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Compuware Earns 12 Cents Per Share in Q2 as Growth Businesses Continue to Soar

(October 21, 2010)



  • Non-mainframe solutions revenue up 53 percent year-over-year in Q2


  • Q2 total revenue increases 3.6 percent year-over-year


  • Total products revenue increases nearly five percent year-over-year to $167.6M in Q2


  • Total APM (Vantage and Gomez) revenues reach $51.4M in Q2, up nearly 26 percent, on a pro forma basis, year-over-year


  • Covisint revenues reach $12.2M, up 27 percent from Q2 last year


  • Professional Services segment contribution margin reaches 12.5 percent


DETROIT, Oct. 21, 2010 (GLOBE NEWSWIRE) -- Compuware Corporation (Nasdaq:CPWR), the technology performance company, today announced financial results for its second quarter ended September 30, 2010.



"Compuware has shaped its business to deliver steady, long-term growth in revenue and earnings," said Compuware President and Chief Operating Officer Bob Paul. "This quarter's results show clearly that we're delivering on that goal. Total revenues are up compared to Q2 last year, with strength in our growth businesses overcoming a difficult compare in mainframe revenues."



Compuware reports second quarter revenues of $225.9 million, up 3.6 percent from $217.9 million in Q2 last year. Second quarter earnings per share were 12 cents, based upon 224.4 million shares outstanding. Second quarter net income was $26 million.


"Compuware's best-in-class offerings in the rapidly growing, multi-billion dollar application performance management and secure collaboration markets are increasingly contributing to our overall growth and profitability," continued Paul. "With Vantage license fees up 48 percent and Gomez subscription fees—on a pro forma basis—up nearly 30 percent year-over-year, we're establishing ourselves not only as the leader, but the world standard in APM.




"Supporting these growth engines, our mainframe business continues to sustain its strong renewal rate of more than 90 percent, and our Professional Services business is now showing year-over-year revenue and margin growth," continued Paul. "Moving forward, I expect Compuware's focused, balanced solution portfolio to continue producing market-leading value for our customers, shareholders and employees."



During the company's second quarter, software license fees were $45.6 million. Maintenance and subscription fees were $122 million in the second quarter, up 11.2 percent from $109.7 million in the second quarter last year. Revenue from Professional Services in the second quarter was $58.3 million, compared to $58.1 million in the same quarter last year.



Second Quarter Fiscal Year 2011 Highlights



During the second quarter, Compuware:




  • Acquired DocSite, an award-winning clinical decision support and quality performance management company, adding quality care and performance management capabilities to Covisint.


  • Announced that Compuware Gomez was named the #1 provider of web performance monitoring solutions to the largest online retailers in the U.S. for the fourth consecutive year by Internet Retailer.


  • Achieved VMware Ready™ status for Compuware Vantage.


  • Released research revealing that large European organizations lose €608,000 every year due to performance-related problems with cloud-based applications.


  • Announced that several Michigan health plans have coalesced under one entity—Michigan Association of Health Plans—leveraging Covisint ExchangeLink™.


  • Introduced the Compuware Workbench, a new modernized open development environment for managing mainframe application development.


  • Was recognized by Enterprise Management Associates as a "Value Leader" and was also recognized as the industry's best Business Service Management (BSM) solution in the "EMA BSM Service Impact Radar Report."


  • Partnered with AppLabs, the world's largest software testing and quality management company, to deliver enhanced performance testing capabilities to customers.


  • Unveiled a strategic partnership with Tatanet to provide end-to-end application performance management services to Tatanet's customers in India.


  • Announced a competitive switch program called "More" that provides an attractive and secure upgrade path to Changepoint PSA for QuickArrow customers.


  • Announced that Steria, one of Europe's leading IT service companies, has chosen Compuware Changepoint to provide a core management system for project and service portfolios worldwide.


  • Announced that RightNow Technologies (Nasdaq:RNOW) chose Compuware's project portfolio management solution, Changepoint, to help RightNow's professional services division deliver valuable information to enhance client support and automate key processes.


  • Released information that Covisint became a member of Energistics, the upstream industry open standards oil and gas consortium.


