BEA Reports Record Second Quarter Financial Results
and Becomes Fastest Software Company Ever to Reach $1 Billion in Trailing 12 Months Revenue
BEA Delivered 23rd Consecutive Quarter of Record Revenues, Year-over-Year WebLogic(R) Business Growth of 70 Percent
SAN JOSE, Calif., Aug 14, 2001 /PRNewswire via COMTEX/ -- BEA Systems, Inc. (Nasdaq: BEAS chart, msgs), one of the world's leading e-business infrastructure software companies, today announced its 23rd straight quarter of record revenues. For the second quarter ended July 31, 2001, BEA reported revenues of $267.8 million, up 44 percent from $186.0 million for the same period in the prior year. BEA reported record second quarter license fees of $172.2 million, up 65 percent from $104.2 million in the second quarter of last fiscal year. Full details on BEA's reported results are on page five of this release. BEA also announced its revised expectations for the remainder of the fiscal year, in light of the current macroeconomic environment.
BEA reported pro forma operating income for the second quarter of $58.5 million, up 128 percent from $25.7 million for the second quarter of last fiscal year. BEA reported pro forma net income for the second quarter of $43.9 million, up 101 percent from $21.9 million for the second quarter of last fiscal year. BEA's pro forma diluted net income per share was $0.10 for the second quarter, up 100 percent from $0.05 per share in the second quarter of last fiscal year. BEA reported pro forma operating margin of 21.8 percent, up from 13.8 percent in last year's second quarter. Pro forma results exclude acquisition-related expenses, employer payroll taxes on stock options, and net gains on investments in securities. The impact of pro forma adjustments is summarized on pages six and seven of this release. For full details on BEA's reported results, see the financial tables accompanying this release.
(In thousands, except
per share data) For the For the
(unaudited) Three Months Ended Six Months Ended
July 31, Apr. 30, July 31, July 31, July 31,
2001 2001 2000 2001 2000
Current Prior Year Current Prior
Quarter Ago Year Year
Revenues $267,764 $257,163 $186,021 $524,927 $339,703
License fees $172,211 $161,193 $104,195 $333,404 $189,434
Pro forma operating
income (a) $58,497 $45,984 $25,696 $104,481 $38,984
Pro forma operating
margin (a) 21.8% 17.9% 13.8% 19.9% 11.5%
Pro forma net
income (a)(b) $43,917 $35,930 $21,870 $79,847 $34,239
Pro forma net income
per share (a)(b)(c) $0.10 $0.08 $0.05 $0.18 $0.08
Pro forma shares
outstanding (c) 423,570 424,620 421,640 424,095 419,975
(a)Adjusted to exclude acquisition-related charges including amortization
of acquired intangible assets, merger-related costs, and the write-off
of acquired in-process research and development; employer payroll
taxes on stock options; and net gain on investments in securities
(see pages six and seven of this release).Without adjusting for these
items, net income (loss) is $23,955, $20,624, $2,269, $44,579 and
$(10,114), and income (loss) per share is $0.06, $0.05, $0.01, $0.11
and $(0.03) in the periods presented.
(b) Amounts presented on a pro forma basis, assuming a tax rate of
30 percent.
(c) Adjusted to reflect a two-for-one stock split effected as a stock
dividend on April 24, 2000.
BEA also announced that it is adjusting its guidance for the second half of the year, based on weakness in the macroeconomic environment and particularly in expected spending on information technology. "While we remain very excited about the market opportunity ahead of us, and confident in our ability to execute well, we feel it is prudent to adjust our short-term guidance to be more conservative given the current business environment and recent trends in information technology spending. In light of these factors, we currently believe it is appropriate to expect total revenue for our fiscal third quarter to be essentially flat, in the $260-$275 million range, followed by low- to mid-single digit percent sequential growth in our fiscal fourth quarter. We currently expect that revenue at those levels would allow us to achieve pro forma net income per share for the fiscal year in the range of $0.39 to $0.41," stated BEA founder, Chairman, and CEO Bill Coleman.
"I am proud of our team's execution in meeting our financial and business objectives in a very difficult and challenging business environment," continued Coleman. "In the second quarter, BEA continued to make significant strides in expanding our market leadership and expanding our product set beyond the application server into an e-business platform, setting the stage to further expand the Java market. On the product front, BEA made three major advances: releasing the Web Services version of BEA WebLogic Server(TM), releasing a standards-based integration product in BEA WebLogic Integration(TM), and announcing BEA WebLogic Portal(TM) 4.0 to expand BEA's current portal framework. Together, these products comprise the BEA WebLogic E-Business Platform(TM), which combines application server, Web Services, integration, and portal technologies into a powerful single, integrated, standards-based e-infrastructure solution. With this complete and integrated platform, BEA will make it easier than ever for customers to connect business processes, link enterprise and e-commerce applications, and share information across the enterprise and the Internet."
