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Compuware Corp (859014) SEC Filing 10-K Annual report for the fiscal year ending Monday, March 31, 2014

Compuware Corp

CIK: 859014

Exhibit 99.1
 
For Immediate Release
May 22, 2014

Compuware Corporation Reports Fourth Quarter and Full Fiscal Year 2014 Results

· Non-GAAP EPS of $0.50 per share in FY ’14, up 25 percent y/y; Q4 non-GAAP EPS of $0.10 per share

· GAAP EPS of $0.32 per share in FY ’14, up 500 percent y/y; Q4 GAAP EPS of $0.09 per share

· Total FY’14 revenue of $721M, flat with prior year; total Q4 revenue of $183M

· APM y/y license and total revenue growth of 16 percent and nine percent, respectively; APM contribution margin increases 761 percent over last year

· Mainframe contribution margin improves to 75 percent from 73 percent last year; highest maintenance renewal rate in last five years at 94 percent; total Mainframe revenue for the year was $296M

· $162M operating cash flow in FY’14; $300M cash-on-hand including approximately $50M from Covisint

· Eliminated $56M in Corporate and Shared Services expenses in FY’14; 25 percent higher than projection

· Issues FY 2015 outlook; plans to triple operating income and margin from FY14 – FY16; additional shareholder value opportunities in FY15; and the potential strategic separation of APM and Mainframe businesses

DETROIT, May 22, 2014 -- Compuware Corporation (Nasdaq: CPWR), the technology performance company, today announced financial results for its fourth quarter and fiscal year ended March 31, 2014.

Non-GAAP net income for the year was $111.0 million, or $0.50 per diluted share, compared to $87.8 million, or $0.40 per diluted share in fiscal 2013. GAAP net income for the year was $71.6 million, or $0.32 per diluted share, compared to ($17.3) million, or ($0.08) per share in the year-ago period.

Non-GAAP net income for the quarter was $22.1 million, or $0.10 per diluted share, compared to $18.2 million, or $0.08 per diluted share in the year-ago period. GAAP net income for the fourth quarter was $20.3 million, or $0.09 per diluted share, compared to ($63.7) million, or ($0.30) per share in the year-ago period.

(Included in the financial tables is a reconciliation between non-GAAP and GAAP results.)

“The key takeaways from our fiscal 2014 results are that our core APM and Mainframe businesses have strengthened and are getting stronger. Also, we have made tremendous progress on our cost rationalization initiative, exceeding our expense-reduction goal by 25 percent for the year,” said Compuware CEO Bob Paul. “We are now focused on building on this momentum in fiscal 2015 by continuing to drive growth and profitability in APM while further stabilizing Mainframe; completing our comprehensive business optimization work; and delivering even greater return to shareholders through additional capital return opportunities.

Compuware Corporation Reports Fourth Quarter and Full Fiscal Year 2014 Results
May 22, 2014
Page 2

I am extremely pleased with the substantial progress we continue to make in our strategic restructuring,” continued Paul. “We are now in the final stage of our transformational journey and, as a logical and final step in the process, we are exploring the feasibility of separating our APM and Mainframe operations, which we believe would allow these very distinct businesses competing in diverse market categories to build on their leadership positions and thrive as independent entities. We believe the rationale for such a separation is very compelling for everyone involved—including shareholders, customers and employees—in terms of return, value and opportunity. We will have more to report on this possibility in future periods as our due diligence progresses.”

Fiscal Year 2014 Results

During the fiscal year ended March 31, 2014:

· Total revenues were approximately $720.8 million, down 0.4 percent from FY’13

· Software license fees were approximately $159.2 million, flat from prior year

· Maintenance fees were approximately $353.4 million, down approximately 2.2 percent from FY’13

· Subscription fees were approximately $80.9 million, up approximately 1.2 percent from FY’13

· Professional services revenues were approximately $30.2 million, down approximately 8.2 percent from F’13

· Application services fees were approximately $97.1 million, up approximately 7.1 percent from FY’13

Fourth Quarter Fiscal Year 2014 Results

During the company’s fourth quarter:

· Total revenues were approximately $183.4 million, down approximately 0.5 percent from Q4 last year

· Software license fees were approximately $43.7 million, up approximately 5.8 percent from Q4 last year

· Maintenance fees were approximately $87.7 million, down approximately 1.3 percent from Q4 last year

· Subscription fees were approximately $19.8 million, down approximately 2.6 percent from Q4 last year

· Services fees were approximately $7.9 million, down approximately 4.4 percent from Q4 last year

· Application services fees were approximately $24.4 million, down approximately 5.1 percent from Q4 last year

Compuware Corporation Reports Fourth Quarter and Full Fiscal Year 2014 Results
May 22, 2014
Page 3

Fiscal 2015 Expectations

The following outlook is based on our expectation of continued strength in our APM business in terms of growth and profitability, further stabilization in our Mainframe business with a sustained strong operating margin, and the completion of our cost-rationalization initiative.

