BMC Software Announces Fiscal 2013 Third Quarter Results

  BMC Software Announces Fiscal 2013 Third Quarter Results

  *Record quarter for maintenance revenue, professional services revenue,
    total revenue and non-GAAP diluted EPS
  *Cloud-related license bookings up 44 percent year-over-year
  *SaaS business grew to approximately 550 active customers; both SaaS
    customers and revenue more than doubled year-over-year
  *Professional services revenue rose 16 percent on a year-over-year basis,
    and non-GAAP gross margin increased by 9 percentage points year-over-year
  *Total revenue for the quarter was $580 million, up 6 percent
    year-over-year
  *Non-GAAP diluted EPS for the quarter was 99 cents, up 6 percent
    year-over-year

Business Wire

HOUSTON -- January 28, 2013

BMC Software (NASDAQ: BMC), the recognized global leader in enterprise IT
management, today announced results for the third quarter of its fiscal 2013.

GAAP net earnings for the third quarter were $106 million, or $0.70 per
diluted share, versus $120 million and $0.71 per diluted share in the third
quarter of fiscal 2012.

Non-GAAP net earnings for the quarter were $151 million, or $0.99 per diluted
share, which reflects a non-GAAP effective tax rate for the quarter of 25
percent. Non-GAAP net earnings for the third quarter of fiscal 2012 were $157
million, or $0.93 per diluted share, which reflects a non-GAAP effective tax
rate of 25 percent. The financial tables include a reconciliation between
non-GAAP and GAAP results.

“BMC Software’s strategy, our target markets, our position in those markets,
and our product and technology leadership continue to present significant
opportunities for our company and our shareholders,” said Bob Beauchamp, BMC’s
chairman and chief executive officer. “Our overall win rate remains high, but
we need to be more consistent and disciplined in how we approach and secure
large, transformational deals, which are a big part of our go-forward
opportunity. In addition, we are scrutinizing the entire company to improve
our operational discipline. This review is currently underway, and it should
position us well as we enter fiscal year 2014.”

The Company posted the following key results for the third quarter of fiscal
2013:

  *Active SaaS customers more than doubled year-over-year to approximately
    550; SaaS revenue also more than doubled year-over-year;
  *Cloud business continues to grow, with cloud-related license bookings up
    44 percent year-over-year;
  *Top 15 MSM deals once again saw an increase in the spend rate, largely due
    to our success in selling more new products to some of our most strategic
    customers;
  *Expanded MSM customer relationships with 209 new product placements, up 31
    percent year-over-year;
  *MSM non-GAAP operating income rose by 2 percent year-over-year; non-GAAP
    operating margin was 62 percent for the quarter; and
  *Professional services revenue rose 16 percent on a year-over-year basis;
    non-GAAP professional services gross margin improved substantially,
    growing by 9 percentage points year-over-year.

During the third quarter, BMC repurchased a total of 14.3 million shares. As
part of the accelerated share repurchase agreement executed in November, the
Company received 13.1 million shares, which is in addition to 1.2 million
shares repurchased for $50 million earlier in the quarter. The current
remaining share repurchase authorization is $700 million.

“This quarter, BMC Software saw lower-than-expected bookings from our MSM and
ESM business units. Two large MSM renewal transactions slipped out of the
quarter. We believe they will close in the fourth quarter, as well as a number
of other key renewals. Even with this slippage, we were pleased that our
continued discipline yielded positive operating results for us,” said Steve
Solcher, BMC’s chief financial officer. “In the ESM business, we also
experienced slipped transactions, which were mainly larger and more
transformational in nature. We did, however, continue to generate double-digit
growth in ESM maintenance revenue, with renewal rates increasing during the
quarter. We saw solid increases in key ESM growth areas, such as cloud and
SaaS, as well as improved performance around the Remedy On–Premise product
line, and we were pleased with the performance of our professional services
business.”

