UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended June 30, 2005

		OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

Commission File No. 000-30207’

SEEBEYOND TECHNOLOGY CORPORATION

(Exact name of Registrant as Specified in Its Charter)

Delaware		95-4249153
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

800 E. Royal Oaks Drive Monrovia, California 91016 (626) 471-6000
(Address, including Zip Code, of Registrant’s Principal Executive Offices and 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 ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 under the Act). Yes ý No o

The number of shares outstanding of the registrant’s Common Stock, $0.0001 par value, as of August 4, 2005 was 85,075,576.

SeeBeyond Technology Corporation and Subsidiaries

INDEX

Part I - Financial Information
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of June 30, 2005 (unaudited) and December 31, 2004
	Condensed Consolidated Statements of Operations (unaudited) for the three months and six months June 30, 2005 and 2004
	Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2005 and 2004
	Notes to Condensed Consolidated Financial Statements (unaudited)
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosure About Market Risk
Item 4.	Controls and Procedures
Part II - Other Information
Item 1.	Legal Proceedings
Item 2.	Changes in Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits
Signatures
Certification of the Chief Executive Officer
Certification of the Chief Financial Officer

PART I —FINANCIAL INFORMATION

Item 1 . Financial Statements

SeeBeyond Technology Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

	June 30, 2005			December 31, 2004
	(unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	66,050		$	73,148
Accounts receivable, net of allowances of $1,138 and $1,606 at June 30, 2005 and December 31, 2004, respectively	22,610			37,995
Prepaid expenses and other current assets	4,503			3,680
Total current assets	93,163			114,823
Property and equipment, net	11,219			12,728
Goodwill	2,637			1,391
Other assets	2,002			2,152
Total assets	$	109,021		$	131,094
Liabilities and stockholders’ equity:
Current liabilities:
Accounts payable	$	6,559		$	6,739
Accrued employee compensation and related expenses	12,789			13,861
Accrued expenses	4,193			5,808
Deferred revenues	30,296			36,537
Capital lease payable - current portion	410			748
Total current liabilities	54,247			63,693
Capital lease payable	32			28
Total liabilities	54,279			63,721
Commitments and contingencies
Stockholders’ equity:
Common stock, $.0001 par value - 200,000,000 shares authorized; 88,674,188 shares issued and 84,954,936 shares outstanding as of June 30, 2005 and 87,559,663 shares issued and 84,930,711 shares outstanding as of December 31, 2004	9			8
Additional paid-in capital	229,185			226,481
Treasury stock	(9,765		)	(6,510		)
Accumulated other comprehensive income	105			990
Accumulated deficit	(164,792		)	(153,596		)
Total stockholders’ equity	54,742			67,373
Total liabilities and stockholders’ equity	$	109,021		$	131,094

The accompanying notes are an integral part of these financial statements.

SeeBeyond Technology Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Revenues:
License	$	10,004		$	19,778		$	23,753		$	30,658
Services	7,417			9,110			17,074			19,620
Maintenance	14,694			12,981			28,596			26,028
Total revenues	32,115			41,869			69,423			76,306
Cost of revenues:
License	59			381			392			658
Services and maintenance revenues	9,895			10,615			20,605			20,794
Total cost of revenues	9,954			10,996			20,997			21,452
Gross profit	22,161			30,873			48,426			54,854
Operating expenses:
Research and development	10,287			9,636			20,298			19,376
Sales and marketing	13,087			16,066			26,794			31,070
General and administrative	5,168			4,249			10,329			8,858
Merger and acquisition	2,350			—			2,350			—
Amortization of sales and marketing warrants	—			—			—			(14		)
Amortization of stock-based compensation	—			—			1			97
Total operating expenses	30,892			29,951			59,772			59,387
(Loss) income from operations	(8,731		)	922			(11,346		)	(4,533		)
Interest income and other income (expense), net	292			143			578			(70		)
Interest expense	(31		)	(61		)	(60		)	(133		)
(Loss) income before income tax provision	(8,470		)	1,004			(10,828		)	(4,736		)
Income tax provision	145			135			368			178
Net (loss) income	$	(8,615	)	$	869		$	(11,196	)	$	(4,914	)

Basic and diluted net (loss) income per share	$	(0.10	)	$	0.01		$	(0.13	)	$	(0.06	)
Number of shares used in calculating:
- basic net (loss) income per share	85,370			84,607			85,364			84,430
- diluted net (loss) income per share	85,370			88,819			85,364			84,430

The accompanying notes are an integral part of these financial statements.

SeeBeyond Technology Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Six Months Ended June 30,
	2005			2004
Cash flows from operating activities:
Net loss	$	(11,196	)	$	(4,914	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss (gain) on disposal of fixed assets	111			(34		)
Depreciation and amortization	2,147			2,443
Provision for doubtful accounts receivable	(111		)	93
Amortization of sales and marketing warrants	—			(14		)
Amortization of stock-based compensation	1			97
Changes in assets and liabilities:
Accounts receivable	15,667			149
Prepaid expenses and other current assets	(823		)	1,065
Accounts payable	(340		)	785
Accrued compensation and related expenses	(1,813		)	(1,404		)
Accrued expenses	(1,817		)	(2,313		)
Deferred revenues	(6,296		)	(1,152		)
Net cash used in operating activities	(4,470		)	(5,199		)

Cash flows from investing activities:
Purchases of property and equipment	(722		)	(1,023		)
Payment to acquire company, net of cash	(286		)	—
Other	150			318
Net cash used in investing activities	(858		)	(705		)

Cash flows from financing activities:
Repayments on bank lines of credit	—			(1,576		)
Repayments of capital lease obligation	(334		)	(130		)
Proceeds from issuance of common stock pursuant to employee stock option plan	2,353			2,744
Proceeds from issuance of common stock pursuant to employee stock purchase plan	351			328
Payments for purchase of common stock	(3,255		)	(644		)
Net cash (used in) provided by financing activities	(885		)	722

Effect of exchange rate changes on cash and cash equivalents	(885		)	(65		)
Net decrease in cash and cash equivalents	(7,098		)	(5,247		)
Cash and cash equivalents at beginning of the period	73,148			70,135
Cash and cash equivalents at end of the period	$	66,050		$	64,888

The accompanying notes are an integral part of these financial statements.

SeeBeyond Technology Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by SeeBeyond Technology Corporation (the “Company” or “SeeBeyond”) in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company, and its results of operations and cash flows. These condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes as of and for the year ended December 31, 2004 included in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 9, 2005.

The results of operations for the three months and six months ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005 or any other interim period, and the Company makes no representations related thereto.

The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

Certain reclassifications have been made to prior year information to conform to the current period’s presentation.

Note 2. Revenue Recognition

The Company recognizes revenue when an agreement has been signed by both parties or other persuasive evidence of an arrangement exists, the software has been shipped or electronically delivered, the fees are fixed or determinable, collection of the resulting receivable is probable and no other significant obligations remain. For multiple element arrangements where vendor-specific objective evidence of fair value exists for all undelivered elements, we account for the delivered elements in accordance with the “residual method” prescribed by Statement of Position 98-9. Vendor-specific objective evidence of fair value is based on the price a customer is required to pay when the element is sold separately. The Company enters into arrangements with end users, which may include the sale of licenses of software, maintenance and services under the arrangement or various combinations of each element, including the sale of such elements separately.

For multiple element arrangements, each element of the arrangement is analyzed and the Company allocates a portion of the total fee under the arrangement to the undelivered elements, primarily services and maintenance, using vendor-specific objective evidence of fair value of the element and the remaining portion of the fee is allocated to the delivered elements (i.e., generally the software license), regardless of any separate prices stated within the contract for each element, under the residual method prescribed by SOP 98-9. Vendor-specific objective evidence of fair value is based on the price the customer is required to pay when the element is sold separately (i.e., hourly rates charged for consulting services when sold separately from a software license and the renewal rate for maintenance arrangements). Each license agreement offers additional maintenance renewal periods at a stated price. If vendor-specific objective evidence of fair value does not exist for the undelivered elements, all revenue is deferred and recognized ratably over the service period if the undelivered element is services, or over the period the maintenance is provided if the undelivered element is maintenance, or until sufficient objective evidence exists or all elements have been delivered.

License Revenues: Amounts allocated to license revenues under the residual method are recognized at the time of delivery of the software when vendor specific objective evidence of fair value exists for the undelivered elements, if any, and all the other revenue recognition criteria discussed above have been met.

