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Compuware Earns Six Cents Per Share in Q1 as Momentum in Growth Engines Continues
(GlobeNewswire Via Acquire Media NewsEdge) Non-mainframe solutions revenue increases 44 percent year-over-year in Q1 excluding divested products, 12.5 percent as reportedTotal products revenue increases 8.7 percent year-over-year in Q1 excluding divested products to $150.1M, decreases one percent as reportedQ1 Vantage license fees increase 52 percent year-over-year to $14.2M, Gomez Q1 subscription revenue reaches $13.3M as demand for Enterprise to Internet APM increasesChangepoint license fees increase 79 percent year-over-year to $2.4M in Q1 as focus on technology companies drives new salesCovisint revenues increase 16 percent year-over-year to $11.2M in Q1 as both healthcare and manufacturing verticals show strengthDETROIT, July 22, 2010 (GLOBE NEWSWIRE) -- Compuware Corporation (Nasdaq:CPWR) today announced final financial results for its first quarter ended June 30, 2010.
"Compared to this time last year, Compuware has a healthier, higher-growth solution portfolio with much stronger competitive positioning," said Compuware President and COO Bob Paul. "Compuware's non-mainframe solutions' revenues are up 44 percent year-over-year, excluding divested products. Each of these growth engines delivered double digit percentage increases in year-over-year license fees or subscription revenues in Q1.
"Our planned reduction of unprofitable services engagements has almost doubled Compuware's professional services segment contribution margin year-over-year to nearly 11 percent in Q1," continued Paul. "This strategy has impacted Compuware's total Q1 revenues modestly, while positioning the services business to reach our 15 percent margin goal by Q4."
Compuware reports first quarter revenues of $206.5 million, compared to $214.4 million in Q1 last year. First quarter earnings per share were six cents, compared to 21 cents in Q1 last year, based upon 227.6 million and 242.5 million shares outstanding, respectively. During Q1 last year, Compuware EPS were positively impacted by 14 cents per share from the gain on the divestiture of the company's quality solutions business.
First quarter net income was $12.6 million compared to $51.0 million in the same period last year. During Q1 last year, Compuware net income was positively impacted by $33.8 million from the after-tax gain on the divestiture of the company's quality solutions business.
During the company's first quarter, software license fees were $33.3 million compared to $31.8 million (excluding divested products) and $40.6 million (as reported) in the first quarter last year. Maintenance and subscription fees were $116.8 million in the first quarter compared to $106.3 million (excluding divested products) and $111.1 million (as reported) in the first quarter last year. Revenue from professional services in the first quarter was $56.4 million, compared to $62.7 million in the same quarter last year.
First Quarter Fiscal Year 2011 Highlights
During the first quarter, Compuware:
strengthened its position as the global leader in application performance by announcing that international IT services company Atos Origin has joined the Compuware Partner Network.
showcased its solutions for managing the performance of applications across the Cisco network at Cisco Live 2010.
improved the application performance of SafeAuto Insurance's critical customer-facing applications that span both the Enterprise and Internet by using Gomez adVantage.
detailed how AccuWeather.com uses the Compuware Gomez mobile monitoring solution.
released Compuware Changepoint 2010, its powerful project portfolio management and professional services automation solution.
announced that leading industry analyst firm Gartner Inc. placed Compuware in the "leaders" quadrant of the "Magic Quadrant for IT Project and Portfolio Management."
announced that Cable&Wireless Worldwide would offer Compuware Vantage and Gomez solutions as an enhancement for its Application Performance Management product portfolio.
improved the efficiency and success rate for patient transfers for Michigan's Thumb Rural Health Network through the technology of Covisint. Additionally, Covisint globally offered PROSTEP AG's data transfer application, OpenDXM® GlobalX™, through Covisint ExchangeLink™.
introduced through Compuware Gomez the industry's first solution for testing how entire websites perform and render on the Apple iPad.
launched Uniface 9.4, which enables a very short time-to-market for rich Internet and mobile applications.
joined Dole Food Company at the Gartner IT Infrastructure, Operations & Management Summit to highlight how Compuware's end-to-end application performance management solution is improving the performance and availability of Dole Food Company's mission-critical applications.
announced that Baptist Health System selected Compuware's EHR Service Delivery Solution powered by Compuware Vantage to monitor the performance and availability of its Electronic Health Record systems and ensure Service Level Agreements were being met.
introduced a free, Compuware Gomez Multi-browser Website Performance Test that provides businesses with an instant evaluation of their website response times across multiple browsers and geographies.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the financial information included following this press release uses non-GAAP measures for revenue. The non-GAAP revenue disclosure provides information on total products 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 to GAAP information is contained in the financial statements following this press release.
Compuware Corporation
Founded in 1973, Compuware provides software, experts and best practices to ensure applications work well and deliver business value. Compuware solutions optimize end-to-end application performance for leading organizations around the world, including 46 of the top 50 Fortune 500 companies and 12 of the top 20 most visited U.S. web sites. Learn more at: http://www.compuware.com.
