##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
      TO
 COMMISSION
FILE NUMBER: 1-16493
 SYBASE, INC.
 
  Delaware
    
    94-2951005(State of Incorporation)
    
    (I.R.S. Employer Identification No.)
  
   
  
   x o
 x o o
 o x




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##### 



PageForward-Looking Statements
    
    
    2Part I: Financial InformationItem 1: Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3: Quantitative and Qualitative Disclosures of Market Risk
    
    
    27Item 4: Controls and Procedures
    
    
    27Part II: Other InformationItem 1: Legal Proceedings
    
    
    28Item 1 (A): Risk Factors
    
    
    28Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 4: Submission of Matters to a Vote of Security Holders
    
    
    37Item 5: Other Information
    
    
    37Item 6: Exhibits
    
    
    37Signatures
    
    
    38Exhibit IndexEXHIBIT 3.1EXHIBIT 3.2EXHIBIT 12EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
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www.sec.gov
 www.sybase.com
  2




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PART I: FINANCIAL INFORMATION
 
 ITEM 1: FINANCIAL STATEMENTS
  
  June 30,2007
    
    
    December 31,(In thousands, except share and per share data)
    
    (Unaudited)
    
    
    2006Current assets:Cash and cash equivalents
    
    $
    436,803
    
    
    $
    355,303Short-term cash investments
    
    
    220,955
    
    
    
    269,612Total cash, cash equivalents and short-term cash investments
    
    
    657,758
    
    
    
    624,915Restricted cash
    
    
    6,024
    
    
    
    6,014Accounts receivable, net
    
    
    196,704
    
    
    
    218,016Deferred income taxes
    
    
    6,242
    
    
    
    6,224Prepaid expenses and other current assets
    
    
    32,857
    
    
    
    16,392Total current assets
    
    
    899,585
    
    
    
    871,561Long-term cash investments
    
    
    45,303
    
    
    
    12,781Property, equipment and improvements, net
    
    
    64,639
    
    
    
    66,458Deferred income taxes
    
    
    38,083
    
    
    
    36,069Capitalized software, net
    
    
    72,006
    
    
    
    71,179Goodwill
    
    
    540,709
    
    
    
    540,303Other purchased intangibles, net
    
    
    138,538
    
    
    
    149,648Other assets
    
    
    36,615
    
    
    
    39,551Total assets
    
    $
    1,835,478
    
    
    $
    1,787,550Current liabilities:Accounts payable
    
    $
    22,735
    
    
    $
    23,439Accrued compensation and related expenses
    
    
    50,403
    
    
    
    59,748Accrued income taxes
    
    
    14,156
    
    
    
    31,364Other accrued liabilities
    
    
    110,913
    
    
    
    108,436Deferred revenue
    
    
    213,792
    
    
    
    193,431Total current liabilities
    
    
    411,999
    
    
    
    416,418Other liabilities
    
    
    44,082
    
    
    
    44,428Deferred income taxes
    
    
    14,186
    
    
    
    14,448Long-term tax liability
    
    
    25,797
    
    
    
    Long-term deferred revenue
    
    
    5,506
    
    
    
    3,965Minority interest
    
    
    5,179
    
    
    
    5,160Convertible subordinated notes
    
    
    460,000
    
    
    
    460,000Commitments and contingent liabilitiesStockholders equity:Preferred stock, $0.001 par value, 8,000,000 shares authorized; none issued or outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value, 200,000,000 shares authorized; 105,337,362 shares issued
and 90,048,943 outstanding (2006105,337,362 shares issued and 91,281,805 outstanding)
    
    
    105
    
    
    
    105Additional paid-in capital
    
    
    990,046
    
    
    
    977,672Accumulated earnings
    
    
    133,655
    
    
    
    92,817Accumulated other comprehensive income
    
    
    53,418
    
    
    
    40,850Cost of 15,288,419 shares of treasury stock (200614,055,557 shares)
    
    
    (308,495
    )
    
    
    (268,313
    )Total stockholders equity
    
    
    868,729
    
    
    
    843,131Total liabilities and stockholders equity
    
    $
    1,835,478
    
    
    $
    1,787,550
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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Dollars in thousands, except per share data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:License fees
    
    $
    77,435
    
    
    $
    83,141
    
    
    $
    146,800
    
    
    $
    150,029Services
    
    
    135,230
    
    
    
    132,418
    
    
    
    264,881
    
    
    
    260,538Messaging
    
    
    32,358
    
    
    
    
    
    
    
    63,379
    
    
    
    Total revenues
    
    
    245,023
    
    
    
    215,559
    
    
    
    475,060
    
    
    
    410,567Costs and expenses:Cost of license fees
    
    
    13,083
    
    
    
    11,930
    
    
    
    25,836
    
    
    
    24,722Cost of services
    
    
    39,539
    
    
    
    38,338
    
    
    
    78,281
    
    
    
    76,690Cost of messaging
    
    
    18,906
    
    
    
    
    
    
    
    37,795
    
    
    
    Sales and marketing
    
    
    64,916
    
    
    
    67,833
    
    
    
    129,491
    
    
    
    129,188Product development and engineering
    
    
    36,920
    
    
    
    37,543
    
    
    
    75,673
    
    
    
    74,540General and administrative
    
    
    32,680
    
    
    
    25,947
    
    
    
    64,176
    
    
    
    50,934Amortization of other purchased intangibles
    
    
    3,436
    
    
    
    1,552
    
    
    
    6,846
    
    
    
    3,098Cost (Reversal) of restructure
    
    
    (51
    )
    
    
    66
    
    
    
    (47
    )
    
    
    100Total costs and expenses
    
    
    209,429
    
    
    
    183,209
    
    
    
    418,051
    
    
    
    359,272Operating income
    
    
    35,594
    
    
    
    32,350
    
    
    
    57,009
    
    
    
