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 ANNOUNCES THIRD QUARTER RESULTS
HOUSTON -- (February 3, 2005) -- BMC Software, Inc. [NYSE: BMC] today announced
financial results for its third quarter of fiscal 2005 ended December 31, 2004.
BMC Software's net earnings excluding special items for the third
quarter of fiscal 2005 were $49.6 million, or $0.22 per diluted common share,
which compares to net earnings of $43.0 million, or $0.19 per diluted common
share a year ago. The Company was within its guidance range of $0.18 to $0.23
per diluted common share. Fiscal 2005 third quarter net earnings on a GAAP basis
were $36.4 million, or $0.16 per share, which compares to a net loss of $44.4
million, or a loss of $0.20 per share, in the third quarter of fiscal 2004.
Included in the financial tables is a reconciliation of results excluding
special items and GAAP results.
Total revenues in the third quarter of fiscal 2005 were $386.8 million,
an increase of three percent compared to the third quarter of fiscal 2004. The
Company was within its guidance range of $380 to $395 million. Operating
expenses excluding $18.7 million in special items were $345.6 million, compared
to $332.1 million in the same quarter a year ago excluding $104.1 million in
special items. Third quarter fiscal 2005 operating expenses excluding special
items includes the write-down of some IT assets of approximately $5 million.
"I am pleased that we met our revenue and earnings per share goals in
the third quarter and delivered strong cash flow from operations of $127.6
million while continuing to maintain our solid balance sheet with over $1.1
billion in cash and marketable securities and a record high $1.49 billion in
deferred revenues," said Bob Beauchamp, president and CEO, BMC Software. "Our
BSM strategy is helping customers meet their compliance goals as well as reduce
costs, automate processes and run more efficient IT organizations to support
their businesses. Today, these are decision-drivers for customer purchases."
Other income was $27.0 million in the third quarter, which included a
gain of $8.0 million related to the termination of the Company's securitization
arrangements, which the Company has not utilized for new receivables in the last
eight quarters.
License bookings in the third quarter of fiscal 2005 were $191.1
million, a 30 percent increase over the second quarter of fiscal 2005 and a 19
percent decrease over the third quarter of
BMC Software Third Quarter Results/Page 2
fiscal 2004. Excluding one very large transaction in the year ago quarter,
license bookings were down three percent. The following table illustrates
license bookings:
THIRD QUARTER FY05 BUSINESS SEGMENT RESULTS
($ MILLIONS) LICENSE NET CHANGE IN LICENSE LICENSE BOOKINGS LICENSE BOOKINGS
REVENUES DEFERRED BOOKINGS* PERCENT GROWTH PERCENT GROWTH VS.
LICENSE VS. Q3FY04 Q2FY05
REVENUES
DM -- Mainframe 44.8 10.9 55.7 (37)% 19%
MAINVIEW(R) 14.6 8.9 23.5 (2)% 190%
Mainframe Management 59.4 19.8 79.2 (30)% 44%
----- ---- ----- --- --
Scheduling & Output Mgmt. 17.2 1.0 18.2 (27)% 44%
DM -- Distributed Systems 11.1 (.5) 10.6 (26)% (13)%
PATROL(R) 28.2 5.3 33.5 (30)% 50%
Distributed Systems Mgmt. 56.5 5.8 62.3 (29)% 32%
Service Management 40.5 5.0 45.5 45% 7%
Identity Management 3.5 (0.2) 3.3 (34)% 83%
----- ---- ----- --- --
TOTAL BMC 161.0 30.1 191.1 (19)% 30%
===== ==== ===== === ==
Due to the exclusion of the non-material category of "Other," all totals do not foot.
*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.
Cash flows from operations were $127.6 million in the third quarter and
$227.7 million for the first nine months of fiscal 2005, compared to $74.3
million in the third quarter last year and $232.4 million for the first nine
months of fiscal 2004.
BMC Software continued its stock repurchase program by spending $25.0
million to repurchase approximately 1.4 million shares during the third fiscal
quarter. Approximately $237 million remains in the company's $1 billion share
repurchase program.
FOURTH QUARTER AND FISCAL 2005 GUIDANCE
The Company expects fourth quarter revenues to be in the $410 to $425
million range and expects fourth quarter earnings per share excluding special
items to be in the $0.17 to $0.22 per share range. Fourth quarter estimates do
not include an estimated $0.06 per share of amortization of acquired technology
and intangibles.