Fiscal 2013 Expectations

For fiscal 2013, BMC expects non-GAAP diluted earnings per share in the range
of $3.35 to $3.45 per share. At the midpoint, this would represent a 5 percent
increase over fiscal 2012.

This range excludes an estimated $1.13 to $1.18 per share for non-GAAP
adjustments, including expenses related to share-based compensation expense;
the amortization of intangible assets; severance, exit costs and related
charges; proxy contest costs; as well as the related tax impacts of these
items.

The Company highlights certain risks, which could impact its ability to
achieve these expectations:

  *Uncertainty surrounding the broader macroeconomic environment, especially
    in Europe;
  *Sales productivity related to the tenure of our ESM sales organization;
    and
  *Uncertainty related to press coverage surrounding our strategic review and
    ongoing press coverage related to activist investor activity.

The current assumptions underlying our full year fiscal 2013 expectations
include:

  *FX impact given today’s rates;
  *Total bookings flat with the prior year, with growth on a constant
    currency basis of low single digits;
  *ESM license bookings decline in the mid to high single digits, and down
    low to mid single digits in constant currency;
  *MSM total bookings decline in the low to mid single digits, and flat to
    down low single digits in constant currency;
  *Revenue growth in the low single digits, with growth on a constant
    currency basis in the low to mid single digits;
  *Non-GAAP operating margin slightly lower than the prior year;
  *Other income at a loss of around $40 million;
  *Weighted shares outstanding down high single to low double digits from the
    prior year; and
  *A non-GAAP tax rate of 25 percent.

BMC expects full year fiscal 2013 cash flow from operations to be between $735
million and $785 million, which at the midpoint represents a 5 percent
decrease over fiscal 2012, including the adverse impact from foreign currency
exchange rates.

Conference Call

A conference call to discuss the fiscal 2013 third quarter is scheduled for
today, January 28, 2013 at 4:00 pm Central Time. Those interested in
participating may call (913) 312-0711 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 or (888) 203-1112 and use the pass code BMC. A live webcast of the
conference call will be available on the Company's website at
investors.bmc.com. A replay of the webcast will be available within 24 hours
and archived on the website.

Use of Non-GAAP Financial Measures

In an effort to provide investors with additional information regarding the
Company’s results as determined by U.S. generally accepted accounting
principles (GAAP), the Company has also disclosed in this press release and
the accompanying tables the following non-GAAP information: (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 earnings per share.
Each of these financial measures excludes the impact of certain items and,
therefore, has not been calculated in accordance with GAAP. These non-GAAP
financial measures exclude share-based compensation expense; the amortization
of intangible assets; severance, exit costs and related charges; proxy contest
costs; as well as the related tax impacts of these items; and certain discrete
tax items. Each of the non-GAAP 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
core operating results when assessing the performance of the organization. In
addition, we have historically reported similar non-GAAP financial measures
and we believe that inclusion of these non-GAAP financial measures provides
consistency and comparability with past reports of financial results.
Accordingly, we believe these non-GAAP financial measures are useful to
investors in allowing for greater transparency of supplemental information
used by management.

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 share-based compensation expense;
the amortization of intangible assets; severance, exit costs and related
charges; proxy contest costs; as well as the related tax impacts of these
items; and certain discrete tax items 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 reconciling the
non-GAAP financial measures to their most comparable GAAP financial measure.
Investors are encouraged to review the reconciliations of the 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:

