - | -------- | ----- | - | 
|                                                                                                              |             |         |        | Three   |  | Three   |        | Nine    |  | Nine  
|                                                                                                              |             |         |        | Months  |  | Months  |        | Months  |  | Months
|                                                                                                              |             |         |        | Ended   |  | Ended   |        | Ended   |  | Ended 
|(Dollars in thousands, except per share data)                                                                 |             | 9/30/03 |        | 9/30/02 |  | 9/30/03 |        | 9/30/02
|                                                                                                              |             |         |        |         |  |         |        |        
|As reported net income/(loss)  stock-based
employee compensation determined using the
intrinsic value method |             | $       | 22,010 |         |  | $       | 11,347 |         |  | $      | 49,543  |      |  | $ | (84,892  | )    
|Add: Stock-based employee compensation cost, net
of tax, included in net income as reported                   |             | $       | 695    |         |  | $       | 497    |         |  | $      | 2,083   |      |  | $ | 1,491    |      
|Less: Pro-forma stock-based employee
compensation cost, net of tax, determined under
the fair value method    |             | $       | (6,936 | )       |  | $       | (9,006 | )       |  | $      | (22,909 | )    |  | $ | (27,006  | )    
|                                                                                                              |             |         |        |         |  |         |        |         |  |        |         |      |  |   |          |      
|Pro-forma net income/(loss)  stock-based
employee compensation determined under the fair
value method        |             | $       | 15,769 |         |  | $       | 2,838  |         |  | $      | 28,717  |      |  | $ | (110,407 | )    
|Basic net income/(loss) per share                                                                             |             |         |        |         |  |         |        |         |  |        |         |      |  |   |          |      
|                                                                                                              | As reported |         | $      | 0.23    |  |         | $      | 0.12    |  |        | $       | 0.53 |  |   | $        | (0.87 | )
|                                                                                                              | Pro forma   |         |        | 0.17    |  |         |        | 0.03    |  |        |         | 0.30 |  |   |          | (1.13 | )
|Diluted net income/(loss) per share                                                                           |             |         |        |         |  |         |        |         |  |        |         |      |  |   |          |      
|                                                                                                              | As reported |         | $      | 0.23    |  |         | $      | 0.12    |  |        | $       | 0.51 |  |   | $        | (0.84 | )
|                                                                                                              | Pro forma   |         |        | 0.17    |  |         |        | 0.03    |  |        |         | 0.30 |  |   |          | (1.13 | )

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The fair value employee compensation cost presented above was determined using
the Black-Scholes option-pricing model using the following weighted-average
assumptions:

|                         |  |         |       |         |  |         |       |         |  |  |       |   |  |  |       |  
|------------------------ |  | ------- | ----- | ------- |  | ------- | ----- | ------- |  |  | ----- | - |  |  | ----- | -
|                         |  | Three   |       | Three   |  | Nine    |       | Nine   
|                         |  | Months  |       | Months  |  | Months  |       | Months 
|                         |  | Ended   |       | Ended   |  | Ended   |       | Ended  
|                         |  | 9/30/03 |       | 9/30/02 |  | 9/30/03 |       | 9/30/02
|                         |  |         |       |         |  |         |       |        
|Expected volatility      |  |         | 62.92 | %       |  |         | 67.65 | %       |  |  | 64.68 | % |  |  | 67.65 | %
|Risk-free interest rates |  |         | 2.67  | %       |  |         | 3.46  | %       |  |  | 2.55  | % |  |  | 3.46  | %
|Expected lives (years)   |  |         | 4.25  |         |  |         | 4.25  |         |  |  | 4.25  |   |  |  | 4.25  |  
|Expected dividend yield  |  |         |      |         |  |         |      |         |  |  |      |   |  |  |      |  

3.     Business Combinations. On December 20, 2002, Sybase agreed to acquire all
the outstanding capital stock of AvantGo, Inc. (AvantGo) a publicly traded
provider of mobile enterprise software, for approximately $40.5 million in cash
including $1.4 million in merger-related transaction expenses. On February 25,
2003, the AvantGo shareholders approved the transaction. As a result of the
acquisition, Sybase expects to strengthen its position in the mobile middleware
market and provide a more complete m-Business platform to its customers. The
results of AvantGo are included in the Companys iAS reporting segment. The
excess of the purchase price over the fair value of the net assets acquired is
approximately $20.1 million. This amount is subject to change pending the
final analysis of the fair values of the assets acquired and the liabilities
assumed, including the valuation of certain tax assets acquired that are
dependent upon the filing of AvantGos final federal and state income tax
returns. Included in the liabilities acquired is $4.7 million related to
estimated facility and severance exit costs accounted for in accordance with
Emerging Task Force Issue Number 95-3 Recognition of Liabilities in Connection
with a Purchase Business Combination.

Of the estimated $20.1 million excess, $2.4 was allocated to developed
technology, $3.1 million was allocated to the AvantGo family of trade names,
and $14.6 million was allocated to goodwill. The developed technology was
assigned a useful life of six years, while an indefinite life was assigned to
the trade names. The allocation and assignment of useful lives was based on a
valuation prepared by an independent third-party appraiser. Included in the
goodwill is approximately $1.0 million that was allocated to goodwill with an
offsetting amount allocated to long-term deferred tax liability for the tax
effect of the amortization of the developed technology, which is not deductible
for tax purposes.

In connection with the acquisition of AvantGo, the Company assumed certain
liabilities associated with AvantGos 2001 and 2002 restructuring programs.
These accrued restructure
liabilities primarily related to excess space at AvantGos Hayward, California
and Chicago, Illinois facilities. The following table summarizes the
restructuring liabilities acquired and post-acquisition activity related to
AvantGos restructuring actions:

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

|                                                          |  |             |     |         |  |          |     |         |  |   |   |             |  |         |     | 
|--------------------------------------------------------- |  | ----------- | --- | ------- |  | -------- | --- | ------- |  | - | - | ----------- |  | ------- | --- | 
|                                                          |  |             |     |         |  |          |     |         |  |   |   |             |  | Accrued
|                                                          |  | Accrued     |     |         |  |          |     |         |  |   |   | liabilities
|                                                          |  | liabilities |     | Amounts |  | Amounts  |     | at     
|(Dollars in millions)                                     |  | Assumed     |     | Paid    |  | reversed |     | 9/30/03
|                                                          |  |             |     |         |  |          |     |        
|Termination payments to employees
and other related costs |  | $           | 0.3 |         |  | $        |    |         |  |   |  |             |  | $       | 0.3 | 
|Lease cancellations and commitments                       |  |             | 4.0 |         |  |          | 0.7 |         |  |   |  |             |  |         | 3.3 | 
|                                                          |  |             |     |         |  |          |     |         |  |   |   |             |  |         |     | 
|                                                          |  | $           | 4.3 |         |  | $        | 0.7 |         |  | $ |  |             |  | $       | 3.6 | 
|                                                          |  |             |     |         |  |          |     |         |  |   |   |             |  |         |     | 

The following unaudited pro forma quarterly financial information presents the
combined results of operations of Sybase and AvantGo as if the acquisition of
AvantGo had occurred as of the beginning of 2003 and 2002, respectively. The
pro forma quarterly financial information gives effect to certain adjustments,
including the amortization of developed technology and the elimination of
AvantGos amortization of stock-based compensation. The pro forma financial
information does not necessarily reflect the results of operations that would
have occurred had the two companies constituted a single entity during such
periods.

|                                                                  |  |         |         |         |  |   |          |  
|----------------------------------------------------------------- |  | ------- | ------- | ------- |  | - | -------- | -
|                                                                  |  | Nine    |         | Nine   
|                                                                  |  | Months  |         | Months 
|                                                                  |  | Ended   |         | Ended  
|(In thousands, except per share data)                             |  | 9/30/03 |         | 9/30/02
|                                                                  |  |         |         |        
|Revenue                                                           |  | $       | 569,425 |         |  | $ | 633,868  |  
|Income before the cumulative effect of an accounting change       |  |         | 37,730  |         |  |   | 31,302   |  
|Net income (loss)                                                 |  | $       | 37,730  |         |  | $ | (101,248 | )
|Income per share before cumulative effect of an accounting change |  | $       | 0.40    |         |  | $ | 0.32     |  
|Cumulative effect of an accounting change                         |  |         |        |         |  |   | (1.36    | )
|                                                                  |  |         |         |         |  |   |          |  
|Basic net income (loss) per share                                 |  | $       | 0.40    |         |  | $ | (1.04    | )
|                                                                  |  |         |         |         |  |   |          |  
|Income per share before cumulative effect of an accounting change |  | $       | 0.39    |         |  | $ | 0.31     |  
|Cumulative effect of an accounting change                         |  |         |        |         |  |   | (1.32    | )
|                                                                  |  |         |         |         |  |   |          |  
|Diluted net income (loss) per share                               |  | $       | 0.39    |         |  | $ | (1.01    | )
|                                                                  |  |         |         |         |  |   |          |  

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

4.     Net income per share. Shares used in computing basic and diluted net income
(loss) per share are based on the weighted average shares outstanding in each
period, excluding treasury stock. Basic net income (loss) per share excludes
any dilutive effects of stock options. Diluted net income (loss) per share
includes the dilutive effect of the assumed exercise of stock options, and
restricted stock using the treasury stock method. The following table shows
the computation of basic and diluted net income (loss) per share:

|                                                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |          |  
|----------------------------------------------------------------- |  | ------- | ------ | ------- |  | ------- | ------ | ------- |  | - | ------ |  |  | - | -------- | -
|                                                                  |  | Three   |        | Three   |  | Nine    |        | Nine   
|                                                                  |  | Months  |        | Months  |  | Months  |        | Months 
|                                                                  |  | Ended   |        | Ended   |  | Ended   |        | Ended  
|(In thousands, except per share data)                             |  | 9/30/03 |        | 9/30/02 |  | 9/30/03 |        | 9/30/02
|                                                                  |  |         |        |         |  |         |        |        
|Income before cumulative effect of an accounting change           |  | $       | 22,010 |         |  | $       | 11,347 |         |  | $ | 49,543 |  |  | $ | 47,558   |  
|Cumulative effect of an accounting change to adopt SFAS 142       |  |         |       |         |  |         |       |         |  |   |       |  |  |   | (132,450 | )
|                                                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |          |  
|Net income (loss)                                                 |  | $       | 22,010 |         |  | $       | 11,347 |         |  | $ | 49,543 |  |  | $ | (84,892  | )
|                                                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |          |  
|Income per share before cumulative effect of an accounting
change |  | $       | 0.23   |         |  | $       | 0.12   |         |  | $ | 0.53   |  |  | $ | 0.49     |  
|Cumulative effect of an accounting change                         |  |         |       |         |  |         |       |         |  |   |       |  |  |   | (1.36    | )
|                                                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |          |  
|Basic net income (loss) per share                                 |  | $       | 0.23   |         |  | $       | 0.12   |         |  | $ | 0.53   |  |  | $ | (0.87    | )
|                                                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |          |  
|Shares used in computing basic net income (loss) per share        |  |         | 94,525 |         |  |         | 96,292 |         |  |   | 94,223 |  |  |   | 97,651   |  
|                                                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |          |  
|Income per share before cumulative effect of an accounting
change |  | $       | 0.23   |         |  | $       | 0.12   |         |  | $ | 0.51   |  |  | $ | 0.47     |  
|Cumulative effect of an accounting change                         |  |         |       |         |  |         |       |         |  |   |       |  |  |   | (1.31    | )
|                                                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |          |  
|Diluted net income (loss) per share                               |  | $       | 0.23   |         |  | $       | 0.12   |         |  | $ | 0.51   |  |  | $ | (0.84    | )
|                                                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |          |  
|Shares used in computing basic net income (loss) per share        |  |         | 94,525 |         |  |         | 96,292 |         |  |   | 94,223 |  |  |   | 97,651   |  
|Dilutive effect of stock options                                  |  |         | 2,765  |         |  |         | 1,756  |         |  |   | 2,388  |  |  |   | 2,453    |  
|Dilutive effect of restricted stock                               |  |         | 147    |         |  |         | 384    |         |  |   | 83     |  |  |   | 384      |  
|                                                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |          |  
|Shares used in computing diluted net income (loss) per share      |  |         | 97,437 |         |  |         | 98,432 |         |  |   | 96,694 |  |  |   | 100,488  |  
|                                                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |          |  

5.     Comprehensive Income (Loss). The following table sets forth the calculation
of comprehensive income (loss) for all periods presented:

|                                                   |  |         |        |         |  |         |        |         |  |   |        |   |  |   |         |  
|-------------------------------------------------- |  | ------- | ------ | ------- |  | ------- | ------ | ------- |  | - | ------ | - |  | - | ------- | -
|                                                   |  | Three   |        | Three   |  | Nine    |        | Nine   
|                                                   |  | Months  |        | Months  |  | Months  |        | Months 
|                                                   |  | Ended   |        | Ended   |  | Ended   |        | Ended  
|(In thousands)                                     |  | 9/30/03 |        | 9/30/02 |  | 9/30/03 |        | 9/30/02
|                                                   |  |         |        |         |  |         |        |        
|Net income (loss)                                  |  | $       | 22,010 |         |  | $       | 11,347 |         |  | $ | 49,543 |   |  | $ | (84,892 | )
|Foreign currency
translation gains/(losses)        |  |         | 4,538  |         |  |         | (1,652 | )       |  |   | 22,268 |   |  |   | 8,352   |  
|Unrealized gains/(losses)
on marketable securities |  |         | (204   | )       |  |         | 606    |         |  |   | (306   | ) |  |   | 242     |  
|                                                   |  |         |        |         |  |         |        |         |  |   |        |   |  |   |         |  
|Comprehensive income (loss)                        |  | $       | 26,344 |         |  | $       | 10,301 |         |  | $ | 71,505 |   |  | $ | (76,298 | )
|                                                   |  |         |        |         |  |         |        |         |  |   |        |   |  |   |         |  

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

6.     Effects of New Accounting Pronouncements. In January 2003, the FASB issued
Interpretation No. 46, Consolidation of Variable Interest Entities, an
Interpretation of Accounting Research Bulletin (ARB) No. 51 (Interpretation
46). Interpretation 46, which establishes accounting guidance for determining
whether certain variable interest entities (VIEs) are required to be
consolidated by their investors, sponsors or transferors. In general, variable
interests are contractual, ownership, or other interests in an entity that
expose their holders to the risks and rewards of the VIE. Variable interests
include equity investments, loans, leases, derivatives, guarantees and other
instruments whose values change with changes in the VIEs assets. The new
rules determine control, and the resulting need for consolidation, based on
which holder bears the majority of the potential variability in losses and
gains of the VIE being evaluated. These rules are currently effective for any
variable interest in VIEs created after January 31, 2003 and will be effective
for variable interests in VIEs created before January 31, 2003 in the Companys
quarter ending December 31, 2003. The adoption of the effective provisions of
Interpretation 46 did not have any impact on the Companys consolidated
financial position or statement of operations.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure (SFAS 148), effective for fiscal
years ending after December 15, 2002. SFAS 148 amends SFAS No. 123,
Accounting for Stock-Based Compensation (SFAS 123), to provide alternative
methods of transition to the voluntary fair value method of accounting for
stock-based employee compensation. SFAS 148 also amends the disclosure
provisions of SFAS 123 to require that disclosure of the pro forma effect of
using the fair value method of accounting for stock-based employee compensation
be displayed in tabular format within our financial statements. See Note 2
above.

