Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - COMPUWARE CORP | ex99_2.htm |
| 8-K - COMPUWARE CORP 8-K 1-27-2011 - COMPUWARE CORP | form8k.htm |
EXHIBIT 99.1
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NEWS RELEASE
COMPUWARE CORPORATION
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Corporate Headquarters
One Campus Martius · Detroit, Michigan 48226
(313) 227-7300
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For Immediate Release
January 27, 2011
Compuware Corporation Earns 15 Cents Per Share in Q3
For Sixth Consecutive Quarter, Compuware Meets or Beats Analysts’ Consensus Estimates for EPS
Q3 Highlights:
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EPS jumps 36.4 percent year-over-year; total revenues increase 7.5 percent year-over-year
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Total APM (Vantage and Gomez) revenues reach $56.1M, up 34 percent*, on a GAAP basis, year-over-year
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Covisint revenues grow 32.8 percent year-over-year to $14.4M
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Non-mainframe solutions revenue up 22.5 percent*, on a GAAP basis, year-over-year
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Professional Services segment contribution margin reaches 15 percent
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DETROIT--January 27, 2011--Compuware Corporation (NASDAQ: CPWR), the technology performance company, today announced financial results for its third quarter ended December 31, 2010.
“Compuware continues to focus on delivering steady increases in revenue, earnings and margins, and Q3 was no exception,” said Compuware President and Chief Operating Officer Bob Paul. “Our growth businesses – APM and Covisint – showed great momentum in their multi-billion-dollar markets, both achieving strong growth this quarter. Mainframe renewals remained greater than 90 percent, and Professional Services delivered a 15 percent contribution margin this quarter, as our mature businesses continue to support our aggressive plans for growth in FY ’12 and beyond.”
Compuware reports third quarter revenues of $247 million, up 7.5 percent from $229.9 million in Q3 last year. Third quarter earnings per share were 15 cents based upon 225.2 million shares outstanding, up 36.4 percent from 11 cents based on 231.1 million shares outstanding in Q3 last year. Third quarter net income was $34 million, up 39.3 percent from $24.4 million in Q3 last year.
During the company’s third quarter, software license fees were $60.2 million, up 15.6 percent from $52 million in Q3 last year. Maintenance and subscription fees were $124.2 million in the third quarter, up 5.6 percent from $117.6 million in Q3 last year. Revenue from Professional Services in the third quarter was $62.7 million, up 4.1 percent from $60.3 million in Q3 last year.
Third Quarter Fiscal Year 2011 Highlights
During the third quarter, Compuware:
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Officially launched CloudSleuth, the industry’s only partner-driven cloud community specifically built to spotlight the performance of the cloud's “federated infrastructure.”
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Page 2
Compuware Corporation Earns 15 Cents Per Share in Q3
January 27, 2011
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Announced a first-of-its-kind SaaS-based application performance management solution that provides visibility from the First Mile (the data center) to the Last Mile (the end-user).
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Announced that Covisint had accelerated successful provider payments for physician offices and large health systems from the Centers for Medicare & Medicaid Services for the 2009 Physician Quality Reporting Initiative.
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Announced that Covisint would demonstrate at the API IT Security Conference how companies can most effectively manage oil and gas identities by quickly building trust relationships for joint ventures, partnerships, customers and suppliers.
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Announced that Marketing Associates uses Compuware’s application performance management solution – Gomez and Vantage – to improve the performance and availability of its mission-critical customer applications.
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Announced that daFlores improved the speed of its web site using the Gomez Web Performance Management monitoring platform, resulting in a 25 percent increase in orders for the online flower delivery company.
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Announced that it was named a “Top Workplace” by the Detroit Free Press.
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Released information about – and results from – its new Gomez Retail UX (User Experience) Index top Web and mobile performers for Black Friday through Cyber Monday.
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Announced that its industry-leading mainframe application development and testing solutions support DB2 Version 10.
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Published results for the September U.S. Retail Mobile Site Performance Index, which measures the performance of mobile-specific versions of retail websites for 15 leading retailers across four carrier and device combinations.
