DETROIT, July 26 /PRNewswire-FirstCall/ -- Compuware Corporation
(Nasdaq: CPWR) today announced final financial results for its first
quarter ended June 30, 2007.
"Despite a poor first quarter, I continue to expect great things for
Compuware this fiscal year," said Compuware Chairman and CEO Peter
Karmanos, Jr. "Based on a detailed analysis, the company has confirmed that
it has a serious sales execution problem. In response, we have worked very
hard to develop a new sales model that will cost less and will be more
agile in responding to the needs of the marketplace and in fixing the
company's problem."
First Quarter Fiscal 2008 Results
Compuware reports first quarter revenues of $279.4 million and net
income of $189,000. Earnings per share (diluted computation) were
break-even, based upon 305.6 million shares outstanding.
During the company's first quarter, software license fees were $47.3
million. Maintenance fees were $113.7 million. Revenue from professional
services in the quarter was $118.4 million.
The company will host a conference call at 5:00 p.m. Eastern time
(21:00 GMT) today to discuss these results.
First Quarter Fiscal Year 2007 Highlights
During the first quarter, Compuware:
-- Announced that its industry-leading IT management solution,
Changepoint, now offers prepackaged product and services that deliver a
defined set of management capabilities in a defined timeframe and at a
known cost. These new offerings-Changepoint Supply and Demand
Accelerator and Rapid Path service--place IT organizations on a rapid
path to achieving their ultimate goal: delivering maximum value to the
business by effectively managing IT supply and demand.
-- Introduced Compuware Optimal(TM), an integrated suite of application
delivery management solutions, including: application delivery
management, business requirements management, project management,
quality assurance and performance assurance.
-- Announced the introduction of Vantage Service Manager, a business
service management solution that enables organizations to optimize IT
service delivery in accordance with business needs.
-- Hosted the company's third-annual Partner Summit, themed Partner
Solution Success. The Summit featured comprehensive learning tracks in
areas such as IT Portfolio Management, Application Delivery Management,
Business Service Management and other high-growth market opportunities
for Compuware partners.
-- Announced that Compuware Professional Services implemented a digital,
filmless imaging system for Oakwood Healthcare, Inc. Oakwood physicians
now have immediate access to patient diagnostic images from any
network-connected PC, allowing collaboration of patient care anytime
and anywhere.
-- Introduced its Trusted Identity Broker, an outsourcing solution from
Compuware Covisint that centralizes, automates and streamlines the
management of digital identities. Trusted Identity Broker makes
federation--the exposing and accepting of identities across security
domains--simple, fast and repeatable.
-- Announced the release of Changepoint 12, the latest version of its
market-leading IT Portfolio Management solution.
-- Announced that LogicaCMG has combined its expertise in risk- and
requirement- based testing for software quality assurance with
Compuware's extensive knowledge in developing enterprise QA solutions
to create a 360 solution named Q-Talk. Q-Talk will help IT departments
effectively communicate the importance, business impact and return on
investment of software testing to business unit customers.
-- Announced the availability of the Compuware Application MIPS Management
solution. The solution offers a proactive approach to identifying the
root cause of excessive CPU and MIPS consumption.
-- Announced that the Georgia Department of Community Health will
collaborate with Compuware Covisint to offer a statewide web-based
program for processing Medicaid communications between the state and
health care providers who choose to use the Covisint program.
-- Announced its inclusion in the Leader's Quadrant of the Gartner Magic
Quadrant for IT Project and Portfolio Management. The report evaluated
more than 22 vendors on the completeness of vision and ability to
execute.
-- Announced that the company has been positioned as the "Software Testing
Tools Market Leader"--featuring both breadth and depth--by Ovum, a
leading analyst firm. According to Ovum, the top test automation
toolsets are now all part of a larger application life cycle management
and/or quality management portfolio.
-- Announced that the company has partnered with Kraft Kennedy & Lesser,
Inc. (KKL) to help ensure IT continuity and availability by proactively
detecting and fixing IT system problems for KKL's legal industry
customers.
-- Introduced Compuware Vantage 10, a sophisticated service-management
solution that enables IT organizations to manage application service
from a business perspective.
-- Hosted a webcast, titled: Rationalize, Optimize, Modernize-Getting the
Most From Your Mainframe Assets," featuring Gartner, Inc. The webcast
shared strategies for IT executives to manage and modernize their
mainframe applications.
