Sybase Delivers Best Quarter in Company History, Resulting in Third Consecutive Year of Record Revenue, Earnings, and Cash Flow

Sybase, Inc. (NYSE:SY), an industry leader in enterprise and mobile software, today reported financial results for the fourth quarter and full year ended December 31, 2009.

Record Achievements:

Total revenue of $331.7 million for Q409 and $1.17 billion for full year
Messaging revenue of $56.2 million for Q409 and $196.6 million for full year
GAAP operating margin of 30% for Q409 and 25% for full year
GAAP operating income of $98.6 million for Q409 and $289.7 million for full year
Non-GAAP operating margin of 35% for Q409 and 30% for full year
Non-GAAP operating income of $115.0 million for Q409 and $349.0 million for full year
GAAP EPS of $1.86 for full year
Non-GAAP EPS of $0.80 for Q409 and $2.48 for full year
Cash flow from operations of $113.5 million for Q409 and $384.1 million for full year

Other Highlights

Q409 total revenue up 9% year over year
Database license revenue increased 9% for Q409 and 22% for full year
Messaging services increased 30% for Q409 and 12% for full year
GAAP operating income up 41% for Q409 and 38% for full year
Non-GAAP operating income up 34% for Q409 and 31% for full year
GAAP EPS of $0.66, up 22% for Q409
Cash flow from operations increased 34% for Q409 and 30% for full year

2009 Fourth Quarter Results

Total revenue for the fourth quarter of 2009 grew 9% to $331.7 million compared with $305.1 million in the fourth quarter of 2008. The company reported license revenue of $123.2 million, services revenue of $152.2 million, and messaging revenue of $56.2 million in the 2009 fourth quarter.

Operating income calculated in accordance with generally accepted accounting principles (GAAP) for the fourth quarter increased 41% year over year to $98.6 million, representing an operating margin of 30%.

For the quarter, GAAP net income grew 34% year over year to $59.8 million. GAAP earnings per diluted share (EPS) grew 22% year over year to $0.66. This compares with 2008 fourth quarter GAAP net income of $44.6 million and GAAP EPS of $0.54.

Non-GAAP operating income for the 2009 fourth quarter increased 34% year over year to $115.0 million, representing a 35% operating margin.

Non-GAAP net income for the fourth quarter grew 14% year over year to $72.4 million. Non-GAAP EPS grew 4% year over year to $0.80.

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 fourth quarter of 2009 and the year ended December 31, 2009 and the comparable prior-year periods.

Cash flow from operations increased 34% year over year to $113.5 million in the quarter.

2009 Full-Year Results

Total revenue for 2009 increased 3% year over year to $1.17 billion. License revenue for the year increased 5% year over year to $402.8 million. Services revenue was flat at $571.2 million, and messaging revenue increased 12% year over year to $196.6 million.

GAAP operating income increased 38% year over year to $289.7 million, representing a GAAP operating margin of 25%. GAAP net income grew 28% year over year to $164.0 million, and GAAP EPS grew 27% year over year to $1.86.

Non-GAAP operating income increased 31% year over year to $349.0 million, representing a non-GAAP operating margin of 30%. Non-GAAP net income grew 16% year over year to $218.9 million, or non-GAAP EPS of $2.48.

Cash flow from operations increased 30% year over year to $384.1 million.

"We are very pleased to deliver another record quarter, culminating in a third consecutive year of record revenue, earnings and cash flow,” stated Chairman, CEO and President of Sybase John Chen.

“2009 marked a year of major accomplishments for Sybase as we strengthened our leadership position in enterprise computing. We secured key mobility partnerships with SAP, Verizon, Samsung and IBM and delivered innovative products in analytics, enterprise mobility, and mobile commerce. In the process, we garnered recognition for leadership in our key growth markets.

“As a result, we enter 2010 well positioned for continued momentum and ongoing market share gains as our vision increasingly resonates with our expanding customer and partner ecosystem," concluded Mr. Chen.

Balance Sheet and Other Data

At December 31, 2009, Sybase reported $1.3 billion in cash and cash investments, including restricted cash of $18.0 million.

