Compuware Increases Vantage and Changepoint License Fees, Total Distributed
Software Products Revenue Year-over-year; Operating Cash Flow and
Maintenance Fees Remain Robust
DETROIT, Jan. 24 /PRNewswire-FirstCall/ -- Compuware Corporation
(Nasdaq: CPWR) today announced final financial results for its quarter
ended December 31, 2007.
"Compuware achieved Q3 results that demonstrated both the strength and
growth potential of the business," said Compuware Chairman and CEO Peter
Karmanos, Jr. "Specifically during Q3, the company delivered a dramatic
increase in total product commitments, excellent operating cash flow,
growing maintenance and improved year-over-year license fees in some of its
most important product lines. I join Compuware employees around the world
in maintaining my confidence in the future of the business, both in the
near and the long-term."
Third Quarter Fiscal 2008 Results
Compuware reports third quarter revenues of $309.3 million, compared to
$315.1 million in the same quarter last year. Earnings per share -- before
restructuring charges -- were 14 cents. On a GAAP basis, earnings per share
were 13 cents, an increase of 18 percent from 11 cents in the same quarter
last year, based upon 282.5 million and 343.1 million shares outstanding,
respectively.
Compuware incurred $4.9 million in restructuring charges in the third
quarter. In the first nine months of the fiscal year, Compuware incurred
$39.6 million in restructuring charges.
Compuware's third quarter net income -- before restructuring charges --
was $38.8 million, an increase of six percent from net income of $36.5
million in the same period last year. On a GAAP basis, Compuware delivered
net income of $35.6 million in Q3, down slightly from Q3 of last year.
During the company's third quarter, software license fees were $79.4
million, compared to $86.0 million in the same quarter last year.
Maintenance fees were $120.0 million, compared to $114.4 million in Q3 last
year. Revenue from professional services in the quarter was $109.9 million,
compared to $114.7 million in the same quarter last year.
The company will host a conference call at 5:00 p.m. Eastern time
(22:00 GMT) today to discuss these results.
Third Quarter Fiscal Year 2008 Highlights
During the Third Quarter, Compuware:
- Modernized the Detroit Medical Center's application portfolio by
streamlining processes, reducing IT costs and improving patient safety
and care. Through this partnership, Compuware also collaborated with
the DMC to deliver an Electronic Medical Records (EMR) system for the
automation of patients' paper medical records.
- Announced that Compuware Covisint's Chief Security Officer, David
Miller, testified before the United States Senate Judiciary Committee
regarding "Electronic Prescribing of Controlled Substances: Addressing
Health Care and Law Enforcement Priorities." Miller outlined how proven
technology developed by Covisint could help solve many problems
associated with the paper-based prescribing of controlled substances.
- Announced that Compuware Covisint earned its second consecutive "Best
Demonstration of Value/ROI" Healthcare Innovation Award at the recent
Gartner Healthcare Summit 2007. Covisint was also nominated for the
third straight year for "Solution with Greatest Market Potential."
- Earned -- for the second consecutive year -- the Yphise award for best
"IT Investment and Project Portfolio Management" for the company's IT
Portfolio Management solution, Compuware Changepoint.
- Achieved recognition from Forrester Research, which named Compuware
Changepoint as a leader in the Project Portfolio Management (PPM)
market.
- Announced that Conseco, a Fortune 500 insurance company, successfully
deployed Compuware's Metrics-based Management solution to ensure the
best available quality for its sourced application development.
- Launched the Compuware Uniface 9.2 Application Platform Suite. The
Uniface enterprise application development solution extends multi-
channel support to include mobile technology, support for SOA, web
services and enterprise mash-ups.
- Released Optimal Trace 5.0, the latest version of Compuware Optimal's
market-leading business requirements management solution.
- Delivered a worldwide executive briefing series on balancing IT supply
and demand, featuring top IT strategist presentations on best practices
to deliver maximum business impact.
- Released a survey in collaboration with the Ponemon Institute revealing
that an overwhelming majority of organizations surveyed risk
compromising critical information by using actual customer data for the
development and testing of applications.