Services Revenues: Revenues from services are comprised of consulting and implementation services and, to a limited extent, training. Services are generally sold on a time-and-materials or fixed fee basis and include a range of services including installation of off-the-shelf software, data conversion and building non-complex interfaces to allow the software to operate in customized environments. Services are generally separable from the other elements under the arrangement since the performance of the services is not essential to the functionality (i.e., do not involve significant production, modification or customization of the software or building

complex interfaces) of any other element of the transaction and are described in the contract such that the total price of the arrangement would be expected to vary as the result of the inclusion or exclusion of the services. Revenues for services are recognized as the services are performed. Training services are sold either on a per student basis or per class and are recognized as classes are attended.

Maintenance Revenues: Maintenance revenues consist primarily of fees for providing unspecified software upgrades on a when-and-if-available basis and technical support over a specified term, which is typically twelve months. Maintenance revenues are typically paid in advance and are recognized on a straight-line basis over the term of the contract.

Revenues on sales made by alliance partners are generally recognized upon shipment of the software to the end user, if all other revenue recognition criteria noted above are met. Under limited arrangements with certain distributors when all the revenue recognition criteria have been met and upon delivery of the product to the distributor, revenues are recognized at that time. The Company does not offer a right of return on its products.

Note 3. Operations by Reportable Segments and Geographic Area

SeeBeyond has developed a comprehensive solution for business integration, enabling the seamless flow of information across systems applications and enterprises in real-time, on a global basis. The Company operates in one industry segment, which is the development and marketing of a comprehensive solution for business integration where all key integration technologies, including application-to-application, business-to-business and business process management, are seamlessly integrated. Revenues and long-lived assets by geographic area were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2005		2004		2005		2004
Revenues:
North America	$	18,350	$	20,596	$	39,823	$	37,450
Europe	10,464		18,367		21,659		33,592
Pacific Rim	3,301		2,906		7,941		5,264
Total revenues	$	32,115	$	41,869	$	69,423	$	76,306

	June 30, 2005		December 31, 2004
Long-lived assets:
North America	$	12,197	$	13,392
Europe	2,561		1,617
Pacific Rim	1,100		1,262
Total long-lived assets	$	15,858	$	16,271

No single customer accounted for more than 10% of the Company’s net revenues during the three months and six months ended June 30, 2005 while one customer accounted for 11% of the Company’s net revenues during the three months and six months ended June 30, 2004.

Note 4. Computation of Net (Loss) Income Per Share

Basic net (loss) income per share is computed on the basis of the weighted average number of common shares outstanding. Diluted net (loss) income per share is computed on the basis of the weighted average number of common shares outstanding plus the effect of outstanding stock warrants and outstanding employee stock options using the “treasury stock” method.

The following table sets forth the components of basic and diluted net (loss) income per share for the periods indicated (in thousands, except per share amounts):

	Three Months Ended June 30,					Six Months Ended June 30,
	2005			2004		2005			2004
Net (loss) income	$	(8,615	)	$	869	$	(11,196	)	$	(4,914	)
Weighted average outstanding shares of common stock used to compute basic net (loss) income per share	85,370			84,607		85,364			84,430
Dilutive effect of employee stock options	—			4,212		—			—
Common stock and common stock equivalents	85,370			88,819		85,364			84,430
Basic and diluted net (loss) income per share	$	(0.10	)	$	0.01	$	(0.13	)	$	(0.06	)

Options to purchase approximately 18,872,176 shares of common stock for the three months and six months ended June 30, 2005, and options to purchase approximately 18,386,656 shares of common stock for the three months and six months ended June 30, 2004 were not included in the calculations of diluted net loss per share because their effect would be antidilutive for the three months ended June 30, 2004, 4,012,000 shares of common stock were included in the calculation of diluted net income. Common stock warrants to purchase 625,000 shares were not included in the calculations of diluted net loss per share because their effect would be antidilutive for the three months ended June 30, 2005 and the six months ended June 30, 2005 and June 30, 2004.

Note 5. Stock-Based Compensation

As permitted under SFAS No. 123 “Accounting for Stock-based Compensation” and SFAS No. 148, “Accounting for Stock-based Compensation — Transition and Disclosure — and amendment to FAS 123”, the Company continues to apply the provisions of APB No. 25, “Accounting for Stock Issued to Employees,” for its recording of stock-based compensation arrangements. Accordingly, the Company accounts for its stock-based compensation using the intrinsic value method, which requires recognition of expense when the option exercise price is less than the fair value of the stock at the date of grant. The Company provides the required pro forma net income (loss) and pro forma earnings (loss) per share disclosures for employee stock option grants made in 1995 and future years as if the fair value based method defined in SFAS No. 123 had been applied. Under the fair value method stock options are valued and expensed based on the fair value of the options determined under an option-pricing model.

The following table sets forth pro forma net loss and pro forma loss per share (in thousands, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Net (loss) income, as reported	$	(8,615	)	$	869		$	(11,196	)	$	(4,914	)
Stock-based employee compensation costs, included in net loss, as reported	—			—			1			97
Stock-based employee compensation costs if fair value based method had been applied	(1,005		)	(2,666		)	(2,901		)	(4,951		)
Pro forma net loss	$	(9,620	)	$	(1,797	)	$	(14,096	)	$	(9,768	)
Loss per share:
Basic and diluted - as reported	$	(0.10	)	$	0.01		$	(0.13	)	$	(0.06	)
Basic and diluted - pro forma	$	(0.11	)	$	(0.02	)	$	(0.17	)	$	(0.12	)

Note 6. Commitments, Contingencies and Debt

Bank Lines of Credit

In November 2000, the Company established a $15.0 million line of credit facility (the “Line”) with a lending institution that bears interest at an annual rate of either prime plus 0.5% or the London InterBank Offered Rate (“LIBOR”) rate plus 2.50% (payable monthly). The expiration date of the Line has been extended through May 31, 2006. As of June 30, 2005, $8.4 million was available under the Line and there were no borrowings outstanding. The Company may use up to $5.0 million of the Line to issue letters of credit. As of June 30, 2005, approximately $778,000 was available for the issuance of letters of credit. The Line is secured by

intellectual property rights, accounts receivable and certain other assets and is subject to certain borrowing base restrictions. The Line requires maintenance of certain financial covenants pertaining to key financial ratios and the Company is in compliance with those covenants as of June 30, 2005.

Note 7. Legal Proceedings

The Company is party to routine claims and suits brought against it in the ordinary course of business including disputes arising over the ownership of intellectual property rights and collection matters. In the opinion of management, the outcome of such routine claims will not have a material adverse effect on the Company’s business, financial condition or results of operation.

Purported class action lawsuits have been filed against SeeBeyond and individual officers and members of our board of directors with respect to the proposed merger involving Sun Microsystems, Inc. (see Notes 11 and 12). The lawsuits generally allege that the defendants breached fiduciary duties to our stockholders and engaged in self-dealing by entering into and approving the merger agreement with Sun Microsystems. The complaints seek, among other things, to enjoin completion of the merger with Sun Microsystems and to rescind the transaction. Please refer to “Note 12—Subsequent Event”.

Note 8. Comprehensive (Loss) Income

SFAS No. 130 “Reporting Comprehensive Income,” establishes standards for reporting comprehensive (loss) income and its components in financial statements. Comprehensive (loss) income, as defined, refers to revenues, expenses, gains and losses that are not included in net (loss) income but rather are recorded directly in stockholders’ equity.

Total comprehensive (loss) income was as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Net (loss) income	$	(8,615	)	$	869		$	(11,196	)	$	(4,914	)
Other comprehensive loss:
Foreign translation adjustment	(520		)	(565		)	(885		)	(65		)
Comprehensive (loss) income	$	(9,135	)	$	304		$	(12,081	)	$	(4,979	)

Note 9. Stockholders’ Equity

Treasury Stock

During the three months ended June 30, 2005, the Company purchased 1,090,300 shares of its common stock at an average price of $2.98 per share. As of June 30, 2005, the Company held 3,719,252 shares of its common stock in treasury.

Note 10. Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards Statement No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”). This Statement is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”. SFAS 123(R) requires a company to measure the grant-date fair value of equity awards given to employees in exchange for services and recognize that cost over the period that such services are performed. SFAS 123R is effective beginning January 1, 2006.

The Company is currently evaluating the two methods of adoption allowed by SFAS 123R: the modified-prospective transition method and the modified-retrospective transition method. Adoption of SFAS 123R is expected to materially increase stock compensation expense and decrease net income; however, the impact cannot be determined at this time. In addition, SFAS 123R requires the excess tax benefits related to stock compensation be reported as a cash inflow from financing activities rather than as a reduction of taxes paid in cash from operating activities.

In May 2005, FASB issued SFAS 154, “Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3”. SFAS 154 changes the requirements for the accounting for and reporting of a change in accounting principle, and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. This statement requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the

period-specific effects or the cumulative effect of the change. SFAS 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. We do not expect that adoption of this statement will have a material impact on our results of operations or financial condition.

