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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934.

(Mark One)

For the fiscal year ended January 31, 2004

OR

Commission File Number: 0-22369

BEA SYSTEMS, INC.

(Exact Name of Registrant as Specified in Its Charter)

2315 North First Street

San Jose, California 95131

(Address of Principal Executive Offices)

(408) 570-8000

(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Act:

None

Securities registered under Section 12(g) of the Act:

Common Stock

Preferred Stock Purchase Rights

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 ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

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

The aggregate market value of the voting common stock held by non-affiliates of the registrant, computed by reference to the closing price at which the common stock was sold on July 31, 2003, as reported on the Nasdaq National Market, was approximately $5,056,769,000. Shares of common stock held by each officer and director have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status does not reflect a determination that such persons are affiliates for any other purposes.

As of March 31, 2004, there were approximately 410,186,490 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Registrant’s 2004 Annual Meeting of Stockholders to be held June 11, 2004 are incorporated by reference in Part III of this Form 10-K Report.

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BEA SYSTEMS, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED JANUARY 31, 2004

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PART I

FORWARD-LOOKING INFORMATION

This Annual Report on Form 10-K (this “Annual Report”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities and Exchange Act of 1934 (the “Exchange Act”). All statements in this Annual Report other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any statements of the plans and objectives for future operations and any statement of assumptions underlying any of the foregoing. Statements that include the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential,” or “continue,” or the negative thereof or other comparable terminology are forward-looking statements. Forward-looking statements include, without limitation:

These forward-looking statements involve risks and uncertainties, and it is important to note that BEA’s actual results could differ materially from those projected or assumed in such forward-looking statements. Among the factors that could cause actual results to differ materially are the factors detailed under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Factors That

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May Impact Future Operating Results” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.” All forward-looking statements and risk factors included in this document are made as of the filing date hereof, based on information available to BEA as of the filing date hereof, and BEA assumes no obligation to update any forward-looking statement or risk factor. You should also consult the risk factors listed from time to time in the Company’s Reports on Form 10-Q and other SEC filings.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Factors That May Impact Future Operating Results” for risk factors that may adversely affect the Company.

Overview

BEA Systems, Inc. (“BEA^®” or the “Company”) is the world’s leading application infrastructure software provider. Our WebLogic Enterprise Platform^™ delivers a highly reliable, scalable software infrastructure designed to bring new services to market quickly, to lower operational costs by automating processes, and to automate relationships with suppliers and distributors. BEA’s WebLogic Enterprise Platform includes BEA WebLogic Server^™, a standards-based application server that serves as a platform for deployment and integration of enterprise-scale applications and Web services; BEA WebLogic Integration^™, a standards-based platform for workflow, application integration, Web services and business-to-business integration; BEA WebLogic Portal^™, a sophisticated rules-based infrastructure for rich user interfaces to a wide variety of enterprise data; BEA Liquid Data^™ for WebLogic^®, a tool for simplifying access and aggregation of distributed information, enabling real-time visibility from a variety of data sources and BEA WebLogic Workshop^™, a rich, easy to use framework for development and deployment of Web services and Java-based applications. Also included as integral parts of BEA’s product line are BEA WebLogic JRockit^™, a highly flexible Java Virtual Machine (“JVM”), offering superior application performance, reliability, and manageability for mission-critical Java applications running on Intel platforms; and BEA Tuxedo^™, a proven, extremely reliable and scalable multi-language enterprise platform for enterprise applications. In addition, we offer associated customer support, training and consulting services. Our products have a reputation for superior performance and high quality, evidenced by several awards and distinctions. For example, in its March 2004 annual Readers’ Choice Awards, Java Pro magazine readers voted BEA WebLogic Server and BEA WebLogic Workshop as the number one product in their respective categories; in the Web Services Journal XML-J Readers Choice awards, BEA WebLogic^™ won eight different awards, including best integrated development environment, best business process management engine and best Web services framework; at the January 2004 Linux World conference, BEA WebLogic Platform^™ 8.1 won the Product Excellence Award for Best System Integration Solution; and BEA WebLogic Workshop won PC Magazine’s Technical Excellence Award for development tools and Computer Reseller News’ Product of the Year for development tools.

Our products have been adopted in a wide variety of industries, including telecommunications, commercial and investment banking, securities trading, government, manufacturing, retail, airlines, pharmaceuticals, package delivery, and insurance. The BEA WebLogic Enterprise Platform provides an application infrastructure for building and deploying distributed, integrated information technology (“IT”) environments, allowing customers to integrate private client/server networks, the Internet, intranets, extranets, virtual private networks, and mainframe and legacy systems as system components. Our products serve as a platform, integration tool or portal framework for applications such as billing, provisioning, customer service, electronic funds transfers, ATM networks, securities trading and settlement, online banking, Internet sales, inventory management, supply chain management, enterprise resource planning, scheduling, logistics, and hotel, airline and car rental reservations. BEA employs more than 3,100 people, is headquartered in San Jose, California, and has 75 offices in 34 countries. Licenses for our products are typically priced on a per-central processing unit (“CPU”) basis, but we also offer licenses priced on other bases.

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Our products are marketed and sold worldwide through a network of sales offices, the Company’s Web site at (www.bea.com), as well as indirectly through distributors, value added resellers (“VARs”) and partnerships with independent software vendors (“ISVs”), application service providers (“ASPs”), hardware original equipment manufacturers (“OEMs”) and systems integrators (“SIs”).