- Released the results of a survey designed to help organizations better
understand MIPS usage and MIPS management. The survey, commissioned by
Compuware and fielded by Computerworld, revealed valuable details for
IT leaders seeking information on increased MIPS consumption.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, this press release uses non-GAAP
measures of net income, earnings per share and revenue. The net income and
earnings per share disclosures on a non-GAAP basis excluded the impact of
restructuring charges. The non-GAAP revenue disclosures provide information
on total product commitments. Compuware management believes the non-GAAP
financial information provided in this release is useful to investors'
understanding and assessment of Compuware's ongoing core operations and
prospects for the future. The presentation of this non-GAAP financial
information is not intended to be considered in isolation or as a
substitute for results prepared in accordance with GAAP. Management uses
both GAAP and non-GAAP information in operating and evaluating its business
and as such has determined that it is important to provide this information
to investors. A reconciliation of non-GAAP and GAAP earnings is continued
in the financial statements following this release.
Compuware Corporation
Compuware Corporation (Nasdaq: CPWR) maximizes the value IT brings to
the business by helping CIOs more effectively manage the business of IT.
Compuware solutions accelerate the development, improve the quality and
enhance the performance of critical business systems while enabling CIOs to
align and govern the entire IT portfolio, increasing efficiency, cost
control and employee productivity throughout the IT organization. Founded
in 1973, Compuware serves the world's leading IT organizations, including
more than 90 percent of the Fortune 100 companies. Learn more about
Compuware at http://www.compuware.com.
Press Contact
Lisa Elkin, Vice President, Communications and Investor Relations,
+1-313-227-7345
Certain statements in this release that are not historical facts,
including those regarding the Company's future plans, objectives and
expected performance, are "forward-looking statements" within the meaning
of the federal securities laws. These forward-looking statements represent
our outlook only as of the date of this release. While we believe any
forward- looking statements we have made are reasonable, actual results
could differ materially since the statements are based on our current
expectations and are subject to risks and uncertainties. These risks and
uncertainties are discussed in the Company's reports filed with the
Securities and Exchange Commission. Readers are cautioned to consider these
factors when relying on such forward-looking information. The Company does
not undertake, and expressly disclaims any obligation, to update or alter
its forward-looking statements whether as a result of new information,
future events or otherwise, except as required by applicable law.
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
AS OF DECEMBER 31,
ASSETS
2007 2006
CURRENT ASSETS:
Cash and cash equivalents $178,620 $284,051
Investments 87,171 222,397
Accounts receivable, net 413,203 421,935
Deferred tax asset, net 42,622 32,038
Income taxes refundable, net 75,942
Prepaid expenses and other current
assets 31,569 27,589
Total current assets 753,185 1,063,952
INVESTMENTS 83,460
PROPERTY AND EQUIPMENT, LESS
ACCUMULATED DEPRECIATION AND AMORTIZATION 370,641 388,891
CAPITALIZED SOFTWARE, LESS
ACCUMULATED AMORTIZATION 63,165 66,599
OTHER:
Accounts receivable 200,506 190,217
Deferred tax asset, net 37,541 15,579
Goodwill 353,104 334,769
Other 35,131 34,853
Total other assets 626,282 575,418
TOTAL ASSETS $1,813,273 $2,178,320
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $19,069 $26,841
Accrued expenses 132,391 166,123
Income taxes payable 5,004
Deferred revenue 329,460 331,601
Total current liabilities 485,924 524,565
DEFERRED REVENUE 328,814 308,300
ACCRUED EXPENSES 18,639 12,168
DEFERRED TAX LIABILITY, NET 16,463 36,806
Total liabilities 849,840 881,839
SHAREHOLDERS' EQUITY:
Common stock 2,742 3,282
Additional paid-in capital 669,344 683,755
Retained earnings 272,430 597,872
Accumulated other comprehensive
income 18,917 11,572
Total shareholders' equity 963,433 1,296,481
