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
July 26, 2007
Compuware Corporation Announces Final First Quarter Financial Results
DETROIT--July 26, 2007--Compuware Corporation (NASDAQ: CPWR) today announced
final financial results for its first quarter ended June 30, 2007.
"Despite a poor first quarter, I continue to expect great things for Compuware
this fiscal year," said Compuware Chairman and CEO Peter Karmanos, Jr. "Based on
a detailed analysis, the company has confirmed that it has a serious sales
execution problem. In response, we have worked very hard to develop a new sales
model that will cost less and will be more agile in responding to the needs of
the marketplace and in fixing the company's problem."
First Quarter Fiscal 2008 Results
Compuware reports first quarter revenues of $279.4 million and net income of
$189,000. Earnings per share (diluted computation) were break-even, based upon
305.6 million shares outstanding.
During the company's first quarter, software license fees were $47.3 million.
Maintenance fees were $113.7 million. Revenue from professional services in the
quarter was $118.4 million.
The company will host a conference call at 5:00 p.m. Eastern time (21:00 GMT)
today to discuss these results.
First Quarter Fiscal Year 2007 Highlights
During the first quarter, Compuware:
o Announced that its industry-leading IT management solution,
Changepoint, now offers prepackaged product and services that
deliver a defined set of management capabilities in a defined
timeframe and at a known cost. These new offerings--Changepoint
Supply and Demand Accelerator and Rapid Path service--place IT
organizations on a rapid path to achieving their ultimate goal:
delivering maximum value to the business by effectively managing IT
supply and demand.
o Introduced Compuware Optimal(TM), an integrated suite of application
delivery management solutions, including: application delivery
management, business requirements management, project management,
quality assurance and performance assurance.
o Announced the introduction of Vantage Service Manager, a business
service management solution that enables organizations to optimize
IT service delivery in accordance with business needs.
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Compuware Corporation Announces Final First Quarter Financial Results
July 26, 2007
o Hosted the company's third-annual Partner Summit, themed Partner
Solution Success. The Summit featured comprehensive learning tracks
in areas such as IT Portfolio Management, Application Delivery
Management, Business Service Management and other high-growth market
opportunities for Compuware partners.
o Announced that Compuware Professional Services implemented a
digital, filmless imaging system for Oakwood Healthcare, Inc.
Oakwood physicians now have immediate access to patient diagnostic
images from any network-connected PC, allowing collaboration of
patient care anytime and anywhere.
o Introduced its Trusted Identity Broker, an outsourcing solution from
Compuware Covisint that centralizes, automates and streamlines the
management of digital identities. Trusted Identity Broker makes
federation--the exposing and accepting of identities across security
domains--simple, fast and repeatable.
o Announced the release of Changepoint 12, the latest version of its
market-leading IT Portfolio Management solution.
o Announced that LogicaCMG has combined its expertise in risk- and
requirement- based testing for software quality assurance with
Compuware's extensive knowledge in developing enterprise QA
solutions to create a 360 solution named Q-Talk. Q-Talk will help IT
departments effectively communicate the importance, business impact
and return on investment of software testing to business unit
customers.
o Announced the availability of the Compuware Application MIPS
Management solution. The solution offers a proactive approach to
identifying the root cause of excessive CPU and MIPS consumption.
o Announced that the Georgia Department of Community Health will
collaborate with Compuware Covisint to offer a statewide web-based
program for processing Medicaid communications between the state and
health care providers who choose to use the Covisint program.
o Announced its inclusion in the Leader's Quadrant of the Gartner
Magic Quadrant for IT Project and Portfolio Management. The report
evaluated more than 22 vendors on the completeness of vision and
ability to execute.
o Announced that the company has been positioned as the "Software
Testing Tools Market Leader"--featuring both breadth and depth--by
Ovum, a leading analyst firm. According to Ovum, the top test
automation toolsets are now all part of a larger application life
cycle management and/or quality management portfolio.
o Announced that the company has partnered with Kraft Kennedy &
Lesser, Inc. (KKL) to help ensure IT continuity and availability by
proactively detecting and fixing IT system problems for KKL's legal
industry customers.
o Introduced Compuware Vantage 10, a sophisticated service-management
solution that enables IT organizations to manage application service
from a business perspective.
