UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 11-K
x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended March 31, 2014
o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from | to |
Commission file number | 0-20900 |
COMPUWARE CORPORATION ESOP/401(k) PLAN
(Full title of the plan)
Compuware Corporation
One Campus Martius
Detroit, Michigan 48226
Compuware Corporation
ESOP/401(k) Plan
Financial Statements as of and for the Years
Ended March 31, 2014 and 2013,
Supplemental Schedule as of March 31, 2014
and Report of Independent Registered Public
Accounting Firm
COMPUWARE CORPORATION ESOP/401(k) PLAN
3 | ||
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED MARCH 31, 2014 and 2013: | ||
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All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Compuware Corporation, which administers the Plan, has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
Compuware Corporation ESOP/401(k) Plan
Date: 09/29/2014 | By: Joseph R. Angileri | By: Richard O. Kalina | |||
Joseph R. Angileri | Richard O. Kalina | ||||
Chief Financial Officer | Plan Administrator and Member of Benefit Plan Committee |
Plan Administrator
Compuware Corporation ESOP/401(k) Plan
Detroit, Michigan
We have audited the accompanying statements of net assets available for benefits of Compuware Corporation ESOP/401(k) Plan (Plan) as of March 31, 2014 and 2013, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of March 31, 2014 and 2013, and the changes in net assets available for benefits for the years then ended in conformity with U.S. generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule H, Line 4i – Schedule of Assets (Held at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic 2014 financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic 2014 financial statements taken as a whole.
s/s Crowe Horwath LLP |
South Bend, Indiana
September 29, 2014
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
MARCH 31, 2014 AND 2013
2014 | 2013 | |||||||
ASSETS: | ||||||||
Investments—at fair value: | ||||||||
Common Stock—Compuware Corporation | $ | 38,944,482 | $ | 54,565,760 | ||||
Collective Trust | 15,861,737 | - | ||||||
Mutual Funds: | ||||||||
Short-term securities | 30,199,627 | 36,999,583 | ||||||
Bonds (government and corporate) | 53,795,070 | 52,507,714 | ||||||
Equity | 282,283,125 | 259,966,459 | ||||||
Lifecycle | 53,484,016 | 39,958,313 | ||||||
Real estate | 9,303,070 | 11,015,439 | ||||||
Total investments—at fair value | 483,871,127 | 455,013,268 | ||||||
Notes receivable from participants | 4,393,663 | 4,573,758 | ||||||
Other receivable | 52,452 | 35,669 | ||||||
Total Assets | $ | 488,317,242 | $ | 459,622,695 | ||||
NET ASSETS AVAILABLE FOR BENEFITS | $ | 488,317,242 | $ | 459,622,695 |
The accompanying notes are an integral part of the financial statements
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED MARCH 31, 2014 AND 2013
2014 | 2013 | |||||||
Additions to net assets available for benefits: | ||||||||
Investment income/(loss): | ||||||||
Interest and dividends | $ | 22,480,879 | $ | 10,347,258 | ||||
Net appreciation/(depreciation) in fair value of | ||||||||
Compuware Corporation common stock | (8,623,678 | ) | 14,917,770 | |||||
Net appreciation in fair value of Collective Trust | 515,325 | |||||||
Net appreciation in fair value of Mutual Funds | 41,448,710 | 23,032,263 | ||||||
Total Investment Income | 55,821,236 | 48,297,291 | ||||||
Interest income on notes receivable from participants | 199,033 | 202,773 | ||||||
Contributions: | ||||||||
Employer | 4,009,019 | 4,132,242 | ||||||
Participant | 22,010,855 | 22,759,292 | ||||||
Participant rollover | 1,283,810 | 1,540,981 | ||||||
Total Contributions | 27,303,684 | 28,432,515 | ||||||
Total Net Additions | 83,323,953 | 76,932,579 | ||||||
Deductions from net assets available for benefits: | ||||||||
Benefits paid to participants | 54,489,581 | 38,485,689 | ||||||
Administrative and other expenses | 139,825 | 140,811 | ||||||
Total Deductions | 54,629,406 | 38,626,500 | ||||||
NET INCREASE | 28,694,547 | 38,306,079 | ||||||
NET ASSETS AVAILABLE FOR BENEFITS—Beginning of year | 459,622,695 | 421,316,616 | ||||||
NET ASSETS AVAILABLE FOR BENEFITS—End of year | $ | 488,317,242 | $ | 459,622,695 |
The accompanying notes are an integral part of the financial statements
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2014 and 2013
1. | GENERAL DESCRIPTION OF THE PLAN |
The following description of the Compuware Corporation (Company) ESOP/401(k) Plan (Plan) provides only general information. The Plan document should be referred to for a more complete description of the Plan’s provisions.