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,813,273 $2,178,320
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
QUARTER ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2007 2006 2007 2006
REVENUES:
Software license fees $79,425 $86,013 $196,712 $210,187
Maintenance fees 120,026 114,432 350,063 339,881
Professional services fees 109,884 114,703 343,920 349,905
Total revenues 309,335 315,148 890,695 899,973
OPERATING EXPENSES:
Cost of software license fees 6,685 7,529 23,660 21,124
Cost of maintenance fees 11,452 10,157 33,110 30,079
Cost of professional services 103,705 102,189 309,752 313,449
Technology development and
support 23,636 27,047 77,134 83,904
Sales and marketing 66,392 73,346 196,580 206,825
Administrative and general 46,158 52,139 134,412 143,523
Restructuring costs 4,894 39,645
Total operating expenses 262,922 272,407 814,293 798,904
INCOME FROM OPERATIONS 46,413 42,741 76,402 101,069
OTHER INCOME (EXPENSES)
Interest income 4,537 9,133 16,004 31,413
Other 113 (121) (268) (907)
OTHER INCOME, NET 4,650 9,012 15,736 30,506
INCOME BEFORE INCOME TAXES 51,063 51,753 92,138 131,575
INCOME TAX PROVISION 15,449 15,267 18,919 40,959
NET INCOME $35,614 $36,486 $73,219 $90,616
DILUTED EPS COMPUTATION
Numerator: Net income $35,614 $36,486 $73,219 $90,616
Denominator:
Weighted-average common shares
outstanding 281,359 342,078 292,514 360,833
Dilutive effect of stock
options 1,123 1,021 1,757 510
Total shares 282,482 343,099 294,271 361,343
Diluted EPS $0.13 $0.11 $0.25 $0.25
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
NINE MONTHS ENDED
DECEMBER 31,
2007 2006
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Net income $73,219 $90,616
Adjustments to reconcile net income
to cash provided by operations:
Depreciation and amortization 41,364 40,547
Property and equipment
impairment associated with
restructuring 3,079
Capitalized software impairment 3,873
Acquisition tax benefits 3,932 3,860
Stock option compensation 8,773 7,211
Deferred income taxes (14,039) 9,864
Other 1,072 (183)
Net change in assets and
liabilities, net of effects
from acquisitions
and currency fluctuations:
Accounts receivable 1,387 36,782
Prepaid expenses and other
current assets 10,422 (2,689)
Other assets 1,201 (166)
Accounts payable and
accrued expenses (10,758) (18,155)
Deferred revenue (47,848) (76,125)
Income taxes 32,355 1,704
Net cash provided by
operating activities 108,032 93,266
CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITIES:
Purchase of:
Businesses, net of cash
acquired (20,484)
Property and equipment (8,828) (15,317)
Capitalized software (11,263) (16,003)
Proceeds from sale of property 15,466
Investments:
Proceeds 90,255 368,120
Purchases (376,387)
Net cash provided by
(used in) investing
activities 70,164 (44,605)
CASH FLOWS USED IN FINANCING
ACTIVITIES:
Net proceeds from exercise of stock
options including excess tax
benefits 66,531 11,899
Contribution to stock purchase
plans 3,184 3,688
Repurchase of common stock (337,785) (398,741)
Net cash used in
financing activities (268,070) (383,154)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH 7,813 6,482
NET DECREASE IN CASH AND CASH
EQUIVALENTS (82,061) (328,011)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 260,681 612,062
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $178,620 $284,051
COMPUWARE CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP INFORMATION
(In Thousands, Except Per Share Data)
QUARTER ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
Net income reconciliation: 2007 2006 2007 2006
GAAP net income $35,614 $36,486 $73,219 $90,616
Restructuring costs,
net of tax 3,181 25,769
Capitalized software
impairment, net of tax 2,517
Net income as adjusted $38,795 $36,486 $101,505 $90,616
EPS reconciliation:
GAAP diluted EPS $ 0.13 $ 0.11 $0.25 $0.25
Restructuring costs,
net of tax 0.01 0.08
Capitalized software
impairment, net of tax 0.01
Diluted EPS as adjusted $ 0.14 $ 0.11 $0.34 $0.25
Compuware initiated a restructuring plan in FY08. Our non-GAAP disclosures
exclude these charges, primarily employee termination benefits,
facilities costs (primarily lease abandonments and property and equipment
impairment) and capitalized software impairment. We believe it is useful
to exclude these costs when evaluating overall performance.
