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

 
FORM 10-Q
 
[X]
 
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended June 30, 2002
 
or
 
¨
 
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from              to             
 
Commission File Number 0-24720
 

Business Objects S.A.
(Exact name of registrant as specified in its charter)
 

 
Republic of France
 
None
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
157-159 Rue Anatole France, 92300 Levallois-Perret, France
(Address of principal executive offices)
 
(408) 953-6000
(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_____            
 
The number of outstanding shares of each of the issuer’s classes of capital or common stock as of July 31, 2002 was 63,095,829 Ordinary Shares of Euro 0.10 nominal value, including 20,917,948 American Depositary Shares (as evidenced by American Depositary Receipts), each corresponding to one Ordinary Share.
 


Table of Contents
 
Business Objects S.A.
Index
 
      
Page

PART I. FINANCIAL INFORMATION
      
Item 1.
  
Unaudited Condensed Consolidated Financial Statements:
      
         
3
         
4
         
5
         
6
Item 2.
       
12
Item 3.
       
29
    
30
    
35

2


Table of Contents
BUSINESS OBJECTS S.A.
CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars)
 
    
June 30, 2002

      
December 31, 2001

 
    
(unaudited)
          
ASSETS
                   
Current assets:
                   
Cash and cash equivalents
  
$
324,845
 
    
$
240,421
 
Restricted cash, current
  
 
8,103
 
    
 
8,103
 
Accounts receivable, net
  
 
79,997
 
    
 
87,523
 
Deferred taxes
  
 
9,981
 
    
 
9,900
 
Other current assets
  
 
14,017
 
    
 
12,832
 
    


    


Total current assets
  
 
436,943
 
    
 
358,779
 
Goodwill, net
  
 
13,870
 
    
 
13,648
 
Other intangible assets, net
  
 
5,734
 
    
 
6,973
 
Property and equipment, net
  
 
37,548
 
    
 
36,046
 
Restricted cash—long term
  
 
315
 
    
 
1,149
 
Deposits and other assets
  
 
5,400
 
    
 
4,874
 
    


    


Total assets
  
$
499,810
 
    
$
421,469
 
    


    


LIABILITIES AND SHAREHOLDERS’ EQUITY
                   
Current liabilities:
                   
Accounts payable
  
$
18,450
 
    
$
19,972
 
Accrued payroll and related expenses
  
 
34,431
 
    
 
37,417
 
Deferred revenue
  
 
73,798
 
    
 
59,741
 
Other current liabilities
  
 
55,697
 
    
 
48,499
 
    


    


Total current liabilities
  
 
182,376
 
    
 
165,629
 
Long-term liabilities
  
 
2,913
 
    
 
3,174
 
Shareholders’ equity
                   
Ordinary shares, Euro 0.10 nominal value ($0.10 U.S. as of June 30, 2002):
                   
Authorized 88,154 at June 30, 2002 and 86,011 at December 31, 2001;
                   
Issued and outstanding—63,054 at June 30, 2002 and 61,928 at December 31, 2001.
  
 
6,689
 
    
 
6,589
 
Additional paid-in capital
  
 
162,495
 
    
 
149,889
 
Treasury stock, 818 shares at June 30, 2002 and December 31, 2001
  
 
(9,049
)
    
 
(9,049
)
Retained earnings
  
 
162,354
 
    
 
139,455
 
Accumulated other comprehensive income
  
 
(7,968
)
    
 
(34,218
)
    


    


Total shareholders’ equity
  
 
314,521
 
    
 
252,666
 
    


    


Total liabilities and shareholders’ equity
  
$
499,810
 
    
$
421,469
 
    


    


 
Note: The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date.
 
See accompanying notes to Condensed Consolidated Financial Statements.

