##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31,
2009
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
  TO
 COMMISSION FILE NUMBER: 1-16493
 SYBASE, INC.
 (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 Delaware
    
    94-2951005(State of Incorporation)
    
    (I.R.S. Employer Identification No.)
  
   
  
  þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



PageForward-Looking Statements
    
    
    2Part I: Financial InformationItem 1: Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations for the three months ended March 31, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3: Quantitative and Qualitative Disclosures of Market Risk
    
    
    28Item 4: Controls and Procedures
    
    
    28Part II: Other InformationItem 1: Legal Proceedings
    
    
    29Item 1 (A) : Risk Factors
    
    
    29Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    39Item 3:
Defaults Upon Senior Securities
    
    
    40Item 4: Submission of Matters to a Vote of Security Holders
    
    
    40Item 5: Other Information
    
    
    40Item 6: Exhibits
    
    
    40Signatures
    
    
    41Exhibit Index
    
    
    42EX-3.2EX-31.1EX-31.2EX-32
  1




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www.sec.gov
 www.sybase.com
  2




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##### Table of Contents



PART I: FINANCIAL INFORMATION
 
 ITEM 1: FINANCIAL STATEMENTS
  
  March 31,2009
    
    
    December 31,(In thousands, except share and per share data)
    
    (Unaudited)
    
    

2008 (1)Current assets:Cash and cash equivalents
    
    $
    675,939
    
    
    $
    611,364Short-term cash investments
    
    
    16,148
    
    
    
    8,689Total cash, cash equivalents and short-term cash investments
    
    
    692,087
    
    
    
    620,053Restricted cash
    
    
    2,657
    
    
    
    2,773Accounts receivable, net
    
    
    230,639
    
    
    
    270,400Deferred income taxes
    
    
    38,727
    
    
    
    45,524Prepaid income taxes
    
    
    6,756
    
    
    
    4,932Prepaid expenses and other current assets
    
    
    35,933
    
    
    
    34,208Total current assets
    
    
    1,006,799
    
    
    
    977,890Long-term cash investments
    
    
    13,714
    
    
    
    15,513Restricted long-term cash investments
    
    
    39
    
    
    
    41Property, equipment and improvements, net
    
    
    58,910
    
    
    
    62,263Deferred income taxes
    
    
    20,173
    
    
    
    17,794Capitalized software, net
    
    
    86,562
    
    
    
    82,400Goodwill
    
    
    525,478
    
    
    
    527,151Other purchased intangibles, net
    
    
    104,383
    
    
    
    113,970Other assets
    
    
    27,859
    
    
    
    29,300Total assets
    
    $
    1,843,917
    
    
    $
    1,826,322Current liabilities:Accounts payable
    
    $
    21,362
    
    
    $
    26,300Accrued compensation and related expenses
    
    
    59,422
    
    
    
    80,031Accrued income taxes
    
    
    20,024
    
    
    
    17,562Other accrued liabilities
    
    
    106,042
    
    
    
    124,050Deferred revenue
    
    
    240,375
    
    
    
    211,903Convertible subordinated notes
    
    
    442,818
    
    
    
    Total current liabilities
    
    
    890,043
    
    
    
    459,846Other liabilities
    
    
    43,081
    
    
    
    44,788Deferred income taxes
    
    
    10,067
    
    
    
    11,898Long-term tax liability
    
    
    37,030
    
    
    
    32,082Long-term deferred revenue
    
    
    5,652
    
    
    
    4,535Convertible subordinated notes
    
    
    
    
    
    
    438,299Commitments 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 80,108,927 outstanding (2008-105,337,362 shares issued and 79,571,991 outstanding)
    
    
    105
    
    
    
    105Additional paid-in capital
    
    
    1,111,803
    
    
    
    1,103,685Accumulated earnings
    
    
    355,096
    
    
    
    330,724Accumulated other comprehensive income
    
    
    22,151
    
    
    
    36,912Cost of 25,228,435 shares of treasury stock (2008-25,765,371 shares)
    
    
    (636,222
    )
    
    
    (641,647
    )Total Sybase, Inc. stockholders equity
    
    
    852,933
    
    
    
    829,779Noncontrolling interest
    
    
    5,111
    
    
    
    5,095Total equity
    
    
    858,044
    
    
    
    834,874Total liabilities and stockholders equity
    
    $
    1,843,917
    
    
    $
    1,826,322
 
 (1)
    
    As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See Note 1 
Basis of Presentation and Note 10  Convertible Subordinated Notes.  3




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Three Months EndedMarch 31,(Dollars in thousands, except per share data)
    
    2009
    
    

2008 (1)Revenues:License fees
    
    $
    89,276
    
    
    $
    78,124Services
    
    
    134,974
    
    
    
    139,397Messaging
    
    
    43,263
    
    
    
    42,627Total revenues
    
    
    267,513
    
    
    
    260,148Costs and expenses:Cost of license fees
    
    
    12,281
    
    
    
    14,537Cost of services
    
    
    36,829
    
    
    
    40,880Cost of messaging
    
    
    26,973
    
    
    
    25,108Sales and marketing
    
    
    64,214
    
    
    
    68,293Product development and engineering
    
    
    34,744
    
    
    
    35,562General and administrative
    
    
    31,862
    
    
    
    36,061Amortization of other purchased intangibles
    
    
    3,723
    
    
    
    3,516Cost (Reversal) of restructure
    
    
    (10
    )
    
    
    27Total costs and expenses
    
    
    210,616
    
    
    
    223,984Operating income
    
    
    56,897
    
    
    
    36,164Interest income
    
    
    2,176
    
    
    
    7,913Interest expense and other, net
    
    
    (11,077
    )
    
    
    (8,616
    )Income before income taxes
    
    
    47,996
    
    
    
    35,461Provision for income taxes
    
    
    19,895
    
    
    
    13,756Net income
    
    $
    28,101
    
    
    $
    21,705Less: Net income attributable to the noncontrolling interest
    
    
    16
    
    
    
    9Net income attributable to Sybase, Inc.
    
