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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Sybase, Inc. | NYSE:SY | NYSE | Ordinary Share |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 64.98 | 0.00 | 01:00:00 |
From Jul 2019 to Jul 2024
Sybase, Inc. (NYSE:SY), an industry leader in delivering enterprise and mobile software, today reported financial results for the third quarter ended September 30, 2009.
Highlights:
2009 Third Quarter Results
Total revenue for the third quarter of 2009 was $293.4 million compared with $284.0 million in the third quarter of 2008. License revenue grew to $96.2 million versus $92.9 million in the third quarter of 2008. Services revenue was $144.4 million, and messaging revenue was $52.8 million in the 2009 third quarter.
Sybase’s third quarter total revenue reflects a 3% negative impact from foreign currency exchange rates. Absent the impact of currency, license revenue and total revenue both increased 6% year over year.
Operating income calculated in accordance with generally accepted accounting principles (GAAP) for the third quarter increased 34% year over year to $70.9 million, representing an operating margin of 24%.
For the quarter, the company reported GAAP net income of $38.5 million and GAAP earnings per diluted share (EPS) of $0.43. This compares with 2008 third quarter GAAP net income of $32.1 million and GAAP EPS of $0.37.
Non-GAAP operating income for the 2009 third quarter increased 28% year over year to $86.9 million, representing a 30% operating margin.
Non-GAAP net income for the third quarter grew 18% year over year to $56.0 million. Non-GAAP EPS grew 16% year over year to $0.63.
Non-GAAP amounts exclude the amortization of certain purchased intangibles, stock-based compensation, restructuring costs, charges related to the impairment of auction rate securities, imputed interest related to our convertible debt, gains or losses on assets held for employees in a deferred compensation plan, and the tax effect of these and related items.
Accompanying this release is a reconciliation from GAAP to non-GAAP amounts for the third quarters of 2008 and 2009.
Cash flow from operations was $104.9 million in the quarter.
Chairman, CEO and President of Sybase John Chen stated, "We are very pleased to deliver all-time third-quarter highs in total revenue, operating margin, net income, and cash flow from operations. Our performance was driven by solid growth in analytics and messaging services.”
Added Mr. Chen, “We are most encouraged by the strategic business wins we secured during the quarter with Verizon, Siemens, and IBM to build mobile applications on Sybase technology. These wins extend our position as the global leader in mobile middleware, mobile device management, and mCommerce.
“Due to our stronger-than-expected performance year to date, we are on pace to achieve our third consecutive record year, and we are again raising our full-year 2009 outlook,” concluded Mr. Chen.
Balance Sheet and Other Data
At September 30, 2009, Sybase reported $1.2 billion in cash and cash investments, including restricted cash of $18.0 million.
During the quarter, the company completed a $400 million private placement of 3.5% convertible notes. Sybase intends to use the net proceeds of this private placement to redeem its existing 1.75% convertible notes. In conjunction with the private placement, the company increased its repurchase program by $150 million and spent $70 million to repurchase its common stock and approximately $50 million to repurchase its 1.75% convertible notes.
As of September 30, 2009, $92.4 million remained authorized under the company’s current share repurchase program.
Days sales outstanding (DSO) for the third quarter was 67.
Guidance
For the fourth quarter ending December 31, 2009, management anticipates total revenue in the range of $305 million to $310 million. Management anticipates non-GAAP fully diluted EPS in the range of $0.66 to $0.68 and GAAP EPS in the range of $0.52 to $0.54.
For full-year 2009, management is raising guidance for total revenue to a range of $1.14 billion to $1.15 billion from prior expectations of $1.11 billion to $1.12 billion. Management is raising guidance for non-GAAP EPS to a range of $2.33 to $2.35 from previous guidance of $2.23 to $2.27. Management is raising GAAP EPS to a range of $1.71 to $1.73, which compares with previous guidance of $1.67 to $1.71. Management is also raising expectations for full-year 2009 cash flow from operations to at least $295 million from prior expectations of at least $275 million.
