EXHIBIT 99
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 EXCEEDS THIRD QUARTER FINANCIAL EXPECTATIONS
Company Raises Fourth Quarter and Fiscal 2004 Guidance
HOUSTON -- (January 27, 2004) -- BMC Software, Inc. [NYSE: BMC] today
announced financial results for its fiscal 2004 third quarter ended December 31,
2003.
BMC Software's net earnings excluding special items for the third quarter
of fiscal 2004 were $43.0 million, or $0.19 per diluted common share, which
compares to net earnings excluding special items of $34.6 million, or $0.15 per
share, in the third quarter of fiscal 2003. This exceeded the current analyst
consensus estimate of $0.17 per share and is at the high end of the $0.15 to
$0.20 per share range the company provided in October. The fiscal 2004 third
quarter net loss on a GAAP basis was $44.4 million, or a loss of $0.20 per
share, which compares to net earnings of $12.1 million, or $0.05 per share, in
the third quarter of fiscal 2003. The $87.4 million difference between third
quarter earnings excluding special items and GAAP earnings is $12.2 million in
amortization of intangibles related to various acquisitions and $75.2 million in
restructuring charges including the related tax effects. Included in the
financial tables is a reconciliation of results excluding special items and GAAP
results.
"BMC Software's strong third quarter performance is a testament to our
strategic focus and solid execution," said Bob Beauchamp, president and CEO, BMC
Software. "From a financial perspective, we met or exceeded all our goals for
the quarter, including revenues, earnings per share and cash flow from
operations. License bookings, excluding Remedy, grew 23 percent compared to the
same quarter last year as we benefited from an improving IT spending environment
and solid execution. The Remedy business unit continues to generate strong
revenue growth and high operating margins. From a strategic perspective, our
Business Service Management strategy continues to gain momentum as customers and
partners alike are embracing its value to empower IT organizations to manage
their IT elements and services from a business perspective in a consistent,
comprehensive and integrated fashion."
Total revenues in the third quarter of fiscal 2004 were $374.8 million, an
increase of 12 percent compared to the second quarter of fiscal 2004. This
exceeded the current consensus estimate of $359 million and the guidance of high
single digit sequential growth that the company provided in October. Operating
expenses, excluding $14.5 million of amortization of intangibles and $89.6
million related to restructuring efforts, were $332.1 million, compared to
$313.3 million in the same quarter of fiscal 2003. Total revenues for Remedy in
the third quarter were $69.8 million and expenses were $45.0 million, excluding
$12.0 million of amortization of intangibles.
BMC Software maintained its strong financial position with cash flow from
operations in the quarter of $74.3 million. At quarter-end, the cash and
marketable securities balance was $1.06 billion and the total deferred revenue
balance was a record $1.23 billion.
BMC Software continued its stock repurchase program by spending $30 million
to repurchase 1.8 million shares during the third fiscal quarter. Approximately
$357 million remains in this program.
LICENSE BOOKINGS
Given the record $73.7 million net increase in deferred license revenues
during the quarter, the company is introducing a new metric called license
bookings that reflects the amount of license contracts signed during a given
quarter. This new license bookings metric includes both the amount that goes to
the income statement and the amount that goes to the deferred license revenue
account on the balance sheet. As license bookings measure new contracts that are
signed in a given quarter, this metric provides a clear measurement of the
company's current sales performance. License bookings can be calculated by
adding license revenues to the net change in the deferred license revenue
balance, as illustrated below.
THIRD QUARTER FY04 BUSINESS SEGMENT RESULTS
-------------------------------------------- ---------------------------
Q3FY04 LICENSE BOOKINGS
-------------------------------------------- ---------------------------
($ IN MILLIONS) LICENSE NET CHANGE TO LICENSE PERCENT PERCENT
REVENUES DEFERRED LICENSE BOOKINGS GROWTH VS. GROWTH VS.
