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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 //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. |