Compuware Corporation (Nasdaq: CPWR), the technology performance company, today announced financial results for its second quarter, fiscal year 2015 ended September 30, 2014.

Non-GAAP net income for the quarter was $19.9 million, or $0.09 per diluted share, compared to $21.2 million, or $0.10 per diluted share in the year-ago period. GAAP net income for the second quarter was $9.2 million, or $0.04 per diluted share, compared to $9.1 million, or $0.04 per diluted share in the year-ago period. Prior-year amounts relate to our continuing operations.

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

“The second quarter was a solid period for Compuware, as we ended up ahead of projected profitability and in line with revenue expectations. We have established a market-leadership position in application performance management and continue to see great progress in stabilizing our mainframe business,” said Compuware CEO Bob Paul. “We remain extremely enthusiastic about the opportunity in front of us . The completion of the Company’s transformation into a lean and focused entity able to compete and win in today’s tech market is almost complete. Also, our recent announcement regarding the finalization of the Covisint spin marks the accomplishment of another key milestone along this path, all of which will significantly benefit customers, employees and shareholders alike.”

With regard to the sale of the Company to Thoma Bravo, Compuware plans to mail the definitive proxy statement to shareholders on or about November 4, 2014 and, subject to regulatory approval, expects the shareholder meeting seeking approval for the transaction to be held on or about December 8, 2014.

Second Quarter Fiscal Year 2015 Dynatrace Segment Results and Highlights
  • Total revenue was approximately $83.2M, up 8.9 percent y/y.
  • Software license fees were approximately $25.9M, up 3.4 percent y/y.
  • Maintenance fees were approximately $29.4M, up 19.5 percent y/y.
  • Subscription fees were approximately $19.9M, flat y/y.
  • Services fees were approximately $7.9M, up 16.6 percent y/y.
  • Continued 90 percent+ overall maintenance renewal rate.
  • Services on growth track due to transition from “implementation services” to “expert services.”
  • Customer satisfaction at industry best 89.9% “Net Promoter Score.”
  • APMaaS bookings up 40 percent y/y with continued strength forecasted.

Second Quarter Fiscal Year 2015 Mainframe Segment Results and Highlights
  • Total revenue was approximately $66.0M, down 8.1 percent y/y.
  • Software license fees were approximately $6.3M, down 16.6 percent y/y.
  • Maintenance fees were approximately $59.6M, down 7.2 percent y/y.
  • Contribution margin was approximately 75.9 percent compared to 76.6 percent last year.
  • Exceeded plan for software license bookings and revenue.

Second Quarter Fiscal Year 2015 Company Results

During the company’s second quarter:
  • Total revenues were approximately $170.9M, down 1.0 percent y/y.
  • Software license fees were approximately $32.2M, down 1.2 percent y/y.
  • Maintenance fees were approximately $89.0 million, flat y/y.
  • Subscription fees were approximately $19.9 million, flat y/y.
  • Application services fees were approximately $21.7 million, down 11.4 percent y/y.

