BMC Software (NYSE:BMC) today announced that total revenue for the
first quarter of fiscal 2009 was $438 million, a 14 percent
year-over-year increase. License revenue in the first quarter was
$149 million, an increase of 19 percent compared to the first
quarter of fiscal 2008. Professional services revenue increased by
43 percent. From a geographic perspective, total revenue and
license revenue grew in all major regions in the first fiscal
quarter, with particular strength noted outside of the United
States. On a GAAP basis, net earnings were $1 million, or $0.01 per
diluted share. First quarter GAAP net earnings were impacted by
anticipated charges associated with the acquisition of BladeLogic,
including a one-time $50 million in-process research and
development charge and incremental intangible asset amortization.
The Company�s non-GAAP net earnings for the fiscal first quarter,
which exclude special items, were $82 million, or $0.43 per diluted
share, representing a 19 percent increase in non-GAAP diluted
earnings per share over the year-ago quarter. Included in the
financial tables is a complete reconciliation between non-GAAP and
GAAP results. "I am very pleased with our first quarter results.
BMC continued the strong momentum we had last year and started off
fiscal 2009 with an impressive first quarter," said Bob Beauchamp,
BMC�s president and chief executive officer. "Our�Business Service
Management strategy took an important step forward, as we completed
the acquisition of BladeLogic. The combination�creates the
industry�s new leader in IT Service Automation � the fastest
growing part of BSM � and�further strengthens our management team.
At the same time, we maintained our sales momentum, our sharp
operational focus and our operating discipline, delivering another
quarter of strong business and financial performance." In addition,
the Company posted the following key results: Bookings on a
trailing 12-month annualized basis grew for the tenth consecutive
quarter. Non-GAAP operating margin increased from 23 percent in the
year-ago quarter to 25 percent in the first fiscal quarter. The
Company continues to maintain a strong balance sheet, ending the
fiscal first quarter with a record total of $1.82 billion in
deferred revenue, an increase of $42 million sequentially. The
Company also ended the quarter with $554 million in deferred
license revenue and $1.07 billion in cash and investments. During
the first fiscal quarter, the Company continued its stock buy-back
program, spending $100 million to repurchase 2.6 million
outstanding shares. As of June 30, 2008, the Company has $575
million remaining under the existing share repurchase program. "Our
financial results in terms of increased bookings, revenue, non-GAAP
operating margin, and non-GAAP diluted EPS reflect the strategic
decisions that we�ve made and continue to make to achieve both our
market leadership and operational excellence," said Steve Solcher,
BMC�s chief financial officer. "Our focus during fiscal 2009
continues to be on three key initiatives: accelerating the top-line
growth of our Enterprise Service Management unit; optimizing the
profitability and cash flow of our Mainframe Service
Management�unit; and maintaining our operating discipline to
achieve�greater business process efficiencies and support long-term
growth." Fiscal 2009 Expectations The Company affirms its
expectations for fiscal 2009. The Company expects non-GAAP diluted
net earnings per share in the range of $2.10 to $2.20 per share,
assuming a seasonal pattern similar to prior years. This range also
assumes an effective tax rate of 30 percent and excludes an
estimated 84 cents of special items including expenses related to
the amortization of acquired technology and intangibles, in-process
research and development associated with our acquisition of
BladeLogic, stock-based compensation and restructuring activity.
The assumptions underlying this full year fiscal 2009 estimate
include: Total bookings and total revenue growth in the low double
digits A license bookings ratable rate slightly higher than last
year A continued improvement in non-GAAP operating margin Dilution
due to the BladeLogic acquisition, including the write down of
deferred revenue and retention and integration costs Other income
that reflects the current interest rate environment The Company
expects full year fiscal 2009 cash flow from operations between
$620 million and $670 million, seasonally skewed to the second half
of the fiscal year. Conference Call A conference call to discuss
first quarter fiscal 2009 results is scheduled for today, July 24,
2008 at 4:00 pm Central Time. Those interested in participating may
call (913) 312-0643 and use the pass code BMC. To access a replay
of the conference call, that will be available for one week, dial
(719) 457-0820 and use the pass code BMC. A live web cast of the
conference call will be available on the Company's website at
www.bmc.com/investors. A replay of the web cast will be available
within 24 hours and archived on the website. Use of Non-GAAP
Financial Measures This press release and the accompanying tables
include the following non-GAAP financial measures: (a) non-GAAP
operating expenses, (b) non-GAAP operating income, (c) non-GAAP
operating margin, (d) non-GAAP net earnings and (e) non-GAAP
diluted net earnings per share. Each of these financial measures
excludes the impact of certain items and therefore has not been
calculated in accordance with U.S. generally accepted accounting
principles, or GAAP. Each of these non-GAAP financial measures
excludes restructuring charges, amortization of intangible assets,
share-based compensation expenses and charges related to in-process
research and development from acquisitions. Each of the adjustments
is described in more detail below. This press release also contains
a reconciliation of each of these non-GAAP measures to its most
comparable GAAP financial measure. We believe that these non-GAAP
financial measures provide meaningful supplemental information
regarding our operating results because they exclude amounts that
BMC management and the Board of Directors do not consider part of
operating results when assessing the performance of the
organization and measuring the results of the Company�s
performance. In addition, we have historically reported similar
non-GAAP financial measures. We believe that inclusion of these
non-GAAP financial measures provides consistency and comparability
with past reports of financial results. BMC Management and the
Board of Directors use these non-GAAP financial measures to
evaluate the Company�s performance and for forecasting purposes, as
well as the allocation of future capital investments, and they are
key variables in determining management incentive compensation.