Note 11. Business Combinations

Acquisition of SpiritSoft

On April 22, 2005, we acquired substantially all of the assets and certain liabilities of SpiritSoft, a privately held software development company.

The total purchase price was approximately $1.2 million, of which approximately $285,000 was paid in cash. The SpiritSoft acquisition was accounted for under SFAS 141 “Business Combinations” and certain specified provisions of SFAS 142 “Goodwill and Other Intangible Assets”. The assets acquired and liabilities assumed are based on their fair values at the date of acquisition. The results of operations of SpiritSoft are included in our Condensed Consolidated Statements of Operations from April 22, 2005. Pro forma results are not presented as the effect of the acquisition is not material to our results of operations.

We are finalizing our assessment of the fair value of the intangible and other assets acquired. The following table summarizes the preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition:

Assets acquired:
Accounts receivable	$	170,861
Property and equipment	26,872
Total assets acquired	197,733

Liabilities assumed:
Accounts payable	159,521
Accrued employee compensation and related expenses	740,514
Deferred revenues	55,302
Other liabilities	202,341
	1,157,678

Cash paid	285,253

Total preliminary purchase price	$	1,245,198

We assessed the potential benefits from this acquisition, including the enhancement of our product suite and determined that the purchase price represented appropriate consideration for the acquisition. As the purchase price exceeded the fair value of the assets purchased, we recorded goodwill in connection with this transaction. In accordance with SFAS 142, goodwill is not being amortized and will be tested for impairment annually or sooner, if circumstances indicate that impairment may have occurred. We expect to finalize the valuation of the acquired intangible and other assets in the third quarter of 2005.

Acquisition by Sun MicroSystems, Inc.

On June 27, 2005, the Company entered into an Agreement and Plan of Merger with Sun Microsystems, Inc. (“Sun”) and Big Bear Acquisition Corporation, a direct wholly owned subsidiary of Sun, pursuant to which, if completed, the Company would become a subsidiary of Sun and stockholders of the Company would receive $4.25 in cash (without interest) for each share of SeeBeyond common stock owned (the “Merger”). The Merger is subject to certain closing conditions, including regulatory approvals and SeeBeyond stockholder approval. The special stockholder meeting will be held on August 25, 2005.

For the three months and six months ended June 30, 2005, we incurred approximately $2.3 million of professional and legal fees in connection with the Merger. If the Merger is not completed, under specified circumstances we may be required to pay a termination fee of $12.6 million to Sun.

Note 12. Subsequent Event

On July 11 and 14, 2005, purported class action lawsuits were filed in the California Superior Court, County of Los Angeles. These cases are captioned Paul L. Henderson v. SeeBeyond Technology Corporation et al., Case No. BC336372 and Manju Mehta, a/k/a Manju Kapoor v. James T. Demetriades, et al., Case No. BC336523, and name as defendants our Chief Executive Officer James Demetriades, the other members of our board of directors: Raymond Lane, John Buckley, Salah Hassanein and Steven Ledger, and SeeBeyond. The complaints allege that, in pursuing the transaction with Sun and approving the merger agreement with

Sun, the defendants breached their fiduciary duties to the holders of SeeBeyond common stock by, among other things, engaging in self-dealing, approving a transaction in which they allegedly stand to receive financial benefits not shared by the other SeeBeyond shareholders, failing to obtain the highest price reasonably available for SeeBeyond and its shareholders, failing to properly value SeeBeyond and agreeing to the termination fee provisions of the merger agreement and voting agreements relating to the Sun merger. The complaints further allege that the merger agreement with Sun resulted from a flawed process and that the defendants tailored the terms of the merger to advance their own financial interests. The complaints seek an injunction preventing the completion of the merger with Sun an order directing our directors to exercise their fiduciary duties to obtain a transaction in the best interests of our stockholders, rescission of the proposed merger to the extent already implemented, and reasonable costs and attorneys’ fees.

Although we believe that the lawsuits are without merit, and intend to defend them vigorously, no assurances can be given that we will prevail in the lawsuits. In the event that holders of a majority of the outstanding shares of SeeBeyond common stock vote in favor of adoption of the merger agreement with Sun in addition to any other defenses SeeBeyond, Mr. Demetriades and the director defendants may assert, SeeBeyond, Mr. Demetriades and the director defendants intend to rely upon the approval of the proposal to adopt the merger agreement with Sun in defense of the claims asserted in the actions. Specifically, SeeBeyond, Mr. Demetriades and the director defendants intend to argue that the approval of the proposal to adopt the merger agreement with Sun by holders of a majority of the shares of our common stock constitutes a ratification or acceptance of the conduct that is the subject of plaintiffs’ complaints. SeeBeyond, Mr. Demetriades and the director defendants further intend to argue that such ratification or approval constitutes a complete defense to the claims asserted in the complaints or otherwise operates to protect them from liability or increase the plaintiffs’ burdens of pleading and proof in the actions.

Furthermore, one of the conditions to the closing of the merger with Sun is that there is no injunction issued by any court preventing the consummation of the merger. No assurances can be given that these lawsuits will not result in such an injunction being issued, which could prevent or delay the closing of the merger with Sun.

Item 2 . Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with the consolidated financial statements and related notes of SeeBeyond Technology Corporation appearing elsewhere in this Form 10-Q and the Form 10-K. The following discussion contains forward-looking statements that involve risks and uncertainties, including statements regarding anticipated costs and expenses, mix of revenues and plans for introducing new products and services. Our actual results could differ materially from the results contemplated by these forward-looking statements as a result of a number of factors, including those discussed below, under “Risk Factors” and elsewhere in this Form 10-Q.

Proposed Merger

On June 27, 2005, the Company entered into an Agreement and Plan of Merger with Sun Microsystems, Inc. (“Sun”) and Big Bear Acquisition Corporation, a direct wholly owned subsidiary of Sun, pursuant to which, if completed, the Company would become a subsidiary of Sun and stockholders of the Company would receive $4.25 in cash (without interest) for each share of SeeBeyond common stock owned. The Merger is subject to certain closing conditions, including regulatory approvals and SeeBeyond stockholder approval. The special stockholder meeting will be held on August 25, 2005.

General Overview

In October 2003, we announced the general availability of our new suite of products, the SeeBeyond Integrated Composite Application Network version 5.0 (“ICAN 5”). ICAN 5 offers the integration industry’s first fully integrated platform for the development and deployment of composite applications. ICAN 5 helps organizations to rapidly assemble and deploy enterprise-scale end-user composite applications built on existing systems and infrastructure.

We derive revenues primarily from three sources: licenses, services and maintenance. We sell our products and services on a global basis through our direct sales force, and through alliances with leading systems integrators, and in other instances, through value-added resellers and technology vendors. Our products are typically licensed directly to customers for a perpetual term, with pricing based on the number of systems or applications the customer is integrating or connecting with our products. We record license revenues when a license agreement has been signed by both parties, the fee is fixed or determinable, collection of the fee is probable, delivery of our products has occurred and no other significant obligations remain. Payments for licenses, services and maintenance received in advance of revenue recognition are recorded as deferred revenue.

Total revenue for the three months and six months ended June 30, 2005 was $32.1million and $69.4 million, respectively, as compared to $41.9 million and $76.3 million, respectively, in the same periods of the prior year, a 23% and 9% decrease from the same periods in the prior year. License revenue for the three months and six months ended June 30, 2005 was $10.0 million and $23.8 million, respectively, a 49% and 22% decrease over the same periods of the prior year. For the three months and six months ended June 30, 2005, license revenues represented 31% and 34%, respectively, of total revenue with services revenues representing 23% and 25%, respectively, and maintenance revenues representing 46% and 41%, respectively.

International revenues represented 43% of total revenues for the three months and six months ended June 30, 2005, with Europe revenues representing 34% and 31%, respectively and Asia Pacific revenues representing 10% and 11%, respectively.

We remain focused on controlling costs, growing license revenue, achieving our operating margin goals and ensuring our customers success with ICAN 5.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

We believe our most critical accounting policies include the following:

• revenue recognition,

• estimating allowance for doubtful accounts, and

• accounting for income taxes.

Revenue recognition. We recognize revenue when an agreement has been signed by both parties or other persuasive evidence of an arrangement exists, the software has been shipped or electronically delivered, the fees are fixed or determinable, collection of the resulting receivable is probable, and no other significant obligations remain. For multiple element arrangements where vendor-specific objective evidence of fair value exists for all undelivered elements, we account for the delivered elements in accordance with the “residual method” prescribed by Statement of Position 98-9. Vendor-specific objective evidence of fair value is based on the price a customer is required to pay when the element is sold separately.

