BMC Software Announces New $1 Billion Share Repurchase Authorization

Wed Oct 31, 2012 4:07pm EDT

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BMC Software Announces New $1 Billion Share Repurchase Authorization

  • BMC expects $750 million of new repurchase authorization to be executed via an accelerated share repurchase agreement to be entered into by December 31, 2012
  • At current prices, new share repurchase would represent roughly 15 percent of the Company’s current shares outstanding

BMC Software’s (NASDAQ: BMC) board of directors has approved a new $1 billion share repurchase. At today’s prices, this repurchase would equal approximately 15 percent of the Company’s current shares outstanding.

BMC anticipates completing this new $1 billion share repurchase within the next 12 months. Of that amount, the Company expects $750 million to be executed via an accelerated share repurchase agreement to be entered into within its fiscal third quarter ending December 31, 2012. BMC expects to fund this program with cash on hand as well as other sources of available liquidity.

The decision to authorize this new program comes after a thorough strategic review by the Company’s board of directors.

“On a regular basis, BMC and its board review a broad array of strategic paths toward maximizing shareholder value – we feel it is responsible policy for a public company,” said Bob Beauchamp, BMC’s chairman and chief executive officer. “After a series of discussions with major shareholders earlier this year, we took an even more rigorous approach to our regular review, including designating four board members as a working group to oversee it.”

With assistance of outside advisors, the Company regularly considers a range of alternatives -- splits, spins, transformational acquisitions, sale, and capital structure -- along with internal investment strategies and independent public company paths to success. This year, a working group made up of four members of the Company’s board led and oversaw the review. The working group included two of BMC’s newest directors -- Jim Schaper and John Dillon -- as well as Lou Lavigne and Mark Hawkins. After evaluating the results of this extensive review, BMC’s board of directors unanimously agreed that the repurchase program is the best outcome for BMC’s shareholders.

“As chairman of the working group that oversaw this review, I was impressed and very pleased with the diligence and focus of management, the board and our external advisors. I am very confident in the process and the results,” Schaper said.

"Mr. Schaper chaired a very well-run strategic review, and I fully support the methodology and the outcome," said Lavigne, who also serves as chairman of BMC’s audit committee.

Dillon said: "I was impressed with the rigor and focus of this process, including the internal review as well as exploration of strategic paths. I feel strongly that the result of this review and the actions taken by the Board are the best paths to shareholder value.”

Beauchamp added, “Management and our board are united in our confidence in our continued prospects and our commitment to delivering superior results and value to our shareholders. We believe that new releases of our industry-leading solutions, together with the launch of BMC MyIT and positive progress on our go-to-market plans, will further strengthen BMC’s execution. Furthermore, we are taking additional steps to deliver on that commitment, which include both a significant return of capital to our shareholders as well as refocusing our internal investments with an increased emphasis on our high-growth initiatives including our cloud, automation and SaaS-based solutions.”

Steve Solcher, BMC’s chief financial officer, added, “Since fiscal 2001, BMC has repurchased approximately $4.5 billion of its shares. BMC's share repurchase program remains one of the many ways we deliver value to our shareholders. BMC Software's strong capital structure and free cash flow generation continue to allow us to enhance shareholder value by returning significant funds to shareholders.”

Along with the Company’s currently outstanding authorization, this new authorization brings the total outstanding share repurchase authorizations to roughly $1.5 billion.

Any repurchases under the Company’s open-market share repurchase program may be made from time to time, subject to market conditions and other factors, in the open market or through solicited or unsolicited privately negotiated transactions or in such other manner that complies with the Securities Exchange Act of 1934. The program does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company’s discretion.

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, including industry-leading Business Service Management and Cloud Management offerings. For the four fiscal quarters ended September 30, 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 2012 BMC Software, Inc.

BMC Software
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mark_stouse@bmc.com
or
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