<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1996
Commission File Number 0-19395
SYBASE, INC.
(Registrant)
Incorporated in the State of Delaware
I.R.S. Employer Identification Number 94-2951005
6475 Christie Avenue, Emeryville, CA 94608
Telephone Number: (510) 922-3500
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes _X_ No ___
On July 31, 1996, 75,328,422 shares of the Registrant's Common Stock,
$.001 par value, were outstanding.
<PAGE> 2
SYBASE, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
INDEX
Page
Part I: Financial Information
Item 1: Financial Statements
Condensed Consolidated Balance Sheets at June 30, 3
1996 and December 31, 1995.
Condensed Consolidated Statements of Income for the 4
three months and six months ended June 30, 1996
and June 30, 1995.
Condensed Consolidated Statements of Cash Flows 5
for the six months ended June 30, 1996 and
June 30, 1995.
Notes to Condensed Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of 7
Financial Condition and Results of Operations.
Part II: Other Information
Item 1: Legal Proceedings 24
Item 4: Submission of Matters to a Vote of 24
Security-Holders
Item 6: Exhibits and Reports on Form 8-K. 25
Signatures 26
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<PAGE> 3
PART I
ITEM 1: FINANCIAL STATEMENTS
SYBASE, INC.
-------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
(In thousands, except share data) 1996 1995
----------------- ------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 149,384 $ 180,877
Short-term cash investments 35,904 42,844
----------------- ------------------
Total cash and short-term cash investments 185,288 223,721
Accounts receivable, net 214,214 193,924
Deferred income taxes 23,898 24,947
Other current assets 19,098 18,905
----------------- ------------------
Total current assets 442,498 461,497
Cash investments 0 0
Property, equipment and improvements, net 203,933 194,916
Deferred income taxes 16,088 16,088
Capitalized software, net 21,597 17,227
Other assets 77,629 76,564
----------------- ------------------
TOTAL ASSETS $ 761,745 $ 766,292
================= ==================
Current liabilities:
Accounts payable $ 31,249 $ 36,939
Accrued compensation and related expenses 45,939 42,400
Accrued income taxes 29,678 28,373
Other accrued liabilities 62,250 75,215
Deferred revenue 153,401 138,264
----------------- ------------------
Total current liabilities 322,517 321,191
Other liabilities 5,489 5,452
Stockholders' equity:
Preferred stock, $0.001 par value, 8,000,000
shares authorized; none issued or outstanding - -
Common stock, $0.001 par value, 200,000,000
shares authorized; 75,150,238 shares issued
and outstanding (1995-72,645,734) 75 72
Additional paid-in capital 346,693 315,064
Retained earnings 93,617 128,255
Accumulated translation adjustments (6,646) (3,742)
----------------- ------------------
Total stockholders' equity 433,739 439,649
----------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 761,745 $ 766,292
================= ==================
</TABLE>
See accompanying notes.
-3-
<PAGE> 4
SYBASE, INC.
--------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
-------------------------------- ---------------------------------
(In thousands, except per share data) 1996 1995 1996 1995
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
License fees $ 150,454 $ 154,206 $ 298,399 $ 290,531
Services 99,433 85,804 195,152 165,731
-------------- -------------- -------------- ---------------
Total revenues 249,887 240,010 493,551 456,262
Costs and expenses:
Cost of license fees 7,585 7,562 14,702 14,784
Cost of services 62,846 50,204 118,985 96,362
Sales and marketing 137,197 120,748 267,490 229,479
Product development and engineering 46,085 36,842 89,176 72,208
General and administrative 19,735 16,233 38,461 31,995
Cost of merger 0 0 0 24,997
Purchase of in-process technology 0 19,965 0 19,965
-------------- -------------- -------------- ---------------
Total costs and expenses 273,448 251,554 528,814 489,790
-------------- -------------- -------------- ---------------
Operating income (loss) (23,561) (11,544) (35,263) (33,528)
Other income and expense, net 2,197 2,374 4,691 4,796
-------------- -------------- -------------- ---------------
Income (loss) before income taxes (21,364) (9,170) (30,572) (28,732)
Provision for income taxes 3,200 0 898 (2,126)
-------------- -------------- -------------- ---------------
Net income (loss) ($24,564) ($9,170) ($31,470) ($26,606)
============== ============== ============== ===============
Net income (loss) per share ($0.33) ($0.13) ($0.42) ($0.38)
============== ============== ============== ===============
Shares used in per share computation 74,927 71,025 74,243 70,504
</TABLE>
See accompanying notes.
-4-
<PAGE> 5
SYBASE, INC.
--------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In thousands) Six Months Ended June 30,
-------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C>
Cash and cash equivalents, beginning of year $ 180,877 $ 152,211
CASH FLOWS FROM OPERATING ACTIVITIES:
Net(loss) ($31,470) ($26,606)
Adjustments to reconcile net income to net cash provided by/(used for)
operating activities:
Depreciation and amortization 47,493 30,876
Deferred income taxes 1,049 (2,629)
Changes in assets and liabilities:
Accounts receivable (21,286) 9,289
Other current assets (169) (1,718)
Accounts payable (5,865) 5,823
Accrued compensation and related expenses 3,532 2,351
Other accrued liabilities (10,015) (503)
Deferred revenues 15,137 25,637
Accrued income taxes 1,305 (20,893)
Other 8 (1,847)
---------------- ----------------
Net cash provided (used) by operating activities (281) 19,780
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Purchases of available-for-sale cash investments (48,280) (53,277)
Maturities of available-for-sale cash investments 52,725 28,083
Sales of available-for-sale cash investments 2,495 41,709
Business combinations, net of cash acquired (873) (23,010)
Purchases of property, equipment and improvements (45,023) (70,865)
Capitalized software development costs (8,100) (4,794)
Decrease (increase) in other assets (3,654) 4,848
---------------- ----------------
Net cash used for investing activities (50,710) (77,306)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 21,861 24,167
Tax benefit of exercise of stock options 0 3,000
Payment on capital lease obligations 0 (430)
---------------- ----------------
Net cash provided by financing activities 21,861 26,737
Effect of exchange rate changes on cash (2,363) 4,529
---------------- ----------------
Net increase in cash and cash equivalents (31,493) (26,260)
Cash and cash equivalents, end of period $ 149,384 $ 125,951
================ ================
Cash investments, end of period 35,904 87,334
---------------- ----------------
Total cash, cash equivalents, and short term cash $ 185,288 $ 213,285
================ ================
Supplemental disclosures:
Capital lease obligations incurred $ 0 $ 0
================ ================
Interest paid $ 0 $ 463
================ ================
Income taxes paid $ 6,439 $ 16,812
================ ================
</TABLE>
See accompanying notes.
