10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     

Commission File Number: 001-16393

BMC Software, Inc.

(Exact name of registrant as specified in its charter)

Delaware	74-2126120
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
2101 CityWest Boulevard Houston, Texas	77042-2827
(Address of principal executive offices)	(Zip Code)

(713) 918-8800

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes   x     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   ¨     No   x

As of October 29, 2012, there were 154,938,817 outstanding shares of Common Stock, par value $.01, of the registrant.

BMC SOFTWARE, INC.

QUARTER ENDED SEPTEMBER 30, 2012

INDEX

	PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at September 30, 2012 (Unaudited) and March 31, 2012		3
Condensed Consolidated Statements of Comprehensive Income for the quarters and six months ended September 30, 2012 and 2011 (Unaudited)		4
Condensed Consolidated Statements of Cash Flows for the six months ended September  30, 2012 and 2011 (Unaudited)		5
Notes to Condensed Consolidated Financial Statements (Unaudited)		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3. Quantitative and Qualitative Disclosures about Market Risk		34
Item 4. Controls and Procedures		35
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		36
Item 1A. Risk Factors		36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 6. Exhibits		37
Signatures		38

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BMC SOFTWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except par value data)

	September 30,			March 31,
	2012			2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,311.2		$	1,496.9
Short-term investments		128.2			86.1
Trade accounts receivable, net		216.9			296.7
Trade finance receivables, net		68.5			108.0
Deferred tax assets		74.6			71.0
Other current assets		105.3			122.2
Total current assets		1,904.7			2,180.9
Property and equipment, net		92.3			87.8
Software development costs, net		262.4			244.7
Long-term investments		45.9			52.6
Long-term trade finance receivables, net		56.2			80.1
Intangible assets, net		229.7			257.5
Goodwill		1,708.3			1,720.6
Other long-term assets		236.2			240.2
Total assets	$	4,535.7		$	4,864.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	44.5		$	31.5
Finance payables		7.7			1.2
Accrued liabilities		249.0			321.4
Deferred revenue		1,004.7			1,059.5
Total current liabilities		1,305.9			1,413.6
Long-term deferred revenue		837.3			934.4
Long-term borrowings		824.8			821.6
Other long-term liabilities		246.3			249.0
Total liabilities		3,214.3			3,418.6
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $.01 par value, 1.0 shares authorized, none issued and outstanding		—			—
Common stock, $.01 par value, 600.0 shares authorized, 249.1 shares issued		2.5			2.5
Additional paid-in capital		1,237.5			1,179.5
Retained earnings		3,397.4			3,245.3
Accumulated other comprehensive income		7.4			31.9
		4,644.8			4,459.2
Treasury stock, at cost (93.5 and 87.4 shares)		(3,323.4	)		(3,013.4	)
Total stockholders’ equity		1,321.4			1,445.8
Total liabilities and stockholders’ equity	$	4,535.7		$	4,864.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

BMC SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions, except per share data)

(Unaudited)

	Quarter Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Revenue:
License	$	209.2		$	229.7		$	380.8		$	419.2
Maintenance		285.4			270.5			564.2			535.1
Professional services		53.6			56.5			107.6			104.8
Total revenue		548.2			556.7			1,052.6			1,059.1
Operating expenses:
Cost of license revenue		40.5			39.3			79.8			77.6
Cost of maintenance revenue		53.0			49.5			103.9			93.3
Cost of professional services revenue		54.5			53.2			112.2			100.6
Selling and marketing expenses		163.1			153.5			327.8			298.2
Research and development expenses		32.3			38.3			74.6			83.0
General and administrative expenses		55.9			51.0			118.9			109.6
Amortization of intangible assets		10.9			10.9			23.5			20.7
Total operating expenses		410.2			395.7			840.7			783.0
Operating income		138.0			161.0			211.9			276.1
Other income (loss), net:
Interest and other income, net		3.5			2.6			5.8			6.4
Interest expense		(10.6	)		(5.2	)		(20.8	)		(10.7	)
Gain (loss) on investments, net		0.7			(2.2	)		0.3			(2.1	)
Total other loss, net		(6.4	)		(4.8	)		(14.7	)		(6.4	)
Earnings before income taxes		131.6			156.2			197.2			269.7
Provision for income taxes		33.8			41.5			45.2			59.3
Net earnings	$	97.8		$	114.7		$	152.0		$	210.4
Basic earnings per share	$	0.62		$	0.66		$	0.96		$	1.20
Diluted earnings per share	$	0.61		$	0.65		$	0.94		$	1.18
Shares used in computing basic earnings per share		157.5			173.0			158.9			174.7
Shares used in computing diluted earnings per share		160.3			176.0			162.1			178.3
Net earnings	$	97.8		$	114.7		$	152.0		$	210.4
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax provision (benefit) of $1.0, $(0.8), $2.6 and $(0.4), respectively		5.1			(41.5	)		(24.1	)		(33.3	)
Unrealized loss on available-for-sale securities, net of tax provision (benefit) of $0, $(0.3), $(0.3) and $(0.3), respectively		—			(0.7	)		(0.4	)		(0.8	)
Total other comprehensive income (loss)		5.1			(42.2	)		(24.5	)		(34.1	)
Total comprehensive income	$	102.9		$	72.5		$	127.5		$	176.3

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

BMC SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Six Months Ended
	September 30,
	2012			2011
Cash flows from operating activities:
Net earnings	$	152.0		$	210.4
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		115.9			111.4
Deferred income tax benefit		(3.8	)		(3.5	)
Share-based compensation expense		74.5			61.6
Loss on investments, net and other		0.8			3.9
Changes in operating assets and liabilities, net of acquisitions:
Trade accounts receivable		79.0			65.7
Trade finance receivables		64.5			109.7
Prepaid and other current assets		10.3			0.7
Other long-term assets		5.2			12.7
Accrued and other current liabilities		(57.9	)		(63.7	)
Deferred revenue		(149.0	)		(64.5	)
Other long-term liabilities		(2.0	)		(9.0	)
Other operating assets and liabilities		(3.4	)		(12.3	)
Net cash provided by operating activities		286.1			423.1
Cash flows from investing activities:
Proceeds from maturities of investments		34.0			15.5
Proceeds from sales of investments		9.6			3.3
Purchases of investments		(79.4	)		(18.9	)
Cash paid for acquisitions, net of cash acquired, and other investments		(19.4	)		(148.9	)
Capitalization of software development costs		(63.3	)		(62.8	)
Purchases of property and equipment		(13.3	)		(10.0	)
Other investing activities		1.9			—
Net cash used in investing activities		(129.9	)		(221.8	)
Cash flows from financing activities:
Treasury stock acquired		(350.0	)		(405.5	)
Repurchases of stock to satisfy employee tax withholding obligations		(20.0	)		(23.0	)
Proceeds from stock options exercised and other		38.9			37.1
Excess tax benefit from share-based compensation expense		3.4			12.6
Repayments of borrowings and capital lease obligations		(5.6	)		(4.7	)
Net cash used in financing activities		(333.3	)		(383.5	)
Effect of exchange rate changes on cash and cash equivalents		(8.6	)		(19.0	)
Net change in cash and cash equivalents		(185.7	)		(201.2	)
Cash and cash equivalents, beginning of period		1,496.9			1,660.9
Cash and cash equivalents, end of period	$	1,311.2		$	1,459.7
Supplemental disclosure of cash flow information:
Cash paid for interest	$	22.2		$	11.6
Cash paid for income taxes, net of amounts refunded	$	48.6		$	13.5

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

BMC SOFTWARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of BMC Software, Inc. and its subsidiaries (collectively, we, us, our or BMC). All significant intercompany balances and transactions have been eliminated in consolidation. These financial statements reflect all normal recurring adjustments necessary to fairly present our financial position and results of operations as of and for the periods presented herein. These financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.

Interim results are not necessarily indicative of results for a full year. Our results reflect the seasonality of our business and generally tend to be stronger in the third and fourth quarters of our fiscal year, as compared to the first and second quarters of our fiscal year; however, general economic conditions also have an impact on our business and financial results. These financial statements should be read in conjunction with our annual audited consolidated financial statements for the fiscal year ended March 31, 2012, as filed with the SEC on Form 10-K.

(2) Business Combinations

During the six months ended September 30, 2012, we completed three business combinations for combined purchase consideration of $19.5 million. The purchase consideration was allocated to acquired assets and assumed liabilities consisting primarily of $19.5 million of acquired technology, with weighted average economic lives of approximately three years, in addition to other tangible assets and liabilities. These acquisitions resulted in a preliminary allocation of $2.7 million to goodwill assigned to our Enterprise Service Management segment. We are in the process of finalizing our assessment of the fair value of acquired assets and assumed liabilities and will adjust the purchase price allocations when they are finalized.

(3) Financial Instruments

We measure certain financial instruments at fair value on a recurring basis using the following valuation techniques:

(A) Market approach — Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

(B) Income approach — Uses valuation techniques to convert future estimated cash flows to a single present amount based on current market expectations about those future amounts, using present value techniques.

6

The fair values of our financial instruments were determined using the following input levels and valuation techniques:

	Fair Value Measurements at Reporting Date Using
September 30, 2012	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
	(In millions)
Assets
Cash equivalents
Money-market funds	$	182.4	$	182.4	$	—	$	—	A
United States Treasury securities		200.0		200.0		—		—	A
Short-term and long-term investments
United States Treasury securities		134.8		134.8		—		—	A
Auction rate securities		18.6		—		—		18.6	B
Mutual funds		20.7		20.7		—		—	A
Foreign currency forward contracts		5.5		—		5.5		—	A
Total	$	562.0	$	537.9	$	5.5	$	18.6
Liabilities
Foreign currency forward contracts	$	4.1	$	—	$	4.1	$	—	A
Total	$	4.1	$	—	$	4.1	$	—

Level 1 classification is applied to any asset or liability that has a readily available quoted market price from an active market where there is significant transparency in the executed/quoted price.

Level 2 classification is applied to assets and liabilities that have evaluated prices where the data inputs to these valuations are observable either directly or indirectly, but do not represent quoted market prices from an active market.

Level 3 classification is applied to assets and liabilities when prices are not derived from existing market data and requires us to develop our own assumptions about how market participants would value the asset or liability.

The following table summarizes the activity in our Level 3 financial instruments (auction rate securities) for the quarters and six months ended September 30, 2012 and 2011, respectively:

	Quarter Ended September 30,						Six Months Ended September 30,
	2012			2011			2012			2011
				(In millions)
Balance at the beginning of the period	$	18.7		$	26.8		$	26.9		$	27.2
Redemption and sales of auction rate securities		—			(0.2	)		(7.6	)		(0.4	)
Change in unrealized gain (loss) included in other comprehensive income		(0.1	)		(1.0	)		(0.7	)		(1.2	)
Balance at the end of the period	$	18.6		$	25.6		$	18.6		$	25.6

7

Investments

Our cash, cash equivalents and investments were comprised of the following:

	September 30, 2012						March 31, 2012
	Cash and Cash Equivalents		Short-term Investments		Long-term Investments		Cash and Cash Equivalents		Short-term Investments		Long-term Investments
	(In millions)
Measured at fair value:
Available-for-sale
United States Treasury securities	$	200.0	$	128.2	$	6.6	$	49.9	$	86.1	$	6.1
Auction rate securities		—		—		18.6		—		—		26.9
Trading
Mutual funds		—		—		20.7		—		—		19.6
Total debt and equity investments measured at fair value		200.0		128.2		45.9		49.9		86.1		52.6
Cash on hand		878.5		—		—		632.6		—		—
Certificates of deposit		50.3		—		—		45.1		—		—
Money-market funds		182.4		—		—		769.3		—		—
Total cash, cash equivalents and investments	$	1,311.2	$	128.2	$	45.9	$	1,496.9	$	86.1	$	52.6
Amounts included in accumulated other comprehensive income from available-for-sale securities (pre-tax):
Unrealized losses*	$	—	$	—	$	3.1	$	—	$	—	$	2.4

* The unrealized losses on available-for-sale securities at September 30, 2012 and March 31, 2012 relate to the auction rate securities.

The following summarizes the underlying contractual maturities of our available-for-sale investments in debt securities at September 30, 2012:

	Cost		Fair Value
	(In millions)
Due in one year or less	$	328.2	$	328.2
Due between one and two years		6.6		6.6
Due after ten years		21.7		18.6
Total	$	356.5	$	353.4

At September 30, 2012 and March 31, 2012, we held auction rate securities with a par value of $21.7 million and $29.3 million, respectively, which were classified as available-for-sale. The total estimated fair value of our auction rate securities was $18.6 million and $26.9 million at September 30, 2012 and March 31, 2012, respectively. Our auction rate securities consist entirely of bonds issued by public agencies that are backed by student loans with at least a 97% guarantee by the federal government under the United States Department of Education’s Federal Family Education Loan Program. All of these bonds are currently rated investment grade by Moody’s or Standard and Poor’s. Auctions for these securities began failing in early 2008 and have continued to fail, resulting in our continuing to hold such securities and the issuers paying interest at the maximum contractual rates. We do not believe that any of the underlying issuers of these auction rate securities are presently at risk of default or that the underlying credit quality of the assets backing the auction rate security investments has been impacted by the reduced liquidity of these investments. Due to the illiquidity in the auction rate securities market caused by failed auctions, we estimated the fair value of these securities using internally developed models of the expected cash flows of the securities on a discounted basis. These models incorporate assumptions about the expected cash flows of the underlying student loans discounted at an estimate of the rate of return required by investors, which includes an adjustment to reflect a lack of liquidity in the market for these securities. The range of and weighted average discount rates used in our valuation models at September 30, 2012 were 3.7% to 4.1%, and 3.9%, respectively. Significant increases (decreases) in the discount rate used in the valuation would result in decreases (increases) in the fair value of the auction rate securities. Periodically, the issuers of certain of our auction rate securities have redeemed portions of our holdings at par value plus accrued interest. There were no redemptions during the quarter ended September 30, 2012. During the six months ended September 30, 2012, issuers redeemed available-for-sale holdings of $7.6 million par value. During the quarter and six months ended September 30, 2011, issuers redeemed available-for-sale holdings of $0.2 million and $0.4 million par value, respectively.

8

The unrealized loss on our available-for-sale auction rate securities, which have a fair value of $18.6 million at September 30, 2012, was $3.1 million and was recorded in accumulated other comprehensive income (loss) as we believe the decline in fair value of these auction rate securities is temporary. In making this determination, we primarily considered the financial condition and near-term prospects of the issuers, the probability scheduled cash flows will continue to be made and the likelihood we would be required to sell the investments before recovery of our cost basis. These available-for-sale auction rate securities have been in an unrealized loss position for greater than twelve months. Because of the uncertainty related to the timing of liquidity associated with these auction rate securities, these securities are classified as long-term investments at September 30, 2012 and March 31, 2012.

Derivative Financial Instruments

We operate globally and transact business in various foreign currencies. Our foreign currency exposures relate primarily to certain foreign currency denominated assets and liabilities, primarily non-U.S. dollar denominated accounts receivable, cash and intercompany balances held by U.S. dollar functional currency entities. To minimize the risk from changes in foreign currency exchange rates, we have established a program that utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. Gains or losses on our foreign currency exposures are offset by gains or losses on the foreign currency forward contracts entered into under this program. These foreign currency forward contracts generally have terms of one month or less and are generally entered into at the prevailing market exchange rate at the end of each month. We do not use foreign currency forward contracts for speculative purposes. While these foreign currency forward contracts are utilized to hedge foreign currency exposures, they are not formally designated as hedges for accounting purposes, and therefore, the changes in the fair values of these contracts are recognized currently in earnings. We record these foreign currency forward contracts at fair value as either assets or liabilities depending on their net settlement position with each respective counterparty at the balance sheet date.

The fair value of our outstanding foreign currency forward contracts that closed in a gain position at September 30, 2012 and March 31, 2012 was $5.5 million and $8.1 million, respectively, and was recorded within other current assets in our condensed consolidated balance sheets. The fair value of our outstanding foreign currency forward contracts that closed in a loss position at September 30, 2012 and March 31, 2012 was $4.1 million and $0.6 million, respectively, and was recorded within accrued liabilities in our condensed consolidated balance sheets. The notional amounts at contract exchange rates of our foreign currency forward contracts outstanding were:

	Notional Amount
	September 30, 2012		March 31, 2012
	(In millions)
Foreign Currency Forward Contracts (receive United States dollar/pay foreign currency)
Euro	$	90.4	$	214.2
Australian dollar		19.8		29.9
Chinese yuan renminbi		13.9		11.7
Swiss franc		7.5		6.8
Singapore dollar		5.6		3.8
New Zealand dollar		5.0		3.4
Canadian dollar		3.8		—
South Korean won		2.9		2.6
Danish krone		2.7		3.9
Brazilian real		2.1		8.7
British pound		—		19.2
Swedish krona		—		8.2
Mexican peso		—		3.2
Other		5.0		6.4
Total	$	158.7	$	322.0

9

	Notional Amount
	September 30,		March 31,
	2012		2012
	(In millions)
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)
Israeli shekel	$	146.5	$	158.2
Indian rupee		11.0		15.0
British pound		6.3		—
Other		0.5		4.8
Total	$	164.3	$	178.0

Our use of foreign currency forward contracts is intended to principally offset gains and losses associated with foreign currency exposures. Therefore, the notional amounts and currencies underlying our foreign currency forward contracts will fluctuate period to period as they are principally dependent on the balances and currency denomination of monetary assets and liabilities maintained by our global entities. The effect of the foreign currency forward contracts for the quarter and six months ended September 30, 2012, was a loss of $1.9 million and a gain of $4.5 million, respectively, which, after including gains and losses on our foreign currency exposures, resulted in net gains of $1.0 million and $0.6 million, respectively, recorded in interest and other income, net. The effect of the foreign currency forward contracts for the quarter and six months ended September 30, 2011, was losses of $2.3 million and $6.0 million, respectively, which, after including gains and losses on our foreign currency exposures, resulted in net losses of $0.9 million and $1.9 million, respectively, recorded in interest and other income, net.

We are exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments, but we do not expect any counterparties to fail to meet their obligations given their high credit ratings. In addition, we diversify this risk across several counterparties and utilize netting agreements to mitigate the counterparty credit risk.

Trade Finance Receivables

A substantial portion of our trade finance receivables is transferred to financial institutions on a non-recourse basis. We utilize wholly-owned finance subsidiaries in these finance receivables transfers. These entities are consolidated into our financial position and results of operations. We account for such transfers as sales in accordance with applicable accounting rules pertaining to the transfer of financial assets and the sale of future revenue when we have surrendered control of such receivables (including determining that such assets have been isolated beyond our reach and the reach of our creditors) and when we do not have significant continuing involvement in the generation of cash flows due the financial institutions. During the quarter and six months ended September 30, 2012, we transferred $39.0 million and $111.8 million, respectively, of such receivables through these programs. During the quarter and six months ended September 30, 2011, we transferred $147.8 million and $159.0 million, respectively, of such receivables through these programs. Finance receivables are typically transferred within several months after origination and the outstanding principal balance at the time of transfer typically approximates fair value.

For those finance receivables not transferred, we evaluate the credit risk of finance receivables in our portfolio based on regional characteristics specific to the risk climate in each of our geographic operations as well as based on internal credit quality indicators for individual receivables. We evaluate the credit risk of finance receivables using an internal credit rating system based on whether an individual receivable meets specific internal criteria including counterparty credit rating and receivable maturity date and assign an internal credit rating of 1, 2 or 3, with a credit rating of 1 representing the best credit quality.

For all regions and credit categories, a finance receivable will be specifically reserved once deemed uncollectible. As of September 30, 2012, we held $124.7 million of finance receivables, net of $0.3 million of specific receivables which have been fully reserved.

10

At September 30, 2012, our finance receivables balance, net of allowance, by region and by class of internal credit rating was as follows:

	North America		EMEA		Asia Pacific		Latin America		Total
	(In millions)
Class 1	$	61.9	$	29.4	$	4.6	$	1.2	$	97.1
Class 2		7.8		12.8		1.8		3.9		26.3
Class 3		0.1		—		0.2		1.0		1.3
Balance at the end of the period	$	69.8	$	42.2	$	6.6	$	6.1	$	124.7

Other Financial Instruments

The fair value of our senior unsecured notes due 2018 at September 30, 2012 and March 31, 2012, based on market prices (Level 2), was $372.4 million and $368.4 million, respectively, compared to the carrying value of $299.0 million and $298.9 million, respectively.