    $
    28,085
    
    
    $
    21,696Basic net income per share attributable to Sybase, Inc.
    
    $
    0.35
    
    
    $
    0.25Shares used in computing basic net income per share attributable to Sybase, Inc.
    
    
    79,809
    
    
    
    87,672Diluted net income per share attributable to Sybase, Inc.
    
    $
    0.33
    
    
    $
    0.24Shares used in computing diluted net income per share attributable to Sybase, Inc.
    
    
    84,451
    
    
    
    90,778
 
 (1)
    
    As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See
Note 1  Basis of Presentation and Note 10  Convertible Subordinated Notes.  4




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Three Months EndedMarch 31,(Dollars in thousands)
    
    2009
    
    

2008(1)Cash flows from operating activities:Net income
    
    $
    28,101
    
    
    $
    21,705Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    22,491
    
    
    
    24,289(Gain) Loss on disposal of assets
    
    
    19
    
    
    
    (28
    )Impairment of investment in auction rate securities
    
    
    1,799
    
    
    
    3,270Deferred income taxes
    
    
    2,587
    
    
    
    (2,533
    )Stock-based compensation  restricted stock
    
    
    2,718
    
    
    
    2,386Stock-based compensation  all other
    
    
    3,032
    
    
    
    3,326Tax benefit from stock-based compensation plans
    
    
    2,368
    
    
    
    Excess tax benefit from stock-based compensation plans
    
    
    (2,453
    )
    
    
    (3,296
    )Imputed interest expense for convertible notes
    
    
    4,519
    
    
    
    4,310Amortization of note issuance costs
    
    
    396
    
    
    
    400Changes in assets and liabilities:Accounts receivable
    
    
    41,832
    
    
    
    19,611Prepaid income taxes
    
    
    (1,824
    )
    
    
    14,767Other current assets
    
    
    (1,730
    )
    
    
    (7,950
    )Other assets  operating
    
    
    1,054
    
    
    
    50Accounts payable
    
    
    (4,941
    )
    
    
    3,819Accrued compensation and related expenses
    
    
    (20,610
    )
    
    
    (15,094
    )Accrued income taxes
    
    
    7,412
    
    
    
    (158
    )Other accrued liabilities
    
    
    (18,285
    )
    
    
    (16,049
    )Deferred revenues
    
    
    29,589
    
    
    
    41,834Other liabilities
    
    
    (693
    )
    
    
    (90
    )Net cash provided by operating activities
    
    
    97,381
    
    
    
    94,569Cash flows from investing activities:(Increase) Decrease in restricted cash
    
    
    118
    
    
    
    (258
    )Purchases of cash investments
    
    
    (8,273
    )
    
    
    (9,455
    )Maturities of cash investments
    
    
    
    
    
    
    22,238Sales of cash investments
    
    
    807
    
    
    
    80,982Purchases of property, equipment and improvements
    
    
    (4,436
    )
    
    
    (6,414
    )Proceeds from sale of property, equipment, and improvements
    
    
    8
    
    
    
    7Capitalized software development costs
    
    
    (12,816
    )
    
    
    (12,877
    )(Increase) Decrease in other assets  investing
    
    
    (19
    )
    
    
    32Net cash provided by (used for) investing activities
    
    
    (24,611
    )
    
    
    74,255Cash flows from financing activities:Repayments of long-term obligations
    
    
    (696
    )
    
    
    (389
    )Net proceeds from the issuance of common stock and reissuance of treasury stock
    
    
    16,761
    
    
    
    8,758Purchases of treasury stock
    
    
    (15,049
    )
    
    
    (273
    )Excess tax benefit from stock-based compensation plans
    
    
    2,453
    
    
    
    3,296Net cash provided by financing activities
    
    
    3,469
    
    
    
    11,392Effect of exchange rate changes on cash
    
    
    (11,664
    )
    
    
    19,378Net increase in cash and cash equivalents
    
    
    64,575
    
    
    
    199,594Cash and cash equivalents, beginning of year
    
    
    611,364
    
    
    
    604,808Cash and cash equivalents, end of period
    
    $
    675,939
    
    
    $
    804,402
 
 (1)
    
    As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See Note 1 
Basis of Presentation and Note 10  Convertible Subordinated Notes.  5




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Notes to Condensed Consolidated Financial Statements
 Basis of Presentation . NonControlling Interests in
Consolidated Financial Statements ,
   1.
    
    FSP No. APB 14-1, Accounting for Convertible Debt Instruments that May be Settled in
Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1)2.
    
    FAS No. 160, NonControlling Interests in Consolidated Financial Statements(FAS 160)3.
    