  *Share-based compensation expense. Our non-GAAP financial measures exclude
    the compensation expenses required to be recorded by GAAP for equity
    awards to employees and directors. Management and the board of directors
    believe it is useful in evaluating corporate performance during a
    particular time period to review the supplemental non-GAAP financial
    measures, excluding 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.
  *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 corporate
    performance during a particular time period to review the supplemental
    non-GAAP financial measures, excluding 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.
  *Severance, exit costs and related charges. Our non-GAAP financial measures
    exclude severance, exit costs and related charges, and any subsequent
    changes in estimates, as they relate to our corporate restructuring and
    exit activities. Management and the board of directors believe it is
    useful in evaluating corporate performance during a particular time period
    to review the supplemental non-GAAP financial measures, excluding
    severance, exit costs and related charges, in order to provide
    comparability and consistency with historical operating results.
  *Proxy contest costs. During the first quarter of fiscal 2013, the Company
    became engaged in a proxy contest initiated by a shareholder of the
    Company. The Company recorded a charge of approximately $6 million for
    unplanned proxy contest expenses during the first quarter of fiscal 2013,
    consisting primarily of outside financial advisory, legal, solicitation
    and consulting fees. During the third quarter of fiscal 2013, we
    renegotiated certain of these fees and recorded a corresponding reduction
    to proxy contest costs. Management and the board of directors believe it
    is useful in evaluating corporate performance during a particular time
    period to review the supplemental non-GAAP financial measures, excluding
    such costs, in order to provide comparability and consistency with
    historical operating results.
  *Provision for income taxes on above pre-tax non-GAAP adjustments. Our
    non-GAAP financial measures exclude the tax impact of the above pre-tax
    non-GAAP adjustments. This amount is calculated using the tax rates of
    each country to which these pre-tax non-GAAP adjustments relate.
    Management excludes the non-GAAP adjustments on a net-of-tax basis in
    evaluating our performance. Therefore, we exclude the tax impact of these
    charges when presenting non-GAAP financial measures.
  *Certain discrete tax items. Our non-GAAP financial measures exclude net
    tax benefits of $6 million for the nine months ended December 31, 2011,
    associated with tax authority settlements related to prior years’ tax
    matters. Management excludes the impact of these items in evaluating our
    performance. Therefore, we exclude these items when presenting non-GAAP
    financial measures.

In this press release we refer to certain bookings information. Bookings
represent the transactional value of new contracts closed and recorded in our
financial statements, including amounts recorded to both revenue and deferred
revenue. We also refer to growth rates for revenue and bookings at constant
currency or adjusting for currency so that the business results can be viewed
without the impact of fluctuations in foreign currency exchange rates, thereby
facilitating period-to-period comparisons of the Company’s business
performance. Generally, when the U.S. dollar either strengthens or weakens
against other currencies, the growth at constant currency rates or adjusting
for currency will be higher or lower than growth reported at actual exchange
rates.

Business runs better when IT runs at its best.

Tens of thousands of IT organizations around the world-- from small and
mid-market businesses to the Global 100 -- rely on BMC Software (NASDAQ: BMC)
to manage their business services and applications across distributed,
mainframe, virtual and cloud environments. BMC helps customers cut costs,
reduce risk and achieve business objectives with the broadest choice of IT
management solutions, includingindustry-leading Business Service Management
and Cloud Management offerings. For the four fiscal quarters ended December
31, 2012, BMC revenue was approximately $2.2 billion. www.bmc.com