Second Quarter Fiscal Year 2015 Company Highlights

During the second quarter, Compuware:
  • Entered into a definitive agreement to be acquired by leading private equity investment firm Thoma Bravo, LLC, in a transaction valued at approximately $2.5 billion. The transaction is subject to approval from Compuware's shareholders, regulatory approvals, and other customary closing conditions. The closing of the transaction is also subject to the completion of a distribution of Covisint.
  • Appointed Christopher O'Malley President of Mainframe Operations effective July 21, 2014. In this role, O'Malley oversees all facets of the business unit’s operations, including sales and marketing, product development and management, and customer support.
  • Announced plans to operationally separate its mainframe and APM businesses and that the resulting mainframe-dedicated company will carry the Compuware name.
  • Announced that its market-leading APM business will operate under the name Dynatrace.
  • Announced that the annual 2014 Compuware PERFORM Global User Conference would be held October 7 - 9 in Orlando, Florida, where the Dynatrace team would share real-world examples of how companies use APM to optimize users’ experiences online, drive profits and build business success.
  • Announced that Gartner, Inc., named Compuware the worldwide APM market share leader for the second year in a row.
  • Announced that SD Times Magazine has named Compuware APM (Dynatrace) to its 2014 SD Times 100 list as a leader and innovator in the “Mobile Testing, Quality Assurance, and Security” category.
  • Revealed that Covisint Chief Security Officer Dave Miller would deliver a presentation on cloud computing titled “The Four Immutable Laws of Cloud Computing,” at the Gartner Catalyst Conference.
  • Stated that Covisint simplified the Physician Quality Reporting System (PQRS) for physicians and healthcare systems with its 2014 PQRS Registry.
  • In conjunction with leading IT industry analyst firm Enterprise Management Associates, teamed up to host “A Pragmatic Approach to DevOps and the Mainframe” live webcast.
  • Announced that Mainframe APM Subject Matter Expert Spencer Hallman and Mainframe Product Manager Tyler Allman would co-present the session, “Break Down IT Walls for Faster, More Seamless Mainframe Application Problem Resolution” at the SHARE conference in Pittsburgh.
  • Announced that Dynatrace teamed up with Rosetta, one of the largest customer engagement and e-commerce agencies in the U.S., for a live webcast to provide tips on how retailers can avoid the most common eCommerce mistakes during the holiday shopping season and deliver superior online experiences to their customers.
  • Announced that Perficient, a leading information technology and management consulting firm serving global 2000 and other large enterprise customers throughout North America, joined Covisint's Certified Service Partner program.
  • Featured on the cover of Enterprise Executive with an article titled, "Compuware’s Chris O’Malley Shares His Vision of “Mainframe’s Next 50 Years.”
  • Released the video, “Empower Your Next-Gen Mainframe Developers,” to help IT organizations overcome the significant challenges of improving the efficiency and productivity of the next generation of development and operations teams.

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 provided non-GAAP net income and non-GAAP diluted earnings per share. These financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. These non-GAAP financial measures exclude stock compensation expense; amortization of purchased software and acquired intangible assets; restructuring charges; advisory fees associated with certain shareholder actions and business transformation; and the related tax impacts of these items. Each of the non-GAAP adjustments is described in more detail below. The accompanying tables provides a reconciliation of each of these non-GAAP measures to its most comparable GAAP financial measure.

We believe that inclusion of these non-GAAP financial measures provides better comparability with our historical financial results and with the results of many of our competitors. In addition, we believe these non-GAAP financial measures are useful to investors because they allow investors to review supplemental information used internally by management to evaluate our financial results. These non-GAAP measures also represent the means by which we communicate our earnings guidance to investors.

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, are not audited, 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 stock compensation expense; amortization of purchased software and acquired intangible assets; restructuring charges; advisory fees associated with certain shareholder actions and business transformation; and the related tax impacts of these items that are excluded from our non-GAAP financial measures can have a material impact on net income. As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, net income or loss, 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. We have procedures in place to ensure that these measures are calculated using the appropriate GAAP components in their entirety and to ensure that our performance is properly reflected to facilitate consistent period-to-period comparisons. Management reviews the non-GAAP adjustments on a net-of-tax basis when evaluating our performance. Therefore, we exclude the tax impact of these charges when presenting non-GAAP financial measures.

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

Stock compensation expense. Our non-GAAP financial measures exclude the compensation charges required to be recorded by GAAP for equity awards to employees and directors. Although this is a normal recurring expense for us, we believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures excluding this expense 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 in the current period.

Amortization of purchased software and acquired intangibles. Our non-GAAP financial measures exclude costs associated with the amortization of purchased software and acquired intangible assets. Although this is a normal recurring expense for us, we believe it is useful in evaluating corporate performance during a particular time period to review the supplemental non-GAAP financial measures excluding this expense because these costs are fixed at the time of acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management in the current period.