For fiscal 2015, Compuware expects the following:

· Total revenues of $720-$735M.

· Non-GAAP earnings per share of $0.41-$0.45.

· Cash flow from operations of $105-$110M.

Fourth Quarter Fiscal Year 2014 Highlights

During the fourth quarter, Compuware:

· Reached an agreement with Elliott Management that included the nomination of two new members to Compuware’s Board of Directors and provided for the creation of an advisory committee to explore enhancing the company’s value and the value it delivers to shareholders.
· Signed and completed an agreement for Marlin Equity Partners to acquire Compuware's Changepoint, Professional Services and Uniface business units.
· Introduced three new members — Dave Hansen, Sam Inman III and Philip Lay — to the Covisint Board of Directors.
· Announced that Ovum named Compuware an APM market leader in its "Ovum Decision Matrixs.”
· Opened a new Center of Excellence for SAP solutions in the Partner Port (near SAP headquarters), where more than 100 SAP partners and other companies with close relationships with SAP have office space in Walldorf, Germany.
· Announced that Covisint was chosen as an approved technology provider for the Direct Marketplace for Michigan, established by the Michigan Health Information Network Shared Services, simplifying and securing the Network's ability to share patient health information between health providers.
· Enhanced and modernized the 2014 Compuware APM Benchmarks, allowing companies to better measure and compare the performance of their entire digital experience against industry competitors and peers across mobile, web, Last Mile and transactions.
· Announced deep enhancements to Compuware Strobe, a key component of Compuware APM for Mainframe.
· Released key findings from an independent global CIO survey investigating the use of the mainframe within the enterprise, including the looming skills shortage of mainframe developers and its concern for CIOs.
· Extended the partnership between SAP company hybris software and Compuware APM to empower collaboration among developers, QA and production teams.
· Announced that analyst firm Ptak Associates LLC penned a report discussing the benefits of new integrations between Compuware’s Mainframe Application Performance solutions and Developer Productivity solutions.
· Expanded the Covisint healthcare platform globally to support the growing international need for secure health information exchange.
· Announced that Covisint achieved full accreditation with the Direct Trusted Agent Accreditation Program from DirectTrust.org and the Electronic Healthcare Network Accreditation Commission.

Compuware Corporation Reports Fourth Quarter and Full Fiscal Year 2014 Results
May 22, 2014
Page 4

· Announced new innovations to the Compuware Workbench, a modern, intuitive Eclipse-based mainframe development environment.
· Enhanced Compuware APM for Big Data to offer support and out-of-the-box dashboards that enable organizations to optimize big data projects through unmatched visibility into Hadoop, NoSQL and Cassandra deployments.
· Introduced with Milliman, Inc., a premier global consulting and actuarial firm, the Covisint Predictive Analytics solution, designed for healthcare providers entering into value-based, capitated-revenue arrangements.
· Announced that a global, top 10 oil company demonstrated at the Microsoft Global Energy Forum how it uses the Covisint platform to increase business agility and drastically reduce security risks
· Released its new Data Center Real User Monitoring solution.
· Announced that Covisint earned "top performing enterprise HIE vendor" for the "payer/insurer-centric" category by Black Book International.
· Released an APM solution for Hadoop on Amazon Elastic MapReduce, enabling organizations to tame big data at scale and allowing customers to gain faster business value at lower cost, while furthering Compuware APM's ability to provide visibility and troubleshooting insight into big data workloads.
· Announced that Database Trends and Applications Magazine named Compuware APM for Big Data a Trend-Setting Product in Data for 2014.
· Enabled Hyundai Genesis owners to access vital vehicle information through Google Glass by way of the Covisint cloud engagement platform.
· Announced the 2013 winners of its annual Best of the Web awards, honoring top performing sites across five major industries.

Use of Non-GAAP Financial Measures

In an effort to provide investors with additional information regarding the Company's results as determined by U.S. generally accepted accounting principles (GAAP), the Company has also disclosed in this press release and the accompanying tables the following non-GAAP information: (a) non-GAAP net income and (b) non-GAAP diluted earnings per share. Each of these financial measures excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. These non-GAAP financial measures exclude share-based compensation expense; the amortization of intangible assets; a goodwill impairment charge; restructuring charges; advisory fees associated with certain shareholder actions; the related tax impacts of these items; and the gain on divestiture, net of tax. Each of the non-GAAP adjustments is described in more detail below. This press release also contains a reconciliation of each of these non-GAAP measures to its most comparable GAAP financial measure.

