EX-99.1 2 ex99_1.htm EXHIBIT 99.1 ex99_1.htm

Exhibit 99.1

NEWS RELEASE
COMPUWARE CORPORATION
 
Corporate Headquarters
One Campus Martius · Detroit, Michigan 48226
(313) 227-7300
 
For Immediate Release
 
May 20, 2010
 
Compuware Growth Drivers Gain Velocity as Company Delivers Solid Q4

 
·
FY ’10 earnings per share reach 60 cents (GAAP); Q4 earnings per share are 16 cents (GAAP)

 
·
Compared to Q4 last year, Vantage license fees up 22 percent, Covisint revenues grow 15 percent, Changepoint license fees rise seven percent

 
·
Gomez Web Performance Division delivers strong commitments of $20.9 million in Q4

 
·
Total products revenue excluding divested products increases 10 percent compared to Q4 last year; increases two percent including divested products

 
·
Professional services margins reach 14.7 percent excluding Covisint; services revenues increase sequentially

 
·
Current FY ’11 guidance assumes revenue growth, strong EPS and cash flow

DETROIT--May 20, 2010--Compuware Corporation (NASDAQ: CPWR) today announced financial results for its fourth quarter and fiscal year ended March 31, 2010.

“Compuware executed a very successful transition year in FY 2010,” said Compuware President and Chief Operating Officer Bob Paul. “Our Compuware 2.0 strategy has streamlined and completely focused the company on markets where we have best-in-class solutions and growth opportunities. This positions Compuware for continued and long-term financial success, including revenue and earnings per share growth, as well as ongoing strong cash flow.”

Fiscal Year 2010 Results

During the fiscal year ended March 31, 2010, revenues were $892.2 million, compared to $1.09 billion in the previous fiscal year. Net income was $140.8 million, compared to $139.6 million in fiscal 2009. Earnings per share were 60 cents, an increase of nine percent from 55 cents in fiscal 2009, based upon 234.6 million and 252.4 million shares outstanding, respectively.

During fiscal 2010, software license fees were $194.5 million, and maintenance and subscription fees were $456.4 million. Professional services fees for fiscal 2010 were $241.3 million.

Fourth Quarter Fiscal Year 2010 Results

 
 

 

Page 2
Compuware Growth Drivers Gain Velocity as Company Delivers Solid Q4
May 20, 2010


During the fourth quarter, revenues were $230 million, compared to $253.4 million in the fourth quarter last year. Net income was $37.4 million, compared to $48.4 million in Q4 last year. Earnings per share were 16 cents compared to 20 cents last year, based upon 228.7 million and 246.0 million shares outstanding, respectively.

During the company’s fourth quarter, software license fees were $51.8 million compared to $50.3 million (excluding divested products) and $55.5 million (as reported) in the fourth quarter last year. Maintenance and subscription fees were $117.9 million in the fourth quarter compared to $104.0 million (excluding divested products) and $111.6 million (as reported) in the fourth quarter last year. Revenue from professional services in the fourth quarter was $60.3 million, compared to $86.3 million in the same quarter last year.
 
Fourth Quarter Fiscal Year 2010 Highlights
 
During the fourth quarter, Compuware:

 
·
Announced that it earned a General Motors 2009 Supplier of the Year award for the third year in a row, topping a who’s who list of software and hardware suppliers.

 
·
Announced that Gartner Inc. placed Compuware in the "leaders" quadrant of the "Magic Quadrant for Application Performance Monitoring (APM)" report.

 
·
Introduced Gomez adVantage, the industry’s first solution for optimizing application performance management across the entire application delivery chain from a single, unified dashboard.

 
·
Announced that Microsoft would discuss how Compuware’s end-to-end application performance management solution is helping to deliver world-class performance to millions of web users worldwide to ensure quality of service.

 
·
Unveiled a Gomez platform-wide upgrade featuring industry firsts for managing web performance across multiple browsers and load testing both mobile and web applications.

 
·
Honored several websites and mobile websites with gold Gomez Web Performance and Mobile Leader Awards for outstanding website performance in 2009.