General—The Plan is a defined contribution plan with two benefit features: an Employee Stock Ownership Plan (ESOP) and a 401(k) Plan. The assets for both features are combined in a common trust. All U.S. employees that are salaried or part-time hourly, as well as certain full-time hourly employees, meeting the eligibility requirements, may receive discretionary employer ESOP contributions. The 401(k) feature covers all full-time and part-time U.S. employees of the Company who have completed one hour of service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Compuware has entered into a trust agreement with Fidelity Management Trust Company (Fidelity) appointing Fidelity to act as trustee of the Plan.
Contributions—ESOP—Employer contributions to the ESOP are at the discretion of the Company, subject to a maximum of 25% of eligible compensation. Contributions may be made in cash, in Company stock or a combination of both and are valued based upon the quoted market price of the Company common stock on the date of contribution. The Company did not make an ESOP contribution for the 2014 and 2013 Plan years.
Contributions—401(k)—Participants in the Plan may elect to defer up to 75% of their pre-tax pay each pay period, and up to 10% of their after-tax pay each pay period, with a combined maximum limit of 85% for investment in the Plan. A Roth 401(k) component is also available. Prior to November 15, 2010 the Plan included a 2% automatic enrollment feature, wherein unless an active participant elected otherwise, they were deemed to have elected an automatic pre-tax contribution of 2% in the Plan. As of November 15, 2010, this percentage was increased to 3% and automatically increases by 1% annually for the first two years of participation unless an active participant elects otherwise. Effective November 15, 2012 the annual auto increase limit was increased from 5% to 6% with an initial enrollment of 3% and automatic increase of 1% for the first three years of participation, unless an active participant elects otherwise. As of October 6, 2013 the annual auto increase limit was increased from 6% to 10% with an initial enrollment of 3% and automatic increase of 1% for the first seven years of participation, unless an active participant elects otherwise. The automatic pre-tax contribution is effective as soon as administratively possible 90 days after the first day of employment or 30 days after the commencement date of employment for participants employed through an acquisition.
The amount of pre-tax and Roth deferral contributions for each participant is limited to $17,500 during the 2014 and 2013 calendar years, based on the applicable provisions of the Internal Revenue Code. Participants who reach age 50 during the calendar year and are making the maximum Internal Revenue Service pre-tax contribution may make additional pre-tax “catch-up” contributions in accordance with the provisions of Code Section 414(v). The maximum annual catch-up contribution is $5,500 for 2014 and 2013.
COMPUWARE CORPORATION ESOP/401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2014 and 2013
1. | GENERAL DESCRIPTION OF THE PLAN (Continued) |
Effective April 1, 2012, employer discretionary contributions may be contributed at the option of the Company and are invested as directed by the participant. The employer discretionary contribution for the 2014 and 2013 plan years was $.33 per every $1.00 contributed by the participant up to 6% of the participant’s eligible earnings.
Participants’ Accounts—ESOP—Company contributions to the ESOP are allocated to eligible individual participant accounts based upon eligible compensation. These amounts are immediately subject to the individual participant’s investment direction.
Participants’ Accounts—401(k)—All Plan withholdings contributed to the Plan are deposited in each participant’s account according to the investment option(s) selected by the participant. Earnings on investments, net of investment management fees, are allocated to participants’ accounts based on the actual earnings of the investment funds selected by the participants.
Vesting—ESOP—Participants are vested based on the number of years of service. Vesting begins after two years of service, with full vesting occurring after six years of service. In addition, full vesting occurs upon death or total disability of a participant or upon the attainment of normal retirement age while still an active employee. Prior to April 1, 2007, vesting began after three years of service, with full vesting occurring after seven years of service.
