EX-99.1 2 d74325_ex99-1.txt PRESS RELEASE EXHIBIT 99.1 NEWS RELEASE COMPUWARE CORPORATION -------------------------------------------------------------------------------- Corporate Headquarters One Campus Martius o Detroit, Michigan 48226 (313) 227-7300 For Immediate Release May 15, 2008 Compuware Closes Year of Growth on High Note; Officially Launches Compuware 2.0 Q4 Results Feature 38 Percent Year-over-year Increase in Software License Fees, Seven Percent Year-over-year Increase in Maintenance DETROIT--May 15, 2008--Compuware Corporation (NASDAQ: CPWR) today announced final financial results for its fourth quarter and fiscal year ended March 31, 2008. "With an excellent performance in Q4, Compuware closed a solid year of growth on a very high note," said Compuware Chairman and CEO Peter Karmanos, Jr. "For more than 35 years, Compuware has helped its customers economically benefit their businesses through powerful products and talented technical people. In the coming year, we will capitalize further on our heritage by becoming an even more focused, customer-responsive and dynamic company. I expect the results to be strong." Fiscal Year 2008 Results During the fiscal year ended March 31, 2008, revenues were $1.23 billion, up from $1.21 billion in the previous fiscal year. Net income--before restructuring charges and capitalized software impairment--was $164.6 million compared to $158.1 million in fiscal 2007. Earnings per share--diluted computation before restructuring charges and capitalized software impairment--were 57 cents, an increase of 27 percent from 45 cents in fiscal 2007, based upon 287.6 million and 351.0 million shares outstanding, respectively. On a GAAP basis, net income was $134.4 million and earnings per share were 47 cents in fiscal 2008. During fiscal 2008, software license fees were $297.5 million, up from $283.4 million in fiscal 2007. Maintenance revenue was $476.4 million in fiscal 2008, compared to $457.6 million in fiscal 2007. Professional services fees for fiscal 2008 were $455.7 million, compared to $472.0 million in fiscal 2007. Fourth Quarter Fiscal 2008 Results Compuware reports fourth quarter net income--before restructuring charges--of $63.1 million on revenues of $338.9 million. On a GAAP basis, net income was $61.2 million in Q4. Earnings per share--diluted computation--were 23 cents, based upon 268.7 million shares outstanding. During the company's fourth quarter, software license fees were $100.8 million, an increase of 38 percent from $73.2 million in the same quarter last year. Maintenance fees were $126.3 million during the quarter, an increase of more than seven percent from $117.7 million in the same quarter last year. Fourth quarter revenue from professional services was $111.8 million, compared to $122.1 million in the same quarter last year. Page 2 Compuware Closes Year of Growth on High Note; Officially Launches Compuware 2.0 May 15, 2008 Compuware 2.0 Launch The company today formally launched Compuware 2.0, along with the official introduction of its new global theme "We make IT rock around the world" and a new microsite, www.wemakeitrockaroundtheworld.com. "Compuware 2.0 is not a campaign, a one-time initiative or a message. Compuware 2.0 is a rebirth based on the company's longtime principles and anchored by definable, actionable and measurable objectives," explained Compuware President and Chief Operating Officer Bob Paul. "While there is a marketing component to Compuware 2.0, the core of this effort is in approaching the market in a fresh way and delivering quantifiable economic value to our customers." Among the specific objectives for Compuware 2.0 are: o Instituting and communicating a strategic vision for the company that positions it as a best-in-class provider of solutions that customers--in the markets where Compuware chooses to compete--have a compelling reason to buy. o Going to market with complete solutions to compelling business problems by combining software, best practices and professional services. o Establishing and extending a lively, engaging corporate brand identity that customers and employees identify with, understand and trust. o Deploying a global recruiting, training and career development function to attract and retain the highest quality professionals. For full details, visit www.wemakeitrockaroundtheworld.com. Fourth Quarter Fiscal Year 2008 Highlights During the fourth quarter, Compuware: o Announced that the company promoted Robert C. Paul to the position of President and Chief Operating Officer, leading the company's products