-5-
<PAGE> 6
SYBASE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated financial statements include
the accounts of Sybase and its subsidiaries, and, in the opinion of
management, reflect all adjustments (consisting only of normal
recurring adjustments) necessary to fairly state the Company's
consolidated financial position, results of operations and cash flows
for the periods stated. The condensed consolidated balance sheet as of
December 31, 1995 has been prepared from the audited financial
statements of the Company.
This report on Form 10-Q should be read in conjunction with the
Company's audited financial statements for the year ended December 31,
1995 and notes included therein. The results of operations for the
quarter and six months ended June 30, 1996 are not necessarily
indicative of results for the entire fiscal year ended December 31,
1996.
2. On February 28, 1996 Sybase acquired Visual Components, Inc., a
developer and marketer of components for software developers. Sybase
issued 733,178 shares of its common stock for all the outstanding
shares of common stock of Visual Components, Inc. and assumed
outstanding options to acquire 135,496 common shares. The transaction
has been accounted for as a pooling of interests. The operating results
of Visual Components, Inc. prior to the combination were not material
in relation to those of Sybase. Therefore, prior period financial
information of Sybase has not been restated.
3. Net loss per share is computed using the weighted average number of
common shares outstanding. Common stock equivalents consisting of stock
options and warrants are not included in the calculation because their
effect would be anti-dilutive.
-6-
<PAGE> 7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
(Dollars in millions)
<TABLE>
<CAPTION>
Six Six
Quarter Quarter Months Months
Ended Ended Percent Ended Ended Percent
6/30/96 6/30/95 Change 6/30/96 6/30/95 Change
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
License fees $ 150.5 $ 154.2 -2% $ 298.4 $ 290.5 3%
Percentage of 60% 64% 60% 64%
total revenues
Services $ 99.4 $ 85.8 16% $ 195.2 $ 165.7 18%
Percentage of 40% 36% 40% 36%
total revenues
Total revenues $ 249.9 $ 240.0 4% $ 493.6 $ 456.3 8%
</TABLE>
Total revenues for the second quarter of 1996 increased 4 percent to
$249.9 million from the $240.0 million achieved in the second quarter of 1995.
License fees declined 2 percent to $150.5 million in the second quarter of 1996,
from $154.2 million recorded in the second quarter of last year. License fees
increased 3 percent to $298.4 in the first six months of 1996 from $290.5 in the
same period of 1995. While the license revenues in the second quarter were up 2
percent from the first quarter of 1996, second quarter license revenues did not
meet the Company's expectations. License fees and, as a consequence, total
revenues did not meet the Company's expectations primarily due to lower than
expected licensing of software products in the Company's Enterprise Business
Group in North America and Europe which the Company believes is due in part to
ineffective marketing and selling of these products.
Services revenues grew 16 percent to $99.4 million in the second
quarter of 1996, up from $85.8 million recorded in the year earlier period. For
the first six months of 1996, services revenues increased 18 percent to $195.2
in 1996 from $165.7 in the same period of 1995. Services revenues consist
primarily of support and maintenance service fees and consulting, education and
other services related to the development and deployment of applications using
the Company's software products. Services revenues as a percentage of total
revenues increased to 40 percent in the second quarter and first half of 1996
from 36 percent in the same periods of 1995, reflecting relatively higher growth
in services revenues as compared with the license revenue decline in the second
quarter of 1996 and the more modest growth in license revenue for the first six
months of 1996.
-7-
<PAGE> 8
The increase in services revenues resulted, in part, from the increase
in support and maintenance service fees related to the Company's growing
installed base and the renewal of maintenance contracts. The increase in
services revenues also resulted from increased demand for the Company's
consulting and other services.
Services revenues in any given period are significantly affected by the
amount of license fee revenues generated in the same and immediately preceding
periods. The rate of quarterly year-over-year services revenue growth has
declined in each of the last seven quarters due to the decrease in license
revenue growth during 1995 and the first half of 1996 discussed above. The
Company expects services revenues to continue to increase modestly in absolute
dollars in 1996, due partially to a larger installed base of customers. However,
as this is a forward-looking statement, future actual results may differ. See
"Future Operating Results."
During the first quarter of 1996, the Company completed the acquisition
of Visual Components, Inc. ("Visual"), a developer of software components. This
acquisition was accounted for as a pooling of interests. The revenues and
results of operations of Visual prior to the acquisition were not material in
relation to those of Sybase. Historical consolidated results of Sybase have not
been restated for this acquisition.
The impact of price changes on the increase in revenues during the
second quarter or first half of 1996 was not significant.