This news release and other related public statements we make contain both
historical information and forward-looking statements. Forward-looking
statements can be identified by words such as “believes,” “anticipates,”
“intends,” “expects,” “estimates,” “guidance,” “outlook,” “view” and similar
references to future periods. Examples of forward-looking statements include,
but are not limited to, statements we make regarding our expectations and
guidance for fiscal 2013 non-GAAP diluted earnings per share and cash flow
from operations, including the underlying assumptions, as well as statements
we make regarding our plans, objectives, strategies and expectations for
future operations and results. Forward-looking statements are based on our
current expectations and assumptions regarding our business, the economy and
other future conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Our actual results may differ
materially from those contemplated by the forward-looking statements. We
caution you therefore against relying on any of these forward-looking
statements. They are neither statements of historical fact nor guarantees or
assurances of future performance. Important factors that could cause actual
results to differ materially from those in the forward-looking statements
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 and market entrants utilizing alternative business models can
result in pricing pressures and competition for new customers as well as
potential displacements of our existing customers; 3) our cash flow from
operations could be affected by many factors, including, but not limited to,
lengthening sales cycles, the size and timing of bookings, customer payment
terms, the timing of collections, increased expenses, reduced net earnings and
movement in foreign currency exchange rates; 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 offset revenue shortfalls in the near-term is limited; 6) software
product development is highly technical and inherently complex and delays in
the timing and feasibility of product releases could have a material adverse
effect on expectations and actual results for bookings, revenue, margins and
cash flow from operations; 7) changes to our sales organization, including
personnel, compensation practices and organizational and process changes, may
be disruptive and negatively impact our results of operations; 8) our
expectations for revenue and earnings are based on assumptions of the
percentage of license revenue which will be recognized upfront versus deferred
and the percentage of customer renewals for maintenance contracts; if our
actual results do not match our assumptions, our recognized revenue and
resultant earnings could fall short of expectations; 9) our effective tax rate
is subject to quarterly fluctuation and any change in such tax rate could
affect our earnings; 10) we conduct significant transactions in currencies
other than the United States dollar and changes in the value of major foreign
currencies relative to the U.S. dollar can significantly affect our reported
revenue and operating results; 11) customers may not require, or may delay,
additional capacity upgrades of our software, particularly our mainframe
management software, due to the existence of sufficient hardware capacity, the
uncertain timing of hardware upgrades or other reasons, and the timing of
renewals of existing license agreements may be different than we expect; and
12) 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 http://investors.bmc.com. Any forward-looking statement made by us
in this news release speaks only as of the date on which it is made. Factors
or events that could cause our actual results to differ may emerge from time
to time, and it is not possible for us to predict all of them. We undertake no
obligation to publicly update any forward-looking statement, whether as a
result of new information, future developments or otherwise, except as may be
required by law.

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. © Copyright
2013 BMC Software, Inc.

                                                              
BMC SOFTWARE, INC.

STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)
                                                                   
                                                                   Incr/(Decr)
                                      Quarter Ended December 31,   Percentage
                                      2011            2012         Change
Revenue:
License                               $  225.0        $  232.3     3.2     %
Maintenance                              272.3           288.7     6.0     %
Professional services                   50.9          59.2     16.3    %
Total revenue                           548.2         580.2    5.8     %
                                                                   
Operating expenses:
Cost of license revenue                  38.6            41.1      6.5     %
Cost of maintenance revenue              46.2            51.3      11.0    %
Cost of professional services            52.8            56.3      6.6     %
revenue
Selling and marketing expenses           154.1           175.8     14.1    %
Research and development expenses        38.5            41.9      8.8     %
General and administrative               50.4            56.2      11.5    %
expenses
Amortization of intangible assets       5.8           10.0     72.4    %
Total operating expenses                386.4         432.6    12.0    %
Operating income                         161.8           147.6     (8.8    )%
Other loss, net                         (3.5   )       (10.6 )   202.9   %
Earnings before income taxes             158.3           137.0     (13.5   )%
Provision for income taxes              38.4          30.7     (20.1   )%
Net earnings                          $  119.9       $  106.3    (11.3   )%
                                                                   
Diluted earnings per share            $  0.71        $  0.70     (1.4    )%
                                                                   
Shares used in computing diluted        169.5         152.6    (10.0   )%
earnings per share

                                                              
BMC SOFTWARE, INC.

STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)
                                                                   Incr/(Decr)
                                  Nine Months Ended December 31,   Percentage
                                  2011              2012           Change
Revenue:
License                           $  644.2          $  613.1       (4.8    )%
Maintenance                          807.4             853.0       5.6     %
Professional services               155.7           166.7      7.1     %
Total revenue                       1,607.3         1,632.8    1.6     %
                                                                   
