Compuware Announces Fiscal Year 2013 Q2 Results

Compuware Logo

  • Earns five cents per share on $220.6M in total revenues, despite challenging European environment
  • APM total revenues increase 7 percent y-o-y to $67.1M
  • Gomez bookings increase 16% y-o-y
  • Covisint revenues increase 17 percent y-o-y to $20.5M

DETROIT, Oct. 23, 2012 (GLOBE NEWSWIRE) -- Compuware Corporation (Nasdaq:CPWR), the technology performance company, today announced financial results for its second quarter ended September 30, 2012.

"Compuware achieved its earnings per share expectations in Q2, supported by continued revenue growth and margin improvements from our APM and Covisint business units," said Compuware CEO Bob Paul. "We have positive momentum heading into the second half of the year and will continue to focus on delivering profitable revenue expansion through our growth engines."

Second Quarter Fiscal Year 2013 Results

During the company's second quarter:

  • software license fees were $31.7 million
  • maintenance fees were $102.2 million
  • subscription fees were $20.2 million
  • professional services fees were $46.0 million
  • application services fees were $20.5 million

During the second quarter, total revenues were $220.6 million. Net income was $10.6 million. Earnings per share were five cents based upon 220 million shares outstanding.

Fiscal 2013 Expectations

For fiscal 2013, Compuware expects total revenues of $980 to $995 million and earnings of 36 to 40 cents per share. The company expects cash flow from operations of $150 to $160 million.

Second Quarter Fiscal Year 2013 Highlights

During the second quarter, Compuware:

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 5:00 p.m. Eastern time (21:00 GMT) today. To join the conference call, interested parties in the United States should call 800-230-1059. 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 265467. Additionally, investors can listen to the conference call via webcast by visiting the Compuware Corporation Investor Relations web site at http://www.compuware.com.

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 SEPTEMBER 30,
ASSETS
2012 2011
CURRENT ASSETS:
Cash and cash equivalents $ 63,516 $ 63,866
Accounts receivable, net 365,143 433,506
Deferred tax asset, net 39,413 44,173
Income taxes refundable 9,930 5,540
Prepaid expenses and other current assets 31,884 30,357
Total current assets 509,886 577,442
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 319,472 330,079
CAPITALIZED SOFTWARE AND OTHER
INTANGIBLE ASSETS, NET 117,395 121,310
ACCOUNTS RECEIVABLE 199,574 200,028
DEFERRED TAX ASSET, NET 37,973 42,366
GOODWILL 794,989 803,289
OTHER ASSETS 35,789 37,430
TOTAL ASSETS $ 2,015,078 $ 2,111,944
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 17,296 $ 21,943
Accrued expenses 82,389 92,937
Income taxes payable 5,490 22,670
Deferred revenue 399,103 421,897
Total current liabilities 504,278 559,447
LONG TERM DEBT 59,300 125,600
DEFERRED REVENUE 300,695 329,212
ACCRUED EXPENSES 24,726 27,715
DEFERRED TAX LIABILITY, NET 84,193 78,639
Total liabilities 973,192 1,120,613
SHAREHOLDERS' EQUITY:
Common stock 2,148 2,184
Additional paid-in capital 693,556 674,318
Retained earnings 362,648 334,723
Accumulated other comprehensive loss (16,466) (19,894)
Total shareholders' equity 1,041,886 991,331
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,015,078 $ 2,111,944
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
THREE MONTHS ENDED
SEPTEMBER 30,
SIX MONTHS ENDED
SEPTEMBER 30,
2012 2011 2012 2011
REVENUES:
Software license fees $ 31,674 $ 61,711 $ 65,668 $ 95,837
Maintenance fees 102,197 109,080 205,146 216,065
Subscription fees 20,231 19,101 40,710 38,225
Professional services fees 45,954 53,256 94,106 106,828
Application services fees 20,542 17,548 41,129 33,715
Total revenues 220,598 260,696 446,759 490,670
OPERATING EXPENSES:
Cost of software license fees 4,904 4,770 9,729 8,306
Cost of maintenance fees 9,068 9,773 18,014 19,304
Cost of subscription fees 7,827 7,774 15,220 14,901
Cost of professional services 40,085 46,100 82,386 91,219
Cost of application services 18,989 19,835 36,710 36,669
Technology development and support 27,549 26,740 54,046 51,441
Sales and marketing 56,641 65,577 118,831 127,572
Administrative and general 38,361 41,967 78,086 83,481
Total operating expenses 203,424 222,536 413,022 432,893
INCOME FROM OPERATIONS 17,174 38,160 33,737 57,777
OTHER INCOME (EXPENSE), NET (87) (8) (35) 990
INCOME BEFORE INCOME TAXES 17,087 38,152 33,702 58,767
INCOME TAX PROVISION 6,493 15,473 12,640 19,103
NET INCOME $ 10,594 $ 22,679 $ 21,062 $ 39,664
DILUTED EPS COMPUTATION
Numerator: Net income $ 10,594 $ 22,679 $ 21,062 $ 39,664
Denominator:
Weighted-average common shares outstanding 215,633 218,521 216,566 218,373
Dilutive effect of stock options 4,337 3,604 4,142 4,439
Total shares 219,970 222,125 220,708 222,812
Diluted EPS $ 0.05 $ 0.10 $ 0.10 $ 0.18
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
SIX MONTHS ENDED
SEPTEMBER 30,
2012 2011
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $ 21,062 $ 39,664
Adjustments to reconcile net income to cash provided
by operations:
Depreciation and amortization 31,126 28,770
Stock award compensation 15,179 11,983
Deferred income taxes 4,812 3,024
Other 269 125
Net change in assets and liabilities, net of effects from
currency fluctuations and acquisitions:
Accounts receivable 90,397 41,669
Prepaid expenses and other current assets (66) 5,913
Other assets 4,601 (7,232)
Accounts payable and accrued expenses (41,426) (10,048)
Deferred revenue (114,452) (95,571)
Income taxes 4,820 13,461
Net cash provided by operating activities 16,322 31,758
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of:
Business, net of cash acquired -- (249,337)
Property and equipment (12,977) (12,189)
Capitalized software (15,583) (13,137)
Other (1,400) (500)
Net cash used in investing activities (29,960) (275,163)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from borrowings 87,300 161,200
Payments on borrowings (73,000) (35,600)
Net proceeds from exercise of stock awards including excess tax benefits 8,676 6,498
Employee contribution to common stock purchase plans 1,427 1,403
Repurchase of common stock (44,828) (3,308)
Net cash provided by (used in) financing activities (20,425) 130,193
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,601) (3,166)
NET CHANGE IN CASH AND CASH EQUIVALENTS (35,664) (116,378)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 99,180 180,244
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 63,516 $ 63,866
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(Dollar Amounts In Thousands)
QUARTER
ENDED
SEP 30,

