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Compuware Corporation Reports Third Quarter, Fiscal Year 2014 Results
[January 23, 2014]

Compuware Corporation Reports Third Quarter, Fiscal Year 2014 Results


DETROIT --(Business Wire)--

Compuware Corporation (Nasdaq: CPWR), the technology performance company, today announced financial results for its third quarter, fiscal year 2014 ended December 31, 2013.

Non-GAAP net income for the quarter was $38.0 million, or $0.17 per diluted share, compared to $32.3 million, or $0.15 per diluted share in the year-ago period. GAAP net income for the third quarter was $25.0 million, or $0.11 per diluted share, compared to $25.3 million, or $0.12 per diluted share in the year-ago period.

(Included in the financial tables is a reconciliation between non-GAAP and GAAP results.)

"The third quarter was a very productive period for the company. First and foremost, we posted another quarter of solid results, led by APM's strong operating execution and our continued improvement in profitability, as evidenced by double-digit earnings growth both year-over-year and sequentially," said Compuware President and CEO Bob Paul. "Our APM business continues to excel on all fronts, driving consistent growth and profitability gains. Although there is more work to do in our Mainframe business, I'm pleased with the company's operating performance while also successfully executing on several key strategic initiatives. As a result, we are now poised to achieve greater earnings and revenue growth going forward. With our portfolio rationalization now behind us, we will continue to execute on the final steps that remain in our transformation into the 'new' Compuware."

Third Quarter Fiscal Year 2014 Results

During the company's third quarter:

  • Total revenues were approximately $250.5M, down 2.9 percent y/y and up 9.8 percent sequentially
  • Software license fees were $56.7M, down 12.6 percent y/y and up 58.8 percent sequentially
  • Maintenance fees were $101.6 million, flat y/y and up 1.1 percent sequentially
  • Subscription fees were $21.7 million, up 4.5 percent y/y and 5.2 percent sequentially
  • Professional services revenues were $46.4 million, flat y/y and sequentially
  • Application services fees were $24.1 million, up 1.1 percent y/y and down 1.7 percent sequentially

Third Quarter Fiscal Year 2014 Highlights

During the third quarter, Compuware:

  • Made changes to its Board of Directors by appointing Jeffrey J. Clarke, Managing Partner at Augusta Columbia Capital, and Jennifer J. Raab, President of Hunter College. Glenda D. Price, Ph.D., and Ralph J. Szygenda stepped down from the Board.
  • Announced that Gartner, Inc. positioned Compuware in the "Leaders" quadrant of the "Magic Quadrant for Application Performance Monitoring (APM)" report for the fourth consecutive year. Compuware is the only vendor to consistently appear in this position since the report first published in 2010. Additionally, Compuware was once again positioned the furthest for 'completeness of vision' in the APM Magic Quadrant for the third consecutive year.
  • Announced that industry analyst firm International Data Corporation (IDC) ranked Compuware the world's third largest APM software vendor based on 2012 revenue. Compuware also had the highest growth rate of the top three vendors.
  • Released a new version of Compuware APM Real User Monitoring for Mobile and Web Apps powered by dynaTrace and PurePath TechnologyTM.
  • Announced day-one support for IBM DB2 11 for z/OS; allowing customers who are ready to migrate their production applications to DB2 11 to immediately begin using Compuware's comprehensive suite of mainframe developer productivity solutions for DB2 including Abend-AID, File-AID, Xpediter and Strobe.
  • Announced the availability of the new Compuware APMaaS Platform, which offers a simplified, zero-configuration user interface for quick time-to-value.
  • Announced the results of a global CIO survey on the impact of new technologies and trends on the mainframe application environment. The survey found mobile technology is increasing complexity, usage and costs of mainframe applications.
  • Revealed that it was once again positioned by Gartner Inc. in the "Magic Quadrant for Integrated IT Portfolio Analysis (IIPA) Applications." This positioning was based on analyst evaluation of Compuware Changepoint, the company's market-leading project and portfolio management solution.
  • Signed a strategic agreement with Cisco. Under the agreement, Cisco will embed Covisint technology within the Cisco exchange platform to provide high-value solutions to customers worldwide.

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 also disclosed in this press release and the accompanying tables non-GAAP net income and non-GAAP diluted earnings per share. Each of these financial measures excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. These non-GAAP financial measures exclude share-based compensation expense; the amortization of acquired software and 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. This press release also contains a reconciliation of each of these non-GAAP measures to its most comparable GAAP financial measure.

