DETROIT--(BUSINESS WIRE)--Compuware Corporation (Nasdaq: CPWR), the technology performance company, today announced financial results for its third quarter, fiscal year 2014 ended December 31, 2013.
Non-GAAP net income for the quarter was $38.0 million, or $0.17 per diluted share, compared to $32.3 million, or $0.15 per diluted share in the year-ago period. GAAP net income for the third quarter was $25.0 million, or $0.11 per diluted share, compared to $25.3 million, or $0.12 per diluted share in the year-ago period.
(Included in the financial tables is a reconciliation between non-GAAP and GAAP results.)
“The third quarter was a very productive period for the company. First and foremost, we posted another quarter of solid results, led by APM’s strong operating execution and our continued improvement in profitability, as evidenced by double-digit earnings growth both year-over-year and sequentially,” said Compuware President and CEO Bob Paul. “Our APM business continues to excel on all fronts, driving consistent growth and profitability gains. Although there is more work to do in our Mainframe business, I’m pleased with the company’s operating performance while also successfully executing on several key strategic initiatives. As a result, we are now poised to achieve greater earnings and revenue growth going forward. With our portfolio rationalization now behind us, we will continue to execute on the final steps that remain in our transformation into the ‘new’ Compuware.”
Third Quarter Fiscal Year 2014 Results
During the company’s third quarter:
- Total revenues were approximately $250.5M, down 2.9 percent y/y and up 9.8 percent sequentially
- Software license fees were $56.7M, down 12.6 percent y/y and up 58.8 percent sequentially
- Maintenance fees were $101.6 million, flat y/y and up 1.1 percent sequentially
- Subscription fees were $21.7 million, up 4.5 percent y/y and 5.2 percent sequentially
- Professional services revenues were $46.4 million, flat y/y and sequentially
- Application services fees were $24.1 million, up 1.1 percent y/y and down 1.7 percent sequentially
Third Quarter Fiscal Year 2014 Highlights
During the third quarter, Compuware:
- Made changes to its Board of Directors by appointing Jeffrey J. Clarke, Managing Partner at Augusta Columbia Capital, and Jennifer J. Raab, President of Hunter College. Glenda D. Price, Ph.D., and Ralph J. Szygenda stepped down from the Board.
- Announced that Gartner, Inc. positioned Compuware in the “Leaders” quadrant of the “Magic Quadrant for Application Performance Monitoring (APM)” report for the fourth consecutive year. Compuware is the only vendor to consistently appear in this position since the report first published in 2010. Additionally, Compuware was once again positioned the furthest for ‘completeness of vision’ in the APM Magic Quadrant for the third consecutive year.
- Announced that industry analyst firm International Data Corporation (IDC) ranked Compuware the world's third largest APM software vendor based on 2012 revenue. Compuware also had the highest growth rate of the top three vendors.
- Released a new version of Compuware APM Real User Monitoring for Mobile and Web Apps powered by dynaTrace and PurePath TechnologyTM.
- Announced day-one support for IBM DB2 11 for z/OS; allowing customers who are ready to migrate their production applications to DB2 11 to immediately begin using Compuware's comprehensive suite of mainframe developer productivity solutions for DB2 including Abend-AID, File-AID, Xpediter and Strobe.
- Announced the availability of the new Compuware APMaaS Platform, which offers a simplified, zero-configuration user interface for quick time-to-value.
- Announced the results of a global CIO survey on the impact of new technologies and trends on the mainframe application environment. The survey found mobile technology is increasing complexity, usage and costs of mainframe applications.
- Revealed that it was once again positioned by Gartner Inc. in the “Magic Quadrant for Integrated IT Portfolio Analysis (IIPA) Applications.” This positioning was based on analyst evaluation of Compuware Changepoint, the company’s market-leading project and portfolio management solution.
- Signed a strategic agreement with Cisco. Under the agreement, Cisco will embed Covisint technology within the Cisco exchange platform to provide high-value solutions to customers worldwide.
