8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  October 23, 2014

Compuware Corporation

(Exact Name of Registrant as Specified in its Charter)

Commission File Number: 000-20900

Michigan	38-2007430
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Campus Martius, Detroit, Michigan	48226-5099
(Address of Principal Executive Offices)	(Zip Code)

(Registrant’s telephone number, including area code): (313) 227-7300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On October 23, 2014, Compuware Corporation (“Compuware”) issued a press release announcing financial results for its second quarter ended September 30, 2014 and certain other information. A copy of the press release is furnished with the Report as Exhibit 99.1.

Forward-Looking Statements

Certain statements in this Current Report on Form 8-K, including but not limited to statements set forth in the attached press release, may constitute forward-looking statements.  These forward looking statements involve a number of known and unknown risks, uncertainties and other factors that may cause such forward-looking statements not to be realized and that could cause actual results to differ materially from Compuware’s expectations in these statements. For more information about other risks that could affect the forward-looking statements herein, please see Compuware’s most recent quarterly report on Form 10-Q, annual report on Form 10-K and other filings made with the Securities and Exchange Commission. Compuware expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any changes in expectations, or any change in events or circumstances on which those statements are based, unless otherwise required by law.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

99.1 Press Release, dated October 23, 2014.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	COMPUWARE CORPORATION
Date: October 27, 2012	By:	/s/ Joseph R. Angileri
	Joseph R. Angileri
	Chief Financial Officer

INDEX OF EXHIBITS

Exhibit No.	Description
99.1	Press Release, dated October 23, 2014.

EX-99.1

Exhibit 99.1

NEWS RELEASE
COMPUWARE CORPORATION
Corporate Headquarters
One Campus Martius · Detroit, Michigan 48226
(313) 227-7300
For Immediate Release
October 23, 2014

Compuware Corporation Reports Second Quarter,

Fiscal Year 2015 Results

· Non-GAAP earnings per share were $0.09; GAAP EPS of $0.04

· Total revenues were approximately $170.9M

· Total APM (Dynatrace) revenue was approximately $83.2M; contribution margin of 11.9 percent

· Total Mainframe revenue was approximately $66.0M; contribution margin of 75.9 percent

DETROIT, October 23, 2014 -- Compuware Corporation (Nasdaq: CPWR), the technology performance company, today announced financial results for its second quarter, fiscal year 2015 ended September 30, 2014.

Non-GAAP net income for the quarter was $19.9 million, or $0.09 per diluted share, compared to $21.2 million, or $0.10 per diluted share in the year-ago period. GAAP net income for the second quarter was $9.2 million, or $0.04 per diluted share, compared to $9.1 million, or $0.04 per diluted share in the year-ago period. Prior-year amounts relate to our continuing operations.

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

“The second quarter was a solid period for Compuware, as we ended up ahead of projected profitability and in line with revenue expectations. We have established a market-leadership position in application performance management and continue to see great progress in stabilizing our mainframe business,” said Compuware CEO Bob Paul. “We remain extremely enthusiastic about the opportunity in front of us. The completion of the Company’s transformation into a lean and focused entity able to compete and win in today’s tech market is almost complete.  Also, our recent announcement regarding the finalization of the Covisint spin marks the accomplishment of another key milestone along this path, all of which will significantly benefit customers, employees and shareholders alike.”

With regard to the sale of the Company to Thoma Bravo, Compuware plans to mail the definitive proxy statement to shareholders on or about November 4, 2014 and, subject to regulatory approval, expects the shareholder meeting seeking approval for the transaction to be held on or about December 8, 2014.

Second Quarter Fiscal Year 2015 Dynatrace Segment Results and Highlights

· Total revenue was approximately $83.2M, up 8.9 percent y/y.

· Software license fees were approximately $25.9M, up 3.4 percent y/y.

· Maintenance fees were approximately $29.4M, up 19.5 percent y/y.

· Subscription fees were approximately $19.9M, flat y/y.

· Services fees were approximately $7.9M, up 16.6 percent y/y.

· Continued 90 percent+ overall maintenance renewal rate.

· Services on growth track due to transition from “implementation services” to “expert services.”

Compuware Corporation Reports Second Quarter, Fiscal Year 2015 ResultsOctober 23, 2014 Page 2

· Customer satisfaction at industry best 89.9% “Net Promoter Score.”