In November 2002, the FASB issued FIN 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. FIN 45 requires that the Company recognize the fair value for guarantee
and indemnification arrangements issued or modified by the Company after
December 31, 2002, if these arrangements are within the scope of the
Interpretation. In addition, the Company must continue to monitor the
conditions that are subject to the guarantees and indemnifications, as required
under previously existing generally accepted accounting principles, in order to
identify if a loss has occurred. If the Company determines it is probable that
a loss has occurred then any such estimable loss would be recognized under
those guarantees and indemnifications. Under its standard software license
agreement (SWLA), the Company agrees to indemnify, defend and hold harmless its
licensees from and against certain losses, damages and costs arising from
claims alleging the licensees use of Company software infringes the
intellectual property rights of a third party. Historically, the Company has
not been required to pay material amounts in connection with claims asserted
under these provisions and, accordingly, the Company has not recorded a
liability relating to such provisions. Under the SWLA, the Company also
represents and warrants to licensees that its software products operate
substantially in accordance with
published specifications. Under its standard consulting and development
agreement, the

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Company warrants that the services it performs will be
undertaken by qualified personnel in a professional manner conforming to
generally accepted industry standards and practices. Historically, only
minimal costs have been incurred relating to the satisfaction of product
warranty claims and, as such, no accruals for warranty claims have been made.
Other guarantees include promises to indemnify, defend and hold harmless each
of the Companys executive officers, non-employee directors and certain key
employees from and against losses, damages and costs incurred by each such
individual in administrative, legal or investigative proceedings arising from
alleged wrongdoing by the individual while acting in good faith within the
scope of his or her job duties on behalf of the Company. Historically minimal
costs have been incurred relating to such indemnifications and, as such, no
accruals for these guarantees have been made. The Company implemented the
provisions of FIN 45 as of January 1, 2003. The implementation of FIN 45 did
not have a material impact on Sybases financial position, results of
operations or cash flows.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities (SFAS 146) effective for calendar years
beginning after December 31, 2002. Under SFAS 146 a liability for the cost
associated with an exit or disposal activity is recognized when the liability
is incurred. Under prior guidance, a liability for such costs could be
recognized at the date of commitment to an exit plan. SFAS No. 146 also
requires that the liability be measured and recorded at fair value.
Accordingly, the adoption of this standard may affect the timing of recognizing
future restructuring costs as well as the amounts recognized. We applied the
provisions of SFAS 146 to restructuring activities undertaken during the
quarter ended June 30, 2003 and will apply to any future restructuring
activities.

7.     Accounting for Goodwill. In June 2001, the FASB issued Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets,
(SFAS 142) effective for fiscal years beginning after December 15, 2001. Under
SFAS 142, goodwill and intangible assets deemed to have indefinite lives are to
be separately disclosed on the balance sheet, and no longer amortized but
subject to annual impairment tests. With the adoption of SFAS 142, we ceased
amortization of goodwill as of January 1, 2002. Prior to this point, goodwill
was amortized using the straight-line method over its estimated useful life.

SFAS 142 requires that goodwill be tested for impairment at the reporting unit
level (i.e., our business segments) upon adoption and at least annually
thereafter using a two-step impairment analysis. In accordance with SFAS 142,
the Company performed the first of the required two-step impairment tests of
goodwill and indefinite-lived assets as of January 1, 2002. In performing the
first step of this analysis, the Company first assigned its assets and
liabilities, including existing goodwill and other intangible assets, to its
identified reporting units to determine their carrying value. For this
purpose, the Companys reporting units equated to its five business segments
then in place. The Companys reporting units equate to its business segments
since this is the lowest level of the Company at which operating plans are
prepared and operating profitability is measured for assessing management
performance. A consolidation of the Companys business segments, such as
occurred in the first quarter of 2003, will impact the business units tested
under SFAS 142. See Note 8 for more information regarding the

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Companys
business segments.Based on an analysis of an independent third party
appraiser, the Company then estimated the fair value of each reporting unit
utilizing various valuation techniques including discounted cash flow and
comparative market analysis. Step one of this
analysis was then completed by comparing the carrying value of each reporting
unit to its fair value. This comparison indicated a possible goodwill
impairment within the FFI and the then-existing eBD reporting unit.

In step two of the analysis, the Company allocated the fair value of FFI and
eBD to their respective assets and then compared the implied value of their
goodwill to such goodwills carrying value. Based on the completed analysis,
the Company recognized an impairment loss of $132.5 million in the first
quarter of 2002. Of this impairment loss, $39.0 million related to the FFI
reporting unit and $93.5 million related to the then-existing eBD reporting
unit. This loss was recognized as a cumulative effect of an accounting change
in the quarter ended March 31, 2002. The impairment loss had no income tax
effect.

The following table reflects the changes in the carrying amount of goodwill
(including assembled workforce) by reporting unit.

|                                         |  |     |         |     |  |     |        |       |  |   |        |  |  |              |         |  
|---------------------------------------- |  | --- | ------- | --- |  | --- | ------ | ----- |  | - | ------ |  |  | ------------ | ------- | -
|                                         |  |     |         |     |  |     |        |       |  |   |        |  |  | Consolidated
|(In thousands)                           |  | IPG |         | FFI |  | IAS |        | Total
|                                         |  |     |         |     |  |     |        |      
|Balance at January 1, 2003               |  | $   | 107,456 |     |  | $   | 29,281 |       |  | $ | 89     |  |  | $            | 136,826 |  
|Goodwill recorded on AvantGo acquisition |  |     |        |     |  |     |       |       |  |   | 14,613 |  |  |              | 14,613  |  
|Reduction in acquisition costs           |  |     | (4      | )   |  |     |       |       |  |   |       |  |  |              | (4      | )
|Foreign currency translation adjustments |  |     | 367     |     |  |     |       |       |  |   |       |  |  |              | 367     |  
|                                         |  |     |         |     |  |     |        |       |  |   |        |  |  |              |         |  
|Balance at September 30, 2003            |  | $   | 107,819 |     |  | $   | 29,281 |       |  | $ | 14,702 |  |  | $            | 151,802 |  
|                                         |  |     |         |     |  |     |        |       |  |   |        |  |  |              |         |  

The following table reflects intangible assets as of September 30, 2003 and
December 31, 2002:

|                     |  |          |         |              |  |          |         |          |  |              |        |                 |  |   |        |  |  |   |         |   |  |   |        | 
|-------------------- |  | -------- | ------- | ------------ |  | -------- | ------- | -------- |  | ------------ | ------ | --------------- |  | - | ------ |  |  | - | ------- | - |  | - | ------ | 
|                     |  | Gross    |         |              |  |          |         | Net      |  | Gross        |        |                 |  |   |        |  |  |  
|                     |  | Carrying |         | Accumulated  |  | Carrying |         | Carrying |  | Accumulated  |        | Net            
|                     |  | Amount   |         | Amortization |  | Amount   |         | Amount   |  | Amortization |        | Carrying Amount
|(In thousands)       |  | 9/30/03  |         | 9/30/03      |  | 9/30/03  |         | 12/31/02 |  | 12/31/02     |        | 12/31/02       
|                     |  |          |         |              |  |          |         |          |  |              |        |                
|Purchased technology |  | $        | 79,100  |              |  | $        | (51,765 | )        |  | $            | 27,335 |                 |  | $ | 76,700 |  |  | $ | (40,338 | ) |  | $ | 36,362 | 
|AvantGo tradenames   |  |          | 3,100   |              |  |          |        |          |  |              | 3,100  |                 |  |   |       |  |  |   |        |   |  |   |       | 
|Customer lists       |  |          | 20,000  |              |  |          | (7,389  | )        |  |              | 12,611 |                 |  |   | 20,000 |  |  |   | (5,889  | ) |  |   | 14,111 | 
|                     |  |          |         |              |  |          |         |          |  |              |        |                 |  |   |        |  |  |   |         |   |  |   |        | 
|Totals               |  | $        | 102,200 |              |  | $        | (59,154 | )        |  | $            | 43,046 |                 |  | $ | 96,700 |  |  | $ | (46,227 | ) |  | $ | 50,473 | 
|                     |  |          |         |              |  |          |         |          |  |              |        |                 |  |   |        |  |  |   |         |   |  |   |        | 



The amortization expense on these intangible assets for the three and nine
months ended September 30, 2003 was $4.3 million and $12.9 million,
respectively. Estimated amortization expense for each of the next five years
ending December 31, is as follows (dollars in thousands):

|     |  |   |        | 
|---- |  | - | ------ | 
|2003 |  | $ | 17,258 | 
|2004 |  |   | 17,325 | 
|2005 |  |   | 8,746  | 
|2006 |  |   | 2,567  | 
|2007 |  |   | 2,400  | 

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The AvantoGo tradenames were assigned an indefinite life and will not be
amortized but instead tested for impairment in the same manner as goodwill.

8.     Segment Information. During 2002, the Company was organized into five
separate business segments, including two majority-owned subsidiaries, each of
which focused on one of five key market segments  Enterprise Solutions
Division (ESD), e-Business Division (eBD), Business Intelligence Division
(BID), iAnywhere Solutions, Inc. (iAS) and Financial Fusion, Inc. (FFI).

Beginning in 2003, the Company created a new Infrastructure Platform Group
(IPG). This segment includes, under one umbrella organization, the former
operations of the ESD, eBD, and BID segments. IPG is focused on integrating
and providing synergies between the Companys application infrastructure
products and solutions with an emphasis on delivering leading edge, open and
modular technology and solutions. Both iAS and FFI continue as separate
segments.

ESD, which is now part of the IPG division, provided products and solutions
that let enterprises integrate, move and manage very large amounts of data and
applications across diverse computing environments. eBD, which is also now
part of the IPG division, provided solutions to enterprises for the integration
of their core technologies and information. BID, which is the final former
segment combined into the IPG division, provided products and solutions that
let businesses consolidate and analyze large amounts of information.

iAS continues to provide mobile and embedded solutions to empower businesses
with always-available access to enterprise information while FFI delivers
e-Finance solutions to leading financial institutions, fusing applications and
middleware on a single integrated platform.

The Company discloses iAS, FFI, IPG as reportable segments in accordance with
Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information. As ESD, eBD and BID have
been combined into IPG and are no longer reported as separate segments, the
Company has restated all earlier periods reported to reflect the segment
changes made in the first quarter of 2003.

Sybases Chief Operating Decision Maker (CODM), which is the President and
Chief Executive Officer, evaluates performance based upon a measure of segment
operating profit or loss that includes an allocation of common expenses, but
excludes certain unallocated expenses. Segment revenue includes transactions
between the segments. These revenues are transferred to the applicable
segments less amounts retained, which are intended to reflect the costs
incurred by the transferring segment. Allocated common costs and expenses are
allocated based on measurable drivers of expense. Unallocated expenses
represent corporate expenditures or cost savings that are not specifically
allocated to the segments including reversals of restructuring expenses
associated with restructuring activities undertaken prior to 2003. The
Companys CODM does not view segment results below operating profit (loss)
before unallocated costs, and therefore

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

unallocated expenses, interest income, interest expense and other, net, the
provision for income taxes, and the cumulative effect of an accounting change
are not broken out by segment. Sybase does not account for, or report to the
CODM, assets or capital expenditures by segment. In accordance with SFAS 146
the Company has allocated the costs associated with 2003 restructuring
activities to each reportable segment. Prior to 2003, the Company did not track
its restructuring activities by segment and it is impracticable to now do so
with respect to these prior activities. Accordingly, restructuring related
expenses and reversals associated with restructuring activities undertaken
before 2003 are not included in segment level operating results but instead
included in the total for unallocated cost savings. A summary of the segment
financial information reported to the CODM for the three months ended September
30, 2003 is presented below:

|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |         |              |         | 
|------------------------------------------------------------------------------------------------------------------------- | ------------ | ----------------------------- | --------------------- | ------- | ------ | ------- | ------ | ----------- | ----- | ------ | ------ | ----- | ----- | ----- | ------- | - | ------ | ------ | ------- | ------- | ------------ | ------- | 
|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |         | Consolidated
|(In thousands)                                                                                                            |              | IPG                           |                       | iAS     |        | FFI     |        | Elimination |       | Total 
|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |       
|Revenues:                                                                                                                 |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |        
|                                                                                                                          | License fees |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |         |             
|                                                                                                                          |              | Enterprise                    |                       | $       | 38,459 |         |        | $           | 11    |        |        | $     |      |       |         |   |       |        |         | $       | 38,470       |        
|                                                                                                                          |              | E-Business                    |                       |         | 9,224  |         |        |             |      |        |        |       |      |       |         |   |       |        |         |         | 9,224        |        
|                                                                                                                          |              | Mobile and Embedded           |                       |         | 7,208  |         |        |             | 9,160 |        |        |       |      |       |         |   |       |        |         |         | 16,368       |        
|                                                                                                                          |              | E-Finance                     |                       |         | 236    |         |        |             |      |        |        |       | 1,098 |       |         |   |       |        |         |         | 1,334        |        
|                                                                                                                          |              | Datawarehouse                 |                       |         | 3,085  |         |        |             |      |        |        |       |      |       |         |   |       |        |         |         | 3,085        |        
|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |        
|                                                                                                                          |              |                               | Subtotal license fees |         |        | 58,212  |        |             |       | 9,171  |        |       |       | 1,098 |         |   |        |       |         |         |              | 68,481  | 
|                                                                                                                          |              | Intersegment license revenues |                       |         | 21     |         |        |             | 6,073 |        |        |       | 197   |       |         |   | (6,291 | )      |         |         |             |        
|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |        
|                                                                                                                          |              |                               | Total license fees    |         |        | 58,233  |        |             |       | 15,244 |        |       |       | 1,295 |         |   |        | (6,291 | )       |         |              | 68,481  | 
|                                                                                                                          | Services     |                               |                       | 119,258 |        |         |        | 2,699       |       |        |        | 3,392 |       |       |         |  |        |        |         | 125,349 |             
|                                                                                                                          |              | Intersegment service revenues |                       |         |       |         |        |             | 6,431 |        |        |       | 1,186 |       |         |   | (7,617 | )      |         |         |             |        
|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |        
|                                                                                                                          |              |                               | Total services        |         |        | 119,258 |        |             |       | 9,130  |        |       |       | 4,578 |         |   |        | (7,617 | )       |         |              | 125,349 | 
|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |        
|Total revenues                                                                                                            |              |                               | 177,491               |         |        |         | 24,374 |             |       |        | 5,873  |       |       |       | (13,908 | ) |        |        | 193,830 |        
|Total allocated costs and expenses before cost
of restructure and amortization of customer
lists and purchased technology |              |                               | 152,254               |         |        |         | 18,902 |             |       |        | 6,386  |       |       |       | (13,908 | ) |        |        | 163,634 |        
|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |        
|Operating income (loss) before cost of
restructure and amortization of customer lists
and purchased technology            |              |                               | 25,237                |         |        |         | 5,472  |             |       |        | (513   | )     |       |       |        |   |        |        | 30,196  |        
|Amortization of other purchased intangibles                                                                               |              |                               |                      |         |        |         |       |             |       |        | 500    |       |       |       |        |   |        |        | 500     |        
|Amortization of purchased technology                                                                                      |              |                               | 2,920                 |         |        |         | 100    |             |       |        | 811    |       |       |       |        |   |        |        | 3,831   |        
|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |        
|Operating income (loss) before unallocated costs
and cost of restructure                                                  |              |                               | 22,317                |         |        |         | 5,372  |             |       |        | (1,824 | )     |       |       |        |   |        |        | 25,865  |        
|Cost of restructure  2003 Activity                                                                                       |              |                               | 1,285                 |         |        |         |       |             |       |        |       |       |       |       |        |   |        |        | 1,285   |        
|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |        
|Operating income (loss) before unallocated costs                                                                          |              |                               | 21,032                |         |        |         | 5,372  |             |       |        | (1,824 | )     |       |       |        |   |        |        | 24,580  |        
|Unallocated cost savings                                                                                                  |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        | (2,001  | )      
|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |        
|Operating income                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        | 26,581  |        
|Interest income, interest expense and other, net                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        | 6,270   |        
|                                                                                                                          |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        |        |         |        
|Income before income taxes                                                                                                |              |                               |                       |         |        |         |        |             |       |        |        |       |       |       |         |   |        | $      | 32,851  |        

