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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, 2005

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 ¨     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.    x

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 30, 2004, as reported on the Nasdaq National Market, was approximately $2,509,847,000. 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, 2005, there were approximately 398,614,600 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Registrant’s 2005 Annual Meeting of Stockholders to be held on June 23, 2005 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, 2005

INDEX

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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:

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These forward-looking statements involve risks and uncertainties, and it is important to note that our actual results could differ materially from those projected or assumed in such forward-looking statements. Our actual results could differ materially from those discussed in this Annual Report. Important factors that could cause or contribute to such differences include difficulties in developing new technologies; unanticipated delays in bringing our products to the market; product defects in the development phase that could cause delays; unanticipated shortages of cash available to invest in building relationships and expanding distribution channels; an unanticipated lack of resources to invest in increasing direct sales and support organizations; political instability; the inability to establish customer and product development relationships; difficulties of our services organization in providing a consistent level of support; unanticipated changes in key personnel; the possibility that customers will switch to competitors products; unanticipated shortages of cash to invest in product development; unanticipated delays in the completion of construction of the San Jose facility; unanticipated growth resulting in a shortage of space in existing facilities; uncertainty of the ultimate outcome of litigation; inherent uncertainty surrounding the litigation process and our inability to accurately predict the determination of complex issues of fact and law; unanticipated changes in laws or regulations requiring us to pay dividends; the inability to generate cash for operations to support our business; the risk that we may be required to expend more cash in the future than anticipated and may be unable to support our operations; difficulty in predicting size and timing of customer orders; unanticipated changes in our incentive structure; economic downturns; the risk that we may not be successful in obtaining orders from our customers; inability to predict the level of future sales of our products; unanticipated fluctuations in interest and foreign currency exchange rates; uncertainties as to the ability to enter into new royalty agreements; a downturn in our sales or defaults on payments by customers; uncertainties as to the assumptions underlying our calculations regarding estimated annual amortization expenses for purchased intangible assets; unanticipated difficulties in development of products with third parties; unanticipated costs and expenses arising from the leased facilities and termination costs; unanticipated changes in tax regulations; unanticipated shortages of cash; uncertainties as to the effects of certain accounting policies; a lack of the required resources to invest in the development of existing and new products; substantial technological changes in the software industry; significant changes in customer preferences; risks and uncertainties associated with international operations, including economic downturns, trade balance issues, fluctuations in interest and foreign currency exchange rates; better than expected cash generated from operations; unanticipated difficulties in integration of our products with other ISV’s products; our inability to successfully retain or recruit executive officers and key personnel; delays in bringing new products or enhancements to market due to development problems; the risk that we may not be successful in obtaining new orders from major customers; uncertainty of suitable companies, divisions or products available for acquisition; unanticipated difficulties affecting management of growth; uncertainty as to the value of the San Jose land; uncertainties as to the prospect of future orders and sales levels; uncertainties as to the future level of sales and revenues; unanticipated operating and business expenses preventing us from meeting debt obligations; unanticipated interest changes and defaults on payments owed to us; changes in laws applicable to posting material on our website in accordance with the SEC; and other factors that could cause actual results to differ materially such as those detailed under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Factors That May Impact Future Operating Results” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies.” All forward-looking statements and risk factors included in this document are made as of the filing date hereof, based on information available to us as of the filing date hereof, and we assume no obligation to update any forward-looking statement or risk factor. You should also consult the risk factors listed from time to time in our Reports on Form 10-Q and our other SEC filings.

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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 a world leader in enterprise application infrastructure software. Our BEA 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 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; BEA Tuxedo^™, a proven, extremely reliable and scalable multi-language enterprise platform for enterprise applications; and BEA WebLogic Enterprise Security^™, an application security infrastructure solution that uses a service-oriented approach to enable applications to leverage shared enterprise security services. BEA recently shipped BEA WebLogic SIP Server^™, the first product in the WebLogic Communications Platform, an integrated, standards-based suite of products and technologies being developed to help enable telecommunications companies gain the ability to increase revenues by creating, delivering and managing converged voice, data, video and mobile services like voice-over-internet protocol (“VOIP”), email, calendaring, peer-to-peer services and a wide variety of digital content and video services over wireless and wireline networks. Additional products in the BEA WebLogic Communications Platform are scheduled to be released throughout fiscal 2006. 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 the March 17, 2004 issue of Software Development Magazine, BEA WebLogic Workshop 8.1 received the Jolt Productivity Award in the Web Development Tool Category; in the May 15, 2004 issue of SD Times, BEA WebLogic Workshop 8.1 was selected to be part of the SD Times 100 in the Tools and Environment Category; in December 2004, BEA WebLogic Platform^™ 8.1 received the Editor’s Choice Award from China Information World; and in March 2005 BEA WebLogic Server was named best J2EE Application Server in the Java Magazine Readers’ Choice Awards.