We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our operating results because they exclude amounts that management and the board of directors do not consider part of core operating results when assessing the performance of the organization. We believe that inclusion of these non-GAAP financial measures provides consistency and comparability with past reports of financial results and provides consistency in calculations by outside analysts reviewing our results. Accordingly, we believe these non-GAAP financial measures are useful to investors in allowing for greater transparency of supplemental information used by management.

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, 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 share-based compensation expense; the amortization of acquired software and 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 earnings. As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, net earnings, 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. Investors are encouraged to review the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures that are included elsewhere in this press release.

The following discusses the reconciling items from our non-GAAP financial measures to the most comparable GAAP financial measures:

Share-based compensation expense. Our non-GAAP financial measures exclude the compensation expenses required to be recorded by GAAP for equity awards to employees and directors. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding expenses related to share-based compensation, 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 once granted.

Amortization of acquired software and intangible assets. Our non-GAAP financial measures exclude costs associated with the amortization of acquired software and intangible assets. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding amortization of acquired software and intangible assets, because these costs are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.

Restructuring charges. Our non-GAAP financial measures exclude restructuring charges, and any subsequent changes in estimates, as they relate to our corporate restructuring activities. Management and the board of directors 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 business transformation. During the fourth quarter of fiscal 2013, in response to an unsolicited, nonbinding offer to purchase the outstanding shares of the Company from a shareholder, the Company announced its willingness to consider other viable offers. The Company continues to incur unplanned consultant fees to analyze the business, review additional requests for information from other interested parties and to implement business transformation plans. Management and the board of directors 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 Corporation

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.

Conference Call Information

Compuware will today hold a conference call to discuss these results at 5:30 p.m. Eastern time (21:00 GMT). To join the conference call, interested parties in the United States should call 800-553-0349. For international access, the conference call number is +1-612-332-7516. No password is required. Additionally, investors can listen to the conference call via webcast by visiting the Compuware Corporation Investor Relations web site. A conference call presentation is also available on the site.

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 312917.

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
2013     2012
CURRENT ASSETS:
Cash and cash equivalents $ 108,897 $ 64,884
Accounts receivable, net 466,669 449,964
Deferred tax asset, net 42,859 38,669
Income taxes refundable 9,552 3,693
Prepaid expenses and other current assets   33,600   32,377
Total current assets 661,577 589,587
 
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 292,872 314,404
 
CAPITALIZED SOFTWARE AND OTHER
INTANGIBLE ASSETS, NET 109,648 119,041
 
ACCOUNTS RECEIVABLE 181,636 190,613
DEFERRED TAX ASSET, NET 29,289 36,254
GOODWILL 735,411 799,823
OTHER ASSETS   26,675   35,202
 
TOTAL ASSETS $ 2,037,108 $ 2,084,924
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Accounts payable $ 25,610 $ 13,509
Accrued expenses 113,061 98,171
Income taxes payable 8,737 14,883
Deferred revenue   408,505   413,446
Total current liabilities 555,913 540,009
 
LONG TERM DEBT - 70,000
 
DEFERRED REVENUE 304,721 311,036
 
ACCRUED EXPENSES 15,549 29,139
 
DEFERRED TAX LIABILITY, NET   64,666   84,648
Total liabilities   940,849   1,034,832
 
SHAREHOLDERS' EQUITY:
Common stock 2,178 2,121
Additional paid-in capital 812,342 692,133
Retained earnings 265,099 368,445
Accumulated other comprehensive loss   (4,213)   (12,607)
Total Compuware shareholders' equity 1,075,406 1,050,092
Non-controlling interest   20,853   -
Total shareholders' equity   1,096,259   1,050,092
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,037,108 $ 2,084,924
 
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,
       
2013 2012 2013 2012
REVENUES:
Software license fees $ 56,694 $ 64,831 $ 127,810 $ 130,499
Maintenance fees 101,600 102,341 300,628 307,487
Subscription fees 21,733 20,793 63,169 61,503
Professional services fees 46,378 46,049 141,790 140,155
Application services fees   24,109   23,852   72,735   64,981
Total revenues   250,514   257,866   706,132   704,625
 
OPERATING EXPENSES:
Cost of software license fees 5,366 5,388 16,404 15,117
Cost of maintenance fees 7,670 8,639 23,615 26,653
Cost of subscription fees 8,430 7,603 25,233 22,823
Cost of professional services 38,278 39,694 116,237 122,080
Cost of application services 28,618 20,758 86,568 57,468
Technology development and support 22,516 25,629 73,176 79,675
Sales and marketing 65,670 65,773 178,613 184,604
Administrative and general 40,325 44,733 113,646 122,819
Restructuring costs   3,737   -   9,082   -
Total operating expenses   220,610   218,217   642,574   631,239
 