Industry Background

Over the past decade, the information systems of many large organizations have evolved from traditional mainframe-based systems to include distributed computing environments. This evolution has been driven by the benefits offered by distributed computing, including lower incremental technology costs, faster application development and deployment, increased flexibility, and improved access to business information. Despite these benefits, large-scale mission-critical applications that enable and support fundamental business processes, such as airline reservations, credit card processing, and customer billing and support systems, have largely remained in mainframe environments. For several decades, the high levels of reliability, scalability, security, manageability and control required for these complex, transaction-intensive systems have been provided by application server functionality included in the mainframe operating system. Mainframe environments, however, suffer from several shortcomings, including inflexibility, lengthy development and maintenance cycles, and limited, character-based user interfaces. These shortcomings have forced many organizations to seek solutions, such as those offered by us, that will enable them to overcome the limitations of distributed computing for mission-critical applications, while providing the robust computing infrastructure previously unavailable outside the mainframe environment.

In addition, many businesses are using the Internet as an element of these infrastructures. Businesses use the Internet as a means of selling products to consumers and distributors, buying components or whole products from suppliers, opening new customer accounts, scheduling service installation, providing account information and customer care, enabling reservations, funds transfers, bill payments and securities trading, and gathering information about customers and their buying habits. Many businesses also use intranets, extranets or virtual private networks for functions such as inventory control, decision support, logistics, reservations, customer care and provisioning, both to support internal users and to make information and applications available to their suppliers or distributors.

As a result of investment in several different technologies, enterprise IT organizations are characterized by complexity, heterogeneous environments, incompatible technologies and high cost of integration. Today’s enterprises must manage the effects of these realities. The heightened investment in technology has significantly increased IT complexity. The Internet has altered users’ expectations of availability, cost, service and functionality. The current economic and IT spending climate highlights the need to leverage existing assets and improve the return on investment for new initiatives.

Achieving the full benefits of distributed computing and Web services requires fully integrating external facing Web-based applications with existing enterprise applications, such as shipping, financial systems, inventory control, billing, payroll, and general ledger, as well as placing new, internal facing applications onto Web-based systems. In order to fully integrate internal applications with Web-based systems, the internal applications must be electronically linked to each other and must be built on a flexible, reliable, scalable, secure infrastructure that can run on, or connect to, the Web and support the demanding loads that result from heavy Internet traffic. The development of standards, such as the Java 2 Enterprise Edition (“J2EE”), enabled the application development and deployment market to flourish, since individual developers, application companies and infrastructure companies could build compatible systems. Standards-based approaches, such as those supported by BEA, have been more widely adopted than proprietary approaches in Web application development and deployment. Standards are emerging in the market for integrating existing applications, including the J2EE Connector Architecture (“JCA”) and Java Messaging Services (“JMS”) and for providing Web services, through organizations such as the Web Services Interoperability Organization (“WS-I”), of which we are a co-founder. We have adopted the standards-based approach to integration, and believe that the standards-based approaches to integration have substantial advantages over proprietary approaches.

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Historically, our primary product category has been application servers, represented by both our Tuxedo^® and WebLogic Server products, which provide an important part of the infrastructure necessary for enterprise applications. BEA has leveraged its success in the application server market by expanding into complementary product categories, to meet a broader set of customers’ application infrastructure needs. The application infrastructure market consists of the application server and related integration, portal, security, development and deployment, and operations, administration and management product categories. BEA has developed significant features or product lines to address these markets and is in the process of developing additional features and products. BEA’s product market focus today is selling a broad platform encompassing all areas of application infrastructure tightly integrated into a single product, but also available for purchase as individual units. This allows us to service the application infrastructure market by enabling customers to buy just the modules needed for a specific project but to easily unify and extend those modules into a platform as they deploy subsequent projects, or to buy the entire platform at once.

Products

The BEA WebLogic Platform includes application infrastructure technology from proven BEA products. WebLogic Platform 8.1 consists of several products: WebLogic Server, Tuxedo, WebLogic Integration, WebLogic Portal, Liquid Data for WebLogic, WebLogic Workshop, and JRockit. These technologies are combined into a single installation, with a single set of application programming interfaces (“APIs”), and other common features such as a single security framework and administration console. By combining these technologies and features, WebLogic Platform offers a single, unified, easy-to-use infrastructure platform for development, deployment and integration of applications and Web services. WebLogic Platform also provides a natural migration path for current WebLogic Server, Integration or Portal users seeking to deploy solutions that enhance and extend their existing environments via a single, integrated architecture.

BEA WebLogic Server: BEA WebLogic Server 8.1, our current version of BEA WebLogic Server which became generally available in March 2003, provides a platform for application development and deployment. WebLogic Server provides the presentation, business and information-access logic, security and management services required for high scalability, high-availability mission-critical applications. WebLogic Server delivers key infrastructure functionality in several categories:

Broad Client Support.    WebLogic Server supports a wide variety of Web browsers, wireless devices, ATMs, point of sale devices and others.

High Performance and Scalability.    WebLogic Server is built on a highly scalable, clustered architecture, delivering load balancing, connection pooling, caching and optimized Web server, operating system, virtual machine and database connections.