The fair value of our senior unsecured notes due 2022 at September 30, 2012 and March 31, 2012, based on market prices (Level 2), was $531.6 million and $506.6 million, respectively, compared to the carrying value of $497.5 million and $497.4 million, respectively.

The carrying values of all other financial instruments, consisting primarily of trade and finance receivables, accounts payable and other borrowings, approximate their respective fair values.

(4) Long-Term Borrowings

Long-term borrowings at September 30, 2012 and March 31, 2012 consisted of:

	September 30,			March 31,
	2012			2012
	(In millions)
Senior unsecured notes due 2018 (net of $1.0 million and $1.1 million of unamortized discount at September 30, 2012 and March 31, 2012, respectively)	$	299.0		$	298.9
Senior unsecured notes due 2022 (net of $2.5 million and $2.6 million of unamortized discount at September 30, 2012 and March 31, 2012, respectively)		497.5			497.4
Capital leases and other obligations		52.4			46.3
Total		848.9			842.6
Less current maturities of capital leases and other obligations (included in accrued liabilities)		(24.1	)		(21.0	)
Long-term borrowings	$	824.8		$	821.6

In February 2012, we issued $500.0 million of senior unsecured notes due 2022. Net proceeds to us after original issuance discount and issuance costs amounted to $493.3 million. These senior notes were issued at an original issuance discount of $2.7 million. These senior notes bear interest at a rate of 4.25% per annum, payable semi-annually in February and August of each year. These senior notes are redeemable at our option at any time in whole or, from time to time, in part at a redemption price equal to the greater of: (i) 100% of the principal amount of these senior notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest discounted at the applicable United States Treasury rate plus 35 basis points, plus accrued and unpaid interest.

In November 2010, we entered into a credit agreement with certain institutional lenders providing for an unsecured revolving credit facility in an amount up to $400.0 million which is scheduled to expire on November 30, 2014 (the Credit Facility). Subject to certain conditions, at any time prior to maturity, we may invite existing and new lenders to increase the size of the Credit Facility up to a maximum of $600.0 million. The Credit Facility includes provisions for swing line loans of up to $25.0 million and standby letters of credit of up to $50.0 million. Revolving loans under the Credit Facility bear interest, at the Company’s option, at a rate equal to either (i) the base rate (as defined) plus a margin based on the credit ratings of BMC's senior unsecured notes due 2018, or (ii) the LIBOR rate (as defined) plus a margin based on the credit ratings of BMC's senior notes due 2018, for interest periods of one, two, three or six months. As of September 30, 2012 and through October 31, 2012, we have not borrowed any funds under the Credit Facility.

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In June 2008, we issued $300.0 million of senior unsecured notes due 2018. Net proceeds to us after original issuance discount and issuance costs amounted to $295.6 million. These senior notes were issued at an original issuance discount of $1.8 million. These senior notes bear interest at a rate of 7.25% per annum, payable semi-annually in June and December of each year. These senior notes are redeemable at our option at any time in whole or, from time to time, in part at a redemption price equal to the greater of: (i) 100% of the principal amount of these senior notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest discounted at the applicable United States Treasury rate plus 50 basis points, plus accrued and unpaid interest.

The above credit facilities are subject to covenants limiting, among other things, the creation of liens securing indebtedness and sale-leaseback transactions. At September 30, 2012, we were in compliance with all debt covenants.

(5) Income Taxes

Income tax expense was $33.8 million and $45.2 million for the quarter and six months ended September 30, 2012, respectively, resulting in effective tax rates of 25.7% and 22.9%, respectively. Income tax expense was $41.5 million and $59.3 million for the quarter and six months ended September 30, 2011, respectively, resulting in effective tax rates of 26.6% and 22.0%, respectively. Our effective tax rate generally differs from the U.S. federal statutory rate of 35% due to favorable tax rates associated with earnings from lower tax rate jurisdictions throughout the world and our policy of indefinitely reinvesting earnings from certain jurisdictions (primarily in Europe), as well as due to additional accruals, changes in estimates, releases and settlements with taxing authorities related to our uncertain tax positions and benefits associated with income attributable to both domestic production activities and the extraterritorial income exclusion. During the quarter and six months ended September 30, 2012, the overall favorable effects of foreign tax rates on our effective tax rate were 7.2% and 9.3% of pre-tax earnings, respectively. During the quarter and six months ended September 30, 2011, the overall favorable effects of foreign tax rates on our effective tax rate were 6.7% and 8.9% of pre-tax earnings, respectively. During the six months ended September 30, 2011, we also recorded discrete net tax benefits of $6.2 million associated with tax authority settlements related to prior years’ tax matters which favorably impacted our effective tax rate by 2.3% of pre-tax earnings. Our effective tax rate could fluctuate on a quarterly basis and could be adversely affected to the extent forecasted earnings for the year are lower than anticipated in countries with lower statutory rates and higher than anticipated in countries with higher statutory rates.

We file a federal income tax return in the United States as well as income tax returns in various local, state and foreign jurisdictions. Our tax years are closed with the United States Internal Revenue Service (IRS) through the tax year ended March 31, 2007, except for one issue related to the year ended March 31, 2006. We received a Notice of Deficiency from the IRS related to this issue and in July 2011 filed a petition for hearing with the U.S. Tax Court. A trial was held in May 2012 and post-trial briefs have been submitted. We are currently awaiting the Tax Court’s ruling. The IRS is in the final stages of an examination of our federal income tax return for the years ended March 31, 2009 and 2010 and there are no unagreed issues. In addition, certain tax years related to local, state, and foreign jurisdictions remain subject to examination. To provide for potential tax exposures, we maintain a liability for unrecognized tax benefits which we believe is adequate.

(6) Share-Based Compensation

During the quarter and six months ended September 30, 2012, we granted 0.2 million and 2.0 million nonvested stock units, respectively, at a weighted average grant date fair value of $40.20 and $43.58, respectively, consisting of both time-based and market-based awards, to our executive officers, non-executive employees and non-employee board members. Time-based nonvested stock units primarily vest in annual increments over one or three years. Market-based nonvested stock units vest in 50% increments over two- and three-year periods upon achievement of certain targets related to our relative shareholder return as compared to the NASDAQ-100 Index over each performance period.

During the quarter and six months ended September 30, 2012, we issued 0.4 million and 1.0 million shares, respectively, of common stock related to exercises of stock options, and 0.3 million and 1.5 million shares, respectively, of common stock related to vesting of nonvested stock units.

At September 30, 2012, we had approximately $229.2 million of total unrecognized compensation costs related to share-based awards that are expected to be recognized as expense over a remaining weighted-average period of two years.

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Share-based compensation expense as recorded in our condensed consolidated statements of comprehensive income is summarized as follows:

	Quarter Ended				Six Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
			(In millions)
Cost of license revenue	$	1.8	$	1.2	$	3.3	$	2.3
Cost of maintenance revenue		4.2		3.8		8.7		7.3
Cost of professional services revenue		1.5		1.2		3.1		2.5
Selling and marketing expenses		14.0		10.0		27.9		19.1
Research and development expenses		3.1		3.6		6.4		6.5
General and administrative expenses		12.3		11.0		25.1		23.9
Total share-based compensation expense	$	36.9	$	30.8	$	74.5	$	61.6

(7) Stockholders’ Equity

Earnings Per Share

The two-class method is utilized for the computation of earnings per share (EPS). The two-class method requires a portion of net income to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents, if declared. Income allocated to these participating securities is excluded from net earnings allocated to common shares and was insignificant for the quarter and six months ended September 30, 2011. There were no participating securities outstanding during the quarter and six months ended September 30, 2012.

Basic earnings per share is computed by dividing net income allocated to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income allocated to common shares by the weighted average number of common shares outstanding during the period, plus the dilutive effect of outstanding share-based awards and other dilutive securities using the treasury stock method.

The following table summarizes our basic and diluted EPS computations for the quarters and six months ended September 30, 2012 and 2011:

	Quarter Ended				Six Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
	(In millions, except per share data)
Basic earnings per share:
Net earnings allocated to common shares	$	97.8	$	114.7	$	152.0	$	210.4
Weighted average number of common shares outstanding		157.5		173.0		158.9		174.7
Basic earnings per share	$	0.62	$	0.66	$	0.96	$	1.20
Diluted earnings per share:
Net earnings allocated to common shares	$	97.8	$	114.7	$	152.0	$	210.4
Weighted average number of common shares outstanding		157.5		173.0		158.9		174.7
Incremental shares from assumed conversions of share-based awards		2.8		3.0		3.2		3.6
Adjusted weighted average number of common shares outstanding		160.3		176.0		162.1		178.3
Diluted earnings per share	$	0.61	$	0.65	$	0.94	$	1.18

For the quarter and six months ended September 30, 2012, 0.9 million and 0.9 million weighted average potential common shares, respectively, have been excluded from the calculation of diluted EPS as they were anti-dilutive. For the quarter and six months ended September 30, 2011, 1.5 million and 0.9 million weighted average potential common shares, respectively, have been excluded from the calculation of diluted EPS as they were anti-dilutive.

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Treasury Stock

Our Board of Directors has previously authorized a total of $5.0 billion to repurchase common stock. During the quarter and six months ended September 30, 2012, we repurchased 4.8 million and 8.3 million shares, respectively, for $200.0 million and $350.0 million, respectively, under these authorizations. At September 30, 2012, approximately $500.3 million remains authorized in the stock repurchase program, which does not have an expiration date. In October 2012, our Board of Directors approved a new $1 billion stock repurchase program. We expect $750 million of the repurchase to be executed via an accelerated share repurchase agreement to be entered into during the quarter ending December 31, 2012.

During the quarter and six months ended September 30, 2012, we repurchased 0.1 million and 0.5 million shares, respectively, for $3.1 million and $20.0 million, to satisfy employee tax withholding obligations upon the vesting of share-based awards.

Shareholder Rights Agreement

On May 12, 2012, our Board of Directors authorized and declared a dividend of one preferred share purchase right (a Right) for each outstanding common share through a shareholder rights agreement (the Rights Agreement). Each Right, once exercisable, represents the right to purchase one one-thousandth of a series B junior participating preferred share, par value $0.01, for $180, or an equivalent value of common shares determined at 50% of the then-current market price of BMC’s common stock, provided sufficient common shares are then unissued. The Rights become exercisable in the event any individual person or entity (including the ownership of their related affiliates) acquires 10% or more of the outstanding share capital of the Company without the approval of BMC’s Board of Directors, and until such time are inseparable from and trade with BMC’s common stock. The Rights have a de minimus fair value and are accounted for as a component of stockholders’ equity. The Rights Agreement expires May 11, 2013.

(8) Guarantees and Contingencies

Guarantees

Under our standard software license agreements, we agree to indemnify, defend and hold harmless our licensees from and against certain losses, damages and costs arising from claims alleging the licensees’ use of our software infringes the intellectual property rights of a third party. Also, under these standard license agreements, we represent and warrant to licensees that our software products operate substantially in accordance with published specifications.

Other guarantees include promises to indemnify, defend and hold harmless each of our executive officers, non-employee directors and certain key employees from and against losses, damages and costs incurred by each such individual in administrative, legal or investigative proceedings arising from alleged wrongdoing by the individual while acting in good faith within the scope of his or her job duties on our behalf.

We also had outstanding letters of credit, performance bonds and similar instruments at September 30, 2012 of approximately $46.1 million primarily in support of performance obligations to various customers, but also related to facilities and other obligations.

Historically, we have not incurred significant costs related to such indemnifications, warranties and guarantees. As such, and based on other factors, no provision or accrual for these items has been made.

Contingencies

We are party to various labor claims brought by certain former international employees alleging that amounts are due to such employees for unpaid commissions and other compensation. The claims are in various stages and are not expected to be fully resolved in the near future; however, we intend to vigorously contest all of the claims. Taking into account accruals recorded by us, we believe the likelihood of a material adverse effect on our financial statements resulting from these claims is remote. However, we cannot predict the timing or ultimate outcome of these matters.

We are currently litigating a matter in Brazilian courts as to whether a tax applies to the remittance of software payments from our Brazilian operations. In February 2007, a law was enacted that clarified that this particular tax did not apply to the remittance of software payments, retroactive to January 1, 2006. We continue to pursue a favorable resolution on this matter for years prior to January 1, 2006. While we believe we will ultimately prevail based on the merits of our position, if we do not, we could incur a charge of up to approximately $10 million based on current exchange rates; however, we cannot predict the timing or ultimate outcome of this matter.

We are subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. Taking into account accruals recorded by us, we believe the likelihood of a material adverse effect on our financial statements resulting from any of these matters is remote.

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(9) Segment Reporting

We are organized into two primary business units, Enterprise Service Management (ESM) and Mainframe Service Management (MSM). ESM derives its revenue from our performance management, automation, IT service management, and Atrium solution suites (collectively, ESM-Solutions), along with professional services revenue derived from consulting, implementation, integration and educational services related principally to the delivery of our ESM solutions (ESM-Services). MSM derives its revenue from solution suites for mainframe data and performance management and enterprise workload automation. Beginning in the first quarter of fiscal 2013, we expanded our ESM segment reporting to include separate financial information for both ESM-Solutions and ESM-Services, consistent with the manner in which business segment performance is being assessed internally for evaluating performance and making resource allocation decisions.

Segment performance is measured based on internal segment operating income. Segment operating income for ESM-Solutions and MSM reflects segment revenue less direct and allocated indirect segment operating expenses. Direct segment operating expenses primarily include cost of revenue, selling and marketing, research and development and general and administrative expenses that can be specifically identified to a particular segment and are directly controllable by segment management, while allocated indirect segment operating expenses primarily include indirect costs within these operating expense categories that are not specifically identified to a particular segment or controllable by segment management. Indirect operating expenses are allocated to ESM-Solutions and MSM based on budgeted bookings, revenue and other allocation methods that management believes to be reasonable. Segment operating income for ESM-Services reflects professional services revenue less direct segment operating expenses consisting primarily of cost of professional services revenue and direct selling and marketing costs. The Company has reclassified all periods presented to conform to the current period presentation.

Our measure of segment operating income does not include the effect of share-based compensation expenses, amortization of acquired technology and other intangible assets, the costs associated with severance, exit costs and related charges or proxy contest costs, which are collectively included in unallocated operating expenses below. Assets and liabilities are reviewed by management at the consolidated level only.

15

The following tables summarize segment performance for the quarters and six months ended September 30, 2012 and 2011:

	Enterprise Service Management							Mainframe Service Management		Consolidated
Quarter Ended September 30, 2012	Solutions		Services			Total
	(In millions)
Revenue:
License	$	129.0	$	—		$	129.0	$	80.2	$	209.2
Maintenance		161.9		—			161.9		123.5		285.4
Professional services		—		53.6			53.6		—		53.6
Total revenue		290.9		53.6			344.5		203.7		548.2
Direct and allocated indirect segment operating expenses:		213.9		58.7			272.6		77.2		349.8
Segment operating income (loss)		77.0		(5.1	)		71.9		126.5		198.4
Unallocated operating expenses											(60.4	)
Other loss, net											(6.4	)
Earnings before income taxes										$	131.6
	Enterprise Service Management							Mainframe Service Management		Consolidated
Quarter Ended September 30, 2011	Solutions		Services			Total
	(In millions)
Revenue:
License	$	146.0	$	—		$	146.0	$	83.7	$	229.7
Maintenance		145.6		—			145.6		124.9		270.5
Professional services		—		56.5			56.5		—		56.5
Total revenue		291.6		56.5			348.1		208.6		556.7
Direct and allocated indirect segment operating expenses:		200.9		58.2			259.1		81.2		340.3
Segment operating income (loss)		90.7		(1.7	)		89.0		127.4		216.4
Unallocated operating expenses											(55.4	)
Other loss, net											(4.8	)
Earnings before income taxes										$	156.2

16

	Enterprise Service Management							Mainframe Service Management		Consolidated
Six Months Ended September 30, 2012	Solutions		Services			Total
	(In millions)
Revenue:
License	$	226.1	$	—		$	226.1	$	154.7	$	380.8
Maintenance		318.4		—			318.4		245.8		564.2
Professional services		—		107.6			107.6		—		107.6
Total revenue		544.5		107.6			652.1		400.5		1,052.6
Direct and allocated indirect segment operating expenses:		428.2		120.4			548.6		157.6		706.2
Segment operating income (loss)		116.3		(12.8	)		103.5		242.9		346.4
Unallocated operating expenses											(134.5	)
Other loss, net											(14.7	)
Earnings before income taxes										$	197.2
	Enterprise Service Management							Mainframe Service Management		Consolidated
Six Months Ended September 30, 2011	Solutions		Services			Total
	(In millions)
Revenue:
License	$	264.5	$	—		$	264.5	$	154.7	$	419.2
Maintenance		286.8		—			286.8		248.3		535.1
Professional services		—		104.8			104.8		—		104.8
Total revenue		551.3		104.8			656.1		403.0		1,059.1
Direct and allocated indirect segment operating expenses:		398.8		108.9			507.7		164.5		672.2
Segment operating income (loss)		152.5		(4.1	)		148.4		238.5		386.9
Unallocated operating expenses											(110.8	)
Other loss, net											(6.4	)
Earnings before income taxes										$	269.7

(10) New Accounting Pronouncements Not Yet Adopted

In December 2011, the Financial Accounting Standards Board (FASB) issued guidance requiring new disclosures regarding balance sheet offsetting. This guidance requires entities to disclose the gross amounts of certain recognized financial assets and liabilities, to reconcile these amounts to the net positions recognized in the balance sheet and to provide qualitative disclosures about the rights of offset relating to these financial assets and liabilities. This new disclosure guidance is effective for us beginning with our first quarter of fiscal 2014.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

It is important that this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) be read in conjunction with: (i) the attached unaudited condensed consolidated financial statements and notes thereto, (ii) the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2012, and (iii) our discussion of risks and uncertainties included within the section entitled Risk Factors in our Annual Report on Form 10-K for the year ended March 31, 2012.

This MD&A contains certain 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), which are identified by the use of the words “believe,” “expect,” “anticipate,” “estimate,” “will,” “contemplate,” “would” and similar expressions that contemplate future events. Such forward-looking statements are based on management’s reasonable current assumptions and expectations. Numerous important factors, risks and uncertainties, including but not limited to those summarized under Risk Factors in our Annual Report on Form 10-K for the year ended March 31, 2012, affect our operating results and could cause our actual results, levels of activity, performance or achievement to differ materially from the results expressed or implied by these or any other forward-looking statements made by us or on our behalf. There can be no assurance that future results will meet expectations.

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.

Unless indicated otherwise, results of operations data in this MD&A are presented in accordance with United States generally accepted accounting principles (GAAP). Additionally, in an effort to provide investors with additional information regarding our results of operations, certain non-GAAP financial measures including non-GAAP operating income, non-GAAP net earnings and non-GAAP diluted earnings per share are provided in this MD&A. See Non-GAAP Financial Measures and Reconciliations below for an explanation of our use of non-GAAP financial measures and reconciliations to their corresponding measures calculated in accordance with GAAP.

18

Overview

A summary of select operating metrics for the quarter and six months ended September 30, 2012 is as follows:

• Total bookings, which represent the contract value of new transactions that we closed and recorded, were $430.4 million for the quarter, representing an increase of $48.0 million, or 12.6%, over the prior year quarter, and for the first half of fiscal 2013 were $900.7 million, representing a decrease of $97.1 million, or 9.7%, from the prior year period. Within the first half of the prior fiscal year, one large transaction generated total bookings of over $100 million, principally related to our MSM business.

• Total license bookings were $187.8 million for the quarter, representing an increase of $0.3 million, or 0.1%, over the prior year quarter, and for the first half of fiscal 2013 were $315.7 million, representing a decrease of $64.3 million, or 16.9%, from the prior year period. During the quarter, we closed 34 transactions with license bookings over $1 million (with total license bookings of $93.3 million) compared to 37 transactions with license bookings over $1 million (with total license bookings of $96.4 million) in the prior year quarter. During the first half of fiscal 2013, we closed 55 transactions with license bookings over $1 million (with total license bookings of $147.1 million) compared to 68 transactions with license bookings over $1 million (with total license bookings of $218.5 million) in the prior year period.

