INVESTOR RELATIONS CONTACT: MEDIA RELATIONS CONTACT:
Neil Yekell Arch Currid
(713) 918-4233 (713) 918-3236
neil_yekell@bmc.com arch_currid@bmc.com
BMC SOFTWARE REPORTS FIRST QUARTER RESULTS
Takes Action to Improve Profitability
HOUSTON -- (July 28, 2003) -- BMC Software, Inc. [NYSE: BMC] today
announced financial results for its first quarter fiscal 2004, ended June 30,
2003.
BMC Software's net earnings excluding special items for the first quarter
of fiscal 2004 were $6.6 million, or $0.03 per diluted common share, which
compares to $0.08 in the first quarter of fiscal 2003. The first quarter fiscal
2004 net loss on a GAAP basis was $6.1 million or a loss of $0.03 per diluted
common share, which compares to net earnings of $5.2 million or $0.02 per
diluted common share in the first quarter of fiscal 2003. Included in the
financial tables is a reconciliation of results excluding special items and
GAAP results.
"We are taking quick action to improve our execution and financial
performance while accelerating investments in strategic growth areas of the
company," said Bob Beauchamp, president and CEO, BMC Software. "Although we
fully expect the IT spending environment to remain challenging, we are
confident that our restructuring actions will allow us to improve our
profitability in the second half of our fiscal year."
Total revenues in the first fiscal quarter were $309.9 million, an
increase of 2 percent compared to the same quarter of fiscal 2003. Total
license revenues in the quarter were $107.6 million, a decrease of 21 percent
compared to the same quarter of fiscal 2003. Maintenance revenues were $183.5
million, an increase of 23 percent, compared to the same quarter of fiscal
2003. Professional services revenues were $18.8 million, a decrease of 4
percent compared to the same quarter last year. Operating expenses, excluding
$15.6 million of amortization of intangibles, were $321.5 million, compared to
$295.1 million in the same quarter of fiscal 2003. These results reflect
Remedy's operations in the first quarter of fiscal 2004. Total revenues for
Remedy in the first quarter were $54.1 million and expenses were $38.7 million,
excluding $12.0 million of amortization of intangibles.
The deferred license revenue balance at June 30, 2003 was $216.3 million,
an increase of $1.0 million compared to a year ago. The total deferred revenue
balance was a company record of $1.18 billion, an increase of $135.6 million
compared to last year. Cash flow from operations in the quarter was $124.0
million. Cash and marketable securities at June 30, 2003 were $1.06 billion.
BMC Software continues to have no debt.
BMC Software continued its Board-authorized stock repurchase program that
began in April 2000 by spending $60 million to repurchase 3.6 million shares
during the first fiscal quarter. Approximately $419 million remains in this
program.
BMC SOFTWARE REPORTS FIRST QUARTER RESULTS/PAGE 2
RESTRUCTURING AIMED AT IMPROVING PROFITABILITY
BMC Software is implementing restructuring actions including: workforce
reductions, facility closures and office consolidations to improve
profitability by aligning costs with the current revenue environment. This
restructuring will include reducing approximately 13 percent of the global BMC
Software workforce.
BMC Software expects the quarterly operating expense rates to decline by
$25 to $30 million once the effect of these restructuring savings are fully
realized in the March quarter.
SECOND QUARTER AND FISCAL 2004 GUIDANCE
BMC Software expects second quarter revenues to be up sequentially
compared to the first quarter and earnings per share excluding special items to
be in the $0.04 to $0.06 range. For fiscal 2004, BMC Software is comfortable
with the current analyst consensus for earnings per share excluding special
items of $0.46.
These estimates do not include $0.05 of amortization of acquired
technology and intangibles in the second quarter, $0.19 of amortization of
acquired technology and intangibles in fiscal 2004, and significant expenses
related to the restructuring announced today. Given the complexity, scope and
timing of the actions, the precise amount of the restructuring charge is not
known at this time.
BMC Software is updating its cash flow from operations guidance for the
year to reflect the estimated $60 million in cash outlays associated with its
restructuring. BMC Software now expects cash flow from operations to be in the
range of $340 million to $390 million. The only difference between this
guidance and the Company's prior guidance of $400 million to $450 million is
the cash outlays associated with the restructuring, which includes severance
and facility-related expenses.
A CONFERENCE CALL TO DISCUSS FIRST QUARTER RESULTS IS SCHEDULED FOR TODAY
AT 11:00 A.M. CDT. THOSE INTERESTED IN PARTICIPATING MAY CALL (719) 457-2641
AND USE THE PASSCODE BMC. TO ACCESS A REPLAY OF THE CONFERENCE CALL, WHICH WILL
BE AVAILABLE FOR ONE WEEK, DIAL (719) 457-0820 AND USE THE PASSCODE BMC. A LIVE
WEBCAST OF THE CONFERENCE CALL AND PRESENTATION WILL BE AVAILABLE ON THE
COMPANY'S WEBSITE AT WWW.BMC.COM/INVESTORS. A REPLAY OF THE WEBCAST WILL BE
AVAILABLE WITHIN 24 HOURS AND ARCHIVED ON THE WEBSITE FOR 90 DAYS.
