Exhibit 99.1
NEWS RELEASE
COMPUWARE CORPORATION COMPUWARE [LOGO]
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Corporate Headquarters
ONE CAMPUS MARTIUS o DETROIT, MICHIGAN 48226
(313) 227-7300
For Immediate Release
May 5, 2005
Compuware Earns 20 Cents Per Share in FY `05,
Up More Than 53 Percent From FY `04
DETROIT--May 5, 2005--Compuware Corporation (NASDAQ: CPWR) today announced
financial results for its fourth quarter and fiscal year ended March 31, 2005.
"Compuware produced a sound fiscal year with full-year earnings increasing more
than 53 percent and operating cash flow of more than $240 million," said
Compuware Chairman and CEO Peter Karmanos, Jr. "For fiscal 2006, I expect
Compuware to again increase earnings by at least 50 percent, resulting in 30 to
35 cents in EPS. I also expect that Compuware will continue to generate strong
operating cash flow of more than $200 million in fiscal 2006."
Fiscal Year 2005 Results
During the fiscal year ended March 31, 2005, revenues were $1.23 billion. Net
income was $76.5 million for fiscal 2005, increasing from $49.8 million in
fiscal 2004. Earnings per share (diluted computation) were 20 cents, compared to
13 cents in fiscal 2004, based upon 388.5 million and 384.6 million shares
outstanding, respectively.
During fiscal 2005, software license fees were $305.2 million, up from $296.6
million in the prior fiscal year. Maintenance revenue was $425.3 million in
fiscal 2005, up from $408.2 million in fiscal 2004. Professional services fees
for fiscal year 2005 were $501.3 million.
Fourth Quarter Fiscal 2005 Results
Compuware reports fourth quarter net income of $26.7 million on revenues of
$318.8 million. Earnings per share (diluted computation) were seven cents, based
upon 389.2 million shares outstanding.
During the company's fourth quarter, software license fees were $86.4 million.
Maintenance fees were $108.4 million during the quarter, and fourth quarter
revenue from professional services was $124.0 million.
Fourth Quarter Fiscal Year 2005 Highlights
During the fourth quarter, Compuware:
o Entered into a software, services and technology relationship with
IBM and settled all outstanding litigation between the enterprises.
According to the agreement, IBM will enter into license and
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Compuware Earns 20 Cents Per Share in FY `05,Up More Than 53 Percent From FY `04
May 5, 2005
maintenance arrangements for $140 million of Compuware software over
four years and offer to purchase $260 million of Compuware services
over four years.
o Announced it was evaluated for its vision and its ability to execute
in the application quality marketplace by leading technology analyst
firm Gartner. The Gartner Application Quality Ecosystem, published
in March 2005, positions Compuware in the "Leaders" quadrant in the
Application Quality Ecosystem Magic Quadrant, 2005: Leaders and
Challengers report.
o Was again named to the "Top 30 Companies for Executive Women" list
sponsored by the National Association for Female Executives.
o Announced the release of the latest new version of its IT governance
solution, Compuware Changepoint, which delivers the industry's
broadest integrated IT governance and management capabilities
through integrations across Compuware's development, quality and
service management offerings.
o Announced a strategic partnership with CAST, whereby Compuware will
integrate and resell CAST Quality Assessment Suite as a complement
to the Compuware Application and Reliability Solution (CARS), which
is Compuware's comprehensive approach to Quality Management.
o Along with SteelTrace, Ltd., announced that the companies had
combined their industry-leading solutions for model-driven
development and requirements definition/management. This means that
Compuware OptimalJ and SteelTrace Catalyze are now integrated to
fully leverage requirements management information throughout the
application development life cycle.
o Announced the general availability of two new DevPartner
products--Compuware DevPartner Fault Simulator and Compuware
DevPartner SecurityChecker. These products significantly extend the
DevPartner product line's longstanding advisory capability to
deliver a broader and deeper view into application quality issues,
enabling project teams to establish best practices for building
quality software across the application development life cycle.
o Announced new support for Java with Compuware DevPartner Java
Edition 3.3, a suite of productivity and profiling tools that speeds
the deployment of reliable, high-performance Java applications and
components.
o Released Compuware OptimalJ 3.3, which extends OptimalJ's automation
capabilities to further speed development, simplify legacy reuse
through service-enablement and ease development team collaboration.
o Unveiled Compuware Vantage Analyzer for J2EE, a significant
extension to the Compuware Vantage service management solution that
helps IT operations staff deliver higher levels of service to their
business at lower cost. Specifically, customers running enterprise
Java applications can now use Compuware Vantage to more quickly
identify and isolate performance and availability problems.
o Announced the general availability of CARS 5.0, which introduces
Quality Governance(TM). CARS 5.0 optimizes a quality assurance
organization's ability to deliver reliable business applications
that provide
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Compuware Earns 20 Cents Per Share in FY `05,Up More Than 53 Percent From FY `04
May 5, 2005
maximum business value through the implementation of effective
governance models and includes integration with Compuware
Changepoint.