REVENUES Q3FY03 Q2FY04
(Y/Y) (SEQUENTIAL)
Data Management - D/S $ 12.8 $ 1.5 $ 14.3 (28)% 30%
Data Management - MF 48.2 40.2 88.4 39% 146%
- ----------------------------------------------------------------------------------------------------------------------
Enterprise Data Management 61.0 41.7 102.7 23% 119%
- ----------------------------------------------------------------------------------------------------------------------
Scheduling & Output Mgmt. 15.1 9.8 24.9 24% 102%
MAINVIEW(R) 16.1 8.0 24.1 26% 131%
PATROL(R) 35.9 12.3 48.2 28% 53%
- ----------------------------------------------------------------------------------------------------------------------
Enterprise Systems Management 67.1 30.1 97.2 27% 79%
- ----------------------------------------------------------------------------------------------------------------------
Security & Other 5.0 0.1 5.1 (13)% 74%
======================================================================================================================
Remedy 29.5 1.8 31.3 106%* 8%
======================================================================================================================
TOTAL BMC $162.6 $73.7 $236.3 30% 78%
======================================================================================================================
* Remedy was acquired in November 2002 with only six weeks remaining in the
third quarter; therefore, Remedy did not contribute a full quarter of
financial results to BMC Software in Q3FY03.
FOURTH QUARTER AND FISCAL 2004 GUIDANCE
BMC Software expects mid-single digit total revenue growth in the fourth
quarter compared to the third quarter.
The company expects fourth quarter earnings per share excluding special
items to be in the $0.21 to $0.25 range. Fourth quarter estimates do not include
an estimated $0.05 per share of amortization of acquired technology and
intangibles, excluding the pending Magic Solutions acquisition.
2
The company expects fiscal 2004 earnings per share excluding special items
to be in the $0.53 to $0.57 range, which is higher than the company's previous
guidance of $0.48 to $0.53. Fiscal 2004 estimates do not include an estimated
$0.22 of amortization of acquired technology and intangibles expense, excluding
the pending Magic Solutions acquisition, and $0.43 related to restructuring
charges that occurred in the second and third quarter.
This guidance assumes that the company's proposed acquisition of the Magic
Solutions business closes in the next few weeks and the company records partial
quarter results assuming high single digit millions in both revenues and
expenses for the fourth quarter with no net impact to earnings.
BMC Software is raising its cash flow from operations guidance for fiscal
2004 to be in the $400 million to $450 million range, which is higher than the
company's previous cash flow guidance of $340 million to $390 million range.
A CONFERENCE CALL TO DISCUSS THIRD QUARTER RESULTS IS SCHEDULED FOR TODAY
AT 11:00 A.M. CENTRAL TIME. 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 results excluding special items (non-GAAP) 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 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
3
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," "expect" and "guidance" 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) 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; 2) BMC Software's
operating costs and expenses are relatively fixed over the short term; 3)
increased competition and pricing pressures could adversely affect BMC
Software's earnings; 4) growth in BMC Software's mainframe revenues is dependent
on demand for significant additional mainframe MIPS capacity; 5) BMC Software's
maintenance revenue could decline if maintenance renewal rates decline or if
license revenues do not grow; 6) new software products and product strategies
may not be timely introduced or successfully adopted; 7) 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; and
8) 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) 2004, BMC Software, Inc. All rights reserved.
4
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
December 31,
---------------------
Fiscal Fiscal %
2003 2004 Change
------- -------
(In millions, except
per share data)
Revenues:
License $ 168.5 $ 162.6 -4%
Maintenance 159.1 190.4 20%
Professional services 22.0 21.8 -1%
------- -------
Total revenues 349.6 374.8 7%
------- -------
Selling and marketing expenses 129.4 177.4 37%
Research, development and support expenses 120.5 177.5 47%
Cost of professional services 22.3 19.9 -11%
General and administrative expenses 41.1 46.9 14%
Acquired research and development 12.0 - -100%
Amortization of acquired technology & intangibles 17.8 14.5 -19%
Merger-related costs, compensation and other (0.3) - n/m
------- -------
Total operating expenses 342.8 436.2 27%
------- -------
Operating income (loss) 6.8 (61.4) n/m
Other income, net 11.7 17.0 45%
------- -------
Earnings (loss) before income taxes 18.5 (44.4) n/m
Income tax provision (benefit) 6.4 - (a) n/m
------- -------
Net earnings (loss) $ 12.1 $ (44.4) n/m
======= =======
Diluted earnings (loss) per share $ 0.05 $ (0.20) n/m
======= =======
Shares used in computing diluted earnings (loss) per share 235.5 225.5 -4%
======= =======
(a) Under Statement of Financial Accounting Standard (SFAS) 109, Accounting for
Income Taxes, BMC Software is required to assess whether it should record a tax
benefit and corresponding deferred tax asset for the reported loss for GAAP
purposes. Upon consideration of all positive and negative evidence, BMC Software
has concluded that SFAS 109 requires that the Company not record a tax benefit
for the loss as reported. Accordingly, BMC Software has recorded a valuation
allowance for the entire tax benefit.