Use of Non-GAAP Financial Measures
In an effort to provide investors with additional information regarding the Company's results as determined by U.S. generally accepted accounting principles (GAAP), the Company has also disclosed in this press release and the accompanying tables non-GAAP net income and non-GAAP diluted earnings per share. Each of these financial measures excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. These non-GAAP financial measures exclude share-based compensation expense; the amortization of acquired software and intangible assets; restructuring charges; advisory fees associated with certain shareholder actions and business transformation; and the related tax impacts of these items. Each of the non-GAAP adjustments is described in more detail below. This press release also contains a reconciliation of each of these non-GAAP measures to its most comparable GAAP financial measure.
We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our operating results because they exclude amounts that management and the board of directors do not consider part of core operating results when assessing the performance of the organization. We believe that inclusion of these non-GAAP financial measures provides consistency and comparability with past reports of financial results and provides consistency in calculations by outside analysts reviewing our results. Accordingly, we believe these non-GAAP financial measures are useful to investors in allowing for greater transparency of supplemental information used by management.
While we believe that these non-GAAP financial measures provide useful supplemental information, there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. Items such as share-based compensation expense; the amortization of acquired software and intangible assets; restructuring charges; advisory fees associated with certain shareholder actions and business transformation; and the related tax impacts of these items that are excluded from our non-GAAP financial measures can have a material impact on net earnings. As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, net earnings, cash flow from operations or other measures of performance prepared in accordance with GAAP. We compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reconciling the non-GAAP financial measures to their most comparable GAAP financial measure. Investors are encouraged to review the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures that are included elsewhere in this press release.
The following discusses the reconciling items from our non-GAAP financial measures to the most comparable GAAP financial measures:
Share-based compensation expense. Our non-GAAP financial measures exclude the compensation expenses required to be recorded by GAAP for equity awards to employees and directors. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding expenses related to share-based compensation, because these costs are generally fixed at the time an award is granted, are then expensed over several years and generally cannot be changed or influenced by management once granted.
Amortization of acquired software and intangible assets. Our non-GAAP financial measures exclude costs associated with the amortization of acquired software and intangible assets. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding amortization of acquired software and intangible assets, because these costs are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.
Restructuring charges. Our non-GAAP financial measures exclude restructuring charges, and any subsequent changes in estimates, as they relate to our corporate restructuring activities. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding restructuring charges, in order to provide comparability and consistency with historical operating results.
Advisory fees associated with certain shareholder actions and business transformation. During the fourth quarter of fiscal 2013, in response to an unsolicited, nonbinding offer to purchase the outstanding shares of the Company from a shareholder, the Company announced its willingness to consider other viable offers. The Company continues to incur unplanned consultant fees to analyze the business, review additional requests for information from other interested parties and to implement business transformation plans. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding such costs, in order to provide comparability and consistency with historical operating results.
Provision for income taxes on above pre-tax non-GAAP adjustments. Our non-GAAP financial measures exclude the tax impact of the above pre-tax non-GAAP adjustments. This amount is calculated using the tax rates of each country to which these pre-tax non-GAAP adjustments relate. Management excludes the non-GAAP adjustments on a net-of-tax basis in evaluating our performance. Therefore, we exclude the tax impact of these charges when presenting non-GAAP financial measures.
Compuware Corporation
Compuware is the technology performance company, and we exist solely to help our customers optimize the performance of their most important and innovative technologies—those that drive their businesses forward. Today, more than 7,100 companies, including many of the world’s largest organizations, depend on Compuware and our new-generation approach to performance management to do just that. Learn more at: http://www.compuware.com.
Conference Call Information
Compuware will today hold a conference call to discuss these results at 5:30 p.m. Eastern time (21:00 GMT). To join the conference call, interested parties in the United States should call 800-553-0349. For international access, the conference call number is +1-612-332-7516. No password is required. Additionally, investors can listen to the conference call via webcast by visiting the Compuware Corporation Investor Relations web site. A conference call presentation is also available on the site.
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 312917.
