<PAGE>

================================================================================

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549


                                   FORM 10-Q

(Mark One)

X    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
-
     Act of 1934

For the quarterly period ended July 31, 1999

                                      OR

___  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the transition period from _______ to ________.

                        Commission File Number: 0-22369


                               BEA SYSTEMS, INC.
            (Exact name of registrant as specified in its charter)


               Delaware                                      77-0394711
     (State or other jurisdiction of                    (I. R. S. Employer
      incorporation or organization)                    Identification No.)

                            2315 North First Street
                          San Jose, California 95131
                   (Address of principal executive offices)


                                (408) 570-8000
             (Registrant's telephone number, including area code)

     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   X                                                 No  __
               -

     As of August 31, 1999, there were approximately 60,590,000 shares of the
Registrant's Common Stock outstanding and 17,824,000 shares of Registrant's
Class B Common Stock outstanding.

================================================================================
<PAGE>

                               BEA SYSTEMS, INC.

                                     INDEX

<TABLE>
<CAPTION>
PART I.   FINANCIAL INFORMATION                                                                                 Page No.
                                                                                                                --------
<S>                                                                                                             <C>
ITEM 1.   Financial Statements (Unaudited):

          Condensed Consolidated Statements of Operations
            Three and Six months ended July 31, 1999 and 1998...................................................    3

          Condensed Consolidated Balance Sheets
            July 31, 1999 and January 31, 1999..................................................................    4

          Condensed Consolidated Statements of Cash Flows
            Six months ended July 31, 1999 and 1998.............................................................    5

          Notes to Condensed Consolidated Financial Statements..................................................    6

ITEM 2.   Management's Discussion and Analysis of Financial Condition and Results of
          Operations............................................................................................    8

ITEM 3.   Quantitative and Qualitative Disclosure about Market Risks............................................   22


PART II.  OTHER INFORMATION

ITEM 4.   Submission of Matters to a Vote of Security Holders...................................................   24

ITEM 6.   Exhibits and Reports on Form 8-K......................................................................   24

Signatures......................................................................................................   25
</TABLE>

                                       2
<PAGE>

PART I.   FINANCIAL INFORMATION

ITEM I.   FINANCIAL STATEMENTS


                               BEA SYSTEMS, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE LOSS
                     (in thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                     Three months ended                 Six months ended
                                                                          July 31,                           July 31,
                                                                 --------------------------         ----------------------------
                                                                   1999             1998             1999              1998
                                                                 ----------      -----------        ----------       -----------
<S>                                                              <C>             <C>                <C>              <C>
Revenues:
     License fees                                                $  64,897       $   45,893         $ 120,803        $   86,512
     Services                                                       38,315           21,678            67,984            39,588
                                                                 ---------       ----------         ---------        ----------
          Total revenues                                           103,212           67,571           188,787           126,100

Cost of revenues:
     Cost of license fees                                              952              842             2,117             1,623
     Cost of services                                               21,741           13,527            38,382            24,991
     Amortization of acquired intangible assets                      7,262            5,226            14,102             8,408
                                                                 ---------       ----------         ---------        ----------
          Total cost of revenues                                    29,955           19,595            54,601            35,022
                                                                 ---------       ----------         ---------        ----------
Gross profit                                                        73,257           47,976           134,186            91,078

Operating expenses:
     Sales and marketing                                            48,528           31,897            90,318            58,944
     Research and development                                       13,800           10,484            25,844            20,977
     General and administrative                                     10,977            6,236            20,087            12,165
     Acquisition-related charges                                         -           38,300                 -            38,791
                                                                 ---------       ----------         ---------        ----------
          Total operating expenses                                  73,305           86,917           136,249           130,877
                                                                 ---------       ----------         ---------        ----------
Loss from operations                                                   (48)         (38,941)           (2,063)          (39,799)

Interest income/(expense) and other, net                              (285)            (257)             (673)               75
                                                                 ---------       ----------         ---------        ----------
Loss before provision for income taxes                                (333)         (39,198)           (2,736)          (39,724)

Provision for income taxes                                           1,735            1,056             3,300             1,679
                                                                 ---------       ----------         ---------        ----------
Net loss                                                            (2,068)         (40,254)           (6,036)          (41,403)
Other comprehensive income/(loss):
     Foreign currency translation adjustments                          185              (65)             (125)               36
     Unrealized loss on available-for-sale investments, net of
       income taxes                                                    (94)             (16)             (116)              (37)
                                                                 ---------       ----------         ---------        ----------
Comprehensive loss                                               $  (1,977)      $  (40,335)        $  (6,277)       $  (41,404)
                                                                 =========       ==========         =========        ==========

Basic and diluted net loss per share                             $   (0.03)      $     (.59)        $   (0.08)       $    (0.61)
                                                                 =========       ==========         =========        ==========

Shares used in computing basic and diluted net loss per share       76,620           68,337            76,185            67,858
                                                                 =========       ==========         =========        ==========
</TABLE>

                            See accompanying notes.

                                       3
<PAGE>

                               BEA SYSTEMS, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)

<TABLE>
<CAPTION>
                                                                                    July 31, 1999        January 31, 1999
                                                                                 -------------------   --------------------
                                                                                     (Unaudited)

<S>                                                                              <C>                   <C>
                                   ASSETS
 Current assets:
      Cash and cash equivalents                                                   $         246,996      $          232,556
      Short-term investments                                                                 13,875                   3,895
      Accounts receivable, net                                                               94,866                  77,068
      Other current assets                                                                    6,874                   4,279
                                                                                  -----------------      ------------------
           Total current assets                                                             362,611                 317,798


 Computer equipment, furniture and leasehold improvements, net                               22,046                  17,185
 Acquired intangible assets, net                                                             50,169                  58,901
 Other assets                                                                                 9,078                   9,127
                                                                                  -----------------      ------------------
           Total assets                                                           $         443,904      $          403,011
                                                                                  =================      ==================



                    LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
      Borrowing under lines of credit                                             $               -      $              679
      Accounts payable                                                                        8,630                   7,615
      Accrued liabilities                                                                    60,827                  47,747
      Accrued income taxes                                                                    6,472                   5,991
      Deferred revenues                                                                      56,246                  33,784
      Current portion of notes payable and capital lease obligations                             38                      43
                                                                                  -----------------      ------------------
           Total current liabilities                                                        132,213                  95,859


 Notes payable and other long-term obligations                                                  860                     112
 Convertible subordinated notes                                                             250,000                 250,000
 Commitments and contingencies

 Stockholders' equity:
      Common stock                                                                               78                      77
      Additional paid-in capital                                                            252,785                 243,097
      Accumulated deficit                                                                  (189,149)               (183,116)
      Notes receivable from shareholders                                                       (544)                   (544)
      Deferred compensation                                                                  (1,504)                 (1,880)
      Accumulated other comprehensive loss                                                     (835)                   (594)
                                                                                  -----------------      ------------------
           Total stockholders' equity                                                        60,831                  57,040
                                                                                  -----------------      ------------------
           Total liabilities and stockholders' equity                             $         443,904      $          403,011
                                                                                  =================      ==================
</TABLE>

                            See accompanying notes

                                       4
<PAGE>

                               BEA SYSTEMS, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                          Six months ended
                                                                                              July 31,
                                                                                  -------------------------------
                                                                                      1999                1998
                                                                                  ------------        -----------
<S>                                                                               <C>                 <C>
Operating activities:
    Net loss                                                                      $      (6,033)      $   (41,403)
    Adjustments to reconcile net loss to net cash provided by operating
     activities:
       Depreciation                                                                       3,429             1,720
       Amortization of deferred compensation                                                376               458
       Amortization of certain acquired intangible assets and
        acquisition-related charges                                                      16,688            47,708
       Amortization of debt issuance costs                                                  522               139
       Changes in operating assets and liabilities                                       14,268            (5,276)
       Other                                                                               (264)               (5)
                                                                                  -------------       -----------
Net cash provided by operating activities                                                28,986             3,341
                                                                                  -------------       -----------
    Amortization of acquired intangible assets

Investing activities:
    Purchase of computer equipment, furniture and
      leasehold improvements                                                             (8,203)           (5,188)
    Payments for business combinations, net of cash acquired                             (6,051)          (98,358)
    Net maturities/(purchases) of available-for-sale short-term investments             (10,096)         (206,646)
                                                                                  -------------       -----------
Net cash used in investing activities                                                   (24,350)         (310,192)
                                                                                  -------------       -----------

Financing activities:
    Net borrowings under lines of credit                                                   (679)              263
    Net payments on notes payable and capital lease obligations                            (102)          (12,731)
    Net proceeds from issuance of common stock and preferred stock                        9,689           249,870
                                                                                  -------------       -----------
Net cash provided by financing activities                                                 8,908           237,402
                                                                                  -------------       -----------


Net increase in cash and cash equivalents                                                13,544           (69,449)

Effect of exchange rate changes on cash                                                     896                67

Cash and cash equivalents at beginning of period                                        232,556            99,989
                                                                                  -------------       -----------
Cash and cash equivalents at end of period                                        $     246,996       $    30,607
                                                                                  =============       ===========
</TABLE>

                            See accompanying notes.