A summary of the company's 2009 guidance assumptions and a reconciliation to the company’s previous guidance assumptions are as follows:
2009 Guidance Assumptions GAAP Non-GAAPRevenue Growth
2009 forecasted revenue growth - constant currency (1) 5 % 6 % 5 % 6 % 2009 forecasted foreign exchange impact on revenue growth (2) (4 %) (4 %) (4 %) (4 %) 2009 forecasted revenue growth - reported 1 % 2 % 1 % 2 %EPS Reconciliation
Prior 2009 EPS guidance 1.67 1.71 2.23 2.27 Increase due to foreign exchange impact 0.05 0.05 0.07 0.07 Increase due to operations 0.14 0.14 0.14 0.14 Amortization of acquisition-related intangible assets (0.01 ) (0.01 ) 0.00 0.00 Stock-based compensation 0.01 0.01 0.00 0.00 Interest on convertible debt (0.11 ) (0.11 ) (0.05 ) (0.05 ) Auction rate securities (0.04 ) (0.04 ) 0.00 0.00 Tax effect from change above 0.00 0.00 (0.03 ) (0.03 ) Tax rate change 0.01 (0.01 ) (0.02 ) (0.04 ) WASO impact due to higher share count (0.01 ) (0.01 ) (0.01 ) (0.01 ) 2009 EPS guidance $ 1.71 $ 1.73 $ 2.33 $ 2.35 (1) No change (2) Prior assumption was (7%)Please see "Note Regarding Non-GAAP Financial Measures" for important information regarding Non-GAAP Financial Measures.
Conference Call and Webcast Information
The Sybase 2009 third quarter conference call and simultaneous Webcast is scheduled to begin at 7:30 a.m. Pacific Time/10:30 a.m. Eastern Time on Thursday, October 22, 2009. 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 October 29, 2009. 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 #8110814. Additionally, the archived Webcast will be available through January 21, 2010 at http://www.sybase.com/about_sybase/investorrelations.
About Sybase, Inc.
Sybase is an industry leader in delivering enterprise and mobile software to manage, analyze and mobilize information. We are recognized globally as the performance leader, proven in the most data-intensive industries and across all systems, networks and devices. For 25 years, our information management, analytics and enterprise mobility solutions have powered the world’s most mission-critical systems in financial services, telecommunications, manufacturing and government. For more information, visit http://www.sybase.com. Read Sybase blogs: http://blogs.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. These statements include the financial projections included in the guidance section of the release. 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 credit market conditions; software industry sales trends; 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 or strategic relationships engaged in by the company or by competitors; shifts in our business strategy; the interoperability of our products with other software products; system failures or other issues that impact our ability to deliver mobile messages; 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, 2008 and its quarterly reports on Form 10-Q for the three-month periods ended March 31, 2009 and June 30, 2009.
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”), the imputed interest expense on our convertible notes, gains or losses on assets held for employees in a deferred compensation plan, 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.
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, impairment charges to our ARS, the imputed interest expense on our convertible notes, and gains or losses on assets held for employees in a deferred compensation plan 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, imputed interest expense, 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, the imputed interest expense on our convertible notes, and gains or losses on assets held for employees in a deferred compensation plan, 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 provides investors an enhanced view of our operations and facilitates comparisons with the results of other periods. In 2009, GAAP changed to require that issuers of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, for GAAP purposes we are required to recognize imputed interest expense on our $460 million of 1.75% convertible subordinated notes that were issued in a private placement in February 2005 and on our $400 million 3.5% convertible senior notes that were issued in a private placement in August 2009, the “imputed interest expense.” The imputed interest expense is excluded from management’s assessment of our operating performance because management believes that this is not indicative of our ongoing business operations. We believe that the exclusion of the imputed interest expense provides investors an enhanced view of our operational performance and will facilitate the comparisons of future reported results with results from periods prior to the GAAP requirement to recognize imputed interest expense.
We maintain a rabbi trust for our deferred compensation plan that was established to allow certain employees the opportunity to defer the receipt of compensation. Plan participants elect to defer a portion of their compensation and these amounts are deemed invested in investment options that mirror the participants’ 401(k) plan investment elections. The rabbi trust for the deferred compensation plan is structured in accordance with IRS guidelines and the assets in the trust are subject to the claims of our general creditors. The gains and losses on assets in the deferred compensation plan 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 gains and losses provides investors an enhanced view of our operational performance and these gains and losses are unrelated to operational performance in any particular period.