"In addition, business relationships BEA entered into this quarter with systems integrators and software vendors will allow customers to connect leading packaged applications such as SAP, PeopleSoft, Oracle, Siebel, and Vignette to this platform, which will help drive customer adoption of the J2EE standards-based approach to integration," Coleman added.
"The most important business developments this quarter are designed to greatly expand the Java market. These developments were the alliance with Intel, followed with announcements from our joint hardware OEM partners including BULL, Compaq, Dell, Hewlett-Packard, NCR, NEC, and Unisys. Together, BEA, Intel, and the OEMs are creating a low-cost Java product designed to increase the Java market by addressing small and mid-sized businesses as well as departments of large companies. We believe that Intel chose the BEA WebLogic E-Business Platform not only because it is acknowledged as the best technology, but also because BEA has the partner and alliance ecosystem in place to rapidly deploy our combined solution. Specifically, the packaged applications that run on BEA WebLogic and the 8,000 consultants trained and ready to implement WebLogic-based systems provide the capability of quickly driving Intel-based servers into the market. We believe that this relationship validates the Sun-BEA Java strategy and increases the market opportunity for all Java players," Coleman concluded.
Key Customer and Partner Deals
Key customer and partner deals for the quarter included Axa, AT&T, British Telecom, Credit Suisse First Boston, Crown Castle, DuPont, Electronic Arts, FDC Technologies, Ford Motor Credit Company, FT Interactive Data, Fujitsu, GE Capital, Homestore.com, Jeppesen, JP Morgan Chase, MasterCard, McKesson HBOC, MiTAC, National Bank of New Zealand, Societe Generale, Sprint, Sprint PCS, UK Department of Social Security, United Overseas Bank (Singapore), and Wells Fargo Bank. New or expanded relationships were also entered into with hardware, systems integrator, ASP, and ISV vendors such as Art Technology Group, Bowstreet, BMC Software, Dell, EDS, Epicentric, Intel, Logica, Manugistics, Nokia, Open Market, PeopleSoft, RSA Security, Siebel, and webMethods. BEA added more than 850 new customers and 130 net new ISVs/ASPs in the quarter.
Key Product Developments
BEA WebLogic Server 6.1: BEA released the Web Services version of its flagship BEA WebLogic Server application server product. Web Services are a set of software components that allow companies to share applications, business logic, and syndication services from multiple sources without having to develop the applications themselves or "hard wire" connections to trading partners who host these applications. BEA WebLogic Server 6.1 is the only enterprise-class solution available today that seamlessly bridges J2EE and Web Services by enabling developers to automatically deploy Enterprise JavaBeans (EJBs) as Web Services with no additional programming. This latest release of BEA WebLogic Server supports the key Web Services standards, including Simple Object Access Protocol (SOAP), Web Services Description Language (WSDL) and Universal Description, Discovery and Integration (UDDI). BEA WebLogic Server 6.1 became generally available on July 30, 2001.
BEA WebLogic Integration: BEA released BEA WebLogic Integration, which supports the J2EE Connection Architecture, ebXML, RosettaNet, and Java Messaging Services, bringing a standards-based approach to the integration market. BEA WebLogic Integration is the industry's first product that delivers application server, enterprise application integration (EAI), data integration, business process management, and B2B integration functionality in a single product. BEA WebLogic Integration also provides the infrastructure for business Web Services, which are multi-party, transactional, highly automated, Web-based interactions between B2B applications that make supply chains faster, more efficient, and more agile. Independent software vendors, system integrators, and other industry leaders supporting BEA WebLogic Integration include Accenture, Actional, Arsin, Attunity, Bowstreet, BroadVision, Calico, Cardonet, CEON, Chordiant, Clarify, Contivo, CSC, Electron Economy, EzCommerce, Infogain Corporation, Insevo, KPMG Consulting, Loudcloud, PeopleSoft, Siebel, Stellcom, Sun Microsystems, Vignette, and webMethods. BEA WebLogic Integration became generally available on July 13, 2001.
