BMC Software Announces Fiscal 2007 Second Quarter Results

HOUSTON, November 8, 2006 – BMC Software today announced that fiscal 2007 second quarter net earnings on a GAAP basis were $58 million, or $0.28 per diluted share, compared to $43 million, or $0.19 per diluted share in the second quarter of fiscal 2006.

Non-GAAP net earnings, which exclude special items, were $78 million, or $0.37 per diluted share, compared to $61 million, or $0.27 per diluted share in the year-ago period. Included in the financial tables is a complete reconciliation between GAAP and non-GAAP results.

“BMC Software delivered a strong fiscal 2007 second quarter,” said Bob Beauchamp, the Company’s president and chief executive officer. “Total revenues are up significantly. Our Business Service Management strategy is delivering major growth in license bookings, which is one of several leading indicators that BSM is in the mainstream with customers. BMC continues to build shareholder value through revenue growth, improved operating margin and strong growth in earnings per share. As we move through the second half of our 2007 fiscal year, we remain focused on executing our strategy to further drive value creation, capture the momentum around Business Service Management, optimize the performance of our business units, and further streamline our processes and operations.”

In addition, the Company posted the following key results for the second quarter of fiscal 2007:

• GAAP operating income was $60 million, up 48 percent compared to the year-ago period.
• GAAP operating margin was 15 percent compared to 11 percent in the year-ago period.
• Non-GAAP operating income was $86 million, an increase of 38 percent from the year-ago quarter.
• Non-GAAP operating margin increased 5 percentage points, to 22 percent. The Company’s performance in the first half of the fiscal year positions it to exceed the previously stated full-year operating margin target of 20 percent.
• The balance sheet remained strong, ending the period with $1.6 billion in deferred revenues and $1.4 billion in cash and marketable securities.

In addition, the Company continued its accelerated stock buy-back program, spending $130 million to re-purchase 5.2 million outstanding shares during the quarter. The Company has $529 million remaining under its current $1 billion share repurchase program, which was approved in the third quarter of fiscal 2006.

"As BMC moves into the second half of fiscal 2007, it’s clear that we have significant advantages in the marketplace,” said Steve Solcher, the Company’s chief financial officer. "Our continued financial strength, coupled with customer acceptance of the benefits of BSM and an ongoing opportunity in the mainframe market, positions BMC well for continued growth. A tighter, more focused and more accountable organization will continue to power greater operating efficiencies. We are moving forward with our share repurchase program while maintaining a strong balance sheet.

Fiscal 2007 Guidance
With the Company’s strong performance in the second quarter, it is raising its non-GAAP earnings per share guidance for the year. BMC now expects non-GAAP EPS will range between $1.40 and $1.48 for fiscal 2007, using an estimated tax rate of 29 percent. Non-GAAP EPS excludes an estimated $0.45 of special items including expenses for amortization of acquired technology and intangibles, stock based compensation and restructuring.

The Company also is raising its revenue and non-GAAP operating margin guidance for fiscal 2007. For fiscal 2007, the Company expects revenue growth in the mid-single digits, and it expects non-GAAP operating margin to exceed 20 percent. The Company reiterates its fiscal 2007 cash flow expectation of between $400 million and $450 million, which includes negative impacts from an estimated $45 million related to the timing of servicing receipts as well as an estimated $30 million in restructuring payments.

For the third quarter of fiscal 2007, BMC expects revenues to be in the range of $390 million to $410 million and non-GAAP EPS to be in the $0.35 to $0.39 range, using an estimated tax rate of 29 percent. Non-GAAP EPS excludes an estimated $0.10 of special items including expenses for amortization of acquired technology and intangibles, stock based compensation and restructuring.

About BMC Software

BMC Software is a leading global provider of enterprise management solutions that empower companies to manage their IT infrastructure from a business perspective. Delivering Business Service Management, BMC solutions span enterprise systems, applications, databases and service management. For the four fiscal quarters ended September 30, 2006, BMC revenue was approximately $1.54 billion. For more information, visit www.bmc.com.

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