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BEA Reports Third Quarter Results; Achieves Net Income of $56 Million, 59% Year-over-Year Growth

SAN JOSE, Calif., Nov. 15 /PRNewswire-FirstCall/ -- BEA Systems, Inc., a world leader in enterprise infrastructure software, today announced financial results for the fiscal third quarter ended October 31, 2007. BEA reported third quarter total revenues of $384.4 million, up 11% from last year's third quarter. BEA reported third quarter license fees of $134.8 million, down 1% from a year ago, and services revenue of $249.6 million, up 18% from a year ago. BEA reported third quarter cash flow from operating activities of $87.5 million, up 62% from a year ago. BEA reported a balance of cash, cash equivalents, short-term investments and restricted cash of $1.2 billion. BEA also reported deferred revenues of $388.6 million, up 15% from a year ago.

SAN JOSE, Calif., Nov. 15 /PRNewswire-FirstCall/ — BEA Systems, Inc., a world leader in enterprise infrastructure software, today announced financial results for the fiscal third quarter ended October 31, 2007. BEA reported third quarter total revenues of $384.4 million, up 11% from last year's third quarter. BEA reported third quarter license fees of $134.8 million, down 1% from a year ago, and services revenue of $249.6 million, up 18% from a year ago. BEA reported third quarter cash flow from operating activities of $87.5 million, up 62% from a year ago. BEA reported a balance of cash, cash equivalents, short-term investments and restricted cash of $1.2 billion. BEA also reported deferred revenues of $388.6 million, up 15% from a year ago.

For the third quarter, on a generally accepted accounting principles ("GAAP") basis, BEA reported operating profit of $64.3 million, up 70% from $37.7 million a year ago. BEA reported GAAP third quarter operating margin of 16.7%, compared to 10.8% a year ago. BEA reported GAAP third quarter net income of $56.0 million, up 59% from $35.1 million a year ago, and GAAP diluted net income per share of $0.13 compared to $0.08 a year ago.

BEA reported third quarter non-GAAP operating income of $96.2 million, up 33% from $72.5 million a year ago. BEA reported third quarter non-GAAP operating margin of 25.0% compared to 20.9% a year ago. BEA reported third quarter non-GAAP net income of $78.9 million, up 33% from $59.5 million a year ago, and non-GAAP diluted net income per share of $0.19, compared to $0.14 a year ago. Non-GAAP results exclude the after-tax effects of certain acquisition-related expenses, employee stock option expenses, net gains or losses on investments in equity securities, net gains on repurchases of debt, restructuring charges, restatement-related charges, and other charges and credits that are expected to be non-recurring. A reconciliation of non-GAAP adjustments to our GAAP financial measures is presented at the end of this release. For full details on BEA's reported results, see the financial tables accompanying this release.

"Our third quarter results demonstrate continuation of the business momentum we built in the second quarter. In spite of significant distractions during the quarter, the team did an outstanding job executing to our revenue plan and generating a strong pipeline of business opportunities as we head into our seasonally strong fourth quarter," said Alfred Chuang, BEA's founder, chairman and chief executive officer. "With today's SEC filings and earnings report, you are now able to see the very significant profitability improvements we have made over the last several quarters. I want to highlight the impact that these profitability improvements have had on our financial results. At the mid-point of our fourth quarter guidance, our fiscal 2008 non-GAAP earnings per share would be $0.70, or 23% above the current First Call mean analyst estimates, which would also represent 43% year-over-year growth. More interestingly, we will have achieved a non-GAAP EPS level this fiscal year that exceeds the current First Call mean estimates for next fiscal year. These results demonstrate not only significant progress in our operating profitability, we also believe they will materially impact how investors value BEA."

"Once again, our performance in the quarter was led by our AquaLogic products, which represented 27% of license revenue. AquaLogic User Interaction had its strongest quarter ever, and AquaLogic Enterprise Registry and Repository, which will be important products for the emerging hot areas of SOA management and governance, sustained the momentum that began in Q2. These results continue to validate our product-driven growth strategy," Chuang said. "Led by China and Japan, license revenue in the Asia/Pacific region grew by 24%, demonstrating how well we are executing in this exciting growth territory."