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 DECEMBER 31, | ||||||||
| ASSETS | ||||||||
| 2013 | 2012 | |||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 108,897 | $ | 64,884 | ||||
| Accounts receivable, net | 466,669 | 449,964 | ||||||
| Deferred tax asset, net | 42,859 | 38,669 | ||||||
| Income taxes refundable | 9,552 | 3,693 | ||||||
| Prepaid expenses and other current assets | 33,600 | 32,377 | ||||||
| Total current assets | 661,577 | 589,587 | ||||||
| PROPERTY AND EQUIPMENT, LESS ACCUMULATED | ||||||||
| DEPRECIATION AND AMORTIZATION | 292,872 | 314,404 | ||||||
| CAPITALIZED SOFTWARE AND OTHER | ||||||||
| INTANGIBLE ASSETS, NET | 109,648 | 119,041 | ||||||
| ACCOUNTS RECEIVABLE | 181,636 | 190,613 | ||||||
| DEFERRED TAX ASSET, NET | 29,289 | 36,254 | ||||||
| GOODWILL | 735,411 | 799,823 | ||||||
| OTHER ASSETS | 26,675 | 35,202 | ||||||
| TOTAL ASSETS | $ | 2,037,108 | $ | 2,084,924 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 25,610 | $ | 13,509 | ||||
| Accrued expenses | 113,061 | 98,171 | ||||||
| Income taxes payable | 8,737 | 14,883 | ||||||
| Deferred revenue | 408,505 | 413,446 | ||||||
| Total current liabilities | 555,913 | 540,009 | ||||||
| LONG TERM DEBT | - | 70,000 | ||||||
| DEFERRED REVENUE | 304,721 | 311,036 | ||||||
| ACCRUED EXPENSES | 15,549 | 29,139 | ||||||
| DEFERRED TAX LIABILITY, NET | 64,666 | 84,648 | ||||||
| Total liabilities | 940,849 | 1,034,832 | ||||||
| SHAREHOLDERS' EQUITY: | ||||||||
| Common stock | 2,178 | 2,121 | ||||||
| Additional paid-in capital | 812,342 | 692,133 | ||||||
| Retained earnings | 265,099 | 368,445 | ||||||
| Accumulated other comprehensive loss | (4,213) | (12,607) | ||||||
| Total Compuware shareholders' equity | 1,075,406 | 1,050,092 | ||||||
| Non-controlling interest | 20,853 | - | ||||||
| Total shareholders' equity | 1,096,259 | 1,050,092 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 2,037,108 | $ | 2,084,924 | ||||
| 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, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| REVENUES: | ||||||||||||||||
| Software license fees | $ | 56,694 | $ | 64,831 | $ | 127,810 | $ | 130,499 | ||||||||
| Maintenance fees | 101,600 | 102,341 | 300,628 | 307,487 | ||||||||||||
| Subscription fees | 21,733 | 20,793 | 63,169 | 61,503 | ||||||||||||
| Professional services fees | 46,378 | 46,049 | 141,790 | 140,155 | ||||||||||||
| Application services fees | 24,109 | 23,852 | 72,735 | 64,981 | ||||||||||||
| Total revenues | 250,514 | 257,866 | 706,132 | 704,625 | ||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Cost of software license fees | 5,366 | 5,388 | 16,404 | 15,117 | ||||||||||||
| Cost of maintenance fees | 7,670 | 8,639 | 23,615 | 26,653 | ||||||||||||
| Cost of subscription fees | 8,430 | 7,603 | 25,233 | 22,823 | ||||||||||||
| Cost of professional services | 38,278 | 39,694 | 116,237 | 122,080 | ||||||||||||
| Cost of application services | 28,618 | 20,758 | 86,568 | 57,468 | ||||||||||||
| Technology development and support | 22,516 | 25,629 | 73,176 | 79,675 | ||||||||||||