Accordingly, we believe these non-GAAP financial measures are
useful to investors in allowing for greater transparency of
supplemental information used by management in its financial and
operational decision-making. While we believe that these non-GAAP
financial measures provide useful supplemental information, there
are limitations associated with the use of these non-GAAP financial
measures. These non-GAAP financial measures are not prepared in
accordance with GAAP, do not reflect a comprehensive system of
accounting and may not be completely comparable to similarly titled
measures of other companies due to potential differences in the
exact method of calculation between companies. Items such as
restructuring charges, amortization of intangible assets,
in-process research and development, and share-based compensation
expenses that are excluded from our non-GAAP financial measures can
have a material impact on net earnings. As a result, these non-GAAP
financial measures have limitations and should not be considered in
isolation from, or as a substitute for, net earnings, cash flow
from operations or other measures of performance prepared in
accordance with GAAP. We compensate for these limitations by using
these non-GAAP financial measures as supplements to GAAP financial
measures and by reviewing the reconciliations of the non-GAAP
financial measures to their most comparable GAAP financial measure.
Investors are encouraged to review the reconciliations of these
non-GAAP financial measures to their most comparable GAAP financial
measures that are included elsewhere in this press release. The
following discusses the reconciliations of our non-GAAP financial
measures to the most comparable GAAP financial measures: �
Restructuring charges. Our non-GAAP financial measures exclude exit
costs and related charges, primarily consisting of severance costs
and lease abandonment costs, and any subsequent changes in
estimates related to exit activities as they relate to our
restructurings, which involved significant layoffs. Management and
the Board of Directors believe it is useful in evaluating the
Company�s and its management teams� and business units� performance
during a particular time period to review the supplemental non-GAAP
financial measures, which exclude restructuring costs, because our
operational managers are evaluated based on the operating expenses
exclusive of restructuring charges and including the restructuring
charges would hinder investors� ability to evaluate the performance
of our management in the manner in which the Company�s management
evaluates performance. Accordingly, management and the Board of
Directors do not consider these costs for purposes of evaluating
the performance of the business, and they exclude such costs when
evaluating the performance of the Company, its business units and
its management teams. Additionally, management uses the non-GAAP
measures to assist in its determinations regarding the allocation
of resources, such as capital investment, among the Company�s
business units and as part of its forecasting and budgeting. �
Amortization of intangible assets. Our non-GAAP financial measures
exclude costs associated with the amortization of intangible
assets. Management and the Board of Directors believe it is useful
in evaluating the Company�s and its management teams� and business
units� performance during a particular time period to review the
supplemental non-GAAP financial measures, which exclude
amortization of intangible assets, because these costs are fixed at
the time of an acquisition, are then amortized over a period of
several years after the acquisition and generally cannot be changed
or influenced by management after the acquisition. Accordingly,
management and the Board of Directors do not consider these costs
for purposes of evaluating the performance of the business during
the applicable time period after the acquisition, and they exclude
such costs when evaluating the performance of the Company, its
business units and its management teams and when making decisions
to allocate resources among the Company�s business units. �
Share-based compensation expenses. Our non-GAAP financial measures
exclude the compensation expenses required to be recorded by
Statement of Financial Accounting Standards No 123 (Revised 2004),
�Share-based Payment� (SFAS 123(R)) for equity awards to employees
and directors. Management and the Board of Directors believe it is
useful in evaluating the Company�s and its management teams� and
business units� performance during a particular time period to
review the supplemental non-GAAP financial measures, which excludes
expenses related to share-based compensation, because these costs
are generally fixed at the time an award is granted, are then
expensed over several years and generally cannot be changed or