    51,295Interest income
    
    
    8,526
    
    
    
    10,190
    
    
    
    15,909
    
    
    
    18,792Interest expense and other, net
    
    
    (3,384
    )
    
    
    (2,973
    )
    
    
    (5,783
    )
    
    
    (5,517
    )Income before income taxes
    
    
    40,736
    
    
    
    39,567
    
    
    
    67,135
    
    
    
    64,570Provision for income taxes
    
    
    14,708
    
    
    
    13,234
    
    
    
    25,959
    
    
    
    20,985Net income
    
    $
    26,028
    
    
    $
    26,333
    
    
    $
    41,176
    
    
    $
    43,585Basic net income per share
    
    $
    0.29
    
    
    $
    0.30
    
    
    $
    0.45
    
    
    $
    0.49Shares used in computing basic net income per share
    
    
    90,891
    
    
    
    89,113
    
    
    
    91,020
    
    
    
    89,375Diluted net income per share
    
    $
    0.28
    
    
    $
    0.29
    
    
    $
    0.44
    
    
    $
    0.48Shares used in computing diluted net income per share
    
    
    92,972
    
    
    
    91,402
    
    
    
    93,294
    
    
    
    91,716
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Six Months EndedJune 30,(Dollars in thousands)
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    
    41,176
    
    
    
    43,585Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    43,238
    
    
    
    34,895Loss on disposal of assets
    
    
    65
    
    
    
    1,038Deferred income taxes
    
    
    (2,262
    )
    
    
    (7,682
    )Stock-based compensation  restricted stock
    
    
    4,185
    
    
    
    4,264Stock-based compensation  all other
    
    
    7,048
    
    
    
    6,724Excess tax benefit from stock-based compensation plans
    
    
    (2,855
    )
    
    
    Amortization of note issuance costs
    
    
    985
    
    
    
    984Changes in assets and liabilities:Accounts receivable
    
    
    22,522
    
    
    
    33,431Other current assets
    
    
    (5,258
    )
    
    
    (2,787
    )Other assets  operating
    
    
    2,572
    
    
    
    (2,457
    )Accounts payable
    
    
    (669
    )
    
    
    699Accrued compensation and related expenses
    
    
    (9,360
    )
    
    
    (5,317
    )Accrued income taxes
    
    
    8,510
    
    
    
    11,005Other accrued liabilities
    
    
    (7,786
    )
    
    
    (14,906
    )Deferred revenues
    
    
    21,902
    
    
    
    20,563Other liabilities
    
    
    (552
    )
    
    
    934Net cash provided by operating activities
    
    
    123,461
    
    
    
    124,973Cash flows from investing activities:Increase in restricted cash
    
    
    (10
    )
    
    
    (127
    )Purchases of available-for-sale cash investments
    
    
    (165,136
    )
    
    
    (346,539
    )Maturities of available-for-sale cash investments
    
    
    99,487
    
    
    
    179,160Sales of available-for-sale cash investments
    
    
    81,984
    
    
    
    160,571Business combinations, net of cash acquired
    
    
    (1,531
    )
    
    
    (3,794
    )Purchases of property, equipment and improvements
    
    
    (11,225
    )
    
    
    (7,847
    )Proceeds from sale of property, equipment, and improvements
    
    
    40
    
    
    
    2Capitalized software development costs
    
    
    (17,228
    )
    
    
    (18,923
    )Increase in other assets  investing
    
    
    (61
    )
    
    
    (7
    )Net cash used for investing activities
    
    
    (13,680
    )
    
    
    (37,504
    )Cash flows from financing activities:Repayments of long-term obligations
    
    
    (33
    )
    
    
    (29
    )Payments on capital lease
    
    
    (879
    )
    
    
    (159
    )Net proceeds from the issuance of common stock and reissuance of treasury stock
    
    
    19,221
    
    
    
    12,225Purchases of treasury stock
    
    
    (58,600
    )
    
    
    (45,280
    )Excess tax benefit from stock-based compensation plans
    
    
    2,855
    
    
    
    Net cash used for financing activities
    
    
    (37,436
    )
    
    
    (33,243
    )Effect of exchange rate changes on cash
    
    
    9,155
    
    
    
    9,840Net increase in cash and cash equivalents
    
    
    81,500
    
    
    
    64,066Cash and cash equivalents, beginning of year
    
    $
    355,303
    
    
    $
    398,741Cash and cash equivalents, end of period
    
    $
    436,803
    
    
    $
    462,807
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Notes to Condensed Consolidated Financial Statements
 Basis of Presentation .
   Stock-Based Compensation .
 Stock-Based Compensation Expense
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(In thousands, except per share data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Cost of services
    
    $
    376
    
    
    $
    681
    
    
    $
    715
    
    
    $
    1,361Cost of messaging
    
    
    124
    
    
    
    
    
    
    
    310
    
    
    
    Sales and marketing
    
    
    1,206
    
    
    
    1,051
    
    
    
    2,472
    
    
    
    2,047Product development and engineering
    
    
    656
    
    
    
    679
    
    
    
    1,342
    
    
    
    1,272General and administrative
    
    
    3,121
    
    
    
    3,151
    
    
    
    6,394
    
    
    
    6,307Stock-based compensation expense included in total costs and expenses
    
    
    5,483
    
    
    
    5,562
    
    
    
    11,233
    
    
    
    10,987Tax benefit related to stock-based compensation expense
    
    
    (1,572
    )
    
    
    (1,619
    )
    
    
    (3,037
    )
    
    
    (3,214
    )Stock-based compensation expense included in net income
    
    $
    3,911
    
    
    $
    3,943
    
    
    $
    8,196
    
    
    $
    7,773Reduction of net income per share:Basic
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.09
    
    
    $
    0.09Diluted
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.09
    
    
    $
    0.08
  6




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Net income per share .
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(In thousands, except per share data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    26,028
    
