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 SECOND QUARTER EPS AND REVENUE CONSENSUS ESTIMATES
Company Raises Fiscal Year 2005 Guidance
HOUSTON -- (November 2, 2004) -- BMC Software, Inc. [NYSE: BMC] today announced
financial results for its second quarter of fiscal 2005 ended September 30,
2004.
BMC Software's net earnings excluding special items for the second
quarter of fiscal 2005 were $35.2 million, or $0.16 per diluted common share,
which compares to net earnings of $22.2 million, or $0.10 per diluted common
share a year ago. This exceeds the consensus estimate of $0.14 per share and is
at the upper end of the Company's guidance range of $0.12 to $0.16 per share.
Fiscal 2005 second quarter net earnings on a GAAP basis were $12.7 million, or
$0.06 per share, which compares to a net loss of $13.2 million, or a loss of
$0.06 per share, in the second quarter of fiscal 2004. Included in the financial
tables is a reconciliation of results excluding special items and GAAP results.
Total revenues in the second quarter of fiscal 2005 were $355.1
million, an increase of 6 percent compared to the second quarter of fiscal 2004.
This exceeds the consensus estimate of $347 million and is at the upper end of
the Company's guidance range of $340 to $355 million. Operating expenses
excluding $31.0 million in special charges were $321.9 million, compared to
$320.8 million in same quarter a year ago excluding $49.7 million in special
items.
"Overall we saw improvement in the technology spending environment in
the second quarter, particularly in the United States," said Bob Beauchamp,
president and CEO, BMC Software. "We did a good job of executing this quarter as
evidenced by our strong revenue, earnings per share and license bookings
results. License bookings had strong sequential growth across all our major
product lines and across all major geographies. We also continued to show solid
expense management and demonstrated significant improvement in our operating
margins as we more than doubled our operating margins compared to the same
quarter a year ago."
License bookings in the second quarter of fiscal 2005 were $147.2
million, a 76 percent increase over the first quarter of fiscal 2005. License
bookings increased 11 percent year-over-year. The following table illustrates
license bookings:
BMC Software Exceeds Second Quarter EPS and Revenue Consensus Estimates /Page 2
SECOND QUARTER FY05 BUSINESS SEGMENT RESULTS
<Table>
<Caption>
NET CHANGE LICENSE LICENSE
IN DEFERRED BOOKINGS BOOKINGS
LICENSE LICENSE LICENSE PERCENT GROWTH PERCENT GROWTH
($ IN MILLIONS) REVENUES REVENUES BOOKINGS* VS. Q2FY04 VS. Q1FY05
------------ ------------ ------------ -------------- --------------
DM - Mainframe 36.0 11.0 47.0 32% 185%
MAINVIEW(R) 10.0 (1.9) 8.1 (22)% 50%
- ---------------------------------------------------------------------------------------------------------------------------
Mainframe Management 46.0 9.1 55.1 20% 152%
- ---------------------------------------------------------------------------------------------------------------------------
Scheduling & Output Mgmt. 12.1 0.5 12.6 2% 42%
DM - Distributed Systems 13.4 (1.2) 12.2 11% 27%
PATROL(R) 21.2 1.2 22.4 (30)% 38%
- ---------------------------------------------------------------------------------------------------------------------------
Distributed Systems Mgmt. 46.7 0.5 47.2 (14)% 36%
- ---------------------------------------------------------------------------------------------------------------------------
Service Management 38.7 4.0 42.7 48% 60%
===========================================================================================================================
Identity Management 1.1 0.7 1.8 (40)% 80%
===========================================================================================================================
TOTAL BMC 132.5 14.7** 147.2** 11% 76%
===========================================================================================================================
</Table>
*License bookings measure the value of new license contracts signed during the
quarter, including both the amount that goes to the income statement and the
amount that goes to the deferred license revenue account on the balance sheet.
License bookings can be calculated by adding license revenues and the net change
in the deferred license revenue balance.
** Due to the exclusion of the non-material category of "Other," all totals do
not foot.
