BEA Reports Record Third Quarter Financial Results
12th Consecutive Record Quarter Achieved as BEA Acquires WebLogic, Marrying Market Leaders in Java Web Application Servers and Business-Critical Middleware
SAN JOSE, Calif., Nov. 19 /PRNewswire/ -- BEA Systems, Inc. (Nasdaq: BEAS - news) today announced its 12th straight quarter of record revenues. For its third quarter ended October 31, 1998, BEA reported revenues of $80.9 million, up 81 percent from $44.8 million for the same period in the prior year, and up 20 percent from $67.6 million reported for the second quarter ended July 31, 1998. Full details on BEA's reported results are on page four of this release.
On an adjusted basis, excluding acquisition-related expenses, and as illustrated in the table below, BEA had operating income for the third quarter of $7.9 million, up 88 percent from $4.2 million for the prior year third quarter. BEA's net income per share, on an adjusted basis, was $0.07 for the third quarter versus $0.04 per share for the third quarter of 1997. The impact of excluded expenses is summarized on page five of this release. For full details on BEA's reported results, see the financial tables accompanying this release.
For the Three Months Ended
Oct. 31, July 31, Oct. 31,
1998 1998(a) 1997(a)
(In thousands, except
per share data) Current Prior Quarter Year Ago
Revenues $80,914 $67,571 $44,804
Operating income (b) 7,855 5,387 4,171
Operating margin percentage (b) 10% 8% 9%
Net income (b) $5,322 $3,591 $3,530
Income per share (b)(c) $0.07 $0.04 $0.04
Pro forma shares outstanding (c) 81,170 81,360 80,290
•(a) Recast to include the results of WebLogic, Inc., which was acquired in a pooling of interests transaction on September 30, 1998. •(b) Adjusted to exclude acquisition-related expenses including amortization of purchased intangible assets, merger-related costs, and the write-off of acquired in-process research and development. Including these acquisition-related charges, net income (loss) would have been $(6,215), $(40,254) and $440 and income (loss) per share would have been $(0.09), $(0.59) and $0.01 in the periods presented. See page five of this release. •(c) Amounts presented on a pro forma basis, giving effect to the conversion of all preferred stock into common stock and the issuance of all WebLogic shares at the beginning of the first period presented.
For the nine months ended October 31, 1998, BEA reported total revenues of $207.0 million, compared to $113.0 million reported for the nine months ended October 31, 1997. On an adjusted basis, excluding acquisition-related expenses, BEA had an operating income of $16.3 million for the first nine months of 1998 versus an operating income of $7.0 million for the first nine months of 1997. On an adjusted basis, BEA had net income per share of $0.14 for the nine month period ended October 31, 1998, compared to net income per share of $0.01 for the nine month period ended October 31, 1997. The impact of the excluded acquisition-related costs is summarized in the financial tables on page six.
''In BEA's most strategic move since we acquired TUXEDO® nearly three years ago, we acquired WebLogic, Inc. -- maker of an industry-leading Java™-based web application server,'' said Bill Coleman, chairman and chief executive officer of BEA. ''Integration of BEA WebLogic with BEA TUXEDO and BEA M3 is on schedule. We saw continued global interest in BEA M3, while continuing to meet demand for BEA's traditional products and services from new and existing customers. BEA's professional services business continued to experience growth as well as improving gross margins. Coleman continued, ''Despite these very positive trends, we were impacted by developments in the worldwide information technology market. In spite of our strong performance, we observed this quarter that the continued slowdown in Asia and worsening economic environment in the U.S. and Europe is lengthening the enterprise software sales cycle.''
During the quarter, BEA added over 150 new name customers, including over 60 new BEA WebLogic customers. New BEA customers from around the world this quarter included Windstar, Attachmate, Kaiser Permanente, Mannesman Mobilfunk, GTE Data Services, Manugistics, Genentech, BanaMex, WW Grainger, Civil Hospital Shimare, Port of Singapore, China Mobile and Esat Digifone.
BEA Systems, Inc.
BEA Systems, Inc., is a leading provider of cross-platform middleware solutions for enterprise applications. BEA's products and services enable mission-critical, distributed applications to work seamlessly in client/server, Internet, and legacy environments. BEA provides transactional, messaging, and distributed object-based software, as well as an industry-leading Java Web application server, for developing and deploying these enterprise applications. The BEA WebLogic application server, developed and supported by BEA's WebXpress division, offers the critical front-end Web component to BEA's end-to-end enterprise middleware solution. In addition to its broad software product line, BEA provides complete solutions to its customers through its extensive partner network, and a full range of services including consulting, training, and support. BEA is headquartered in San Jose, Calif., and has 50 offices in 24 countries around the globe. The company's common stock trades on the Nasdaq National Market under the symbol ''BEAS.'' Additional information on BEA is available on the Internet at beasys.com.