INCOME FROM OPERATIONS 29,904 39,649 63,558 73,386
 
OTHER INCOME, NET   2,960   (55)   3,347   (90)
 
INCOME BEFORE INCOME TAXES 32,864 39,594 66,905 73,296
 
INCOME TAX PROVISION   8,874   14,254   17,762   26,894
 
NET INCOME 23,990 25,340 49,143 46,402
 
Less: Net income (loss) attributable to the
non-controlling interest in Covisint Corporation   (1,032)   -   (2,186)   -
 
NET INCOME ATTRIBUTABLE TO COMPUWARE CORP $ 25,022 $ 25,340 $ 51,329 $ 46,402
 
DILUTED EPS COMPUTATION
Numerator: Net income $ 25,022 $ 25,340 $ 51,329 $ 46,402
Denominator:
Weighted-average common shares outstanding 216,856 212,836 215,146 215,318
Dilutive effect of stock awards   4,705   4,036   5,530   4,153
Total shares   221,561   216,872   220,676   219,471
Diluted EPS $ 0.11 $ 0.12 $ 0.23 $ 0.21
 
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
 
    NINE MONTHS ENDED
DECEMBER 31,
2013     2012
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $ 49,143 $ 46,402
Adjustments to reconcile net income to cash provided
by operations:
Depreciation and amortization 48,294 49,358
Stock award compensation 32,526 20,663
Deferred income taxes (4,484) 6,172
Other (5,396) 552
Net change in assets and liabilities, net of effects from
currency fluctuations:
Accounts receivable (40,679) 17,140
Prepaid expenses and other assets 7,066 4,608
Accounts payable and accrued expenses 3,438 (24,868)
Deferred revenue (18,161) (91,181)
Income taxes   (12,503)   20,122
Net cash provided by operating activities   59,244   48,968
 
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of:
Property and equipment (11,518) (18,241)
Capitalized software (18,879) (24,817)
Other   (275)   (1,400)
Net cash used in investing activities   (30,672)   (44,458)
 
CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from borrowings 51,000 142,800
Payments on borrowings (69,000) (117,800)
Net proceeds from exercise of stock awards including excess tax benefits 30,285 11,965
Employee contribution to common stock purchase plans 1,812 2,046
Repurchase of common stock (8,903) (76,366)
Dividends (80,808) -
IPO proceeds 68,448 -
Other   (1,397)   -
Net cash used in financing activities   (8,563)   (37,355)
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH   (985)   (1,451)
 
NET CHANGE IN CASH AND CASH EQUIVALENTS 19,024 (34,296)
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   89,873   99,180
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 108,897 $ 64,884
 
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(Dollar Amounts In Thousands)
           
QUARTER
ENDED
DEC 31, YR - YR
2013 2012 % Chg
Total Product Software Revenue by Geography
North America $ 98,541 $ 106,211 (7.2 %)
International 81,486 81,754 (0.3 %)
 
Deferred License Fees
Current $ 16,497 $ 19,451 (15.2 %)
Long-term 8,762 10,276 (14.7 %)
 
Deferred Maintenance
Current $ 311,907 $ 310,450 0.5 %
Long-Term 273,763 269,275 1.7 %
 
Deferred Subscription
Current $ 43,401 $ 48,315 (10.2 %)
Long-Term 6,336 8,333 (24.0 %)
 
Deferred Professional Services $ 23,049 $ 22,322 3.3 %
 
Deferred Application Services $ 29,511 $ 36,060 (18.2 %)
 
 
 
Other:
Total Company Headcount 4,357 4,579 (4.8 %)
 
Total DSO (Billed) 89.5 83.9
Total DSO 167.7 157.0
 
 
 
Stock-based compensation expense
 
Cost of maintenance fees $ - $ 164 (100.0 %)
Cost of subscription fees (54 ) (47 ) 14.9 %
Cost of professional services 67 65 3.1 %
Cost of application services 3,765 396 850.8 %
Technology development and support (27 ) 468 (105.8 %)
Sales and marketing 1,152 1,328 (13.3 %)
Administrative and general 1,861 3,110 (40.2 %)
Restructuring costs   450     -   N/A
 
Total stock-based compensation expense before income taxes $ 7,214   $ 5,484   31.5 %
 
COMPUWARE CORPORATION AND SUBSIDIARIES
BUSINESS UNIT RESULTS OF OPERATIONS
(In Thousands)
               