• Within our ESM-Solutions segment, where we evaluate performance on the basis of license bookings, total license bookings for the quarter increased by $2.6 million, or 2.1%, over the prior year quarter, and for the first half of fiscal 2013 decreased by $9.1 million, or 4.0%, from the prior year period. We attribute this first half decrease primarily to the impact of foreign currency exchange rate changes, a weakening global economic environment and internal sales-related factors. We estimate that foreign currency exchange rate changes for the quarter had a minimal impact on ESM license bookings as compared to the prior year quarter and for the first half of fiscal 2013 contributed to an approximate $5 million, or 2%, reduction in ESM license bookings as compared to the prior year period, on a constant currency basis. We also saw evidence of the weakening economic environment in certain areas. Lastly, while sales force capacity has reached planned levels, we believe that overall productivity for the first half of fiscal 2013 was negatively impacted by lower sales force tenure and experience levels, particularly in certain regions.

• Within our MSM segment, where we evaluate performance based on total and annualized bookings, total bookings for the trailing twelve months ended September 30, 2012 decreased by $146.9 million, or 15.6%, and on an annualized basis, after normalizing for contract length, decreased by $22.9 million, or 7.9%, as compared to the prior year period. These trailing twelve month decreases were attributable primarily to the large prior year transaction referred to above as well as the timing of other transaction renewal cycles. Over the trailing 36 months ended September 30, 2012, total MSM bookings increased by $54.9 million, or 2.3%, and on an annualized basis, after normalizing for contract length, increased by $18.3 million, or 2.3%, as compared to the prior year period.

• Total revenue for the quarter was $548.2 million, representing a decrease of $8.5 million, or 1.5%, from the prior year quarter, and for the first half of fiscal 2013 was $1,052.6 million, representing a decrease of $6.5 million, or 0.6%, from the prior year period. The decrease for the quarter was reflective of decreases of $20.5 million, or 8.9%, and $2.9 million, or 5.1%, in license and professional services revenue, respectively, partially offset by a maintenance revenue increase of $14.9 million, or 5.5%. The decrease for the first half of fiscal 2013 was reflective of a decrease of $38.4 million, or 9.2%, in license revenue, partially offset by increases of $29.1 million, or 5.4%, and $2.8 million, or 2.7%, in maintenance and professional services revenue, respectively. On a segment basis, ESM-Solutions revenue for the quarter decreased by $0.7 million, or 0.2%, ESM-Services revenue decreased by $2.9 million, or 5.1%, and MSM revenue decreased by $4.9 million, or 2.3%, as compared to the prior year quarter. For the first half of fiscal 2013, ESM-Solutions revenue decreased by $6.8 million, or 1.2%, ESM-Services revenue decreased by $2.8 million, or 2.7%, and MSM revenue decreased by $2.5 million, or 0.6%, from the prior year period. We estimate that foreign currency exchange rate fluctuations contributed to an approximate $7 million, or 1%, decrease in revenue for the quarter, and an approximate $17 million, or 2%, decrease in revenue for the first half of fiscal 2013, as compared to the respective prior year periods, on a constant currency basis.

19

• Operating income for the quarter was $138.0 million, representing a decrease of $23.0 million, or 14.3%, from the prior year quarter, and for the first half of fiscal 2013 was $211.9 million, representing a decrease of $64.2 million, or 23.3%, from the prior year period. Non-GAAP operating income for the quarter was $198.4 million, representing a decrease of $18.0 million, or 8.3%, from the prior year quarter, and for the first half of fiscal 2013 was $346.4 million, representing a decrease of $40.5 million, or 10.5%, from the prior year period.

• Net earnings for the quarter were $97.8 million, representing a decrease of $16.9 million, or 14.7%, from the prior year quarter, and for the first half of fiscal 2013 were $152.0 million, representing a decrease of $58.4 million, or 27.8%, from the prior year period. Non-GAAP net earnings for the quarter were $140.8 million, representing a decrease of $12.6 million, or 8.2%, from the prior year quarter, and for the first half of fiscal 2013 were $246.7 million, representing a decrease of $36.0 million, or 12.7%, from the prior year period.

• Diluted earnings per share for the quarter was $0.61, representing a decrease of $0.04 per share, or 6.2%, from the prior year quarter, and for the first half of fiscal 2013 was $0.94, representing a decrease of $0.24 per share, or 20.3%, from the prior year period. Non-GAAP diluted earnings per share was $0.88, representing an increase of $0.01 per share, or 1.1%, over the prior year quarter, and for the first half of fiscal 2013 was $1.52, representing a decrease of $0.07 per share, or 4.4%, from the prior year period.

• Cash flows from operations for the six months ended September 30, 2012 were $286.1 million, representing a decrease of $137.0 million, or 32.4%, from the prior year period. We closed out the quarter with a strong balance sheet at September 30, 2012, including $1.5 billion in cash, cash equivalents and investments and $1.8 billion in deferred revenue.

We continue to invest in our technology leadership, including in the areas of cloud computing and software-as-a-service (SaaS). In addition to our ongoing product development efforts, we consummated three strategic acquisitions in our ESM segment during the six months ended September 30, 2012, acquiring Abydos Limited, a provider of workflow management solutions, VaraLogix, Inc., an application release automation provider, and my-eService, Inc., a provider of self-service IT support solutions.

We also continue to enhance shareholder value by returning cash to shareholders through our stock repurchase program. During the six months ended September 30, 2012, we repurchased 8.3 million shares for a total value of $350.0 million. In October 2012, our Board of Directors approved a new $1 billion stock repurchase program. We expect $750 million of the repurchase to be executed via an accelerated share repurchase agreement to be entered into during the quarter ending December 31, 2012.

Our earnings are subject to volatility as a significant portion of our operating expenses is fixed in the short-term and we plan a portion of our expense run-rate based on our expectations of future revenue. In addition, a significant amount of our license transactions are completed during the final weeks and days of each quarter and, therefore, we generally do not know whether revenue has met our expectations until after the end of the quarter. If a shortfall in revenue were to occur in any given quarter, there would be an immediate, and possibly significant, impact to our overall earnings and, most likely, our stock price.

Because our software solutions are designed for and marketed to companies looking to improve the management of their IT infrastructure and processes, demand for our products, and therefore our financial results, are dependent upon customers continuing to value such solutions and to invest in such technology. There are a number of trends that have historically influenced demand for IT management software, including, among others, business demands placed on IT, computing capacity within IT departments, complexity of IT systems and IT operational costs. Our financial results are also influenced by many economic and industry conditions, including, but not limited to, general economic and market conditions in the United States and other economies in which we market products, changes in foreign currency exchange rates, general levels of customer spending, IT budgets, the competitiveness of the IT management software and solutions industry, the adoption rate for Business Service Management and the stability of the mainframe market.

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Results of Operations and Financial Condition

The following table sets forth, for the periods indicated, the percentages that selected items in the condensed consolidated statements of comprehensive income represent of total revenue. These financial results are not necessarily indicative of future results.

	Percentage of Total Revenue
	Quarter Ended September 30,						Six Months Ended September 30,
	2012			2011			2012			2011
Revenue:
License		38.2	%		41.3	%		36.2	%		39.6	%
Maintenance		52.1	%		48.6	%		53.6	%		50.5	%
Professional services		9.8	%		10.1	%		10.2	%		9.9	%
Total revenue		100.0	%		100.0	%		100.0	%		100.0	%
Operating expenses:
Cost of license revenue		7.4	%		7.1	%		7.6	%		7.3	%
Cost of maintenance revenue		9.7	%		8.9	%		9.9	%		8.8	%
Cost of professional services revenue		9.9	%		9.6	%		10.7	%		9.5	%
Selling and marketing expenses		29.8	%		27.6	%		31.1	%		28.2	%
Research and development expenses		5.9	%		6.9	%		7.1	%		7.8	%
General and administrative expenses		10.2	%		9.2	%		11.3	%		10.3	%
Amortization of intangible assets		2.0	%		2.0	%		2.2	%		2.0	%
Total operating expenses		74.8	%		71.1	%		79.9	%		73.9	%
Operating income		25.2	%		28.9	%		20.1	%		26.1	%
Other loss, net		(1.2	)%		(0.9	)%		(1.4	)%		(0.6	)%
Earnings before income taxes		24.0	%		28.1	%		18.7	%		25.5	%
Provision for income taxes		6.2	%		7.5	%		4.3	%		5.6	%
Net earnings		17.8	%		20.6	%		14.4	%		19.9	%

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Revenue

The following tables provide information regarding software license and software maintenance revenue for the quarters and six months ended September 30, 2012 and 2011:

	Quarter Ended							Six Months Ended
	September 30,							September 30,
Software License Revenue	2012		2011		% Change			2012		2011		% Change
	(In millions)							(In millions)
Enterprise Service Management	$	129.0	$	146.0		(11.6	)%	$	226.1	$	264.5		(14.5	)%
Mainframe Service Management		80.2		83.7		(4.2	)%		154.7		154.7		—
Total software license revenue	$	209.2	$	229.7		(8.9	)%	$	380.8	$	419.2		(9.2	)%
	Quarter Ended							Six Months Ended
	September 30,							September 30,
Software Maintenance Revenue	2012		2011		% Change			2012		2011		% Change
	(In millions)							(In millions)
Enterprise Service Management	$	161.9	$	145.6		11.2	%	$	318.4	$	286.8		11.0	%
Mainframe Service Management		123.5		124.9		(1.1	)%		245.8		248.3		(1.0	)%
Total software maintenance revenue	$	285.4	$	270.5		5.5	%	$	564.2	$	535.1		5.4	%
	Quarter Ended							Six Months Ended
	September 30,							September 30,
Total Software Revenue	2012		2011		% Change			2012		2011		% Change
	(In millions)							(In millions)
Enterprise Service Management	$	290.9	$	291.6		(0.2	)%	$	544.5	$	551.3		(1.2	)%
Mainframe Service Management		203.7		208.6		(2.3	)%		400.5		403.0		(0.6	)%
Total software revenue	$	494.6	$	500.2		(1.1	)%	$	945.0	$	954.3		(1.0	)%

Software License Revenue

License revenue for the quarter ended September 30, 2012 was $209.2 million, a decrease of $20.5 million, or 8.9%, from the prior year quarter. This decrease was attributable to decreases in ESM and MSM license revenue, as further discussed below. Recognition of license revenue that was deferred in prior periods decreased $8.7 million for the quarter ended September 30, 2012 as compared to the prior year quarter. Of the license revenue transactions recorded, the percentage of license revenue recognized upfront was 60% in the current quarter as compared to 64% in the prior year quarter.

License revenue for the six months ended September 30, 2012 was $380.8 million, a decrease of $38.4 million, or 9.2%, from the prior year period. This decrease was attributable to a decrease in ESM license revenue, as further discussed below, while MSM license revenue remained relatively flat as compared to the prior year period. Recognition of license revenue that was deferred in prior periods decreased $18.5 million for the six months ended September 30, 2012 as compared to the prior year period. Of the license revenue transactions recorded, the percentage of license revenue recognized upfront was 59% in the current six month period as compared to 54% in the prior year period.

ESM license revenue was $129.0 million, or 61.7%, and $226.1 million, or 59.4%, of our total license revenue for the quarter and six months ended September 30, 2012, respectively, and $146.0 million, or 63.6%, and $264.5 million, or 63.1%, of our total license revenue for the quarter and six months ended September 30, 2011, respectively. ESM license revenue for the quarter ended September 30, 2012 decreased by $17.0 million, or 11.6%, from the prior year quarter, due to a $9.9 million decrease in the recognition of previously deferred license revenue and a $7.1 million reduction in upfront license revenue recognized in connection with new transactions. The decrease in upfront license revenue recognized in the quarter ended September 30, 2012 was attributable to a lower percentage of license transaction bookings that were recognized as revenue upfront rather than ratably over the underlying contractual maintenance terms, partially offset by an increase in license bookings. ESM license revenue for the six months ended September 30, 2012 decreased by $38.4 million, or 14.5%, from the prior year period, due to a $22.2 million decrease in the recognition of previously deferred license revenue and a $16.2 million reduction in upfront license revenue in connection with new transactions. The decrease in upfront license revenue recognized in the six months ended September 30, 2012 was attributable to a decrease in license transaction bookings along with a lower percentage of such bookings that were recognized as revenue upfront rather than ratably over the underlying contractual maintenance terms.

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MSM license revenue was $80.2 million, or 38.3%, and $154.7 million, or 40.6%, of our total license revenue for the quarter and six months ended September 30, 2012, and $83.7 million, or 36.4%, and $154.7 million, or 36.9%, of our total license revenue for the quarter and six months ended September 30, 2011. MSM license revenue for the quarter ended September 30, 2012 decreased by $3.5 million, or 4.2%, from the prior year quarter. This decrease was due to a $4.7 million decrease in the amount of upfront license revenue recognized in connection with new transactions, partially offset by a $1.2 million increase in the recognition of previously deferred license revenue. The decrease in upfront license revenue recognized in the quarter ended September 30, 2012 was attributable to a decrease in license bookings along with a slight decrease in the percentage of license transaction bookings that were recognized as revenue upfront rather than ratably over the underlying contractual maintenance terms. MSM license revenue for the six months ended September 30, 2012 remained flat as compared to the prior year period.

Deferred License Revenue

For the quarters ended September 30, 2012 and 2011, our recognized license revenue was impacted by the changes in our deferred license revenue balance as follows:

	Quarter Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
				(In millions)
Deferrals of license revenue	$	75.6		$	67.9		$	129.1		$	174.0
Recognition from deferred license revenue		(98.2	)		(106.9	)		(192.7	)		(211.2	)
Impact of foreign currency exchange rate changes		1.2			(3.2	)		(1.5	)		(2.0	)
Net decrease in deferred license revenue	$	(21.4	)	$	(42.2	)	$	(65.1	)	$	(39.2	)
Deferred license revenue balance at end of period	$	625.6		$	646.9		$	625.6		$	646.9

The primary reasons for license revenue deferrals include, but are not limited to, customer transactions that include products for which the maintenance pricing is based on a combination of undiscounted license list prices, net license fees or discounted license list prices, certain arrangements that include unlimited licensing rights, time-based licenses that are recognized over the term of the arrangement, customer transactions that include products with differing maintenance periods and other transactions for which we do not have or are not able to determine vendor-specific objective evidence of the fair value of the maintenance and/or professional services. The contract terms and conditions that result in deferral of revenue recognition for a given transaction result from arm’s length negotiations between us and our customers. We anticipate our transactions will continue to include such contract terms that result in deferral of the related license revenue as we expand our offerings to meet customers’ product, pricing and licensing needs.

Once it is determined that license revenue for a particular contract must be deferred, based on the contractual terms and application of revenue recognition policies to those terms, we recognize such license revenue either ratably over the term of the contract or when the revenue recognition criteria are met. Because of this, we generally know the timing of the subsequent recognition of license revenue at the time of deferral. Therefore, the amount of license revenue to be recognized from the deferred revenue balance in each future quarter is generally predictable. At September 30, 2012, the deferred license revenue balance was $625.6 million. Estimated future recognition from deferred license revenue at September 30, 2012 is (in millions):

Remainder of fiscal 2013	$	179.6
Fiscal 2014		225.8
Fiscal 2015 and thereafter		220.2
	$	625.6

Software Maintenance Revenue

Maintenance revenue for the quarter ended September 30, 2012 was $285.4 million, an increase of $14.9 million, or 5.5%, over the prior year quarter, due to an increase in ESM maintenance revenue, partially offset by a decrease in MSM maintenance revenue, as discussed below. Maintenance revenue for the six months ended September 30, 2012 was $564.2 million, an increase of $29.1 million, or 5.4%, over the prior year period, due to an increase in ESM maintenance revenue, partially offset by a decrease in MSM maintenance revenue, as discussed below. Maintenance revenue included revenue from our SaaS offerings, which is included in our ESM segment, of $6.3 million and $2.4 million for the quarters ended September 30, 2012 and 2011, respectively, and $11.9 million and $3.5 million for the six months ended September 30, 2012 and 2011, respectively.

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ESM maintenance revenue was $161.9 million, or 56.7%, and $318.4 million, or 56.4%, of our total maintenance revenue for the quarter and six months ended September 30, 2012, respectively, and $145.6 million, or 53.8%, and $286.8 million, or 53.6%, of our total maintenance revenue for the quarter and six months ended September 30, 2011, respectively. ESM maintenance revenue for the quarter ended September 30, 2012 increased by $16.3 million, or 11.2%, over the prior year quarter. ESM maintenance revenue for the six months ended September 30, 2012 increased by $31.6 million, or 11.0%, over the prior year period. These increases were attributable primarily to an expanded installed ESM customer license base and increases in SaaS subscription revenue.

MSM maintenance revenue was $123.5 million, or 43.3%, and $245.8 million, or 43.6%, of our total maintenance revenue for the quarter and six months ended September 30, 2012, respectively, and $124.9 million, or 46.2%, and $248.3 million, or 46.4%, of our total maintenance revenue for the quarter and six months ended September 30, 2011, respectively. MSM maintenance revenue for the quarter ended September 30, 2012 decreased by $1.4 million, or 1.1%, from the prior year quarter. MSM maintenance revenue for the six months ended September 30, 2012 decreased by $2.5 million, or 1.0%, from the prior year period.

Deferred Maintenance Revenue

At September 30, 2012, the deferred maintenance revenue balance was $1.2 billion. Estimated future recognition from deferred maintenance revenue at September 30, 2012 is (in millions):

Remainder of fiscal 2013	$	414.3
Fiscal 2014		417.3
Fiscal 2015 and thereafter		344.7
	$	1,176.3

Domestic vs. International Revenue

	Quarter Ended							Six Months Ended
	September 30,							September 30,
	2012		2011		% Change			2012		2011		% Change
	(In millions)							(In millions)
License:
Domestic	$	104.0	$	122.2		(14.9	)%	$	181.7	$	207.5		(12.4	)%
International		105.2		107.5		(2.1	)%		199.1		211.7		(6.0	)%
Total license revenue		209.2		229.7		(8.9	)%		380.8		419.2		(9.2	)%
Maintenance:
Domestic		158.4		146.3		8.3	%		312.8		287.9		8.6	%
International		127.0		124.2		2.3	%		251.4		247.2		1.7	%
Total maintenance revenue		285.4		270.5		5.5	%		564.2		535.1		5.4	%
Professional services:
Domestic		26.6		29.6		(10.1	)%		51.0		51.4		(0.8	)%
International		27.0		26.9		0.4	%		56.6		53.4		6.0	%
Total professional services revenue		53.6		56.5		(5.1	)%		107.6		104.8		2.7	%
Total domestic revenue		289.0		298.1		(3.1	)%		545.5		546.8		(0.2	)%
Total international revenue		259.2		258.6		0.2	%		507.1		512.3		(1.0	)%
Total revenue	$	548.2	$	556.7		(1.5	)%	$	1,052.6	$	1,059.1		(0.6	)%

We estimate that foreign currency exchange rate fluctuations contributed to an approximate $7 million and $17 million decrease in our international revenue for the quarter and six months ended September 30, 2012, respectively, as compared to the respective prior year periods, on a constant currency basis.

Domestic License Revenue

Domestic license revenue was $104.0 million, or 49.7%, and $181.7 million, or 47.7%, of our total license revenue for the quarter and six months ended September 30, 2012, respectively, and $122.2 million, or 53.2%, and $207.5 million, or 49.5%, of our total license revenue for the quarter and six months ended September 30, 2011, respectively. Domestic license revenue for the quarter ended September 30, 2012 decreased by $18.2 million, or 14.9%, from the prior year quarter, due to a $13.4 million decrease in ESM license revenue and a $4.8 million decrease in MSM license revenue. Domestic license revenue for the six months ended September 30, 2012 decreased by $25.8 million, or 12.4%, from the prior year period, due to a $23.1 million decrease in ESM license revenue and a $2.7 million decrease in MSM license revenue.

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International License Revenue

International license revenue was $105.2 million, or 50.3%, and $199.1 million, or 52.3%, of our total license revenue for the quarter and six months ended September 30, 2012, respectively, and $107.5 million or 46.8%, and $211.7 million, or 50.5%, of our total license revenue for the quarter and six months ended September 30, 2011, respectively.