High Availability.    WebLogic Server delivers high system availability to mission-critical business applications. WebLogic Server delivers automatic fail over at the Web, business logic, and database tiers, allowing continued system availability despite failures of system components or disconnections of Web sessions. WebLogic Server uses clustering to take advantage of the redundancy of multiple servers to protect against system failures. The same service can be deployed across multiple servers in the cluster, so that if one server fails, another can take over, increasing the availability of the application to users. A WebLogic cluster consists of a number of WebLogic Servers deployed on a network, coordinated with a combination of domain name service, Java naming and directory interface tree replication, in-memory session data replication, and WebLogic remote method invocation clustering enhancements.

Broad Deployment Options.    WebLogic Server features tight integration with the leading databases, enterprise operating systems, Web servers, Web browsers, mobile devices and Java virtual machines (“JVM”). WebLogic Server supports several operating systems, such as Sun Solaris, HP Unix, Aix, Windows, Red Hat Linux, IBM O/S 390 and IBM Linux/390. WebLogic Server is designed so that the underlying hardware, operating system and database are transparent to the application—the application is written to WebLogic Server and does not need to be modified based on the underlying hardware, operating

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system or database. As a result, it is easy to migrate applications built on WebLogic Server from one underlying technology to another, or to deploy in a heterogeneous environment. For example, most WebLogic Server customers develop on Windows machines and deploy on Unix; some WebLogic Server customers deploy on several Unix servers, and use a mainframe as a system component to provide extra capacity for peak loads or as a backup site.

J2EE Services.    WebLogic Server provides a robust implementation of the J2EE specification, including servlets, java server pages, enterprise java beans, java messaging services, java database connection, java transaction API and others. J2EE services provide access to standard network protocols, database and messaging systems.

Web Services.    WebLogic Server seamlessly bridges J2EE and Web services by enabling developers to automatically deploy Enterprise JavaBeans (“EJBs”) as Web services with virtually no additional programming. WebLogic Server supports key Web services standards, including Simple Object Access Protocol (“SOAP”), Web Services Description Language (“WSDL”) and Universal Description, Discovery and Integration (“UDDI”).

Application Management and Monitoring.    WebLogic Server provides a powerful, Web-based administration console that provides systems administrators with tools needed to deploy, configure and monitor applications. Through the administration console, administrators can configure attributes of resources, deploy applications or components, monitor resource usage (such as server load, JVM memory usage, or database connection pool load), view log messages, shut down servers, and other management actions. WebLogic Server’s system management and monitoring capabilities are enhanced by complementary offerings from ISVs, such as BMC Software, Computer Associates, Hewlett-Packard, Mercury Interactive, NEON Systems, TeaLeaf Technology, Tivoli Software and Wily Technology.

Security.    WebLogic Server provides a comprehensive security architecture encompassing access control cryptography-based privacy and user authentication and authorization. WebLogic Server also utilizes user and group-level access control lists, realms, secure socket layer, digital certificates and other standards-based security measures. Using these features, a developer can restrict access to WebLogic services through application logic when an application is being designed, or the system administrator can define how services are accessed after deployment. WebLogic Server can be incorporated into a single-sign-on solution by accessing existing security information stores, or it can operate independently. WebLogic Server’s security framework is enhanced by complementary offerings from ISVs such as Entegrity Solutions, Entrust Technology, Netegrity, Oblix, NetIQ and RSA Security.

BEA Tuxedo.    Tuxedo is a platform for enterprise-scale applications built using the C, C++ or COBOL programming languages, and also supports CORBA and XML. The current version of Tuxedo, released in February 2003, also supports Web services. Tuxedo handles the underlying complexities of distributed, crossplatform application development, such as distributed transaction management, high availability, load balancing, transaction queuing, message queuing, event brokering and security. Tuxedo allows clients and servers to participate in a distributed transaction that involves coordinated updating of multiple databases. Tuxedo’s sophisticated transaction management helps ensure that all databases are updated properly, or will “roll-back” the databases to their prior state, assuring that data integrity is maintained despite component failures within complex computer systems. Tuxedo constantly monitors system components for application, transaction, network, and hardware failures. When a failure occurs, Tuxedo excludes the failed component from the system, manages any necessary recovery procedures, and re-routes messages and transactions to available systems—all transparent to the end-user and without disruption in service. Tuxedo manages unexpected high demand by automatically spawning and terminating application services as the system load dictates. Tuxedo balances the workload among all the available systems to minimize bottlenecks, whether the services are on the same component or spread across components. With data dependent routing, Tuxedo can route messages based on their context. This enables efficient transaction processing and higher levels of performance. Tuxedo enables connection of Internet clients to Tuxedo resources and to mainframes, as well as connection to applications built on WebLogic Server. Tuxedo supports a wide variety of platforms, such as Sun Solaris, HP-UX, IBM AIX, IBM OS/390, Microsoft Windows, Compaq Tru64, Red Hat Linux and Unisys SVR 4.