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

A summary of the segment financial information reported to the CODM for the
three months ended September 30, 2002 is presented below:

|                                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |         |              |         | 
|------------------------------------------------------------------------------------------------- | ------------ | ----------------------------- | --------------------- | ------- | ------ | ------- | ------ | ----------- | ----- | ------ | ----- | ----- | ----- | ----- | ------- | - | ------ | ------ | ------- | ------- | ------------ | ------- | 
|                                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |         | Consolidated
|(In thousands)                                                                                    |              | IPG                           |                       | iAS     |        | FFI     |        | Elimination |       | Total 
|                                                                                                  |              |                               |                       |         |        |         |        |             |       |       
|Revenues:                                                                                         |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |        
|                                                                                                  | License fees |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |         |             
|                                                                                                  |              | Enterprise                    |                       | $       | 40,461 |         |        | $           | 75    |        |       | $     |      |       |         |   |       |        |         | $       | 40,536       |        
|                                                                                                  |              | E-Business                    |                       |         | 16,743 |         |        |             | 4     |        |       |       | 39    |       |         |   |       |        |         |         | 16,786       |        
|                                                                                                  |              | Mobile and Embedded           |                       |         | 7,548  |         |        |             | 6,663 |        |       |       |      |       |         |   |       |        |         |         | 14,211       |        
|                                                                                                  |              | E-Finance                     |                       |         | 1,020  |         |        |             |      |        |       |       | 1,942 |       |         |   |       |        |         |         | 2,962        |        
|                                                                                                  |              | Datawarehouse                 |                       |         | 4,259  |         |        |             |      |        |       |       |      |       |         |   |       |        |         |         | 4,259        |        
|                                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |        
|                                                                                                  |              |                               | Subtotal license fees |         |        | 70,031  |        |             |       | 6,742  |       |       |       | 1,981 |         |   |        |       |         |         |              | 78,754  | 
|                                                                                                  |              | Intersegment license revenues |                       |         | 71     |         |        |             | 6,312 |        |       |       | 849   |       |         |   | (7,232 | )      |         |         |             |        
|                                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |        
|                                                                                                  |              |                               | Total license fees    |         |        | 70,102  |        |             |       | 13,054 |       |       |       | 2,830 |         |   |        | (7,232 | )       |         |              | 78,754  | 
|                                                                                                  | Services     |                               |                       | 119,154 |        |         |        | 712         |       |        |       | 4,389 |       |       |         |  |        |        |         | 124,255 |             
|                                                                                                  |              | Intersegment service revenues |                       |         | 34     |         |        |             | 4,970 |        |       |       | 899   |       |         |   | (5,903 | )      |         |         |             |        
|                                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |        
|                                                                                                  |              |                               | Total services        |         |        | 119,188 |        |             |       | 5,682  |       |       |       | 5,288 |         |   |        | (5,903 | )       |         |              | 124,255 | 
|                                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |        
|Total revenues                                                                                    |              |                               | 189,290               |         |        |         | 18,736 |             |       |        | 8,118 |       |       |       | (13,135 | ) |        |        | 203,009 |        
|Total allocated costs and expenses before
amortization of customer lists and purchased
technology |              |                               | 165,344               |         |        |         | 13,464 |             |       |        | 7,198 |       |       |       | (13,135 | ) |        |        | 172,871 |        
|                                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |        
|Operating income before amortization of customer
lists and purchased technology                   |              |                               | 23,946                |         |        |         | 5,272  |             |       |        | 920   |       |       |       |        |   |        |        | 30,138  |        
|Amortization of other purchased intangibles                                                       |              |                               |                      |         |        |         |       |             |       |        | 500   |       |       |       |        |   |        |        | 500     |        
|Amortization of purchased technology                                                              |              |                               | 2,920                 |         |        |         |       |             |       |        | 811   |       |       |       |        |   |        |        | 3,731   |        
|                                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |        
|Operating income (loss) before unallocated costs                                                  |              |                               | 21,026                |         |        |         | 5,272  |             |       |        | (391  | )     |       |       |        |   |        |        | 25,907  |        
|Unallocated cost                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        | 4,249   |        
|                                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |        
|Operating income                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        | 21,658  |        
|Interest income, interest expense and other, net                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        | 3,250   |        
|                                                                                                  |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        |        |         |        
|Income before income taxes                                                                        |              |                               |                       |         |        |         |        |             |       |        |       |       |       |       |         |   |        | $      | 24,908  |        

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

A summary of the segment financial information reported to the CODM for the
nine months ended September 30, 2003 is presented below:

|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |         |              |         | 
|------------------------------------------------------------------------------------------------------------------------- | ------------ | ----------------------------- | --------------------- | ------- | ------- | ------- | ------ | ----------- | ------ | ------ | ------ | ----- | ----- | ------ | ------- | - | ------- | ------- | ------- | ------- | ------------ | ------- | 
|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |         | Consolidated
|(In thousands)                                                                                                            |              | IPG                           |                       | iAS     |         | FFI     |        | Elimination |        | Total 
|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |       
|Revenues:                                                                                                                 |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |        
|                                                                                                                          | License fees |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |         |             
|                                                                                                                          |              | Enterprise                    |                       | $       | 107,634 |         |        | $           | 742    |        |        | $     |      |        |         |   |        |         |         | $       | 108,376      |        
|                                                                                                                          |              | E-Business                    |                       |         | 29,810  |         |        |             |       |        |        |       |      |        |         |   |        |         |         |         | 29,810       |        
|                                                                                                                          |              | Mobile and Embedded           |                       |         | 18,133  |         |        |             | 24,104 |        |        |       |      |        |         |   |        |         |         |         | 42,237       |        
|                                                                                                                          |              | E-Finance                     |                       |         | 1,177   |         |        |             |       |        |        |       | 1,733 |        |         |   |        |         |         |         | 2,910        |        
|                                                                                                                          |              | Datawarehouse                 |                       |         | 9,919   |         |        |             |       |        |        |       |      |        |         |   |        |         |         |         | 9,919        |        
|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |        
|                                                                                                                          |              |                               | Subtotal license fees |         |         | 166,673 |        |             |        | 24,846 |        |       |       | 1,733  |         |   |         |        |         |         |              | 193,252 | 
|                                                                                                                          |              | Intersegment license revenues |                       |         | 64      |         |        |             | 15,169 |        |        |       | 999   |        |         |   | (16,232 | )       |         |         |             |        
|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |        
|                                                                                                                          |              |                               | Total license fees    |         |         | 166,737 |        |             |        | 40,015 |        |       |       | 2,732  |         |   |         | (16,232 | )       |         |              | 193,252 | 
|                                                                                                                          | Services     |                               |                       | 358,925 |         |         |        | 7,417       |        |        |        | 7,815 |       |        |         |  |         |         |         | 374,157 |             
|                                                                                                                          |              | Intersegment service revenues |                       |         | 3       |         |        |             | 19,097 |        |        |       | 3,470 |        |         |   | (22,570 | )       |         |         |             |        
|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |        
|                                                                                                                          |              |                               | Total services        |         |         | 358,928 |        |             |        | 26,514 |        |       |       | 11,285 |         |   |         | (22,570 | )       |         |              | 374,157 | 
|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |        
|Total revenues                                                                                                            |              |                               | 525,665               |         |         |         | 66,529 |             |        |        | 14,017 |       |       |        | (38,802 | ) |         |         | 567,409 |        
|Total allocated costs and expenses before cost
of restructure and amortization of customer
lists and purchased technology |              |                               | 459,494               |         |         |         | 53,417 |             |        |        | 17,917 |       |       |        | (38,802 | ) |         |         | 492,026 |        
|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |        
|Operating income (loss) before cost of
restructure and amortization of customer lists
and purchased technology            |              |                               | 66,171                |         |         |         | 13,112 |             |        |        | (3,900 | )     |       |        |        |   |         |         | 75,383  |        
|Amortization of other purchased intangibles                                                                               |              |                               |                      |         |         |         |       |             |        |        | 1,500  |       |       |        |        |   |         |         | 1,500   |        
|Amortization of purchased technology                                                                                      |              |                               | 8,759                 |         |         |         | 233    |             |        |        | 2,434  |       |       |        |        |   |         |         | 11,426  |        
|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |        
|Operating income (loss) before unallocated costs
and cost of restructure                                                  |              |                               | 57,412                |         |         |         | 12,879 |             |        |        | (7,834 | )     |       |        |        |   |         |         | 62,457  |        
|Cost of restructure  2003 Activity                                                                                       |              |                               | 9,577                 |         |         |         | 341    |             |        |        | 13     |       |       |        |        |   |         |         | 9,931   |        
|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |        
|Operating income (loss) before unallocated costs                                                                          |              |                               | 47,835                |         |         |         | 12,538 |             |        |        | (7,847 | )     |       |        |        |   |         |         | 52,526  |        
|Unallocated cost savings                                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         | (9,107  | )      
|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |        
|Operating income                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         | 61,633  |        
|Interest income, interest expense and other, net                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         | 12,237  |        
|                                                                                                                          |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         |         |         |        
|Income before income taxes                                                                                                |              |                               |                       |         |         |         |        |             |        |        |        |       |       |        |         |   |         | $       | 73,870  |        

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

A summary of the segment financial information reported to the CODM for the
nine months ended September 30, 2002 is presented below:

|                                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |         |              |         | 
|------------------------------------------------------------------------------------------------- | ------------ | ----------------------------- | --------------------- | ------- | ------- | ------- | ------ | ----------- | ------ | ------ | ------ | ------ | ----- | ------ | ------- | - | ------- | ------- | ------- | ------- | ------------ | ------- | 
|                                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |         | Consolidated
|(In thousands)                                                                                    |              | IPG                           |                       | iAS     |         | FFI     |        | Elimination |        | Total 
|                                                                                                  |              |                               |                       |         |         |         |        |             |        |       
|Revenues:                                                                                         |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |        
|                                                                                                  | License fees |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |         |             
|                                                                                                  |              | Enterprise                    |                       | $       | 120,092 |         |        | $           | (12    | )      |        | $      |      |        |         |   |        |         |         | $       | 120,080      |        
|                                                                                                  |              | E-Business                    |                       |         | 55,414  |         |        |             | 4      |        |        |        | 97    |        |         |   |        |         |         |         | 55,515       |        
|                                                                                                  |              | Mobile and Embedded           |                       |         | 23,037  |         |        |             | 22,616 |        |        |        |      |        |         |   |        |         |         |         | 45,653       |        
|                                                                                                  |              | E-Finance                     |                       |         | 2,399   |         |        |             |       |        |        |        | 4,497 |        |         |   |        |         |         |         | 6,896        |        
|                                                                                                  |              | Datawarehouse                 |                       |         | 11,907  |         |        |             |       |        |        |        |      |        |         |   |        |         |         |         | 11,907       |        
|                                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |        
|                                                                                                  |              |                               | Subtotal license fees |         |         | 212,849 |        |             |        | 22,608 |        |        |       | 4,594  |         |   |         |        |         |         |              | 240,051 | 
|                                                                                                  |              | Intersegment license revenues |                       |         | 144     |         |        |             | 19,175 |        |        |        | 2,028 |        |         |   | (21,347 | )       |         |         |             |        
|                                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |        
|                                                                                                  |              |                               | Total license fees    |         |         | 212,993 |        |             |        | 41,783 |        |        |       | 6,622  |         |   |         | (21,347 | )       |         |              | 240,051 | 
|                                                                                                  | Services     |                               |                       | 366,114 |         |         |        | 2,086       |        |        |        | 11,057 |       |        |         |  |         |         |         | 379,257 |             
|                                                                                                  |              | Intersegment service revenues |                       |         | 85      |         |        |             | 13,502 |        |        |        | 2,570 |        |         |   | (16,157 | )       |         |         |             |        
|                                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |        
|                                                                                                  |              |                               | Total services        |         |         | 366,199 |        |             |        | 15,588 |        |        |       | 13,627 |         |   |         | (16,157 | )       |         |              | 379,257 | 
|                                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |        
|Total revenues                                                                                    |              |                               | 579,192               |         |         |         | 57,371 |             |        |        | 20,249 |        |       |        | (37,504 | ) |         |         | 619,308 |        
|Total allocated costs and expenses before
amortization of customer lists and purchased
technology |              |                               | 509,241               |         |         |         | 42,125 |             |        |        | 20,452 |        |       |        | (37,504 | ) |         |         | 534,314 |        
|                                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |        
|Operating income (loss) before amortization of
customer lists and purchased technology            |              |                               | 69,951                |         |         |         | 15,246 |             |        |        | (203   | )      |       |        |        |   |         |         | 84,994  |        
|Amortization of other purchased intangibles                                                       |              |                               |                      |         |         |         |       |             |        |        | 1,500  |        |       |        |        |   |         |         | 1,500   |        
|Amortization of purchased technology                                                              |              |                               | 8,760                 |         |         |         |       |             |        |        | 2,433  |        |       |        |        |   |         |         | 11,193  |        
|                                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |        
|Operating income (loss) before unallocated costs                                                  |              |                               | 61,191                |         |         |         | 15,246 |             |        |        | (4,136 | )      |       |        |        |   |         |         | 72,301  |        
|Unallocated cost                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         | 555     |        
|                                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |        
|Operating income                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         | 71,746  |        
|Interest income, interest expense and other, net                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         | 11,689  |        
|                                                                                                  |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         |         |         |        
|Income before income taxes and cumulative
effect of an accounting change                          |              |                               |                       |         |         |         |        |             |        |        |        |        |       |        |         |   |         | $       | 83,435  |        

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

9.     Litigation. Sybase is a party to various legal disputes and proceedings
arising in the ordinary course of business. In the opinion of management,
resolution of those matters is not expected to have a material adverse effect
on our results of operations or consolidated financial position. However,
depending on the amount and timing of such resolution, an unfavorable
resolution of some or all of these matters could materially affect our future
results of operations or cash flows in a particular period.

10.   Future Commitments. Beginning in 1998, the Board of Directors authorized
Sybase to repurchase the Companys outstanding common stock from time to time,
subject to price and other conditions. During the first nine months of 2003,
the Company repurchased approximately 2.3 million shares at a cost of
approximately $30.9 million. Through September 30, 2003, the Company has used
an aggregate total of $380.8 million under the stock repurchase program (of the
total $400 million authorized) to repurchase an aggregate total of 24.9 million
shares.

11.   Restructuring.

2003 Restructuring Actions

During the first quarter of 2003, Sybases license revenues were well below the
Companys expectations. Given this lower than expected revenue the Company
reduced its projections regarding revenues for the remainder of the year and
began to identify means of reducing its cost structure to produce earnings in
line with its revised plan amounts. After this review, and in order to reduce
its fixed quarterly cost structure, the Company embarked on a Restructuring
Plan (the 2003 Plan) aimed at reducing its annual payroll and facilities
related expenses by approximately $16.0 million. These activities included the
planned termination of approximately 240 employees worldwide and the planned
closure or consolidation of approximately 9 facilities worldwide. It is
anticipated that the Company will incur approximately $11.3 million over the
next 12 months once the restructuring activities prescribed under the 2003 Plan
are fully completed. Certain expenses may extend beyond this twelve-month time
frame depending upon when the costs associated with the sublease of certain
facilities are incurred. In accordance with SFAS No. 146, the Company has
recorded approximately $9.9 million to restructuring charges during the nine
months ended September 30, 2003 as follows:

|                                                   |  |          |  |     |     |         |     |       |     |   |     |              |     |   |     | 
|-------------------------------------------------- |  | -------- |  | --- | --- | ------- | --- | ----- | --- | - | --- | ------------ | --- | - | --- | 
|                                                   |  |          |  |     |     | Segment |     |       |     |  
|                                                   |  |          |  |     |     |         |     |       |     |  
|                                                   |  | Cash/    |  |     |     |         |     |       |     |   |     | Consolidated
|(Dollars in millions)                              |  | Non-Cash |  | IPG |     | iAS     |     | Total
|                                                   |  |          |  |     |     |         |     |      
|Employee termination costs                         |  | Cash     |  | $   | 5.8 |         |     | $     | 0.3 |   |     | $            | 6.1 |  
|                                                   |  | Cash/    |  |     |     |         |     |       |     |   |     |              |     |  
|Lease cancellations and commitments                |  | Non-cash |  |     | 2.5 |         |     |       |    |   |     |              | 2.5 |  
|                                                   |  |          |  |     |     |         |     |       |     |   |     |              |     |   |     | 
|Total for the quarter ended June 30, 2003          |  |          |  |     |     | $       | 8.3 |       |     | $ | 0.3 |              |     | $ | 8.6 | 
|                                                   |  |          |  |     |     |         |     |       |     |   |     |              |     |   |     | 
|Employee termination costs                         |  | Cash     |  | $   | 1.1 |         |     |       |     |   |     | $            | 1.1 |  
|                                                   |  | Cash/    |  |     |     |         |     |       |     |   |     |              |     |  
|Lease cancellations and commitments                |  | Non-cash |  |     | 0.2 |         |     |       |    |   |     |              | 0.2 |  
|                                                   |  |          |  |     |     |         |     |       |     |   |     |              |     |   |     | 
|Total for the quarter ended September 30, 2003     |  |          |  |     |     | $       | 1.3 |       |     |   |    |              |     | $ | 1.3 | 
|                                                   |  |          |  |     |     |         |     |       |     |   |     |              |     |   |     | 
|Total for the nine months ended September 30, 2003 |  |          |  |     |     | $       | 9.6 |       |     | $ | 0.3 |              |     | $ | 9.9 | 
|                                                   |  |          |  |     |     |         |     |       |     |   |     |              |     |   |     | 

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Termination payments to employees and other related costs

During the quarter ended June 30, 2003, the Company recorded restructuring
charges of $6.1 million for severance payments, termination benefits and
related expenses incurred in connection with the termination of approximately
215 Sybase employees. The employees terminated crossed largely all employee
levels, business functions, operating units and geographic regions.