Vesting—401(k) and Roth 401(k)—Plan participants’ contributions and earnings thereon are fully vested. Employer discretionary contributions are fully vested upon the participants’ completion of three years of service.
Forfeited Accounts – ESOP and 401(k)—As of March 31, 2014 and 2013, forfeited nonvested accounts totaled $25,301 and $20,852 respectively. These accounts may be allocated to remaining participants in the same manner as Company ESOP contributions or used for employer discretionary matching contributions or Plan administrative expenses.
Notes Receivable from Participants—Participants may have only two outstanding loans at any time. Effective January 3, 2006, loans must originate from assets in the 401(k) portion of the participants’ accounts. Prior to January 3, 2006, participants were allowed to have one loan originating from the ESOP allocations and one loan from the remaining portion of their 401(k) Plan account, excluding certain amounts from plan mergers.
The maximum loan amount is equal to the lesser of $50,000 or 50% of their vested balance (excluding the ESOP source beginning January 3, 2006) minus the highest outstanding loan balance in the past 12 months. Generally, loan terms range from 6 to 60 months. The loans are secured by the balance in the participant’s account. Interest is paid quarterly at 1% above the Prime Interest Rate. Interest rates on loans currently outstanding range from 4.25% to 9.25%. Principal and interest is paid ratably through semi-monthly payroll deductions for salaried employees and via Fidelity’s loan coupon service for hourly employees, terminated employees, and rehires.
COMPUWARE CORPORATION ESOP/401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2014 and 2013
1. | GENERAL DESCRIPTION OF THE PLAN (Continued) |
Payment of Benefits: On termination of service due to death, disability, retirement, or other reasons, a participant may request to receive a lump-sum amount equal to the value of the participant’s vested interest in the account. Benefit payments from merged plans shall be payable in such other forms as were permitted under the terms of the merged plan from which they were transferred.
Administrative and Investment Management Expenses: Loan origination fees and loan maintenance fees associated with notes receivable from participants are paid by the participants. Plan’s record keeping and trustee fees are paid by the Plan and are reflected in the financial statements as administrative expenses of the Plan. Quarterly recordkeeping expenses of the Plan are paid using the Plan forfeiture account. Investment management fees are charged to the Plan as a reduction of investment return and included in the investment income (loss) reported by the Plan. All other expenses of the Plan are paid by the Company.
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Accounting: The financial statements of the Plan are prepared on an accrual basis in accordance with U.S. generally accepted accounting principles.
Investment Valuation and Income Recognition: The investment valuation policy of the Plan is to value investments at fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded based on the ex-dividend date, the record date that a participant must be on the company's books as a shareholder to receive a dividend. Net appreciation (depreciation) includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Fair value is the price that would be received by the Plan for an asset or paid by the Plan to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date in the Plan’s principal or most advantageous market for the asset or liability. A fair value hierarchy is established, whereby fair value measurements are determined by maximizing the use of observable inputs and minimizing the use of unobservable inputs.
The hierarchy places the highest priority to readily available unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. Following is the description of the three levels of inputs within the fair value hierarchy:
COMPUWARE CORPORATION ESOP/401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2014 and 2013
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using significant observable inputs. Observable inputs are inputs that other participants would use in valuing a portfolio instrument. These may include quoted prices for similar securities, interest rates, payment spreads, credit risk, and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Plan’s own assumptions about the factors market participants would use in valuing a portfolio instrument, and would be based on the best information available. |
In some cases, a valuation technique used to measure fair value may include inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. Changes in valuation techniques may result in transfers in or out of an investment’s assigned level within the hierarchy.
The following description of the valuation method and assumptions used by the Plan to estimate the fair values of investments apply to investments held directly by the Plan.
Company common stock and mutual funds: The fair values of Company stock and mutual fund investments are determined by quoted market prices on nationally recognized securities exchanges (level 1 inputs). The Plan’s investment in Company stock is valued at its quoted market price of $10.50 and $12.49 per share at March 31, 2014 and 2013, respectively.