3


Table of Contents
BUSINESS OBJECTS S.A.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of US dollars, except per ADS and per share data)
 
    
Three Months Ended
June 30

    
Six Months Ended
June 30

 
    
2002

    
2001

    
2002

    
2001

 
Revenues:
  
(unaudited)
License fees
  
$
60,939
 
  
$
61,012
 
  
$
124,090
 
  
$
121,613
 
Services
  
 
50,257
 
  
 
40,493
 
  
 
94,644
 
  
 
78,170
 
    


  


  


  


Total revenues
  
 
111,196
 
  
 
101,505
 
  
 
218,734
 
  
 
199,783
 
Cost of revenues:
                                   
License fees
  
 
519
 
  
 
464
 
  
 
1,062
 
  
 
1,066
 
Services
  
 
17,632
 
  
 
15,728
 
  
 
34,687
 
  
 
31,156
 
    


  


  


  


Total cost of revenues
  
 
18,151
 
  
 
16,192
 
  
 
35,749
 
  
 
32,222
 
    


  


  


  


Gross margin
  
 
93,045
 
  
 
85,313
 
  
 
182,985
 
  
 
167,561
 
Operating expenses:
                                   
Sales and marketing
  
 
54,658
 
  
 
48,490
 
  
 
106,841
 
  
 
96,477
 
Research and development
  
 
16,934
 
  
 
13,574
 
  
 
32,433
 
  
 
26,567
 
General and administrative
  
 
7,183
 
  
 
7,053
 
  
 
13,345
 
  
 
12,826
 
Restructuring charge
  
 
3,756
 
  
 
 
  
 
3,756
 
  
 
 
Intangible asset amortization
  
 
228
 
  
 
 
  
 
560
 
  
 
 
Goodwill amortization
  
 
 
  
 
1,115
 
  
 
 
  
 
2,247
 
    


  


  


  


Total operating expenses
  
 
82,759
 
  
 
70,232
 
  
 
156,935
 
  
 
138,117
 
    


  


  


  


Income from operations
  
 
10,286
 
  
 
15,081
 
  
 
26,050
 
  
 
29,444
 
Interest and other income, net
  
 
8,871
 
  
 
2,950
 
  
 
10,883
 
  
 
5,793
 
    


  


  


  


Income before provision for income taxes
  
 
19,157
 
  
 
18,031
 
  
 
36,933
 
  
 
35,237
 
Provision for income taxes
  
 
(7,279
)
  
 
(7,032
)
  
 
(14,034
)
  
 
(13,742
)
    


  


  


  


Net income
  
$
11,878
 
  
$
10,999
 
  
$
22,899
 
  
$
21,495
 
    


  


  


  


Net income per ADS and share—basic
  
$
0.19
 
  
$
0.18
 
  
$
0.37
 
  
$
0.35
 
    


  


  


  


ADS and shares used in computing net income per ADS &
per share—basic
  
 
62,168
 
  
 
61,216
 
  
 
61,707
 
  
 
60,984
 
    


  


  


  


Net income per ADS and share—diluted
  
$
0.18
 
  
$
0.17
 
  
$
0.35
 
  
$
0.33
 
    


  


  


  


ADS and shares and common share equivalents used in
computing net income per ADS & per share—diluted
  
 
64,605
 
  
 
64,686
 
  
 
64,686
 
  
 
64,802
 
 
See accompanying notes to Condensed Consolidated Financial Statements.

4


Table of Contents
 
BUSINESS OBJECTS S.A.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands of US dollars)
 
    
Six Months Ended June 30,

 
    
2002

    
2001

 
Cash flows from operating activities:
                 
Net income
  
$
22,899
 
  
$
21,494
 
Adjustments to reconcile net income to net cash provided by operating activities:
                 
Depreciation and amortization
  
 
8,316
 
  
 
9,122
 
Deferred income taxes
  
 
57
 
  
 
—  
 
Changes in operating assets and liabilities:
                 
Accounts receivable, net
  
 
14,279
 
  
 
8,777
 
Current and other assets
  
 
277
 
  
 
46
 
Accounts payable
  
 
(3,268
)
  
 
(5,420
)
Accrued payroll and related expenses
  
 
(5,989
)
  
 
(2,580
)
Deferred revenue
  
 
9,628
 
  
 
5,836
 
Other current liabilities
  
 
4,990
 
  
 
(2,439
)
    


  


Net cash provided by operating activities
  
 
51,189
 
  
 
34,836
 
Cash flows from investing activities:
                 
Purchases of property and equipment
  
 
(6,460
)<