BMC Software 8-K BMC Software Announces Fiscal 2014 First Quarter Results

Exhibit 99

BMC Software Announces Fiscal 2014 First Quarter Results

• Total Company bookings for the quarter grew 6 percent from a year ago
• First quarter non-GAAP diluted EPS was $0.77, up 18 percent year-over-year
• Total revenue for the first quarter was $484 million, down 4 percent year-over-year
• Cash flow from operations for the quarter was $267 million, up 22 percent year-over-year

HOUSTON--(BUSINESS WIRE)--August 5, 2013--BMC Software (NASDAQ: BMC), the recognized global leader in enterprise IT management, today announced results for the first quarter of its fiscal 2014.

GAAP net earnings for the first quarter were $53 million, or $0.36 per diluted share, versus $54 million, or $0.33 per diluted share in the year-ago period. Non-GAAP net earnings for the quarter were $112 million, or $0.77 per diluted share, compared to $106 million, or $0.65 per diluted share in the year-ago period.

The Company has $1.8 billion of cash and investments, $476 million in net cash and investments and $2.0 billion in deferred revenue as of June 30, 2013.

Included in the financial tables is a reconciliation between non-GAAP and GAAP results. All earnings materials are available on the Company’s website at investors.bmc.com.

Use of Non-GAAP Financial Measures

In an effort to provide investors with additional information regarding the Company’s results as determined by U.S. generally accepted accounting principles (GAAP), the Company has also disclosed in this press release and the accompanying tables the following non-GAAP information: (a) non-GAAP operating expenses, (b) non-GAAP operating income, (c) non-GAAP operating margin, (d) non-GAAP net earnings and (e) non-GAAP diluted earnings per share. Each of these financial measures excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. These non-GAAP financial measures exclude share-based compensation expense; the amortization of intangible assets; severance, exit costs and other restructuring charges; proxy contest costs; merger-related costs; as well as the related tax impacts of these items. Each of the non-GAAP adjustments is described in more detail below. This press release also contains a reconciliation of each of these non-GAAP measures to its most comparable GAAP financial measure.

We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our operating results because they exclude amounts that BMC management and the board of directors do not consider part of core operating results when assessing the performance of the organization. In addition, we have historically reported similar non-GAAP financial measures and we believe that inclusion of these non-GAAP financial measures provides consistency and comparability with past reports of financial results. Accordingly, we believe these non-GAAP financial measures are useful to investors in allowing for greater transparency of supplemental information used by management.

While we believe that these non-GAAP financial measures provide useful supplemental information, there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. Items such as share-based compensation expense; the amortization of intangible assets; severance, exit costs and other restructuring charges; proxy contest costs; merger-related costs; as well as the related tax impacts of these items that are excluded from our non-GAAP financial measures can have a material impact on net earnings. As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, net earnings, cash flow from operations or other measures of performance prepared in accordance with GAAP. We compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reconciling the non-GAAP financial measures to their most comparable GAAP financial measure. Investors are encouraged to review the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures that are included elsewhere in this press release.

The following discusses the reconciliations of our non-GAAP financial measures to the most comparable GAAP financial measures:

• Share-based compensation expense. Our non-GAAP financial measures exclude the compensation expenses required to be recorded by GAAP for equity awards to employees and directors. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding expenses related to share-based compensation, because these costs are generally fixed at the time an award is granted, are then expensed over several years and generally cannot be changed or influenced by management once granted.

• Amortization of intangible assets. Our non-GAAP financial measures exclude costs associated with the amortization of intangible assets. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding amortization of intangible assets, because these costs are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.

• Severance, exit costs and other restructuring charges. Our non-GAAP financial measures exclude severance, exit costs and other restructuring charges, and any subsequent changes in estimates, as they relate to our corporate restructuring and exit activities. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding severance, exit costs and other restructuring charges, in order to provide comparability and consistency with historical operating results.

• Proxy contest costs. During the first quarter of fiscal 2013, the Company became engaged in a proxy contest initiated by a shareholder of the Company. The Company recorded a charge of approximately $6 million for unplanned proxy contest expenses during the first quarter of fiscal 2013, consisting primarily of outside financial advisory, legal, solicitation and consulting fees. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding such costs, in order to provide comparability and consistency with historical operating results.