We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our operating results because they exclude amounts that management and the board of directors do not consider part of core operating results when assessing the performance of the organization. We believe that inclusion of these non-GAAP financial measures provides consistency and comparability with past reports of financial results and provides consistency in calculations by outside analysts reviewing our results. Accordingly, we believe these non-GAAP financial measures are useful to investors in allowing for greater transparency of supplemental information used by management.

While we believe that these non-GAAP financial measures provide useful supplemental information, there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. Items such as share-based compensation expense; the amortization of intangible assets; a goodwill impairment charge; restructuring charges; advisory fees associated with certain shareholder actions; the related tax impacts of these items; and the gain on divestiture, net of tax that are excluded from our non-GAAP financial measures can have a material impact on net earnings. As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, net earnings, cash flow from operations or other measures of performance prepared in accordance with GAAP. We compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reconciling the non-GAAP financial measures to their most comparable GAAP financial measure. Investors are encouraged to review the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures that are included elsewhere in this press release.

Compuware Corporation Reports Fourth Quarter and Full Fiscal Year 2014 Results
May 22, 2014
Page 5

The following discusses the reconciling items from our non-GAAP financial measures to the most comparable GAAP financial measures:

Share-based compensation expense. Our non-GAAP financial measures exclude the compensation expenses required to be recorded by GAAP for equity awards to employees and directors. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding expenses related to share-based compensation, because these costs are generally fixed at the time an award is granted, are then expensed over several years and generally cannot be changed or influenced by management once granted.

Amortization of intangible assets. Our non-GAAP financial measures exclude costs associated with the amortization of intangible assets. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding amortization of intangible assets, because these costs are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.

Goodwill impairment charge. Our non-GAAP financial measures exclude an impairment charge associated with a decline in the estimated fair value of our professional services business unit. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding goodwill impairment to provide comparability and consistency with historical operating results.

Restructuring charges. Our non-GAAP financial measures exclude restructuring charges, and any subsequent changes in estimates, as they relate to our corporate restructuring and exit activities, including asset impairments resulting from a fourth quarter fiscal 2013 operational review. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding restructuring charges, in order to provide comparability and consistency with historical operating results.

Advisory fees associated with certain shareholder actions. During the third quarter of fiscal 2013, the Company received an unsolicited, nonbinding offer to purchase the outstanding shares of the Company from a shareholder. The Company has incurred costs of approximately $3 million for unplanned consultant fees to review the offer, analyze the business and review additional requests for information from other interested parties. Management and the board of directors believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures, excluding such costs, in order to provide comparability and consistency with historical operating results.

Compuware Corporation Reports Fourth Quarter and Full Fiscal Year 2014 Results
May 22, 2014
Page 6

Provision for income taxes on above pre-tax non-GAAP adjustments. Our non-GAAP financial measures exclude the tax impact of the above pre-tax non-GAAP adjustments. This amount is calculated using the tax rates of each country to which these pre-tax non-GAAP adjustments relate. Management excludes the non-GAAP adjustments on a net-of-tax basis in evaluating our performance. Therefore, we exclude the tax impact of these charges when presenting non-GAAP financial measures.

Gain on divestiture of business segments, net of tax. Our non-GAAP financial measures exclude the gain from the divestiture of our Changepoint, Professional Services and Uniface business segments, net of tax. This gain is included in “Income (loss) from discontinued operations, net of tax” in the statements of operations. This gain is not comparable to activity in the other periods presented. We believe it is useful in evaluation corporate performance during a particular time period to review the supplemental non-GAAP financial measures excluding the effect of this gain in order to provide comparability and consistency with historical results.

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 today hold a conference call to discuss these results at 5:30 p.m. Eastern time (21:30 GMT). To join the conference call, interested parties in the United States should call 800-288-8974. For international access, the conference call number is +1-612-332-0932. 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 324275. 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, Senior Vice President, Marketing, 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 MARCH 31,
 
ASSETS
 
   
 
 
 
2014
   
2013
 
CURRENT ASSETS:
 
   
 
Cash and cash equivalents
 
$
300,059
   
$
89,873
 
Accounts receivable, net
   
385,232
     
424,587
 
Deferred tax asset, net
   
35,871
     
37,618
 
Income taxes refundable
   
4,161
     
4,951
 
Prepaid expenses and other current assets
   
27,231
     
36,210
 
Total current assets
   
752,554
     
593,239
 
 
               