| Sales and marketing | 65,670 | 65,773 | 178,613 | 184,604 | ||||||||||||
| Administrative and general | 40,325 | 44,733 | 113,646 | 122,819 | ||||||||||||
| Restructuring costs | 3,737 | - | 9,082 | - | ||||||||||||
| Total operating expenses | 220,610 | 218,217 | 642,574 | 631,239 | ||||||||||||
| INCOME FROM OPERATIONS | 29,904 | 39,649 | 63,558 | 73,386 | ||||||||||||
| OTHER INCOME, NET | 2,960 | (55) | 3,347 | (90) | ||||||||||||
| INCOME BEFORE INCOME TAXES | 32,864 | 39,594 | 66,905 | 73,296 | ||||||||||||
| INCOME TAX PROVISION | 8,874 | 14,254 | 17,762 | 26,894 | ||||||||||||
| NET INCOME | 23,990 | 25,340 | 49,143 | 46,402 | ||||||||||||
| Less: Net income (loss) attributable to the | ||||||||||||||||
| non-controlling interest in Covisint Corporation | (1,032) | - | (2,186) | - | ||||||||||||
| NET INCOME ATTRIBUTABLE TO COMPUWARE CORP | $ | 25,022 | $ | 25,340 | $ | 51,329 | $ | 46,402 | ||||||||
| DILUTED EPS COMPUTATION | ||||||||||||||||
| Numerator: Net income | $ | 25,022 | $ | 25,340 | $ | 51,329 | $ | 46,402 | ||||||||
| Denominator: | ||||||||||||||||
| Weighted-average common shares outstanding | 216,856 | 212,836 | 215,146 | 215,318 | ||||||||||||
| Dilutive effect of stock awards | 4,705 | 4,036 | 5,530 | 4,153 | ||||||||||||
| Total shares | 221,561 | 216,872 | 220,676 | 219,471 | ||||||||||||
| Diluted EPS | $ | 0.11 | $ | 0.12 | $ | 0.23 | $ | 0.21 | ||||||||
| COMPUWARE CORPORATION AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In Thousands) | ||||||||
| NINE MONTHS ENDED | ||||||||
| DECEMBER 31, | ||||||||
| 2013 | 2012 | |||||||
| CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 49,143 | $ | 46,402 | ||||
| Adjustments to reconcile net income to cash provided | ||||||||
| by operations: | ||||||||
| Depreciation and amortization | 48,294 | 49,358 | ||||||
| Stock award compensation | 32,526 | 20,663 | ||||||
| Deferred income taxes | (4,484) | 6,172 | ||||||
| Other | (5,396) | 552 | ||||||
| Net change in assets and liabilities, net of effects from | ||||||||
| currency fluctuations: | ||||||||
| Accounts receivable | (40,679) | 17,140 | ||||||
| Prepaid expenses and other assets | 7,066 | 4,608 | ||||||
| Accounts payable and accrued expenses | 3,438 | (24,868) | ||||||
| Deferred revenue | (18,161) | (91,181) | ||||||
| Income taxes | (12,503) | 20,122 | ||||||
| Net cash provided by operating activities | 59,244 | 48,968 | ||||||
| CASH FLOWS USED IN INVESTING ACTIVITIES: | ||||||||
| Purchase of: | ||||||||
| Property and equipment | (11,518) | (18,241) | ||||||
| Capitalized software | (18,879) | (24,817) | ||||||
| Other | (275) | (1,400) | ||||||
| Net cash used in investing activities | (30,672) | (44,458) | ||||||
| CASH FLOWS USED IN FINANCING ACTIVITIES: | ||||||||
| Proceeds from borrowings | 51,000 | 142,800 | ||||||
| Payments on borrowings | (69,000) | (117,800) | ||||||
| Net proceeds from exercise of stock awards including excess tax benefits | 30,285 | 11,965 | ||||||
| Employee contribution to common stock purchase plans | 1,812 | 2,046 | ||||||
| Repurchase of common stock | (8,903) | (76,366) | ||||||
| Dividends | (80,808) | - | ||||||