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Launched fifteen new international industry benchmarks that provide companies with an unbiased view of the state of website performance.
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Released information that Covisint was recognized by Everything Channel’s CRN Magazine as one of the “Top 100 Healthcare Vendors.”
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Introduced the industry’s first mobile application benchmark that measures the iPhone mobile application performance of fifteen leading U.S. retailers across three key metrics: response time, availability and consistency.
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Use of Non-GAAP Financial Information
*Compuware acquired Gomez on November 9, 2009; only revenue following the acquisition date is included in the Q3 GAAP comparisons of total APM revenues and non-mainframe solutions revenues. On a pro forma basis APM revenue grew 11.6 percent. Non-mainframe solutions revenues grew 9.4 percent on a pro forma basis.
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the financial information included with this press release uses non-GAAP measures for revenue. The non-GAAP revenue disclosures provide information on total products commitments and pro forma revenue for Gomez subscription fees as if their results were included in the comparable prior year period. Compuware management believes the non-GAAP financial information provided in this release is useful to investors’ understanding and assessment of Compuware’s ongoing core operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in operating and evaluating its business and as such has determined that it is important to provide this information to investors. A reconciliation of non-GAAP to GAAP information is contained in the financial statements following this press release.
Page 3
Compuware Corporation Earns 15 Cents Per Share in Q3
January 27, 2011
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 host a conference call to discuss these results at 5 p.m. Eastern time (22:00 GMT) today. To join the conference call, interested parties in the United States should call 800-398-9402. For international access, the conference call number is +1-612-332-0630. 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 182384. 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, Investor Relations, Marketing and Communications, lisa.elkin@compuware.com, 313-227-7345
For Sales and Marketing Information
Compuware Corporation, One Campus Martius, Detroit, MI 48226, 800-521-9353, http://www.compuware.com
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
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AS OF DECEMBER 31,
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ASSETS
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2010
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2009
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CURRENT ASSETS:
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Cash and cash equivalents
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$ | 81,863 | $ | 87,862 | ||||
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Accounts receivable, net
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517,775 | 509,339 | ||||||
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Deferred tax asset, net
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49,861 | 46,642 | ||||||
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Income taxes refundable
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4,624 | 4,237 | ||||||
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Prepaid expenses and other current assets
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30,675 | 26,198 | ||||||
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Total current assets
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684,798 | 674,278 | ||||||
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PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION
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334,482 | 346,270 | ||||||
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CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET
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86,133 | 89,723 | ||||||
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ACCOUNTS RECEIVABLE
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192,470 | 234,428 | ||||||
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DEFERRED TAX ASSET, NET
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32,061 | 34,823 | ||||||
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GOODWILL
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608,228 | 592,948 | ||||||
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OTHER ASSETS
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33,664 | 26,760 | ||||||
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TOTAL ASSETS
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$ | 1,971,836 | $ | 1,999,230 | ||||
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES:
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Accounts payable
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$ | 18,139 | $ | 17,723 | ||||
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Accrued expenses
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97,422 | 111,895 | ||||||
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Income taxes payable
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21,304 | 23,207 | ||||||
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Deferred revenue
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449,342 | 459,580 | ||||||
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Total current liabilities
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586,207 | 612,405 | ||||||
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LONG TERM DEBT
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35,000 | |||||||
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DEFERRED REVENUE
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354,296 | 383,274 | ||||||
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ACCRUED EXPENSES
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36,420 | 34,364 | ||||||
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DEFERRED TAX LIABILITY, NET
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56,638 | 46,704 | ||||||
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Total liabilities
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1,033,561 | 1,111,747 | ||||||
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SHAREHOLDERS' EQUITY:
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Common stock
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2,185 | 2,274 | ||||||
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Additional paid-in capital
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636,713 | 607,035 | ||||||
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Retained earnings
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297,419 | 282,133 | ||||||