GEOGRAPHICAL REVENUES
(Dollars in millions)
<TABLE>
<CAPTION>
Six Six
Quarter Quarter Months Months
Ended Ended Percent Ended Ended Percent
6/30/96 6/30/95 Change 6/30/96 6/30/95 Change
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
North American $ 151.4 $ 146.9 3% $ 302.2 $ 281.7 7%
Percentage of 61% 61% 61% 62%
total revenues
International:
European $ 57.0 $ 63.6 -10% $ 116.3 $ 119.5 -3%
Percentage of 23% 27% 24% 26%
total revenues
Intercontinental $ 41.5 $ 29.5 41% $ 75.1 $ 55.1 36%
Percentage of 17% 12% 15% 12%
total revenues
Total international $ 98.5 $ 93.1 6% $ 191.4 $ 174.6 10%
Percentage of 39% 39% 39% 38%
total revenues
Total revenues $ 249.9 $ 240.0 4% $ 493.6 $ 456.3 8%
</TABLE>
-8-
<PAGE> 9
North American revenues (United States, Canada and Mexico) grew 3
percent in the second quarter of 1996 to $151.4 million from $146.9 million in
the second quarter of 1995. North American revenues were up 7 percent in the
first half of 1996 to $302.2 million from $281.7 million in the same period in
1995. International revenues increased 6 percent in the second quarter of 1996
to $98.5 million from $93.1 million in the year earlier period, with European
revenues declining 10 percent and Intercontinental revenues (principally Asia,
Australia, and Latin America) increasing 41 percent. Over the first six months
of 1996, International revenues increased 10 percent to $191.4 million from
$174.6 million in the year earlier period, with European revenues declining 3
percent and Intercontinental revenues increasing 36 percent. The Company
attributes the slow rates of growth in North America, reduced rates of growth in
Intercontinental revenues and reduced European revenues in the second quarter
and first half of 1996 compared to the same periods of 1995, to the decline in
the growth rate of license revenues and related causes discussed above.
International revenues comprised 39 percent of total revenues in each
of the second quarters of 1996 and 1995. International revenues comprised 39
percent of total revenues during the first six months of 1996 compared to 38
percent in the same period of 1995. The stronger total Intercontinental revenue
growth rate in the second quarter and first half of 1996 compared to the North
American growth rate reflects, in part, the effects of actions taken and
investments made in expanding the Company's international organization.
The consolidated results for the second quarter of 1996 were impacted
by exchange rate changes from the prior year. Had exchange rates in the second
quarter of 1996 remained the same as the second quarter of 1995, Company
revenues would have been $257.2 million, representing a 7 percent increase over
1995. International revenues would have been $105.8 million in the second
quarter of 1996, representing a 14% increase over 1995. Over the first six
months of 1996, total revenues were not materially impacted by exchange rates
when compared to the same period in 1995 Although the Company takes into account
changes in exchange rates over time in its pricing and strategy, the Company's
business and results of operations could be materially and adversely affected by
fluctuations in foreign currency exchange rates. See "Future Operating Results."
-9-
<PAGE> 10
COSTS AND EXPENSES
(Dollars in millions)
<TABLE>
<CAPTION>
Six Six
Quarter Quarter Months Months
Ended Ended Percent Ended Ended Percent
6/30/96 6/30/95 Change 6/30/96 6/30/95 Change
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Cost of license fees $ 7.6 $ 7.6 0% $ 14.7 $ 14.8 -1%
Percentage of 3% 3% 3% 3%
license fees
Cost of services $ 62.8 $ 50.2 25% $ 119.0 $ 96.4 23%
Percentage of 63% 59% 61% 58%
services revenues
Sales and marketing $ 137.2 $ 120.7 14% $ 267.5 $ 229.5 17%
Percentage of 55% 50% 54% 50%
total revenues
Product development
and engineering $ 46.1 $ 36.8 25% $ 89.2 $ 72.2 23%
Percentage of 18% 15% 18% 16%
total revenues
General and
administrative $ 19.7 $ 16.2 22% $ 38.5 $ 32.0 20%
Percentage of 8% 7% 8% 7%
total revenues
Cost of merger with
Powersoft $ 0.0 $ 0.0 * $ 0.0 $ 25.0 *
Percentage of 0% 0% 0% 5%
total revenues
Purchase of in-process
technology $ 0.00 $ 19.7 * $ 0.0 $ 19.7 *
Percentage of 0% 8% 0% 4%
total revenues
</TABLE>
- ---------------------------------
* Not meaningful
Cost of license fees. Cost of license fees, consisting primarily of
product costs (media and documentation); amortization of capitalized software
development costs; cost of acquired technologies; and third-party royalty costs,
remained consistent in absolute dollar amount in the second quarter of 1996 as
compared to the second quarter of 1995, and represented 3 percent of license
fees in each of the first quarters of 1996 and 1995. Cost of license fees
totaled $14.7 million in the first six months of 1996 and $14.8 million in same
period of 1995. Cost of license fees remained essentially flat year-over-year in
absolute dollars and as a
-10-
<PAGE> 11
percentage of license fees. Amortization of capitalized software costs included
in cost of license fees was $2.0 million in the second quarter of 1996, up from
$1.2 million in the first quarter of last year, and $3.8 million in the first
half of 1996, up from $2.6 million over the same period in 1995.
Cost of services. Cost of services, consisting primarily of
maintenance, consulting and education expenses and, to a lesser degree,
services-related product costs (media and documentation), increased as a
percentage of services revenues to 63 percent in the second quarter of 1996 from
59 percent in the second quarter of 1995, and to 61 percent from 58 percent for
the first six months of 1996 compared to the same period in 1995. The increase
in cost of services as a percentage of services revenues is primarily due to the
hiring of additional staff in the Company's customer service and support
organization and the mass update of customers holding maintenance contracts for
the Company's SQL Server product. Customers under maintenance contracts are
entitled to free upgrades of the product and in the beginning the second quarter
of 1996 customers were shipped version 11.1 of the new database software. The
increase in absolute dollars in the second quarter and first half of 1996
compared to the same periods in 1995 reflects the expansion of the customer
support and the professional services organizations, made in order to better
support the growth in customer sites, to enable the migration of the Company's
customer base to the latest versions of Sybase(R) database products, to gain a
more geographically diverse customer base and to better enable customers to
develop and deploy the Company's existing and new software products.
Sales and marketing. Sales and marketing expenses increased as a
percentage of total revenues to 55 percent in the second quarter of 1996, from
50 percent in the second quarter of 1995 and also increased in absolute dollars.
Sales and marketing expenses increased as a percentage of total revenues to 54
percent in the first half of 1996, from 50 percent in the first half of 1995 and
also increased in absolute dollars. The increase in sales and marketing expenses
as a percentage of total revenues is primarily the result of lower than expected
license revenues realized in the second quarter and first half of 1996 and, to a
lesser extent, the continued up-front costs of implementation of a named account
and indirect channels sales reorganization.