Collective Trusts: The fair values of participation units held in collective trusts are based on their net asset values, as reported by the managers of the collective trusts, and as supported by the unit prices of actual purchase and sale transactions occurring as of or close to the financial statement date (level 2 inputs). The investment objective of the Winslow Large Cap Growth Fund is to seek long-term capital appreciation. The Fund seeks to achieve this objective by using a fundamental, bottom-up investment process which centers on identifying growth companies. The performance benchmark for the Fund is the Russell 1000 Growth Index. There is no assurance that such objective will be achieved. The net asset value per unit of the Funds is calculated on each business day by dividing the total value of assets, less liabilities, by the number of units outstanding. Unit issuances and redemptions are based on the net asset value determined at the end of the current day with no advance notice requirement.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation method is appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following is a summary of the inputs used, as of March 31, 2014 and 2013, involving the Plan’s investments carried at fair value. The inputs or methodologies used for valuing investments and other financial instruments may not be an indication of the risk associated with investing in those securities.
COMPUWARE CORPORATION ESOP/401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2014 and 2013
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Investments | ||||||||||||
Fair Value Measurement at March 31, 2014 | ||||||||||||
Investments | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||
Common Stock—Compuware Corporation | $ | 38,944,482 | $ | - | $ | - | ||||||
Collective Trust - Large Cap | - | 15,861,737 | - | |||||||||
Mutual Funds: | ||||||||||||
Short-term securities | 30,199,627 | - | - | |||||||||
Bonds (government and corporate) | 53,795,070 | - | - | |||||||||
Equity | ||||||||||||
Large Cap | 131,436,472 | - | - | |||||||||
Mid-Cap | 76,580,983 | - | - | |||||||||
Small Cap | 17,437,127 | - | - | |||||||||
International | 53,014,796 | - | - | |||||||||
Emerging Markets | 3,813,747 | - | - | |||||||||
Vanguard Lifecycle | ||||||||||||
Target Retirement 2010 Fund | 404,464 | - | - | |||||||||
Target Retirement 2015 Fund | 3,949,041 | - | - | |||||||||
Target Retirement 2020 Fund | 6,790,778 | - | - | |||||||||
Target Retirement 2025 Fund | 9,854,665 | - | - | |||||||||
Target Retirement 2030 Fund | 7,621,062 | - | - | |||||||||
Target Retirement 2035 Fund | 9,299,084 | - | - | |||||||||
Target Retirement 2040 Fund | 5,818,254 | - | - | |||||||||
Target Retirement 2045 Fund | 4,712,910 | - | - | |||||||||
Target Retirement 2050 Fund | 1,942,712 | - | - | |||||||||
Target Retirement 2055 Fund | 1,218,107 | - | - | |||||||||
Target Retirement Income Fund | 1,872,939 | - | - | |||||||||
Real estate | 9,303,070 | - | - | |||||||||
Total | $ | 468,009,390 | $ | 15,861,737 | $ | - |
There were no transfers between Level 1 and Level 2 during the plan year ended March 31, 2014.
COMPUWARE CORPORATION ESOP/401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2014 and 2013
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Investments | ||||||||||||
Fair Value Measurement at March 31, 2013 | ||||||||||||
Investments | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||
Common Stock—Compuware Corporation | $ | 54,565,760 | $ | - | $ | - | ||||||
Mutual Funds: | ||||||||||||
Short-term securities | 36,999,583 | - | - | |||||||||
Bonds (government and corporate) | 52,507,714 | - | - | |||||||||
Equity | ||||||||||||
Large Cap | 127,243,040 | - | - | |||||||||
Mid-Cap | 66,829,275 | - | - | |||||||||
Small Cap | 14,401,337 | - | - | |||||||||
International | 47,491,368 | - | - | |||||||||
Emerging Markets | 4,001,439 | - | - | |||||||||
Vanguard Lifecycle | ||||||||||||
Target Retirement 2010 Fund | 462,465 | - | - | |||||||||
Target Retirement 2015 Fund | 3,942,229 | - | - | |||||||||
Target Retirement 2020 Fund | 5,750,748 | - | - | |||||||||
Target Retirement 2025 Fund | 7,387,318 | - | - | |||||||||
Target Retirement 2030 Fund | 5,779,388 | - | - | |||||||||
Target Retirement 2035 Fund | 6,188,443 | - | - | |||||||||
Target Retirement 2040 Fund | 4,384,295 | - | - | |||||||||
Target Retirement 2045 Fund | 3,095,737 | - | - | |||||||||
Target Retirement 2050 Fund | 1,049,073 | - | - | |||||||||
Target Retirement 2055 Fund | 661,639 | - | - | |||||||||
Target Retirement Income Fund | 1,256,978 | - | - | |||||||||
Real estate | 11,015,439 | - | - | |||||||||
Total | $ | 455,013,268 | $ | - | $ | - |
There were no transfers between Level 1 and Level 2 during the plan year ended March 31, 2013.
