<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
BMC Software, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
BOOLE & BABBAGE, INC.
March 18, 1999
To the Stockholders of
Boole & Babbage, Inc.
You should have previously received a notice of special meeting dated February
26, 1999 and a proxy statement/prospectus relating to a special meeting of the
stockholders of Boole & Babbage, Inc. to be held on March 30, 1999 at 12:00 p.m.
at the principal executive offices of Boole located at 3131 Zanker Road, San
Jose, California. As you know, at the special meeting, the Boole stockholders
will be asked to adopt the merger agreement among Boole, BMC Software, Inc. and
Ranger Acquisition Corp., and approve the merger described in the merger
agreement.
For your information, we are enclosing with this letter a Current Report on Form
8-K that BMC recently filed with the Securities and Exchange Commission. The
enclosed Form 8-K includes information relating to the proposed acquisition by
BMC of New Dimension Software Ltd., and certain litigation recently filed
against BMC.
As we mentioned in the proxy statement/prospectus, your Board of Directors has
determined that the merger is fair to stockholders and is in your best
interests. Your vote on the merger is very important. Therefore, we urge you to
vote as soon as possible if you have not already done so.
Sincerely,
/s/ Arthur F. Knapp, Jr.
Arthur F. Knapp, Jr.
Secretary
<PAGE> 3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): March 7, 1999
---------------------
BMC SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-17136 74-21226120
(State or other jurisdiction (Commission File Number) (I.R.S. Employer Identification
of incorporation or No.)
organization)
</TABLE>
<TABLE>
<S> <C>
2101 CITYWEST BOULEVARD
HOUSTON, TEXAS 77042-2827
(Address of principal executive offices) (Zip code)
</TABLE>
Registrant's telephone number, including area code: (713) 918-8800
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 4
ITEM 5. OTHER EVENTS.
I. NEW DIMENSION SOFTWARE LTD.
A. TENDER AGREEMENT AND RELATED AGREEMENTS
On March 8, 1999, BMC Software, Inc., a Delaware corporation (the
"Company"), issued a press release announcing the execution of a Share Purchase
and Tender Agreement, dated March 7, 1999 (the "Tender Agreement"), by and
between the Company and New Dimension Software Ltd., an Israeli corporation
("New Dimension"). Pursuant to the Tender Agreement, the Company will offer
$52.50 in cash (the "Offer Price") for each outstanding ordinary share, par
value NIS 0.01 per share (collectively, the "Shares"), of New Dimension in
accordance with the Offer (as defined therein). New Dimension has also agreed to
acquire and cancel all options to purchase shares of New Dimension and its
subsidiary for an amount in cash equal to the positive difference between the
Offer Price and the exercise price of such options, subject to adjustment in the
case of options to purchase shares of New Dimension's subsidiary. In addition,
the Company has agreed to issue stock options to purchase an aggregate of
500,000 shares of common stock of the Company to employees of New Dimension
after completion of the Offer. The Offer is conditioned upon, among other
things, there being validly tendered and not withdrawn prior to the expiration
of the Offer a number of Shares constituting at least 90% of the then issued and
outstanding Shares not owned by the Company and its subsidiaries (the "90%
Condition").
If the Company is successful in acquiring through the Offer at least 90% of
the Shares not then owned by the Company or its subsidiaries within four months
of the date the Offer commences, the Company has agreed in the Tender Agreement,
in accordance with Section 236 of the Companies Ordinance (New Version) 5743-
1983 of the State of Israel, to declare by notice to the remaining shareholders
of New Dimension that it is unilaterally acquiring (the "Compulsory
Acquisition") the remaining Shares not yet held by it on the terms set forth in
the Offer.
A description of the Tender Agreement is contained in the March 8, 1999
press release by the Company, filed herewith as Exhibit 99.1 and incorporated
herein by reference. The Tender Agreement is also filed herewith as Exhibit 2.1
and is incorporated herein by reference.