BMC Software Third Quarter Results/Page 3
The Company expects full year fiscal 2005 revenues to be in the $1.478 to
$1.493 billion range and expects fiscal 2005 earnings per share excluding
special items to be in the $0.69 to $0.74 per share range. Fiscal 2005 estimates
do not include an estimated $0.32 per share of special items.
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 THIRD QUARTER RESULTS IS SCHEDULED FOR TODAY,
FEBRUARY 3, 2005 AT 11:00 A.M. CENTRAL TIME. THOSE INTERESTED IN PARTICIPATING
MAY CALL (719) 457-2727 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
BMC Software Third Quarter Results/Page 4
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 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) 2005, BMC Software, Inc. All rights reserved.
BMC Software Announces Third Quarter Results
Page 5
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
December 31,
---------------------------
Fiscal Fiscal Percentage
2004 2005 Change
------------- ------------ ----------
(In millions, except
per share data)
Revenues:
License $ 162.6 $ 161.0 -1%
Maintenance 190.4 202.2 6%
Professional services 21.8 23.6 8%
------------- ------------
Total revenues 374.8 386.8 3%
------------- ------------
Selling and marketing expenses 177.4 145.7 -18%
Research, development and support expenses 177.5 116.4 -34%
Cost of professional services 19.9 24.9 25%
General and administrative expenses 46.9 57.8 23%
Amortization of acquired technology & intangibles 14.5 19.5 34%
------------- ------------
Total operating expenses 436.2 364.3 -16%
------------- ------------
Operating income (loss) (61.4) 22.5 n/m
Other income, net 17.0 27.0 59%
------------- ------------
Earnings (loss) before income taxes (44.4) 49.5 n/m
Income tax provision (benefit)
-- 13.1 n/m
------------- ------------
Net earnings (loss) $ (44.4) $ 36.4 n/m
============= ============
Diluted earnings (loss) per share $ (0.20) $ 0.16 n/m
============= ============
Shares used in computing diluted earnings (loss) per share 225.5 224.4 0%
============= ============
BMC Software Announces Third Quarter Results
Page 6
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS EXCLUDING SPECIAL ITEMS
(UNAUDITED)
Three Months Ended
December 31,
---------------------------
Fiscal Fiscal Percentage
2004 2005 Change
------------ ------------ ----------
(In millions, except
per share data)
Revenues:
License $ 162.6 $ 161.0 -1%
Maintenance 190.4 202.2 6%
Professional services 21.8 23.6 8%
------------ ------------
Total revenues 374.8 386.8 3%
------------ ------------
Selling and marketing expenses 140.2 145.8 4%
Research, development and support expenses 127.2 117.1 -8%
Cost of professional services 19.6 24.9 27%
General and administrative expenses 45.1 57.8 28%
------------ ------------
Total operating expenses 332.1 345.6 4%
------------ ------------
Operating income (loss) 42.7 41.2 -4%
Other income, net 17.0 27.0 59%
------------ ------------
Earnings (loss) before income taxes 59.7 68.2 14%
Income tax provision (benefit) 16.7 18.6 11%
------------ ------------
Net earnings (loss) $ 43.0 $ 49.6 15%
============ ============
Diluted earnings (loss) per share $ 0.19 $ 0.22 16%
============ ============
Shares used in computing diluted earnings (loss) per share 227.0 224.4 -1%
============ ============
See the accompanying Supplemental Analysis of Effect of Special Items, where
these Statements of Operations Excluding Special Items are reconciled to the
Statements of Operations prepared in accordance with U.S. generally accepted
accounting principles.
