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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 30, 1999
BMC SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-17136 74-21226120
(State or other jurisdiction (Commission File Number) (I.R.S. Employer Identification No.)
of incorporation or organization)
2101 CITYWEST BOULEVARD
HOUSTON, TEXAS 77042-2827
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (713) 918-8800
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Item 2. Acquisition or Disposition of Assets.
Effective March 30, 1999, a wholly owned subsidiary of BMC Software,
Inc., a Delaware corporation (the "Company"), was merged (the "Merger") with and
into Boole and Babbage, Inc., a Delaware corporation ("Boole"), pursuant to an
Agreement and Plan of Merger, dated October 31, 1998, between the Company and
Boole (the "Merger Agreement"). The stockholders of Boole approved the Merger at
a special meeting held on March 30, 1999. In the Merger, each issued and
outstanding share of common stock of Boole, par value $.001 per share (the
"Boole Common Stock") was converted into 0.675 of a share (the "Exchange Ratio")
of Company common stock, par value $.01 per share (the "Company Common Stock").
The Exchange Ratio was fixed pursuant to the Merger Agreement and was determined
through arm's length negotiations between the parties prior to the signing of
the Merger Agreement on October 31, 1998. According to Boston EquiServe, the
Company's transfer agent and registrar, approximately 19,117,440 shares of
Company Common Stock were issued to the former stockholders of Boole in the
Merger. The Boole stockholders will receive cash in lieu of any fractional
share of Company Common Stock. The Merger was accounted for as a
pooling-of-interests.
A description of the closing of the Merger is contained in the March
30, 1999 press release of the Company, which is filed herewith as Exhibit 99.1
and incorporated herein by reference. The Merger Agreement is incorporated
herein by reference to Annex A of the Proxy Statement/Prospectus contained in
Amendment No. 3 to the Company's Registration Statement on Form S-4 (File No.
333-67263), filed with the Securities and Exchange Commission (the "Commission")
on February 24, 1999 and declared effective by the Commission on February 25,
1999 (the "Registration Statement"). A description of the Merger, including
additional information requested pursuant to Item 2 of Form 8-K, are contained
in the Registration Statement, the text of which is incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
The financial statements required to be filed were previously reported
on pages 12 through 30 of Exhibit 13.1 to Boole's Annual Report on Form 10-K
for the fiscal year ended September 30, 1998 filed with the Commission on
December 29, 1998, and on pages 1 through 6 of Boole's Quarterly Report on Form
10-Q for the quarter ended December 31, 1998 filed with the Commission on
February 16, 1999, and are incorporated herein by reference.
(b) Pro Forma Financial Information
The following unaudited pro forma condensed combined financial statements
reflect adjustments to the historical consolidated balance sheets and statements
of income of BMC and Boole to give effect to the merger, using the pooling of
interests method of accounting for a business combination.
The unaudited pro forma condensed combined statements of income for the
nine months ended December 31, 1997 and 1998 and for the years ended March 31,
1996, 1997 and 1998 assume the merger was effected as of April 1, 1995.
The unaudited pro forma condensed combined balance sheet as of December 31,
1998 assumes the merger was effected as of December 31, 1998.
The fiscal year ends for the Company and Boole occur at different dates.
The Company's fiscal year end is March 31 while Boole's fiscal year end is
September 30. In order to present the pro forma combined results on a comparable
basis, certain adjustments were made to Boole's results of operations for
certain periods to conform to those of the Company. See "Notes to Unaudited
Pro Forma Condensed Combined Financial Statements" in this section for an
explanation of the pro forma adjustments.
The following unaudited pro forma condensed combined financial statements
have been prepared from, and should be read in conjunction with, the historical
consolidated financial statements and notes thereto of the Company and Boole.
The following unaudited pro forma condensed combined statements of income are
not necessarily indicative of the results of operations that would have occurred
had the merger occurred on April 1, 1995, nor are they necessarily indicative of
the future operating results of the combined company.