                                       5
<PAGE>

                               BEA SYSTEMS, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 1.  Basis of Presentation

     The condensed consolidated financial statements included herein are
unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position, results of operations and cash flows for
the interim periods. These condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto, together with Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in the BEA Systems, Inc. ("BEA" or
the "Company") Annual Report on Form 10-K for the fiscal year ended January 31,
1999. The results of operations for the three and six months ended July 31, 1999
are not necessarily indicative of the results for the entire fiscal year ending
January 31, 2000.

     The Company acquired Leader Group, Inc. ("Leader Group") on April 30, 1998
and WebLogic, Inc. ("WebLogic") on September 30, 1998 in merger transactions
accounted for as poolings of interests. The results of operations for the three
and six months ended July 31, 1998 have been restated to reflect the combined
operations of the Company, Leader Group and WebLogic.

     The consolidated balance sheet at January 31, 1999 has been derived from
the audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.

Note 2.  Earnings Per Share

     The Company has adopted Statement of Financial Accounting Standard No. 128,
Earnings per Share ("FAS 128"). Under this standard, basic net loss per share is
computed based on the weighted average number of shares of the Company's common
stock. Diluted net loss per share is computed based on the weighted average
number of shares of the Company's common stock and common equivalent shares
(stock options, warrants, convertible notes and preferred stock), if dilutive.

     The following is a reconciliation of the numerators and denominators of the
basic and diluted loss per share computations (in thousands, except per share
data):

<TABLE>
<CAPTION>
                                              Three months ended             Six months ended
                                                   July 31,                      July 31,
                                           -------------------------     -------------------------
                                              1999           1998           1999           1998
                                           ----------     ----------     ----------     ----------
<S>                                       <C>            <C>            <C>            <C>
Basic and diluted loss per share:
Numerator:
  Net loss                                $   (2,068)    $  (40,254)    $  (6,036)     $  (41,403)
                                           ==========     ==========     ==========     ==========

Denominator:
  Weighted average shares                     77,539         69,991        77,196          69,604
  Shares subject to repurchase                  (919)        (1,654)       (1,011)         (1,746)
                                           ----------     ----------     ----------     ----------
  Weighted average shares, net                76,620         68,337        76,185          67,858
                                           ==========     ==========     ==========     ==========

  Basic and diluted net loss per share    $    (0.03)    $    (0.59)    $   (0.08)     $    (0.61)
                                           ==========     ==========     ==========     ==========
</TABLE>

     The computations of basic and diluted net loss per share for the three and
six months ended July 31, 1999 and 1998 excludes the impact of approximately 5.9
million and 5.5 million stock options, respectively, as well as the conversion
of the 4% Convertible Subordinated Notes issued in June and July 1998 (See Note
3), which are convertible into 9,466,111 shares of common stock, as such impact
would be antidilutive for the periods presented.

                                       6
<PAGE>

Note 3.  Convertible Subordinated Debt Offering

     In June and July, 1998, the Company completed the sale of $250 million of
4% Convertible Subordinated Notes ("Notes") due June 15, 2005 in an offering to
Qualified Institutional Buyers. The Notes are subordinated to all existing and
future senior indebtedness of the Company, and the principal amount of the Notes
is convertible into common stock of the Company at a conversion rate of 37.87
shares per $1,000 principal amount of Notes (equivalent to an approximate
conversion price of $26.41 per share). The Notes are redeemable at the option of
the Company in whole or in part at any time on or after June 5, 2001, in cash
plus accrued interest, if any, through the redemption date, subject to certain
events. Interest is payable semi-annually on June 15th and December 15th.

Note 4.  Comprehensive Loss

     On February 1, 1998, the Company adopted Statement of Financial Accounting
Standard No. 130, Reporting Comprehensive Income ("FAS 130"). This standard
established new rules for the reporting and display of comprehensive loss and
its components and requires unrealized gains or losses on the Company's
available-for-sale securities and the foreign currency translation adjustments
to be included in other comprehensive loss.

     The components of accumulated other comprehensive loss are as follows
(in thousands):


<TABLE>
<CAPTION>
                                                                      July 31,              January 31,
                                                                 -----------------       -----------------
                                                                        1999                   1999
                                                                 -----------------       -----------------
<S>                                                              <C>                     <C>
Foreign currency translation adjustment                               $    (692)              $    (567)
Unrealized loss on available-for-sale investments, net of tax              (143)                    (27)
                                                                      ---------               ---------
Total accumulated other comprehensive loss                            $    (835)              $    (594)
                                                                      =========               =========
</TABLE>

Note 5.  Industry and Geographic Segment Information

     Information regarding the Company's operations by geographic areas at July
31, 1999 and 1998 and for the three and six months then ended is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                 Three months ended           Six months ended
                                                      July 31,                     July 31,
                                             -------------------------    -------------------------
                                                1999           1998          1999           1998
                                             ----------     ----------    ----------     ----------
     <S>                                     <C>            <C>           <C>            <C>
     Total revenues
       United States                         $   61,259     $   39,570    $  112,098     $   67,543
       Europe, Middle East and Africa (EMEA)     32,894         23,738        61,145         47,722
       Asia/Pacific and other                     9,059          4,263        15,544         10,835
                                             ----------     ----------    ----------     ----------
                                             $  103,212     $   67,571    $  188,787     $  126,100
                                             ==========     ==========    ==========     ==========
     Long-lived assets (at July 31):
       United States                         $   55,650     $   84,956
       Europe, Middle East and Africa             2,677          2,774
       Asia/Pacific and other                    22,966          8,966
                                             ----------     ----------
                                             $   81,293     $   96,696
                                             ==========     ==========
</TABLE>

     Within EMEA, France represented 11 percent of total revenues for the three
and six months ended July 31, 1999. Revenue is attributed to regions based upon
customer location.

NOTE 6. Subsequent Event.

     In August 1999, the Company purchased Avitek, Inc. for approximately
$9.6 million in cash. The Company expects a significant portion of the purchase
price to be allocated to intangible assets.

                                       7
<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

     The following discussion of the financial condition and results of
operations of BEA Systems, Inc. ("BEA" or the "Company") should be read in
conjunction with the Management's Discussion and Analysis of Financial Condition
and Results of Operations and the Consolidated Financial Statements and the
Notes thereto included in the Company's Annual Report on Form 10-K for the year
ended January 31, 1999. This quarterly report on Form 10-Q 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 using terminology such as "may," "will,"
"expects," "plans," "anticipates," "estimates," "potential," or "continue," or
the negative thereof or other comparable terminology regarding beliefs, plans,
expectations or intentions regarding the future. Forward-looking statements
include statements regarding growth in the middleware market, consolidation of
companies serving the middleware market and opportunities for BEA related
thereto, future acquisitions or licensing transactions, building sales capacity
and pursuing partnerships with other companies, future cost and expense levels,
expected timing and amount of amortization expenses related to acquisitions, the
adequacy of resources to meet future cash requirements, future hiring,
evaluation and resolution of the Year 2000 problem, and expenses, costs and
material disruptions in the Company's business related to the Year 2000 problem.
These forward-looking statements involve risks and uncertainties and actual
results could differ materially from those discussed in the forward-looking
statements. These risks and uncertainties include, but are not limited to, those
described in this Management's Discussion and Analysis of Financial Condition
and Results of Operations under the headings, "Overview," "Year 2000 Compliance"
and "Factors That May Impact Future Operating Results." All forward-looking
statements and risk factors included in this document are made as of the date
hereof, based on information available to BEA as of the date thereof, and BEA
assumes no obligation to update any forward-looking statement or risk factors.

Overview

     BEA Systems, Inc. ("BEA" or the "Company") is a leading provider of
mission-critical Web and transaction middleware solutions for the world's
largest enterprises. BEA's product line enables end-to-end, integrated solutions
for electronic commerce and business-critical systems. BEA products include BEA
TUXEDO, the industry's market share leader for distributed transaction
management platforms; BEA WebLogic, a leading application server family
providing CORBA and Java solutions; and BEA eLink, a solution for integrating
enterprise applications. BEA also provides a broad suite of consulting,
education, and customer support offerings to preserve and maximize technology
investments in BEA products.

     Potential Spending Freeze Related to Year 2000. Industry sources widely
predict that many large corporations will stop deploying new computer systems in
late 1999 and early 2000, in order to avoid disrupting their computer systems
before the year 2000. Large corporations represent the majority of BEA's
customer base, and a material portion of our license fees come from new computer
system deployments. BEA is monitoring its customer base, especially customers
expected to place orders in late 1999, to determine their plans and has been
informed by some of our customers that they intend to stop deploying new
computer systems in late 1999 and early 2000. However, BEA currently believes
that its business will not likely be materially affected by these delays. BEA is
also taking several management steps to reduce our exposure to Year 2000
deployment delays, such as providing special incentives to our sales force
during this time and focussing on transactions that are not dependent on new
deployments of pending projects. However, if the Year 2000 related delays in
deployments are larger than we anticipate, start earlier or last longer than we
anticipate, or involves more of our targeted customers than we anticipate, our
revenues in late 1999 or early 2000 could be materially lower than expected. We
also may experience reduced sales as customers reduce their budgets for and
personnel allocated to middleware and web application software deployments due
to increased expenditures and work on Year 2000 compliance. See "Factors That
May Impact Future Operating Results--Potential Fluctuations in Quarterly
Operating Results."

