Exhibit 99.1
NEWS RELEASE
COMPUWARE CORPORATION
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Corporate Headquarters COMPUWARE [LOGO]
One Campus Martius o Detroit, MICHIGAN 48226
313-227-7300
For Immediate Release
October 26, 2006
Compuware Announces Fiscal Year 2007 Second Quarter Results
Compuware Earns Seven Cents Per Share in Q2; Sales of Distributed Products
Increase 10.5 Percent Year-over-year
DETROIT--October 26, 2006--Compuware Corporation (NASDAQ: CPWR) today announced
financial results for its second quarter, which ended September 30, 2006. The
company's final results for the quarter are in-line with its preliminary
financial results announced on October 12, 2006.
Second Quarter Fiscal 2007 Results
Compuware reports second quarter revenues of $288.5 million and second quarter
net income of $24.8 million. Compuware earned seven cents per share (diluted
computation) in the quarter, compared to six cents in Q2 of fiscal 2006, based
upon 364.5 million and 391.2 million shares outstanding, respectively. During
the company's second quarter, software license fees were $56.7 million,
professional services fees were $116.7 million, and maintenance fees were $115.1
million.
Second Quarter Fiscal Year 2007 Highlights
During the second quarter, Compuware:
o Announced that the company's Board of Directors authorized the repurchase
of an additional $300 million of the company's common stock.
o Earned inclusion on the new NASDAQ Global Select Market, which has the
highest initial listing standards of any exchange in the world based on
financial and liquidity requirements.
o Announced that Compuware Changepoint was selected "Best Technology and
Service Provider" by senior IT executive attendees at the Project &
Portfolio Management 2006 event. Compuware Changepoint gives CIOs the
information they need to make effective decisions about investments and to
communicate the value that IT delivers to the business.
o Highlighted a number of recent Compuware Vantage customer successes at
high-profile businesses including AutoTrader.com; Dickinson Wright, PLLC
and Honigman Miller Schwartz and Cohn. Compuware Vantage--an application
service management solution--helps IT organizations manage application
performance from the perspective that matters most: that of the end-user.
o Announced a three-year contract for Compuware Covisint to provide
messaging and integration services to Shanghai GM and hundreds of its
suppliers based in Asia, North America, Europe and Latin America.
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Page 2
Compuware Announces Fiscal Year 2007 Second Quarter Results
October 26, 2006
Initially, Covisint will establish connectivity and supply chain
visibility across Shanghai GM and its supplier communities that support
power-train and vehicle-assembly operations.
o Introduced the Compuware Covisint collaborative exchange for healthcare.
Covisint's healthcare offering enables access to, and improved visibility
of, critical healthcare information, which reduces costs and increases the
quality of care. United Physicians, P.C., Michigan's largest independent
physician organization, will use Compuware Covisint to establish a
physician desktop portal.
o Showcased at Share East 2006 its industry-leading solutions for optimizing
the value of mainframe investments. Compuware conducted a number of
educational sessions at the event on achieving mainframe goals and on
overcoming key business challenges facing IT organizations.
o Conducted a number of interactive webcasts and seminars for senior IT
executives related to critical business issues such as Project and
Portfolio Management and Business Requirements Management.
o Earned top-10 placement on the Fourth Annual Best Companies for Blacks in
Technology list, sponsored by The National Black Data Processing
Associates and WorkplaceDiversity.com.
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.
###
Conference Call Information
Compuware will host a conference call today to discuss these results at 5:00
p.m. Eastern time (21:00 GMT). Interested parties calling from the United States
should call 800-230-1766. For international access, the conference call number
is +1-612-288-0318. A conference call replay will also be available at
800-475-6701 for United States-based callers and at 320-365-3844 for
internationally based callers. The replay passcode is 840562. For more
information, visit the Compuware Corporation Investor Relations web site at
http://www.compuware.com.
