[October 23, 2014] |
|
Compuware Corporation Reports Second Quarter, Fiscal Year 2015 Results
DETROIT --(Business Wire)--
Compuware Corporation (Nasdaq: CPWR), the technology performance
company, today announced financial results for its second quarter,
fiscal year 2015 ended September 30, 2014.
Non-GAAP net income for the quarter was $19.9 million, or $0.09 per
diluted share, compared to $21.2 million, or $0.10 per diluted share in
the year-ago period. GAAP net income for the second quarter was $9.2
million, or $0.04 per diluted share, compared to $9.1 million, or $0.04
per diluted share in the year-ago period. Prior-year amounts relate to
our continuing operations.
(Included in the financial tables is a reconciliation between non-GAAP
and GAAP results.)
"The second quarter was a solid period for Compuware, as we ended up
ahead of projected profitability and in line with revenue expectations.
We have established a market-leadership position in application
performance management and continue to see great progress in stabilizing
our mainframe business," said Compuware CEO Bob Paul. "We remain
extremely enthusiastic about the opportunity in front of us. The
completion of the Company's transformation into a lean and focused
entity able to compete and win in today's tech market is almost
complete. Also, our recent announcement regarding the finalization of
the Covisint spin marks the accomplishment of another key milestone
along this path, all of which will significantly benefit customers,
employees and shareholders alike."
With regard to the sale of the Company to Thoma Bravo, Compuware plans
to mail the definitive proxy statement to shareholders on or about
November 4, 2014 and, subject to regulatory approval, expects the
shareholder meeting seeking approval for the transaction to be held on
or about December 8, 2014.
Second Quarter Fiscal Year 2015 Dynatrace Segment Results and
Highlights
-
Total revenue was approximately $83.2M, up 8.9 percent y/y.
-
Software license fees were approximately $25.9M, up 3.4 percent y/y.
-
Maintenance fees were approximately $29.4M, up 19.5 percent y/y.
-
Subscription fees were approximately $19.9M, flat y/y.
-
Services fees were approximately $7.9M, up 16.6 percent y/y.
-
Continued 90 percent+ overall maintenance renewal rate.
-
Services on growth track due to transition from "implementation
services" to "expert services."
-
Customer satisfaction at industry best 89.9% "Net Promoter Score."
-
APMaaS bookings up 40 percent y/y with continued strength forecasted.
Second Quarter Fiscal Year 2015 Mainframe Segment Results and
Highlights
-
Total revenue was approximately $66.0M, down 8.1 percent y/y.
-
Software license fees were approximately $6.3M, down 16.6 percent y/y.
-
Maintenance fees were approximately $59.6M, down 7.2 percent y/y.
-
Contribution margin was approximately 75.9 percent compared to 76.6
percent last year.
-
Exceeded plan for software license bookings and revenue.
Second Quarter Fiscal Year 2015 Company Results
During the company's second quarter:
-
Total revenues were approximately $170.9M, down 1.0 percent y/y.
-
Software license fees were approximately $32.2M, down 1.2 percent y/y.
-
Maintenance fees were approximately $89.0 million, flat y/y.
-
Subscription fees were approximately $19.9 million, flat y/y.
-
Application services fees were approximately $21.7 million, down 11.4
percent y/y.
Second Quarter Fiscal Year 2015 Company Highlights
During the second quarter, Compuware:
-
Entered into a definitive agreement to be acquired by leading private
equity investment firm Thoma Bravo, LLC, in a transaction valued at
approximately $2.5 billion. The transaction is subject to approval
from Compuware's shareholders, regulatory approvals, and other
customary closing conditions. The closing of the transaction is also
subject to the completion of a distribution of Covisint.
-
Appointed Christopher O'Malley President of Mainframe Operations
effective July 21, 2014. In this role, O'Malley oversees all facets of
the business unit's operations, including sales and marketing, product
development and management, and customer support.
-
Announced plans to operationally separate its mainframe and APM
businesses and that the resulting mainframe-dedicated company will
carry the Compuware name.
-
Announced that its market-leading APM business will operate under the
name Dynatrace.
-
Announced that the annual 2014 Compuware PERFORM
Global User Conference would be held October 7 - 9 in Orlando,
Florida, where the Dynatrace team would share real-world examples of
how companies use APM to optimize users' experiences online, drive
profits and build business success.
-
Announced that Gartner, Inc., named Compuware the worldwide APM market
share leader for the second year in a row.
-
Announced that SD Times Magazine has named Compuware
APM (Dynatrace) to its 2014
SD Times 100 list as a leader and innovator in the "Mobile
Testing, Quality Assurance, and Security" category.
-
Revealed that Covisint Chief Security Officer Dave Miller would
deliver a presentation on cloud computing titled "The Four Immutable
Laws of Cloud Computing," at the Gartner
Catalyst Conference.