Covisint Unallocated
Professional Application Expenses
Quarter Ended: APM Changepoint Mainframe Uniface Services Services & Eliminations Total
 
December 31, 2013
 
Software license fees $ 39,761 $ 3,019 $ 11,436 $ 2,478 - - - $ 56,694
Maintenance fees 26,094 4,139 63,616 7,751 - - - 101,600
Subscription fees 20,982 751 - - - - - 21,733
Professional services fees 7,767 3,165 41 1,061 $ 34,644 - $ (300 ) 46,378
Application services fees   -     -     -     -     -   $ 24,109     -     24,109  
Total revenues 94,604 11,074 75,093 11,290 34,644 24,109 (300 ) 250,514
 
Total operating expenses   76,127     10,704     18,196     5,499     28,457     29,322     52,305     220,610  
 
Income (loss) from operations $ 18,477   $ 370   $ 56,897   $ 5,791   $ 6,187   $ (5,213 ) $ (52,605 ) $ 29,904  
Contribution margin % 19.5 % 3.3 % 75.8 % 51.3 % 17.9 % (21.6 %) 11.9 %
 
Operating expenses include:
Stock awards compensation $ 740 $ 3 $ 190 $ 5 $ 61 $ 3,766 $ 2,449 $ 7,214
Amortization of purchased software $ 1,894 $ - $ - $ - $ - $ 94 $ - $ 1,988
Amortization of other acquired intangible assets

$

1,728 $ - $ - $ - $ - $ 77 $ - $ 1,805
 
 
December 31, 2012
 
Software license fees $ 33,938 $ 2,684 $ 24,743 $ 3,466 - - - $ 64,831
Maintenance fees 23,369 4,139 67,048 7,785 - - - 102,341
Subscription fees 20,130 663 - - - - - 20,793
Professional services fees 7,624 3,137 673 1,413 $ 33,202 - - 46,049
Application services fees   -     -     -     -     -   $ 23,852     -     23,852  
Total revenues 85,061 10,623 92,464 12,664 33,202 23,852 - 257,866
 
Operating expenses   76,773     10,951     24,727     5,254     28,264     21,664  

 

50,584     218,217  
 
Income (loss) from operations

$

8,288  

$

(328 )

$

67,737  

$

7,410  

$

4,938  

$

2,188  

$

(50,584 )

$

39,649  
Contribution margin % 9.7 % (3.1 %) 73.3 % 58.5 % 14.9 % 9.2 % 15.4 %
 
Operating expenses include:
Stock awards compensation $ 680 $ 12 $ 606 $ 6 $ 45 $ 396 $ 3,739 $ 5,484
Amortization of purchased software $ 2,272 $ - $ - $ - $ - $ 148 $ - $ 2,420
Amortization of other acquired intangible assets $ 1,758 $ - $ - $ - $ - $ 113 $ - $ 1,871
 
COMPUWARE CORPORATION AND SUBSIDIARIES
BUSINESS UNIT RESULTS OF OPERATIONS
(In Thousands)
               
Covisint Unallocated
Professional Application Expenses
Nine Months Ended: APM Changepoint Mainframe Uniface Services Services & Eliminations Total
 
December 31, 2013
 
Software license fees $ 86,028 $ 6,173 $ 29,503 $ 6,106 - - - $ 127,810
Maintenance fees 74,192 12,513 191,499 22,424 - - - 300,628
Subscription fees 61,045 2,124 - - - - - 63,169
Professional services fees 22,165 9,936 141 3,171 $ 107,643 - (1,266 ) 141,790
Application services fees   -     -     -     -     -   $ 72,735     -     72,735  
Total revenues 243,430 30,746 221,143 31,701 107,643 72,735 (1,266 ) 706,132
 
Total operating expenses   218,930     29,845     54,696     15,363     88,007     89,107     146,626     642,574  
 
Income (loss) from operations $ 24,500   $ 901   $ 166,447   $ 16,338   $ 19,636   $ (16,372 ) $ (147,892 ) $ 63,558  
Contribution margin % 10.1 % 2.9 % 75.3 % 51.5 % 18.2 % (22.5 %) 9.0 %
 
Operating expenses include:
Stock awards compensation $ 5,360 $ 9 $ 409 $ 16 $ 196 $ 14,271 $ 12,265 $ 32,526
Amortization of purchased software $ 6,467 $ - $ - $ - $ - $ 282 $ - $ 6,749
Amortization of other acquired intangible assets $ 5,128 $ - $ - $ - $ - $ 272 $ - $ 5,400
 