Press Contact
Lisa Elkin, Vice President, Communications and Investor Relations, 313-227-7345
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 SEPTEMBER 30,
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ASSETS
2006 2005
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CURRENT ASSETS:
Cash and cash equivalents $ 470,095 $ 550,903
Investments 242,030 304,344
Accounts receivable, net 381,262 388,042
Deferred tax asset, net 30,744 32,783
Income taxes refundable, net 81,509 46,694
Prepaid expenses and other current assets 41,437 26,230
Buildings - held for sale 15,700
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Total current assets 1,247,077 1,364,696
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INVESTMENTS 49,446 27,274
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PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 391,239 404,575
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CAPITALIZED SOFTWARE, LESS ACCUMULATED
AMORTIZATION 65,450 59,146
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OTHER:
Accounts receivable 195,039 226,141
Deferred tax asset, net 16,051
Goodwill 334,639 318,468
Other 35,314 34,570
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Total other assets 581,043 579,179
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TOTAL ASSETS $2,334,255 $2,434,870
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 23,040 $ 17,532
Accrued expenses 145,018 151,817
Deferred revenue 365,069 365,076
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Total current liabilities 533,127 534,425
DEFERRED REVENUE 297,298 326,123
ACCRUED EXPENSES 13,200 16,080
DEFERRED TAX LIABILITY, NET 32,750 6,569
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Total liabilities 876,375 883,197
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SHAREHOLDERS' EQUITY:
Common stock 3,522 3,874
Additional paid-in capital 720,946 756,971
Retained earnings 723,610 782,598
Accumulated other comprehensive income 9,802 8,230
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Total shareholders' equity 1,457,880 1,551,673
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,334,255 $2,434,870
========== ==========
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
QUARTER ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2006 2005 2006 2005
-------- -------- -------- --------
REVENUES:
Software license fees $ 56,709 $ 63,589 $124,174 $131,611
Maintenance fees 115,132 110,901 225,449 218,275
Professional services fees 116,666 118,156 235,202 240,088
-------- -------- -------- --------
Total revenues 288,507 292,646 584,825 589,974
-------- -------- -------- --------
OPERATING EXPENSES:
Cost of software license fees 7,010 5,552 13,595 11,239
Cost of professional services 103,645 104,944 211,260 211,189
Technology development and support 39,539 34,400 76,779 70,053
Sales and marketing 67,711 68,198 133,479 140,235
Administrative and general 45,156 51,299 91,384 99,528
-------- -------- -------- --------
Total operating expenses 263,061 264,393 526,497 532,244
-------- -------- -------- --------
INCOME FROM OPERATIONS 25,446 28,253 58,328 57,730
OTHER INCOME, NET 10,613 7,852 21,494 14,585
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 36,059 36,105 79,822 72,315
INCOME TAX PROVISION 11,250 11,915 25,692 23,502
-------- -------- -------- --------
NET INCOME $ 24,809 $ 24,190 $ 54,130 $ 48,813
======== ======== ======== ========
DILUTED EPS COMPUTATION
Numerator: Net income $ 24,809 $ 24,190 $ 54,130 $ 48,813
-------- -------- -------- --------
Denominator:
Weighted-average common shares outstanding 363,834 387,327 370,261 387,775
Dilutive effect of stock options 713 3,837 704 2,183
-------- -------- -------- --------
Total shares 364,547 391,164 370,965 389,958
-------- -------- -------- --------
Diluted EPS $ 0.07 $ 0.06 $ 0.15 $ 0.13
======== ======== ======== ========
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
SIX MONTHS ENDED
SEPTEMBER 30,