-
Stated that Covisint simplified the Physician Quality Reporting System
(PQRS) for physicians and healthcare systems with its 2014 PQRS
Registry.
-
In conjunction with leading IT industry analyst firm Enterprise
Management Associates, teamed up to host "A Pragmatic Approach to
DevOps and the Mainframe" live webcast.
-
Announced that Mainframe APM Subject Matter Expert Spencer Hallman and
Mainframe Product Manager Tyler Allman would co-present the session, "Break
Down IT Walls for Faster, More Seamless Mainframe Application Problem
Resolution" at the SHARE conference in Pittsburgh.
-
Announced that Dynatrace teamed up with Rosetta,
one of the largest customer engagement and e-commerce agencies in the
U.S., for a live webcast to provide tips on how retailers can avoid
the most common eCommerce mistakes during the holiday shopping season
and deliver superior online experiences to their customers.
-
Announced that Perficient, a leading information technology and
management consulting firm serving global 2000 and other large
enterprise customers throughout North America, joined Covisint's
Certified Service Partner program.
-
Featured on the cover of Enterprise
Executive with an article titled, "Compuware's
Chris O'Malley Shares His Vision of "Mainframe's Next 50 Years."
-
Released the video,
"Empower Your Next-Gen Mainframe Developers," to help IT organizations
overcome the significant challenges of improving the efficiency and
productivity of the next generation of development and operations
teams.
Use of Non-GAAP Financial Measures
In an effort to provide investors with additional information regarding
the Company's results as determined by U.S. generally accepted
accounting principles ("GAAP"), the Company has provided non-GAAP net
income and non-GAAP diluted earnings per share. These financial measures
exclude the impact of certain items and, therefore, have not been
calculated in accordance with GAAP. These non-GAAP financial measures
exclude stock compensation expense; amortization of purchased software
and acquired intangible assets; restructuring charges; advisory fees
associated with certain shareholder actions and business transformation;
and the related tax impacts of these items. Each of the non-GAAP
adjustments is described in more detail below. The accompanying tables
provides a reconciliation of each of these non-GAAP measures to its most
comparable GAAP financial measure.
We believe that inclusion of these non-GAAP financial measures provides
better comparability with our historical financial results and with the
results of many of our competitors. In addition, we believe these
non-GAAP financial measures are useful to investors because they allow
investors to review supplemental information used internally by
management to evaluate our financial results. These non-GAAP measures
also represent the means by which we communicate our earnings guidance
to investors.
While we believe that these non-GAAP financial measures provide useful
supplemental information, there are limitations associated with the use
of these non-GAAP financial measures. These non-GAAP financial measures
are not prepared in accordance with GAAP, are not audited, do not
reflect a comprehensive system of accounting and may not be completely
comparable to similarly titled measures of other companies due to
potential differences in the exact method of calculation between
companies. Items such as stock compensation expense; amortization of
purchased software and acquired intangible assets; restructuring
charges; advisory fees associated with certain shareholder actions and
business transformation; and the related tax impacts of these items that
are excluded from our non-GAAP financial measures can have a material
impact on net income. As a result, these non-GAAP financial measures
have limitations and should not be considered in isolation from, or as a
substitute for, net income or loss, cash flow from operations or other
measures of performance prepared in accordance with GAAP. We compensate
for these limitations by using these non-GAAP financial measures as
supplements to GAAP financial measures and by reconciling the non-GAAP
financial measures to their most comparable GAAP financial measure. We
have procedures in place to ensure that these measures are calculated
using the appropriate GAAP components in their entirety and to ensure
that our performance is properly reflected to facilitate consistent
period-to-period comparisons. Management reviews the non-GAAP
adjustments on a net-of-tax basis when evaluating our performance.
Therefore, we exclude the tax impact of these charges when presenting
non-GAAP financial measures.
The following discusses the reconciling items from our non-GAAP
financial measures to the most comparable GAAP financial measures:
Stock compensation expense. Our non-GAAP financial measures exclude the
compensation charges required to be recorded by GAAP for equity awards
to employees and directors. Although this is a normal recurring expense
for us, we believe it is useful in evaluating corporate performance
during a particular time period to review the supplemental non-GAAP
financial measures excluding this expense because these costs are
generally fixed at the time an award is granted, are then expensed over
several years and generally cannot be changed or influenced by
management in the current period.
Amortization of purchased software and acquired intangibles. Our
non-GAAP financial measures exclude costs associated with the
amortization of purchased software and acquired intangible assets.
Although this is a normal recurring expense for us, we believe it is
useful in evaluating corporate performance during a particular time
period to review the supplemental non-GAAP financial measures excluding
this expense because these costs are fixed at the time of acquisition,
are then amortized over a period of several years after the acquisition
and generally cannot be changed or influenced by management in the
current period.