· APMaaS bookings up 40 percent y/y with continued strength forecasted.

Second Quarter Fiscal Year 2015 Mainframe Segment Results and Highlights

· Total revenue was approximately $66.0M, down 8.1 percent y/y.

· Software license fees were approximately $6.3M, down 16.6 percent y/y.

· Maintenance fees were approximately $59.6M, down 7.2 percent y/y.

· Contribution margin was approximately 75.9 percent compared to 76.6 percent last year.

· Exceeded plan for software license bookings and revenue.

Second Quarter Fiscal Year 2015 Company Results

During the company’s second quarter:

· Total revenues were approximately $170.9M, down 1.0 percent y/y.

· Software license fees were approximately $32.2M, down 1.2 percent y/y.

· Maintenance fees were approximately $89.0 million, flat y/y.

· Subscription fees were approximately $19.9 million, flat y/y.

· Application services fees were approximately $21.7 million, down 11.4 percent y/y.

Second Quarter Fiscal Year 2015 Company Highlights

During the second quarter, Compuware:

· Entered into a definitive agreement to be acquired by leading private equity investment firm Thoma Bravo, LLC, in a transaction valued at approximately $2.5 billion.  The transaction is subject to approval from Compuware's shareholders, regulatory approvals, and other customary closing conditions. The closing of the transaction is also subject to the completion of a distribution of Covisint.

· Appointed Christopher O'Malley President of Mainframe Operations effective July 21, 2014. In this role, O'Malley oversees all facets of the business unit’s operations, including sales and marketing, product development and management, and customer support.

· Announced plans to operationally separate its mainframe and APM businesses and that the resulting mainframe-dedicated company will carry the Compuware name.

· Announced that its market-leading APM business will operate under the name Dynatrace.

· Announced that the annual 2014 Compuware PERFORM Global User Conference would be held October 7 - 9 in Orlando, Florida, where the Dynatrace team would share real-world examples of how companies use APM to optimize users’ experiences online, drive profits and build business success.

· Announced that Gartner, Inc., named Compuware the worldwide APM market share leader for the second year in a row.

· Announced that SD Times Magazine has named Compuware APM (Dynatrace) to its 2014 SD Times 100 list as a leader and innovator in the “Mobile Testing, Quality Assurance, and Security” category.

Compuware Corporation Reports Second Quarter, Fiscal Year 2015 ResultsOctober 23, 2014 Page 3

· Revealed that Covisint Chief Security Officer Dave Miller would deliver a presentation on cloud computing titled “The Four Immutable Laws of Cloud Computing,” at the Gartner Catalyst Conference.

· Stated that Covisint simplified the Physician Quality Reporting System (PQRS) for physicians and healthcare systems with its 2014 PQRS Registry.

· In conjunction with leading IT industry analyst firm Enterprise Management Associates, teamed up to host “A Pragmatic Approach to DevOps and the Mainframe” live webcast.

· Announced that Mainframe APM Subject Matter Expert Spencer Hallman and Mainframe Product Manager Tyler Allman would co-present the session, “Break Down IT Walls for Faster, More Seamless Mainframe Application Problem Resolution” at the SHARE conference in Pittsburgh.

· Announced that Dynatrace teamed up with Rosetta, one of the largest customer engagement and e-commerce agencies in the U.S., for a live webcast to provide tips on how retailers can avoid the most common eCommerce mistakes during the holiday shopping season and deliver superior online experiences to their customers.

· Announced that Perficient, a leading information technology and management consulting firm serving global 2000 and other large enterprise customers throughout North America, joined Covisint's Certified Service Partner program.

· Featured on the cover of Enterprise Executive with an article titled, "Compuware’s Chris O’Malley Shares His Vision of “Mainframe’s Next 50 Years.”

· Released the video, “Empower Your Next-Gen Mainframe Developers,” to help IT organizations overcome the significant challenges of improving the efficiency and productivity of the next generation of development and operations teams.

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 provided non-GAAP net income and non-GAAP diluted earnings per share. These financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. These non-GAAP financial measures exclude stock compensation expense; amortization of purchased software and acquired 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. The accompanying tables provides a reconciliation of each of these non-GAAP measures to its most comparable GAAP financial measure.