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BEA WebLogic Workshop.    BEA WebLogic Workshop is an integrated development framework for developers on the BEA WebLogic Platform. This framework is designed to accelerate software development by providing simplified abstractions to help enable developers to build applications, Web services, integrations, business processes and portals quickly and easily. WebLogic Workshop uses the concept of “controls” to simplify access to complex resources. For each control, developers simply set properties, call methods and handle events, rather than programming to an API. This enables developers to build and deploy solutions on the entire BEA WebLogic Platform stack without requiring the developer to learn complexities such as J2EE, object-oriented programming, transaction processing and Web services. WebLogic Workshop automates the complex coding required for Java and Web services, so the developer can focus on business logic and application features. WebLogic Workshop is designed to make J2EE easier to adopt for developers who currently do not use Java, such as Visual Basic, Power Builder, COBOL and integration developers, as well as simplifying tasks for advanced J2EE developers.

BEA WebLogic Integration.    WebLogic Integration offers a single solution that delivers application server, enterprise application integration (“EAI”), business process management, data integration and business-to business integration functionality. WebLogic Integration supports the JCA, cXML, RosettaNet, EDI, XOCP and JMS standards, bringing a standards-based approach to the integration market. Based on WebLogic Server for availability, transactions, security and other features, WebLogic Integration allows EAI solutions that support complex transactions, bi-directional communication between applications, synchronous or asynchronous communication between applications, high reliability, high availability, caching and the other features of WebLogic Server. These features offer customers the ability to link separate enterprise systems, not only with each other but also with Web and wireless applications. Business process management, supported by WebLogic Integration, is the process of building rules that instruct a computer system in the series of actions to take, or applications to update, when an event occurs. As business processes change, or new applications are integrated into the system, the system can be modified relatively easily by simply modifying the business process rules, rather than modifying the applications themselves or the connections between applications. This allows customers to build broad, robust systems that are very flexible and easy to modify. Data integration features of WebLogic Integration include data translation and data transformation, enabling customers to make broader use of data across the company and across multiple computing environments. WebLogic Integration also provides the infrastructure for business Web Services, which are multi-party, transactional, highly automated, Web-based interactions between applications. WebLogic Integration supports business-to-business integration, so that all of its features are available for systems that are integrated solely within a single organization, or between an organization and its suppliers, distributors or customers.

BEA WebLogic Portal.    Enterprise portals enable a user to aggregate data and application functionality from several sources into a single screen or user interface. WebLogic Portal provides a framework for building enterprise portals, for internal, customer-facing or business-to-business purposes. Based on WebLogic Server for availability, transactions, security and other features, WebLogic Portal also makes it possible for an enterprise to deploy multiple applications with a common, personalized interface for customers, partners and employees, simplifying and improving their experience while lowering administrative costs and centralizing information access. WebLogic Portal includes an extensive set of features and enabling technologies, including portal configuration and administration tools, a unique rules-based entitlement engine, role-based personalization, reusable presentation software components, and a standards-based framework that supports JCA and Web Services.

BEA Liquid Data for WebLogic.    BEA Liquid Data for WebLogic is a virtual data access and aggregation product for information visibility that supports a real-time unified view of disparate enterprise data. It provides a cost-effective, standard way to rapidly aggregate and expose logical views from any number of heterogeneous sources, including Web services, databases, flat files, XML files, applications and Web sites. This enables developers to re-use information across applications without moving or dealing with the complexity of the underlying data. It provides highly optimized, real-time data access and data processing inside and outside firewalls, regardless of source location, format, or type. Unlike alternative solutions that require the developer to

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change the data’s format or location, BEA WebLogic for Liquid Data allows developers to access the data in its existing state, reducing the complexity of the project and reducing the risk of accessing inconsistent or old data. Once accessed and aggregated, the data can be simply viewed by an end user, either internally (such as a sales representative or call center employee) or externally (such as a supplier of component parts or an online banking customer), or the data can be manipulated by an application or analytics system.

BEA WebLogic JRockit.    BEA WebLogic JRockit is a Java virtual machine (“JVM”) designed for use in enterprise, server-based applications. A JVM is a layer of software whose primary role is to translate software code such as application and application server code into bytecode that is usable by the server’s chip and input/output systems. Traditional JVMs on the market today originated with desktop computer environments, supporting a single user. These JVMs have been modified over time to address server environments, which support multiple users and applications running on multiple networked machines. BEA WebLogic JRockit was designed from scratch to address server-based applications, which have very different requirements than desktop computer based applications. BEA WebLogic JRockit is designed to provide high reliability, scalability, and high performance for server-based applications. In contrast to desktop applications, server-based applications tend to communicate via a network, maintain a large number of active threads representing a large number of concurrent user sessions, and have long running times. BEA WebLogic JRockit combines code generation, memory management, thread management and native methods, combining the best optimization techniques in these four different areas for efficient operation. BEA WebLogic JRockit also provides a framework through which the Java programmer can easily profile and tune the JVM to improve application performance. BEA WebLogic JRockit is designed to be as platform independent as possible, making it easier to move applications to different operating systems and computer chips.

BEA WebLogic Enterprise Security^™.    BEA WebLogic Enterprise Security (“WLES”) allows applications and resources built on heterogeneous IT infrastructure and platforms—including diverse Web servers, application servers, and custom applications built in multiple languages—to leverage a common, consistent application security infrastructure. The solution can plug into customers’ existing IT infrastructure, often requiring no application coding because security services are provided transparently through the WLES resource container. WLES is an application security infrastructure solution that uses a service-oriented approach to help enable applications to leverage shared enterprise security services. It combines centralized policy control and visibility with distributed policy decision-making and enforcement. This combination is designed to help enable users to provide appropriate application-level security without sacrificing performance, scalability, and reliability. WLES can improve security and IT efficiency by replacing disparate and unsynchronized application security silos with a consistent service-oriented approach. Security technology and code is abstracted from the application into distributed enterprise “security services” that manage security requests from applications across the enterprise. Instead of maintaining these functions redundantly within each application, WLES can enable applications to delegate these functions to a common security services layer. WLES is designed to provide a seamless out-of-the-box experience by providing default security service implementations that include: authentication, identity assertion, credential mapping, dynamic role mapping, rules-based parametric authorization, and auditing.