     Acquisitions. Since its inception, BEA has acquired several companies and
product lines, and distribution rights to product lines. Through these
acquisitions, BEA has added additional product lines, additional functionality
to its existing products, additional direct distribution capacity and additional
service capacity. These acquisitions have resulted in significant charges to
BEA's operating results in the periods in which the acquisitions were completed
and have added intangible assets to BEA's balance sheet, the value of which is
being amortized and charged to BEA's operating results over periods ranging from
two to five years after completion of the acquisitions. BEA's management views
the middleware market as growing but that companies serving that market are
consolidating, and that this consolidation presents an opportunity for BEA to
further expand its product lines and functionality, distribution capacity and
services offerings and to add new, related lines of business. BEA

                                       8
<PAGE>

anticipates that it will make additional, perhaps material, acquisitions in the
future. The timing of any such acquisition is impossible to predict and the
charges associated with any such acquisition could materially adversely affect
BEA's results of operations beginning in the periods in which any such
acquisition is completed.

     Investment in Distribution Channel. BEA is currently investing in building
its sales capacity by aggressively hiring sales and technical sales support
personnel, as well as aggressively pursuing partnerships with system platform
companies, packaged application software developers, systems integrators and
independent consultants, independent software tool vendors, and distributors.
This investment results in an immediate increase in expenses, especially in
sales and marketing, although the return on such investments, if any, is not
anticipated to occur until future periods.

     BEA eSolutions and eLink. BEA is developing and marketing a set of
solutions for enterprise application integration and application development,
especially in the area of electronic commerce. BEA's planned investment in this
effort may affect BEA's anticipated overall financial results, particularly
service revenues as a percentage of total revenues, cost of revenues as a
percentage of total revenues, and research and development expense as a
percentage of total revenues. In addition, investment in this project results in
an immediate increase in expenses, especially in research and development,
although the return on such investment, if any, is not anticipated to occur
until future periods. The expenses adversely affect BEA's operating results in
the short term and also in the long term if the anticipated benefits of such
investment do not materialize.

     Change in Sales Cycles. Since mid-fiscal 1999, BEA has experienced changes
in sales cycles for its products. In September 1998, BEA completed its merger
with WebLogic, Inc. ("WebLogic"), whose products tend to have a shorter sales
cycle than BEA's enterprise application solutions. During the second half of
fiscal 1999, an increasing number of BEA customers began negotiating licenses to
use BEA's enterprise application solutions products as an architectural platform
for several applications. These architectural commitments are larger in scope
and potential revenue than single project transactions. In some cases, these
architectural commitments have longer sales cycles than BEA's typical
transactions, both because of the customer's decision cycle in adopting an
architectural platform and because of heightened corporate approval requirements
for larger contracts. In some cases, architectural commitment transactions have
a shorter than usual sales cycle, in order for the customer to proceed with
development of the new applications. These contrasting changes in the sales
cycles and product mix may affect BEA's future quarterly revenues, revenue mix
and operating results.

     Increase in Service Revenues as a Percentage of Total Revenues. Service
revenues have increased as a percentage of total revenues, from 32 percent of
total revenues in the quarter ended July 31, 1998 to 37 percent in the quarter
ended July 31, 1999. Although gross margin on service revenues increased from
38 percent to 43 percent of service revenues over the same period, gross
margin on service revenues is significantly lower than gross margin on license
revenues. BEA has made a strategic decision to increase services, to as high as
40 percent of total revenues over the course of the next several quarters. BEA
believes that its customer base is in the process of transitioning to mission-
critical applications based on CORBA and Java programming models, but that
customers typically do not have sufficient numbers of programmers experienced in
building large, reliable systems on these programming models. BEA believes that
by providing its customers with additional services, especially in architecting,
building and deploying CORBA and Java systems and training customers'
programmers to develop these systems, BEA will speed customers' deployment of
systems based on our CORBA and Java platform products, resulting in license
fees for use of those platform products. The increase in service revenues as a
percentage of total revenues will have a negative impact on gross margins and
could have a negative impact on operating margins if the increase in service
revenues do no result in an increase in license revenues.

Results of Operations

Three and six months ended July 31, 1999 and 1998

Revenues

     BEA's revenues are derived from fees for software licenses, customer
support, education and consulting services. Total revenues increased by $35.6
million, or 53 percent from the quarter ended July 31, 1998 to the quarter ended
July 31, 1999. Total revenues also increased $62.7 million or 50 percent from
the six months ended July 31, 1998 to the six months ended July 31, 1999. These
increases reflect additional sales to existing customers, the addition of new
customer accounts and an increase in product and service offerings.

                                       9
<PAGE>

     License Revenues. License revenues increased 41 percent from the second
quarter of fiscal 1999 to the second quarter of fiscal 2000. For the six months
ended July 31, 1999, license revenues increased $34.3 million or 40 percent from
the six months ended July 31, 1998. The increases in license revenues were
mainly due to continued customer and market acceptance of the Company's
products, and expansion of the Company's direct sales force. License revenues as
a percentage of total revenues represented 63 percent and 68 percent of total
revenues in the second quarters of fiscal 2000 and 1999, respectively, and 64
percent and 69 percent of total revenues for the six month periods ended July
31, 1999 and 1998, respectively. The decreases in both the quarterly and six
month period comparisons were attributable to the percentage increases in
service revenues as a result of the Company's increased focus on its service
offerings.

     Service Revenues. Service revenues increased 77 percent in the second
quarter of fiscal 2000 compared with the same quarter in fiscal 1999. For the
six months ended July 31, 1999, services revenues increased $28.4 million or 72
percent from the same period of the prior fiscal year. Service revenues as a
percentage of total revenues represented 37 percent and 32 percent of total
revenues in the second quarter of fiscal 2000 and 1999, respectively, and 36
percent and 31 percent of total revenues for the six months ended July 31, 1999
and 1998, respectively. These increases were primarily due to the increase in
application and component development projects, increased charges for customer
support resulting from increased license sales, an increase in consulting
services offered by the Company, and increased numbers of service personnel and
consultants.

     International Revenues. International revenues accounted for 41 percent of
total revenue for the second quarter of both fiscal 2000 and 1999. For the six
months ended July 31, 1999 and 1998, international revenues were 41 percent and
46 percent of total revenues, respectively. The increase in absolute dollars was
the result of expansion of the Company's international sales force and the
improvement in the economic conditions of the Asia/Pacific region.

     Revenues from the European, Middle East and Africa region ("EMEA") and
Asia/Pacific region ("APAC") increased in the second quarters of fiscal 2000 and
1999 to $32.9 million and $8.6 million, respectively, from $23.7 million and
$4.0 million in the same quarter of the prior fiscal year. Revenues from EMEA
represented 32 percent of total revenues in the second quarter of fiscal 2000,
compared with 35 percent in the same quarter of the prior fiscal year. Revenues
from APAC represented 8 percent of total revenues in the second quarter of
fiscal 2000, compared with 6 percent in the same quarter of the prior fiscal
year. The decrease in EMEA was the direct result of the expansion of the
Company's domestic sales force and increased domestic revenue resulting from the
acquisition of WebLogic. The increase in APAC was primarily the result of the
gradual improvement in the economic conditions in that region.

Cost of Revenues

     Total cost of revenues represented 29 percent of total revenues in both
quarters ended July 31, 1999 and 1998.

     Cost of Licenses. Cost of licenses includes expenses related to the
purchase of disks and compact discs, costs associated with transferring the
Company's software to electronic media, the printing of user manuals, packaging
and distribution costs. Cost of licenses represented approximately 2 percent of
license revenues for the second quarter of both fiscal 2000 and 1999, and the
six month periods ended July 31, 1999 and 1998.

     Cost of Services. Cost of services consists primarily of salaries and
benefits for consulting, education and product support personnel. Cost of
services increased 61 percent in the second quarter of fiscal 2000 compared to
the same quarter of the prior fiscal year. For the six months ended July 31,
1999, cost of services increased $13.4 or 54 percent from the same period of the
prior fiscal year. These increases were the result of the increase in
application and component development projects, the expansion of customer
support centers in Europe and Asia, overall increased demand for the Company's
services, and increased professional services headcount. Cost of services
represented 57 percent and 62 percent of service revenues in the quarters ended
July 31, 1999 and 1998, respectively. For the six months ended July 31, 1999 and
1998, cost of services represented 56 percent and 63 percent of service
revenues, respectively. Cost of services as a percentage of service revenues
decreased primarily as a result of nonrecurring fixed costs associated with the
fiscal 1999 expansion of support centers in Europe and Asia. In the future,
management expects the cost of services as a percentage of services revenue to
range between 55 percent and 65 percent, as the Company continues to build its
support and service organization.