| IPO proceeds | 68,448 | - | ||||||
| Other | (1,397) | - | ||||||
| Net cash used in financing activities | (8,563) | (37,355) | ||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | (985) | (1,451) | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 19,024 | (34,296) | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 89,873 | 99,180 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 108,897 | $ | 64,884 | ||||
| COMPUWARE CORPORATION AND SUBSIDIARIES | ||||||||||||||
| OPERATIONAL HIGHLIGHTS | ||||||||||||||
| (Dollar Amounts In Thousands) | ||||||||||||||
| QUARTER | ||||||||||||||
| ENDED | ||||||||||||||
| DEC 31, | YR - YR | |||||||||||||
| 2013 | 2012 | % Chg | ||||||||||||
| Total Product Software Revenue by Geography | ||||||||||||||
| North America | $ | 98,541 | $ | 106,211 | (7.2 | %) | ||||||||
| International | 81,486 | 81,754 | (0.3 | %) | ||||||||||
| Deferred License Fees | ||||||||||||||
| Current | $ | 16,497 | $ | 19,451 | (15.2 | %) | ||||||||
| Long-term | 8,762 | 10,276 | (14.7 | %) | ||||||||||
| Deferred Maintenance | ||||||||||||||
| Current | $ | 311,907 | $ | 310,450 | 0.5 | % | ||||||||
| Long-Term | 273,763 | 269,275 | 1.7 | % | ||||||||||
| Deferred Subscription | ||||||||||||||
| Current | $ | 43,401 | $ | 48,315 | (10.2 | %) | ||||||||
| Long-Term | 6,336 | 8,333 | (24.0 | %) | ||||||||||
| Deferred Professional Services | $ | 23,049 | $ | 22,322 | 3.3 | % | ||||||||
| Deferred Application Services | $ | 29,511 | $ | 36,060 | (18.2 | %) | ||||||||
| Other: | ||||||||||||||
| Total Company Headcount | 4,357 | 4,579 | (4.8 | %) | ||||||||||
| Total DSO (Billed) | 89.5 | 83.9 | ||||||||||||
| Total DSO | 167.7 | 157.0 | ||||||||||||
| Stock-based compensation expense | ||||||||||||||
| Cost of maintenance fees | $ | - | $ | 164 | (100.0 | %) | ||||||||
| Cost of subscription fees | (54 | ) | (47 | ) | 14.9 | % | ||||||||
| Cost of professional services | 67 | 65 | 3.1 | % | ||||||||||
| Cost of application services | 3,765 | 396 | 850.8 | % | ||||||||||
| Technology development and support | (27 | ) | 468 | (105.8 | %) | |||||||||
| Sales and marketing | 1,152 | 1,328 | (13.3 | %) | ||||||||||
| Administrative and general | 1,861 | 3,110 | (40.2 | %) | ||||||||||
| Restructuring costs | 450 | - | N/A | |||||||||||
| Total stock-based compensation expense before income taxes | $ | 7,214 | $ | 5,484 | 31.5 | % | ||||||||
| COMPUWARE CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
| BUSINESS UNIT RESULTS OF OPERATIONS | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| Covisint | Unallocated | |||||||||||||||||||||||||||||||
| Professional | Application | Expenses | ||||||||||||||||||||||||||||||
| Quarter Ended: | APM | Changepoint | Mainframe | Uniface | Services | Services | & Eliminations | Total | ||||||||||||||||||||||||
| December 31, 2013 | ||||||||||||||||||||||||||||||||
| Software license fees | $ | 39,761 | $ | 3,019 | $ | 11,436 | $ | 2,478 | - | - | - | $ | 56,694 | |||||||||||||||||||
| Maintenance fees | 26,094 | 4,139 | 63,616 | 7,751 | - | - | - | 101,600 | ||||||||||||||||||||||||