Restructuring charges. Our non-GAAP financial measures exclude restructuring charges, and any subsequent changes in estimates as they relate to our ongoing corporate restructuring activities. We 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 and our business transformation initiative. In response to certain shareholder actions dating back to fiscal 2013, we have taken various actions to drive shareholder value. These actions have resulted in significant consultant fees to investigate business alternatives and implement business transformation plans. We 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.

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.

Compuware is the technology performance company, and we exist solely to help our customers optimize the performance of their most important and innovative technologies—those that drive their businesses forward. Today, more than 7,100 companies, including many of the world’s largest organizations, depend on Compuware and our new-generation approach to performance management to do just that . Learn more at: http://www.compuware.com.

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 SEPTEMBER 30,
ASSETS
2014 2013
CURRENT ASSETS:
Cash and cash equivalents $ 255,270 $ 50,372
Accounts receivable, net 313,944 381,892
Offering proceeds receivable - 68,448
Deferred tax asset, net 37,192 42,837
Income taxes refundable 4,313 4,628
Prepaid expenses and other current assets   30,892     33,365  
Total current assets 641,611 581,542
 
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 279,748 295,264
 
CAPITALIZED SOFTWARE AND OTHER
INTANGIBLE ASSETS, NET 95,805 111,162
 
ACCOUNTS RECEIVABLE 161,130 191,208
DEFERRED TAX ASSET, NET 16,011 30,351
GOODWILL 632,106 732,265
OTHER ASSETS   23,460     28,688  
 
TOTAL ASSETS $ 1,849,871   $ 1,970,480  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Accounts payable $ 18,947 $ 16,894
Accrued expenses 79,451 92,969
Income taxes payable 14,998 18,266
Deferred revenue   347,092     387,878  
Total current liabilities 460,488 516,007
 
LONG TERM DEBT - 14,000
 
DEFERRED REVENUE 250,646 285,119
 
ACCRUED EXPENSES 20,079 18,274
 
DEFERRED TAX LIABILITY, NET   36,378     52,769  
Total liabilities   767,591     886,169  
 
SHAREHOLDERS' EQUITY:
Common stock 2,208 2,157
Additional paid-in capital 847,172 799,647
Retained earnings 237,874 268,937
Accumulated other comprehensive loss   (21,635 )   (7,539 )
Total Compuware shareholders' equity 1,065,619 1,063,202
Non-controlling interest   16,661     21,109  
Total shareholders' equity   1,082,280     1,084,311  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,849,871   $ 1,970,480  
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
       
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
 
2014 2013 2014 2013
REVENUES:
Software license fees $ 32,189 $ 32,591 $ 58,876 $ 64,334
Maintenance fees 89,023 88,819 177,483 175,981
Subscription fees 19,949 19,931 39,311 40,063
Services fees 7,997 6,827 16,411 14,498
Application services fees   21,735     24,525     43,322     48,626  
Total revenues   170,893     172,693     335,403     343,502  
 
OPERATING EXPENSES:
Cost of software license fees 4,300 5,227 9,295 10,156
Cost of maintenance fees 5,942 6,846 12,864 14,185
Cost of subscription fees 8,506 8,450 16,708 16,290
Cost of services 6,901 5,892 13,633 12,534
Cost of application services 27,231 33,689 58,133 57,950
Technology development and support 19,615 21,379 39,567 45,070
Sales and marketing 50,976 47,356 104,079 99,623
Administrative and general 30,580 32,838 64,593 68,886
Restructuring costs   2,255     219     5,230     5,022  
Total operating expenses   156,306     161,896     324,102     329,716  
 
INCOME FROM CONTINUING OPERATIONS 14,587 10,797 11,301 13,786
 
OTHER INCOME (EXPENSE), NET   (935 )   185     (712 )   387  
 
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAX PROVISION 13,652 10,982 10,589 14,173
 