We assess whether the fee is fixed and determinable and collection is probable at the time of the transaction. In assessing whether the fee is fixed and determinable, we analyze the payment terms of the transaction and other factors, including the nature and class of customer, our historical experience of collecting under our payment terms without granting a concession, the possibility of the product becoming technologically obsolete before the payments become due and the likelihood of the customer asking for a refund. We do not offer a right of return on our products.

If we determine the fee is not fixed or determinable, we defer the revenue until the payments under the arrangement become due. We assess whether collection is probable based on a number of factors, including the customer’s past transaction history and credit worthiness. If we determine that collection of a fee is not probable, we defer the fee and recognize revenue at the time collection becomes probable, which is generally upon the receipt of cash.

Maintenance revenues consist primarily of fees for providing unspecified software upgrades on a when-and-if-available basis and technical support over a specified term, which is typically twelve months. Maintenance revenues are typically paid in advance and are recognized on a straight-line basis over the specified term.

Revenues on sales made by alliance partners are generally recognized upon shipment of the software to the end user, if all other revenue recognition criteria noted above are met. Under limited arrangements with certain distributors when all the revenue recognition criteria have been met upon delivery of the product to the distributor, revenues are recognized at that time. The Company does not offer a right of return on its products.

The fair value of services such as consulting or training is based upon separate sales of these services. Consulting and training services are generally sold on a time-and-materials or fixed fee basis and are generally recognized as the services are performed. Consulting services primarily consist of implementation services related to the installation of our products and generally do not involve significant production, modification or customization to or development of the software.

Significant management judgments and estimates must be made when applying our revenue recognition policy. In the event the application of our revenue recognition policy is incorrect material differences in the amount and timing of revenue could result.

Allowance for doubtful accounts. We maintain allowances for doubtful accounts based on our analyses of the likelihood that our customers will not pay us all the amounts due us. In circumstances where there is knowledge of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the net recognized receivable to the amount that is reasonably believed to be collected. For all our customers we perform analyses, which include a review of their credit profiles, the terms and conditions of the contracts with our customers, and the current economic trends and payment history. We reassess these allowances each accounting period. If actual payment experience with our customers is different than our estimates, adjustments to these allowances may be necessary resulting in additional charges to our statement of operations.

Accounting for income taxes. We record a valuation allowance to reduce our deferred tax assets by the estimated amount of tax benefits which are not expected to be realized. Tax benefits will not be realized if we do not generate sufficient taxable income in the future to utilize those deferred tax assets. Our accounting for deferred taxes under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“Statement 109”), involves the evaluation of a number of factors concerning the ability to realize our deferred tax assets. In concluding that a valuation allowance was required on the remaining net deferred tax assets, we primarily considered such factors as our history of operating losses and expected future income or losses and the nature of our deferred tax assets in specific jurisdictions. In the event that we determine we are able to realize our deferred tax assets in the future in excess of their net recorded amount, an adjustment to the valuation allowance would increase income in the period such a determination was made.

Significant management judgment is required for purposes of assessing our ability to realize any future benefit from our net deferred tax assets. In the event actual results differ from these estimates or we adjust these estimates in future periods, our operating results and financial position could be materially affected.

In addition, Federal and state income taxes have not been provided for accumulated undistributed earnings of our foreign subsidiaries. We intend to permanently reinvest such earnings in those foreign subsidiaries. The amount of earnings designated as indefinitely reinvested offshore is based upon the Company’s expectations of the future cash needs of its entities. Income tax considerations are also a factor in determining the amount of foreign earnings to be repatriated. In the event actual cash needs of the Company’s U.S. entity exceeds its current expectations or the actual cash needs of its foreign entities are less than expected, the Company may need to repatriate foreign earnings which have been designated as indefinitely reinvested offshore. This would result in additional income tax expense being recorded.

Results of Operations

The following table sets forth our results of operations for the three months ended June 30, 2005 and 2004, respectively, expressed as a percentage of total revenues:

	Three Months Ended June 30,				Six Months Ended June 30,
	2005		2004		2005		2004
Revenues:
License	31	%	47	%	34	%	40	%
Services	23		22		25		26
Maintenance	46		31		41		34
Total revenues	100		100		100		100
Cost of revenues:
License	—		1		1		1
Services and maintenance	31		25		29		27
Total cost of revenues	31		26		30		28
Gross profit	69		74		70		72
Operating expenses:
Research and development	32		23		29		25
Sales and marketing	41		38		39		41
General and administrative	16		10		15		12
Merger and acquisition	7		—		3		—
Amortization of sales and marketing warrants	—		—		—		—
Amortization of stock-based compensation	—		—		—		—
Total operating expenses	96		72		86		78
(Loss) income from operations	(27	)	2		(16	)	(6	)
Interest and other income (expense), net	—		—		—		—
Interest expense	—		—		—		—
(Loss) income before income tax provision	(27	)	2		(16	)	(6	)
Income tax provision	—		—		—		—
Net (loss) income	(27	)%	2	%	(16	)%	(6	)%

Revenues

Total revenues (in thousands except percentages):

	Three Months Ended June 30,									Six Months Ended June 30,
	2005		2004		Change					2005		2004		Change
Total revenues	$	32,115	$	41,869	$	(9,754	)	(23	)%	$	69,423	$	76,306	$	(6,883	)	(9	)%

Total revenues decreased for the three months and six months ended June 30, 2005 as compared to the same periods of the prior year primarily due to decreases in license and services revenues.

License revenues (in thousands except percentages):

	Three Months Ended June 30,									Six Months Ended June 30,
	2005		2004		Change					2005		2004		Change
License revenues	$	10,004	$	19,778	$	(9,774	)	(49	)%	$	23,753	$	30,658	$	(6,905	)	(23	)%

License revenues decreased for the three months and six months ended June 30, 2005 as compared to the same periods in the prior year primarily due to two factors. In Europe, license revenue decreased year over year due to the signing of a single large license deal in the prior year, which represented approximately 10% of revenue in the prior year. In addition, license revenue for the three months and six months ended June 30, 2005 was impacted by the announcement by the Company on June 27, 2005 regarding the Company’s acquisition by Sun Microsystems, Inc. This announcement impacted the potential signing of new license deals with customers as they delay decisions to evaluate the impact of the announced merger on the Company’s product offerings.

Services revenues (in thousands except percentages):

Revenues from services include consulting and implementation services, training and reimbursable out-of-pocket expenses. A majority of our customers use third-party systems integrators to implement our products. Customers also typically purchase additional consulting services from us to support their implementation activities. From time to time, we use third-party systems integrators in a sub-contractor capacity to supplement our own internal services employees. Our consulting services are generally sold on a time and materials or fixed fee basis, and services revenues are recognized as the services are performed. We also offer training services, which are sold on a per student basis and for which revenues are recognized as the classes are attended.

	Three Months Ended June 30,									Six Months Ended June 30,
	2005		2004		Change					2005		2004		Change
Services revenues	$	7,417	$	9,110	$	(1,693	)	(19	)%	$	17,074	$	19,620	$	(2,546	)	(13	)%

Services revenues decreased for the three months and six months ended June 30, 2005 as compared to the same periods of the prior year primarily due to a decrease in the size, nature and timing of such engagements as a result of lower license revenues in the current year’s three and six month periods as compared to the same periods in the prior year.

Maintenance revenues (in thousands except percentages):

Customers who license our products normally purchase maintenance contracts. These contracts provide unspecified software upgrades and technical support over a fixed term, which is typically 12 months. Maintenance contracts are usually paid in advance, and revenues from these contracts are recognized ratably over the term of the contract.

	Three Months Ended June 30,								Six Months Ended June 30,
	2005		2004		Change				2005		2004		Change
Maintenance revenues	$	14,694	$	12,981	$	1,713	13	%	$	28,596	$	26,028	$	2,568	10	%

Maintenance revenues for the three months and six months ended June 30, 2005 increased as compared to the same periods of the prior year primarily due to renewals of prior period maintenance contracts associated with the increase in our cumulative license revenues.

Cost of revenues (in thousands except percentages):

Cost of revenues consists primarily of compensation and related overhead costs for personnel and sub-contractors engaged in implementation services, maintenance support activities, training and out-of-pocket expenses as well as royalties for third-party products embedded or bundled with our products. Such costs include salaries, employee benefits, incentive compensation, bonuses, travel, rent and allocated facilities and professional fees.

	Three Months Ended June 30,									Six Months Ended June 30,
	2005		2004		Change					2005		2004		Change
Total cost of revenues	$	9,954	$	10,996	$	(1,042	)	(9	)%	$	20,997	$	21,452	$	(455	)	(2	)%

Total cost of revenues for the three months and six months ended June 30, 2005 decreased slightly as compared to the same periods of the prior year with no significant year over year changes in any particular cost of revenue line item.

Operating expenses

Research and development expenses (in thousands except percentages):

Research and development expenses consist primarily of personnel, third party contractors and related costs associated with the development and enhancement of our products.

