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FYI: BMC Software exceeds third quarter financial expectations

  • 28 January, 2004 12:24

<p>Sydney, 28 January 2004 - BMC Software, Inc. [NYSE: BMC] today announced financial results for its fiscal 2004 third quarter ended December 31, 2003.</p>
<p>BMC Software's net earnings excluding special items for the third quarter of fiscal 2004 were US$43.0 million, or US$0.19 per diluted common share, which compares to net earnings excluding special items of US$34.6 million, or US$0.15 per share, in the third quarter of fiscal 2003. This exceeded the current analyst consensus estimate of US$0.17 per share and is at the high end of the US$0.15 to US$0.20 per share range the company provided in October. The fiscal 2004 third quarter net loss on a GAAP basis was US$44.4 million, or a loss of US$0.20 per share, which compares to net earnings of US$12.1 million, or US$0.05 per share, in the third quarter of fiscal 2003. The US$87.4 million difference between third quarter earnings excluding special items and GAAP earnings is US$12.2 million in amortisation of intangibles related to various acquisitions and US$75.2 million in restructuring charges including the related tax effects.</p>
<p>"BMC Software's strong third quarter performance is a testament to our strategic focus and solid execution," said Bob Beauchamp, president and CEO, BMC Software. "From a financial perspective, we met or exceeded all our goals for the quarter, including revenues, earnings per share and cash flow from operations. License bookings, excluding Remedy, grew 23 percent compared to the same quarter last year as we benefited from an improving IT spending environment and solid execution. The Remedy business unit continues to generate strong revenue growth and high operating margins. From a strategic perspective, our Business Service Management strategy continues to gain momentum as customers and partners alike are embracing its value to empower IT organisations to manage their IT elements and services from a business perspective in a consistent, comprehensive and integrated fashion."</p>
<p>Total revenues in the third quarter of fiscal 2004 were US$374.8 million, an increase of 12 percent compared to the second quarter of fiscal 2004. This exceeded the current consensus estimate of US$359 million and the guidance of high single digit sequential growth that the company provided in October. Operating expenses, excluding US$14.5 million of amortisation of intangibles and US$89.6 million related to restructuring efforts, were US$332.1 million, compared to US$313.3 million in the same quarter of fiscal 2003. Total revenues for Remedy in the third quarter were US$69.8 million and expenses were US$45.0 million, excluding US$12.0 million of amortisation of intangibles.</p>
<p>BMC Software maintained its strong financial position with cash flow from operations in the quarter of US$74.3 million. At quarter-end, the cash and marketable securities balance was US$1.06 billion and the total deferred revenue balance was a record US$1.23 billion.</p>
<p>BMC Software continued its stock repurchase program by spending US$30 million to repurchase 1.8 million shares during the third fiscal quarter. Approximately US$357 million remains in this program.</p>
<p>License Bookings
Given the record US$73.7 million net increase in deferred license revenues during the quarter, the company is introducing a new metric called license bookings that reflects the amount of license contracts signed during a given quarter. This new license bookings metric includes both the amount that goes to the income statement and the amount that goes to the deferred license revenue account on the balance sheet. As license bookings measure new contracts that are signed in a given quarter, this metric provides a clear measurement of the company's current sales performance. License bookings can be calculated by adding license revenues to the net change in the deferred license revenue balance, as illustrated below.</p>
<p>Fourth Quarter and Fiscal 2004 Guidance
BMC Software expects mid-single digit total revenue growth in the fourth quarter compared to the third quarter.</p>
<p>The company expects fourth quarter earnings per share excluding special items to be in the US$0.21 to US$0.25 range. Fourth quarter estimates do not include an estimated US$0.05 per share of amortisation of acquired technology and intangibles, excluding the pending Magic Solutions acquisition.</p>
<p>The company expects fiscal 2004 earnings per share excluding special items to be in the US$0.53 to US$0.57 range, which is higher than the company's previous guidance of US$0.48 to US$0.53. Fiscal 2004 estimates do not include an estimated US$0.22 of amortisation of acquired technology and intangibles expense, excluding the pending Magic Solutions acquisition, and US$0.43 related to restructuring charges that occurred in the second and third quarter.</p>
<p>This guidance assumes that the company's proposed acquisition of the Magic Solutions business closes in the next few weeks and the company records partial quarter results assuming high single digit millions in both revenues and expenses for the fourth quarter with no net impact to earnings.</p>
<p>BMC Software is raising its cash flow from operations guidance for fiscal 2004 to be in the US$400 million to US$450 million range, which is higher than the company's previous cash flow guidance of US$340 million to US$390 million range.</p>
<p>Conference call replay
To access a replay of the earnings conference call, which will be available for one week, dial 0011 1 (719) 457-0820 and use the passcode BMC. A live Web cast of the conference call and presentation will be available on the company's Web site at www.bmc.com/investors. A replay of the Web cast will be available within 24 hours and archived on the Web site for 90 days.</p>
<p>For further information, please contact:</p>
<p>Pip Livingstone
BMC Software
(02) 8899 2933
pip_livingstone@bmc.com</p>
<p>Edwina Priest
Porter Novelli Public Relations
(02) 9463 7600
epriest@porternovelli.com.au</p>
<p>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 US$1.3 billion. For more information about BMC Software, visit www.bmc.com.</p>
<p>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," "expect" 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 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) 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) BMC Software's operating costs and expenses are relatively fixed over the short term; 3) increased competition and pricing pressures could adversely affect BMC Software's earnings; 4) growth in BMC Software's mainframe revenues is dependent on demand for significant additional mainframe MIPS capacity; 5) BMC Software's maintenance revenue could decline if maintenance renewal rates decline or if license revenues do not grow; 6) new software products and product strategies may not be timely introduced or successfully adopted; 7) 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; and 8) 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.</p>

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