December 31, 2012
 
Software license fees $ 74,237 $ 5,545 $ 43,566 $ 7,151 - - - $ 130,499
Maintenance fees 66,544 12,321 205,972 22,650 - - - 307,487
Subscription fees 59,526 1,977 - - - - - 61,503
Professional services fees 23,003 9,898 1,640 3,684 $ 101,930 - - 140,155
Application services fees   -     -     -     -     -   $ 64,981     -     64,981  
Total revenues 223,310 29,741 251,178 33,485 101,930 64,981 - 704,625
 
Operating expenses   226,928     31,392     67,856     15,279     85,322     59,731   $ 144,731     631,239  
 
Income (loss) from operations $ (3,618 ) $ (1,651 ) $ 183,322   $ 18,206   $ 16,608   $ 5,250   $ (144,731 ) $ 73,386  
Contribution margin % (1.6 %) (5.6 %) 73.0 % 54.4 % 16.3 % 8.1 % 10.4 %
 
Operating expenses include:
Stock awards compensation $ 3,834 $ 42 $ 2,118 $ 42 $ 160 $ 1,105 $ 13,362 $ 20,663
Amortization of purchased software $ 6,755 $ - $ - $ - $ - $ 444 $ - $ 7,199
Amortization of other acquired intangible assets $ 5,435 $ - $ - $ - $ - $ 338 $ - $ 5,773
 
COMPUWARE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(In Thousands, Except Per Share Data)
           
 
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2013 2012 2013 2012
 
NET INCOME $ 25,022 $ 25,340 $ 51,329 $ 46,402
 
STOCK COMPENSATION (EXCL. RESTRUCTURING & IMPACT OF NON-CONTROLLING INTEREST) 6,021 5,484 27,652 20,663
AMORTIZATION OF PURCHASED SOFTWARE,(EXCL. IMPACT OF NON-CONTROLLING INTEREST) 1,970 2,420 6,729 7,199
AMORTIZATION OF ACQUIRED INTANGIBLES (EXCL. IMPACT OF NON-CONTROLLING INTEREST) 1,789 1,871 5,383 5,773
RESTRUCTURING EXPENSES (EXCL. IMPACT OF NON-CONTROLLING INTEREST) 3,681 - 9,026 -
ADVISORY FEES 7,305 146 10,438 146
               
TOTAL ADJUSTMENTS 20,766 9,921 59,228 33,781
INCOME TAX EFFECT OF ADJUSTMENTS (7,745) (3,002) (21,652) (10,533)
               
NON-GAAP NET INCOME $ 38,043 $ 32,259 $ 88,905 $ 69,650
                             
 
DILUTED EARNINGS PER SHARE - GAAP $ 0.11 $ 0.12 $ 0.23 $ 0.21
 
STOCK COMPENSATION (EXCL. RESTRUCTURING & IMPACT OF NON-CONTROLLING INTEREST) 0.03 0.03 0.13 0.09
AMORTIZATION OF PURCHASED SOFTWARE,(EXCL. IMPACT OF NON-CONTROLLING INTEREST) 0.01 0.01 0.03 0.03
AMORTIZATION OF ACQUIRED INTANGIBLES (EXCL. IMPACT OF NON-CONTROLLING INTEREST) 0.01 0.01 0.02 0.03
RESTRUCTURING EXPENSES (EXCL. IMPACT OF NON-CONTROLLING INTEREST) 0.02 - 0.04 -
ADVISORY FEES 0.03 - 0.05 -
               
TOTAL ADJUSTMENTS 0.09 0.05 0.27 0.15
INCOME TAX EFFECT OF ADJUSTMENTS (0.03) (0.01) (0.10) (0.05)
               
NON-GAAP DILUTED EPS $ 0.17 $ 0.15 $ 0.40 $ 0.32
 
DILUTED SHARES OUTSTANDING   221,561   216,872   220,676   219,471
 
COMPUWARE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(In Millions)
                     
 
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, VARIANCE % DECEMBER 31, VARIANCE %
2013 2012 2013 2012
 
OPERATING EXPENSES (GAAP) $ 220.6 $ 218.2 1.1 % $ 642.6 $ 631.2 1.8 %
 
Less:
Advisory fees 7.3 0.1 10.4 0.1
Restructuring expenses 3.7 - 9.1 -
Stock compensation related to Covisint IPO performance options 3.4 - 13.0
               
NON-GAAP OPERATING EXPENSES $ 206.2 $ 218.1 -5.5 % $ 610.1 $ 631.1 -3.3 %
 

Source:Compuware


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