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Accumulated other comprehensive income (loss)
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1,958 | (3,959 | ) | |||||
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Total shareholders' equity
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938,275 | 887,483 | ||||||
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 1,971,836 | $ | 1,999,230 | ||||
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
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THREE MONTHS ENDED
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NINE MONTHS ENDED
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DECEMBER 31,
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DECEMBER 31,
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2010
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2009
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2010
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2009
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REVENUES:
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Software license fees
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$ | 60,152 | $ | 52,023 | $ | 139,095 | $ | 142,679 | ||||||||
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Maintenance and subscription fees
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124,162 | 117,583 | 362,928 | 338,444 | ||||||||||||
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Professional services fees
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62,711 | 60,258 | 177,356 | 181,058 | ||||||||||||
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Total revenues
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247,025 | 229,864 | 679,379 | 662,181 | ||||||||||||
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OPERATING EXPENSES:
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Cost of software license fees
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3,745 | 4,072 | 10,428 | 11,895 | ||||||||||||
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Cost of maintenance and subscription fees
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15,274 | 10,968 | 41,826 | 28,292 | ||||||||||||
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Cost of professional services
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53,811 | 53,378 | 155,820 | 164,049 | ||||||||||||
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Technology development and support
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22,517 | 22,562 | 65,951 | 65,677 | ||||||||||||
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Sales and marketing
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62,437 | 58,969 | 176,648 | 162,873 | ||||||||||||
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Administrative and general
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39,760 | 42,761 | 115,977 | 121,658 | ||||||||||||
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Restructuring costs
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1,024 | 4,842 | ||||||||||||||
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Gain on divestiture of product lines
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(52,351 | ) | ||||||||||||||
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Total operating expenses
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197,544 | 193,734 | 566,650 | 506,935 | ||||||||||||
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INCOME FROM OPERATIONS
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49,481 | 36,130 | 112,729 | 155,246 | ||||||||||||
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OTHER INCOME (EXPENSES)
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Interest income
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1,351 | 1,049 | 3,167 | 3,877 | ||||||||||||
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Other
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25 | 27 | (64 | ) | (48 | ) | ||||||||||
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OTHER INCOME, NET
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1,376 | 1,076 | 3,103 | 3,829 | ||||||||||||
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INCOME BEFORE INCOME TAXES
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50,857 | 37,206 | 115,832 | 159,075 | ||||||||||||
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INCOME TAX PROVISION
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16,858 | 12,794 | 43,196 | 55,630 | ||||||||||||
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NET INCOME
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$ | 33,999 | $ | 24,412 | $ | 72,636 | $ | 103,445 | ||||||||
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DILUTED EPS COMPUTATION
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Numerator: Net income
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$ | 33,999 | $ | 24,412 | $ | 72,636 | $ | 103,445 | ||||||||
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Denominator:
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Weighted-average common shares outstanding
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218,683 | 229,105 | 221,490 | 234,704 | ||||||||||||
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Dilutive effect of stock options
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6,475 | 1,985 | 3,622 | 1,847 | ||||||||||||
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Total shares
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225,158 | 231,090 | 225,112 | 236,551 | ||||||||||||
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Diluted EPS
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$ | 0.15 | $ | 0.11 | $ | 0.32 | $ | 0.44 | ||||||||
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
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NINE MONTHS ENDED
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DECEMBER 31,
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2010
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2009
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CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
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Net income
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$ | 72,636 | $ | 103,445 | ||||
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Adjustments to reconcile net income to cash provided by operations:
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Gain on divestiture of product lines
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(52,351 | ) | ||||||
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Depreciation and amortization
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37,300 | 32,476 | ||||||
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Stock award compensation
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13,387 | 12,649 | ||||||
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Deferred income taxes
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7,554 | 7,578 | ||||||
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Other