    FAS No. 141 (Revised 2007), Business Combinations (FAS 141(R))4.
    
    FSP FAS No. 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a
Business Combination That Arise from Contingencies5.
    
    FSP FAS 142-3, Determination of Useful Life of Intangible Assets (FSP FAS 142-3)6.
    
    FSP No. FAS 157-2, Effective Date of FASB Statement No. 157 (FSP 157-2)7.
    
    FAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (FAS
161)
    6




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December 31, 2008
    
    
    
    
    
    
    
    
    
    December 31, 2008Consolidated Balance Sheet
    
    Adjustments
    
    Consolidated Balance Sheet(In thousands)
    
    As Previously Reported
    
    FSP APB 14-1
    
    FAS 160
    
    Retrospectively AdjustedDeferred income taxes
    
    
    26,474
    
    
    
    (8,680
    )
    
    
    
    
    
    
    17,794Other assets
    
    
    29,715
    
    
    
    (415
    )
    
    
    
    
    
    
    29,300Minority interest
    
    
    5,095
    
    
    
    
    
    
    
    (5,095
    )
    
    
    Convertible subordinated notes
    
    
    460,000
    
    
    
    (21,701
    )
    
    
    
    
    
    
    438,299Additional paid-in capital
    
    
    1,054,517
    
    
    
    49,168
    
    
    
    
    
    
    
    1,103,685Accumulated earnings
    
    
    367,286
    
    
    
    (36,562
    )
    
    
    
    
    
    
    330,724Noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    5,095
    
    
    
    5,095
 March 31, 2008
    
    
    
    
    
    
    
    
    
    March 31, 2008Consolidated Statement
    
    
    
    
    
    
    
    
    
    Consolidated StatementOf Operations
    
    Adjustments
    
    Of Operations(In thousands, except per share data)
    
    As Previously Reported
    
    FSP APB 14-1
    
    FAS 160
    
    Retrospectively AdjustedInterest expense and other, net
    
    
    (4,398
    )
    
    
    (4,218
    )
    
    
    
    
    
    
    (8,616
    )Minority interest
    
    
    (9
    )
    
    
    
    
    
    
    9
    
    
    
    Provision for income taxes
    
    
    15,480
    
    
    
    (1,724
    )
    
    
    
    
    
    
    13,756Net income
    
    
    24,190
    
    
    
    (2,494
    )
    
    
    9
    
    
    
    21,705Less: Net income attributable to the
noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )Net income attributable to Sybase, Inc.
    
    
    
    
    
    
    
    
    
    
    21,696
    
    
    
    21,696Basic net income per share
    
    
    0.28
    
    
    
    
    
    
    
    (0.28
    )
    
    
    Diluted net income per share
    
    
    0.27
    
    
    
    
    
    
    
    (0.27
    )
    
    
    Basic net income per share
attributable to Sybase, Inc.
    
    
    
    
    
    
    (0.03
    )
    
    
    0.28
    
    
    
    0.25Diluted net income per share
attributable to Sybase, Inc.
    
    
    
    
    
    
    (0.03
    )
    
    
    0.27
    
    
    
    0.24
 March 31, 2008
    
    
    
    
    
    
    
    
    
    March 31, 2008Consolidated Statement
    
    
    
    
    
    
    
    
    
    Consolidated StatementOf Cash Flows
    
    Adjustments
    
    Of Cash Flows(In thousands)
    
    As Previously Reported
    
    FSP APB 14-1
    
    FAS 160
    
    Retrospectively AdjustedNet income
    
    
    24,190
    
    
    
    (2,494
    )
    
    
    9
    
    
    
    21,705Minority interest
    
    
    9
    
    
    
    
    
    
    
    (9
    )
    
    
    Deferred income taxes
    
    
    (809
    )
    
    
    (1,724
    )
    
    
    
    
    
    
    (2,533
    )Imputed interest expense for
convertible notes
    
    
    
    
    
    
    4,310
    
    
    
    
    
    
    
    4,310Amortization of note issuance costs
    
    
    492
    
    
    
    (92
    )
    
    
    
    
    
    
    400
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Stock-Based Compensation .
  Three Months EndedMarch 31,(In thousands, except per share data)
    
    2009
    
    
    2008Cost of services
    
    $
    342
    
    
    $
    359Cost of messaging
    
    
    138
    
    
    
    91Sales and marketing
    
    
    1,400
    
    
    
    1,356Product development and engineering
    
    
    718
    
    
    
    664General and administrative
    
    
    3,152
    
    
    
    3,241Stock-based compensation expense included in total costs and expenses
    
    
    5,750
    
    
    
    5,711Tax benefit related to stock-based compensation expense
    
    
    (1,605
    )
    
    
    (1,625
    )Stock-based compensation expense included in net income
    
    $
    4,145
    
    
    $
    4,086Reduction of net income per share:Basic
    
    $
    0.05
    
    
    $
    0.05Diluted
    
    $
    0.05
    
    
    $
    0.05
 8




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Net income per share attributable to Sybase, Inc.
  Three Months EndedMarch 31,(In thousands, except per share data)
    
    2009
    
    

2008(1)Net income attributable to Sybase, Inc.
    
    $
    28,085
    
    
    $
    21,696Basic net income per share attributable to Sybase, Inc.
    