 
·
Announced the findings of an independent study examining the performance of websites experiencing peak traffic volumes and the impact on consumer behavior and business results.

 
·
Announced that Onet.pl, Poland’s largest and most popular multimedia web portal, selected Compuware’s end-to-end application performance management solution to monitor end-user experience of its critical business applications that span both the enterprise and Internet.

 
·
Introduced Compuware Changepoint for Technology Companies, which addresses the specific needs of technology companies such as software and hardware vendors.

 
 

 

Page 3
Compuware Growth Drivers Gain Velocity as Company Delivers Solid Q4
May 20, 2010


 
·
Announced the results of a benchmark study, commissioned by Compuware and conducted by the Ponemon Institute© that found six primary areas of vulnerability to privacy and data security for the financial services industry.

 
·
Launched Covisint ExchangeLink™ for Healthcare, a platform-as-a-service (PaaS) ecosystem providing a one-stop choice for healthcare organizations and caregivers to securely access applications and exchange information across the entire care delivery system.

 
·
Announced a partnership agreement with CareTech Solutions to leverage the Covisint ExchangeLink™ for Healthcare platform to enhance CareTech’s physician and patient portal capabilities.

 
·
Launched a free Gomez online Custom Benchmark tool that lets IT, web and marketing teams compare the performance of their website to competitors, peers or industry leaders.

 
·
Introduced its newest Changepoint Accelerator to help technology companies drive best practices for product and professional services delivery.

 
·
Announced that Providence Health & Services Washington Region selected Compuware’s EHR Service Delivery Solution—powered by Vantage—to improve the performance and availability of its clinical applications.

 
·
Announced a series of enhancements to Strobe 4.1 and iStrobe 4.1 that help customers save money by increasing visibility into DB2 applications.http://www.globenewswire.com/newsroom/ctr?d=182859&l=1&a=Gomez&u=http%3A%2F%2Fwww.gomez.com%2F

 
·
Previewed key findings from an independent study examining consumers’ web experiences when shopping, booking travel or conducting financial transactions online during peak traffic times.

 
·
Announced that the Detroit Medical Center (DMC) would discuss how end-to-end application performance management using Compuware’s EHR Service Delivery improved clinician adoption and productivity.

 
·
Published a new whitepaper titled: "Who Moved My App? How to Achieve Effective Application Performance in a Virtualized World," which detailed what IT organizations should look for in an APM solution to ensure the success of their virtualized environment.

 
·
Announced that Luxury Link—using on-demand software from Gomez—proactively monitors the performance of its most important web pages and transactions from the outside-in—the perspective of its global customer base.

 
·
Announced that Chairman and CEO Peter Karmanos, Jr. would be honored on at the American Hellenic Institute’s national public service awards dinner in Washington, D.C.

 
 

 

Page 4
Compuware Growth Drivers Gain Velocity as Company Delivers Solid Q4
May 20, 2010


 
·
Announced its President and COO Bob Paul was appointed to Compuware’s Board of Directors.

 
·
Announced that Vice President of Channels and Alliances Kimberly King was named a 2010 Channel Chief by Everything Channel’s CRN.

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 in and following this press release uses a non-GAAP measure for revenue. 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.

###
 
Conference Call Information

Compuware will host a conference call to discuss these results at 5:00 p.m. Eastern time (21:00 GMT) today. To join the conference call, interested parties in the United States should call 800-230-1096. For international access, the conference call number is +1-612-332-0107. 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 147899. Additionally, investors can listen to the conference call via webcast by visiting the Compuware Corporation Investor Relations web site at http://www.compuware.com.

Press Contact

Lisa Elkin, Vice President, Marketing and Communications, +1-313-227-7345

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. The completion of the definitive agreement to acquire Gomez is subject to customary government approvals and the satisfaction of other routine conditions.