INCOME TAX PROVISION   5,275     3,008     3,568     1,937  
 
NET INCOME FROM CONTINUING OPERATIONS
INCLUDING NON-CONTROLLING INTEREST 8,377 7,974 7,021 12,236
 
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX   -     7,212     -     12,917  
 
NET INCOME INCLUDING NON-CONTROLLING INTEREST 8,377 15,186 7,021 25,153
 
Less: Net loss attributable to the
non-controlling interest in Covisint Corporation   (774 )   (1,154 )   (2,182 )   (1,154 )
 
NET INCOME ATTRIBUTABLE TO COMPUWARE CORP $ 9,151   $ 16,340   $ 9,203   $ 26,307  
 
Amounts attributable to Compuware common shareholders
Income from continuing operations 8,377 7,974 7,021 12,236
Loss attributable to non-controlling interest   (774 )   (1,154 )   (2,182 )   (1,154 )
Income from continuing operations, net of tax 9,151 9,128 9,203 13,390
Income from discontinued operations, net of tax   -     7,212     -     12,917  
Net income attributable to Compuware common shareholders $ 9,151   $ 16,340   $ 9,203   $ 26,307  
 
Diluted earnings per share:
Continuing operations 0.04 0.04 0.04 0.06
Discontinued operations   -     0.03     -     0.06  
Diluted earnings per share $ 0.04   $ 0.07   $ 0.04   $ 0.12  
 
Weighted-average common shares outstanding 220,285 214,926 219,978 214,287
Dilutive effect of stock awards   3,385     5,503     3,511     5,720  
Total shares   223,670     220,429     223,489     220,007  
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
 
  SIX MONTHS ENDED
SEPTEMBER 30,
2014   2013
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income including non-controlling interest $ 7,021 $ 25,153
Adjustments to reconcile net income to cash provided
by operations:
Depreciation and amortization 29,017 32,501
Stock award compensation 15,277 25,312
Deferred income taxes (861 ) (16,450 )
Other 1,902 42
Net change in assets and liabilities, net of effects from
currency fluctuations:
Accounts receivable 63,202 33,366
Prepaid expenses and other assets (2,483 ) 5,640
Accounts payable and accrued expenses (9,153 ) (24,180 )
Deferred revenue (72,879 ) (58,934 )
Income taxes   (19,273 )   4,634  
Net cash provided by operating activities   11,770     27,084  
 
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of:
Property and equipment (5,923 ) (5,953 )
Capitalized software (14,648 ) (11,649 )
Divestiture of business units (8,046 ) -
Other   -     (275 )
Net cash used in investing activities   (28,617 )   (17,877 )
 
CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from borrowings - 37,500
Payments on borrowings - (41,500 )
Net proceeds from exercise of stock awards including excess tax benefits 9,203 15,333
Employee contribution to common stock purchase plans 617 1,235
Repurchase of common stock (6,960 ) (6,415 )
Dividends (27,474 ) (53,629 )
Other   -     (608 )
Net cash used in financing activities   (24,614 )   (48,084 )
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH   (3,328 )   (624 )
 
NET CHANGE IN CASH AND CASH EQUIVALENTS (44,789 ) (39,501 )
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   300,059     89,873  
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 255,270   $ 50,372  
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(Dollar Amounts In Thousands)
     
QUARTER
ENDED
SEP 30, YR - YR
2014 2013 % Chg
Total Product Software Revenue by Geography
North America $ 81,835 $ 85,171 (3.9 %)
International 59,326 56,170 5.6 %
 
Deferred License Fees
Current $ 14,569 $ 15,263 (4.5 %)
Long-term 7,187 9,426 (23.8 %)
 
Deferred Maintenance
Current $ 254,587 $ 294,910 (13.7 %)
Long-Term 225,372 251,137 (10.3 %)
 
