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  • Sybase Reports Strong Business Momentum with Record First Quarter

    (EMAILWIRE.COM, April 25, 2008 ) HONG KONG – Sybase, Inc. (NYSE: SY), the largest enterprise software and services company exclusively focused on managing and mobilizing information, today reported financial results for the first quarter ended March 31, 2008.

    Highlights:
    - Total revenue of $260.1 million, up 13% year over year

    - License revenue increased 13% year over year

    - Services revenue increased 8% year over year

    - Database license revenue increased 19% year over year

    - Messaging revenue increased 37% year over year

    - GAAP operating margin of 14%, versus 9% a year ago; non–GAAP operating margin of 19%, versus 15% a year ago

    - GAAP net income of $24.2 million, up 60% year over year; GAAP EPS up 65% year over year

    - Non–GAAP net income of $35.3 million, up 42% year over year; non–GAAP EPS up 46% year over year

    - Cash flow from operations of $94.6 million, up 36% year over year

    2008 First Quarter Results
    Total revenue for the first quarter of 2008 increased 13% to $260.1 million
    from $230.0 million in the first quarter of 2007. License revenue grew
    13% to $78.1 million from $69.4 million in the first quarter of 2007.
    Services revenue increased 8% to $139.4 million from $129.7 million a year ago. Messaging revenue grew 37% to $42.6 million from $31.0 million a year ago.

    For the first quarter, operating income calculated in accordance with generally accepted accounting principles (GAAP) increased 69% year over year to $36.2 million, representing an operating margin of 14%. This compares with GAAP operating income of $21.4 million and an operating margin of 9% a year ago.

    GAAP net income increased 60% year over year to $24.2 million from $15.1 million a year ago. GAAP earnings per diluted share (EPS) increased 65% to
    $0.27 for the 2008 first quarter from $0.16 for the first quarter of 2007.


    Non-GAAP operating income for the first quarter increased 44% year over year to $49.0 million, representing a 19% operating margin. This compares with non-GAAP operating income of $33.9 million, representing a 15% operating margin, in the 2007 first quarter. Non-GAAP net income for the
    2008 first quarter increased 42% to $35.3 million from $24.9 million for the first quarter of 2007. Non-GAAP EPS for the 2008 first quarter increased 46% to $0.39 from $0.27 for the first quarter of 2007.

    Non-GAAP amounts exclude the amortization of certain purchased intangibles, stock-based compensation, restructuring costs, non-cash charges related to the write-down 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 first quarter of 2008.

    "I am extremely pleased with our start to 2008,” stated John Chen, chairman, CEO and president of Sybase. "Our momentum in the marketplace continues, driven by the market-leading Unwired Enterprise platform, combined with our consistently strong execution. As a result, we delivered the best first quarter in Sybase's history, which follows our record 2007 performance."

    Added Mr. Chen, "Looking toward the balance of 2008, our compelling suite of products and services addresses the highest-priority information technology needs facing enterprises today. Growth drivers for the upcoming year and beyond include our enterprise database cluster option, risk analytics platform, mobile banking and payments solutions, and a new MMS content delivery gateway. Additionally, our latest release of Information Anywhere Suite now supports the Apple iPhone and Google Android platforms, as well as Symbian, Microsoft, RIM, and Palm.

    “Despite current uncertainty in the macro-economic environment, our business pipelines remain healthy, and we remain confident in our outlook for the year. As a result, we are raising our expectation for full-year
    2008 earnings, and we anticipate revenue and cash flow toward the high end of our most recent full-year guidance,” concluded Mr. Chen.

    Balance Sheet and Other Data
    At March 31, 2008, Sybase reported $841.3 million in cash and cash investments, including long-term cash investments of $23.9 million and restricted cash of $3.7 million. In the first quarter, the company generated $94.6 million in cash flow from operations.

    On April 15, 2008, the company completed its previously announced modified “Dutch auction” tender offer to purchase $300 million of its common stock. There remains $82.9 million authorized under the company’s current share repurchase program.

    Days sales outstanding (DSO) for the first quarter was 76.

    Guidance
    For the second quarter ending June 30, 2008, management anticipates total revenue in the range of $255 million to $265 million. Management anticipates non-GAAP fully diluted EPS in the range of $0.40 to $0.45 and GAAP EPS in the range of $0.30 to $0.35.

    Management is raising guidance for full-year 2008 EPS due to the company's stronger-than-expected performance in the 2008 first quarter and including approximately $0.04 of incremental EPS accretion related to its recently completed Dutch tender. Non-GAAP EPS is now anticipated in the range of
    $1.94 to $1.99, and GAAP EPS is anticipated in the range of $1.51 to $1.56.

    Management also anticipates full-year 2008 total revenue toward the high end of its previously stated guidance range of $1.075 billion to $1.090 billion and cash flow from operations toward the high end of its previously stated guidance in the range of $220 million to $240 million.

    A reconciliation from the companyÂ’s previous full-year 2008 EPS guidance to current guidance is as follows:

    (Please open the attachement to view the table)

    Accompanying this release is a reconciliation from projected GAAP to non-GAAP amounts for the estimated 2008 second quarter and full year results.

    Conference Call and Webcast Information
    The Sybase 2008 first 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, April 24, 2008. To access the live Webcast, please visit
    www.fulldisclosure.com or SybaseÂ’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 May 1, 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 8408149. Additionally, the archived Webcast will be available through July 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 worldÂ’s most critical data in commerce, finance, government, healthcare, and defense 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 companyÂ’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.Â’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.

    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 write-down of auction rate securities, 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 Q1 2008 results and full-year 2008 guidance exclude impairment charges for reductions in the carrying value of our auction rate securities (“ARS”).

    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 managementÂ’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 companyÂ’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 CompanyÂ’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.

    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 CompanyÂ’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.

    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 managementÂ’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.

    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 CompanyÂ’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 CompanyÂ’s GAAP results.

    ###

    Issued on behalf of Sybase
    by EBA Communications

    For more information, please contact:
    Lai-Fun Man, (Sybase) : (852) 2506 8750
    (Email: lai.fun.man@sybase.com)
    Howard Jones / Emma Jenkins (EBA): (852) 2537 8022
    (Email: howard.jones@ebacomms.com / emma.jenkens@ebacomms.com)

    ###

    This press release was issued through GroupWeb EmailWire.Com. For more information on unlimited press release distribution for $499/year, go to http://www.emailwire.com

    Sybase, Inc
    Lai-Fun Man
    (852) 2506 8750
    lai.fun.man@sybase.com

    Source: EmailWire.com

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