International license revenue for the quarter ended September 30, 2012 decreased by $2.3 million, or 2.1%, from the prior year quarter, due to a $3.6 million decrease in ESM license revenue, offset by a $1.3 million increase in MSM license revenue. The ESM license revenue decrease was attributable primarily to decreases of $2.6 million and $1.6 million in our Europe, Middle East and Africa (EMEA) and Canada markets, respectively, partially offset by a $1.3 million increase in our Latin America market. The MSM license revenue increase was attributable to increases of $1.5 million and $1.3 million in our Latin America and Asia Pacific markets, respectively, partially offset by a combined net decrease of $1.5 million in our other international markets.

International license revenue for the six months ended September 30, 2012 decreased by $12.6 million, or 6.0%, from the prior year period, due to a $15.3 million decrease in ESM license revenue, partially offset by a $2.7 million increase in MSM license revenue. The ESM license revenue decrease was attributable to decreases of $9.0 million, $3.4 million, $1.7 million and $1.2 million in our EMEA, Asia Pacific, Latin America and Canada markets, respectively. The MSM license revenue increase was attributable primarily to increases of $3.3 million and $2.5 million in our Asia Pacific and Latin America markets, respectively, partially offset by a $2.5 million decrease in our EMEA market.

Domestic Maintenance Revenue

Domestic maintenance revenue was $158.4 million, or 55.5%, and $312.8 million, or 55.4%, of our total maintenance revenue for the quarter and six months ended September 30, 2012, respectively, and $146.3 million, or 54.1%, and $287.9 million, or 53.8%, of our total maintenance revenue for the quarter and six months ended September 30, 2011, respectively. Domestic maintenance revenue for the quarter ended September 30, 2012 increased by $12.1 million, or 8.3%, over the prior year quarter, due to an $11.5 million increase in ESM maintenance revenue and a $0.6 million increase in MSM maintenance revenue. Domestic maintenance revenue for the six months ended September 30, 2012 increased by $24.9 million, or 8.6%, over the prior year period, due to a $23.0 million increase in ESM maintenance revenue and a $1.9 million increase in MSM maintenance revenue.

International Maintenance Revenue

International maintenance revenue was $127.0 million, or 44.5%, and $251.4 million, or 44.6%, of our total maintenance revenue for the quarter and six months ended September 30, 2012, respectively, and $124.2 million or 45.9%, and $247.2 million, or 46.2%, of our total maintenance revenue for the quarter and six months ended September 30, 2011, respectively.

International maintenance revenue for the quarter ended September 30, 2012 increased by $2.8 million, or 2.3%, over the prior year quarter, due to a $4.7 million increase in ESM maintenance revenue, partially offset by a $1.9 million decrease in MSM maintenance revenue. The ESM maintenance revenue increase was attributable primarily to increases of $2.9 million and $1.4 million in our EMEA and Asia Pacific markets, respectively. The MSM maintenance revenue decrease was attributable primarily to a decrease of $1.5 million in our Latin America market.

International maintenance revenue for the six months ended September 30, 2012 increased by $4.2 million, or 1.7%, over the prior year period, due to an $8.6 million increase in ESM maintenance revenue, partially offset by a $4.4 million decrease in MSM maintenance revenue. The ESM maintenance revenue increase was attributable to increases of $4.8 million, $3.2 million and $1.7 million in our EMEA, Asia Pacific and Canada markets, respectively, partially offset by a decrease of $1.1 million in our Latin America market. The MSM maintenance revenue decrease was attributable to decreases of $3.1 million and $1.3 million in our Latin America and EMEA markets, respectively.

Professional Services Revenue

Professional services revenue for the quarter ended September 30, 2012 decreased by $2.9 million, or 5.1%, from the prior year quarter, which is reflective of a $3.0 million, or 10.1%, decrease in domestic professional services revenue, partially offset by a $0.1 million, or 0.4%, increase in international professional services revenue. Professional services revenue for the six months ended September 30, 2012 increased by $2.8 million, or 2.7%, over the prior year period, which is reflective of a $3.2 million, or 6.0%, increase in international professional services revenue, partially offset by a $0.4 million, or 0.8%, decrease in domestic professional services revenue.

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Operating Expenses

	Quarter Ended							Six Months Ended
	September 30,							September 30,
	2012		2011		% Change			2012		2011		% Change
	(In millions)							(In millions)
Cost of license revenue	$	40.5	$	39.3		3.1	%	$	79.8	$	77.6		2.8	%
Cost of maintenance revenue		53.0		49.5		7.1	%		103.9		93.3		11.4	%
Cost of professional services revenue		54.5		53.2		2.4	%		112.2		100.6		11.5	%
Selling and marketing expenses		163.1		153.5		6.3	%		327.8		298.2		9.9	%
Research and development expenses		32.3		38.3		(15.7	)%		74.6		83.0		(10.1	)%
General and administrative expenses		55.9		51.0		9.6	%		118.9		109.6		8.5	%
Amortization of intangible assets		10.9		10.9		—			23.5		20.7		13.5	%
Total operating expenses	$	410.2	$	395.7		3.7	%	$	840.7	$	783.0		7.4	%

We estimate that foreign currency exchange rate fluctuations contributed to an approximate $10 million and $23 million decrease in our international operating expenses for the quarter and six months ended September 30, 2012, respectively, as compared to the respective prior year periods, on a constant currency basis.

Cost of License Revenue

Cost of license revenue consists primarily of the amortization of capitalized software costs for internally developed products, the amortization of acquired technology for products acquired through business combinations, license-based royalties to third parties and production and distribution costs for initial product licenses. For the quarter and six months ended September 30, 2012, cost of license revenue was $40.5 million, or 7.4%, and $79.8 million, or 7.6%, of total revenue, respectively, and 19.4% and 21.0% of license revenue, respectively. For the quarter and six months ended September 30, 2011, cost of license revenue was $39.3 million, or 7.1%, and $77.6 million, or 7.3%, of total revenue, respectively, and 17.1% and 18.5% of license revenue, respectively.

Cost of license revenue for the quarter ended September 30, 2012 increased by $1.2 million, or 3.1%, over the prior year quarter. This increase was attributable primarily to a $3.9 million increase in the amortization of capitalized software development costs, partially offset by a $2.2 million decrease in the amortization of acquired technology. Cost of license revenue for the six months ended September 30, 2012 increased by $2.2 million, or 2.8%, over the prior year period. This increase was attributable primarily to a $5.4 million increase in the amortization of capitalized software development costs, partially offset by a $2.5 million decrease in the amortization of acquired technology. The increases in the amortization of capitalized software development costs are related to increases in the amount of costs capitalized in prior periods related to development activities and represented an increased investment in software development. The decreases in amortization of acquired technology were attributable to a reduction in amortization associated with intangible assets acquired in connection with past acquisitions that became fully amortized, partially offset by an increase in amortization associated with intangible assets acquired in connection with our fiscal 2012 and 2013 acquisitions.

Cost of Maintenance Revenue

Cost of maintenance revenue consists primarily of the costs associated with customer support and research and development personnel that provide maintenance, enhancement and support services to our customers, as well as internal and third party infrastructure hosting and support costs associated with our SaaS offerings. For the quarter and six months ended September 30, 2012, cost of maintenance revenue was $53.0 million, or 9.7%, and $103.9 million, or 9.9%, of total revenue, respectively, and 18.6% and 18.4% of maintenance revenue, respectively. For the quarter and six months ended September 30, 2011, cost of maintenance revenue was $49.5 million, or 8.9%, and $93.3 million, or 8.8%, of total revenue, respectively, and 18.3% and 17.4% of maintenance revenue, respectively.

Cost of maintenance revenue for the quarter ended September 30, 2012 increased by $3.5 million, or 7.1%, over the prior year quarter. This increase was attributable primarily to a $2.7 million increase in personnel costs and a $1.2 million increase in third party SaaS hosting and support costs.

Cost of maintenance revenue for the six months ended September 30, 2012 increased by $10.6 million, or 11.4%, over the prior year period. This increase was attributable primarily to a $4.7 million increase in personnel costs, a $2.7 million increase in third party SaaS hosting and support costs, a $1.3 million increase in third party maintenance outsourcing costs and a $1.4 million increase in share-based compensation expense.

26

Cost of Professional Services Revenue

Cost of professional services revenue consists primarily of salaries, related personnel costs and third party subcontracting fees associated with implementation, consulting and education services that we provide to our customers and the related infrastructure to support this business. For the quarter and six months ended September 30, 2012, cost of professional services revenue was $54.5 million, or 9.9%, and $112.2 million, or 10.7%, of total revenue, respectively, and 101.7% and 104.3% of professional services revenue, respectively. For the quarter and six months ended September 30, 2011, cost of professional services revenue was $53.2 million, or 9.6%, and $100.6 million, or 9.5%, of total revenue, respectively, and 94.2% and 96.0% of professional services revenue, respectively.

Cost of professional services revenue for the quarter ended September 30, 2012 increased by $1.3 million, or 2.4%, over the prior year quarter. This increase was attributable primarily to a $3.6 million increase in personnel and related costs, due principally to an increase in professional services headcount, partially offset by a $3.0 million decrease in third party subcontracting fees.

Cost of professional services revenue for the six months ended September 30, 2012 increased by $11.6 million, or 11.5%, over the prior year period. This increase was attributable to an $11.6 million increase in personnel and related costs, due principally to an increase in professional services headcount, and a $1.6 million net increase in other expenses, partially offset by a $1.6 million decrease in third party subcontracting fees.

Selling and Marketing Expenses

Selling and marketing expenses consist primarily of salaries, related personnel costs, sales commissions and costs associated with advertising, marketing, industry trade shows and sales seminars. For the quarter and six months ended September 30, 2012, selling and marketing expenses were $163.1 million, or 29.8%, and $327.8 million, or 31.1%, of total revenue, respectively. For the quarter and six months ended September 30, 2011, selling and marketing expenses were $153.5 million, or 27.6%, and $298.2 million, or 28.2%, of total revenue, respectively.

Selling and marketing expenses for the quarter ended September 30, 2012 increased by $9.6 million, or 6.3%, over the prior year quarter. This increase was attributable primarily to a $4.2 million increase in sales personnel and related costs, a $4.0 million increase in share-based compensation expense, both principally due to an increase in sales personnel headcount as well as sales retention efforts, and a $1.0 million increase in marketing campaign expenditures.

Selling and marketing expenses for the six months ended September 30, 2012 increased by $29.6 million, or 9.9%, over the prior year period. This increase was attributable to a $15.7 million increase in sales personnel and related costs, an $8.8 million increase in share-based compensation expense, both principally due to an increase in sales personnel headcount as well as sales retention efforts, a $2.2 million increase in third party consulting fees, a $1.5 million increase in marketing campaign expenditures and a $1.4 million net increase in other expenses.

Research and Development Expenses

Research and development expenses consist primarily of salaries and personnel costs and third party subcontracting fees related to software developers and development support personnel, including product management, software programmers, testing and quality assurance personnel and writers of technical documentation, such as product manuals and installation guides. These expenses also include computer hardware and software costs, telecommunications costs and personnel costs associated with our development and production labs. For the quarter and six months ended September 30, 2012, research and development expenses were $32.3 million, or 5.9%, and $74.6 million, or 7.1%, of total revenue, respectively. For the quarter and six months ended September 30, 2011, research and development expenses were $38.3 million, or 6.9%, and $83.0 million, or 7.8%, of total revenue, respectively.

Research and development expenses for the quarter ended September 30, 2012 decreased by $6.0 million, or 15.7%, from the prior year quarter. This decrease was attributable primarily to a $7.7 million decrease in personnel expenses, partially offset by a $1.9 million increase in third-party subcontracting fees.

Research and development expenses for the six months ended September 30, 2012 decreased by $8.4 million, or 10.1%, from the prior year period. This decrease was attributable primarily to an $11.4 million decrease in personnel expenses, partially offset by a $3.1 million increase in third-party subcontracting fees.

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General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related personnel costs of executive management, finance and accounting, facilities management, legal and human resources. Other costs included in general and administrative expenses include fees paid for outside accounting and legal services, consulting projects and insurance. For the quarter and six months ended September 30, 2012, general and administrative expenses were $55.9 million, or 10.2%, and $118.9 million, or 11.3%, of total revenue, respectively. For the quarter and six months ended September 30, 2011, general and administrative expenses were $51.0 million, or 9.2%, and $109.6 million, or 10.3%, of total revenue, respectively.

General and administrative expenses for the quarter ended September 30, 2012 increased by $4.9 million, or 9.6%, over the prior year quarter. This increase was attributable to a $2.5 million increase in professional fees, a $2.2 million increase in personnel expense and a $1.3 million increase in share-based compensation expense, partially offset by a $1.1 million net decrease in other expenses.

General and administrative expenses for the six months ended September 30, 2012 increased by $9.3 million, or 8.5%, over the prior year period. This increase was attributable primarily to a $6.2 million increase in proxy contest costs, a $2.0 million increase in personnel expenses and a $1.2 million increase in share-based compensation expense.

Amortization of Intangible Assets

Amortization of intangible assets consists of the amortization of customer relationships and other intangible assets recorded in connection with our business combinations. For the quarter and six months ended September 30, 2012, amortization of intangible assets was $10.9 million and $23.5 million, respectively. For the quarter and six months ended September 30, 2011, amortization of intangible assets was $10.9 million and $20.7 million, respectively.

Amortization of intangible assets for the quarter ended September 30, 2012 was flat as compared to the prior year quarter.

Amortization of intangible assets for the six months ended September 30, 2012 increased by $2.8 million, or 13.5%, over the prior year period. This increase was attributable primarily to amortization associated with intangible assets acquired in connection with our fiscal 2012 acquisitions, partially offset by a reduction in amortization associated with intangible assets acquired in connection with past acquisitions that became fully amortized.

Other Income (Loss), Net

Other income (loss), net, consists primarily of interest earned, realized gains and losses on investments and interest expense on our senior unsecured notes due 2018 and 2022 and capital leases. Other income (loss), net, for the quarter and six months ended September 30, 2012, was a loss of $6.4 million and $14.7 million, respectively. Other income (loss), net, for the quarter and six months ended September 30, 2011, was a loss of $4.8 million and $6.4 million, respectively.

The change in other income (loss), net for the quarter ended September 30, 2012 was attributable primarily to a $5.4 million increase in interest expense, primarily due to the issuance of our senior unsecured notes due 2022, partially offset by a change in net gains on investments of $2.9 million.

The change in other income (loss), net for the six months ended September 30, 2012 was attributable primarily to a $10.1 million increase in interest expense, primarily due to the issuance of our senior unsecured notes due 2022, partially offset by a change in net gains on investments of $2.4 million.

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Income Taxes

Income tax expense was $33.8 million and $45.2 million for the quarter and six months ended September 30, 2012, respectively, resulting in effective tax rates of 25.7% and 22.9%, respectively. Income tax expense was $41.5 million and $59.3 million for the quarter and six months ended September 30, 2011, respectively, resulting in effective tax rates of 26.6% and 22.0%, respectively. Our effective tax rate generally differs from the U.S. federal statutory rate of 35% due to favorable tax rates associated with earnings from lower tax rate jurisdictions throughout the world and our policy of indefinitely reinvesting earnings from certain jurisdictions (primarily in Europe), as well as due to additional accruals, changes in estimates, releases and settlements with taxing authorities related to our uncertain tax positions and benefits associated with income attributable to both domestic production activities and the extraterritorial income exclusion. During the quarter and six months ended September 30, 2012, the overall favorable effect of foreign tax rates on our effective tax rate was 7.2% and 9.3% of pre-tax earnings, respectively. During the quarter and six months ended September 30, 2011, the overall favorable effect of foreign tax rates on our effective tax rate was 6.7% and 8.9% of pre-tax earnings, respectively. During the six months ended September 30, 2011, we also recorded discrete net tax benefits of $6.2 million associated with tax authority settlements related to prior years’ tax matters which favorably impacted our effective tax rate by 2.3% of pre-tax earnings. Our effective tax rate could fluctuate on a quarterly basis and could be adversely affected to the extent forecasted earnings for the year are lower than anticipated in countries with lower statutory rates and higher than anticipated in countries with higher statutory rates.

Non-GAAP Financial Measures and Reconciliations

In an effort to provide investors with additional information regarding our results as determined by GAAP, we disclose various non-GAAP financial measures in our quarterly earnings press releases and other public disclosures. The primary non-GAAP financial measures we focus on are: (i) non-GAAP operating income, (ii) non-GAAP net earnings, and (iii) 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. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is also included below.

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 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 these non-GAAP financial measures to their most comparable GAAP financial measures below.

For a detailed explanation of the adjustments made to comparable GAAP financial measures, the reasons why management uses these measures and the usefulness of these measures, see items (1) – (6) below.

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	Quarter Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
	(In millions)
Operating income:
GAAP operating income	$	138.0		$	161.0		$	211.9		$	276.1
Share-based compensation expense (1)		36.9			30.8			74.5			61.6
Amortization of intangible assets (2)		22.0			24.1			46.9			46.6
Severance, exit costs and related charges (3)		1.5			0.5			6.9			2.6
Proxy contest costs (4)		—			—			6.2			—
Non-GAAP operating income	$	198.4		$	216.4		$	346.4		$	386.9
	Quarter Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
	(In millions)
Net earnings:
GAAP net earnings	$	97.8		$	114.7		$	152.0		$	210.4
Share-based compensation expense (1)		36.9			30.8			74.5			61.6
Amortization of intangible assets (2)		22.0			24.1			46.9			46.6
Severance, exit costs and related charges (3)		1.5			0.5			6.9			2.6
Proxy contest costs (4)		—			—			6.2			—
Provision for income taxes on above pre-tax non-GAAP adjustments (5)		(17.4	)		(16.7	)		(39.8	)		(32.3	)
Certain discrete tax items (6)		—			—			—			(6.2	)
Non-GAAP net earnings	$	140.8		$	153.4		$	246.7		$	282.7
	Quarter Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Diluted earnings per share*:
GAAP diluted earnings per share	$	0.61		$	0.65		$	0.94		$	1.18
Share-based compensation expense (1)		0.23			0.18			0.46			0.35
Amortization of intangible assets (2)		0.14			0.14			0.29			0.26
Severance, exit costs and related charges (3)		0.01			—			0.04			0.01
Proxy contest costs (4)		—			—			0.04			—
Provision for income taxes on above pre-tax non-GAAP adjustments (5)		(0.11	)		(0.09	)		(0.25	)		(0.18	)
Certain discrete tax items (6)		—			—			—			(0.03	)
Non-GAAP diluted earnings per share*	$	0.88		$	0.87		$	1.52		$	1.59

* Non-GAAP diluted earnings per share is computed independently for each period presented. The sum of GAAP diluted earnings per share and non-GAAP adjustments per share may not equal non-GAAP diluted earnings per share due to rounding differences.

(1) 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.

(2) Amortization of intangible assets. Our non-GAAP financial measures exclude costs associated with the amortization of intangible assets, which are included in cost of license revenue and amortization of intangible assets in our condensed consolidated statements of comprehensive income. 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.

(3) 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.

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(4) 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 incurred approximately $6.2 million in unplanned proxy contest expenses during the first quarter of fiscal 2013, consisting primarily of outside financial advisory, legal, solicitation and consulting fees. 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.

(5) 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.

(6) Certain discrete tax items. Our non-GAAP financial measures exclude net tax benefits of $6.2 million for the six months ended September 30, 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.

Liquidity and Capital Resources

At September 30, 2012, we had $1.5 billion in cash, cash equivalents and investments, approximately 67% of which was held by our international subsidiaries and was largely generated from our international operations. Our international operations have generated $671.4 million of earnings that we have determined will be invested indefinitely in those operations. If such earnings were to be repatriated, we would incur a United States federal income tax liability that is not currently accrued in our financial statements. We also had outstanding letters of credit, performance bonds and similar instruments at September 30, 2012 of approximately $46.1 million primarily in support of performance obligations to various customers, but also related to facilities and other obligations.