During the quarter ended September 30, 2003, the Company recorded restructuring
charges of $1.1 million for severance payments, termination benefits and
related expenses incurred in connection with the termination of approximately
25 Sybase employees. The employees terminated were largely from the technical
support organization in Europe.

Severance payments and termination benefits were accrued and charged to
restructuring costs in the period that the amounts were determined and
communicated to the affected employees, provided the employee was not to render
services to the Company beyond a minimum retention period. In such a case, the
severance amounts were expensed over the retention period.

As part of the 2003 Plan, the Company expects to incur additional restructuring
charges of approximately $0.9 million for severance payments, termination
benefits and related expenses associated with: (i) certain legal contingencies
in connection with certain individuals outside the
US who have not yet agreed to their severance package and as such will be
subject to legal proceedings; and (ii) certain benefits potentially due to
certain individuals terminated that have not been incurred. The balance of the
restructuring charge will be included in future results of operations in the
quarter such expenses are actually incurred.

Lease cancellations and commitments

As part of the termination of employees referred to above, and in connection
with further streamlining the Companys infrastructure to align its expenses
with decreased growth projections, the Company identified a variety of Sybase
facilities for closure or consolidation.

During the quarter ended June 30, 2003, Sybase recorded restructuring charges
of $2.5 million for facilities vacated by the Company before June 30, 2003,
including properties located in France, Germany, Netherlands, Sweden, Norway,
and Thailand.

During the quarter ended September 30, 2003, Sybase recorded restructuring
charges of $0.2 million for facilities vacated by the Company during the
quarter, including properties located in Pennsylvania, and Denmark.

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The offices included above were primarily used for the sale of Sybase software
products, and the provision of professional services and customer support.
These restructuring charges reflect the fair value of remaining contractual
obligations under the facility leases and certain costs associated with the
expected sublease of the facilities, net of anticipated sublease income from
the date of vacancy to the end of the lease term. The amounts recorded were
based upon the analysis of an independent real estate consultant.

As part of the 2003 Plan, the Company expects to incur additional lease
cancellations and other related expenses of approximately $0.5 million in
future periods. These estimated restructuring charges primarily relate to
certain leasehold improvements associated with property located in Italy and
certain costs associated with the expected sublease of facilities that have
been vacated. These additional restructuring related expenses will be included
in future results of operations in the quarter in which such expenses are
actually incurred.

The following table summarizes the activity related to the 2003 Plan.

|                                          |  |             |      |               |  |       |      |   |  |   |      |  
|----------------------------------------- |  | ----------- | ---- | ------------- |  | ----- | ---- | - |  | - | ---- | -
|                                          |  |             |      |               |  | Lease |      |   |  |  
|                                          |  | Employee    |      | Cancellations |  |       |      |  
|                                          |  | Termination |      | and           |  |       |      |  
|(Dollars in millions)                     |  | Costs       |      | Commitments   |  | Total
|                                          |  |             |      |               |  |      
|Total charges                             |  | $           | 6.1  |               |  | $     | 2.5  |   |  | $ | 8.6  |  
|Amounts paid or written off               |  |             | (4.0 | )             |  |       | (0.2 | ) |  |   | (4.2 | )
|                                          |  |             |      |               |  |       |      |   |  |   |      |  
|Accrued liabilities at June 30, 2003      |  | $           | 2.1  |               |  | $     | 2.3  |   |  | $ | 4.4  |  
|Total charges                             |  | $           | 1.1  |               |  | $     | 0.2  |   |  | $ | 1.3  |  
|Amounts paid or written off               |  |             | (1.7 | )             |  |       | (0.8 | ) |  |   | (2.5 | )
|                                          |  |             |      |               |  |       |      |   |  |   |      |  
|Accrued liabilities at September 30, 2003 |  | $           | 1.5  |               |  | $     | 1.7  |   |  | $ | 3.2  |  
|                                          |  |             |      |               |  |       |      |   |  |   |      |  

2002 Restructuring Activities

In response to the continued economic slowdown, the Company embarked on certain
restructuring actions during the third and fourth quarters of 2002 (2002 Plan)
aimed at reducing
the Companys annual payroll and facilities-related expenses by approximately
$24.0 million. We recorded restructuring charges of $36.5 million to reflect
these activities. These activities included the termination of approximately
400 employees worldwide, the closure or consolidation of approximately 18
facilities worldwide, and the liquidation of approximately 9 foreign
subsidiaries.

The following table summarizes the activity related to the 2002 Plan:

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

|                                          |  |             |     |               |  |       |      |       |  |   |     |  |  |   |      | 
|----------------------------------------- |  | ----------- | --- | ------------- |  | ----- | ---- | ----- |  | - | --- |  |  | - | ---- | 
|                                          |  |             |     |               |  | Lease |      |       |  |   |     |  |  |  
|                                          |  | Employee    |     | Cancellations |  |       |      |       |  |   |     | 
|                                          |  | Termination |     | and           |  |       |      |       |  |   |     | 
|(Dollars in millions)                     |  | Costs       |     | Commitments   |  | other |      | Total
|                                          |  |             |     |               |  |       |      |      
|Accrued liabilities at December 31,
2002  |  | $           | 2.7 |               |  | $     | 23.3 |       |  | $ | 0.2 |  |  | $ | 26.2 | 
|Amounts paid                              |  |             | 2.0 |               |  |       | 2.3  |       |  |   |    |  |  |   | 4.3  | 
|Amount reversed                           |  |             | 0.1 |               |  |       | 0.1  |       |  |   |    |  |  |   | 0.2  | 
|                                          |  |             |     |               |  |       |      |       |  |   |     |  |  |   |      | 
|Accrued liabilities at March 31, 2003     |  | $           | 0.6 |               |  | $     | 20.9 |       |  | $ | 0.2 |  |  | $ | 21.7 | 
|Amounts paid                              |  |             | 0.2 |               |  |       | 2.8  |       |  |   |    |  |  |   | 3.0  | 
|Amounts reversed                          |  |             | 0.1 |               |  |       | 0.1  |       |  |   |    |  |  |   | 0.2  | 
|                                          |  |             |     |               |  |       |      |       |  |   |     |  |  |   |      | 
|Accrued liabilities at June 30, 2003      |  | $           | 0.3 |               |  | $     | 18.0 |       |  | $ | 0.2 |  |  | $ | 18.5 | 
|Amounts paid                              |  |             | 0.1 |               |  |       | 1.6  |       |  |   |    |  |  |   | 1.7  | 
|                                          |  |             |     |               |  |       |      |       |  |   |     |  |  |   |      | 
|Accrued liabilities at September 30,
2003 |  | $           | 0.2 |               |  | $     | 16.4 |       |  | $ | 0.2 |  |  | $ | 16.8 | 
|                                          |  |             |     |               |  |       |      |       |  |   |     |  |  |   |      | 

The remaining restructuring accrual primarily relates to certain lease costs
the Company is contractually required to pay on certain closed facilities, net
of estimated associated sublease amounts, and certain remaining termination
benefits payable to employees terminated as part of the 2002 Plan.
Substantially all remaining severance payments are expected to be made during
2003. Sybases payments toward the accruals relating to lease cancellations
and commitments are dependent upon market conditions and the Companys ability
to negotiate acceptable lease buy-outs or to locate suitable subtenants. These
payments will be made over the remaining lease terms, ending at various dates
through May 2010, or over a shorter period as the Company may negotiate with
its lessors.

During the three months ended June 30, 2003, approximately $0.2 million in
restructuring accruals were reversed by a corresponding credit to restructuring
expense. The reversal to the lease cancellations and commitments accrual
primarily related to our facility in Dallas, Texas from which we were able to
terminate our lease obligation for an amount less than that provided. The
reversal to the severance accrual primarily related to excess amounts
associated with certain foreign employees who were paid amounts less than
originally provided, after the applicable administrative hearings required
under local law.

During the three months ended March 31, 2003, approximately $0.2 million in
restructuring accruals were reversed by a corresponding credit to restructuring
expense. The reversal to the severance accrual primarily related to the
retention of three U.S. employees previously slated for termination under the
2002 Plan, to replace certain employees who left the Company for reasons
unrelated to the 2002 Plan. The other restructuring reversals were related
primarily to facility-related exit activities.

2001 Restructuring Activities

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SYBASE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

A total restructuring accrual of $14.7 million remains with respect to the
Companys 2001 restructuring Plan. The remaining restructuring accrual
primarily relates to certain lease payments the Company is contractually
required to make on certain closed facilities, net of estimated associated
sublease amounts. The payments of these accruals are dependent upon market
conditions and the Companys ability to negotiate acceptable lease buy-outs or
locate suitable subtenants. These payments will be paid over the remaining
lease terms, ending at various dates through December 2011, or over a shorter
period as the Company may negotiate with its lessors.

During the three months ended June 30, 2003, approximately $0.4 million in
restructuring accruals related to the 2001 restructuring activities were
reversed by a corresponding credit to restructuring expense. Of this amount,
$0.3 million was reversed related to credit to the lease cancellations and
commitments accrual primarily related to the conclusion of lease negotiations
associated with properties located in Orem, Utah and Canada. The Company also
recorded a reversal of $0.1 million from the severance accrual primarily
related to excess amounts associated with certain foreign employees who were
paid amounts less than originally provided, after the applicable administrative
hearings required under local law.

12. Issuance of Company Stock for Certain Services

During the quarter ended September 30, 2003, the Company issued approximately
0.7 million shares of its common stock to an unrelated party in connection with
an agreement under which the Company will be provided with certain specified
marketing services over a period of 42 months. The Company recorded a
pre-paid asset of approximately $10.4 million upon the issuance of these shares
based on the fair value of such shares on the date of grant. The expense
associated with the marketing services provided to the Company under this
agreement will be recognized as they are received.

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ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Policies and Estimates

We prepare our financial statements in conformity with U.S. generally accepted
accounting principles (GAAP). These accounting principles require us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and the disclosure of contingent assets and liabilities at the
date of our financial statements. We are also required to make certain
judgments that affect the reported amounts of revenues and expenses during each
reporting period. We periodically evaluate our estimates including those
relating to revenue recognition, impairment of goodwill and intangible assets,
the allowance for doubtful accounts, capitalized software, restructuring,
income taxes, stock-based compensation and contingencies and litigation. We
base our estimates on historical experience and various other assumptions that
we believe to be reasonable based on specific circumstances. Our management
has reviewed the development, selection, and disclosure of these estimates with
the Audit Committee of our Board of Directors. These estimates and assumptions
form the basis for our judgments about the carrying value of certain assets and
liabilities that are not readily apparent from other sources. Actual results
could differ from these estimates. See also Future Operating Results 
Financial Accounting Related Matters, below.

We believe the following critical accounting policies impact the most
significant judgments and estimates used in the preparation of our consolidated
financial statements:



| |  |  | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | Revenue recognition rules for software companies are very complex. We
follow very specific and detailed guidance in measuring revenue. Certain
judgments, however, affect the application of our revenue policy.                                                                                                                                                                                                                                                                 
|
| |   |  | We recognize revenue in accordance with Statement of Position (SOP) 97-2,
Software Revenue Recognition, as amended by SOP 98-4 and SOP 98-9, and
in certain instances in accordance with SOP 81-1, Accounting for
Performance of Construction-Type and Certain Production-Type Contracts.                                                                                                                                                                                    
|
| |   |  | We license software under non-cancelable license agreements. License fees
revenues are recognized when a non-cancelable license agreement is in
force, the product has been shipped, the license fee is fixed or
determinable, and collection is reasonably assured. If the fee is not
fixed or determinable, revenue is recognized as payments become due from
the customer.                                                                                                    
|
| |   |  | Residual Method Accounting. In software arrangements that include
multiple elements (such as license rights and technical support
services), we allocate the total arrangement fee 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.

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| |   |  | Percentage of Completion Accounting. Fees from licenses sold
together with consulting services are generally recognized upon shipment
of the licenses, provided (i) the above criteria are
met, (ii) payment of the license fees are not dependent upon the
performance of the services, and (iii) the consulting services are not
essential to the functionality of the licensed software. If the services
are essential to the functionality of the software, or payment of license
fees is dependent on performance of services, both the software license
and consulting fees are recognized under the percentage of completion
method of contract accounting. Under this method, management is required
to estimate the number of total hours needed to complete a particular
project, and revenues and profits are recognized based on the percentage
of total contract hours completed. As a result, recognized revenues and
profits are subject to revisions as the contract phases are actually
completed.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | Sublicense Revenues. We recognize sublicense fees as reported to us
by our licensees. License fees revenue for certain application
development and data access tools are recognized upon direct shipment to
the end user or direct shipment to the reseller for resale to the end
user. If collection is not reasonably assured in advance, revenue is
recognized only when the fee is actually collected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |   |  | Service Revenues. Technical support revenues are recognized ratably
over the term of the related agreements, 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
other contract services are generally recognized under the percentage of
completion method of contract accounting described above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | Impairment of Goodwill and Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |   |  | Goodwill and intangible assets have generally resulted from our business
combinations accounted for as purchases. Prior to 2002, these assets
were generally recorded at amortized cost. The carrying values of these
intangible assets were reviewed on a periodic basis, under the accounting
rules then in effect, and our testing indicated no impairment of the
assets carrying value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |   |  | Beginning in 2002, new accounting rules issued by the Financial
Accounting Standards Board (FASB) provided that goodwill could no longer
be amortized, but had to be tested for impairment at least annually. For
a further discussion of goodwill impairment, see Note 7 to Condensed
Consolidated Financial Statements, Part I, Item 1, incorporated here by
reference. These rules further changed the method of evaluating goodwill
from a recoverability test based upon undiscounted cash flows to a fair
value approach. The application of these new rules resulted in a
cumulative effect of an accounting change of $132.5 million in the first
quarter of 2002 and a goodwill impairment of $12.3 million in the fourth
quarter of 2002.                                                                                                                                                                                                                                                                  
|
| |   |  | As of September 30, 2003, we had recorded $151.8 million of goodwill.
The review of goodwill for potential impairment is highly subjective and
requires us to make numerous estimates to determine both the fair values
and the carrying values of our reporting units to which goodwill is
assigned. For these purposes, our reporting units equate to our                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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| |   |  | reported
segments (see Note 8 to Condensed Consolidated Financial Statements, Part
I, Item 1, 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 intangible assets including in-process research and
development, and developed technology.                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | Changes in our internal business structure, 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 goodwill
impairment charge.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |   |  | We continue to review our other intangible assets (purchased technology,
tradenames and customer lists) for indications of impairment whenever
events or changes in circumstances indicate the carrying amount of such
an 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 could
result in impairment losses associated with other intangible assets.                                                                                                                                                                                                                                                                                                                        
|
| |  |  | Allowance for Doubtful Accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |   |  | We maintain an allowance for doubtful accounts to reflect the expected
non-collection of accounts receivable based on past collection history
and specific risks identified in our portfolio of receivables. Additional
allowances might be required if deteriorating economic conditions or
other factors affect our customers ability to make timely payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  |  | Capitalized Software                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |   |  | We capitalize certain software development costs after a product becomes
technologically feasible and before its general release to customers.
Subjective judgment is required in determining when a product becomes
technologically feasible. Capitalized development costs are then
amortized over the products estimated life beginning upon general
release. Periodically, 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 (and reduced by the estimated future
costs of completing and disposing of 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
disposing of certain products. If these estimates change, write-offs of
capitalized software costs could result.
|
| |  |  | Restructuring                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |   |  | We have recorded significant accruals in connection with various
restructuring activities. These accruals include estimated net costs to
settle certain lease obligations, based on the 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 the
estimates. If                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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| |   |  | we are unable to negotiate affordable termination fees, if
rental rates continue to decrease in the markets where the properties are
located, or if it takes us longer then expected to find suitable sublease
tenants, the actual costs could exceed our estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |   |  | We use the asset and liability approach to account for income taxes.
This methodology recognizes deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities. We then
record a valuation allowance to reduce deferred tax assets to an amount
that likely will be realized. We consider future taxable income and
ongoing prudent and feasible tax planning strategies in assessing the
need for the valuation allowance. If we determine during any period that
we could realize a larger net deferred tax asset than the recorded
amount, we would adjust the deferred tax asset to increase income for the
period. Conversely, if we determine that we would be unable to realize a
portion of our recorded deferred tax asset, we would adjust the deferred
tax asset to record a charge to income for the period. Subjective
judgment is required in assessing the future tax consequences of events
that have been recognized in the Companys financial statements or tax
returns. Fluctuations in the actual outcome of these future tax
consequences could materially impact our financial position or results of
operations.
|
| |  |  | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |   |  | SFAS 123, Accounting for Stock-Based Compensation, encourages, but does
not require, companies to record compensation cost for stock-based
employee compensation plans at fair value. We have chosen to continue to
account for stock-based employee compensation using the intrinsic value
method. Accordingly, compensation cost for stock options granted to
employees is measured as the excess, if any, of the quoted market price
of the Company stock at the date of the grant over the amount an employee
must pay to acquire the stock. See also Note 2 to Condensed Consolidated
Financial Statements, Part I, Item 1, incorporated here by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  |  | Contingencies and Litigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |   |  | We are involved from time to time in various proceedings, lawsuits and
claims involving our customers, products, intellectual property,
stockholders and employees, among other things. When we reasonably
determine that a liability has been or will be incurred, and can
reasonably estimate the range of potential losses in these matters, we
are required to adequately provide for these loss contingencies. Even if
we are not able to estimate the amount of potential loss in these
matters, in the case of a potential material matter, we are required to
disclose the fact that there is a reasonable possibility that a loss has
been incurred. Our financial position or results of operations could be
materially and adversely affected if we have grossly underestimated the
scope of potential liability and/or the range of a potential loss in any
matter.                                                                                                                                                                                                                                                                                                                                                                          

