Sybase (NYSE:SY)
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Sybase, Inc. (NYSE:SY), the largest enterprise software and services
company exclusively focused on managing and mobilizing information,
today reported financial results for the second quarter ended June 30,
2008.
Highlights:
Total revenue of $282.7 million, up 15% year over year
License revenue increased 17% year over year
Services revenue increased 8% year over year
Database license revenue increased 38% year over year
Messaging revenue increased 41% year over year
GAAP operating margin of 18%, versus 15% a year ago; non-GAAP
operating margin of 23%, versus 20% a year ago
GAAP net income of $32.4 million, up 24% year over year; GAAP EPS up
31% year over year
Non-GAAP net income of $43.0 million, up 26% year over year; non-GAAP
EPS up 33% year over year
Cash flow from operations of $62.7 million, up 16% year over year
Management raises full-year guidance for revenue, earnings, and cash
flow from operations
2008 Second Quarter Results
Total revenue for the second quarter of 2008 increased 15% to $282.7
million from $245.0 million in the second quarter of 2007. License
revenue grew 17% to $90.5 million from $77.4 million in the second
quarter of 2007. Services revenue increased 8% to $146.6 million from
$135.2 million a year ago. Messaging revenue grew 41% to $45.6 million
from $32.4 million a year ago.
For the second quarter, operating income calculated in accordance with
generally accepted accounting principles (GAAP) increased 44% year over
year to $51.1 million, representing an operating margin of 18%. This
compares with GAAP operating income of $35.6 million and an operating
margin of 15% a year ago.
GAAP net income increased 24% year over year to $32.4 million from $26.0
million a year ago. GAAP earnings per diluted share (EPS) increased 31%
to $0.37 for the 2008 second quarter from $0.28 for the second quarter
of 2007.
Non-GAAP operating income for the second quarter increased 33% year over
year to $63.7 million, representing a 23% operating margin. This
compares with non-GAAP operating income of $47.8 million, representing a
20% operating margin, in the 2007 second quarter.
Non-GAAP net income for the 2008 second quarter increased 26% to $43.0
million from $34.3 million for the second quarter of 2007. Non-GAAP EPS
for the 2008 second quarter increased 33% to $0.49 from $0.37 for the
second quarter of 2007.
Non-GAAP amounts exclude the amortization of certain purchased
intangibles, stock-based compensation, restructuring costs, charges
related to the impairment of auction rate securities, and the tax effect
of these and related items. Accompanying this release is a
reconciliation from GAAP to non-GAAP amounts for the second quarter of
2008.
“I am extremely pleased with our strong
performance in the second quarter of 2008,”
stated John Chen, chairman, CEO and president of Sybase. “We
have now delivered three consecutive record quarters, four consecutive
quarters exceeding Street consensus revenue, and 16 consecutive quarters
exceeding consensus earnings.”
Added Mr. Chen, “Our ongoing success is
attributable to growing market acceptance of our Unwired Enterprise
strategy. We are excited about our prospects for continued growth,
driven by our flagship enterprise database, IQ analytics server, mobile
middleware, and mobile messaging. Additional growth catalysts expected
to enhance our momentum include new offerings such as risk analytics,
data clustering, Mobile Office, mobile banking, and next-generation
mobile messaging.
“Notwithstanding the macro-economic
cross-currents, our business pipeline remains healthy, and we are
confident in our team’s ability to execute. As
a result, we are again raising our 2008 revenue, earnings, and cash flow
targets, which put us on track to deliver yet another record full-year
performance,” concluded Mr. Chen.
Balance Sheet and Other Data
At June 30, 2008, Sybase reported $606.4 million in cash and cash
investments, including long-term cash investments of $22.7 million and
restricted cash of $3.7 million. In the second quarter, the company
generated $62.7 million in cash flow from operations.
There remains $82.9 million authorized under the company’s
current share repurchase program.
Days sales outstanding (DSO) for the second quarter was 75.
Guidance
For the third quarter ending September 30, 2008, management anticipates
total revenue in the range of $270 million to $275 million. Management
anticipates non-GAAP fully diluted EPS in the range of $0.48 to $0.50
and GAAP EPS in the range of $0.38 to $0.40.
Management is raising guidance for full-year 2008 revenue, earnings, and
cash flow from operations due to the company’s
stronger-than-expected performance in the second quarter of 2008.
Management now anticipates total revenue of approximately $1.11 billion.