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, helping allow 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 3,300 people, is headquartered in San Jose, California, and has 77 offices in 37 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.

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”).

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

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applications. Specifically, Tuxedo and BEA WebLogic Server perform functions such as load balancing; failover protection and clustering that provide high levels of reliability, availability, scalability and performance for enterprise applications. To meet a broader set of customers’ application infrastructure needs, BEA has leveraged its success in the application server market by expanding into complementary product categories that take advantage of the reliability, availability, scalability and performance provided by the underlying application server. The application infrastructure markets consist of the application server market and products and related integration, portal, security, development and deployment, and operations, administration and management markets and 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 markets by enabling customers to buy just the modules needed for a specific project and 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. BEA WebLogic Platform 8.1 consists of several products: BEA WebLogic Server, Tuxedo, BEA WebLogic Integration, BEA WebLogic Portal, BEA Liquid Data for WebLogic, BEA WebLogic Workshop, and BEA WebLogic 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, BEA WebLogic Platform offers a single, unified, infrastructure platform for development, deployment and integration of applications and Web services. BEA WebLogic Platform also helps provide a natural migration path for current BEA 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. BEA WebLogic Server helps provide the presentation, business and information-access logic, security and management services required for high scalability, high-availability mission-critical applications. BEA WebLogic Server is designed to provide key infrastructure functionality in several categories:

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

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

High Availability. BEA WebLogic Server is designed to provide high system availability to mission-critical business applications. BEA WebLogic Server offers automatic fail over at the Web, business logic, and database tiers, helping provide continued system availability despite failures of system components or disconnections of Web sessions. BEA WebLogic Server uses clustering to take advantage of the redundancy of multiple servers to help 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 BEA 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 is designed to integrate 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. As a result, this facilitates the migration of

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applications built on WebLogic Server from one underlying technology to another. 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 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 high level 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, 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 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 also supports Web services. Tuxedo is designed to help address the underlying complexities of distributed, cross platform application development, such as distributed transaction management, high availability, load balancing, transaction queuing, message queuing, event brokering and security. Tuxedo helps enable 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 the necessary recovery procedures, and re-routes messages and transactions to available systems—all of which is 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 helps enable efficient transaction processing and higher levels of performance. Tuxedo helps enable 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.

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

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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. BEA WebLogic Integration offers a single solution that designed to provide 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 helps enable EAI solutions that support complex transactions, bi-directional and 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. BEA WebLogic Integration helps enable solutions that address business process management, 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 more easily by simply modifying the business process rules, rather than modifying the applications themselves or the connections between applications. This helps allow customers to build broad, robust systems that are more flexible and easier to modify. Data integration features of WebLogic Integration include data translation and data transformation, helping enable customers to make broader use of data across the company and across multiple computing environments. WebLogic Integration also helps 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 its features can be 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 helps enable for an enterprise to deploy multiple applications with a common, personalized interface for customers, partners and employees, helping to simplify and improve 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 standard way to rapidly aggregate and expose logical views from numerous of sources, including Web services, databases, flat files, XML files, applications and Web sites. This helps enable developers to re-use information across applications without moving or dealing with the complexity of the underlying data. It provides highly optimized, rapid data access and data processing inside and outside firewalls, and across multiple locations, formats, and types. Unlike alternative solutions that require the developer to change the data’s format or location, BEA WebLogic for Liquid Data is designed to allow 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.

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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 byte code 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 optimization techniques in these four different areas for efficient operation. BEA WebLogic JRockit also provides a framework through which the Java programmer can 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”) helps enable 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 is designed to easily integrate with 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 default security service implementations that include: authentication, identity assertion, credential mapping, dynamic role mapping, rules-based parametric authorization, and auditing.