"BEA innovations deliver solutions for our customers' most demanding needs," Chuang said. "Our growth strategy of delivering new products to meet those needs has been validated by the performance of a growing number of AquaLogic product categories. In addition, WebLogic Communication Platform delivered its strongest quarter ever. In its first quarter, we seeded WebLogic Server Virtualization Edition in key accounts and demonstrated referenceable results. These products, along with Project Genesis for the next generation of dynamic business applications, provide BEA with exciting growth opportunities to build shareholder value."

Guidance

Based on current business conditions, BEA currently expects fourth quarter total revenue to be in the range of $420 to $434 million.

Annual Meeting

BEA announced that it has scheduled its annual meeting of shareholders to be held on February 14, 2008. The record date for shareholders entitled to vote at the annual meeting is December 17, 2007. In connection with setting the meeting date, BEA has extended the deadline for shareholders to propose director nominees at this meeting from November 26, 2007 until January 1, 2008.

BEA Delivers Business Results for Key Customers and Expands Partnerships

Key customer, partner and end-user agreements signed during the quarter included Abbott Laboratories, Airbus France, Amgen, Atreus Systems, AT&T, Barclay Card US, Beijing DongCheng District Info Center, British American Tobacco, BT, China Mobile Communication Corporation, Comcast, eBay, Edmunds, Electric Power Agriculture Shanxi, Enterprise Rent-A-Car, Eurocontrol, Fortis, Global Village Telecom, GuangDong Development Bank, Hallmark Card, Hafslund, Instituto Mexicano del Seguro Social, Italtel, Intermountain Health Care, Johnson and Johnson, KLM Royal Dutch Airlines, Mexico Sistema de Administracion Tributaria, Northern Trust Bank, Pearson Educational Management, Petrobras, Police Service Northern Ireland, Polska Telefonia Cyfrowa, Sage, Santander Consumer Bank, Sempra Energy, Smart and Final, Specialist Computer Centres, ST Microelectronics, State of Utah Department of Public Safety, SunLife, Swiss International Air Lines, TD Ameritrade, Telefonica Moviles Espana, Tetra Pak, TIM Celular, USAA, US Air Force, US Army, US FDA, Vivo, Warner Music Group, WebEx Communications and Zurich American Insurance.

New, renewed or expanded relationships were entered into with VARs, hardware OEMs, systems integrators, ASPs and ISVs, including ArisGlobal, Atreus Systems, Callidus Software, Compliance11, DMLT, Financial Sciences, HealthEdge, i2, InnoPath, Management Dynamics, Nomis Solutions, PDX, Puridiom, Saber Corporation, Siricon, Solstice Software, Thinkorswim, Ventyx, Verisign, VMware and Zycus.

About BEA Systems, Inc.

BEA Systems, Inc. (Nasdaq: BEAS) is a world leader in enterprise infrastructure software. Information about how BEA helps customers build a Liquid Enterprise(TM) that transforms their business can be found at bea.com.

Investors will have the opportunity to listen to the conference call over the Internet on the investor information page of the BEA Website (http://ir.bea.com/?page=eventdetail&eventid=42397). The broadcast will be available live, followed by a replay available for 360 days thereafter. Investors will also have the opportunity to access a telephone replay of the call through December 16, 2007 by calling (706) 645-9291, access code 20285047.