	Three Months Ended June 30,								Six Months Ended June 30,
	2005		2004		Change				2005		2004		Change
Research and development expenses	$	10,287	$	9,636	$	651	7	%	$	20,298	$	19,376	$	922	5	%

Research and development expenses increased for the three months and six months ended June 30, 2005 as compared to the same periods of the prior year as we transition our product development efforts to new products due to the completion of the ICAN 5 product suite and continue to enhance and extend our product suites. We anticipate research and development expenses to increase slightly in absolute dollars for the foreseeable future.

Sales and marketing expenses (in thousands except percentages):

Sales and marketing expenses consist primarily of personnel and related costs of our direct sales force and marketing staff and the cost of expenditures specific to the marketing group, such as public relations and advertising, trade shows and marketing collateral materials and expenditures.

	Three Months Ended June 30,									Six Months Ended June 30,
	2005		2004		Change					2005		2004		Change
Sales and marketing expenses	$	13,087	$	16,066	$	(2,979	)	(19	)%	$	26,794	$	31,070	$	(4,276	)	(14	)%

Sales and marketing expenses decreased for the three months and six months ended June 30, 2005 as compared to the same periods of the prior year primarily due to a decrease in sales commissions on lower license sales and promotional and public relations activities. We anticipate sales and marketing expenses to increase slightly in absolute dollars for the foreseeable future.

General and administrative expenses (in thousands except percentages):

General and administrative expenses consist primarily of personnel and related costs for corporate, executive, human resources, legal, IT, finance and accounting functions.

	Three Months Ended June 30,								Six Months Ended June 30,
	2005		2004		Change				2005		2004		Change
General and administrative expenses	$	5,168	$	4,249	$	919	22	%	$	10,329	$	8,858	$	1,471	17	%

General and administrative expenses for the three months and six months ended June 30, 2005 increased as compared to the same periods of the prior year primarily due to consulting and related expenses incurred on compliance and review projects related to the requirements imposed by the Sarbanes-Oxley Act of 2002. We anticipate general and administrative expenses to increase slightly in absolute dollars for the foreseeable future.

Merger and acquisition expenses (in thousands except percentages):

	Three Months Ended June 30,							Six Months Ended June 30,
	2005		2004	Change				2005		2004	Change
Merger and acquisition expenses	$	2,350	—	$	2,350	100	%	$	2,350	—	$	2,350	100	%

Merger and acquisition expenses increased for the three months and six months ended June 30, 2005 as compared to the same periods of the prior year primarily due to professional and legal fees incurred in relation to the Sun acquisition.

Interest income and other income (expense), net (in thousands except percentages):

Interest income and other income (expense), net consists of interest earned on cash balances, foreign currency gains and losses, gains and losses on the disposal of fixed assets and other miscellaneous income and expense items.

	Three Months Ended June 30,								Six Months Ended June 30,
	2005		2004		Change				2005		2004			Change
Interest income and other income (expense), net	$	292	$	143	$	149	104	%	$	578	$	(70	)	$	648	(926	)%

Interest income and other income (expense), net for the three months and six months ended June 30, 2005 increased as compared to the same periods of the prior year primarily due to decreases in foreign exchange losses in several of our international subsidiaries and an increase in interest income earned as a result of higher interest rates.

Interest expense (in thousands except percentages):

	Three Months Ended June 30,										Six Months Ended June 30,
	2005			2004			Change				2005			2004			Change
Interest expense	$	(31	)	$	(61	)	$	30	(49	)%	$	(60	)	$	(133	)	$	73	(55	)%

Interest expense for the three months and six months ended June 30, 2005 decreased as compared to the same periods of the prior year primarily due to repayment in full of the equipment line and equipment advance prior to December 31, 2004.

Income tax provision (in thousands except percentages):

	Three Months Ended June 30,								Six Months Ended June 30,
	2005		2004		Change				2005		2004		Change
Income tax provision	$	145	$	135	$	10	7	%	$	368	$	178	$	190	107	%

The income tax provision consists primarily of foreign taxes due to income earned in foreign operations and state franchise taxes. The estimated effective tax rates differ from the U.S. statutory rate primarily due to state taxes, non-deductible expenses and changes in the valuation allowance.

The Company records valuation allowances against its deferred tax assets, when necessary, in accordance with SFAS No. 109, “Accounting for Income Taxes”. Realization of deferred tax assets (such as net operating loss carryforwards and income tax credits) is dependent on future taxable earnings and is therefore uncertain. To the extent management believes recovery is unlikely, the Company establishes a valuation allowance against its deferred tax asset. The Company’s tax position as of June 30, 2005 has not changed since December 31, 2004. The Company continues to monitor the need for the valuation allowance each period. In the event actual results differ from the Company’s estimates, the operating results and financial position could be materially affected.

Net undistributed earnings of certain foreign subsidiaries are considered to be indefinitely reinvested, and accordingly, no provision for U.S. Federal and state income taxes has been provided thereon. Upon distribution of these earnings in the form of dividends, or otherwise, the Company would be subject to U.S. income tax.

Liquidity and capital resources

As of June 30, 2005, we had cash and cash equivalents of $66.0 million, a decrease of $7.1 million from $73.1 million held as of December 31, 2004.

Operating activities:

	Six Months Ended June 30,
	2005			2004			Change
Net cash used in operating activities	$	(4,470	)	$	(5,199	)	$	729	(14	)%

Net cash used in operating activities for the six months ended June 30, 2005 was primarily due to a net loss of $11.2 million and decreases in accounts payable, accrued compensation and related expenses, accrued expenses and deferred revenues, partially offset by a decrease in accounts receivable.

Net cash provided by operating activities for the six months ended June 30, 2004 was primarily due to a net loss of $4.9 million and decreases in accrued compensation and related expenses and accrued expenses, partially offset by a decrease in accounts receivable and increases in accounts payable and deferred revenues.

Investing activities:

	Six Months Ended June 30,
	2005			2004			Change
Net cash used in investing activities	$	(858	)	$	(705	)	$	153	(22	)%

The change in investing activities from June 30, 2004 to June 30, 2005 is due primarily to a decrease in capital expenditures, partially offset by a payment to acquire a company during the six months ended June 30, 2005. We expect capital expenditures in the next three months to remain flat compared to the previous three months.

Financing activities:

	Six Months Ended June 30,
	2005			2004		Change
Net cash (used in) provided by financing activities	$	(885	)	$	722	$	(1,607	)	(223	)%

Net cash used in financing activities for the six months ended June 30, 2005 was primarily due to payments for the repurchase of 1,090,300 shares of treasury stock, partially offset by proceeds from the issuance of common stock pursuant to the employee stock option plan.

Net cash provided by financing activities for the six months ended June 30, 2004 was primarily due to proceeds from the issuance of common stock pursuant to the employee stock option plan, partially offset by repayments on the bank lines of credit.

In November 2000, the Company established a $15.0 million line of credit facility (the “Line”) with a lending institution that bears interest at an annual rate of either prime plus 0.5% or the London InterBank Offered Rate (“LIBOR”) rate plus 2.50% (payable monthly). The Line expires on May 31, 2006. As of June 30, 2005, approximately $8.4 million was available under the Line and there were no borrowings outstanding. The Company may use up to $5.0 million of the Line to issue letters of credit. As of June 30, 2005, approximately $778,000 was available for the issuance of letters of credit. The Line is secured by intellectual property rights, accounts receivable and certain other assets and is subject to certain borrowing base restrictions. The Line requires maintenance of certain financial covenants pertaining to key financial ratios and the Company is in compliance with those covenants as of June 30, 2005.

We believe that our current cash and cash equivalents balance will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months. However, we may need to raise additional funds, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all. In addition, we may also utilize cash resources to fund acquisitions or investments in complementary businesses, technologies or product lines.

Risks Related to SeeBeyond

You should carefully consider the risks described below in evaluating the other statements made herein. The risks described below are not the only ones facing our Company. Additional risks not presently known to us, or we currently deem immaterial, may also impair our business operations.

Our business, financial condition or results of operations could be adversely affected by any of these risks. The trading price of our

common stock could decline due to any of these risks.

Failure to complete the merger recently announced with Sun Microsystems, Inc. could have a negative impact on the market price of our common stock and on our business.

On June 27, 2005, we entered into a merger agreement with Sun Microsystems, Inc. (“Sun”) that would result in SeeBeyond becoming a wholly owned subsidiary of Sun. If the merger is not completed, the price of our common stock may decline to the extent that the current market price reflects a market assumption that the merger will be completed. In addition, our business and operations may be harmed to the extent that customers, suppliers and others believe that we cannot compete effectively in the marketplace without the merger. We also will be required to pay significant costs incurred in connection with the merger, whether or not the merger is completed. Moreover, under specified circumstances we may be required to pay a termination fee of $12.6 million to Sun in connection with a termination of the merger agreement.