Restructuring charges. Our non-GAAP financial measures exclude
restructuring charges, and any subsequent changes in estimates as they
relate to our ongoing corporate restructuring activities. We believe it
is useful in evaluating corporate performance during a particular time
period to review the supplemental non-GAAP financial measures excluding
restructuring charges in order to provide comparability and consistency
with historical operating results.
Advisory fees associated with certain shareholder actions and our
business transformation initiative. In response to certain shareholder
actions dating back to fiscal 2013, we have taken various actions to
drive shareholder value. These actions have resulted in significant
consultant fees to investigate business alternatives and implement
business transformation plans. We believe it is useful in evaluating
corporate performance during a particular time period to review the
supplemental non-GAAP financial measures excluding such costs in order
to provide comparability and consistency with historical operating
results.
Provision for income taxes on above pre-tax non-GAAP adjustments. Our
non-GAAP financial measures exclude the tax impact of the above pre-tax
non-GAAP adjustments. This amount is calculated using the tax rates of
each country to which these pre-tax non-GAAP adjustments relate.
Management excludes the non-GAAP adjustments on a net-of-tax basis in
evaluating our performance. Therefore, we exclude the tax impact of
these charges when presenting non-GAAP financial measures.
Compuware is the technology performance company, and we exist solely to
help our customers optimize the performance of their most important and
innovative technologies-those that drive their businesses forward.
Today, more than 7,100 companies, including many of the world's largest
organizations, depend on Compuware and our new-generation approach to
performance management to do just that. Learn more at: 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
|
|
|
|
|
|
|
2014
|
|
2013
|
CURRENT ASSETS:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
255,270
|
|
|
$
|
50,372
|
|
Accounts receivable, net
|
|
|
313,944
|
|
|
|
381,892
|
|
Offering proceeds receivable
|
|
|
-
|
|
|
|
68,448
|
|
Deferred tax asset, net
|
|
|
37,192
|
|
|
|
42,837
|
|
Income taxes refundable
|
|
|
4,313
|
|
|
|
4,628
|
|
Prepaid expenses and other current assets
|
|
|
30,892
|
|
|
|
33,365
|
|
Total current assets
|
|
|
641,611
|
|
|
|
581,542
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
|
|
|
|
|
DEPRECIATION AND AMORTIZATION
|
|
|
279,748
|
|
|
|
295,264
|
|
|
|
|
|
|
CAPITALIZED SOFTWARE AND OTHER
|
|
|
|
|
INTANGIBLE ASSETS, NET
|
|
|
95,805
|
|
|
|
111,162
|
|
|
|
|
|
|
ACCOUNTS RECEIVABLE
|
|
|
161,130
|
|
|
|
191,208
|
|
DEFERRED TAX ASSET, NET
|
|
|
16,011
|
|
|
|
30,351
|
|
GOODWILL
|
|
|
632,106
|
|
|
|
732,265
|
|
OTHER ASSETS
|
|
|
23,460
|
|
|
|
28,688
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
1,849,871
|
|
|
$
|
1,970,480
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
Accounts payable
|
|
$
|
18,947
|
|
|
$
|
16,894
|
|
Accrued expenses
|
|
|
79,451
|
|
|
|
92,969
|
|
Income taxes payable
|
|
|
14,998
|
|
|
|
18,266
|
|
Deferred revenue
|
|
|
347,092
|
|
|
|
387,878
|
|
Total current liabilities
|
|
|
460,488
|
|
|
|
516,007
|
|
|
|
|
|
|
LONG TERM DEBT
|
|
|
-
|
|
|
|
14,000
|
|
|
|
|
|
|
DEFERRED REVENUE
|
|
|
250,646
|
|
|
|
285,119
|
|
|
|
|
|
|
ACCRUED EXPENSES
|
|
|
20,079
|
|
|
|
18,274
|
|
|
|
|
|
|
DEFERRED TAX LIABILITY, NET
|
|
|
36,378
|
|
|
|
