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____________________________________________________________________________________________________________

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 September 30, 2004

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 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 November 1, 2004, 44,682,475 shares of Registrant's Common Stock, $0.001 par value were outstanding.



     
     
 

WEBEX COMMUNICATIONS, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED
SEPTEMBER 30, 2004

TABLE OF CONTENTS

 
Page No.
PART I. FINANCIAL INFORMATION
 
  
Item 1.    Financial Statements
 
3
        Condensed Consolidated Balance Sheets at September 30, 2004 and December 31, 2003
 
3
        Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2004 and 2003
 
4
        Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003
 
5
        Notes to Condensed Consolidated Financial Statements
 
6
Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
 
13
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
 
34
Item 4.     Controls and Procedures
 
34
PART II. OTHER INFORMATION
 
35
Item 2.    Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
 
35
Item 5.    Other Information

 35

 

Item 6.    Exhibits
 
36
Signatures
 
37
Exhibit Index
 
38


 

    
     
 

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
WEBEX COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands; unaudited)

ASSETS

 
     September 30, 2004      
December 31,
2003
 
Current assets:
              
    Cash and cash equivalents    
  
$
73,635
  
$
70,996
  
    Short-term investments    
    
90,931
    
63,639
  
    Accounts receivable, net of allowances of $5,363 and $6,837, respectively     
    
29,331
   
21,414
 
    Deferred tax assets    
    
14,623
    
14,623
  
    Prepaid expenses and other current assets    
    
5,096
   
2,505
 
        Total current assets    
    
213,616
   
173,177
 
Property and equipment, net    
    
39,326
   
19,275
 
Goodwill and intangible assets, net    
    
5,077
    
541
  
Deferred tax assets    
    
6,476
    
6,809
  
Other non-current assets    
    
1,125
   
1,694
 
        Total assets    
  
$
265,620
  
$
201,496
  
                                        LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
              
    Accounts payable    
  
$
8,403
  
$
4,648
  
    Accrued liabilities    
    
19,502
   
18,953
 
    Deferred revenue    
    
10,311
   
9,648
 
    Income tax payable    
    
8,513
    
2,353
 
        Total liabilities    
    
46,729
   
35,602
 
               
Commitments and contingencies
              
               
Stockholders' equity:
              
    Common stock    
    
44
   
43
 
    Additional paid-in capital    
    
233,790
   
213,275
 
    Deferred equity-based compensation    
    
(19
)
  
(74
)
    Accumulated other comprehensive income    
    
1,895
   
1,573
 
    Accumulated deficit    
    
(16,819
)
  
(48,923
)
        Total stockholders' equity    
    
218,891
   
165,894
 
        Total liabilities and stockholders' equity    
  
$
265,620
  
$
201,496
  
               

See accompanying notes to condensed consolidated financial statements.

 

    
     
 

WEBEX COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data; unaudited)
 
                                                                                                                            &nbs p;                                                                     Three Month Ended                                               Nine Month Ended
 
    
September 30, 2004 
September 30, 2003
September 30, 2004
September 30, 2003
                       
Net revenues    
  
$
63,968
  
$
48,764
  
$
181,440
  
$135,481
Cost of revenues    
    
11,018
    
8,180
    
30,927
 
23,037
    Gross profit    
    
52,950
    
40,584
    
150,513
 
112,444
Operating expenses:
                      
     Sales and marketing    
    
21,200
    
17,889
    
62,501
 
55,336
     Research and development    
    
9,122
    
5,992
    
24,602
 
18,148
     General and administrative    
    
4,419
    
3,671
    
12,856
 
9,461
     Equity-based compensation*    
    
66
    
406
    
447
 
1,302
        Total operating expenses    
    
34,807
    
27,958
    
100,406
 
84,247
    Operating income     
    
18,143
    
12,626
    
50,107
 
28,197
Interest and other income, net    
    
172
    
237
    
717
  
931
Net income before income tax    
    
18,315
    
12,863
    
50,824
 
29,128
Provision for income tax    
    
6,497
    
1,672
    
18,720
 
3,787
Net income     
  
$
11,818
  
$
11,191
  
$
32,104
  
$25,341
                       
Net income per share:
                      
Basic    
  
$
0.27
  
$
0.27
  
$
0.74
  
$0.61
Diluted    
    
0.26
    
0.25
    
0.69
  
0.59
                       
Shares used in per share calculations:
                      
Basic    
    
44,026
    
41,788
    
43,596
  
41,268
Diluted    
    
45,833
    
44,275
    
46,264
  
42,979