influenced by management once granted. Accordingly, our operational
managers are evaluated based on the operating expenses exclusive of
share-based compensation expenses and including such charges would
hamper investors� ability to evaluate the performance of our
management in the manner in which the Company�s management
evaluates performance. Additionally, we believe it is useful in
measuring the Company�s performance to exclude expenses related to
FAS 123(R) equity expense because it enables comparability with
prior period information. Accordingly, management and the Board of
Directors do not consider these costs for purposes of evaluating
the performance of the business, and they exclude such costs when
evaluating the performance of the Company, its business units and
its management teams and when making decisions to allocate
resources among the Company�s business units. � In-process research
and development charges. Our non-GAAP financial measures exclude
in-process research and development charges. These amounts
represent the estimated fair value of core research and development
projects that were incomplete as of the respective dates of
acquisition and had neither reached technological feasibility nor
been determined to have alternative future uses pending achievement
of technological feasibility upon further development. Such amounts
are required to be expensed by us as of the date of the respective
acquisition. Because the costs are fixed at the time of acquisition
and are not subject to management influence, management does not
consider the costs in evaluating the performance of the Company and
its business units nor when it allocates resources among the
business units. We believe excluding these items is useful to
investors because it facilitates comparisons to our historical
operating results without being affected by our acquisition history
and the results of other companies in our industry, which have
their own unique acquisition histories. About BMC Software BMC
Software is a leading global provider of enterprise management
solutions that empower companies to automate their IT and prove its
business value. Delivering Business Service Management and Service
Automation, BMC solutions span enterprise systems, applications,
databases and service management. For the four fiscal quarters
ended June 30, 2008, BMC revenue was approximately $1.78 billion.
For more information, visit www.bmc.com. This news release and
other related public statements we make contain 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 forecasts and estimates 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) the possibility
that general economic conditions or uncertainty cause information
technology spending to be reduced or purchasing decisions to be
delayed; 2) competition in our markets can result in pricing
pressures and competition for new customers as well as potential
displacements of our existing customers; 3) the adoption rate for
BSM may be slower than we expect and customers may not increase
their purchases of our products if they do not adopt a BSM
strategy; 4) a significant percentage of our license transactions
are completed during the final weeks and days of each quarter,
which creates a level of uncertainty as to whether revenue, license
bookings and/or earnings will have met expectations until after the
end of the quarter; 5) our operating costs and expenses are
relatively fixed over the short term, so if we have a shortfall in
revenue in any given quarter, our ability to off-set revenue
shortfalls in the near-term is limited; 6) our expectations for
revenue and earnings are based on an assumption of the percentage
of license revenue which will be recognized upfront versus
deferred; if our actual results do not match our assumption, our
recognized revenue and resultant earnings could fall short of
expectations; 7) our effective tax rate is subject to quarterly
fluctuation and any change in such tax rate could affect our
earnings; and 8) the additional risks and important factors
described in BMC Software's Annual Report on Form 10-K and
quarterly reports on Form 10-Q filed with the U.S. Securities and
Exchange Commission. These filings are available on our website at
www.bmc.com/investors. We undertake no obligation to update
information contained in this release. BMC, BMC Software, and the
BMC Software logo are the exclusive properties of BMC Software
Inc., are registered with the U.S. Patent and Trademark Office, and
may be registered or pending registration in other countries. All
other BMC trademarks, service marks, and logos may be registered or
pending registration in the U.S. or in other countries. All other
trademarks or registered trademarks are the property of their
respective owners. � 2008 BMC Software, Inc. BMC SOFTWARE, INC.