The company repurchased $9.1 million of its outstanding common stock during the fourth quarter and a total of $94.1 million for the year. As of December 31, 2009, $83.3 million remained authorized under the company’s current share repurchase program.

Days sales outstanding (DSO) for the fourth quarter was 74.

Guidance

For the first quarter ending March 31, 2010, the company anticipates total revenue in the range of $285 million to $295 million. The company anticipates non-GAAP fully diluted EPS in the range of $0.54 to $0.56 and GAAP EPS in the range of $0.41 to $0.43.

For full-year 2010, the company anticipates total revenue of approximately $1.23 billion, non-GAAP EPS of approximately $2.59, and GAAP EPS of approximately $2.10. The company expects cash flow from operations of at least $300 million.

A summary of the company's 2010 guidance assumptions follows:

2010 Guidance Assumptions GAAP Non-GAAP

Revenue Growth

2010 forecasted revenue growth - constant currency 5 % 5 % 2010 forecasted foreign exchange impact on revenue growth 0 % 0 % 2010 forecasted revenue growth - reported 5 % 5 %

EPS Reconciliation

2009 reported EPS $ 1.86 $ 2.48 2010 forecasted operating margin expansion 75bp

75bp

Increase due to operations 0.29 0.29 Decrease due to other income (0.03 ) (0.03 ) Amortization of acquisition-related intangible assets 0.04 Stock Based Compensation (0.01 ) Cost of restructuring 0.01 Imputed interest on convertible debt 0.09 Auction Rate Securities 0.07 Tax effect from change above (0.16 ) (0.09 ) Tax rate change (0.04 ) (0.03 ) WASO Dilution Impact (1) (0.02 ) (0.03 ) 2010 EPS guidance $ 2.10 $ 2.59

Please see "Note Regarding Non-GAAP Financial Measures" for important information regarding Non-GAAP Financial Measures.

(1) Fully diluted share count assumes the 2005 convertible notes are redeemed and the premium balance related to these notes is settled through a 50/50 mix of cash and common stock.

Accompanying this release is a reconciliation from projected GAAP to non-GAAP amounts for the estimated 2010 first quarter and full-year results.

Conference Call and Webcast Information

The Sybase 2009 fourth 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, January 28, 2010. 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 February 4, 2010. 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 #5090147. Additionally, the archived Webcast will be available through April 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. 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, June 30, 2009, and September 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, gains or losses on assets held for employees in a deferred compensation plan 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:

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.

While the interest imputed on our convertible notes does not directly impact our current cash position, such expense recognizes the deemed economic value of the conversion feature associated with the notes. The expense associated with this deemed economic value is excluded from our non-GAAP measures and, therefore, non-GAAP measures do not reflect a deemed expense associated with our convertible notes.

Excluded expenses for stock-based compensation, amortization of acquisition-related intangible assets, imputed interest on our convertible debt, and gains and losses on assets in our deferred compensation plan 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.

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 December 31, December 31, (In thousands, except share and per share data) 2009 2008 (1) (Unaudited) Current assets: Cash and cash equivalents $ 947,152 $ 611,364 Short-term investments 239,232 8,689 Total cash, cash equivalents and short-term investments 1,186,384 620,053 Restricted cash 17,983 2,773 Accounts receivable, net 273,457 270,400 Deferred income taxes 58,494 45,524 Prepaid income taxes 5,754 4,932 Other current assets 18,685 34,208 Total current assets 1,560,757 977,890 Long-term investments 86,091 15,513 Property, equipment and improvements, net 67,863 62,263 Deferred income taxes 7,188 17,794 Capitalized software, net 86,866 82,400 Goodwill, net 532,375 527,151 Other purchased intangibles, net 88,012 113,970 Other assets 38,732 29,341 Total assets $ 2,467,884 $ 1,826,322 Current liabilities: Accounts payable $ 20,202 $ 26,300 Accrued compensation and related expenses 84,426 80,031 Accrued income taxes 24,484 17,562 Other accrued liabilities 138,931 124,050 Deferred revenue 234,761 211,903 Convertible notes 417,321 - Total current liabilities 920,125 459,846 Other liabilities 42,628 44,788 Deferred income taxes 49,611 11,898 Long-term tax liability 58,350 32,082 Long-term deferred revenue 5,855 4,535 Convertible notes 329,565 438,299 Total stockholders' equity and temporary equity 1,061,750 834,874 Total liabilities, stockholders' equity and temporary equity $ 2,467,884 $ 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 December 31,

