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Compuware Corporation (Nasdaq: CPWR), the technology performance
company, today announced financial results for its third quarter ended
December 31, 2012 that reflect improving margins and strong revenue
momentum from its growth businesses, particularly its APM unit.
During the third quarter, total revenues were $257.9 million, compared
to $253.1 million in the third quarter last year. Net income was $25.3
million, compared to $21.6 million in the third quarter last year.
Earnings per share were twelve cents compared to ten cents last year,
based upon 217 million and 222 million shares outstanding, respectively.
“Our results reflect the progress we are making in our business
transformation, as our two growth businesses experienced year-over-year
revenue growth and margin improvement,” said Compuware CEO Bob Paul. “We
have stabilized the Mainframe business and continue to generate
significant revenue and cash flow to fund investments and innovation in
our growth businesses. Mainframe revenue grew 17 percent
quarter-over-quarter, and we expect our new Compuware APM for Mainframe
offering to meaningfully contribute to our Mainframe earnings going
forward. At the same time, we continued to extend our competitive
advantages beyond Mainframe into higher-growth, market-leading
capabilities. Today, more than 40% of our revenues come from these
higher-growth businesses, which is a dramatic improvement over prior
years. Our APM business delivered 27 percent growth over last quarter,
driven by the strength of the enterprise licensing business, which was
up 89 percent from the second quarter.
“We are moving quickly to anticipate industry trends and drive the
business forward with differentiated value solutions that optimize the
user experience,” Paul added. “We remain focused on optimizing each of
our business units through prudent capital allocation and improved
efficiencies and are also pursuing specific shareholder value creation
strategies such as the IPO of Covisint, for which we filed a
registration statement with the SEC during the quarter. While we have
additional work ahead of us, we are confident that our strategic
approach to business transformation and shareholder value is delivering
results.”
Mr. Paul noted that Compuware’s Board of Directors is in the process of
carefully reviewing the proposal by Elliott Management Corporation. The
Board will be meeting later this week to conclude its review and plans
to respond very shortly to the proposal.
Compuware noted that during the company's third quarter:
software license fees were $64.8 million
maintenance fees were $102.3 million
subscription fees were $20.8 million
professional services fees were $46.0 million
application services fees were $23.9 million
Third Quarter Fiscal Year 2013 Highlights
During the third quarter, Compuware:
Introduced Compuware APM for Mainframe, which is marketed as PurePath
for zOS, the industry’s first and only solution for deep transaction
management from the edge through the Mainframe. PurePath gives
Compuware a formidable differentiator to successfully compete and grow
market share, and is showing strong potential with several early deals
already completed. The company also announced major enhancements to
Compuware Strobe.
Submitted a registration statement on a confidential basis for
Covisint Corporation, to the U.S. Securities and Exchange Commission
for a possible initial public offering of its Class A common stock.
Announced that it has been positioned by Gartner, Inc. in the “Magic
Quadrant for Integrated IT Portfolio Analysis (IIPA) Applications,”
based on analyst evaluation of the Company’s market-leading project
and portfolio management solution Changepoint.
Was recognized by the Michigan Business & Professional Association for
the 12th consecutive year as a "101 Best and Brightest Companies to
Work For" in the Detroit region.
Developed a new generation performance analytics solution that raises
the intelligence of software-as-a-service application performance
management. Outage Analyzer provides real-time visualizations and
alerts of outages in third-party web services that are mission
critical to web, mobile and cloud applications around the world.
Detailed its strategy for helping customers to modernize enterprise
applications and to leverage new technologies including cloud
computing.
Released Uniface 9.6, a significant milestone in its vision of helping
organizations modernize applications and enabling the development of
applications of engagement.
Announced that it is providing “day one” support for IBM’s CICS
Transaction Server for z/OS V5.1, a crucial component of modern,
multi-tiered and customer-facing applications.
Announced that it has partnered with REAL TECH AG, a provider of
software solutions for enterprise-wide IT management and SAP
consultancy, to incorporate Compuware APM – dynaTrace Data Center Real
User Monitoring into the latest release of its IT service management
software.
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.