Customers

The total number of customers and end users of our products and solutions is greater than 15,000 worldwide. Our target end-user customers are organizations with sophisticated, high-end information systems with numerous, often geographically-dispersed users and diverse, heterogeneous computing environments. Typical customers are mainframe-reliant, have large-scale client/server implementations that handle very high volumes of business transactions, or have Web-based applications with large and unpredictable usage volumes. No customer accounted for more than 10 percent of total revenues in any of the fiscal years 2004, 2003 or 2002.

A representative list of BEA customers includes:

Financial Services and Insurance: Abbey National, Accredited Home Lenders, Ameriquest Mortgage, Ameritrade, AXA, BACS, Bank of America, Bank of New York, Barclays Global Investors, Bayerische Hypo-

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und Vereinsbank, Bear Stearns, BNP Paribas, Capital One, Central Depositary Bangladesh, Charles Schwab, China Construction Bank, CIBC, Citibank, Credit Suisse Group, Daiwa Securities America, Delta Dental, Depository Trust Company, Deutsche Bank, Deutsche Leasing, Discovery Europe, E*Trade, Fannie Mae, First Bank, Ford Motor Credit, Franklin Templeton, Freddie Mac, Geico Insurance, German Stock Exchange, Huntington National Bank, JP Morgan Chase, Kookmin Bank, Lehman Brothers, London Clearing House, Marsh & McLennan, MasterCard International, Merrill Lynch, Mizuho Securities, Morgan Stanley, Mumbai Stock Exchange, Nasdaq, Nordea, Oppenheimer Funds, PacificCare Health Systems, Prudential UK, Sallie Mae, Samsung Securities, Sanpaolo Wealth Management, Shanghai Finance Bureau, Societe Generale, SWIFT, The Hartford, The Northern Trust, Thomson Financial Services, TIAA-CREF, Toyota Financial Services, Trust Company of the West, Union des Societes du Credit Cooperatif, United Overseas Bank (Singapore), Wells Fargo, and Zion’s Bank.

Telecommunications: Alltel, AT&T, AT&T Wireless, BellSouth, BT, Cesky Telecom, China Railway Communication, China Telecom, ChungHwa Telecom, Cingular Wireless, Deutsche Telecom, Hutchinson Whampoa 3G, Intec Telecom Systems, KDDI, Level 3 Communications, Netia Telekom SA, Nextel, NTT DoCoMo, Orange PCS Ltd., Qwest Communications, SK Telecom, Sprint, Sprint PCS, Telecom Italia Mobile, Telia Mobile, Telstra, T-Mobile USA, United States Cellular, Verizon, Virgin Mobile USA, and Vodafone.

Services: American Airlines, American President Lines, AOL, Bertelsmann, British Airways, Budget Rent a Car, Cendant Corporation, China Post, CoxInteractive Media, Delta Airlines, DHL, DirecTV, Edmunds.com, EDS Solutions Centre, FedEx, Financial Times, Finnish Rail, GSI Commerce Solutions, Hilton International, Hotels.com, Hotwire, Hyatt Corporation, Infosys Technologies, Instinet, Integradora de Services Operativos, Intercall, InterContinental Hotels, JB Hunt Transport Services, Kinko’s, Knight Ridder, La Mondiale, Marsh Corporate Services, NCS Pearson, Nielsen Media Research, Northwest Airlines, Paychex, Qantas Airways, Reuters, Sabre, Singapore Airlines, Sony, Starwood Hotels, United Airlines, Universal Music Group, Verisign, Virgin Atlantic Airways, Vivendi Universal Publishing Services, WebEx Communications, and Westech Information.

Manufacturing: Applied Materials, BAE Systems, BMW, Boeing, Bose, BP Amoco, Casio Computer, Chartered Semiconductor Manufacturing, Dell, DuPont, EMC, GE Healthcare Systems, GE Power Systems, General Motors, Harley-Davidson Motor, Honeywell International, HP, Johnson & Johnson, KLA-Tencor, Kohler, Lenscrafters, LG Electronics, Lockheed Martin, McKesson Corporation, Medtronics, Moet et Chandon, Motorola, NEC, Network Appliance, Northrup Grumman, Pentax, PepsiAmericas, Raytheon, Siemens AG, Sony, Texas Instruments, Toshiba American Business Solutions, Toyota, TRW, and Vattenfall.

Retail/Wholesale: Abt Electronics, Albertsons, Amazon.com, Best Buy, Circuit City Stores, Columbia House, FlyingJ, JM Family Enterprises, Kohl’s Department Stores, Longs Drug Stores, Luxottica Retail, New York Mercantile Exchange, NuSkin Enterprises, Smart and Final, Victoria’s Secret, Walgreens, and Wendy’s International.