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1998
-------------------------------------------------
PRO FORMA PRO FORMA
BMC BOOLE ADJUSTMENTS COMBINED
---------- -------- ----------- ----------
(IN THOUSANDS)
Current Assets:
Cash and cash equivalents..... $ 123,070 $ 51,166 $ 174,236
Investments................... 66,569 43,848 110,417
Trade receivables............. 218,443 97,226 315,669
Other current assets.......... 56,892 15,806 72,698
---------- -------- ----------
Total current
assets............. 464,974 208,046 673,020
Property and equipment, net..... 224,396 10,831 235,227
Purchased and internally
developed software, net....... 119,973 13,088 133,061
Investment securities........... 835,336 -- 835,336
Other long-term assets.......... 50,187 107,984 158,171
---------- -------- ----------
Total assets.......... $1,694,866 $339,949 $2,034,815
========== ======== ==========
Current liabilities:
Current portion of deferred
revenue.................... $ 300,385 $ 61,495 $ 361,880
Other current liabilities..... 130,747 55,258 32,520(A) 218,525
---------- -------- ------- ----------
Total current
liabilities........ 431,132 116,753 32,520 580,405
Deferred revenue................ 160,247 62,660 222,907
Other long-term liabilities..... 48,207 1,433 49,640
---------- -------- ------- ----------
Total liabilities..... 639,586 180,846 32,520 852,952
Stockholders' Equity:
Common stock.................. 2,173 31 160(B) 2,364
Additional paid-in capital.... 110,719 105,130 (41,043)(B) 174,806
Retained earnings............. 962,975 79,739 (32,520)(B) 1,010,194
Other stockholders' equity.... (20,587) (25,797) 40,883(B) (5,501)
---------- -------- ------- ----------
Total stockholders'
equity............. 1,055,280 159,103 (32,520) 1,181,863
========== ======== ======= ==========
Total liabilities and
stockholders'
equity............. $1,694,866 $339,949 $2,034,815
========== ======== ==========
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED MARCH 31, 1996
--------------------------------------------------------
MARCH 31, SEPTEMBER 30,
1996 1995 PRO FORMA PRO FORMA
BMC BOOLE ADJUSTMENTS COMBINED
-------------- ------------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Licenses................... $290,998 $ 89,542 $380,540
Maintenance................ 178,908 79,485 258,393
-------- -------- -------- --------
Total revenues..... 469,906 169,027 638,933
Selling and marketing
expenses................... 130,220 86,753 216,973
Research and development
expenses and related
charges.................... 60,976 21,056 82,032
Cost of maintenance services
and product licenses....... 55,033 31,293 86,326
General and administrative
expenses................... 41,071 17,140 58,211
Acquired research and
development costs.......... 23,589 -- 23,589
-------- -------- -------- --------
Operating income........... 159,017 12,785 171,802
Interest and other income.... 16,378 3,907 20,285
-------- -------- --------
Income before taxes........ 175,395 16,692 192,087
Provision for income taxes... 61,842 5,076 66,918
-------- -------- --------
Net earnings............... $113,553 $ 11,616 $125,169
======== ======== ========
Basic earnings per share..... $ .55 $ .67 $ .56
======== ======== ========
Shares used in computing
basic earnings per share... 208,213 17,236 225,449
Diluted earnings per share... $ .52 $ .62 $ .53
======== ======== ========
Shares used in computing
diluted earnings per
share...................... 216,748 18,698 235,446
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED MARCH 31, 1997
----------------------------------------------------
MARCH 31, SEPTEMBER 30,
1997 1996 PRO FORMA PRO FORMA
BMC BOOLE ADJUSTMENTS COMBINED
--------- ------------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Licenses.................... $409,015 $ 95,219 $504,234
Maintenance................. 202,773 84,932 287,705
-------- -------- -------- --------
Total revenues...... 611,788 180,151 791,939
Selling and marketing
expenses.................... 169,521 91,766 261,287
Research and development
expenses and related
charges..................... 80,210 22,326 102,536
Cost of maintenance services
and product licenses........ 70,906 34,838 105,744
General and administrative
expenses.................... 49,887 18,392 68,279
Acquired research and
development costs........... 11,259 -- 11,259
-------- -------- -------- --------
Operating income............ 230,005 12,829 242,834
Interest and other income..... 21,129 5,643 26,772
-------- -------- -------- --------
Income before taxes......... 251,134 18,472 269,606
Provision for income taxes.... 78,149 7,015 85,164
-------- -------- -------- --------
Net earnings................ $172,985 $ 11,457 $184,442
======== ======== ========
Basic earnings per share...... $ .83 $ .64 $ .81
======== ======== ========
Shares used in computing basic
earnings per share.......... 208,611 17,931 226,542
Diluted earnings per share.... $ .78 $ .59 $ .76
======== ======== ========
Shares used in computing
diluted earnings per
share....................... 222,012 19,450 241,462
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED MARCH 31, 1998
-----------------------------------------------
ADJUSTED
MARCH 31, MARCH 31,
1998 1998 PRO FORMA PRO FORMA
BMC BOOLE ADJUSTMENTS COMBINED
--------- --------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Licenses......................... $549,338 $117,759 $667,097
Maintenance...................... 238,815 89,646 328,461
-------- -------- -------- --------
Total revenues........... 788,153 207,405 995,558
Selling and marketing expenses..... 221,461 97,716 319,177
Research and development expenses
