Q4 Results Feature 38 Percent Year-over-year Increase in Software License
Fees, Seven Percent Year-over-year Increase in Maintenance
DETROIT, May 15 /PRNewswire-FirstCall/ -- Compuware Corporation
(Nasdaq: CPWR) today announced final financial results for its fourth
quarter and fiscal year ended March 31, 2008.
"With an excellent performance in Q4, Compuware closed a solid year of
growth on a very high note," said Compuware Chairman and CEO Peter
Karmanos, Jr. "For more than 35 years, Compuware has helped its customers
economically benefit their businesses through powerful products and
talented technical people. In the coming year, we will capitalize further
on our heritage by becoming an even more focused, customer-responsive and
dynamic company. I expect the results to be strong."
Fiscal Year 2008 Results
During the fiscal year ended March 31, 2008, revenues were $1.23
billion, up from $1.21 billion in the previous fiscal year. Net
income-before restructuring charges and capitalized software impairment-was
$164.6 million compared to $158.1 million in fiscal 2007. Earnings per
share-diluted computation before restructuring charges and capitalized
software impairment- were 57 cents, an increase of 27 percent from 45 cents
in fiscal 2007, based upon 287.6 million and 351.0 million shares
outstanding, respectively. On a GAAP basis, net income was $134.4 million
and earnings per share were 47 cents in fiscal 2008.
During fiscal 2008, software license fees were $297.5 million, up from
$283.4 million in fiscal 2007. Maintenance revenue was $476.4 million in
fiscal 2008, compared to $457.6 million in fiscal 2007. Professional
services fees for fiscal 2008 were $455.7 million, compared to $472.0
million in fiscal 2007.
Fourth Quarter Fiscal 2008 Results
Compuware reports fourth quarter net income-before restructuring
charges- of $63.1 million on revenues of $338.9 million. On a GAAP basis,
net income was $61.2 million in Q4. Earnings per share-diluted
computation-were 23 cents, based upon 268.7 million shares outstanding.
During the company's fourth quarter, software license fees were $100.8
million, an increase of 38 percent from $73.2 million in the same quarter
last year. Maintenance fees were $126.3 million during the quarter, an
increase of more than seven percent from $117.7 million in the same quarter
last year. Fourth quarter revenue from professional services was $111.8
million, compared to $122.1 million in the same quarter last year.
Compuware 2.0 Launch
The company today formally launched Compuware 2.0, along with the
official introduction of its new global theme "We make IT rock around the
world" and a new microsite, http://www.wemakeitrockaroundtheworld.com.
"Compuware 2.0 is not a campaign, a one-time initiative or a message.
Compuware 2.0 is a rebirth based on the company's longtime principles and
anchored by definable, actionable and measurable objectives," explained
Compuware President and Chief Operating Officer Bob Paul. "While there is a
marketing component to Compuware 2.0, the core of this effort is in
approaching the market in a fresh way and delivering quantifiable economic
value to our customers."
Among the specific objectives for Compuware 2.0 are:
-- Instituting and communicating a strategic vision for the company that
positions it as a best-in-class provider of solutions that customers-in
the markets where Compuware chooses to compete-have a compelling reason
to buy.
-- Going to market with complete solutions to compelling business problems
by combining software, best practices and professional services.
-- Establishing and extending a lively, engaging corporate brand identity
that customers and employees identify with, understand and trust.
-- Deploying a global recruiting, training and career development function
to attract and retain the highest quality professionals.
For full details, visit http://www.wemakeitrockaroundtheworld.com.
Fourth Quarter Fiscal Year 2008 Highlights
During the fourth quarter, Compuware:
-- Announced that the company promoted Robert C. Paul to the position of
President and Chief Operating Officer, leading the company's products
and services operations, Compuware 2.0 effort and other key functions.
-- Acquired privately held Hilgraeve, Inc. This acquisition made Compuware
Covisint the world's largest on-demand collaboration platform for lab
and prescription data sharing.
-- Launched a new initiative to provide hospitals and physicians with the
means to more effectively navigate the dynamically changing healthcare
technology environment. Compuware's IT Service Management for
Healthcare initiative drives improved patient care, reduces costs for
hospitals and provides significant ROI.
-- Announced that Compuware Covisint entered into an agreement to work
with Microsoft(R) HealthVault(TM), Microsoft's personal health
technology platform. Covisint will provide physicians with better, more
efficient and secure access to patients' records by enabling patients
to grant provider access to their HealthVault records through
Covisint's OnDemand platform.
-- Announced that it received Corp! Magazine's award for
"Diversity-focused Company." The award is based on the company's
commitment to diversity-in race, ethnicity and more-as a business
driver.
-- Announced the sponsorship of a webcast titled: "Improving Quality in
Your Application Delivery Process-A Success Story at Arizona Federal."
In the webcast, Kevin Bingham, Assistant Vice President, Information
Technology at Arizona Federal presented how his organization leveraged
test automation and a structured process to deliver applications
without sacrificing budget, time or quality by using Compuware
TestPartner.