We believe that inclusion of these non-GAAP financial measures provides better comparability with our historical financial results and with the results of many of our competitors. In addition, we believe these non-GAAP financial measures are useful to investors because they allow investors to review supplemental information used internally by management to evaluate our financial results. These non-GAAP measures also represent the means by which we communicate our earnings guidance to investors.

Compuware Corporation Reports Second Quarter, Fiscal Year 2015 ResultsOctober 23, 2014 Page 4

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, are not audited, 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 stock compensation expense; amortization of purchased software and acquired 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 income. As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, net income or loss, 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. We have procedures in place to ensure that these measures are calculated using the appropriate GAAP components in their entirety and to ensure that our performance is properly reflected to facilitate consistent period-to-period comparisons. Management reviews the non-GAAP adjustments on a net-of-tax basis when evaluating our performance. Therefore, we exclude the tax impact of these charges when presenting non-GAAP financial measures.

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

Stock compensation expense. Our non-GAAP financial measures exclude the compensation charges required to be recorded by GAAP for equity awards to employees and directors.  Although this is a normal recurring expense for us, we believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures excluding this expense 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 in the current period.

Amortization of purchased software and acquired intangibles.  Our non-GAAP financial measures exclude costs associated with the amortization of purchased software and acquired intangible assets.  Although this is a normal recurring expense for us, we believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures excluding this expense because these costs are fixed at the time of acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management in the current period.

Restructuring charges. Our non-GAAP financial measures exclude restructuring charges, and any subsequent changes in estimates as they relate to our ongoing corporate restructuring activities. We 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 our business transformation initiative. In response to certain shareholder actions dating back to fiscal 2013, we have taken various actions to drive shareholder value.  These actions have resulted in significant consultant fees to investigate business alternatives and implement business transformation plans. We 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.

Compuware Corporation Reports Second Quarter, Fiscal Year 2015 ResultsOctober 23, 2014 Page 5

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 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.

###

Press Contact

Lisa Elkin, Senior Vice President, Marketing, Communications and Investor Relations, +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.

Compuware Corporation Reports Second Quarter, Fiscal Year 2015 ResultsOctober 23, 2014 Page 6

COMPUWARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

	AS OF SEPTEMBER 30,
ASSETS
	2014			2013
CURRENT ASSETS:
Cash and cash equivalents	$	255,270		$	50,372
Accounts receivable, net		313,944			381,892
Offering proceeds receivable		-			68,448
Deferred tax asset, net		37,192			42,837
Income taxes refundable		4,313			4,628
Prepaid expenses and other current assets		30,892			33,365
Total current assets		641,611			581,542
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION		279,748			295,264
CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET		95,805			111,162
ACCOUNTS RECEIVABLE		161,130			191,208
DEFERRED TAX ASSET, NET		16,011			30,351
GOODWILL		632,106			732,265
OTHER ASSETS		23,460			28,688
TOTAL ASSETS	$	1,849,871		$	1,970,480
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	18,947		$	16,894
Accrued expenses		79,451			92,969
Income taxes payable		14,998			18,266
Deferred revenue		347,092			387,878
Total current liabilities		460,488			516,007
LONG TERM DEBT		-			14,000
DEFERRED REVENUE		250,646			285,119
ACCRUED EXPENSES		20,079			18,274
DEFERRED TAX LIABILITY, NET		36,378			52,769
Total liabilities		767,591			886,169
SHAREHOLDERS' EQUITY:
Common stock		2,208			2,157
Additional paid-in capital		847,172			799,647
Retained earnings		237,874			268,937
Accumulated other comprehensive loss		(21,635	)		(7,539	)
Total Compuware shareholders' equity		1,065,619			1,063,202
Non-controlling interest		16,661			21,109
Total shareholders' equity		1,082,280			1,084,311
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,849,871		$	1,970,480

Compuware Corporation Reports Second Quarter, Fiscal Year 2015 ResultsOctober 23, 2014 Page 7

COMPUWARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Data)