At September 30, 2012 and March 31, 2012, we held auction rate securities with a par value of $21.7 million and $29.3 million, respectively, which were classified as available-for-sale. The total estimated fair value of our auction rate securities was $18.6 million and $26.9 million at September 30, 2012 and March 31, 2012, respectively. Our auction rate securities consist entirely of bonds issued by public agencies that are backed by student loans with at least a 97% guarantee by the federal government under the United States Department of Education’s Federal Family Education Loan Program. All of these bonds are currently rated investment grade by Moody’s or Standard and Poor’s. Auctions for these securities began failing in early 2008 and have continued to fail, resulting in our continuing to hold such securities and the issuers paying interest at the maximum contractual rates. We do not believe that any of the underlying issuers of these auction rate securities are presently at risk of default or that the underlying credit quality of the assets backing the auction rate security investments has been impacted by the reduced liquidity of these investments. Due to the illiquidity in the auction rate securities market caused by failed auctions, we estimated the fair value of these securities using internally developed models of the expected cash flows of the securities on a discounted basis. These models incorporate assumptions about the expected cash flows of the underlying student loans discounted at an estimate of the rate of return required by investors, which includes an adjustment to reflect a lack of liquidity in the market for these securities. Periodically, the issuers of certain of our auction rate securities have redeemed portions of our holdings at par value plus accrued interest. There were no redemptions during the quarter ended September 30, 2012. During the six months ended September 30, 2012, issuers redeemed available-for-sale holdings of $7.6 million par value. During the quarter and six months ended September 30, 2011, issuers redeemed available-for-sale holdings of $0.2 million and $0.4 million par value, respectively.

In February 2012, we issued $500.0 million of senior unsecured notes due 2022. Net proceeds to us after original issuance discount and issuance costs amounted to $493.3 million. These senior notes were issued at an original issuance discount of $2.7 million. These senior notes bear interest at a rate of 4.25% per annum, payable semi-annually in February and August of each year. These senior notes are redeemable at our option at any time in whole or, from time to time, in part at a redemption price equal to the greater of: (i) 100% of the principal amount of these senior notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest discounted at the applicable United States Treasury rate plus 35 basis points, plus accrued and unpaid interest.

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In November 2010, we entered into a credit agreement with certain institutional lenders providing for an unsecured revolving credit facility in an amount up to $400.0 million which is scheduled to expire on November 30, 2014 (the Credit Facility). Subject to certain conditions, at any time prior to maturity, we may invite existing and new lenders to increase the size of the Credit Facility up to a maximum of $600.0 million. The Credit Facility includes provisions for swing line loans of up to $25.0 million and standby letters of credit of up to $50.0 million. Revolving loans under the Credit Facility bear interest, at the Company’s option, at a rate equal to either (i) the base rate (as defined) plus a margin based on the credit ratings of BMC's senior unsecured notes due 2018, or (ii) the LIBOR rate (as defined) plus a margin based on the credit ratings of BMC's senior notes due 2018, for interest periods of one, two, three or six months. As of September 30, 2012 and through October 31, 2012, we have not borrowed any funds under the Credit Facility.

In June 2008, we issued $300.0 million of senior unsecured notes due 2018. Net proceeds to us after original issuance discount and issuance costs amounted to $295.6 million. These senior notes were issued at an original issuance discount of $1.8 million. These senior notes bear interest at a rate of 7.25% per annum, payable semi-annually in June and December of each year. These senior notes are redeemable at our option at any time in whole or, from time to time, in part at a redemption price equal to the greater of: (i) 100% of the principal amount of these senior notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest discounted at the applicable United States Treasury rate plus 50 basis points, plus accrued and unpaid interest.

These credit facilities are subject to covenants limiting, among other things, the creation of liens securing indebtedness and sale-leaseback transactions.

We believe that our existing cash and investment balances, funds generated from operating activities and available credit under the Credit Facility will be sufficient to meet our working and other capital requirements for the foreseeable future. In the normal course of business, we evaluate the merits of acquiring technology or businesses, or establishing strategic relationships with or investing in these businesses. We may elect to use available cash and investments to fund such activities in the future. In the event additional needs for cash arise, we might find it advantageous to utilize third party financing sources based on factors such as our then available cash and its source (i.e., cash held in the United States versus international locations), the cost of financing and our internal cost of capital.

We may from time to time seek to repurchase or retire securities, including outstanding borrowings and equity securities, in open market repurchases, unsolicited or solicited privately negotiated transactions or in such other manner as will comply with the provisions of the Exchange Act and the rules and regulations thereunder. Such repurchases or exchanges, if any, will depend on a number of factors, including, but not limited to, prevailing market conditions, our liquidity requirements and contractual restrictions, if applicable. The amount of repurchases, which is subject to management discretion, may be material and may change from period to period.

Our cash flows for the quarters ended September 30, 2012 and 2011 were:

	Six Months Ended
	September 30,
	2012			2011
	(In millions)
Net cash provided by operating activities	$	286.1		$	423.1
Net cash used in investing activities		(129.9	)		(221.8	)
Net cash used in financing activities		(333.3	)		(383.5	)
Effect of exchange rate changes on cash and cash equivalents		(8.6	)		(19.0	)
Net change in cash and cash equivalents	$	(185.7	)	$	(201.2	)

Cash Flows from Operating Activities

Our primary method for funding operations and growth has been through cash flows generated from operating activities. Net cash provided by operating activities for the six months ended September 30, 2012 decreased by $137.0 million from the prior year period, attributable primarily to a decrease in net income and the net impact of working capital changes.

Cash Flows from Investing Activities

Net cash used in investing activities for the six months ended September 30, 2012 decreased by $91.9 million from the prior year period. This decrease was attributable primarily to a decrease in cash paid for acquisitions and an increase in proceeds from maturities of investments, partially offset by an increase in purchases of investments.

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Cash Flows from Financing Activities

Net cash used in financing activities for the six months ended September 30, 2012 decreased by $50.2 million from the prior year period, attributable primarily to a decrease in treasury stock acquired.

Treasury Stock Purchases

Our Board of Directors has previously authorized a total of $5.0 billion to repurchase common stock. During the quarter and six months ended September 30, 2012, we purchased 4.8 million and 8.3 million shares, respectively, for $200.0 million and $350.0 million, respectively. From the inception of the stock repurchase authorization through September 30, 2012, we have purchased 160.3 million shares for $4.5 billion. At September 30, 2012, there was $500.3 million remaining in the stock repurchase program, which does not have an expiration date. In October 2012, our Board of Directors approved a new $1 billion stock repurchase program. We expect $750 million of the repurchase to be executed via an accelerated share repurchase agreement to be entered into during the quarter ending December 31, 2012.

During the quarter and six months ended September 30, 2012, we repurchased 0.1 million and 0.5 million shares, respectively, for $3.1 million and $20.0 million, respectively, to satisfy employee tax withholding obligations upon the vesting of share-based awards.

The repurchase of stock will continue to be funded primarily with cash generated from domestic operations and, therefore, affects our overall domestic versus international liquidity balances. See PART II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds below for a monthly detail of treasury stock purchases for the quarter ended September 30, 2012.

Shareholder Rights Agreement

On May 12, 2012, our Board of Directors authorized and declared a dividend of one preferred share purchase right (a Right) for each outstanding common share through a shareholder rights agreement (the Rights Agreement). Each Right, once exercisable, represents the right to purchase one one-thousandth of a series B junior participating preferred share, par value $0.01, for $180, or an equivalent value of common shares determined at 50% of the then-current market price of BMC’s common stock, provided sufficient common shares are then unissued. The Rights become exercisable in the event any individual person or entity (including the ownership of their related affiliates) acquires 10% or more of the outstanding share capital of the Company without the approval of BMC’s Board of Directors, and until such time are inseparable from and trade with BMC’s common stock. The Rights have a de minimus fair value and are accounted for as a component of stockholders’ equity. The Rights Agreement expires May 11, 2013.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. On an on-going basis, we make and evaluate estimates and judgments, including those related to revenue recognition, capitalized software development costs, share-based compensation, goodwill and intangible assets, valuation of investments and accounting for income taxes. We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances; the results of which form the basis for making judgments about amounts and timing of revenue and expenses, the carrying values of assets and the recorded amounts of liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and such estimates may change if the underlying conditions or assumptions change. We have discussed the development and selection of the critical accounting policies and estimates with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed our related disclosures. The critical accounting policies related to the estimates and judgments are discussed in our Annual Report on Form 10-K for the year ended March 31, 2012 under Management’s Discussion and Analysis of Financial Condition and Results of Operations. There have been no changes to our critical accounting policies and estimates during the six months ended September 30, 2012.

New Accounting Pronouncements Not Yet Adopted

In December 2011, the Financial Accounting Standards Board (FASB) issued guidance requiring new disclosures regarding balance sheet offsetting. This guidance requires entities to disclose the gross amounts of certain recognized financial assets and liabilities, to reconcile these amounts to the net positions recognized in the balance sheet and to provide qualitative disclosures about the rights of offset relating to these financial assets and liabilities. This new disclosure guidance is effective for us beginning with our first quarter of fiscal 2014.

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Available Information

Our internet website address is http://www.bmc.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available through the investor relations page of our internet website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC). Our internet website and the information contained therein or connected thereto are not intended to be incorporated into this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to a variety of risks, including foreign currency exchange rate fluctuations, the impact of changes in interest rates on our investments and long-term borrowings and changes in market prices of our debt and equity securities. In the normal course of business, we employ established policies and procedures to manage these risks including the use of derivative instruments. There have been no material changes in our foreign currency exchange rate risk management strategy or our portfolio management strategy subsequent to March 31, 2012; therefore, the risk profile of our market risk sensitive instruments remains substantially unchanged from the description in our Annual Report on Form 10-K for the year ended March 31, 2012.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

Based on management’s evaluation (with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO)), as of the end of the period covered by this report, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) are effective.

Changes in Internal Control over Financial Reporting

There was no change to our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 and Rule 15d-15 under the Exchange Act that occurred during our second fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no items that require disclosure under this item.

Item 1A. Risk Factors

There have been no material changes to the risk factors as presented in our Annual Report on Form 10-K for the year ended March 31, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

							Total Dollar Value		Approximate Dollar
					Total Number of Shares		of Shares Purchased		Value of Shares that
	Total Number of		Average Price		Purchased as Part of a		as Part of a		may yet be
	Shares		Paid per		Publicly Announced		Publicly Announced		Purchased Under
Period	Purchased (1)		Share		Program (2)		Program (2)		the Program (2)
July 1—31, 2012		596,785	$	40.19		559,675	$	22,491,157	$	677,759,715
August 1—31, 2012		3,763,819	$	41.22		3,729,369		153,741,671	$	524,018,044
September 1—30, 2012		565,128	$	42.57		558,027		23,757,932	$	500,260,112
Total		4,925,732	$	41.26		4,847,071	$	199,990,760	$	500,260,112

(1) Includes 78,661 shares of our common stock withheld by us to satisfy employee tax withholding obligations.

(2) Our Board of Directors has previously authorized a total of $5.0 billion to repurchase common stock. At September 30, 2012, approximately $500.3 million remains authorized in this stock repurchase program and the program does not have an expiration date. In October 2012, our Board of Directors approved a new $1 billion stock repurchase program. We expect $750 million of the repurchase to be executed via an accelerated share repurchase agreement to be entered into during the quarter ending December 31, 2012.

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Item 6.  Exhibits

(a) Exhibits.

31.1	Certification of Chief Executive Officer of BMC Software, Inc. pursuant to Section 13a-14(a) of the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer of BMC Software, Inc. pursuant to Section 13a-14(a) of the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer of BMC Software, Inc. pursuant to Section 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
32.2	Certification of Chief Financial Officer of BMC Software, Inc. pursuant to Section 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

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SIGNATURES

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 thereunto duly authorized.

	BMC SOFTWARE, INC.
October 31, 2012	By:	/s/ ROBERT E. BEAUCHAMP
		Robert E. Beauchamp
		Chairman of the Board, President and Chief Executive Officer
October 31, 2012	By:	/s/ STEPHEN B. SOLCHER
		Stephen B. Solcher
		Senior Vice President and Chief Financial Officer

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Exhibits

INDEX

31.1	Certification of Chief Executive Officer of BMC Software, Inc. pursuant to Section 13a-14(a) of the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer of BMC Software, Inc. pursuant to Section 13a-14(a) of the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer of BMC Software, Inc. pursuant to Section 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
32.2	Certification of Chief Financial Officer of BMC Software, Inc. pursuant to Section 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

39

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

OF BMC SOFTWARE, INC.

I, Robert E. Beauchamp, certify that:

1. I have reviewed this quarterly report on Form 10-Q of BMC Software, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 31, 2012

By:	/s/ ROBERT E. BEAUCHAMP
	Robert E. Beauchamp (Chief Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

OF BMC SOFTWARE, INC.

I, Stephen B. Solcher, certify that:

1. I have reviewed this quarterly report on Form 10-Q of BMC Software, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 31, 2012

By:	/s/ STEPHEN B. SOLCHER
	Stephen B. Solcher (Chief Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER

OF BMC SOFTWARE, INC.

PURSUANT TO 18 U.S.C. § 1350

Based on my knowledge, I, Robert E. Beauchamp, Chief Executive Officer of BMC Software, Inc. (the “Company”), hereby certify that the accompanying report on Form 10-Q for the period ending September 30, 2012 and filed with the Securities and Exchange Commission on the date hereof pursuant to Section 13(a) of the Securities Exchange Act of 1934 (the “Report”) by the Company fully complies with the requirements of that section.

Based on my knowledge, I further certify that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ROBERT E. BEAUCHAMP

Robert E. Beauchamp

October 31, 2012

EX-32.2

Exhibit 32.2

CERTIFICATION OF

CHIEF FINANCIAL OFFICER

OF BMC SOFTWARE, INC.

PURSUANT TO 18 U.S.C. § 1350

Based on my knowledge, I, Stephen B. Solcher, Chief Financial Officer of BMC Software, Inc. (the “Company”), hereby certify that the accompanying report on Form 10-Q for the period ending September 30, 2012 and filed with the Securities and Exchange Commission on the date hereof pursuant to Section 13(a) of the Securities Exchange Act of 1934 (the “Report”) by the Company fully complies with the requirements of that section.

Based on my knowledge, I further certify that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ STEPHEN B. SOLCHER

Stephen B. Solcher

October 31, 2012

XML

Guarantees And Contingencies (Narrative) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Contingencies And Commitments [Line Items]
Outstanding letters of credit, performance bonds and similar instruments	$ 46.1
Maximum estimated charge from litigation of foreign tax dispute	$ 10

XML

Long-Term Borrowings (Narrative) (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended	6 Months Ended	1 Months Ended	6 Months Ended	1 Months Ended	6 Months Ended
	Nov. 30, 2010	Sep. 30, 2012	Feb. 29, 2012 Senior Unsecured Notes Due 2022 [Member]	Sep. 30, 2012 Senior Unsecured Notes Due 2022 [Member]	Jun. 30, 2008 Senior Unsecured Notes Due 2018 [Member]	Sep. 30, 2012 Senior Unsecured Notes Due 2018 [Member]
Debt Instrument [Line Items]
Issuance of senior notes			$ 500.0		$ 300.0
Net proceeds after original issuance discount and issuance costs			493.3		295.6
Original issuance discount			2.7		1.8
Interest rate on senior unsecured notes			4.25%		7.25%
Redemption options of senior notes				The greater of (i) 100% of the principal amount of these senior notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest discounted at the applicable United States Treasury rate plus 35 basis points, plus accrued and unpaid interest		The greater of (i) 100% of the principal amount of these senior notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest discounted at the applicable United States Treasury rate plus 50 basis points, plus accrued and unpaid interest
Percentage of principal amount of senior notes to be redeemed				100.00%		100.00%
Number of basis points to be added to the discounted present value of remaining scheduled payments				35 basis points		50 basis points
Maximum amount of credit facility	600.0
Expiration date of credit facility	Nov. 30, 2014
Amount of unsecured revolving credit facility	400.0
Provisions for swing line loans (maximum)	25.0
Provision for standby letters of credit (maximum)	$ 50
Interest periods for revolving loans under the credit facility		One, two, three or six months

XML

Financial Instruments (Summary Of Activity In Level 3 Financial Instruments) (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at the beginning of the period	$ 18.7	$ 26.8	$ 26.9	$ 27.2
Redemption and sales of auction rate securities		(0.2)	(7.6)	(0.4)
Change in unrealized gain (loss) included in other comprehensive income	(0.1)	(1.0)	(0.7)	(1.2)
Balance at the end of the period	$ 18.6	$ 25.6	$ 18.6	$ 25.6

XML

Stockholders' Equity (Computation Of Basic And Diluted EPS) (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Basic earnings per share:
Net earnings allocated to common shares	$ 97.8	$ 114.7	$ 152.0	$ 210.4
Weighted average number of common shares outstanding	157.5	173.0	158.9	174.7
Basic earnings per share	$ 0.62	$ 0.66	$ 0.96	$ 1.20
Diluted earnings per share:
Net earnings allocated to common shares	$ 97.8	$ 114.7	$ 152.0	$ 210.4
Weighted average number of common shares outstanding	157.5	173.0	158.9	174.7
Incremental shares from assumed conversions of share-based awards	2.8	3.0	3.2	3.6
Adjusted weighted average number of common shares outstanding	160.3	176.0	162.1	178.3
Diluted earnings per share	$ 0.61	$ 0.65	$ 0.94	$ 1.18

XML

Financial Instruments

6 Months Ended

Sep. 30, 2012

Financial Instruments

(3) Financial Instruments

We measure certain financial instruments at fair value on a recurring basis using the following valuation techniques:

(A) Market approach — Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

(B) Income approach — Uses valuation techniques to convert future estimated cash flows to a single present amount based on current market expectations about those future amounts, using present value techniques.

The fair values of our financial instruments were determined using the following input levels and valuation techniques:

	Fair Value Measurements at Reporting Date Using
September 30, 2012	Total		Quoted Prices in  Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
	(In millions)
Assets
Cash equivalents
Money-market funds	$	182.4	$	182.4	$	—	$	—	A
United States Treasury securities		200.0		200.0		—		—	A
Short-term and long-term investments
United States Treasury securities		134.8		134.8		—		—	A
Auction rate securities		18.6		—		—		18.6	B
Mutual funds		20.7		20.7		—		—	A
Foreign currency forward contracts		5.5		—		5.5		—	A
Total	$	562.0	$	537.9	$	5.5	$	18.6
Liabilities
Foreign currency forward contracts	$	4.1	$	—	$	4.1	$	—	A
Total	$	4.1	$	—	$	4.1	$	—

Level 1 classification is applied to any asset or liability that has a readily available quoted market price from an active market where there is significant transparency in the executed/quoted price.

Level 2 classification is applied to assets and liabilities that have evaluated prices where the data inputs to these valuations are observable either directly or indirectly, but do not represent quoted market prices from an active market.

Level 3 classification is applied to assets and liabilities when prices are not derived from existing market data and requires us to develop our own assumptions about how market participants would value the asset or liability.

The following table summarizes the activity in our Level 3 financial instruments (auction rate securities) for the quarters and six months ended September 30, 2012 and 2011, respectively:

	Quarter Ended September 30,						Six Months Ended September 30,
	2012			2011			2012			2011
				(In millions)
Balance at the beginning of the period	$	18.7		$	26.8		$	26.9		$	27.2
Redemption and sales of auction rate securities		—			(0.2	)		(7.6	)		(0.4	)
Change in unrealized gain (loss) included in other comprehensive income		(0.1	)		(1.0	)		(0.7	)		(1.2	)
Balance at the end of the period	$	18.6		$	25.6		$	18.6		$	25.6

Investments

Our cash, cash equivalents and investments were comprised of the following:

	September 30, 2012						March 31, 2012
	Cash and Cash Equivalents		Short-term Investments		Long-term Investments		Cash and Cash Equivalents		Short-term Investments		Long-term Investments
	(In millions)
Measured at fair value:
Available-for-sale
United States Treasury securities	$	200.0	$	128.2	$	6.6	$	49.9	$	86.1	$	6.1
Auction rate securities		—		—		18.6		—		—		26.9
Trading
Mutual funds		—		—		20.7		—		—		19.6
Total debt and equity investments measured at fair value		200.0		128.2		45.9		49.9		86.1		52.6
Cash on hand		878.5		—		—		632.6		—		—
Certificates of deposit		50.3		—		—		45.1		—		—
Money-market funds		182.4		—		—		769.3		—		—
Total cash, cash equivalents and investments	$	1,311.2	$	128.2	$	45.9	$	1,496.9	$	86.1	$	52.6
Amounts included in accumulated other comprehensive income from available-for-sale securities (pre-tax):
Unrealized losses*	$	—	$	—	$	3.1	$	—	$	—	$	2.4

* The unrealized losses on available-for-sale securities at September 30, 2012 and March 31, 2012 relate to the auction rate securities.