Government: EUCARIS, European Commission, Federal Portal Belgium, Italian Ministry of Finance, Musee du Louvre, NASA Peer Review, National Education Association, Republic of Ireland, Smithsonian Institution, UK Companies House, UK Employment Service, UK HM Customs and Excise, UK Inland Revenue, US Air Force, US Army, US Bureau of Labor and Statistics, US Central Intelligence Agency, US Defense Information Systems Agency, US Defense Logistics Agency, US Department of Veterans Affairs, US Federal Bureau of Investigation, US General Services Administration, and US National Security Agency.

Chemicals and Pharmaceuticals: 3M Health Information Systems, Abbott Laboratories, Astrazeneca Pharmaceutical, Blue Cross/Blue Shield, Boehringer Ingelheim Pharma, Fujitsu Social Science Laboratory, Genentech, GlaxoSmithKline, Incyte Genomics, Ortho-McNeil Pharmaceutical, Pfizer, PSS World Medical, Roche Pharma, Sapient Health Network, Shell Trading, and SmithKlineBeecham Pharmaceutical.

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Sales and Marketing

Our sales strategy is to pursue opportunities worldwide within large organizations and organizations that are establishing e-businesses, through our direct sales, services and technical support organizations, complemented by indirect sales channels such as distributors, value-added resellers (“VARs”), hardware original equipment manufacturers (“OEMs”), independent software vendors (“ISVs”), application service providers (“ASPs”) and systems integrators (“SIs”). We currently intend to continue to add to our direct sales and support organizations in major worldwide markets, as well as to invest in building our indirect distribution channel through relationships with VARs, SIs, packaged application developers and others.

Direct Sales Organization.    We market our software and services primarily through our direct sales organization. As of January 31, 2004, we had approximately 1,990 employees in consulting, training, sales, support and marketing, including 505 quota-bearing sales representatives, located in 75 offices in 34 countries. We are currently investing in building our direct sales capacity by hiring experienced enterprise sales and technical sales support personnel. We typically use a consultative, solution-oriented sales model that entails the collaboration of technical and sales personnel to formulate proposals to address specific customer requirements, often in conjunction with hardware, software and services providers. Because our products are typically used as a platform or integration tool for initiatives and applications that are critical to a customer’s business, we focus our initial sales efforts on senior executives and information technology department personnel who are responsible for such initiatives and applications.

Targeting Developers.    We also market our software directly to system, application and integration developers. We make developer copies of our tools and products available for free download over our Web site. In addition, we periodically provide developer training and trial licenses through technical seminars in various locations worldwide, including on-site at our large customers. We also maintain a developers’ Web site, designed to create a community among developers who use our products, providing a forum to exchange technical information and sample code, as well as feedback to us on our products and industry directions that we should pursue. With the introduction of BEA WebLogic Workshop, BEA is expanding our addressable market by targeting Visual Basic, Power Builder and COBOL programmers in addition to our traditional J2EE developers.

Strategic Relations.    An important element of our sales and marketing strategy is to expand our relationships with third parties and strategic partners to increase the market awareness, demand and acceptance of BEA and our solutions. Partners have often generated and qualified sales leads, made initial customer contacts, assessed needs, recommended use of our solutions prior to our introduction to the customer, and introduced us to at high levels within the customer organization. In many cases, BEA and one or more partners coordinate to make a joint proposal to potential customers. In some cases, we engage in joint account planning with our strategic partners. A strategic partner can provide customers with additional resources and expertise, especially in vertical or geographic markets in which the partner has expertise, to help meet customers’ system definition and application development requirements. Types of strategic partnerships include:

System platform companies.    Our partners often act as resellers of our products, either under the BEA product name or integrated with the platform vendor’s own software products, or co-sell BEA products and recommend our products to their customers and prospects. In July 2001, we announced a significant relationship with Intel, under which BEA and Intel are jointly working to optimize our technology on Intel chip sets and jointly working on sale opportunities.

Packaged application software developers.    We license our software to packaged application software vendors. These vendors build on our software as an infrastructure for the applications they supply, giving these applications improved reliability, increased scalability and portability across all hardware, operating systems and databases on which our platform runs. Customers can also easily integrate other applications built using our solutions with these packaged applications.

Application service providers.    ASPs buy and maintain the hardware, infrastructure software and application software necessary for Web sites and e-businesses, and rent access to these systems to their

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customers, primarily small and medium-sized businesses, who do not have the resources or the desire to buy and maintain these systems themselves. We license our software to ASPs who use it as an exclusive or optional feature in their systems.

Systems integrators and independent consultants.    SIs often refer their customers to us, utilize us as a subcontractor in some situations, and build custom solutions on our products. We also work cooperatively with independent consulting organizations, often being referred to prospective customers by services organizations with expertise in high-end transactional applications.

Distributors.    To supplement the efforts of our direct sales force, we use software distributors to sell our products in Europe, Asia, Latin America and, to a lesser degree, North America.

Channel partners include leading SIs, hardware OEMs, application ISVs, tools and technology ISVs, independent business consultants and others.

Services.    We believe that our services organization plays an important role in facilitating initial license sales and enabling customers to successfully architect, design, develop, deploy and manage systems and applications. Our services revenue comes from customer support or maintenance fees, as well as fees for consulting and training services.