Copyright 1995-2007, BEA Systems, Inc. All rights reserved. BEA, BEA AquaLogic, BEA eLink, BEA WebLogic, BEA WebLogic Portal, BEA WebLogic Server, Connectera, Compoze Software, Jolt, JoltBeans, JRockit, SteelThread, Think Liquid, Top End, Tuxedo, and WebLogic are registered trademarks of BEA Systems, Inc. BEA Blended Application Development, BEA Blended Development Model, BEA Blended Strategy, BEA Builder, BEA Guardian, BEA Manager, BEA MessageQ, BEA microService Architecture, BEA SOA 360, BEA Workshop, BEA WorkSpace 360, Signature Editor, Signature Engine, Signature Patterns, Support Patterns, Arch2Arch, Arch2Arch Advisor, Dev2Dev, Dev2Dev Dispatch, Exec2Exec, Exec2Exec Voice, IT2IT, IT2IT Insight, Business LiquidITy, and Liquid Thinker are trademarks of BEA Systems, Inc. BEA Mission Critical Support, BEA Mission Critical Support Continuum, BEA SOA Self Assessment, and Fluid Framework are service marks of BEA Systems, Inc. All other company and product names may be the subject of intellectual property rights reserved by third parties. All other trademarks are the property of their respective companies.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our historical fourth quarter financial performance; how our financial results may impact how investors value BEA; the success of our products in the emerging SOA management and governance areas; how BEA may provide investors with opportunities to build shareholder value; and our projected future growth and financial performance for our fourth quarter, fiscal 2008 and beyond. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Such risks and uncertainties include, but are not limited to, that BEA may not achieve its internal projections; that management and the Board of Directors may be distracted by acquisition rumors or proposals, certain shareholders' calls to auction us, or a proxy contest; quarterly fluctuations in customer spending due to economic, geopolitical, competitive and other factors; dependence on the growth of the markets for BEA's products, especially the markets for SOA, service infrastructure, VOIP and telecommunications software, and overseas markets such as China; changes in the standards or technologies used in the SOA, telecommunications and portal markets that could render our products less competitive; declines in spending by the telecommunications industry as a result of consolidation or adverse economic conditions; our dependence on large transactions, particularly those consummated at the end of our quarters; dependence on new product introductions and enhancements; the introduction by competitors of new products and pricing strategies; market acceptance of BEA's enhanced product portfolio; BEA's ability to integrate new technology and personnel as a result of acquisitions; the length of BEA's sales cycle; the acceptance of BEA's products by channel partners; the success of BEA's channel partners; rapid technological change; potential software defects (particularly with regard to newly introduced and planned products); BEA's ability to retain and hire key personnel; misinterpretations resulting from the provision of non-GAAP financial information; and other risks indicated in our filings with the SEC. For more details, please refer to our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended January 31, 2007, our Quarterly Report on Form 10-Q for the quarter ended July 31, 2007, as well as similar disclosures in subsequent 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) Three Months Ended Nine Months Ended October 31, October 31, 2007 2006 2007 2006 Revenues: License fees $134,782 $136,365 $372,549 $404,735 Services 249,646 211,307 722,339 605,788 Total revenues 384,428 347,672 1,094,888 1,010,523 Cost of revenues: Cost of license fees 14,045 15,501 47,972 46,770 Cost of services 75,021 67,807 219,451 198,702 Total cost of revenues 89,066 83,308 267,423 245,472 Gross profit 295,362 264,364 827,465 765,051 Operating expenses: Sales and marketing 133,627 130,368 390,621 378,445 Research and development 57,070 58,710 177,186 169,568 General and administrative 40,379 35,881 114,546 98,004 Acquisition-related in-process research and development — 1,700 — 4,400 Restructuring charges — — 1,605 — Impairment of Land — — — — Total operating expenses 231,076 226,659 683,958 650,417 Income from operations 64,286 37,705 143,507 114,634 Interest and other, net 13,670 9,544 41,580 33,802 Income before provision for income taxes 77,956 47,249 185,087 148,436 Provision for income taxes 21,985 12,128 52,626 44,205 Net income $55,971 $35,121 $132,461 $104,231 Net income per share: Basic $0.14 $0.09 $0.33 $0.27 Diluted $0.13 $0.08 $0.32 $0.25 Shares used in computing net income per share: Basic 398,300 397,790 398,310 393,000 Diluted 415,600 415,470 414,130 409,010 BEA SYSTEMS, INC. RECONCILIATION OF GAAP TO NON-GAAP OPERATING MEASURES INCOME FROM OPERATIONS, NET INCOME AND DILUTED NET INCOME PER SHARE (In thousands, except for per share data) (unaudited)

The following tables reconcile the Company's income from operations, net income and diluted net income per share as presented in its unaudited Condensed Consolidated Statements of Operations as prepared in accordance with Generally Accepted Accounting Principles ("GAAP") with non-GAAP income from operations, non-GAAP net income and non-GAAP net income per share. The Company's non-GAAP income from operations excludes acquisition-related intangible asset amortization, acquisition-related deferred compensation expense, acquisition-related in-process research and development expenses, FAS123R expense, stock option review expenses, separation costs, strategic advisor expenses, 409A expenses and restatement adjustments.