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561 | 1,061 | ||||||
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Net change in assets and liabilities, net of effects from acquisitions, the divestiture and currency fluctuations:
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Accounts receivable
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(23,489 | ) | 9,262 | |||||
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Prepaid expenses and other current assets
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14,572 | 16,338 | ||||||
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Other assets
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(1,514 | ) | (5,626 | ) | ||||
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Accounts payable and accrued expenses
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(11,882 | ) | (57 | ) | ||||
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Deferred revenue
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(77,463 | ) | (17,994 | ) | ||||
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Income taxes
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4,123 | (3,415 | ) | |||||
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Net cash provided by operating activities
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35,785 | 103,366 | ||||||
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CASH FLOWS USED IN INVESTING ACTIVITIES:
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Purchase of:
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Business, net of cash acquired
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(18,165 | ) | (284,393 | ) | ||||
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Property and equipment
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(13,328 | ) | (7,070 | ) | ||||
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Capitalized software
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(12,877 | ) | (7,427 | ) | ||||
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Net proceeds from divestiture of product lines
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64,992 | |||||||
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Net cash used in investing activities
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(44,370 | ) | (233,898 | ) | ||||
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CASH FLOWS USED IN FINANCING ACTIVITIES:
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Proceeds from borrowings on credit facility
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35,000 | |||||||
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Net proceeds from exercise of stock options including excess tax benefits
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53,331 | 2,857 | ||||||
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Employee contribution to common stock purchase plans
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1,892 | 1,647 | ||||||
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Repurchase of common stock
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(116,600 | ) | (111,156 | ) | ||||
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Net cash used in financing activities
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(61,377 | ) | (71,652 | ) | ||||
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EFFECT OF EXCHANGE RATE CHANGES ON CASH
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1,928 | 11,934 | ||||||
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NET DECREASE IN CASH AND CASH EQUIVALENTS
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(68,034 | ) | (190,250 | ) | ||||
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
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149,897 | 278,112 | ||||||
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CASH AND CASH EQUIVALENTS AT END OF PERIOD
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$ | 81,863 | $ | 87,862 | ||||
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(Dollar Amounts In Thousands)
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QUARTER
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QUARTER
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ENDED
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ENDED
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DEC 31,
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YR - YR
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SEP 30,
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QTR - QTR
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2010
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2009
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% Chg
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2010
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% Chg
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Products:
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Software License Fees:
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Distributed License Fees:
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Vantage
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$ | 21,059 | $ | 20,376 | 3.4 | % | $ | 18,231 | 15.5 | % | ||||||||||
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Changepoint
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1,545 | 2,991 | (48.3 | %) | 2,248 | (31.3 | %) | |||||||||||||
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Uniface
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2,671 | 2,291 | 16.6 | % | 2,374 | 12.5 | % | |||||||||||||
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Other
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155 | 408 | (62.0 | %) | 366 | (57.7 | %) | |||||||||||||
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Distributed License Fees
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25,430 | 26,066 | (2.4 | %) | 23,219 | 9.5 | % | |||||||||||||
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Mainframe License Fees
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34,722 | 25,957 | 33.8 | % | 22,394 | 55.1 | % | |||||||||||||
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Total Software License Fees
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60,152 | 52,023 | 15.6 | % | 45,613 | 31.9 | % | |||||||||||||
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Maintenance and Subscription Fees:
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Distributed Products
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28,879 | 27,993 | 3.2 | % | 26,810 | 7.7 | % | |||||||||||||
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Mainframe Products
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77,442 | 83,825 | (7.6 | %) | 77,541 | (0.1 | %) | |||||||||||||
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Subscription (Gomez)
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17,841 | 5,765 | 209.5 | % | 17,656 | 1.0 | % | |||||||||||||
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Total Maintenance and Subscription Fees
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124,162 | 117,583 | 5.6 | % | 122,007 | 1.8 | % | |||||||||||||