BEA WebLogic Portal 4.0: BEA announced BEA WebLogic Portal 4.0, which is designed to expand BEA's current portal framework included as part of BEA WebLogic Personalization Server to include new portal technologies, user tools, and partner applications to more easily and cost-effectively deploy e-business portals for employees, customers, partners, and suppliers. This platform technology makes it possible for an enterprise to deploy all applications with a common, personalized interface for customers, partners, and employees, simplifying and improving their experience while lowering administrative costs and centralizing customer utilization information. BEA WebLogic Portal is based on BEA WebLogic Server and will include an extensive set of features and enabling technologies, including portal configuration tools, a unique rules-based entitlement engine, reusable presentation software components, and a standards-based framework that supports J2EE CA and Web Services. BEA Portal Framework is currently available as a feature of BEA WebLogic Personalization Server and BEA WebLogic Commerce Server. BEA WebLogic Portal 4.0 is currently scheduled to become generally available in fall 2001.
About BEA
BEA Systems, Inc. is one of the world's leading e-business infrastructure software companies, with more than 11,000 customers around the world, including the majority of the Fortune Global 500. BEA and its WebLogic(R) brand are among the most trusted names in e-business. Businesses built on the award-winning BEA WebLogic E-Business Platform(TM) are reliable, highly scalable, and poised to bring new services to market quickly. BEA's e-business platform is the de facto standard for more than 2,100 systems integrators, independent software vendors (ISVs), and application service providers (ASPs) to provide complete solutions that fast-track and future-proof e-businesses for high growth and profitability. Headquartered in San Jose, Calif., BEA has 93 offices in 34 countries and is on the Web at www.bea.com.
Investors will have the opportunity to listen to BEA's earnings release conference call over the Internet through Street Events, Inc., at streetevents.com or on the investor information page of BEA's Web site at bea.com. The call will be available live on both the Street Events and BEA Web sites beginning today at 2 p.m. PDT, and a replay will be available immediately following completion of the live call and for up to 30 days thereafter. In addition, investors will have the opportunity to access a telephone replay of the call through August 21, 2001 by dialing (703) 925-2435, access code 5432556.
NOTE: BEA and WebLogic are registered trademarks of BEA Systems, Inc. BEA WebLogic E-Business Platform, BEA WebLogic Server, BEA WebLogic Portal, and BEA WebLogic Integration are trademarks 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 market opportunity, future financial performance, new feature and product introductions, partner product introductions, and performance of BEA's indirect channel. 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: quarterly fluctuation in customer spending due to economic and other factors, dependence on growth of the markets for BEA's products, competition, dependence on acceptance of BEA's products by channel partners, dependence on success of BEA's channel partners, market acceptance of BEA's products, integration of past and future acquisitions, length of BEA's sales cycle, dependence on hiring key personnel, 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 section entitled "Factors That May Impact Future Operating Results" on pages 19 through 29 of BEA's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2001, as well as similar disclosures in subsequent BEA periodic SEC reports. 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 Six months ended
July 31, July 31,
2001 2000 2001 2000
Revenues:
License fees $172,211 $104,195 $333,404 $189,434
Services 95,553 81,826 191,523 150,269
Total revenues 267,764 186,021 524,927 339,703
Cost of revenues:
Cost of license fees 6,041 4,503 11,692 8,278
Cost of services 47,675 47,891 98,421 88,304
Amortization of certain
acquired intangible assets 6,003 10,184 12,416 20,167
Total cost of revenues 59,719 62,578 122,529 116,749
Gross profit 208,045 123,443 402,398 222,954
Operating expenses:
Sales and marketing 105,067 76,969 213,223 145,664
Research and development 31,525 21,574 61,050 40,453
General and administrative 19,954 12,619 38,136 23,483
Amortization of goodwill 15,109 14,309 31,118 26,504
Acquisition-related charges -- -- -- 2,200
Total operating expenses 171,655 125,471 343,527 238,304
Income (loss) from operations 36,390 (2,028) 58,871 (15,350)
Interest income and other, net 4,241 5,547 17,958 9,693
Income (loss) before provision
for income taxes 40,631 3,519 76,829 (5,657)
Provision for income taxes 16,676 1,250 32,250 4,457
Net income (loss) $23,955 $2,269 $44,579 $(10,114)
Net income (loss) per share:
Basic $0.06 $0.01 $0.11 $(0.03)
Diluted $0.06 $0.01 $0.11 $(0.03)
Shares used in computing net
income (loss) per share:
Basic 394,910 374,440 393,305 370,699
Diluted 423,570 421,640 424,095 370,699
BEA SYSTEMS, INC.