o Introduced Compuware Strobe 3.2 and Compuware iStrobe 2.1, new
versions of its application performance management solution.
o Released enhancements to the automated functional and performance
testing suites, Compuware QACenter Enterprise Edition and Compuware
QACenter Performance Edition.
o Announced enhancements to the Compuware File-AID product line, which
help IT organizations save time and reduce the level of complexity
associated with generating confidential test data without exposing
sensitive customer information.
o Inaugurated, along with Wipro Technologies, a dedicated Center of
Excellence that will provide training and Proofs-of-Concept on
Compuware's automated testing and service management solutions for
the Wipro Interop Solutions Horizontal.
o Announced it would host a data privacy webinar titled "Implementing
Data Privacy Assurance in the Application Testing Environment" in
April.
Compuware Corporation
Compuware Corporation (NASDAQ: CPWR) maximizes the value IT brings to the
business by helping CIOs more effectively manage the business of IT. Compuware
solutions accelerate the development, improve the quality and enhance the
performance of critical business systems while enabling CIOs to align and govern
the entire IT portfolio, increasing efficiency, cost control and employee
productivity throughout the IT organization. Founded in 1973, Compuware serves
the world's leading IT organizations, including more than 90 percent of the
Fortune 100 companies. Learn more about Compuware at http://www.compuware.com.
###
Press Contact:
Lisa Elkin, Vice President, Communications and Investor Relations, 313-227-7345,
lisa.elkin@compuware.com
Certain statements in this press release and announcement may constitute
forward-looking statements. These forward looking statements involve a number of
known and unknown risks, uncertainties and other factors that may cause such
forward-looking statements not to be realized and that could cause actual
results to differ materially from Compuware's expectations in these statements.
For more information about other risks that could affect the forward-looking
statements herein, please see Compuware's most recent quarterly report on Form
10-Q, annual report on Form 10-K and other filings made with the Securities and
Exchange Commission. Compuware expressly disclaims any obligation to release
publicly any updates or revisions to any forward-looking statements to reflect
any changes in expectations, or any change in events or circumstances on which
those statements are based, unless otherwise required by law.
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
AS OF MARCH 31,
ASSETS -------------------------
2005 2004
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents $ 497,687 $ 454,916
Investments 299,715 149,654
Accounts receivable, net 448,611 452,057
Deferred tax asset, net 35,726 32,460
Income taxes refundable, net 32,609 33,946
Prepaid expenses and other current assets 24,369 19,976
Building - held for sale 19,702
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Total current assets 1,358,419 1,143,009
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INVESTMENTS 69,169 162,484
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PROPERTY AND EQUIPMENT, LESS
ACCUMULATED DEPRECIATION
AND AMORTIZATION 418,241 444,401
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CAPITALIZED SOFTWARE, LESS
ACCUMULATED AMORTIZATION 54,043 45,489
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OTHER:
Accounts receivable 248,686 198,742
Deferred tax asset, net 1,804 28,628
Goodwill 293,391 213,359
Other 34,465 26,597
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Total other assets 578,346 467,326
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TOTAL ASSETS $2,478,218 $2,262,709
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 36,439 $ 35,298
Accrued expenses 168,600 188,279
Deferred revenue 373,157 302,804
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Total current
liabilities 578,196 526,381
DEFERRED REVENUE 364,270 300,664
ACCRUED EXPENSES 19,597 22,073
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Total liabilities 962,063 849,118
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SHAREHOLDERS' EQUITY:
Common stock 3,884 3,853
Additional paid-in capital 744,747 722,206
Retained earnings 757,597 681,115
Foreign currency translation
adjustment 9,927 6,417
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Total shareholders'
equity 1,516,155 1,413,591
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,478,218 $2,262,709
========== ==========
Note: Certain amounts in prior periods have been reclassified to conform to the
current presentation.
