Great Quarter considering the environment...
SAN JOSE, Calif., Aug. 14 /PRNewswire-FirstCall/ --
BEA Systems, Inc. (Nasdaq: BEAS), the world's leading application
infrastructure software company, today announced results of its fiscal second
quarter. For the second quarter ended July 31, 2002, BEA reported total
revenues of $225.9 million, including license fees of $124.1 million. In the
quarter, BEA completed nearly 2,400 transactions and generated $32.2 million
in cash flow from operations.
BEA also announced that BEA founder, President and CEO Alfred Chuang has
been promoted to Chairman of the Board, succeeding BEA founder Bill Coleman,
who will continue in his capacity as a member of the Board of Directors.
Second Quarter Results
For the second quarter, BEA reported operating income of $27.3 million on
a generally accepted accounting principles ("GAAP") basis and an operating
margin of 12.1 percent. BEA reported GAAP net income of $20.2 million and
diluted net income per share of $0.05 for the second quarter. BEA confirmed
that its CEO and CFO will certify the Company's Report on Form 10-Q containing
its GAAP results for the quarter when the report is filed with the SEC in mid
September, in accordance with new legal requirements.
For the second quarter, BEA reported pro forma operating income of
$35.5 million and pro forma operating margin of 15.7 percent. BEA reported pro
forma net income of $25.9 million and pro forma diluted net income per share
of $0.06 for the second quarter. Pro forma results exclude
acquisition-related expenses, employer payroll taxes on stock options, net
gains or losses on investments in equity securities, and other non-recurring
charges. A reconciliation of pro forma adjustments is summarized on pages six
and seven of this release. Forfull details on BEA's reported results, see
the financial tables accompanying this release.
"We saw an improvement in our business throughout the second quarter, and
we enter Q3 with a strong pipeline," stated Alfred Chuang. "Although the
IT spending environment continues to be challenging, we had a solid quarter,
demonstrating that the market pendulum is swinging toward custom development,
scalable architecture and secure, reliable infrastructure. The wireless
Internet space continues to grow, and the BEA WebLogic Enterprise Platform
continues to be the infrastructure software choice for these projects."
"What we see in the application server market gives us every reason to
believe that we are taking customers and market share from the competition and
that we continue to widen our product lead," Chuang continued. "This quarter,
BEA gained market share by winning more than 200 direct head-to-head
competitions with our primary competitor, including more than 120 replacements
or displacements. In some cases, we won replacement deals after customers
couldn't get an application in production for almost a year after purchasing
our competitor's product. We even replaced our competitor's infrastructure in
mainframe deployments, our competitor's core business. Customers who choose
BEA recognize that there are significant costs associated with our
competitor's product -- lost business opportunities from delayed and failed
projects, increased development costs, increased hardware costs and more. The
enormous hidden costs associated with our competitor's product have allowed us
to win on the total cost of a project, even when they give away their
software."
"BEA's focused effort in R&D is paying off, as demonstrated by the market.
We delivered eight new products in 90 days, including the first versions of
WebLogic Platform, WebLogic Workshop and WebLogic JRockit JVM," Chuang noted.
"With WebLogic Server, WebLogic Workshop and our work on the standards bodies,
we are the leader in Web services."
"Now, we are in the process of radically changing the integration market,"
Chuang continued. "This quarter, we delivered a new version of WebLogic
Integration and now offer more than 30 BEA branded, sold and supported JCA
adapters, as well as more than 150 adapters delivered by our partners. BEA is
investing heavily in the integration business. Over the last two quarters,
we've assembled a team of industry experts, including several key executives,
developers and senior sales representatives from the leading pure-play EAI
vendors. The strategy developed under their leadership has received
enthusiastic reviews from some of our best customers and partners. We intend
to lead the integration market by radically reducing the cost and complexity
of integration solutions."
"We are also driving down the cost and complexity of Java and Web services
systems, which broadens our market. Our Intel, HP, Linux and WebLogic
Workshop strategies are helping make this a reality," Chuang concluded. "Our
work continues with Intel, optimizing our performance on their 64-bit
architecture. Simpler operating systems, mass market chip sets and easy to
use development tools like WebLogic Workshop make Java accessible by more
developers and cost-effective for more projects. We are working with our
partners to make Java easier and less expensive."
Alfred Chuang Promoted to Chairman
"When Bill, Ed and I founded BEA seven years ago, we focused on delivering
exceptional value to customers," stated Chuang. "Together we won more than
13,000 customers, built a worldwide network of partnerships with the world's
leading companies and grew annual revenues to over $900 million. Bill came to
the board earlier this year and indicated that he felt his job of nurturing
the company through its initial years was now completed and he wished to
concentrate more fully on his several important civic efforts. We look
forward to Bill's continued efforts in building and maintaining relationships
with our customers and partners, and continued service on our Board of
Directors."
Coleman said, "I am proud of what we've accomplished at BEA in a short
time and I know I leave management of the company in the exceptionally capable
hands of my good friend and partner, Alfred Chuang. I have watched his tenure
as CEO with admiration, and I know the company is in excellent strategic and
operational shape. I have some very specific ideas about my next projects,
which will be outside of the business world." Coleman will remain a board
member and will assume the role of BEA's Chief Customer Advocate, involved in
customer relationships, strategic alliances and sales. Additional details
regarding Mr. Coleman's continuing relationship with the Company are in a
Report on Form 8-K filed with the SEC today.