The Company's non-GAAP net income and non-GAAP diluted net income per share consists of non-GAAP income from operations and excludes net gains on minority interests in equity investments and net gains on retirement of convertible subordinated notes. In addition, the Company's non-GAAP net income and non-GAAP diluted net income per share are adjusted for the tax effect related to those items that have been excluded from the non-GAAP results.

For the For the Three Months Ended Nine Months Ended October 31, October 31, October 31, October 31, 2007 2006 2007 2006 GAAP Income from operations $64,286 $37,705 $143,507 $114,634 Adjustments: Acquisition-related intangible asset amortization 6,148 9,598 26,251 28,200 Acquisition- related deferred compensation expense 1,032 3,311 5,008 8,220 Acquisition-related in-process research and development — 1,700 — 4,400 Restructuring charges — — 1,605 — FAS123R expense 7,805 14,090 27,829 42,421 Stock option review expenses 6,096 2,048 13,577 2,048 Separation costs 6,985 — 6,985 — Strategic advisor expenses 1,431 — 1,431 — 409A expense 186 — 4,508 — Restatement adjustment 2,263 4,090 1,911 927 Non-GAAP Income from operations $96,232 $72,542 $232,612 $200,850 For the For the Three Months Ended Nine Months Ended October 31, October 31, October 31, October 31, 2007 2006 2007 2006 GAAP Net Income $55,971 $35,121 $132,461 $104,231 Adjustments: Acquisition-related intangible asset amortization 6,148 9,598 26,251 28,200 Acquisition-related deferred compensation expense 1,032 3,311 5,008 8,220 Acquisition-related in-process research and development — 1,700 — 4,400 Restructuring charges — — 1,605 — FAS123R stock compensation expense 7,805 14,090 27,829 42,421 Net gains on minority interest in equity investments — — (1,132) (10,972) Net gains on retirement of convertible subordinated notes — — — (818) Stock option review expenses 6,096 2,048 13,577 2,048 Separation costs 6,985 — 6,985 — Strategic advisor expenses 1,431 — 1,431 — 409A expense 186 — 4,508 — Restatement adjustment 2,263 4,090 1,911 927 Income tax adjustments (9,023) (10,473) (25,066) (22,553) Non-GAAP Net Income $78,894 $59,485 $195,368 $156,104 Non-GAAP diluted net income per share $0.19 $0.14 $0.47 $0.38 Diluted shares outstanding 415,600 415,470 414,130 409,010 BEA SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) October 31, January 31, 2007 2007 (unaudited) (*) ASSETS Current assets: Cash and cash equivalents 826,602 $867,294 Restricted cash 1,035 1,413 Short-term investments 416,619 313,941 Accounts receivable, net 297,013 394,799 Deferred tax assets 98,122 56,767 Prepaid expenses and other current assets 55,956 46,126 Total current assets 1,695,347 1,680,340 Property and equipment, net 189,397 144,471 Acquired intangible assets, net 274,980 301,957 Long-term investments 26,374 93,528 Long-term restricted cash 2,399 2,372 Long-term deferred tax assets 111,477 166,027 Other long-term assets 9,931 10,147 2,309,905 $2,398,842 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities 229,144 354,858 Deferred revenues 388,589 449,282 Current portion of convertible subordinated notes — — Current portion of notes payable and other obligations 657 1,302 Total current liabilities 618,390 805,442 Notes payable and other long-term obligations 155,772 228,790 Long-term portion of convertible subordinated notes — — Stockholders' equity: Common stock and additional paid-in capital 1,936,891 1,903,113 Retained earnings 50,179 (72,416) Deferred compensation — — Treasury stock (478,249) (478,249) Accumulated other comprehensive income 26,922 12,162 Total stockholders' equity 1,535,743 1,364,610 2,309,905 $2,398,842 (*) Derived from audited consolidated financial statements.

SOURCE BEA Systems, Inc.

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