    $
    0.35
    
    
    $
    0.25Shares used in computing basic net income per share attributable to Sybase, Inc.
    
    
    79,809
    
    
    
    87,672Diluted net income per share attributable to Sybase, Inc.
    
    $
    0.33
    
    
    $
    0.24Shares used in computing basic net income per share attributable to Sybase, Inc.
    
    
    79,809
    
    
    
    87,672Dilutive effect of stock options, restricted stock and stock appreciation rights
    
    
    2,008
    
    
    
    2,156Dilutive effect of convertible subordinated debt
    
    
    2,634
    
    
    
    950Shares used in computing diluted net income per share attributable to Sybase,
Inc.
    
    
    84,451
    
    
    
    90,778
 
 (1)
    
    As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See Note 1 
Basis of Presentation and Note 10  Convertible Subordinated Notes.  Comprehensive Income
 Three Months EndedMarch 31,(In thousands)
    
    2009
    
    

2008(1)Net income
    
    $
    28,101
    
    
    $
    21,705Foreign currency translation gains (losses)
    
    
    (14,756
    )
    
    
    19,881Change in unrealized losses on marketable securities
    
    
    (5
    )
    
    
    (176
    )Comprehensive income
    
    
    13,340
    
    
    
    41,410Less: Comprehensive income attributable to noncontrolling interest
    
    
    16
    
    
    
    9Comprehensive income attributable to Sybase, Inc.
    
    $
    13,324
    
    
    $
    41,401
 
 (1)
    
    As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See Note 1 
Basis of Presentation and Note 10  Convertible Subordinated Notes.  9




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Segment Information
     Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    
    TotalRevenues:License feesInfrastructure
    
    $
    65,384
    
    
    $
    13
    
    
    $
    372
    
    
    
    
    
    
    $
    65,769Mobile and Embedded
    
    
    10,305
    
    
    
    13,192
    
    
    
    10
    
    
    
    
    
    
    
    23,507Subtotal license fees
    
    
    75,689
    
    
    
    13,205
    
    
    
    382
    
    
    
    
    
    
    
    89,276Intersegment license revenues
    
    
    29
    
    
    
    8,585
    
    
    
    9
    
    
    $
    (8,623
    )
    
    
    Total license fees
    
    
    75,718
    
    
    
    21,790
    
    
    
    391
    
    
    
    (8,623
    )
    
    
    89,276ServicesDirect service revenue
    
    
    125,129
    
    
    
    9,478
    
    
    
    367
    
    
    
    
    
    
    
    134,974Intersegment service revenues
    
    
    
    
    
    
    7,531
    
    
    
    
    
    
    
    (7,531
    )
    
    
    Total services
    
    
    125,129
    
    
    
    17,009
    
    
    
    367
    
    
    
    (7,531
    )
    
    
    134,974Messaging
    
    
    
    
    
    
    
    
    
    
    43,263
    
    
    
    
    
    
    
    43,263Total revenues
    
    
    200,847
    
    
    
    38,799
    
    
    
    44,021
    
    
    
    (16,154
    )
    
    
    267,513Total allocated costs and expenses before amortization of other
purchased intangibles, purchased technology, cost of restructure
and unallocated costs
    
    
    144,216
    
    
    
    30,437
    
    
    
    40,153
    
    
    
    (16,154
    )
    
    
    198,652Operating income before amortization of other purchased
intangibles, purchased technology, cost of restructure and
unallocated costs
    
    
    56,631
    
    
    
    8,362
    
    
    
    3,868
    
    
    
    
    
    
    
    68,861Amortization of other purchased intangibles
    
    
    527
    
    
    
    1,023
    
    
    
    2,173
    
    
    
    
    
    
    
    3,723Amortization of purchased technology
    
    
    78
    
    
    
    2,010
    
    
    
    1,113
    
    
    
    
    
    
    
    3,201Operating income before cost of restructure and unallocated costs
    
    
    56,026
    
    
    
    5,329
    
    
    
    582
    
    
    
    
    
    
    
    61,937Reversal of
restructure - 2009 Activity
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )Operating income before unallocated costs
    
    
    56,036
    
    
    
    5,329
    
    
    
    582
    
    
    
    
    
    
    
    61,947Unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,050Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,897Interest income, interest expense and other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,901
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47,996
 10




---



##### Table of Contents



Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    Elimination
    
    

Total(1)Revenues:License feesInfrastructure
    
    $
    56,379
    
    
    $
    59
    
    
    $
    12
    
    
    
    
    
    
    $
    56,450Mobile and Embedded
    
    
    6,237
    
    
    
    15,437
    
    
    
    
    
    
    
    
    
    
    
    21,674Subtotal license fees
    
    
    62,616
    
    
    
    15,496
    
    
    
    12
    
    
    
    
    
    
    
    78,124Intersegment license revenues
    
    
    62
    
    
    
    5,198
    
    
    
    
    
    
    $
    (5,260
    )
    
    
    Total license fees
    
    
    62,678
    
    
    
    20,694
    
    
    
    12
    
    
    
    (5,260
    )
    
    
    78,124ServicesDirect service revenue
    
    
    128,134
    
    
    
    10,692
    
    
    
    571
    
    
    
    
    
    
    
    139,397Intersegment service revenues
    
    
    5
    
    
    