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Results of Operations

Revenues
(Dollars in millions)

|               |                              |   |         |    |         |   |         |    |         |  |         |    |         |   |       |    |   |   |       |    |   |  |     |    | 
|-------------- | ---------------------------- | - | ------- | -- | ------- | - | ------- | -- | ------- |  | ------- | -- | ------- | - | ----- | -- | - | - | ----- | -- | - |  | --- | -- | 
|               |                              |   | Three   |    | Three   |   |         |    |         |  | Nine    |    | Nine    |   |       |    |  
|               |                              |   | Months  |    | Months  |   |         |    |         |  | Months  |    | Months  |   |       |    |  
|               |                              |   | Ended   |    | Ended   |   | Percent |    | Ended   |  | Ended   |    | Percent
|               |                              |   | 9/30/03 |    | 9/30/02 |   | Change  |    | 9/30/03 |  | 9/30/02 |    | Change 
|               |                              |   |         |    |         |   |         |    |         |  |         |    |        
|License fees   |                              | $ | 68.5    |    |         | $ | 78.7    |    |         |  | (13     | %) |         | $ | 193.2 |    |   | $ | 240.0 |    |   |  | (19 | %)
|               | Percentage of total revenues |   |         | 35 | %       |   |         | 39 | %       |  |         |    |         |   |       | 34 | % |   |       | 39 | % |  |     |    | 
|Services       |                              | $ | 125.3   |    |         | $ | 124.3   |    |         |  | 1       | %  |         | $ | 374.2 |    |   | $ | 379.3 |    |   |  | (1  | %)
|               | Percentage of total revenues |   |         | 65 | %       |   |         | 61 | %       |  |         |    |         |   |       | 66 | % |   |       | 61 | % |  |     |    | 
|Total revenues |                              | $ | 193.8   |    |         | $ | 203.0   |    |         |  | (5      | %) |         | $ | 567.4 |    |   | $ | 619.3 |    |   |  | (8  | %)

License fees decreased 13 percent and 19 percent for the three and nine months
ended September 30, 2003, respectively, as compared to the same periods in
2002. The decrease in license fees revenues during the quarter and year to date
is primarily due to a decline in license revenues from enterprise products and
enterprise applications (E-Business) products included in the IPG division.
Demand for these products continues to be affected by sluggish economic growth
and a significant decrease in overall IT spending, especially for larger
enterprise systems. We also experienced significantly less demand from the
expansion of our existing customers internally deployed applications.

Services revenues (derived from technical support, education, and professional
services) increased 1 percent for the three months ended September 30, 2003,
and decreased by 1 percent for the nine months ended September 30, 2003 as
compared to the same periods in 2002.The 1 percent increase in service
revenues for the three months ended September 30, 2003 is primarily due to a 3
percent increase in revenues from technical support and the addition of
advertising and placement revenues generated from the acquisition of AvantGo.
These increases were offset by a 11 percent decline in professional services
and education revenues. The decrease in services revenue for the nine months
ended September 30, 2003 is primarily due to a 19 percent decrease in
professional services revenues and education revenues. We believe the decline
in professional services and education revenues is largely the result of the
economic factors discussed above. The decrease for the nine month period
September 30, 2003 was partially offset by a 4 percent increase in technical
support revenues.

Services revenues as a percentage of total revenues increased to 65 percent and
66 percent for the three and nine months ended September 30, 2003,
respectively, as compared to 61 percent for the same periods in 2002.

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Geographical Revenues
(Dollars in millions)

|                    |                              |                              |       |         |    |         |       |         |    |         |    |         |    |         |       |       |    |   |       |       |    |   |     |     |    | 
|------------------- | ---------------------------- | ---------------------------- | ----- | ------- | -- | ------- | ----- | ------- | -- | ------- | -- | ------- | -- | ------- | ----- | ----- | -- | - | ----- | ----- | -- | - | --- | --- | -- | 
|                    |                              |                              |       | Three   |    | Three   |       |         |    |         |    | Nine    |    | Nine    |       |       |    |  
|                    |                              |                              |       | Months  |    | Months  |       |         |    |         |    | Months  |    | Months  |       |       |    |  
|                    |                              |                              |       | Ended   |    | Ended   |       | Percent |    | Ended   |    | Ended   |    | Percent
|                    |                              |                              |       | 9/30/03 |    | 9/30/02 |       | Change  |    | 9/30/03 |    | 9/30/02 |    | Change 
|                    |                              |                              |       |         |    |         |       |         |    |         |    |         |    |        
|North American      |                              | $                            | 119.4 |         |    | $       | 126.7 |         |    |         | (6 | %)      |    | $       | 336.5 |       |    | $ | 375.5 |       |    |   | (10 | %) 
|                    | Percentage of total revenues |                              |       | 62      | %  |         |       | 62      | %  |         |    |         |    |         |       | 59    | %  |   |       | 61    | %  |   |     |     |   
|International       |                              |                              |       |         |    |         |       |         |    |         |    |         |    |         |       |       |    |   |       |       |    |   |     |    
|                    | European                     |                              | $     | 46.0    |    |         | $     | 48.2    |    |         |    | (4      | %) |         | $     | 151.7 |    |   | $     | 153.2 |    |   |     | (1  | %)
|                    |                              | Percentage of total revenues |       |         | 24 | %       |       |         | 24 | %       |    |         |    |         |       |       | 27 | % |       |       | 25 | % |     |     |    | 
|                    | Intercontinental             |                              | $     | 28.4    |    |         | $     | 28.1    |    |         |    | 1       | %  |         | $     | 79.2  |    |   | $     | 90.6  |    |   |     | (13 | %)
|                    |                              | Percentage of total revenues |       |         | 14 | %       |       |         | 14 | %       |    |         |    |         |       |       | 14 | % |       |       | 14 | % |     |     |    | 
|Total International |                              | $                            | 74.4  |         |    | $       | 76.3  |         |    |         | (2 | %)      |    | $       | 230.9 |       |    | $ | 243.8 |       |    |   | (5  | %) 
|                    | Percentage of total revenues |                              |       | 38      | %  |         |       | 38      | %  |         |    |         |    |         |       | 41    | %  |   |       | 39    | %  |   |     |     |   
|Total revenues      |                              | $                            | 193.8 |         |    | $       | 203.0 |         |    |         | (5 | %)      |    | $       | 567.4 |       |    | $ | 619.3 |       |    |   | (8  | %) 

North American revenues (United States, Canada and Mexico) decreased 6 percent
and 10 percent for the three and nine months ended September 30, 2003,
respectively, as compared to the same periods in 2002. For the three months
ended September 30, 2003, the decrease in North America revenues was primarily
attributable to a $7.5 million decline in license fees revenues. For the nine
months ended September 30, 2003, the decrease in North America revenues was
primarily attributable to a 27 percent decline in license fees revenues and a 1
percent decline in services revenues. The decrease in North America revenues
was largely the result of the economic factors discussed under Revenues
above.

The decrease in European revenues for the three months ended September 30, 2003
was primarily attributable to a $2.5 million decline in license fees revenues.
The decrease in European revenues for the nine months ended September 30, 2003
was due to a 1 percent decline in both license fees and services revenues. The
increase in Intercontinental revenues (principally Asia Pacific and South
America) for the three months ended September 30, 2003 was primarily
attributable to a 7 percent increase in technical support revenues. The
decrease in Intercontinental revenues for the nine months ended September 30,
2003 was primarily attributable to a 19 percent decrease in license fees
revenues and a decrease of 5 percent in services revenues. The decrease in
total international revenues was largely the result of the economic factors
discussed under Revenues above. International revenues comprised 38 percent
and 41 percent of total revenues for the three and nine months ended September
30, 2003, respectively, as compared to 38 percent and 39 percent for the same
periods in 2002.

In Europe and the Intercontinental region, most revenues and expenses are
denominated in local currencies. During the three months ended September 30,
2003, foreign currency exchange rate changes from the quarter ended September
30, 2002, resulted in a 3 percent increase in our revenues and a 2 percent
increase in our operating expenses. For the nine month period ended September
30, 2003, the cumulative impact of changes in foreign exchange rates from the
comparable periods in the previous year resulted in a 5 percent increase in our
revenues and a 3 percent increase in our operating expenses.

Although we take into account changes in exchange rates over time in our
pricing strategy, our business and results of operations could be materially
and adversely affected by fluctuations in foreign currency exchange rates.
Changes in foreign currency exchange rates, the strength of local economies,
and the general volatility of worldwide software markets may result in a higher
or lower proportion of international revenues as a percentage of total revenues
in the future. For additional risks associated with currency fluctuations, see
Future Operating Results, below, and Quantitative and Qualitative
Disclosures of Market Risk, Part I, Item 3.

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Costs and Expenses
(Dollars in millions)

|                                            |                                     |   |         |    |         |   |         |    |         |  |         |    |         |   |       |    |   |   |       |    |   |  |     |    | 
|------------------------------------------- | ----------------------------------- | - | ------- | -- | ------- | - | ------- | -- | ------- |  | ------- | -- | ------- | - | ----- | -- | - | - | ----- | -- | - |  | --- | -- | 
|                                            |                                     |   | Three   |    | Three   |   |         |    |         |  | Nine    |    | Nine    |   |       |    |  
|                                            |                                     |   | Months  |    | Months  |   |         |    |         |  | Months  |    | Months  |   |       |    |  
|                                            |                                     |   | Ended   |    | Ended   |   | Percent |    | Ended   |  | Ended   |    | Percent
|                                            |                                     |   | 9/30/03 |    | 9/30/02 |   | Change  |    | 9/30/03 |  | 9/30/02 |    | Change 
|                                            |                                     |   |         |    |         |   |         |    |         |  |         |    |        
|Cost of license fees                        |                                     | $ | 15.5    |    |         | $ | 12.8    |    |         |  | 21      | %  |         | $ | 44.1  |    |   | $ | 37.5  |    |   |  | 18  | % 
|                                            | Percentage of license fees revenues |   |         | 23 | %       |   |         | 16 | %       |  |         |    |         |   |       | 23 | % |   |       | 16 | % |  |     |    | 
|Cost of services                            |                                     | $ | 40.7    |    |         | $ | 46.5    |    |         |  | (12     | %) |         | $ | 120.5 |    |   | $ | 147.0 |    |   |  | (18 | %)
|                                            | Percentage of services revenues     |   |         | 32 | %       |   |         | 37 | %       |  |         |    |         |   |       | 32 | % |   |       | 39 | % |  |     |    | 
|Sales and marketing                         |                                     | $ | 59.3    |    |         | $ | 65.9    |    |         |  | (10     | %) |         | $ | 177.4 |    |   | $ | 203.7 |    |   |  | (13 | %)
|                                            | Percentage of total revenues        |   |         | 31 | %       |   |         | 32 | %       |  |         |    |         |   |       | 31 | % |   |       | 33 | % |  |     |    | 
|Product development and
Engineering         |                                     | $ | 29.0    |    |         | $ | 28.0    |    |         |  | 4       | %  |         | $ | 88.3  |    |   | $ | 87.5  |    |   |  | 1   | % 
|                                            | Percentage of total revenues        |   |         | 15 | %       |   |         | 14 | %       |  |         |    |         |   |       | 16 | % |   |       | 14 | % |  |     |    | 
|General and administrative                  |                                     | $ | 20.3    |    |         | $ | 20.8    |    |         |  | (2      | %) |         | $ | 62.9  |    |   | $ | 63.5  |    |   |  | (1  | %)
|                                            | Percentage of total revenues        |   |         | 10 | %       |   |         | 10 | %       |  |         |    |         |   |       | 11 | % |   |       | 10 | % |  |     |    | 
|Amortization of other purchased
intangibles |                                     | $ | .5      |    |         | $ | .5      |    |         |  | *       |    |         | $ | 1.5   |    |   | $ | 1.5   |    |   |  | *   |   
|                                            | Percentage of total revenues        |   |         | *  |         |   |         | *  |         |  |         |    |         |   |       | *  |   |   |       | *  |   |  |     |    | 
|Stock compensation expense                  |                                     | $ | .7      |    |         | $ | .5      |    |         |  | 40      | %  |         | $ | 2.1   |    |   | $ | 1.5   |    |   |  | 40  | % 
|                                            | Percentage of total revenues        |   |         | *  |         |   |         | *  |         |  |         |    |         |   |       | *  |   |   |       | *  |   |  |     |    | 
|Cost of restructure                         |                                     | $ | 1.3     |    |         | $ | 6.3     |    |         |  | (79     | %) |         | $ | 9.0   |    |   | $ | 5.4   |    |   |  | 67  | % 
|                                            | Percentage of total revenues        |   |         | 1  | %       |   |         | 3  | %       |  |         |    |         |   |       | 2  | % |   |       | 1  | % |  |     |    | 



---

|* | Not meaningful
|- | --------------

Cost of License Fees.Cost of license fees consists primarily of product costs
(media and documentation), amortization of capitalized software development
costs and purchased technology, and third-party royalty costs. These costs were
$15.5 million and $44.1 million for the three and nine months ended September
30, 2003, respectively, up from $12.8 million and $37.5 million for the same
periods in 2002. Such costs were 23 percent of license fees revenue for the
three and nine months ended September 30, 2003, as compared to 16 percent for
the same periods in 2002. The increase in the cost of license fees for the
three and nine months ended September 30, 2003 was primarily due to an increase
in amortization of capitalized software development costs and an increase in
third-party royalties. Amortization of capitalized software costs included in
cost of license fees was $7.9 million and $21.7 million for the three and nine
months ended September 30, 2003, respectively, as compared to $6.2 million and
$17.8 million for the same periods in 2002. The increase in amortization of
capitalized software costs for the three and nine months ended September 30,
2003 was primarily due to certain enterprise database products that we began
amortizing in the first quarter of 2003 and certain enterprise application
products that we began amortizing in the second half of 2002. Amortization of
purchased technology acquired was $3.8 million and $11.4 million for the three
and nine months

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ended September 30, 2003, respectively, as compared to $3.7 million and $11.2
million for the same periods in 2002.