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 a non-GAAP
measure of net income and earnings per share. The net income and earnings
per share disclosures on a non-GAAP basis excluded the impact of
restructuring charges and capitalized software impairment. See the attached
"Reconciliation of non-GAAP Information" schedule for complete details.
Compuware management believes the non-GAAP financial information provided
in this release helps investors better understand and assess 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.
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.
Conference Call Information
Compuware will host a conference call today to discuss these results at
5:00 p.m. Eastern time (21:00 GMT). Interested parties from the United
States should call 800-230-1074. For international access, the conference
call number is +1-612-332-0107.
A conference call replay will also be available. The United States
replay number will be 800-475-6701, and the international replay number
will be +1-320-365-3844. The replay passcode is 906724. For more
information, visit the Compuware Corporation Investor Relations web site 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 MARCH 31,
ASSETS 2008 2007
CURRENT ASSETS:
Cash and cash equivalents $215,943 $260,681
Investments 70,474 107,062
Accounts receivable, net 535,094 420,774
Deferred tax asset, net 44,374 33,392
Income taxes refundable, net 3,746 58,266
Prepaid expenses and other current assets 49,285 41,019
Total current assets 918,916 921,194
INVESTMENTS 71,391
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 365,691 385,227
CAPITALIZED SOFTWARE, LESS ACCUMULATED
AMORTIZATION 61,653 72,276
OTHER:
Accounts receivable 244,388 172,255
Deferred tax asset, net 35,851 15,987
Goodwill 356,267 353,682
Other 35,791 37,400
Total other assets 672,297 579,324
TOTAL ASSETS $2,018,557 $2,029,412
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $18,772 $27,713
Accrued expenses 148,268 141,970
Income taxes payable, net 4,976
Deferred revenue 472,864 359,688
Total current liabilities 644,880 529,371
DEFERRED REVENUE 399,548 321,881
ACCRUED EXPENSES 19,513 11,346
DEFERRED TAX LIABILITY, NET 27,585 34,666
Total liabilities 1,091,526 897,264
SHAREHOLDERS' EQUITY:
Common stock 2,616 3,030
Additional paid-in capital 643,544 673,660
Retained earnings 261,754 444,159
Accumulated other comprehensive income 19,117 11,299
Total shareholders' equity 927,031 1,132,148
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,018,557 $2,029,412
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
QUARTER ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
2008 2007 2008 2007
REVENUES:
Software license fees $100,794 $73,225 $297,506 $283,412
Maintenance fees 126,311 117,713 476,374 457,594
Professional services fees 111,811 122,091 455,731 471,996
Total revenues 338,916 313,029 1,229,611 1,213,002
OPERATING EXPENSES:
Cost of software license
fees 6,815 7,457 30,475 28,581
Cost of maintenance fees 13,190 11,454 46,300 41,533
Cost of professional
services 104,169 107,280 413,921 420,729
Technology development and
support 23,998 30,167 101,132 114,071
Sales and marketing 71,220 74,905 267,800 281,730
Administrative and general 48,076 50,055 182,488 193,578
Restructuring costs 3,000 42,645
Total operating expenses 270,468 281,318 1,084,761 1,080,222
INCOME FROM OPERATIONS 68,448 31,711 144,850 132,780
OTHER INCOME (EXPENSES)
Interest income 3,906 8,014 19,910 39,427
Settlement 16,160 10,598 16,160 10,598
Gain on sale of investment
in partially owned company 11,250 11,250
Other (260) (91) (528) (998)
OTHER INCOME, NET 19,806 29,771 35,542 60,277
INCOME BEFORE INCOME TAXES 88,254 61,482 180,392 193,057
INCOME TAX PROVISION
(BENEFIT) 27,079 (5,994) 45,998 34,965
NET INCOME $61,175 $67,476 $134,394 $158,092
DILUTED EPS COMPUTATION
Numerator: Net income $61,175 $67,476 $134,394 $158,092
Denominator:
Weighted-average common
shares outstanding 267,932 317,764 286,402 350,213
Dilutive effect of stock
options 800 1,512 1,226 754
Total shares 268,732 319,276 287,628 350,967
Diluted EPS $0.23 $0.21 $0.47 $0.45
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
TWELVE MONTHS ENDED
MARCH 31,
2008 2007
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $134,394 $158,092
Adjustments to reconcile net income
to cash provided by operations:
Depreciation and amortization 55,167 55,026
Property and equipment impairment
associated with restructuring 2,981
Capitalized software impairment 3,873
Gain on sale of investment in partially
owned company (11,250)
Acquisition tax benefits 5,090 5,257
Stock option compensation 11,553 9,432
Deferred income taxes (2,022) 6,953
Other 1,474 (8)
Net change in assets and liabilities,
net of effects from acquisitions and
currency fluctuations:
Accounts receivable (64,019) 61,202
Prepaid expenses and other current