STATEMENTS OF OPERATIONS � (Unaudited) � � � Quarter Ended June 30,
Incr/(Decr) Percentage 2007 2008 Change � � (In millions, except
per share data) � � Revenue: License $ 125.9 $ 149.4 18.7 %
Maintenance 235.5 254.3 8.0 % Professional services � 23.6 � 33.8
43.2 % Total revenue � 385.0 � 437.5 13.6 % � Cost of license
revenue 23.2 27.6 19.0 % Cost of maintenance revenue 41.9 40.5 (3.3
)% Cost of professional services revenue 27.5 35.2 28.0 % Selling
and marketing expenses 127.9 140.4 9.8 % Research and development
expenses 45.6 61.8 35.5 % General and administrative expenses 50.7
53.5 5.5 % Amortization of intangible assets 3.0 8.5 183.3 %
In-process research and development 2.2 50.3 2186.4 % Severance,
exit costs and related charges � 1.8 � 6.4 255.6 % Total operating
expenses � 323.8 � 424.2 31.0 % Operating income 61.2 13.3 (78.3 )%
Other income, net � 20.6 � 8.1 (60.7 )% Earnings before income
taxes 81.8 21.4 (73.8 )% Provision for income taxes � 26.6 � 20.2
(24.1 )% Net earnings $ 55.2 $ 1.2 (97.8 )% � Diluted earnings per
share $ 0.27 $ 0.01 (96.3 )% � Shares used in computing diluted
earnings per share � 204.8 � 193.7 (5.4 )% BMC SOFTWARE, INC.
BALANCE SHEETS � � � � � � � (Unaudited) (Audited) (Unaudited) June
30, September 30, December 31, March 31, June 30, 2007 2007 2007
2008 2008 � � � Current assets: Cash and cash equivalents $ 1,141.6
$ 1,062.5 $ 1,013.2 $ 1,288.3 $ 986.5 (a) Investments 238.8 275.2
244.4 62.2 - (a) Trade accounts receivable, net 129.1 152.7 211.6
208.0 162.6 Trade finance receivables, net 102.3 65.5 75.0 88.8
82.7 Other current assets � 178.1 � 162.4 � 162.4 � 155.3 � 181.1
Total current assets 1,789.9 1,718.3 1,706.6 1,802.6 1,412.9 �
Property and equipment, net 93.8 92.6 97.7 99.8 100.3 Software
development costs, net 106.9 112.1 113.2 113.4 111.2 Long-term
investments 186.3 141.3 107.9 124.7 87.0 (a) Long-term trade
finance receivables, net 91.2 51.0 62.8 56.4 54.5 Goodwill and
intangible assets, net 749.7 810.3 826.7 803.3 1,588.7 Other
long-term assets � 224.2 � 221.9 � 233.2 � 345.3 � 256.0 � Total
assets $ 3,242.0 $ 3,147.5 $ 3,148.1 $ 3,345.5 $ 3,610.6 � Current
liabilities: Trade accounts payable 24.4 30.6 26.6 43.8 45.1
Finance payables 3.2 9.9 26.3 4.3 9.1 Accrued liabilities 245.2
260.1 270.0 313.7 247.1 Deferred revenue � 900.3 � 864.5 � 867.7 �
926.8 � 975.0 Total current liabilities 1,173.1 1,165.1 1,190.6
1,288.6 1,276.3 � Long-term deferred revenue 881.9 837.5 827.0
852.6 846.5 Long-term debt 9.2 7.1 8.9 9.2 306.4 Other long-term
liabilities � 137.7 � 156.6 � 166.5 � 200.6 � 204.9 Total long-term
liabilities 1,028.8 1,001.2 1,002.4 1,062.4 1,357.8 � Total
stockholders' equity � 1,040.1 � 981.2 � 955.1 � 994.5 � 976.5 �
Total liabilities and stockholders' equity $ 3,242.0 $ 3,147.5 $
3,148.1 $ 3,345.5 $ 3,610.6 � � � � � � � � � � � � � � (a) Total
cash and investments $ 1,566.7 � $ 1,479.0 � $ 1,365.5 � $ 1,475.2
� $ 1,073.5 BMC SOFTWARE, INC. STATEMENTS OF CASH FLOWS �
(Unaudited) � � Quarter Ended June 30, 2007 2008 � � (In millions)
Cash flows from operating activities: Net earnings $ 55.2 $ 1.2
Adjustments to reconcile net earnings to net cash Provided by
operating activities: Depreciation and amortization 35.6 44.8
Share-based compensation expense 15.2 22.4 In-process research and
development 2.2 50.3 Gain on sale of investments (1.0 ) (1.2 )
Change in operating assets and liabilities, net of acquisitions:
Trade finance receivables 60.9 8.0 Finance payables (35.8 ) 4.8
Deferred revenue 51.5 34.4 Other operating assets and liabilities �
(18.8 ) � (13.4 ) Net cash provided by operating activities � 165.0
� � 151.3 � � Cash flows from investing activities: Cash paid for
acquisitions, net of cash acquired (38.6 ) (784.1 ) Purchases of