The increase in sales and marketing expenses in absolute dollars in the
second quarter and first six months of 1996 is attributable to the Company's
investment in reorganizing, building and training its direct sales and sales
management organizations; supporting increased sales through indirect channels;
and developing relationships and programs with Sybase
-11-
<PAGE> 12
reseller and system integration partners. Also in the second quarter of 1996,
Sybase incurred marketing expenses relating to new marketing programs supporting
launches and announcements of several new products such as PowerBuilder 5.0(R)
and Optima++(TM).
Product development and engineering. Product development and
engineering expenses (net of capitalized software development costs) grew at a
higher rate than revenues in the first two quarters of 1996 and, as a result,
increased as a percentage of total revenues to 18 percent in the second quarter
of 1996 from 15 percent in the second quarter 1995, and increased to 18 percent
in the first half of 1996 compared to 16 percent over the same period in 1995.
The increase in product development and engineering expenses as a percent of
total revenues in the second quarter and first half of 1996 is primarily the
result of lower than anticipated license revenues realized in the periods. In
absolute dollars, product development and engineering expenses in the second
quarter of 1996 increased 25 percent over the second quarter of 1995. These
expenses rose 23 percent in the first six months of 1996 compared to the first
six months of 1995. The increase in the second quarter of 1996 was the result of
several major product development programs begun in 1995. Expenditures in the
second quarter and first half of 1996 were made to further develop the System
11(TM) suite of products, including enhancements to Sybase(R) SQL Server(TM),
SQL Anywhere(TM), and Replication Server(R) products and certain other existing
database products; the systems management tools products, including Enterprise
SQL Server Manager(TM); the Company's interoperability products, including
Enterprise CONNECT(TM) products; and application development tools, including
PowerBuilder 5.0 and Optima++. The Company capitalized approximately $3.4
million and $2.1 million of software development costs in the second quarter of
1996 and 1995, respectively, representing 7 percent and 5 percent of gross
product development and engineering expenditures. The Company capitalized
approximately $8.1 million and $4.6 million of software development costs in the
first half of 1996 and first half of 1995, respectively, representing 8 percent
and 6 percent of gross product development and engineering expenditures. The
increase in capitalization of product development and engineering expenditures
for the second quarter and first half of 1996 reflects major development
programs such as Sybase IQ, Sybase MPP(TM), PowerBuilder 5.0 and Optima++, all
of which achieved technological feasibility for purposes of capitalization. The
Company believes that product development and engineering expenditures are
essential to technology and product leadership.
General and administrative. General and administrative expenses
increased slightly both in absolute dollars and as a percentage of total
revenues to 8 percent in the second quarter and first half of 1996 versus
-12-
<PAGE> 13
7 percent in the same periods in 1995 The increase in general and administrative
expenses as a percentage of total revenues during these periods is primarily the
result of lower than anticipated license revenues and, to a lesser extent, a
slower rate of growth in services revenues. The absolute dollar increases in
general and administrative expenses resulted primarily from increased
investments in systems infrastructure and from the lingering effects of several
acquisitions made over the last two years.
Cost of mergers. In the first quarter of 1995, the company charged to
operations approximately $25.0 million related to the cost of merger with
Powersoft. In the second quarter of 1995, the Company charged to operations
approximately $20.0 million for the write-off of purchased in-process technology
related to the acquisition of SDP S.A. See "Future Operating Results."
OPERATING INCOME (LOSS)
(Dollars in millions)
<TABLE>
<CAPTION>
Six Six
Quarter Quarter Months Months
Ended Ended Percent Ended Ended Percent
6/30/96 6/30/95 Change 6/30/96 6/30/95 Change
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) ($23.6) ($11.5) * ($35.3) ($33.5) *
Percentage of -9% -5% -7% -7%
total revenues
Operating income
exclusive of one-time
charges ($23.6) $8.4 * ($35.3) $11.4 *
Percentage of -9% 4% -7% 3%
total revenues
</TABLE>
- ----------------------
* Not meaningful
The Company incurred an operating loss of $23.6 million in the second
quarter of 1996. This compares with $8.4 million of operating income in the
second quarter of 1995 before a one-time, pre-tax charge of $20 million for the
write-off of purchased in-process technology. The Company incurred an operating
loss of $35.3 million in the first six months of 1996. This compares with $11.4
million of operating income in the first six months of 1995 before one-time,
pre-tax charges of $20 million for the write-off of purchased in-process
technology and $25 million in merger related costs. The substantial decrease in
operating income and margins in the second quarter and first half of 1996
compared to the same periods of 1995 results from the operating factors
described above.
-13-
<PAGE> 14
OTHER INCOME AND EXPENSE, NET
(Dollars in millions)
<TABLE>
<CAPTION>
Six Six
Quarter Quarter Months Months
Ended Ended Percent Ended Ended Percent
6/30/96 6/30/95 Change 6/30/96 6/30/95 Change
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Other income $ 2.5 $ 2.3 9% $ 5.1 $ 4.9 4%
Percentage of 1% 1% 1% 1%
total revenues
Other expense, net $ 0.3 ($0.1) * $ 0.4 $ 0.1 313%
Percentage of 0% 0% 0% 0%
total revenues
</TABLE>
- --------------------
* Not meaningful
Interest income consists primarily of interest earned on cash
investments. Interest expense and other (net) includes interest expense from
capital lease obligations incurred in prior years, bank fees and expenses, net
gains and losses resulting from the Company's foreign currency exposures and
hedging activities and the related cost of foreign exchange hedging. The
increase in interest income in absolute dollars in the second quarter and first
half of 1996 is largely due to higher effective returns resulting from a shift
in investments to taxable from tax-exempt investments, offset by smaller average
invested cash balances than in the year earlier period. Net foreign exchange
gains and losses resulting from the Company's hedging activities were immaterial
for all periods covered. Interest income consists primarily of interest earned
on investments. Interest expense and other (net) includes interest expense from
capital lease obligations incurred in prior years, bank fees and expenses, net
gains and losses resulting from the Company's foreign currency exposures and
hedging activities and the related cost of foreign exchange hedging. Net foreign
exchange gains and losses resulting from the Company's hedging activities were
immaterial for all periods covered.