    
    $
    26,333
    
    
    $
    41,176
    
    
    $
    43,585Basic net income per share
    
    $
    0.29
    
    
    $
    0.30
    
    
    $
    0.45
    
    
    $
    0.49Shares used in computing basic net income per share
    
    
    90,891
    
    
    
    89,113
    
    
    
    91,020
    
    
    
    89,375Diluted net income per share
    
    $
    0.28
    
    
    $
    0.29
    
    
    $
    0.44
    
    
    $
    0.48Shares used in computing basic net income per share
    
    
    90,891
    
    
    
    89,113
    
    
    
    91,020
    
    
    
    89,375Dilutive effect of stock options, restricted stock and stock appreciation rights
    
    
    2,081
    
    
    
    2,289
    
    
    
    2,274
    
    
    
    2,341Shares used in computing diluted net income per share
    
    
    92,972
    
    
    
    91,402
    
    
    
    93,294
    
    
    
    91,716
  Comprehensive Income
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(In thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    26,028
    
    
    $
    26,333
    
    
    $
    41,176
    
    
    $
    43,585Foreign currency translation gains
    
    
    9,372
    
    
    
    8,790
    
    
    
    12,449
    
    
    
    10,772Unrealized gains/(losses) on marketable securities
    
    
    (26
    )
    
    
    (215
    )
    
    
    118
    
    
    
    (588
    )Comprehensive income
    
    $
    35,374
    
    
    $
    34,908
    
    
    $
    53,743
    
    
    $
    53,769
  Segment Information
   7




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##### Table of Contents



Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    
    TotalRevenues:License feesInfrastructure
    
    $
    52,572
    
    
    $
    346
    
    
    $
    3
    
    
    
    
    
    
    $
    52,921Mobile and Embedded
    
    
    7,789
    
    
    
    16,725
    
    
    
    
    
    
    
    
    
    
    
    24,514Subtotal license fees
    
    
    60,361
    
    
    
    17,071
    
    
    
    3
    
    
    
    
    
    
    
    77,435Intersegment license revenues
    
    
    207
    
    
    
    6,495
    
    
    
    
    
    
    $
    (6,702
    )
    
    
    Total license fees
    
    
    60,568
    
    
    
    23,566
    
    
    
    3
    
    
    
    (6,702
    )
    
    
    77,435ServicesDirect service revenue
    
    
    123,446
    
    
    
    11,784
    
    
    
    
    
    
    
    
    
    
    
    135,230Intersegment service revenues
    
    
    147
    
    
    
    7,275
    
    
    
    
    
    
    
    (7,422
    )
    
    
    Total services
    
    
    123,593
    
    
    
    19,059
    
    
    
    
    
    
    
    (7,422
    )
    
    
    135,230Messaging
    
    
    
    
    
    
    
    
    
    
    32,358
    
    
    
    
    
    
    
    32,358Total revenues
    
    
    184,161
    
    
    
    42,625
    
    
    
    32,361
    
    
    
    (14,124
    )
    
    
    245,023Total allocated costs and expenses before amortization of other
purchased intangibles, purchased technology, cost of restructure and
unallocated costs
    
    
    146,545
    
    
    
    34,402
    
    
    
    29,718
    
    
    
    (14,124
    )
    
    
    196,541Operating income before amortization of other purchased intangibles,
purchased technology, cost of restructure and unallocated costs
    
    
    37,616
    
    
    
    8,223
    
    
    
    2,643
    
    
    
    
    
    
    
    48,482Amortization of other purchased intangibles
    
    
    527
    
    
    
    1,046
    
    
    
    1,863
    
    
    
    
    
    
    
    3,436Amortization of purchased technology
    
    
    403
    
    
    
    2,003
    
    
    
    931
    
    
    
    
    
    
    
    3,337Operating income (loss) before cost of restructure and unallocated costs
    
    
    36,686
    
    
    
    5,174
    
    
    
    (151
    )
    
    
    
    
    
    
    41,709Reversal of restructure  2007 Activity
    
    
    (51
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51
    )Operating income (loss) before unallocated costs
    
    
    36,737
    
    
    
    5,174
    
    
    
    (151
    )
    
    
    
    
    
    
    41,760Unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,166Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,594Interest income, interest expense and other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,142Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    40,736
  Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    Elimination
    
    
    TotalRevenues:License feesInfrastructure
    
    $
    59,105
    
    
    $
    26
    
    
    
    
    
    
    $
    59,131Mobile and Embedded
    
    
    7,605
    
    
    
    16,405
    
    
    
    
    
    
    
    24,010Subtotal license fees
    
    
    66,710
    
    
    
    16,431
    
    
    
    
    
    
    
    83,141Intersegment license revenues
    
    
    22
    
    
    
    6,338
    
    
    $
    (6,360
    )
    
    
    Total license fees
    
    
    66,732
    
    
    
    22,769
    
    
    
    (6,360
    )
    
    
    83,141ServicesDirect service revenue
    
    
    121,183
    
    
    
    11,235
    
    
    
    
    
    
    
    132,418Intersegment service revenues
    
    
    52
    
    
    
    6,055
    
    
    
    (6,107
    )
    
    
    Total services
    
    
    121,235
    
    
    
    17,290
    
    
    
    (6,107
    )
    
    
    132,418Total revenues
    
    
    187,967
    
    
    
    40,059
    
    
    
    (12,467
    )
    
    
    215,559Total allocated costs and expenses before amortization of other
purchased intangibles, purchased technology, cost of restructure
and unallocated costs
    
    
    151,248
    
    
    
    34,445
    
    
    
    (12,467
    )
    
    
    173,226Operating income before amortization of other purchased
intangibles, purchased technology, cost of restructure and
unallocated costs
    
    
    36,719
    
    
    
    5,614
    
    
    
    
    
    
    