     Amortization of Acquired Intangible Assets. The amortization of acquired
intangible assets, consisting of developed technology, distribution rights,
trademarks and tradenames, totaled $7.3 million and $5.2 million for the second
quarter of fiscal years 2000 and 1999, respectively. For the six months ended
July 31, 1999 and 1998, amortization of certain acquired intangible assets
totaled $14.1 million and $8.4 million, respectively. These increases were
primarily due to intangible assets

                                       10
<PAGE>

resulting from a number of strategic acquisitions, particularly the fiscal 1999
acquisition of the TOP END product. In the future, amortization expense
associated with intangible assets recorded through July 31, 1999 is expected to
total $6.7 million and $6.5 million for the third and fourth quarter of fiscal
2000, approximately $21.2 million, $1.3 million, and $411,000 for the fiscal
years ending January 31, 2001, 2002 and thereafter, respectively.

Operating Expenses

     Sales and Marketing. Sales and marketing expenses include salaries,
benefits, sales commissions, travel, and facility costs for the Company's sales
and marketing personnel. These expenses also include programs aimed at
increasing revenues, such as advertising, public relations, trade shows and user
conferences. Sales and marketing expenses increased 52 percent in the second
quarter of fiscal 2000 compared with the same quarter of the prior fiscal year.
For the six months ended July 31, 1999, sales and marketing expenses increased
$31.4 million or 53 percent from the same period of the prior fiscal year. These
expenses represented 47 percent of total revenues for both quarters ended July
31, 1999 and 1998 and 48 percent and 47 percent of total revenues for the six
month periods ended July 31, 1999 and 1998, respectively. The Company expects to
continue to invest in sales channel expansion and marketing programs to promote
the Company's products. Accordingly, the Company expects sales and marketing
expenses to continue to increase in future periods in absolute dollars.

     Research and Development. Research and development expenses consist
primarily of salaries and benefits for software engineers, contract development
fees, costs of computer equipment used in software development and facilities
expenses. Total expenditures for research and development increased 32 percent
in the second quarter of fiscal 2000 compared with the same quarter in fiscal
1999. For the six months ended July 31, 1999, research and development expenses
increased $4.9 million or 23 percent from the same period of the prior fiscal
year. Research and development expenses represented 13 percent and 16 percent of
total revenues in the second quarter of fiscal 2000 and 1999, respectively and
14 percent and 17 percent of total revenues in the six month periods ended July
31, 1999 and 1998, respectively. The increase in research and development
spending in absolute dollars was attributed to an increase in software
development personnel and related expenses. The decrease in research and
development expenses as a percentage of total revenues was primarily due to the
substantial increase in license and service revenues. The Company expects to
continue to commit substantial resources to product development and engineering
in future periods. As a result, the Company expects research and development
expenses to continue to increase in absolute dollars in future periods.
Additionally, management intends to continue recruiting and hiring experienced
software development personnel and to consider the licensing and acquisition of
technologies complementary to the Company's business.

     General and Administrative. General and administrative expenses include
costs for the Company's human resources, finance, information technology,
facilities and general management functions, as well as the amortization of
goodwill associated with various acquisitions. General and administrative
expenses increased 76 percent in the second quarter of fiscal 2000 compared with
the same quarter of fiscal 1999. For the six months ended July 31, 1999, general
and administrative expenses increased $7.9 million or 65 percent from the same
period of the prior fiscal year. General and administrative expenses represented
11 percent and 9 percent of total revenues for the quarters ended July 31, 1999
and 1998, respectively and 11 percent and 10 percent of total revenues for the
six month periods ended July 31, 1999 and 1998, respectively. The increases in
general and administrative expenses were attributed to the increase in goodwill
amortization, the expansion of the Company's support infrastructure, including
information systems and associated expenses necessary to manage the Company's
growth. Goodwill amortization totaled $1.6 million and $802,000 in the second
quarter of fiscal 2000 and 1999, respectively. For the six months ended July 31,
1999 and 1998, goodwill amortization totaled $2.6 million and $1.0 million,
respectively. In the future, amortization of goodwill recorded prior to July 31,
1999 is expected to total $2.0 million for each of the remaining quarters in
fiscal 2000, approximately $7.4 million, $2.8 million for fiscal years ending
January 31, 2001, 2002 and thereafter, respectively.

     Acquisition related charges. In the three and six month periods ended July
31, 1998, acquisition related charges were related to direct acquisition
expenses and the write-off of in-process research and development costs
associated with the acquisition of Leader Group, Inc. ("Leader") and the TOP END
product from NCR.

     Interest Expense; Interest Income and Other, Net. Interest expense was $2.5
million in the second quarters of both fiscal 2000 and 1999. Interest expense is
the result of the issuance of the $250 million four percent Convertible
Subordinated Notes ("Notes"). Interest income and other, net was approximately
$2.2 million in the second quarters of both fiscal 2000 and 1999.

                                       11
<PAGE>

     Provision for Income Taxes. While the Company has experienced operating
losses to date, the Company has incurred income tax expense of approximately
$1.7 million and $1.1 million in the second quarters of fiscal years 2000 and
1999, respectively. For the six months ended July 31, 1999 and 1998, income tax
expense totaled approximately $3.3 million and $1.7 million, respectively. The
income tax expense consists primarily of domestic minimum taxes, foreign
withholding taxes and foreign income tax expense incurred as a result of local
country profits. The increase in income taxes in the second quarter of fiscal
2000, relative to the same quarter of the prior fiscal year was primarily due to
an overall increase in foreign corporate income taxes.

     Under Statement of Financial Accounting Standards No.109 Accounting for
Income Taxes ("FAS 109"), deferred tax assets and liabilities are determined
based on the difference between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. FAS 109 provides for the
recognition of deferred tax assets if realization of such assets is more likely
than not. Based upon the available evidence, which includes BEA's historical
operating performance and the reported cumulative net losses from prior years,
the Company has provided a full valuation allowance against its net deferred tax
assets. The Company intends to evaluate the realizability of the deferred tax
assets on a quarterly basis.

Liquidity and Capital Resources

     As of July 31, 1999, total cash, cash equivalents and short-term
investments totaled $260.9 million, up from $236.5 million at January 31, 1999.
The increase in cash, cash equivalents and short-term investments was primarily
due to cash generated from operations.

     Cash generated from operating activities rose to $29.0 million for the six
months ended July 31, 1999, compared with $3.3 million generated in the same
period of the prior fiscal year. The primary sources of cash generated from
operations were an increase in deferred revenue and net income adjusted for non-
cash transactions including depreciation and amortization.

     Investing activities consumed $24.3 million in cash during the six months
ended July 31, 1999, compared with $310.2 million in the same period of the
prior fiscal year. Cash used for investing activities in the first six months of
fiscal 2000 was primarily due to purchases of short-term investments and
computer equipment, furniture and leasehold improvements. In the same period of
the prior fiscal year the primary use of cash for investing activities was
primarily due to the purchases of short-term investments as well as the
acquisition of the TOP END product.

     The Company generated $8.9 million from financing activities in the six
months ended July 31, 1999, compared with $237.4 million in the same period of
the prior fiscal year. The primary source of cash from financing activities in
the first six months of fiscal 2000 was the issuance of common stock by BEA and
in the same period of the prior fiscal year the primary source of cash was the
sale of the Notes.

     As of July 31, 1999, the Company's outstanding short and long-term debt
obligations were $250.9 million, up from $250.1 million at January 31, 1999. At
July 31, 1999, the Company's outstanding debt obligations consisted principally
of the $250 million Notes.

     In addition to normal operating expenses, cash requirements are anticipated
for financing anticipated growth, payment of outstanding debt obligations and
the acquisition or licensing of companies, products and technologies
complementary to the Company's business. The Company believes that its existing
cash, cash equivalents, short-term investments and cash generated from
operations, if any, will be sufficient to satisfy its currently anticipated cash
requirements through July 31, 2000. However, the Company expects to make
additional acquisitions and may need to raise additional capital through future
debt or equity financing to the extent necessary to fund any such acquisitions.
There can be no assurance that additional financing will be available, at all,
or on terms favorable to the Company.

Year 2000 Compliance

     BEA is aware of the issues associated with the programming code in existing
computer systems as the Year 2000 approaches. The "Year 2000 problem" is
pervasive and complex as virtually every computer operation will be affected in
some way by the rollover of the two-digit year value to 00. The issue is whether
computer systems will properly recognize date-

                                       12
<PAGE>

sensitive information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data or cause a
system to fail.

State of Readiness

         The Company has been evaluating the Year 2000 readiness of the most
current versions of BEA WebLogic Enterprise, BEA TUXEDO and its other software
products sold by the Company ("Products"). Internal information technology
systems used in our operations ("IT Systems") and our non-IT Systems, such as
security systems, building equipment, voice mail and other systems are also
being evaluated for Year 2000 readiness. The Company's evaluation primarily
covers: identification of all Products, IT Systems, and non-IT Systems;
assessing business and customer satisfaction risks associated with such systems,
creating action plans to address known risks, executing and monitoring action
plans, and contingency planning.