investments (105.5 ) (2.2 ) Proceeds from maturities /sales of
investments 303.3 101.2 Purchases of property and equipment (6.9 )
(8.3 ) Capitalization of software development costs (18.0 ) (11.7 )
Other investing activities � 0.4 � � (0.1 ) Net cash provided by
(used in) investing activities � 134.7 � � (705.2 ) � Cash flows
from financing activities: Payments on debt and capital leases (1.6
) (2.6 ) Proceeds from stock options exercised and other 31.6 50.4
Proceeds from issuance of long-term debt, net of debt issuance
costs - 295.6 Excess tax benefit from share-based compensation 7.3
19.9 Treasury stock acquired (83.4 ) (100.0 ) Repurchases of stock
to satisfy employee tax withholding obligations � - � � (15.8 ) Net
cash provided by (used in) financing activities � (46.1 ) � 247.5 �
� Effect of exchange rate changes on cash � 4.5 � � 4.6 � Net
change in cash and cash equivalents 258.1 (301.8 ) Cash and cash
equivalents, beginning of period � 883.5 � � 1,288.3 � Cash and
cash equivalents, end of period $ 1,141.6 � $ 986.5 � BMC SOFTWARE,
INC. Table of Reconciliation from GAAP Operating Expenses to
Non-GAAP Operating Expenses (In millions) (Unaudited) � � � Quarter
Ended June 30, 2007 2008 � GAAP operating expenses $ 323.8 � $
424.2 � � Severance, exit costs and related charges (1.8 ) (6.4 ) �
Amortization of intangible assets (8.7 ) (18.5 ) � Share-based
compensation (15.2 ) (22.4 ) � In-process research and development
(2.2 ) (50.3 ) � � Non-GAAP operating expenses $ 295.9 � $ 326.6 �
� BMC SOFTWARE, INC. Table of Reconciliation from GAAP Operating
Income to Non-GAAP Operating Income (In millions) (Unaudited) � � �
Quarter Ended June 30, 2007 2008 � GAAP operating income $ 61.2 $
13.3 � Severance, exit costs and related charges 1.8 6.4 �
Amortization of intangible assets 8.7 18.5 � Share-based
compensation 15.2 22.4 � In-process research and development 2.2
50.3 � � Non-GAAP operating income $ 89.1 $ 110.9 � BMC SOFTWARE,
INC. Table of Reconciliation from GAAP Operating Margin to Non-GAAP
Operating Margin (In millions) (Unaudited) � � � � � � � Quarter
Ended June 30, Quarter Ended June 30, Quarter Ended June 30, 2007
2008 2007 2008 2007 2008 � GAAP revenue: $ 385.0 $ 437.5 GAAP
operating income: $ 61.2 $ 13.3 GAAP operating margin: 16 % 3 % �
Severance, exit costs and related charges 1.8 6.4 � Amortization of
intangible assets 8.7 18.5 � Share-based compensation 15.2 22.4 �
In-process research and development 2.2 50.3 � � � � � � GAAP
revenue: $ 385.0 $ 437.5 Non-GAAP operating income: $ 89.1 $ 110.9
Non-GAAP operating margin: 23 % 25 % BMC SOFTWARE, INC. Table of
Reconciliation from GAAP Net Earnings to Non-GAAP Net Earnings (In
millions) (Unaudited) � � � Quarter Ended June 30, 2007 2008 � GAAP
net earnings $ 55.2 � $ 1.2 � � Severance, exit costs and related
charges 1.8 6.4 � Amortization of intangible assets 8.7 18.5 �
Share-based compensation 15.2 22.4 � In-process research and
development 2.2 50.3 � � Subtotal pretax reconciling items � 27.9 �
� 97.6 � � Tax effect of reconciling items � (8.6 ) � (16.4 )
Non-GAAP net earnings $ 74.5 � $ 82.4 � � BMC SOFTWARE, INC. Table
of Reconciliation from GAAP Earnings Per Share to Non-GAAP Earnings
Per Share (Unaudited) � � � Quarter Ended June 30, 2007 2008 � GAAP
diluted earnings per share $ 0.27 � $ 0.01 � � Severance, exit
costs and related charges 0.01 0.03 � Amortization of intangible
assets 0.04 0.10 � Share-based compensation 0.07 0.12 � In-process
research and development 0.01 0.26 � � Subtotal pretax reconciling
items $ 0.14 � $ 0.50 � � Tax effect of reconciling items � (0.04 )
� (0.08 ) Non-GAAP diluted net earnings per share $ 0.36 � $ 0.43 �
� Shares used in computing diluted earnings per share (in millions)
204.8 193.7
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