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Compuware Corporation Earns 15 Cents Per Share in Q3

(January 27, 2011)


Q3 Highlights:




  • EPS jumps 36.4 percent year-over-year; total revenues increase 7.5 percent year-over-year


  • Total APM (Vantage and Gomez) revenues reach $56.1M, up 34 percent*, on a GAAP basis, year-over-year


  • Covisint revenues grow 32.8 percent year-over-year to $14.4M


  • Non-mainframe solutions revenue up 22.5 percent*, on a GAAP basis, year-over-year


  • Professional Services segment contribution margin reaches 15 percent



DETROIT, Jan. 27, 2011 (GLOBE NEWSWIRE) -- Compuware Corporation (Nasdaq:CPWR), the technology performance company, today announced financial results for its third quarter ended December 31, 2010.



"Compuware continues to focus on delivering steady increases in revenue, earnings and margins, and Q3 was no exception," said Compuware President and Chief Operating Officer Bob Paul. "Our growth businesses – APM and Covisint – showed great momentum in their multi-billion-dollar markets, both achieving strong growth this quarter. Mainframe renewals remained greater than 90 percent, and Professional Services delivered a 15 percent contribution margin this quarter, as our mature businesses continue to support our aggressive plans for growth in FY '12 and beyond."


Compuware reports third quarter revenues of $247 million, up 7.5 percent from $229.9 million in Q3 last year. Third quarter earnings per share were 15 cents based upon 225.2 million shares outstanding, up 36.4 percent from 11 cents based on 231.1 million shares outstanding in Q3 last year. Third quarter net income was $34 million, up 39.3 percent from $24.4 million in Q3 last year.




During the company's third quarter, software license fees were $60.2 million, up 15.6 percent from $52 million in Q3 last year. Maintenance and subscription fees were $124.2 million in the third quarter, up 5.6 percent from $117.6 million in Q3 last year. Revenue from Professional Services in the third quarter was $62.7 million, up 4.1 percent from $60.3 million in Q3 last year.



Third Quarter Fiscal Year 2011 Highlights



During the third quarter, Compuware:




  • Officially launched CloudSleuth, the industry's only partner-driven cloud community specifically built to spotlight the performance of the cloud's "federated infrastructure."


  • Announced a first-of-its-kind SaaS-based application performance management solution that provides visibility from the First Mile (the data center) to the Last Mile (the end-user).


  • Announced that Covisint had accelerated successful provider payments for physician offices and large health systems from the Centers for Medicare & Medicaid Services for the 2009 Physician Quality Reporting Initiative.


  • Announced that Covisint would demonstrate at the API IT Security Conference how companies can most effectively manage oil and gas identities by quickly building trust relationships for joint ventures, partnerships, customers and suppliers.


  • Announced that Marketing Associates uses Compuware's application performance management solutionGomez and Vantage – to improve the performance and availability of its mission-critical customer applications.


  • Announced that daFlores improved the speed of its web site using the Gomez Web Performance Management monitoring platform, resulting in a 25 percent increase in orders for the online flower delivery company.


  • Announced that it was named a "Top Workplace" by the Detroit Free Press.


  • Released information about – and results from – its new Gomez Retail UX (User Experience) Index top Web and mobile performers for Black Friday through Cyber Monday.


  • Announced that its industry-leading mainframe application development and testing solutions support DB2 Version 10.


  • Published results for the September U.S. Retail Mobile Site Performance Index, which measures the performance of mobile-specific versions of retail websites for 15 leading retailers across four carrier and device combinations.


  • Launched fifteen new international industry benchmarks that provide companies with an unbiased view of the state of website performance.


  • Released information that Covisint was recognized by Everything Channel's CRN Magazine as one of the "Top 100 Healthcare Vendors."


  • Introduced the industry's first mobile application benchmark that measures the iPhone mobile application performance of fifteen leading U.S. retailers across three key metrics: response time, availability and consistency.



Use of Non-GAAP Financial Information



*Compuware acquired Gomez on November 9, 2009; only revenue following the acquisition date is included in the Q3 GAAP comparisons of total APM revenues and non-mainframe solutions revenues. On a pro forma basis APM revenue grew 11.6 percent. Non-mainframe solutions revenues grew 9.4 percent on a pro forma basis.



In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the financial information included with this press release uses non-GAAP measures for revenue. The non-GAAP revenue disclosures provide information on total products commitments and pro forma revenue for Gomez subscription fees as if their results were included in the comparable prior year period. 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



Compuware Corporation, the technology performance company, provides software, experts and best practices to ensure technology works well and delivers value. Compuware solutions make the world's most important technologies perform at their best for leading organizations worldwide, 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.



