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Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
 

 
FORM 10-Q
 
(Mark One)
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended October 31, 2002
 
OR
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File Number: 0-22369
 

 
BEA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
(State or other jurisdiction of
incorporation or organization)
    
77-0394711
(I. R. S. Employer
Identification No.)
 
2315 North First Street
San Jose, California 95131
(Address of principal executive offices)
 
(408) 570-8000
(Registrant’s telephone number, including area code)
 

 
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 ¨
 
As of November 30, 2002, there were approximately 410,497,699 shares of the Registrant’s common stock outstanding.
 


Table of Contents
BEA SYSTEMS, INC.
 
INDEX
 
    
Page
No.

PART I.    FINANCIAL INFORMATION
    
ITEM 1.    Financial Statements (Unaudited):
    
  
3
  
4
  
5
  
6
  
16
  
40
  
42
PART II.    OTHER INFORMATION
    
  
43
  
44
  
45
  
46

2


Table of Contents
PART I.    FINANCIAL INFORMATION
 
ITEM 1.    Financial Statements
 
BEA SYSTEMS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
 
(in thousands, except per share data)
(Unaudited)
 
    
Three Months Ended
October 31,

    
Nine Months Ended
October 31,

 
    
2002

    
2001

    
2002

    
2001

 
Revenues:
                                   
License fees
  
$
126,116
 
  
$
126,625
 
  
$
381,317
 
  
$
460,029
 
Services
  
 
107,907
 
  
 
92,998
 
  
 
303,412
 
  
 
284,521
 
    


  


  


  


Total revenues
  
 
234,023
 
  
 
219,623
 
  
 
684,729
 
  
 
744,550
 
Cost of revenues:
                                   
Cost of license fees
  
 
4,981
 
  
 
4,559
 
  
 
14,097
 
  
 
16,251
 
Cost of services
  
 
46,177
 
  
 
42,500
 
  
 
131,797
 
  
 
140,921
 
Amortization of acquired intangible assets
  
 
6,393
 
  
 
6,627
 
  
 
21,492
 
  
 
19,043
 
Impairment of acquired intangible assets
  
 
—  
 
  
 
7,082
 
  
 
—  
 
  
 
7,082
 
    


  


  


  


Total cost of revenues
  
 
57,551
 
  
 
60,768
 
  
 
167,386
 
  
 
183,297
 
    


  


  


  


Gross profit
  
 
176,472
 
  
 
158,855
 
  
 
517,343
 
  
 
561,253
 
Operating expenses:
                                   
Sales and marketing
  
 
89,572
 
  
 
93,597
 
  
 
274,507
 
  
 
306,820
 
Research and development
  
 
34,548
 
  
 
29,660
 
  
 
99,068
 
  
 
90,710
 
General and administrative
  
 
18,936
 
  
 
18,962
 
  
 
56,595
 
  
 
57,098
 
Amortization of goodwill
  
 
—  
 
  
 
11,838
 
  
 
—  
 
  
 
42,956
 
Facilities consolidation and severance charges
  
 
—  
 
  
 
20,666
 
  
 
—  
 
  
 
20,666
 
Impairment of goodwill
  
 
—  
 
  
 
73,068
 
  
 
—  
 
  
 
73,068
 
    


  


  


  


Total operating expenses
  
 
143,056
 
  
 
247,791
 
  
 
430,170
 
  
 
591,318
 
    


  


  


  


Income (loss) from operations
  
 
33,416
 
  
 
(88,936
)
  
 
87,173
 
  
 
(30,065
)
Interest expense
  
 
(5,504
)
  
 
(5,449
)
  
 
(16,567
)
  
 
(16,723
)
Write-down of equity investments
  
 
—  
 
  
 
(9,867
)
  
 
(22,386
)
  
 
(21,022
)
Net gains on sale of equity investments (see Note 2—Related Party Transactions)
  
 
—  
 
  
 
—  
 
  
 