    8,125
    
    
    
    
    
    
    
    (8,130
    )
    
    
    Total services
    
    
    128,139
    
    
    
    18,817
    
    
    
    571
    
    
    
    (8,130
    )
    
    
    139,397Messaging
    
    
    8
    
    
    
    
    
    
    
    42,619
    
    
    
    
    
    
    
    42,627Total revenues
    
    
    190,825
    
    
    
    39,511
    
    
    
    43,202
    
    
    
    (13,390
    )
    
    
    260,148Total allocated costs and expenses before amortization of other
purchased intangibles, purchased technology, cost of restructure
and unallocated costs
    
    
    150,864
    
    
    
    34,646
    
    
    
    39,063
    
    
    
    (13,390
    )
    
    
    211,183Operating income before amortization of other purchased
intangibles, purchased technology, cost of restructure and
unallocated costs
    
    
    39,961
    
    
    
    4,865
    
    
    
    4,139
    
    
    
    
    
    
    
    48,965Amortization of other purchased intangibles
    
    
    527
    
    
    
    1,023
    
    
    
    1,966
    
    
    
    
    
    
    
    3,516Amortization of purchased technology
    
    
    403
    
    
    
    2,151
    
    
    
    993
    
    
    
    
    
    
    
    3,547Operating income before cost of restructure and unallocated costs
    
    
    39,031
    
    
    
    1,691
    
    
    
    1,180
    
    
    
    
    
    
    
    41,902Cost of
restructure - 2008 Activity
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27Operating income before unallocated costs
    
    
    39,004
    
    
    
    1,691
    
    
    
    1,180
    
    
    
    
    
    
    
    41,875Unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,711Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,164Interest income, interest expense and other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (703
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    35,461
 
 (1)
    
    As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See Note 1 
Basis of Presentation and Note 10  Convertible Subordinated Notes. Goodwill and Intangible Assets .
  Consolidated(In thousands)
    
    IPG
    
    
    iAS
    
    
    SY365
    
    
    TotalBalance at January 1, 2009
    
    $
    73,885
    
    
    $
    102,788
    
    
    $
    350,478
    
    
    $
    527,151Reduction in goodwill recorded on Paybox acquisition
    
    
    
    
    
    
    
    
    
    
    (27
    )
    
    
    (27
    )Foreign currency translation adjustments & other
    
    
    (340
    )
    
    
    (213
    )
    
    
    (1,093
    )
    
    
    (1,646
    )Balance at March 31, 2009
    
    $
    73,545
    
    
    $
    102,575
    
    
    $
    349,358
    
    
    $
    525,478
  March 31, 2009
    
    
    December 31, 2008Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying(In thousands)
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountPurchased technology
    
    $
    168,550
    
    
    $
    (128,169
    )
    
    $
    40,381
    
    
    $
    169,758
    
    
    $
    (125,265
    )
    
    $
    44,493AvantGo tradenames
    
    
    3,100
    
    
    
    
    
    
    
    3,100
    
    
    
    3,100
    
    
    
    
    
    
    
    3,100XcelleNet tradenames
    
    
    4,000
    
    
    
    
    
    
    
    4,000
    
    
    
    4,000
    
    
    
    
    
    
    
    4,000Covenant not to compete
    
    
    319
    
    
    
    (298
    )
    
    
    21
    
    
    
    319
    
    
    
    (271
    )
    
    
    48Customer lists
    
    
    112,390
    
    
    
    (55,509
    )
    
    
    56,881
    
    
    
    114,632
    
    
    
    (52,303
    )
    
    
    62,329Totals
    
    $
    288,359
    
    
    $
    (183,976
    )
    
    $
    104,383
    
    
    $
    291,809
    
    
    $
    (177,839
    )
    
    $
    113,970
  11




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##### Table of Contents



2009
    
    $
    27,5142010
    
    
    25,5372011
    
    
    20,2272012
    
    
    13,6592013
    
    
    11,683
  Litigation .
       . Stock Repurchase Plan .
 12




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##### Table of Contents



Restructuring
   (Dollars in thousands)
    
    2004
    
    2002
    
    2001Restructuring planAccrued liabilities at December 31, 2008
    
    $
    2,254
    
    
    $
    3,391
    
    
    $
    713Amounts paid
    
    
    (296
    )
    
    
    (679
    )
    
    
    (89
    )Amounts added/(reversed)
    
    
    (10
    )Accrued liabilities at March 31, 2009
    
    $
    1,948
    
    
    $
    2,712
    
    
    $
    624
 Convertible Subordinated Notes
       13




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##### Table of Contents



As ofMarch 31,
    
    
    December 31,2009
    
    
    2008As Adjusted(In millions)Gross equity component of notes
    
    $
    85.0
    
    
    $
    85.0Deferred tax asset reduction
    
    
    (34.0
    )
    
    
    (34.0
    )Equity issuance costs
    
    
    (1.8
    )
    
    
    (1.8
    )Equity component of notes
    
    $
    49.2
    
    
    $
    49.2Principal amount of notes
    
    $
    460.0
    
    
    $
    460.0Unamortized discount of notes
    
    
    (17.2
    )
    
    
    (21.7
    )Liability component of notes
    
    $
    442.8
    
    
    $
    438.3
  Income Taxes
     14




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##### Table of Contents



Fair Value Measurements
  
    
    Level 1  Quoted prices in active markets for identical assets or liabilities.
    