         The Company has completed the evaluation of the following products and
believes the current versions of these products are Year 2000 compliant:

         .     BEA WebLogic Enterprise

         .     BEA WebLogic Express

         .     BEA WebLogic Server

         .     BEA TUXEDO

         .     BEA Manager

         .     BEA Builder

         .     BEA Jolt

         .     BEA ObjectBroker

         .     BEA ObjectBroker Desktop Connection

         .     BEA MQ Series Connection

         .     BEA Connect

         .     BEA TOP END

         .     BEA TOP END LU6.2 IBM Connectivity

         Some customers may be using software versions that are not Year 2000
compliant. The Company has been encouraging such customers to upgrade to current
product versions.

         The Company has substantially tested BEA TOP END Security Services and
confirmed its Year 2000 compliance.

         With respect to internal IT Systems and non-IT Systems, the Company has
initiated an assessment of its internal IT Systems including third-party
software and hardware technology and its non-IT Systems. To the extent that the
Company is not able to test the technology provided by third-party vendors, the
Company is seeking assurance from such vendors that their systems are Year 2000
compliant. The Company has been informed by substantially all of its material
business application software suppliers that their software is, or shortly will
be, Year 2000 compliant. The software from these suppliers, such as PeopleSoft,
Clarify and Microsoft, is used in the Company's financial, sales, customer
support and administrative operations. Further, the Company relies, both
domestically and internationally, upon various vendors, governmental agencies,
utility companies, telecommunications service companies, delivery service
companies and other service providers who are outside of the Company's control.
There is no assurance that such parties will not suffer a Year 2000 business
disruption, which could have a material adverse effect on the Company's
financial condition and results of operations.

Costs Associated with Year 2000 Issues

         To date, the Company has not incurred any material costs in connection
with identifying or evaluating Year 2000 compliance issues. Most of its expenses
have related to the opportunity cost of time spent by employees of the Company
evaluating its software, the current versions of its products, and Year 2000
compliance matters. It is possible that the Company

                                       13
<PAGE>

may experience additional costs associated with assisting customers with
upgrades, but such costs are not expected by the management to be material.

Risks of Year 2000 Issues

         Although the Company does not believe that it will incur any material
costs or experience material disruptions in its business associated with
preparing its internal systems for the Year 2000, there can be no assurances
that the Company will not experience serious unanticipated negative consequences
and/or material costs caused by undetected errors or defects in the technology
used in its internal systems. Internal systems are primarily composed of
third-party software and third-party hardware which contain embedded software
and the Company's own software products. Worst case scenarios would include:
corruption of data contained in the Company's internal information systems,
hardware failure, and the failure of services provided by government agencies
and other third parties (e.g., electricity, phone service, water transport,
Internet services, etc.). See "Factors That May Impact Future Operating
Results--Risks of Software Defects".

Contingency Plans

         The Company has not fully developed a comprehensive contingency plan to
address situations that may result from the Year 2000. If additional Year 2000
compliance issues are discovered, the Company will evaluate the need for
contingency plans relating to such issues.

Factors That May Impact Future Operating Results

         BEA Systems, Inc. operates in a rapidly changing environment that
involves numerous risks and uncertainties. The following section lists some, but
not all, of these risks and uncertainties which may have a material adverse
effect on the Company's business, financial condition or results of operations.

Limited Operating History; Integration of Acquisitions; No Assurance of
Profitability

         BEA was incorporated in January 1995 and therefore has a limited
operating history. We have generated revenues to date primarily from sales of
BEA TUXEDO, a software product to which we acquired worldwide distribution
rights in February 1996, and from fees for related software products and
services. We have also acquired a number of businesses, technologies and
products, most recently WebLogic, Inc. ("WebLogic"). Our limited operating
history and the difficulties of integrating a number of separate and independent
business operations subject our business to numerous risks. At July 31, 1999, we
had an accumulated deficit of approximately $189.1 million. In addition, in
connection with certain acquisitions completed prior to July 31, 1999, we
recorded approximately $242.1 million as intangible assets. Under Generally
Accepted Accounting Principles, these intangible assets are required to be
amortized in future periods. Approximately $191.9 million of these assets have
been amortized as of July 31, 1999 and we expect to amortize the remaining
approximately $50.2 million in future periods through our fiscal year ending
January 31, 2003. We expect to amortize $17.2 million of such intangible assets
over the remaining quarters of fiscal year ending January 31, 2000 and $28.6
million in the fiscal year ended January 31, 2001. If we acquire additional
businesses, products and technologies in the future, we may report additional,
potentially significant, expenses related thereto. If future events cause the
impairment of any intangible assets acquired in our past or future acquisitions,
we may have to write off expenses sooner than we expect. Because of BEA's
limited operating history and its ongoing write offs associated with prior
acquisitions, there can be no assurance that we will be profitable in any future
period and recent operating results should not be considered indicative of
future financial performance.

Potential Fluctuations in Quarterly Operating Results

         We expect to experience significant fluctuations in our future
quarterly revenues and operating results as a result of many factors, including:

         .    a widely-predicted freeze in deployment of new computer systems by
              large corporations in the second half of calendar year 1999,
              related to remediation of the Y2K problem

         .    the size and timing of customer orders, introduction or
              enhancement of our products or our competitors' products

         .    general economic conditions which can affect our customers'
              capital investment levels and the length of our sales cycle

                                       14
<PAGE>

         .    the impact and duration of deteriorating economic and political
              conditions in Asia

         .    market acceptance of middleware products

         .    the lengthy sales cycle for our products

         .    technological changes in computer systems and environments

         .    the structure, timing and integration of acquisitions of
              businesses, products and technologies

         .    whether we are able to develop, introduce and market new products
              on a timely basis

         .    changes in our competitors' product offerings and pricing
              policies, and customer order deferrals in anticipation of future
              new products and product enhancements from BEA or competitors

         .    whether we are able to expand our sales and marketing programs

         .    the mix of our products and services sold and mix of distribution
              channels

         .    whether we are able to meet our customers' service requirements

         .    costs associated with acquisitions, including the acquisition of
              the TOP END enterprise middleware technology and product family
              from NCR, and the WebLogic acquisition

         .    the terms and timing of financing activities

         .    loss of key personnel

         .    fluctuations in foreign currency exchange rates

         .    interpretations of the accounting pronouncements on software
              revenues recognition.

         Industry sources widely predict that many large corporations will stop
deploying new computer systems in late 1999 and early 2000, in order to avoid
disrupting their computer systems before the Year 2000. Large corporations
represent the majority of BEA's customer base, and a material portion of our
license fees come from new computer system deployments. BEA is monitoring its
customer base, especially customers expected to place orders in late 1999, to
determine their plans and have been informed by some of our customers that they
intend to stop deploying new computer systems. BEA is also taking several
management steps to reduce our exposure to Year 2000 deployment delays, such as
providing special incentives to our sales force during this time and focusing on
transactions that are not dependent on new deployments of pending projects.
However, if the Year 2000 related delays in deployments are larger than we
anticipate, start earlier or last longer than we anticipate, or involves more of
our targeted customers than we anticipate, our revenues in late 1999 or early
2000 could be materially lower than expected. Furthermore, certain of our
customers who originally intended to delay deployments in late 1999 have
informed us that they may accelerate their deployments. This could result in an
unusual fluctuation of orders, in which an unusually large number of orders are
received in the middle of 1999, then an unusual decrease in orders in subsequent
quarters. Customer behavior, and consequently our orders, during this period
will be unusually difficult to forecast.

                                       15
<PAGE>

         As a result of all of these factors, we believe that quarterly revenues
and operating results are difficult to forecast and period-to-period comparisons
of our results of operations are not necessarily meaningful and should not be
relied upon as indications of trends or future performance.

         Our revenues are derived principally from large orders as customers
deploy our products throughout their organizations. Increases in the dollar size
of individual license transactions also increase the risk of fluctuation in
future quarterly results. If we cannot generate large customer orders, or
customers delay or cancel such orders in a particular quarter, it will have a
material adverse effect on our revenues and, more significantly on a percentage
basis, our net income or loss in that quarter. Moreover, we typically receive
and fulfill a majority of our orders within the quarter, with the substantial
majority of our orders received in the last month of each fiscal quarter. As a
result, we may not learn of revenues shortfalls until late in a fiscal quarter,
after it is too late to adjust expenses for that quarter. Additionally, our
operating expenses are based in part on our expectations for future revenues and
are relatively fixed in the short term. Any revenue shortfall below our
expectations could have an immediate and significant adverse effect on our
results of operations.

         Similarly, shortfalls in our revenues and earnings from levels expected
by securities analysts, or decreases in revenue or earnings projections by
securities analysts could have an immediate and significant adverse effect on
the trading price of our common stock. Moreover, our stock price is subject to
the volatility generally associated with software and technology stocks and may
also be affected by broader market trends unrelated to our performance.