| Subscription fees | 20,982 | 751 | - | - | - | - | - | 21,733 | ||||||||||||||||||||||||
| Professional services fees | 7,767 | 3,165 | 41 | 1,061 | $ | 34,644 | - | $ | (300 | ) | 46,378 | |||||||||||||||||||||
| Application services fees | - | - | - | - | - | $ | 24,109 | - | 24,109 | |||||||||||||||||||||||
| Total revenues | 94,604 | 11,074 | 75,093 | 11,290 | 34,644 | 24,109 | (300 | ) | 250,514 | |||||||||||||||||||||||
| Total operating expenses | 76,127 | 10,704 | 18,196 | 5,499 | 28,457 | 29,322 | 52,305 | 220,610 | ||||||||||||||||||||||||
| Income (loss) from operations | $ | 18,477 | $ | 370 | $ | 56,897 | $ | 5,791 | $ | 6,187 | $ | (5,213 | ) | $ | (52,605 | ) | $ | 29,904 | ||||||||||||||
| Contribution margin % | 19.5 | % | 3.3 | % | 75.8 | % | 51.3 | % | 17.9 | % | (21.6 | %) | 11.9 | % | ||||||||||||||||||
| Operating expenses include: | ||||||||||||||||||||||||||||||||
| Stock awards compensation | $ | 740 | $ | 3 | $ | 190 | $ | 5 | $ | 61 | $ | 3,766 | $ | 2,449 | $ | 7,214 | ||||||||||||||||
| Amortization of purchased software | $ | 1,894 | $ | - | $ | - | $ | - | $ | - | $ | 94 | $ | - | $ | 1,988 | ||||||||||||||||
| Amortization of other acquired intangible assets |
$ |
1,728 | $ | - | $ | - | $ | - | $ | - | $ | 77 | $ | - | $ | 1,805 | ||||||||||||||||
| December 31, 2012 | ||||||||||||||||||||||||||||||||
| Software license fees | $ | 33,938 | $ | 2,684 | $ | 24,743 | $ | 3,466 | - | - | - | $ | 64,831 | |||||||||||||||||||
| Maintenance fees | 23,369 | 4,139 | 67,048 | 7,785 | - | - | - | 102,341 | ||||||||||||||||||||||||
| Subscription fees | 20,130 | 663 | - | - | - | - | - | 20,793 | ||||||||||||||||||||||||
| Professional services fees | 7,624 | 3,137 | 673 | 1,413 | $ | 33,202 | - | - | 46,049 | |||||||||||||||||||||||
| Application services fees | - | - | - | - | - | $ | 23,852 | - | 23,852 | |||||||||||||||||||||||
| Total revenues | 85,061 | 10,623 | 92,464 | 12,664 | 33,202 | 23,852 | - | 257,866 | ||||||||||||||||||||||||
| Operating expenses | 76,773 | 10,951 | 24,727 | 5,254 | 28,264 | 21,664 |
|
50,584 | 218,217 | |||||||||||||||||||||||
| Income (loss) from operations |
$ |
8,288 |
$ |
(328 | ) |
$ |
67,737 |
$ |
7,410 |
$ |
4,938 |
$ |
2,188 |
$ |
(50,584 | ) |
$ |
39,649 | ||||||||||||||
| Contribution margin % | 9.7 | % | (3.1 | %) | 73.3 | % | 58.5 | % | 14.9 | % | 9.2 | % | 15.4 | % | ||||||||||||||||||
| Operating expenses include: | ||||||||||||||||||||||||||||||||
| Stock awards compensation | $ | 680 | $ | 12 | $ | 606 | $ | 6 | $ | 45 | $ | 396 | $ | 3,739 | $ | 5,484 | ||||||||||||||||
| Amortization of purchased software | $ | 2,272 | $ | - | $ | - | $ | - | $ | - | $ | 148 | $ | - | $ | 2,420 | ||||||||||||||||
| Amortization of other acquired intangible assets | $ | 1,758 | $ | - | $ | - | $ | - | $ | - | $ | 113 | $ | - | $ | 1,871 | ||||||||||||||||
| COMPUWARE CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
| BUSINESS UNIT RESULTS OF OPERATIONS | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| Covisint | Unallocated | |||||||||||||||||||||||||||||||
| Professional | Application | Expenses | ||||||||||||||||||||||||||||||