52,769
|
|
Total liabilities
|
|
|
767,591
|
|
|
|
886,169
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY:
|
|
|
|
|
Common stock
|
|
|
2,208
|
|
|
|
2,157
|
|
Additional paid-in capital
|
|
|
847,172
|
|
|
|
799,647
|
|
Retained earnings
|
|
|
237,874
|
|
|
|
268,937
|
|
Accumulated other comprehensive loss
|
|
|
(21,635
|
)
|
|
|
(7,539
|
)
|
Total Compuware shareholders' equity
|
|
|
1,065,619
|
|
|
|
1,063,202
|
|
Non-controlling interest
|
|
|
16,661
|
|
|
|
21,109
|
|
Total shareholders' equity
|
|
|
1,082,280
|
|
|
|
1,084,311
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
$
|
1,849,871
|
|
|
$
|
1,970,480
|
|
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,
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
REVENUES:
|
|
|
|
|
|
|
|
|
Software license fees
|
|
$
|
32,189
|
|
|
$
|
32,591
|
|
|
$
|
58,876
|
|
|
$
|
64,334
|
|
Maintenance fees
|
|
|
89,023
|
|
|
|
88,819
|
|
|
|
177,483
|
|
|
|
175,981
|
|
Subscription fees
|
|
|
19,949
|
|
|
|
19,931
|
|
|
|
39,311
|
|
|
|
40,063
|
|
Services fees
|
|
|
7,997
|
|
|
|
6,827
|
|
|
|
16,411
|
|
|
|
14,498
|
|
Application services fees
|
|
|
21,735
|
|
|
|
24,525
|
|
|
|
43,322
|
|
|
|
48,626
|
|
Total revenues
|
|
|
170,893
|
|
|
|
172,693
|
|
|
|
335,403
|
|
|
|
343,502
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
Cost of software license fees
|
|
|
4,300
|
|
|
|
5,227
|
|
|
|
9,295
|
|
|
|
10,156
|
|
Cost of maintenance fees
|
|
|
5,942
|
|
|
|
6,846
|
|
|
|
12,864
|
|
|
|
14,185
|
|
Cost of subscription fees
|
|
|
8,506
|
|
|
|
8,450
|
|
|
|
16,708
|
|
|
|
16,290
|
|
Cost of services
|
|
|
6,901
|
|
|
|
5,892
|
|
|
|
13,633
|
|
|
|
12,534
|
|
Cost of application services
|
|
|
27,231
|
|
|
|
33,689
|
|
|
|
58,133
|
|
|
|
57,950
|
|
Technology development and support
|
|
|
19,615
|
|
|
|
21,379
|
|
|
|
39,567
|
|
|
|
45,070
|
|
Sales and marketing
|
|
|
50,976
|
|
|
|
47,356
|
|
|
|
104,079
|
|
|
|
99,623
|
|
Administrative and general
|
|
|
30,580
|
|
|
|
32,838
|
|
|
|
64,593
|
|
|
|
68,886
|
|
Restructuring costs
|
|
|
2,255
|
|
|
|
219
|
|
|
|
5,230
|
|
|
|
5,022
|
|
Total operating expenses
|
|
|
156,306
|
|
|
|
161,896
|
|
|
|
324,102
|
|
|
|
329,716
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS
|
|
|
14,587
|
|
|
|
10,797
|
|
|
|
11,301
|
|
|
|
13,786
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE), NET
|
|
|
(935
|
)
|
|
|
185
|
|
|
|
(712
|
)
|
|
|
387
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
|
BEFORE INCOME TAX PROVISION
|
|
|
13,652
|
|
|
|
10,982
|
|
|
|
10,589
|
|
|
|
14,173
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX PROVISION
|
|
|
5,275
|
|
|
|
3,008
|
|
|
|
3,568
|
|
|
|
1,937
|
|
|
|
|
|
|
|
|
|
|
NET INCOME FROM CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
|
INCLUDING NON-CONTROLLING INTEREST
|
|
|
8,377
|
|
|
|
7,974
|
|
|
|
7,021
|
|
|
|
12,236
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX
|
|
|
-
|
|
|
|
7,212
|
|
|
|
-
|
|
|
|
12,917
|
|
|
|
|
|
|
|
|
|
|
NET INCOME INCLUDING NON-CONTROLLING INTEREST
|
|
|
8,377
|
|
|
|
15,186
|
|
|
|
7,021
|
|
|
|
25,153
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss attributable to the
|
|
|
|
|
|
|
|
|
non-controlling interest in Covisint Corporation
|
|
|
(774
|
)
|
|
|
(1,154
|
)
|
|
|
(2,182
|
)
|
|
|
(1,154
|
)
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO COMPUWARE CORP
|
|
$
|
9,151
|
|
|
$
|
16,340
|
|
|
$
|
9,203
|
|
|
$
|
26,307
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Compuware common shareholders
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
8,377
|
|
|