Customer Support.    Fees for customer support are generally charged on an annual subscription basis, and vary by the level of support the customer chooses. BEA offers support via telephone, Web, e-mail and fax. In addition, customer support fees entitle the customer to certain product upgrades and maintenance updates. Our support is available 24 hours per day, with support centers located around the world. We offer enhanced, mission-critical support, which may include features such as priority call response, personalized case monitoring and escalation management, release/patch management planning, migration assessment planning and training on best practices.

Consulting Services. Fees for consulting services are generally charged on a time and materials basis and vary depending upon the nature and extent of services to be performed. Our services organization works directly with end user customers and also with SIs, to provide a variety of consulting services. Consulting services we offer include application development, application migration, integration, architectural assessment and architectural validation.

Education Services.    We offer introductory and advanced classes and training programs. We also offer a certification program, and we are a sponsor member of jCert. The jCert initiative was created to establish and promote industry standards for certification of enterprise developers using Java technology. Our training and certification programs are offered at our offices, customer sites and training centers worldwide, as well as over the Internet. These programs cover the use of BEA products and are designed for end user customers, SIs and packaged application developers. In addition, we offer a mentoring program as a follow on to our training programs or as an approach to customized training. Fees for education services are generally charged on a per-class or per-engagement basis.

Marketing.    Our marketing efforts are directed at broadening the demand for BEA products and solutions by increasing awareness of the benefits of using our products to build mission-critical distributed and Web-based applications. Marketing efforts are also aimed at supporting our worldwide direct and indirect sales channels. Marketing personnel engage in a variety of activities including conducting public relations and product seminars, issuing newsletters, sending direct mailings, preparing sales collateral and other marketing materials, coordinating our participation in industry trade shows, programs and forums, and establishing and maintaining relationships with recognized industry analysts and press. Our senior executives are frequent speakers at industry forums in many of the major markets we serve.

Competition

The market for application server and integration software, and related software infrastructure products and services, is highly competitive. Our competitors are diverse and offer a variety of solutions directed at various segments of this marketplace. These competitors include IBM, which also offers operating system software and

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hardware as discussed below, and Oracle, which can bundle its competing product with their database and other software offerings at a discounted price. In addition, certain application vendors, enterprise application integration vendors and other companies are developing or offering application server, enterprise application integration and portal software products and related services that may compete with products that we offer. Further, software development tool vendors typically emphasize the broad versatility of their tool sets and, in some cases, offer complementary software that supports these tools and performs basic application server and integration functions. These tool vendors offer products that may compete with some of the features of our own product offerings. Finally, internal development groups within prospective customer organizations may develop software and hardware systems that may substitute for those we offer. A number of our competitors and potential competitors have longer operating histories, substantially greater financial, technical, marketing and other resources, greater name recognition and a larger installed base of customers than we have.

Some of our competitors are also hardware vendors who bundle their own application server, integration software and tool products, or similar products, with their computer systems and database vendors that advocate client/server networks driven by the database server. IBM is the primary hardware vendor that we compete with which offers a line of application server, integration, and related software infrastructure solutions for their customers. Sun Microsystems is another hardware vendor who offers a line of application server and related software infrastructure solutions. IBM’s sale of application server and integration functionality along with its proprietary hardware systems requires us to compete with IBM, particularly with regard to its installed customer base, where IBM has certain inherent advantages due to its much greater financial, technical, marketing and other resources, greater name recognition and the integration of its enterprise application server and integration functionality with its proprietary hardware and database systems. These inherent advantages allow IBM to bundle, at a discounted price, application server and integration solutions with computer hardware, software and related service sales. In addition, IBM Global Services, a division of IBM and a large provider of consulting and information technology services, can influence their service customers’ choice of software products in favor of IBM’s. Due to these factors, if we do not sufficiently differentiate our products based on functionality, reliability, ease of development, interoperability with non-IBM systems, performance, total cost of ownership and return on investment and establish our products as more effective solutions to customers’ technological and economic needs, our business, operating results, and financial condition will suffer.

In addition to its current products which include some application server functionality, Microsoft has announced that it intends to include and enhance certain application server and integration functionalities in its .NET technologies. Microsoft’s .NET technologies is a proprietary programming environment that competes with the Java-based environment of our products. A widespread acceptance of Microsoft’s .NET technologies, particularly among the large and mid-sized enterprises from which most of our revenues are generated, could curtail the use of Java and therefore adversely impact the sales of our products. The .NET technologies and the bundling of competing functionality in versions of Windows can require us to compete in certain areas with Microsoft, which has certain inherent advantages due to its much greater financial, technical, marketing and other resources, its greater name recognition, very large developer community, its substantial installed base and the integration of its broad product line and features into a Web Services environment. We need to differentiate our products from Microsoft’s based on scalability, functionality, interoperability with non-Microsoft platforms, performance, total cost of ownership, return on investment, ease of development and reliability, and need to establish our products as more effective solutions to customers’ technological and economic needs. We may not be able to successfully or sufficiently differentiate our products from those offered by Microsoft, and Microsoft’s continued efforts in the application server, integration and Web Services markets and their proposed .NET alternative to Java could materially adversely affect our business, operating results and financial condition.