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 800-700-7860. For
international access, the conference call number is +1-612-332-0226. 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 274653.
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 DECEMBER 31,
ASSETS
2012
2011
CURRENT ASSETS:
Cash and cash equivalents
$
64,884
$
82,201
Accounts receivable, net
449,964
470,724
Deferred tax asset, net
38,669
47,460
Income taxes refundable
3,693
4,634
Prepaid expenses and other current assets
32,377
32,283
Total current assets
589,587
637,302
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND
AMORTIZATION
314,404
326,099
CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET
119,041
117,175
ACCOUNTS RECEIVABLE
190,613
216,735
DEFERRED TAX ASSET, NET
36,254
40,789
GOODWILL
799,823
797,163
OTHER ASSETS
35,202
35,547
TOTAL ASSETS
$
2,084,924
$
2,170,810
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
$
13,509
$
16,805
Current portion of long term debt
-
110,000
Accrued expenses
98,171
107,512
Income taxes payable
14,883
19,073
Deferred revenue
413,446
435,219
Total current liabilities
540,009
688,609
LONG TERM DEBT
70,000
-
DEFERRED REVENUE
311,036
356,693
ACCRUED EXPENSES
29,139
27,908
DEFERRED TAX LIABILITY, NET
84,648
77,100
Total liabilities
1,034,832
1,150,310
SHAREHOLDERS' EQUITY:
Common stock
2,121
2,188
Additional paid-in capital
692,133
681,359
Retained earnings
368,445
355,650
Accumulated other comprehensive loss
(12,607
)
(18,697
)
Total shareholders' equity
1,050,092
1,020,500
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
2,084,924
$
2,170,810
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,
2012
2011
2012
2011
REVENUES:
Software license fees
$
64,831
$
57,121
$
130,499
$
152,958
Maintenance fees
102,341
106,843
307,487
322,908
Subscription fees
20,793
19,931
61,503
58,156
Professional services fees
46,049
50,575
140,155
157,403
Application services fees
23,852
18,587
64,981
52,302
Total revenues
257,866
253,057
704,625
743,727
OPERATING EXPENSES:
Cost of software license fees
5,388
4,844
15,117
13,150
Cost of maintenance fees
8,639
9,603
26,653
28,907
Cost of subscription fees
7,603
7,291
22,823
22,192
Cost of professional services
39,694
45,277
122,080
136,496
Cost of application services
20,758
17,265
57,468
53,934
Technology development and support
25,629
27,265
79,675
78,706
Sales and marketing
65,773
69,683
184,604
197,255
Administrative and general
44,733
39,236
122,819
122,717
Total operating expenses
218,217
220,464
631,239
653,357
INCOME FROM OPERATIONS
39,649
32,593
73,386
90,370
OTHER INCOME (EXPENSE), NET
(55
)
231
(90
)
1,221
INCOME BEFORE INCOME TAXES
39,594
32,824
73,296
91,591
INCOME TAX PROVISION
14,254
11,236
26,894
30,339
NET INCOME
$
25,340
$
21,588
$
46,402
$
61,252
DILUTED EPS COMPUTATION
Numerator: Net income
$
25,340
$
21,588
$
46,402
$
61,252
Denominator:
Weighted-average common shares outstanding
212,836
218,534
215,318
218,427
Dilutive effect of stock options
4,036
3,349
4,153
4,134
Total shares
216,872
221,883
219,471
222,561
Diluted EPS
$
0.12
$
0.10
$
0.21
$
0.28
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
NINE MONTHS ENDED
DECEMBER 31,
2012
2011
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income
$
46,402
$
61,252
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization
49,358
44,706
Stock award compensation
20,663
17,555
Deferred income taxes
6,172
7,460
Other
552
221
Net change in assets and liabilities, net of effects from currency
fluctuations and acquisitions:
Accounts receivable
17,140
(14,201
)
Prepaid expenses and other current assets
(2,024
)
1,940
Other assets
6,632
(3,451
)
Accounts payable and accrued expenses
(24,868
)
783
Deferred revenue
(91,181
)
(53,184
)
Income taxes
20,122
10,604
Net cash provided by operating activities
48,968
73,685
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of:
Business, net of cash acquired
-
(249,337
)
Property and equipment
(18,241
)
(15,879
)