|
7,974
|
|
|
|
7,021
|
|
|
|
12,236
|
|
Loss attributable to non-controlling interest
|
|
|
(774
|
)
|
|
|
(1,154
|
)
|
|
|
(2,182
|
)
|
|
|
(1,154
|
)
|
Income from continuing operations, net of tax
|
|
|
9,151
|
|
|
|
9,128
|
|
|
|
9,203
|
|
|
|
13,390
|
|
Income from discontinued operations, net of tax
|
|
|
-
|
|
|
|
7,212
|
|
|
|
-
|
|
|
|
12,917
|
|
Net income attributable to Compuware common shareholders
|
|
$
|
9,151
|
|
|
$
|
16,340
|
|
|
$
|
9,203
|
|
|
$
|
26,307
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
0.04
|
|
|
|
0.04
|
|
|
|
0.04
|
|
|
|
0.06
|
|
Discontinued operations
|
|
|
-
|
|
|
|
0.03
|
|
|
|
-
|
|
|
|
0.06
|
|
Diluted earnings per share
|
|
$
|
0.04
|
|
|
$
|
0.07
|
|
|
$
|
0.04
|
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
220,285
|
|
|
|
214,926
|
|
|
|
219,978
|
|
|
|
214,287
|
|
Dilutive effect of stock awards
|
|
|
3,385
|
|
|
|
5,503
|
|
|
|
3,511
|
|
|
|
5,720
|
|
Total shares
|
|
|
223,670
|
|
|
|
220,429
|
|
|
|
223,489
|
|
|
|
220,007
|
|
COMPUWARE CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In Thousands)
|
|
|
|
SIX MONTHS ENDED
|
|
|
SEPTEMBER 30,
|
|
|
2014
|
|
2013
|
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
|
|
|
|
|
Net income including non-controlling interest
|
|
$
|
7,021
|
|
|
$
|
25,153
|
|
Adjustments to reconcile net income to cash provided
|
|
|
|
|
by operations:
|
|
|
|
|
Depreciation and amortization
|
|
|
29,017
|
|
|
|
32,501
|
|
Stock award compensation
|
|
|
15,277
|
|
|
|
25,312
|
|
Deferred income taxes
|
|
|
(861
|
)
|
|
|
(16,450
|
)
|
Other
|
|
|
1,902
|
|
|
|
42
|
|
Net change in assets and liabilities, net of effects from
|
|
|
|
|
currency fluctuations:
|
|
|
|
|
Accounts receivable
|
|
|
63,202
|
|
|
|
33,366
|
|
Prepaid expenses and other assets
|
|
|
(2,483
|
)
|
|
|
5,640
|
|
Accounts payable and accrued expenses
|
|
|
(9,153
|
)
|
|
|
(24,180
|
)
|
Deferred revenue
|
|
|
(72,879
|
)
|
|
|
(58,934
|
)
|
Income taxes
|
|
|
(19,273
|
)
|
|
|
4,634
|
|
Net cash provided by operating activities
|
|
|
11,770
|
|
|
|
27,084
|
|
|
|
|
|
|
CASH FLOWS USED IN INVESTING ACTIVITIES:
|
|
|
|
|
Purchase of:
|
|
|
|
|
Property and equipment
|
|
|
(5,923
|
)
|
|
|
(5,953
|
)
|
Capitalized software
|
|
|
(14,648
|
)
|
|
|
(11,649
|
)
|
Divestiture of business units
|
|
|
(8,046
|
)
|
|
|
-
|
|
Other
|
|
|
-
|
|
|
|
(275
|
)
|
Net cash used in investing activities
|
|
|
(28,617
|
)
|
|
|
(17,877
|
)
|
|
|
|
|
|
CASH FLOWS USED IN FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from borrowings
|
|
|
-
|
|
|
|
37,500
|
|
Payments on borrowings
|
|
|
-
|
|
|
|
(41,500
|
)
|
Net proceeds from exercise of stock awards including excess tax
benefits
|
|
|
9,203
|
|
|
|
15,333
|
|
Employee contribution to common stock purchase plans
|
|
|
617
|
|
|
|
1,235
|
|
Repurchase of common stock
|
|
|
(6,960
|
)
|
|
|
(6,415
|
)
|
Dividends
|
|
|
(27,474
|
)
|
|
|
(53,629
|
)
|
Other
|
|
|
-
|
|
|
|
(608
|
)
|
Net cash used in financing activities
|
|
|
(24,614
|
)
|
|
|
(48,084
|
)
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
(3,328
|
)
|
|
|
(624
|
)
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
|
(44,789
|
)
|
|
|
(39,501
|
)
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
300,059
|
|
|
|
89,873
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
255,270
|
|
|
$
|
50,372
|
|
COMPUWARE CORPORATION AND SUBSIDIARIES
|
OPERATIONAL HIGHLIGHTS
|
(Dollar Amounts In Thousands)
|
|
|
|
|
|
|
|
|
|
QUARTER
|
|
|
|
|
ENDED
|
|
|
|
|
SEP 30,
|
|
YR - YR
|
|
|
2014
|
|
2013
|
|
% Chg
|
Total Product Software Revenue by Geography