	THREE MONTHS ENDED						SIX MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2014			2013			2014			2013
REVENUES:
Software license fees	$	32,189		$	32,591		$	58,876		$	64,334
Maintenance fees		89,023			88,819			177,483			175,981
Subscription fees		19,949			19,931			39,311			40,063
Services fees		7,997			6,827			16,411			14,498
Application services fees		21,735			24,525			43,322			48,626
Total revenues		170,893			172,693			335,403			343,502
OPERATING EXPENSES:
Cost of software license fees		4,300			5,227			9,295			10,156
Cost of maintenance fees		5,942			6,846			12,864			14,185
Cost of subscription fees		8,506			8,450			16,708			16,290
Cost of services		6,901			5,892			13,633			12,534
Cost of application services		27,231			33,689			58,133			57,950
Technology development and support		19,615			21,379			39,567			45,070
Sales and marketing		50,976			47,356			104,079			99,623
Administrative and general		30,580			32,838			64,593			68,886
Restructuring costs		2,255			219			5,230			5,022
Total operating expenses		156,306			161,896			324,102			329,716
INCOME FROM CONTINUING OPERATIONS		14,587			10,797			11,301			13,786
OTHER INCOME (EXPENSE), NET		(935	)		185			(712	)		387
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION		13,652			10,982			10,589			14,173
INCOME TAX PROVISION		5,275			3,008			3,568			1,937
NET INCOME FROM CONTINUING OPERATIONS INCLUDING NON-CONTROLLING INTEREST		8,377			7,974			7,021			12,236
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		-			7,212			-			12,917
NET INCOME INCLUDING NON-CONTROLLING INTEREST		8,377			15,186			7,021			25,153
Less: Net loss attributable to the non-controlling interest in Covisint Corporation		(774	)		(1,154	)		(2,182	)		(1,154	)
NET INCOME ATTRIBUTABLE TO COMPUWARE CORP	$	9,151		$	16,340		$	9,203		$	26,307
Amounts attributable to Compuware common shareholders
Income from continuing operations		8,377			7,974			7,021			12,236
Loss attributable to non-controlling interest		(774	)		(1,154	)		(2,182	)		(1,154	)
Income from continuing operations, net of tax		9,151			9,128			9,203			13,390
Income from discontinued operations, net of tax		-			7,212			-			12,917
Net income attributable to Compuware common shareholders	$	9,151		$	16,340		$	9,203		$	26,307
Diluted earnings per share:
Continuing operations		0.04			0.04			0.04			0.06
Discontinued operations		-			0.03			-			0.06
Diluted earnings per share	$	0.04		$	0.07		$	0.04		$	0.12
Weighted-average common shares outstanding		220,285			214,926			219,978			214,287
Dilutive effect of stock awards		3,385			5,503			3,511			5,720
Total shares		223,670			220,429			223,489			220,007

Compuware Corporation Reports Second Quarter, Fiscal Year 2015 ResultsOctober 23, 2014 Page 8

COMPUWARE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

	SIX MONTHS ENDED
	SEPTEMBER 30,
	2014			2013
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income including non-controlling interest	$	7,021		$	25,153
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization		29,017			32,501
Stock award compensation		15,277			25,312
Deferred income taxes		(861	)		(16,450	)
Other		1,902			42
Net change in assets and liabilities, net of effects from currency fluctuations:
Accounts receivable		63,202			33,366
Prepaid expenses and other assets		(2,483	)		5,640
Accounts payable and accrued expenses		(9,153	)		(24,180	)
Deferred revenue		(72,879	)		(58,934	)
Income taxes		(19,273	)		4,634
Net cash provided by operating activities		11,770			27,084
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of:
Property and equipment		(5,923	)		(5,953	)
Capitalized software		(14,648	)		(11,649	)
Divestiture of business units		(8,046	)		-
Other		-			(275	)
Net cash used in investing activities		(28,617	)		(17,877	)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from borrowings		-			37,500
Payments on borrowings		-			(41,500	)
Net proceeds from exercise of stock awards including excess tax benefits		9,203			15,333
Employee contribution to common stock purchase plans		617			1,235
Repurchase of common stock		(6,960	)		(6,415	)
Dividends		(27,474	)		(53,629	)
Other		-			(608	)
Net cash used in financing activities		(24,614	)		(48,084	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(3,328	)		(624	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(44,789	)		(39,501	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		300,059			89,873
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	255,270		$	50,372