• Merger-related costs. On May 6, 2013, the Company entered into an Agreement and Plan of Merger with an entity formed by affiliates of investment funds advised by Bain Capital, LLC, Golden Gate Private Equity, Inc. and Insight Venture Management, LLC, and an entity affiliated with GIC Special Investments Pte Ltd. During the first quarter of fiscal 2014, we incurred merger-related costs of $13 million, consisting primarily of outside financial advisory, legal and consulting fees. Management and the Board of Directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding such costs, in order to provide comparability and consistency with historical operating results.

• Provision for income taxes on above pre-tax non-GAAP adjustments. Our non-GAAP financial measures exclude the tax impact of the above pre-tax non-GAAP adjustments. This amount is calculated using the tax rates of each country to which these pre-tax non-GAAP adjustments relate. Management excludes the non-GAAP adjustments on a net-of-tax basis in evaluating our performance. Therefore, we exclude the tax impact of these charges when presenting non-GAAP financial measures.

In this press release, we refer to certain bookings information. Bookings represent the transactional value of new contracts closed and recorded in our financial statements, including amounts recorded to both revenue and deferred revenue. We also refer to growth rates for revenue and bookings at constant currency or adjusting for currency so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of the Company’s business performance. Generally, when the U.S. dollar either strengthens or weakens against other currencies, the growth at constant currency rates or adjusting for currency will be higher or lower than growth reported at actual exchange rates.

Business runs better when IT runs at its best.

Tens of thousands of IT organizations around the world -- from small and mid-market businesses to the Global 100 -- rely on BMC Software (NASDAQ: BMC) to manage their business services and applications across distributed, mainframe, virtual and cloud environments. BMC helps customers cut costs, reduce risk and achieve business objectives with the broadest choice of IT management solutions, including industry-leading Business Service Management and Cloud Management offerings. For the four fiscal quarters ended June 30, 2013, BMC revenue was approximately $2.2 billion. www.bmc.com

BMC, BMC Software, and the BMC Software logo are the exclusive properties of BMC Software Inc., are registered with the U.S. Patent and Trademark Office, and may be registered or pending registration in other countries. All other BMC trademarks, service marks, and logos may be registered or pending registration in the U.S. or in other countries. All other trademarks or registered trademarks are the property of their respective owners. © Copyright 2013 BMC Software, Inc.

BMC SOFTWARE, INC. STATEMENTS OF OPERATIONS (In millions, except per share data) (Unaudited)
							Incr/(Decr)
	Quarter Ended June 30,						Percentage
	2012			2013			Change
Revenue:
License	$	171.6		$	141.0		(17.8	)%
Maintenance		278.8			289.3		3.8	%
Professional services		54.0			53.3		(1.3	)%
Total revenue		504.4			483.6		(4.1	)%
Operating expenses:
Cost of license revenue		39.2			40.1		2.3	%
Cost of maintenance revenue		50.9			51.5		1.2	%
Cost of professional services revenue		57.7			49.2		(14.7	)%
Selling and marketing expenses		164.9			146.5		(11.2	)%
Research and development expenses		42.2			43.0		1.9	%
General and administrative expenses		63.0			73.3		16.3	%
Amortization of intangible assets		12.6			10.3		(18.3	)%
Total operating expenses		430.5			413.9		(3.9	)%
Operating income		73.9			69.7		(5.7	)%
Other expense, net		(8.2	)		(14.0	)	70.7	%
Earnings before income taxes		65.7			55.7		(15.2	)%
Provision for income taxes		11.6			3.2		(72.4	)%
Net earnings	$	54.1		$	52.5		(3.0	)%
Diluted earnings per share	$	0.33		$	0.36		9.1	%
Shares used in computing diluted earnings per share		163.8			145.2		(11.4	)%