-- Announced that Laura Fournier, Compuware Senior Vice President and
Chief Financial Officer, earned Public Company CFO of the Year
recognition in the first-annual Crain's Detroit Business CFO of the
Year Awards.
-- Announced that the company has been named to BZ Media's fifth annual SD
Times 100 list for the fifth consecutive year.
-- Announced that for the second consecutive year, Hour Detroit readers
have voted Compuware "Best Place to Work and Best Workplace Ambiance"
in the magazine's annual Best of Detroit issue.
Compuware Corporation
Compuware Corporation (Nasdaq: CPWR) is a world leader in delivering
software and services that enable businesses to manage their enterprises
and maximize the value of their IT assets. Compuware solutions accelerate
the development, improve the quality and enhance the performance of
business- driving applications. 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 800-230-1093. 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 will be 875887. Additionally,
investors can listen to the conference call via webcast by visiting 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 JUNE 30,
ASSETS
2007 2006
CURRENT ASSETS:
Cash and cash equivalents $339,482 $610,890
Investments 78,052 285,699
Accounts receivable, net 367,443 391,016
Deferred tax asset, net 37,536 30,709
Income taxes refundable, net 28,294 72,923
Prepaid expenses and other current
assets 34,132 27,606
Buildings - held for sale 13,000
Total current assets 884,939 1,431,843
INVESTMENTS 57,150 23,141
PROPERTY AND EQUIPMENT, LESS
ACCUMULATED
DEPRECIATION AND AMORTIZATION 379,743 391,730
CAPITALIZED SOFTWARE, LESS
ACCUMULATED
AMORTIZATION 67,250 66,983
OTHER:
Accounts receivable 175,326 194,268
Deferred tax asset, net 16,817 13,781
Goodwill 353,405 334,594
Other 36,140 35,933
Total other assets 581,688 578,576
TOTAL ASSETS $1,970,770 $2,492,273
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable $16,607 $20,724
Accrued expenses 111,146 148,223
Deferred revenue 372,951 374,930
Total current liabilities 500,704 543,877
DEFERRED REVENUE 296,278 319,612
ACCRUED EXPENSES 18,987 14,593
DEFERRED TAX LIABILITY, NET 4,076 28,380
Total liabilities 820,045 906,462
SHAREHOLDERS' EQUITY:
Common stock 3,046 3,737
Additional paid-in capital 727,208 759,962
Retained earnings 405,698 811,504
Accumulated other comprehensive
income 14,773 10,608
Total shareholders' equity 1,150,725 1,585,811
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,970,770 $2,492,273
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
QUARTER ENDED
JUNE 30,
2007 2006
REVENUES:
Software license fees $47,271 $67,465
Maintenance fees 113,741 110,317
Professional services fees 118,377 118,536
Total revenues 279,389 296,318
OPERATING EXPENSES:
Cost of software license fees 10,365 6,585
Cost of maintenance fees 11,453 10,126
Cost of professional services 104,077 107,615
Technology development and support 29,329 27,114
Sales and marketing 64,731 65,768
Administrative and general 45,380 46,228
Restructuring costs 16,020
Total operating expenses 281,355 263,436
INCOME (LOSS) FROM OPERATIONS (1,966) 32,882
OTHER INCOME (EXPENSES)
Interest income 5,964 11,243
Other (305) (362)
OTHER INCOME, NET 5,659 10,881
INCOME BEFORE INCOME TAXES 3,693 43,763
INCOME TAX PROVISION 3,504 14,442
NET INCOME $189 $29,321
DILUTED EPS COMPUTATION
Numerator: Net income $189 $29,321
Denominator:
Weighted-average common shares
outstanding 301,967 376,759
Dilutive effect of stock options 3,627 768
Total shares 305,594 377,527
Diluted EPS $0.00 $0.08
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
THREE MONTHS ENDED
JUNE 30,
2007 2006
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Net income $189 $29,321
Adjustments to reconcile net income
to cash provided
by operations:
Depreciation and amortization 13,817 13,393
Property and equipment
impairment associated with
restructuring 2,998
Capitalized software impairment 3,873