Pending stockholder lawsuits could prevent or delay the closing of the merger or otherwise negatively impact the business and operations of SeeBeyond.

Purported class action lawsuits have been filed against SeeBeyond and individual officers and members of our board of directors with respect to the merger involving Sun. The lawsuits generally allege that the defendants breached fiduciary duties to our stockholders and engaged in self-dealing by entering into and approving the merger agreement with Sun. The complaints seek, among other things, to enjoin completion of the merger with Sun and to rescind the transaction. Please refer to “Note 12—Subsequent Event” in our Notes to Consolidated Financial Statements.

Although we believe that the lawsuits are without merit, and intend to defend them vigorously, no assurances can be given that we will prevail in the lawsuits. In the event that holders of a majority of the outstanding shares of SeeBeyond common stock vote in favor of adoption of the merger agreement with Sun, in addition to any other defenses SeeBeyond, Mr. Demetriades and the director defendants may assert, SeeBeyond, Mr. Demetriades and the director defendants intend to rely upon the approval of the proposal to adopt the merger agreement with Sun in defense of the claims asserted in the actions. Specifically, SeeBeyond, Mr. Demetriades and the director defendants intend to argue that the approval of the proposal to adopt the merger agreement with Sun by holders of a majority of the shares of our common stock constitutes a ratification or acceptance of the conduct that is the subject of plaintiffs’ complaints. SeeBeyond, Mr. Demetriades and the director defendants further intend to argue that such ratification or approval constitutes a complete defense to the claims asserted in the complaints or otherwise operates to protect them from liability or increase the plaintiffs’ burdens of pleading and proof in the actions.

A downturn in the general economy or a continuation of the industry trend toward reducing or delaying additional information technology spending due to cost-cutting pressures could reduce demand for our products and services.

We rely significantly upon customers making large information technology purchasing decisions as a source of revenue. The general slow-down in capital spending by our customers that we experienced in recent years, if sustained again in future periods, could result in reduced sales or the postponement of sales to our customers. There can be no assurance the level of spending on information technology in general or on business integration software by our customers and potential customers in particular, will increase or remain at current levels in future periods. Lower spending on information technology could result in reduced license sales to our customers, reduced overall revenues, diminished margin levels, and could impair our operating results in future periods.

We have a large accumulated deficit, we may incur future losses and we may not maintain profitability.

We have incurred substantial losses since 1998 as we increased funding of the development of our products and technologies and expanded our sales and marketing organization. As of June 30, 2005, we had an accumulated deficit of approximately $164.8 million. We may continue to incur losses in future periods and we may not achieve and sustain profitability on a quarterly basis, or on an annual basis.

Our operating results fluctuate significantly, and an unanticipated decline in revenues or gross margin may disappoint securities analysts or investors and result in a decline in our stock price.

Our operating results have fluctuated significantly in the past and may vary significantly in the future. We believe period-to-period

comparisons of our historical results of operations are not a good predictor of our future performance.

Our revenues and operating results depend upon the volume and timing of customer orders and payments and the date of product delivery. Historically, a substantial portion of our revenues in a given quarter has been recorded in the final month of that quarter, with a concentration of these revenues in the last two weeks of the final month. We expect this trend to continue and, therefore, any failure or delay in the closing of orders would have a material adverse effect on our quarterly operating results. Since our operating expenses are based on anticipated revenues and because a high percentage of these expenses are relatively fixed, a delay in the recognition of revenues from one or more license transactions could cause significant variations in operating results from quarter to quarter and cause a decline in our stock price. We realize substantially higher gross margins on our license revenues compared to our services and maintenance revenues. Thus, our margins for any particular quarter will be highly dependent on our revenue mix in that quarter. In our international markets, we have experienced some seasonality of revenues, with lower revenues in the summer months. Although this seasonality has not had a material impact on our operating results in the past, we cannot assure that our operating results will not fluctuate in the future as a result of these and other international trends.

We record as deferred revenue, payments from customers that do not meet our revenue recognition policy requirements. Since only a small portion of our revenues each quarter is recognized from deferred revenue, our quarterly results depend primarily upon entering into new contracts to generate revenues for that quarter. New contracts may not result in revenues in the quarter in which the contract was signed, and we may not be able to predict accurately when revenues from these contracts will be recognized. If our operating results are below the expectations of securities analysts or investors for these or other reasons, our stock price would likely decline, perhaps substantially.

We experience long and variable sales cycles, which could have a negative impact on our results of operations for any given quarter.

Our products are often used by our customers throughout their organizations to address critical business problems. Customers generally consider a wide range of issues before committing to purchase our products, including product benefits, the ability to operate with existing and future computer systems, the ability to accommodate increased transaction volumes and product reliability. Many customers are addressing these issues for the first time when they consider whether to buy our products and services. As a result, we or other parties, including systems integrators, must educate potential customers on the use and benefits of our products and services. In addition, the purchase of our products generally involves a significant commitment of capital and other resources by a customer. This commitment often requires significant technical review, assessment of competitive products and approval at a number of management levels within a customer’s organization. Our sales cycle may vary based on the industry in which the potential customer operates and is difficult to predict for any particular license transaction. The length and variability of our sales cycle makes it difficult to predict whether particular sales will be concluded in any given quarter. If one or more of our license transactions are not consummated in a given quarter, our results of operations for that quarter may be below our expectations and the expectations of analysts and investors.

Our operating results are highly dependent on license revenues from one software suite, and our business could be materially harmed by factors that adversely affect the pricing and demand for this software suite.

Substantially all of our license revenues have been, and are expected to continue to be, derived from the license of our Business Integration Suite. Accordingly, our future operating results will depend on the demand for our Business Integration Suite by future customers, including new and enhanced releases that are subsequently introduced. Our latest version of the Business Integration Suite, ICAN 5, was made generally available to customers in October 2003. If our competitors release new products that are superior to our Business Integration Suite in functionality, performance or price, or if we fail to enhance our Business Integration Suite and introduce new products in a timely manner, demand for our products may decline, and we may have to reduce the pricing of our products. A decline in demand or pricing for our Business Integration Suite as a result of these or other factors would significantly reduce our revenues.

In the past, we have experienced delays in the commencement of commercial releases of our Business Integration Suite. In the future, we may fail to introduce or deliver new products on a timely basis. If new releases or products are delayed or do not achieve market acceptance, we could experience customer dissatisfaction or a delay or loss of revenues. For example, the introduction of new enterprise and business applications requires us to introduce new e*Way adapters to support the integration of these applications. Our failure to introduce these or other modules in a timely manner could cause our revenues and market share to decline. In addition, customers may delay purchases of our products in anticipation of future releases. If customers defer material orders in anticipation of new releases or new product introductions, our revenues may decline.

Moreover, as we release enhanced versions of our products, we may not be successful in upgrading our customers who purchased previous versions of our Business Integration Suite to the current version. We also may not be successful in selling add-on modules

for our products to existing customers. Any failure to continue to upgrade existing customers’ products or sell new modules, if and when they are introduced, could negatively impact customer satisfaction and our revenues.

The loss of any significant customer could harm our business and cause our stock price to decline.

We do not have long-term sales contracts with any of our customers. There can be no assurance that any of our customers will continue to purchase our products in the future. As a result, a customer that generates substantial revenue for us in one period may not be a source of revenue in subsequent periods. Because a significant portion of our revenues are derived from repeat customer business, the loss of any significant customer or the failure of such a customer to license additional products and services from us, could cause our revenues to decline, harm our business and cause our stock price to decline.

Our revenues will likely decline if we do not develop and maintain successful relationships with our systems integration partners and other partners, who also have relationships with our competitors.

We have entered into agreements with a number of systems integrators for them to install and deploy our products and perform custom integration of systems and applications. These systems integrators also engage in joint marketing and sales efforts with us. If these relationships fail, we will have to devote substantially more resources to the sales and marketing and implementation and support of our products than we would otherwise, and our efforts may not be as effective as those of the systems integrators. In many cases, these parties have extensive relationships with our existing and potential customers and influence the decisions of these customers. We rely upon these firms to recommend our products during the evaluation stage of the purchasing process, as well as for implementation and customer support services.

These systems integrators are not contractually required to implement our products, and competition for these resources may preclude us from obtaining sufficient resources to provide the necessary implementation services to support our needs. If the number of installations of our products exceeds our access to the resources provided by these systems integrators, we will be required to provide these services internally, which would increase our expenses and significantly limit our ability to meet our customers’ implementation needs. A number of our competitors have stronger relationships with some of these systems integrators and, as a result, these systems integrators might be more likely to recommend competitors’ products and services instead of ours. In addition, a number of our competitors have relationships with a greater number of these systems integrators or have stronger systems integrator relationships based on specific vertical markets and, therefore, have access to a broader base of customers.