PROVISION FOR INCOME TAXES
(Dollars in millions)
<TABLE>
<CAPTION>
Six Six
Quarter Quarter Months Months
Ended Ended Percent Ended Ended Percent
6/30/96 6/30/95 Change 6/30/96 6/30/95 Change
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Provision for
income taxes $ 3.2 $ 0.0 * $ 0.9 ($2.1) -143%
Effective tax rate * 0% * *
</TABLE>
- ----------
* Not meaningful
-14-
<PAGE> 15
The Company recorded an income tax provision of $3.2 million in the
second quarter of 1996 and no income tax provision in second quarter of 1995.
The tax provision in the second quarter of 1996 was primarily due to the
generation of taxable income in certain foreign jurisdictions. For the first six
months of 1996, the Company's tax provision totals $0.9 million compared to a
tax benefit of $2.1 million over the same period of 1995.
Realization of the Company's net deferred tax assets, which total $40.0
million at June 30, 1996, is dependent upon the Company generating sufficient
taxable income in future years in appropriate tax jurisdictions to obtain
benefit from the reversal of temporary differences and from net operating loss
and tax credit carryforwards. The amount of deferred tax assets considered
realizable is subject to adjustment in future periods if estimates of future
taxable income are reduced and any such adjustments could have an impact on the
Company's effective tax rate in future periods. See "Future Operating Results."
NET INCOME (LOSS) AND NET INCOME (LOSS) PER SHARE
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Six Six
Quarter Quarter Months Months
Ended Ended Percent Ended Ended Percent
6/30/96 6/30/95 Change 6/30/96 6/30/95 Change
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) ($24.6) ($9.2) 167% ($31.5) ($26.6) 18%
Percentage of -10% -4% -6% -6%
total revenues
Net income (loss)
per share ($0.33) ($0.13) 154% ($0.42) ($0.38) 11%
Shares used in per
share computation 74.9 71.0 74.2 70.5
</TABLE>
The Company incurred a net loss in the second quarter of 1996 of $24.6
million, or $0.33 per share, compared to a net loss of $9.2 million, or $0.13
per share in the second quarter of 1995. The Company incurred a net loss in the
first half of 1996 of $31.5 million, or $0.42 per share, compared to a net loss
of $26.6 million, or $0.38 per share in the first half of 1995. Shares used in
the per share computation increased 5 percent in the second quarter and first
half of 1996 from the same periods of 1995.
-15-
<PAGE> 16
FINANCIAL CONDITION
(Dollars in millions)
<TABLE>
<CAPTION>
Six Six
Months Months
Ended Ended Percent
6/30/96 6/30/95 Change
------- ------- -------
<S> <C> <C> <C>
Working capital $ 120.0 $ 142.5 -16%
Cash, cash equivalents and $ 185.3 $ 213.3 -13%
short-term cash investments
Net cash provided (used) ($0.3) $ 19.8 -102%
by operating activities
Net cash used by $ 50.7 $ 77.3 -34%
investing activities
Net cash provided by $ 21.9 $ 26.7 -18%
financing activities
</TABLE>
Net cash used in operating activities was $0.3 million in the first six
months of 1996 compared to net cash provided by operating activities of $19.8
million in the first six months of 1995. Net cash provided by operating
activities during the first half of 1996 reflects a net loss of $31.5 million
versus a loss of $26.6 million in the year ago period. Additionally, decreased
net cash from operating activities reflects an increase of accounts receivable
of $21.3 million in the first half of 1996 compared to an accounts receivable
decrease of $9.3 million in the same period of 1995. Accounts payable and other
accrued liabilities decreased during the first half of 1996, resulting in a
total cash decline of $15.9 million over this period, compared to an increase
totaling $5.3 million over the same period in 1995. Cash provided by an increase
in the deferred revenue balance was $15.1 million in the first six months of
1996 compared to $25.6 million in the same period of 1995. In the first half of
1996 a reduction in accrued income taxes totaled $1.3 million compared to
accrued taxes paid of $20.9 million in the same period of 1995.
Net cash used for investing activities decreased to $50.7 million in
the first half of 1996 compared to $77.3 million in the first half of 1995.
Investing activities included capital expenditures of $45.0 million in the first
half of 1996 compared to $70.9 million in the first half of 1995, which reflects
slower expansion of expenditures required to support the Company's growing
employee base around the world and systems and infrastructure investments.
Additionally, investing activities included cash used in business combinations
of $0.9 million in the first half of 1996, compared to a cash use of $23.0
million (net of cash acquired) during the first six months of 1995. During the
first six months of 1996 there was a net
-16-
<PAGE> 17
decrease of cash investments in the amount of $6.9 million compared to a net
increase of $16.5 million in the first half of 1995.
Net cash provided by financing activities for the first half of 1996
was $21.9 million compared to $26.7 million in the first half of 1995. In the
first half of 1996, $21.9 million was provided from the issuance of common stock
upon the exercise of employee stock options, the sale of shares through employee
stock purchase plans, and the tax benefit associated with the exercise of stock
options, as compared to $27.2 million in the year earlier period.
The Company engages in business operations around the world and is
therefore exposed to foreign currency fluctuations. As of June 30 1996, the
Company had identifiable assets totaling $121.2 million associated with its
European operations and $65.9 million associated with its Intercontinental
operations. The Company experiences foreign exchange transaction exposures from
short-term intercompany payables and receivables denominated in different
currencies. The Company hedges certain of these short-term exposures under a
plan approved by the Sybase Board of Directors (see Note 2 of Notes to
Consolidated Financial Statements of 1995 Sybase Annual Report). The Company
also experiences foreign exchange translation exposure on its net assets
denominated in different currencies. As these net assets are considered by
Sybase, the U.S. parent company, to be a permanent investment in each
subsidiary, the foreign currency translation gains and losses are reflected in
stockholders' equity accumulated foreign currency translation adjustments.
Cash, cash equivalents, and short-term cash investments totaled $185.3
million at June 30, 1996, compared to $213.3 million at June 30, 1995.
The Company believes that it has the financial resources needed to meet
its presently anticipated business requirements, including capital expenditure
and strategic operating programs, for the foreseeable future.