Twelve Months Ended December 31,

(In thousands, except per share data) 2009

2008 (1)

2009

2008 (1)

Revenues: License fees $ 123,202 $ 122,084 $ 402,779 $ 383,661 Services 152,237 139,803 571,198 572,090 Messaging 56,241 43,204 196,592 176,179 Total revenues 331,680 305,091 1,170,569 1,131,930 Costs and expenses: Cost of license fees 14,021 19,524 58,692 67,342 Cost of services 39,368 38,419 153,112 160,604 Cost of messaging 38,220 27,139 128,423 107,757 Sales and marketing 65,874 72,464 252,972 285,376 Product development and engineering 33,953 37,873 138,140 146,932 General and administrative 36,614 36,011 133,235 138,980 Amortization of other purchased intangibles 3,859 3,707 15,142 14,716 Cost of restructure 1,126 109 1,144 167 Total costs and expenses 233,035 235,246 880,860 921,874 Operating income 98,645 69,845 289,709 210,056 Interest income and expense and other, net (12,911 ) (5,948 ) (31,700 ) (7,031 ) Total other-than-temporary impairment losses - (3,835 ) (3,609 ) (13,387 ) Losses recognized in (reclassified from) other comprehensive income (34 ) - (2,341 ) - Total other-than-temporary impairment losses recognized in earnings (34 ) (3,835 ) (5,950 ) (13,387 ) Income before income taxes 85,700 60,062 252,059 189,638 Provision for income taxes 25,871 15,465 88,000 61,451 Net income $ 59,829 $ 44,597 $ 164,059 $ 128,187 Less: Net income (loss) attributable to the noncontrolling interest 6 (44 ) 42 (51 ) Net income attributable to Sybase, Inc. $ 59,823 $ 44,641 $ 164,017 $ 128,238 Basic net income per share attributable to Sybase, Inc. common stockholders (2) $ 0.73 $ 0.55 $ 2.01 $ 1.54 Shares used in computing basic net income per share attributable to Sybase, Inc. common stockholders (2) 80,032 79,634 80,118 82,060 Diluted net income per share attributable to Sybase, Inc. common stockholders (2) $ 0.66 $ 0.54 $ 1.86 $ 1.46 Shares used in computing diluted net income per share attributable to Sybase, Inc. common stockholders (2) 90,086 80,758 86,981 86,264

(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 Twelve Months Ended December 31, December 31, 2009

2008 (1)

2009

2008 (1)

Operating Income GAAP operating income 98,645 69,845 289,709 210,056 Plus: Amortization of acquisition-related intangible assets 7,137 10,147 29,142 33,351 Stock-based compensation expense 7,650 5,670 26,396 22,515 Cost of restructure 1,126 109 1,144 167 Change in value of assets in deferred compensation plan 404 - 2,613 - Non-GAAP operating income $ 114,962 $ 85,771 $ 349,004 $ 266,089 Net Income Attributable to Sybase, Inc. GAAP net income attributable to Sybase, Inc. 59,823 44,641 164,017 128,238 Plus: Amortization of acquisition-related intangible assets 7,137 10,147 29,142 33,351 Stock-based compensation expense 7,650 5,670 26,396 22,515 Cost of restructure 1,126 109 1,144 167 Impairment loss on auction rate securities 34 3,835 5,950 13,387 Imputed interest expense for convertible notes 7,531 4,561 23,317 17,823 Less: Incremental income taxes associated with certain Non-GAAP items (10,949 ) (5,476 ) (31,105 ) (25,578 ) Credit received on purchased assets - - - (555 ) Non-GAAP net income attributable to Sybase, Inc. $ 72,352 $ 63,487 $ 218,861 $ 189,348 Net Income Per Diluted Share GAAP net income per diluted share (2) $ 0.66 $ 0.54 $ 1.86 $ 1.46 Plus: Amortization of acquisition-related intangible assets 0.08

