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Compuware Corporation Posts Year-Over-Year Increases in Revenue, Earnings and Operating Cash Flow
DETROIT
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"We achieved substantial operational improvements in the first phase of
the Compuware 2.0 initiative in Q1," said Compuware President and Chief
Operating Officer
First Quarter Fiscal 2008 Results
Compuware reports first quarter revenues of
During the company's first quarter, software license fees were
The company will host a conference call at
First Quarter Fiscal Year 2008 Highlights
During the first quarter, Compuware:
-- received a General Motors 2007 Technology Supplier of the Year award for its significant contributions to GM's global product and performance achievements.
-- Changepoint was positioned by Gartner Inc. in the "leaders" quadrant in the "Magic Quadrant for IT Project and Portfolio Management."
-- announced that Build-A-Bear Workshop(R) is using Compuware Vantage to ensure the successful and effective operation of the company's websites.
-- released the results of a study commissioned by Compuware and conducted by Forrester Consulting that found while 81 percent of the organizations have adopted formal service level agreements, they only meet these agreements 74 percent of the time on average.
-- announced that two of the company's thought leaders-
-- released version 6.4 of its powerful DB2 administration workbench, Compuware DBA-Xpert for DB2.
-- held the North American Uniface User Forum-focused on best practices and knowledge sharing for enterprise application development-at its world headquarters.
-- announced the availability of an on-demand webcast featuring Gartner Inc., titled: Effective PPM-Realistic Steps to Success.
Conference Call Information
Compuware will host a conference call today to discuss these results at
A conference call replay will also be available.
Compuware Corporation
Compuware Corporation makes IT rock around the world, helping CIOs optimize IT performance to achieve business goals. Compuware solutions accelerate the development, improve the quality and enhance the performance of critical business systems while enabling CIOs to align and govern the entire IT portfolio, increasing efficiency, cost control and employee productivity throughout the IT organization. Founded in 1973, Compuware serves the world's leading IT organizations, including more than 90 percent of the Fortune 100 companies. Learn more about Compuware at http://www.compuware.com .
Press Contact
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 JUNE 30,
ASSETS
2008 2007
CURRENT ASSETS:
Cash and cash equivalents $216,457 $339,482
Investments 56,423 78,052
Accounts receivable, net 479,861 367,443
Deferred tax asset, net 45,806 37,536
Income taxes refundable, net 4,189 28,294
Prepaid expenses and other current assets 37,162 34,132
Total current assets 839,898 884,939
INVESTMENTS 57,150
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 360,476 379,743
CAPITALIZED SOFTWARE, LESS ACCUMULATED
AMORTIZATION 58,769 67,250
OTHER:
Accounts receivable 266,509 175,326
Deferred tax asset, net 35,520 16,817
Goodwill 356,026 353,405
Other 33,808 36,140
Total other assets 691,863 581,688
TOTAL ASSETS $1,951,006 $1,970,770
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $17,551 $16,607
Accrued expenses 108,428 111,146
Income taxes payable, net 15,262
Deferred revenue 444,705 372,951
Total current liabilities 585,946 500,704
DEFERRED REVENUE 406,528 296,278
ACCRUED EXPENSES 18,526 18,987
DEFERRED TAX LIABILITY, NET 30,090 4,076
Total liabilities 1,041,090 820,045
SHAREHOLDERS' EQUITY:
Common stock 2,560 3,046
Additional paid-in capital 634,885 727,208
Retained earnings 252,430 405,698
Accumulated other comprehensive income 20,041 14,773
Total shareholders' equity 909,916 1,150,725
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,951,006 $1,970,770
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
THREE MONTHS ENDED
JUNE 30,
2008 2007
REVENUES:
Software license fees $61,442 $47,271
Maintenance fees 126,527 113,741
Professional services fees 110,619 118,377
Total revenues 298,588 279,389
OPERATING EXPENSES:
Cost of software license fees 6,090 10,365
Cost of maintenance fees 11,994 11,453
Cost of professional services 103,822 104,077
Technology development and support 22,570 29,329
Sales and marketing 61,327 64,731
Administrative and general 41,144 45,380
Restructuring costs 682 16,020
Total operating expenses 247,629 281,355
INCOME (LOSS) FROM OPERATIONS 50,959 (1,966)
OTHER INCOME (EXPENSES)
Interest income 3,409 5,964
Other (188) (305)
OTHER INCOME, NET 3,221 5,659
INCOME BEFORE INCOME TAXES 54,180 3,693
INCOME TAX PROVISION 19,448 3,504