NON-GAAP FINANCIAL MEASURES
This press release includes financial measures for net earnings, earnings
per share (EPS) and operating expenses that exclude certain charges and
therefore have not been calculated in accordance with U.S. generally accepted
accounting principles (GAAP). A detailed reconciliation between the GAAP
results and non-GAAP results is included with the financial tables accompanying
this press release. BMC Software has provided these non-GAAP measures in its
press releases reporting historical financial results because the Company
believes these measures provide a consistent basis for comparison between
quarters, as they are not influenced by certain non-cash or non-recurring
expenses and are therefore useful to investors in helping them understand the
financial condition of BMC Software by focusing on the performance of its core
operations. Management uses these non-GAAP financial measures internally to
evaluate the Company's performance and as a key variable in determining
management compensation. These non-GAAP measures should not be considered an
alternative to
BMC SOFTWARE REPORTS FIRST QUARTER RESULTS/PAGE 3
GAAP, and these non-GAAP measures may not be comparable to
information provided by other companies.
ABOUT BMC SOFTWARE
BMC Software, Inc. [NYSE:BMC], is a leading provider of enterprise
management solutions that empower companies to manage their IT infrastructure
from a business perspective. Delivering Business Service Management, BMC
Software solutions span enterprise systems, applications, databases and service
management. Founded in 1980, BMC Software has offices worldwide and fiscal 2003
revenues of more than $1.3 billion. For more information about BMC Software,
visit www.bmc.com.
This news release contains both historical information and forward-looking
information. Statements of plans, objectives, strategies and expectations for
future operations and results, identified by words such as "believe,"
"anticipate" and "expect" are forward-looking statements. Numerous important
factors affect BMC Software's operating results and could cause BMC Software's
actual results to differ materially from the results indicated by this press
release or by any other forward-looking statements made by, or on behalf of,
BMC Software, and there can be no assurance that future results will meet
expectations, estimates or projections. These factors include, but are not
limited to, the following: 1) uncertainty regarding future economic conditions
worldwide may continue to affect the overall demand for software and services
and any worsening of significant economies could result in decreased revenues
or lower revenue growth rates; 2) BMC Software's revenues and earnings are
subject to a number of factors, including the significant percentage of
quarterly sales typically closed at the end of each quarter, that make
estimation of operating results prior to the end of a quarter extremely
uncertain; 3) BMC Software's operating costs and expenses are relatively fixed
over the short term; 4) increased competition and pricing pressures could
adversely affect BMC Software's earnings; 5) growth in BMC Software's mainframe
revenues is dependent on continued demand for significant additional mainframe
MIPS capacity; 6) BMC Software's maintenance revenue could decline if
maintenance renewal rates decline or if license revenues do not continue to
grow; 7) new software products and product strategies may not be timely
introduced or successfully adopted; 8) BMC Software's quarterly cash flow from
operations is and has been volatile and is dependent upon a number of factors
described in BMC Software's filings with the SEC; 9) the additional risks and
important factors described in BMC Software's quarterly reports on Form 10-Q
and in its Annual Report to Stockholders on Form 10-K for the fiscal year ended
March 31, 2003 and other filings with the SEC. BMC Software undertakes no
obligation to update information contained in this release.
###
BMC Software, the BMC Software logos, and all other BMC Software product or
service names are registered trademarks or trademarks of BMC Software, Inc. All
other trademarks or registered trademarks belong to their respective companies.
(C) 2003, BMC Software, Inc. All rights reserved.