BMC Software maintained its strong financial position with a cash and
marketable securities balance of over $1.0 billion and a record total deferred
revenue balance of $1.407 billion. Cash flows from operations were $10.0 million
in the second quarter and $100.1 million for the first six months of fiscal
2005.
BMC Software continued its stock repurchase program by spending $25.0
million to repurchase approximately 1.6 million shares during the second fiscal
quarter. Approximately $262 million remains in this program.
BMC Software recently reached an agreement in principle with Nastel
Technologies in the previously disclosed complaint whereby BMC Software will pay
Nastel Technologies $11.25 million. Nastel Technologies filed a complaint
against BMC Software alleging among other claims that Boole and Babbage, a
company that BMC Software acquired in 1999, had exceeded license rights of
software prior to its acquisition by BMC, and that BMC then stopped marketing
certain products in 1999. BMC Software determined that the best course of action
was to resolve this issue. This amount is shown as a "settlement of litigation"
in our second quarter GAAP income statement and is not included in BMC
Software's earnings excluding special items. The cash outlay related to this
settlement will likely occur in the third quarter.
BMC Software Exceeds Second Quarter EPS and Revenue Consensus Estimates /Page 3
THIRD QUARTER AND FISCAL 2005 GUIDANCE
The Company expects third quarter revenues to be in the $380 to $395
million range and expects third quarter earnings per share excluding special
items to be in the $0.18 to $0.23 per share range. Third quarter estimates do
not include an estimated $0.06 per share of amortization of acquired technology
and intangibles.
The Company is raising full year guidance and now expects fiscal 2005
revenues to be in the $1.47 to $1.50 billion range and expects fiscal 2005
earnings per share excluding special items to be in the $0.67 to $0.77 per share
range. Fiscal 2005 estimates do not include an estimated $0.23 per share of
amortization of acquired technology and intangibles.
BMC Software expects cash flows from operations for fiscal 2005 to be over
$400 million, which is unchanged from prior expectations.
A CONFERENCE CALL TO DISCUSS SECOND QUARTER RESULTS IS SCHEDULED FOR TODAY,
NOVEMBER 2, 2004 AT 11:00 A.M. CENTRAL TIME. THOSE INTERESTED IN PARTICIPATING
MAY CALL (913) 981-5591 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
BMC Software Exceeds Second Quarter EPS and Revenue Consensus Estimates /Page 4
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
management. Founded in 1980, BMC Software has offices worldwide and fiscal 2004
revenues of more than $1.4 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," "estimate" 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; 8) BMC Software's effective tax rate is subject
to quarterly fluctuation and any change in such tax rate could affect the
Company's earnings; and 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, 2004 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.
BMC Software Exceeds Second Quarter EPS and Revenue Consensus Estimates
Page 5
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(UNAUDITED)
<Table>
<Caption>
Three Months Ended
September 30,
------------------------------
Fiscal Fiscal Percentage
2004 2005 Change
------------ ------------ ------------
(In millions, except
per share data)
Revenues:
License $ 124.7 $ 132.5 6%
Maintenance 188.2 199.9 6%
Professional services 20.9 22.7 9%
------------ ------------
Total revenues 333.8 355.1 6%
------------ ------------
Selling and marketing expenses 140.2 131.2 -6%
Research, development and support expenses 147.1 117.7 -20%
Cost of professional services 20.0 23.2 16%
General and administrative expenses 47.9 49.9 4%
Settlement of litigation -- 11.3 n/m
Acquired research and development -- 0.2 n/m
Amortization of acquired technology & intangibles 15.3 19.4 27%
------------ ------------
Total operating expenses 370.5 352.9 -5%
------------ ------------
Operating income (loss) (36.7) 2.2 n/m
Other income, net 17.8 15.7 -12%
------------ ------------
Earnings (loss) before income taxes (18.9) 17.9 n/m
Income tax provision (benefit) (5.7) 5.2 n/m
------------ ------------
Net earnings (loss) $ (13.2) $ 12.7 n/m
============ ============
Diluted earnings (loss) per share $ (0.06) $ 0.06 n/m
============ ============