In connection with the Offer contemplated by the Tender Agreement, the
Company entered into shareholder agreements, dated as of March 7, 1999 (the
"Shareholder Agreements"), with (i) Einav Computer Systems Ltd., an Israeli
corporation ("ECS"), and Roni A. Einav and Dalia Prashker-Katzman, the sole
shareholders of ECS, and (ii) Yossie Hollander (each a "Principal Shareholder"
and collectively, the "Principal Shareholders"). Pursuant to the Shareholder
Agreements, (a) the Principal Shareholders have agreed to tender into the Offer
all of their Shares, which, on the date of the Tender Agreement, represented an
aggregate of 7,482,500, or approximately 61%, of the issued and outstanding
Shares, (b) the Principal Shareholders have granted to the Company an
irrevocable option to purchase all of such Shares in certain circumstances, and
(c) each Principal Shareholder has granted to the Company an irrevocable proxy
to vote such Principal Shareholder's Shares with respect to matters relating to
the Tender Agreement, the Offer or matters inconsistent with the Offer. The
Shareholder Agreements are filed herewith as Exhibits 99.2 and 99.3 and are
incorporated herein by reference.
As an inducement to the Company's execution of the Tender Agreement and
concurrently therewith, New Dimension agreed to enter into a third amendment
(the "Third Amendment") to the distribution agreement between New Dimension and
Boole & Babbage Europe, an Irish corporation ("Distributor") and a wholly owned
subsidiary of Boole & Babbage, Inc., a Delaware corporation ("Boole"), dated
October 28, 1994, as amended April 24 and October 31, 1997 (the "Distribution
Agreement"). The Third Amendment, effective as of March 6, 1999, excludes the
Offer from the provisions of the Distribution Agreement, which provides that a
"change of control" of New Dimension would provide the Distributor the right to
terminate the Distribution Agreement and receive a termination payment from New
Dimension. The Third Amendment is filed herewith as Exhibit 99.4 and is
incorporated herein by reference.
In addition to the Third Amendment, the Company and New Dimension entered
into a letter agreement, dated March 7, 1999 (the "Letter Agreement"), which
provides that New Dimension will not exercise its right to terminate the
Distribution Agreement by reason of the Company's acquisition of Boole pursuant
to the
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<PAGE> 5
Agreement and Plan of Reorganization, dated October 31, 1998, by and between the
Company and Boole (the "Merger Agreement"), until April 10, 1999. The Letter
Agreement further provides that upon completion of the Company's acquisition of
Boole, the Company and the Distributor will enter into a fourth amendment (the
"Fourth Amendment") to the Distribution Agreement, which will provide for the
extension of the period during which New Dimension has the right to terminate
the Distribution Agreement as a result of the Company's acquisition of Boole
until December 31, 1999; provided, that New Dimension does not give notice of
its intent to terminate the Distribution Agreement in connection with the
Company's acquisition of Boole until the earlier of the day first succeeding (i)
the termination of the Offer or (ii) July 12, 1999, and that such termination
notice will become effective within 60 days of the receipt thereof by the
Distributor. The Letter Agreement is filed herewith as Exhibit 99.5 and is
incorporated herein by reference.
B. FINANCING.
The total amount of funds required by the Company to consummate the Offer
(including cash payments related to the cancellation of outstanding New
Dimension options) and the Compulsory Acquisition and to pay related fees and
expenses is estimated to be approximately $700 million.
The consideration for the Shares to be purchased pursuant to the Offer and
the Compulsory Acquisition is expected to be funded from the Company's working
capital and loans from U.S. banks. The Company is currently negotiating with
three major commercial banks (the "Proposed Lenders") to obtain a credit
facility in an aggregate amount of $500,000,000 (the "Proposed Credit
Facility"). On March 10, 1999, the Company received commitments from each of the
Proposed Lenders, which are filed herewith as Exhibit 99.2 and are incorporated
herein by reference. The following is a summary of the principal terms of the
Proposed Credit Facility.