The Compuware logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5950
Conference Call Information
Compuware will host a conference call to discuss these results at 5 p.m. Eastern time (21:00 GMT) today. To join the conference call, interested parties from the United States should call 800-230-1092. For international access, the conference call number is +1-612-288-0337. 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 104766. Additionally, investors can listen to the conference call via webcast by visiting the Compuware Corporation Investor Relations web site 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 SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In Thousands)
AS OF JUNE 30, ASSETS
2010
2009
CURRENT ASSETS:
Cash and cash equivalents
$138,670
$390,680
Accounts receivable, net
399,976
379,771
Deferred tax asset, net
49,410
41,231
Income taxes refundable
4,965
3,793
Prepaid expenses and other current assets
25,645
27,203
Total current assets
618,666
842,678
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION
338,739
349,258
CAPITALIZED SOFTWARE, LESS ACCUMULATED AMORTIZATION
42,480
36,114
OTHER:
Accounts receivable
200,309
217,207
Deferred tax asset, net
35,293
32,493
Goodwill
591,455
341,841
Other
69,465
32,960
Total other assets
896,522
624,501
TOTAL ASSETS
$1,896,407
$1,852,551
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
$14,339
$24,101
Accrued expenses
70,944
74,193
Income taxes payable
23,211
39,927
Deferred revenue
441,068
398,624
Total current liabilities
549,562
536,845
DEFERRED REVENUE
342,273
351,006
ACCRUED EXPENSES
33,376
28,214
DEFERRED TAX LIABILITY, NET
48,989
28,361
Total liabilities
974,200
944,426
SHAREHOLDERS' EQUITY:
Common stock
2,236
2,378
Additional paid-in capital
609,249
626,421
Retained earnings
307,394
279,951
Accumulated other comprehensive income (loss)
3,328
(625)
Total shareholders' equity
922,207
908,125
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$1,896,407
$1,852,551
COMPUWARE CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In Thousands, Except Per Share Data)
THREE MONTHS ENDED
JUNE 30,
2010
2009
REVENUES:
Software license fees
$33,330
$40,546
Maintenance and subscription fees
116,759
111,127
Professional services fees
56,396
62,715
Total revenues
206,485
214,388
OPERATING EXPENSES:
Cost of software license fees
3,416
3,949
Cost of maintenance and subscription fees
13,287
8,956
Cost of professional services
50,713
58,901
Technology development and support
21,541
21,482
Sales and marketing
57,704
53,148
Administrative and general
37,437
40,130
Restructuring costs
2,490
Gain on divestiture of product lines
(52,351)
Total operating expenses
184,098
136,705
INCOME FROM OPERATIONS
22,387
77,683
OTHER INCOME (EXPENSES)
Interest income
909
1,569
Other
(44)
(149)
OTHER INCOME, NET
865
1,420
INCOME BEFORE INCOME TAXES
23,252
79,103
INCOME TAX PROVISION
10,607
28,056
NET INCOME
$12,645
$51,047
DILUTED EPS COMPUTATION
Numerator: Net income
$12,645
$51,047
Denominator:
Weighted-average common shares outstanding
224,538
240,784
Dilutive effect of stock options
3,037
1,764
Total shares
227,575
242,548
Diluted EPS
$0.06
$0.21
COMPUWARE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands)
THREE MONTHS ENDED
JUNE 30,
2010
2009
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income
$12,645
$51,047
Adjustments to reconcile net income to cash provided by operations:
Gain on divestiture of product lines
(52,351)
Depreciation and amortization
12,213
10,378
Stock award compensation
5,304
5,637
Deferred income taxes
(6,079)
1,017
Other
336
870
Net change in assets and liabilities, net of effects from divestiture and currency fluctuations:
Accounts receivable
62,573
119,957
Prepaid expenses and other current assets
19,659
14,521
Other assets
1,452
(2,339)
Accounts payable and accrued expenses
(35,066)
(23,061)
Deferred revenue
(64,919)
(64,745)
Income taxes
8,024
13,972
Net cash provided by operating activities
16,142
74,903
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchase of:
Property and equipment
(4,268)
(1,674)
Capitalized software
(4,506)
(4,034)
Net proceeds from divestiture of product lines
64,992
Net cash provided by (used in) investing activities
(8,774)
59,284
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net proceeds from exercise of stock options including excess tax benefits
2,227
1,628
Employee contribution to common stock purchase plans
719
579
Repurchase of common stock
(16,160)
(32,305)
Net cash used in financing activities
(13,214)
(30,098)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(5,381)
8,479
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(11,227)