Shares used in computing diluted earnings (loss) per share 227.1 223.9 -1%
============ ============
</Table>
BMC Software Exceeds Second Quarter EPS and Revenue Consensus Estimates
Page 6
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS EXCLUDING SPECIAL ITEMS
(UNAUDITED)
<Table>
<Caption>
Three Months Ended
September 30,
-----------------------------
Fiscal Fiscal Percentage
2004 2005 Change
------------ ------------ ------------
(In millions, except
per share data)
Revenues:
License $ 124.7 $ 132.5 6%
Maintenance 188.2 199.9 6%
Professional services 20.9 22.7 9%
------------ ------------
Total revenues 333.8 355.1 6%
------------ ------------
Selling and marketing expenses 121.9 130.3 7%
Research, development and support expenses 135.5 118.5 -13%
Cost of professional services 17.8 23.2 30%
General and administrative expenses 45.6 49.9 9%
------------ ------------
Total operating expenses 320.8 321.9 0%
------------ ------------
Operating income (loss) 13.0 33.2 155%
Other income, net 17.8 15.7 -12%
------------ ------------
Earnings (loss) before income taxes 30.8 48.9 59%
Income tax provision (benefit) 8.6 13.7 59%
------------ ------------
Net earnings (loss) $ 22.2 $ 35.2 59%
============ ============
Diluted earnings (loss) per share $ 0.10 $ 0.16 60%
============ ============
Shares used in computing diluted earnings (loss) per share 227.9 223.9 -2%
============ ============
</Table>
See the accompanying Supplemental Analysis of Effect of Special Items,
where these Statements of Operations Before Special Items are reconciled to
the Statements of Operations prepared in accordance with U.S. generally
accepted accounting principles.
BMC Software Exceeds Second Quarter EPS and Revenue Consensus Estimates
Page 7
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(UNAUDITED)
<Table>
<Caption>
Six Months Ended
September 30,
------------------------------
Fiscal Fiscal Percentage
2004 2005 Change
------------ ------------ ------------
(In millions, except
per share data)
Revenues:
License $ 232.3 $ 232.8 0%
Maintenance 371.7 404.7 9%
Professional services 39.7 43.6 10%
------------ ------------
Total revenues 643.7 681.1 6%
------------ ------------
Selling and marketing expenses 278.1 255.9 -8%
Research, development and support expenses 274.4 227.0 -17%
Cost of professional services 39.0 43.7 12%
General and administrative expenses 85.2 92.6 9%
Settlement of litigation -- 11.3 n/m
Acquired research and development -- 0.2 n/m
Amortization of acquired technology & intangibles 30.9 35.5 15%
------------ ------------
Total operating expenses 707.6 666.2 -6%
------------ ------------
Operating income (loss) (63.9) 14.9 n/m
Other income, net 38.6 33.3 -14%
------------ ------------
Earnings (loss) before income taxes (25.3) 48.2 n/m
Income tax provision (benefit) (6.0) 24.8 n/m
------------ ------------
Net earnings (loss) $ (19.3) $ 23.4 n/m
============ ============
Diluted earnings (loss) per share $ (0.08) $ 0.10 n/m
============ ============
Shares used in computing diluted earnings (loss) per share 228.3 224.5 -2%
============ ============
</Table>
BMC Software Exceeds Second Quarter EPS and Revenue Consensus Estimates
Page 8
BMC SOFTWARE, INC. AND SUBSIDIARIES
BALANCE SHEETS
<Table>
<Caption>
March 31, September 30,
2004 2004
------------ ------------
(Unaudited)
(In millions)
Current assets:
Cash and cash equivalents $ 612.3 $ 479.0(a)
Marketable securities 296.6 166.3(a)
Trade accounts receivable, net 172.6 134.2
Current trade finance receivables, net 175.5 149.8
Other current assets 167.9 145.9
------------ ------------
Total current assets 1,424.9 1,075.2
Property and equipment, net 396.0 406.2
Software development costs and related assets, net 138.9 130.8
Long-term marketable securities 304.1 374.0(a)
Long-term finance receivables, net 158.7 179.4
Acquired technology, goodwill and intangibles, net 520.1 685.0
Other long-term assets 102.1 151.6
------------ ------------
$ 3,044.8 $ 3,002.2
============ ============
Current liabilities:
Accounts payable and accrued liabilities $ 318.5 $ 283.5
Current portion of deferred revenue 668.4 689.6
------------ ------------
Total current liabilities 986.9 973.1
Long-term deferred revenue 733.2 717.8
Other long-term liabilities 109.5 92.9
Total stockholders' equity 1,215.2 1,218.4
------------ ------------
$ 3,044.8 $ 3,002.2
============ ============
</Table>
(a) Total cash and marketable securities are $1,019.3 at September 30, 2004.