The Proposed Credit Facility will consist of $500,000,000 of availability
under: (a) a 364-day revolving credit facility for general corporate purposes,
including the funding of the Offer, with renewal options by the Proposed Lenders
and with a one-year option granted to the Company, which will enable the Company
to convert the revolving loans into a one-year term loan, and (b) a competitive
bid facility which will enable the Company to request bids from the Proposed
Lenders for loans on a negotiated basis up to the existing availability under
the Proposed Credit Facility. If the Company elects to convert revolving
borrowings to a term loan, such term loan must be repaid within one year with
interest payable at specified margin levels above LIBOR.
Interest rates for loans under the Proposed Credit Facility are based upon
a margin above LIBOR within current market parameters and certain financial
ratios of the Company.
The Proposed Credit Facility will include, among others, covenants
regarding the maintenance by the Company of: (a) at least $300,000,000 in cash
and marketable securities and (b) certain financial ratios. The Proposed Credit
Facility will also contain other typical and customary covenants as well as
customary events of default.
The Proposed Credit Facility requires the Company to pay an arrangement fee
on the aggregate commitment of the Proposed Lenders together with a facility fee
(ranging from 10 to 20 basis points) on the drawn and undrawn portion of the
aggregate commitments of the Proposed Lenders.
Any loans under the Proposed Credit Facility will be repaid over time from
a variety of potential sources including, but not limited to, funds generated
internally by the Company and its subsidiaries. The Offer is not conditioned on
consummation of the Proposed Credit Facility.
C. FINANCIAL INFORMATION
The financial information provided in this Section C is being included in
this Form 8-K to provide additional information solely for the purpose of
illustrating how the New Dimension transaction might affect the Company and
Boole as a combined company from a financial point of view. The acquisition of
New Dimension is subject to numerous significant conditions, including the 90%
Condition. As a result of the 90% Condition, the acquisition of New Dimension by
the Company is uncertain. There can be no assurance that
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<PAGE> 6
the Company will succeed in its acquisition of New Dimension. The following
estimated financial information may not reflect the actual financial results of
the Company, Boole and New Dimension as a combined company. In addition, the
Company has made various assumptions in its preparation of these estimates.
These assumptions and estimated financial information consist of forward looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). These statements are identified as forward looking statements
in this discussion. Important factors, risks and uncertainties that could cause
the Company's, Boole's and New Dimension's actual results to differ materially
from the results implied by these forward looking statements are also discussed.
1. SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The unaudited pro forma financial information is derived from historical
financial information for the three companies, but includes assumptions and
adjustments to reflect the proposed combination of the three companies. The
descriptions of these assumptions and adjustments include forward looking
statements that contemplate future events, calculations or determinations. These
forward looking statements are subject to various risks and uncertainties that
could cause actual pro forma financial information for the three companies to
differ materially from those set forth below, including the following items:
- Different Fiscal Year Ends. The fiscal year ends for the Company, Boole
and New Dimension occur at different dates. The Company's fiscal year end
is March 31, Boole's is September 30, and New Dimension's is December 31.
In order to present the unaudited pro forma combined results on a
comparable basis, certain adjustments were made to Boole's and New
Dimension's results of operations for certain periods to conform to those
of the Company. The selected unaudited pro forma condensed combined
financial information for the years ended March 31, 1996 and 1997 are
based on the consolidated financial statements of the Company for the
years ended March 31, 1996 and 1997, Boole for the years ended September
30, 1995 and 1996, and New Dimension for the years ended December 31,
1995 and 1996. The selected unaudited pro forma condensed combined
financial information for the year ended March 31, 1998 is based on the
consolidated financial statements of the Company for the year ended March
31, 1998; Boole for the year ended September 30, 1997 reduced by the
unaudited consolidated statement of income of Boole for the six months
ended March 31, 1997 and increased by the unaudited consolidated
statement of income of Boole for the six months ended March 31, 1998; and
New Dimension for the year ended December 31, 1998. The selected
unaudited pro forma condensed combined financial information for the nine
months ended December 31, 1997 and 1998 are based on the unaudited
consolidated financial statements of the Company for the nine months
ended December 31, 1997 and 1998; the consolidated financial statements
of Boole for the years ended September 30, 1997 and 1998 reduced by the
unaudited consolidated statements of income of Boole for the six months
ended March 31, 1997 and 1998, respectively and increased by the
unaudited consolidated statements of income of Boole for the three months
ended December 31, 1997 and 1998, respectively; and the audited
consolidated financial statements of New Dimension for the year ended
December 31, 1997 and the unaudited consolidated financial statements for
the year ended December 31, 1998 reduced by the unaudited consolidated
financial statements of income of New Dimension for the three months
ended March 31, 1997 and 1998, respectively. As a result of the
adjustments to conform Boole's fiscal year end to the year ended March
31, 1998, Boole's results of operations for the six months ended March
31, 1997, which include total revenues of $96,212,000 and a net loss of
$386,000 have not been included in the selected unaudited pro forma
condensed combined statements of income for the periods presented. The
unaudited pro forma condensed combined total assets amount is based on
the balance sheets of the Company, Boole and New Dimension at December
31, 1998.