COMPUWARE CORPORATION ESOP/401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2014 and 2013
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Notes Receivable from Participants: Notes receivable from participants are reported at their unpaid principal balance plus any accrued but unpaid interest with no allowance for credit losses, as repayments of principal and interest are received through direct payments or payroll deductions and the notes are collateralized by the participants` account balances.
Use of Estimates: The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires plan management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and disclosure of contingent assets and liabilities at March 31, 2014 and 2013, and the reported amounts of changes in net assets available for benefits during the years then ended. Actual results could differ from those estimates.
Risks and Uncertainties: The Plan invests in various investments. Investments, in general, are exposed to various risks, such as interest rate, credit, liquidity and overall market volatility. Due to the level of risk associated with certain investments and the sensitivity of certain fair value estimates to changes in valuation assumptions, it is reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits and participants’ individual account balances.
Benefit Payments: Payments for benefits are recorded when paid.
3. | PLAN TERMINATION |
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, participants will become fully vested in their accounts.
4. | TAX STATUS |
The Internal Revenue Service has determined and informed the Company by a letter dated September 20, 2013, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code. While the Plan has been amended since the receipt of the determination letter, the Plan Administrator believes the Plan is designed and is currently being operated in accordance with applicable provisions of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
COMPUWARE CORPORATION ESOP/401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2014 and 2013
4. | TAX STATUS (Continued) |
Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan. The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of March 31, 2014 and 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by the Department of Labor or Internal Revenue Service, however, there are currently no audits for any tax periods in progress. The plan administrator believes it is no longer subject to income tax examinations for Plan years prior to 2011.
5. | PARTIES-IN-INTEREST TRANSACTIONS |
Parties-in-interest are defined under Department of Labor regulations as any fiduciary of the Plan, any party rendering service to the Plan, the employer, and certain others. Certain investments of the Plan are shares of mutual funds, which are offered by Fidelity Investments, an affiliate of the Plan trustee. The Plan also invests in shares of common stock issued by Compuware Corporation, which qualify as a party-in-interest investment. Further, notes receivable from participants are also party-in-interest transactions.
The 3,708,915 and 4,368,692 shares of Compuware Corporation common stock held by the Plan as of March 31, 2014 and 2013 represent approximately 1.7% and 2.0% of the Company’s outstanding shares as of March 31, 2014 and 2013, respectively. The Company common stock held by the Plan as of March 31, 2014 and 2013 has been valued at its quoted market price as of the 2014 and 2013 financial statement date of $10.50 and $12.49 per share respectively.
Compuware paid a total of $2,086,002 in dividends to the Plan during the plan year ended March 31, 2014. There were no cash dividends paid to the Plan by Compuware Corporation during the plan year ended March 31, 2013. Total depreciation for the Compuware Corporation common stock for the plan year ended March 31, 2014 was $8,623,678. Total appreciation for the Compuware Corporation common stock for the plan year ended March 31, 2013 was $14,917,770. This is included in net appreciation/(depreciation) per the Statement of Changes in Net Assets Available for Benefits.