5
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Ended
December 31,
------------------------
Fiscal Fiscal %
2003 2004 Change
----------- -----------
(In millions, except
per share data)
Revenues:
License $ 424.9 $ 394.9 -7%
Maintenance 459.7 562.1 22%
Professional services 61.4 61.6 0%
----------- -----------
Total revenues 946.0 1,018.6 8%
----------- -----------
Selling and marketing expenses 361.6 455.5 26%
Research, development and support expenses 351.1 451.9 29%
Cost of professional services 64.6 58.9 -9%
General and administrative expenses 112.5 132.2 18%
Acquired research and development 12.0 - -100%
Amortization of acquired technology & intangibles 42.6 45.4 7%
Merger-related costs, compensation and other 0.5 - -100%
----------- -----------
Total operating expenses 944.9 1,143.9 21%
----------- -----------
Operating income (loss) 1.1 (125.3) n/m
Other income, net 38.3 55.6 45%
----------- -----------
Earnings (loss) before income taxes 39.4 (69.7) n/m
Income tax provision (benefit) 12.0 (6.0) n/m
----------- -----------
Net earnings (loss) $ 27.4 $ (63.7) n/m
=========== ===========
Diluted earnings (loss) per share $ 0.11 $ (0.28) n/m
=========== ===========
Shares used in computing diluted earnings (loss) per share 239.3 227.4 -5%
=========== ===========
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BMC SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2003 2003
-------- ------------
(Unaudited)
(In millions)
Current Assets:
Cash and cash equivalents $ 500.1 $ 444.2 (a)
Marketable securities 151.7 319.0 (a)
Trade accounts receivable, net 186.4 152.8
Current trade finance receivables, net 154.4 136.8
Other current assets 105.6 111.7
-------- --------
Total current assets 1,098.2 1,164.5
Property and equipment, net 408.4 385.2
Software development costs and related assets, net 192.7 152.7
Long-term marketable securities 363.5 301.7 (a)
Long-term finance receivables, net 175.9 189.9
Acquired technology, goodwill and intangibles, net 527.9 487.8
Other long-term assets 78.9 104.2
-------- --------
$2,845.5 $2,786.0
======== ========
Current liabilities:
Accounts payable and accrued liabilities $ 277.2 $ 271.0
Current portion of deferred revenue 561.6 596.5
-------- --------
Total current liabilities 838.8 867.5
Long-term deferred revenue 607.1 630.2
Other long-term liabilities 16.2 72.6
Total stockholders' equity 1,383.4 1,215.7
-------- --------
$2,845.5 $2,786.0
======== ========
(a) Total cash and marketable securities are $1,064.9 at December 31, 2003.
7
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
December 31,
-----------------
Fiscal Fiscal
2003 2004
------ ------
(In millions)
Cash flows from operating activities:
Net earnings (loss) $ 27.4 $(63.7)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Accrued restructuring and severance costs (1.3) 78.0
Merger-related costs and compensation charges 12.6 --
Depreciation and amortization 171.6 184.6
Incremental depreciation on facilities to be exited -- 14.3
Impairment of technology assets and investments 4.5 --
(Gain) loss on marketable securities 6.2 (0.9)
Earned portion of restricted stock compensation 2.0 1.5
(Increase) decrease in finance receivables (101.1) 3.1
Increase (decrease) in payable to third-party financing institutions
for finance receivables 28.8 (28.1)
Net change in income taxes receivable 53.0 0.7
Net change in trade receivables, payables, deferred revenue and
other components of working capital 176.4 42.9
------ ------
Net cash provided by operating activities 380.1 232.4
------ ------
Cash flows from investing activities:
Debtor-in-possession financing provided to Peregrine Systems, Inc. (53.8) --
Proceeds from debtor-in-possession financing provided to Peregrine Systems, Inc. 53.8 --
Cash paid for technology acquisitions and other investments,
net of cash acquired (366.1) (9.0)
Adjustment of cash paid for Remedy acquisition -- 7.2
Return of capital for cost-basis investments 0.7 0.1
Proceeds from sale of technology -- 2.0