Cost of Services.Cost of services consists primarily of the cost to provide
technical support, consulting and education services and, to a lesser degree,
services-related product costs (media and documentation). These costs were
$40.7 million and $120.5 million for the three and nine months ended September
30, 2003, respectively, as compared to $46.5 million and $147.0 million for the
same periods in 2002. These costs were 32 percent of services revenues for the
three and nine months ended September 30, 2003, as compared to 37 percent and
39 percent for the same periods in 2002. The decrease in cost of services in
absolute dollars and as a percentage of services revenues for the three and
nine months ended September 30, 2003 is primarily due to a reduction in
consulting personnel as a result of our restructuring activities in the second
half of 2002, and a decrease in costs associated with third-party consultants.

Sales and Marketing.Sales and marketing expenses decreased 10 percent to
$59.3 million for the three months ended September 30, 2003 as compared to
$65.9 million for the three months ended September 30, 2002. Sales and
marketing expenses decreased 13 percent to $177.4 million for the nine months
ended September 30, 2003 as compared to $203.7 million for the nine months
ended September 30, 2002. These costs were 31 percent of total revenues for
the three and nine months ended September 30, 2003, as compared to 32 percent
and 33 percent for the same periods in 2002. The decrease in sales and
marketing expenses in absolute dollars and as a percentage of total revenues
for the three and nine months ended September 30, 2003 was primarily due to a
decrease in sales and marketing personnel as a result of our 2002 restructuring
activities, a reduction in sales commissions (principally due to lower license
fees revenues), and a reduction in discretionary spending on marketing
programs.

Product Development and Engineering.Product development and engineering
expenses (net of capitalized software development costs) increased 4 percent to
$29.0 million for the three months ended September 30, 2003 as compared to
$28.0 million for the three months ended September 30, 2002. Overall product
development and engineering expenses increased 1 percent to $88.3 million for
the nine months ended September 30, 2003 as compared to $87.5 million for the
nine months ended September 30, 2002. These costs were 15 percent and 16
percent of total revenues for the three and nine months ended September 30,
2003, respectively, as compared to 14 percent for the same periods in 2002. The
increase in product development and engineering in absolute dollars and as a
percentage of total revenues for the three and nine months ended September 30,
2003 is primarily due to the addition of product development and engineering
personnel associated with the AvantGo acquisition, an increase in compensation
to product development and engineering personnel, and a decrease in capitalized
software development costs, partially offset by a decrease in allocated common
costs. We allocate various common costs, primarily certain telecommunications
and facilities related expenses, to sales and marketing, product development
and engineering, and general and administrative expenses.

We capitalized approximately $7.7 million and $22.8 million of software
development costs for the three and nine months ended September 30, 2003,
respectively, as compared to $9.1 million and $24.9 million for the same
periods in 2002. For the nine months ended September 30, 2003, capitalized
software costs included costs incurred for the development of the Business
Process

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Integrator 3.9, Enterprise Application Server 5.0, Enterprise Portal 6.0,
PowerBuilder® 9.0, and PowerDesigner® 10.0.

We believe that product development and engineering expenditures are essential
to technology and product leadership and expect product development and
engineering expenditures to continue to be significant, both in absolute
dollars and as a percentage of total revenues.

General and Administrative.General and administrative expenses which include
IT, legal, business operations, finance and administrative functions, were
$20.3 million and $62.9 million for the three and nine months ended September
30, 2003, respectively, as compared to $20.8 million and $63.5 million for the
same periods in 2002. These costs represented 10 percent and 11 percent of
total revenues for the three and nine months ended September 30, 2003,
respectively, as compared to 10 percent for the same periods in 2002. The
decrease in absolute dollars for the three and nine months ended September 30,
2003 was primarily due to a decrease in allocated common costs.

Amortization of Other Purchased Intangibles.Amortization of other purchased
intangibles reflects the amortization of the established customer list
associated with the acquisition in 2000 of Home Financial Network, Inc. (now
FFI).

Stock Compensation Expense.Stock compensation expense reflects non-cash
compensation expense associated with restricted stock purchase rights granted
to certain Sybase executives in the second quarter of 2001 and in the first
quarter of 2003, and the amortization of the value assigned to certain unvested
stock options assumed in the acquisition of New Era of Networks (NEN) in 2001.

Cost of Restructuring Accruals.

2003 Restructuring Actions

During the first quarter of 2003 license revenues were well below our
expectations. Given this lower than expected revenue, we reduced our
projections regarding revenues for the remainder of the year and began to
identify means of reducing our cost structure to produce earnings in line with
revised plan amounts. After this review, and in order to reduce our fixed
quarterly cost structure, we embarked on a Restructuring Plan (2003 Plan) aimed
at reducing our annual payroll and facilities related expenses by approximately
$16.0 million. These activities included the planned termination of
approximately 240 employees worldwide and the planned closure or consolidation
of approximately 9 facilities worldwide. It is anticipated that the total
costs, once the restructuring activities prescribed under the 2003 Plan are
fully completed, will be $11.3 million. In general, these expenses will be
incurred over a 12-month period although certain expenses may extend beyond
this twelve-month time frame depending upon when the costs associated with the
sublease of certain facilities are incurred. In accordance with SFAS No. 146,
we recorded approximately $9.9 million to restructuring charges during the nine
months ended September 30, 2003 as follows:

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|                                                   |  |               |  |     |     |         |     |       |     |   |     |              |     |   |     | 
|-------------------------------------------------- |  | ------------- |  | --- | --- | ------- | --- | ----- | --- | - | --- | ------------ | --- | - | --- | 
|                                                   |  |               |  |     |     | Segment |     |       |     |  
|                                                   |  |               |  |     |     |         |     |       |     |  
|                                                   |  | Cash/         |  |     |     |         |     |       |     |   |     | Consolidated
|(Dollars in millions)                              |  | Non Cash      |  | IPG |     | IAS     |     | Total
|                                                   |  |               |  |     |     |         |     |      
|Employee termination costs                         |  | Cash          |  | $   | 5.8 |         |     | $     | 0.3 |   |     | $            | 6.1 |  
|Lease cancellations and commitments                |  | Cash/Non-cash |  |     | 2.5 |         |     |       |    |   |     |              | 2.5 |  
|                                                   |  |               |  |     |     |         |     |       |     |   |     |              |     |   |     | 
|Total for the quarter ended June 30, 2003          |  |               |  |     |     | $       | 8.3 |       |     | $ | 0.3 |              |     | $ | 8.6 | 
|                                                   |  |               |  |     |     |         |     |       |     |   |     |              |     |   |     | 
|Employee termination costs                         |  | Cash          |  | $   | 1.1 |         |     |       |     |   |     | $            | 1.1 |  
|Lease cancellations and commitments                |  | Cash/Non-cash |  |     | 0.2 |         |     |       |    |   |     |              | 0.2 |  
|                                                   |  |               |  |     |     |         |     |       |     |   |     |              |     |   |     | 
|Total for the quarter ended September
30, 2003     |  |               |  |     |     | $       | 1.3 |       |     |   |    |              |     | $ | 1.3 | 
|                                                   |  |               |  |     |     |         |     |       |     |   |     |              |     |   |     | 
|Total for the nine months ended
September 30, 2003 |  |               |  |     |     | $       | 9.6 |       |     | $ | 0.3 |              |     | $ | 9.9 | 
|                                                   |  |               |  |     |     |         |     |       |     |   |     |              |     |   |     | 

Termination payments to employees and other related costs

During the quarter ended June 30, 2003, the we recorded restructuring charges
of $6.1 million for severance payments, termination benefits and related
expenses incurred in connection with the termination of approximately 215
Sybase employees. The employees terminated crossed largely all employee
levels, business functions, operating units and geographic regions.

During the quarter ended September 30, 2003, we recorded restructuring charges
of $1.1 million for severance payments, termination benefits and related
expenses incurred in connection with the termination of approximately 25 Sybase
employees. The employees terminated were largely from the technical support
organization in Europe.

Severance payments and termination benefits were accrued and charged to
restructuring costs in the period that the amounts were determined and
communicated to the affected employees, provided the employee was not to render
services to the Company beyond a minimum retention period. In such a case, the
severance amounts were expensed over the retention period.

As part of the 2003 Plan, we expect to incur additional restructuring charges
of approximately $0.9 million for severance payments, termination benefits and
related expenses associated with: (i) certain legal contingencies in connection
with certain individuals outside the US who have not yet agreed to their
severance package and as such will be subject to legal proceedings; and (ii)
certain benefits potentially due to certain individuals terminated that have
not been incurred. The balance of the restructuring charge will be included in
future results of operations in the quarter such expenses are actually
incurred.

Lease cancellations and commitments

As part of the termination of employees referred to above, and in connection
with further streamlining our infrastructure to align our expenses with
decreased growth projections, we identified a variety of Sybase facilities for
closure or consolidation.

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During the quarter ended June 30, 2003, we recorded restructuring charges of
$2.5 million for facilities we vacated before June 30, 2003, including
properties located in France, Germany, Netherlands, Sweden, Norway, and
Thailand.

During the quarter ended September 30, 2003, we recorded restructuring charges
of $0.2 million for facilities we vacated during the quarter, including
properties located in Pennsylvania, and Denmark.

The offices included above were primarily used for the sale of our software
products, and the provision of professional services and customer support.
These restructuring charges reflect the fair value of remaining contractual
obligations under the facility leases and certain costs associated with the
expected sublease of the facilities, net of anticipated sublease income from
the date of vacancy to the end of the lease term. The amounts recorded were
based upon the analysis of an independent real estate consultant.

As part of the 2003 Plan, we expect to incur additional lease cancellations and
other related expenses of approximately $0.5 million in future periods. These
estimated restructuring charges primarily relate to certain leasehold
improvements associated with property located in Italy and certain costs
associated with the expected sublease of facilities that have been vacated.
These additional restructuring related expenses will be included in future
results of operations in the quarter in which such expenses are actually
incurred.

2002 Restructuring Activities

In response to the continued economic slowdown, we embarked on certain
restructuring actions during the third and fourth quarters of 2002 (2002 Plan)
aimed at reducing our annual payroll and facilities-related expenses by
approximately $24.0 million. We recorded restructuring charges of $36.5
million to reflect these activities. These activities included the termination
of approximately 400 employees worldwide, the closure or consolidation of
approximately 18 facilities worldwide, and the liquidation of approximately 9
foreign subsidiaries.

During the three months ended June 30, 2003, approximately $0.2 million in
restructuring accruals were reversed by a corresponding credit to restructuring
expense. There was a $0.1 million reversal to the lease cancellations and
commitments accrual primarily related to our facility in Dallas, Texas from
which we were able to terminate our lease obligation for an amount less than
that provided. There was also a $0.1 million reversal to the severance accrual
primarily related to excess amounts associated with certain foreign employees
who were paid amounts less than originally provided, after the applicable
administrative hearings required under local law.

During the three months ended March 31, 2003, approximately $0.2 million in
restructuring accruals were reversed by a corresponding credit to restructuring
expense. There was a $0.1 million reversal to the severance accrual primarily
related to the retention of three U.S. employees previously slated for
termination under the 2002 Plan, to replace certain employees who left the
Company for reasons unrelated to the 2002 Plan. The other restructuring
reversals were related primarily to facility-related exit activities.

At September 30, 2003, a total of restructuring accrual of $16.8 million
remained with respect to the 2002 plan. This accrual primarily relates to
certain lease costs we are contractually required

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to pay on certain closed facilities, net of estimated associated sublease
amounts. Our payments toward this accrual are dependent upon market conditions
and our ability to negotiate acceptable lease buy-outs or to locate suitable
subtenants. These payments will be made over the remaining lease terms, ending
at various dates through May 2010, or over a shorter period we negotiate with
our lessors.

2001 Restructuring Activities

A total restructuring accrual of $14.7 million remains with respect to our 2001
restructuring Plan. The remaining restructuring accrual primarily relates to
certain lease payments we are contractually required to make on certain closed
facilities, net of estimated associated sublease amounts. The payments of
accruals related to lease cancellations and commitments are dependent upon
market conditions and our ability to negotiate acceptable lease buy-outs or
locate suitable subtenants. These payments will be paid over the remaining
lease terms, ending at various dates through December 2011, or over a shorter
period as we may negotiate with our lessors.

During the three months ended June 30, 2003, approximately $0.4 million in
restructuring accruals were reversed by a corresponding credit to restructuring
expense. A $0.3 million reversal was made to the lease cancellations and
commitments accrual primarily due to the conclusion of lease negotiations
associated with properties located in Orem, Utah and Canada. A $0.1 million
reversal was also made to the severance accrual primarily for excess amounts
associated with certain foreign employees who were paid amounts less than
originally provided after the applicable administrative hearings required under
local law.

Operating Income
(Dollars in millions)

|                 |                              |   |         |    |         |   |         |    |         |  |         |   |         |   |      |    |   |   |      |    |   |  |     |    | 
|---------------- | ---------------------------- | - | ------- | -- | ------- | - | ------- | -- | ------- |  | ------- | - | ------- | - | ---- | -- | - | - | ---- | -- | - |  | --- | -- | 
|                 |                              |   | Three   |    | Three   |   |         |    |         |  | Nine    |   | Nine    |   |      |    |  
|                 |                              |   | Months  |    | Months  |   |         |    |         |  | Months  |   | Months  |   |      |    |  
|                 |                              |   | Ended   |    | Ended   |   | Percent |    | Ended   |  | Ended   |   | Percent
|                 |                              |   | 9/30/03 |    | 9/30/02 |   | Change  |    | 9/30/03 |  | 9/30/02 |   | Change 
|                 |                              |   |         |    |         |   |         |    |         |  |         |   |        
|Operating income |                              | $ | 26.6    |    |         | $ | 21.7    |    |         |  | 23      | % |         | $ | 61.6 |    |   | $ | 71.7 |    |   |  | (14 | %)
|                 | Percentage of total revenues |   |         | 14 | %       |   |         | 11 | %       |  |         |   |         |   |      | 11 | % |   |      | 12 | % |  |     |    | 

Operating income was $26.6 million and $61.6 million for the three and nine
months ended September 30, 2003, respectively, compared to operating income of
$21.7 million and $71.7 million for the same periods in 2002. The increase in
operating income for the three months ended September 30, 2003 is primarily due
to a decrease in operating expenses resulting from the benefit obtained from
the 2002 and 2003 Plans, partially offset by a 13 percent decline in license
fees revenues. The decrease in operating income for the nine months ended
September 30, 2003 is primarily due to the decline in total revenues, partially
offset by a decrease in operating expenses, primarily resulting from the
benefit obtained from the 2002 and 2003 Plans.

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Other Income (Expense), Net
(Dollars in millions)

|                                |                              |   |         |   |         |   |         |   |         |  |         |    |         |   |     |   |   |   |     |   |   |  |    |    | 
|------------------------------- | ---------------------------- | - | ------- | - | ------- | - | ------- | - | ------- |  | ------- | -- | ------- | - | --- | - | - | - | --- | - | - |  | -- | -- | 
|                                |                              |   | Three   |   | Three   |   |         |   |         |  | Nine    |    | Nine    |   |     |   |  
|                                |                              |   | Months  |   | Months  |   |         |   |         |  | Months  |    | Months  |   |     |   |  
|                                |                              |   | Ended   |   | Ended   |   | Percent |   | Ended   |  | Ended   |    | Percent
|                                |                              |   | 9/30/03 |   | 9/30/02 |   | Change  |   | 9/30/03 |  | 9/30/02 |    | Change 
|                                |                              |   |         |   |         |   |         |   |         |  |         |    |        
|Interest income                 |                              | $ | 2.7     |   |         | $ | 3.0     |   |         |  | (10     | %) |         | $ | 8.4 |   |   | $ | 8.8 |   |   |  | (5 | %)
|                                | Percentage of total revenues |   |         | 1 | %       |   |         | 1 | %       |  |         |    |         |   |     | 1 | % |   |     | 1 | % |  |    |    | 
|Interest expense and other, net |                              | $ | 3.5     |   |         | $ | 0.3     |   |         |  | 1067    | %  |         | $ | 3.8 |   |   | $ | 2.9 |   |   |  | 31 | % 
|                                | Percentage of total revenues |   |         | 2 | %       |   |         | * |         |  |         |    |         |   |     | * |   |   |     | * |   |  |    |    | 



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|* | Not meaningful
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Interest income decreased 10 percent to $2.7 million and 5 percent to $8.4
million for the three and nine months ended September 30, 2003, respectively,
compared to $3.0 million and $8.8 million for the same periods in 2002.
Interest income consists primarily of interest earned on investments. The
decrease in interest income for both comparable periods is primarily due to the
decrease in the interest rate yields of the cash balances invested.