PRO FORMA STATEMENTS OF OPERATIONS
IMPACT OF PRO FORMA ADJUSTMENTS ON REPORTED NET INCOME
(In thousands, except for per share data)
(unaudited)
For the Three Months For the Three Months
Ended July 31, 2001 Ended July 31, 2000
As Adjust- As As Adjust- As
Reported ments* Adjusted Reported ments* Adjusted
Revenues $267,764 $-- $267,764 $186,021 $-- $186,021
Cost of revenues 59,719 (6,293) 53,426 62,578 (10,637) 51,941
Gross profit 208,045 6,293 214,338 123,443 10,637 134,080
Operating
expenses 171,655 (15,814) 155,841 125,471 (17,087) 108,384
Income (loss)
from operations 36,390 22,107 58,497 (2,028) 27,724 25,696
Interest income
and other, net 4,241 -- 4,241 5,547 -- 5,547
Income before
provision
for taxes 40,631 22,107 62,738 3,519 27,724 31,243
Provision for
income taxes 16,676 2,145 18,821 1,250 8,123 9,373
Net income $23,955 $19,962 $43,917 $2,269 $19,601 $21,870
Net income
per share $0.06 $0.10 $0.01 $0.05
Pro forma shares
outstanding** 423,570 423,570 421,640 421,640
* The adjustments represent the reversals of acquisition related charges
including the write-off of acquired in-process research and
development, merger-related costs, amortization of acquired intangible
assets, premium paid on conversion of notes, net gain on investments in
securities, employer payroll taxes on stock options, and assumes a tax
rate of 30 percent. The pro forma adjustments also reflect the impact
of these charges on the provision for income taxes.
** Shares reflect the April 24, 2000 two-for-one stock split.
BEA SYSTEMS, INC.
PRO FORMA STATEMENTS OF OPERATIONS
IMPACT OF PROFORMA ADJUSTMENTS ON REPORTED NET INCOME (LOSS)
(In thousands, except for per share data)
(unaudited)
For the Six Months For the Six Months
Ended July 31, 2001 Ended July 31, 2000
As Adjust- As As Adjust- As
Reported ments* Adjusted Reported ments* Adjusted
Revenues $524,927 $-- $524,927 $339,703 $-- $339,703
Cost of revenues 122,529 (13,080) 109,449 116,749 (21,758) 94,991
Gross profit 402,398 13,080 415,478 222,954 21,758 244,712
Operating
expenses 343,527 (32,530) 310,997 238,304 (32,576) 205,728
Income (loss)
from operations 58,871 45,610 104,481 (15,350) 54,334 38,984
Interest income
(expense) and
other, net 17,958 8,372 9,586 9,693 (236) 9,929
Income (loss)
before
provision for
taxes 76,829 37,238 114,067 (5,657) 54,570 48,913
Provision for
income taxes 32,250 1,970 34,220 4,457 10,217 14,674
Net income (loss) $44,579 $35,268 $79,847 $(10,114) $44,353 $34,239
Net income (loss)
per share $0.11 $0.18 $(0.03) $0.08
Pro forma shares
outstanding** 424,095 424,095 370,699 419,975
* The adjustments represent the reversals of acquisition related charges
including the write-off of acquired in-process research and
development, merger-related costs, amortization of acquired intangible
assets, premium paid on conversion of notes, net gain on investments in
securities, employer payroll taxes on stock options, and assumes a tax
rate of 30 percent.The pro forma adjustments also reflect the impact of
these charges on the provision for income taxes.
** Shares reflect the April 24, 2000 stock split.
BEA SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 31, January 31,
2001 2001
(unaudited) (*)
ASSETS
Current assets:
Cash and cash equivalents $757,761 $907,635
Restricted cash 6,903 4,998
Short-term investments 207,145 33,294
Accounts receivable, net 225,654 214,706
Other current assets 29,186 46,258
Total current assets 1,226,649 1,206,891
Property and equipment, net 67,021 51,223
Acquired intangible assets, net 163,385 190,692
Long term restricted cash 120,129 --
Other long-term assets 134,167 143,530
$1,711,351 $1,592,336
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $207,809 $172,632
Deferred revenues 206,296 203,947
Current portion of notes payable and
other obligations 9,435 13,321
Total current liabilities 423,540 389,900
Notes payable and other long-term obligations 7,502 35,011
Convertible subordinated notes 561,421 561,421
Stockholders' equity:
Common stock 871,570 794,119
Accumulated deficit (141,294) (185,873)
Notes receivable from stockholders (146) (198)
Deferred compensation (6,797) (523)
Accumulated other comprehensive loss (4,445) (1,521)
Total stockholders' equity 718,888 606,004
$1,711,351 $1,592,336
(*) Derived from audited consolidated financial statements. |