0.13 0.34

0.39 Stock-based compensation expense 0.08

0.07 0.30

0.26 Cost of restructure 0.01

0.00 0.01

0.00 Impairment loss on auction rate securities 0.00

0.05 0.07

0.16 Imputed interest expense for convertible notes 0.08

0.06 0.27

0.21 Less: Incremental income taxes associated with certain Non-GAAP items (0.12 ) ($0.07 ) (0.36 ) ($0.30 ) Credit received on purchased assets - - - ($0.01 ) Non-GAAP net income per diluted share (2) $ 0.80 $ 0.77 $ 2.48 $ 2.16

Shares used in computing diluted net income per share (2)

90,086 80,758 86,981 86,264 CLASSIFICATION OF STOCK-BASED COMPENSATION EXPENSE The following table shows the classification of stock-based compensation expense (in 000s): Three Months Ended Twelve Months Ended December 31, December 31, 2009 2008 2009 2008 Cost of services 385 352 1,540 1,364 Cost of messaging 139 134 582 484 Sales and marketing 1,639 1,393 6,240 5,538 Product development and engineering 821 744 3,220 2,887 General and administrative 4,666 3,047 14,814 12,242 Total $ 7,650 $ 5,670 $ 26,396 $ 22,515 CLASSIFICATION OF AMORTIZATION OF PURCHASED INTANGIBLES The following table shows the classification of amortization of purchased intangibles expense (in 000s): Three Months Ended Twelve Months Ended December 31, December 31, 2009 2008 2009 2008 Cost of license fees 2,026 5,480 9,316 14,593 Cost of messaging 1,252 960 4,684 4,042 Amortization of other purchased intangibles 3,859 3,707 15,142 14,716 Total $ 7,137 $ 10,147 $ 29,142 $ 33,351

COMPUTATION OF BASIC AND DILUTED NET INCOME PER SHARE The following tables reflect calculation of Sybase Basic and Diluted Net Income Per Share

(in 000s except per share amounts):

Three Months Ended Twelve Months Ended December 31, December 31, 2009 2008 2009 2008 GAAP Basic Net Income Per Share Net income attributable to Sybase, Inc. $59,823 $44,641 $164,017 $128,238 Basic net income per share attributable to Sybase, Inc. common stockholders $0.73 $0.55 $2.01 $1.54 Effective number of shares used in computing basic net income attributable to Sybase, Inc. common stockholders (1) 81,464 80,885 81,515 83,354 Three Months Ended Twelve Months Ended December 31, December 31, 2009 2008 2009 2008 Non-GAAP Basic Net Income Per Share Net income attributable to Sybase, Inc. $72,352 $63,487 $218,861 $189,348 Basic net income per share attributable to Sybase, Inc. common stockholders $0.89 $0.78 $2.68 $2.27 Effective number of shares used in computing basic net income attributable to Sybase, Inc. common stockholders (1) 81,464 80,885 81,515 83,354 Three Months Ended Twelve Months Ended December 31, December 31, 2009 2008 2009 2008 GAAP Diluted Net Income Per Share Net income attributable to Sybase, Inc. $59,823 $44,641 $164,017 $128,238 Diluted net income per share attributable to Sybase, Inc. common stockholders $0.66 $0.54 $1.86 $1.46 Effective number of shares used in computing diluted net income attributable to Sybase, Inc. common stockholders (1) 90,086 82,009 88,378 87,558 Three Months Ended Twelve Months Ended December 31, December 31, 2009 2008 2009 2008 Non-GAAP Diluted Net Income Per Share Net income attributable to Sybase, Inc. $72,352 $63,487 $218,861 $189,348 Diluted net income per share attributable to Sybase, Inc. common stockholders $0.80 $0.77 $2.48 $2.16 Effective number of shares used in computing diluted net income attributable to Sybase, Inc. common stockholders (1) 90,086 82,009 88,378 87,558