Non-GAAP EPS is now anticipated in the range of $1.98 to $2.00, and GAAP
EPS is anticipated in the range of $1.53 to $1.55. Management now
anticipates cash flow from operations of approximately $250 million.
A reconciliation from the company’s previous
full-year 2008 EPS guidance range to the current guidance range is as
follows:
Reconciliation of 2008 EPS Guidance Range
GAAP
Non-GAAP
2008 EPS guidance range on April 24, 2008
$
1.51
$
1.56
$
1.94
$
1.99
Increase due to operations
0.09
0.06
0.09
0.06
Decrease due to auction rate securities
(0.03
)
(0.03
)
0.00
0.00
Decrease due to convert dilution from higher share price
(0.04
)
(0.04
)
(0.05
)
(0.05
)
2008 EPS guidance range on July 23, 2008
$
1.53
$
1.55
$
1.98
$
2.00
Please see "Note Regarding Non-GAAP Financial Measures" for
important information regarding Non-GAAP Financial Measures.
Accompanying this release is a reconciliation from projected GAAP to
non-GAAP amounts for the estimated 2008 third quarter and full year
results.
Conference Call and Webcast Information
The Sybase 2008 second quarter conference call and simultaneous Webcast
is scheduled to begin at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time
on Wednesday, July 23, 2008. To access the live Webcast, please visit www.fulldisclosure.com
or Sybase’s Website at www.sybase.com
at least 20 minutes prior to the call to download any necessary audio or
plug-in software. A telephone replay will be available approximately two
hours after the conference call ends and will be available until 10:00
p.m. Pacific Time on July 30, 2008. To access the replay, please dial
(888) 203-1112 for domestic access and (719) 457-0820 for international
callers; the access code for the telephone replay is 2984621.
Additionally, the archived Webcast will be available through October 23,
2008 at http://www.sybase.com/about_sybase/investorrelations.
About Sybase, Inc.
Sybase is the largest enterprise software and services company
exclusively focused on managing and mobilizing information. With our
global solutions, enterprises can extend their information securely and
make it useful for people anywhere using any device. The world’s
most critical data in commerce, finance, government, and healthcare runs
on Sybase. For more information, visit the Sybase Website at http://www.sybase.com.
Forward-Looking Statements
Certain statements in this release concerning Sybase, Inc. and its
prospects and future growth are forward-looking and involve a number of
uncertainties and risks. Factors that could cause actual events or
results to differ materially from those suggested by these
forward-looking statements include, but are not limited to, the
performance of the global economy and growth in software industry sales;
market acceptance of the company’s products
and services; customer and industry analyst perception of the company
and its technology vision and future prospects; the success of certain
business combinations engaged in by the company or by competitors;
political unrest or acts of war; possible disruptive effects of
organizational or personnel changes; and other factors described in
Sybase, Inc.’s reports filed with the U.S.
Securities and Exchange Commission, including its annual report on Form
10-K for the year ended December 31, 2007 and its quarterly report on
Form 10-Q for the period ended March 31, 2008.
Note Regarding Non-GAAP Financial Measures
In addition to our GAAP results, Sybase discloses adjusted operating
income, net income and net income per share, referred to respectively as “non-GAAP
operating income”, “non-GAAP
net income”, and “non-GAAP
net income per diluted share”. These items,
which are collectively referred to as “Non-GAAP
Measures”, exclude the impact of stock-based
compensation, the amortization of acquisition-related intangible assets,
restructuring costs, non-cash charges related to the impairment of
auction rate securities (“ARS”),
and the tax effect of these and related items. From time to time,
subject to the review and approval of the audit committee of the Board
of Directors, we may make other adjustments for expenses and gains that
we do not consider reflective of core operating performance in a
particular period and may modify the Non-GAAP Measures by excluding
these expenses and gains. The Non-GAAP Measures for our Q2 2008 results
and full-year 2008 guidance exclude impairment charges for reductions in
the carrying value of our auction rate securities.