Deferred Subscription
Current $ 42,003 $ 41,358 1.6 %
Long-Term 10,112 7,042 43.6 %
 
Deferred Services $ 21,867 $ 22,358 (2.2 %)
 
Deferred Application Services $ 22,041 $ 31,503 (30.0 %)
 
Other:
Total Company Headcount 2,975 4,338 (31.4 %)
 
Total DSO (Billed) 67.9 66.0
Total DSO 165.3 150.7
 
 
Stock-based compensation expense
 
Cost of license fees $ - $ - N/A
Cost of maintenance fees 78 170 (54.1 %)
Cost of subscription fees 4 1 300.0 %
Cost of services 22 21 4.8 %
Cost of application services 1,255 10,020 (87.5 %)
Technology development and support 256 527 (51.4 %)
Sales and marketing 1,888 803 135.1 %
Administrative and general 2,974 3,253 (8.6 %)
Restructuring costs - - N/A
Discontinued operations   -   80 (100.0 %)
 
Total stock-based compensation expense before income taxes $ 6,477 $ 14,875 (56.5 %)
COMPUWARE CORPORATION AND SUBSIDIARIES
BUSINESS UNIT RESULTS OF OPERATIONS
(In Thousands)
           
Covisint
Application Unallocated
Quarter Ended: Dynatrace Mainframe Services Expenses Total
 
September 30, 2014
 
Software license fees $ 25,883 $ 6,306 - - $ 32,189
Maintenance fees 29,400 59,623 - - 89,023
Subscription fees 19,949 - - - 19,949
Services fees 7,923 74 - - 7,997
Application services fees   -     -   $ 21,735     -     21,735  
Total revenues 83,155 66,003 21,735 - 170,893
 
Total operating expenses   73,285     15,907     28,899     38,215     156,306  
 
Income (loss) from operations $ 9,870   $ 50,096   $ (7,164 ) $ (38,215 ) $ 14,587  
Contribution margin % 11.9 % 75.9 % (33.0 %) 8.5 %
 
Operating expenses include:
Stock awards compensation $ 2,410 $ (31 ) $ 1,255 $ 2,843 $ 6,477
Amortization of purchased software $ 1,570 $ - $ 94 $ - $ 1,664
Amortization of other acquired intangible assets $ 955 $ - $ 77 $ - $ 1,032
 
 
September 30, 2013
 
Software license fees $ 25,027 $ 7,564 - - $ 32,591
Maintenance fees 24,596 64,223 - - 88,819
Subscription fees 19,931 - - - 19,931
Services fees 6,796 31 - - 6,827
Application services fees   -     -   $ 24,525     -     24,525  
Total revenues 76,350 71,818 24,525 - 172,693
 
Operating expenses   69,260     16,821     34,362   $ 41,453     161,896  
 
Income (loss) from operations $ 7,090   $ 54,997   $ (9,837 ) $ (41,453 ) $ 10,797  
Contribution margin % 9.3 % 76.6 % (40.1 %) 6.3 %
 
Operating expenses include:
Stock awards compensation $ 1,796 $ (315 ) $ 10,020 $ 3,294 $ 14,795
Amortization of purchased software $ 2,296 $ - $ 94 $ - $ 2,390
Amortization of other acquired intangible assets $ 1,707 $ - $ 96 $ - $ 1,803
 

Prior year amounts have been reclassified to reflect the transition of Dynatrace for Mainframe from the Mainframe segment to the Dynatrace segment.
COMPUWARE CORPORATION AND SUBSIDIARIES
BUSINESS UNIT RESULTS OF OPERATIONS
(In Thousands)
         
Covisint
Application Unallocated
Six Months Ended: Dynatrace Mainframe Services Expenses Total
 
September 30, 2014
 
Software license fees $ 47,270 $ 11,606 - - $ 58,876
Maintenance fees 57,695 119,788 - - 177,483
Subscription fees 39,311 - - - 39,311
Services fees 16,255 156 - - 16,411
Application services fees   -     -   $ 43,322     -     43,322  
Total revenues 160,531 131,550 43,322 - 335,403
 