BMC Software Exceeds Second Quarter EPS and Revenue Consensus Estimates
Page 9
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<Table>
<Caption>
Six Months Ended
September 30,
------------------------------
Fiscal Fiscal
2004 2005
------------ ------------
(In millions)
Cash flows from operating activities:
Net earnings (loss) $ (19.3) $ 23.4
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:
Acquired research and development -- 0.2
Depreciation and amortization 134.7 102.5
Impairment of technology assets and investments -- 1.0
(Gain) loss on marketable securities (0.2) 1.8
Earned portion of stock-based compensation 1.0 1.4
(Increase) decrease in finance receivables 105.0 1.7
Increase (decrease) in payables to third-party financing institutions
for finance receivables (34.2) (25.4)
Increase (decrease) in accrued exit costs 9.1 (17.0)
Net change in trade receivables, payables, deferred revenue and
other components of working capital (38.0) 10.5
------------ ------------
Net cash provided by (used in) operating activities 158.1 100.1
------------ ------------
Cash flows from investing activities:
Cash paid for technology acquisitions and other investments,
net of cash acquired (6.7) (212.0)
Adjustment of cash paid for Remedy acquisition 7.2 --
Return of capital for cost-basis investments 0.1 0.7
Proceeds from sale of technology 2.0 --
Proceeds from sale of financial instruments and other -- 4.5
Purchases of marketable securities (267.2) (115.5)
Maturities of/proceeds from sales of marketable securities 130.2 187.0
Purchases of property and equipment (22.9) (34.4)
Capitalization of software development costs and related assets (31.8) (29.6)
------------ ------------
Net cash provided by (used in) investing activities (189.1) (199.3)
------------ ------------
Cash flows from financing activities:
Payments on capital leases -- (2.3)
Stock options exercised and other 9.0 13.4
Treasury stock acquired (90.0) (45.0)
------------ ------------
Net cash provided by (used in) financing activities (81.0) (33.9)
------------ ------------
Effect of exchange rate changes on cash 3.3 (0.2)
------------ ------------
Net change in cash and cash equivalents (108.7) (133.3)
Cash and cash equivalents, beginning of period 500.1 612.3
------------ ------------
Cash and cash equivalents, end of period $ 391.4 $ 479.0
============ ============
</Table>
BMC Software Exceeds Second Quarter EPS and Revenue Consensus Estimates
Page 10
BMC SOFTWARE, INC. AND SUBSIDIARIES
SUPPLEMENTAL ANALYSIS OF EFFECT OF SPECIAL ITEMS
(UNAUDITED)
<Table>
<Caption>
Three Months Ended September 30, 2003 Three Months Ended September 30, 2004
------------------------------------------ -----------------------------------------
Special Excluding Special Excluding
As Reported Items Special Items As Reported Items Special Items
---------- ---------- ------------- ----------- ---------- -------------
(In millions, except per share data) (In millions, except per share data)
Revenues:
License $ 124.7 $ -- $ 124.7 $ 132.5 $ -- $ 132.5
Maintenance 188.2 -- 188.2 199.9 -- 199.9
Professional services 20.9 -- 20.9 22.7 -- 22.7
---------- ---------- ---------- ---------- ---------- ----------
Total revenues 333.8 -- 333.8 355.1 -- 355.1
---------- ---------- ---------- ---------- ---------- ----------
Selling and marketing expenses 140.2 (18.3)(a) 121.9 131.2 (0.9)(b) 130.3
Research, development and support
expenses 147.1 (11.6)(a) 135.5 117.7 0.8(b) 118.5