We define our core operating performance to be the revenues recorded in
a particular period and the expenses incurred within that period which
management has the capability of directly affecting in order to drive
operating income. Non-cash stock-based compensation, amortization of
acquisition-related intangible assets, restructuring charges and
impairment charges to our ARS are excluded from our core operating
performance because the decisions which gave rise to these expenses were
not made to drive revenue in a particular period, but rather were made
for our long-term benefit over multiple periods. While strategic
decisions, such as the decisions to issue stock-based compensation, to
acquire a company or to restructure the organization, are made to
further our long-term strategic objectives and do impact our income
statement under GAAP, these items affect multiple periods and management
is not able to change or affect these items within any particular
period. As such, supplementing GAAP disclosure with non-GAAP disclosure
using the Non-GAAP Measures provides management with an additional view
of operational performance by excluding expenses that are not directly
related to performance in any particular period. Therefore, we exclude
these impacts in our planning, monitoring, evaluation and reporting of
our underlying revenue-generating operations for a particular period.
Prior to the adoption of Financial Accounting Standards Board Statement
123 Revised “Share-based Payment”
(“FAS 123R”) on
January 1, 2006, our practice was to exclude stock-based compensation
internally to evaluate performance and we presented investors with
certain Non-GAAP Measures. With the adoption of FAS 123R, we continue to
believe that Non-GAAP Measures can provide relevant disclosure to
investors as contemplated by Staff Accounting Bulletin 107 (“SAB
107”) and we have presented Non-GAAP Measures
that exclude stock-based compensation, amortization of
acquisition-related intangible assets, impairment charges to ARS,
restructuring costs and the related tax effects. While these items
(other than restructuring) are recurring and affect GAAP net income, we
do not use them to assess our operational performance for any particular
period because (a) these items affect multiple periods and are unrelated
to business performance in a particular period; (b) we are not able to
change these items in any particular period; and (c) these items do not
contribute to the operational performance of our business for any
particular period.
We also use Non-GAAP Measures to operate the business because the
excluded expenses are not under the control of, and accordingly are not
used in evaluating the performance of, operations personnel within their
respective areas of responsibility. In the case of stock-based
compensation expense, the award of stock options is governed by the
stock committee of the Board of Directors and, in the case of
acquisition-related intangible assets; acquisitions arise from strategic
decisions which are not the responsibility of most levels of operational
management. The restructuring charges, like our stock-based compensation
charges, amortization of acquisition-related intangible assets and
write-downs to ARS, are excluded in management’s
internal evaluations of our operating results and are not considered for
management compensation purposes.
In the case of stock-based compensation, our compensation strategy is to
use stock-based compensation to attract and retain key employees and
executives. It is principally aimed at long term employee retention,
rather than to motivate or reward operational performance for any
particular period. Thus, stock-based compensation expense varies for
reasons that are generally unrelated to operational performance in any
particular period. We use annual cash incentive payouts for executives
and other employees to motivate and reward the achievement of short-term
operational objectives.
We view amortization of acquisition-related intangible assets, such as
the amortization of an acquired company’s
research and development efforts, customer lists and customer
relationships, as items arising from pre-acquisition activities. These
are costs that are determined at the time of an acquisition. While it is
continually viewed for impairment, amortization of the cost is a static
expense, one that is typically not affected by operations during any
particular period and does not contribute to operational performance for
any particular period.
The cost of restructure charges are excluded in our Non-GAAP Measures
because they are significantly different in magnitude and character from
routine personnel and facility adjustments that management makes when
monitoring and conducting the Company’s core
operations during any particular period. We have not undertaken
restructuring since 2004 and amounts included in cost of restructure in
2006 and subsequently reflect lease termination costs from previously
announced restructuring efforts. Our previous restructuring activities
and related expenses were not related to operating performance for any
particular period, and were not subject to change by management in any
particular period. Instead, the prior restructuring was intended to
align our business model and expense structure to our position in the
market.
The liquidity and fair value of our investments in marketable
securities, including auction rate securities, have been negatively
impacted by the uncertainty in the credit markets and failed auctions
due to a lack of marketability of these securities. As a result, we
recorded impairment charges to reduce the carrying value of our ARS
investments. The impairment charges related to our ARS investments have
been excluded from our non-GAAP results of operations. These impairment
charges are excluded from management’s
assessment of our operating performance because management believes that
they are not indicative of our ongoing business operations. We believe
that the exclusion of these unique charges provide investors an enhanced
view of our operations and facilitates comparisons with the results of
other periods that do not reflect such charges.
Our historical non-GAAP effective tax rates differ from our GAAP
effective tax rates because of (i) the exclusion of the amortization of
acquisition-related intangible assets, stock-based compensation expenses
and restructuring costs described above, (ii) the exclusion of certain
acquired tax attributes, and (iii) the resulting impact on the
realization of the Company’s other tax
assets. We exclude the impact of these discrete tax items from our
non-GAAP income tax provision or benefit because management believes
that they are not indicative of our ongoing business operations.