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION
   
287,013
     
302,492
 
 
               
CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET
   
98,762
     
116,663
 
 
               
ACCOUNTS RECEIVABLE
   
168,875
     
174,891
 
DEFERRED TAX ASSET, NET
   
16,514
     
31,754
 
GOODWILL
   
648,546
     
722,042
 
OTHER ASSETS
   
24,845
     
32,201
 
 
               
TOTAL ASSETS
 
$
1,997,109
   
$
1,973,282
 
 
               
LIABILITIES AND SHAREHOLDERS' EQUITY
               
 
               
CURRENT LIABILITIES:
               
Accounts payable
 
$
14,251
   
$
18,717
 
Accrued expenses
   
107,452
     
103,994
 
Income taxes payable
   
33,093
     
14,507
 
Deferred revenue
   
382,558
     
417,862
 
Total current liabilities
   
537,354
     
555,080
 
 
               
LONG TERM DEBT
   
-
     
18,000
 
 
               
DEFERRED REVENUE
   
302,565
     
310,453
 
 
               
ACCRUED EXPENSES
   
19,765
     
27,873
 
 
               
DEFERRED TAX LIABILITY, NET
   
36,391
     
63,650
 
Total liabilities
   
896,075
     
975,056
 
 
               
SHAREHOLDERS' EQUITY:
               
Common stock
   
2,193
     
2,132
 
Additional paid-in capital
   
828,264
     
713,580
 
Retained earnings
   
257,236
     
301,298
 
Accumulated other comprehensive loss
   
(6,915
)
   
(18,784
)
Total Compuware shareholders' equity
   
1,080,778
     
998,226
 
Non-controlling interest
   
20,256
     
-
 
Total shareholders' equity
   
1,101,034
     
998,226
 
 
               
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
$
1,997,109
   
$
1,973,282
 

COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)

 
 
THREE MONTHS ENDED
   
TWELVE MONTHS ENDED
 
 
 
MARCH 31,
   
MARCH 31,
 
 
 
   
   
   
 
 
 
2014
   
2013
   
2014
   
2013
 
REVENUES:
 
   
   
   
 
Software license fees
 
$
43,666
   
$
41,290
   
$
159,197
   
$
159,093
 
Maintenance fees
   
87,683
     
88,843
     
353,374
     
361,359
 
Subscription fees
   
19,812
     
20,336
     
80,857
     
79,862
 
Services fees
   
7,887
     
8,253
     
30,193
     
32,896
 
Application services fees
   
24,400
     
25,713
     
97,135
     
90,694
 
Total revenues
   
183,448
     
184,435
     
720,756
     
723,904
 
 
                               
OPERATING EXPENSES:
                               
Cost of software license fees
   
5,200
     
4,698
     
20,310
     
18,986
 
Cost of maintenance fees
   
7,488
     
7,562
     
28,387
     
31,621
 
Cost of subscription fees
   
7,974
     
8,087
     
32,406
     
30,264
 
Cost of services
   
6,661
     
7,534
     
25,662
     
31,777
 
Cost of application services
   
30,587
     
25,830
     
117,155
     
83,298
 
Technology development and support
   
21,418
     
23,439
     
86,181
     
95,356
 
Sales and marketing
   
58,883
     
58,714
     
216,115
     
220,714
 
Administrative and general
   
27,737
     
37,271
     
134,695
     
153,733
 
Restructuring costs
   
3,773
     
15,751
     
11,990
     
15,751
 
Total operating expenses
   
169,721
     
188,886
     
672,901
     
681,500
 
 
                               
INCOME FROM OPERATIONS
   
13,727
     
(4,451
)
   
47,855
     
42,404
 
 
                               
OTHER INCOME, NET
   
(59
)
   
(1,080
)
   
3,288
     
(1,170
)
 
                               
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION
   
13,668
     
(5,531
)
   
51,143
     
41,234
 
 
                               
INCOME TAX PROVISION (BENEFIT)
   
5,553
     
(8,755
)
   
12,944
     
15,917
 
 
                               
NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NON-CONTROLLING INTEREST
   
8,115
     
3,224
     
38,199
     
25,317
 
 
                               
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX
   
10,867
     
(66,877
)
   
29,926
     
(42,568
)
 
                               
NET INCOME INCLUDING NON-CONTROLLING INTEREST
   
18,982
     
(63,653
)
   
68,125
     
(17,251
)
 
                               
Less: Net income (loss) attributable to the non-controlling interest in Covisint Corporation
   
(1,272
)
   
-
     
(3,458
)
   