and related charges.............. 99,876 25,489 125,365
Cost of maintenance services and
product licenses................. 92,926 35,435 128,361
General and administrative
expenses......................... 58,955 18,255 77,210
Merger costs....................... 7,737 -- 7,737
Acquired research and development
costs............................ 65,473 -- 65,473
-------- -------- -------- --------
Operating income................. 241,725 30,510 272,235
Interest and other income.......... 30,277 13,222 43,499
-------- -------- --------
Income before taxes.............. 272,002 43,732 315,734
Provision for income taxes......... 97,012 12,055 109,067
-------- -------- --------
Net earnings..................... $174,990 $ 31,677 $206,667
======== ======== ========
Basic earnings per share........... $ .83 $ 1.67 $ .90
======== ======== ========
Shares used in computing basic
earnings per share............... 211,129 18,941 230,070
Diluted earnings per share......... $ .78 $ 1.54 $ .84
======== ======== ========
Shares used in computing diluted
earnings per share............... 224,185 20,609 244,794
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED DECEMBER 31, 1997
---------------------------------------------------
PRO FORMA PRO FORMA
BMC BOOLE ADJUSTMENTS COMBINED
------------- -------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Licenses...................... $382,891 $ 86,783 $469,674
Maintenance................... 174,542 67,035 241,577
-------- -------- -------- --------
Total revenues........ 557,433 153,818 711,251
Selling and marketing
expenses...................... 157,633 72,950 230,583
Research and development
expenses and related
charges....................... 75,084 19,074 94,158
Cost of maintenance services and
product licenses.............. 64,658 26,621 91,279
General and administrative
expenses...................... 42,373 13,322 55,695
Merger costs.................... -- -- --
Acquired research and
development costs............. 65,473 -- 65,473
-------- -------- -------- --------
Operating income.............. 152,212 21,851 174,063
Interest and other income....... 21,471 8,747 30,218
-------- -------- --------
Income before taxes........... 173,683 30,598 204,281
Provision for income taxes...... 67,171 8,375 75,546
-------- -------- --------
Net earnings.................. $106,512 $ 22,223 $128,735
======== ======== ========
Basic earnings per share........ $ 0.51 $ 1.17 $ 0.56
======== ======== ========
Shares used in computing basic
earnings per share............ 210,301 18,928 229,229
Diluted earnings per share...... $ 0.48 $ 1.08 $ 0.53
======== ======== ========
Shares used in computing diluted
earnings per share............ 224,132 20,569 244,701
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED DECEMBER 31, 1998
----------------------------------------------
PRO FORMA PRO FORMA
BMC BOOLE ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Licenses......................... $532,241 $ 98,874 $631,115
Maintenance...................... 212,669 73,562 286,231
-------- -------- ------- --------
Total revenues........... 744,910 172,436 917,346
Selling and marketing expenses..... 213,005 77,925 290,930
Research and development expenses
and related charges.............. 101,440 19,200 120,640
Cost of maintenance services and
product licenses................. 76,624 29,644 106,268
General and administrative
expenses......................... 53,278 15,266 68,544
Acquired research and development
costs............................ 17,304 -- 17,304
-------- -------- ------- --------
Operating income................. 283,259 30,401 313,660
Interest and other income.......... 35,732 10,041 45,773
-------- -------- --------
Income before taxes.............. 318,991 40,442 359,433
Provision for income taxes......... 85,918 11,325 97,243
-------- -------- --------
Net earnings..................... $233,073 $ 29,117 $262,190
======== ======== ========
Basic earnings per share........... $ 1.08 $ 1.54 $ 1.12
======== ======== ========
Shares used in computing basic
earnings per share............... 215,111 18,893 234,004
Diluted earnings per share......... $ 1.02 $ 1.41 $ 1.05
======== ======== ========
Shares used in computing diluted
earnings per share............... 228,035 20,625 248,660
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma condensed combined statements of income for the
nine months ended December 31, 1997 and 1998 are based on the unaudited
consolidated financial statements of BMC for the nine months ended December 31,
1997 and 1998 and the consolidated financial statements of Boole for the years
ended September 30, 1997 and 1998 reduced by the unaudited consolidated
statements of income of Boole for the six months ended March 31, 1997 and 1998,
respectively and increased by the unaudited consolidated statements of income of
Boole for the three months ended December 31, 1997 and 1998, respectively. The
unaudited pro forma condensed combined statements of income for the years ended
March 31, 1996 and 1997 are based on the consolidated financial statements of
BMC for the years ended March 31, 1996 and 1997 and Boole for the years ended
September 30, 1995 and 1996. The unaudited pro forma condensed combined
statement of income for the year ended March 31, 1998 is based on the
consolidated financial statements of BMC for the years ended March 31, 1998 and
Boole for the year ended September 30, 1997 reduced by the unaudited
consolidated statements of income of Boole for the six months ended March 31,
1997 and increased by the unaudited consolidated statements of income of Boole
for the six months ended March 31, 1998.
