Company to Continue Increasing Focus, Reducing Expenses
DETROIT, Oct. 23 /PRNewswire-FirstCall/ -- Compuware Corporation
(Nasdaq: CPWR) today announced financial results for its second quarter
ended September 30, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080605/CLTH112LOGO )
Compuware reports second quarter revenues of $269.8 million, compared
to $302.0 million in the same quarter last year. Earnings were eight cents
per share in Q2, compared to 13 cents per share in the same quarter last
year, based upon 257.6 million and 295.4 million shares outstanding,
respectively. Compuware's net income in the quarter was $21.6 million,
compared to $37.4 million in the same quarter last year.
During the company's second quarter, software license fees were $42.3
million, compared to $70.0 million in the same quarter last year.
Maintenance fees recognized in the quarter were $124.7 million, compared to
$116.3 million in Q2 last year. Revenue from professional services in the
quarter was $102.8 million, compared to $115.7 million in the same quarter
last year.
"During a challenging Q2, Compuware generated $127.1 million in total
product commitments, compared to $128.9 million in a strong second quarter
last year," said Compuware President and Chief Operating Officer Bob Paul.
"In particular, total maintenance commitments -- a figure that includes
deferred maintenance fees not recognized in the quarter -- were excellent,
with $90.4 million in maintenance contracts and renewals in Q2, compared to
$71.6 million in the same quarter last year.
"In addition to these underlying strengths in the quarter, Compuware's
business pipeline remains robust," continued Paul. "A halt in technology
purchasing at the end of the quarter pushed a substantial number of
opportunities into Q3 and Q4. The entire Compuware sales team continues to
pursue these -- and other -- active opportunities to ensure success for
Compuware and its customers in the last half of the fiscal year.
"The company's transformational Compuware 2.0 initiative continues to
have a positive impact on operations," said Paul. "Additionally, we remain
on track to launch the company's long-term strategy in late November.
Through this plan, Compuware will deliver a significant opportunity for
growth and improved organizational efficiency."
The company will host a conference call at 5:00 p.m. Eastern time
(21:00 UTC) today to discuss these results.
Second Quarter Fiscal Year 2009 Highlights
During the second quarter, Compuware:
-- made a free and complete eBook, "The Definitive Guide to Business
Service Management" available at http://www.compuware.com/ebook
-- announced that AAA Michigan uses Compuware Vantage to proactively
prevent problems and improve the end-to-end performance of its business-
critical sales and service application.
-- released Abend-AID 11, which features an innovative web interface
that helps leading IT organizations enable new mainframe talent to support
vital systems.
-- earned category winner recognition for Compuware Changepoint as
"Best Portfolio Analysis" at the Project & Portfolio Management Summits
2008 Innovation Awards.
-- announced that it helps Emergisoft deliver high-quality software to
hospital emergency rooms using Compuware Application Performance Assurance.
-- detailed an agreement between its Covisint subsidiary and the
Minnesota Health Information Exchange, a public-private coalition in
Minnesota, to build one of the largest e-health exchanges in the nation.
-- announced that leading law firm Ballard Spahr Andrews & Ingersol,
LLP turned to Compuware Vantage to help maintain open communication
channels for nearly 550 mobile lawyers.
-- won a Visual Studio Magazine Readers Choice Award for Compuware
DevPartner Studio Professional Edition as favorite "Performance, Profiling
& Debugging" tool.
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 for revenue. 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 makes IT rock around the world, helping CIOs
optimize IT performance to achieve business goals. 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 92 percent of the
Fortune 50 companies. Learn more about Compuware at
http://www.compuware.com.
Conference Call Information
Compuware will host a conference call today to discuss these results.
The call will take place at 5:00 p.m. Eastern time (21:00 UTC). To access
the call, interested parties from the United States should call
800-230-1092. 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 957228. Additionally,
investors can listen to the conference call via webcast by visiting the
Compuware Corporation Investor Relations web site at
http://www.compuware.com/.