Capitalized software
(24,817
)
(18,346
)
Other
(1,400
)
(575
)
Net cash used in investing activities
(44,458
)
(284,137
)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from borrowings
142,800
180,200
Payments on borrowings
(117,800
)
(70,200
)
Net proceeds from exercise of stock awards including excess tax
benefits
11,965
8,503
Employee contribution to common stock purchase plans
2,046
2,101
Repurchase of common stock
(76,366
)
(4,259
)
Net cash provided by (used in) financing activities
(37,355
)
116,345
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(1,451
)
(3,936
)
NET CHANGE IN CASH AND CASH EQUIVALENTS
(34,296
)
(98,043
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
99,180
180,244
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
64,884
$
82,201
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(Dollar Amounts In Thousands)
QUARTER
ENDED
DEC 31,
YR - YR
2012
2011
% Chg
Total Product Software Revenue by Geography
North America
$
106,211
$
98,244
8.1
%
International
81,754
85,651
(4.5
%)
Deferred License Fees
Current
$
19,451
$
26,952
(27.8
%)
Long-term
10,276
12,270
(16.3
%)
Deferred Maintenance
Current
$
310,450
$
323,485
(4.0
%)
Long-Term
269,275
305,549
(11.9
%)
Deferred Subscription
Current
$
48,315
$
50,444
(4.2
%)
Long-Term
8,333
13,265
(37.2
%)
Deferred Professional Services
$
22,322
$
20,361
9.6
%
Deferred Application Services
$
36,060
$
39,586
(8.9
%)
Other:
Total Company Headcount
4,579
4,722
(3.0
%)
Total DSO (Billed)
83.9
88.0
Total DSO
157.0
167.4
Stock-based compensation expense
Cost of license fees
$
-
$
-
N/A
Cost of maintenance fees
164
202
(18.8
%)
Cost of subscription fees
(47
)
(68
)
30.9
%
Cost of professional services
65
54
20.4
%
Cost of application services
396
254
55.9
%
Technology development and support
468
575
(18.6
%)
Sales and marketing
1,328
1,493
(11.1
%)
Administrative and general
3,110
3,062
1.6
%
Total stock-based compensation expense before income taxes
SYS-CON Events announced today that OpenStack will exhibit at SYS-CON's 12th International Cloud Expo, which will take place on June 10–13, 2013, at the Javits Center in New York City, New York. OpenStack software controls large pools of compute, storage, and networking resources thro...
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SYS-CON Events announced today that OpenStack will exhibit at SYS-CON's 12th International Cloud Expo, which will take place on June 10–13, 2013, at the Javits Center in New York City, New York. OpenStack software controls large pools of compute, storage, and networking resources thro...
“Cloud has everything to do with what has happened with Big Data,” explained Jason Deck, Director of Strategic Alliances at Logicworks, in this exclusive Q&A with Cloud Expo Conference Chair Jeremy Geelan. “Big Data doesn’t exist in its easily accessible way without cloud. From reduced...
Cloud computing must have been brushing up on its bedside manner.
HIPAA requirements now stipulate everyone in the health-care industry must begin migrating patient records and other data to cloud computing. By 2015, all medical professionals with access to patient records must utiliz...
Looking to hang with the cool kids, Yahoo CEO Marissa Mayer, swearing “not to screw it up,” is buying Tumblr for a cool $1.1 billion, a big chunk of her $5.4 billion pocketbook since it’s “substantially all” in cash.
The New York-based acquisition will remain a separate business with...
Daryl Taft’s article in eWeek reminded me that next month, on June 6th. IBM’s DB2 RDBMS product will celebrate its 30th. anniversary. This has a personal significance for me. I was part of the DB2 planning team then and on … 
“Open source has always provided a number of benefits, including easing adoption costs, propagating a better understanding of the technology, and allowing for faster evolution and commercialization of products and services based on it,” noted Terry Woloszyn, Founder & CEO, Leeward Secu...
