Attached files
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| 8-K - COMPUWARE CORPORATION 8-K 7-21-2011 - COMPUWARE CORP | form8-k.htm |
| EX-99.2 - EXHIBIT 99.2 - COMPUWARE CORP | ex99_2.htm |
Exhibit 99.1
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NEWS RELEASE
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COMPUWARE CORPORATION
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Corporate Headquarters
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One Campus Martius · Detroit, Michigan 48226
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(313) 227-7300
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For Immediate Release
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July 21, 2011
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Compuware Earns Eight Cents Per Share in Q1
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·
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Total revenues increase 11.4 percent year-over-year to $230.0M (up 6.5 percent in constant currency); earnings per share increase 33 percent from Q1 last year
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APM subscription fees increase 40.6 percent year-over-year to $18.7M
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Covisint application services fees increase 43.8 percent year-over-year to $16.2 million
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Mainframe license fees jump 28.3 percent year-over-year to $18.6M
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Professional Services fees rise 18.6 percent year-over-year to $53.6M; Professional Services achieves 15.8 percent contribution margin, up from 10.9 percent last Q1
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DETROIT--July 21, 2011--Compuware Corporation (NASDAQ: CPWR), the technology performance company, today announced financial results for its first quarter ended June 30, 2011.
“Compuware delivered positive Q1 results across our business units, resulting in double digit year-over-year increases in both revenues and earnings,” said Compuware Chief Executive Officer Bob Paul. “These results position Compuware well to meet its strategic and financial goals for the year as catalysts like the dynaTrace acquisition, increased demand for multi-enterprise collaboration (Covisint), emerging market expansions and unrelenting demand for optimally performing applications create additional velocity for our growth engines.”
First Quarter Fiscal Year 2012 Results
During the company’s first quarter, software license fees were $34.1 million, up from $33.3 million in the first quarter last year. Maintenance and subscription fees were $126.1 million in the first quarter, up from $116.8 million in the first quarter last year. Revenue from professional services in the first quarter was $69.8 million, up from $56.4 million in the same quarter last year.
During the first quarter, total revenues were $230.0 million, up from $206.5 million in the first quarter last year. Net income was $17.0 million, compared to $12.6 million in the first quarter last year. Earnings per share were eight cents compared to six cents last year, based upon 222.9 million and 227.6 million shares outstanding, respectively.
First Quarter Fiscal Year 2012 Highlights
During the first quarter, Compuware:
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Announced that Co-Founder Peter Karmanos, Jr. moved to a position as Executive Chairman of the Board, Bob Paul was named Chief Executive Officer and Joseph Angileri joined Compuware as its President and Chief Operating Officer.
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Announced that it rebranded its Application Performance Management (APM) products to a single product family name, Compuware Gomez®, and also released its integrated APM solution, the Compuware Gomez platform®.
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Page 2
Compuware Earns Eight Cents Per Share in Q1
July 21, 2011
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Integrated the Compuware Gomez Platform® with Google's Page Speed to help organizations optimize web application performance.
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Announced that Enterprise Management Associates, a leading analyst firm, published an EMA Impact Brief report titled: "Compuware Gomez Targets End-to-End Application Delivery Across Ecosystems in Spring Announcements," that reaffirms Compuware's leadership position in the application performance management market.
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Announced that Covisint and JVHL, a network consortium of 129 hospital laboratories located throughout Michigan, are delivering a statewide solution to automatically standardize laboratory orders and results, while still allowing physicians to use their preferred terminology and pick lists.
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Announced that Covisint and Vermont Blueprint for Health together were named "Innovation Award" winners by Microsoft Health User Group at the Microsoft Connected Health Conference.
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Announced that American Express won the One Million Dollar Grand Prize in Compuware's Mainframe Cost Savings Program.
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Launched 17 new international Compuware Gomez Benchmarks that provide companies with valuable competitive and market-leader insight into web and mobile site performance; and also launched the U.S. Healthcare Information benchmarks that include both Home Page and Last Mile measurements.
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Launched the industry's first Social Networking Mobile Site Performance Index.
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Announced the results of its 2011 U.S. Tax Season study of 11 top online tax preparation and filing web sites, revealing inconsistent performance on the April 18 tax filing deadline day.
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Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the financial information included in and following this press release uses a non-GAAP measure for revenue. 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.
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.
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Page 3
Compuware Earns Eight Cents Per Share in Q1
July 21, 2011
Conference Call Information
Compuware will host a conference call to discuss these results at 5:00 p.m. Eastern time (21:00 GMT) today. To join the conference call, interested parties in the United States should call 800-230-1059. For international access, the conference call number is +1-612-234-9959. 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 208368. Additionally, investors can listen to the conference call via webcast by visiting the Compuware Corporation Investor Relations web site at http://www.compuware.com.