Our failure to establish or maintain systems integrator relationships would significantly harm our ability to license and successfully implement our software products. In addition, we rely on the industry expertise and customer contacts of these firms in order to market our products more effectively. Therefore, any failure of these relationships would also harm our ability to increase revenues in key commercial markets. We are currently investing, and plan to continue to invest, significant resources to develop these relationships. Our operating results could be adversely affected if these efforts do not generate license and service revenues necessary to offset this investment.

Our markets are highly competitive and, if we do not compete effectively, we may suffer price reductions, reduced gross margins and loss of market share.

The market for our products is intensely competitive, evolving and subject to rapid technological change. We expect the intensity of competition to increase in the future. As a result of increased competition, we may have to reduce the price of our products and services, and we may experience reduced gross margins and loss of market share, any one of which could significantly reduce our future revenues and operating results. Our current competitors include vendors offering business application integration and traditional electronic data interchange, or EDI, software products, as well as “in house” information technology departments of potential customers that have developed or may develop systems that provide some or all of the functionality of our Business Integration Suite. We may also encounter competition from major enterprise software developers in the future.

Many of our existing and potential competitors have more resources, broader customer relationships and better-established brands than we do. In addition, many of these competitors have extensive knowledge of our industry. Some of our competitors have established or may establish cooperative relationships among themselves or with third parties to offer a single solution and increase the ability of their products to address customer needs.

Our substantial and expanding international operations are subject to uncertainties, which could adversely affect our operating results.

Revenues from the sale of products and services outside the United States accounted for 43% during the three months and six months ended June 30, 2005. Revenues from the sale of products and services in the United Kingdom as a percent of our total revenues were

15% and 14%, respectively during the three months and six months ended June 30, 2005. We believe revenues from sales outside the United States will continue to account for a material portion of our total revenues for the foreseeable future. We are exposed to several risks inherent in conducting business internationally, such as:

• fluctuations in currency exchange rates, which could result in increased expenses;

• unexpected changes in regulatory requirements, including imposition of currency exchange controls, applicable to our business or to the Internet, which could result in increased costs of doing business overseas;

• difficulties and costs of staffing and managing international operations;

• political and economic instability, which could result in increasing governmental ownership or regulation of businesses or other instrumentalities of commerce, wage and price controls, higher interest rates and spiraling inflation; and

• reduced protection for intellectual property rights in some countries.

Any of these factors could adversely affect our international operations and, consequently, our operating results.

New regulations related to equity compensation will adversely affect our operating results and may affect our ability to attract and retain key personnel.

Since our inception, we have used stock options as an important component of our employee compensation packages. We believe that our stock option plan is an essential tool to link the long-term interests of our stockholders and employees, and serve to motivate management to make decisions that will, in the long run, give the best returns to stockholders. The Financial Accounting Standards Board (FASB) has implemented changes to United States generally accepted accounting principles requiring us to record a charge to earnings for employee stock option grants, as well as other equity-based awards. The changes implemented by FASB relating to the accounting for equity compensation plans are scheduled to go into effect in the first quarter of 2006. This accounting pronouncement will negatively impact our operating results and could affect our ability to raise capital on acceptable terms. For an illustrative example of the adverse impact this accounting change may have had on our recent operating results, please see Note 5 — “Stock-Based Compensation” to the consolidated financial statements included elsewhere in this report. To the extent that new regulations make it more difficult or expensive to grant options to employees, we may incur increased compensation costs, change our equity compensation strategy or find it difficult to attract, retain and motivate employees, each of which could materially and adversely affect our business.

We could suffer losses and negative publicity if new versions or releases of our products contain errors or defects.

Our products and their interactions with customers’ software applications and IT systems are complex and, accordingly, there may be undetected errors or failures when our products are introduced or as new versions are released. In the past we have discovered software errors in our new releases and new products after their introduction, which have resulted in additional product development expenses. To date, these additional expenses have not been material. These errors have resulted in product release delays, delayed revenues and customer dissatisfaction. In the future we may discover errors, including performance limitations, in new releases or new products after the commencement of commercial shipments. Since many customers are using our products for mission-critical business operations, any of these occurrences could seriously harm our business and generate negative publicity, which could have a negative impact on future sales. Although we maintain product liability and errors and omissions insurance, we cannot assure you these policies will be sufficient to compensate for losses caused by any of these occurrences.

If our products do not operate with the many hardware and software platforms used by our customers and keep pace with technological change, our business may fail.

We currently serve a customer base with a wide variety of constantly changing hardware, software applications and platforms. If our products fail to gain broad market acceptance due to an inability to support a variety of these platforms, our operating results may suffer. Our business depends on a number of factors, including the following:

• our ability to integrate our products with multiple platforms and existing, or legacy, systems and to modify our products as new versions of software applications are introduced;

• the portability of our products, particularly the number of operating systems and databases our products can source or target;

• our ability to anticipate and support new standards, especially Internet standards;

• the integration of additional software modules under development with our existing products; and

• our management of software being developed by third parties for our customers for use with our products.

Our industry is characterized by very rapid technological change, frequent new product introductions and enhancements, changes in customer demands and evolving industry standards. We have also found the technological life cycles of our products are difficult to estimate. We believe we must continue to enhance our current products and concurrently develop and introduce new products that anticipate emerging technology standards and keep pace with competitive and technological developments. Failure to do so will harm our ability to compete. As a result, we are required to continue to make substantial product development investments.

The market for business integration software may not grow as quickly as we anticipate which would cause our revenues to fall below expectations.

The market for business integration software is rapidly evolving. We earn substantially all of our license revenues from sales of our Business Integration Suite. We expect to earn substantially all of our revenues in the foreseeable future from sales of our Business Integration Suite and related products and services. Our future financial performance will depend on continued growth in the number of organizations demanding software and services for application integration and business integration solutions and seeking outside vendors to develop, manage and maintain this software for their critical applications. Many of our potential customers have made significant investments in internally developed systems and would incur significant costs in switching to third-party products, which may substantially inhibit the growth of the market for business integration software. If this market fails to grow, or grows more slowly than we expect, our revenues will be adversely affected.

Pending or future litigation could have a material adverse impact on our results of operation and financial condition.

From time to time, we have been subject to litigation. In addition to the related cost and use of cash, pending or future litigation could cause the diversion of management’s attention and resources, and ultimately could have a material adverse impact on our results of operation and financial condition.

If we fail to adequately protect our proprietary rights, we may lose these rights and our business may be seriously harmed.

We depend upon our ability to develop and protect our proprietary technology and intellectual property rights to distinguish our product from our competitors’ products. The unauthorized use by others of our proprietary rights could materially harm our business. We rely on a combination of copyright, trademark and trade secret laws, as well as confidentiality agreements and licensing arrangements, to establish and protect our proprietary rights. We currently have no issued patents. Despite our efforts to protect our proprietary rights, existing laws afford only limited protection. Attempts may be made to copy or reverse engineer aspects of our products or to obtain and use information we regard as proprietary. Accordingly, we cannot be certain we will be able to protect our proprietary rights against unauthorized third party copying or use. Furthermore, policing the unauthorized use of our products is difficult, and expensive litigation may be necessary in the future to enforce our intellectual property rights.

Our products could infringe the intellectual property rights of others, causing costly litigation and the loss of significant rights.

Third parties may claim we have infringed their current or future intellectual property rights. We expect software developers in our market will increasingly be subject to infringement claims as the number of products in different software industry segments overlap. Any claims, with or without merit, could be time-consuming, result in costly litigation, prevent product shipment or cause delays, or require us to enter into royalty or licensing agreements, any of which could harm our business. Patent litigation in particular has complex technical issues and inherent uncertainties. In the event an infringement claim against us is successful and we cannot obtain a license on acceptable terms, license a substitute technology or redesign our products to avoid infringement, our business would be harmed. Furthermore, former employers of our current and future employees may assert our employees have improperly disclosed to us or are using their confidential or proprietary information.

Failure to raise additional capital or generate the significant capital necessary to expand our operations and invest in new products could reduce our ability to compete and result in lower revenues.

We currently expect our current cash resources will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months. After that, we may need to raise additional funds, and we cannot be certain we will be able to obtain additional debt or equity financing on favorable terms, or at all. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests and the per share value of our common stock could decline. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness and force us to maintain specified liquidity or other ratios, any of which could harm our business. If we need additional capital and cannot raise it on acceptable

terms, we may not be able to, among other things:

• develop or enhance our products and services;

• maintain or expand our sales and marketing organizations;

• acquire complementary technologies, products or businesses;

• expand operations, in the United States or internationally;

• hire, train and retain employees; or

• respond to competitive pressures or unanticipated working capital requirements.