Risks Associated with Past and Future Acquisitions

         From our inception in January 1995, we have made a number of strategic
acquisitions. Integration of acquired companies, divisions and products involves
the assimilation of potentially conflicting operations and products, which
divert the attention of our management team and may have a material adverse
effect on our operating results in future quarters. We acquired Leader Group,
Inc. ("Leader Group") and a business unit of Penta Systems Technology, Inc.
("Penta") in the quarter ended April 30, 1998, TOP END in June 1998, the
Entersoft Systems Corporation ("Entersoft") in July 1998, WebLogic, Inc.
("WebLogic") in September 1998, Component Systems, LLC in May 1999 and Avitek,
Inc. ("Avitek") in August 1999. We intend to make additional acquisitions in the
future, although there can be no assurance that suitable companies, divisions or
products will be available for acquisition. Such acquisitions entail numerous
risks, including the risk we will not successfully assimilate the acquired
operations and products, or retain key employees of the acquired operations.
There are also risks relating to the diversion of our management's attention,
and difficulties and uncertainties in our ability to maintain the key business
relationships the acquired entities have established. In addition, if we
undertake future acquisitions, we may issue dilutive securities, assume or incur
additional debt obligations, incur large one-time expenses, and acquire
intangible assets that would result in significant future amortization expense.
Any of these events could have a material adverse effect on our business,
operating results and financial condition.

         Recently, the Financial Accounting Standards Board ("FASB") voted to
eliminate pooling of interests accounting for acquisitions and considering the
elimination of the immediate write-off of acquired in-process research and
development. The effect of these changes would be to increase the portion of the
purchase price for any future acquisitions that must be charged to the Company's
cost of revenues and operating expenses in the periods following any such
acquisitions. As a consequence, the Company's results of operations in periods
following any such acquisitions could be materially adversely affected. Although
these changes would not directly affect the purchase price for any such
acquisitions, they would have the effect of increasing the reported expenses
associated with any such acquisitions. To that extent, these changes may make it
more difficult for the Company to acquire other companies, product lines or
technologies.

Product Concentration

         We currently derive the majority of our license and service revenues
from BEA TUXEDO and from related products and services. Although we expect these
products and services to continue to account for the majority of our revenues in
the immediate future, we believe that BEA WebLogic will become an increasingly
important revenue source. As a result, factors adversely affecting the pricing
of or demand for BEA TUXEDO and BEA WebLogic, such as competition, product
performance or technological change, could have a material adverse effect on our
business and consolidated results of operations and financial condition.

                                       16
<PAGE>

Lengthy Sales Cycle

         Our customers typically use our products to integrate large,
sophisticated applications that are critical to their business, and their
purchases are often part of their implementation of a distributed computing
environment. Customers evaluating our software products face complex decisions
regarding alternative approaches to the integration of enterprise applications,
competitive product offerings, rapidly changing software technologies and
limited internal resources due to other information systems requirements. For
these and other reasons, the sales cycle for our products is lengthy and is
subject to delays or cancellation over which we have little or no control.
Recently, we have experienced a significant increase in the number of million
and multi-million dollar license transactions. In some cases, this has resulted
in more extended customer evaluation and procurement processes, which in turn
have lengthened the overall sales cycle for our products. Moreover, in contrast,
during the second half of fiscal 1999, an increasing number of BEA customers
began negotiating licenses to use BEA's enterprise application solutions as an
architectural platform for several applications. These architectural commitments
are larger in scope and potential revenue than single application transactions.
In some cases, these architectural commitments also have longer sales cycles
than BEA's typical single application transactions, because of both the
customer's decision cycle in adopting an architectural platform and heightened
corporate approval requirements for larger contracts. We believe general
economic conditions that impact customers' capital investment decisions also
affect our sales cycles. In addition, industry sources widely predict that large
corporations will stop deploying new computer systems in late 1999 and early
2000, in order to avoid disrupting their computer systems before the Year 2000.
If our customers stop deploying new computer systems, our revenues could be
materially reduced and our operating results could be materially adversely
affected, especially in the third and fourth quarters of calendar year 1999 (our
fiscal year 2000). Any significant change in customer buying decisions or sales
cycles for our products could have a material adverse effect on our business,
results of operations and financial condition.

         Although we use a standard license agreement which meets the revenue
recognition criteria under current generally accepted accounting principles, we
must often negotiate and revise terms and conditions of this standard agreement,
particularly in larger license transactions. Negotiation of mutually acceptable
terms and conditions can extend the sales cycle and, in certain situations, may
require us to defer recognition of revenue on the license. In addition, while we
do not expect the recently issued Statement of Position 97-2, Software Revenues
Recognition, ("SOP 97-2") and SOP 98-4 and SOP 98-9, which amend certain
provisions of SOP 97-2, to have a material impact on our revenues and earnings,
however, detailed implementation guidelines of the new standard have not yet
been issued. Once issued, such detailed guidance could lead to unanticipated
changes in our current revenues recognition practices and such changes could
have an adverse impact on revenues and earnings.

Competition

         The market for middleware, application servers and related services
is highly competitive. Our competitors are diverse and offer a variety of
solutions directed at various segments of the middleware and application server
marketplace. These competitors include operating system vendors such as IBM, Sun
Microsystems and database vendors such as Oracle. Microsoft has released a
product that includes certain basic application server functionality and has
announced that it intends to include middleware functionality in future versions
of its Windows 2000 operating system. In addition, there are companies offering
and developing middleware and application integration software products and
related services that directly compete with products we offer. Further, software
development tool vendors typically emphasize the broad versatility of their
toolsets and, in some cases, offer complementary middleware software that
supports these tools and performs basic middleware functions. Last, internal
development groups within prospective customers' 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,
significantly greater financial, technical, marketing and other resources,
greater name recognition and a larger installed base of customers than us.

         Our principal competitors currently include hardware vendors who bundle
their own middleware software products with their computer systems and database
vendors that advocate client/server networks driven by the database server. IBM
and Sun Microsystems are the primary hardware vendors who offer a line of
middleware and application server solutions for its customers. IBM's sale of
middleware and application server functionality along with its IBM proprietary
hardware and application server systems requires us to compete with IBM in its
installed base, where IBM has certain inherent advantages due to its
significantly greater financial, technical, marketing and other resources,
greater name recognition and the integration of its enterprise middleware
functionality with its proprietary hardware and database systems. We need to
differentiate our products based on functionality, interoperability with non-IBM
systems, performance and reliability, and establish our products

                                       17
<PAGE>

as more effective solutions to customers' needs. Oracle is the primary
relational database vendor offering products that are intended to serve as
alternatives to our enterprise middleware solutions.

         Microsoft has announced that it intends to include certain middleware
functionality in future versions of its Windows 2000 operating system. Microsoft
has also introduced a product that includes certain basic application server
functionality. The bundling of competing functionality in versions of Windows
requires us to compete with Microsoft in the Windows marketplace, where
Microsoft has certain inherent advantages due to its significantly greater
financial, technical, marketing and other resources, its greater name
recognition, its substantial installed base and the integration of its
middleware functionality with Windows. We need to differentiate our products
from Microsoft's based on scalability, functionality, interoperability with
non-Microsoft platforms, performance and reliability, and need to establish our
products as more effective solutions to customers' needs. There can be no
assurance that we will be able to successfully differentiate our products from
those offered by Microsoft, or that Microsoft's entry into the middleware market
will not 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 our 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 materially
adversely affect our ability to sell additional software licenses and
maintenance, 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. There can be no assurance that we
will be able to compete successfully against current and future competitors and
the failure to do so would have a material adverse effect upon our business,
operating results and financial condition.

Dependence on Proprietary Technology; Risk of Infringement

         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. No assurance can be given that other companies will not
successfully challenge the validity or scope of our patents or that our patents
will 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. There can be no assurance that the protection of our
proprietary rights will be adequate or that our competitors will not
independently develop similar technology, duplicate our products or design
around any patents or other intellectual property rights we hold.

         We do not believe that any of our products infringe the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim the Company's current or future products infringe their rights.
Any such claims, with or without merit, could cause costly litigation that could
absorb significant management time, which could materially adversely effect our
business, operating results and financial condition. Such claims might require
us to enter into royalty or license agreements. If required, the Company may not
be able to obtain such royalty or license agreements, or obtain them on terms
acceptable to us, which could have a material adverse effect upon the Company's
business, operating results and financial condition.

                                       18
<PAGE>

International Operations

         International revenues accounted for 41 percent of our consolidated
revenues for both quarters ended July 31, 1999 and 1998, respectively. We sell
our products and services through a network of branches and subsidiaries located
in 27 countries worldwide. In addition, we also market through distributors in
Europe and the Asia/Pacific region. We believe that our success depends upon
continued expansion of our international operations. Our international business
is subject to a number of risks, including unexpected changes in regulatory
practices and tariffs, greater difficulties in staffing and managing foreign
operations, longer collection cycles, seasonality, potential changes in tax
laws, greater difficulty in protecting intellectual property and the impact of
fluctuating exchange rates between the US dollar and foreign currencies in
markets where BEA does business, in particular the French franc, the German
mark, the British pound, the Japanese yen, the Australian dollar and the Korean
won. General economic and political conditions in these foreign markets may also
impact our international revenues. Since the late summer of 1997, a number of
Pacific Rim countries have experienced economic, banking and currency
difficulties that has led to economic downturns in those countries. Among other
things, the decline in value of Asian currencies, together with difficulties
obtaining credit, has resulted in a decline in the purchasing power of our Asian
customers, which in turn has resulted in the delay of orders for our products
from certain Asian customers and is likely to result in further delays and,
possibly the cancellation, of such orders. We anticipate that weak Asian
conditions may adversely impact our financial results. It is difficult for us to
predict the extent of the future impact of these conditions. There can be no
assurances that these factors and other factors will not have a material adverse
effect on our future international revenues and consequently on our business and
consolidated financial condition and results of operations.