COMPUWARE CORPORATION ESOP/401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2014 and 2013
6. | INVESTMENTS |
The fair value of individual investments that represent 5% or more of the Plan’s assets available for benefits are as follows:
2014 | 2013 | |||||||
Compuware Corporation Common Stock: | ||||||||
ESOP ( 2,887,406 and 3,467,307 shares, respectively) | $ | 30,318,445 | $ | 43,307,290 | ||||
401(k) ( 821,509 and 901,385 shares, respectively) | 8,626,037 | 11,258,470 | ||||||
Vanguard Institutional Index Fund | 48,575,689 | 43,284,065 | ||||||
Fidelity Diversified International Fund | 34,835,300 | 31,883,035 | ||||||
Fidelity Retirement Money Market Fund | 30,199,627 | 30,191,318 | ||||||
MSIFT Mid-Cap Growth | 40,155,357 | 33,610,052 | ||||||
Janus Twenty Fund | 30,071,140 | 25,574,220 | ||||||
Vanguard Total Bond Market Index Fund* | 22,897,481 | 26,633,338 | ||||||
Artisan Mid Cap Value Fund | 36,425,626 | 33,219,223 | ||||||
Harbor Large Cap Value Fund | 28,495,470 | 25,880,048 |
* Investment is not 5% of net assets as of 3/31/2014 and is presented for comparative purposes only.
COMPUWARE CORPORATION ESOP/401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2014 and 2013
7. | FUND INFORMATION |
Investment income, participant contributions, employer contributions, benefits paid to participants, administrative and other expenses and exchanges are as follows for the years ended March 31, 2014 and 2013:
ESOP* | Loan*** | 401 (k) | Total | |||||||||||||
BEGINNING BALANCE—MARCH 31, 2013 | $ | 52,266,301 | $ | 440,420 | $ | 406,915,974 | $ | 459,622,695 | ||||||||
INVESTMENT (LOSS)/INCOME | (3,961,307 | ) | - | 59,782,543 | 55,821,236 | |||||||||||
INTEREST ON NOTES RECEIVABLE FROM PARTICIPANTS | 18,484 | 1,275 | 179,274 | 199,033 | ||||||||||||
CONTRIBUTIONS / NET OF FORFEITURES: | ||||||||||||||||
Employer ** | (117,187 | ) | - | 4,126,206 | 4,009,019 | |||||||||||
Participant | - | - | 22,010,855 | 22,010,855 | ||||||||||||
Participant rollover | - | - | 1,283,810 | 1,283,810 | ||||||||||||
Total contributions | (117,187 | ) | - | 27,420,871 | 27,303,684 | |||||||||||
BENEFITS PAID TO PARTICIPANTS | (7,762,661 | ) | (24,604 | ) | (46,702,316 | ) | (54,489,581 | ) | ||||||||
ADMINISTRATIVE AND OTHER EXPENSES | (59,155 | ) | - | (80,670 | ) | (139,825 | ) | |||||||||
EXCHANGES | (21,310 | ) | 21,310 | - | - | |||||||||||
ENDING BALANCE—MARCH 31, 2014 | $ | 40,363,165 | $ | 438,401 | $ | 447,515,676 | $ | 488,317,242 |
* This Balance includes previously forfeited amounts held within the money market fund
** Negative employer contributions balance consists of forfeitures that were used to fund company match of ($107,426.85) on 3/14/2014 and QNEC contribution corrections of ($9,399.18) on 10/10/2013 and (360.98) on 01/24/2014
*** The loan amount presented here is related only to the ESOP portion of the plan
COMPUWARE CORPORATION ESOP/401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2014 and 2013
7. | FUND INFORMATION (Continued) |
ESOP* | Loan** | 401 (k) | Total | |||||||||||||
BEGINNING BALANCE—MARCH 31, 2012 | $ | 44,113,524 | $ | 556,758 | $ | 376,646,334 | $ | 421,316,616 | ||||||||
INVESTMENT INCOME/(LOSS) | 12,491,877 | - | 35,805,414 | 48,297,291 | ||||||||||||
INTEREST ON NOTES RECEIVABLE FROM PARTICIPANTS | 21,423 | 1,166 | 180,184 | 202,773 | ||||||||||||
CONTRIBUTIONS: | ||||||||||||||||
Employer | - | - | 4,132,242 | 4,132,242 | ||||||||||||
Participant | - | - | 22,759,292 | 22,759,292 | ||||||||||||
Participant rollover | - | - | 1,540,981 | 1,540,981 | ||||||||||||
Total contributions | - | - | 28,432,515 | 28,432,515 | ||||||||||||