2012

2011
YR - YR
% Chg
Total Product Software Revenue by Geography
North America $ 88,809 $ 107,989 (17.8%)
International 65,293 81,903 (20.3%)
Deferred License Fees
Current $ 17,747 $ 30,120 (41.1%)
Long-term 8,774 14,361 (38.9%)
Deferred Maintenance
Current $ 299,037 $ 309,689 (3.4%)
Long-Term 257,798 275,379 (6.4%)
Deferred Subscription
Current $ 46,602 $ 49,314 (5.5%)
Long-Term 10,549 14,412 (26.8%)
Deferred Professional Services $ 22,190 $ 18,845 17.8%
Deferred Application Services $ 37,101 $ 38,989 (4.8%)
Other:
Total Company Headcount 4,567 4,720 (3.2%)
Total DSO (Billed) 64.9 66.8
Total DSO 148.9 149.7
Stock-based compensation Expense
Cost of license fees $ -- $ -- N/A
Cost of maintenance fees 235 274 (14.2%)
Cost of subscription fees 18 32 (43.8%)
Cost of professional services 68 40 70.0%
Cost of application services 387 515 (24.9%)
Technology development and support 730 750 (2.7%)
Sales and marketing 1,403 1,767 (20.6%)
Administrative and general 4,049 3,282 23.4%
Total stock-based compensation expense before income taxes $ 6,890 $ 6,660 3.5%
COMPUWARE CORPORATION AND SUBSIDIARIES
BUSINESS UNIT RESULTS OF OPERATIONS
(In Thousands)
Quarter Ended: APM Changepoint Mainframe Uniface Professional Services Covisint Application Services Unallocated Expenses Total
September 30, 2012
Software license fees $ 17,942 $ 2,068 $ 9,773 $ 1,891 -- -- -- $ 31,674
Maintenance fees 22,410 4,052 68,378 7,357 -- -- -- 102,197
Subscription fees 19,544 687 -- -- -- -- -- 20,231
Professional services fees 7,184 3,317 674 1,095 $ 33,684 -- -- 45,954
Application services fees -- -- -- -- -- $ 20,542 -- 20,542
Total revenues 67,080 10,124 78,825 10,343 33,684 20,542 -- 220,598
Operating expenses 74,059 10,752 20,284 4,606 28,138 20,051 $ 45,534 203,424
Income (loss) from operations $ (6,979) $ (628) $ 58,541 $ 5,737 $ 5,546 $ 491 $ (45,534) $ 17,174
Contribution margin % (10.4%) (6.2%) 74.3% 55.5% 16.5% 2.4% 7.8%
Operating expenses include:
Stock awards compensation $ 1,651 $ 15 $ 550 $ 10 $ 42 $ 387 $ 4,235 $ 6,890
Amortization of purchased software $ 2,224 $ -- $ -- $ -- $ -- $ 148 $ -- $ 2,372
Amortization of other acquired intangible assets $ 1,826 $ -- $ -- $ -- $ -- $ 113 $ -- $ 1,939
September 30, 2011
Software license fees $ 18,329 $ 2,136 $ 38,456 $ 2,790 -- -- -- $ 61,711
Maintenance fees 19,129 3,913 78,019 8,019 -- -- -- 109,080
Subscription fees 18,599 502 -- -- -- -- -- 19,101
Professional services fees 6,787 4,300 1,569 1,072 $ 39,528 -- -- 53,256
Application services fees -- -- -- -- -- $ 17,548 -- 17,548
Total revenues 62,844 10,851 118,044 11,881 39,528 17,548 -- 260,696
Operating expenses 79,932 10,944 24,129 5,151 31,662 19,835 $ 50,883 222,536