and services operations, Compuware 2.0 effort and other key functions. o Acquired privately held Hilgraeve, Inc. This acquisition made Compuware Covisint the world's largest on-demand collaboration platform for lab and prescription data sharing. o Launched a new initiative to provide hospitals and physicians with the means to more effectively navigate the dynamically changing healthcare technology environment. Compuware's IT Service Management for Healthcare initiative drives improved patient care, reduces costs for hospitals and provides significant ROI. o Announced that Compuware Covisint entered into an agreement to work with Microsoft(R) HealthVault(TM), Microsoft's personal health technology platform. Covisint will provide physicians Page 3 Compuware Closes Year of Growth on High Note; Officially Launches Compuware 2.0 May 15, 2008 with better, more efficient and secure access to patients' records by enabling patients to grant provider access to their HealthVault records through Covisint's OnDemand platform. o Announced that it received Corp! Magazine's award for "Diversity-focused Company." The award is based on the company's commitment to diversity--in race, ethnicity and more--as a business driver. o Announced the sponsorship of a webcast titled: "Improving Quality in Your Application Delivery Process--A Success Story at Arizona Federal." In the webcast, Kevin Bingham, Assistant Vice President, Information Technology at Arizona Federal presented how his organization leveraged test automation and a structured process to deliver applications without sacrificing budget, time or quality by using Compuware TestPartner. Use of Non-GAAP Financial Information In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, this press release uses a non-GAAP measure of net income and earnings per share. The net income and earnings per share disclosures on a non-GAAP basis excluded the impact of restructuring charges and capitalized software impairment. See the attached "Reconciliation of non-GAAP Information" schedule for complete details. Compuware management believes the non-GAAP financial information provided in this release helps investors better understand and assess 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. Compuware Corporation Compuware Corporation (NASDAQ: CPWR) maximizes the value IT brings to the business by helping CIOs more effectively manage the business of IT. 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. ### Conference Call Information Compuware will host a conference call today to discuss these results at 5:00 p.m. Eastern time (21:00 GMT). Interested parties from the United States should call 800-230-1074. For international access, the conference call number is +1-612-332-0107. 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 is 906724. For more information, visit the Compuware Corporation Investor Relations web site at http://www.compuware.com. Page 4 Compuware Closes Year of Growth on High Note; Officially Launches Compuware 2.0 May 15, 2008 Press Contact Lisa Elkin, Vice President, 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 AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands)
AS OF MARCH 31, ------------------------------ ASSETS 2008 2007 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 215,943 $ 260,681 Investments 70,474 107,062 Accounts receivable, net 535,094 420,774 Deferred tax asset, net 44,374 33,392 Income taxes refundable, net 3,746 58,266 Prepaid expenses and other current assets 49,285 41,019 ------------ ------------ Total current assets 918,916 921,194 ------------ ------------ INVESTMENTS 71,391 ------------ ------------ PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION 365,691 385,227 ------------ ------------ CAPITALIZED SOFTWARE, LESS ACCUMULATED AMORTIZATION 61,653 72,276 ------------ ------------ OTHER: Accounts receivable 244,388 172,255 Deferred tax asset, net 35,851 15,987 Goodwill 356,267 353,682 Other 35,791 37,400 ------------ ------------ Total other assets 672,297 579,324 ------------ ------------ TOTAL ASSETS $ 2,018,557 $ 2,029,412 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 18,772 $ 27,713 Accrued expenses 148,268 141,970 Income taxes payable, net 4,976 Deferred revenue 472,864 359,688 ------------ ------------ Total current liabilities 644,880 529,371 DEFERRED REVENUE 399,548 321,881 ACCRUED EXPENSES 19,513 11,346 DEFERRED TAX LIABILITY, NET 27,585 34,666 ------------ ------------ Total liabilities 1,091,526 897,264 ------------ ------------ SHAREHOLDERS' EQUITY: Common stock 2,616 3,030 Additional paid-in capital 643,544 673,660 Retained earnings 261,754 444,159 Accumulated other comprehensive income 19,117 11,299 ------------ ------------ Total shareholders' equity 927,031 1,132,148 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,018,557 $ 2,029,412 ============ ============