-
 
 
                               
NET INCOME ATTRIBUTABLE TO COMPUWARE CORP
 
$
20,254
   
$
(63,653
)
 
$
71,583
   
$
(17,251
)
 
                               
Amounts attributable to Compuware common shareholders
                               
Income from continuing operations
   
8,115
     
3,224
     
38,199
     
25,317
 
Loss attributable to non-controlling interest
   
(1,272
)
   
-
     
(3,458
)
   
-
 
Income from continuing operations, net of tax
   
9,387
     
3,224
     
41,657
     
25,317
 
Income (loss) from discontinued operations, net of tax
   
10,867
     
(66,877
)
   
29,926
     
(42,568
)
Net income (loss) attributable to Compuware common shareholders
 
$
20,254
   
$
(63,653
)
 
$
71,583
   
$
(17,251
)
 
                               
Diluted earnings (loss) per share:
                               
Continuing operations
   
0.04
     
0.01
     
0.19
     
0.12
 
Discontinued operations
   
0.05
     
(0.31
)
   
0.13
     
(0.20
)
Diluted earnings (loss) per share
 
$
0.09
   
$
(0.30
)
 
$
0.32
   
$
(0.08
)
 
                               
Weighted-average common shares outstanding
   
218,417
     
212,516
     
215,952
     
214,627
 
Dilutive effect of stock awards
   
4,266
     
6,262
     
5,228
     
4,953
 
Total shares
   
222,683
     
218,778
     
221,180
     
219,580
 

COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

 
 
TWELVE MONTHS ENDED
 
 
 
MARCH 31,
 
 
 
2014
   
2013
 
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
 
   
 
Net income (loss) including non-controlling interest
 
$
68,125
   
$
(17,251
)
Adjustments to reconcile net income (loss) to cash provided by operations:
               
Depreciation and amortization
   
63,427
     
65,919
 
Goodwill impairment
   
-
     
71,840
 
Gain on sale of business units
   
(34,195
)
   
-
 
Stock award compensation
   
40,881
     
31,677
 
Deferred income taxes
   
(14,112
)
   
(8,724
)
Other
   
(4,593
)
   
3,520
 
Net change in assets and liabilities, net of effects from currency fluctuations:
               
Accounts receivable
   
10,900
     
50,131
 
Prepaid expenses and other assets
   
9,121
     
8,359
 
Accounts payable and accrued expenses
   
(9,450
)
   
(12,611
)
Deferred revenue
   
15,837
     
(78,869
)
Income taxes
   
15,585
     
18,421
 
Net cash provided by operating activities
   
161,526
     
132,412
 
 
               
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
               
Purchase of:
               
Property and equipment
   
(15,535
)
   
(24,274
)
Capitalized software
   
(23,443
)
   
(31,797
)
Proceeds from divestiture of business units
   
112,000
     
-
 
Other
   
3,418
     
812
 
Net cash provided by (used in) investing activities
   
76,440
     
(55,259
)
 
               
CASH FLOWS USED IN FINANCING ACTIVITIES:
               
Proceeds from borrowings
   
51,000
     
142,800
 
Payments on borrowings
   
(69,000
)
   
(169,800
)
Net proceeds from exercise of stock awards including excess tax benefits
   
39,012
     
23,419
 
Employee contribution to common stock purchase plans
   
2,401
     
2,804
 
Repurchase of common stock
   
(9,712
)
   
(81,741
)
Dividends
   
(108,171
)
   
-
 
IPO proceeds
   
68,448
     
-
 
Other
   
(1,412
)
   
(714
)
Net cash used in financing activities
   
(27,434
)
   
(83,232
)
 
               
EFFECT OF EXCHANGE RATE CHANGES ON CASH
   
(346
)
   
(3,228
)
 
               
NET CHANGE IN CASH AND CASH EQUIVALENTS
   
210,186
     
(9,307
)
 
               
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
   
89,873
     
99,180
 
 
               
CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
300,059
   
$
89,873
 

COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(Dollar Amounts In Thousands)

 
 
QUARTER
   
 
 
 
ENDED
   
 
 
 
MAR 31,
   
YR - YR
 
 
 
2014
   
2013
   
% Chg
 
Total Product Software Revenue by Geography
 
   
   
 
North America
 
$
84,893
   
$
86,921
     
(2.3
%)
International
   
66,268
     
63,548
     
4.3
%
 
                       
Deferred License Fees
                       
Current
 
$
15,968
   
$
17,583
     
(9.2
%)
Long-term
   
7,158
     
9,916
     
(27.8
%)
 
