Company Continues Strong Growth across Major Product Lines;
4th Quarter Highlighted by Execution of
Strategic Acquisitions
BMC Software Inc. (Nasdaq:BMCS.O) today announced financial results
for its fourth quarter of fiscal 1999, ended March 31, 1999. Growth
was strong across all geographies and lines of business. Very strong
growth in both mainframe and distributed license systems revenues as
well as strong growth in maintenance revenues yielded the seventh
consecutive record breaking revenue quarter. The company also closed
its acquisition of Boole & Babbage Inc. in the quarter, whose
financial results are included in the financial results presented in
this press release.
Total revenues for the fourth quarter of fiscal 1999 increased 37
percent to $386.5 million from $282.8 million in the same quarter of
fiscal 1998. In the quarter, net earnings and diluted earnings per
share, excluding nonrecurring costs and benefits in the quarter,
increased 41 percent to $115.7 million and 42 percent to $.47,
respectively, compared to net earnings of $81.9 million and diluted
earnings per share of $.33 in the year-ago quarter, which excludes
acquired research and development charges. Nonrecurring costs incurred
in the quarter comprised a charge associated with BMC Software's
acquisition of Boole & Babbage Inc. and the cumulative effect of BMC
Software's early adoption of SFAS No. 133 (accounting for hedging
related expenses). BMC Software received a one-time income tax benefit
in the quarter. The amount of these charges and benefit are included
in the attached quarterly financial statements. Net earnings and
diluted earnings per share reflecting these costs and benefit were
$100.4 million and $.40 for the fourth quarter of fiscal 1999, as
compared to $75.7 million and $.31 in fiscal 1998, respectively.
Total revenues in fiscal 1999 were $1,303.9 million, a 32 percent
increase from total revenues of $985.2 million in fiscal 1998. Fiscal
1999 earnings and diluted earnings per share, excluding one-time
charges for acquired research and development in the year and the
nonrecurring quarterly costs and benefit described above, were $389.3
million and $1.57, respectively. This represented growth of 48 percent
and 45 percent, respectively, compared to earnings and diluted
earnings per share in fiscal 1998 of $263.7 million and $1.08,
excluding charges for acquired research and development in fiscal
1998. Net earnings and diluted earnings per share reflecting the
quarterly nonrecurring costs and benefits discussed above and the
charges in both years for acquired research and development were
$362.8 million and $1.46 for the 1999 fiscal year, as compared to
$188.5 million and $.77 in fiscal 1998.
"Fiscal 1999 was our most successful so far as we achieved $1
billion in annual revenues through internal growth, successfully
integrated BGS Systems and, most importantly, sharpened our focus on
our customers. We addressed critical customer needs by expanding our
cross-platform application service assurance vision while growing our
business in all geographies and across all of our lines of business. I
am most pleased at the success we achieved this year from the product
families that we inherited with BGS Systems. We took BGS Systems,
which historically had a slow growth rate, set higher objectives for
that business and even exceeded those objectives," said Max Watson,
BMC Software chairman, president and CEO. "I believe this bodes well
for our success in fiscal 2000 as we integrate Boole & Babbage and New
Dimension Software. I strongly believe we have the necessary
components for delivering the winning cross-platform systems
management products that our customers require. We will put our
energies into articulating our vision to a broader audience as we
evolve into a more marketing-oriented company."
Total license revenue growth was 41 percent for the fourth
quarter of fiscal 1999, with North American license revenues growing
40 percent and International license revenues growing 41 percent.
Maintenance revenues increased 28 percent from the fourth quarter of
fiscal 1998, in part because of customers' increasing implementation
of the company's distributed systems products and, to a lesser extent,
the company's growing services business. Total revenues in the
company's core mainframe IMS and DB2 database tools and utilities
increased 44 percent over the fourth quarter of fiscal 1998. Total
mainframe revenues increased 34 percent over the fourth quarter of
fiscal 1998 and increased 28 percent for the fiscal year. Total
distributed systems revenues of $130.8 million in the fourth quarter
represent an increase of 43 percent over the fourth quarter of fiscal
1998. Total distributed systems revenues of $390.4 million represent
an increase of 45 percent for the fiscal year.
"We feel good about our future because our customers continue to
expand their use of the heterogeneous technologies and platforms we
support, from the mainframe to the Internet," Watson added. "This
tells us enterprises will continue to require the solutions we deliver
-- those that assure business availability."