  • Announced that the Gomez global performance network expanded by 50 percent, exceeding 150,000 global Last Mile locations and 150 commercial-grade Internet backbone nodes.


  • Launched through Gomez numerous new industry benchmarks that provide companies with an unbiased view of the state of web and mobile site performance.


  • Introduced with Gomez a free Cross-Device Website Compatibility test that allows organizations to see if their web or mobile site displays correctly across mobile smart devices including the iPhone, iPad, BlackBerry and Nexus One.


  • Announced that, for the 10th consecutive year, it earned the "101 Best and Brightest Companies to Work For" award presented by The Michigan Business & Professional Association.



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 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 (21:00 GMT) today. To join the conference call, interested parties in the United States should call 800-230-1074. For international access, the conference call number is +1-612-234-9959. 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 170179. 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 SEPTEMBER 30, 

 ASSETS 

 

 

 

2010

2009

 CURRENT ASSETS: 

 

 

Cash and cash equivalents 

 $ 77,268

 $ 332,975

Accounts receivable, net 

 433,373

 407,645

Deferred tax asset, net 

 51,535

 40,408

Income taxes refundable 

 4,252

 3,357

Prepaid expenses and other current assets 

 28,979

 24,855

Total current assets 

 595,407

 809,240

 

 

 

PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION 

 335,614

 345,158

 

 

 

CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET 

 86,164

 42,146

 

 

 

 ACCOUNTS RECEIVABLE 

 201,759

 229,078

 DEFERRED TAX ASSET, NET 

 35,350

 34,275

 GOODWILL 

 607,616

 341,502

 OTHER ASSETS 

 30,648

 25,626

 

 

 

 TOTAL ASSETS 

 $ 1,892,558

 $ 1,827,025

 

 

 

 LIABILITIES AND SHAREHOLDERS' EQUITY 

 

 

 

 

 

 CURRENT LIABILITIES: 

 

 

Accounts payable 

 $ 15,789

 $ 23,142

Accrued expenses 

 85,112

 84,106

Income taxes payable 

 20,768

 32,227

Deferred revenue 

 429,328

 396,351

Total current liabilities 

 550,997

 535,826

 

 

 

 DEFERRED REVENUE 

 344,334

 345,534

 

 

 

 ACCRUED EXPENSES 

 33,897

 30,222

 

 

 

 DEFERRED TAX LIABILITY, NET 

 54,029

 29,845

Total liabilities 

 983,257

 941,427

 

 

 

 SHAREHOLDERS' EQUITY: 

 

 

Common stock 

 2,183

 2,306

Additional paid-in capital 

 599,468

 611,469

Retained earnings 

 305,585

 273,799

Accumulated other comprehensive income (loss) 

 2,065

 (1,976)

Total shareholders' equity 

 909,301

 885,598

 

 

 

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 

 $ 1,892,558

 $ 1,827,025




































































































































































































































































































































 

 

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,

 

 

 

 

 

 

2010

2009

2010

2009

REVENUES:

 

 

 

 

Software license fees

 $ 45,613

 $ 50,110

 $ 78,943

 $ 90,656

Maintenance and subscription fees

122,007

109,734

 238,766

 220,861

Professional services fees

58,249

58,085

 114,645

 120,800

Total revenues

225,869

217,929

432,354

432,317

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

Cost of software license fees

3,267

3,874

 6,683

 7,823

Cost of maintenance and subscription fees

13,265

8,368

 26,552

 17,324

Cost of professional services

51,296

51,770

 102,009

 110,671

Technology development and support

21,893

21,633

 43,434

 43,115

Sales and marketing

56,507

50,756

 114,211

 103,904

Administrative and general

38,780

38,767

 76,217

 78,897

Restructuring costs

 

1,328

 

 3,818

Gain on divestiture of product lines

 

 

 

 (52,351)

Total operating expenses

185,008

176,496

369,106

313,201

 

 

 

 

 

INCOME FROM OPERATIONS

40,861

41,433

63,248

119,116

 

 

 

 

 

OTHER INCOME (EXPENSES)

 

 

 

 

Interest income

907

1,259

 1,816

 2,828

Other

(45)