                       
Deferred Maintenance
                       
Current
 
$
285,535
   
$
313,323
     
(8.9
%)
Long-Term
   
274,164
     
272,267
     
0.7
%
 
                       
Deferred Subscription
                       
Current
 
$
45,131
   
$
49,152
     
(8.2
%)
Long-Term
   
9,425
     
7,409
     
27.2
%
 
                       
Deferred Services
 
$
19,913
   
$
23,492
     
(15.2
%)
 
                       
Deferred Application Services
 
$
27,829
   
$
35,173
     
(20.9
%)
 
                       
Other:
                       
Total Company Headcount
   
3,066
     
4,491
     
(31.7
%)
 
                       
Total DSO (Billed)
   
87.7
     
83.8
         
Total DSO
   
171.9
     
159.3
         
 
                       
Stock-based compensation expense
                       
 
                       
Cost of license fees
 
$
-
   
$
1
     
(100.0
%)
Cost of maintenance fees
   
53
     
159
     
(66.7
%)
Cost of subscription fees
   
26
     
40
     
(35.0
%)
Cost of services
   
6
     
21
     
(71.4
%)
Cost of application services
   
3,047
     
524
     
481.5
%
Technology development and support
   
139
     
495
     
(71.9
%)
Sales and marketing
   
2,910
     
2,144
     
35.7
%
Administrative and general
   
1,850
     
3,004
     
(38.4
%)
Restructuring costs
   
350
     
4,572
     
(92.3
%)
Discontinued operations
   
(26
)
   
54
     
(148.1
%)
 
                       
Total stock-based compensation expense before income taxes
 
$
8,355
   
$
11,014
     
(24.1
%)

COMPUWARE CORPORATION AND SUBSIDIARIES
BUSINESS UNIT RESULTS OF OPERATIONS
(In Thousands)

 
 
   
   
Covisint
   
   
 
 
 
   
   
Application
   
Unallocated
   
 
Quarter Ended:
 
APM
   
Mainframe
   
Services
   
Expenses
   
Total
 
 
 
   
   
   
   
 
March 31, 2014
 
   
   
   
   
 
 
 
   
   
   
   
 
Software license fees
 
$
30,345
   
$
13,321
     
-
     
-
   
$
43,666
 
Maintenance fees
   
26,051
     
61,632
     
-
     
-
     
87,683
 
Subscription fees
   
19,812
     
-
     
-
     
-
     
19,812
 
Services fees
   
7,729
     
158
     
-
     
-
     
7,887
 
Application services fees
   
-
     
-
   
$
24,400
     
-
     
24,400
 
Total revenues
   
83,937
     
75,111
     
24,400
     
-
     
183,448
 
 
                                       
Total operating expenses
   
79,994
     
19,688
     
31,126
     
38,913
     
169,721
 
 
                                       
Income (loss) from operations
 
$
3,943
   
$
55,423
   
$
(6,726
)
 
$
(38,913
)
 
$
13,727
 
Contribution margin %
   
4.7
%
   
73.8
%
   
(27.6
%)
           
7.5
%
 
                                       
Operating expenses include:
                                       
Stock awards compensation
 
$
2,828
   
$
188
   
$
3,061
   
$
2,304
   
$
8,381
 
Amortization of purchased software
 
$
1,613
   
$
-
   
$
94
   
$
-
   
$
1,707
 
Amortization of other acquired intangible assets
 
$
1,733
   
$
-
   
$
77
   
$
-
   
$
1,810
 
 
                                       
March 31, 2013
                                       
 
                                       
Software license fees
 
$
26,328
   
$
14,962
     
-
     
-
   
$
41,290
 
Maintenance fees
   
22,991
     
65,852
     
-
     
-
     
88,843
 
Subscription fees
   
20,336
     
-
     
-
     
-
     
20,336
 
Services fees
   
7,568
     
685
     
-
     
-
     
8,253
 
Application services fees
   
-
     
-
   
$
25,713
     
-
     
25,713
 
Total revenues
   
77,223
     
81,499
     
25,713
     
-
     
184,435
 
 
                                       
Operating expenses
   
77,907
     
23,469
     
26,353
   
$
61,157
     
188,886
 
 
                                       
Income (loss) from operations
 
$
(684
)
 
$
58,030
   
$
(640
)
 
$
(61,157
)
 
$
(4,451
)
Contribution margin %
   
(0.9
%)
   
71.2
%
   
(2.5
%)
           
(2.4
%)
 
                                       
Operating expenses include:
                                       