    42,333Amortization of other purchased intangibles
    
    
    506
    
    
    
    1,046
    
    
    
    
    
    
    
    1,552Amortization of purchased technology
    
    
    339
    
    
    
    1,964
    
    
    
    
    
    
    
    2,303Operating income before cost of restructure and unallocated costs
    
    
    35,874
    
    
    
    2,604
    
    
    
    
    
    
    
    38,478Cost of restructure  2006 Activity
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    66Operating income before unallocated costs
    
    
    35,808
    
    
    
    2,604
    
    
    
    
    
    
    
    38,412Unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,062Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,350Interest income, interest expense and other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,217Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    39,567
 9




---



##### Table of Contents



Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    
    TotalRevenues:License feesInfrastructure
    
    $
    100,887
    
    
    $
    367
    
    
    $
    17
    
    
    
    
    
    
    $
    101,271Mobile and Embedded
    
    
    14,428
    
    
    
    31,101
    
    
    
    
    
    
    
    
    
    
    
    45,529Subtotal license fees
    
    
    115,315
    
    
    
    31,468
    
    
    
    17
    
    
    
    
    
    
    
    146,800Intersegment license revenues
    
    
    239
    
    
    
    12,031
    
    
    
    
    
    
    $
    (12,270
    )
    
    
    Total license fees
    
    
    115,554
    
    
    
    43,499
    
    
    
    17
    
    
    
    (12,270
    )
    
    
    146,800ServicesDirect service revenue
    
    
    241,829
    
    
    
    23,052
    
    
    
    
    
    
    
    
    
    
    
    264,881Intersegment service revenues
    
    
    174
    
    
    
    14,058
    
    
    
    
    
    
    
    (14,232
    )
    
    
    Total services
    
    
    242,003
    
    
    
    37,110
    
    
    
    
    
    
    
    (14,232
    )
    
    
    264,881Messaging
    
    
    
    
    
    
    
    
    
    
    63,379
    
    
    
    
    
    
    
    63,379Total revenues
    
    
    357,557
    
    
    
    80,609
    
    
    
    63,396
    
    
    
    (26,502
    )
    
    
    475,060Total allocated costs and expenses before amortization of other
purchased intangibles, purchased technology, cost of restructure and
unallocated costs
    
    
    290,663
    
    
    
    68,512
    
    
    
    59,695
    
    
    
    (26,502
    )
    
    
    392,368Operating income before amortization of other purchased intangibles,
purchased technology, cost of restructure and unallocated costs
    
    
    66,894
    
    
    
    12,097
    
    
    
    3,701
    
    
    
    
    
    
    
    82,692Amortization of other purchased intangibles
    
    
    1,054
    
    
    
    2,092
    
    
    
    3,700
    
    
    
    
    
    
    
    6,846Amortization of purchased technology
    
    
    805
    
    
    
    4,006
    
    
    
    1,847
    
    
    
    
    
    
    
    6,658Operating income (loss) before cost of restructure and unallocated costs
    
    
    65,035
    
    
    
    5,999
    
    
    
    (1,846
    )
    
    
    
    
    
    
    69,188Reversal of restructure  2007 Activity
    
    
    (47
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47
    )Operating income (loss) before unallocated costs
    
    
    65,082
    
    
    
    5,999
    
    
    
    (1,846
    )
    
    
    
    
    
    
    69,235Unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,226Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,009Interest income, interest expense and other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,126Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    67,135
  Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    Elimination
    
    
    TotalRevenues:License feesInfrastructure
    
    $
    103,280
    
    
    $
    66
    
    
    
    
    
    
    $
    103,346Mobile and Embedded
    
    
    12,858
    
    
    
    33,825
    
    
    
    
    
    
    
    46,683Subtotal license fees
    
    
    116,138
    
    
    
    33,891
    
    
    
    
    
    
    
    150,029Intersegment license revenues
    
    
    43
    
    
    
    10,686
    
    
    $
    (10,729
    )
    
    
    Total license fees
    
    
    116,181
    
    
    
    44,577
    
    
    
    (10,729
    )
    
    
    150,029ServicesDirect service revenue
    
    
    238,020
    
    
    
    22,518
    
    
    
    
    
    
    
    260,538Intersegment service revenues
    
    
    102
    
    
    
    12,192
    
    
    
    (12,294
    )
    
    
    Total services
    
    
    238,122
    
    
    
    34,710
    
    
    
    (12,294
    )
    
    
    260,538Total revenues
    
    
    354,303
    
    
    
    79,287
    
    
    
    (23,023
    )
    
    
    410,567Total allocated costs and expenses before amortization of other
purchased intangibles, purchased technology, cost of restructure and
unallocated costs
    
    
    294,960
    
    
    
    68,580
    
    
    
    (23,023
    )
    
    
    340,517Operating income before amortization of other purchased intangibles,
purchased technology, cost of restructure and unallocated costs
    
    
    59,343
    
    
    
    10,707
    
    
    
    
    
    
    
    70,050Amortization of other purchased intangibles
    
    
    1,006
    
    
    
    2,092
    
    
    
    
    
    
    
    3,098Amortization of purchased technology
    
    
    822
    
    
    
    3,928
    
    
    
    
    
    
    
    4,750Operating income before cost of restructure and unallocated cost savings
    
    
    57,515
    
    
    
    4,687
    
    
    
    
    
    
    
    62,202Cost of restructure  2006 Activity
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    100Operating income before unallocated costs
    
    
    57,415
    
    
    
    4,687
    
    
    
    
    
    
    
    62,102Unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,807Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,295Interest income, interest expense and other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,275Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    64,570
 10




---



##### Table of Contents



Goodwill and Intangible Assets .
  Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    TotalBalance at January 1, 2007
    
    $
    96,186
    
    
    $
    110,408
    
    
    $
    333,709
    
    
    $
    540,303Addition in goodwill recorded on Mobile 365 acquisition
    
    
    