74

 (89)

 (75)

 

 

 

 

 

OTHER INCOME, NET

862

1,333

1,727

2,753

 

 

 

 

 

INCOME BEFORE INCOME TAXES

41,723

42,766

64,975

121,869

 

 

 

 

 

INCOME TAX PROVISION

15,731

14,780

 26,338

 42,836

 

 

 

 

 

NET INCOME 

 $ 25,992

 $ 27,986

 $ 38,637

 $ 79,033

 

 

 

 

 

DILUTED EPS COMPUTATION

 

 

 

 

Numerator: Net income 

 $ 25,992

 $ 27,986

 $ 38,637

 $ 79,033

Denominator:

 

 

 

 

Weighted-average common shares outstanding

221,280

234,290

 222,900

 237,519

Dilutive effect of stock options

3,114

1,825

 3,071

 1,784

Total shares

224,394

236,115

225,971

239,303

Diluted EPS

 $ 0.12

 $ 0.12

 $ 0.17

 $ 0.33




































































































































































































































 

 

COMPUWARE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

 

 

 

 

SIX MONTHS ENDED

 

SEPTEMBER 30,

 

2010

2009

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:

 

 

Net income

 $ 38,637

 $ 79,033

Adjustments to reconcile net income to cash provided by operations:

 

 

Gain on divestiture of product lines

 

(52,351)

Depreciation and amortization

24,505

20,884

Stock award compensation

9,195

9,478

Deferred income taxes

(627)

3,536

Other

416

892

Net change in assets and liabilities, net of effects from acquisition, divestiture and currency fluctuations:

 

 

Accounts receivable

49,767

91,059

Prepaid expenses and other current assets

16,822

17,004

Other assets

745

(2,616)

Accounts payable and accrued expenses

(28,040)

(15,794)

Deferred revenue

(104,230)

(87,772)

Income taxes

6,171

6,646

Net cash provided by operating activities

13,361

69,999

 

 

 

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:

 

 

Purchase of:

 

 

Business, net of cash acquired

(15,715)

 

Property and equipment

(7,528)

(3,674)

Capitalized software

(9,826)

(5,780)

Net proceeds from divestiture of product lines

 

64,992

Net cash provided by (used in) investing activities

(33,069)

55,538

 

 

 

CASH FLOWS USED IN FINANCING ACTIVITIES:

 

 

Net proceeds from exercise of stock options including excess tax benefits

3,241

1,702

Employee contribution to common stock purchase plans

1,232

1,075

Repurchase of common stock

(59,015)

(85,806)

Net cash used in financing activities

(54,542)

(83,029)

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

1,621

12,355

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(72,629)

54,863

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

149,897

278,112

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 $ 77,268

 $ 332,975









































































































































































































































































































































































































































































































 

 

COMPUWARE CORPORATION AND SUBSIDIARIES

OPERATIONAL HIGHLIGHTS

(Dollar Amounts In Thousands)

 

 

 

 

 

 

 

QUARTER

 

QUARTER

 

 

ENDED

 

ENDED

 

 

SEP 30,

YR - YR

JUN 30,

QTR - QTR

 

2010

2009

% Chg

2010

% Chg

Products:

 

 

 

 

 

Software License Fees:

 

 

 

 

 

Distributed License Fees:

 

 

 

 

 

Vantage

 $ 18,231

 $ 12,308

48.1%

 $ 14,232

28.1%

Changepoint

 2,248

 1,647

36.5%

 2,352

(4.4%)

Uniface

 2,374

 1,771

34.0%

 2,038

16.5%

Other

 366

 155

136.1%

 187

95.7%

Distributed License Fees

 23,219

 15,881

46.2%

 18,809

23.4%

Mainframe License Fees

 22,394

 34,229

(34.6%)

 14,521

54.2%

Total Software License Fees

 45,613

 50,110

(9.0%)

 33,330

36.9%

 

 

 

 

 

 

Maintenance and Subscription Fees:

 

 

 

 

 

Distributed Products

 26,810

 26,675

0.5%

 26,127

2.6%

Mainframe Products

 77,541

 83,059

(6.6%)

