DETROIT, Jan. 28 /PRNewswire-FirstCall/ -- Compuware Corporation (Nasdaq:
CPWR) today announced financial results for its third quarter ended
December 31, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080605/CLTH112LOGO )
Compuware reports third quarter revenues of $268.7 million, compared to
$309.3 million in the same quarter last year. Earnings per share -- before
restructuring charges -- grew to 15 cents in Q3, compared to 14 cents per
share in the same quarter last year, based upon 246.8 million and 282.5
million shares outstanding, respectively. On a GAAP basis, earnings per share
were 14 cents compared to 13 cents in the same quarter last year.
Compuware's third quarter net income -- before restructuring charges --
was $37.5 million compared to $38.8 million in the same period last year. On a
GAAP basis, Compuware delivered net income of $35.0 million in Q3, compared to
net income of $35.6 million in the same quarter last year.
During the third quarter, the company's software license fee revenue was
$60.5 million, compared to $79.4 million in the same quarter last year.
Maintenance fees recognized in the quarter were $116.6 million, compared to
$120.0 million in Q3 last year. Revenue from professional services in Q3 was
$91.6 million, compared to $109.9 million in the same quarter last year.
"In a really tough selling environment, Compuware has produced a good Q3,
propelling us to a 44 percent increase in GAAP EPS for the fiscal
year-to-date," said Compuware President and Chief Operating Officer Bob Paul.
"Moving forward, we will accelerate Compuware's growth by further focusing the
business on a differentiated and compelling solution that will position the
company as best-in-class.
"IT leaders today face relentless pressure to deliver applications that
drive innovation and eliminate costs," continued Paul. "To meet these demands
in the face of increasingly complex technologies like SOA, cloud computing and
virtualization, IT leadership desperately needs an end-to-end, business user's
view of application performance. Compuware provides that view through Business
Service Delivery, our strategic approach to ensuring that applications work
well and deliver value. And we're going to achieve breakout growth by doing it
better than anyone else in the world."
The company will host a conference call at 5:00 p.m. Eastern time (22:00
UTC) today to discuss these results.
Third Quarter Fiscal Year 2009 Highlights
During the third quarter, Compuware:
-- Launched Changepoint 2009, the latest version of its market-leading IT
portfolio management solution. Changepoint 2009 provides greater visibility
into all the work of IT, increasing the ability of IT organizations to respond
to business needs.
-- Announced that Covisint was named a "cloud computing pioneer" by
independent analyst firm, Forrester Research, Inc. According to the report,
customers can benefit from Covisint's "pay as you go" model, speed and focus.
Covisint also earned its third consecutive "Best Demonstration of Value/ROI"
Innovation Award at the Healthcare IT Summit 2008.
-- Released the results of a new study, commissioned by the company and
conducted by the Ponemon Institute(C), that showed insiders were the number
one cause of all data breaches, with hackers ranking a distant fifth. This
study underscored the relevance of Compuware's Data Privacy solutions.
-- Launched the Compuware Uniface 9.3 Application Platform Suite, its
enterprise application development solution, at the Compuware Uniface User
Conference (CU2008). Attendees at CU2008 also received an exclusive first look
at the yet-to-be-announced Uniface 9.4 development solution, as well as an
update on features of the new version.
-- Announced that its Covisint subsidiary will electronically connect
hospitals in Michigan's "thumb" region, now called Michigan Thumb Health
Information System (THIS), enabling faster clinical decision-making and
improving healthcare delivery, costs. Covisint will also electronically
connect doctors across Michigan via MSMS Connect, leveraging the Covisint on-
demand healthcare platform. With Covisint, MSMS Connect now enables secure
messaging, including patient-specific information from physician-to-physician.
-- Earned the "diversity and multiculturalism" top honor as part of the
"101 Best and Brightest Companies to Work For" award program.
-- Announced the latest version of its award-winning code quality
solution, Compuware DevPartner Studio 9.0, at the Microsoft Professional
Developers Conference 2008.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, this press release and the
accompanying schedules following the release use a non-GAAP measure for EPS,
net income and revenue (referred to as product commitments). Compuware
management believes the non-GAAP financial information provided in these
schedules help 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 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. To
join the conference call, interested parties in the United States should call
800-230-1059. For international access, the conference call number is +1-612-
234-9959. No password is required.