|
|
|
|
|
|
|
North America
|
|
$
|
81,835
|
|
$
|
85,171
|
|
(3.9
|
%)
|
International
|
|
|
59,326
|
|
|
56,170
|
|
5.6
|
%
|
|
|
|
|
|
|
|
Deferred License Fees
|
|
|
|
|
|
|
Current
|
|
$
|
14,569
|
|
$
|
15,263
|
|
(4.5
|
%)
|
Long-term
|
|
|
7,187
|
|
|
9,426
|
|
(23.8
|
%)
|
|
|
|
|
|
|
|
Deferred Maintenance
|
|
|
|
|
|
|
Current
|
|
$
|
254,587
|
|
$
|
294,910
|
|
(13.7
|
%)
|
Long-Term
|
|
|
225,372
|
|
|
251,137
|
|
(10.3
|
%)
|
|
|
|
|
|
|
|
Deferred Subscription
|
|
|
|
|
|
|
Current
|
|
$
|
42,003
|
|
$
|
41,358
|
|
1.6
|
%
|
Long-Term
|
|
|
10,112
|
|
|
7,042
|
|
43.6
|
%
|
|
|
|
|
|
|
|
Deferred Services
|
|
$
|
21,867
|
|
$
|
22,358
|
|
(2.2
|
%)
|
|
|
|
|
|
|
|
Deferred Application Services
|
|
$
|
22,041
|
|
$
|
31,503
|
|
(30.0
|
%)
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
Total Company Headcount
|
|
|
2,975
|
|
|
4,338
|
|
(31.4
|
%)
|
|
|
|
|
|
|
|
Total DSO (Billed)
|
|
|
67.9
|
|
|
66.0
|
|
|
Total DSO
|
|
|
165.3
|
|
|
150.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of license fees
|
|
$
|
-
|
|
$
|
-
|
|
N/A
|
|
Cost of maintenance fees
|
|
|
78
|
|
|
170
|
|
(54.1
|
%)
|
Cost of subscription fees
|
|
|
4
|
|
|
1
|
|
300.0
|
%
|
Cost of services
|
|
|
22
|
|
|
21
|
|
4.8
|
%
|
Cost of application services
|
|
|
1,255
|
|
|
10,020
|
|
(87.5
|
%)
|
Technology development and support
|
|
|
256
|
|
|
527
|
|
(51.4
|
%)
|
Sales and marketing
|
|
|
1,888
|
|
|
803
|
|
135.1
|
%
|
Administrative and general
|
|
|
2,974
|
|
|
3,253
|
|
(8.6
|
%)
|
Restructuring costs
|
|
|
-
|
|
|
-
|
|
N/A
|
|
Discontinued operations
|
|
|
-
|
|
|
80
|
|
(100.0
|
%)
|
|
|
|
|
|
|
Total stock-based compensation expense before income taxes
|
|
$
|
6,477
|
|
$
|
14,875
|
|
(56.5
|
%)
|
COMPUWARE CORPORATION AND SUBSIDIARIES
|
BUSINESS UNIT RESULTS OF OPERATIONS
|
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covisint
|
|
|
|
|
|
|
|
|
|
|
|
Application
|
|
Unallocated
|
|
|
Quarter Ended:
|
|
Dynatrace
|
|
|
Mainframe
|
|
Services
|
|
Expenses
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software license fees
|
|
$
|
25,883
|
|
|
|
$
|
6,306
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
32,189
|
|
Maintenance fees
|
|
|
29,400
|
|
|
|
|
59,623
|
|
|
|
-
|
|
|
|
-
|
|
|
|
89,023
|
|
Subscription fees
|
|
|
19,949
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,949
|
|
Services fees
|
|
|
7,923
|
|
|
|
|
74
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,997
|
|
Application services fees
|
|
|
-
|
|
|
|
|
-
|
|
|
$
|
21,735
|
|
|
|
-
|
|
|
|
21,735
|
|
Total revenues
|
|
|
83,155
|
|
|
|
|
66,003
|
|
|
|
21,735
|
|
|
|
-
|
|
|
|
170,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
73,285
|
|
|
|
|
15,907
|
|
|
|
28,899
|
|
|
|
38,215
|
|
|
|
156,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
$
|
9,870
|
|
|
|
$
|
50,096
|
|
|
$
|
(7,164
|
)
|
|
$
|
(38,215
|
)
|
|
$
|
14,587
|
|
Contribution margin %
|
|
|
11.9
|
%
|
|
|
|
75.9
|
%
|
|
|
(33.0
|
%)
|
|
|
|
|
8.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses include:
|
|
|
|
|
|
|
|
|
|
|
|
Stock awards compensation
|
|
$
|
2,410
|
|
|
|
$
|
(31
|
)
|
|
$
|
1,255
|
|
|
$
|
2,843
|
|
|
$
|
6,477
|
|
Amortization of purchased software
|
|
$
|
1,570
|
|
|
|
$
|
-
|
|
|
$
|
94
|
|
|
$
|
-
|
|
|
$
|
1,664
|
|
Amortization of other acquired intangible assets
|
|
$
|
955
|
|
|
|
$
|
-
|
|
|
$
|
77
|
|
|
$
|
-
|
|
|
$
|
1,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software license fees
|
|
$
|
25,027
|
|
|
|
$
|
7,564
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