Operating expenses:
Cost of license revenue              116.2             120.8       4.0     %
Cost of maintenance revenue          139.5             155.1       11.2    %
Cost of professional services        153.4             168.5       9.8     %
revenue
Selling and marketing                452.3             503.7       11.4    %
expenses
Research and development             121.5             116.5       (4.1    )%
expenses
General and administrative           160.0             175.1       9.4     %
expenses
Amortization of intangible          26.5            33.5       26.4    %
assets
Total operating expenses            1,169.4         1,273.2    8.9     %
Operating income                     437.9             359.6       (17.9   )%
Other loss, net                     (9.9     )       (25.4   )   156.6   %
Earnings before income taxes         428.0             334.2       (21.9   )%
Provision for income taxes          97.7            75.9       (22.3   )%
Net earnings                      $  330.3         $  258.3      (21.8   )%
                                                                   
Diluted earnings per share        $  1.88          $  1.63       (13.3   )%
                                                                   
Shares used in computing            175.2           158.9      (9.3    )%
diluted earnings per share

                                                                                                  
BMC SOFTWARE, INC.

BALANCE SHEETS

(In millions)
                                                                                                                  
                  Unaudited                                               Unaudited
                  June 30,      September     December      March 31,     June 30,      September     December
                                30,           31,                                       30,           31,
                  2011          2011          2011          2012          2012          2012          2012
                                                                                                                  
Current
assets:
Cash and cash     $ 1,582.9     $ 1,459.7     $ 1,319.5     $ 1,496.9     $ 1,465.5     $ 1,311.2     $ 1,057.9   (a)
equivalents
Short-term          31.9          30.9          37.1          86.1          138.1         128.2         123.6     (a)
investments
Trade
accounts            176.2         219.6         239.4         296.7         192.1         216.9         265.8
receivable,
net
Trade finance
receivables,        99.0          52.5          74.2          108.0         64.2          68.5          69.5
net
Other current      173.3        170.4        165.6        193.2        181.3        179.9        196.7
assets
Total current       2,063.3       1,933.1       1,835.8       2,180.9       2,041.2       1,904.7       1,713.5
assets
                                                                                                                  
Property and
equipment,          90.9          86.3          84.4          87.8          88.0          92.3          89.6
net
Software
development         201.9         214.1         230.2         244.7         255.2         262.4         268.0
costs, net
Long-term           64.1          61.9          57.4          52.6          44.6          45.9          71.6      (a)
investments
Long-term
trade finance       132.8         59.0          55.7          80.1          51.4          56.2          42.9
receivables,
net
Goodwill and
intangible          1,648.2       1,612.4       1,606.2       1,978.1       1,944.7       1,938.0       1,929.9
assets, net
Other
long-term          236.5        222.8        218.5        240.2        239.7        236.2        213.3
assets
Total assets      $ 4,437.7     $ 4,189.6     $ 4,088.2     $ 4,864.4     $ 4,664.8     $ 4,535.7     $ 4,328.8
                                                                                                                  
Current
liabilities:
Trade
accounts          $ 33.3        $ 32.1        $ 31.8        $ 31.5        $ 46.6        $ 44.5        $ 38.1
payable
Finance             1.0           0.4           2.2           1.2           1.9           7.7           10.7
payables
Accrued             204.0         256.6         248.5         321.4         221.8         249.0         270.4
liabilities
Deferred           1,065.8      990.5        1,001.9      1,059.5      1,060.6      1,004.7      979.2
revenue
Total current       1,304.1       1,279.6       1,284.4       1,413.6       1,330.9       1,305.9       1,298.4
liabilities
                                                                                                                  
Long-term
deferred            1,002.7       903.7         868.5         934.4         899.2         837.3         796.9
revenue
Long-term           333.9         336.9         325.4         821.6         823.3         824.8         1,308.6
borrowings
Other
long-term          163.3        146.2        144.6        249.0        247.6        246.3        244.8
liabilities
Total
long-term           1,499.9       1,386.8       1,338.5       2,005.0       1,970.1       1,908.4       2,350.3
liabilities
                                                                                                                  
Total
stockholders'      1,633.7      1,523.2      1,465.3      1,445.8      1,363.8      1,321.4      680.1
equity
                                                                                                                  
Total
liabilities
and               $ 4,437.7     $ 4,189.6     $ 4,088.2     $ 4,864.4     $ 4,664.8     $ 4,535.7     $ 4,328.8
stockholders'
equity
                                                                                                                  
                                                                                 
(a) Total
cash and        $ 1,678.9   $ 1,552.5   $ 1,414.0   $ 1,635.6   $ 1,648.2   $ 1,485.3   $ 1,253.1
investments

                                                           
BMC SOFTWARE, INC.

STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)
                                  
Quarter Ended December 31,                           Nine Months Ended December
                                                     31,
2011            2012                                 2011            2012
                                                                     
                                  Cash flows
                                  from operating
                                  activities:
$ 119.9         $ 106.3           Net earnings       $ 330.3         $ 258.3
                                  Adjustments to
                                  reconcile net
                                  earnings to
                                  net cash
                                  provided by
                                  operating
                                  activities:
                                  Depreciation
  50.2            57.3            and                  161.6           173.2
                                  amortization
                                  Deferred
  1.0             (1.9    )       income tax           (2.5    )       (5.7     )
                                  provision
                                  (benefit)
                                  Share-based
  31.1            41.5            compensation         92.7            115.9
                                  expense
  (1.5    )       2.1             Other non-cash       2.4             2.9
                                  items
                                  Changes in
                                  operating
                                  assets and
                                  liabilities,
                                  net of
                                  acquisitions:
  (18.6   )       (51.0   )       Trade accounts       47.1            28.0
                                  receivable
  (17.8   )       12.6            Trade finance        91.9            77.1
                                  receivables
                                  Prepaid and
  5.6             6.4             other current        6.3             16.7
                                  assets
                                  Other
  5.1             2.2             long-term            17.8            7.4
                                  assets
                                  Accrued and
  15.9            26.5            other current        (47.8   )       (31.4    )
                                  liabilities
  (24.1   )       (63.7   )       Deferred             (88.6   )       (212.7   )
                                  revenue
                                  Other
  (0.1    )       (3.5    )       long-term            (9.1    )       (5.5     )
                                  liabilities
                                  Other
 (2.4    )      (3.0    )       operating           (14.7   )      (6.3     )
                                  assets and
                                  liabilities
                                  Net cash
 164.3         131.8          provided by         587.4         417.9    
                                  operating
                                  activities
                                                                     
                                  Cash flows
                                  from investing
                                  activities:
                                  Proceeds from
  9.3             35.0            maturities of        24.8            69.0
                                  investments
                                  Proceeds from
  1.1             3.7             sales of             4.4             13.3
                                  investments
  (11.1   )       (59.8   )       Purchases of         (30.0   )       (139.2   )
                                  investments
                                  Cash paid for
                                  acquisitions,
  (14.1   )       -               net of cash          (163.0  )       (19.4    )
                                  acquired, and
                                  other
                                  investments
                                  Capitalization
  (34.9   )       (30.9   )       of software          (97.7   )       (94.2    )
                                  development
                                  costs
                                  Purchases of
  (7.6    )       (6.0    )       property and         (17.6   )       (19.3    )
                                  equipment
                                  Other
 -             -              investing           -             1.9      
                                  activities
                                  Net cash used
 (57.3   )      (58.0   )       in investing        (279.1  )      (187.9   )
                                  activities
                                                                     
                                  Cash flows
                                  from financing
                                  activities:
                                  Purchases of
                                  common stock,
  (225.0  )       (800.0  )       including            (630.5  )       (1,150.0 )
                                  accelerated
                                  share
                                  repurchase
                                  Repurchases of
                                  stock to
  (8.7    )       (18.1   )       satisfy              (31.7   )       (38.1    )
                                  employee tax
                                  withholding
                                  obligations
                                  Proceeds from
  4.8             11.8            stock options        41.9            50.7
                                  exercised and
                                  other
                                  Excess tax
                                  benefit from
  1.0             2.4             share-based          13.6            5.8
                                  compensation
                                  expense
                                  Repayments of
  (16.0   )       (15.8   )       borrowings and       (20.7   )       (21.4    )
                                  capital lease
                                  obligations
                                  Proceeds from
 -             494.7          borrowings,         -             494.7    
                                  net of
                                  issuance costs
                                  Net cash used
 (243.9  )      (325.0  )       in financing        (627.4  )      (658.3   )
                                  activities
                                                                     