The Compuware logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5950



Conference Call Information



Compuware will host a conference call to discuss these results at 5 p.m. Eastern time (22:00 GMT) today. To join the conference call, interested parties in the United States should call 800-398-9402. For international access, the conference call number is +1-612-332-0630. 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 182384. Additionally, investors can listen to the conference call via webcast by visiting the Compuware Corporation Investor Relations web site at http://www.compuware.com.






































































































































































































































































 

COMPUWARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

 

 

 

 

 AS OF DECEMBER 31, 

 ASSETS 

 

 

 

2010

2009

 CURRENT ASSETS: 

 

 

 Cash and cash equivalents 

$ 81,863

$ 87,862

 Accounts receivable, net 

 517,775

 509,339

 Deferred tax asset, net 

 49,861

 46,642

 Income taxes refundable 

 4,624

 4,237

 Prepaid expenses and other current assets 

 30,675

 26,198

 Total current assets 

 684,798

 674,278

 

 

 

  PROPERTY AND EQUIPMENT, LESS ACCUMULATED

  DEPRECIATION AND AMORTIZATION 

 334,482

 346,270

 

 

 

  CAPITALIZED SOFTWARE AND OTHER

  INTANGIBLE ASSETS, NET 

 86,133

 89,723

 

 

 

 ACCOUNTS RECEIVABLE 

 192,470

 234,428

 DEFERRED TAX ASSET, NET 

 32,061

 34,823

 GOODWILL 

 608,228

 592,948

 OTHER ASSETS 

 33,664

 26,760

 

 

 

 TOTAL ASSETS 

$ 1,971,836

$ 1,999,230

 

 

 

 LIABILITIES AND SHAREHOLDERS' EQUITY 

 

 

 

 

 

 CURRENT LIABILITIES: 

 

 

 Accounts payable 

$18,139

$17,723

 Accrued expenses 

 97,422

 111,895

 Income taxes payable 

 21,304

 23,207

 Deferred revenue 

 449,342

 459,580

 Total current liabilities 

 586,207

 612,405

 

 

 

 LONG TERM DEBT 

 

 35,000

 

 

 

 DEFERRED REVENUE 

 354,296

 383,274

 

 

 

 ACCRUED EXPENSES 

 36,420

 34,364

 

 

 

 DEFERRED TAX LIABILITY, NET 

 56,638

 46,704

 Total liabilities 

 1,033,561

 1,111,747

 

 

 

 SHAREHOLDERS' EQUITY: 

 

 

 Common stock 

 2,185

 2,274

 Additional paid-in capital 

 636,713

 607,035

 Retained earnings 

 297,419

 282,133

 Accumulated other comprehensive income (loss) 

 1,958

 (3,959)

 Total shareholders' equity 

 938,275

 887,483

 

 

 

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 

$ 1,971,836

$ 1,999,230




































































































































































































































































































































 

 

COMPUWARE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Data)

 

 

 

 

 

 

 

 

 

 

 

THREE MONTHS ENDED

NINE MONTHS ENDED

 

DECEMBER 31,

DECEMBER 31,

 

 

 

 

 

 

2010

2009

2010

2009

REVENUES:

 

 

 

 

 Software license fees

$ 60,152

$ 52,023

$ 139,095

$ 142,679

 Maintenance and subscription fees

124,162

117,583

 362,928

 338,444

 Professional services fees

62,711

60,258

 177,356

 181,058

 Total revenues

247,025

229,864

679,379

662,181

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 Cost of software license fees

3,745

4,072

 10,428

 11,895

 Cost of maintenance and subscription fees

15,274

10,968

 41,826

 28,292

 Cost of professional services

53,811

53,378

 155,820

 164,049

 Technology development and support

22,517

22,562

 65,951

 65,677

 Sales and marketing

62,437

58,969

 176,648

 162,873

 Administrative and general

39,760

42,761

 115,977

 121,658

 Restructuring costs

 

1,024

 

 4,842

 Gain on divestiture of product lines

 

 

 

 (52,351)

 Total operating expenses

197,544

193,734

566,650

506,935

 

 

 

 

 

INCOME FROM OPERATIONS

49,481

36,130

112,729

155,246

 

 

 

 

 

OTHER INCOME (EXPENSES)

 

 

 

 

 Interest income

1,351

1,049

 3,167

 3,877

 Other

25

27

 (64)