Because the Non-GAAP Measures are not calculated in accordance with
GAAP, they are used by our management as a supplement to, and not an
alternative to, or superior to, financial measures calculated in
accordance with GAAP. There are a number of limitations on the Non-GAAP
Measures, including the following:
These Non-GAAP Measures do not have standardized meanings and may not
be comparable to similar non-GAAP measures used or reported by other
software or technology companies.
The Non-GAAP Measures do not reflect all costs associated with our
operations determined in accordance with GAAP. For example:
Non-GAAP operating margin performance and non-GAAP net income do not
include stock compensation expense related to equity awards granted
to our workforce. Our stock incentive plans are important components
of our employee incentive compensation arrangements and are
reflected as expenses in our GAAP results under FAS 123R. While we
include the dilutive impact of such equity awards in weighted
average shares outstanding, the expense associated with stock-based
awards is excluded from our non-GAAP measures.
Although amortization of acquisition-related intangible assets does
not directly impact our current cash position, such expense
represents the declining value of the technology or other intangible
assets that we have acquired. These assets are amortized over their
respective expected economic lives or impaired, if appropriate. The
expense associated with this decline in value is excluded from our
non-GAAP measures and therefore non-GAAP measures do not include the
costs of acquired intangible assets that supplement our research and
development.
Restructuring charges in 2006 and subsequently primarily represent
lease termination costs associated with restructuring activities
that commenced in 2004 and before. Most of the charges are cash
expenditures, which are excluded from our Non-GAAP Measures.
Excluded expenses for stock-based compensation and amortization of
acquisition-related intangible assets will continue to recur and
impact the Company’s GAAP results. While
restructuring costs are non-recurring activities, their occasional
occurrence will impact GAAP results. As such, the Non-GAAP Measures
should not be construed as an inference that the excluded items are
unusual, infrequent or non-recurring.
Management compensates for these limitations by relying on these
Non-GAAP Measures only as a supplement to the Company’s
GAAP results.
SYBASE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
June 30,2008
December 31,2007
(Unaudited)
Current assets:
Cash and cash equivalents
$
575,148
$
604,808
Short-term investments
4,815
93,462
Total cash, cash equivalents and short-term cash investments
579,963
698,270
Restricted cash
3,733
3,424
Accounts receivable, net
234,447
245,267
Deferred income taxes
42,088
37,979
Prepaid income taxes
-
17,604
Other current assets
32,145
25,182
Total current assets
892,376
1,027,726
Long-term cash investments
22,674
36,637
Property, equipment and improvements, net
66,186
64,841
Deferred income taxes
5,475
10,038
Capitalized software, net
81,496
74,278
Goodwill, net
534,110
533,339
Other purchased intangibles, net
119,606
130,608
Other assets
35,648
36,016
Total assets
$
1,757,571
$
1,913,483
Current liabilities:
Accounts payable
$
33,947
$
30,290
Accrued compensation and related expenses
58,338
63,852
Accrued income taxes
7,284
273
Other accrued liabilities
118,654
124,849
Deferred revenue
225,944
203,734
Total current liabilities
444,167
422,998
Other liabilities
46,471
44,669
Deferred income taxes
13,920
14,115
Long-term tax liability
30,807
30,807
Long-term deferred revenue
4,716
4,937
Minority interest
5,119
5,147
Convertible subordinated notes
460,000
460,000
Total stockholders' equity
752,371
930,810
Total liabilities and stockholders' equity
$
1,757,571
$
1,913,483
SYBASE, INC.CONDENSED CONSOLIDATED STATEMENTS OF
INCOME(UNAUDITED)
Three Months Ended June 30,
Six Months Ended June 30,