(1) 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)

Twelve Months Ended

December 31,

(Dollars in thousands) 2009

2008 (1)

Cash flows from operating activities: Net income $ 164,059 $ 128,187 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 98,700 105,915 Loss on disposal of assets 87 2,498 Impairment of investment in auction rate securities 5,950 13,387 Deferred income taxes 7,762 (12,733 ) Stock-based compensation – restricted stock 13,788 10,236 Stock-based compensation – all other 12,608 12,279 Tax benefit from stock-based compensation plans 17,678 11,478 Excess tax benefit from stock-based compensation plans (17,015 ) (11,182 ) Imputed interest expense for convertible notes 23,316 17,823 Amortization of note issuance costs 2,331 1,609 Changes in assets and liabilities: Accounts receivable (2,335 ) (25,985 ) Prepaid income taxes (822 ) 12,672 Other current assets 421 (8,963 ) Other assets – operating (3,267 ) 4,218 Accounts payable (6,101 ) (4,740 ) Accrued compensation and related expenses 3,978 7,508 Accrued income taxes 30,363 27,509 Other accrued liabilities 10,462 (5,706 ) Deferred revenues 24,178 7,767 Other liabilities (2,041 ) 1,737 Net cash provided by operating activities 384,100 295,514 Cash flows from investing activities: (Increase) Decrease in restricted cash (169 ) 610 Purchases of investments (396,126 ) (16,275 ) Maturities of investments 91,608 38,299 Sales of investments 1,261 80,982 Business combinations, net of cash acquired — (35,368 ) Purchases of property, equipment and improvements (34,443 ) (32,350 ) Proceeds from sale of property, equipment, and improvements 242 30 Capitalized software development costs (46,211 ) (50,706 ) Decrease in other assets – investing 20 138 Net cash used for investing activities (383,818 ) (14,640 ) Cash flows from financing activities: Proceeds from the issuance of convertible senior notes, net of issuance costs 389,379 — Extinguishment of convertible subordinated notes (58,430 ) — Repayments of long-term obligations (1,177 ) (910 ) Net proceeds from the issuance of common stock and reissuance of treasury stock 67,992 49,953 Purchases of treasury stock (94,124 ) (306,111 ) Excess tax benefit from stock-based compensation plans 17,015 11,182 Net cash provided by (used for) financing activities 320,655 (245,886 ) Effect of exchange rate changes on cash 14,851 (28,432 ) Net increase in cash and cash equivalents 335,788 6,556 Cash and cash equivalents, beginning of year 611,364 604,808 Cash and cash equivalents, end of period $ 947,152 $ 611,364

SYBASE, INC. CONSOLIDATED STATEMENT OF OPERATIONS BY SEGMENT FOR THE THREE MONTHS ENDED DECEMBER 31, 2009 (UNAUDITED) (In thousands, except per share data)

Revenues:

InfrastructurePlatform Group

iAnywhereSolutions

Sybase 365 Eliminations

ConsolidatedTotal

License fees Infrastructure $ 90,835 $ 66 $ 635 $ - $ 91,536 Mobile and Embedded 13,143 18,522 1 - 31,666 Subtotal license fees 103,978 18,588 636 - 123,202 Intersegment license revenues 35 10,948 8 (10,991 ) - Total license fees 104,013 29,536 644 (10,991 ) 123,202 Services Direct service revenue 141,722 9,631 884 - 152,237 Intersegment service revenues - 8,001 - (8,001 ) - Total services 141,722 17,632 884 (8,001 ) 152,237 Messaging Direct messaging revenue - - 56,241 - 56,241 Total revenues 245,735 47,168 57,769 (18,992 ) 331,680

Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology

155,135 29,602 50,973 (18,992 ) 216,718

Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology

90,600 17,566 6,796 - 114,962 Cost of restructure - 2009 Activity 1,256 - - - 1,256 Amortization of other purchased intangibles 500 1,023 2,336 - 3,859 Amortization of purchased technology 75 1,951 1,252 - 3,278 Operating income before unallocated costs $ 88,769 $ 14,592 $ 3,208 $ - $ 106,569 Other unallocated costs 7,924 Operating income after unallocated costs 98,645 Interest income and expense and other, net, and total other-than-temporary impairment losses recognized in earnings (12,945 ) Income before income taxes 85,700 Provision for income taxes 25,871 Net income $ 59,829 Less: Net income attributable to the noncontrolling interest 6 Net income attributable to Sybase, Inc. $ 59,823

Basic net income per share attributable to Sybase, Inc. common stockholders (1)

$ 0.73

Shares used in computing basic net income per share attributable to Sybase, Inc. common stockholders (1) 80,032 Diluted net income per share attributable to Sybase, Inc. common stockholders (1) $ 0.66 Shares used in computing diluted net income per share attributable to Sybase, Inc. common stockholders (1) 90,086

(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 TWELVE MONTHS ENDED DECEMBER 31, 2009 (UNAUDITED) (In thousands, except per share data)

Revenues:

InfrastructurePlatform Group

iAnywhereSolutions

Sybase 365 Eliminations

ConsolidatedTotal

License fees Infrastructure $ 292,782 $ 101 $ 1,298 $ - $ 294,181 Mobile and Embedded 44,485 64,103 10 - 108,598 Subtotal license fees 337,267 64,204 1,308 - 402,779 Intersegment license revenues 122 37,193 34 (37,349 ) - Total license fees 337,389 101,397 1,342 (37,349 ) 402,779 Services Direct service revenue 531,246 37,546 2,406 - 571,198 Intersegment service revenues - 31,076 - (31,076 ) - Total services 531,246 68,622 2,406 (31,076 ) 571,198 Messaging Direct messaging revenue 6 - 196,586 - 196,592 Intersegment messaging revenues - - 5 (5 ) - Total messaging 6 - 196,591 (5 ) 196,592 Total revenues 868,641 170,019 200,339 (68,430 ) 1,170,569

Total allocated costs and expenses before cost of restructure and amortization of other purchased intangibles and purchased technology

593,187 118,336 178,472 (68,430 ) 821,565

Operating income before cost of restructure and amortization of other purchased intangibles and purchased technology

275,454 51,683 21,867 - 349,004 Cost of restructure - 2009 Activity 1,274 - - - 1,274 Amortization of other purchased intangibles 2,048 4,094 9,000 - 15,142 Amortization of purchased technology 1,464 7,852 4,684 - 14,000 Operating income before unallocated costs $ 270,668 $ 39,737 $ 8,183 $ - $ 318,588 Other unallocated costs 28,879 Operating income after unallocated costs 289,709 Interest income and expense and other, net, and total other-than-temporary impairment losses recognized in earnings (37,650 ) Income before income taxes 252,059 Provision for income taxes 88,000 Net income $ 164,059 Less: Net income attributable to the noncontrolling interest 42 Net income attributable to Sybase, Inc. $ 164,017 Basic net income per share attributable to Sybase, Inc. common stockholders (1) $ 2.01

Shares used in computing basic net income per share attributable to Sybase, Inc. common stockholders (1) 80,118 Diluted net income per share attributable to Sybase, Inc. common stockholders (1) $ 1.86 Shares used in computing diluted net income per share attributable to Sybase, Inc. common stockholders (1) 86,981

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 thousands):

Three Months Ended Twelve Months Ended December 31, 2009 December 31, 2009 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 88,769 14,592 3,208 270,668 39,737 8,183 Plus: Amortization of acquisition-related intangible assets 575 2,974 3,588 3,512 11,946 13,684 Cost of restructure 1,256 - - 1,274 - - Non-GAAP operating income before unallocated costs $90,600 $17,566 $6,796 $275,454 $51,683 $21,867 SYBASE, INC. Reconciliation of GAAP-based EPS to Non-GAAP EPS for the three months ended March 31, 2010 (unaudited) GAAP-based EPS $ 0.41 $ 0.43 Amortization of acquisition-related intangible assets 0.07 0.07 Stock-based compensation expense 0.08 0.08 Imputed interest expense for convertible notes 0.06 0.06 Income tax effect of above adjustments (0.08 ) (0.08 ) Income tax effect due to differences between the GAAP and non-GAAP effective tax rate 0.00 0.00 Non-GAAP EPS $ 0.54 $ 0.56