Press Contact
Lisa Elkin, Vice President, Communications and Investor Relations, +1-313-227-7345
Certain statements in this release that are not historical facts, including those regarding the Company’s future plans, objectives and expected performance, are “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements represent our outlook only as of the date of this release. While we believe any forward-looking statements we have made are reasonable, actual results could differ materially since the statements are based on our current expectations and are subject to risks and uncertainties. These risks and uncertainties are discussed in the Company’s reports filed with the Securities and Exchange Commission. Readers are cautioned to consider these factors when relying on such forward-looking information. The Company does not undertake, and expressly disclaims any obligation, to update or alter its forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
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AS OF JUNE 30,
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ASSETS
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2011
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2010
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CURRENT ASSETS:
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Cash and cash equivalents
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$ | 194,866 | $ | 138,670 | ||||
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Accounts receivable, net
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419,978 | 399,976 | ||||||
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Deferred tax asset, net
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42,570 | 49,410 | ||||||
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Income taxes refundable
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6,213 | 4,965 | ||||||
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Prepaid expenses and other current assets
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34,278 | 25,645 | ||||||
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Total current assets
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697,905 | 618,666 | ||||||
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PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION
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331,272 | 338,739 | ||||||
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CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS, NET
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80,876 | 83,640 | ||||||
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ACCOUNTS RECEIVABLE
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204,397 | 200,309 | ||||||
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DEFERRED TAX ASSET, NET
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43,333 | 35,293 | ||||||
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GOODWILL
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607,794 | 591,455 | ||||||
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OTHER ASSETS
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37,954 | 28,305 | ||||||
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TOTAL ASSETS
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$ | 2,003,531 | $ | 1,896,407 | ||||
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES:
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Accounts payable
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$ | 17,858 | $ | 14,339 | ||||
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Accrued expenses
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81,565 | 70,944 | ||||||
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Income taxes payable
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12,264 | 23,211 | ||||||
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Deferred revenue
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446,309 | 441,068 | ||||||
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Total current liabilities
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557,996 | 549,562 | ||||||
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DEFERRED REVENUE
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366,374 | 342,273 | ||||||
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ACCRUED EXPENSES
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25,406 | 33,376 | ||||||
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DEFERRED TAX LIABILITY, NET
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72,552 | 48,989 | ||||||
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Total liabilities
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1,022,328 | 974,200 | ||||||
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SHAREHOLDERS' EQUITY:
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Common stock
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2,185 | 2,236 | ||||||
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Additional paid-in capital
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666,533 | 609,249 | ||||||
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Retained earnings
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314,052 | 307,394 | ||||||
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Accumulated other comprehensive income (loss)
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(1,567 | ) | 3,328 | |||||
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Total shareholders' equity
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981,203 | 922,207 | ||||||
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 2,003,531 | $ | 1,896,407 | ||||
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
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THREE MONTHS ENDED
JUNE 30,
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2011
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2010
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REVENUES:
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Software license fees
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$ | 34,126 | $ | 33,330 | ||||
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Maintenance and subscription fees
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126,109 | 116,759 | ||||||
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Professional services fees
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69,739 | 56,396 | ||||||
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Total revenues
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229,974 | 206,485 | ||||||
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OPERATING EXPENSES:
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Cost of software license fees
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3,536 | 3,416 | ||||||
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Cost of maintenance and subscription fees
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16,658 | 13,287 | ||||||
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Cost of professional services
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61,953 | 50,713 | ||||||
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Technology development and support
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24,701 | 21,541 | ||||||
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Sales and marketing
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61,995 | 57,704 | ||||||
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Administrative and general
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41,514 | 37,437 | ||||||
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Total operating expenses
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210,357 | 184,098 | ||||||
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INCOME FROM OPERATIONS
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19,617 | 22,387 | ||||||
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OTHER INCOME (EXPENSE)
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Interest income
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1,001 | 909 | ||||||
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Other
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(3 | ) | (44 | ) | ||||
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OTHER INCOME, NET
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998 | 865 | ||||||
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INCOME BEFORE INCOME TAXES
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20,615 | 23,252 | ||||||
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INCOME TAX PROVISION
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3,630 | 10,607 | ||||||
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NET INCOME
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$ | 16,985 | $ | 12,645 | ||||
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DILUTED EPS COMPUTATION
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Numerator: Net income
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$ | 16,985 | $ | 12,645 | ||||
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Denominator:
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Weighted-average common shares outstanding