BEA WebLogic Communications Platform. BEA WebLogic Communications Platform is an integrated, standards-based suite of products and technologies being developed to help enable telecommunications companies gain the ability to increase revenues by creating, delivering and managing converged voice, data, video and mobile services like VOIP, email, calendaring, peer-to-peer services and a wide variety of digital content and video services over wireless and wireline networks. The first product in this product family is BEA WebLogic SIP Server^™, a carrier-grade, standards-based server product for building, deploying, and managing next-generation services in a session initiation protocol (SIP) environment. Telecommunications companies can use it to extend their infrastructure – and service offerings – to provide new converged voice and data services across diverse networks, connections, and endpoint devices. BEA is currently developing the next product in this family, BEA WebLogic Network Gatekeeper, which is scheduled to be released during fiscal 2006. BEA WebLogic Network Gatekeeper is designed to provide a carrier-grade, industry standards-based platform for automated partner management, flexible billing management, policy-based network protection, and application access control. This platform is based on IT and telecom industry standards, and is designed to help protect and manage access to network resources.

Customers

The total number of customers and end users of our products and solutions is greater than 15,000 worldwide. For a breakdown of our revenues by geographical region, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Revenues by Geographic Region.” Our target end-user customers are organizations with sophisticated, high-end information systems with numerous, often geographically-dispersed users and diverse 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

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and unpredictable usage volumes. No customer accounted for more than 10 percent of total revenues in any of the fiscal years 2005, 2004 or 2003.

A representative list of BEA customers includes:

Financial Services and Insurance: A.G. Edwards, Abbey National, ABN AMRO Holding, Accredited Home Lenders, Agricultural Bank of China, Allianz, Allstate, Ameritech, Ameritrade Holding, AON, AXA, Banc of America Securities, Bank of America Corp., Bank of China, Bank of Ireland, Bank of New York, Bank of Tokyo-Mitsubishi, Bank One Corp., Barclays, Bear Stearns, BNP Paribas, Canadian Imperial Bank of Commerce, Charles Schwab Corporation, China Construction Bank, Chubb, Citigroup, Credit Agricole, Credit Suisse, Dai-Ichi Kangyo Bank, E*Trade, Edward Jones, Fannie Mae, Fifth Third Bancorp, First Union Corp., First USA, FleetBoston, Fortis, Freddie Mac, Goldman Sachs Group, Hartford Accident & Indemnity, Hartford Financial Services, Huntington Bancshares, HypoVereinsbank, ING Group, JM Family Enterprises, J.P. Morgan & Co., John Hancock Financial Services, Lehman Brothers Holdings, Lincoln National, Lloyds TSB Group, Marsh & McLennan, Mass. Mutual Life Insurance, MasterCard International Inc., MBNA, Merrill Lynch, MetLife, Morgan Stanley Dean Witter, Mutual of Omaha Insurance, Nationwide Insurance Enterprise, New York Board of Trade, New York Life Insurance, Nomura Securities, Nordea, Northern Trust Corp., OppenheimerFunds Inc., Progressive, Prudential Ins. Co. of America, Prudential UK, Royal Bank of Canada, Royal Bank of Scotland, S.W.I.F.T., Samsung Life Insurance, Samsung Securities, Societe Generale, Student Loan Finance Corporation, Sumitomo Bank, Swiss Reinsurance, TeleCash, The Hartford, Thomson Financial, TIAA-CREF, Tokyo Marine & Fire Insurance, TrueLink, U.S. Bancorp, UBS PaineWebber, Visa, Wachovia Corp, Washington Mutual, and Wells Fargo.

Telecommunications: 12Snap, Alcatel, Alltel, AT&T, BellSouth, British Telecom, Cable & Wireless, Cablevision Systems, China Telecom, ChungHwa Telecom, Cingular, Comcast, Comindico, Covad, Deutsche Telekom, DIRECTV, Dish Networks, Ericsson, France Telecom, Hong Kong Telecom, KDDI Corporation, KPN Royal Dutch Telecom, LG Telecom, MCI WorldCom, mmO2, Mobilkom Austria, Nextel Communications, Nippon Telegraph & Telephone, Qwest Communications, SBC Communications, SK Telecom, Sprint Corporation, Telecordia Technologies, Telecom Italia, Telefonica, Telenor Mobile, Telstra, TIM Peru, T-Mobile, US West, Verizon, Virgin Mobile USA, and Vodafone.