| Nine Months Ended: | APM | Changepoint | Mainframe | Uniface | Services | Services | & Eliminations | Total | ||||||||||||||||||||||||
| December 31, 2013 | ||||||||||||||||||||||||||||||||
| Software license fees | $ | 86,028 | $ | 6,173 | $ | 29,503 | $ | 6,106 | - | - | - | $ | 127,810 | |||||||||||||||||||
| Maintenance fees | 74,192 | 12,513 | 191,499 | 22,424 | - | - | - | 300,628 | ||||||||||||||||||||||||
| Subscription fees | 61,045 | 2,124 | - | - | - | - | - | 63,169 | ||||||||||||||||||||||||
| Professional services fees | 22,165 | 9,936 | 141 | 3,171 | $ | 107,643 | - | (1,266 | ) | 141,790 | ||||||||||||||||||||||
| Application services fees | - | - | - | - | - | $ | 72,735 | - | 72,735 | |||||||||||||||||||||||
| Total revenues | 243,430 | 30,746 | 221,143 | 31,701 | 107,643 | 72,735 | (1,266 | ) | 706,132 | |||||||||||||||||||||||
| Total operating expenses | 218,930 | 29,845 | 54,696 | 15,363 | 88,007 | 89,107 | 146,626 | 642,574 | ||||||||||||||||||||||||
| Income (loss) from operations | $ | 24,500 | $ | 901 | $ | 166,447 | $ | 16,338 | $ | 19,636 | $ | (16,372 | ) | $ | (147,892 | ) | $ | 63,558 | ||||||||||||||
| Contribution margin % | 10.1 | % | 2.9 | % | 75.3 | % | 51.5 | % | 18.2 | % | (22.5 | %) | 9.0 | % | ||||||||||||||||||
| Operating expenses include: | ||||||||||||||||||||||||||||||||
| Stock awards compensation | $ | 5,360 | $ | 9 | $ | 409 | $ | 16 | $ | 196 | $ | 14,271 | $ | 12,265 | $ | 32,526 | ||||||||||||||||
| Amortization of purchased software | $ | 6,467 | $ | - | $ | - | $ | - | $ | - | $ | 282 | $ | - | $ | 6,749 | ||||||||||||||||
| Amortization of other acquired intangible assets | $ | 5,128 | $ | - | $ | - | $ | - | $ | - | $ | 272 | $ | - | $ | 5,400 | ||||||||||||||||
| December 31, 2012 | ||||||||||||||||||||||||||||||||
| Software license fees | $ | 74,237 | $ | 5,545 | $ | 43,566 | $ | 7,151 | - | - | - | $ | 130,499 | |||||||||||||||||||
| Maintenance fees | 66,544 | 12,321 | 205,972 | 22,650 | - | - | - | 307,487 | ||||||||||||||||||||||||
| Subscription fees | 59,526 | 1,977 | - | - | - | - | - | 61,503 | ||||||||||||||||||||||||
| Professional services fees | 23,003 | 9,898 | 1,640 | 3,684 | $ | 101,930 | - | - | 140,155 | |||||||||||||||||||||||
| Application services fees | - | - | - | - | - | $ | 64,981 | - | 64,981 | |||||||||||||||||||||||
| Total revenues | 223,310 | 29,741 | 251,178 | 33,485 | 101,930 | 64,981 | - | 704,625 | ||||||||||||||||||||||||
| Operating expenses | 226,928 | 31,392 | 67,856 | 15,279 | 85,322 | 59,731 | $ | 144,731 | 631,239 | |||||||||||||||||||||||
| Income (loss) from operations | $ | (3,618 | ) | $ | (1,651 | ) | $ | 183,322 | $ | 18,206 | $ | 16,608 | $ | 5,250 | $ | (144,731 | ) | $ | 73,386 | |||||||||||||
| Contribution margin % | (1.6 | %) | (5.6 | %) | 73.0 | % | 54.4 | % | 16.3 | % | 8.1 | % | 10.4 | % | ||||||||||||||||||
| Operating expenses include: | ||||||||||||||||||||||||||||||||
| Stock awards compensation | $ | 3,834 | $ | 42 | $ | 2,118 | $ | 42 | $ | 160 | $ | 1,105 | $ | 13,362 | $ | 20,663 | ||||||||||||||||