Key Customer and Partner Deals
Key customer and partner deals for the quarter included Abt Electronics,
Applied Materials, British Airways, Budget Rent a Car, China Telecom,
Citibank, Columbia House, Duke Energy, Edmunds.com, Federal Portal Belgium,
Finnish Rail, German Stock Exchange, Harley-Davidson Motor, Integradora de
Services Operativos, Johnson & Johnson, KLA-Tencor, Kohl's Department Stores,
Kookmin Bank, La Mondiale, Longs Drug Stores, Marsh Corporate Services,
McKesson Corporation, Medtronics, Nordea, ORIX Capital Markets, Shanghai
Finance Bureau, SK Telecom, Sprint, Sprint PCS, TIM Peru, TRW, UK Inland
Revenue, US Air Force, United Parcel Service, United States Cellular,
Vodafone, and Zion's Bank. BEA added more than 425 new customers during the
quarter, and signed 165 new partnerships. New or expanded relationships were
also entered into with hardware, systems integrator, ASP, and ISVs including
Alcatel Space Industries, AT&T Online Services, Blueframe Solutions, Borland,
Ceon, CompuCom, Connectika, Critical Path, Dante Consulting, Diagonal
Solutions, Electronic Data Systems, Entology, Hewlett-Packard, InfoTech
Enterprises, Intel, LegacyJ, Lockheed Martin, Niteo Partners (an NEC company),
RedHat, Reuters Espana, SBS International (a Boeing company), TogetherSoft,
Verio, WorldChain, Xtria and Yahoo!.
About BEA
BEA Systems, Inc. is the world's leading application infrastructure
software company, providing the enterprise software foundation for more than
13,000 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
business.
Headquartered in San Jose, Calif., BEA has 91 offices in 33 countries and
is on the Web at www.bea.com.
Investors will have the opportunity to listen to BEA's live conference
call discussing these results over the Internet on the investor information
page of BEA's Web site at bea.com . The call will be
available live 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, 2002 by dialing 703-925-2435,
access code 6139509.
NOTE: BEA, BEA Tuxedo, BEA WebLogic, BEA WebLogic Enterprise, BEA
WebLogic Enterprise Platform, BEA WebLogic Server, BEA WebLogic Integration,
BEA WebLogic Portal, BEA WebLogic Integration Business Connect and BEA
WebLogic Workshop are trademarks or registered 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, customer and partner
acceptance of BEA products, 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, competitive and other
factors, dependence on growth of the markets for BEA's products, market
acceptance of BEA's products, competition, dependence on acceptance of BEA's
products by channel partners, dependence on success of BEA's channel partners,
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 "Risk Factors That May Impact Future Operating
Results" on pages 25 through 36 of BEA's Report on Form 10-Q for the quarter
ended April 30, 2002, as well as similar disclosures in subsequent BEA SEC
filings. 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,
2002 2001
Revenues:
License fees $124,063 $172,211 $255,201 $333,404
Services 101,800 95,553 195,505 191,523
Total revenues 225,863 267,764 450,706 524,927
Cost of revenues:
Cost of license fees 4,459 6,041 9,116 11,692
Cost of services 43,730 47,675 85,620 98,421
Amortization of acquired
intangible assets 7,404 6,003 15,099 12,416
Total cost of revenues 55,593 59,719 109,835 122,529
Gross profit 170,270 208,045 340,871 402,398
Operating expenses:
Sales and marketing 91,007 105,067 184,935 213,223
Research and development 33,185 31,525 64,520 61,050
General and administrative 18,730 19,954 37,659 38,136
Amortization of goodwill -- 15,109 -- 31,118
Total operating expenses 142,922 171,655 287,114 343,527
Income from operations 27,348 36,390 53,757 58,871
Interest and other, net 1,576 4,241 (19,307) 17,958
Income before provision for
income taxes 28,924 40,631 34,450 76,829
Provision for income taxes 8,677 16,676 10,335 32,250
Net income $20,247 $23,955 $24,115 $44,579
Net income per share:
Basic $0.05 $0.06 $0.06 $0.11
Diluted $0.05 $0.06 $0.06 $0.11
Shares used in computing net
income per share:
Basic 406,760 394,910 405,370 393,305
Diluted 417,400 423,570 419,285 424,095
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 Ended July 31, 2002
As Reported Adjustments As Adjusted
Revenues$225,863 $-- $225,863
Cost of revenues 55,593 (7,447)(a) 48,146
Gross profit 170,270 7,447 177,717
Operating expenses 142,922 (659)(b) 142,263
Income from operations 27,348 8,106 35,454
Interest and other, net 1,576 -- 1,576
Income before provision for income
taxes 28,924 8,106 37,030
Provision for income taxes 8,677 2,432 (c) 11,109
Net income $20,247 $5,674 $25,921
Net income per share $0.05 $0.06
Pro forma shares outstanding 417,400 417,400
For the Three Months Ended July 31, 2001
As Reported Adjustments As Adjusted
Revenues $267,764 $-- $267,764
Cost of revenues 59,719 (6,293)(a) 53,426
Gross profit 208,045 6,293 214,338
Operating expenses 171,655 (15,814)(b) 155,841
Income from operations 36,390 22,107 58,497
Interest and other, net 4,241 -- 4,241
Income before provision for income
taxes 40,631 22,107 62,738
Provision for income taxes 16,676 2,145 (c) 18,821
Net income $23,955 $19,962 $43,917
Net income per share $0.06 $0.10
Pro forma shares outstanding 423,570 423,570
(a) Pro forma cost of revenues exclude $43 and $290 related to employer
payroll taxes on stock options and $7,404 and $6,003 related
to the amortization of acquired intangible assets for the three
months ended July 31, 2002 and 2001, respectively.