In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties, thereby increasing the ability of their products to address the needs of their current and prospective customers. Accordingly, it is possible that new competitors or alliances among current and new competitors may emerge and rapidly gain significant market share. Such competition could materially adversely affect our ability to sell additional software licenses and maintenance, consulting and

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support services on terms favorable to us. Further, competitive pressures could require us to reduce the price of our products and related services, which could materially adversely affect our business, operating results and financial condition. We may not be able to compete successfully against current and future competitors and any failure to do so would have a material adverse effect upon our business, operating results and financial condition.

Product Development

Our total research and development expenses were approximately $140.9 million, $132.8 million and $120.9 million in fiscal 2004, 2003 and 2002, respectively. Research and development expenses consist primarily of salaries and benefits for software engineers, contract development fees, costs of computer equipment used in software development, information technology and facilities expenses. The fiscal 2003 and 2004 year-over-year increases in research and development expenses were due to increases in product development personnel and expenses associated with the development and release of several new products and product versions, as well as the acquisition of several small companies engaged in research and development activities during fiscal 2003 and fiscal 2004. We believe that a significant level of research and development is required to remain competitive and we expect to continue to commit substantial resources to product development and engineering in future periods.

Intellectual Property and Licenses

Our success depends upon our proprietary technology. We rely on a combination of patent, copyright, trademark and trade secret rights, confidentiality procedures and licensing arrangements to establish and protect our proprietary rights. It is possible that other companies could successfully challenge the validity or scope of our patents and that our patents may not provide a competitive advantage to us. As part of our confidentiality procedures, we generally enter into non-disclosure agreements with our employees, distributors and corporate partners and into license agreements with respect to our software, documentation and other proprietary information. Despite these precautions, third parties could copy or otherwise obtain and use our products or technology without authorization, or develop similar technology independently. In particular, we have, in the past, provided certain hardware OEMs with access to our source code, and any unauthorized publication or proliferation of this source code could materially adversely affect our business, operating results and financial condition. It is difficult for us to police unauthorized use of our products, and although we are unable to determine the extent to which piracy of our software products exists, software piracy is a persistent problem. Effective protection of intellectual property rights is unavailable or limited in certain foreign countries. The protection of our proprietary rights may not be adequate and our competitors could independently develop similar technology, duplicate the functionality of our products, or design around patents and other intellectual property rights that we hold.

Employees

As of January 31, 2004, we had approximately 3,122 full-time employees, including 730 in research and development, 1,990 in consulting, training, sales, support and marketing and 402 in administration. None of our employees are represented by a collective bargaining agreement, and we have never experienced any work stoppage. We consider our relations with our employees to be good.

Availability of this Report

We are a Delaware corporation incorporated in January 1995. Our Internet address is www.bea.com. On our Investor Information page on this web site we post the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission: our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. All such filings on our Investor Information web page are available to be viewed on this page free of charge. Information

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contained on our web site is not part of this Annual Report on Form 10-K or our other filings with the Securities and Exchange Commission. We assume no obligation to update or revise any forward-looking statements in this Annual Report on Form 10-K, whether as a result of new information, future events or otherwise, unless we are required to do so by law. A copy of this Annual Report on Form 10-K is available without charge upon written request to: Investor Relations, Heather Dickinson, BEA Systems, Inc., 2315 North First Street, San Jose, California, 95131.

Our corporate offices and those related to product development, corporate sales, marketing and administrative functions, totaling approximately 224,000 square feet, are located in San Jose, California under leases expiring in 2007 and 2008. We also lease office space in various locations throughout the United States for sales, support and development personnel, and our foreign subsidiaries lease space for their operations. We own substantially all of the equipment used in our facilities. In the first quarter of fiscal 2002, we entered into a lease agreement for the lease of approximately 40 acres of land adjacent to our San Jose, California offices upon which we plan to have constructed additional corporate offices and research and development facilities. We believe our existing facilities together with those we plan to lease upon completion of construction of the San Jose facility will be adequate to meet our anticipated needs for the foreseeable future. See Note 1 of the Notes to our Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Factors that May Impact Future Operating Results—We could incur substantial charges to our consolidated statement of operations if we alter our plan to construct additional corporate offices and research and development facilities on the leased 40-acre parcel of land in San Jose, California that is recorded in our balance sheet,” for information regarding and risks related to our lease agreements and obligations.

We are not currently party to any material legal proceedings, although we are periodically subject to legal proceedings and claims that have arisen, and may arise in the future, in the ordinary course of our business. While management currently believes the amount of ultimate liability, if any, with respect to these actions will not materially affect the financial position, results of operations, or liquidity of the Company, the ultimate outcome of any litigation is uncertain. Were an unfavorable outcome to occur, or if protracted litigation were to ensue, the impact could be material to the Company.

No matters were submitted to a vote of security holders during the fourth quarter of fiscal year 2004.

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PART II

Since our initial public offering on April 11, 1997, our common stock has traded on the Nasdaq National Market under the symbol “BEAS.” According to our transfer agent, we had approximately 930 stockholders of record as of March 31, 2004.

The following table sets forth the high and low sales prices reported on the Nasdaq National Market for our common stock for the periods indicated:

We have never declared or paid any cash dividends on our common stock. We currently intend to invest cash generated from operations, if any, to support the development of our business and do not anticipate paying cash dividends for the foreseeable future. Payment of future dividends, if any, will be as determined by of our Board of Directors.

The following selected consolidated financial data should be read in conjunction with the Consolidated Financial Statements and Notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Annual Report on Form 10-K.