- Purchase Price. The unaudited pro forma financial information assumes a
total purchase price for New Dimension of approximately $700 million,
including transaction costs of approximately $15 million. The purchase
price also includes approximately $2.26 million representing Boole's
basis in approximately 452,800 shares of New Dimension common stock owned
by Boole prior to the combination of the three companies. The shares of
New Dimension common stock held by Boole are
3
<PAGE> 7
reflected in Boole's unaudited historical financial information at current
market value which, as of December 31, 1998, approximated $48.125 per share. The
shares of New Dimension common stock held by Boole have been assumed to be owned
by the Company prior to the tender offer, and therefore are not deemed to
be outstanding as of the tender offer and not subject to the tender offer
price of $52.50 per share for purposes of calculating the purchase price.
- Purchase Price Allocation. The purchase price allocation for acquired
in-process research and development is assumed to be approximately $132.3
million, net of income taxes. The purchase price allocation for goodwill
and other intangibles is assumed to be approximately $428 million.
Amortization of goodwill and other intangibles is assumed to occur over a
four year life, resulting in an annual noncash amortization expense of
$70 million, net of income taxes, in each year following the acquisition.
The final purchase price allocation will not be known until an
independent appraisal is complete. The relative allocations of portions
of the purchase price to acquired in-process research and development and
the period over which goodwill and other intangibles will be amortized
and the resulting amortization charge will be based upon determinations
by the Company and its independent appraisers and will be subject to
review by its auditors and by the Securities and Exchange Commission. The
actual amount of any write-off of acquired in-process research and
development, remaining amortized goodwill, the actual amortization period
and the amount of annual amortization of goodwill and intangibles may
vary significantly from these assumptions.
- No Cost Savings or Revenue Enhancements. The unaudited pro forma
financial information also does not reflect the effect of cost savings
and revenue enhancements, if any, which may be realized after
consummation of the transactions.
- Elimination of Distributor Payments. The unaudited pro forma financial
information eliminates distributor payments between Boole and New
Dimension of $8.3 million, $11.3 million and $15.2 million for the years
ended March 31, 1996, 1997 and 1998, respectively. The information also
eliminates distributor payments between Boole and New Dimension of $10.5
million and $10.1 million for the nine months ended December 31, 1997 and
1998.
- Interest. The unaudited pro forma financial information assumes interest
expense related to short term borrowings of $500 million at 6.0% per
annum and reduced interest income associated with the use of $176 million
cash and investments with an approximate return of 6.0% per annum. These
adjustments include assumptions about anticipated borrowing amounts, cost
of funds and return on investment that could prove inaccurate.
- Costs Associated with Proposed Combination of the Company and Boole. The
unaudited pro forma financial information reflects an accrual, made only
to the unaudited pro forma condensed combined balance sheet, of
approximately $25.0 million (or $16.25 million, net of income taxes) for
estimated transaction fees, certain identified restructuring charges and
costs incident to the proposed merger between the Company and Boole.
Actual results incurred in connection with the proposed merger could
differ significantly from these estimates.