(In thousands, except per share data)
2008
2007
2008
2007
Revenues:
License fees
$
90,515
$
77,435
$
168,639
$
146,800
Services
146,594
135,230
285,991
264,881
Messaging
45,604
32,358
88,231
63,379
Total revenues
282,713
245,023
542,861
475,060
Costs and expenses:
Cost of license fees
15,129
13,083
29,666
25,836
Cost of services
41,080
39,539
81,960
78,281
Cost of messaging
27,403
18,906
52,511
37,795
Sales and marketing
74,272
64,916
142,565
129,491
Product development and engineering
36,046
36,920
71,608
75,673
General and administrative
34,077
32,680
70,138
64,176
Amortization of other purchased intangibles
3,573
3,436
7,089
6,846
Cost (Reversal) of restructure
(8
)
(51
)
19
(47
)
Total costs and expenses
231,572
209,429
455,556
418,051
Operating income
51,141
35,594
87,305
57,009
Interest income and expense and other, net
(876
)
5,142
2,639
10,146
Minority interest
37
-
28
(20
)
Income before income taxes
50,302
40,736
89,972
67,135
Provision for income taxes
17,948
14,708
33,427
25,959
Net income
$
32,354
$
26,028
$
56,545
$
41,176
Basic net income per share
$
0.40
$
0.29
$
0.67
$
0.45
Shares used in computing basic net income per share
81,688
90,891
84,680
91,020
Diluted net income per share
$
0.37
$
0.28
$
0.62
$
0.44
Shares used in computing diluted net income per share
88,033
92,972
90,977
93,294
NON-GAAP RESULTS RECONCILED TO GAAP RESULTS
The following tables reflect selected Sybase non-GAAP results
reconciled to GAAP results (in 000s except percentage and per
share amounts):
Three Months Ended
Six Months Ended
June 30,
June 30,
2008
2007
2008
2007
Operating Income
GAAP operating income
51,141
35,594
87,305
57,009
Plus:
Amortization of acquisition-related intangible assets
7,162
6,773
14,225
13,504
Stock-based compensation expense
5,382
5,483
11,093
11,233
Cost (Reversal) of restructure
(8
)
(51
)
19
(47
)
Non-GAAP operating income
$
63,677
$
47,799
$
112,642
$
81,699
Net Income
GAAP net income
32,354
26,028
56,545
41,176
Plus:
Amortization of acquisition-related intangible assets
7,162
6,773
14,225
13,504
Stock-based compensation expense
5,382
5,483
11,093
11,233
Cost (Reversal) of restructure
(8
)
(51
)
19
(47
)
Impairment loss on auction rate securities
3,015
-
6,285
-
Less:
Incremental income taxes associated with certain Non-GAAP items
(4,868
)
(3,983
)
(9,792
)
(6,731
)
Non-GAAP net income
$
43,037
$
34,250
$
78,375
$
59,135
Net Income Per Diluted Share
GAAP net income per diluted share
$
0.37
$
0.28
$
0.62
$
0.44
Plus:
Amortization of acquisition-related intangible assets
$
0.08
0.07
0.16
0.14
Stock-based compensation expense
$
0.06
0.06
0.12
0.12
Cost (Reversal) of restructure
($0.00
)
(0.00
)
0.00
(0.00
)
Impairment loss on auction rate securities
$
0.03
-
0.07
-
Less:
Incremental income taxes associated with certain Non-GAAP items
($0.06
)
(0.04
)
(0.11
)
(0.07
)
Non-GAAP net income per diluted share
$
0.49
$
0.37
$
0.86
$
0.63
Shares used in computing diluted net income per share
88,033
92,972
90,977
93,294
CLASSIFICATION OF STOCK-BASED COMPENSATION EXPENSE
The following table shows the classification of stock-based
compensation expense:
Three Months Ended
Six Months Ended
June 30,
June 30,
2008
2007
2008
2007
($000)
($000)
Cost of services
306
376
665
715
Cost of messaging
127
124
218
310
Sales and marketing
1,360
1,206
2,716
2,472
Product development and engineering
733
656
1,397
1,342
General and administrative
2,856
3,121
6,097
6,394
Total
$
5,382
$
5,483
$
11,093
$
11,233
CLASSIFICATION OF AMORTIZATION OF PURCHASED INTANGIBLES
The following table shows the classification of amortization of
purchased intangibles expense:
Three Months Ended
Six Months Ended
June 30,
June 30,
2008
2007
2008
2007
($000)
($000)
Cost of license fees
2,562
2,406
5,116
4,811
Cost of messaging
1,027
931
2,020
1,847
Amortization of other purchased intangibles
3,573
3,436
7,089
6,846
Total
$
7,162
$
6,773
$
14,225
$
13,504
SYBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
(Dollars in thousands)
2008
2007