 77,360

0.2%

Subscription (Gomez)

 17,656

 -- 

N/A

 13,272

33.0%

Total Maintenance and Subscription Fees

 122,007

 109,734

11.2%

 116,759

4.5%

 

 

 

 

 

 

Total Products Revenue:

 

 

 

 

 

Distributed Products

 50,029

 42,556

17.6%

 44,936

11.3%

Mainframe Products

 99,935

 117,288

(14.8%)

 91,881

8.8%

Subscription (Gomez) 

 17,656

 -- 

N/A

 13,272

33.0%

Total Products Revenue 

 $ 167,620

 $ 159,844

4.9%

 $ 150,089

11.7%

 

 

 

 

 

 

Subscription (Gomez) - proforma basis

 $ 17,656

 $ 13,625

29.6%

 $ 13,272

33.0%

 

 

 

 

 

 

Total Product Revenue by Geography

 

 

 

 

 

North America

 $ 97,131

 $ 88,285

10.0%

 $ 83,951

15.7%

International

 $ 70,489

 $ 71,559

(1.5%)

 $ 66,138

6.6%

 

 

 

 

 

 

Total Cost of Product Revenue 

 $ 94,932

 $ 84,631

12.2%

 $ 95,948

(1.1%)

 

 

 

 

 

 

Deferred License Fees

 

 

 

 

 

Current

 $ 43,790

 $ 52,637

(16.8%)

 $ 46,168

(5.2%)

Long-term

 $ 33,370

 $ 47,027

(29.0%)

 $ 36,424

(8.4%)

Deferred During Quarter

 $ 5,619

 $ 12,155

(53.8%)

 $ 7,000

(19.7%)

Recognized During Quarter

 $ 15,584

 $ 18,631

(16.4%)

 $ 15,271

2.0%

 

 

 

 

 

 

Professional Services:

 

 

 

 

 

Professional Services Segment Fees

 $ 46,087

 $ 48,532

(5.0%)

 $ 45,157

2.1%

Application Services Segment Fees

 12,162

 9,553

27.3%

 11,239

8.2%

Total Professional Services Fees

 $ 58,249

 $ 58,085

0.3%

 $ 56,396

3.3%

 

 

 

 

 

 

Professional Services Segment Contribution Margin 

12.5%

11.7%

 

10.9%

 

Application Services Segment Contribution Margin 

9.9%

6.9%

 

6.8%

 

Total Professional Services Fees Contribution Margin 

11.9%

10.9%

 

10.1%

 

 

 

 

 

 

 

Billable Professional Services Segment Headcount

 1,159

1,280

(9.5%)

 1,171

(1.0%)

Application Services Segment Headcount

 345

277

24.5%

 309

11.7%

 

 

 

 

 

 

Other:

 

 

 

 

 

Total Company Headcount

 4,290

4,151

3.3%

 4,256

0.8%

 

 

 

 

 

 

Total DSO (Billed) 

 66.6

 63.3

 

 64.3

 

Total DSO

 172.7

 168.3

 

 174.3

 

























































































































































 

 

COMPUWARE CORPORATION AND SUBSIDIARIES

PRODUCT COMMITMENTS 

(In Thousands)

 

 

 

 

 

 

 

 

 

QUARTER ENDED

 

SEPTEMBER 30,

JUNE 30,

SEPTEMBER 30,

 

2010

2010

2009

 

 

 

 

License fees

 $ 45,613

 $ 33,330

 $ 50,110

 

 

 

 

Change in deferred license fees 

 (9,965)

 (8,271)

 (6,476)

 

 

 

 

License contracts entered into during period 

 35,648

 25,059

 43,634

 

 

 

 

 

 

 

 

Maintenance and subscription fees 

 122,007

 116,759

 109,734

 

 

 

 

Change in deferred maintenance and subscription fees

 (33,029)

 (57,515)

 (16,656)

 

 

 

 

Maintenance and subscription contracts & renewals entered into during period 

 88,978

 59,244

 93,078

 

 

 

 

Total products commitments during period 

 $ 124,626

 $ 84,303

 $ 136,712

 

 

 

 

 

 

 

 

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



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