- Conversion of Outstanding Shares of Boole's Common Stock. The unaudited
pro forma financial information reflects the issuance of 0.675 of a share
of the Company's common stock for each share of Boole common stock
outstanding at December 31, 1998, pursuant to the terms of the Merger
Agreement. Therefore, the historical combined common stock,
paid-in-capital and retained earnings balances have been adjusted to
reflect the number of shares assumed to be issued, the difference in par
value per common share of the Company and Boole and the cancellation of
Boole treasury stock. These adjustments are based on the historical
outstanding share amounts. Actual shares outstanding on the date the
proposed merger is consummated and, therefore, the actual impact of the
conversion of outstanding shares of Boole's common stock on the
historical combined common stock, paid-in-capital and retained earnings
balances might differ from this estimate.
The following table sets forth selected unaudited pro forma condensed
combined financial information derived from the historical financial information
of the Company, Boole and New Dimension and is based on
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<PAGE> 8
the assumptions and adjustments discussed above to reflect the expected
combination of the three companies. The unaudited pro forma combined income
statement data for the nine months ended December 31, 1997 and 1998 and for the
years ended March 31, 1996, 1997 and 1998 assume the merger with Boole and the
acquisition of New Dimension were both effected as of April 1, 1995. The
unaudited pro forma balance sheet data as of December 31, 1998 assumes the
merger with Boole and the acquisition of New Dimension were both effected as of
December 31, 1998.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED MARCH 31, DECEMBER 31,
-------------------------------- ---------------------
1996 1997 1998 1997 1998
-------- -------- ---------- -------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
COMPANY, BOOLE AND NEW DIMENSION
COMBINED INCOME STATEMENT DATA:
Total revenues..................... $666,373 $824,208 $1,045,300 $752,919 $ 982,255
======== ======== ========== ======== ==========
Net earnings....................... $ 29,941 $ 93,339 $ 121,078 $ 64,989 $ 205,500
======== ======== ========== ======== ==========
Diluted earnings per share......... $ 0.13 $ 0.39 $ 0.49 $ 0.27 $ 0.83
COMPANY, BOOLE AND NEW DIMENSION
COMBINED BALANCE SHEET DATA:
Total assets....................... $2,467,443
Short term borrowings.............. $ 500,000
Stockholder's equity............... $1,065,827
</TABLE>
2. ANALYSIS OF IMPACT OF NEW DIMENSION TRANSACTION ON CERTAIN PRO FORMA
ESTIMATES OF FUTURE FINANCIAL RESULTS
The Company has prepared these calculations solely to illustrate the
estimated financial impact of the New Dimension transaction on the Company and
Boole as a combined company. If the New Dimension transaction is completed, the
Company expects the New Dimension transaction to close in the first or second
quarter of its March 31, 2000 fiscal year. The Company has made the following
assumptions in preparing the following pro forma financial information. These
assumptions and the pro forma financial information are forward looking
statements. Certain risks and uncertainties could cause the Company's future
operating results to differ materially from those indicated by any of these
forward looking statements, including those described below.
- Revenue and Earnings Estimates of the Company and Boole are not Estimates
by the Company or Boole and are Being Provided Solely for Illustrative
Purposes. Combined earnings estimates for the Company and Boole for
fiscal 2000 are based upon published financial estimates of SG Cowen &
Co. dated January 25, 1999 for the Company and Boole on a combined basis.
For fiscal 2001, the Company has assumed an earnings growth rate of 25%
and applied this growth rate to the SG Cowen estimate for fiscal 2000.
The use of the SG Cowen estimates and the assumed 25% growth rate are
solely for the illustrative purpose of estimating the impact of the New
Dimension transaction on the Company and Boole as a combined company. The
Company is not adopting the SG Cowen estimates or the 25% fiscal 2001
growth rate as accurate or indicative of the Company's internal
estimates, nor is the Company giving guidance that it expects revenues,
net earnings or earnings per share to equal or exceed these assumed
amounts in fiscal 2000 or 2001.