Interest expense and other, net was $3.5 million and $3.8 million for the three
and nine months ended September 30, 2003, respectively, compared to $0.3
million and $2.9 million for the same periods in 2002. Interest expense and
other, net, primarily includes; net gains and losses resulting from foreign
currency transactions and the related hedging activities; the cost of hedging
foreign currency exposures; bank fees and gains from the disposition of certain
real estate and investments. The net increase in interest expense and other,
net for the three and nine months ended September 30, 2003 was primarily due to
the gain of approximately $3.2 million recorded in the third quarter of 2003
relating to the realization of a note receivable originally generated from our
sale of certain Swiss subsidiaries

Provision for Income Taxes
(Dollars in millions)

|                           |  |         |      |         |  |         |      |         |  |         |     |         |  |   |      |  |  |   |      |  |  |  |     |   
|-------------------------- |  | ------- | ---- | ------- |  | ------- | ---- | ------- |  | ------- | --- | ------- |  | - | ---- |  |  | - | ---- |  |  |  | --- | --
|                           |  | Three   |      | Three   |  |         |      |         |  | Nine    |     | Nine    |  |   |      | 
|                           |  | Months  |      | Months  |  |         |      |         |  | Months  |     | Months  |  |   |      | 
|                           |  | Ended   |      | Ended   |  | Percent |      | Ended   |  | Ended   |     | Percent
|                           |  | 9/30/03 |      | 9/30/02 |  | Change  |      | 9/30/03 |  | 9/30/02 |     | Change 
|                           |  |         |      |         |  |         |      |         |  |         |     |        
|Provision for income taxes |  | $       | 10.8 |         |  | $       | 13.6 |         |  |         | (21 | %)      |  | $ | 24.3 |  |  | $ | 35.9 |  |  |  | (32 | %)

We recorded income tax provisions of $10.8 million and $24.3 million for the
three and nine months ended September 30, 2003, respectively, as compared to
$13.6 million and $35.9 million for the same periods in 2002. The income tax
provisions for these periods are primarily the result of tax on earnings
generated from operations and withholding taxes on revenues in certain
international jurisdictions. For the three and nine months ended September 30,
2003, the income tax provision was recorded on pre-tax income at an effective
rate of 33 percent . The income tax provision was recorded on income before
the cumulative effect of the SFAS 142 accounting change at an effective rate of
approximately 54 percent for the three months ended September 30, 2002, and 43
percent for the nine months ended September 30, 2002. The reduction in the
effective pre-tax tax rate is largely the result of the expected utilization of
certain foreign tax credits on which a full valuation allowance had been
provided, and a more beneficial mix of our profits toward low tax
jurisdictions.

We had net deferred tax assets of $69.4 million at September 30, 2003. The
deferred tax assets were net of a valuation allowance of $48.5 million.
Realization of our net deferred tax assets depends upon the generation of
sufficient taxable income in future years in appropriate tax

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jurisdictions to obtain benefit from the reversal of temporary differences, and
from tax credit carryforwards. The amount of deferred tax assets considered
realizable is subject to adjustment in future periods if estimates of future
taxable income are reduced. Any such adjustments could have a material adverse
impact on our effective tax rate and results of operations in future periods.

Cumulative Effect of an Accounting Change to Adopt SFAS 142
(Dollars in millions)

|                                                            |  |         |   |         |  |         |   |         |  |         |   |         |  |  |   |  |  |   |        |   |  |  |   | 
|----------------------------------------------------------- |  | ------- | - | ------- |  | ------- | - | ------- |  | ------- | - | ------- |  |  | - |  |  | - | ------ | - |  |  | - | 
|                                                            |  | Three   |   | Three   |  |         |   |         |  | Nine    |   | Nine    |  |  |   | 
|                                                            |  | Months  |   | Months  |  |         |   |         |  | Months  |   | Months  |  |  |   | 
|                                                            |  | Ended   |   | Ended   |  | Percent |   | Ended   |  | Ended   |   | Percent
|                                                            |  | 9/30/03 |   | 9/30/02 |  | Change  |   | 9/30/03 |  | 9/30/02 |   | Change 
|                                                            |  |         |   |         |  |         |   |         |  |         |   |        
|Cumulative effect of
an accounting change
to adopt SFAS 142 |  |         |  |         |  |         |  |         |  |         | * |         |  |  |  |  |  | $ | (132.5 | ) |  |  | * | 



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In accordance with SFAS 142, we performed the required two-step impairment
tests of goodwill and indefinite-lived intangible assets as of January 1, 2002
using an independent third-party appraiser. Based on this analysis, we
recognized an impairment loss of $132.5 million in the first quarter of 2002.
See Note 7 to Condensed Consolidated Financial Statements, Part I, Item 1,
incorporated here by reference.

The fair value of the eBD (now part of IPG) and FFI reporting units were
determined using the income approach. The income approach focuses on the
income-producing capability of an asset, measuring the current value of the
asset by calculating the present value of its future economic benefits such as
cash earnings, cost savings, tax deductions, and proceeds from disposition.
Value indications are developed by discounting expected cash flows to their
present value at a rate of return that incorporates the risk-free rate for the
use of funds, the expected rate of inflation, and risks associated with the
particular investment.

In future periods, a reduction of our estimated fair values associated with
certain reporting units could result in a further impairment loss associated
with various intangible assets.

Net Income (Loss) Per Share
(Dollars and shares in millions, except per share data)

|                                                             |                              |   |         |    |         |   |         |   |         |  |         |    |         |   |      |   |   |   |       |     |    |  |    |    | 
|------------------------------------------------------------ | ---------------------------- | - | ------- | -- | ------- | - | ------- | - | ------- |  | ------- | -- | ------- | - | ---- | - | - | - | ----- | --- | -- |  | -- | -- | 
|                                                             |                              |   | Three   |    | Three   |   |         |   |         |  | Nine    |    | Nine    |   |      |   |  
|                                                             |                              |   | Months  |    | Months  |   |         |   |         |  | Months  |    | Months  |   |      |   |  
|                                                             |                              |   | Ended   |    | Ended   |   | Percent |   | Ended   |  | Ended   |    | Percent
|                                                             |                              |   | 9/30/03 |    | 9/30/02 |   | Change  |   | 9/30/03 |  | 9/30/02 |    | Change 
|                                                             |                              |   |         |    |         |   |         |   |         |  |         |    |        
|Net income (loss)                                            |                              | $ | 22.0    |    |         | $ | 11.3    |   |         |  | 95      | %  |         | $ | 49.5 |   |   | $ | (84.9 | )   |    |  | *  |   
|                                                             | Percentage of total revenues |   |         | 11 | %       |   |         | 6 | %       |  |         |    |         |   |      | 9 | % |   |       | (14 | %) |  |    |    | 
|Basic net income (loss) per share                            |                              | $ | 0.23    |    |         | $ | 0.12    |   |         |  | 92      | %  |         | $ | 0.53 |   |   | $ | (0.87 | )   |    |  | *  |   
|Diluted net income (loss) per share                          |                              | $ | 0.23    |    |         | $ | 0.12    |   |         |  | 92      | %  |         | $ | 0.51 |   |   | $ | (0.84 | )   |    |  | *  |   
|Shares used in computing basic net
income (loss) per share   |                              |   | 94.5    |    |         |   | 96.3    |   |         |  | (2      | %) |         |   | 94.2 |   |   |   | 97.7  |     |    |  | (4 | %)
|Shares used in computing diluted
net income (loss) per share |                              |   | 97.4    |    |         |   | 98.4    |   |         |  | (1      | %) |         |   | 96.7 |   |   |   | 100.5 |     |    |  | (4 | %)



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We reported net income of $22.0 million and $49.5 million for the three and
nine months ended September 30, 2003, respectively, as compared to net income
(loss) of $11.3 million and $(84.9) million for the same periods in 2002. The
increase in net income for the three months ended September 30, 2003 is
primarily related to the decrease in operating expenses resulting from the
benefit obtained from the 2002 and 2003 Plans, a $3.2 million gain included in
other income, and a decrease in the income tax provision, partially offset by a
5 percent decline in total revenues.

The increase in net income for the nine months ended September 30, 2003 is
primarily related to the $132.5 million goodwill impairment loss recognized as
a cumulative effect of an accounting change in the first quarter of 2002, the
decrease in operating expenses resulting from the benefit received from the
2002 and 2003 Plans, and the decrease in the income tax provision, partially
offset by a 8 percent decline in total revenues. Basic net income per share
was $0.23 and $0.53 for the three and nine months ended September 30, 2003,
respectively, as compared to basic net income (loss) per share of $0.12 and
$(0.87) for the same periods in 2002. Diluted net income per share was $0.23
and $0.51 for the three and nine months ended September 30, 2003, respectively,
as compared to diluted net income (loss) per share of $0.12 and $(0.84) for the
same periods in 2002.

Shares used in computing basic net income (loss) per share decreased 2 percent
and 4 percent for the three and nine months ended September 30, 2003,
respectively, as compared to the three and nine months ended September 30, 2002
due primarily to shares repurchased under our stock repurchase program (See
Note 10 to Condensed Consolidated Financial Statements, Part I, Item 1,
incorporated here by reference), partially offset by the exercise of employee
stock options and the issuance of approximately 0.7 million shares of our
common stock during the third quarter of 2003 to an unrelated third party in
connection with an agreement under which we will be provided with certain
specified marketing services over a period of approximately 42 months. At the
time the shares were issued, they had a fair market value of approximately
$10.4 million. We are recognizing the expense associated with these services
as they are received.

Shares used in computing diluted net income (loss) per share decreased 1
percent and at 4 percent for the three and nine months ended September 30,
2003, respectively, as compared to the same periods in 2002 due primarily for
the reasons stated above.

Liquidity and Capital Resources
(Dollars in millions)

|                                                     |  |         |       |         |  |         |       |   |  |  |     |  
|---------------------------------------------------- |  | ------- | ----- | ------- |  | ------- | ----- | - |  |  | --- | -
|                                                     |  | Nine    |       | Nine    |  |         |       |  
|                                                     |  | Months  |       | Months  |  |         |       |  
|                                                     |  | Ended   |       | Ended   |  | Percent
|                                                     |  | 9/30/03 |       | 9/30/02 |  | Change 
|                                                     |  |         |       |         |  |        
|Working capital                                      |  | $       | 192.0 |         |  | $       | 71.9  |   |  |  | 167 | %
|Cash, cash equivalents and cash investments          |  | $       | 498.2 |         |  | $       | 363.0 |   |  |  | 37  | %
|Net cash provided by operating activities            |  | $       | 147.1 |         |  | $       | 124.2 |   |  |  | 18  | %
|Net cash used for investing activities               |  | $       | 64.6  |         |  | $       | 49.2  |   |  |  | 31  | %
|Net cash provided by (used for) financing activities |  | $       | 2.4   |         |  | $       | (57.7 | ) |  |  | *   |  



---

|* |  | Not meaningful
|- |  | --------------

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Net cash provided by operating activities increased 18 percent for the nine
months ended September 30, 2003 compared to the nine months ended September 30,
2002. The increase in net cash provided by operating activities is primarily
due to a decrease in accounts receivable and a lower decline in other accrued
liabilities and deferred revenues for the nine months ended September 30, 2003,
as compared to the nine months ended September 30, 2002.

Net cash used for investing activities was $64.6 million for the nine months
ended September 30, 2003 compared to $49.2 million for the nine months ended
September 30, 2002. The increase in net cash used for investing activities is
primarily due to net purchases of cash investments of $3.1 million during the
nine months ended September 30, 2003, compared to net dispositions of $9.7
million in cash investments during the nine months ended September 30, 2002.

Net cash provided by financing activities was $2.4 million for the nine months
ended September 30, 2003 compared to net cash used of $57.7 million for the
nine months ended September 30, 2002. The shift from net cash used for
financing activities to net cash provided by financing activities was primarily
the result of a decrease in the cash used to repurchase our common stock during
the nine months ended September 30, 2003, compared to the cash used for a
similar purpose during the same period in 2002.

During the nine months ended September 30, 2003, we repurchased 2.3 million
shares of our common stock for $30.9 million pursuant to the Board of
Directors authorization. For additional information regarding our stock
repurchase program, see Note 10 to Consolidated Financial Statements, Part I,
Item 1, incorporated here by reference.

We had no significant commitments for capital expenditures at September 30,
2003. We expect to fund expenditures for future capital requirements,
liquidity and strategic operating programs from a combination of available cash
balances and internally generated funds. We have no outside debt, and do not
have any plans to enter into borrowing arrangements. There have been no
significant changes to the contractual obligations we disclosed in our Annual
Report on Form 10-K for the year ended December 31, 2002.

We engage in global business operations and are therefore exposed to foreign
currency fluctuations. As of September 30, 2003, we had identifiable net assets
totaling $211.2 million associated with our European operations and $58.4
million associated with our Asia and Latin American operations. We experience
foreign exchange transaction exposure on our net assets and liabilities
denominated in currencies other than the US dollar. As these assets are
considered by Sybase,Inc., the U.S. parent company, to be a permanent
investment in the respective subsidiaries, the related foreign currency
translation gains and losses are reflected in Accumulated other comprehensive
income/(loss) under Stockholders equity on the balance

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sheet. We also experience foreign exchange translation exposure from certain
balances that are denominated in a currency other than the functional currency
of the entity on whose books the balance resides. We hedge certain of these
short-term exposures under a plan approved by the Board of Directors (see
Qualitative and Quantitative Disclosure of Market Risk, Part I, Item 3).

Future Operating Results 

Our future operating results may vary substantially from period to period due to a variety of significant risks, some of which are discussed in this Report on Form 10-Q. We strongly urge current and prospective investors to carefully consider the cautionary statements and risks contained in this Report including those regarding forward-looking statements described on Page 3 of this Report.



| |  | Revenue Related Factors
|- |  | -----------------------

The post-9/11 decline of the U.S. and
global economies compounded by the war in the Middle East contributed
to depressed IT spending during 2003. We will continue to pursue our business strategies, with an increased emphasis
 on creating successful strategic and global alliances with key partners, including Intel, Sun Microsystems, Apple Computer and
 others
 to provide customers with optimal solutions based on our
 leading-edge technology and our partners capabilities in specific markets. However, if we are unable to achieve these goals, or if we are unable to maintain and provide desirable, innovative products and services to existing customers, our ability to maintain or grow revenue may be significantly impaired. This, in turn, could adversely impact our results of operations, even if we continue to generate a profit and to maintain positive cash flows.

Furthermore, complex revenue recognition rules for software companies directly affect our ability to measure revenue for any given accounting period. Such rules are subject to constant review and revision by various bodies tasked with the establishment of accounting standards. Therefore, modifications or new interpretations of existing accounting guidance governing revenue recognition in the software industry could have a material effect on our business. For a general discussion of our current revenue recognition rules and other critical accounting policies, see Critical Accounting Policies and Estimates, above, and Changing Legal and Accounting Environment, below, incorporated here by reference.

In addition to the above factors, the timing and amount of our revenues are subject to a number of factors that make it difficult to accurately estimate revenues and operating results on a quarterly or annual basis. In our experience, license fees revenues tend to decline between the fourth quarter of one year and the first quarter of the next year. This has contributed to lower total revenues and earnings in the first quarter compared to the prior fourth quarter. We currently anticipate that this seasonal pattern will continue.

Since we operate with little or no backlog, quarterly revenues depend largely on orders booked and shipped in that quarter. Historically, we have recorded approximately 50% to 70% of our quarterly revenues in the last month of each quarter, particularly during the final two weeks. Our customers include many large enterprises that make substantial investments in our products and services. Therefore, the inability to record one or more large orders, or a significant number of

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smaller orders, at the very end of a quarter could materially and adversely
impact our results of
operations. Our operating expenses are based on projected annual and quarterly
revenue levels, and are generally incurred ratably throughout each quarter.
Since our operating expenses are relatively fixed in the short term, failure to
realize projected revenues for a specified period could impact operating
results, causing an operating loss for that period.