BMC SOFTWARE, INC. BALANCE SHEETS (In millions) (Unaudited)
	June 30,		September 30,		December 31,		March 31,		June 30,
	2012		2012		2012		2013		2013
Current assets:
Cash and cash equivalents	$	1,465.5	$	1,311.2	$	1,057.9	$	1,379.2	$	1,642.4	(a)
Short-term investments		138.1		128.2		123.6		131.2		101.1	(a)
Trade accounts receivable, net		192.1		216.9		265.8		265.5		148.1
Trade finance receivables, net		64.2		68.5		69.5		110.4		53.3
Other current assets		183.2		181.8		198.6		213.1		179.3
Total current assets		2,043.1		1,906.6		1,715.4		2,099.4		2,124.2
Property and equipment, net		88.0		92.3		89.6		85.2		80.7
Software development costs, net		255.2		262.4		268.0		271.4		277.1
Long-term investments		44.6		45.9		71.6		71.5		60.6	(a)
Long-term trade finance receivables, net		51.4		56.2		42.9		67.8		73.5
Goodwill and intangible assets, net		1,924.2		1,917.5		1,909.4		1,895.7		1,881.9
Other long-term assets		239.7		236.2		213.3		229.3		229.5
Total assets	$	4,646.2	$	4,517.1	$	4,310.2	$	4,720.3	$	4,727.5
Current liabilities:
Trade accounts payable	$	46.6	$	44.5	$	38.1	$	31.6	$	38.8
Finance payables		1.9		7.7		10.7		10.5		10.6
Accrued liabilities		219.8		247.0		268.4		326.4		218.9
Deferred revenue		1,060.6		1,004.7		979.2		1,038.6		1,039.3
Total current liabilities		1,328.9		1,303.9		1,296.4		1,407.1		1,307.6
Long-term deferred revenue		899.2		837.3		796.9		936.7		949.3
Long-term borrowings		823.3		824.8		1,308.6		1,306.0		1,304.1
Other long-term liabilities		231.0		229.7		228.2		252.0		248.1
Total long-term liabilities		1,953.5		1,891.8		2,333.7		2,494.7		2,501.5
Total stockholders' equity		1,363.8		1,321.4		680.1		818.5		918.4
Total liabilities and stockholders' equity	$	4,646.2	$	4,517.1	$	4,310.2	$	4,720.3	$	4,727.5
(a) Total cash and investments	$	1,648.2	$	1,485.3	$	1,253.1	$	1,581.9	$	1,804.1

BMC SOFTWARE, INC. STATEMENTS OF CASH FLOWS (In millions) (Unaudited)
	Quarter Ended June 30,
	2012			2013
Cash flows from operating activities:
Net earnings	$	54.1		$	52.5
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		57.9			57.4
Deferred income tax provision		1.4			1.1
Share-based compensation expense		37.6			40.0
Other non-cash items		0.7			0.6
Changes in operating assets and liabilities, net of acquisitions:
Trade accounts receivable		103.4			114.9
Trade finance receivables		72.8			61.7
Prepaid and other current assets		10.0			7.5
Other long-term assets		3.1			1.5
Accrued and other current liabilities		(88.3	)		(81.8	)
Deferred revenue		(26.5	)		20.5
Other long-term liabilities		(4.1	)		(6.5	)
Other operating assets and liabilities		(2.5	)		(2.3	)
Net cash provided by operating activities		219.6			267.1
Cash flows from investing activities:
Proceeds from maturities of investments		12.0			42.3
Proceeds from sales of investments		8.7			7.9
Purchases of investments		(65.8	)		(8.8	)
Cash paid for acquisitions, net of cash acquired		(6.9	)		(3.1	)
Capitalization of software development costs		(32.0	)		(31.5	)
Purchases of property and equipment		(7.2	)		(5.6	)
Other investing activities		2.1			-
Net cash provided by (used in) investing activities		(89.1	)		1.2
Cash flows from financing activities:
Purchases of common stock		(150.0	)		-
Repurchases of stock to satisfy employee tax withholding obligations		(16.9	)		(18.1	)
Proceeds from stock options exercised and other		20.6			24.5
Excess tax benefit from share-based compensation expense		2.9			2.4
Repayments of borrowings and capital lease obligations		(2.6	)		(3.1	)
Net cash provided by (used in) financing activities		(146.0	)		5.7
Effect of exchange rate changes on cash and cash equivalents		(15.9	)		(10.8	)
Net change in cash and cash equivalents		(31.4	)		263.2
Cash and cash equivalents, beginning of period		1,496.9			1,379.2
Cash and cash equivalents, end of period	$	1,465.5		$	1,642.4