    
    
    
    
    
    
    
    106
    
    
    
    106Foreign currency translation adjustments & other
    
    
    299
    
    
    
    1
    
    
    
    
    
    
    
    300Balance at June 30, 2007
    
    $
    96,485
    
    
    $
    110,409
    
    
    $
    333,815
    
    
    $
    540,709
    June 30, 2007
    
    
    December 31, 2006Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying(In thousands)
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountPurchased technology
    
    $
    164,256
    
    
    $
    (101,877
    )
    
    $
    62,379
    
    
    $
    163,333
    
    
    $
    (95,193
    )
    
    $
    68,140AvantGo tradenames
    
    
    3,100
    
    
    
    
    
    
    
    3,100
    
    
    
    3,100
    
    
    
    
    
    
    
    3,100XcelleNet tradenames
    
    
    4,000
    
    
    
    
    
    
    
    4,000
    
    
    
    4,000
    
    
    
    
    
    
    
    4,000Covenant not to compete
    
    
    319
    
    
    
    (112
    )
    
    
    207
    
    
    
    319
    
    
    
    (59
    )
    
    
    260Customer lists
    
    
    99,828
    
    
    
    (30,976
    )
    
    
    68,852
    
    
    
    98,289
    
    
    
    (24,141
    )
    
    
    74,148Totals
    
    $
    271,503
    
    
    $
    (132,965
    )
    
    $
    138,538
    
    
    $
    269,041
    
    
    $
    (119,393
    )
    
    $
    149,648
  2007
    
    $
    26,8652008
    
    
    26,6632009
    
    
    26,2712010
    
    
    23,8362011
    
    
    18,326
  11




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##### Table of Contents



Litigation
       . Stock Repurchase Plan .
 Restructuring
  12




---



##### Table of Contents



(Dollars in millions)
    
    Lease Cancellations / Commitments and OtherRestructuring plan
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    AvantGo
    
    
    Mobile 365Accrued liabilities at December 31, 2006
    
    $
    4.2
    
    
    $
    0.2
    
    
    $
    8.3
    
    
    $
    2.0
    
    
    $
    0.9
    
    
    $
    1.3Amounts paid
    
    
    (0.6
    )
    
    
    (0.1
    )
    
    
    (1.6
    )
    
    
    (0.4
    )
    
    
    (0.5
    )
    
    
    (0.1
    )Amounts reversed
    
    
    
    
    
    
    (0.1
    )Accrued liabilities at June 30, 2007
    
    $
    3.6
    
    
    $
    
    
    
    $
    6.7
    
    
    $
    1.6
    
    
    $
    0.4
    
    
    $
    1.2
 Convertible Subordinated Notes
     Income Taxes Accounting for Uncertainty in Income
Taxes,
   Recent Accounting Pronouncements
  13




---



##### Table of Contents



The Fair Value Option for Financial Assets and
Financial Liabilities Fair Value Measurements, Disclosures about Fair Value of Financial Instruments.
 14




---



##### Table of Contents



ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
    
    Executive Overview that discusses at a high level our operating results and some of the trends that affect our business.
    
    Significant changes since our most recent Annual Report on Form 10-K in the Critical Accounting Policies and Estimates
as we believe it is important to understanding the assumptions and judgments underlying our financial statements.
    
    Results of Operations that begins with an overview followed by a more detailed discussion of our revenue and expenses.
    
    Liquidity and Capital Resources which discusses key aspects of our statements of cash flows, changes in our balance
sheets and our financial commitments.
    Executive Overview
 Our Business
    Our Results
  15




---



##### Table of Contents



Business Trends
  ®
   16




---



##### Table of Contents



Critical Accounting Policies and Estimates
 Accounting for Income Taxes
 
    
    Accounting for Income Taxes
    Recent Accounting Pronouncements
 SFAS 157, Fair Value Measurements
 SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities
 17




---



##### Table of Contents



Fair Value Measurements, Disclosures about Fair Value of Financial Instruments.
 18




---



##### Table of Contents



Results of Operations
 Revenues  (Dollars in millions)
 Three Months ended June 30,
    
    
    Six Months ended June 30,Percent
    
    
    
    
    
    
    
    
    
    
    Percent2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    ChangeLicense fees by segment:IPG
    
    $
    60.6
    
    
    $
    66.7
    
    
    
    (9
    %)
    
    $
    115.6
    
    
    $
    116.2
    
    
    
    (1
    %)IAS
    
    
    23.5
    
    
    
    22.8
    
    
    
    3
    %
    
    
    43.5
    
    
    
    44.5
    
    
    
    (2
    %)SY365
    
    
    0.0
    
    
    
    
    
    
    
    *
    
    
    
    0.0
    
    
    
    
    
    
    
    *Eliminations
    
    
    (6.7
    )
    
    
    (6.4
    )
    
    
    5
    %
    
    
    (12.3
    )
    
    
    (10.7
    )
    
    
    15
    %Total license fees
    
    $
    77.4
    
    
    $
    83.1
    
    
    
    (7
    %)
    
    $
    146.8
    
    
    $
    150.0
    
    
    
    (2
    %)Percentage of total revenues
    
    
    32
    %
    
    
    39
    %
    
    
    
    

    
    
    31
    %
    
    
    37
    %Services by segment:IPG
    
    $
    123.6
    
    
    $
    121.3
    
    
    
    2
    %
    
    $
    242.0
    
    
    $
    238.2
    
    
    
    2
    %IAS
    
    
    19.0
    
    
    
    17.3
    
    
    
    10
    %
    
    
    37.1
    
    
    
    34.7
    
    
    
    7
    %Eliminations
    
    
    (7.4
    )
    
    
    (6.1
    )
    
    
    21
    %
    
    
    (14.2
    )
    
    
    (12.3
    )
    