| Amortization of purchased software | $ | 6,755 | $ | - | $ | - | $ | - | $ | - | $ | 444 | $ | - | $ | 7,199 | ||||||||||||||||
| Amortization of other acquired intangible assets | $ | 5,435 | $ | - | $ | - | $ | - | $ | - | $ | 338 | $ | - | $ | 5,773 | ||||||||||||||||
| COMPUWARE CORPORATION | ||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP | ||||||||||||||
| (In Thousands, Except Per Share Data) | ||||||||||||||
| THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||
| DECEMBER 31, | DECEMBER 31, | |||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||
| NET INCOME | $ | 25,022 | $ | 25,340 | $ | 51,329 | $ | 46,402 | ||||||
| STOCK COMPENSATION (EXCL. RESTRUCTURING & IMPACT OF NON-CONTROLLING INTEREST) | 6,021 | 5,484 | 27,652 | 20,663 | ||||||||||
| AMORTIZATION OF PURCHASED SOFTWARE,(EXCL. IMPACT OF NON-CONTROLLING INTEREST) | 1,970 | 2,420 | 6,729 | 7,199 | ||||||||||
| AMORTIZATION OF ACQUIRED INTANGIBLES (EXCL. IMPACT OF NON-CONTROLLING INTEREST) | 1,789 | 1,871 | 5,383 | 5,773 | ||||||||||
| RESTRUCTURING EXPENSES (EXCL. IMPACT OF NON-CONTROLLING INTEREST) | 3,681 | - | 9,026 | - | ||||||||||
| ADVISORY FEES | 7,305 | 146 | 10,438 | 146 | ||||||||||
| TOTAL ADJUSTMENTS | 20,766 | 9,921 | 59,228 | 33,781 | ||||||||||
| INCOME TAX EFFECT OF ADJUSTMENTS | (7,745) | (3,002) | (21,652) | (10,533) | ||||||||||
| NON-GAAP NET INCOME | $ | 38,043 | $ | 32,259 | $ | 88,905 | $ | 69,650 | ||||||
| DILUTED EARNINGS PER SHARE - GAAP | $ | 0.11 | $ | 0.12 | $ | 0.23 | $ | 0.21 | ||||||
| STOCK COMPENSATION (EXCL. RESTRUCTURING & IMPACT OF NON-CONTROLLING INTEREST) | 0.03 | 0.03 | 0.13 | 0.09 | ||||||||||
| AMORTIZATION OF PURCHASED SOFTWARE,(EXCL. IMPACT OF NON-CONTROLLING INTEREST) | 0.01 | 0.01 | 0.03 | 0.03 | ||||||||||
| AMORTIZATION OF ACQUIRED INTANGIBLES (EXCL. IMPACT OF NON-CONTROLLING INTEREST) | 0.01 | 0.01 | 0.02 | 0.03 | ||||||||||
| RESTRUCTURING EXPENSES (EXCL. IMPACT OF NON-CONTROLLING INTEREST) | 0.02 | - | 0.04 | - | ||||||||||
| ADVISORY FEES | 0.03 | - | 0.05 | - | ||||||||||
| TOTAL ADJUSTMENTS | 0.09 | 0.05 | 0.27 | 0.15 | ||||||||||
| INCOME TAX EFFECT OF ADJUSTMENTS | (0.03) | (0.01) | (0.10) | (0.05) | ||||||||||
| NON-GAAP DILUTED EPS | $ | 0.17 | $ | 0.15 | $ | 0.40 | $ | 0.32 | ||||||
| DILUTED SHARES OUTSTANDING | 221,561 | 216,872 | 220,676 | 219,471 | ||||||||||
| COMPUWARE CORPORATION | |||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP | |||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||
| THREE MONTHS ENDED | NINE MONTHS ENDED | ||||||||||||||||||||||
| DECEMBER 31, | VARIANCE % | DECEMBER 31, | VARIANCE % | ||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||
| OPERATING EXPENSES (GAAP) | $ | 220.6 | $ | 218.2 | 1.1 | % | $ | 642.6 | $ | 631.2 | 1.8 | % | |||||||||||
| Less: | |||||||||||||||||||||||
| Advisory fees | 7.3 | 0.1 | 10.4 | 0.1 | |||||||||||||||||||
| Restructuring expenses | 3.7 | - | 9.1 | - | |||||||||||||||||||
| Stock compensation related to Covisint IPO performance options | 3.4 | - | 13.0 | ||||||||||||||||||||
| NON-GAAP OPERATING EXPENSES | $ | 206.2 | $ | 218.1 | -5.5 | % | $ | 610.1 | $ | 631.1 | -3.3 | % | |||||||||||
Source:Compuware