Our failure to do any of these things could result in lower revenues and could seriously harm our business.

If we fail to attract, retain and integrate qualified personnel, our ability to compete will be harmed.

We depend on the continued service of our key technical, sales and senior management personnel, including our founder and Chief Executive Officer, James T. Demetriades. Most of these persons are not bound by an employment agreement, and we do not maintain key person life insurance on any of these persons, other than Mr. Demetriades. The loss of any of our senior management or other key product development or sales and marketing personnel could adversely affect our future operating results. Additionally, we recently experienced significant turnover in our North American sales force, including new staff and management. Our ability to effectively train and integrate this new North American sales force could pose continuing challenges to our business. If we fail to do so, our operating results, particularly in the short term, could be negatively impacted. In addition, we must attract, retain and motivate highly skilled employees, including sales personnel and software engineers. We face significant competition for individuals with the skills required to develop, market and support our products and services. We may not be able to recruit and retain sufficient numbers of these highly skilled employees. If we fail to do so, our ability to compete will be significantly harmed.

Our growth continues to place a significant strain on our management systems and resources. If we fail to manage our growth, our ability to market and sell our products and develop new products may be harmed.

We must plan and manage our growth effectively in order to offer our products and services and achieve revenue growth and profitability in a rapidly evolving market. Our growth has and will continue to place a significant strain on our management systems and resources, and we may not be able to effectively manage our growth in the future.

Furthermore, if our relationships with systems integrators succeed and we are able to penetrate additional commercial markets, we may need additional sales and marketing and professional services resources to support these customers. The growth of our customer base will require us to invest significant resources in the training and development of our employees and our systems integration partners. If these organizations fail to keep pace with the number and demands of the customers that license our products, our ability to market and sell our products and services and our ability to develop new products and services will be harmed. To manage our business, we must continue to:

• effectively manage our direct sales force;

• effectively manage our professional services organization;

• hire and retain qualified software engineers;

• improve our operational, financial and management controls;

• improve our reporting systems and procedures;

• enhance our management and information control systems; and

• effectively manage, train and motivate our workforce.

In addition, if we acquire or invest in other companies, we may experience further strain on our resources and face risks inherent in integrating two corporate cultures, product lines, operations and businesses.

We have implemented anti-takeover provisions that could discourage or prevent a takeover, even if an acquisition would be beneficial to our stockholders.

Some provisions of Delaware law and our certificate of incorporation and bylaws could have the effect of delaying or preventing a third party from acquiring us, even if a change in control would be beneficial to our stockholders. For example, our certificate of incorporation provides for a classified board of directors whose members serve staggered three-year terms and does not provide for cumulative voting in the election of directors. Our board of directors has the authority, without further action by our stockholders, to fix the rights and preferences of and issue shares of preferred stock. In addition, our stockholders are unable to act by written consent. These and other provisions could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders.

Concentration of ownership among our existing executive officers and directors may prevent new investors from influencing significant corporate decisions.

Our Chief Executive Officer, James T. Demetriades beneficially owns approximately 30% of our outstanding common stock. Our executive officers and directors beneficially own, in the aggregate, approximately 39% of our outstanding common stock. As a result, these stockholders will be able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This could have the effect of delaying or preventing a change of control of SeeBeyond and will make some transactions difficult or impossible without the support of these stockholders.

External factors such as potential terrorist attacks could have a material adverse affect on the U.S. and global economics.

The possibility of potential terrorist attacks could have an adverse effect upon an already weakened world economy and could cause U.S. and foreign businesses to slow spending on products and services and delay sales cycles. The economic uncertainty resulting from any such future attacks and other responses associated with such attacks may continue to negatively impact short-term consumer and business confidence.

Item 3 . Quantitative and Qualitative Disclosure About Market Risk

We are exposed to a variety of risks, including changes in interest rates affecting the return on our investments and foreign currency fluctuations. We have established policies and procedures to manage our exposure to fluctuations in interest rates and foreign currency exchange rates.

Interest rate risk. We maintain our funds in money market and certificate of deposit accounts at financial institutions. Our exposure to market risk due to fluctuations in interest rates relates primarily to our interest earnings on our cash deposits. These securities are subject to interest rate risk in as much as their fair value may fall if market interest rates increase. If market interest rates were to increase immediately and uniformly by 10% from the levels prevailing as of June 30, 2005, the fair value of the portfolio would not decline by a material amount. We do not use derivative financial instruments to mitigate risks. However, we do have an investment policy that would allow us to invest in short-term and long-term investments such as money market instruments and corporate debt securities. Our policy attempts to reduce such risks by typically limiting the maturity date of such securities, placing our investments with high credit quality issuers and limiting the amount of credit exposure with any one issuer.

Foreign currency exchange rate risk. Our exposure to market risk due to fluctuations in foreign currency exchange rates relates primarily to the intercompany balances with our subsidiaries located in Australia, France, Germany, Japan and the United Kingdom. Transaction gains or losses have not been significant in the past and we do not participate in any hedging activity on foreign currencies. We would not experience a material foreign exchange loss based on a hypothetical 10% adverse change in the price of any of the local currencies of these countries. Consequently, we do not expect that a reduction in the value of such accounts denominated in foreign currencies resulting from a sudden or significant fluctuation in foreign exchange rates would have a direct material impact on our financial position, results of operations or cash flows.

Item 4 . Controls and Procedures

Our management evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. There was no change in our internal control over financial reporting (as defined in Rule 13a—15(f) under the Exchange Act) during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II —OTHER INFORMATION

Item 1. Legal Proceedings

Purported class action lawsuits have been filed against SeeBeyond and individual officers and members of our board of directors with respect to the merger involving Sun Microsystems. The lawsuits generally allege that the defendants breached fiduciary duties to our stockholders and engaged in self-dealing by entering into and approving the merger agreement with Sun Microsystems. The complaints seek, among other things, to enjoin completion of the merger with Sun Microsystems and to rescind the transaction. Please refer to “Note 12—Subsequent Event” in our Notes to Consolidated Financial Statements.

Item 2. Changes in Securities and Use of Proceeds

(a) Modification of Constituent Instruments

Not applicable

(b) Change in Rights

Not applicable

(c) Changes in Securities

Not applicable

(d) Not applicable

(e) Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans	(d) Maximum Dollar Amount of Shares that May Yet Be Purchased Under the Plan
4/1/05-4/30/05	—
5/1/05-5/31/05	1,025,300	$	2.95	1,932,250	$	6,975,365
6/1/05-6/30/05	65,000	$	2.99	1,997,250	$	6,781,015
Total	1,090,300	$	2.98	1,997,250	$	6,781,015

On May 5, 2005, another repurchase plan was announced by our Board of Directors who approved a stock repurchase program of up to $10.0 million of common stock and will terminate in 24 months on May 5, 2007.

Item 3. Defaults Upon Senior Securities

Not applicable

Item 4. Submission of Matters to a Vote of Security Holders

The following proposals were approved at our annual meeting of stockholders held on June 17, 2005:

PROPOSAL ONE: To elect one Class II director to the Company’s Board of Directors to serve for a term of three years or until the Annual meeting of shareholders in 2008

Directors		FOR		WITHHOLD AUTHORITY
Salah M. Hassanein		76,196,582		768,073

The aforesaid nominee has been elected as Director for the term set forth above.

PROPOSAL TWO: To appoint Ernst & Young LLP as indeptendent auditors for the 2005 fiscal year received the following vote:

FOR:	76,555,962	99.47	%
AGAINST:	384,834	0.50	%
ABSTAIN:	23,860	0.03	%

The proposal was approved and accordingly ratified.

Item 5. Other Information

None

Item 6. Exhibits

Exhibit No.		Description
3.1(f)		Restated Certificate of Incorporation of the Registrant
3.2(f)		Bylaws of the Registrant
4.1(a)		Specimen common stock certificates
10.36		Eighth Amendment to the Loan and Security Agreement dated December 24, 2002 between the Registrant and Comerica Bank-California dated May 31, 2005

31.1		Rule 13a-14(a)/ 15d-14(a) Certifications of Chief Executive Officer and Chief Financial Officer
32.1		Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

(a)		Incorporated by reference to an exhibit in the Registrant’s Registration Statement on Form S-1 File No. 333-330648.
(f)		Incorporated by reference to an exhibit in the Registrant’s Annual Report on Form 10-K filed with the Commission on February 8, 2002.

Signature

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on August 8, 2005.

SeeBeyond Technology Corporation
/s/ BARRY J. PLAGA
Barry J. Plaga
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

SEEBEYOND TECHNOLOGY CORP 10-Q