 
 

 

COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)

   
AS OF MARCH 31,
 
ASSETS
           
   
2010
   
2009
 
CURRENT ASSETS:
           
Cash and cash equivalents
  $ 149,897     $ 278,112  
Accounts receivable, net
    456,504       472,011  
Deferred tax asset, net
    46,286       37,359  
Income taxes refundable
    6,160       2,578  
Prepaid expenses and other current assets
    46,434       41,350  
Assets held for sale
            27,354  
Total current assets
    705,281       858,764  
                 
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION
    341,696       353,182  
                 
CAPITALIZED SOFTWARE, LESS ACCUMULATED AMORTIZATION
    41,952       35,763  
                 
OTHER:
               
Accounts receivable
    222,344       224,681  
Deferred tax asset, net
    38,969       30,851  
Goodwill
    591,870       339,134  
Other
    71,213       32,475  
Total other assets
    924,396       627,141  
                 
TOTAL ASSETS
  $ 2,013,325     $ 1,874,850  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES:
               
Accounts payable
  $ 15,713     $ 13,796  
Accrued expenses
    110,732       87,205  
Income taxes payable
    16,314       24,646  
Deferred revenue
    469,834       409,410  
Liabilities held for sale
            26,470  
Total current liabilities
    612,593       561,527  
                 
DEFERRED REVENUE
    398,515       378,094  
                 
ACCRUED EXPENSES
    33,193       30,111  
                 
DEFERRED TAX LIABILITY, NET
    55,211       24,470  
Total liabilities
    1,099,512       994,202  
                 
SHAREHOLDERS' EQUITY:
               
Common stock
    2,250       2,418  
Additional paid-in capital
    606,484       628,955  
Retained earnings
    305,441       249,897  
Accumulated other comprehensive loss
    (362 )     (622 )
Total shareholders' equity
    913,813       880,648  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $ 2,013,325     $ 1,874,850  

 
 

 

COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)

   
THREE MONTHS ENDED
   
TWELVE MONTHS ENDED
 
   
MARCH 31,
   
MARCH 31,
 
                         
   
2010
   
2009
   
2010
   
2009
 
REVENUES:
                       
Software license fees
  $ 51,825     $ 55,428     $ 194,504     $ 219,634  
Maintenance and subscription fees
    117,899       111,622       456,343       479,480  
Professional services fees
    60,274       86,305       241,332       391,341  
Total revenues
    229,998       253,355       892,179       1,090,455  
                                 
OPERATING EXPENSES:
                               
Cost of software license fees
    3,535       6,031       15,430       24,491  
Cost of maintenance and subscription fees
    14,263       9,063       42,555       41,877  
Cost of professional services
    52,812       78,348       216,861       368,030  
Technology development and support
    25,568       18,550       91,245       86,453  
Sales and marketing
    59,574       51,686       222,447       226,408  
Administrative and general
    42,975       28,881       164,633       148,019  
Restructuring costs
    3,118       3,115       7,960       10,037  
Gain on divestiture of product lines
                    (52,351 )        
Total operating expenses
    201,845       195,674       708,780       905,315  
                                 
INCOME FROM OPERATIONS
    28,153       57,681       183,399       185,140  
                                 
OTHER INCOME (EXPENSES)
                               
Interest income
    1,093       1,765       4,970       10,776  
Settlement
    20,734       17,943       20,734       17,943  
Other
    65       (685 )     17       (1,138 )
                                 
OTHER INCOME, NET
    21,892       19,023       25,721       27,581  
                                 
INCOME BEFORE INCOME TAXES
    50,045       76,704       209,120       212,721  
                                 
INCOME TAX PROVISION
    12,684       28,323       68,314       73,074  
                                 
NET INCOME
  $ 37,361     $ 48,381     $ 140,806     $ 139,647  
                                 
DILUTED EPS COMPUTATION
                               
Numerator:  Net income
  $ 37,361     $ 48,381     $ 140,806     $ 139,647  
Denominator:
                               
Weighted-average common shares outstanding
    226,306       245,006       232,634       250,916  
Dilutive effect of stock options
    2,428       966       1,931       1,486  
Total shares
    228,734       245,972       234,565       252,402  
Diluted EPS
  $ 0.16     $ 0.20     $ 0.60     $ 0.55  