453
 
  
 
17,374
 
Interest income and other, net
  
 
7,408
 
  
 
9,102
 
  
 
21,097
 
  
 
32,115
 
    


  


  


  


Income (loss) before income taxes
  
 
35,320
 
  
 
(95,150
)
  
 
69,770
 
  
 
(18,321
)
Provision (benefit) for income taxes
  
 
10,596
 
  
 
(4,287
)
  
 
20,931
 
  
 
27,963
 
    


  


  


  


Net income (loss)
  
 
24,724
 
  
 
(90,863
)
  
 
48,839
 
  
 
(46,284
)
Other comprehensive income (loss):
                                   
Foreign currency translation adjustments
  
 
(799
)
  
 
884
 
  
 
1,991
 
  
 
(2,097
)
Unrealized gain on available-for-sale investments, net of income taxes
  
 
426
 
  
 
278
 
  
 
1,631
 
  
 
335
 
    


  


  


  


Comprehensive income (loss)
  
$
24,351
 
  
$
(89,701
)
  
$
52,461
 
  
$
(48,046
)
    


  


  


  


Net income (loss) per share:
                                   
Basic and diluted net income (loss) per share
  
$
0.06
 
  
$
(0.23
)
  
$
0.12
 
  
$
(0.12
)
    


  


  


  


Number of shares used in per share calculations:
                                   
Basic
  
 
406,900
 
  
 
397,970
 
  
 
405,880
 
  
 
394,860
 
    


  


  


  


Diluted
  
 
413,400
 
  
 
397,970
 
  
 
417,323
 
  
 
394,860
 
    


  


  


  


 
See accompanying notes to condensed consolidated financial statements.
 

3


Table of Contents
BEA SYSTEMS, INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(in thousands)
(Unaudited)
 
    
October 31,
2002

    
January 31,
2002

 
ASSETS
             
Current assets:
                 
Cash and cash equivalents
  
$
771,173
 
  
$
821,802
 
Restricted cash
  
 
1,143
 
  
 
6,903
 
Short-term investments
  
 
358,980
 
  
 
205,395
 
Accounts receivable, net
  
 
198,503
 
  
 
193,099
 
Deferred tax assets
  
 
—  
 
  
 
1,983
 
Other current assets (see Note 2—Related Party Transactions)
  
 
40,982
 
  
 
34,247
 
    


  


Total current assets
  
 
1,370,781
 
  
 
1,263,429
 
Property and equipment, net
  
 
70,413
 
  
 
79,204
 
Goodwill, net
  
 
53,567
 
  
 
46,545
 
Acquired intangible assets, net
  
 
14,991
 
  
 
26,497
 
Long-term restricted cash
  
 
131,389
 
  
 
122,839
 
Other long-term assets (see Note 2—Related Party Transactions)
  
 
96,152
 
  
 
121,437
 
    


  


Total assets
  
$
1,737,293
 
  
$
1,659,951
 
    


  


LIABILITIES AND STOCKHOLDERS’ EQUITY
             
Current liabilities:
                 
Accounts payable
  
$
11,017
 
  
$
23,111
 
Accrued liabilities
  
 
151,122
 
  
 
147,949
 
Accrued facilities consolidation and severance charges
  
 
19,353
 
  
 
26,552
 
Accrued income taxes
  
 
45,615
 
  
 
34,719
 
Deferred revenues
  
 
218,727
 
  
 
194,846
 
Other current liabilities
  
 
764
 
  
 
1,340
 
    


  


Total current liabilities
  
 
446,598
 
  
 
428,517
 
Deferred tax liabilities
  
 
4,214
 
  
 
4,383
 
Notes payable and other long-term obligations
  
 
3,671
 
  
 
3,135
 
Convertible subordinated notes
  
 
550,000
 
  
 
550,000
 
Commitments and contingencies
                 
Stockholders’ equity:
                 
Common stock
  
 
410