    
    15
    %Total services
    
    $
    135.2
    
    
    $
    132.5
    
    
    
    2
    %
    
    $
    264.9
    
    
    $
    260.6
    
    
    
    2
    %Percentage of total revenues
    
    
    55
    %
    
    
    61
    %
    
    
    
    
    

    
    56
    %
    
    
    63
    %Messaging by segment:SY365
    
    $
    32.4
    
    
    
    
    
    
    
    *
    
    
    $
    63.4
    
    
    
    
    
    
    
    *Total messaging
    
    $
    32.4
    
    
    
    
    
    
    
    *
    
    
    $
    63.4
    
    
    
    
    
    
    
    *Percentage of total revenues
    
    
    13
    %
    
    
    
    
    
    
    *
    
    
    
    13
    %
    
    
    
    
    
    
    *Total revenues
    
    $
    245.0
    
    
    $
    215.6
    
    
    
    14
    %
    
    $
    475.1
    
    
    $
    410.6
    
    
    
    16
    %
 
 *
    
    Not meaningful ®
     19




---



##### Table of Contents



Geographical Revenues  (Dollars in millions)
 Three Months ended June 30,
    
    
    Six Months ended June 30,Percent
    
    
    
    
    
    
    
    
    
    
    Percent2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    ChangeNorth American
    
    $
    130.8
    
    
    $
    118.4
    
    
    
    10
    %
    
    $
    254.9
    
    
    $
    231.6
    
    
    
    10
    %Percentage of total revenues
    
    
    53
    %
    
    
    55
    %
    
    
    
    
    
    
    54
    %
    
    
    56
    %Total Outside North America
    
    $
    114.2
    
    
    $
    97.2
    
    
    
    17
    %
    
    $
    220.2
    
    
    $
    179.0
    
    
    
    23
    %Percentage of total revenues
    
    
    47
    %
    
    
    45
    %
    
    
    
    
    
    
    46
    %
    
    
    44
    %International: EMEA (Europe, Middle East and Africa)
    
    $
    77.6
    
    
    $
    66.7
    
    
    
    16
    %
    
    $
    149.5
    
    
    $
    121.9
    
    
    
    23
    %Percentage of total revenues
    
    
    32
    %
    
    
    31
    %
    
    
    
    
    
    
    31
    %
    
    
    30
    %Intercontinental: (Asia Pacific and Latin America)
    
    $
    36.6
    
    
    $
    30.5
    
    
    
    20
    %
    
    $
    70.7
    
    
    $
    57.1
    
    
    
    24
    %Percentage of total revenues
    
    
    15
    %
    
    
    14
    %
    
    
    
    
    
    
    15
    %
    
    
    14
    %Total revenues
    
    $
    245.0
    
    
    $
    215.6
    
    
    
    14
    %
    
    $
    475.1
    
    
    $
    410.6
    
    
    
    16
    %
      20




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##### Table of Contents



21




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##### Table of Contents



Costs and Expenses  (Dollars in millions)
 Three Months ended June 30,
    
    
    Six Months ended June 30,Percent
    
    
    
    
    
    
    
    
    
    
    Percent2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    ChangeCost of license fees
    
    $
    13.1
    
    
    $
    11.9
    
    
    
    10
    %
    
    $
    25.8
    
    
    $
    24.7
    
    
    
    4
    %Percentage of license fees revenues
    
    
    17
    %
    
    
    14
    %
    
    
    
    
    

    
    18
    %
    
    
    16
    %Cost of services
    
    $
    39.5
    
    
    $
    38.3
    
    
    
    3
    %
    
    $
    78.3
    
    
    $
    76.7
    
    
    
    2
    %Percentage of services revenues
    
    
    29
    %
    
    
    29
    %
    
    
    
    
    
    
    30
    %
    
    
    29
    %Cost of messaging
    
    $
    18.9
    
    
    
    
    
    
    
    *
    
    
    $
    37.8
    
    
    
    
    
    
    
    *Percentage of messaging revenues
    
    
    58
    %
    
    
    
    
    
    
    
    
    
    
    60
    %
    
    
    Sales and marketing
    
    $
    64.9
    
    
    $
    67.8
    
    
    
    (4
    %)
    
    $
    129.5
    
    
    $
    129.2
    
    
    
    *Percentage of total revenues
    
    
    26
    %
    
    
    31
    %
    
    
    
    
    
    
    27
    %
    
    
    31
    %Product development and engineering
    
    $
    36.9
    
    
    $
    37.5
    
    
    
    (2
    %)
    
    $
    75.7
    
    
    $
    74.5
    
    
    
    2
    %Percentage of total revenues
    
    
    15
    %
    
    
    17
    %
    
    
    
    
    

    
    16
    %
    
    
    18
    %General and administrative
    
    $
    32.7
    
    
    $
    25.9
    
    
    
    26
    %
    
    $
    64.2
    
    
    $
    50.9
    
    
    
    26
    %Percentage of total revenues
    
    
    13
    %
    
    
    12
    %
    
    
    
    
    
    
    14
    %
    
    
    12
    %Amortization of other purchased intangibles
    
    $
    3.4
    
    
    $
    1.6
    
    
    
    113
    %
    
    $
    6.8
    
    
    $
    3.1
    
    
    
    119
    %Percentage of total revenues
    
    
    1
    %
    
    
    1
    %
    
    
    
    
    
    
    1
    %
    
    
    1
    %Cost of restructure
    
    $
    (0.1
    )
    
    $
    0.1
    
    
    
    *
    
    
    $
    (0.0
    )
    
    $
    0.1
    
    
    
    *Percentage of total revenues
    
    
    *
    
    
    
    *
    
    
    
    
    

    
    
    *
    
    
    
    *
 
 *
    
    Not meaningful Cost of License Fees.
 Cost of Services.
 Cost of Messaging
 Sales and Marketing.
 22