 (48)

 

 

 

 

 

OTHER INCOME, NET

1,376

1,076

3,103

3,829

 

 

 

 

 

INCOME BEFORE INCOME TAXES

50,857

37,206

115,832

159,075

 

 

 

 

 

INCOME TAX PROVISION

16,858

12,794

 43,196

 55,630

 

 

 

 

 

NET INCOME 

$ 33,999

$ 24,412

$ 72,636

$ 103,445

 

 

 

 

 

DILUTED EPS COMPUTATION

 

 

 

 

Numerator: Net income 

$ 33,999

$ 24,412

$ 72,636

$ 103,445

Denominator:

 

 

 

 

 Weighted-average common shares outstanding

218,683

229,105

 221,490

 234,704

 Dilutive effect of stock options

6,475

1,985

 3,622

 1,847

 Total shares

225,158

231,090

225,112

236,551

Diluted EPS

$ 0.15

$ 0.11

$ 0.32

$ 0.44









































































































































































































































 

 

COMPUWARE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

 

 

 

 

NINE MONTHS ENDED

 

DECEMBER 31,

 

2010

2009

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:

 

 

 Net income

$ 72,636

$ 103,445

 Adjustments to reconcile net income to cash provided

 by operations:

 

 

 Gain on divestiture of product lines

 

(52,351)

 Depreciation and amortization

37,300

32,476

 Stock award compensation

13,387

12,649

 Deferred income taxes

7,554

7,578

 Other

561

1,061

 Net change in assets and liabilities, net of effects from acquisitions,

 the divestiture and currency fluctuations:

 

 

 Accounts receivable

(23,489)

9,262

 Prepaid expenses and other current assets

14,572

16,338

 Other assets

(1,514)

(5,626)

 Accounts payable and accrued expenses

(11,882)

(57)

 Deferred revenue

(77,463)

(17,994)

 Income taxes

4,123

(3,415)

 Net cash provided by operating activities

35,785

103,366

 

 

 

CASH FLOWS USED IN INVESTING ACTIVITIES:

 

 

 Purchase of:

 

 

 Business, net of cash acquired

(18,165)

(284,393)

 Property and equipment

(13,328)

(7,070)

 Capitalized software

(12,877)

(7,427)

 Net proceeds from divestiture of product lines

 

64,992

 Net cash used in investing activities

(44,370)

(233,898)

 

 

 

CASH FLOWS USED IN FINANCING ACTIVITIES:

 

 

 Proceeds from borrowings on credit facility

 

35,000

 Net proceeds from exercise of stock options including excess tax benefits

53,331

2,857

 Employee contribution to common stock purchase plans

1,892

1,647

 Repurchase of common stock

(116,600)

(111,156)

 Net cash used in financing activities

(61,377)

(71,652)

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

1,928

11,934

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

(68,034)

(190,250)

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

149,897

278,112

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$ 81,863

$ 87,862












































































































































































































































































































































































































































































































 

 

COMPUWARE CORPORATION AND SUBSIDIARIES

OPERATIONAL HIGHLIGHTS

(Dollar Amounts In Thousands)

 

 

QUARTER

 

QUARTER

 

 

ENDED

 

ENDED

 

 

DEC 31,

YR - YR

SEP 30,

QTR - QTR

 

2010

2009

% Chg

2010

% Chg

Products:

 

 

 

 

 

Software License Fees:

 

 

 

 

 

 Distributed License Fees:

 

 

 

 

 

Vantage

 $ 21,059

 $ 20,376

3.4%

 $ 18,231

15.5%

Changepoint

 1,545

 2,991

(48.3%)

 2,248

(31.3%)

Uniface

 2,671

 2,291

16.6%

 2,374

12.5%

Other

 155

 408

(62.0%)

 366

(57.7%)

 Distributed License Fees

 25,430

 26,066

(2.4%)

 23,219

9.5%

 Mainframe License Fees

 34,722

 25,957

33.8%

 22,394

55.1%

Total Software License Fees

 60,152

 52,023

15.6%

 45,613

31.9%

 

 

 

 

 

 

Maintenance and Subscription Fees:

 

 

 

 

 

 Distributed Products

 28,879

 27,993

3.2%

 26,810

7.7%

 Mainframe Products

 77,442

 83,825

(7.6%)

 77,541

(0.1%)

 Subscription (Gomez)

 17,841

 5,765

209.5%

 17,656

1.0%

Total Maintenance and Subscription Fees

 124,162

 117,583

5.6%

 122,007

1.8%

 