- New Dimension Revenue and Earnings Estimates are not Estimates by the
Company or New Dimension and are Being Provided Solely for Illustrative
Purposes. BMC and New Dimension are on different fiscal years. BMC's
fiscal year ends on March 31, and New Dimension's ends on December 31. In
preparing this analysis for BMC's fiscal year ending March 31, 2000 and
2001, BMC has used estimates for New Dimension's fiscal year ending
December 31, 1999 and 2000, respectively. This is consistent with the
method of reconciling the two different fiscal year ends used in
preparing the information provided above under the heading "Selected
Unaudited Pro Forma Condensed Combined Financial Information." Earnings
estimates for New Dimension's fiscal year ending December 31, 1999 and
2000 are based upon published estimates of Goldman, Sachs & Co. dated
February 24, 1999. The use of the Goldman, Sachs estimates are solely for
the illustrative purpose of estimating the
5
<PAGE> 9
impact of the New Dimension transaction on the Company and Boole as a combined
company. The Company is not adopting the Goldman, Sachs estimates as accurate or
indicative of the Company's or New Dimension's internal estimates, nor is the
Company giving guidance that it expects revenues, net earnings or earnings
per share of New Dimension to equal or exceed these assumed amounts in
fiscal 2000 or 2001.
- Estimated Outstanding Shares are not Estimates by the Company and are
Being Provided Solely for Illustrative Purposes. Estimated shares
outstanding for fiscal 2000 are from the SG Cowen January 25, 1999
report. Estimated shares outstanding for fiscal 2001 were calculated by
increasing the fiscal 2000 amount by 4%. The Company is presenting these
estimates solely for the purpose of this calculation. The amount of
shares outstanding could be significantly increased by stock option
grants, stock option exercises and acquisitions for stock, which increase
the number of shares used to calculate earnings per share on a diluted
basis.
- Purchase Price Allocation; Amortization of Intangible Assets. The
purchase price allocation for acquired research and development is
assumed to be approximately $132.3 million, net of income taxes. The
purchase price allocation for goodwill and other intangibles is assumed
to be approximately $428 million. Amortization of goodwill and other
intangibles is assumed to occur over a four year life, resulting in an
annual noncash amortization expense of $70 million, net of income taxes,
in each year following the acquisition. The net earnings and earnings per
share amounts for fiscal 2000 and 2001 reflect amortization of intangible
assets acquired in the New Dimension transaction. The net earnings and
earnings per share amounts for fiscal 2000 reflect the anticipated
write-off of acquired in-process research and development of
approximately $132.3 million, net of income taxes. The net earnings and
earnings per share amounts for fiscal 2000 and 2001 reflect the annual
amortization of intangibles expense of $70 million, net of income taxes.
Excluding these non-charges, the net earnings and earnings per share
amounts in this presentation would be as follows:
- The net earnings and earnings per share amounts for fiscal 2000
excluding the anticipated write-off of acquired research and
development would be $439 million and $1.69.
- The net earnings and earnings per share amounts for fiscal 2000
excluding the anticipated write-off of acquired research and
development and amortization of intangibles would be $508 million and
$1.95.
- The net earnings and earnings per share amounts for fiscal 2001
excluding the amortization of intangibles would be $644 million and
$2.38.
The final purchase price allocation will not be known until an
independent appraisal is complete. The relative allocations of portions
of the purchase price to acquired in-process research and development and
the period over which goodwill and other intangibles will be amortized
and the resulting amortization charge will be based upon determinations
by the Company, its auditors and its independent appraisers and will be
subject to review by the Securities and Exchange Commission. The actual
amount of any write-off of acquired in-process research and development,
remaining amortized goodwill, the actual amortization period and the
amount of annual amortization of goodwill and intangibles may vary
significantly from these assumptions.
- Other Risks. The financial results and operations of the Company, Boole,
and the Company and Boole as a combined company are subject to numerous
risks and uncertainties including those set forth in the Company's
Registration Statement on Form S-4 dated February 23, 1999 under the
heading "Risk Factors" and additional risks and uncertainties applicable
to the Company's financial results and operations set forth in the
Company's Quarterly Reports on Form 10-Q and Annual Report on Form 10-K
under the heading "Certain Risks and Uncertainties that Could Affect
Future Operating Results."