BENEFITS PAID TO PARTICIPANTS | (4,187,056 | ) | (15,980 | ) | (34,282,653 | ) | (38,485,689 | ) | ||||||||
ADMINISTRATIVE AND OTHER EXPENSES | (86,108 | ) | - | (54,703 | ) | (140,811 | ) | |||||||||
EXCHANGES | (87,359 | ) | (101,524 | ) | 188,883 | - | ||||||||||
ENDING BALANCE—MARCH 31, 2013 | $ | 52,266,301 | $ | 440,420 | $ | 406,915,974 | $ | 459,622,695 |
* This Balance includes previously forfeited amounts held within the money market fund
** The loan amount presented here is related only to the ESOP portion of the plan
8. | SUBSEQUENT EVENTS |
Marlin Transaction: On January 31, 2014, the Company sold substantially all of the assets and transferred certain liabilities associated with its Changepoint, Professional Services and Uniface business segments to Marlin Equity Partners (“Marlin”). Effective March 1, 2014, Marlin employees commenced coverage under a Marlin 401k plan and could elect to roll over their account balance to a Marlin Plan. No contributions were accepted by the Plan attributable to compensation and service earned after March 1, 2014 by Marlin employees. As part of this transaction, participants could elect to rollover their account balances of the Compuware ESOP / 401(k) Plan. On March 26, 2014 amounts totaling $2,613,314, related to holdings in the Compuware common stock of those participants that elected to rollover their account balance to a Marlin Plan, were rolled out of the Plan and are included in the benefits paid to participants per the Statement of Changes in Net Assets for the year ended March 31, 2014. On April 1, 2014, amounts totaling $27,546,860, related to the remaining investment holdings included in the account balances for those employees that elected to rollover their account balance to a Marlin Plan, were rolled out of the Plan and will be recognized as activity for the Plan year ended March 31, 2015. |
Covisint Corporation: Subsequent to March 31, 2014, Covisint Corporation (“Covisint”) is no longer a Participating Employer under the Plan, and Covisint employees are no longer covered under the Plan. Effective April 1, 2014, Covisint employees commenced coverage under the Covisint 401(k) Plan (the “Covisint Plan”). No contributions will be accepted by the Plan attributable to compensation and service earned after March 31, 2014 by Covisint employees. On April 8, 2014 the account balances of $25,968,841 (vested and unvested) of active Covisint employees on March 31, 2014, were transferred in-kind from the Plan to the Covisint Plan through a trustee to trustee transfer. The account balances of deferred vested Covisint employees will remain in the plan, subject to a later plan to plan transfer or rollover to the Covisint Plan if they subsequently become eligible to participate in the Covisint Plan. |
Compuware Corporation Merger: On September 2, 2014, Compuware Corporation entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Thoma Bravo, LLC. The Merger Agreement is subject to certain conditions, including, without limitation, the approval by the holders of at least a majority of the outstanding shares of the Company Common Stock entitled to vote on the Merger, the waiting period applicable to the Sale under the Hart-Scott-Rodino Act and the applicable pre-merger review and clearance requirement under German anti-trust laws and the absence of any law or order restraining, enjoining, rendering illegal or otherwise prohibiting the Sale or the Spin-Off. It is expected that, if approved, the Merger Agreement will be consummated in late 2014 or early 2015. The effect of the Merger on the Plan, if consummated, is not known as of the date of this filing. |
FORM 5500, SCHEDULE H, PART IV, LINE 4i -