Stock awards compensation
 
$
1,956
   
$
459
   
$
524
   
$
8,021
   
$
10,960
 
Amortization of purchased software
 
$
2,293
   
$
-
   
$
112
   
$
-
   
$
2,405
 
Amortization of other acquired intangible assets
 
$
1,704
   
$
-
   
$
104
   
$
-
   
$
1,808
 

COMPUWARE CORPORATION AND SUBSIDIARIES
BUSINESS UNIT RESULTS OF OPERATIONS
(In Thousands)

 
 
   
   
Covisint
   
   
 
 
 
   
   
Application
   
Unallocated
   
 
Twelve Months Ended:
 
APM
   
Mainframe
   
Services
   
Expenses
   
Total
 
 
 
   
   
   
   
 
March 31, 2014
 
   
   
   
   
 
 
 
   
   
   
   
 
Software license fees
 
$
116,373
   
$
42,824
     
-
     
-
   
$
159,197
 
Maintenance fees
   
100,243
     
253,131
     
-
     
-
     
353,374
 
Subscription fees
   
80,857
     
-
     
-
     
-
     
80,857
 
Services fees
   
29,894
     
299
     
-
     
-
     
30,193
 
Application services fees
   
-
     
-
   
$
97,135
     
-
     
97,135
 
Total revenues
   
327,367
     
296,254
     
97,135
     
-
     
720,756
 
 
                                       
Total operating expenses
   
298,924
     
74,384
     
120,233
     
179,360
     
672,901
 
 
                                       
Income (loss) from operations
 
$
28,443
   
$
221,870
   
$
(23,098
)
 
$
(179,360
)
 
$
47,855
 
Contribution margin %
   
8.7
%
   
74.9
%
   
(23.8
%)
           
6.6
%
 
                                       
Operating expenses include:
                                       
Stock awards compensation
 
$
8,187
   
$
597
   
$
17,333
   
$
14,569
   
$
40,686
 
Amortization of purchased software
 
$
8,079
   
$
-
   
$
376
   
$
-
   
$
8,455
 
Amortization of other acquired intangible assets
 
$
6,861
   
$
-
   
$
349
   
$
-
   
$
7,210
 
 
                                       
March 31, 2013
                                       
 
                                       
Software license fees
 
$
100,565
   
$
58,528
     
-
     
-
   
$
159,093
 
Maintenance fees
   
89,535
     
271,824
     
-
     
-
     
361,359
 
Subscription fees
   
79,862
     
-
     
-
     
-
     
79,862
 
Services fees
   
30,571
     
2,325
     
-
     
-
     
32,896
 
Application services fees
   
-
     
-
   
$
90,694
     
-
     
90,694
 
Total revenues
   
300,533
     
332,677
     
90,694
     
-
     
723,904
 
 
                                       
Operating expenses
   
304,835
     
91,325
     
86,084
   
$
199,256
     
681,500
 
 
                                       
Income (loss) from operations
 
$
(4,302
)
 
$
241,352
   
$
4,610
   
$
(199,256
)
 
$
42,404
 
Contribution margin %
   
(1.4
%)
   
72.5
%
   
5.1
%
           
5.9
%
 
                                       
Operating expenses include:
                                       
Stock awards compensation
 
$
5,790
   
$
2,577
   
$
1,629
   
$
21,164
   
$
31,160
 
Amortization of purchased software
 
$
9,048
   
$
-
   
$
556
   
$
-
   
$
9,604
 
Amortization of other acquired intangible assets
 
$
7,139
   
$
-
   
$
442
   
$
-
   
$
7,581
 

COMPUWARE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(In Thousands, Except Per Share Data)

 
 
THREE MONTHS ENDED
   
TWELVE MONTHS ENDED
 
 
 
MARCH 31,
   
MARCH 31,
 
 
 
2014
   
2013
   
2014
   
2013
 
 
 
   
   
   
 
NET INCOME ATTRIBUTABLE TO COMPUWARE COPORATION
 
$
20,254
   
$
(63,653
)
 
$
71,583
   
$
(17,251
)
ADJUSTMENTS EXCLUDING IMPACT OF NON-CONTROLLING INTEREST
                               
Stock compensation (excl. restructuring)
   
7,393
     
6,442
     
35,045
     
27,105
 
Amortization of purchased software
   
1,689
     
2,405
     
8,418
     
9,604
 
Amortization of acquired intangibles
   
1,795
     
1,808
     
7,178
     
7,581
 
Restructuring expense
   
4,170
     
16,573
     
13,196
     
16,573
 
Goodwill impairment
   
-
     
71,840
             
71,840
 
Advisory fees
   
2,658
     
2,651
     
13,096
     
2,797
 
Income tax effect of above adjustments
   
(6,327
)
   