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 EPS for the twelve months ended December 31, 2010 (unaudited) GAAP-based EPS $ 2.10

Amortization of acquisition-related intangible assets

0.29 Stock-based compensation expense 0.30 Imputed interest expense for convertible notes 0.17 Income tax effect of above adjustments (0.27 ) Income tax effect due to differences between the GAAP and non-GAAP effective tax rate 0.00 Non-GAAP EPS $ 2.59

Please 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

December 31, 2009

2008 (1)

Software License & Services: Software license & services revenue License revenue $ 122,566 $ 121,920 CS&S revenue 124,417 112,212 Other services 26,936 27,327 Total software license & services revenue 273,919 261,459 Cost of software license & services Cost of license 11,995 14,044 Cost of services 38,983 38,067 Sales expense 47,730 54,809 Total cost of software license & services 98,708 106,920 Margin $ 175,211 $ 154,539 64 % 59 % Messaging and Hosted Software: Messaging and hosted software revenue Messaging revenue $ 56,241 $ 43,204 Hosted license and services revenue 1,520 428 Total messaging and hosted software revenue 57,761 43,632 Cost of messaging & hosted software Cost of Messaging 36,829 26,045 Sales expense 5,972 5,622 Total cost of messaging & hosted software 42,801 31,667 Margin $ 14,960 $ 11,965 26 % 27 % Total revenues for reportable segments $ 331,680 $ 305,091 Total expenses for reportable segments 141,509 138,587 Total margin for reportable segments 190,171 166,504 Marketing expenses (10,363 ) (10,640 ) Product development and engineering expenses (32,946 ) (37,129 ) General and administrative expenses (31,900 ) (32,964 ) Amortization of intangible assets (7,137 ) (10,147 ) Cost (Reversal) of restructure (1,126 ) (109 ) Stock-based compensation (7,650 ) (5,670 ) Change in value of assets in deferred compensation plan (404 ) - Interest income and expense and other, net (12,945 ) (9,783 ) Income before provision for income taxes $ 85,700 $ 60,062

(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) Twelve Months Ended December 31, 2009

2008 (1)

Software License & Services: Software license & services revenue License revenue $ 401,470 $ 383,427 CS&S revenue 466,407 457,208 Other services 102,385 113,233 Total software license & services revenue 970,262 953,868 Cost of software license & services Cost of license 49,376 52,749 Cost of services 151,572 159,240 Sales expense 179,700 214,235 Total cost of software license & services 380,648 426,224 Margin $ 589,614 $ 527,644 61 % 55 % Messaging and Hosted Software: Messaging and hosted software revenue Messaging revenue $ 196,592 $ 176,179 Hosted license and services revenue 3,715 1,883 Total messaging and hosted software revenue 200,307 178,062 Cost of messaging & hosted software Cost of Messaging 123,157 103,231 Sales expense 24,595 23,846 Total cost of messaging & hosted software 147,752 127,077 Margin $ 52,555 $ 50,985 26 % 29 % Total revenues for reportable segments $ 1,170,569 $ 1,131,930 Total expenses for reportable segments 528,400 553,301 Total margin for reportable segments 642,169 578,629 Marketing expenses (41,340 ) (41,757 ) Product development and engineering expenses (133,718 ) (144,045 ) General and administrative expenses (118,107 ) (126,738 ) Amortization of intangible assets (29,142 ) (33,351 ) Cost (Reversal) of restructure (1,144 ) (167 ) Stock-based compensation (26,396 ) (22,515 ) Change in value of assets in deferred compensation plan (2,613 ) - Interest income and expense and other, net (37,650 ) (20,418 ) Income before provision for income taxes $ 252,059 $ 189,638

(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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