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Table of Contents
 

 
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 September 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
  
(I.R.S. Employer
incorporation or organization)
  
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 October 31, 2002 was 63,434,39 Ordinary Shares of Euro 0.10 nominal value, including 22,122,806American 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.
    
15
Item 3.
    
34
Item 4.
    
34
Item 5.
    
35
PART II.
    
36
  
39

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Table of Contents
 
BUSINESS OBJECTS S.A.
 
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
    
September 30, 2002

    
December 31, 2001

 
    
(unaudited)
        
ASSETS
                 
Current assets:
                 
Cash and cash equivalents
  
$
266,356
 
  
$
240,421
 
Restricted cash, current
  
 
8,654
 
  
 
8,103
 
Accounts receivable, net
  
 
76,276
 
  
 
87,523
 
Deferred taxes
  
 
9,979
 
  
 
9,900
 
Other current assets
  
 
14,979
 
  
 
12,832
 
    


  


Total current assets
  
 
376,244
 
  
 
358,779
 
Goodwill
  
 
75,361
 
  
 
13,648
 
Other intangible assets, net
  
 
12,097
 
  
 
6,973
 
Property and equipment, net
  
 
36,018
 
  
 
36,046
 
Restricted cash—long term
  
 
10,570
 
  
 
1,149
 
Deposits and other assets
  
 
4,964
 
  
 
4,874
 
    


  


Total assets
  
$
515,254
 
  
$
421,469
 
    


  


LIABILITIES AND SHAREHOLDERS’ EQUITY
                 
Current liabilities:
                 
Accounts payable
  
$
16,025
 
  
$
19,972
 
Accrued payroll and related expenses
  
 
38,776
 
  
 
37,417
 
Deferred revenue
  
 
71,476
 
  
 
59,741
 
Income taxes payable
  
 
7,397
 
  
 
15,035
 
Other current liabilities
  
 
41,959
 
  
 
30,808
 
Notes payable—current portion
  
 
2,656
 
  
 
2,656
 
    


  


Total current liabilities
  
 
178,289
 
  
 
165,629
 
Notes and escrows payable
  
 
10,613
 
  
 
1,717
 
Long-term deferred rent
  
 
7,105
 
  
 
1,457
 
Commitments and contingencies
                 
Shareholders’ equity
                 
Ordinary shares, Euro 0.10 nominal value ($0.10 as of September 30, 2002 and $0.09 U.S. as of December 31, 2001):
                 
Authorized 81,436 at September 30, 2002 and 86,011 at December 31, 2001;
                 
Issued and outstanding—63,358 at September 30, 2002 and 61,928 at December 31, 2001
  
 
6,719
 
  
 
6,589
 
Additional paid-in capital
  
 
164,542
 
  
 
149,889
 
Treasury stock, 818 shares at September 30, 2002 and December 31, 2001.
  
 
(9,049
)
  
 
(9,049
)
Retained earnings
  
 
167,222
 
  
 
139,455
 
Accumulated other comprehensive loss
  
 
(10,187
)
  
 
(34,218
)
    


  


Total shareholders’ equity
  
 
319,247
 
  
 
252,666
 
    


  


Total liabilities and shareholders’ equity
  
$
515,254
 
  
$
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.
 
 

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

    
Nine Months Ended
September 30

 
    
2002

    
2001

    
2002

    
2001

 
    
(unaudited)
 
Revenues:
                                   
License fees
  
$
53,736
 
  
$
55,293
 
  
$
177,826
 
  
$
176,906
 
Services
  
 
56,146
 
  
 
43,907
 
  
 
150,790
 
  
 
122,077
 
    


  


  


  


Total revenues
  
 
109,882
 
  
 
99,200
 
  
 
328,616
 
  
 
298,983
 
Cost of revenues:
                                   
License fees
  
 
742
 
  
 
532
 
  
 
1,804
 
  
 
1,598
 
Services
  
 
18,036
 
  
 
15,712
 
  
 
52,723
 
  
 
46,868
 
    


  


  


  


Total cost of revenues
  
 
18,778
 
  
 
16,244
 
  
 
54,527
 
  
 
48,466
 
    


  


  


  


Gross margin
  
 
91,104
 
  
 
82,956
 
  
 
274,089
 
  
 
250,517
 
Operating expenses:
                                   
Sales and marketing
  
 
56,056
 
  
 
50,419
 
  
 
162,897
 
  
 
146,896
 
Research and development
  
 
20,262
 
  
 
13,447
 
  
 
53,255
 
  
 
40,014
 
General and administrative
  
 
8,144
 
  
 
5,073
 
  
 
21,489
 
  
 
17,899
 
Acquired in-process technology
  
 
2,000
 
  
 
—  
 
  
 
2,000
 
  
 
—  
 
Restructuring
  
 
—  
 
  
 
—  
 
  
 
3,756
 
  
 
—  
 
Goodwill amortization
  
 
—  
 
  
 
1,122
 
  
 
—  
 
  
 
3,369
 
    


  


  


  


Total operating expenses
  
 
86,462
 
  
 
70,061
 
  
 
243,397
 
  
 
208,178
 
    


  


  


  


Income from operations
  
 
4,642
 
  
 
12,895
 
  
 
30,692
 
  
 
42,339
 
Interest and other income, net
  
 
4,435
 
  
 
2,093
 
  
 
15,318
 
  
 
7,886
 
    


  


  


  


Income before provision for income taxes
  
 
9,077
 
  
 
14,988
 
  
 
46,010
 
  
 
50,225
 
Provision for income taxes
  
 
(4,209
)
  
 
(5,696
)
  
 
(18,243
)
  
 
(19,438
)
    


  


  


  


Net income
  
$
4,868
 
  
$
9,292
 
  
$
27,767
 
  
$
30,787
 
    


  


  


  


Net income per ADS and share—basic
  
$
0.08
 
  
$
0.15
 
  
$
0.45
 
  
$
0.51
 
    


  


  


  


ADS and shares used in computing net income per ADS & per share—basic
  
 
62,295
 
  
 
60,823
 
  
 
61,827
 
  
 
60,919
 
    


  


  


  


Net income per ADS and share—diluted
  
$
0.08
 
  
$
0.15
 
  
$
0.43
 
  
$
0.48
 
    


  


  


  


ADS and shares and common share equivalents used in computing net income per ADS & per share—diluted
  
 
63,801
 
  
 
63,762
 
  
 
64,095
 
  
 
64,510
 
 
See accompanying notes to Condensed Consolidated Financial Statements.

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Table of Contents
 
BUSINESS OBJECTS S.A.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
    
Nine Months Ended September 30,

 
    
2002

    
2001

 
Cash flows from operating activities:
                 
Net income
  
$
27,767
 
  
$
30,787
 
Adjustments to reconcile net income to net
                 
Cash provided by operating activities:
                 
Depreciation and amortization
  
 
13,259
 
  
 
13,217
 
Acquired in-process technology
  
 
2,000
 
  
 
—  
 
Deferred income taxes