Income (loss) from operations $ (17,088) $ (93) $ 93,915 $ 6,730 $ 7,866 $ (2,287) $ (50,883) $ 38,160
Contribution margin % (27.2%) (0.9%) 79.6% 56.6% 19.9% (13.0%) 14.6%
Operating expenses include:
Stock awards compensation $ 2,149 $ 107 $ 536 $ 61 $ 10 $ 515 $ 3,282 $ 6,660
Amortization of purchased software $ 2,397 $ -- $ -- $ -- $ -- $ 148 $ -- $ 2,545
Amortization of other acquired intangible assets $ 2,350 $ -- $ -- $ -- $ -- $ 113 $ -- $ 2,463
COMPUWARE CORPORATION AND SUBSIDIARIES
BUSINESS UNIT RESULTS OF OPERATIONS
(In Thousands)
Six Months Ended: APM Changepoint Mainframe Uniface Professional Services Covisint Application Services Unallocated Expenses Total
September 30, 2012
Software license fees $ 40,299 $ 2,861 $ 18,823 $ 3,685 -- -- -- $ 65,668
Maintenance fees 43,175 8,182 138,924 14,865 -- -- -- 205,146
Subscription fees 39,396 1,314 -- -- -- -- -- 40,710
Professional services fees 15,379 6,761 967 2,271 $ 68,728 -- -- 94,106
Application services fees -- -- -- -- -- $ 41,129 -- 41,129
Total revenues 138,249 19,118 158,714 20,821 68,728 41,129 -- 446,759
Operating expenses 150,155 20,441 43,129 10,025 57,058 38,067 $ 94,147 413,022
Income (loss) from operations $ (11,906) $ (1,323) $ 115,585 $ 10,796 $ 11,670 $ 3,062 $ (94,147) $ 33,737
Contribution margin % (8.6%) (6.9%) 72.8% 51.9% 17.0% 7.4% 7.6%
Operating expenses include:
Stock awards compensation $ 3,155 $ 30 $ 1,511 $ 37 $ 115 $ 709 $ 9,622 $ 15,179
Amortization of purchased software $ 4,483 $ -- $ -- $ -- $ -- $ 296 $ -- $ 4,779
Amortization of other acquired intangible assets $ 3,676 $ -- $ -- $ -- $ -- $ 225 $ -- $ 3,901
September 30, 2011
Software license fees $ 29,782 $ 4,130 $ 57,154 $ 4,771 -- -- -- $ 95,837
Maintenance fees 37,562 7,752 154,994 15,757 -- -- -- 216,065
Subscription fees 37,260 965 -- -- -- -- -- 38,225
Professional services fees 13,753 7,970 3,402 2,278 $ 79,425 -- -- 106,828
Application services fees -- -- -- -- -- $ 33,715 -- 33,715
Total revenues 118,357 20,817 215,550 22,806 79,425 33,715 -- 490,670
Operating expenses 149,371 22,306 48,205 10,551 63,251 36,669 $ 102,540 432,893
Income (loss) from operations $ (31,014) $ (1,489) $ 167,345 $ 12,255 $ 16,174 $ (2,954) $ (102,540) $ 57,777
Contribution margin % (26.2%) (7.2%) 77.6% 53.7% 20.4% (8.8%) 11.8%
Operating expenses include:
Stock awards compensation $ 3,265 $ 206 $ 1,035 $ 118 $ 203 $ 942 $ 6,214 $ 11,983
Amortization of purchased software $ 3,431 $ -- $ -- $ -- $ -- $ 296 $ 3,727
Amortization of other acquired intangible assets $ 3,812 $ -- $ -- $ -- $ -- $ 226 $ 4,038
CONTACT: Press Contact Lisa Elkin, Senior Vice President, Investor Relations, Marketing and Communications +1-313-227-7345

Source:Compuware