Item 7.01. Regulation FD Disclosure
Item 8.01. Other Events
Following Sybase, Inc.s (the Company or Sybase) fourth quarter and fiscal year 2007 which
were the best in its 23-year history and included historical highs in total revenue, operating
margin, operating income, net income, earnings per share, and cash flow from operations the
Company reaffirmed its commitment to its goals of creating sustainable value for all of its
shareholders and commented on its repurchase strategy.
On February 15
th
and February 20
th
, 2008, representatives of the Company
participated in calls with representatives of Sandell Asset Management Corp. (Sandell), a 6%
stockholder of the Company, to discuss Sandells previously stated concerns with the Companys
strategic direction and, in particular, Sybases balance sheet and cash position. In these calls,
as in prior calls with Sandell, the Company explained to Sandell that the Companys Board
continually evaluates the Companys financial position to optimize its capitalization, including
maintaining a well-balanced approach to leverage and return of capital. The Company believes it is
important to preserve an appropriate level of cash, especially given the current macroeconomic
uncertainty and as valuations become more attractive on potential strategic acquisitions necessary
to pursue the Companys strategy.
Sybases current worldwide cash balance is approximately $735 million. However, of that
amount, restricted cash and long-term investments, which are not immediately available to the
Company, constitute approximately $35 million, thereby reducing the Companys available cash
balance to approximately $700 million. 50% (or $350 million) of this cash is in the US, and the
remaining 50% is held overseas by 39 different foreign entities controlled by the Company. The
Company estimates that its working capital needs for 2008 are expected to be approximately $85
million in the US and $115 million outside of the US. After providing for expected working
capital needs, the Company therefore has approximately $265 million in US cash and $235 million in
foreign cash. Of the foreign cash, $50 million cannot be repatriated due to foreign governmental
and regulatory controls and dividend restrictions based on local earnings and profits, and the
remainder is subject to taxes on repatriation.
As a result of these restrictions and in light of the current environment, as well as the Companys
obligation to repay in cash the principal amount of its $460 million convertible debt facility, the
Company believes that it is also prudent to retain cash from operations to (i) allow the business
to respond to market conditions, (ii) scale to address market opportunities, and (iii) maintain
financial flexibility. Based upon all of these factors the Company believes that it currently has
freely available cash of between $225-$250 million.
Sandell has previously indicated its intention to nominate three directors for election at the
Companys 2008 annual meeting and also urged the Company to, among other things, incur debt to
conduct a larger stock buyback. While the Company remains committed to communication with its
stockholder base, the Company believes Sandells proposal for taking on additional debt to support
a larger stock buyback, a separation of its mobility and database businesses or auction of the
Company are short-sighted, inadvisable and ill-timed, in light of the current economic environment
the Companys proven track record which includes repurchases of a total of $511 million of common
stock since 2004 and 14 consecutive quarters of EPS that have exceeded Wall Street consensus
estimates.
The Company remains committed to its goals of creating sustainable value and continuing to act in
the best interest of the Company and all Sybase shareholders. Sybase regularly evaluates the
strategic direction that will best position the Company to continue to drive and enhance
stockholder value with the assistance of its independent advisors. This assessment includes an
evaluation of the Companys operational and strategic plans, capital structure optimization,
potential acquisitions, and other possible strategic opportunities.