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 975120. 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
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 DECEMBER 31,
ASSETS
2008 2007
CURRENT ASSETS:
Cash and cash equivalents $163,716 $178,620
Investments 87,171
Accounts receivable, net 522,514 413,203
Deferred tax asset, net 35,403 42,622
Income taxes refundable 3,243
Prepaid expenses and other current
assets 26,850 31,569
Total current assets 751,726 753,185
PROPERTY AND EQUIPMENT, LESS
ACCUMULATED
DEPRECIATION AND AMORTIZATION 358,660 370,641
CAPITALIZED SOFTWARE, LESS
ACCUMULATED
AMORTIZATION 52,853 63,165
OTHER:
Accounts receivable 238,591 200,506
Deferred tax asset, net 28,960 37,541
Goodwill 349,245 353,104
Other 32,370 35,131
Total other assets 649,166 626,282
TOTAL ASSETS $1,812,405 $1,813,273
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $14,997 $19,069
Accrued expenses 104,175 132,391
Income taxes payable 8,103 5,004
Deferred revenue 422,216 329,460
Total current liabilities 549,491 485,924
DEFERRED REVENUE 363,812 328,814
ACCRUED EXPENSES 22,384 18,639
DEFERRED TAX LIABILITY, NET 20,527 16,463
Total liabilities 956,214 849,840
SHAREHOLDERS' EQUITY:
Common stock 2,466 2,742
Additional paid-in capital 632,267 669,344
Retained earnings 217,499 272,430
Accumulated other comprehensive
income 3,959 18,917
Total shareholders' equity 856,191 963,433
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,812,405 $1,813,273
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2008 2007 2008 2007
REVENUES:
Software license fees $60,513 $79,425 $164,206 $196,712
Maintenance fees 116,614 120,026 367,858 350,063
Professional services fees 91,540 109,884 305,036 343,920
Total revenues 268,667 309,335 837,100 890,695
OPERATING EXPENSES:
Cost of software license fees 6,117 6,685 18,460 23,660
Cost of maintenance fees 9,488 11,452 32,814 33,110
Cost of professional services 86,887 103,705 289,682 309,752
Technology development and
support 22,395 23,636 67,903 77,134
Sales and marketing 55,042 66,392 174,722 196,580
Administrative and general 35,520 46,158 119,138 134,412
Restructuring costs 4,009 4,894 6,922 39,645
Total operating expenses 219,458 262,922 709,641 814,293
INCOME FROM OPERATIONS 49,209 46,413 127,459 76,402
OTHER INCOME (EXPENSES)
Interest income 2,371 4,537 9,011 16,004
Other (80) 113 (453) (268)
OTHER INCOME, NET 2,291 4,650 8,558 15,736
INCOME BEFORE INCOME TAXES 51,500 51,063 136,017 92,138
INCOME TAX PROVISION 16,548 15,449 44,751 18,919
NET INCOME $34,952 $35,614 $91,266 $73,219
DILUTED EPS COMPUTATION
Numerator: Net income $34,952 $35,614 $91,266 $73,219
Denominator:
Weighted-average common shares
outstanding 246,537 281,359 252,850 292,514
Dilutive effect of stock
options 262 1,123 1,385 1,757
Total shares 246,799 282,482 254,235 294,271
Diluted EPS $0.14 $0.13 $0.36 $0.25
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
NINE MONTHS ENDED
DECEMBER 31,
2008 2007
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Net income $91,266 $73,219
Adjustments to reconcile net income
to cash provided by operations:
Depreciation and amortization 40,302 41,364
Property and equipment
impairment 662 3,079
Capitalized software impairment 3,873
Acquisition tax benefits 3,933 3,932
Stock option compensation 12,933 8,773
Deferred income taxes 5,943 (14,039)
Other 419 1,072
Net change in assets and
liabilities, net of effects
from acquisitions
and currency fluctuations:
Accounts receivable (30,433) 1,387
Prepaid expenses and other
current assets 19,064 10,422
Other assets (1,549) 1,201
Accounts payable and
accrued expenses (30,704) (10,758)
Deferred revenue (36,099) (47,848)
Income taxes 3,070 32,355
Net cash provided by
operating activities 78,807 108,032
CASH FLOWS PROVIDED BY INVESTING
ACTIVITIES:
Purchase of:
Property and equipment (15,257) (8,828)
Capitalized software (9,456) (11,263)
Investment proceeds 70,212 90,255
Net cash provided by
investing activities 45,499 70,164
CASH FLOWS USED IN FINANCING
ACTIVITIES:
Net proceeds from exercise of stock
options including excess tax
benefits 11,207 66,531
Contribution to stock purchase
plans 2,349 3,184
Repurchase of common stock (177,195) (337,785)
Net cash used in
financing activities (163,639) (268,070)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (12,894) 7,813
NET DECREASE IN CASH AND CASH
EQUIVALENTS (52,227) (82,061)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 215,943 260,681
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $163,716 $178,620
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(dollar amounts in thousands)
QUARTER
QUARTER ENDED ENDED
DEC 31, DEC 31, YR-YR SEPT 30 QTR-QTR
2008 2007 % Change 2008 % Change
License Fees:
Distributed Product
License Fees
Vantage $18,606 $20,018 (7.1%) $9,415 97.6%
Changepoint 2,967 3,781 (21.5%) 2,359 25.8%
Quality 6,567 7,231 (9.2%) 5,434 20.9%
Uniface 3,505 3,890 (9.9%) 2,253 55.6%
DevPartner 1,274 2,607 (51.1%) 1,359 (6.3%)
Total Distributed Product
License Fees 32,919 37,527 (12.3%) 20,820 58.1%
Mainframe Product License
Fees 27,594 41,898 (34.1%) 21,431 28.8%
Total License Fees 60,513 79,425 (23.8%) 42,251 43.2%
Maintenance Fees 116,614 120,026 (2.8%) 124,717 (6.5%)
Total Products Revenue $177,127 $199,451 (11.2%) $166,968 6.1%
Total Mainframe Products
Revenue $109,296 $125,710 (13.1%) $108,801 0.5%
Total Distributed Products
Revenue $67,831 $73,741 (8.0%) $58,167 16.6%
Total Products Revenue by
Geography
North America $89,360 $97,898 (8.7%) $85,460 4.6%
International $87,767 $101,553 (13.6%) $81,508 7.7%
Product Releases
Mainframe 1 2 (50.0%) 3 (66.7%)
Distributed 10 12 (16.7%) 7 42.9%
Total Costs of Software
Products $93,042 $108,165 (14.0%) $98,876 (5.9%)
Deferred license fees
Current $59,880 $68,033 (12.0%) $57,808 3.6%
Long-term $47,172 $48,087 (1.9%) $51,615 (8.6%)
Deferred during quarter $21,403 $38,064 (43.8%) $14,618 46.4%
Recognized during quarter $20,406 $23,550 (13.4%) $20,081 1.6%
Professional Services
Professional Services
Revenue $91,540 $109,884 (16.7%) $102,877 (11.0%)
Contribution Margin 5.1% 5.6% 3.8%
Billable Headcount 2,747 3,251 (15.5%) 2,916 (5.8%)
Total Company Headcount 5,648 6,496 (13.1%) 6,012 (6.1%)
Total DSO 175.0 120.2 141.7
Total DSO (Billed) 96.1 55.1 56.8
COMPUWARE CORPORATION AND SUBSIDIARIES
PRODUCT COMMITMENTS
(In Thousands)
QUARTER QUARTER QUARTER
ENDED ENDED ENDED
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
2008 2008 2007
License revenue $60,513 $42,251 $79,425
Change in deferred license 997 (5,479) 14,515
License contracts entered into
during period 61,510 36,772 93,940
Maintenance revenue 116,614 124,717 120,026
Change in deferred maintenance 17,859 (34,356) 61,394
Maintenance contracts & renewals
entered into during period 134,473 90,361 181,420
Total products commitments during
period $195,983 $127,133 $275,360
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 December 31, 2007 period was adjusted to conform with current period
presentation.
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: 2008 2007 2008 2007
GAAP net income $34,952 $35,614 $91,266 $73,219
Restructuring
costs, net of
tax 2,566 3,181 4,404 25,769
Capitalized
software
impairment,
net of tax 2,517
Net income as
adjusted $37,518 $38,795 $95,670 $101,505
EPS reconciliation:
GAAP diluted
EPS $0.14 $0.13 $0.36 $0.25
Restructuring
costs, net of
tax 0.01 0.01 0.02 0.08
Capitalized
software
impairment,
net of tax 0.01
Diluted EPS as
adjusted $0.15 $0.14 $0.38 $0.34
Compuware undertook restructuring actions in FY08 and FY09. 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.