 
 

 

COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

   
TWELVE MONTHS ENDED
 
   
MARCH 31,
 
   
2010
   
2009
 
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
           
Net income
  $ 140,806     $ 139,647  
Adjustments to reconcile net income to cash provided by operations:
               
Gain on divestiture of product lines
    (52,351 )        
Depreciation and amortization
    44,997       53,129  
Asset impairment
    1,567       662  
Acquisition tax benefits
    880       5,059  
Stock award compensation
    17,444       15,637  
Deferred income taxes
    12,141       4,986  
Other
    362       413  
Net change in assets and liabilities, net of effects from acquisition, divestiture and currency fluctuations:
               
Accounts receivable
    64,487       17,853  
Prepaid expenses and other current assets
    (4,470 )     3,555  
Other assets
    (2,666 )     (3,641 )
Accounts payable and accrued expenses
    (1,040 )     (29,623 )
Deferred revenue
    17,455       4,015  
Income taxes
    (13,300 )     20,316  
Net cash provided by operating activities
    226,312       232,008  
                 
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
               
Purchase of:
               
Business, net of cash acquired
    (284,393 )        
Property and equipment
    (9,576 )     (17,943 )
Capitalized software
    (9,778 )     (15,072 )
Net proceeds from divestiture of product lines
    64,992          
Investment proceeds
            70,212  
Net cash provided by (used in) investing activities
    (238,755 )     37,197  
                 
CASH FLOWS USED IN FINANCING ACTIVITIES:
               
Proceeds from borrowings on credit facility
    51,000          
Payments on credit facility
    (51,000 )        
Net proceeds from exercise of stock options including excess tax benefits
    5,475       11,237  
Employee contribution to common stock purchase plans
    2,215       2,986  
Repurchase of common stock
    (132,941 )     (206,042 )
Net cash used in financing activities
    (125,251 )     (191,819 )
                 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
    9,479       (15,217 )
                 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    (128,215 )     62,169  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    278,112       215,943  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 149,897     $ 278,112  

 
 

 

OPERATIONAL HIGHLIGHTS
(dollar amounts in thousands)

   
QUARTER ENDED
MAR 31,
   
YR - YR
   
QUARTER ENDED
DEC 31,
   
QTR - QTR
 
 
 
2010
   
2009
   
% Chg
   
2009
   
% Chg
 
Products:
                             
Software License Fees excluding Divested Products:
                             
Distributed License Fees:
                             
Vantage
  $ 16,988     $ 13,937       21.9 %   $ 20,376       (16.6 %)
Changepoint
    2,695       2,528       6.6 %     2,991       (9.9 %)
Uniface
    2,713       3,287       (17.5 %)     2,291       18.4 %
Other
    590       537       9.9 %     408       44.6 %
Distributed License Fees excluding  Divested Products
    22,986       20,289       13.3 %     26,066       (11.8 %)
Mainframe License Fees
    28,839       30,066       (4.1 %)     25,957       11.1 %
Total Software License Fees excluding Divested Products
    51,825       50,355       2.9 %     52,023       (0.4 %)
                                         
Maintenance and Subscription Fees excluding Divested Products:
                                       
Distributed Products
    26,819       24,236       10.7 %     27,993       (4.2 %)
Mainframe Products
    79,993       79,770       0.3 %     83,825       (4.6 %)
Subscription - Gomez
    11,087       -       N/A       5,765       92.3 %
Total Maintenance and Subscription Fees excluding Divested Products
    117,899       104,006       13.4 %     117,583       0.3 %
                                         
Total Products Revenue excluding Divested Products:
                                       
Distributed Products
    49,805       44,525       11.9 %     54,059       (7.9 %)
Mainframe Products
    108,832       109,836       (0.9 %)     109,782       (0.9 %)
Subscription - Gomez
    11,087       -       N/A       5,765       92.3 %
Total Products Revenue excluding Divested Products
    169,724       154,361       10.0 %     169,606       0.1 %
                                         
Divested Products:
                                       