 

 

 

 

 

Total Products Revenue:

 

 

 

 

 

 Distributed Products

 54,309

 54,059

0.5%

 50,029

8.6%

 Mainframe Products

 112,164

 109,782

2.2%

 99,935

12.2%

 Subscription (Gomez) 

 17,841

 5,765

209.5%

 17,656

1.0%

Total Products Revenue 

 $ 184,314

 $ 169,606

8.7%

 $ 167,620

10.0%

 

 

 

 

 

 

Subscription (Gomez) - proforma basis

 $ 17,841

 $ 14,209

25.6%

 $ 17,656

1.0%

 

 

 

 

 

 

Total Product Revenue by Geography

 

 

 

 

 

North America

 $ 96,171

 $ 88,569

8.6%

 $ 97,131

(1.0%)

International

 $ 88,143

 $ 81,037

8.8%

 $ 70,489

25.0%

 

 

 

 

 

 

Total Cost of Product Revenue 

 $ 103,973

 $ 96,571

7.7%

 $ 94,932

9.5%

 

 

 

 

 

 

Deferred License Fees

 

 

 

 

 

 Current

 $ 42,813

 $ 53,404

(19.8%)

 $ 43,790

(2.2%)

 Long-term

 $ 28,650

 $ 51,959

(44.9%)

 $ 33,370

(14.1%)

 

 

 

 

 

 

 Deferred During Quarter

 $ 9,188

 $ 25,026

(63.3%)

 $ 5,619

63.5%

 Recognized During Quarter

 $ 15,620

 $ 19,227

(18.8%)

 $ 15,584

0.2%

 

 

 

 

 

 

Professional Services:

 

 

 

 

 

Professional Services Segment Fees

 $ 48,332

 $ 49,430

(2.2%)

 $ 46,087

4.9%

Application Services Segment Fees

 14,379

 10,828

32.8%

 12,162

18.2%

Total Professional Services Fees

 $ 62,711

 $ 60,258

4.1%

 $ 58,249

7.7%

 

 

 

 

 

 

Professional Services Segment Contribution Margin 

15.0%

12.1%

 

12.5%

 

Application Services Segment Contribution Margin 

11.5%

8.1%

 

9.9%

 

Total Professional Services Fees Contribution Margin 

14.2%

11.4%

 

11.9%

 

 

 

 

 

 

 

Billable Professional Services Segment Headcount

 1,265

1,270

(0.4%)

 1,159

9.1%

Application Services Segment Headcount

 277

294

(5.8%)

 345

(19.7%)

 

 

 

 

 

 

Other:

 

 

 

 

 

Total Company Headcount

 4,329

4,410

(1.8%)

 4,290

0.9%

 

 

 

 

 

 

Total DSO (Billed) 

 95.4

 105.9

 

 66.4

 

Total DSO

 188.6

 199.4

 

 172.7

 

























































































































































 

 

COMPUWARE CORPORATION AND SUBSIDIARIES

PRODUCT COMMITMENTS 

(In Thousands)

 

 

 

 

 

 

 

 

 

QUARTER ENDED

 

DECEMBER 31

SEPTEMBER 30,

DECEMBER 31

 

2010

2010

2009

 

 

 

 

License fees

 $ 60,152

 $ 45,613

 $ 52,023

 

 

 

 

Change in deferred license fees 

 (6,432)

 (9,965)

 5,829

 

 

 

 

License contracts entered into during period 

 53,720

 35,648

 57,852

 

 

 

 

 

 

 

 

Maintenance and subscription fees 

 124,162

 122,007

 117,583

 

 

 

 

Change in deferred maintenance and subscription fees

 27,340

 (33,077)

 55,570

 

 

 

 

Maintenance and subscription contracts & renewals entered into during period 

 151,502

 88,930

 173,153

 

 

 

 

Total products commitments during period 

 $ 205,222

 $ 124,578

 $ 231,005

 

 

 

 

 

 

 

 

A significant portion of the company's product software revenue is recognized ratably over the contractual term of the arrangement. Therefore, to supplement the understanding of Compuware's software business, we believe it is important to also consider the amount of product commitments, which represents the full contractual value of each product software arrangement entered into during the reporting period.

CONTACT: Press Contact
Lisa Elkin, Vice President, Investor Relations, Marketing
and Communications
lisa.elkin@compuware.com
313-227-7345
For Sales and Marketing Information
Compuware Corporation
One Campus Martius,
Detroit, MI 48226
800-521-9353
http://www.compuware.com



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