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, restructuring costs, and other expense and income items 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:
The company adjusts 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 September 30, December 31, (In thousands, except share and per share data) 2009 2008 (1) (Unaudited) Current assets: Cash and cash equivalents $ 906,937 $ 611,364 Short-term investments 198,339 8,689 Total cash, cash equivalents and short-term investments 1,105,276 620,053 Restricted cash 17,973 2,773 Accounts receivable, net 218,662 270,400 Deferred income taxes 43,173 45,524 Prepaid income taxes 9,610 4,932 Other current assets 31,205 34,208 Total current assets 1,425,899 977,890 Long-term investments 77,447 15,513 Property, equipment and improvements, net 59,067 62,263 Deferred income taxes 3,671 17,794 Capitalized software, net 83,973 82,400 Goodwill, net 529,938 527,151 Other purchased intangibles, net 93,818 113,970 Other assets 39,146 29,341 Total assets $ 2,312,959 $ 1,826,322 Current liabilities: Accounts payable $ 25,966 $ 26,300 Accrued compensation and related expenses 74,819 80,031 Accrued income taxes 25,646 17,562 Other accrued liabilities 124,253 124,050 Deferred revenue 204,976 211,903 Convertible subordinated notes 417,961 - Total current liabilities 873,621 459,846 Other liabilities 43,018 44,788 Deferred income taxes 36,525 11,898 Long-term tax liability 42,505 32,082 Long-term deferred revenue 5,786 4,535 Convertible subordinated notes 326,455 438,299 Total stockholders' equity and temporary equity 985,049 834,874 Total liabilities, stockholders' equity and temporary equity $ 2,312,959 $ 1,826,322(1)
On January 1, 2009 the Company adopted FASB Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May be Settled in Cash Upon Conversion (Including Partial Cash Settlement) (the “FSP”) and FAS No. 160, “NonControlling Interests in Consolidated Financial Statements” (FAS 160). As required by the FSP and FAS 160, prior period results have been recast to conform with the new pronouncements.
SYBASE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands, except per share data) 2009 2008 (1) 2009 2008 (1) Revenues: License fees $ 96,175 $ 92,939 $ 279,577 $ 261,578 Services 144,400 146,295 418,961 432,286 Messaging 52,844 44,744 140,351 132,975 Total revenues 293,419 283,978 838,889 826,839 Costs and expenses: Cost of license fees 18,206 18,151 44,671 47,818 Cost of services 38,078 40,225 113,744 122,185 Cost of messaging 35,619 28,107 90,203 80,618 Sales and marketing 60,606 70,347 187,098 212,912 Product development and engineering 33,508 37,451 104,187 109,059 General and administrative 32,667 32,831 96,621 102,969 Amortization of other purchased intangibles 3,804 3,920 11,283 11,009 Cost of restructure 17 39 18 58 Total costs and expenses 222,505 231,071 647,825 686,628 Operating income 70,914 52,907 191,064 140,211 Interest income and expense and other, net (8,001 ) (1,455 ) (18,789 ) (1,083 ) Total other-than-temporary impairment losses (1,811 ) (3,267 ) (3,609 ) (9,552 ) Losses recognized in, or reclassified from, other comprehensive income (1,919 ) - (2,307 ) - Total other-than-temporary impairment losses recognized in earnings (3,730 ) (3,267 ) (5,916 ) (9,552 ) Income before income taxes 59,183 48,185 166,359 129,576 Provision for income taxes 20,686 16,054 62,129 45,986 Net income $ 38,497 $ 32,131 $ 104,230 $ 83,590 Less: Net income (loss) attributable to the noncontrolling interest (20 ) 21 36 (7 ) Net income attributable to Sybase, Inc. $ 38,517 $ 32,110 $ 104,194 $ 83,597 Basic net income per share attributable to Sybase, Inc. common stockholders (2) $ 0.47 $ 0.40 $ 1.28 $ 0.99 Shares used in computing basic net income per share attributable to Sybase, Inc. common stockholders (2) 80,047 79,245 80,147 82,868 Diluted net income per share attributable to Sybase, Inc. common stockholders (2) $ 0.43 $ 0.37 $ 1.19 $ 0.93 Shares used in computing diluted net income per share attributable to Sybase, Inc. common stockholders (2) 87,427 86,797 86,144 88,115(1)
On January 1, 2009 the Company adopted FASB Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May be Settled in Cash Upon Conversion (Including Partial Cash Settlement) (the “FSP”) and FAS No. 160, “NonControlling Interests in Consolidated Financial Statements” (FAS 160). As required by the FSP and FAS 160, prior period results have been recast to conform with the new pronouncements.