The following table sets forth certain pro forma estimates of future
financial results of the New Dimension transaction on the Company and Boole as a
combined company and is based on the assumptions and adjustments discussed
above. The data further assumes that the New Dimension transaction will close on
April 1, 1999.
6
<PAGE> 10
<TABLE>
<CAPTION>
YEARS ENDING
MARCH 31,
----------------------
2000 2001
--------- ---------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
COMPANY AND BOOLE COMBINED INCOME STATEMENT DATA:
Net earnings.............................................. $508,000 $635,000
======== ========
Net earnings per share.................................... $ 1.95 $ 2.35
Shares used in calculating net earnings per share......... 260,000 270,000
COMPANY, BOOLE AND NEW DIMENSION COMBINED INCOME STATEMENT
DATA:
Net earnings.............................................. $306,700 $574,000
======== ========
Net earnings per share.................................... $ 1.18 $ 2.12
Shares used in calculating net earnings per share......... 260,000 270,000
</TABLE>
II. NEW LITIGATION
On March 9, 1999, a class action complaint was filed in the United States
District Court for the Southern District of Texas, Houston Division, styled
Rickey Hartman v. BMC Software, Inc., Max P. Watson, William M. Austin, M.
Brinkley Morse and Kevin Klausmeyer, No. B-99-0715, against the Company and four
senior executives of the Company alleging violations of Sections 10(b) and 20(a)
of the Exchange Act in connection with the Company's financial statement
presentation following its acquisition of BGS Systems, Inc. ("BGS") in March
1998 in a pooling-of-interests transaction. The lawsuit was filed following the
Company's announcement that it was restating its historical financial results to
include BGS's financial results in the Company's financial statements as a
condition to the Securities and Exchange Commission declaring effective the
Company's registration statement on Form S-4 for its pending acquisition of
Boole. The complaint alleges that the Company and the individual defendants
artificially inflated the Company's stock price by failing to include the
historical results of BGS in the Company's historical financial statements
thereby reporting inflated revenue and income growth rates during the first
three quarters of fiscal 1999 ended December 31, 1998. The plaintiffs seek an
unspecified amount of compensatory damages, interest and costs, including legal
fees.
The Company denies the allegations of wrongdoing in connection with the
matters set forth in the complaint and intends to vigorously defend the action.
An unfavorable judgment or settlement, however, could have a material adverse
effect on the financial results of the Company.
7
<PAGE> 11
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Share Purchase and Tender Agreement, dated as of March 7,
1999, by and between the Company and New Dimension.
99.1 -- Press Release of the Company, dated as of March 8, 1999,
reporting on the execution of the Share Purchase and
Tender Agreement, dated as of March 7, 1999.
99.2 -- Commitment Letters, dated as of March 10, 1999, to the
Company from Proposed Lenders.
99.3 -- Shareholder Agreement, dated as of March 7, 1999, by and
among the Company, Einav Computer Systems Ltd., an
Israeli corporation, Roni A. Einav and Dalia
Prashker-Katzman.
99.4 -- Shareholder Agreement, dated as of March 7, 1999, by and
between the Company and Yossie Hollander.
99.5 -- Third Amendment to Distribution Agreement by and between
New Dimension and Distributor dated October 28, 1994, as
amended on April 24 and October 31, 1997, effective as of
March 6, 1999.
99.6 -- Letter Agreement regarding Fourth Amendment to
Distribution Agreement by and between the Company and New
Dimension, dated as of March 7, 1999.
99.7 -- Letter to Boole shareholders transmitting the Current
Report on Form 8-K.
</TABLE>
8
<PAGE> 12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BMC SOFTWARE, INC.
By: /s/ M. BRINKLEY MORSE
----------------------------------
Name: M. Brinkley Morse
Title: Senior Vice President
Date: March 18, 1999
