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BMC Software Reports First Quarter Results - Takes Action to Improve Profitability HOUSTON - (July 28, 2003) - BMC Software, Inc. [NYSE: BMC], today announced financial results for its first quarter fiscal 2004, June 30, 2003. BMC Software's net earnings excluding special items for the first quarter of fiscal 2004 were $6.6 million, or $0.03 per diluted common share, which compares to $0.08 in the first quarter of fiscal 2003. The first quarter fiscal 2004 net loss on a GAAP basis was $6.1 million or a loss of $0.03 per diluted common share, which compares to net earnings of $5.2 million or $0.02 per diluted common share in the first quarter of fiscal 2003. Included in the financial tables is a reconciliation of results excluding special items and GAAP results. "We are taking quick action to improve our execution and financial performance while accelerating investments in strategic growth areas of the company," said Bob Beauchamp, president and CEO, BMC Software. "Although we fully expect the IT spending environment to remain challenging, we are confident that our restructuring actions will allow us to improve our profitability in the second half of our fiscal year." Total revenues in the first fiscal quarter were $309.9 million, an increase of 2 percent compared to the same quarter of fiscal 2003. Total license revenues in the quarter were $107.6 million, a decrease of 21 percent compared to the same quarter of fiscal 2003. Maintenance revenues were $183.5 million, an increase of 23 percent, compared to the same quarter of fiscal 2003. Professional services revenues were $18.8 million, a decrease of 4 percent compared to the same quarter last year. Operating expenses, excluding $15.6 million of amortization of intangibles, were $321.5 million, compared to $295.1 million in the same quarter of fiscal 2003. These results reflect Remedy's operations in the first quarter of fiscal 2004. Total revenues for Remedy in the first quarter were $54.1 million and expenses were $38.7 million, excluding $12.0 million of amortization of intangibles. The deferred license revenue balance at June 30, 2003 was $216.3 million, an increase of $1.0 million compared to a year ago. The total deferred revenue balance was a company record of $1.18 billion, an increase of $135.6 million compared to last year. Cash flow from operations in the quarter was $124.0 million. Cash and marketable securities at June 30, 2003 were $1.06 billion. BMC Software continues to have no debt. BMC Software continued its Board-authorized stock repurchase program that began in April 2000 by spending $60 million to repurchase 3.6 million shares during the first fiscal quarter. Approximately $419 million remains in this program. Restructuring Aimed at Improving Profitability BMC Software is implementing restructuring actions including: workforce reductions, facility closures and office consolidations to improve profitability by aligning costs with the current revenue environment. This restructuring will include reducing approximately 13 percent of the global BMC Software workforce. BMC Software expects the quarterly operating expense rates to decline by $25 to $30 million once the effect of these restructuring savings are fully realized in the March quarter. Second Quarter and Fiscal 2004 Guidance BMC Software expects second quarter revenues to be up sequentially compared to the first quarter and earnings per share excluding special items to be in the $0.04 to $0.06 range. For fiscal 2004, BMC Software is comfortable with the current analyst consensus for earnings per share excluding special items of $0.46. These estimates do not include $0.05 of amortization of acquired technology and intangibles in the second quarter, $0.19 of amortization of acquired technology and intangibles in fiscal 2004, and significant expenses related to the restructuring announced today. Given the complexity, scope and timing of the actions, the precise amount of the restructuring charge is not known at this time. BMC Software is updating its cash flow from operations guidance for the year to reflect the estimated $60 million in cash outlays associated with its restructuring. BMC Software now expects cash flow from operations to be in the range of $340 million to $390 million. The only difference between this guidance and the company's prior guidance of $400 million to $450 million is the cash outlays associated with the restructuring, which includes severance and facility-related expenses. A conference call to discuss first quarter results is scheduled for today at 11:00 a.m. CDT. Those interested in participating may call (719) 457-2641 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 non-GAAP results 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 Business Service Management, BMC Software solutions span enterprise systems, applications, databases and service management. Founded in 1980, BMC Software has offices worldwide and fiscal 2003 revenues of more than $1.3 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" and "expect" 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) uncertainty regarding future economic conditions worldwide may continue to affect the overall demand for software and services and any worsening of significant economies could result in decreased revenues or lower revenue growth rates; 2) 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; 3) BMC Software's operating costs and expenses are relatively fixed over the short term; 4) increased competition and pricing pressures could adversely affect BMC Software's earnings; 5) growth in BMC Software's mainframe revenues is dependent on continued demand for significant additional mainframe MIPS capacity; 6) BMC Software's maintenance revenue could decline if maintenance renewal rates decline or if license revenues do not continue to grow; 7) new software products and product strategies may not be timely introduced or successfully adopted; 8) 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; 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, 2003 and other filings with the SEC. BMC Software undertakes no obligation to update information contained in this release.
Investor Relations Contact: BMC Software, the BMC Software logos, and all other BMC Software product or service names are registered trademarks or trademarks of BMC Software, Inc. © 2003 BMC Software, Inc. All rights reserved. All other trademarks are owned by their respective companies.
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