    Level 2  Inputs other than Level 1 that are observable, either
directly or indirectly, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable market
data for substantially the full term of the assets or liabilities.
    
    Level 3  Unobservable inputs that are supported by little or no
market activity and that are significant to the fair value of the
assets or liabilities.
     Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalMoney market funds
    
    $
    529,698
    
    
    
    
    
    
    
    
    
    
    $
    529,698Trading securities
    
    
    8,619
    
    
    
    
    
    
    
    
    
    
    
    8,619Available-for-sale cash investments
    
    
    87,373
    
    
    
    
    
    
    $
    13,714
    
    
    
    101,087Total
    
    $
    625,690
    
    
    
    
    
    
    $
    13,714
    
    
    $
    639,404
   15




---



##### Table of Contents



Auction RateSecuritiesBalance at December 31, 2008
    
    $
    15,513Impairment loss included in interest expense and other, net
    
    
    (1,799
    )Balance at March 31, 2009
    
    $
    13,714
  Recent Accounting Pronouncements
 FSP FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly
  FSP FAS 115-2 and FAS 124-2 Recognition and Presentation of Other-Than-Temporary Impairments
  FSP FAS 107-1 and APB 28-1 Interim Disclosures About Fair Value of Financial Instruments
  16




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##### 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.
   Accounting for Convertible Debt
Instruments that May be Settled in Cash upon Conversion (Including Partial Cash Settlement)
 Executive Overview
 Our Business
    Our Results
  17




---



##### Table of Contents



®
    Business Trends
        18




---



##### Table of Contents



Critical Accounting Policies and Estimates
   Recent Accounting Pronouncements
 FSP FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly
  FSP FAS 115-2 and FAS 124-2 Recognition and Presentation of Other-Than-Temporary Impairments
  FSP FAS 107-1 and APB 28-1 Interim Disclosures About Fair Value of Financial Instruments
 
 FAS No. 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies. FSP SFAS No. 141(R)-1
  19




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##### Table of Contents



Results of Operations
 Revenues
(Dollars in millions)
 Three Months ended March 31,Percent2009
    
    2008
    
    ChangeLicense fees by segment:IPG
    
    $
    75.7
    
    
    $
    62.7
    
    
    
    21
    %IAS
    
    
    21.8
    
    
    
    20.7
    
    
    
    5
    %SY365
    
    
    0.4
    
    
    
    0.0
    
    
    
    *Eliminations
    
    
    (8.6
    )
    
    
    (5.3
    )
    
    
    62
    %Total license fees
    
    $
    89.3
    
    
    $
    78.1
    
    
    
    14
    %Percentage of total revenues
    
    
    33
    %
    
    
    30
    %Services by segment:IPG
    
    $
    125.1
    
    
    $
    128.1
    
    
    
    (2
    %)IAS
    
    
    17.0
    
    
    
    18.8
    
    
    
    (10
    %)SY365
    
    
    0.4
    
    
    
    0.6
    
    
    
    (33
    %)Eliminations
    
    
    (7.5
    )
    
    
    (8.1
    )
    
    
    (7
    %)Total services
    
    $
    135.0
    
    
    $
    139.4
    
    
    
    (3
    %)Percentage of total revenues
    
    
    51
    %
    
    
    54
    %SY365 messaging revenue
    
    $
    43.2
    
    
    $
    42.6
    
    
    
    1
    %SY 365 messaging as percentage of total revenues
    
    
    16
    %
    
    
    16
    %Total revenues
    
    $
    267.5
    
    
    $
    260.1
    
    
    
    3
    %
 
 *
    
    Not meaningful ®
     20




---



##### Table of Contents



Geographical Revenues
(Dollars in millions)
 Three Months ended March 31,Percent2009
    
    2008
    
    ChangeNorth American
    
    $
    139.8
    
    
    $
    132.0
    
    
    
    6
    %Percentage of total revenues
    
    
    52
    %
    
    
    51
    %Total Outside North America
    
    $
    127.7
    
    
    $
    128.1
    
    
    
    *Percentage of total revenues
    
    
    48
    %
    
    
    49
    %International: EMEA (Europe, Middle East and Africa)
    
    $
    89.1
    
    
    $
    91.9
    
    
    
    (3
    %)Percentage of total revenues
    
    
    33
    %
    
    
    35
    %Intercontinental: (Asia Pacific and Latin America)
    
    $
    38.6
    
    
    $
    36.2
    
    
    
    7
    %Percentage of total revenues
    
    
    15
    %
    
    
    14
    %Total revenues
    
    $
    267.5
    
    
    $
    260.1
    
    
    
    3
    %
 
 *
    
    Not meaningful       21




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##### Table of Contents



Costs and Expenses
(Dollars in millions)
 Three Months ended March 31,Percent2009
    
    2008
    
    ChangeCost of license fees
    
    $
    12.3
    
    
    $
    14.5
    
    
    
    (15
    %)Percentage of license fees revenues
    
    
    14
    %
    
    
    19
    %Cost of services
    
    $
    36.8
    
    
    $
    40.9
    
    
    
    (10
    %)Percentage of services revenues
    
    
    27
    %
    
    
    29
    %Cost of messaging
    
    $
    27.0
    
    
    $
    25.1
    
    
    