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
QUARTER ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
---------------------------- ----------------------------
2005 2004 2005 2004
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REVENUES:
Software license fees $ 86,428 $ 101,266 $ 305,189 $ 296,627
Maintenance fees 108,380 104,278 425,310 408,191
Professional services fees 123,975 132,153 501,340 559,829
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Total revenues 318,783 337,697 1,231,839 1,264,647
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OPERATING EXPENSES:
Cost of software license fees 6,004 8,251 27,293 31,579
Cost of professional services 107,478 113,807 444,996 513,621
Technology development and support 37,799 39,257 153,386 163,655
Sales and marketing 85,444 83,476 319,940 310,643
Administrative and general 51,515 51,528 199,628 207,613
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Total operating expenses 288,240 296,319 1,145,243 1,227,111
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INCOME FROM OPERATIONS 30,543 41,378 86,596 37,536
OTHER INCOME 6,576 5,735 19,629 18,481
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INCOME BEFORE INCOME TAXES 37,119 47,113 106,225 56,017
INCOME TAX PROVISION 10,393 13,191 29,743 6,185
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NET INCOME $ 26,726 $ 33,922 $ 76,482 $ 49,832
========== ========== ========== ==========
DILUTED EPS COMPUTATION
Numerator: Net income $ 26,726 $ 33,922 $ 76,482 $ 49,832
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Denominator:
Weighted-average common shares outstanding 387,389 384,422 386,701 382,630
Dilutive effect of stock options 1,830 2,804 1,800 1,978
---------- ---------- ---------- ----------
Total shares 389,219 387,226 388,501 384,608
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Diluted EPS $ 0.07 $ 0.09 $ 0.20 $ 0.13
========== ========== ========== ==========
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
TWELVE MONTHS ENDED
MARCH 31,
--------------------------
2005 2004
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CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES:
Net income $ 76,482 $ 49,832
Adjustments to reconcile net
income to cash provided
by operations:
Depreciation and
amortization 56,388 55,175
Tax benefit from exercise
of stock options 634 704
Issuance of common stock
to ESOP 4,872
Acquisition tax benefits 6,986 6,579
Deferred income taxes 27,731 30,571
Other 3,189 3,774
Net change in assets and
liabilities, net of
effects from
acquisitions:
Accounts receivable (32,614) 163,479
Prepaid expenses and
other current assets (2,307) (1,404)
Other assets 2,346 4,887
Accounts payable and
accrued expenses (25,110) (8,085)
Deferred revenue 122,316 (24,378)
Income taxes 1,374 (23,014)
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Net cash provided by
operating activities 242,287 258,120
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CASH FLOWS USED IN INVESTING
ACTIVITIES:
Purchase of:
Businesses (104,993) (6,939)
Property and equipment:
Headquarters facility (10,738) (65,240)
Other (17,964) (9,358)
Capitalized software (19,299) (11,287)
Investments:
Proceeds 208,427 356,713
Purchases (267,740) (404,048)
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Net cash used in
investing activities (212,307) (140,159)
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CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES:
Net proceeds from exercise
of stock options 1,772 2,798
Contribution to stock
purchase plans 8,288 8,293
Repurchase of common stock (996)
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Net cash provided by
financing activities 10,060 10,095
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EFFECT OF EXCHANGE RATE
CHANGES ON CASH 2,731 7,394
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NET INCREASE IN CASH AND
CASH EQUIVALENTS 42,771 135,450
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 454,916 319,466
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 497,687 $ 454,916
========= =========
Note: Certain amounts in prior periods have been reclassified to conform to the
current presentation.
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(dollar amounts in thousands)
QUARTER ENDED
-------------------------- QUARTER ENDED
MARCH 31, MARCH 31, YR - YR DECEMBER 31, QTR - QTR
2005 2004 % Change 2004 % Change
--------- --------- ------- ------------ ---------
License Fees:
Distributed Product License Fees
DevPartner $ 3,924 $ 7,056 (44.4%) $ 4,157 (5.6%)
QACenter and File-AID Client/Server 6,530 9,317 (29.9%) 7,150 (8.7%)
UNIFACE and Optimal 5,694 6,056 (6.0%) 5,080 12.1%
Vantage 14,850 13,614 9.1% 11,544 28.6%
IT Governance 2,761 -- N/A 2,900 (4.8%)
-------- -------- --------
Total Distributed Product License Fees 33,759 36,043 (6.3%) 30,831 9.5%
Mainframe Product License Fees 52,669 65,223 (19.2%) 68,165 (22.7%)
-------- -------- --------
Total License Fees 86,428 101,266 (14.7%) 98,996 (12.7%)
Maintenance Fees 108,380 104,278 3.9% 108,658 (0.3%)
-------- -------- --------
Total Products Revenue $194,808 $205,544 (5.2%) $207,654 (6.2%)
======== ======== ========
Total Mainframe Products Revenue $135,028 $151,114 (10.6%) $151,885 (11.1%)
Total Distributed Products Revenue $ 59,780 $ 54,430 9.8% $ 55,769 7.2%
Total Products Revenue by Geography
North America $100,881 $104,266 (3.2%) $114,237 (11.7%)
International $ 93,927 $101,278 (7.3%) $ 93,417 0.5%
Product Releases
Mainframe 4 5 (20.0%) 4 0.0%
Distributed 15 14 7.1% 9 66.7%
Total Costs of Software Products $129,247 $130,984 (1.3%) $123,751 4.4%
Professional Services
Professional Services Revenue $123,975 $132,153 (6.2%) $122,881 0.9%
Contribution Margin 13.3% 13.9% 14.0%
Billable Headcount 3,856 4,233 (8.9%) 3,884 (0.7%)
Total Company Headcount 7,908 8,660 (8.7%) 8,109 (2.5%)