(b) Pro forma operating expenses exclude $66 and $705 related to employer
payroll taxes on stock options, $0 and $15,109 related
to the amortization of goodwill, and $593 and $0 related to deferred
stock compensation expense for the three months ended
July 31, 2002 and 2001, respectively.
(c) Provision for income taxes assume a tax rate of 30 percent and include
the impact of these pro forma adjustments.
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 Six Months Ended July 31, 2002
As Reported Adjustments As Adjusted
Revenues $450,706 $-- $450,706
Cost of revenues 109,835 (15,177)(a) 94,658
Gross profit 340,871 15,177 356,048
Operating expenses 287,114 (1,578)(b) 285,536
Income from operations 53,757 16,755 70,512
Interest and other, net (19,307) (21,933)(c) 2,626
Income before provision for income
taxes 34,450 38,688 73,138
Provision for income taxes 10,335 11,606 (d) 21,941
Net income $24,115 $27,082 $51,197
Net income per share $0.06 $0.12
Pro forma shares outstanding 419,285 419,285
For the Six Months Ended July 31, 2001
As Reported Adjustments As Adjusted
Revenues $524,927 $-- $524,927
Cost of revenues 122,529 (13,080)(a) 109,449
Gross profit 402,398 13,080 415,478
Operating expenses 343,527 (32,530)(b) 310,997
Income from operations 58,871 45,610 104,481
Interest and other, net 17,958 8,372 (c) 9,586
Income before provision for income
taxes 76,829 37,238 114,067
Provision for income taxes 32,250 1,970 (d) 34,220
Net income $44,579 $35,268 $79,847
Net income per share $0.11 $0.18
Pro forma shares outstanding 424,095 424,095
(a) Pro forma cost of revenues exclude $78 and $664 related to employer
payroll taxes on stock options, and $15,099 and $12,416 related
to the amortization of acquired intangible assets for the six months
ended July 31, 2002 and 2001, respectively.
(b) Pro forma operating expenses exclude $392 and $1,412 related to
employer payroll taxes on stock options, $0 and $31,118 related
to the amortization of goodwill, and $1,186 and $0 related to
deferred stock compensation expense for the six months ended
July 31, 2002 and 2001, respectively.
(c) Pro forma interest and other, net exclude $21,933 of net losses and
$8,372 of net gains on investments in equity securities for the six
months ended July 31, 2002 and 2001, respectively.
(d) Provision for income taxes assume a tax rate of 30 percent and include
the impact of these pro forma adjustments.
BEASYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 31, January 31,
2002 2002
(unaudited) (*)
ASSETS
Current assets:
Cash and cash equivalents $813,257 $821,802
Restricted cash 1,003 6,903
Short-term investments 289,775 205,395
Accounts receivable, net 189,171 193,099
Other current assets 39,788 36,230
Total current assets 1,332,994 1,263,429
Property and equipment, net 76,468 79,204
Acquired intangible assets, net 72,681 73,042
Long-term restricted cash 129,414 122,839
Other long-term assets 116,913 121,437
$1,728,470 $1,659,951
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $222,138 $232,331
Deferred revenues 214,694 194,846
Current portion of notes payable
and other obligations 764 1,340
Total current liabilities 437,596 428,517
Notes payable and other long-term
obligations 7,812 7,518
Convertible subordinated notes 550,000 550,000
Stockholders' equity:
Common stock 954,343 913,978
Accumulated deficit (197,436) (221,551)
Deferred compensation (21,366) (12,037)
Accumulated other comprehensive loss (2,479) (6,474)
Total stockholders' equity 733,062 673,916
$1,728,470 $1,659,951
(*) Derived from audited condensed consolidated financial statements.
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SOURCE BEA Systems, Inc.
-0- 08/14/2002
/CONTACT: Kevin Faulkner, Vice President - Investor Relations,
+1-408-570-8293, or Kevin McGuirk, Vice President - Public Relations,
+1-408-570-8672, both of BEA Systems, Inc.; or Karen Keating of
FRB | Weber Shandwick, +1-415-986-1591, for BEA Systems, Inc./
/Web site: bea.com
(BEAS)
CO: BEA Systems, Inc.
ST: California
IN: STW CPR
SU: ERN PER CCA
JM-JO
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