COMPUWARE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Data)
QUARTER ENDED TWELVE MONTHS ENDED MARCH 31, MARCH 31, ----------------------------- ----------------------------- 2008 2007 2008 2007 ----------- ----------- ----------- ----------- REVENUES: Software license fees $ 100,794 $ 73,225 $ 297,506 $ 283,412 Maintenance fees 126,311 117,713 476,374 457,594 Professional services fees 111,811 122,091 455,731 471,996 ----------- ----------- ----------- ----------- Total revenues 338,916 313,029 1,229,611 1,213,002 ----------- ----------- ----------- ----------- OPERATING EXPENSES: Cost of software license fees 6,815 7,457 30,475 28,581 Cost of maintenance fees 13,190 11,454 46,300 41,533 Cost of professional services 104,169 107,280 413,921 420,729 Technology development and support 23,998 30,167 101,132 114,071 Sales and marketing 71,220 74,905 267,800 281,730 Administrative and general 48,076 50,055 182,488 193,578 Restructuring costs 3,000 42,645 ----------- ----------- ----------- ----------- Total operating expenses 270,468 281,318 1,084,761 1,080,222 ----------- ----------- ----------- ----------- INCOME FROM OPERATIONS 68,448 31,711 144,850 132,780 ----------- ----------- ----------- ----------- OTHER INCOME (EXPENSES) Interest income 3,906 8,014 19,910 39,427 Settlement 16,160 10,598 16,160 10,598 Gain on sale of investment in partially owned company 11,250 11,250 Other (260) (91) (528) (998) ----------- ----------- ----------- ----------- OTHER INCOME, NET 19,806 29,771 35,542 60,277 ----------- ----------- ----------- ----------- INCOME BEFORE INCOME TAXES 88,254 61,482 180,392 193,057 INCOME TAX PROVISION (BENEFIT) 27,079 (5,994) 45,998 34,965 ----------- ----------- ----------- ----------- NET INCOME $ 61,175 $ 67,476 $ 134,394 $ 158,092 =========== =========== =========== =========== DILUTED EPS COMPUTATION Numerator: Net income $ 61,175 $ 67,476 $ 134,394 $ 158,092 ----------- ----------- ----------- ----------- Denominator: Weighted-average common shares outstanding 267,932 317,764 286,402 350,213 Dilutive effect of stock options 800 1,512 1,226 754 ----------- ----------- ----------- ----------- Total shares 268,732 319,276 287,628 350,967 ----------- ----------- ----------- ----------- Diluted EPS $ 0.23 $ 0.21 $ 0.47 $ 0.45 =========== =========== =========== ===========
COMPUWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands)
TWELVE MONTHS ENDED MARCH 31, ------------------------------- 2008 2007 ------------ ------------ CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: Net income $ 134,394 $ 158,092 Adjustments to reconcile net income to cash provided by operations: Depreciation and amortization 55,167 55,026 Property and equipment impairment associated with restructuring 2,981 Capitalized software impairment 3,873 Gain on sale of investment in partially owned company (11,250) Acquisition tax benefits 5,090 5,257 Stock option compensation 11,553 9,432 Deferred income taxes (2,022) 6,953 Other 1,474 (8) Net change in assets and liabilities, net of effects from acquisitions and currency fluctuations: Accounts receivable (64,019) 61,202 Prepaid expenses and other current assets (7,120) (13,857) Other assets 640 (1,211) Accounts payable and accrued expenses (837) (46,483) Deferred revenue 64,875 (38,448) Income taxes 28,641 20,027 ------------ ------------ Net cash provided by operating activities 234,690 204,732 ------------ ------------ CASH FLOWS PROVIDED BY INVESTING ACTIVITIES: Purchase of: Businesses, net of cash acquired (4,649) (51,818) Property and equipment (10,498) (18,590) Capitalized software (14,359) (21,457) Proceeds from sale of property 15,466 Proceeds from sale of investment in partially owned company 11,250 Investments: Proceeds 106,717 495,371 Purchases (376,387) ------------ ------------ Net cash provided by investing activities 77,211 53,835 ------------ ------------ CASH FLOWS USED IN FINANCING ACTIVITIES: Net proceeds from exercise of stock options including excess tax benefits 67,178 54,364 Contribution to stock purchase plans 4,066 4,635 Repurchase of common stock (440,988) (676,757) ------------ ------------ Net cash used in financing activities (369,744) (617,758) ------------ ------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH 13,105 7,810 ------------ ------------ NET DECREASE IN CASH AND CASH EQUIVALENTS (44,738) (351,381) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 260,681 612,062 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 215,943 $ 260,681 ============ ============