BMC Software Reports First Quarter Results
Page 4
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
June 30,
---------------------
Fiscal Fiscal %
2003 2004 Increase
------- -------
(In millions, except
per share data)
Revenues:
License $ 136.0 $ 107.6 -21%
Maintenance 149.7 183.5 23%
Professional services 19.5 18.8 -4%
------- -------
Total revenues 305.2 309.9 2%
------- -------
Selling and marketing expenses 119.5 137.9 15%
Research and development expenses 118.2 127.3 8%
Cost of professional services 21.4 19.0 -11%
General and administrative expenses 36.0 37.3 4%
Amortization of acquired technology & intangibles 12.4 15.6 26%
Merger-related costs & compensation charges and other 0.5 -- -100%
------- -------
Total operating expenses 308.0 337.1 9%
------- -------
Operating loss (2.8) (27.2) n/m
Other income, net 9.5 20.8 119%
------- -------
Earnings (loss) before income taxes 6.7 (6.4) n/m
Income tax provision (benefit) 1.5 (0.3) n/m
------- -------
Net earnings (loss) $ 5.2 $ (6.1) n/m
======= =======
Diluted earnings (loss) per share $ 0.02 $ (0.03) n/m
======= =======
Shares used in computing diluted earnings (loss) per share 242.5 229.6 -5%
======= =======
BMC Software Reports First Quarter Results
Page 5
BMC SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, June 30,
2003 2003
-------- --------
(Unaudited)
(in millions)
Current Assets:
Cash and cash equivalents $ 500.1 $ 428.1(a)
Marketable securities 151.7 255.5(a)
Trade accounts receivable, net 186.4 150.0
Current trade finance receivables, net 154.4 107.8
Other current assets 105.6 107.9
-------- --------
Total current assets 1,098.2 1,049.3
Property and equipment, net 408.4 402.9
Software development costs and related assets, net 192.7 185.5
Long-term marketable securities 363.5 375.8(a)
Long-term finance receivables, net 175.9 132.3
Acquired technology, goodwill and intangibles, net 527.9 514.8
Other long-term assets 78.9 85.1
-------- --------
$2,845.5 $2,745.7
======== ========
Current liabilities:
Accounts payable and accrued liabilities $ 277.2 $ 217.6
Current portion of deferred revenue 561.6 594.8
-------- --------
Total current liabilities 838.8 812.4
Long-term deferred revenue 607.1 586.8
Other long-term liabilities 16.2 13.3
Total stockholders' equity 1,383.4 1,333.2
-------- --------
$2,845.5 $2,745.7
======== ========
(a) Total cash and marketable securities are $1,059.4 at June 30, 2003.
BMC Software Reports First Quarter Results
Page 6
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
June 30,
-------------------
Fiscal Fiscal
2003 2004
------ ------
(In millions, except
per share data)
Cash flows from operating activities:
Net earnings (loss) $ 5.2 $ (6.1)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Merger-related costs and compensation charges 0.6 --
Depreciation and amortization 52.9 57.7
Loss on marketable securities 6.3 0.8
Earned portion of restricted stock compensation 0.7 0.6
Decrease in finance receivables 30.7 91.3
Increase (decrease) in payable to third-party financing institutions
for finance receivables 6.0 (35.1)
Net change in trade receivables, payables, deferred revenue and
other components of working capital 148.4 14.8
------ ------
Net cash provided by operating activities 250.8 124.0
------ ------
Cash flows from investing activities:
Cash paid for technology acquisitions and other investments,
net of cash acquired (1.9) (6.1)
Adjustment of cash paid for Remedy acquisition -- 7.2
Purchases of marketable securities (57.9) (163.2)
Maturities of/proceeds from sales of marketable securities 80.7 49.1
Purchases of property and equipment (3.8) (12.7)
Capitalization of software development costs and related assets (17.5) (15.0)
------ ------
Net cash used in investing activities (0.4) (140.7)
------ ------
Cash flows from financing activities:
Stock options exercised and other 10.9 1.3
Treasury stock acquired (38.7) (60.0)
------ ------
Net cash used in financing activities (27.8) (58.7)
------ ------
Effect of exchange rate changes on cash (8.6) 3.4
------ ------
Net change in cash and cash equivalents 214.0 (72.0)
Cash and cash equivalents, beginning of period 330.0 500.1
------ ------
Cash and cash equivalents, end of period $544.0 $428.1
====== ======
BMC Software Reports First Quarter Results
Page 7
BMC SOFTWARE, INC. AND SUBSIDIARIES
SUPPLEMENTAL ANALYSIS OF EFFECT OF SPECIAL ITEMS
FOR THE THREE MONTHS ENDED JUNE 30, 2003
(UNAUDITED)
Special Before
As Reported Items Special Items
----------- ------- -------------
(In millions, except per share data)
Revenues:
License $ 107.6 $ -- $ 107.6
Maintenance 183.5 -- 183.5
Professional services 18.8 -- 18.8
------- ------- -------
Total revenues 309.9 -- 309.9
------- ------- -------
Selling and marketing expenses 137.9 -- 137.9
Research and development expenses 127.3 -- 127.3
Cost of professional services 19.0 -- 19.0
General and administrative expenses 37.3 -- 37.3
Amortization of acquired technology & intangibles 15.6 (15.6) --
------- ------- -------
Total operating expenses 337.1 (15.6) 321.5
------- ------- -------
Operating loss (27.2) 15.6 (11.6)
Other income, net 20.8 -- 20.8
------- ------- -------
Earnings (loss) before income taxes (6.4) 15.6 9.2
Income tax provision (benefit) (0.3) 2.9 2.6
------- ------- -------
Net earnings (loss) $ (6.1) $ 12.7 $ 6.6
======= ======= =======
Diluted earnings (loss) per share $ (0.03) $ 0.06 $ 0.03
======= ======= =======
Shares used in computing diluted earnings (loss) per share 229.6 229.6 230.6
======= ======= =======