Services: Accenture, Adecco, American Airlines, American President Lines, AOL, Bertelsmann, British Airways, Budget Rent a Car, Cendant Corporation, China Post, Computer Sciences Corporation, 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, Siemens Business Services, Singapore Airlines, Sony, Starwood Hotels, Towers Perrin, 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

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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.

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”).

Direct Sales Organization. We market our software and services primarily through our direct sales organization. As of January 31, 2005, we had approximately 2,088 employees in consulting, training, sales, support and marketing, including 564 quota-bearing sales representatives, located in 77 offices in 37 countries. We typically use a consultative 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 at 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 larger customers. These licenses are restricted use and they do not include customer support. We also maintain a Developers’ Website, 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.

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, helping improve these applications reliability, scalability and portability across 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.

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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 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. 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. Consulting services generally do not involve customization of the core software products licensed and are not essential to the functionality of the software.

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.

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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 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

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materially adversely affect our ability to sell additional software licenses and maintenance and consulting and 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 $146.6 million, $140.9 million, and $132.8 million in fiscal 2005, 2004 and 2003, 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 2004 and 2005 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 2004 and fiscal 2005. 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.

Backlog

Our aggregate backlog at January 31, 2005 was $357 million, of which $312 million is included on our balance sheet as deferred revenues. Backlog is comprised primarily of deferred revenue from customer support contracts, but also includes deferred consulting and education orders for services not yet completed or delivered, and current software license orders which have not shipped or have not otherwise met all of the required criteria for revenue recognition. The majority of our backlog that is not included on our balance sheet consists of customer support and consulting contracts.

We do not believe that backlog, as of any particular date, is a reliable indicator of future performance. We typically receive and fulfill most of our orders within the quarter, and a substantial portion of our orders, particularly our larger transactions, are usually received in the last month of each fiscal quarter, with a concentration of such orders in the final week of the quarter. Although it is generally our practice to promptly ship product upon receipt of properly finalized purchase orders, we frequently have license product orders which have not shipped or have otherwise not met all the required criteria for revenue recognition. Although the amount of such license product orders may vary, we generally do not believe that the amount, if any, of such license product orders at the end of a particular quarter is a reliable indicator of future performance because, as noted above, such a large portion of our revenue is concentrated at the end of the quarter.

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Employees

As of January 31, 2005, we had approximately 3,353 full-time employees, including 853 in research and development, 2,088 in consulting, training, sales, support and marketing and 412 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 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, 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 236,000 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 October 2003, in accordance with the accounting literature, we recorded the carrying value of the 40 acres of land adjacent to our San Jose, California offices. We believe our existing facilities will be adequate to meet our anticipated needs for the foreseeable future. See Note 1 of Notes to 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 were to commit to a plan to sell and take related actions with regard to the 40-acre parcel of land in San Jose, California that is recorded in our balance sheet,” for information regarding and risks related to our San Jose land.

Beginning on June 9, 2004, several purported shareholder class action complaints were filed in the United States District Court for the Northern District of California against the Company and several of our officers. The actions were purportedly brought on behalf of purchasers of our publicly-traded securities from November 13, 2003 through May 13, 2004 (the “Class Actions”). The consolidated complaint filed by the lead plaintiff generally alleged that defendants made false statements about our operating results and business, while concealing material information. On February 14, 2005, the court granted defendants’ motion to dismiss the consolidated complaint. On March 11, 2005, the court entered a judgment dismissing the case with prejudice. Beginning on June 15, 2004, several derivative lawsuits were filed by purported Company shareholders in the United States District Court for the Northern District of California and the Superior Court of California, Santa Clara County. The complaints named certain of the Company’s present and former officers and directors as defendants and named the Company as a nominal defendant. These complaints were based on the same facts and circumstances as the Class Actions and generally alleged that the named directors and offices breached their fiduciary duties to the Company. On March 16, 2005, the federal court dismissed the derivative action, without prejudice. Subsequently, plaintiffs for each of the state court actions have filed Notices of Entry of Dismissal, all of which have been entered by the court.