(2)
The Company has applied FSP EITF 03-6-1 "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities" to its historical and current EPS calculations. The EPS numbers shown reflect the two-class method mandated by the guidance for calculating EPS, which adjusts both income and shares used for computing EPS.
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 Nine Months Ended September 30, September 30, 2009 2008 (1) 2009 2008 (1) Operating Income GAAP operating income 70,914 52,907 191,064 140,211 Plus: Amortization of acquisition-related intangible assets 8,164 8,979 22,005 23,205 Stock-based compensation expense 6,317 5,752 18,746 16,845 Cost of restructure 17 39 18 58 Change in value of assets in deferred compensation plan 1,518 - 2,209 - Non-GAAP operating income $ 86,930 $ 67,677 $ 234,042 $ 180,319 Net Income Attributable to Sybase, Inc. GAAP net income attributable to Sybase, Inc. 38,517 32,110 104,194 83,597 Plus: Amortization of acquisition-related intangible assets 8,164 8,979 22,005 23,205 Stock-based compensation expense 6,317 5,752 18,746 16,845 Cost of restructure 17 39 18 58 Impairment loss on auction rate securities 3,730 3,267 5,916 9,552 Imputed interest expense for convertible notes 6,530 4,525 15,786 13,262 Less: Incremental income taxes associated with certain Non-GAAP items (7,243 ) (6,816 ) (20,156 ) (20,103 ) Credit received on purchased assets - (555 ) - (555 ) Non-GAAP net income attributable to Sybase, Inc. $ 56,032 $ 47,301 $ 146,509 $ 125,861 Net Income Per Diluted Share GAAP net income per diluted share (2) $ 0.43 $ 0.37 $ 1.19 $ 0.93 Plus: Amortization of acquisition-related intangible assets 0.09 $ 0.10 0.26 $ 0.26 Stock-based compensation expense 0.07 $ 0.07 0.22 $ 0.19 Cost of restructure 0.00 $ 0.00 0.00 $ 0.00 Impairment loss on auction rate securities 0.04 $ 0.04 0.07 $ 0.11 Imputed interest expense for convertible notes 0.07 $ 0.05 0.18 $ 0.15 Less: Incremental income taxes associated with certain Non-GAAP items (0.08 ) ($0.08 ) (0.23 ) ($0.23 ) Credit received on purchased assets - ($0.01 ) - ($0.01 ) Non-GAAP net income per diluted share (2) $ 0.63 $ 0.54 $ 1.67 $ 1.41 Shares used in computing diluted net income per share (2) 87,427 86,797 86,144 88,115 CLASSIFICATION OF STOCK-BASED COMPENSATION EXPENSE The following table shows the classification of stock-based compensation expense (in 000s): Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Cost of services 383 347 1,155 1,012 Cost of messaging 152 132 443 350 Sales and marketing 1,533 1,429 4,601 4,145 Product development and engineering 786 746 2,399 2,143 General and administrative 3,463 3,098 10,148 9,195 Total $ 6,317 $ 5,752 $ 18,746 $ 16,845 CLASSIFICATION OF AMORTIZATION OF PURCHASED INTANGIBLES The following table shows the classification of amortization of purchased intangibles expense (in 000s): Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Cost of license fees 3,180 3,997 7,290 9,114 Cost of messaging 1,180 1,062 3,432 3,082 Amortization of other purchased intangibles 3,804 3,920 11,283 11,009 Total $ 8,164 $ 8,979 $ 22,005 $ 23,205
(1)
On January 1, 2009 the Company adopted FASB Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May be Settled in Cash Upon Conversion (Including Partial Cash Settlement) (the “FSP”) and FAS No. 160, “NonControlling Interests in Consolidated Financial Statements” (FAS 160). As required by the FSP and FAS 160, prior period results have been recast to conform with the new pronouncements.
(2)
The Company has applied FSP EITF 03-6-1 "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities" to its historical and current EPS calculations. The EPS numbers shown reflect the two-class method mandated by the guidance for calculating EPS, which adjusts both income and shares used for computing EPS.
SYBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
(Dollars in thousands) 2009 2008 (1) Cash flows from operating activities: Net income $ 104,230 $ 83,590 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 75,083 77,341 Loss on disposal of assets 53 5 Impairment of investment in auction rate securities 5,916 9,552 Deferred income taxes 12,436 (3,876 ) Stock-based compensation – restricted stock 9,208 7,583 Stock-based compensation – all other 9,538 9,262 Tax benefit from stock-based compensation plans 7,999 — Excess tax benefit from stock-based compensation plans (7,568 ) (8,970 ) Imputed interest expense for convertible notes 15,786 13,262 Amortization of note issuance costs 1,522 1,204 Changes in assets and liabilities: Accounts receivable 51,285 11,003 Prepaid income taxes (4,678 ) 17,604 Other current assets (12,099 ) (3,814 ) Other assets – operating (2,795 ) 805 Accounts payable (337 ) 983 Accrued compensation and related expenses (5,213 ) (212 ) Accrued income taxes 18,506 13,335 Other accrued liabilities (963 ) (13,290 ) Deferred revenues (5,676 ) (6,276 ) Other liabilities (1,660 ) 1,899 Net cash provided by operating activities 270,573 210,990 Cash flows from investing activities: (Increase) Decrease in restricted cash (159 ) 83 Purchases of investments (284,756 ) (16,332 ) Maturities of investments 29,330 35,870 Sales of investments 1,245 80,982 Business combinations, net of cash acquired — (27,372 ) Purchases of property, equipment and improvements (16,349 ) (26,013 ) Proceeds from sale of property, equipment, and improvements 85 22 Capitalized software development costs (33,982 ) (38,885 ) Decrease in other assets – investing 18 91 Net cash provided by (used for) investing activities (304,568 ) 8,446 Cash flows from financing activities: Proceeds from the issuance of convertible subordinated notes, net of issuance costs 389,384 — Extinguishment of convertible subordinated notes (50,120 ) — Repayments of long-term obligations (1,043 ) (791 ) Net proceeds from the issuance of common stock and reissuance of treasury stock 48,559 47,711 Purchases of treasury stock (85,049 ) (300,737 ) Excess tax benefit from stock-based compensation plans 7,568 8,970 Net cash provided by (used for) financing activities 309,299 (244,847 ) Effect of exchange rate changes on cash 20,269 (20,698 ) Net increase (decrease) in cash and cash equivalents 295,573 (46,109 ) Cash and cash equivalents, beginning of year 611,364 604,808 Cash and cash equivalents, end of period $ 906,937 $ 558,699(1)
On January 1, 2009 the Company adopted FASB Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May be Settled in Cash Upon Conversion (Including Partial Cash Settlement) (the “FSP”) and FAS No. 160, “NonControlling Interests in Consolidated Financial Statements” (FAS 160). As required by the FSP and FAS 160, prior period results have been recast to conform with the new pronouncements.
SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 (UNAUDITED) (In thousands, except per share data) Infrastructure iAnywhere Consolidated Revenues: Platform Group Solutions Sybase 365 Eliminations Total License fees Infrastructure $ 69,585 $ 9 $ 264 $ - $ 69,858 Mobile and Embedded 12,373 13,944 - - 26,317 Subtotal license fees 81,958 13,953 264 - 96,175 Intersegment license revenues 33 10,425 8 (10,466 ) - Total license fees 81,991 24,378 272 (10,466 ) 96,175 Services Direct service revenue 134,488 9,481 431 - 144,400 Intersegment service revenues - 7,684 - (7,684 ) - Total services 134,488 17,165 431 (7,684 ) 144,400 Messaging Direct messaging revenue - - 52,844 - 52,844 Total revenues 216,479 41,543 53,547 (18,150 ) 293,419Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology
148,616 28,724 47,299 (18,150 ) 206,489Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology
67,863 12,819 6,248 - 86,930 Cost of restructure - 2009 Activity 17 - - - 17 Amortization of other purchased intangibles 500 1,024 2,280 - 3,804 Amortization of purchased technology 1,233 1,947 1,180 - 4,360 Operating income before unallocated costs $ 66,113 $ 9,848 $ 2,788 $ - $ 78,749 Other unallocated costs 7,835 Operating income after unallocated costs 70,914 Interest income and expense and other, net, and total other-than-temporary impairment losses recognized in earnings (11,731 ) Income before income taxes 59,183 Provision for income taxes 20,686 Net income $ 38,497 Less: Net income attributable to the noncontrolling interest (20 ) Net income attributable to Sybase, Inc. $ 38,517 Basic net income per share attributable to Sybase, Inc. common stockholders (1) $ 0.47Shares used in computing basic net income per share attributable to Sybase, Inc. common stockholders (1) 80,047 Diluted net income per share attributable to Sybase, Inc. common stockholders (1) $ 0.43 Shares used in computing diluted net income per share attributable to Sybase, Inc. common stockholders (1) 87,427
(1)
The Company has applied FSP EITF 03-6-1 "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities" to its current EPS calculations. The EPS numbers shown reflect the two-class method mandated by the guidance for calculating EPS, which adjusts both income and shares used for computing EPS.
SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (UNAUDITED) (In thousands, except per share data) Infrastructure iAnywhere Consolidated Revenues:
Platform Group
Solutions Sybase 365 Eliminations Total License fees Infrastructure $ 201,947 $ 35 $ 663 $ - $ 202,645 Mobile and Embedded 31,342 45,581 9 - 76,932 Subtotal license fees 233,289 45,616 672 - 279,577 Intersegment license revenues 87 26,245 26 (26,358 ) - Total license fees 233,376 71,861 698 (26,358 ) 279,577 Services Direct service revenue 389,524 27,915 1,522 - 418,961 Intersegment service revenues - 23,075 - (23,075 ) - Total services 389,524 50,990 1,522 (23,075 ) 418,961 Messaging Direct messaging revenue 6 - 140,345 - 140,351 Intersegment messaging revenues - - 5 (5 ) - Total messaging 6 - 140,350 (5 ) 140,351 Total revenues 622,906 122,851 142,570 (49,438 ) 838,889Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology
438,052 88,734 127,499 (49,438 ) 604,847Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology
184,854
34,117 15,071 - 234,042 Cost of restructure - 2009 Activity 18 - - - 18 Amortization of other purchased intangibles 1,548 3,071 6,664 - 11,283 Amortization of purchased technology 1,389 5,901 3,432 - 10,722 Operating income before unallocated costs $ 181,899 $ 25,145 $ 4,975 $ - $ 212,019 Other unallocated costs 20,955 Operating income after unallocated costs 191,064 Interest income and expense and other, net, and total other-than-temporary impairment losses recognized in earnings (24,705 ) Income before income taxes 166,359 Provision for income taxes 62,129 Net income $ 104,230 Less: Net income attributable to the noncontrolling interest 36 Net income attributable to Sybase, Inc.$ 104,194 Basic net income per share attributable to Sybase, Inc. common stockholders (1) $ 1.28
Shares used in computing basic net income per share attributable to Sybase, Inc. common stockholders (1) 80,147 Diluted net income per share attributable to Sybase, Inc. common stockholders (1) $ 1.19 Shares used in computing diluted net income per share attributable to Sybase, Inc. common stockholders (1) 86,144
(1)
The Company has applied FSP EITF 03-6-1 "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities" to its current EPS calculations. The EPS numbers shown reflect the two-class method mandated by the guidance for calculating EPS, which adjusts both income and shares used for computing EPS.
NON-GAAP RESULTS RECONCILED TO GAAP RESULTS - SEGMENTS The 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 Nine Months Ended September 30, 2009 September 30, 2009InfrastructurePlatform Group
iAnywhereSolutions
Sybase 365InfrastructurePlatform Group
iAnywhereSolutions
Sybase 365 Operating Income Before Unallocated Costs GAAP operating income before unallocated costs 66,113 9,848 2,788 181,899 25,145 4,975 Plus: Amortization of acquisition-related intangible assets 1,733 2,971 3,460 2,937 8,972 10,096 Cost of restructure 17 - - 18 - - Non-GAAP operating income before unallocated costs $ 67,863 $ 12,819 $ 6,248 $ 184,854 $ 34,117 $ 15,071 SYBASE, INC. Reconciliation of GAAP-based EPS to Non-GAAP EPS for the three months ended December 31, 2009 (unaudited) GAAP-based EPS $ 0.52 $ 0.54 Amortization of acquisition-related intangible assets 0.08 0.08 Stock-based compensation expense 0.08 0.08 Imputed interest expense for convertible notes 0.08 0.08 Impairment loss on auction rate securities 0.00 0.00 Income tax effect of above adjustments (0.07 ) (0.07 ) Income tax effect due to differences between the GAAP and non-GAAP effective tax rate (0.03 ) (0.03 ) Non-GAAP EPS $ 0.66 $ 0.68Please 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 EPS for the twelve months ended December 31, 2009 (unaudited) GAAP-based EPS $ 1.71 $ 1.73 Amortization of acquisition-related intangible assets 0.33 0.33 Stock-based compensation expense 0.29 0.29 Imputed interest expense for convertible notes 0.26 0.26 Impairment loss on auction rate securities 0.07 0.07 Income tax effect of above adjustments (0.33 ) (0.33 ) Income tax effect due to differences between the GAAP and non-GAAP effective tax rate 0.00 0.00 Non-GAAP EPS $ 2.33 $ 2.35Please see "Note Regarding Non-GAAP Financial Measures" for important information regarding Non-GAAP Financial Measures.
SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS - SUPPLEMENTAL FORMAT (in thousands) Three Months Ended September 30, 2009 2008 (1) Software License & Services: Software license & services revenue License revenue $ 95,911 $ 92,934 CS&S revenue 118,081 117,374 Other services 25,888 28,614 Total software license & services revenue 239,880 238,922 Cost of software license & services Cost of license 15,026 14,154 Cost of services 37,695 39,878 Sales expense 42,662 52,646 Total cost of software license & services 95,383 106,678 Margin $ 144,497 $ 132,244 60 % 55 % Messaging and Hosted Software: Messaging and hosted software revenue Messaging revenue $ 52,844 $ 44,744 Hosted license and services revenue 695 312 Total messaging and hosted software revenue 53,539 45,056 Cost of messaging & hosted software Cost of Messaging 34,287 26,913 Sales expense 5,795 5,762 Total cost of messaging & hosted software 40,082 32,675 Margin $ 13,457 $ 12,381 25 % 27 % Total revenues for reportable segments $ 293,419 $ 283,978 Total expenses for reportable segments 135,465 139,353 Total margin for reportable segments 157,954 144,625 Marketing expenses (9,978 ) (10,510 ) Product development and engineering expenses (32,024 ) (36,705 ) General and administrative expenses (29,022 ) (29,733 ) Amortization of intangible assets (8,164 ) (8,979 ) Cost (Reversal) of restructure (17 ) (39 ) Stock-based compensation (6,317 ) (5,752 ) Change in value of assets in deferred compensation plan (1,518 ) - Interest income and expense and other, net (11,731 ) (4,722 ) Income before provision for income taxes $ 59,183 $ 48,185(1)
On January 1, 2009 the Company adopted FASB Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May be Settled in Cash Upon Conversion (Including Partial Cash Settlement) (the “FSP”). As required by the FSP, prior period results have been recast to conform with the new pronouncement.
SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS - SUPPLEMENTAL FORMAT (in thousands) Nine Months Ended September 30, 2009 2008 (1) Software License & Services: Software license & services revenue License revenue $ 278,904 $ 261,507 CS&S revenue 341,990 344,996 Other services 75,449 85,906 Total software license & services revenue 696,343 692,409 Cost of software license & services Cost of license 37,381 38,704 Cost of services 112,589 121,173 Sales expense 131,970 159,426 Total cost of software license & services 281,940 319,303 Margin $ 414,403 $ 373,106 60 % 54 % Messaging and Hosted Software: Messaging and hosted software revenue Messaging revenue $ 140,351 $ 132,975 Hosted license and services revenue 2,195 1,455 Total messaging and hosted software revenue 142,546 134,430 Cost of messaging & hosted software Cost of Messaging 86,328 77,186 Sales expense 18,623 18,224 Total cost of messaging & hosted software 104,951 95,410 Margin $ 37,595 $ 39,020 26 % 29 % Total revenues for reportable segments $ 838,889 $ 826,839 Total expenses for reportable segments 386,891 414,713 Total margin for reportable segments 451,998 412,126 Marketing expenses (30,977 ) (31,117 ) Product development and engineering expenses (100,771 ) (106,916 ) General and administrative expenses (86,208 ) (93,774 ) Amortization of intangible assets (22,005 ) (23,205 ) Cost (Reversal) of restructure (18 ) (58 ) Stock-based compensation (18,746 ) (16,845 ) Change in value of assets in deferred compensation plan (2,209 ) - Interest income and expense and other, net (24,705 ) (10,635 ) Income before provision for income taxes $ 166,359 $ 129,576
(1)
On January 1, 2009 the Company adopted FASB Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May be Settled in Cash Upon Conversion (Including Partial Cash Settlement) (the “FSP”). As required by the FSP, prior period results have been recast to conform with the new pronouncement.
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