As a result of the adjustments to conform BMC and Boole's fiscal year ends
for the year ended March 31, 1998, Boole's results of operations for the six
months ended March 31, 1997, which include total revenues of $96.2 million and a
net loss of $0.4 million, have not been included in the unaudited pro forma
condensed combined statements of income for the periods presented.
The unaudited pro forma condensed combined balance sheet is based on the
balance sheets of BMC and Boole at December 31, 1998, after giving effect to the
adjustments and assumptions described below.
The unaudited pro forma condensed combined balance sheet reflects expenses
expected to be incurred by BMC and Boole in connection with the merger; however,
the unaudited pro forma condensed combined statements of income do not reflect
such expenses. The unaudited pro forma condensed combined financial statements
do not reflect the effect of cost savings and revenue enhancements, if any,
which may be realized after consummation of the merger.
BMC and Boole employ accounting policies that are in accordance with
generally accepted accounting principles in the United States. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Ultimate results
could differ from those estimates. In the opinion of management, the unaudited
pro forma condensed combined financial statements include all adjustments
necessary to present fairly the financial position of BMC and Boole and the
results of operations of BMC and Boole.
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NOTE 2. PRO FORMA ADJUSTMENTS
The Company expects to incur charges to operations of approximately $38.3
million (or $32.5 million net of income taxes) for transaction fees, costs
incident to the merger and certain identified restructuring charges. These
expenses are reflected in the unaudited pro forma condensed combined balance
sheet as of December 31, 1998, consistent with SEC reporting rules. These
expenses are not reflected in the unaudited pro forma condensed combined
statements of income. No adjustments have been reflected in the unaudited pro
forma condensed combined financial statements for the benefits that BMC
management anticipates to result from the merger. BMC expects
to restructure the combined operations, resulting in additional nonrecurring
charges, which could be significant. The estimate of restructuring charges
is based on the information currently available to management.
The unaudited pro forma condensed combined financial statements reflect the
following pro forma adjustments:
(A) Other current liabilities -- reflects the accrual of the estimated
transaction fees, costs incident to the merger and certain identified
restructuring charges.
(B) Stockholders' equity -- Stockholders' equity reflects the issuance of
approximately 19,117,440 shares of BMC common stock in exchange for all
outstanding shares of Boole common stock at March 30, 1999. Therefore,
the historical combined common stock, paid-in capital and retained
earnings balances have been adjusted to reflect the number of shares
assumed to be issued, the differences in par value per common share of
BMC and Boole and the cancellation of Boole treasury stock. Retained
earnings has also been adjusted to reflect the accrual of the estimated
transaction fees, costs incident to the merger and certain identified
frestructuring charges.
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(c) Exhibits
The following Exhibits are filed as part of this report:
2.1 Agreement and Plan of Reorganization, dated as of
October 31, 1998, between the Company and Boole
(included as Annex A of the Proxy
Statement/Prospectus contained in the Company's
Registration Statement)
23.1 Consent of Ernst & Young LLP
23.2 Consent of PricewaterhouseCoopers LLP
99.1 Press release, dated March 30, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BMC SOFTWARE, INC.
Date: June 14, 1999 By: /s/ Kevin M. Klausmeyer
-------------------------------------
Name: Kevin M. Klausmeyer
Title: Vice President, Controller
and Chief Accounting Officer
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EXHIBIT INDEX
Exhibit
Number Description
2.1 Agreement and Plan of Reorganization, dated as of October
31, 1998, between the Company and Boole (included as Annex
A of the Proxy Statement/Prospectus contained in the
Company's Registration Statement)
23.1 Consent of Ernst & Young LLP
23.2 Consent of PricewaterhouseCoopers LLP
99.1 Press release, dated March 30, 1999.