(19,887
)
   
(27,978
)
   
(30,420
)
Gain on divestiture of business units, net of tax
   
(9,529
)
           
(9,529
)
       
Total adjustments
   
1,849
     
81,832
     
39,426
     
105,080
 
NON-GAAP NET INCOME
 
$
22,103
   
$
18,179
   
$
111,009
   
$
87,829
 
 
                               
 
                               
DILUTED EARNINGS PER SHARE - GAAP
 
$
0.09
   
$
(0.30
)
 
$
0.32
   
$
(0.08
)
 
                               
RECALCULATED USING DILUTIVE SHARES
 
$
0.09
   
$
(0.29
)
 
$
0.32
   
$
(0.08
)
ADJUSTMENTS EXCLUDING IMPACT OF NON-CONTROLLING INTEREST
                               
Stock compensation (excl. restructuring)
   
0.03
     
0.03
     
0.16
     
0.12
 
Amortization of purchased software
   
0.01
     
0.01
     
0.04
     
0.04
 
Amortization of acquired intangibles
   
0.01
     
0.01
     
0.03
     
0.03
 
Restructuring expense
   
0.02
     
0.08
     
0.06
     
0.08
 
Goodwill impairment
   
-
     
0.33
     
-
     
0.33
 
Advisory fees
   
0.01
     
0.01
     
0.06
     
0.01
 
Income tax effect of above adjustments
   
(0.03
)
   
(0.09
)
   
(0.13
)
   
(0.14
)
Gain on divestiture of business units, net of tax
   
(0.04
)
   
0.00
     
(0.04
)
   
0.00
 
Total adjustments
   
0.01
     
0.37
     
0.18
     
0.48
 
NON-GAAP NET INCOME
 
$
0.10
   
$
0.08
   
$
0.50
   
$
0.40
 
 
                               
Diluted shares outstanding
   
222,683
     
218,778
     
221,180
     
219,580
 

EPS amounts may not add to the total due to rounding
 
 


The following information was filed by Compuware Corp on Thursday, May 29, 2014 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Financial Statements, Disclosures and Schedules

Inside this 10-K Annual Report

Document And Entity Information
Consolidated Balance Sheets
Consolidated Balance Sheets (parenthetical)
Consolidated Statements Of Cash Flows
Consolidated Statements Of Comprehensive Income
Consolidated Statements Of Operations
Consolidated Statements Of Shareholders' Equity
Consolidated Statements Of Shareholders' Equity (parenthetical)
Acquisitions
Acquisitions (details)
Acquisitions (tables)
Benefit Plans
Benefit Plans (details)
Benefit Plans (tables)
Benefit Plans, Allocation Of Recognized Period (details)
Capital Stock
Capital Stock (details)
Commitments And Contingencies
Commitments And Contingencies (details)
Commitments And Contingencies (tables)
Debt
Debt (details)
Discontinued Operations
Discontinued Operations (details)
Discontinued Operations (tables)
Earnings Per Common Share
Earnings Per Common Share (details)
Earnings Per Common Share (tables)
Fair Value Of Assets And Liabilities
Fair Value Of Assets And Liabilities (details)
Fair Value Of Assets And Liabilities (tables)
Financing Receivables
Financing Receivables (details)
Financing Receivables (tables)
Foreign Currency Transactions And Derivatives
Foreign Currency Transactions And Derivatives (details)
Goodwill, Capitalized Software And Other Intangible Assets
Goodwill, Capitalized Software And Other Intangible Assets (details)
Goodwill, Capitalized Software And Other Intangible Assets (tables)
Income Taxes
Income Taxes (details)
Income Taxes (tables)
Investment In Partially Owned Companies
Investment In Partially Owned Companies (details)
Property And Equipment
Property And Equipment (details)
Property And Equipment (tables)
Quarterly Financial Information (unaudited)
Quarterly Financial Information (unaudited) (details)
Quarterly Financial Information (unaudited) (tables)
Related Party Transactions
Related Party Transactions (details)
Restructuring Charges
Restructuring Charges (details)
Restructuring Charges (tables)
Segment Information
Segment Information (details)
Segment Information (tables)
Segment Information, Geographic Operations (details)
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies (details)
Summary Of Significant Accounting Policies (policies)
Summary Of Significant Accounting Policies (tables)
CIK: 859014
Form Type: 10-K Annual Report
Accession Number: 0001140361-14-023703
Submitted to the SEC: Fri May 30 2014 1:54:26 PM EST
Accepted by the SEC: Fri May 30 2014
Period: Monday, March 31, 2014
Industry: Prepackaged Software

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