The following summarizes the underlying contractual maturities of our available-for-sale investments in debt securities at September 30, 2012:

	Cost		Fair Value
	(In millions)
Due in one year or less	$	328.2	$	328.2
Due between one and two years		6.6		6.6
Due after ten years		21.7		18.6
Total	$	356.5	$	353.4

At September 30, 2012 and March 31, 2012, we held auction rate securities with a par value of $21.7 million and $29.3 million, respectively, which were classified as available-for-sale. The total estimated fair value of our auction rate securities was $18.6 million and $26.9 million at September 30, 2012 and March 31, 2012, respectively. Our auction rate securities consist entirely of bonds issued by public agencies that are backed by student loans with at least a 97% guarantee by the federal government under the United States Department of Education’s Federal Family Education Loan Program. All of these bonds are currently rated investment grade by Moody’s or Standard and Poor’s. Auctions for these securities began failing in early 2008 and have continued to fail, resulting in our continuing to hold such securities and the issuers paying interest at the maximum contractual rates. We do not believe that any of the underlying issuers of these auction rate securities are presently at risk of default or that the underlying credit quality of the assets backing the auction rate security investments has been impacted by the reduced liquidity of these investments. Due to the illiquidity in the auction rate securities market caused by failed auctions, we estimated the fair value of these securities using internally developed models of the expected cash flows of the securities on a discounted basis. These models incorporate assumptions about the expected cash flows of the underlying student loans discounted at an estimate of the rate of return required by investors, which includes an adjustment to reflect a lack of liquidity in the market for these securities. The range of and weighted average discount rates used in our valuation models at September 30, 2012 were 3.7% to 4.1%, and 3.9%, respectively. Significant increases (decreases) in the discount rate used in the valuation would result in decreases (increases) in the fair value of the auction rate securities. Periodically, the issuers of certain of our auction rate securities have redeemed portions of our holdings at par value plus accrued interest. There were no redemptions during the quarter ended September 30, 2012. During the six months ended September 30, 2012, issuers redeemed available-for-sale holdings of $7.6 million par value. During the quarter and six months ended September 30, 2011, issuers redeemed available-for-sale holdings of $0.2 million and $0.4 million par value, respectively.

The unrealized loss on our available-for-sale auction rate securities, which have a fair value of $18.6 million at September 30, 2012, was $3.1 million and was recorded in accumulated other comprehensive income (loss) as we believe the decline in fair value of these auction rate securities is temporary. In making this determination, we primarily considered the financial condition and near-term prospects of the issuers, the probability scheduled cash flows will continue to be made and the likelihood we would be required to sell the investments before recovery of our cost basis. These available-for-sale auction rate securities have been in an unrealized loss position for greater than twelve months. Because of the uncertainty related to the timing of liquidity associated with these auction rate securities, these securities are classified as long-term investments at September 30, 2012 and March 31, 2012.

Derivative Financial Instruments

We operate globally and transact business in various foreign currencies. Our foreign currency exposures relate primarily to certain foreign currency denominated assets and liabilities, primarily non-U.S. dollar denominated accounts receivable, cash and intercompany balances held by U.S. dollar functional currency entities. To minimize the risk from changes in foreign currency exchange rates, we have established a program that utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. Gains or losses on our foreign currency exposures are offset by gains or losses on the foreign currency forward contracts entered into under this program. These foreign currency forward contracts generally have terms of one month or less and are generally entered into at the prevailing market exchange rate at the end of each month. We do not use foreign currency forward contracts for speculative purposes. While these foreign currency forward contracts are utilized to hedge foreign currency exposures, they are not formally designated as hedges for accounting purposes, and therefore, the changes in the fair values of these contracts are recognized currently in earnings. We record these foreign currency forward contracts at fair value as either assets or liabilities depending on their net settlement position with each respective counterparty at the balance sheet date.

The fair value of our outstanding foreign currency forward contracts that closed in a gain position at September 30, 2012 and March 31, 2012 was $5.5 million and $8.1 million, respectively, and was recorded within other current assets in our condensed consolidated balance sheets. The fair value of our outstanding foreign currency forward contracts that closed in a loss position at September 30, 2012 and March 31, 2012 was $4.1 million and $0.6 million, respectively, and was recorded within accrued liabilities in our condensed consolidated balance sheets. The notional amounts at contract exchange rates of our foreign currency forward contracts outstanding were:

	Notional Amount
	September 30, 2012		March 31, 2012
	(In millions)
Foreign Currency Forward Contracts (receive United States dollar/pay foreign currency)
Euro	$	90.4	$	214.2
Australian dollar		19.8		29.9
Chinese yuan renminbi		13.9		11.7
Swiss franc		7.5		6.8
Singapore dollar		5.6		3.8
New Zealand dollar		5.0		3.4
Canadian dollar		3.8		—
South Korean won		2.9		2.6
Danish krone		2.7		3.9
Brazilian real		2.1		8.7
British pound		—		19.2
Swedish krona		—		8.2
Mexican peso		—		3.2
Other		5.0		6.4
Total	$	158.7	$	322.0

	Notional Amount
	September 30,		March 31,
	2012		2012
	(In millions)
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)
Israeli shekel	$	146.5	$	158.2
Indian rupee		11.0		15.0
British pound		6.3		—
Other		0.5		4.8
Total	$	164.3	$	178.0

Our use of foreign currency forward contracts is intended to principally offset gains and losses associated with foreign currency exposures. Therefore, the notional amounts and currencies underlying our foreign currency forward contracts will fluctuate period to period as they are principally dependent on the balances and currency denomination of monetary assets and liabilities maintained by our global entities. The effect of the foreign currency forward contracts for the quarter and six months ended September 30, 2012, was a loss of $1.9 million and a gain of $4.5 million, respectively, which, after including gains and losses on our foreign currency exposures, resulted in net gains of $1.0 million and $0.6 million, respectively, recorded in interest and other income, net. The effect of the foreign currency forward contracts for the quarter and six months ended September 30, 2011, was losses of $2.3 million and $6.0 million, respectively, which, after including gains and losses on our foreign currency exposures, resulted in net losses of $0.9 million and $1.9 million, respectively, recorded in interest and other income, net.

We are exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments, but we do not expect any counterparties to fail to meet their obligations given their high credit ratings. In addition, we diversify this risk across several counterparties and utilize netting agreements to mitigate the counterparty credit risk.

Trade Finance Receivables

A substantial portion of our trade finance receivables is transferred to financial institutions on a non-recourse basis. We utilize wholly-owned finance subsidiaries in these finance receivables transfers. These entities are consolidated into our financial position and results of operations. We account for such transfers as sales in accordance with applicable accounting rules pertaining to the transfer of financial assets and the sale of future revenue when we have surrendered control of such receivables (including determining that such assets have been isolated beyond our reach and the reach of our creditors) and when we do not have significant continuing involvement in the generation of cash flows due the financial institutions. During the quarter and six months ended September 30, 2012, we transferred $39.0 million and $111.8 million, respectively, of such receivables through these programs. During the quarter and six months ended September 30, 2011, we transferred $147.8 million and $159.0 million, respectively, of such receivables through these programs. Finance receivables are typically transferred within several months after origination and the outstanding principal balance at the time of transfer typically approximates fair value.

For those finance receivables not transferred, we evaluate the credit risk of finance receivables in our portfolio based on regional characteristics specific to the risk climate in each of our geographic operations as well as based on internal credit quality indicators for individual receivables. We evaluate the credit risk of finance receivables using an internal credit rating system based on whether an individual receivable meets specific internal criteria including counterparty credit rating and receivable maturity date and assign an internal credit rating of 1, 2 or 3, with a credit rating of 1 representing the best credit quality.

For all regions and credit categories, a finance receivable will be specifically reserved once deemed uncollectible. As of September 30, 2012, we held $124.7 million of finance receivables, net of $0.3 million of specific receivables which have been fully reserved.

At September 30, 2012, our finance receivables balance, net of allowance, by region and by class of internal credit rating was as follows:

	North America		EMEA		Asia Pacific		Latin America		Total
	(In millions)
Class 1	$	61.9	$	29.4	$	4.6	$	1.2	$	97.1
Class 2		7.8		12.8		1.8		3.9		26.3
Class 3		0.1		—		0.2		1.0		1.3
Balance at the end of the period	$	69.8	$	42.2	$	6.6	$	6.1	$	124.7

Other Financial Instruments

The fair value of our senior unsecured notes due 2018 at September 30, 2012 and March 31, 2012, based on market prices (Level 2), was $372.4 million and $368.4 million, respectively, compared to the carrying value of $299.0 million and $298.9 million, respectively.

The fair value of our senior unsecured notes due 2022 at September 30, 2012 and March 31, 2012, based on market prices (Level 2), was $531.6 million and $506.6 million, respectively, compared to the carrying value of $497.5 million and $497.4 million, respectively.

The carrying values of all other financial instruments, consisting primarily of trade and finance receivables, accounts payable and other borrowings, approximate their respective fair values.

XML

Financial Instruments (Notional Amounts At Contract Exchange Rates Of Foreign Currency Forward Contracts) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Mar. 31, 2012
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	$ 158.7	$ 322.0
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	164.3	178.0
Euro [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	90.4	214.2
Australian Dollar [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	19.8	29.9
Chinese Yuan Renminbi [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	13.9	11.7
Swiss Franc [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	7.5	6.8
Singapore Dollar [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	5.6	3.8
New Zealand Dollar [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	5.0	3.4
Canadian dollar [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	3.8
South Korean Won [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	2.9	2.6
Danish Krone [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	2.7	3.9
Brazilian real [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	2.1	8.7
British Pound [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)		19.2
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	6.3
Swedish krona [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)		8.2
Mexican peso [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)		3.2
Other [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	5.0	6.4
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	0.5	4.8
Israeli Shekel [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	146.5	158.2
Indian Rupee [Member]
Derivative [Line Items]
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)	$ 11.0	$ 15.0

XML

Financial Instruments (Narrative) (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Mar. 31, 2012
Guarantee by the federal government for bonds issued by public agencies			97.00%		97.00%
Discount rate used in internally developed models, minimum			3.70%
Discount rate used in internally developed models, maximum			4.10%
Discount rate used in internally developed models, weighted average			3.90%
Redemption of available-for-sale holdings by issuers of auction rate securities	$ 0	$ 0.2	$ 7.6	$ 0.4
Unrealized loss on available-for-sale auction rate securities		(0.7)	(0.4)	(0.8)
Foreign currency forward contracts that closed in a gain position	5.5		5.5		8.1
Foreign currency forward contracts that closed in a loss position	4.1		4.1		0.6
Trade finance receivables transferred to financial institutions on a non-recourse basis	39.0	147.8	111.8	159.0
Finance receivables	124.7		124.7
Specific finance receivables fully reserved	0.3		0.3
Senior Unsecured Notes Due 2018 [Member]
Fair value of senior unsecured notes	372.4		372.4		368.4
Carrying value of senior unsecured notes	299.0		299.0		298.9
Senior Unsecured Notes Due 2022 [Member]
Fair value of senior unsecured notes	531.6		531.6		506.6
Carrying value of senior unsecured notes	497.5		497.5		497.4
Foreign Currency Foreign Exchange Contract [Member]
Effect of foreign currency forward contracts	1.9	2.3	4.5	6.0
Net effect of foreign currency forward contracts after including gains and losses on foreign currency exposure	1.0	0.9	0.6	1.9
Auction Rate Securities [Member]
Par value of Auction rate securities held Available-for-sale securities in auction rate securities held			21.7		29.3
Fair value of available-for-sale auction rate securities	18.6		18.6		26.9
Unrealized loss on available-for-sale auction rate securities			$ 3.1

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Financial Instruments (Finance Receivables Balance, Net Of Allowance, By Region And By Class Of Internal Credit Rating) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	$ 124.7
Class 1 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	97.1
Class 2 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	26.3
Class 3 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	1.3
North America [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	69.8
North America [Member] | Class 1 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	61.9
North America [Member] | Class 2 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	7.8
North America [Member] | Class 3 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	0.1
EMEA [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	42.2
EMEA [Member] | Class 1 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	29.4
EMEA [Member] | Class 2 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	12.8
Asia Pacific [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	6.6
Asia Pacific [Member] | Class 1 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	4.6
Asia Pacific [Member] | Class 2 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	1.8
Asia Pacific [Member] | Class 3 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	0.2
Latin America [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	6.1
Latin America [Member] | Class 1 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	1.2
Latin America [Member] | Class 2 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	3.9
Latin America [Member] | Class 3 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Finance Receivables Balance	$ 1.0

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Long-Term Borrowings (Long-Term Borrowings) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Mar. 31, 2012
Debt Instrument [Line Items]
Capital leases and other obligations	$ 52.4	$ 46.3
Total	848.9	842.6
Less current maturities of capital leases and other obligations (included in accrued liabilities)	(24.1)	(21.0)
Long-term borrowings	824.8	821.6
Senior Unsecured Notes Due 2018 [Member]
Debt Instrument [Line Items]
Senior unsecured notes due	299.0	298.9
Senior Unsecured Notes Due 2022 [Member]
Debt Instrument [Line Items]
Senior unsecured notes due	$ 497.5	$ 497.4

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Business Combinations

6 Months Ended

Sep. 30, 2012

Business Combinations

(2) Business Combinations

During the six months ended September 30, 2012, we completed three business combinations for combined purchase consideration of $19.5 million. The purchase consideration was allocated to acquired assets and assumed liabilities consisting primarily of $19.5 million of acquired technology, with weighted average economic lives of approximately three years, in addition to other tangible assets and liabilities. These acquisitions resulted in a preliminary allocation of $2.7 million to goodwill assigned to our Enterprise Service Management segment. We are in the process of finalizing our assessment of the fair value of acquired assets and assumed liabilities and will adjust the purchase price allocations when they are finalized.

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Long-Term Borrowings (Long-Term Borrowings) (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Mar. 31, 2012
Senior Unsecured Notes Due 2018 [Member]
Debt Instrument [Line Items]
Unamortized discount	$ 1.0	$ 1.1
Senior Unsecured Notes Due 2022 [Member]
Debt Instrument [Line Items]
Unamortized discount	$ 2.5	$ 2.6

XML

Segment Reporting (Narrative) (Detail)	Sep. 30, 2012 Segment
Segment Reporting Information [Line Items]
Number of business units	2

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Condensed Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Mar. 31, 2012
Current assets:
Cash and cash equivalents	$ 1,311.2	$ 1,496.9
Short-term investments	128.2	86.1
Trade accounts receivable, net	216.9	296.7
Trade finance receivables, net	68.5	108.0
Deferred tax assets	74.6	71.0
Other current assets	105.3	122.2
Total current assets	1,904.7	2,180.9
Property and equipment, net	92.3	87.8
Software development costs, net	262.4	244.7
Long-term investments	45.9	52.6
Long-term trade finance receivables, net	56.2	80.1
Intangible assets, net	229.7	257.5
Goodwill	1,708.3	1,720.6
Other long-term assets	236.2	240.2
Total assets	4,535.7	4,864.4
Current liabilities:
Trade accounts payable	44.5	31.5
Finance payables	7.7	1.2
Accrued liabilities	249.0	321.4
Deferred revenue	1,004.7	1,059.5
Total current liabilities	1,305.9	1,413.6
Long-term deferred revenue	837.3	934.4
Long-term borrowings	824.8	821.6
Other long-term liabilities	246.3	249.0
Total liabilities	3,214.3	3,418.6
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $.01 par value, 1.0 shares authorized, none issued and outstanding
Common stock, $.01 par value, 600.0 shares authorized, 249.1 shares issued	2.5	2.5
Additional paid-in capital	1,237.5	1,179.5
Retained earnings	3,397.4	3,245.3
Accumulated other comprehensive income	7.4	31.9
Total stockholders' equity before treasury stock	4,644.8	4,459.2
Treasury stock, at cost (93.5 and 87.4 shares)	(3,323.4)	(3,013.4)
Total stockholders' equity	1,321.4	1,445.8
Total liabilities and stockholders' equity	$ 4,535.7	$ 4,864.4

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net earnings	$ 152.0	$ 210.4
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	115.9	111.4
Deferred income tax benefit	(3.8)	(3.5)
Share-based compensation expense	74.5	61.6
Loss on investments, net and other	0.8	3.9
Changes in operating assets and liabilities, net of acquisitions:
Trade accounts receivable	79.0	65.7
Trade finance receivables	64.5	109.7
Prepaid and other current assets	10.3	0.7
Other long-term assets	5.2	12.7
Accrued and other current liabilities	(57.9)	(63.7)
Deferred revenue	(149.0)	(64.5)
Other long-term liabilities	(2.0)	(9.0)
Other operating assets and liabilities	(3.4)	(12.3)
Net cash provided by operating activities	286.1	423.1
Cash flows from investing activities:
Proceeds from maturities of investments	34.0	15.5
Proceeds from sales of investments	9.6	3.3
Purchases of investments	(79.4)	(18.9)
Cash paid for acquisitions, net of cash acquired, and other investments	(19.4)	(148.9)
Capitalization of software development costs	(63.3)	(62.8)
Purchases of property and equipment	(13.3)	(10.0)
Other investing activities	1.9
Net cash used in investing activities	(129.9)	(221.8)
Cash flows from financing activities:
Treasury stock acquired	(350.0)	(405.5)
Repurchases of stock to satisfy employee tax withholding obligations	(20.0)	(23.0)
Proceeds from stock options exercised and other	38.9	37.1
Excess tax benefit from share-based compensation expense	3.4	12.6
Repayments of borrowings and capital lease obligations	(5.6)	(4.7)
Net cash used in financing activities	(333.3)	(383.5)
Effect of exchange rate changes on cash and cash equivalents	(8.6)	(19.0)
Net change in cash and cash equivalents	(185.7)	(201.2)
Cash and cash equivalents, beginning of period	1,496.9	1,660.9
Cash and cash equivalents, end of period	1,311.2	1,459.7
Supplemental disclosure of cash flow information:
Cash paid for interest	22.2	11.6
Cash paid for income taxes, net of amounts refunded	$ 48.6	$ 13.5

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Share-Based Compensation (Narrative) (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended
	Sep. 30, 2012	Sep. 30, 2012 Stock Options [Member]	Sep. 30, 2012 Restricted Stock Units [Member]	Sep. 30, 2012 Time-Based Nonvested Stock Units [Member]	Sep. 30, 2012 Market-Based Nonvested Stock Units [Member]
Nonvested stock units granted				0.2	2.0
Granted, weighted average grant date fair value				$ 40.20	$ 43.58
Vesting period				Annual increments over one or three years	50% increments over two- and three-year periods upon achievement of certain targets related to our relative shareholder
Issuance of shares related to exercises of stock options		0.4	1.0
Issuance of shares related to vesting of nonvested stock units		0.3	1.5
Total unrecognized compensation costs related to stock options, nonvested stock and nonvested stock units	$ 229.2
Weighted-average period (in years) to recognize total unrecognized compensation costs related to stock options, nonvested stock and nonvested stock units	2 years

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Segment Reporting (Tables)

6 Months Ended

Sep. 30, 2012

Summary Of Segment Performance

The following tables summarize segment performance for the quarters and six months ended September 30, 2012 and 2011:

	Enterprise Service Management							Mainframe Service Management		Consolidated
Quarter Ended September 30, 2012	Solutions		Services			Total
	(In millions)
Revenue:
License	$	129.0	$	—		$	129.0	$	80.2	$	209.2
Maintenance		161.9		—			161.9		123.5		285.4
Professional services		—		53.6			53.6		—		53.6
Total revenue		290.9		53.6			344.5		203.7		548.2
Direct and allocated indirect segment operating expenses:		213.9		58.7			272.6		77.2		349.8
Segment operating income (loss)		77.0		(5.1	)		71.9		126.5		198.4
Unallocated operating expenses											(60.4	)
Other loss, net											(6.4	)
Earnings before income taxes										$	131.6
	Enterprise Service Management							Mainframe Service Management		Consolidated
Quarter Ended September 30, 2011	Solutions		Services			Total
	(In millions)
Revenue:
License	$	146.0	$	—		$	146.0	$	83.7	$	229.7
Maintenance		145.6		—			145.6		124.9		270.5
Professional services		—		56.5			56.5		—		56.5
Total revenue		291.6		56.5			348.1		208.6		556.7
Direct and allocated indirect segment operating expenses:		200.9		58.2			259.1		81.2		340.3
Segment operating income (loss)		90.7		(1.7	)		89.0		127.4		216.4
Unallocated operating expenses											(55.4	)
Other loss, net											(4.8	)
Earnings before income taxes										$	156.2