NOTE: BEA, BEA M3, BEA WebLogic, are trademarks of BEA Systems, Inc. TUXEDO is a registered trademark of BEA Systems, Inc. All other company and product names may be trademarks of the company with which they are associated.
Legal Notice Regarding Forward-Looking Statements
Some of the statements in this press release are forward-looking, including statements regarding future: demand for BEA products and services, gross margins, impact of the Asian, U.S. and European economic conditions, revenue from any particular customer, and acceptance and deployment of BEA M3. BEA's actual results could differ materially from those expressed in any forward-looking statements. Risks and uncertainties BEA faces that could cause results to differ materially include risks associated with: integration of past and future acquisitions, length of BEA's sales cycle, competition, continuation of the Asian economic crisis, effect on other regions of the Asian economic crisis, dependence on growth of the middleware market, dependence on hiring key personnel, need to expand distribution channels and reliance on third parties for distribution, rapid technological change, dependence on new product introductions and enhancements, potential software defects, and significant leverage and debt service requirements. Readers should also refer to the Risk Factors section of BEA's Report on Form 8K-A dated October 29, 1998. The forward looking statements and risks stated in this press release are based on information available to BEA today. BEA assumes no obligation to update them.
BEA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data)
(unaudited)
Three months ended Nine months ended
October 31, October 31,
1998 1997 1998 1997
Revenues:
License fees $53,394 $32,195 $139,906 $83,743
Services 27,520 12,609 67,108 29,260
Total revenues 80,914 44,804 207,014 113,003
Cost of revenues:
Cost of license fees 1,073 544 2,696 1,712
Cost of services 16,085 7,875 41,076 18,585
Amortization of certain acquired
intangible assets 7,878 2,961 16,286 8,375
Total cost of revenues 25,036 11,380 60,058 28,672
Gross margin 55,878 33,424 146,956 84,331
Operating expenses:
Sales and marketing 38,031 20,148 96,975 53,714
Research and development 11,083 7,500 32,060 19,440
General and administrative 7,776 4,695 19,941 12,854
Acquisition-related charges 3,453 - 42,244 16,000
Total operating expenses 60,343 32,343 191,220 102,008
Income (loss) from operations (4,465) 1,081 (44,264) (17,677)
Interest and other, net (252) 80 (177) (4,230)
Income (loss) before
provision for taxes (4,717) 1,161 (44,441) (21,907)
Provision for income taxes 1,498 721 3,177 1,893
Net income (loss) $(6,215) $ 440 $(47,618) $(23,800)
Net income (loss) per share:
Basic $(0.09) $0.01 $(0.69) $(0.50)
Diluted $(0.09) $0.01 $(0.69) $(0.50)
Shares used in computing net
income (loss) per share:
Basic 70,660 65,747 68,792 48,092
Diluted 70,660 72,900 68,792 48,092
BEA SYSTEMS, INC.
PRO FORMA STATEMENT OF OPERATIONS
IMPACT OF ACQUISITION RELATED CHARGES ON REPORTED NET INCOME (LOSS)
(In thousands, except for per share data)
(unaudited)
For the Three Months
Ended Oct. 31, 1998
As Reported Adjustments As Adjusted
Revenues $80,914 $- $80,914
Cost of revenues 25,036 (7,878) 17,158
Gross margin 55,878 7,878 63,756
Operating expenses 60,343 (4,442) 55,901
Income (loss) from operations (4,465) 12,320 7,855
Interest and other, net (252) - (252)
Income (loss) before provision for taxes(4,717) 12,320 7,603
Provision for income taxes 1,498 783 2,281
Net income (loss) $(6,215) $11,537 $5,322
Net income (loss) per share $(0.09) $0.07
Pro forma shares outstanding** 70,660 81,170
For the Three Months
Ended Oct. 31, 1997
As Reported Adjustments* As Adjusted
Revenues $44,804 $- $44,804
Cost of revenues 11,380 (2,961) 8,419
Gross margin 33,424 2,961 36,385
Operating expenses 32,343 (129) 32,214
Income (loss) from operations 1,081 3,090 4,171
Interest and other, net 80 - 80
Income (loss) before provision for taxes 1,161 3,090 4,251
Provision for income taxes 721 - 721
Net income (loss) $ 440 $3,090 $3,530
Net income (loss) per share $0.01 $0.04
Pro forma shares outstanding** 65,747 80,290
* The adjustments represent the reversals of acquisition related charges
including the write-offs of acquired in-process research and
development,merger-related costs, and the amortization of acquired
intangible assets. The pro forma adjustments also reflect the impact
of acquisition related charges on the provision for income taxes.