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
March 31, 2014
Identity of Issue, Borrower, Lessor or Similar Party | Description of Investment Including Maturity Date, Rate of Interest, Collateral Par or Maturity Value (in Shares) | Cost | Current Value | |||||||||
* | Compuware Corporation | Compuware Corporation Common Stock; 3,708915.019 shares | $ | 23,986,408 | $ | 38,944,482 | ||||||
Nuveen / SEI | Large Cap Collective Trust Growth Fund; 516,164.549 units | 15,385,329 | 15,861,737 | |||||||||
* | Fidelity Investments | Diversified International Fund; 952,825.487 units | 25,646,772 | 34,835,300 | ||||||||
* | Fidelity Investments | Dividend Growth Fund; 576,453.102 units | 15,784,774 | 20,694,666 | ||||||||
* | Fidelity Investments | Retirement Money - Market Fund; 30,199,626.540 units | 30,199,627 | 30,199,627 | ||||||||
* | Fidelity Investments | Ltd Term Govt; 622,589.417 units | 6,218,815 | 6,238,346 | ||||||||
Vanguard | Institutional Index Fund; 283,240.169 units | 32,759,374 | 48,575,689 | |||||||||
Vanguard | Windsor II ADM Fund; 27,946.902 units | 1,727,235 | 1,876,355 | |||||||||
Domini | Social Equity Fund; 63,211.742 units | 1,639,542 | 1,723,152 | |||||||||
PIMCO | Total Return Bond Index Fund; 506,146.195 units | 5,630,629 | 5,456,256 | |||||||||
PIMCO | Foreign Bond Index Fund; 570,553.334 units | 6,011,049 | 6,116,332 | |||||||||
Artisan | Mid Cap Value Fund; 1,324,568.223 units | 32,847,513 | 36,425,626 | |||||||||
Allianz | AGIC High Yield IS; 1,300,860.354 units | 12,698,929 | 13,086,655 | |||||||||
Harbor | Large Cap Value Fund; 2,418,970.273 units | 18,883,453 | 28,495,470 | |||||||||
Janus | Twenty T Fund; 480,830.503 units | 27,387,112 | 30,071,140 | |||||||||
Morgan Stanley Institutional | ||||||||||||
Fund Trust | Mid-Cap Growth Fund; 885,454.398 units | 32,612,188 | 40,155,357 | |||||||||
LZRD | EMRG MKTS EQ IS; 205,150.481 units | 3,984,289 | 3,813,747 | |||||||||
* | Fidelity Investments | Real Estate Investments; 266,182.277 units | 7,846,316 | 9,303,070 | ||||||||
American Funds | New Perspective R6 Fund; 482,342.686 units | 13,508,699 | 18,179,496 | |||||||||
Vanguard | Target Retirement 2010 Fund; 15,538.380 units | 371,184 | 404,464 | |||||||||
Vanguard | Target Retirement 2020 Fund; 246,042.690 units | 5,792,337 | 6,790,778 | |||||||||
Vanguard | Target Retirement 2030 Fund; 271,019.285 units | 6,183,508 | 7,621,062 | |||||||||
Vanguard | Target Retirement 2040 Fund; 202,092.877 units | 4,594,149 | 5,818,254 | |||||||||
Vanguard | Target Retirement 2050 Fund; 67,784.773 units | 1,648,378 | 1,942,712 | |||||||||
Vanguard | Total Bond Market Index Fund; 2,141,953.317 units | 22,371,601 | 22,897,481 | |||||||||
Vanguard | Target Retirement Income Fund; 148,058.380 units | 1,785,221 | 1,872,939 | |||||||||
Vanguard | Target Retirement 2015 Fund; 262,743.927 units | 3,481,484 | 3,949,041 | |||||||||
Vanguard | Target Retirement 2025 Fund; 614,763.910 units | 8,125,534 | 9,854,665 | |||||||||
Vanguard | Target Retirement 2035 Fund; 538,453.036 units | 7,562,557 | 9,299,084 | |||||||||
Vanguard | Target Retirement 2045 Fund; 260,958.450 units | 3,826,371 | 4,712,910 | |||||||||
Vanguard | Target Retirement 2055 Fund; 39,459.245 units | 1,050,609 | 1,218,107 | |||||||||
Luther King Capital | ||||||||||||
Management | Small Cap Equity Fund; 623,868.598 units | 13,162,681 | 17,437,127 | |||||||||
* | Participants | Notes receivable from participants (interest rates of 4.25% to 9.25%) | $ | 4,393,663 | ||||||||
Total assets held for investment purposes | $ | 488,264,790 | ||||||||||
* | Party-in-interest |
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