assets (7,120) (13,857)
Other assets 640 (1,211)
Accounts payable and accrued expenses (837) (46,483)
Deferred revenue 64,875 (38,448)
Income taxes 28,641 20,027
Net cash provided by operating
activities 234,690 204,732
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchase of:
Businesses, net of cash acquired (4,649) (51,818)
Property and equipment (10,498) (18,590)
Capitalized software (14,359) (21,457)
Proceeds from sale of property 15,466
Proceeds from sale of investment in
partially owned company 11,250
Investments:
Proceeds 106,717 495,371
Purchases (376,387)
Net cash provided by investing
activities 77,211 53,835
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net proceeds from exercise of stock
options including excess tax benefits 67,178 54,364
Contribution to stock purchase plans 4,066 4,635
Repurchase of common stock (440,988) (676,757)
Net cash used in financing
activities (369,744) (617,758)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 13,105 7,810
NET DECREASE IN CASH AND CASH EQUIVALENTS (44,738) (351,381)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 260,681 612,062
CASH AND CASH EQUIVALENTS AT END OF PERIOD $215,943 $260,681
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(dollar amounts in thousands)
QUARTER
QUARTER ENDED ENDED
MARCH 31, MARCH 31, YR-YR DEC. 31 QTR-QTR
2008 2007 %Change 2007 %Change
License Fees:
Distributed Product
License Fees
Vantage $23,510 $19,407 21.1% $20,018 17.4%
Changepoint 3,296 3,628 (9.2%) 3,781 (12.8%)
Quality 8,218 8,079 1.7% 7,231 13.6%
Uniface 4,464 5,900 (24.3%) 3,890 14.8%
DevPartner 2,385 3,305 (27.8%) 2,607 (8.5%)
Total Distributed Product
License Fees 41,873 40,319 3.9% 37,527 11.6%
Mainframe Product License
Fees 58,921 32,906 79.1% 41,898 40.6%
Total License Fees 100,794 73,225 37.6% 79,425 26.9%
Maintenance Fees 126,311 117,713 7.3% 120,026 5.2%
Total Products Revenue $227,105 $190,938 18.9% $199,451 13.9%
Total Mainframe Products
Revenue $147,247 $118,926 23.8% $125,710 17.1%
Total Distributed Products
Revenue $79,858 $72,012 10.9% $73,741 8.3%
Total Products Revenue by
Geography
North America $113,485 $100,971 12.4% $97,898 15.9%
International $113,620 $89,967 26.3% $101,553 11.9%
Product Releases
Mainframe 7 5 40.0% 2 250.0%
Distributed 2 12 (83.3%) 12 (83.3%)
Total Costs of Software
Products $115,223 $123,983 (7.1%) $108,165 6.5%
Deferred license fees
Current $68,885 $71,550 (3.7%) $68,033 1.3%
Long-term $60,237 $44,304 36.0% $48,087 25.3%
Deferred during quarter $38,545 $27,967 37.8% $38,064 1.3%
Recognized during quarter $28,760 $24,736 16.3% $23,550 22.1%
Professional Services
Professional Services
Revenue $111,811 $122,091 (8.4%) $109,884 1.8%
Contribution Margin 6.8% 12.1% 5.6%
Billable Headcount 3,171 3,465 (8.5%) 3,251 (2.5%)
Total Company Headcount 6,344 7,539 (15.9%) 6,496 (2.3%)
Total DSO 142.1 121.0 120.2
Total DSO (Billed) 76.9 56.3 55.1
COMPUWARE CORPORATION AND SUBSIDIARIES
PRODUCT COMMITMENTS
(In Thousands)
QUARTER ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2008 2007 2008 2007
License revenue $100,794 $73,225 $297,506 $283,412
Change in deferred license 9,786 3,231 5,033 (17,960)
License contracts entered into
during period 110,580 76,456 302,539 265,452
Maintenance revenue 126,311 117,713 476,374 457,594
Change in deferred maintenance 77,259 16,370 49,671 (24,931)
Maintenance contracts & renewals
entered into during period 203,570 134,083 526,045 432,663
Total products commitments during
period $314,150 $210,539 $828,584 $698,115
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. Compuware now evaluates company performance for purposes
of executive bonuses based in part on product commitments for the fiscal
year.
Prior periods were adjusted to conform with current period presentation.
COMPUWARE CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP INFORMATION
(In Thousands, Except Per Share Data)
QUARTER ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
2008 2007 2008 2007
Net income reconciliation:
GAAP net income $61,175 $67,476 $134,394 $158,092
Restructuring costs, net of tax 1,950 27,719
Capitalized software impairment,
net of tax 2,517
Net income as adjusted $63,125 $67,476 $164,630 $158,092
EPS reconciliation:
GAAP diluted EPS $0.23 $0.21 $0.47 $0.45
Restructuring costs, net of tax 0.09
Capitalized software impairment,
net of tax 0.01
Diluted EPS as adjusted $0.23 $0.21 $0.57 $0.45
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.
SOURCE Compuware Corporation
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Related links:
http://www.compuware.com
http://www.wemakeitrockaroundtheworld.com
http://www.prnewswire.com/comp/112310.html /
CONTACT:
Lisa Elkin, Vice President, Communications
and Investor Relations, Compuware Corporation, +1-313-227-7345
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