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In 2003, Software AG and its domestic subsidiary filed a complaint against us in the United States District Court for the District of Delaware alleging that certain of our products, including WebLogic Server, WebLogic Integration and WebLogic Workshop infringe U.S. Patent No. 5,329,619 held by Software AG and its domestic subsidiary. Software AG’s complaint sought unspecified monetary damages and an injunction against infringement. In 2003, we counterclaimed against Software AG requesting a declaratory judgment of noninfringement, invalidity and inequitable conduct by Software AG. A trial date of May 2, 2005 has been set.

Software AG has now quantified the damages it seeks to be approximately $63 million (plus prejudgment interest and attorneys fees), in addition to injunctive relief. Software AG also asserts that we willfully infringed the patent Software AG holds. If a finding of willful patent infringement were upheld, Software AG could be awarded damages of up to three times the amount of any actual damages that were found.

While management currently believes the amount of ultimate liability, if any, with respect to these actions will not materially affect the our financial position, overall trends in results of operations, or liquidity, the ultimate outcome of any litigation or claim is uncertain, and the impact of an unfavorable outcome could be material to us.

On November 29, 2004, we filed a complaint against Software AG and Software AG, Inc. in the United States District Court for the Eastern District of Virginia alleging that certain products of Software AG and Software AG, Inc. infringe US. Patent Nos. 6,115,744 and 5,619,710 held by us. Software AG has counterclaimed, seeking a declaratory judgment that our patents are invalid and not infringed.

In February 2005, we filed a petition with the U.S. Patent and Trademark Office seeking reexamination of Software AG’s patent number 5,329,619. The PTO’s decision on whether or not to grant a reexamination is expected by early May 2005.

No matters were submitted to a vote of security holders during the fourth quarter of fiscal year 2005.

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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 888 stockholders of record as of March 31, 2005.

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.

Issuer Purchases of Equity Securities

Stock Repurchases:

The following table summarizes our stock repurchase activity including broker commissions for the three months ended January 31, 2005

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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.

No cash dividends have been declared or paid and no redeemable preferred stock was outstanding in any period presented.

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Executive Summary

During fiscal 2005, revenues increased from fiscal 2004 primarily due to continued increases in our customer support revenues, as well as favorable foreign exchange rate impacts resulting from the translation of our international revenues into U.S. Dollars. Revenue increased 21.5 percent for services (customer support, consulting and education) and declined 7.3 percent for licenses. Europe, Middle East and Africa (“EMEA”) and Asia/Pacific (“APAC”) reported revenue growth, whereas, the Americas (U.S., Canada, Mexico and Latin America) revenues declined. Most expenses increased in absolute dollars, but remained fairly consistent year over year as a percentage of revenues. Additionally, our international revenues and profitability benefited from foreign currencies strengthening against the U.S. Dollar. In fiscal 2005, changes in exchange rates resulted in increased revenues of $45.6 million and increased expenses of $25.5 million when compared with international results translated at a constant exchange rate.

During fiscal 2004, revenues increased from fiscal 2003 primarily due to a slight increase in technology spending, new product introductions, continued increases in our customer support revenues, as well as favorable foreign exchange rate impacts on our international operations. Revenue increased for both licenses and services. Additionally, each geographical region also reported revenue growth. The benefit of our fiscal 2003 cost containment measures continued to be reflected during the year, resulting in increased net income from fiscal 2003. Our international operations benefited from foreign currencies strengthening against the U.S. Dollar. In fiscal 2004, changes in exchange rates resulted in increased revenues of $50.5 million and increased expenses of $29.0 million compared with international results when translated at a constant exchange rate period over period.

As discussed below in the Results of Operations section, we have seen a generally increasing trend toward multi-million dollar licensing arrangements since fiscal 2002.

Seasonality. Our first fiscal quarter license revenues are typically lower than license revenues in the immediately preceding fourth fiscal quarter because our commission plans and other sales incentives are structured for annual performance and contain bonus provisions based on annual quotas that typically are triggered in the later quarters in a year. In addition, many of our customers begin a new fiscal year on January 1 and it is common for capital expenditures to be lower in an organization’s first quarter than in its fourth quarter. We anticipate that the negative impact of seasonality on our first fiscal quarter results will continue.

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Results of Operations

The following table sets forth certain line items in BEA’s consolidated statements of operations as a percentage of total revenues for the fiscal years ended January 31, 2005, 2004, and 2003.