For Sales and Marketing Information
Compuware Corporation, One Campus Martius, Detroit, MI 48226,
800-521-9353, http://www.compuware.com
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 SEPTEMBER 30,
ASSETS
2008 2007
CURRENT ASSETS:
Cash and cash equivalents $161,323 $215,654
Investments 10,813 95,404
Accounts receivable, net 424,718 398,703
Deferred tax asset, net 35,355 36,835
Income taxes refundable 3,472 31,272
Prepaid expenses and other current
assets 29,376 29,183
Total current assets 665,057 807,051
INVESTMENTS 10,958
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 355,978 375,555
CAPITALIZED SOFTWARE, LESS ACCUMULATED
AMORTIZATION 55,770 65,543
OTHER:
Accounts receivable 267,389 174,657
Deferred tax asset, net 33,789 33,185
Goodwill 353,393 354,133
Other 34,435 35,048
Total other assets 689,006 597,023
TOTAL ASSETS $1,765,811 $1,856,130
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $22,499 $18,632
Accrued expenses 102,529 116,669
Income taxes payable 2,145
Deferred revenue 405,622 371,867
Total current liabilities 532,795 507,168
DEFERRED REVENUE 371,220 277,963
ACCRUED EXPENSES 19,758 20,110
DEFERRED TAX LIABILITY, NET 20,992 17,437
Total liabilities 944,765 822,678
SHAREHOLDERS' EQUITY:
Common stock 2,465 2,861
Additional paid-in capital 625,316 693,160
Retained earnings 182,547 316,934
Accumulated other comprehensive
income 10,718 20,497
Total shareholders' equity 821,046 1,033,452
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,765,811 $1,856,130
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2008 2007 2008 2007
REVENUES:
Software license fees $42,251 $70,016 $103,693 $117,287
Maintenance fees 124,717 116,296 251,244 230,037
Professional services fees 102,877 115,659 213,496 234,036
Total revenues 269,845 301,971 568,433 581,360
OPERATING EXPENSES:
Cost of software license fees 6,253 6,609 12,343 16,975
Cost of maintenance fees 11,332 10,206 23,326 21,658
Cost of professional services 98,973 101,970 202,795 206,047
Technology development and
support 22,938 24,170 45,508 53,498
Sales and marketing 58,353 65,456 119,680 130,188
Administrative and general 42,474 42,874 83,618 88,254
Restructuring costs 2,231 18,731 2,913 34,751
Total operating expenses 242,554 270,016 490,183 551,371
INCOME FROM OPERATIONS 27,291 31,955 78,250 29,989
OTHER INCOME (EXPENSES)
Interest income 3,231 5,503 6,640 11,467
Other (185) (76) (373) (381)
OTHER INCOME, NET 3,046 5,427 6,267 11,086
INCOME BEFORE INCOME TAXES 30,337 37,382 84,517 41,075
INCOME TAX PROVISION (BENEFIT) 8,755 (34) 28,203 3,470
NET INCOME $21,582 $37,416 $56,314 $37,605
DILUTED EPS COMPUTATION
Numerator: Net income $21,582 $37,416 $56,314 $37,605
Denominator:
Weighted-average common shares
outstanding 252,394 294,321 256,024 298,122
Dilutive effect of stock
options 5,221 1,116 4,428 2,239
Total shares 257,615 295,437 260,452 300,361
Diluted EPS $0.08 $0.13 $0.22 $0.13
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
SIX MONTHS ENDED
SEPTEMBER 30,
2008 2007
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Net income $56,314 $37,605
Adjustments to reconcile net income
to cash provided
by operations:
Depreciation and amortization 27,072 27,554
Property and equipment impairment 662 3,079
Capitalized software impairment 3,873
Acquisition tax benefits 2,622 2,621
Stock option compensation 7,900 7,183
Deferred income taxes 2,597 (3,634)
Other 410 815
Net change in assets and liabilities, net
of effects from acquisitions and currency
fluctuations:
Accounts receivable 54,314 39,425
Prepaid expenses and other current
assets 18,214 12,762
Other assets (3,992) 3,652