                                  Effect of
                                  exchange rate
 (3.3    )      (2.1    )       changes on          (22.3   )      (10.7    )
                                  cash and cash
                                  equivalents
                                  Net change in
  (140.2  )       (253.3  )       cash and cash        (341.4  )       (439.0   )
                                  equivalents
                                  Cash and cash
 1,459.7       1,311.2        equivalents,        1,660.9       1,496.9  
                                  beginning of
                                  period
                                  Cash and cash
$ 1,319.5      $ 1,057.9        equivalents,       $ 1,319.5      $ 1,057.9  
                                  end of period

                                                          
BMC SOFTWARE, INC.

Table of Reconciliation from GAAP Operating Expenses to Non-GAAP Operating
Expenses

(In millions)

(Unaudited)
                                                                   
                  Quarter Ended December 31,     Nine Months Ended December
                                                 31,
                  2011             2012          2011              2012
                                                                   
GAAP
operating         $  386.4        $ 432.6      $  1,169.4       $ 1,273.2 
expenses
                                                                   
Share-based
compensation         (31.1  )        (41.5 )        (92.7    )       (115.9  )
expense
                                                                   
Amortization
of intangible        (19.5  )        (20.5 )        (66.1    )       (67.4   )
assets
                                                                   
Severance,
exit costs           (0.3   )        (1.9  )        (2.9     )       (8.8    )
and related
charges
                                                                   
Proxy contest        -               1.3            -                (4.9    )
costs
                                                                
Non-GAAP
operating         $  335.5        $ 370.0      $  1,007.7       $ 1,076.2 
expenses


BMC SOFTWARE, INC.

Table of Reconciliation from GAAP Operating Income to Non-GAAP Operating
Income

(In millions)

(Unaudited)
                                                            
                   Quarter Ended December 31,       Nine Months Ended December
                                                    31,
                   2011          2012               2011            2012
                                                                    
GAAP operating     $   161.8     $  147.6          $   437.9       $   359.6
income
                                                                    
Share-based
compensation           31.1         41.5                92.7            115.9
expense
                                                                    
Amortization of        19.5         20.5                66.1            67.4
intangible assets
                                                                    
Severance, exit
costs and related      0.3          1.9                 2.9             8.8
charges
                                                                    
Proxy contest          -            (1.3   )            -               4.9
costs
                                                                 
Non-GAAP operating $   212.7     $  210.2          $   599.6       $   556.6
income


BMC SOFTWARE, INC.

Table of Reconciliation from GAAP Operating Margin to Non-GAAP Operating Margin

(In millions)

(Unaudited)
                                                                                        
                                                                                                Quarter
             Quarter Ended December                       Quarter Ended                         Ended
             31,                                          December 31,                          December
                                                                                                31,
             2011          2012                           2011      2012                        2011   2012
                                                                                                       
GAAP                                     GAAP                                     GAAP
revenue:     $ 548.2       $ 580.2       operating        $ 161.8   $ 147.6      operating     30 %   25 %
                                         income:                                  margin:
                                                                                                       
                                         Share-based
                                         compensation       31.1      41.5
                                         expense
                                                                                                       
                                         Amortization
                                         of                 19.5      20.5
                                         intangible
                                         assets
                                                                                                       
                                         Severance,
                                         exit costs         0.3       1.9
                                         and related
                                         charges
                                                                                                       
                                         Proxy
                                         contest            -         (1.3  )
                                         costs
                                                                                                  
GAAP                                     Non-GAAP                                 Non-GAAP
revenue:     $ 548.2       $ 580.2       operating        $ 212.7   $ 210.2      operating     39 %   36 %
                                         income:                                  margin:
                                                                                                       
