8-K 1 e20336_8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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): January 25, 2005 Compuware Corporation (Exact name of registrant as specified in its charter) Michigan (State or other jurisdiction of incorporation) 000-20900 38-2007430 (Commission File Number) (IRS Employer Identification No.) One Campus Martius, Detroit, MI 48226-5099 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (313) 227-7300 (Former name or former address, if changed since last report) 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 (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 9.01: Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits 99.1 Press Release, dated January 25, 2005. 99.2 Transcript of conference call held on January 25, 2005. Item 2.02: Results of Operations and Financial Condition. On January 25, 2005, Compuware Corporation issued a press release announcing its financial results for the quarter ended December 31, 2004 and certain other information. A copy of the press release is furnished with this Report as Exhibit 99.1. A transcript of the conference call held on January 25, 2005 is furnished with this Report as Exhibit 99.2. Certain statements made during the conference call and contained in the transcript 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 the conference call. While we believe any forward-looking statements we have made are reasonable, actual results could differ materially since the statements were based on our then-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. You should refer to and 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. 1 2 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. January 25, 2005 COMPUWARE CORPORATION By: /s/ Laura L. Fournier --------------------- Laura L. Fournier Senior Vice President Chief Financial Officer 3 EXHIBIT INDEX Number Description 99.1 Press Release, dated January 25, 2005. 99.2 Transcript of conference call held on January 25, 2005. 4 COMPUWARE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands)
AS OF DECEMBER 31, --------------------------------- ASSETS 2004 2003 ---------- ---------- CURRENT ASSETS: Cash and cash equivalents $ 419,567 $ 367,199 Investments 194,719 175,043 Accounts receivable, net 431,701 427,433 Deferred tax asset, net 34,233 33,450 Income taxes refundable, net 23,578 21,848 Prepaid expenses and other current assets 24,756 16,991 Building - available for sale 19,702 ---------- ---------- Total current assets 1,148,256 1,041,964 ---------- ---------- INVESTMENTS 122,481 117,386 ---------- ---------- PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION 424,524 427,561 ---------- ---------- CAPITALIZED SOFTWARE, LESS ACCUMULATED AMORTIZATION 55,715 44,220 ---------- ---------- OTHER: Accounts receivable 250,973 244,228 Deferred tax asset, net 15,676 57,194 Goodwill 297,108 213,083 Other 36,104 25,718 ---------- ---------- Total other assets 599,861 540,223 ---------- ---------- TOTAL ASSETS $2,350,837 $2,171,354 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 25,730 $ 28,194 Accrued expenses 188,631 196,584 Deferred revenue 293,176 263,589 ---------- ---------- Total current liabilities 507,537 488,367 DEFERRED REVENUE 339,140 291,542 ACCRUED EXPENSES 18,890 18,798 ---------- ---------- Total liabilities 865,567 798,707 ---------- ---------- SHAREHOLDERS' EQUITY: Common stock 3,873 3,842 Additional paid-in capital 738,165 715,071 Retained earnings 730,871 647,193 Foreign currency translation adjustment 12,361 6,541 ---------- ---------- Total shareholders' equity 1,485,270 1,372,647 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,350,837 $2,171,354 ========== ==========
Note: Certain amounts in prior periods have been reclassified to conform to the current presentation. 5 COMPUWARE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Data)
QUARTER ENDED NINE MONTHS ENDED DECEMBER 31, DECEMBER 31, -------------------------- -------------------------- 2004 2003 2004 2003 --------- --------- --------- --------- REVENUES: Software license fees $ 98,996 $ 80,678 $ 218,761 $ 195,361 Maintenance fees 108,658 102,940 316,930 303,913 Professional services fees 122,881 134,567 377,365 427,676 --------- --------- --------- --------- Total revenues 330,535 318,185 913,056 926,950 --------- --------- --------- --------- OPERATING EXPENSES: Cost of software license fees 5,403 8,285 21,289 23,328 Cost of professional services 105,734 123,767 337,518 399,814 Technology development and support 33,907 41,640 115,587 124,398 Sales and marketing 84,441 82,117 234,496 227,167 Administrative and general 48,321 50,245 148,735 158,074 --------- --------- --------- --------- Total operating expenses 277,806 306,054 857,625 932,781 --------- --------- --------- --------- INCOME (LOSS) FROM OPERATIONS 52,729 12,131 55,431 (5,831) OTHER INCOME 5,191 4,988 13,675 14,735 --------- --------- --------- --------- INCOME BEFORE INCOME TAXES 57,920 17,119 69,106 8,904 INCOME TAX PROVISION (BENEFIT) 16,218 (4,706) 19,350 (7,006) --------- --------- --------- --------- NET INCOME $ 41,702 $ 21,825 $ 49,756 $ 15,910 ========= ========= ========= ========= DILUTED EPS COMPUTATION Numerator: Net income $ 41,702 $ 21,825 $ 49,756 $ 15,910 --------- --------- --------- --------- Denominator: Weighted-average common shares outstanding 387,211 384,090 386,475 382,550 Dilutive effect of stock options 1,609 1,852 1,785 1,753 --------- --------- --------- --------- Total shares 388,820 385,942 388,260 384,303 --------- --------- --------- --------- Diluted EPS $ 0.11 $ 0.06 $ 0.13 $ 0.04 ========= ========= ========= =========
6 COMPUWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (In Thousands)
NINE MONTHS ENDED DECEMBER 31, ---------------------------- 2004 2003 --------- --------- CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: Net income $ 49,756 $ 15,910 Adjustments to reconcile net income to cash provided by operations: Depreciation and amortization 43,654 39,994 Tax benefit from exercise of stock options 372 175 Issuance of common stock to ESOP 4,872 Acquisition tax benefits 5,406 5,275 Deferred income taxes 11,397 804 Other 2,015 3,012 Net change in assets and liabilities, net of effects from acquisitions: Accounts receivable (6,634) 144,406 Prepaid expenses and other current assets (2,341) 876 Other assets 1,968 5,204 Accounts payable and accrued expenses (24,936) (6,984) Deferred revenue 6,908 (72,429) Income taxes 10,362 (10,947) --------- --------- Net cash provided by operating activities 102,799 125,296 --------- --------- CASH FLOWS USED IN INVESTING ACTIVITIES: Purchase of: Business (104,993) Property and equipment: Headquarters facility (7,073) (50,497) Other (15,628) (5,500) Capitalized software (16,431) (9,165) Investments: Proceeds 157,927 275,344 Purchases (164,953) (302,353) --------- --------- Net cash used in investing activities (151,151) (92,171) --------- --------- CASH FLOWS PROVIDED BY FINANCING ACTIVITIES: Net proceeds from exercise of stock options 1,283 1,179 Contribution to stock purchase plans 6,111 6,468 Repurchase of common stock (996) --------- --------- Net cash provided by financing activities 7,394 6,651 --------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 5,609 7,957 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (35,349) 47,733 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 454,916 319,466 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 419,567 $ 367,199 ========= =========
Note: Certain amounts in prior periods have been reclassified to conform to the current presentation. 7 COMPUWARE CORPORATION AND SUBSIDIARIES OPERATIONAL HIGHLIGHTS (dollar amounts in thousands)
QUARTER ENDED ---------------------------- QUARTER ENDED DECEMBER 31, DECEMBER 31, YR - YR SEPTEMBER 30, QTR - QTR 2004 2003 % Change 2004 % Change ---------- ------------ -------- -------------- --------- License Fees: Distributed Product License Fees DevPartner $ 4,157 $ 6,901 (39.8%) $ 3,929 5.8% QACenter and File-AID Client/Server 7,150 6,173 15.8% 5,961 19.9% UNIFACE and Optimal 5,080 5,496 (7.6%) 3,295 54.2% Vantage 11,544 11,610 (0.6%) 7,635 51.2% IT Governance 2,900 -- N/A 1,657 75.0% -------- -------- -------- Total Distributed Product License Fees 30,831 30,180 2.2% 22,477 37.2% Mainframe Product License Fees 68,165 50,498 35.0% 43,185 57.8% -------- -------- -------- Total License Fees 98,996 80,678 22.7% 65,662 50.8% Maintenance Fees 108,658 102,940 5.6% 104,771 3.7% -------- -------- -------- Total Products Revenue $207,654 $183,618 13.1% $170,433 21.8% ======== ======== ======== Total Mainframe Products Revenue $151,885 $135,943 11.7% $126,096 20.5% Total Distributed Products Revenue $ 55,769 $ 47,675 17.0% $ 44,337 25.8% Total Products Revenue by Geography North America $114,237 $ 97,003 17.8% $ 95,644 19.4% International $ 93,417 $ 86,615 7.9% $ 74,789 24.9% Product Releases Mainframe 4 4 0.0% 2 100.0% Distributed 9 16 (43.8%) 6 50.0% Total Costs of Software Products $123,751 $132,042 (6.3%) $128,188 (3.5%) Professional Services Professional Services Revenue $122,881 $134,567 (8.7%) $125,035 (1.7%) Contribution Margin 14.0% 8.0% 9.7% Billable Headcount 3,884 4,707 (17.5%) 3,949 (1.6%) Total Company Headcount 8,109 9,097 (10.9%) 8,446 (4.0%)
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