112,568
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
149,897
278,112
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$138,670
$390,680
COMPUWARE CORPORATION AND SUBSIDIARIESOPERATIONAL HIGHLIGHTS(dollar amounts in thousands)
QUARTER
QUARTER
ENDED
ENDED
JUN 30,YR - YRMAR 31,QTR - QTR 20102009% Chg2010% ChgProducts:
Software License Fees excluding Divested Products:
Distributed License Fees:
Vantage
$ 14,232
$ 9,358
52.1%
$ 16,988
(16.2%)
Changepoint
2,352
1,316
78.7%
2,695
(12.7%)
Uniface
2,038
1,474
38.3%
2,713
(24.9%)
Other
187
481
(61.1%)
590
(68.3%)
Distributed License Fees excluding Divested Products
18,809
12,629
48.9%
22,986
(18.2%)
Mainframe License Fees
14,521
19,193
(24.3%)
28,839
(49.6%)
Total Software License Fees excluding Divested Products
33,330
31,822
4.7%
51,825
(35.7%)
Maintenance and Subscription Fees excluding Divested Products:
Distributed Products
26,127
25,896
0.9%
26,819
(2.6%)
Mainframe Products
77,360
80,392
(3.8%)
79,993
(3.3%)
Subscription - Gomez
13,272
--
N/A
11,087
19.7%
Total Maintenance and Subscription Fees excluding Divested Products
116,759
106,288
9.9%
117,899
(1.0%)
Total Products Revenue excluding Divested Products:
Distributed Products
44,936
38,525
16.6%
49,805
(9.8%)
Mainframe Products
91,881
99,585
(7.7%)
108,832
(15.6%)
Subscription - Gomez
13,272
--
N/A
11,087
19.7%
Total Products Revenue excluding Divested Products
150,089
138,110
8.7%
169,724
(11.6%)
Divested Products:
License Fees
--
8,724
(100.0%)
--
Maintenance Fees
--
4,839
(100.0%)
--
Total Products Revenue Divested Products
--
13,563
(100.0%)
--
Total Product Revenue
$ 150,089
$ 151,673
(1.0%)
$ 169,724
(11.6%)
Total Product Revenue by Geography
North America
$ 83,951
$ 80,608
4.1%
$ 91,417
(8.2%)
International
$ 66,138
$ 71,065
(6.9%)
$ 78,307
(15.5%)
Total Cost of Product Revenue (excluding Gain on Divestiture)
$ 95,948
$ 87,535
9.6%
$ 102,940
(6.8%)
Deferred License Fees
Current
$ 46,168
$ 55,961
(17.5%)
$ 50,514
(8.6%)
Long-term
$ 36,424
$ 47,323
(23.0%)
$ 43,350
(16.0%)
Deferred During Quarter
$ 7,000
$ 10,679
(34.5%)
$ 7,729
(9.4%)
Recognized During Quarter
$ 15,271
$ 24,385
(37.4%)
$ 18,342
(16.7%)
Professional Services:
Professional Services Segment Fees
$ 45,157
$ 53,045
(14.9%)
$ 49,858
(9.4%)
Application Services Segment Fees
11,239
9,670
16.2%
10,416
7.9%
Total Professional Services Fees
$ 56,396
$ 62,715
(10.1%)
$ 60,274
(6.4%)
Professional Services Segment Contribution Margin
10.9%
5.5%
14.7%
Application Services Segment Contribution Margin
6.8%
9.1%
1.2%
Total Professional Services Fees Contribution Margin
10.1%
6.1%
12.4%
Billable Professional Services Segment Headcount
1,171
1,391
(15.8%)
1,218
(3.9%)
Application Services Segment Headcount
309
259
19.3%
305
1.3%
Other:
Total Company Headcount
4,256
4,275
(0.4%)
4,336
(1.8%)
Total DSO (Billed)
64.3
58.4
75.2
Total DSO
174.3
159.4
178.6
COMPUWARE CORPORATION AND SUBSIDIARIESPRODUCT COMMITMENTS (In Thousands)
QUARTER ENDED
JUNE 30,JUNE 30,
20102009
License fees
$ 33,330
$ 40,546
License fees - divested products *
(8,724)
License fees excluding divested products
33,330
31,822
Change in deferred license fees excluding divested products *
(8,271)
(6,669)
License contracts entered into during period excluding divested products 25,059 25,153
Maintenance and subscription fees
116,759
111,127
Maintenance fees - divested products *
(4,839)
Maintenance and subscription fees excluding divested products
116,759
106,288
Change in deferred maintenance and subscription fees excluding divested products *
(57,515)
(47,887)
Maintenance and subscription contracts & renewals entered into during period excluding divested products 59,244 58,401
Total products commitments during period excluding divested products $ 84,303 $ 83,554
* The company divested its Quality and DevPartner product lines during the quarter ended June 30, 2009. For comparison purposes, the Products Commitments schedule excludes Quality and DevPartner license revenue, maintenance revenue and product commitments from the quarter ended June 30, 2009.
A significant portion of the company's product software revenue is recognized ratably over the contractual term of the arrangement. Therefore, to supplement the understanding of Compuware's software business, we believe it is important to also consider the amount of product commitments, which represents the full contractual value of each product software arrangement entered into during the reporting period.CONTACT: Compuware Corporation
Press Contact
Lisa Elkin, Vice President, Marketing and Communications
+1-313-227-7345
2010 GlobeNewswire, Inc.
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