Management of Growth

         We are continuing to experience a period of rapid and substantial
growth that has placed, and if such growth continues would continue to place, a
strain on the Company's administrative and operational infrastructure. We have
increased the number of our employees from 120 employees in three offices in the
United States at January 31, 1996 to over 1,400 employees in over 58 offices in
27 countries at July 31, 1999. Our ability to manage our staff and growth
effectively requires us to continue to improve our operational, financial and
management controls, reporting systems and procedures. In this regard, we are
currently updating our management information systems to integrate financial and
other reporting among our multiple domestic and foreign offices. In addition, we
intend to continue to increase our staff worldwide and to continue to improve
the financial reporting and controls for our global operations. There can be no
assurance that we will be able to successfully implement improvements to our
management information and control systems in an efficient or timely manner or
that, during the course of this implementation, we will not discover
deficiencies in existing systems and controls. If we are unable to manage growth
effectively, our business, results of operations and financial condition will be
materially adversely affected.

Dependence on Growth of Market for Middleware and Application Servers

         We sell our products and services in the middleware and application
server markets. These markets are emerging and are characterized by continuing
technological developments, evolving industry standards and changing customer
requirements. Our success is dependent in large part on acceptance of our
products by large customers with substantial legacy mainframe systems, customers
establishing a presence on the Web for commerce, and developers of web-based
commerce applications. Our future financial performance will depend in large
part on continued growth in the number of companies extending their mainframe-
based, mission-critical applications to an enterprise-wide distributed computing
environment and to the Internet through the use of middleware technology. There
can be no assurance that the markets for middleware technology and
application servers and related services will continue to grow. If these markets
fail to grow or grow more slowly than we currently anticipate, or if we
experience increased competition in these markets, our business, results of
operations and financial condition will be adversely affected.

                                       19
<PAGE>

Year 2000 Risks

         There can be no assurances that the Company's current products do not
contain undetected errors or defects associated with year 2000 date functions
that may result in material costs or liabilities to the Company, Moreover, our
software directly and indirectly interacts with a large number of other hardware
and software systems. Som of the Company's customers are running product
versions that are not year 2000 compliant. The Company has been encouraging its
customers to migrate to current product versions. In addition, there can be no
assurances that the Company's current products do not contain undetected errors
or defects associated with year 2000 date functions that may result in material
costs to the Company. Moreover, our software directly and indirectly interacts
with a large number of other hardware and software systems could contain defects
associated with the year 2000 date. We are unable to predict to what extent our
business may be affected if our software or the systems that operate in
conjunction with our software experience a material year 2000 related failure.
Any year 2000 defect in our products or the software and hardware systems with
which our products operate, as well as any year 2000 errors caused by older
non-current products that were not upgraded by our customers, could expose us to
litigation that could have a material adverse impact on the Company. The risks
of such litigation may be particularly acute due to the mission-critical
applications for which the Company's products are used. Some commentators have
stated that a significant amount of litigation will arise out of year 2000
compliance issues, and the Company is aware of a growing number of lawsuits
against other software vendors. Because of the unprecedented nature of such
litigation, it is uncertain whether or to what extent the Company may be
affected by it.

         The Company could also experience serious unanticipated negative
consequences caused by undetected year 2000 defects in its internal systems,
including third party software and hardware products. Internal systems are
primarily composed of third-party software and third-party hardware which
contain embedded software and the Company's own software products. For example
the Company could experience a (i) corruption of data contained in the Company's
internal information systems or a (ii) failure of hardware, software, or other
information technology systems, causing an interruption or failure of normal
business operations. Any such events could have a material adverse impact on the
Company. In addition, the Company could experience serious unanticipated
negative consequences caused by the failure of services or products provided by
third parties that are critical to the continued day-to-day operation of the
Company, such as electrical power, telecommunications services, and shipping
services (particularly outside of countries such as the United States where year
2000 remediation has progressed the furthest), which consequences could have a
material adverse effect on the Company's business operations.

         In addition, a widely-predicted freeze in deployment of new computer
systems by large corporations in the second half of calendar year 1999 related
to remediation of the Y2K problem could result in an unusual fluctuation of
orders, in which an unusually large number of orders are received in the middle
of 2000, followed by an unusual decrease in orders in subsequent quarters.

Dependence on Key Personnel and Need to Hire Additional Personnel

         We believe our future success will depend upon our ability to attract
and retain highly skilled personnel including the Company's founders, Messrs.
William T. Coleman III, Edward W. Scott, Jr., Alfred S. Chuang and key members
of management. Competition for these types of employees is intense, and there
can be no assurance that we will be able to retain our key employees or that we
will be successful in attracting, assimilating and retaining qualified
candidates in the future. As we seek to expand our global organization, the
hiring of qualified sales, technical and support personnel will be difficult due
to the limited number of qualified professionals. Failure to attract, assimilate
and retain key personnel would have a material adverse effect on our business,
results of operations and financial condition.

Expanding Distribution Channels and Reliance on Third Parties

         To date, we have sold our products principally through our direct sales
force, as well as through indirect sales channels, such as system platform
companies, packaged application software developers, systems integrators and
independent consultants, independent software tool vendors and distributors. Our
ability to achieve revenue growth in the future will depend in large part on our
success in expanding our direct sales force and in further establishing and
expanding relationships with distributors, ISVs, OEMs and systems integrators.
In particular, a significant part of our strategy is to embed our technology in
products our ISV customers offer. We intend to seek distribution arrangements
with additional ISVs to embed our middleware and Web application servers
technology in their products. There can be no assurance that we will be able to
successfully expand our direct sales force or other distribution channels,
secure license agreements with additional ISVs on commercially reasonable terms
or at all, or otherwise further develop our relationships with indirect
distribution channels.

                                       20
<PAGE>

There also can be no assurance that any such expansion or additional license
agreements would increase our revenues. Although we believe that our investments
in the expansion of our direct sales force and in the establishment of other
distribution channels through third parties ultimately will improve our
operating results, to the extent that such investments are made and revenues do
not correspondingly increase, our business, results of operations and financial
condition will be materially and adversely affected.

         We rely on informal relationships with a number of consulting and
systems integration firms to enhance our sales, support, service and marketing
efforts, particularly with respect to implementation and support of our products
as well as lead generation and assistance in the sale process. We will need to
expand our relationships with third parties in order to support license revenues
growth. Many such firms have similar, and often more established, relationships
with our principal competitors. There can be no assurance that these and other
third parties will provide the level and quality of service required to meet the
needs of our customers, that we will be able to maintain an effective, long term
relationship with these third parties, or that these third parties will continue
to meet the needs of our customers.

Rapid Technology Change; Dependence on New Products and Product Enhancements

         The market for our products is highly fragmented, competitive with
alternative computing architectures, and characterized by continuing
technological development, evolving industry standards and changing customer
requirements. The introduction of products embodying new technologies, the
emergence of new industry standards or changes in customer requirements could
render our existing products obsolete and unmarketable. As a result, our success
depends upon our ability to enhance existing products, respond to changing
customer requirements and develop and introduce in a timely manner new products
that keep pace with technological developments and emerging industry standards.
There can be no assurance that our products will adequately address the changing
needs of the marketplace or that we will be successful in developing and
marketing enhancements to our existing products or products incorporating new
technology on a timely basis. Failure to develop and introduce new products, or
enhancements to existing products, in a timely manner in response to changing
market conditions or customer requirements, will materially and adversely affect
the Company's business, results of operations and financial condition.

Risk of Software Defects

         The software products we offer are internally complex and, despite
extensive testing and quality control, may contain errors or defects, especially
when we first introduced them. We may need to issue corrective releases of our
software products to fix these defects or errors. These defects and errors could
also cause damage to our reputation, loss of revenues, product returns or order
cancellations, or lack of market acceptance of our products. Accordingly, these
defects and errors could have a material and adverse effect on our business,
results of operations and financial condition.

         Our license agreements with our customers typically contain provisions
designed to limit our exposure to potential product liability claims. It is
possible, however, that the limitation of liability provisions contained in our
license agreements may not be effective as a result of existing or future
federal, state or local laws or ordinances or unfavorable judicial decisions.
Although we have not experienced any product liability claims to date, sale and
support of our products entails the risk of such claims, which could be
substantial in light of customers' use of such products in mission-critical
applications. If a claimant brings a product liability claim against us, it
could have a material adverse effect on our business, results of operations and
financial condition.