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Total Products Revenue:
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Distributed Products
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54,309 | 54,059 | 0.5 | % | 50,029 | 8.6 | % | |||||||||||||
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Mainframe Products
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112,164 | 109,782 | 2.2 | % | 99,935 | 12.2 | % | |||||||||||||
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Subscription (Gomez)
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17,841 | 5,765 | 209.5 | % | 17,656 | 1.0 | % | |||||||||||||
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Total Products Revenue
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$ | 184,314 | $ | 169,606 | 8.7 | % | $ | 167,620 | 10.0 | % | ||||||||||
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Subscription (Gomez) - proforma basis
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$ | 17,841 | $ | 14,209 | 25.6 | % | $ | 17,656 | 1.0 | % | ||||||||||
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Total Product Revenue by Geography
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North America
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$ | 96,171 | $ | 88,569 | 8.6 | % | $ | 97,131 | (1.0 | %) | ||||||||||
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International
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$ | 88,143 | $ | 81,037 | 8.8 | % | $ | 70,489 | 25.0 | % | ||||||||||
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Total Cost of Product Revenue
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$ | 103,973 | $ | 96,571 | 7.7 | % | $ | 94,932 | 9.5 | % | ||||||||||
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Deferred License Fees
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Current
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$ | 42,813 | $ | 53,404 | (19.8 | %) | $ | 43,790 | (2.2 | %) | ||||||||||
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Long-term
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$ | 28,650 | $ | 51,959 | (44.9 | %) | $ | 33,370 | (14.1 | %) | ||||||||||
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Deferred During Quarter
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$ | 9,188 | $ | 25,026 | (63.3 | %) | $ | 5,619 | 63.5 | % | ||||||||||
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Recognized During Quarter
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$ | 15,620 | $ | 19,227 | (18.8 | %) | $ | 15,584 | 0.2 | % | ||||||||||
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Professional Services:
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Professional Services Segment Fees
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$ | 48,332 | $ | 49,430 | (2.2 | %) | $ | 46,087 | 4.9 | % | ||||||||||
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Application Services Segment Fees
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14,379 | 10,828 | 32.8 | % | 12,162 | 18.2 | % | |||||||||||||
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Total Professional Services Fees
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$ | 62,711 | $ | 60,258 | 4.1 | % | $ | 58,249 | 7.7 | % | ||||||||||
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Professional Services Segment Contribution Margin
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15.0 | % | 12.1 | % | 12.5 | % | ||||||||||||||
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Application Services Segment Contribution Margin
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11.5 | % | 8.1 | % | 9.9 | % | ||||||||||||||
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Total Professional Services Fees Contribution Margin
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14.2 | % | 11.4 | % | 11.9 | % | ||||||||||||||
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Billable Professional Services Segment Headcount
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1,265 | 1,270 | (0.4 | %) | 1,159 | 9.1 | % | |||||||||||||
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Application Services Segment Headcount
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277 | 294 | (5.8 | %) | 345 | (19.7 | %) | |||||||||||||
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Other:
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Total Company Headcount
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4,329 | 4,410 | (1.8 | %) | 4,290 | 0.9 | % | |||||||||||||
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Total DSO (Billed)
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95.4 | 105.9 | 66.4 | |||||||||||||||||
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Total DSO
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188.6 | 199.4 | 172.7 | |||||||||||||||||
COMPUWARE CORPORATION AND SUBSIDIARIES
PRODUCT COMMITMENTS
(In Thousands)
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QUARTER ENDED
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DECEMBER 31
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SEPTEMBER 30,
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DECEMBER 31
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2010
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2010
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2009
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License fees
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$ | 60,152 | $ | 45,613 | $ | 52,023 | ||||||
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Change in deferred license fees
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(6,432 | ) | (9,965 | ) | 5,829 | |||||||
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License contracts entered into during period
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53,720 | 35,648 | 57,852 | |||||||||
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Maintenance and subscription fees
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124,162 | 122,007 | 117,583 | |||||||||
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Change in deferred maintenance and subscription fees
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27,340 | (33,077 | ) | 55,570 | ||||||||
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Maintenance and subscription contracts & renewals entered into during period
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151,502 | 88,930 | 173,153 | |||||||||
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Total products commitments during period
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$ | 205,222 | $ | 124,578 | $ | 231,005 | ||||||
A significant portion of the company's product software revenue is recognized ratably over the contractual term of the arrangement. Therefore, to supplement the understanding of Compuware's software business, we believe it is important to also consider the amount of product commitments, which represents the full contractual value of each product software arrangement entered into during the reporting period.