BMC Software Announces Third Quarter Results
Page 7
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
December 31,
--------------------
Fiscal Fiscal Percentage
2004 2005 Change
------ ----- ----------
(In millions, except
per share data)
Revenues:
License $ 394.9 $ 393.8 0%
Maintenance 562.1 606.9 8%
Professional services 61.6 67.2 9%
-------- --------
Total revenues 1,018.6 1,067.9 5%
-------- --------
Selling and marketing expenses 455.5 401.6 -12%
Research, development and support expenses 451.9 343.5 -24%
Cost of professional services 58.9 68.6 16%
General and administrative expenses 132.2 150.3 14%
Settlement of litigation - 11.3 n/m
Acquired research and development - 0.2 n/m
Amortization of acquired technology & intangibles 45.4 55.0 21%
-------- --------
Total operating expenses 1,143.9 1,030.5 -10%
-------- --------
Operating income (loss) (125.3) 37.4 n/m
Other income, net 55.6 60.3 8%
-------- --------
Earnings (loss) before income taxes (69.7) 97.7 n/m
Income tax provision (benefit) (6.0) 37.9 n/m
-------- --------
Net earnings (loss) $ (63.7) $ 59.8 n/m
======== ========
Diluted earnings (loss) per share $ (0.28) $ 0.27 n/m
======== ========
Shares used in computing diluted earnings (loss) per share 227.4 223.7 -2%
======== ========
BMC Software Announces Third Quarter Results
Page 8
BMC SOFTWARE, INC. AND SUBSIDIARIES
BALANCE SHEETS
March 31, December 31,
2004 2004
--------- ------------
(Unaudited)
(In millions)
Current assets:
Cash and cash equivalents $ 612.3 $ 589.8 (a)
Marketable securities 296.6 131.0 (a)
Trade accounts receivable, net 172.6 206.8
Current trade finance receivables, net 175.5 152.2
Other current assets 167.9 145.7
---------- ----------
Total current assets 1,424.9 1,225.5
Property and equipment, net 396.0 400.4
Software development costs and related assets, net 138.9 131.8
Long-term marketable securities 304.1 379.9 (a)
Long-term finance receivables, net 158.7 187.8
Acquired technology, goodwill and intangibles, net 520.1 671.3
Other long-term assets 102.1 156.7
---------- ----------
$ 3,044.8 $ 3,153.4
========== ==========
Current liabilities:
Accounts payable and accrued liabilities $ 318.5 $ 339.5
Current portion of deferred revenue 668.4 729.2
---------- ----------
Total current liabilities 986.9 1,068.7
Long-term deferred revenue 733.2 756.1
Other long-term liabilities 109.5 85.6
Total stockholders' equity 1,215.2 1,243.0
---------- ----------
$ 3,044.8 $ 3,153.4
========== ==========
(a) Total cash and marketable securities are $1,100.7 at December 31, 2004.
BMC Software Announces Third Quarter Results
Page 9
BMC SOFTWARE, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
December 31,
----------------------------
Fiscal Fiscal
2004 2005
------------ -------------
(In millions)
Cash flows from operating activities:
Net earnings (loss) $ (63.7) $ 59.8
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 198.9 159.7
(Gain) loss on marketable securities (0.9) 1.9
(Gain) loss on previously securitized finance receivables (8.0)
Other non-cash charges 1.5 4.1
(Increase) decrease in finance receivables 3.1 17.5
Increase (decrease) in payables to third-party financing institutions
for finance receivables (28.1) (26.6)
Increase (decrease) in accrued exit costs 78.0 (21.9)
Net change in trade receivables, payables, deferred revenue and
other components of working capital 43.6 41.2
----------- ------------
Net cash provided by (used in) operating activities 232.4 227.7
----------- ------------
Cash flows from investing activities:
Cash paid for technology acquisitions and other investments,
net of cash acquired (9.0) (215.8)
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 -
Cash receipts from previously securitizeed finance receivables - 10.0
Purchases of marketable securities (273.9) (183.1)
Proceeds from maturities/sales of marketable securities 160.3 280.8
Purchases of property and equipment (31.8) (48.0)
Capitalization of software development costs and related assets (38.3) (48.1)
----------- ------------
Net cash provided by (used in) investing activities (183.4) (203.5)
----------- ------------
Cash flows from financing activities:
Payments on capital leases (2.2) (3.7)
Stock options exercised and other 13.1 21.8
Treasury stock acquired (120.1) (70.0)
----------- ------------
Net cash provided by (used in) financing activities (109.2) (51.9)