Compuware Corporation Reports Second Quarter, Fiscal Year 2015 ResultsOctober 23, 2014 Page 9

COMPUWARE CORPORATION AND SUBSIDIARIES

OPERATIONAL HIGHLIGHTS

(Dollar Amounts In Thousands)

	QUARTER
	ENDED
	SEP 30,				YR - YR
	2014		2013		% Chg
Total Product Software Revenue by Geography
North America	$	81,835	$	85,171		(3.9	%)
International		59,326		56,170		5.6	%
Deferred License Fees
Current	$	14,569	$	15,263		(4.5	%)
Long-term		7,187		9,426		(23.8	%)
Deferred Maintenance
Current	$	254,587	$	294,910		(13.7	%)
Long-Term		225,372		251,137		(10.3	%)
Deferred Subscription
Current	$	42,003	$	41,358		1.6	%
Long-Term		10,112		7,042		43.6	%
Deferred Services	$	21,867	$	22,358		(2.2	%)
Deferred Application Services	$	22,041	$	31,503		(30.0	%)
Other:
Total Company Headcount		2,975		4,338		(31.4	%)
Total DSO (Billed)		67.9		66.0
Total DSO		165.3		150.7
Stock-based compensation expense
Cost of license fees	$	-	$	-		N/	A
Cost of maintenance fees		78		170		(54.1	%)
Cost of subscription fees		4		1		300.0	%
Cost of services		22		21		4.8	%
Cost of application services		1,255		10,020		(87.5	%)
Technology development and support		256		527		(51.4	%)
Sales and marketing		1,888		803		135.1	%
Administrative and general		2,974		3,253		(8.6	%)
Restructuring costs		-		-		N/	A
Discontinued operations		-		80		(100.0	%)
Total stock-based compensation expense before income taxes	$	6,477	$	14,875		(56.5	%)

Compuware Corporation Reports Second Quarter, Fiscal Year 2015 ResultsOctober 23, 2014 Page 10

COMPUWARE CORPORATION AND SUBSIDIARIES

BUSINESS UNIT RESULTS OF OPERATIONS

(In Thousands)

							Covisint
							Application			Unallocated
Quarter Ended:	Dynatrace			Mainframe			Services			Expenses			Total
September 30, 2014
Software license fees	$	25,883		$	6,306			-			-		$	32,189
Maintenance fees		29,400			59,623			-			-			89,023
Subscription fees		19,949			-			-			-			19,949
Services fees		7,923			74			-			-			7,997
Application services fees		-			-		$	21,735			-			21,735
Total revenues		83,155			66,003			21,735			-			170,893
Total operating expenses		73,285			15,907			28,899			38,215			156,306
Income (loss) from operations	$	9,870		$	50,096		$	(7,164	)	$	(38,215	)	$	14,587
Contribution margin %		11.9	%		75.9	%		(33.0	%)					8.5	%
Operating expenses include:
Stock awards compensation	$	2,410		$	(31	)	$	1,255		$	2,843		$	6,477
Amortization of purchased software	$	1,570		$	-		$	94		$	-		$	1,664
Amortization of other acquired intangible assets	$	955		$	-		$	77		$	-		$	1,032
September 30, 2013
Software license fees	$	25,027		$	7,564			-			-		$	32,591
Maintenance fees		24,596			64,223			-			-			88,819
Subscription fees		19,931			-			-			-			19,931
Services fees		6,796			31			-			-			6,827
Application services fees		-			-		$	24,525			-			24,525
Total revenues		76,350			71,818			24,525			-			172,693
Operating expenses		69,260			16,821			34,362		$	41,453			161,896
Income (loss) from operations	$	7,090		$	54,997		$	(9,837	)	$	(41,453	)	$	10,797
Contribution margin %		9.3	%		76.6	%		(40.1	%)					6.3	%
Operating expenses include:
Stock awards compensation	$	1,796		$	(315	)	$	10,020		$	3,294		$	14,795
Amortization of purchased software	$	2,296		$	-		$	94		$	-		$	2,390
Amortization of other acquired intangible assets	$	1,707		$	-		$	96		$	-		$	1,803

Prior year amounts have been reclassified to reflect the transition of Dynatrace for Mainframe from the Mainframe segment to the Dynatrace segment.