COMPUWARE CORPORATION AND SUBSIDIARIES OPERATIONAL HIGHLIGHTS (dollar amounts in thousands)
QUARTER ENDED ---------------------------- QUARTER ENDED MARCH 31, MARCH 31, YR - YR DECEMBER 31 QTR - QTR 2008 2007 % Change 2007 % Change --------- --------- ------- ------------- --------- License Fees: Distributed Product License Fees Vantage $ 23,510 $ 19,407 21.1% $ 20,018 17.4% Changepoint 3,296 3,628 (9.2%) 3,781 (12.8%) Quality 8,218 8,079 1.7% 7,231 13.6% Uniface 4,464 5,900 (24.3%) 3,890 14.8% DevPartner 2,385 3,305 (27.8%) 2,607 (8.5%) ----------- ----------- ----------- Total Distributed Product License Fees 41,873 40,319 3.9% 37,527 11.6% Mainframe Product License Fees 58,921 32,906 79.1% 41,898 40.6% ----------- ----------- ----------- Total License Fees 100,794 73,225 37.6% 79,425 26.9% Maintenance Fees 126,311 117,713 7.3% 120,026 5.2% ----------- ----------- ----------- Total Products Revenue $ 227,105 $ 190,938 18.9% $ 199,451 13.9% =========== =========== =========== Total Mainframe Products Revenue $ 147,247 $ 118,926 23.8% $ 125,710 17.1% Total Distributed Products Revenue $ 79,858 $ 72,012 10.9% $ 73,741 8.3% Total Products Revenue by Geography North America $ 113,485 $ 100,971 12.4% $ 97,898 15.9% International $ 113,620 $ 89,967 26.3% $ 101,553 11.9% Product Releases Mainframe 7 5 40.0% 2 250.0% Distributed 2 12 (83.3%) 12 (83.3%) Total Costs of Software Products $ 115,223 $ 123,983 (7.1%) $ 108,165 6.5% Deferred license fees Current $ 68,885 $ 71,550 (3.7%) $ 68,033 1.3% Long-term $ 60,237 $ 44,304 36.0% $ 48,087 25.3% Deferred during quarter $ 38,545 $ 27,967 37.8% $ 38,064 1.3% Recognized during quarter $ 28,760 $ 24,736 16.3% $ 23,550 22.1% Professional Services Professional Services Revenue $ 111,811 $ 122,091 (8.4%) $ 109,884 1.8% Contribution Margin 6.8% 12.1% 5.6% Billable Headcount 3,171 3,465 (8.5%) 3,251 (2.5%) Total Company Headcount 6,344 7,539 (15.9%) 6,496 (2.3%) Total DSO 142.1 121.0 120.2 Total DSO (Billed) 76.9 56.3 55.1
COMPUWARE CORPORATION AND SUBSIDIARIES PRODUCT COMMITMENTS (In Thousands)
QUARTER ENDED TWELVE MONTHS ENDED ---------------------------- ---------------------------- MARCH 31, MARCH 31, MARCH 31, MARCH 31, 2008 2007 2008 2007 ----------- ----------- ----------- ----------- License revenue $ 100,794 $ 73,225 $ 297,506 $ 283,412 Change in deferred license 9,786 3,231 5,033 (17,960) ----------- ----------- ----------- ----------- License contracts entered into during period 110,580 76,456 302,539 265,452 ----------- ----------- ----------- ----------- Maintenance revenue 126,311 117,713 476,374 457,594 Change in deferred maintenance 77,259 16,370 49,671 (24,931) ----------- ----------- ----------- ----------- Maintenance contracts & renewals entered into during period 203,570 134,083 526,045 432,663 ----------- ----------- ----------- ----------- Total products commitments during period $ 314,150 $ 210,539 $ 828,584 $ 698,115 =========== =========== =========== ===========
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. 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. COMPUWARE CORPORATION AND SUBSIDIARIES RECONCILIATION OF NON-GAAP INFORMATION (In Thousands, Except Per Share Data)
QUARTER ENDED TWELVE MONTHS ENDED MARCH 31, MARCH 31, ---------------------------- ---------------------------- Net income reconciliation: 2008 2007 2008 2007 ----------- ----------- ----------- ----------- GAAP net income $ 61,175 $ 67,476 $ 134,394 $ 158,092 Restructuring costs, net of tax 1,950 27,719 Capitalized software impairment, net of tax 2,517 ----------- ----------- ----------- ----------- Net income as adjusted $ 63,125 $ 67,476 $ 164,630 $ 158,092 =========== =========== =========== =========== EPS reconciliation: GAAP diluted EPS $ 0.23 $ 0.21 $ 0.47 $ 0.45 Restructuring costs, net of tax 0.09 Capitalized software impairment, net of tax 0.01 ----------- ----------- ----------- ----------- Diluted EPS as adjusted $ 0.23 $ 0.21 $ 0.57 $ 0.45 =========== =========== =========== ===========
Compuware initiated a restructuring plan in FY08. Our non-GAAP disclosures exclude these charges, primarily employee termination benefits, facilities costs (primarily lease abandonments and property and equipment impairment) and capitalized software impairment. We believe it is useful to exclude these costs when evaluating overall performance.