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Compuware Corporation Announces Final First Quarter Financial Results
July 26, 2007
o Hosted a webcast, titled: Rationalize, Optimize, Modernize--Getting
the Most From Your Mainframe Assets," featuring Gartner, Inc. The
webcast shared strategies for IT executives to manage and modernize
their mainframe applications.
o Announced that Laura Fournier, Compuware Senior Vice President and
Chief Financial Officer, earned Public Company CFO of the Year
recognition in the first-annual Crain's Detroit Business CFO of the
Year Awards.
o Announced that the company has been named to BZ Media's fifth annual
SD Times 100 list for the fifth consecutive year.
o Announced that for the second consecutive year, Hour Detroit readers
have voted Compuware "Best Place to Work and Best Workplace
Ambiance" in the magazine's annual Best of Detroit issue.
Compuware Corporation
Compuware Corporation (NASDAQ: CPWR) is a world leader in delivering software
and services that enable businesses to manage their enterprises and maximize the
value of their IT assets. Compuware solutions accelerate the development,
improve the quality and enhance the performance of business-driving
applications. 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/.
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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 from the United States should
call 800-230-1093. For international access, the conference call number is
+1-612-332-0107.
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 875887. Additionally, investors can
listen to the conference call via webcast by visiting the Compuware Corporation
Investor Relations web site at http://www.compuware.com/.
Press Contact
Lisa Elkin, Vice President, Communications and Investor Relations,
+1-313-227-7345
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 JUNE 30,
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ASSETS
2007 2006
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CURRENT ASSETS:
Cash and cash equivalents $ 339,482 $ 610,890
Investments 78,052 285,699
Accounts receivable, net 367,443 391,016
Deferred tax asset, net 37,536 30,709
Income taxes refundable, net 28,294 72,923
Prepaid expenses and other current assets 34,132 27,606
Buildings - held for sale 13,000
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Total current assets 884,939 1,431,843
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INVESTMENTS 57,150 23,141
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PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 379,743 391,730
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CAPITALIZED SOFTWARE, LESS ACCUMULATED
AMORTIZATION 67,250 66,983
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OTHER:
Accounts receivable 175,326 194,268
Deferred tax asset, net 16,817 13,781
Goodwill 353,405 334,594
Other 36,140 35,933
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Total other assets 581,688 578,576
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TOTAL ASSETS $ 1,970,770 $ 2,492,273
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 16,607 $ 20,724
Accrued expenses 111,146 148,223
Deferred revenue 372,951 374,930
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Total current liabilities 500,704 543,877
DEFERRED REVENUE 296,278 319,612
ACCRUED EXPENSES 18,987 14,593
DEFERRED TAX LIABILITY, NET 4,076 28,380
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Total liabilities 820,045 906,462
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SHAREHOLDERS' EQUITY:
Common stock 3,046 3,737
Additional paid-in capital 727,208 759,962
Retained earnings 405,698 811,504
Accumulated other comprehensive income 14,773 10,608
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Total shareholders' equity 1,150,725 1,585,811
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,970,770 $ 2,492,273
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COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
QUARTER ENDED
JUNE 30,
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2007 2006
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REVENUES:
Software license fees $ 47,271 $ 67,465
Maintenance fees 113,741 110,317
Professional services fees 118,377 118,536
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Total revenues 279,389 296,318
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OPERATING EXPENSES:
Cost of software license fees 10,365 6,585
Cost of maintenance fees 11,453 10,126
Cost of professional services 104,077 107,615
Technology development and support 29,329 27,114
Sales and marketing 64,731 65,768
Administrative and general 45,380 46,228
Restructuring costs 16,020
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Total operating expenses 281,355 263,436
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INCOME (LOSS) FROM OPERATIONS (1,966) 32,882
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OTHER INCOME (EXPENSES)
Interest income 5,964 11,243
Other (305) (362)
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OTHER INCOME, NET 5,659 10,881
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INCOME BEFORE INCOME TAXES 3,693 43,763
INCOME TAX PROVISION 3,504 14,442
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NET INCOME $ 189 $ 29,321
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DILUTED EPS COMPUTATION
Numerator: Net income $ 189 $ 29,321
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Denominator:
Weighted-average common shares outstanding 301,967 376,759
Dilutive effect of stock options 3,627 768
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Total shares 305,594 377,527