FUTURE OPERATING RESULTS
The Company's future operating results may vary substantially from
period to period. The timing and amount of the Company's license fee revenues
are subject to a number of factors that make estimation of revenues and
operating results prior to the end of a quarter extremely uncertain. The Company
has operated historically with little or no backlog and, as a result, license
fees in any quarter are dependent on orders booked and shipped in that quarter.
In addition, the timing of closing of
-17-
<PAGE> 18
large license agreements increases the risk of quarter-to-quarter fluctuations
and the uncertainty of estimating quarterly operating results. The Company has
experienced a pattern of recording 50 percent to 70 percent of its quarterly
revenues in the third month of the quarter, with a concentration of such
revenues in the last two weeks of that third month. The Company's operating
expenses are based on projected annual and quarterly revenue levels and are
incurred approximately ratably throughout each quarter. Because the Company's
operating expenses are relatively fixed in the short term, if projected revenues
are not realized in the expected period, the Company's operating results for
that period would be adversely affected and could result in an operating loss,
as occurred in the first and second quarters of 1996. Failure to achieve
revenue, earnings and other operating and financial results as forecast or
anticipated by brokerage firm and industry analysts could result in an immediate
and adverse effect on the market price of the Company's stock. The Company's
rate of year-over-year growth slowed significantly in each of the past six
quarters compared to the year earlier periods. The Company may not achieve in
the future the relatively high rates of growth experienced by the Company in
1991 through 1994 or the rates of growth projected for the client/server
software industry.
Commencing in late 1995 and continuing throughout 1996 the Company
implemented a variety of changes to the sales organization, including a new
sales model, changes to sales compensation programs and an increased focus on
sales through indirect channels. Although such changes are intended to enhance
overall revenues, such changes could, in the short-run, materially and adversely
affect the sales process and revenues. For example, the Company believes that
these changes may have contributed in part to the lower than expected revenues
in the first two quarters of 1996. In the second quarter of 1996, the Company
announced several other management and organizational changes, including changes
in the senior management of the sales and marketing organizations and the
grouping of products and certain product-related services into two major
business groups, the Enterprise Business Group and the Powersoft Business Group.
In the third quarter of 1996, Mitchell Kertzman succeeded Mark Hoffman as the
Company's President and Chief Executive Officer, with Mr. Hoffman continuing as
the Company's Chairman of the Board. Also in the third quarter of 1996, Jack
Acosta succeeded Ken Goldman as the Company's Chief Financial Officer. The
Company may make other management and organization changes in the future.
Organizational and management changes are intended to enhance productivity and
competitiveness. However, such changes may not produce the desired results, and
could materially adversely affect productivity, expenses and revenues.
-18-
<PAGE> 19
The market for the Company's stock is highly volatile. The trading
price of the Company's common stock fluctuated widely in 1995 and the first half
of 1996 and will continue to be subject to wide fluctuations in response to
quarterly variations in operating and financial results, announcements of
technological innovations, new products, or customer contracts won by the
Company or its competitors, changes in prices of the Company's or its
competitors' products and services, changes in product mix, changes in the
Company's revenue and revenue growth rates for the Company as a whole or for
individual geographic areas, business units, products or product categories, as
well as other events or factors. Statements or changes in opinions, ratings or
earnings estimates made by brokerage firms and industry analysts relating to the
market in which the Company does business, the Company's competitors, or the
Company or its products specifically, have resulted, and could in the future
result, in an immediate and adverse effect on the market price of the Company's
common stock. In particular, due to a variety of factors, the Company's stock
price declined significantly during the third quarter of 1994, the second
quarter of 1995 and the first and second quarters of 1996. In addition, the
stock market has from time to time experienced extreme price and volume
fluctuations which have particularly affected the market price for many
high-technology companies and which often have been unrelated to the operating
performance of these companies.
An increased portion of the Company's revenues in recent quarters has
been derived from its international operations. Several of the Company's
international subsidiaries have been only recently acquired or formed. In
addition there have been several management and organizational changes within
the international operations. International revenues, in absolute dollars and as
a percentage of total revenues, may fluctuate in part due to the growth and, in
some cases, the relative immaturity of international organizations. The
Company's operations and financial results could be significantly affected by
factors associated with international operations such as changes in foreign
currency exchange rates and uncertainties relative to regional economic
circumstances, political instability in emerging markets and difficulties in
staffing and managing foreign operations, as well as by other risks associated
with international activities.
The market for the Company's software products and services is
extremely competitive and characterized by dynamic customer demands, rapid
technological and marketplace changes, and frequent product enhancements and new
product introductions. The Company competes with a number of companies,
including Oracle Systems Corporation, Informix Corporation, Microsoft
Corporation, IBM Corporation, and Computer Associates, Inc. Many of the
Company's competitors and
-19-
<PAGE> 20
potential competitors have significantly greater financial, technical, sales and
marketing resources and a larger installed base than the Company. Each of
Informix, IBM, Microsoft and Oracle has announced the development of enhanced
versions of their principal database products that are intended to improve the
performance or expand the capabilities of their existing products. New or
enhanced products introduced by existing or future competitors could increase
the competition faced by the Company's products, and result in greater price
pressure on certain of the Company's database products, especially to the extent
that market acceptance for personal computer oriented technologies increases. A
failure by the Company to compete successfully with its existing competitors or
with new competitors could have a material adverse effect on the Company's
business and results of operations and on the market price of the Company's
common stock.
Existing and future competition or changes by the Company in its
product offerings or product pricing structure could result in an immediate
reduction in the prices of the Company's products. The Company introduced
changes in its pricing and licensing structure in the first quarter of 1996 that
increased the prices for certain products or configurations, and reduced the
prices for other products and configurations. The Company will introduce price
and licensing changes from time to time in the future. If recently implemented
or future changes in the Company's products, pricing structure or existing or
future competition, for example from Microsoft, were to result in significant
revenue declines, the Company's business and financial results would be
adversely affected.