Annual Highlights
-- Exceeded $1 billion in annual revenues before inclusion of Boole
& Babbage and exceeded $1.3 billion including Boole & Babbage;
-- Successfully integrated BGS Systems Inc., BMC Software's largest
acquisition when acquired in March 1998;
-- Launched "application service assurance" (ASA) as our strategic
direction. ASA is the unifying theme for BMC Software's product
initiatives, which enable IT organizations to deliver optimal
service levels by ensuring that business critical applications
are available, perform optimally, and can be quickly and
completely recovered at any point in time;
-- Expanded the foundation for our ASA solution suites and
reaffirmed our commitment to delivering the absolute best
cross-platform systems management products by:
-- Acquiring Boole & Babbage, Inc. in March 1999; and
-- Executing the acquisition of New Dimension Software Ltd.,
which closed in April 1999.
-- Established strategic development and/or distribution
partnerships with Compaq Computer Corporation, Microsoft
Corporation, Sun Microsystems Inc. and other key enterprise
technology players;
-- Reached tenth anniversary as a publicly traded company; added to
the S&P 500; named as one of "Fortune Magazine's" "100 Best
Companies To Work For."
About BMC Software
BMC Software is the world's leading provider of management
solutions that ensure the availability, performance, and recovery of
companies' business-critical applications. We call this "application
service assurance," and it means that the applications companies and
their customers rely on most stay up and running, around the clock.
For more than 18 years, the world's leading companies have relied on
BMC Software.
BMC Software is among the world's largest independent software
vendors, a Forbes 500 company and a member of the S&P 500, with fiscal
year 1999 revenues exceeding $1.3 billion. The company is
headquartered in Houston, Texas, with offices worldwide. For more
information, visit our Web site at bmc.com, or please call
800/841-2031 or 713/918-8800.
This news release contains both historical information and
forward-looking information. For example, statements in this
discussion regarding BMC Software's future financial and operating
results, the development of and anticipated markets for BMC Software's
products, BMC Software's operating strategies, anticipated acquisition
benefits and other statements that are not statements of historical
fact are forward looking statements. Actual results could differ
materially from any expectation, estimate or projection conveyed by
these statements and there can be no assurance that any such
expectation, estimate or projection will be met. Numerous important
factors, risks and uncertainties affect BMC Software's operating
results and could cause actual results to differ from the results
implied by these or any other forward looking statements. 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)
competition for BMC Software's products is increasing for both the
distributed systems and the mainframe database utility products; 3)
BMC Software has completed two significant acquisitions in the last
two months and may experience difficulties integrating these companies
into BMC Software; expectations for these additional acquired
operations may not be met for many reasons, including the high degree
of difficulty of integrating different software products and
technologies and the general risks associated with mergers of high
technology companies, such as the potential loss of key personnel and
cultural conflicts; 4) international results can be volatile; 5) BMC
Software continues to increasingly depend on large enterprise license
transactions as an integral part of its core mainframe and distributed
systems businesses; 6) the uncertainties of whether new software
products and product strategies will be successful; and 7) the
additional risks and important factors described in the companies'
Annual Report to Stockholders on Forms 10-K and 10-Q and other filings
with the SEC.
Note to interested parties: BMC Software has scheduled a
conference call for 4:00 p.m. CST today to discuss the fourth quarter
and fiscal year results. Interested parties may participate by calling
847/619-6057. You may also access the conference call over the
Internet through Vcall at vcall.com. To listen to the live
call, please go to the web site at least 15 minutes early to register,
download and install any necessary audio software.
BMC Software Inc. is an Equal Opportunity Employer. BMC Software,
the BMC Software logo, Assuring Business Availability, BGS Systems,
Boole & Babbage and New Dimension Software are registered trademarks
or trademarks of BMC Software, Inc. in the USA and in other select
countries. Other third-party logos and product/trade names are
registered trademarks or trademarks of their respective companies.