	Enterprise Service Management							Mainframe Service Management		Consolidated
Six Months Ended September 30, 2012	Solutions		Services			Total
	(In millions)
Revenue:
License	$	226.1	$	—		$	226.1	$	154.7	$	380.8
Maintenance		318.4		—			318.4		245.8		564.2
Professional services		—		107.6			107.6		—		107.6
Total revenue		544.5		107.6			652.1		400.5		1,052.6
Direct and allocated indirect segment operating expenses:		428.2		120.4			548.6		157.6		706.2
Segment operating income (loss)		116.3		(12.8	)		103.5		242.9		346.4
Unallocated operating expenses											(134.5	)
Other loss, net											(14.7	)
Earnings before income taxes										$	197.2
	Enterprise Service Management							Mainframe Service Management		Consolidated
Six Months Ended September 30, 2011	Solutions		Services			Total
	(In millions)
Revenue:
License	$	264.5	$	—		$	264.5	$	154.7	$	419.2
Maintenance		286.8		—			286.8		248.3		535.1
Professional services		—		104.8			104.8		—		104.8
Total revenue		551.3		104.8			656.1		403.0		1,059.1
Direct and allocated indirect segment operating expenses:		398.8		108.9			507.7		164.5		672.2
Segment operating income (loss)		152.5		(4.1	)		148.4		238.5		386.9
Unallocated operating expenses											(110.8	)
Other loss, net											(6.4	)
Earnings before income taxes										$	269.7

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Share-Based Compensation (Share-Based Compensation Expense) (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation expense	$ 36.9	$ 30.8	$ 74.5	$ 61.6
Cost Of License Revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation expense	1.8	1.2	3.3	2.3
Cost Of Maintenance Revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation expense	4.2	3.8	8.7	7.3
Cost Of Professional Services Revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation expense	1.5	1.2	3.1	2.5
Selling And Marketing Expenses [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation expense	14.0	10.0	27.9	19.1
Research And Development Expenses [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation expense	3.1	3.6	6.4	6.5
General And Administrative Expenses [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation expense	$ 12.3	$ 11.0	$ 25.1	$ 23.9

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Financial Instruments (Input Levels And Valuation Techniques For Determination Of Fair Values Of Financial Instruments) (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Sep. 30, 2012
Recurring [Member]
Assets
Foreign currency forward contracts	5.5
Total	562.0
Liabilities
Foreign currency forward contracts	4.1
Total	4.1
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | Recurring [Member]
Assets
Total	537.9
Significant Other Observable Inputs (Level 2) [Member] | Recurring [Member]
Assets
Foreign currency forward contracts	5.5
Total	5.5
Liabilities
Foreign currency forward contracts	4.1
Total	4.1
Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member]
Assets
Total	18.6
Money-Market Funds [Member]
Liabilities
Valuation Technique	A
Money-Market Funds [Member] | Recurring [Member]
Assets
Cash equivalents	182.4
Money-Market Funds [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | Recurring [Member]
Assets
Cash equivalents	182.4
United States Treasury Securities [Member]
Liabilities
Valuation Technique	A
United States Treasury Securities [Member] | Recurring [Member]
Assets
Cash equivalents	200.0
Short-term and long-term investments	134.8
United States Treasury Securities [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | Recurring [Member]
Assets
Cash equivalents	200.0
Short-term and long-term investments	134.8
Auction Rate Securities [Member]
Liabilities
Valuation Technique	B
Auction Rate Securities [Member] | Recurring [Member]
Assets
Short-term and long-term investments	18.6
Auction Rate Securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member]
Assets
Short-term and long-term investments	18.6
Mutual Funds [Member]
Liabilities
Valuation Technique	A
Mutual Funds [Member] | Recurring [Member]
Assets
Short-term and long-term investments	20.7
Mutual Funds [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | Recurring [Member]
Assets
Short-term and long-term investments	20.7
Foreign Currency Forward Contracts [Member]
Liabilities
Valuation Technique	A

XML

Basis of Presentation

6 Months Ended

Sep. 30, 2012

Basis of Presentation

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of BMC Software, Inc. and its subsidiaries (collectively, we, us, our or BMC). All significant intercompany balances and transactions have been eliminated in consolidation. These financial statements reflect all normal recurring adjustments necessary to fairly present our financial position and results of operations as of and for the periods presented herein. These financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.

Interim results are not necessarily indicative of results for a full year. Our results reflect the seasonality of our business and generally tend to be stronger in the third and fourth quarters of our fiscal year, as compared to the first and second quarters of our fiscal year; however, general economic conditions also have an impact on our business and financial results. These financial statements should be read in conjunction with our annual audited consolidated financial statements for the fiscal year ended March 31, 2012, as filed with the SEC on Form 10-K.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Per Share data, unless otherwise specified	Sep. 30, 2012	Mar. 31, 2012
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	1.0	1.0
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	600.0	600.0
Common stock, shares issued	249.1	249.1
Treasury stock, shares	93.5	87.4

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New Accounting Pronouncements Not Yet Adopted (Policies)

6 Months Ended

Sep. 30, 2012

New Accounting Pronouncements Not Yet Adopted

New Accounting Pronouncements Not Yet Adopted

In December 2011, the Financial Accounting Standards Board (FASB) issued guidance requiring new disclosures regarding balance sheet offsetting. This guidance requires entities to disclose the gross amounts of certain recognized financial assets and liabilities, to reconcile these amounts to the net positions recognized in the balance sheet and to provide qualitative disclosures about the rights of offset relating to these financial assets and liabilities. This new disclosure guidance is effective for us beginning with our first quarter of fiscal 2014.

XML

Document and Entity Information	6 Months Ended
	Sep. 30, 2012	Oct. 29, 2012
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Trading Symbol	BMC
Entity Registrant Name	BMC SOFTWARE INC
Entity Central Index Key	0000835729
Current Fiscal Year End Date	--03-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		154,938,817

XML

Financial Instruments (Tables)

6 Months Ended

Sep. 30, 2012

Input Levels And Valuation Techniques For Determination Of Fair Values Of Financial Instruments

The fair values of our financial instruments were determined using the following input levels and valuation techniques:

	Fair Value Measurements at Reporting Date Using
September 30, 2012	Total		Quoted Prices in  Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
	(In millions)
Assets
Cash equivalents
Money-market funds	$	182.4	$	182.4	$	—	$	—	A
United States Treasury securities		200.0		200.0		—		—	A
Short-term and long-term investments
United States Treasury securities		134.8		134.8		—		—	A
Auction rate securities		18.6		—		—		18.6	B
Mutual funds		20.7		20.7		—		—	A
Foreign currency forward contracts		5.5		—		5.5		—	A
Total	$	562.0	$	537.9	$	5.5	$	18.6
Liabilities
Foreign currency forward contracts	$	4.1	$	—	$	4.1	$	—	A
Total	$	4.1	$	—	$	4.1	$	—

Summary Of Activity In Level 3 Financial Instruments

The following table summarizes the activity in our Level 3 financial instruments (auction rate securities) for the quarters and six months ended September 30, 2012 and 2011, respectively:

	Quarter Ended September 30,						Six Months Ended September 30,
	2012			2011			2012			2011
				(In millions)
Balance at the beginning of the period	$	18.7		$	26.8		$	26.9		$	27.2
Redemption and sales of auction rate securities		—			(0.2	)		(7.6	)		(0.4	)
Change in unrealized gain (loss) included in other comprehensive income		(0.1	)		(1.0	)		(0.7	)		(1.2	)
Balance at the end of the period	$	18.6		$	25.6		$	18.6		$	25.6

Components Of Cash, Cash Equivalents And Investments

Our cash, cash equivalents and investments were comprised of the following:

	September 30, 2012						March 31, 2012
	Cash and Cash Equivalents		Short-term Investments		Long-term Investments		Cash and Cash Equivalents		Short-term Investments		Long-term Investments
	(In millions)
Measured at fair value:
Available-for-sale
United States Treasury securities	$	200.0	$	128.2	$	6.6	$	49.9	$	86.1	$	6.1
Auction rate securities		—		—		18.6		—		—		26.9
Trading
Mutual funds		—		—		20.7		—		—		19.6
Total debt and equity investments measured at fair value		200.0		128.2		45.9		49.9		86.1		52.6
Cash on hand		878.5		—		—		632.6		—		—
Certificates of deposit		50.3		—		—		45.1		—		—
Money-market funds		182.4		—		—		769.3		—		—
Total cash, cash equivalents and investments	$	1,311.2	$	128.2	$	45.9	$	1,496.9	$	86.1	$	52.6
Amounts included in accumulated other comprehensive income from available-for-sale securities (pre-tax):
Unrealized losses*	$	—	$	—	$	3.1	$	—	$	—	$	2.4

* The unrealized losses on available-for-sale securities at September 30, 2012 and March 31, 2012 relate to the auction rate securities.

Contract Maturities Of Available For Sale Investments In Debt Securities

The following summarizes the underlying contractual maturities of our available-for-sale investments in debt securities at September 30, 2012:

	Cost		Fair Value
	(In millions)
Due in one year or less	$	328.2	$	328.2
Due between one and two years		6.6		6.6
Due after ten years		21.7		18.6
Total	$	356.5	$	353.4

Notional Amounts At Contract Exchange Rates Of Foreign Currency Forward Contracts

The notional amounts at contract exchange rates of our foreign currency forward contracts outstanding were:

	Notional Amount
	September 30, 2012		March 31, 2012
	(In millions)
Foreign Currency Forward Contracts (receive United States dollar/pay foreign currency)
Euro	$	90.4	$	214.2
Australian dollar		19.8		29.9
Chinese yuan renminbi		13.9		11.7
Swiss franc		7.5		6.8
Singapore dollar		5.6		3.8
New Zealand dollar		5.0		3.4
Canadian dollar		3.8		—
South Korean won		2.9		2.6
Danish krone		2.7		3.9
Brazilian real		2.1		8.7
British pound		—		19.2
Swedish krona		—		8.2
Mexican peso		—		3.2
Other		5.0		6.4
Total	$	158.7	$	322.0

	Notional Amount
	September 30,		March 31,
	2012		2012
	(In millions)
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)
Israeli shekel	$	146.5	$	158.2
Indian rupee		11.0		15.0
British pound		6.3		—
Other		0.5		4.8
Total	$	164.3	$	178.0

Finance Receivables Balance, Net Of Allowance, By Region And By Class Of Internal Credit Rating

At September 30, 2012, our finance receivables balance, net of allowance, by region and by class of internal credit rating was as follows:

	North America		EMEA		Asia Pacific		Latin America		Total
	(In millions)
Class 1	$	61.9	$	29.4	$	4.6	$	1.2	$	97.1
Class 2		7.8		12.8		1.8		3.9		26.3
Class 3		0.1		—		0.2		1.0		1.3
Balance at the end of the period	$	69.8	$	42.2	$	6.6	$	6.1	$	124.7

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenue:
License	$ 209.2	$ 229.7	$ 380.8	$ 419.2
Maintenance	285.4	270.5	564.2	535.1
Professional services	53.6	56.5	107.6	104.8
Total revenue	548.2	556.7	1,052.6	1,059.1
Operating expenses:
Cost of license revenue	40.5	39.3	79.8	77.6
Cost of maintenance revenue	53.0	49.5	103.9	93.3
Cost of professional services revenue	54.5	53.2	112.2	100.6
Selling and marketing expenses	163.1	153.5	327.8	298.2
Research and development expenses	32.3	38.3	74.6	83.0
General and administrative expenses	55.9	51.0	118.9	109.6
Amortization of intangible assets	10.9	10.9	23.5	20.7
Total operating expenses	410.2	395.7	840.7	783.0
Operating income	138.0	161.0	211.9	276.1
Other income (loss), net:
Interest and other income, net	3.5	2.6	5.8	6.4
Interest expense	(10.6)	(5.2)	(20.8)	(10.7)
Gain (loss) on investments, net	0.7	(2.2)	0.3	(2.1)
Total other loss, net	(6.4)	(4.8)	(14.7)	(6.4)
Earnings before income taxes	131.6	156.2	197.2	269.7
Provision for income taxes	33.8	41.5	45.2	59.3
Net earnings	97.8	114.7	152.0	210.4
Basic earnings per share	$ 0.62	$ 0.66	$ 0.96	$ 1.20
Diluted earnings per share	$ 0.61	$ 0.65	$ 0.94	$ 1.18
Shares used in computing basic earnings per share	157.5	173.0	158.9	174.7
Shares used in computing diluted earnings per share	160.3	176.0	162.1	178.3
Net earnings	97.8	114.7	152.0	210.4
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax provision (benefit) of $1.0, $(0.8), $2.6 and $(0.4), respectively	5.1	(41.5)	(24.1)	(33.3)
Unrealized loss on available-for-sale securities, net of tax provision (benefit) of $0, $(0.3), $(0.3) and $(0.3), respectively		(0.7)	(0.4)	(0.8)
Total other comprehensive income (loss)	5.1	(42.2)	(24.5)	(34.1)
Total comprehensive income	$ 102.9	$ 72.5	$ 127.5	$ 176.3

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Share-Based Compensation

6 Months Ended

Sep. 30, 2012

Share-Based Compensation

(6) Share-Based Compensation

During the quarter and six months ended September 30, 2012, we granted 0.2 million and 2.0 million nonvested stock units, respectively, at a weighted average grant date fair value of $40.20 and $43.58, respectively, consisting of both time-based and market-based awards, to our executive officers, non-executive employees and non-employee board members. Time-based nonvested stock units primarily vest in annual increments over one or three years. Market-based nonvested stock units vest in 50% increments over two- and three-year periods upon achievement of certain targets related to our relative shareholder return as compared to the NASDAQ-100 Index over each performance period.

During the quarter and six months ended September 30, 2012, we issued 0.4 million and 1.0 million shares, respectively, of common stock related to exercises of stock options, and 0.3 million and 1.5 million shares, respectively, of common stock related to vesting of nonvested stock units.

At September 30, 2012, we had approximately $229.2 million of total unrecognized compensation costs related to share-based awards that are expected to be recognized as expense over a remaining weighted-average period of two years.

Share-based compensation expense as recorded in our condensed consolidated statements of comprehensive income is summarized as follows:

	Quarter Ended				Six Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
			(In millions)
Cost of license revenue	$	1.8	$	1.2	$	3.3	$	2.3
Cost of maintenance revenue		4.2		3.8		8.7		7.3
Cost of professional services revenue		1.5		1.2		3.1		2.5
Selling and marketing expenses		14.0		10.0		27.9		19.1
Research and development expenses		3.1		3.6		6.4		6.5
General and administrative expenses		12.3		11.0		25.1		23.9
Total share-based compensation expense	$	36.9	$	30.8	$	74.5	$	61.6

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Income Taxes

6 Months Ended

Sep. 30, 2012

Income Taxes

(5) Income Taxes

Income tax expense was $33.8 million and $45.2 million for the quarter and six months ended September 30, 2012, respectively, resulting in effective tax rates of 25.7% and 22.9%, respectively. Income tax expense was $41.5 million and $59.3 million for the quarter and six months ended September 30, 2011, respectively, resulting in effective tax rates of 26.6% and 22.0%, respectively. Our effective tax rate generally differs from the U.S. federal statutory rate of 35% due to favorable tax rates associated with earnings from lower tax rate jurisdictions throughout the world and our policy of indefinitely reinvesting earnings from certain jurisdictions (primarily in Europe), as well as due to additional accruals, changes in estimates, releases and settlements with taxing authorities related to our uncertain tax positions and benefits associated with income attributable to both domestic production activities and the extraterritorial income exclusion. During the quarter and six months ended September 30, 2012, the overall favorable effects of foreign tax rates on our effective tax rate were 7.2% and 9.3% of pre-tax earnings, respectively. During the quarter and six months ended September 30, 2011, the overall favorable effects of foreign tax rates on our effective tax rate were 6.7% and 8.9% of pre-tax earnings, respectively. During the six months ended September 30, 2011, we also recorded discrete net tax benefits of $6.2 million associated with tax authority settlements related to prior years’ tax matters which favorably impacted our effective tax rate by 2.3% of pre-tax earnings. Our effective tax rate could fluctuate on a quarterly basis and could be adversely affected to the extent forecasted earnings for the year are lower than anticipated in countries with lower statutory rates and higher than anticipated in countries with higher statutory rates.

We file a federal income tax return in the United States as well as income tax returns in various local, state and foreign jurisdictions. Our tax years are closed with the United States Internal Revenue Service (IRS) through the tax year ended March 31, 2007, except for one issue related to the year ended March 31, 2006. We received a Notice of Deficiency from the IRS related to this issue and in July 2011 filed a petition for hearing with the U.S. Tax Court. A trial was held in May 2012 and post-trial briefs have been submitted. We are currently awaiting the Tax Court’s ruling. The IRS is in the final stages of an examination of our federal income tax return for the years ended March 31, 2009 and 2010 and there are no unagreed issues. In addition, certain tax years related to local, state, and foreign jurisdictions remain subject to examination. To provide for potential tax exposures, we maintain a liability for unrecognized tax benefits which we believe is adequate.

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Business Combinations (Narrative) (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Sep. 30, 2012 Y
Business Acquisition [Line Items]
Acquisition price of business	$ 19.5
Assets and liabilities consisting primarily of acquired technology	19.5
Weighted average economic lives	3
Purchase consideration allocated to goodwill	$ 2.7

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Long-Term Borrowings (Tables)

6 Months Ended

Sep. 30, 2012

Long -Term Borrowings

Long-term borrowings at September 30, 2012 and March 31, 2012 consisted of:

	September 30,			March 31,
	2012			2012
	(In millions)
Senior unsecured notes due 2018 (net of $1.0 million and $1.1 million of unamortized discount at September 30, 2012 and March 31, 2012, respectively)	$	299.0		$	298.9
Senior unsecured notes due 2022 (net of $2.5 million and $2.6 million of unamortized discount at September 30, 2012 and March 31, 2012, respectively)		497.5			497.4
Capital leases and other obligations		52.4			46.3
Total		848.9			842.6
Less current maturities of capital leases and other obligations (included in accrued liabilities)		(24.1	)		(21.0	)
Long-term borrowings	$	824.8		$	821.6

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Segment Reporting

6 Months Ended

Sep. 30, 2012

Segment Reporting

(9) Segment Reporting

We are organized into two primary business units, Enterprise Service Management (ESM) and Mainframe Service Management (MSM). ESM derives its revenue from our performance management, automation, IT service management, and Atrium solution suites (collectively, ESM-Solutions), along with professional services revenue derived from consulting, implementation, integration and educational services related principally to the delivery of our ESM solutions (ESM-Services). MSM derives its revenue from solution suites for mainframe data and performance management and enterprise workload automation. Beginning in the first quarter of fiscal 2013, we expanded our ESM segment reporting to include separate financial information for both ESM-Solutions and ESM-Services, consistent with the manner in which business segment performance is being assessed internally for evaluating performance and making resource allocation decisions.

Segment performance is measured based on internal segment operating income. Segment operating income for ESM-Solutions and MSM reflects segment revenue less direct and allocated indirect segment operating expenses. Direct segment operating expenses primarily include cost of revenue, selling and marketing, research and development and general and administrative expenses that can be specifically identified to a particular segment and are directly controllable by segment management, while allocated indirect segment operating expenses primarily include indirect costs within these operating expense categories that are not specifically identified to a particular segment or controllable by segment management. Indirect operating expenses are allocated to ESM-Solutions and MSM based on budgeted bookings, revenue and other allocation methods that management believes to be reasonable. Segment operating income for ESM-Services reflects professional services revenue less direct segment operating expenses consisting primarily of cost of professional services revenue and direct selling and marketing costs. The Company has reclassified all periods presented to conform to the current period presentation.

Our measure of segment operating income does not include the effect of share-based compensation expenses, amortization of acquired technology and other intangible assets, the costs associated with severance, exit costs and related charges or proxy contest costs, which are collectively included in unallocated operating expenses below. Assets and liabilities are reviewed by management at the consolidated level only.