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(dollar amounts in thousands)
QUARTER ENDED QUARTER ENDED
DECEMBER DECEMBER SEPTEMBER
31 31 YR - YR 30 QTR - QTR
2007 2006 % Change 2007 % Change
License Fees:
Distributed Product
License Fees
DevPartner $2,607 $2,586 0.8% $2,561 1.8%
QACenter and File-AID
Client/Server 6,213 6,930 (10.3%) 6,845 (9.2%)
UNIFACE and Optimal 4,908 6,091 (19.4%) 3,983 23.2%
Vantage 20,018 18,905 5.9% 21,547 (7.1%)
Changepoint 3,781 3,618 4.5% 6,758 (44.1%)
Total Distributed Product
License Fees 37,527 38,130 (1.6%) 41,694 (10.0%)
Mainframe Product License
Fees 41,898 47,883 (12.5%) 28,322 47.9%
Total License Fees 79,425 86,013 (7.7%) 70,016 13.4%
Maintenance Fees 120,026 114,432 4.9% 116,296 3.2%
Total Products Revenue $199,451 $200,445 (0.5%) $186,312 7.1%
Total Mainframe Products
Revenue $125,710 $132,194 (4.9%) $110,484 13.8%
Total Distributed Products
Revenue $73,741 $68,251 8.0% $75,828 (2.8%)
Total Products Revenue by
Geography
North America $97,898 $108,103 (9.4%) $98,236 (0.3%)
International $101,553 $92,342 10.0% $88,076 15.3%
Product Releases
Mainframe 2 9 (77.8%) 11 (81.8%)
Distributed 12 6 100.0% 4 200.0%
Total Costs of Software
Products $108,165 $118,079 (8.4%) $106,441 1.6%
Deferred license fees
Current $68,033 $72,218 (5.8%) $63,414 7.3%
Long-term $48,087 $39,686 21.2% $37,845 27.1%
Deferred during quarter $38,064 $26,308 44.7% $13,598 179.9%
Recognized during quarter $23,550 $25,571 (7.9%) $26,295 (10.4%)
Professional Services
Professional Services
Revenue $109,884 $114,703 (4.2%) $115,659 (5.0%)
Contribution Margin 5.6% 10.9% 11.8%
Billable Headcount 3,251 3,488 (6.8%) 3,284 (1.0%)
Total Company Headcount 6,496 7,578 (14.3%) 6,731 (3.5%)
Total DSO 120.2 120.5 118.8
Total DSO (Billed) 55.1 54.1 51.9
COMPUWARE CORPORATION AND SUBSIDIARIES
PRODUCT COMMITMENTS
(In Thousands)
QUARTER QUARTER QUARTER
ENDED ENDED ENDED
DECEMBER SEPTEMBER DECEMBER
31, 30, 31,
2007 2007 2006
License revenue $79,425 $70,016 $86,013
Change in deferred license 14,515 (12,698) 737
License contracts entered into during
period 93,940 57,318 86,750
Maintenance revenue 120,026 116,296 114,432
Change in deferred maintenance (8,302) (30,123) (32,265)
Maintenance contracts & renewals
entered into during period 111,724 86,173 82,167
Total products commitments during
period $205,664 $143,491 $168,917
As Compuware continues to emphasize solution selling, deals are becoming
more complex, increasing the likelihood that software transactions
will be recognized ratably over the maintenance term. Therefore to
understand the health of Compuware's software business, we believe it is
important to also consider the amount of product commitments during the
reported periods.
SOURCE Compuware Corporation
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Related links:
http://www.compuware.com
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CONTACT:
Lisa Elkin, Vice President, Communications
and Investor Relations, Compuware Corporation, +1-313-227-7345
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