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Diluted EPS $ 0.00 $ 0.08
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COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
THREE MONTHS ENDED
JUNE 30,
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2007 2006
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CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $ 189 $ 29,321
Adjustments to reconcile net income to cash provided
by operations:
Depreciation and amortization 13,817 13,393
Property and equipment impairment associated with restructuring 2,998
Capitalized software impairment 3,873
Acquisition tax benefits 1,311 1,309
Stock option compensation 1,573 2,797
Deferred income taxes (2,519) 4,700
Other 494 (136)
Net change in assets and liabilities, net of effects from acquisitions
and currency fluctuations:
Accounts receivable 56,869 56,772
Prepaid expenses and other current assets 8,648 (2,565)
Other assets 1,223 667
Accounts payable and accrued expenses (30,242) (32,393)
Deferred revenue (19,532) (14,614)
Income taxes (896) 4,626
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Net cash provided by operating activities 37,806 63,877
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CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchase of:
Businesses, net of cash acquired (20,484)
Property and equipment (4,346) (2,663)
Capitalized software (4,173) (5,486)
Proceeds from sale of property 2,016
Investments:
Proceeds 42,885 125,816
Purchases (137,304)
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Net cash provided by (used in) investing activities 34,366 (38,105)
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CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Net proceeds from exercise of stock options including excess tax benefits 58,364 597
Contribution to stock purchase plans 1,592 1,504
Repurchase of common stock (55,218) (32,839)
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Net cash provided by (used in) financing activities 4,738 (30,738)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,891 3,794
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 78,801 (1,172)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 260,681 612,062
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 339,482 $ 610,890
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COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(dollar amounts in thousands)
QUARTER ENDED
------------------------------- QUARTER ENDED
JUNE 30 JUNE 30 YR - YR MARCH 31 QTR - QTR
2007 2006 % Change 2007 % Change
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License Fees:
Distributed Product License Fees
DevPartner $ 2,173 $ 2,938 (26.0%) $ 3,305 (34.3%)
QACenter and File-AID Client/Server 6,002 5,558 8.0% 7,237 (17.1%)
UNIFACE and Optimal 4,063 3,290 23.5% 6,742 (39.7%)
Vantage 10,537 15,488 (32.0%) 19,407 (45.7%)
Changepoint 2,363 2,426 (2.6%) 3,628 (34.9%)
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Total Distributed Product License Fees 25,138 29,700 (15.4%) 40,319 (37.7%)
Mainframe Product License Fees 22,133 37,765 (41.4%) 32,906 (32.7%)
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Total License Fees 47,271 67,465 (29.9%) 73,225 (35.4%)
Maintenance Fees 113,741 110,317 3.1% 117,713 (3.4%)
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Total Products Revenue $ 161,012 $ 177,782 (9.4%) $ 190,938 (15.7%)
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Total Mainframe Products Revenue $ 103,237 $ 119,741 (13.8%) $ 118,926 (13.2%)
Total Distributed Products Revenue $ 57,775 $ 58,041 (0.5%) $ 72,012 (19.8%)
Total Products Revenue by Geography
North America $ 85,416 $ 100,426 (14.9%) $ 100,971 (15.4%)
International $ 75,596 $ 77,356 (2.3%) $ 89,967 (16.0%)
Product Releases
Mainframe 4 3 33.3% 5 (20.0%)
Distributed 9 12 (25.0%) 12 (25.0%)
Total Costs of Software Products $ 115,878 $ 109,593 5.7% $ 123,983 (6.5%)
Deferred license fees
Current $ 70,081 $ 68,525 2.3% $ 71,550 (2.1%)
Long-term $ 40,739 $ 50,557 (19.4%) $ 44,304 (8.0%)
Deferred during quarter $ 17,465 $ 10,652 64.0% $ 27,967 (37.6%)
Recognized during quarter $ 24,035 $ 23,056 4.2% $ 24,736 (2.8%)
Professional Services
Professional Services Revenue $ 118,377 $ 118,536 (0.1%) $ 122,091 (3.0%)
Contribution Margin 12.1% 9.2% 12.1%
Billable Headcount 3,384 3,563 (5.0%) 3,465 (2.3%)
Total Company Headcount 7,091 7,525 (5.8%) 7,539 (5.9%)
Total DSO 118.4 118.9 121.0
Total DSO (Billed) 48.9 50.0 56.3
COMPUWARE CORPORATION AND SUBSIDIARIES
PRODUCT COMMITMENTS
(In Thousands)
QUARTER ENDED QUARTER ENDED QUARTER ENDED
JUNE 30, MARCH 31, JUNE 30,
2007 2007 2006
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License revenue $ 47,271 $ 73,225 $ 67,465
Change in deferred license (6,570) 3,231 (12,404)
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License contracts entered into during period 40,701 76,456 55,061
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Maintenance revenue 113,741 117,713 110,317
Change in deferred maintenance (10,826) 30,479 (1,918)
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Maintenance contracts & renewals entered into during period 102,915 148,192 108,399
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Total products commitments during period $ 143,616 $ 224,648 $ 163,460
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As Compuware continues to emphasize solution selling, deals are becoming more
complex, increasing the likelihood that software transactions will be recognized
ratably over the maintenance term. Therefore to understand the health of
Compuware's software business, we believe it is important to also consider the
amount of product commitments during the reported periods.