    8
    %Percentage of messaging revenues
    
    
    62
    %
    
    
    59
    %Sales and marketing
    
    $
    64.2
    
    
    $
    68.3
    
    
    
    (6
    %)Percentage of total revenues
    
    
    24
    %
    
    
    26
    %Product development and engineering
    
    $
    34.7
    
    
    $
    35.6
    
    
    
    (3
    %)Percentage of total revenues
    
    
    13
    %
    
    
    14
    %General and administrative
    
    $
    31.9
    
    
    $
    36.1
    
    
    
    (12
    %)Percentage of total revenues
    
    
    12
    %
    
    
    14
    %Amortization of other purchased intangibles
    
    $
    3.7
    
    
    $
    3.5
    
    
    
    6
    %Percentage of total revenues
    
    
    1
    %
    
    
    1
    %
 Cost of License Fees.
 Cost of Services.
 Cost of Messaging
 Sales and Marketing.
 Product Development and Engineering.
   22




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##### Table of Contents



General and Administrative.
 Amortization of Other Purchased Intangibles.
 Operating Income
(Dollars in millions)
 Three Months ended March 31,Percent2009
    
    2008
    
    ChangeOperating income by segment:IPG
    
    $
    56.0
    
    
    $
    39.0
    
    
    
    44
    %IAS
    
    
    5.3
    
    
    
    1.7
    
    
    
    212
    %SY365
    
    
    0.6
    
    
    
    1.2
    
    
    
    (50
    %)Unallocated costs
    
    
    (5.0
    )
    
    
    (5.7
    )
    
    
    (12
    %)Total operating income:
    
    $
    56.9
    
    
    $
    36.2
    
    
    
    57
    %Percentage of total revenues
    
    
    21
    %
    
    
    14
    %
        23




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##### Table of Contents



Other Income (Expense), Net
(Dollars in millions)
 Three Months ended March 31,Percent2009
    

2008(1)
    
    ChangeInterest income
    
    $
    2.2
    
    
    $
    7.9
    
    
    
    (72
    %)Percentage of total revenues
    
    
    1
    %
    
    
    3
    %Interest expense and other, net
    
    $
    (11.1
    )
    
    $
    (8.6
    )
    
    
    29
    %Percentage of total revenues
    
    
    (4
    %)
    
    
    (3
    %)
 
 (1)
    
    As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See Note 1 
Basis of Presentation and Note 10  Convertible Subordinated Notes.    Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion
 Provision for Income Taxes
(Dollars in millions)
 Three Months ended March 31,Percent2009
    

2008(1)
    
    ChangeProvision for income taxes
    
    $
    19.9
    
    
    $
    13.8
    
    
    
    44
    %
 
 (1)
    
    As adjusted due to the implementation of FSP APB 14-1. See Note 1  Basis of
Presentation and Note 10  Convertible Subordinated Notes.  24




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##### Table of Contents



Net Income Per Share Attributable to Sybase, Inc.
(Dollars and shares in millions, except per share data)
 Three Months ended March 31,Percent2009
    

2008(1)
    
    ChangeNet income attributable to Sybase, Inc.
    
    $
    28.1
    
    
    $
    21.7
    
    
    
    29
    %Percentage of total revenues
    
    
    10
    %
    
    
    8
    %Basic net income per share attributable to Sybase, Inc.
    
    $
    0.35
    
    
    $
    0.25
    
    
    
    40
    %Diluted net income per share attributable to Sybase, Inc.
    
    $
    0.33
    
    
    $
    0.24
    
    
    
    38
    %Shares used in computing basic net income per share
attributable to Sybase, Inc.
    
    
    79.8
    
    
    
    87.7
    
    
    
    (9
    %)Shares used in computing diluted net income per share
attributable to Sybase, Inc.
    
    
    84.5
    
    
    
    90.8
    
    
    
    (7
    %)
 
 (1)
    
    As adjusted due to the implementation of FSP APB 14-1 and FAS 160. See Note 1 
Basis of Presentation and Note 10  Convertible Subordinated Notes.    .
 Liquidity and Capital Resources
(Dollars in millions)
 Three Months EndedMarch 31,
    
    Percent2009
    
    2008
    
    ChangeWorking capital
    
    $
    116.8
    
    
    $
    674.4
    
    
    
    (83
    %)Cash and cash equivalents
    
    $
    675.9
    
    
    $
    804.4
    
    
    
    (16
    %)Net cash provided by operating activities
    
    $
    97.4
    
    
    $
    94.6
    
    
    
    3
    %Net cash provided by (used for) investing activities
    
    $
    (24.6
    )
    
    $
    74.3
    
    
    
    *Net cash provided by financing activities
    
    $
    3.5
    
    
    $
    11.4
    
    
    
    (69
    %)
 
 *
    
    Not meaningful 25




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##### Table of Contents



.
  Working Capital
  Cash Flow
   26




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27




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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
        
 ITEM 4: CONTROLS AND PROCEDURES
     28




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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.
    Economic and credit market conditions in the U.S. and worldwide could adversely affect our
revenues.
  29




---



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If we fail to maintain or expand our relationships with strategic partners and indirect
distribution channels our license revenues could decline.
   System failures, delays, insufficient capacity and other problems could harm our reputation and
business, cause us to lose customers and expose us to customer liability.
    Industry consolidation and other competitive pressures could affect prices or demand for our
products and services, and our business may be adversely affected.
  30