BMC SOFTWARE, INC. Table of Reconciliation from GAAP Operating Expenses to Non-GAAP Operating Expenses (In millions) (Unaudited)
	Quarter Ended June 30,
	2012			2013
GAAP operating expenses	$	430.5		$	413.9
Share-based compensation expense		(37.6	)		(40.0	)
Amortization of intangible assets		(24.9	)		(19.5	)
Severance, exit costs and other restructuring charges		(5.4	)		(13.3	)
Proxy contest costs		(6.2	)		-
Merger-related costs		-			(12.7	)
Non-GAAP operating expenses	$	356.4		$	328.4

BMC SOFTWARE, INC. Table of Reconciliation from GAAP Operating Income to Non-GAAP Operating Income (In millions) (Unaudited)
	Quarter Ended June 30,
	2012		2013
GAAP operating income	$	73.9	$	69.7
Share-based compensation expense		37.6		40.0
Amortization of intangible assets		24.9		19.5
Severance, exit costs and other restructuring charges		5.4		13.3
Proxy contest costs		6.2		-
Merger-related costs		-		12.7
Non-GAAP operating income	$	148.0	$	155.2

BMC SOFTWARE, INC. Table of Reconciliation from GAAP Operating Margin to Non-GAAP Operating Margin (In millions) (Unaudited)
	Quarter Ended June 30,					Quarter Ended June 30,					Quarter Ended June 30,
	2012		2013			2012		2013			2012		2013
GAAP revenue:	$	504.4	$	483.6	GAAP operating income:	$	73.9	$	69.7	GAAP operating margin:	15	%	14	%
					Share-based compensation expense		37.6		40.0
					Amortization of intangible assets		24.9		19.5
					Severance, exit costs and other restructuring charges		5.4		13.3
					Proxy contest costs		6.2		-
					Merger-related costs		-		12.7
GAAP revenue:	$	504.4	$	483.6	Non-GAAP operating income:	$	148.0	$	155.2	Non-GAAP operating margin:	29	%	32	%

BMC SOFTWARE, INC. Table of Reconciliation from GAAP Net Earnings to Non-GAAP Net Earnings (In millions) (Unaudited)
	Quarter Ended June 30,
	2012			2013
GAAP net earnings	$	54.1		$	52.5
Share-based compensation expense		37.6			40.0
Amortization of intangible assets		24.9			19.5
Severance, exit costs and other restructuring charges		5.4			13.3
Proxy contest costs		6.2			-
Merger-related costs		-			12.7
Subtotal pre-tax reconciling items		74.1			85.5
Tax effect of above pre-tax items		(22.3	)		(26.5	)
Non-GAAP net earnings	$	105.9		$	111.5

BMC SOFTWARE, INC. Table of Reconciliation from GAAP Diluted Earnings Per Share to Non-GAAP Diluted Earnings Per Share (Unaudited)
	Quarter Ended June 30,
	2012			2013
GAAP diluted earnings per share	$	0.33		$	0.36
Share-based compensation expense		0.23			0.28
Amortization of intangible assets		0.15			0.13
Severance, exit costs and other restructuring charges		0.03			0.09
Proxy contest costs		0.04			-
Merger-related costs		-			0.09
Subtotal pre-tax reconciling items		0.45			0.59
Tax effect of above pre-tax items		(0.14	)		(0.18	)
Non-GAAP diluted earnings per share	$	0.65		$	0.77
Shares used in computing diluted earnings per share (in millions)		163.8			145.2

CONTACT:
BMC Software
Global Communications:
Mark Stouse, 281-468-1608
Vice President, Global Connect
mark_stouse@bmc.com
or
Investor Relations:
Derrick Vializ, 713-918-1805
Vice President, Investor Relations
derrick_vializ@bmc.com