NET INCOME $34,732 $189
DILUTED EPS COMPUTATION
Numerator: Net income $34,732 $189
Denominator:
Weighted-average common shares outstanding 259,694 301,967
Dilutive effect of stock options 1,399 3,627
Total shares 261,093 305,594
Diluted EPS $0.13 $0.00
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
THREE MONTHS ENDED
JUNE 30,
2008 2007
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Net income $34,732 $189
Adjustments to reconcile net income
to cash provided by operations:
Depreciation and amortization 13,463 13,817
Property and equipment impairment 662 2,998
Capitalized software impairment 3,873
Acquisition tax benefits 1,311 1,311
Stock option compensation 2,326 1,573
Deferred income taxes 1,751 (2,519)
Other 295 494
Net change in assets and liabilities,
net of effects from acquisitions and
currency fluctuations:
Accounts receivable 34,044 56,869
Prepaid expenses and other current
assets 12,212 8,648
Other assets 1,851 1,223
Accounts payable and accrued
expenses (42,527) (30,242)
Deferred revenue (22,649) (19,532)
Income taxes 10,365 (896)
Net cash provided by operating
activities 47,836 37,806
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchase of:
Property and equipment (2,384) (4,346)
Capitalized software (2,788) (4,173)
Investment proceeds 13,856 42,885
Net cash provided by investing
activities 8,684 34,366
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
Net proceeds from exercise of stock options
including excess tax benefits 1,397 58,364
Contribution to stock purchase plans 934 1,592
Repurchase of common stock (58,891) (55,218)
Net cash provided by (used in)
financing activities (56,560) 4,738
EFFECT OF EXCHANGE RATE CHANGES ON CASH 554 1,891
NET INCREASE IN CASH AND CASH EQUIVALENTS 514 78,801
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 215,943 260,681
CASH AND CASH EQUIVALENTS AT END OF PERIOD $216,457 $339,482
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(dollar amounts in thousands)
QUARTER QUARTER
ENDED ENDED
JUNE 30, JUNE 30, YR-YR MARCH 31 QTR- QTR
2008 2007 % Change 2008 % Change
License Fees:
Distributed Product License
Fees
Vantage $13,724 $10,537 30.2% $23,510 (41.6%)
Changepoint 3,104 2,363 31.4% 3,296 (5.8%)
Quality 6,177 6,473 (4.6%) 8,218 (24.8%)
Uniface 2,814 3,592 (21.7%) 4,464 (37.0%)
DevPartner 1,689 2,173 (22.3%) 2,385 (29.2%)
Total Distributed Product
License Fees 27,508 25,138 9.4% 41,873 (34.3%)
Mainframe Product License
Fees 33,934 22,133 53.3% 58,921 (42.4%)
Total License Fees 61,442 47,271 30.0% 100,794 (39.0%)
Maintenance Fees 126,527 113,741 11.2% 126,311 0.2%
Total Products Revenue $187,969 $161,012 16.7% $227,105 (17.2%)
Total Mainframe Products
Revenue $122,458 $103,237 18.6% $147,247 (16.8%)
Total Distributed Products
Revenue $65,511 $57,775 13.4% $79,858 (18.0%)
Total Products Revenue by
Geography
North America $99,328 $85,416 16.3% $113,485 (12.5%)
International $88,641 $75,596 17.3% $113,620 (22.0%)
Product Releases
Mainframe 8 4 100.0% 7 14.3%
Distributed 4 9 (55.6%) 2 100.0%
Total Costs of Software
Products $101,981 $115,878 (12.0%) $115,223 (11.5%)
Deferred license fees
Current $63,418 $70,081 (9.5%) $68,885 (7.9%)
Long-term $59,267 $40,739 45.5% $60,237 (1.6%)
Deferred during quarter $16,727 $17,465 (4.2%) $38,546 (56.6%)
Recognized during quarter $23,914 $24,035 (0.5%) $28,760 (16.8%)
Professional Services
Professional Services
Revenue $110,619 $118,377 (6.6%) $111,811 (1.1%)
Contribution Margin 6.1% 12.1% 6.8%
Billable Headcount 2,980 3,384 (11.9%) 3,171 (6.0%)
Total Company Headcount 6,099 7,091 (14.0%) 6,344 (3.9%)
Total DSO 144.6 118.4 142.1
Total DSO (Billed) 67.0 48.9 76.9
COMPUWARE CORPORATION AND SUBSIDIARIES
PRODUCT COMMITMENTS
(In Thousands)
QUARTER ENDED
JUNE 30, JUNE 30,
2008 2007
License revenue $61,442 $47,271
Change in deferred license (7,187) (6,570)
License contracts entered into during period 54,255 40,701
Maintenance revenue 126,527 113,741
Change in deferred maintenance (13,337) (44,267)
Maintenance contracts & renewals entered into
during period 113,190 69,474
Total products commitments during period $167,445 $110,175
As Compuware continues to emphasize solution selling, deals are becoming
more complex, increasing the likelihood that software transactions will be
recognized ratably over the maintenance term. Therefore to understand the
health of Compuware's software business, we believe it is important to
also consider the amount of product commitments (a non-GAAP disclosure)
during the reported periods. Compuware now evaluates company performance
for purposes of executive bonuses based in part on product commitments for
the fiscal year.
Prior periods were adjusted to conform with current period presentation.
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