The Company's future results will depend in part on its ability to
enhance its existing products and to introduce new products, on a timely and
cost-effective basis, that meet dynamic customer requirements. Customer
requirements for products can rapidly change as a result of innovations or
changes within the computer hardware and software industries. For example, the
widespread use of the Internet is rapidly giving rise to new customer
requirements as well as new methods and practices of selling, marketing and
distributing products and services. Sybase's future results will depend in part
on its success in developing new products, making generally available products
that have been previously announced, enhancing its existing products and
adapting its existing products to changing customer requirements, and ultimately
on the market acceptance received by such new or enhanced products. The Company
has announced the development and anticipated availability dates of several
products. For example, Optima++ for Java development, and the Company currently
plans to commence commercial shipment of this product in the second half of
1996. The Company has experienced
-20-
<PAGE> 21
delays in introducing some new products in the past. For example, the commercial
shipment of Sybase IQ which became commercially available in February 1996 was
previously planned for the second half of 1995. Unanticipated delays in product
availability schedules could result from various factors including development
or testing difficulties, feature changes, software errors, shortages in
appropriately skilled software engineers and project management problems. Delays
in the scheduled availability of these or other products, a lack of or decrease
in market acceptance of new or enhanced products, particularly SQL Server 11
which became commercially available in December 1995 and PowerBuilder 5.0 which
became commercially available in June 1996, or the Company's failure to
accurately anticipate customer demand or meet customer performance requirements
or to anticipate competitive products and developments could have a material
adverse effect on the Company's business and financial results. New products or
new versions of existing products may, despite testing, contain undetected
errors or bugs that will delay the introduction or adversely affect commercial
acceptance of such products.
Sybase's results will also depend increasingly on the ability of its
products to interoperate and perform well with existing and future leading,
industry-standard application software products intended to be used in
connection with relational database management systems. Failure to meet existing
or future interoperability and performance requirements of certain independent
vendors marketing such applications in a timely manner has in the past and could
in the future adversely affect the market for Sybase's products. Certain leading
applications will not be interoperable with Sybase relational database
management systems ("RDBMSs") until certain features are added to the Company's
RDBMS and others may never be available on Sybase RDBMS. In addition, the
Company's application development tools, database design tools and certain
connectivity products are designed for use with RDBMSs offered by the Company's
competitors. Vendors of non-Sybase RDBMSs and related products may become less
willing in the future to provide the Company with access to products, technical
information and marketing and sales support. If existing and potential customers
of the Company who use non-Sybase RDBMSs refrain from purchasing such products
due to concerns that over time the development, quality, and support of products
for non-Sybase RDBMSs will diminish, the Company's business, results of
operations and financial condition could be materially and adversely affected.
Commercial acceptance of the Company's products and services could be
adversely affected by critical or negative statements or reports by brokerage
firms, industry and financial analysts, and industry periodicals
-21-
<PAGE> 22
concerning the Company, its products, business, or competitors, or by the
advertising or marketing efforts of competitors, or other factors that could
affect customer perception, such as the criticism of the scalability of the
Company's SQL Server 10 database product experienced in 1995. In addition,
customer perception of Sybase and its products could be adversely affected by
financial results reported for the 1995 fiscal year and the first half of 1996
and by press reports related thereto.
As the number of software products in the industry and the number of
software patents increase, the Company believes that software developers may
become increasingly subject to infringement claims. Third parties have in the
past asserted and may in the future assert that their patents or other
proprietary rights are violated by products offered or in development by the
Company. Any such claims, with or without merit, can be time consuming and
expensive to defend or settle, and could have an adverse effect on the Company's
business and results of operations.
The Company's ability to achieve its future revenues and earnings will
depend in part on the ability of its officers and key personnel to manage
growth, costs and expenses successfully through the implementation of
appropriate management systems and controls. Failure to effectively implement or
maintain such systems and controls could adversely affect the Company's business
and results of operations. The success of the Company also depends in part on
its ability to attract and retain qualified technical, managerial, sales and
marketing personnel. The competition for such personnel is intense in the
software industry, and Sybase believes, has increased substantially in recent
years. In particular, there have been several changes in 1995 and 1996 to the
Company's executive management team. Changes in management, the Company's recent
financial performance and a reduction in the overall number of Sybase employees
made in the third quarter of 1996 could cause an increase in the amount of
employee turnover. The failure to effectively recruit, train and retain
qualified personnel or high rates of employee turnover, particularly among
engineering or sales staff, could adversely affect the Company's product
development efforts, product sales and other aspects of the Company's operations
and results. During 1995, the software industry generally, and Sybase
specifically, experienced higher than historical rates of employee turnover.
Sybase currently enters most of its North American customer orders in
its Burlington, Massachusetts operations center and ships all of its products in
North America (other than its Powersoft products) from its Emeryville,
California distribution facility. Because of the pattern of recording a high
percentage of quarterly revenues within the last week or two weeks of the
quarter, the closure or inoperability of one or both of
-22-
<PAGE> 23
these facilities during such weeks due to natural calamity or due to a systems
or power failure could have a material adverse effect on the Company's ability
to record revenues for such quarter.
In 1994 and 1995 the Company acquired Powersoft and several other
companies. In February 1996, the Company acquired Visual Components, Inc. The
Company may acquire other distributors, companies, products, or technologies in
the future. The achievement of the desired benefits of these and future
acquisitions will depend in part upon whether the integration of the acquired
businesses is achieved in an efficient and effective manner. The successful
combination of businesses will require, among other things, integration of the
companies' related product offerings and coordination of their sales, marketing
and research and development efforts. The difficulties of such coordination may
be increased by the geographic distance between separate organizations. The
Company may be unable to integrate effectively these or future acquired
businesses, and may not obtain the anticipated or desired benefits of such
acquisitions. Such acquisitions may result in costs, liabilities or additional
expenses that could adversely affect the Company's results of operations and
financial condition. In addition, acquisitions or changes in business or market
conditions may cause the Company to revise its plans, which could result in
unplanned expenses or a loss of anticipated benefits from past investments.