---



##### Table of Contents



Product Development and Engineering.
 ®
  General and Administrative.
 Amortization of Other Purchased Intangibles.
 Cost of Restructure
 Operating Income  (Dollars in millions)
 Three Months ended June 30,
    
    
    Six Months ended June 30,Percent
    
    
    
    
    
    
    
    
    
    
    Percent2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    ChangeOperating income by segment:IPG
    
    $
    36.7
    
    
    $
    35.8
    
    
    
    3
    %
    
    $
    65.1
    
    
    $
    57.4
    
    
    
    13
    %IAS
    
    
    5.2
    
    
    
    2.6
    
    
    
    100
    %
    
    
    6.0
    
    
    
    4.7
    
    
    
    28
    %SY365
    
    
    (0.1
    )
    
    
    
    
    
    
    *
    
    
    
    (1.9
    )
    
    
    
    
    
    
    *Unallocated costs
    
    
    (6.2
    )
    
    
    (6.0
    )
    
    
    3
    %
    
    
    (12.2
    )
    
    
    (10.8
    )
    
    
    13
    %Total operating income:
    
    $
    35.6
    
    
    $
    32.4
    
    
    
    10
    %
    
    $
    57.0
    
    
    $
    51.3
    
    
    
    11
    %Percentage of total revenues
    
    
    15
    %
    
    
    15
    %
    
    
    
    
    
    
    12
    %
    
    
    12
    %
 
 *
    
    Not meaningful  23




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##### Table of Contents



Other Income (Expense), Net  (Dollars in millions)
 Three Months ended June 30,
    
    
    Six Months ended June 30,Percent
    
    
    
    
    
    
    
    
    
    
    Percent2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    ChangeInterest income
    
    $
    8.5
    
    
    $
    10.2
    
    
    
    (17
    %)
    
    $
    15.9
    
    
    $
    18.8
    
    
    
    (15
    %)Percentage of total revenues
    
    
    3
    %
    
    
    5
    %
    
    
    
    
    
    
    3
    %
    
    
    5
    %Interest expense and other, net
    
    $
    (3.4
    )
    
    $
    (3.0
    )
    
    
    13
    %
    
    $
    (5.8
    )
    
    $
    (5.5
    )
    
    
    5
    %Percentage of total revenues
    
    
    (1
    %)
    
    
    (1
    %)
    
    
    
    
    
    
    (1
    %)
    
    
    (1
    %)
   24




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Provision for Income Taxes  (Dollars in millions)
 Three Months ended June 30,
    
    
    Six Months ended June 30,Percent
    
    
    
    
    
    
    
    
    
    
    Percent2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    ChangeProvision for income taxes
    
    $
    14.7
    
    
    $
    13.2
    
    
    
    11
    %
    
    $
    26.0
    
    
    $
    21.0
    
    
    
    24
    %
   Net Income Per Share  (Dollars and shares in millions, except per share data)
 Three Months ended June 30,
    
    
    Six Months ended June 30,Percent
    
    
    
    
    
    
    
    
    
    
    Percent2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    ChangeNet income
    
    $
    26.0
    
    
    $
    26.3
    
    
    
    (1
    %)
    
    $
    41.2
    
    
    $
    43.6
    
    
    
    (6
    %)Percentage of total revenues
    
    
    11
    %
    
    
    12
    %
    
    
    
    
    
    
    9
    %
    
    
    11
    %Basic net income per share
    
    $
    0.29
    
    
    $
    0.30
    
    
    
    (3
    %)
    
    $
    0.45
    
    
    $
    0.49
    
    
    
    (8
    %)Diluted net income per share
    
    $
    0.28
    
    
    $
    0.29
    
    
    
    (3
    %)
    
    $
    0.44
    
    
    $
    0.48
    
    
    
    (8
    %)Shares used in computing basic net income per share
    
    
    90.9
    
    
    
    89.1
    
    
    
    2
    %
    
    
    91.0
    
    
    
    89.4
    
    
    
    2
    %Shares used in computing diluted net income per share
    
    
    93.0
    
    
    
    91.4
    
    
    
    2
    %
    
    
    93.3
    
    
    
    91.7
    
    
    
    2
    %
     25




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##### Table of Contents



Liquidity and Capital Resources  (Dollars in millions)
 Six Months EndedJune 30,Percent2007
    
    
    2006
    
    
    ChangeWorking capital
    
    $
    487.6
    
    
    $
    635.2
    
    
    
    (23
    %)Cash and cash equivalents
    
    $
    436.8
    
    
    $
    462.8
    
    
    
    (6
    %)Net cash provided by operating activities
    
    $
    123.5
    
    
    $
    125.0
    
    
    
    (1
    %)Net cash used for investing activities
    
    $
    13.7
    
    
    $
    37.5
    
    
    
    (63
    %)Net cash used for financing activities
    
    $
    37.4
    
    
    $
    33.2
    
    
    
    13
    %
           26




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##### Table of Contents



ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
        
 ITEM 4: CONTROLS AND PROCEDURES
     27




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##### Table of Contents



PART II: OTHER INFORMATION
 
 ITEM 1: LEGAL PROCEEDINGS
  
 ITEM 1 (A): RISK FACTORS
 Future Operating Results
  Significant variation in the timing and amount of our revenues may cause fluctuations in our
quarterly operating results and an accurate estimation of our revenues is difficult.
    We may encounter difficulties in integrating our Mobile 365 acquisition, other acquisitions or
strategic relationships and we may incur acquisition-related charges that could adversely affect
our operating results.
   ®
 28




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Economic conditions in the U.S. and worldwide could adversely affect our revenues.
  If we fail to maintain or expand our relationships with strategic partners and indirect
distribution channels our license revenues could decline.
   29