In North America, we currently ship most of our products from our Dublin,
California facility near the site of our corporate headquarters. Because we
tend to record a high percentage of revenues during the last two weeks of each
quarter, disruption of operations at that facility (due to natural calamity or
systems failure, for example) could directly harm our ability to record
revenues for such quarter. This could, in turn, have an adverse impact on
operating results.



| |  | Changing Legal and Accounting Environment
|- |  | -----------------------------------------

During the past several years, various accounting guidance has been issued with
respect to revenue recognition rules in the software industry. However, much
of this guidance addresses software revenue recognition primarily from a
conceptual level, and is silent as to specific implementation requirements. We
believe our current business arrangements and contract terms have been properly
reported under the current rules. However, if final interpretations of these
rules necessitate a change in our current revenue recognition practices, our
results of operations, financial condition and business could be materially and
adversely affected. For further discussion, see Critical Accounting Policies
and Estimates, above.

In addition to the above, the U.S. Congress enacted the Sarbanes-Oxley Act of
2002 (SOA) on July 30, 2002, largely in response to a rash of financial
scandals involving public companies such as Enron. The SOA provides for
sweeping and unprecedented corporate reforms, focusing on public company
financial reporting, corporate ethics, and oversight of the accounting
profession, among other areas, and establishing harsher civil and criminal
penalties for violation of U.S. securities laws. Certain provisions of the SOA
became effective immediately, and others required the SEC and the national
securities exchanges to enact rules and regulations to carry out the purposes
of the act. Many of these new SEC-mandated rules and procedures (including
rules requiring personal certification of a companys SEC reports by the
companys chief executive officer and senior financial officers, accelerated
filing of certain SEC reports, and changes in the role and functions of a
companys audit committee), became effective during the latter half of 2002 and
in early 2003, and many additional SEC rules and regulations, as well as
conforming rules promulgated by the New York Stock Exchange, where the
Companys stock is traded, have also recently become effective. We believe our
corporate practices and standards currently meet or exceed the current rules
and regulations promulgated under the SOA. However, new or additional rules or
practices that influence significant adjustments to our business practices and
procedures could result in increased administrative expenses, lengthened sales
cycles and other changes that could adversely affect our results of operations.



| |  | Stock Price Volatility
|- |  | ----------------------

Our ability to exceed, or our failure to achieve, expected operating results
for any period could significantly impact our stock price. Inevitably, some
investors will experience gains while others will experience losses depending
on the timing of their investment. The market for our

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stock and
for technology stocks in general has been highly volatile, and the trading
price of the Companys common stock has fluctuated widely in recent years.

During the past two years, U.S. stock prices in general have experienced a
significant downturn, due, in part, to the collapse of dot.com stocks, the
continued weakening of the U.S. and global economic conditions, acts of
domestic and international terrorism, and the war in the Middle East (see also
Revenue Related Factors, above). Our stock price may continue to fluctuate
in the future in response to these and various other factors, including our
financial results, press and industry analyst reports, market acceptance of our
products and pricing policies, activities of competitors, acquisitions of other
businesses and technologies, and other events. In addition, the stock market
has from time to time experienced extreme price and volume fluctuations that
have categorically affected the market price for high technology companies, but
which often have been unrelated to the operating performance of these
companies.



| |  | Competition
|- |  | -----------

The IT industry and the market for our products and services is fast-paced and
extremely competitive, and is marked by dynamic customer demands, short product
life cycles, and the burgeoning e-Business marketplace. We have numerous
competitors, including large companies such as Oracle Corporation, Microsoft
Corporation, and IBM Corporation, and other smaller highly aggressive firms.
Many of these companies may have greater financial, technical, sales and
marketing resources, and a larger installed customer base than Sybase. In
addition, our competitors advertising and marketing efforts could adversely
influence customer perception of our products and services, and harm our
business and prospects as a result. To remain competitive, we must be able to
develop new products, enhance existing products and retain competitive pricing
policies in a timely manner. Our failure to compete successfully with new or
existing competitors could have a material adverse impact on our business, and
on the market price of our stock.



| |  | Product Development
|- |  | -------------------

Increased widespread use of the Internet and fast-growing market demand for
enterprise portals and mobile and embedded solutions may significantly alter
how we do business in the future. This could affect our ability to timely meet
the demand for new or enhanced products and services at competitive prices,
which could significantly impact our ability to generate future revenues.

We have released the Sybase Enterprise Portal, an industry leading
enterprise-class portal product designed to enable organizations to provide
personalized business interfaces to employees, customers, partners and
suppliers. With our acquisition of NEN in April 2001, we gained the ability to
offer enterprise application integrators that integrate Sybase Enterprise
Portal with other applications. Sybase Enterprise Portal solutions are
intended to enable successful e-Business strategies for organizations
transacting business via the Internet. When we acquired OnePage, Inc. in April
2002, we gained technology designed to further enhance our Sybase Enterprise
Portal offering. The completion of our acquisition of AvantGo in the first
quarter of 2003 allows us to significantly enhance our iAS mobile and embedded
products and solutions. We believe our focus on enterprise portals, mobile and
embedded solutions and services and our other

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strategies will enhance revenues
and profitability. However, if the market does not continue to develop as
anticipated, or if our solutions and services do not successfully compete in
the relevant markets, we may not realize expected revenues and profitability.

Our future results may also be affected if our products cannot interoperate and
perform well with software products of other companies. Certain leading
applications currently are not interoperable with our products, and others may
never be. In addition, many of our principal products are designed for use
with products offered by competitors. In the future, vendors of non-Sybase
products may become less willing to provide us with access to their products,
technical information, and marketing and sales support, which could harm our
business and prospects.



| |  | Changes in Sales Model
|- |  | ----------------------

Our sales model has evolved significantly during the past few years to keep
pace with new and developing business environments, such as the World Wide Web,
and changing customer demands in our targeted markets. If we have misjudged
demand for our products and services in our target markets, or if we are unable
to coordinate our sales efforts in a focused and efficient way, this could
materially and adversely affect our business and prospects.

In January 1999, we realigned our direct sales force, product teams and
professional services capabilities into four divisions. This reorganization was
intended to enhance overall revenues and profitability by providing increased
focus on each of four key markets: Enterprise Solutions, Mobile and Embedded
Computing, Internet Applications and Business Intelligence. In January 2000,
the acquisition of HFN (now FFI) increased our focus on the financial services
market. In May 2000, we announced the launch of iAnywhere Solutions, Inc., a
majority-owned subsidiary formed to continue the business of our former Mobile
and Embedded Company (MEC) division in mobile and embedded e-Business products
and services. eBD was created in the second quarter of 2001 when we acquired
NEN, and consists of certain operations of NEN along with certain products
previously in the ESD segment and certain products previously in the former
Internet Applications Division. In January 2003, we further reorganized our
sales focus with the creation of the Infrastructure Platform Group (IPG), which
consolidated the former operations of eBD, ESD and Business Intelligence, and
which will focus on increasing market presence and revenue through solution
partners (e.g., ISVs, VARs and OEMs) and delivery partners (e.g., SIs,
distributors and resellers). Our worldwide field organization will continue to
focus on end user customers, and will continue to provide field support to
promote growth of our business through partners. Further reorganization of our
sales model could have a direct affect on our results of operations. See
Revenue Related Factors, above.



| |  | International Operations
|- |  | ------------------------

We currently derive a substantial portion of our revenues from our
international operations, and we plan to continue expanding our business in
international markets in the future. In the first nine months of 2003, our
revenues outside North America represented 41% of our total revenues.. Because
of this, global political unrest, acts of terrorism, the situation in the
Middle East and other factors could, individually or in combination, have a
material impact on our international revenues and operations. See Revenue
Related Factors, above.

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As a global concern, we also face exposure to adverse movements in foreign
currency exchange rates. For a discussion of risks associated with currency
fluctuation, see Financial Risk Management  Foreign Exchange Risk, above,
incorporated here by reference.

Our revenues outside North America could also fluctuate due to the relative
immaturity of some markets, rapid growth in other markets, and organizational
changes we have made to accommodate these conditions. For example, during 2002,
we centralized our finance functions within specific geographic regions (rather
than maintaining them on a country-by-country basis), closed a subsidiary in
the Czech Republic, and dissolved NEN as well as several of its majority-owned
and wholly-owned subsidiaries. In February 2001, we acquired our distributor
in Denmark and in September 2000, we acquired certain assets and assumed
certain liabilities of our distributor in Mexico. During 1999 and 2000, we
closed various subsidiaries including Chile and Peru. Several significant
management and organizational changes also occurred during the same periods,
including the resignation and replacement of regional management in Europe and
Asia.

Other factors that could significantly impact aspects of our international
operations include:



| |  |  | Changes in political, regulatory, or economic conditions
| | - |  | --------------------------------------------------------
|
| |  |  | Changes or limitations in trade protection laws         
|
| |  |  | Changes in tax treaties or laws favorable to Sybase     
|
| |  |  | Natural disasters, including epidemics                  



| |  | Intellectual Property
|- |  | ---------------------

Our inability to obtain adequate copyright, patent or trade secret protection
for our products in certain countries may have a material adverse impact on
future operating results. In addition, as the number of software products and
associated patents increase, it is possible that software developers will
become subject to more frequent infringement claims.

In the past, third parties have claimed that Sybase products or technologies
violated their patents or other proprietary rights. It is possible that such
claims will be asserted in the future. In addition, to the extent we acquire
other technologies, whether directly from third parties or through acquisitions
of other companies, we face the possibility that such intellectual property
will be found to infringe or violate the proprietary rights of others. For
example, a trademark infringement and dilution case filed in 1999 against NEN,
then not yet a wholly-owned subsidiary of Sybase, resulted in a multi-million
dollar judgment against NEN and an injunction against NENs use of the trade
name NEON. The action was settled in September 2001 for a lesser amount as
well as certain other concessions. Regardless of whether these claims have
merit, they can be time consuming and expensive to defend or settle, and can
harm the Companys business and reputation. We do not believe our products
infringe any third party patents or proprietary rights, but there is no
guarantee that we can avoid claims or findings of infringement in the future.

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| |  | Changes in Management; Human Resources
|- |  | --------------------------------------

In recent years, we have added to our executive management team. For example,
In January 2003, Thomas Volk joined the Company as Executive Vice President,
Infrastructure Platform Group, and in the second quarter of 2002, Michael
Bealmear joined the Company as Executive Vice President, Worldwide Field
Operations. Richard Moore, who was named President of FFI in August 2002,
joined the Company in July 2001 as Senior Vice President and General Manager of
the v-Business Group. In June 2003, Pamela George, Senior Vice President,
Corporate Affairs resigned, and operations that had been reporting to her were
consolidated under Marty Beard, Senior Vice President, Corporate Development
and Marketing. Further changes involving executives and managers resulting
from acquisitions, mergers and other events could increase the current rate of
employee turnover, particularly in consulting, engineering and sales. Changes
in our Board membership could also affect the Companys current strategic
business plans.

Additionally, our inability to hire and retain qualified technical, managerial,
sales and other employees could affect our product development and sales
efforts, other aspects of our operations, and our financial results.
Competition for highly skilled personnel in the software industry is typically
intense. Our financial and stock price performance relative to the companies
with whom we compete for employees, and the high cost of living in the San
Francisco Bay Area, where our headquarters is located, could also impact the
degree of future employee turnover.



| |  | Acquisitions and Strategic Relationships
|- |  | ----------------------------------------

We regularly explore possible acquisitions and other strategic ventures to
expand and enhance our business. We have recently acquired or invested in a
number of companies and formed certain strategic relationships, and will likely
continue to do so in the future. For example, in February 2003 we completed
our acquisition of AvantGo, Inc., a leading provider of mobile enterprise
software, and in April 2002, we acquired all of the issued and outstanding
stock of OnePage, Inc., a leading provider of technology and applications for
building the information components  portlets  of corporate, consumer and
wireless portals. During 2001, we acquired NEN, a developer of enterprise
application integration software, as well as our distributor in Denmark.
During 2000, we acquired certain assets of our distributor in Mexico, and the
stock of Home Financial Network, Inc. (now FFI). In 1999, we acquired Data
Warehouse Network, a provider of industry-specific business intelligence
applications.

We may not achieve the desired benefits of our acquisitions and investments.
For example, we may be unable to successfully assimilate an acquired companys
management team, business infrastructure, company culture, or other important
factors. Also, dedication of additional resources to handle these integration
tasks could temporarily divert attention from other important business. Such
acquisitions could also result in costs, liabilities, or additional expenses
that could harm our results of operations and financial condition. With
respect to our investments in other companies, we may not realize a return on
our investments, or the value of our investments may decline if the businesses
in which we invest are not successful.

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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES
OF MARKET RISK

The following discussion about our risk management activities includes
forward-looking statements that involve risks and uncertainties, as more fully
described on Page 3 of this Report.

Foreign Exchange Risk

As a global concern, we face exposure to adverse movements in foreign currency
exchange rates. These exposures may change over time as business practices
evolve and could have a material adverse impact on our financial position and
results of operations. Historically, our primary exposures have related to non
dollar-denominated sales and expenses in Europe, Asia Pacific, and Latin
America. In order to reduce the effect of foreign currency fluctuations, we
utilize foreign currency forward exchange contracts (forward contracts) to
hedge certain foreign currency transaction exposures outstanding during the
period (approximately 30 days). The gains and losses on the forward contracts
mitigate the gains and losses on our outstanding foreign currency transactions.
We do not enter into forward contracts for trading purposes. All foreign
currency transactions and all outstanding forward contracts are
marked-to-market at the end of the period with unrealized gains and losses
included in interest expense and other, net. The unrealized gain (loss) on the
outstanding forward contracts as of September 30, 2003 was immaterial to our
consolidated financial statements.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates to our
investment portfolio, which consists of taxable, short-term money market
instruments and debt securities with maturities between 90 days and three
years. We do not use derivative financial instruments in our investment
portfolio. We place our investments with high-credit quality issuers and, by
policy, we limit the amount of credit exposure to any one issuer.

We mitigate default risk by investing in only the safe and high-credit quality
securities and by monitoring the credit rating of investment issuers. The
portfolio includes only marketable securities with active secondary or resale
markets to ensure portfolio liquidity. These securities are generally
classified as available for sale, and consequently, are recorded on the balance
sheet at fair value with unrealized gains or losses reported, as a separate
component of stockholders equity, net of tax. Losses realized from the less
than temporary decline in the value of specific marketable securities are
recorded in interest expenses and other, net on the income statement. Neither
realized nor unrealized gains and losses at September 30, 2003 were material.

We have no cash flow exposure due to rate changes for cash equivalents and cash
investments as all of these investments are at fixed interest rates.

There has been no material change in our interest rate exposure since December
31, 2002.

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ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial
Officer, carried out an evaluation of the effectiveness of our disclosure
controls and procedures, as of the end of the period covered by this Quarterly
Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and
our Chief Financial Officer concluded that our disclosure controls and
procedures were effective to ensure that information required to be included in
the reports that we file or submit pursuant to the Securities and Exchange Act
of 1934 is recorded, processed, summarized and reported within the timeframe
specified by the Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls or in other factors that
materially affected, or are reasonably likely to materially affect, our
internal controls over financial reporting.

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PART II: OTHER INFORMATION




ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits furnished pursuant to Section 601 of
Regulation S-K

| |  |  |      |  |  |                                                                                                                                                                              
| |  |  | ---- |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | 31.1 |  |  | 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  
| |  |  |      |  |  |                                                                                                                                                                              
| |  |  | 32   |  |  | 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

(b) Reports on Form 8-K:



| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) On July 23, 2003, we filed a Report on Form 8-K in connection
with our press release announcing our results for the quarter
ended June 30, 2003.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                  |                                                   |                         
|----------------- | ------------------------------------------------- | ------------------------
|November 13, 2003 | SYBASE, INC.                                     
|                  |                                                   |                         
|                  | By                                                | /s/ PIETER VAN DER VORST
|                  |                                                   |                         
|                  | Pieter Van der Vorst                             
|                  | Senior Vice President and Chief Financial Officer
|                  | (Principal Financial Officer)                    
|                  |                                                   |                         
|                  | By                                                | /s/ MARTIN J. HEALY     
|                  |                                                   |                         
|                  | Martin J. Healy                                  
|                  | Vice President and Corporate Controller          
|                  | (Principal Accounting Officer)                   

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EXHIBIT INDEX TO SYBASE, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2003

|            |  |                                                                                                                                                                              
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                  
|            |  |                                                                                                                                                                              
|31.1        |  | 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  
|            |  |                                                                                                                                                                              
|32          |  | 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

50