32,591
|
|
Maintenance fees
|
|
|
24,596
|
|
|
|
|
64,223
|
|
|
|
-
|
|
|
|
-
|
|
|
|
88,819
|
|
Subscription fees
|
|
|
19,931
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,931
|
|
Services fees
|
|
|
6,796
|
|
|
|
|
31
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,827
|
|
Application services fees
|
|
|
-
|
|
|
|
|
-
|
|
|
$
|
24,525
|
|
|
|
-
|
|
|
|
24,525
|
|
Total revenues
|
|
|
76,350
|
|
|
|
|
71,818
|
|
|
|
24,525
|
|
|
|
-
|
|
|
|
172,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
69,260
|
|
|
|
|
16,821
|
|
|
|
34,362
|
|
|
$
|
41,453
|
|
|
|
161,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
$
|
7,090
|
|
|
|
$
|
54,997
|
|
|
$
|
(9,837
|
)
|
|
$
|
(41,453
|
)
|
|
$
|
10,797
|
|
Contribution margin %
|
|
|
9.3
|
%
|
|
|
|
76.6
|
%
|
|
|
(40.1
|
%)
|
|
|
|
|
6.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses include:
|
|
|
|
|
|
|
|
|
|
|
|
Stock awards compensation
|
|
$
|
1,796
|
|
|
|
$
|
(315
|
)
|
|
$
|
10,020
|
|
|
$
|
3,294
|
|
|
$
|
14,795
|
|
Amortization of purchased software
|
|
$
|
2,296
|
|
|
|
$
|
-
|
|
|
$
|
94
|
|
|
$
|
-
|
|
|
$
|
2,390
|
|
Amortization of other acquired intangible assets
|
|
$
|
1,707
|
|
|
|
$
|
-
|
|
|
$
|
96
|
|
|
$
|
-
|
|
|
$
|
1,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year amounts have been reclassified to reflect the
transition of Dynatrace for Mainframe from the Mainframe segment
to the Dynatrace segment.
|
COMPUWARE CORPORATION AND SUBSIDIARIES
|
BUSINESS UNIT RESULTS OF OPERATIONS
|
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covisint
|
|
|
|
|
|
|
|
|
|
|
Application
|
|
Unallocated
|
|
|
Six Months Ended:
|
|
Dynatrace
|
|
Mainframe
|
|
Services
|
|
Expenses
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software license fees
|
|
$
|
47,270
|
|
|
$
|
11,606
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
58,876
|
|
Maintenance fees
|
|
|
57,695
|
|
|
|
119,788
|
|
|
|
-
|
|
|
|
-
|
|
|
|
177,483
|
|
Subscription fees
|
|
|
39,311
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39,311
|
|
Services fees
|
|
|
16,255
|
|
|
|
156
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,411
|
|
Application services fees
|
|
|
-
|
|
|
|
-
|
|
|
$
|
43,322
|
|
|
|
-
|
|
|
|
43,322
|
|
Total revenues
|
|
|
160,531
|
|
|
|
131,550
|
|
|
|
43,322
|
|
|
|
-
|
|
|
|
335,403
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
148,918
|
|
|
|
33,023
|
|
|
|
62,291
|
|
|
|
79,870
|
|
|
|
324,102
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
$
|
11,613
|
|
|
$
|
98,527
|
|
|
$
|
(18,969
|
)
|
|
$
|
(79,870
|
)
|
|
$
|
11,301
|
|
Contribution margin %
|
|
|
7.2
|
%
|
|
|
74.9
|
%
|
|
|
(43.8
|
%)
|
|
|
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses include:
|
|
|
|
|
|
|
|
|
|
|
Stock awards compensation
|
|
$
|
4,322
|
|
|
$
|
216
|
|
|
$
|
3,874
|
|
|
$
|
6,865
|
|
|
$
|
15,277
|
|
Amortization of purchased software
|
|
$
|
3,190
|
|
|
$
|
-
|
|
|
$
|
188
|
|
|
$
|
-
|
|
|
$
|
3,378
|
|
Amortization of other acquired intangible assets
|
|
$
|
2,693
|
|
|
$
|
-
|
|
|
$
|
154
|
|
|
$
|
-
|
|
|
$
|
2,847
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software license fees
|
|
$
|
48,557
|
|
|
$
|
15,777
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
64,334
|
|
Maintenance fees
|
|
|
48,397
|
|
|
|
127,584
|
|
|
|
-
|
|
|
|
-
|
|
|
|
175,981
|
|
Subscription fees
|
|
|
40,063
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,063
|
|
Services fees
|
|
|
14,398
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,498
|
|
Application services fees
|
|