As announced on July 2, 1996, the Company is currently implementing a
plan of reorganization aimed at reducing costs, before a restructuring charge,
to an amount below the revenues earned in the second quarter of 1996. The
Company currently anticipates a restructuring charge to operating results for
the third quarter of 1996 to be approximately $30 million. The foregoing
statements regarding future expense levels and the amount of the restructuring
charge constitute forward-looking statements. The actual amount of the
Company's expenses and restructuring charge may differ materially for a variety
of reasons including: the inability to effectively implement cost-cutting
initiatives, to conclude planned divestitures or to terminate or reduce
existing lease and other contractual commitments in the amounts or at the speed
planned; the incurrence of unanticipated expenses, charges or liabilities; and
changes in the rate of employee turn-over.
-23-
<PAGE> 24
PART II: OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Following the Company's announcement on April 3, 1995 of its
preliminary results for the first fiscal quarter ended March 31, 1995, several
class action lawsuits were filed against the Company and certain of its officers
in the U.S. District Court, Northern District of California. The complaints are
similar and allege violations of federal and state securities laws and request
unspecified monetary damages. These actions have been consolidated, and a
consolidated amended class action complaint was served on August 7, 1995, and
the parties are in the early stages of pretrial discovery. Management believes
that the claims contained in the consolidated amended complaint are without
merit and intends to defend against the claims vigorously. In the opinion of
management, resolution of this litigation is not expected to have a material
adverse effect on the financial position of the Company. However, depending on
the amount and timing, an unfavorable resolution of this matter could materially
affect the Company's future results of operations or cash flows in a particular
period.
Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Annual Meeting of Stockholders of the Registrant was held on May
21, 1996. At the Annual Meeting the following matters were submitted to a vote
of stockholders and were approved, with the votes cast on each matter as
indicated:
1. Election of three Class I directors, each to serve a three-year term
expiring upon the 1999 Annual Meeting of Stockholders or until a
successor is duly elected and qualified. Mark B. Hoffman, Frank A.
Ingari, and Alan B. Salisbury were the only nominees and each was
elected (64,518,334 votes were cast for election of Mr. Hoffman and
723,012 votes were cast withholding authority to vote for his election.
64,514,789 votes were cast for election of Mr. Ingari and 726,557 votes
were cast withholding authority to vote for his election. 65,566,967
votes were cast for election of Mr. Salisbury and 674,379 votes were
cast withholding authority to vote for his election. There were no
abstentions or broker non-votes.). In addition to these directors, the
Company's other incumbent directors (Robert Epstein, Mitchell Kertzman,
Richard Alberding, William Krause, David Liddle, Robert Wayman and
Jeffrey Webber) had terms that continued after the 1996 Annual Meeting.
2. Approval of the 1996 Stock Plan and the reservation of 2,977,000 shares
of Common Stock for issuance thereunder (52,110,051 votes
-24-
<PAGE> 25
for, 11,996,954 votes against, 667,398 abstentions and 466,943 broker
non-votes).
3. Approval of an amendment to the 1992 Director Stock Option Plan
increasing the total number of shares of Common Stock reserved for
issuance thereunder by 300,000 shares and increasing by 4,000 shares
the number of shares subject to options granted annually to outside
directors (41,552,799 votes for, 22,521,931 votes against, 699,673
abstentions and 466,943 broker non-votes.).
4. Ratification of the appointment of Ernst & Young LLP as independent
auditors for the Company for the year ending December 31, 1996
(64,952,083 votes for, 142,736 votes against, 146,527 abstentions and
no broker non-votes).
Item 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.1 Computation of Loss Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
-25-
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
August 2, 1996 SYBASE, INC.
By /s/ JACK L. ACOSTA
---------------------------
Jack L. Acosta
Senior Vice President, Finance
and Chief Financial Officer
(Principal Financial Officer)
By /s/ PETER F. PERVERE
---------------------------
Peter F. Pervere
Vice President and
Corporate Controller
(Principal Accounting Officer)
-26-
<PAGE> 27
EXHIBIT INDEX TO SYBASE, INC.
QUARTERLY REPORT ON FORM 10-Q
Exhibit Number Description
- -------------- -----------
11.1 Computation of Loss Per Share
27 Financial Data Schedule
-27-
<PAGE> 1
Exhibit 11.1
SYBASE, INC
--------------------
COMPUTATION OF LOSS PER SHARE
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
----------------------------- --------------------------------
(In thousands, except for per share data) 1996 1995 1996 1995
------------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
Actual weighted average shares
outstanding for the period:
Common stock 74,927 71,025 74,243 70,504
Dilutive employee stock options
and warrants (1) 0 0 0 0
Weighted average shares in common stock
equivalents of Powersoft Corporation (2) 0 0 0 0
------------ -------------- -------------- --------------
Total common and common
equivalent shares 74,927 71,025 74,243 70,504
============ ============== ============== ==============
Net income (loss) ($24,564) ($9,170) ($31,470) ($26,606)
============ ============== ============== ==============
Net income (loss) per share ($0.33) ($0.13) ($0.42) ($0.38)
============ ============== ============== ==============
</TABLE>
(1) Computed using the treasury stock method. Not included if
anti-dilutive.
(2) On an as converted basis using the merger conversion ratio of 1.6
shares of Sybase, Inc. common stock and equivalents for each share of
Powersoft Corporation common stock and equivalents.
-28-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
UNAUDITED BALANCE SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH (B) NONE.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 149384
<SECURITIES> 35904
<RECEIVABLES> 235846
<ALLOWANCES> 21633
<INVENTORY> 0
<CURRENT-ASSETS> 442498
<PP&E> 379261
<DEPRECIATION> 175328
<TOTAL-ASSETS> 761745
<CURRENT-LIABILITIES> 322517
<BONDS> 0
0
0
<COMMON> 75
<OTHER-SE> 433664
<TOTAL-LIABILITY-AND-EQUITY> 761745
<SALES> 150454
<TOTAL-REVENUES> 249887
<CGS> 7585
<TOTAL-COSTS> 207628
<OTHER-EXPENSES> 65820
<LOSS-PROVISION> 2400
<INTEREST-EXPENSE> 153
<INCOME-PRETAX> (21364)
<INCOME-TAX> 3200
<INCOME-CONTINUING> (24564)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24564)
<EPS-PRIMARY> (0.33)
<EPS-DILUTED> (0.33)
</TABLE>