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2006 2005
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CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $ 54,130 $ 48,813
Adjustments to reconcile net income to cash provided
by operations:
Depreciation and amortization 26,900 25,394
Acquisition tax benefits 2,585 3,502
Stock option compensation 4,862
Deferred income taxes 6,405 11,033
Other (329) 8,910
Net change in assets and liabilities, net of effects from acquisitions:
Accounts receivable 64,142 70,402
Prepaid expenses and other current assets (4,315) (1,592)
Other assets (99) (506)
Accounts payable and accrued expenses (33,107) (33,706)
Deferred revenue (44,772) (33,160)
Income taxes (3,982) (10,809)
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Net cash provided by operating activities 72,420 88,281
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CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of:
Businesses, net of cash acquired (20,484) (30,917)
Property and equipment (10,485) (6,321)
Capitalized software (9,475) (10,732)
Proceeds from sale of property 3,298
Investments:
Proceeds 272,305 209,798
Purchases (266,248) (173,676)
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Net cash used in investing activities (31,089) (11,848)
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CASH FLOWS USED IN FINANCING ACTIVITIES:
Net proceeds from exercise of stock options 1,218 8,678
Contribution to stock purchase plans 2,577 4,447
Repurchase of common stock (190,104) (31,354)
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Net cash used in financing activities (186,309) (18,229)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH 3,011 (4,988)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (141,967) 53,216
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 612,062 497,687
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 470,095 $ 550,903
========= =========
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(dollar amounts in thousands)
QUARTER ENDED
------------------------------ QUARTER ENDED
SEPTEMBER 30, SEPTEMBER 30, YR - YR JUNE 30, QTR - QTR
2006 2005 % Change 2006 % Change
------------- ------------- -------- ------------- ---------
License Fees:
Distributed Product License Fees
DevPartner $ 2,966 $ 3,153 (5.9%) $ 2,938 1.0%
QACenter and File-AID Client/Server 6,600 5,546 19.0% 5,558 18.7%
UNIFACE and Optimal 3,015 4,417 (31.7%) 3,290 (8.4%)
Vantage 12,831 10,485 22.4% 15,488 (17.2%)
Changepoint 3,243 2,325 39.5% 2,426 33.7%
----------- ----------- -----------
Total Distributed Product License Fees 28,655 25,926 10.5% 29,700 (3.5%)
Mainframe Product License Fees 28,054 37,663 (25.5%) 37,765 (25.7%)
----------- ----------- -----------
Total License Fees 56,709 63,589 (10.8%) 67,465 (15.9%)
Maintenance Fees 115,132 110,901 3.8% 110,317 4.4%
----------- ----------- -----------
Total Products Revenue $ 171,841 $ 174,490 (1.5%) $ 177,782 (3.3%)
=========== =========== ===========
Total Mainframe Products Revenue $ 113,941 $ 122,232 (6.8%) $ 119,741 (4.8%)
Total Distributed Products Revenue $ 57,900 $ 52,258 10.8% $ 58,041 (0.2%)
Total Products Revenue by Geography
North America $ 94,315 $ 95,420 (1.2%) $ 100,426 (6.1%)
International $ 77,526 $ 79,070 (2.0%) $ 77,356 0.2%
Product Releases
Mainframe 4 4 0.0% 3 33.3%
Distributed 11 8 37.5% 12 (8.3%)
Total Costs of Software Products $ 114,260 $ 108,150 5.6% $ 109,593 4.3%
Deferred license fees
Current $ 66,975 $ 69,262 (3.3%) $ 68,525 (2.3%)
Long-term $ 42,060 $ 57,316 (26.6%) $ 50,557 (16.8%)
Deferred during quarter $ 11,475 $ 14,832 (22.6%) $ 10,652 7.7%
Recognized during quarter $ 20,999 $ 23,519 (10.7%) $ 23,056 (8.9%)
Professional Services
Professional Services Revenue $ 116,666 $ 118,156 (1.3%) $ 118,536 (1.6%)
Contribution Margin 11.2% 11.2% 9.2%
Billable Headcount 3,502 3,713 (5.7%) 3,563 (1.7%)
Total Company Headcount 7,582 7,565 0.2% 7,525 0.8%
Total DSO 118.9 119.3 118.9
Total DSO (Billed) 48.0 44.1 50.0