** Amounts presented on a pro forma basis, giving effect to the conversion
of all preferred stock into common stock and the issuance of all
WebLogic shares at the beginning of the first period presented.
BEA SYSTEMS, INC.
PRO FORMA STATEMENT OF OPERATIONS
IMPACT OF ACQUISITION RELATED CHARGES ON REPORTED NET INCOME (LOSS)
(In thousands, except for per share data)
(unaudited)
For the Nine Months Ended Oct. 31, 1998
As Reported Adjustments* As Adjusted
Revenues $207,014 $- $207,014
Cost of revenues 60,058 (16,286) 43,772
Gross margin 146,956 16,286 163,242
Operating expenses 191,220 (44,236) 146,984
Income (loss) from operations (44,264) 60,522 16,258
Interest and other, net (177) - (177)
Income (loss) before
provision for taxes (44,441) 60,522 16,081
Provision for income taxes 3,177 1,351 4,528
Net income (loss) $(47,618) $59,171 $11,553
Net income (loss) per share $(0.69) $0.14
Pro forma shares outstanding** 68,792 81,277
For the Nine Months Ended Oct. 31, 1997
As Reported Adjustments* As Adjusted
Revenues $113,003 $- $113,003
Cost of revenues 28,672 (8,375) 20,297
Gross margin 84,331 8,375 92,706
Operating expenses 102,008 (16,265) 85,743
Income (loss) from operations (17,677) 24,640 6,963
Interest and other, net (4,230) - (4,230)
Income (loss) before
provision for taxes (21,907) 24,640 2,733
Provision for income taxes 1,893 - 1,893
Net income (loss) $(23,800) $24,640 $ 840
Net income (loss) per share $(0.50) $0.01
Pro forma shares outstanding** 48,092 68,945
* The adjustments represent the reversals of acquisition related charges
including the write-offs of acquired in-process research and
development, merger-related costs, and the amortization of acquired
intangible assets. The pro forma adjustments also reflect the impact
of acquisition related charges on the provision for income taxes.
** Amounts presented on a pro forma basis, giving effect to the conversion
of all preferred stock into common stock and the issuance of all
WebLogic shares at the beginning of the first period presented.
BEA Systems, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
October 31, July 31, January 31,
1998 1998 1998
(unaudited) (unaudited) (*)
Assets
Current assets:
Cash and cash equivalents $228,833 $30,607 $90,984
Short-term investments 3,852 215,354 8,708
Accounts receivable, net 73,467 66,244 47,922
Other current assets 3,765 5,264 3,163
Total current assets 309,917 317,469 150,777
Computer equipment,
furniture and leasehold
improvements, net 14,457 11,913 8,206
Acquired intangible assets, net 66,894 75,504 12,315
Other assets 9,169 9,279 2,905
$400,437 $ 414,165 $174,203
Liabilities and Stockholders' Equity
Current liabilities:
Borrowings under lines of credit $2,182 $2,173 $1,879
Accounts payable and accrued
liabilities 64,304 52,613 34,091
Deferred revenues 26,312 19,973 14,963
Current portion of notes payable
and capital lease obligations 1,371 29,797 43,141
Total current liabilities 94,169 104,556 94,074
Notes payable and capital
lease obligations 227 733 766
Convertible subordinated notes 250,000 250,000 --
Stockholders' equity:
Preferred stock -- 4 1
Common stock 75 70 69
Additional paid-in capital 238,443 237,500 211,556
Accumulated deficit (179,206) (173,017) (130,546)
Notes receivable from
shareholders (544) (544) (544)
Deferred compensation (2,048) (4,601) (601)
Foreign currency translation
adjustment (679) (536) (572)
Total stockholders' equity 56,041 58,876 79,363
$400,437 $ 414,165 $174,203
(*) Derived from audited consolidated financial statements.
SOURCE: BEA Systems, Inc. |