         Our products interoperate with many parts of complicated computer
systems, such as mainframes, servers, personal computers, application software,
databases, operating systems and data transformation software. Failure of any
one of these parts due to the Year 2000 problem could cause all or large parts
of computer systems to fail. In such circumstances, it may be difficult to
determine which part failed, and it is likely that customers will bring a
lawsuit against several suppliers. Even if BEA's software is not at fault, BEA
could suffer material expense and material diversion of management time in
defending any such lawsuits. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Year 2000 Compliance".

Control by Management and Current Stockholders

         As of August 31, 1999, BEA's officers and directors and their
affiliates, in the aggregate, had voting control over approximately 57 percent
of BEA's voting Common Stock. In particular, Warburg, Pincus Ventures, L.P.
("Warburg") had

                                       21
<PAGE>

effective voting control over approximately 48 percent of BEA's voting Common
Stock (assuming the conversion of the non-voting Class B Common Stock owned by
Warburg). As a result, these stockholders would be able to control all matters
requiring majority stockholder approval, including the election of directors and
approval of significant corporate transactions. The voting power of Warburg
combined with BEA's officers and directors under certain circumstances could
have the effect of delaying, or preventing a change in control of BEA.

Significant Leverage; Debt Service

         In connection with our sale of 4% Convertible Subordinated Notes in
June and July 1998, we incurred $250 million in long-term indebtedness. Our
principal and interest payment obligations increased substantially because of
this indebtedness. The degree to which we are leveraged could materially and
adversely affect our ability to obtain financing for working capital,
acquisitions or other purposes and could make us more vulnerable to industry
downturns and competitive pressures. These notes are convertible into Common
Stock, which conversion could cause substantial dilution to stockholders and
would increase the number of shares eligible for sale in the market, but would
eliminate the need for the Company to repay the principal amount of such
converted notes. There can be no assurance, however, that any of these notes
will be converted. Our ability to meet our debt service obligations will be
dependent upon our future performance, which will be subject to financial,
business and other factors affecting our operations, many of which are beyond
our control.

         We will require substantial amounts of cash to fund scheduled payments
of interest on these notes, payment of the principal amount of these notes at
maturity, payment of principal and interest on our other indebtedness, future
capital expenditures and any increased working capital requirements. If we
cannot meet our cash requirements out of cash flow from operations, there can be
no assurance that we will be able to obtain alternative financing. If we cannot
obtain such financing, our ability to respond to changing business and economic
conditions, to make future acquisitions, to absorb adverse operating results or
to fund capital expenditures or increased working capital requirements may be
adversely affected. Any failure by us to satisfy our obligations with respect to
these notes at maturity (with respect to payments of principal) or prior thereto
(with respect to payments of interest or required repurchases) would constitute
a default under the indenture entered into in connection with the issuance of
these notes and could cause a default under agreements governing other
indebtedness, if any, of BEA.

Possible Adverse Impact of Recent Accounting Pronouncements

         The American Institute of Certified Public Accountants has issued a
series of recent pronouncements which address revenue recognition in the
software industry, including SOP 97-2, SOP 98-4, and SOP 98-9. These
pronouncements principally focus on concepts versus specific implementation
guidance. The Company believes it is in compliance with these standards, but the
software industry and the accounting profession are currently discussing a wide
range of potential interpretations which may result in the issuance of more
pronouncements or interpretive guidance. As future guidance becomes available or
if the software industry broadly adopts certain practices which are different
than the Company's current revenue recognition practices which could have a
material adverse effect on our business practices, financial condition, or
results of operations.

         The Company has not fully assessed its ability to comply with SOP 98-9
using current business practices. However, the Company believes that SOP 98-9
may require significantly more revenues to be deferred for certain types of
transactions.


ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Foreign Exchange

         BEA's revenue originating outside the United States was 41 percent of
total revenues for both quarters ended July 31, 1999 and 1998. For the three
months ended July 31, 1999 international revenues from EMEA and APAC represented
32 percent and 8 percent of total revenues. Within EMEA, France represented 11
percent of total revenues for the three and six months ended July 31, 1999.
International sales are made mostly from the Company's foreign sales
subsidiaries in the local countries and are typically denominated in the local
currency of each country. These subsidiaries also incur most of their expenses
in the local currency. Accordingly, foreign subsidiaries use the local currency
as their functional currency.

         The Company's international business is subject to risks typical of an
international business, including, but not limited to, differing economic
conditions, changes in political climate, differing tax structures, other
regulations and restrictions, and

                                       22
<PAGE>

foreign exchange volatility. Accordingly, the Company's future results could be
materially adversely impacted by changes in these or other factors.

         The Company's exposure to foreign exchange rate fluctuations arise in
part from intercompany accounts in which certain costs of software development,
support and product marketing incurred in the United States are charged to the
Company's foreign subsidiaries. These intercompany accounts are typically
denominated in the functional currency of the foreign subsidiary in order to
centralize foreign exchange risk with the parent company in the United States.
The Company is also exposed to foreign exchange rate fluctuations as the
financial results of foreign subsidiaries are translated into U.S. dollars in
consolidation. As exchange rates vary, these results, when translated, may vary
from expectations and adversely impact overall financial results.

         The Company has a program to reduce the effect of foreign exchange
transaction gains and losses from recorded foreign currency-denominated assets
and liabilities. This program involves the use of forward foreign exchange
contracts in certain European and Asian currencies, principally those of Western
Europe, Sweden, Japan and Australia. A forward foreign exchange contract
obligates the Company to exchange predetermined amounts of specified foreign
currencies at specified exchange rates on specified dates or to make an
equivalent U.S. dollar payment equal to the value of such exchange. Each month
the Company marks to market open foreign exchange contracts based on the change
in the foreign exchange rates with any resulting gain or losses recorded in the
interest and other expenses.

         The Company does not currently hedge anticipated foreign
currency-denominated revenues and expenses not yet incurred.

Interest Rates

         The Company invests its cash in a variety of financial instruments,
consisting principally of investments in commercial paper, interest-bearing
demand deposit accounts with financial institutions, money market funds. These
investments are denominated in U.S. dollars. Cash balances in foreign currencies
overseas are operating balances and are only invested in short-term time
deposits of the local operating bank.

         The Company accounts for its investment instruments in accordance with
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities, ("FAS 115"). All of the cash
equivalent, short term and long term investments are treated as
"available-for-sale" under FAS 115. Investments in both fixed rate and floating
rate interest earning instruments carry a degree of interest rate risk. Fixed
rate securities may have their market value adversely impacted due to a rise in
interest rates, while floating rate securities may produce less income than
expected if interest rates fall. Due in part to these factors, the Company's
future investment income may fall short of expectations due to changes in
interest rates or the Company may suffer losses in principal if forced to sell
securities which have seen a decline in market value due to changes in interest
rates.

         However, the Company reduces its interest rate risk by investing its
cash in instruments with short maturities. At July 31, 1999 the average maturity
of the Company's cash equivalents and investments was 22 days.

                                       23
<PAGE>

PART II.   OTHER INFORMATION

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         At the Company's Annual Meeting of Stockholders held on July 19, 1999,
the following individuals were elected to the Board of Directors:

<TABLE>
<CAPTION>
                                               Votes For           Votes Withheld
                                           ------------------    ------------------
<S>                                        <C>                   <C>
Edward W. Scott, Jr.                             46,248,871              184,135
Stewart K. P. Gross                              46,256,538              176,468
Carol A. Bartz                                   46,258,388              174,618
</TABLE>

The following proposals were approved at the Company's Annual Meeting:

<TABLE>
<CAPTION>
                                               Affirmative            Negative                Votes
                                                  Votes                 Votes               Withheld
                                            ------------------    ------------------    ------------------
<S>                                         <C>                   <C>                   <C>
1.    Amendment of the  Company's  1997
      Employee Stock Purchase Plan.               35,770,945            3,782,222             31,185

2.    Amendment of the  Company's  1997
      Stock Incentive Plan.                       34,455,033            5,099,011             30,308

3.    Amendment of the Company's
      Certificate of Incorporation.               43,692,590            2,701,512             38,904

4.    Ratify the appointment of Ernst
      & Young, LLP as independent
      auditors for the fiscal year
      ending January 31, 2000.                    46,339,768               28,810             64,428
</TABLE>

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits

         The following exhibits are filed by attachment to this Form 10-Q:

             Exhibit             Description
             -------             -----------
              27.1               Financial Data Schedule

(b)  Reports on Form 8-K

         No reports on Form 8-K were filed by the Company during the fiscal
quarter ended July 31, 1999.

                                       24
<PAGE>

                                  SIGNATURES

         Pursuant to the requirement of the Security Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                   BEA SYSTEMS, INC.
                                                   (Registrant)


                                                   /s/ STEVE L. BROWN
                                                   --------------------
                                                   Steve L. Brown
                                                   Executive Vice President and
                                                   Chief Financial Officer
                                                   (Principal Financial and
                                                   Chief Accounting Officer)

Dated:   September 14, 1999

                                       25