----------- ------------
Effect of exchange rate changes on cash 4.3 5.2
----------- ------------
Net change in cash and cash equivalents (55.9) (22.5)
Cash and cash equivalents, beginning of period 500.1 612.3
----------- ------------
Cash and cash equivalents, end of period $444.2 $ 589.8
=========== ============
BMC Software Announces Third Quarter Results
Page 10
BMC SOFTWARE, INC. AND SUBSIDIARIES
SUPPLEMENTAL ANALYSIS OF EFFECT OF SPECIAL ITEMS
(UNAUDITED)
Three Months Ended December 31, 2003
---------------------------------------------------
Special Excluding
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) (c) -
---------- ------ --------------
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 (d) 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) Exit costs and related charges $(89.6)
(b) Changes in estimates related to exit activities $ -
(c) Amortization of acquired technology & intangibles $(14.5)
(d) Tax effect of special items $ 16.7
Three Months Ended December 31, 2004
----------------------------------------------------
Special Excluding
As Reported Items Special Items
----------- ----- -------------
(In millions, except per share data)
Revenues:
License $ 161.0 $ - $ 161.0
Maintenance 202.2 - 202.2
Professional services 23.6 - 23.6
----------- ---------- -------------
Total revenues 386.8 - 386.8
----------- ---------- -------------
Selling and marketing expenses 145.7 0.1 (b) 145.8
Research, development and support expenses 116.4 0.7 (b) 117.1
Cost of professional services 24.9 - 24.9
General and administrative expenses 57.8 - 57.8
Amortization of acquired technology & intangibles 19.5 (19.5) (c) -
----------- --------- -------------
Total operating expenses 364.3 (18.7) 345.6
----------- --------- -------------
Operating income (loss) 22.5 18.7 41.2
Other income, net 27.0 - 27.0
----------- --------- -------------
Earnings (loss) before income taxes 49.5 18.7 68.2
Income tax provision (benefit) 13.1 5.5 (d) 18.6
----------- --------- -------------
Net earnings (loss) $ 36.4 $ 13.2 $ 49.6
=========== ========= =============
Diluted earnings (loss) per share $ 0.16 $ 0.06 $ 0.22
=========== ========= =============
Shares used in computing diluted earnings (loss) per share 224.4 224.4 224.4
=========== ========= =============
(a) Exit costs and related charges $ -
(b) Changes in estimates related to exit activities $ 0.8
(c) Amortization of acquired technology & intangibles $ (19.5)
(d) Tax effect of special items $ 5.5
BMC Software Announces Third Quarter Results
Page 11
BMC SOFTWARE, INC. AND SUBSIDIARIES
SUPPLEMENTAL ANALYSIS OF EFFECT OF SPECIAL ITEMS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2004
(UNAUDITED)
Special Excluding
As Reported Items Special Items
----------- ----- -------------
(In millions, except per share data)
Revenues:
License $ 393.8 $ - $ 393.8
Maintenance 606.9 - 606.9
Professional services 67.2 - 67.2
----------- ------- -----------
Total revenues 1,067.9 - 1,067.9
----------- ------- -----------
Selling and marketing expenses 401.6 (1.5) (a) 400.1
Research, development and support expenses 343.5 4.0 (a) 347.5
Cost of professional services 68.6 - 68.6
General and administrative expenses 150.3 - 150.3
Settlement of litigation 11.3 (11.3) (b) -
Acquired research and development 0.2 (0.2) (c) -
Amortization of acquired technology & intangibles 55.0 (55.0) (d) -
----------- ------- -----------
Total operating expenses 1,030.5 (64.0) 966.5
----------- ------- -----------
Operating income (loss) 37.4 64.0 101.4
Other income, net 60.3 - 60.3
----------- ------- -----------
Earnings (loss) before income taxes 97.7 64.0 161.7
Income tax provision (benefit) 37.9 6.9 (e,f) 44.8
----------- ------- -----------
Net earnings (loss) $ 59.8 $ 57.1 $ 116.9
=========== ======= ===========
Diluted earnings (loss) per share $ 0.27 $ 0.25 $ 0.52
=========== ======= ===========
Shares used in computing diluted earnings (loss) per share 223.7 223.7 223.7
=========== ======= ===========
(a) Changes in estimates related to exit activities $ $ 2.5
(b) Settlement of litigation $ (11.3)
(c) Acquired research and development for immaterial acquisition $ (0.2)
(d) Amortization of acquired technology & intangibles $ (55.0)
(e) Tax effect of special items $ 18.0
(f) Adjustments to income tax accruals $ (11.1)