The following tables summarize segment performance for the quarters and six months ended September 30, 2012 and 2011:

	Enterprise Service Management							Mainframe Service Management		Consolidated
Quarter Ended September 30, 2012	Solutions		Services			Total
	(In millions)
Revenue:
License	$	129.0	$	—		$	129.0	$	80.2	$	209.2
Maintenance		161.9		—			161.9		123.5		285.4
Professional services		—		53.6			53.6		—		53.6
Total revenue		290.9		53.6			344.5		203.7		548.2
Direct and allocated indirect segment operating expenses:		213.9		58.7			272.6		77.2		349.8
Segment operating income (loss)		77.0		(5.1	)		71.9		126.5		198.4
Unallocated operating expenses											(60.4	)
Other loss, net											(6.4	)
Earnings before income taxes										$	131.6
	Enterprise Service Management							Mainframe Service Management		Consolidated
Quarter Ended September 30, 2011	Solutions		Services			Total
	(In millions)
Revenue:
License	$	146.0	$	—		$	146.0	$	83.7	$	229.7
Maintenance		145.6		—			145.6		124.9		270.5
Professional services		—		56.5			56.5		—		56.5
Total revenue		291.6		56.5			348.1		208.6		556.7
Direct and allocated indirect segment operating expenses:		200.9		58.2			259.1		81.2		340.3
Segment operating income (loss)		90.7		(1.7	)		89.0		127.4		216.4
Unallocated operating expenses											(55.4	)
Other loss, net											(4.8	)
Earnings before income taxes										$	156.2

	Enterprise Service Management							Mainframe Service Management		Consolidated
Six Months Ended September 30, 2012	Solutions		Services			Total
	(In millions)
Revenue:
License	$	226.1	$	—		$	226.1	$	154.7	$	380.8
Maintenance		318.4		—			318.4		245.8		564.2
Professional services		—		107.6			107.6		—		107.6
Total revenue		544.5		107.6			652.1		400.5		1,052.6
Direct and allocated indirect segment operating expenses:		428.2		120.4			548.6		157.6		706.2
Segment operating income (loss)		116.3		(12.8	)		103.5		242.9		346.4
Unallocated operating expenses											(134.5	)
Other loss, net											(14.7	)
Earnings before income taxes										$	197.2
	Enterprise Service Management							Mainframe Service Management		Consolidated
Six Months Ended September 30, 2011	Solutions		Services			Total
	(In millions)
Revenue:
License	$	264.5	$	—		$	264.5	$	154.7	$	419.2
Maintenance		286.8		—			286.8		248.3		535.1
Professional services		—		104.8			104.8		—		104.8
Total revenue		551.3		104.8			656.1		403.0		1,059.1
Direct and allocated indirect segment operating expenses:		398.8		108.9			507.7		164.5		672.2
Segment operating income (loss)		152.5		(4.1	)		148.4		238.5		386.9
Unallocated operating expenses											(110.8	)
Other loss, net											(6.4	)
Earnings before income taxes										$	269.7

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Stockholders' Equity

6 Months Ended

Sep. 30, 2012

Stockholders' Equity

(7) Stockholders’ Equity

Earnings Per Share

The two-class method is utilized for the computation of earnings per share (EPS). The two-class method requires a portion of net income to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents, if declared. Income allocated to these participating securities is excluded from net earnings allocated to common shares and was insignificant for the quarter and six months ended September 30, 2011. There were no participating securities outstanding during the quarter and six months ended September 30, 2012.

Basic earnings per share is computed by dividing net income allocated to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income allocated to common shares by the weighted average number of common shares outstanding during the period, plus the dilutive effect of outstanding share-based awards and other dilutive securities using the treasury stock method.

The following table summarizes our basic and diluted EPS computations for the quarters and six months ended September 30, 2012 and 2011:

	Quarter Ended				Six Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
	(In millions, except per share data)
Basic earnings per share:
Net earnings allocated to common shares	$	97.8	$	114.7	$	152.0	$	210.4
Weighted average number of common shares outstanding		157.5		173.0		158.9		174.7
Basic earnings per share	$	0.62	$	0.66	$	0.96	$	1.20
Diluted earnings per share:
Net earnings allocated to common shares	$	97.8	$	114.7	$	152.0	$	210.4
Weighted average number of common shares outstanding		157.5		173.0		158.9		174.7
Incremental shares from assumed conversions of share-based awards		2.8		3.0		3.2		3.6
Adjusted weighted average number of common shares outstanding		160.3		176.0		162.1		178.3
Diluted earnings per share	$	0.61	$	0.65	$	0.94	$	1.18

For the quarter and six months ended September 30, 2012, 0.9 million and 0.9 million weighted average potential common shares, respectively, have been excluded from the calculation of diluted EPS as they were anti-dilutive. For the quarter and six months ended September 30, 2011, 1.5 million and 0.9 million weighted average potential common shares, respectively, have been excluded from the calculation of diluted EPS as they were anti-dilutive.

Treasury Stock

Our Board of Directors has previously authorized a total of $5.0 billion to repurchase common stock. During the quarter and six months ended September 30, 2012, we repurchased 4.8 million and 8.3 million shares, respectively, for $200.0 million and $350.0 million, respectively, under these authorizations. At September 30, 2012, approximately $500.3 million remains authorized in the stock repurchase program, which does not have an expiration date. In October 2012, our Board of Directors approved a new $1 billion stock repurchase program. We expect $750 million of the repurchase to be executed via an accelerated share repurchase agreement to be entered into during the quarter ending December 31, 2012.

During the quarter and six months ended September 30, 2012, we repurchased 0.1 million and 0.5 million shares, respectively, for $3.1 million and $20.0 million, to satisfy employee tax withholding obligations upon the vesting of share-based awards.

Shareholder Rights Agreement

On May 12, 2012, our Board of Directors authorized and declared a dividend of one preferred share purchase right (a Right) for each outstanding common share through a shareholder rights agreement (the Rights Agreement). Each Right, once exercisable, represents the right to purchase one one-thousandth of a series B junior participating preferred share, par value $0.01, for $180, or an equivalent value of common shares determined at 50% of the then-current market price of BMC’s common stock, provided sufficient common shares are then unissued. The Rights become exercisable in the event any individual person or entity (including the ownership of their related affiliates) acquires 10% or more of the outstanding share capital of the Company without the approval of BMC’s Board of Directors, and until such time are inseparable from and trade with BMC’s common stock. The Rights have a de minimus fair value and are accounted for as a component of stockholders’ equity. The Rights Agreement expires May 11, 2013.

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Guarantees and Contingencies

6 Months Ended

Sep. 30, 2012

Guarantees and Contingencies

(8) Guarantees and Contingencies

Guarantees

Under our standard software license agreements, we agree to indemnify, defend and hold harmless our licensees from and against certain losses, damages and costs arising from claims alleging the licensees’ use of our software infringes the intellectual property rights of a third party. Also, under these standard license agreements, we represent and warrant to licensees that our software products operate substantially in accordance with published specifications.

Other guarantees include promises to indemnify, defend and hold harmless each of our executive officers, non-employee directors and certain key employees from and against losses, damages and costs incurred by each such individual in administrative, legal or investigative proceedings arising from alleged wrongdoing by the individual while acting in good faith within the scope of his or her job duties on our behalf.

We also had outstanding letters of credit, performance bonds and similar instruments at September 30, 2012 of approximately $46.1 million primarily in support of performance obligations to various customers, but also related to facilities and other obligations.

Historically, we have not incurred significant costs related to such indemnifications, warranties and guarantees. As such, and based on other factors, no provision or accrual for these items has been made.

Contingencies

We are party to various labor claims brought by certain former international employees alleging that amounts are due to such employees for unpaid commissions and other compensation. The claims are in various stages and are not expected to be fully resolved in the near future; however, we intend to vigorously contest all of the claims. Taking into account accruals recorded by us, we believe the likelihood of a material adverse effect on our financial statements resulting from these claims is remote. However, we cannot predict the timing or ultimate outcome of these matters.

We are currently litigating a matter in Brazilian courts as to whether a tax applies to the remittance of software payments from our Brazilian operations. In February 2007, a law was enacted that clarified that this particular tax did not apply to the remittance of software payments, retroactive to January 1, 2006. We continue to pursue a favorable resolution on this matter for years prior to January 1, 2006. While we believe we will ultimately prevail based on the merits of our position, if we do not, we could incur a charge of up to approximately $10 million based on current exchange rates; however, we cannot predict the timing or ultimate outcome of this matter.

We are subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. Taking into account accruals recorded by us, we believe the likelihood of a material adverse effect on our financial statements resulting from any of these matters is remote.

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New Accounting Pronouncements Not Yet Adopted

6 Months Ended

Sep. 30, 2012

New Accounting Pronouncements Not Yet Adopted

(10) New Accounting Pronouncements Not Yet Adopted

In December 2011, the Financial Accounting Standards Board (FASB) issued guidance requiring new disclosures regarding balance sheet offsetting. This guidance requires entities to disclose the gross amounts of certain recognized financial assets and liabilities, to reconcile these amounts to the net positions recognized in the balance sheet and to provide qualitative disclosures about the rights of offset relating to these financial assets and liabilities. This new disclosure guidance is effective for us beginning with our first quarter of fiscal 2014.

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Income Taxes (Narrative) (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Taxes [Line Items]
Provision for income taxes	$ 33.8	$ 41.5	$ 45.2	$ 59.3
Effective tax rate	25.70%	26.60%	22.90%	22.00%
United States federal statutory rate			35.00%
Overall effect of foreign tax rates on effective tax rate	7.20%	6.70%	9.30%	8.90%
Discrete tax benefits associated with tax authority settlement				$ 6.2
Prior years' impact of discrete net tax benefits on effective tax rate				2.30%

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Stockholders' Equity (Tables)

6 Months Ended

Sep. 30, 2012

Computation Of Basic And Diluted EPS

The following table summarizes our basic and diluted EPS computations for the quarters and six months ended September 30, 2012 and 2011:

	Quarter Ended				Six Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
	(In millions, except per share data)
Basic earnings per share:
Net earnings allocated to common shares	$	97.8	$	114.7	$	152.0	$	210.4
Weighted average number of common shares outstanding		157.5		173.0		158.9		174.7
Basic earnings per share	$	0.62	$	0.66	$	0.96	$	1.20
Diluted earnings per share:
Net earnings allocated to common shares	$	97.8	$	114.7	$	152.0	$	210.4
Weighted average number of common shares outstanding		157.5		173.0		158.9		174.7
Incremental shares from assumed conversions of share-based awards		2.8		3.0		3.2		3.6
Adjusted weighted average number of common shares outstanding		160.3		176.0		162.1		178.3
Diluted earnings per share	$	0.61	$	0.65	$	0.94	$	1.18

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Financial Instruments (Components Of Cash, Cash Equivalents And Investments) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Mar. 31, 2012
Auction Rate Securities [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Available-for-sale	$ 18.6	$ 26.9
Cash And Cash Investments [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Total debt and equity investments measured at fair value	200.0	49.9
Total cash, cash equivalents and investments	1,311.2	1,496.9
Cash And Cash Investments [Member] | United States Treasury Securities [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Available-for-sale	200.0	49.9
Cash And Cash Investments [Member] | Cash On Hand [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Other measurement basis	878.5	632.6
Cash And Cash Investments [Member] | Certificates Of Deposit [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Available-for-sale	50.3	45.1
Cash And Cash Investments [Member] | Money-Market Funds [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Other measurement basis	182.4	769.3
Short-Term Investments [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Total debt and equity investments measured at fair value	128.2	86.1
Total cash, cash equivalents and investments	128.2	86.1
Short-Term Investments [Member] | United States Treasury Securities [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Available-for-sale	128.2	86.1
Long-Term Investments [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Total debt and equity investments measured at fair value	45.9	52.6
Total cash, cash equivalents and investments	45.9	52.6
Amounts included in accumulated other comprehensive income from available-for-sale securities (pre-tax):
Unrealized losses	3.1	2.4
Long-Term Investments [Member] | United States Treasury Securities [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Available-for-sale	6.6	6.1
Long-Term Investments [Member] | Auction Rate Securities [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Available-for-sale	18.6	26.9
Long-Term Investments [Member] | Mutual Funds [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Trading	$ 20.7	$ 19.6

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Segment Reporting (Summary Of Segment Performance) (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenue:
License	$ 209.2	$ 229.7	$ 380.8	$ 419.2
Maintenance	285.4	270.5	564.2	535.1
Professional services	53.6	56.5	107.6	104.8
Total revenue	548.2	556.7	1,052.6	1,059.1
Direct and allocated indirect segment operating expenses:	349.8	340.3	706.2	672.2
Segment operating income (loss)	198.4	216.4	346.4	386.9
Unallocated operating expenses	(60.4)	(55.4)	(134.5)	(110.8)
Other loss, net	(6.4)	(4.8)	(14.7)	(6.4)
Earnings before income taxes	131.6	156.2	197.2	269.7
Enterprise Service Management [Member]
Revenue:
License	129.0	146.0	226.1	264.5
Maintenance	161.9	145.6	318.4	286.8
Professional services	53.6	56.5	107.6	104.8
Total revenue	344.5	348.1	652.1	656.1
Direct and allocated indirect segment operating expenses:	272.6	259.1	548.6	507.7
Segment operating income (loss)	71.9	89.0	103.5	148.4
Unallocated operating expenses
Other loss, net
Earnings before income taxes
Enterprise Service Management [Member] | Solutions [Member]
Revenue:
License	129.0	146.0	226.1	264.5
Maintenance	161.9	145.6	318.4	286.8
Total revenue	290.9	291.6	544.5	551.3
Direct and allocated indirect segment operating expenses:	213.9	200.9	428.2	398.8
Segment operating income (loss)	77.0	90.7	116.3	152.5
Unallocated operating expenses
Other loss, net
Earnings before income taxes
Enterprise Service Management [Member] | Services [Member]
Revenue:
Professional services	53.6	56.5	107.6	104.8
Total revenue	53.6	56.5	107.6	104.8
Direct and allocated indirect segment operating expenses:	58.7	58.2	120.4	108.9
Segment operating income (loss)	(5.1)	(1.7)	(12.8)	(4.1)
Unallocated operating expenses
Other loss, net
Earnings before income taxes
Mainframe Service Management [Member]
Revenue:
License	80.2	83.7	154.7	154.7
Maintenance	123.5	124.9	245.8	248.3
Total revenue	203.7	208.6	400.5	403.0
Direct and allocated indirect segment operating expenses:	77.2	81.2	157.6	164.5
Segment operating income (loss)	126.5	127.4	242.9	238.5
Unallocated operating expenses
Other loss, net
Earnings before income taxes

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Foreign currency translation adjustment, net of tax provision (benefit)	$ 1.0	$ (0.8)	$ 2.6	$ (0.4)
Unrealized loss on available-for-sale securities, tax benefit	$ 0	$ (0.3)	$ (0.3)	$ (0.3)

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Long-Term Borrowings

6 Months Ended

Sep. 30, 2012

Long-Term Borrowings

(4) Long-Term Borrowings

Long-term borrowings at September 30, 2012 and March 31, 2012 consisted of:

	September 30,			March 31,
	2012			2012
	(In millions)
Senior unsecured notes due 2018 (net of $1.0 million and $1.1 million of unamortized discount at September 30, 2012 and March 31, 2012, respectively)	$	299.0		$	298.9
Senior unsecured notes due 2022 (net of $2.5 million and $2.6 million of unamortized discount at September 30, 2012 and March 31, 2012, respectively)		497.5			497.4
Capital leases and other obligations		52.4			46.3
Total		848.9			842.6
Less current maturities of capital leases and other obligations (included in accrued liabilities)		(24.1	)		(21.0	)
Long-term borrowings	$	824.8		$	821.6

In February 2012, we issued $500.0 million of senior unsecured notes due 2022. Net proceeds to us after original issuance discount and issuance costs amounted to $493.3 million. These senior notes were issued at an original issuance discount of $2.7 million. These senior notes bear interest at a rate of 4.25% per annum, payable semi-annually in February and August of each year. These senior notes are redeemable at our option at any time in whole or, from time to time, in part at a redemption price equal to the greater of: (i) 100% of the principal amount of these senior notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest discounted at the applicable United States Treasury rate plus 35 basis points, plus accrued and unpaid interest.

In November 2010, we entered into a credit agreement with certain institutional lenders providing for an unsecured revolving credit facility in an amount up to $400.0 million which is scheduled to expire on November 30, 2014 (the Credit Facility). Subject to certain conditions, at any time prior to maturity, we may invite existing and new lenders to increase the size of the Credit Facility up to a maximum of $600.0 million. The Credit Facility includes provisions for swing line loans of up to $25.0 million and standby letters of credit of up to $50.0 million. Revolving loans under the Credit Facility bear interest, at the Company’s option, at a rate equal to either (i) the base rate (as defined) plus a margin based on the credit ratings of BMC's senior unsecured notes due 2018, or (ii) the LIBOR rate (as defined) plus a margin based on the credit ratings of BMC's senior notes due 2018, for interest periods of one, two, three or six months. As of September 30, 2012 and through October 31, 2012, we have not borrowed any funds under the Credit Facility.

In June 2008, we issued $300.0 million of senior unsecured notes due 2018. Net proceeds to us after original issuance discount and issuance costs amounted to $295.6 million. These senior notes were issued at an original issuance discount of $1.8 million. These senior notes bear interest at a rate of 7.25% per annum, payable semi-annually in June and December of each year. These senior notes are redeemable at our option at any time in whole or, from time to time, in part at a redemption price equal to the greater of: (i) 100% of the principal amount of these senior notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest discounted at the applicable United States Treasury rate plus 50 basis points, plus accrued and unpaid interest.

The above credit facilities are subject to the provisions of an indenture which includes covenants limiting, among other things, the creation of liens securing indebtedness and sale-leaseback transactions. At September 30, 2012, we were in compliance with all debt covenants.

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Financial Instruments (Contract Maturities Of Available For Sale Investments In Debt Securities) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Due in one year or less, Cost	$ 328.2
Due between one and two years, Cost	6.6
Due after ten years, Cost	21.7
Maturities of available-for-sale investments in debt securities at Cost	356.5
Due in one year or less, Fair Value	328.2
Due between one and two years, Fair Value	6.6
Due after ten years, Fair Value	18.6
Maturities of available-for-sale investments in debt securities at Fair Value	$ 353.4

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Stockholders' Equity (Narrative) (Detail) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	1 Months Ended	3 Months Ended		6 Months Ended				1 Months Ended
	Oct. 31, 2012	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	May 12, 2012	Mar. 31, 2012	May 31, 2012 Series B Preferred Stock [Member]	May 12, 2012 Series B Preferred Stock [Member]	Mar. 31, 2012 Series B Preferred Stock [Member]
Conversion of Stock [Line Items]
Weighted average potential anti-dilutive common shares excluded from the calculation of diluted EPS		0.9	1.5	0.9	0.9
Amount authorized by Board of Directors to repurchase common stock				$ 5,000,000,000
Shares repurchased, shares		4.8		8.3
Shares repurchased, amount		200.0		350.0
Remaining authorized amount in stock repurchase program		500,300,000
Stock repurchase program additional authorized amount	1,000,000,000
Accelerated share repurchase agreement expected contract value	750,000,000
Shares repurchased to satisfy employee tax withholding obligations, shares		0.1		0.5
Repurchases of stock to satisfy employee tax withholding obligations		$ 3,100,000		$ 20,000,000	$ 23,000,000
Conversion rights exercisable by common share holders								One one-thousandth of a series B junior participating preferred share
Preferred stock, par value		$ 0.01		$ 0.01			$ 0.01			$ 0.01
Preferred stock, exercisable price									180
Percentage of market price used to calculate exercise price of rights									50.00%
Class of warrant or right ownership requirement description for exercise of rights						10% or more
Shareholder rights agreement expiration date						May 13, 2013

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Share-Based Compensation (Tables)

6 Months Ended

Sep. 30, 2012

Share-Based Compensation Expense

Share-based compensation expense as recorded in our condensed consolidated statements of comprehensive income is summarized as follows:

	Quarter Ended				Six Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
			(In millions)
Cost of license revenue	$	1.8	$	1.2	$	3.3	$	2.3
Cost of maintenance revenue		4.2		3.8		8.7		7.3
Cost of professional services revenue		1.5		1.2		3.1		2.5
Selling and marketing expenses		14.0		10.0		27.9		19.1
Research and development expenses		3.1		3.6		6.4		6.5
General and administrative expenses		12.3		11.0		25.1		23.9
Total share-based compensation expense	$	36.9	$	30.8	$	74.5	$	61.6