License Fees
    -       5,073       (100.0 %)     -          
Maintenance Fees
    -       7,616       (100.0 %)     -          
Total Products Revenue Divested Products
    -       12,689       (100.0 %)     -          
                                         
Total Product Revenue
  $ 169,724     $ 167,050       1.6 %   $ 169,606       0.1 %
                                         
Total Product Revenue by Geography
                                       
North America
  $ 91,417     $ 87,228       4.8 %   $ 88,569       3.2 %
International
  $ 78,307     $ 79,822       (1.9 %)   $ 81,037       (3.4 %)
                                         
Total Cost of Product Revenue
  $ 102,940     $ 85,330       20.6 %   $ 96,571       6.6 %
                                         
Deferred License Fees
                                       
Current
  $ 50,514     $ 59,592       (15.2 %)   $ 53,404       (5.4 %)
Long-term
  $ 43,350     $ 52,513       (17.4 %)   $ 51,959       (16.6 %)
                                         
Deferred during quarter
  $ 7,729     $ 27,288       (71.7 %)   $ 25,056       (69.2 %)
Recognized during quarter
  $ 18,342     $ 20,351       (9.9 %)   $ 19,227       (4.6 %)
                                         
Professional Services:
                                       
Professional Services Fees
  $ 49,858     $ 77,260       (35.5 %)   $ 49,430       0.9 %
Application Services Fees
    10,416       9,045       15.2 %     10,828       (3.8 %)
Total Professional Services Fees
  $ 60,274     $ 86,305       (30.2 %)   $ 60,258       0.0 %
                                         
Professional Services Contribution Margin
    14.7 %     9.5 %             12.1 %        
Application Services Contribution Margin
    1.2 %     6.9 %             8.1 %        
Total Professional Services Fees Contribution Margin
    12.4 %     9.2 %             11.4 %        
                                         
Billable Headcount
    1,523       2,116       (28.0 %)     1,564       (2.6 %)
                                         
Other:
                                       
Total Company Headcount
    4,336       5,006       (13.4 %)     4,410       (1.7 %)
                                         
Total DSO (Billed)
    75.2       83.4               105.9          
Total DSO
    178.6       167.7               199.4          

 
 

 

COMPUWARE CORPORATION AND SUBSIDIARIES
PRODUCT COMMITMENTS
(In Thousands)

   
QUARTER ENDED
   
TWELVE MONTHS ENDED
 
   
MARCH 31,
   
MARCH 31,
   
MARCH 31,
   
MARCH 31,
 
   
2010
   
2009
   
2010
   
2009
 
                         
License fees
  $ 51,825     $ 55,428     $ 194,504     $ 219,634  
                                 
License fees - divested products *
            (5,073 )     (8,724 )     (26,198 )
                                 
License fees excluding divested products
    51,825       50,355       185,780       193,436  
                                 
Change in deferred license fees excluding divested products *
    (10,613 )     7,405       (17,929 )     633  
                                 
License contracts entered into during period excluding divested products
    41,212       57,760       167,851       194,069  
                                 
                                 
Maintenance and subscription fees
    117,899       111,622       456,343       479,480  
                                 
Maintenance fees - divested products *
            (7,616 )     (4,839 )     (34,044 )
                                 
Maintenance and subscription fees excluding divested products
    117,899       104,006       451,504       445,436  
                                 
Change in deferred maintenance and subscription fees excluding divested products *
    28,324       30,803       19,351       5,022  
                                 
Maintenance and subscription contracts & renewals entered into during period excluding divested products
                               
      146,223       134,809       470,855       450,458  
                                 
Total products commitments during period excluding divested products
  $ 187,435     $ 192,569     $ 638,706     $ 644,527  

* Compuware divested its Quality and DevPartner product lines during the first quarter of fiscal 2010.  For comparison purposes, the Products Commitments schedule excludes Quality and DevPartner license revenue, maintenance revenue and product commitments from the quarter ended March 31, 2009 period and the twelve months ended March 31, 2010 and 2009 periods.

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 during the reported periods.