                                                                                                       
                                                                                                       
                                                                                                       
                                                                                                       
                                                                                                Nine Months
             Nine Months Ended                            Nine Months Ended                     Ended
             December 31,                                 December 31,                          December
                                                                                                31,
             2011          2012                           2011      2012                        2011   2012
                                                                                                       
GAAP                                     GAAP                                     GAAP
revenue:     $ 1,607.3     $ 1,632.8     operating        $ 437.9   $ 359.6      operating     27 %   22 %
                                         income:                                  margin:
                                                                                                       
                                         Share-based
                                         compensation       92.7      115.9
                                         expense
                                                                                                       
                                         Amortization
                                         of                 66.1      67.4
                                         intangible
                                         assets
                                                                                                       
                                         Severance,
                                         exit costs         2.9       8.8
                                         and related
                                         charges
                                                                                                       
                                         Proxy
                                         contest            -         4.9
                                         costs
                                                                                                  
GAAP                                     Non-GAAP                                 Non-GAAP
revenue:     $ 1,607.3     $ 1,632.8     operating        $ 599.6   $ 556.6      operating     37 %   34 %
                                         income:                                  margin:


BMC SOFTWARE, INC.

Table of Reconciliation from GAAP Net Earnings to Non-GAAP Net Earnings

(In millions)

(Unaudited)
                                                           
                 Quarter Ended December 31,       Nine Months Ended December
                                                  31,
                 2011            2012             2011            2012
                                                                  
GAAP net         $  119.9       $  106.3        $  330.3       $  258.3  
earnings
                                                                  
Share-based
compensation        31.1            41.5             92.7            115.9
expense
                                                                  
Amortization of
intangible          19.5            20.5             66.1            67.4
assets
                                                                  
Severance, exit
costs and           0.3             1.9              2.9             8.8
related charges
                                                                  
Proxy contest       -               (1.3  )          -               4.9
costs
                                                               
Subtotal pre-tax
reconciling        50.9          62.6           161.7         197.0  
items
                                                                  
Tax effect of
above pre-tax       (13.9  )        (18.4 )          (46.2  )        (58.1  )
items
                                                                  
Impact of
certain discrete    -               -                (6.2   )        -
tax items
                                                               
Non-GAAP net     $  156.9       $  150.5        $  439.6       $  397.2  
earnings


BMC SOFTWARE, INC.

Table of Reconciliation from GAAP Diluted Earnings Per Share to Non-GAAP
Diluted Earnings Per Share

(Unaudited)
                                                           
                 Quarter Ended December 31,       Nine Months Ended December
                                                  31,
                 2011            2012             2011            2012
                                                                  
GAAP diluted
earnings per     $  0.71        $  0.70         $  1.88        $  1.63   
share
                                                                  
Share-based
compensation        0.18            0.27             0.53            0.73
expense
                                                                  
Amortization of
intangible          0.12            0.13             0.38            0.42
assets
                                                                  
Severance, exit
costs and           -               0.01             0.02            0.06
related charges
                                                                  
Proxy contest       -               (0.01 )          -               0.03
costs
                                                               
Subtotal pre-tax
reconciling        0.30          0.41           0.92          1.24   
items
                                                                  
Tax effect of
above pre-tax       (0.08  )        (0.12 )          (0.26  )        (0.37  )
items
                                                                  
Impact of
certain discrete    -               -                (0.04  )        -
tax items
                                                               
Non-GAAP diluted
earnings per     $  0.93        $  0.99         $  2.51        $  2.50   
share
                                                                  
Shares used in
computing
diluted earnings    169.5           152.6            175.2           158.9
per share (in
millions)

Contact:

BMC Software
Global Communications:
Mark Stouse, 281-468-1608
Vice President, Global Connect
mark_stouse@bmc.com
or
Investor Relations:
Derrick Vializ, 713-918-1805
Vice President, Investor Relations
derrick_vializ@bmc.com
 
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