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*T
BMC SOFTWARE INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
March 31,
---------------------
Fiscal Fiscal
1998 1999 % Increase
---- ---- -----------
(Unaudited)
(In millions, except
per share data)
Revenues:
Licenses $196.2 $275.7 41%
Maintenance 86.6 110.8 28%
------- -------
Total revenues 282.8 386.5 expenses 89.1 126.8 42%
Research and development
expenses 31.1 47.6 53%
Cost of maintenance services
and product licenses 37.4 45.7 22%
General and administrative
expenses 21.1 26.6 26%
Merger related costs 7.7 38.3 397%
------- -------
Operating income 96.4 101.5 5%
Other income 11.4 16.9 48%
------- -------
Earnings before income
taxes 107.8 118.4 10%
Income taxes 32.1 16.5 (49)%
------- -------
Net earnings before
cumulative effect of
accounting change 75.7 101.9 35%
Cumulative effect of accounting
change -- (1.5) N/A
------- -------
Net earnings $75.7 $100.4 33%
======= =======
Diluted earnings per share $0.31 $0.40 29%
======= =======
Shares used in computing diluted
earnings per share 246.5 248.8 1%
======= =======
Refer to accompanying table
BMC SOFTWARE INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
Fiscal Year Fiscal Year
1998 1999 % Increase
---- ---- (Decrease)
(Unaudited)
(In millions, except
per share data)
Revenues:
Licenses $658.2 $906.9 38%
Maintenance 327.0 397.0 21%
------- --------
Total revenues 985.2 1,303.9 32%
Selling and marketing expenses 317.3 417.7 32%
Research and development
expenses 124.7 168.2 35%
Cost of maintenance services
and product licenses 127.7 152.0 19%
General and administrative
expenses 77.5 95.2 23%
Acquired research and development
costs 65.5 17.3 (74)%
Merger related costs 19.0 38.3 102%
------- --------
Operating income 253.5 415.2 64%
Other income 39.5 62.7 59%
------- --------
Earnings before income taxes 293.0 478.0 63%
Income taxes 104.5 113.7 9%
------- --------
Net earnings before cumulative
effect of accounting change 188.5 364.3 93%
Cumulative effect of accounting
change -- (1.5) N/A
------- --------
Net earnings $188.5 $362.8 92%
======= ========
Diluted earnings per share $0.77 $1.46 90%
------- --------
Shares used in computing diluted
earnings per share 244.5 248.6 2%
======= ========
Refer to accompanying table
BMC SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, March 31,
1998 1999
---- ----
(Unaudited)
(In millions)
ASSETS
Current assets:
Cash and cash equivalents $106.0 $347.9
Investment securities 79.2 106.3
Trade receivables 262.7 359.0
Prepaid expenses and other 85.5 60.2
---- ----
Total current assets 533.4 873.4
Property and equipment, net 173.0 244.4
Software development costs, net 73.8 111.3
Finance receivables 70.5 224.0
Investment securities 587.8 750.4
Deferred charges and other assets 59.6 79.2
---- ----
$1,498.1 $2,282.7
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $20.2 $27.3
Accrued liabilities and other 120.5 216.3
Current portion of deferred revenue 296.3 411.9
----- -----
Total current liabilities 437.0 655.5
Deferred revenue and other 183.4 296.8
----- -----
Total liabilities 620.4 952.3
Stockholders' equity:
Paid-in capital 214.7 184.2
Retained earnings 762.7 1,143.1
Other stockholders' equity (99.7) 3.1
----- -------
Total stockholders' equity 877.7 1,330.4
----- -------
1,498.1 $2,282.7
======= =======
BMC SOFTWARE INC. AND SUBSIDIARIES
COMBINING SCHEDULE OF SELECTED COMPONENTS
Quarter Ended March 31,
(Unaudited)
BMC Software Boole & Babbage Combined Results
1998 1999 1998 1999 1998 1999
---- ---- ---- ---- ---- ----
% % %
Incr. Incr. Incr.
Revenue
License $166.4 $234.4 41% $29.8 $41.3 39% $196.2 $275.7 41%
Maint. 64.3 84.6 32% 22.3 26.2 17% 86.6 110.8 28%
------ ------ ----- ----- ------ ------
Total $230.7 $319.0 38% $52.1 $67.5 30% $282.8 $386.5 37%
====== ====== ===== ===== ====== ======
Total
Revenue
Mainframe $153.1 $211.4 38% $38.4 $44.3 15% $191.5 $255.7 34%
D/S 77.6 107.6 39% 13.7 23.2 69% 91.3 130.8 43%
------ ------ ----- ----- ------ ------
Total $230.7 $319.0 38% $52.1 $67.5 30% $282.8 $386.5 37%
====== ====== ===== ===== ====== ======
License
Revenue
Mainframe $98.5 $146.8 49% $21.1 $25.5 21% $119.6 $172.3 44%
D/S 67.9 87.6 29% 8.7 15.8 82% 76.6 103.4 35%
------ ------ ----- ----- ------ ------
$166.4 $234.4 41% $29.8 $41.3 39% $196.2 $275.7 41%
====== ====== ===== ===== ====== ======
Deferred
Revenue $353.2 $546.9 55% $91.7 $153.2 67% $444.9 $700.1 57%
BMC SOFTWARE INC. AND SUBSIDIARIES
COMBINING SCHEDULE OF SELECTED COMPONENTS |