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##### Table of Contents



System failures, delays and other problems could harm our reputation and business, cause us to lose
customers and expose us to customer liability.
    Industry consolidation and other competitive pressures could affect prices or demand for our
products and services, and our business may be adversely affected.
   The ability to rapidly develop and bring to market advanced products and services that are
successful is crucial to maintaining our competitive position.
  If our existing customers cancel or fail to renew their technical support agreements, our technical
support revenues could be adversely affected.
  30




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##### Table of Contents



Pricing pressure in the mobile messaging market could adversely affect our operating results.
  Unanticipated delays or accelerations in our sales cycles could result in significant fluctuations
in our quarterly operating results.
  Our mobile messaging customer contracts may not continue to generate revenues at or near our
historical levels of revenues from these customers.
  If we do not adapt to rapid technological change in the telecommunications industry, we could lose
customers or market share.
  Restructuring activities and reorganizations in our sales model or business units may not succeed
in increasing revenues and operating results.
   31




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##### Table of Contents



Our results of operations may depend on the compatibility of our products with other software
developed by third parties.
  We are subject to risks arising from our international operations.
  We may not receive significant revenues from our current research and development efforts for
several years, if at all.
  We might experience significant errors or security flaws in our products and services.
  Unanticipated changes in our tax rates could affect our future financial results.
  We face exposure to adverse movements in foreign currency exchange rates.
   32




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##### Table of Contents



Growing market acceptance of open source software could cause a decline in our revenues and
operating margins.
  Insufficient protection for our intellectual property rights may have a material adverse affect on
our results of operations or our ability to compete.
  If third parties claim that we are in violation of their intellectual property rights, it could
have a negative impact on our results of operations or ability to compete.
   33




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##### Table of Contents



Laws and regulations affecting our customers and us and future laws and regulations to which they
or we may become subject may harm our business.
  Our key personnel are critical to our business, and we cannot assure that they will remain with us.
  Our sales to government clients subject us to risks including early termination, audits,
investigations, sanctions and penalties.
   Changes in accounting and legal standards could adversely affect our future operating results.
  34




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##### Table of Contents



,
 
   The unfavorable outcome of litigation and other claims against us could have a material adverse
impact on our financial condition and results of operations.
  Our operations and financial results could be severely harmed by certain natural disasters.
  Provisions of our corporate documents have anti-takeover effects that could prevent a change in
control.
  35




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##### Table of Contents



ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   ISSUER PURCHASES OF EQUITY SECURITIES
 (d) Maximum(c) Total
    
    
    Number (orNumber of
    
    
    ApproximateShares (or
    
    
    Dollar Value)Units)
    
    
    of Shares (or(a) Total
    
    
    
    
    
    
    Purchased as
    
    
    Units) that MayNumber of
    
    
    (b) Average
    
    
    Part of Publicly
    
    
    Yet BeShares (or
    
    
    Price Paid per
    
    
    Announced
    
    
    PurchasedPeriod
    
    Units)
    
    
    Share (or Unit)
    
    
    Plans or
    
    
    Under the Plans(2006)
    
    Purchased (#)
    
    
    ($)
    
    
    Programs (#)
    
    
    or Programs ($)April 1  30
    
    
    233,200
    
    
    $
    24.23
    
    
    
    233,200
    
    
    $
    225,556,000May 1  31
    
    
    1,467,791
    
    
    
    23.41
    
    
    
    1,467,791
    
    
    
    191,195,000June 1  30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,700,991
    
    
    $
    23.52
    
    
    
    1,700,991
    
    
    $
    191,195,000
 36




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##### Table of Contents



ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  1.
    
    Election of three Class III directors, each to serve a three-year term
expiring at the 2010 Annual Meeting of Stockholders or until a
successor is duly elected and qualified. Cecilia Claudio, L. William
Krause and Robert P. Wayman were the only nominees, and each was
elected (79,879,578 votes were cast for the election of Ms. Claudio
and 5,887,433 were withheld; 77,594,820 votes were cast for the
election of Mr. Krause and 8,172,191 were withheld; and 83,293,570
votes were cast for the election of Mr. Wayman and 2,473,441 were
withheld). There were no abstentions or broker non-votes. In addition
to these directors, our boards other incumbent directors (John Chen,
Alan B. Salisbury, Richard C. Alberding, Jack E. Sum and Linda K.
Yates) had terms that continued after the 2007 Annual Meeting. In
June 2007 Michael Daniels was appointed to our Board of Directors to
serve until the 2008 Annual Meeting.2.
    
    Ratification of the appointment of Ernst & Young LLP as independent
auditors for the year ending December 31, 2007 (82,927,625 for;
2,804,266 against; 57,464 abstentions and no broker non-votes).3.
    
    Approval of amendments to the Certificate of Incorporation to
reorganize the Board of Directors into a single class (84,791,192 for;
897,517 against; 100,643 abstentions and no broker non-votes).4.
    
    Approval of amendments to the 2003 Stock Plan that among other matters
increase the share reserve by 4,000,000 shares (60,019,618 for;
18,276,127 against; 115,008 abstentions and no broker non-votes).
 
 ITEM 5: OTHER INFORMATION
  
 ITEM 6: EXHIBITS
   37




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##### Table of Contents



SIGNATURES
  August 9, 2007
    
    SYBASE, INC.By
    
    /s/ PIETER VAN DER VORSTPieter Van der Vorst
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)By
    
    /s/ JEFFREY G. ROSSJeffrey G. Ross
Vice President and Corporate Controller
(Principal Accounting Officer)
 38




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description3.1
    
    Amended and Restate Certificate of Incorporation of Sybase,
Inc. and Amended and Restated Certificate of Designation,
Rights, Preferences and Privileges of Series A Participating
Preferred Stock of Sybase, Inc.3.2
    
    Bylaws of the Company, as amended and restated on June 11, 200712
    
    Computation of Ratio of Earnings to Fixed Charges31.1
    
    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 200231.2
    
    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 200232
    
    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