Compuware Corporation Reports Second Quarter, Fiscal Year 2015 ResultsOctober 23, 2014 Page 11

COMPUWARE CORPORATION AND SUBSIDIARIES

BUSINESS UNIT RESULTS OF OPERATIONS

(In Thousands)

							Covisint
							Application			Unallocated
Six Months Ended:	Dynatrace			Mainframe			Services			Expenses			Total
September 30, 2014
Software license fees	$	47,270		$	11,606			-			-		$	58,876
Maintenance fees		57,695			119,788			-			-			177,483
Subscription fees		39,311			-			-			-			39,311
Services fees		16,255			156			-			-			16,411
Application services fees		-			-		$	43,322			-			43,322
Total revenues		160,531			131,550			43,322			-			335,403
Total operating expenses		148,918			33,023			62,291			79,870			324,102
Income (loss) from operations	$	11,613		$	98,527		$	(18,969	)	$	(79,870	)	$	11,301
Contribution margin %		7.2	%		74.9	%		(43.8	%)					3.4	%
Operating expenses include:
Stock awards compensation	$	4,322		$	216		$	3,874		$	6,865		$	15,277
Amortization of purchased software	$	3,190		$	-		$	188		$	-		$	3,378
Amortization of other acquired intangible assets	$	2,693		$	-		$	154		$	-		$	2,847
September 30, 2013
Software license fees	$	48,557		$	15,777			-			-		$	64,334
Maintenance fees		48,397			127,584			-			-			175,981
Subscription fees		40,063			-			-			-			40,063
Services fees		14,398			100			-			-			14,498
Application services fees		-			-		$	48,626			-			48,626
Total revenues		151,415			143,461			48,626			-			343,502
Operating expenses		143,671			35,632			59,785		$	90,628			329,716
Income (loss) from operations	$	7,744		$	107,829		$	(11,159	)	$	(90,628	)	$	13,786
Contribution margin %		5.1	%		75.2	%		(22.9	%)					4.0	%
Operating expenses include:
Stock awards compensation	$	4,619		$	219		$	10,506		$	9,816		$	25,160
Amortization of purchased software	$	4,573		$	-		$	188		$	-		$	4,761
Amortization of other acquired intangible assets	$	3,400		$	-		$	195		$	-		$	3,595

Compuware Corporation Reports Second Quarter, Fiscal Year 2015 ResultsOctober 23, 2014 Page 12

COMPUWARE CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP

(In Thousands, Except Per Share Data)

	THREE MONTHS ENDED						SIX MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2014			2013			2014			2013
NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMPUWARE COPORATION	$	9,151		$	9,128		$	9,203		$	13,390
ADJUSTMENTS EXCLUDING IMPACT OF NON-CONTROLLING INTEREST
Stock compensation (excl. restructuring)		6,260			12,905			14,564			21,479
Amortization of purchased software		1,648			2,389			3,344			4,759
Amortization of acquired intangibles		1,019			1,801			2,819			3,594
Restructuring expense		2,255			219			5,230			5,022
Advisory fees		5,351			1,977			8,095			3,133
Income tax effect of above adjustments		(5,811	)		(7,245	)		(12,083	)		(13,738	)
Total adjustments		10,722			12,046			21,969			24,249
NON-GAAP NET INCOME FROM CONTINUING OPERATIONS	$	19,873		$	21,174		$	31,172		$	37,639
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS - GAAP	$	0.04		$	0.04		$	0.04		$	0.06
ADJUSTMENTS EXCLUDING IMPACT OF NON-CONTROLLING INTEREST
Stock compensation (excl. restructuring)		0.03			0.06			0.07			0.10
Amortization of purchased software		0.01			0.01			0.01			0.02
Amortization of acquired intangibles		0.00			0.01			0.01			0.02
Restructuring expense		0.01			0.00			0.02			0.02
Advisory fees		0.02			0.01			0.04			0.01
Income tax effect of above adjustments		(0.03	)		(0.03	)		(0.05	)		(0.06	)
Total adjustments		0.05			0.05			0.10			0.11
NON-GAAP EPS FROM CONTINUING OPERATIONS	$	0.09		$	0.10		$	0.14		$	0.17
Diluted shares outstanding		223,670			220,429			223,489			220,007

EPS amounts may not add to the total due to rounding