|
-
|
|
|
|
-
|
|
|
$
|
48,626
|
|
|
|
-
|
|
|
|
48,626
|
|
Total revenues
|
|
|
151,415
|
|
|
|
143,461
|
|
|
|
48,626
|
|
|
|
-
|
|
|
|
343,502
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
143,671
|
|
|
|
35,632
|
|
|
|
59,785
|
|
|
$
|
90,628
|
|
|
|
329,716
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
$
|
7,744
|
|
|
$
|
107,829
|
|
|
$
|
(11,159
|
)
|
|
$
|
(90,628
|
)
|
|
$
|
13,786
|
|
Contribution margin %
|
|
|
5.1
|
%
|
|
|
75.2
|
%
|
|
|
(22.9
|
%)
|
|
|
|
|
4.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses include:
|
|
|
|
|
|
|
|
|
|
|
Stock awards compensation
|
|
$
|
4,619
|
|
|
$
|
219
|
|
|
$
|
10,506
|
|
|
$
|
9,816
|
|
|
$
|
25,160
|
|
Amortization of purchased software
|
|
$
|
4,573
|
|
|
$
|
-
|
|
|
$
|
188
|
|
|
$
|
-
|
|
|
$
|
4,761
|
|
Amortization of other acquired intangible assets
|
|
$
|
3,400
|
|
|
$
|
-
|
|
|
$
|
195
|
|
|
$
|
-
|
|
|
$
|
3,595
|
|
|
Prior year amounts have been reclassified to reflect the
transition of Dynatrace for Mainframe from the Mainframe segment
to the Dynatrace segment.
|
COMPUWARE CORPORATION
|
RECONCILIATION OF GAAP TO NON-GAAP
|
(In Thousands, Except Per Share Data)
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
SIX MONTHS ENDED
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMPUWARE
COPORATION
|
|
$
|
9,151
|
|
|
$
|
9,128
|
|
|
$
|
9,203
|
|
|
$
|
13,390
|
|
ADJUSTMENTS EXCLUDING IMPACT OF NON-CONTROLLING INTEREST
|
|
|
|
|
|
|
|
|
Stock compensation (excl. restructuring)
|
|
|
6,260
|
|
|
|
12,905
|
|
|
|
14,564
|
|
|
|
21,479
|
|
Amortization of purchased software
|
|
|
1,648
|
|
|
|
2,389
|
|
|
|
3,344
|
|
|
|
4,759
|
|
Amortization of acquired intangibles
|
|
|
1,019
|
|
|
|
1,801
|
|
|
|
2,819
|
|
|
|
3,594
|
|
Restructuring expense
|
|
|
2,255
|
|
|
|
219
|
|
|
|
5,230
|
|
|
|
5,022
|
|
Advisory fees
|
|
|
5,351
|
|
|
|
1,977
|
|
|
|
8,095
|
|
|
|
3,133
|
|
Income tax effect of above adjustments
|
|
|
(5,811
|
)
|
|
|
(7,245
|
)
|
|
|
(12,083
|
)
|
|
|
(13,738
|
)
|
|
|
|
|
|
|
|
|
|
Total adjustments
|
|
|
10,722
|
|
|
|
12,046
|
|
|
|
21,969
|
|
|
|
24,249
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP NET INCOME FROM CONTINUING OPERATIONS
|
|
$
|
19,873
|
|
|
$
|
21,174
|
|
|
$
|
31,172
|
|
|
$
|
37,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS - GAAP
|
|
$
|
0.04
|
|
|
$
|
0.04
|
|
|
$
|
0.04
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
ADJUSTMENTS EXCLUDING IMPACT OF NON-CONTROLLING INTEREST
|
|
|
|
|
|
|
|
|
Stock compensation (excl. restructuring)
|
|
|
0.03
|
|
|
|
0.06
|
|
|
|
0.07
|
|
|
|
0.10
|
|
Amortization of purchased software
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.02
|
|
Amortization of acquired intangibles
|
|
|
0.00
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.02
|
|
Restructuring expense
|
|
|
0.01
|
|
|
|
0.00
|
|
|
|
0.02
|
|
|
|
0.02
|
|
Advisory fees
|
|
|
0.02
|
|
|
|
0.01
|
|
|
|
0.04
|
|
|
|
0.01
|
|
Income tax effect of above adjustments
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
(0.05
|
)
|
|
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
Total adjustments
|
|
|
0.05
|
|
|
|
0.05
|
|
|
|
0.10
|
|
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP EPS FROM CONTINUING OPERATIONS
|
|
$
|
0.09
|
|
|
$
|
0.10
|
|
|
$
|
0.14
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
Diluted shares outstanding
|
|
|
223,670
|
|
|
|
220,429
|
|
|
|
223,489
|
|
|
|
220,007
|
|
|
|
|
|
|
|
|
|
|
EPS amounts may not add to the total due to rounding
|
Source:Compuware
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|