Acquisition tax benefits 1,311 1,309
Stock option compensation 1,573 2,797
Deferred income taxes (2,519) 4,700
Other 494 (136)
Net change in assets and
liabilities, net of effects
from acquisitions
and currency fluctuations:
Accounts receivable 56,869 56,772
Prepaid expenses and other
current assets 8,648 (2,565)
Other assets 1,223 667
Accounts payable and
accrued expenses (30,242) (32,393)
Deferred revenue (19,532) (14,614)
Income taxes (896) 4,626
Net cash provided by
operating activities 37,806 63,877
CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITIES:
Purchase of:
Businesses, net of cash
acquired (20,484)
Property and equipment (4,346) (2,663)
Capitalized software (4,173) (5,486)
Proceeds from sale of property 2,016
Investments:
Proceeds 42,885 125,816
Purchases (137,304)
Net cash provided by
(used in) investing
activities 34,366 (38,105)
CASH FLOWS PROVIDED BY (USED IN)
FINANCING ACTIVITIES:
Net proceeds from exercise of stock
options including excess tax
benefits 58,364 597
Contribution to stock purchase
plans 1,592 1,504
Repurchase of common stock (55,218) (32,839)
Net cash provided by
(used in) financing
activities 4,738 (30,738)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH 1,891 3,794
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 78,801 (1,172)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 260,681 612,062
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $339,482 $610,890
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(dollar amounts in thousands)
QUARTER ENDED QUARTER ENDED
QTR -
JUNE 30 JUNE 30 YR - YR MARCH 31 QTR
2007 2006 % Change 2007 % Change
License Fees:
Distributed Product
License Fees
DevPartner $2,173 $2,938 (26.0%) $3,305 (34.3%)
QACenter and File-AID
Client/Server 6,002 5,558 8.0% 7,237 (17.1%)
UNIFACE and Optimal 4,063 3,290 23.5% 6,742 (39.7%)
Vantage 10,537 15,488 (32.0%) 19,407 (45.7%)
Changepoint 2,363 2,426 (2.6%) 3,628 (34.9%)
Total Distributed Product
License Fees 25,138 29,700 (15.4%) 40,319 (37.7%)
Mainframe Product License
Fees 22,133 37,765 (41.4%) 32,906 (32.7%)
Total License Fees 47,271 67,465 (29.9%) 73,225 (35.4%)
Maintenance Fees 113,741 110,317 3.1% 117,713 (3.4%)
Total Products Revenue $161,012 $177,782 (9.4%) $190,938 (15.7%)
Total Mainframe Products
Revenue $103,237 $119,741 (13.8%) $118,926 (13.2%)
Total Distributed Products
Revenue $57,775 $58,041 (0.5%) $72,012 (19.8%)
Total Products Revenue by
Geography
North America $85,416 $100,426 (14.9%) $100,971 (15.4%)
International $75,596 $77,356 (2.3%) $89,967 (16.0%)
Product Releases
Mainframe 4 3 33.3% 5 (20.0%)
Distributed 9 12 (25.0%) 12 (25.0%)
Total Costs of Software
Products $115,878 $109,593 5.7% $123,983 (6.5%)
Deferred license fees
Current $70,081 $68,525 2.3% $71,550 (2.1%)
Long-term $40,739 $50,557 (19.4%) $44,304 (8.0%)
Deferred during quarter $17,465 $10,652 64.0% $27,967 (37.6%)
Recognized during
quarter $24,035 $23,056 4.2% $24,736 (2.8%)
Professional Services
Professional Services
Revenue $118,377 $118,536 (0.1%) $122,091 (3.0%)
Contribution Margin 12.1% 9.2% 12.1%
Billable Headcount 3,384 3,563 (5.0%) 3,465 (2.3%)
Total Company Headcount 7,091 7,525 (5.8%) 7,539 (5.9%)
Total DSO 118.4 118.9 121.0
Total DSO (Billed) 48.9 50.0 56.3
COMPUWARE CORPORATION AND SUBSIDIARIES
PRODUCT COMMITMENTS
(In Thousands)
QUARTER QUARTER QUARTER
ENDED ENDED ENDED
JUNE 30, MARCH 31, JUNE 30,
2007 2007 2006
License revenue $47,271 $73,225 $67,465
Change in deferred license (6,570) 3,231 (12,404)
License contracts entered into during
period 40,701 76,456 55,061
Maintenance revenue 113,741 117,713 110,317
Change in deferred maintenance (10,826) 30,479 (1,918)
Maintenance contracts & renewals
entered into during period 102,915 148,192 108,399
Total products commitments during
period $143,616 $224,648 $163,460
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/
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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