Total operating expenses   148,918     33,023     62,291     79,870     324,102  
 
Income (loss) from operations $ 11,613   $ 98,527   $ (18,969 ) $ (79,870 ) $ 11,301  
Contribution margin % 7.2 % 74.9 % (43.8 %) 3.4 %
 
Operating expenses include:
Stock awards compensation $ 4,322 $ 216 $ 3,874 $ 6,865 $ 15,277
Amortization of purchased software $ 3,190 $ - $ 188 $ - $ 3,378
Amortization of other acquired intangible assets $ 2,693 $ - $ 154 $ - $ 2,847
 
September 30, 2013
 
Software license fees $ 48,557 $ 15,777 - - $ 64,334
Maintenance fees 48,397 127,584 - - 175,981
Subscription fees 40,063 - - - 40,063
Services fees 14,398 100 - - 14,498
Application services fees   -     -   $ 48,626     -     48,626  
Total revenues 151,415 143,461 48,626 - 343,502
 
Operating expenses   143,671     35,632     59,785   $ 90,628     329,716  
 
Income (loss) from operations $ 7,744   $ 107,829   $ (11,159 ) $ (90,628 ) $ 13,786  
Contribution margin % 5.1 % 75.2 % (22.9 %) 4.0 %
 
Operating expenses include:
Stock awards compensation $ 4,619 $ 219 $ 10,506 $ 9,816 $ 25,160
Amortization of purchased software $ 4,573 $ - $ 188 $ - $ 4,761
Amortization of other acquired intangible assets $ 3,400 $ - $ 195 $ - $ 3,595
 

Prior year amounts have been reclassified to reflect the transition of Dynatrace for Mainframe from the Mainframe segment to the Dynatrace segment.
COMPUWARE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(In Thousands, Except Per Share Data)
   

THREE MONTHS ENDED
 

SIX MONTHS ENDED

2014
  2013

2014
  2013
 
NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMPUWARE COPORATION $ 9,151   $ 9,128   $ 9,203   $ 13,390  
ADJUSTMENTS EXCLUDING IMPACT OF NON-CONTROLLING INTEREST
Stock compensation (excl. restructuring) 6,260 12,905 14,564 21,479
Amortization of purchased software 1,648 2,389 3,344 4,759
Amortization of acquired intangibles 1,019 1,801 2,819 3,594
Restructuring expense 2,255 219 5,230 5,022
Advisory fees 5,351 1,977 8,095 3,133
Income tax effect of above adjustments (5,811 ) (7,245 ) (12,083 ) (13,738 )
       
Total adjustments 10,722 12,046 21,969 24,249
       
NON-GAAP NET INCOME FROM CONTINUING OPERATIONS $ 19,873   $ 21,174   $ 31,172   $ 37,639  
               
 
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS - GAAP $ 0.04   $ 0.04   $ 0.04   $ 0.06  
 
ADJUSTMENTS EXCLUDING IMPACT OF NON-CONTROLLING INTEREST
Stock compensation (excl. restructuring) 0.03 0.06 0.07 0.10
Amortization of purchased software 0.01 0.01 0.01 0.02
Amortization of acquired intangibles 0.00 0.01 0.01 0.02
Restructuring expense 0.01 0.00 0.02 0.02
Advisory fees 0.02 0.01 0.04 0.01
Income tax effect of above adjustments (0.03 ) (0.03 ) (0.05 ) (0.06 )
       
Total adjustments 0.05 0.05 0.10 0.11
       
NON-GAAP EPS FROM CONTINUING OPERATIONS $ 0.09   $ 0.10   $ 0.14   $ 0.17  
 
Diluted shares outstanding   223,670     220,429     223,489     220,007  
 
EPS amounts may not add to the total due to rounding

Source:Compuware

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