Cost of professional services 20.0 (2.2)(a) 17.8 23.2 -- 23.2
General and administrative expenses 47.9 (2.3)(a) 45.6 49.9 -- 49.9
Settlement of litigation -- -- -- 11.3 (11.3)(c) --
Acquired research and development -- -- -- 0.2 (0.2)(d) --
Amortization of acquired technology
& intangibles 15.3 (15.3)(e) -- 19.4 (19.4)(e) --
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses 370.5 (49.7) 320.8 352.9 (31.0) 321.9
---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss) (36.7) 49.7 13.0 2.2 31.0 33.2
Other income, net 17.8 -- 17.8 15.7 -- 15.7
---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss) before
income taxes (18.9) 49.7 30.8 17.9 31.0 48.9
Income tax provision (benefit) (5.7) 14.3(f) 8.6 5.2 8.5(f) 13.7
---------- ---------- ---------- ---------- ---------- ----------
Net earnings (loss) $ (13.2) $ 35.4 $ 22.2 $ 12.7 $ 22.5 $ 35.2
========== ========== ========== ========== ========== ==========
Diluted earnings (loss) per share $ (0.06) $ 0.16 $ 0.10 $ 0.06 $ 0.10 $ 0.16
========== ========== ========== ========== ========== ==========
Shares used in computing diluted
earnings (loss) per share 227.1 227.1 227.9 223.9 223.9 223.9
========== ========== ========== ========== ========== ==========
(a) Exit costs and related charges $ (34.4) $ --
(b) Changes in estimates related to exit
activities $ -- $ (0.1)
(c) Settlement of litigation $ -- $ (11.3)
(d) Acquired research and development for
immaterial acquisition $ -- $ (0.2)
(e) Amortization of acquired technology
& intangibles $ (15.3) $ (19.4)
(f) Tax effect of special items $ 14.3 $ 8.5
</Table>
BMC Software Exceeds Second Quarter EPS and Revenue Consensus Estimates
Page 11
BMC SOFTWARE, INC. AND SUBSIDIARIES
SUPPLEMENTAL ANALYSIS OF EFFECT OF SPECIAL ITEMS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED)
<Table>
<Caption>
Special Excluding
As Reported Items Special Items
------------ ------------ -------------
(In millions, except per share data)
Revenues:
License $ 232.8 $ -- $ 232.8
Maintenance 404.7 -- 404.7
Professional services 43.6 -- 43.6
------------ ------------ ------------
Total revenues 681.1 -- 681.1
------------ ------------ ------------
Selling and marketing expenses 255.9 (1.6)(a) 254.3
Research, development and support expenses 227.0 3.3(a) 230.3
Cost of professional services 43.7 -- 43.7
General and administrative expenses 92.6 -- 92.6
Settlement of litigation 11.3 (11.3)(b) --
Acquired research and development 0.2 (0.2)(c) --
Amortization of acquired technology & intangibles 35.5 (35.5)(d) --
------------ ------------ ------------
Total operating expenses 666.2 (45.3) 620.9
------------ ------------ ------------
Operating income (loss) 14.9 45.3 60.2
Other income, net 33.3 -- 33.3
------------ ------------ ------------
Earnings (loss) before income taxes 48.2 45.3 93.5
Income tax provision (benefit) 24.8 1.4(e,f) 26.2
------------ ------------ ------------
Net earnings (loss) $ 23.4 $ 43.9 $ 67.3
============ ============ ============
Diluted earnings (loss) per share $ 0.10 $ 0.20 $ 0.30
============ ============ ============
Shares used in computing diluted earnings (loss) per share 224.5 224.5 224.5
============ ============ ============
(a) Changes in estimates related to exit activities $ 1.7
(b) Settlement of litigation $ (11.3)
(c) Acquired research and development for immaterial acquisition $ (0.2)
(d) Amortization of acquired technology & intangibles $ (35.5)
(e) Tax effect of special items $ 12.5
(f) Adjustments to income tax accruals $ (11.1)
</Table>