Cash flows from operating activities:
Net income
$
56,545
$
41,176
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
48,859
43,238
Minority interest in income of subsidiaries
(28
)
20
(Gain) Loss on disposal of assets
(18
)
45
Impairment of investment in auction rate securities
6,285
—
Deferred income taxes
259
(2,262
)
Stock-based compensation – restricted
stock
4,835
4,185
Stock-based compensation – all other
6,258
7,048
Excess tax benefit from stock-based compensation plans
(6,233
)
(2,855
)
Amortization of note issuance costs
985
985
Changes in assets and liabilities:
Accounts receivable
6,315
22,522
Prepaid income taxes
17,604
—
Other current assets
(6,960
)
(5,258
)
Other assets - operating
(696
)
2,572
Accounts payable
3,657
(669
)
Accrued compensation and related expenses
(5,514
)
(9,360
)
Accrued income taxes
6,429
8,510
Other accrued liabilities
(5,704
)
(7,786
)
Deferred revenues
21,989
21,902
Other liabilities
2,385
(552
)
Net cash provided by operating activities
157,252
123,461
Cash flows from investing activities:
Increase in restricted cash
(309
)
(10
)
Purchases of available-for-sale cash investments
(14,767
)
(165,136
)
Maturities of available-for-sale cash investments
32,027
99,487
Sales of available-for-sale cash investments
80,982
81,984
Business combinations, net of cash acquired
—
(1,531
)
Purchases of property, equipment and improvements
(16,123
)
(11,225
)
Proceeds from sale of property, equipment, and improvements
7
40
Capitalized software development costs
(27,219
)
(17,228
)
(Increase) Decrease in other assets - investing
75
(61
)
Net cash provided by (used for) investing activities
54,673
(13,680
)
Cash flows from financing activities:
Repayments of long-term obligations
(378
)
(33
)
Payments on capital lease
(220
)
(879
)
Net proceeds from the issuance of common stock and reissuance of
treasury stock
33,279
19,221
Purchases of treasury stock
(300,601
)
(58,600
)
Excess tax benefit from stock-based compensation plans
6,233
2,855
Net cash used for financing activities
(261,687
)
(37,436
)
Effect of exchange rate changes on cash
20,102
9,155
Net increase (decrease) in cash and cash equivalents
(29,660
)
81,500
Cash and cash equivalents, beginning of year
604,808
355,303
Cash and cash equivalents, end of period
$
575,148
$
436,803
SYBASE, INC.CONSOLIDATED STATEMENT OF OPERATIONS BY
SEGMENTFOR THE THREE MONTHS ENDED JUNE 30, 2008(UNAUDITED)
(In thousands, except per share data)
Revenues:
Infra-structurePlatform Group
iAnywhereSolutions
Sybase 365
Eliminations
ConsolidatedTotal
License fees
Infrastructure
$ 64,228
$ 53
$ 54
$ -
$ 64,335
Mobile and Embedded
7,920
18,260
-
-
26,180
Subtotal license fees
72,148
18,313
54
-
90,515
Intersegment license revenues
103
6,600
-
(6,703)
-
Total license fees
72,251
24,913
54
(6,703)
90,515
Services
Direct service revenue
135,469
10,619
506
-
146,594
Intersegment service revenues
58
8,600
-
(8,658)
-
Total services
135,527
19,219
506
(8,658)
146,594
Messaging
Direct messaging revenue
6
-
45,598
-
45,604
Intersegment messaging revenues
-
-
12
(12)
-
Total messaging
6
-
45,610
(12)
45,604
Total revenues
207,784
44,132
46,170
(15,373)
282,713
Total allocated costs and expenses before cost of restructure and
amortization of other purchased intangibles and purchased
technology
158,429
34,634
41,346
(15,373)
219,036
Operating income before cost of restructure and amortization of
other purchased intangibles and purchased technology
49,355
9,498
4,824
-
63,677
Cost of restructure - 2008 Activity
33
-
-
-
33
Amortization of other purchased intangibles
527
1,023
2,023
-
3,573
Amortization of purchased technology
403
2,159
1,027
-
3,589
Operating income before unallocated costs
$ 48,392
$ 6,316
$ 1,774
$ -
$ 56,482
Other unallocated costs
5,341
Operating income after unallocated costs
51,141
Interest income and expense and other, net
(876)
Minority interest
37
Income before income taxes
50,302
Provision for income taxes
17,948
Net income
$ 32,354