---



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We may encounter difficulties in completing acquisitions or strategic relationships and we may
incur acquisition-related charges that could adversely affect our operating results.
        The ability to rapidly develop and bring to market advanced products and services that are
successful is crucial to maintaining our competitive position.
  31




---



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If our existing customers cancel or fail to renew their technical support agreements, our technical
support revenues could be adversely affected.
  Pricing pressure in the mobile messaging market could adversely affect our operating results.
  Unanticipated delays or accelerations in our sales cycles could result in significant fluctuations
in our quarterly operating results.
  Our mobile messaging customer contracts may not continue to generate revenues and margins at or
near our historical levels of revenues and margins from these customers and we rely on a limited
number of customers for most of our messaging revenue.
  If we do not adapt to rapid technological change in the telecommunications industry, we could lose
customers or market share.
  Impairments in our investment portfolio may result in temporary and/or realized losses.
  32




---



##### Table of Contents



Restructuring activities and reorganizations in our sales model or business units may not succeed
in increasing revenues and operating results.
   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.
  33




---



##### Table of Contents



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.
  We are subject to risks related to the terms of our 1.75% Convertible Subordinated Notes.
   34




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Unanticipated changes in our tax rates could affect our future financial results.
  We face exposure to adverse movements in foreign currency exchange rates.
    Growing market acceptance of open source software could cause a decline in our revenues and
operating margins.
  Insufficient protection for our intellectual property rights may have a material adverse effect on
our results of operations or our ability to compete.
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If third parties claim that we are in violation of their intellectual property rights, it could
have a negative impact on our results of operations or ability to compete.
   36




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Laws and regulations affecting our customers and us and future laws and regulations to which they
or we may become subject may harm our business.
  Our key personnel are critical to our business, and we cannot assure that they will remain with us.
  Our sales to government clients subject us to risks including early termination, audits,
investigations, sanctions and penalties.
  Changes in accounting and legal standards could adversely affect our future operating results.
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The unfavorable outcome of litigation and other claims against us could have a material adverse
impact on our financial condition and results of operations.
  Our operations and financial results could be severely harmed by certain natural disasters.
  Provisions of our corporate documents have anti-takeover effects that could prevent a change in
control.
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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(2009)
    
    Purchased (#)
    
    
    ($)
    
    
    Programs (#)
    
    
    or Programs ($)January 1 - 31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    February 1  28
    
    
    228,400
    
    
    $
    27.33
    
    
    
    228,400
    
    
    $
    71,297,000March 1  31
    
    
    330,700
    
    
    
    26.53
    
    
    
    330,700
    
    
    
    62,523,000Total
    
    
    559,100
    
    
    $
    26.86
    
    
    
    559,100
    
    
    $
    62,523,000
 39




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ITEM 3: DEFAULTS UPON SENIOR SECURITIES
 Not applicable.
 
 ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  1.
    
    Election of five directors, each to serve a one-year terms expiring at
the 2010 Annual Meeting of Stockholders or until a successor is duly
elected and qualified. John S. Chen, Richard C. Alberding, Michael A.
Daniels, Alan B. Salisbury and Jack E. Sum were the only nominees, and
each was elected (71,939,522 votes were cast for the election of Mr.
Chen and 1,891,952 were withheld; 69,159,599 votes were cast for the
election of Mr. Alberding and 4,671,875 were withheld; 70,153,282
votes were cast for the election of Mr. Daniels and 3,678,192 were
withheld; 69,185,143 votes were cast for the election of Mr. Salisbury
and 4,646,331 were withheld; and 73,710,076 votes were cast for the
election of Mr. Sum and 121,398 were withheld). There were no
abstentions or broker non-votes. In addition to these directors, our
boards other incumbent directors (Cecilia Claudio, L. William Krause
and Robert P. Wayman) had terms that continued after the 2009 Annual
Meeting. Ms. Linda Yates term as a director ended at the 2009 Annual
Meeting and Ms. Yates decided not to seek re-election to the Board.2.
    
    Ratification of the appointment of Ernst & Young LLP as independent
auditors for the year ending December 31, 2009 (71,003,131 for;
2,810,354 against; 17,989 abstentions and no broker non-votes).3.
    
    Amendments to the Sybase, Inc. Amended and Restated 2003 Stock Plan,
that among other matters, increase the share reserve by 5,000,000
shares and approve its material terms and performance goals for
purposes of Internal Revenue Code Section 162(m) (57,762,509 for;
10,339,553 against; 265,478 abstentions and 5,463,954 broker
non-votes).
 
 ITEM 5: OTHER INFORMATION
  
 ITEM 6: EXHIBITS
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SIGNATURES
  May 8, 2009
    SYBASE, INC.By
    /s/ JEFFREY G. ROSSJeffrey G. RossSenior Vice President and Chief Financial Officer
(Principal Financial Officer)By
    /s/ KEITH JENSENKeith JensenVice President and Corporate Controller
(Principal Accounting Officer) 41




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EXHIBIT INDEX
 Exhibit No.
    
    Description3.2
    
    Amended and Restated Bylaws of Sybase, Inc. as of May 6, 200931.1
    
    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
 42