Accounts payable and accrued
expenses (35,600) (24,657)
Deferred revenue (61,346) (53,760)
Income taxes (2,701) (4,045)
Net cash provided by operating
activities 66,466 52,473
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchase of:
Property and equipment (4,922) (6,691)
Capitalized software (6,090) (7,889)
Investment proceeds 59,402 71,375
Net cash provided by
investing activities 48,390 56,795
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net proceeds from exercise of stock
options including excess tax benefits 11,163 64,379
Contribution to stock purchase plans 1,674 2,230
Repurchase of common stock (174,186) (227,695)
Net cash used in financing
activities (161,349) (161,086)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (8,127) 6,791
NET DECREASE IN CASH AND CASH EQUIVALENTS (54,620) (45,027)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 215,943 260,681
CASH AND CASH EQUIVALENTS AT END OF PERIOD $161,323 $215,654
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(dollar amounts in thousands)
QUARTER ENDED QUARTER
SEPTEMBER SEPTEMBER ENDED
30 30 YR - YR JUNE 30 QTR-QTR
2008 2007 % Change 2008 % Change
License Fees:
Distributed Product
License Fees
Vantage $9,415 $21,547 (56.3%) $13,724 (31.4%)
Changepoint 2,359 6,758 (65.1%) 3,104 (24.0%)
Quality 5,434 7,556 (28.1%) 6,177 (12.0%)
Uniface 2,253 3,272 (31.1%) 2,814 (19.9%)
DevPartner 1,359 2,561 (46.9%) 1,689 (19.5%)
Total Distributed Product
License Fees 20,820 41,694 (50.1%) 27,508 (24.3%)
Mainframe Product License
Fees 21,431 28,322 (24.3%) 33,934 (36.8%)
Total License Fees 42,251 70,016 (39.7%) 61,442 (31.2%)
Maintenance Fees 124,717 116,296 7.2% 126,527 (1.4%)
Total Products Revenue $166,968 $186,312 (10.4%) $187,969 (11.2%)
Total Mainframe Products
Revenue $108,801 $110,484 (1.5%) $122,458 (11.2%)
Total Distributed Products
Revenue $58,167 $75,828 (23.3%) $65,511 (11.2%)
Total Products Revenue by
Geography
North America $85,460 $98,236 (13.0%) $99,328 (14.0%)
International $81,508 $88,076 (7.5%) $88,641 (8.0%)
Product Releases
Mainframe 3 11 (72.7%) 8 (62.5%)
Distributed 7 4 75.0% 4 75.0%
Total Costs of Software
Products $98,876 $106,441 (7.1%) $101,981 (3.0%)
Deferred license fees
Current $57,808 $63,414 (8.8%) $63,418 (8.8%)
Long-term $51,615 $37,845 36.4% $59,267 (12.9%)
Deferred during quarter $14,618 $13,598 7.5% $16,727 (12.6%)
Recognized during quarter $20,081 $26,295 (23.6%) $23,914 (16.0%)
Professional Services
Professional Services
Revenue $102,877 $115,659 (11.1%) $110,619 (7.0%)
Contribution Margin 3.8% 11.8% 6.1%
Billable Headcount 2,916 3,284 (11.2%) 2,980 (2.1%)
Total Company Headcount 6,012 6,731 (10.7%) 6,099 (1.4%)
Total DSO 141.7 118.8 144.6
Total DSO (Billed) 56.8 51.9 67.0
COMPUWARE CORPORATION AND SUBSIDIARIES
PRODUCT COMMITMENTS
(In Thousands)
QUARTER QUARTER QUARTER
ENDED ENDED ENDED
SEPTEMBER 30, JUNE 30, SEPTEMBER 30,
2008 2008 2007
License revenue $42,251 $61,442 $70,016
Change in deferred license (5,479) (7,187) (12,698)
License contracts entered into during
period 36,772 54,255 57,318
Maintenance revenue 124,717 126,527 116,296
Change in deferred maintenance (34,356) (13,337) (44,715)
Maintenance contracts & renewals
entered into during period 90,361 113,190 71,581
Total products commitments during
period $127,133 $167,445 $128,899
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.
The September 30, 2007 period was adjusted to conform with current period
presentation.
Press Contact
Lisa Elkin, Vice President, Communications and Investor Relations,
+1-313-227-7345
SOURCE Compuware Corporation
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