Purchases of marketable securities (123.6) (273.9)
Maturities of/proceeds from sales of marketable securities 297.3 160.3
Purchases of property and equipment (16.1) (31.8)
Capitalization of software development costs and related assets (66.3) (38.3)
------ ------
Net cash used in investing activities (274.1) (183.4)
------ ------
Cash flows from financing activities:
Payments on capital leases -- (2.2)
Stock options exercised and other 19.6 13.1
Treasury stock acquired (158.8) (120.1)
------ ------
Net cash used in financing activities (139.2) (109.2)
------ ------
Effect of exchange rate changes on cash (9.6) 4.3
------ ------
Net change in cash and cash equivalents (42.8) (55.9)
Cash and cash equivalents, beginning of period 330.0 500.1
------ ------
Cash and cash equivalents, end of period $287.2 $444.2
====== ======
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BMC SOFTWARE, INC. AND SUBSIDIARIES
SUPPLEMENTAL ANALYSIS OF EFFECT OF SPECIAL ITEMS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2003
(UNAUDITED)
Special Before
As Reported Items Special Items
----------- ---------- -------------
(In millions, except per share data)
Revenues:
License $ 162.6 $ -- $ 162.6
Maintenance 190.4 -- 190.4
Professional services 21.8 -- 21.8
------- ------- -------
Total revenues 374.8 -- 374.8
------- ------- -------
Selling and marketing expenses 177.4 (37.2) (a) 140.2
Research, development and support expenses 177.5 (50.3) (a) 127.2
Cost of professional services 19.9 (0.3) (a) 19.6
General and administrative expenses 46.9 (1.8) (a) 45.1
Amortization of acquired technology & intangibles 14.5 (14.5) (a) --
------- ------- -------
Total operating expenses 436.2 (104.1) 332.1
------- ------- -------
Operating income (loss) (61.4) 104.1 42.7
Other income, net 17.0 -- 17.0
------- ------- -------
Earnings (loss) before income taxes (44.4) 104.1 59.7
Income tax provision (benefit) -- 16.7 16.7
------- ------- -------
Net earnings (loss) $ (44.4) $ 87.4 $ 43.0
======= ======= =======
Diluted earnings (loss) per share $ (0.20) $ 0.39 $ 0.19
======= ======= =======
Shares used in computing diluted earnings (loss) per share 225.5 225.5 227.0
======= ======= =======
(a) The net earnings effect of the individual special items is as follows (in
millions):
Exit costs and related charges $ (75.2)
Amortization of acquired technology & intangibles $ (12.2)
9
BMC SOFTWARE, INC. AND SUBSIDIARIES
SUPPLEMENTAL ANALYSIS OF EFFECT OF SPECIAL ITEMS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2003
(UNAUDITED)
Special Before
As Reported Items Special Items
----------- ----------- -------------
millions, except per share data)
Revenues:
License $ 394.9 $ -- $ 394.9
Maintenance 562.1 -- 562.1
Professional services 61.6 -- 61.6
---------- ---------- ----------
Total revenues 1,018.6 -- 1,018.6
---------- ---------- ----------
Selling and marketing expenses 455.5 (55.5) (a) 400.0
Research, development and support expenses 451.9 (61.8) (a) 390.1
Cost of professional services 58.9 (2.5) (a) 56.4
General and administrative expenses 132.2 (4.2) (a) 128.0
Amortization of acquired technology & intangibles 45.4 (45.4) (a) --
---------- ---------- ----------
Total operating expenses 1,143.9 (169.4) 974.5
---------- ---------- ----------
Operating income (loss) (125.3) 169.4 44.1
Other income, net 55.6 -- 55.6
---------- ---------- ----------
Earnings (loss) before income taxes (69.7) 169.4 99.7
Income tax provision (benefit) (6.0) 33.9 27.9
---------- ---------- ----------
Net earnings (loss) $ (63.7) $ 135.5 $ 71.8
========== ========== ==========
Diluted earnings (loss) per share $ (0.28) $ 0.59 $ 0.31
========== ========== ==========
Shares used in computing diluted earnings (loss) per
share 227.4 227.4 228.5
========== ========== ==========
(a) The net earnings effect of the individual special items is as follows (in
millions):
Exit costs and related charges $ (97.6)
Amortization of acquired technology & intangibles $ (37.9)
10