Basic net income per share
$ 0.40
Shares used in computing basic net income per share
81,688
Diluted net income per share
$ 0.37
Shares used in computing diluted net income per share
88,033
SYBASE, INC.CONSOLIDATED STATEMENT OF OPERATIONS BY
SEGMENTFOR THE SIX MONTHS ENDED JUNE 30, 2008(UNAUDITED)
(In thousands, except per share data)
Revenues:
Infra-structurePlatform Group
iAnywhereSolutions
Sybase 365
Eliminations
ConsolidatedTotal
License fees
Infrastructure
$ 120,606
$ 111
$ 67
$ -
$ 120,784
Mobile and Embedded
14,158
33,697
-
-
47,855
Subtotal license fees
134,764
33,808
67
-
168,639
Intersegment license revenues
165
11,799
-
(11,964)
-
Total license fees
134,929
45,607
67
(11,964)
168,639
Services
Direct service revenue
263,602
21,312
1,077
-
285,991
Intersegment service revenues
64
16,725
-
(16,789)
-
Total services
263,666
38,037
1,077
(16,789)
285,991
Messaging
Direct messaging revenue
14
-
88,217
-
88,231
Intersegment messaging revenues
-
-
12
(12)
-
Total messaging
14
-
88,229
(12)
88,231
Total revenues
398,609
83,644
89,373
(28,765)
542,861
Total allocated costs and expenses before cost of restructure and
amortization of other purchased intangibles and purchased
technology
309,293
69,281
80,410
(28,765)
430,219
Operating income before cost of restructure and amortization of
other purchased intangibles and purchased technology
89,316
14,363
8,963
-
112,642
Cost of restructure - 2008 Activity
60
-
-
-
60
Amortization of other purchased intangibles
1,054
2,046
3,989
-
7,089
Amortization of purchased technology
806
4,310
2,020
-
7,136
Operating income before unallocated costs
$ 87,396
$ 8,007
$ 2,954
$ -
$ 98,357
Other unallocated costs
11,052
Operating income after unallocated costs
87,305
Interest income and expense and other, net
2,639
Minority interest
28
Income before income taxes
89,972
Provision for income taxes
33,427
Net income
$ 56,545
Basic net income per share
$ 0.67
Shares used in computing basic net income per share
84,680
Diluted net income per share
$ 0.62
Shares used in computing diluted net income per share
90,977
NON-GAAP RESULTS RECONCILED TO GAAP RESULTS - SEGMENTSThe
following table reflects non-GAAP operating income before
unallocated costs reconciled to GAAP results for each Sybase
segment (in 000s except percentage and per share amounts):
Three Months Ended
Six Months Ended
June 30, 2008
June 30, 2008
Infrastructure Platform Group
iAnywhere Solutions
Sybase 365
Infrastructure Platform Group
iAnywhere Solutions
Sybase 365
Operating Income Before Unallocated Costs
GAAP operating income before unallocated costs
48,392
6,316
1,774
87,396
8,007
2,954
Plus:
Amortization of acquisition-related intangible assets
930
3,182
3,050
1,860
6,356
6,009
Cost of restructure
33
-
-
60
-
-
Non-GAAP operating income before unallocated costs
$49,355
$9,498
$4,824
$89,316
$14,363
$8,963
SYBASE, INC.Reconciliation of GAAP-based EPS to
Non-GAAP EPSfor the three months ended September 30,
2008(unaudited)
GAAP - based EPS
$
0.38
$
0.40
Amortization of purchased intangibles
0.09
0.09
Amortization of stock compensation expense
0.06
0.06
Income tax effect of above adjustments
(0.05
)
(0.05
)
Income tax effect due to differences between the GAAP and non-GAAP
effective tax rate
0.00
0.00
Non-GAAP EPS
$
0.48
$
0.50
Please see "Note Regarding Non-GAAP Financial Measures" for
important information regarding Non-GAAP Financial Measures.
SYBASE, INC.Reconciliation of GAAP-based EPS to
Non-GAAP EPSfor the twelve months ended December 31,
2008(unaudited)
GAAP - based EPS
$
1.53
$
1.55
Amortization of purchased intangibles
0.35
0.35
Amortization of stock compensation expense
0.25
0.25
Impairment of Auction Rate Securities
0.07
0.07
Income tax effect of above adjustments
(0.20
)
(0.20
)
Income tax effect due to differences between the GAAP and non-GAAP
effective tax rate
(0.02
)
(0.02
)
Non-GAAP EPS
$
1.98
$
2.00
Please see "Note Regarding Non-GAAP Financial Measures" for
important information regarding Non-GAAP Financial Measures.