WEBEX COMMUNICATIONS INC - 10-Q Quarterly Report

FORM 10-Q

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 March 31, 2004

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________ .

Commission File No.: 0-30849

WEBEX COMMUNICATIONS, INC

(Exact name of registrant as specified in its charter)

Delaware	77-0548319
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

307 West Tasman Drive

San Jose, California 95134

(Address of principal executive offices)

Telephone: (408) 435-7000

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (l) 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 at least the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

On May 3, 2004, 44,039,234 shares of Registrant's Common Stock, $0.001 par value were outstanding.

Form 10-Q for quarter ended March 31, 2004

FORM 10-Q

WEBEX COMMUNICATIONS, INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED

MARCH 31, 2004

TABLE OF CONTENTS

	Page No.

PART I. FINANCIAL INFORMATION
Item 1 Financial Statements	3
Unaudited Condensed Consolidated Balance Sheets at March 31, 2004 and December 31, 2003	3
Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2004 and 2003	4
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and 2003	5
Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3 Quantitative and Qualitative Disclosures About Market Risk	33
Item 4. Controls and Procedures	33
PART II. OTHER INFORMATION
Item 2 Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	34
Item 6 Exhibits and Reports on Form 8-K	34
Signatures	36
Exhibit Index	37

Form 10-Q for quarter ended March 31, 2004

FORM 10-Q

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

WEBEX COMMUNICATIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)

ASSETS	March 31, 2004			December 31, 2003

Current assets:
Cash and cash equivalents.	$	37,925		$	70,996
Short-term investments.		105,548			63,639
Accounts receivable, net of allowances of $6,331 and $6,837, respectively .		22,867			21,414
Deferred tax assets.		14,623			14,623
Prepaid expenses and other current assets.		3,638			2,505

Total current assets.		184,601			173,177
Property and equipment, net.		36,478			19,275
Deferred tax assets.		6,809			6,809
Other non-current assets.		1,641			2,235

Total assets.	$	229,529		$	201,496

LIABILITES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable.	$	7,056		$	4,648
Accrued liabilities.		18,406			18,953
Deferred revenue.		10,523			9,648
Income tax payable.		5,778			2,353

Total liabilities.		41,763			35,602


Commitments and contingencies

Stockholders' equity:
Common stock.		43			43
Additional paid-in capiital.		225,628			213,275
Deferred equity-based compensation.		(32	)		(74	)
Accumulated other comprehensive income.		1,049			1,573
Accumulated deficit.		(38,922	)		(48,923	)

Total stockholders' equity.		187,766			165,894

Total liabilities and stockholders' equity.	$	229,529		$	201,496

See accompanying notes to unaudited condensed consolidated financial statements.

Form 10-Q for quarter ended March 31, 2004

FORM 10-Q

WEBEX COMMUNICATIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended

		March 31, 2004		March 31, 2003

Net revenue.	$	56,344	$	41,808
Cost of revenue.		9,525		7,406

Gross profit.		46,819		34,402

Operating expenses:
Sales and marketing.		19,924		18,396
Research and development.		7,215		6,058
General and administrative.		3,407		2,802
Equity-based compensation*.		511		319

Total operating expenses.		31,057		27,575

Operating income.		15,762		6,827
Interest and other income, net.		112		396

Net income before income tax.		15,874		7,223
Provision for income tax.		5,873		940

Net income.	$	10,001	$	6,283


Net income per share:
Basic.	$	0.23	$	0.15
Diluted.		0.22		0.15

Shares used in per share calculations:
Basic.		42,954		40,800
Diluted.		46,459		42,246

*Equity-based compensation:
Sales and marketing.	$	51	$	99
Research and development.		27		107
General and administrative.		433		113

	$	511	$	319

See accompanying notes to unaudited condensed consolidated financial statements.

Form 10-Q for quarter ended March 31, 2004

FORM 10-Q

WEBEX COMMUNICATIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three Months Ended

		March 31, 2004			March 31, 2003

Cash flows from operating activities:
Net income.	$	10,001		$	6,283
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for doubtful accounts and sales allowance.		1,676			2,311
Depreciation and amortization.		2,554			3,190
Tax benefit of stock plans.		2,100			--
Equity-based compensation.		511			319
Changes in operating assets and liabilities:
Accounts receivable.		(3,129	)		(1,956	)
Prepaid expenses and other current assets.		(1,133	)		(168	)
Other non-current assets.		554			43
Accounts payable.		2,408			48
Accrued liabilities.		(547	)		2,592
Income tax payable.		3,425			940
Deferred revenue.		875			605
Other.		(524	)		167

Net cash provided by operating activities.		18,771			14,374


Cash flows from investing activities:
Repayment of note receivable from related party.		---			45
Refund of security deposits .		---			8