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218,200 | 224,538 | ||||||
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Dilutive effect of stock options
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4,748 | 3,037 | ||||||
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Total shares
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222,948 | 227,575 | ||||||
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Diluted EPS
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$ | 0.08 | $ | 0.06 | ||||
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
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THREE MONTHS ENDED
JUNE 30,
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2011
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2010
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CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
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Net income
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$ | 16,985 | $ | 12,645 | ||||
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Adjustments to reconcile net income to cash provided by operations:
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Depreciation and amortization
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13,015 | 12,213 | ||||||
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Stock award compensation
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5,323 | 5,304 | ||||||
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Deferred income taxes
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(1,200 | ) | (6,079 | ) | ||||
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Other
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45 | 336 | ||||||
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Net change in assets and liabilities, net of effects from currency fluctuations:
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Accounts receivable
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64,773 | 62,573 | ||||||
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Prepaid expenses and other current assets
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3,787 | 19,659 | ||||||
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Other assets
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(6,557 | ) | 1,452 | |||||
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Accounts payable and accrued expenses
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(31,561 | ) | (35,066 | ) | ||||
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Deferred revenue
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(52,356 | ) | (64,919 | ) | ||||
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Income taxes
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2,952 | 8,024 | ||||||
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Net cash provided by operating activities
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15,206 | 16,142 | ||||||
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CASH FLOWS USED IN INVESTING ACTIVITIES:
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Purchase of:
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Property and equipment
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(5,020 | ) | (4,268 | ) | ||||
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Capitalized software
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(3,593 | ) | (4,506 | ) | ||||
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Net cash used in investing activities
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(8,613 | ) | (8,774 | ) | ||||
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CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
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Net proceeds from exercise of stock options including excess tax benefits
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5,142 | 2,227 | ||||||
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Employee contribution to common stock purchase plans
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779 | 719 | ||||||
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Repurchase of common stock
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0 | (16,160 | ) | |||||
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Net cash provided by (used in) financing activities
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5,921 | (13,214 | ) | |||||
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EFFECT OF EXCHANGE RATE CHANGES ON CASH
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2,108 | (5,381 | ) | |||||
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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14,622 | (11,227 | ) | |||||
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
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180,244 | 149,897 | ||||||
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CASH AND CASH EQUIVALENTS AT END OF PERIOD
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$ | 194,866 | $ | 138,670 | ||||
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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JUN 30,
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YR - YR
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MAR 31,
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QTR - QTR
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2011
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2010
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% Chg
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2011
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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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Gomez on-premises
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$ | 11,453 | $ | 14,232 | (19.5 | %) | $ | 24,301 | (52.9 | %) | ||||||||||
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Changepoint
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1,994 | 2,352 | (15.2 | %) | 3,081 | (35.3 | %) | |||||||||||||
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Uniface
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1,981 | 2,038 | (2.8 | %) | 4,793 | (58.7 | %) | |||||||||||||
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Other
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73 | 187 | (61.0 | %) | 37 | 97.3 | % | |||||||||||||
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Distributed License Fees
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15,501 | 18,809 | (17.6 | %) | 32,212 | (51.9 | %) | |||||||||||||
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Mainframe License Fees
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18,625 | 14,521 | 28.3 | % | 23,438 | (20.5 | %) | |||||||||||||
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Total Software License Fees
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34,126 | 33,330 | 2.4 | % | 55,650 | (38.7 | %) | |||||||||||||
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Maintenance and Subscription Fees:
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Distributed Products
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30,240 | 26,127 | 15.7 | % | 27,850 | 8.6 | % | |||||||||||||
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Mainframe Products
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76,745 | 77,360 | (0.8 | %) | 77,231 | (0.6 | %) | |||||||||||||
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Subscription
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19,124 | 13,272 | 44.1 | % | 18,949 | 0.9 | % | |||||||||||||
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Total Maintenance and Subscription Fees
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126,109 | 116,759 | 8.0 | % | 124,030 | 1.7 | % | |||||||||||||
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Total Product Software Revenue:
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Distributed Products
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45,741 | 44,936 | 1.8 | % | 60,062 | (23.8 | %) | |||||||||||||
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Mainframe Products
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95,370 | 91,881 | 3.8 | % | 100,669 | (5.3 | %) | |||||||||||||
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Subscription
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19,124 | 13,272 | 44.1 | % | 18,949 | 0.9 | % | |||||||||||||
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Total Product Software Revenue
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$ | 160,235 | $ | 150,089 | 6.8 | % | $ | 179,680 | (10.8 | %) | ||||||||||
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Total Product Software Revenue by Geography
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North America
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$ | 88,841 | $ | 83,951 | 5.8 | % | $ | 95,541 | (7.0 | %) | ||||||||||
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International
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$ | 71,394 | $ | 66,138 | 7.9 | % | $ | 84,139 | (15.1 | %) | ||||||||||
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Total Cost of Product Software Revenue
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$ | 106,890 | $ | 95,948 | 11.4 | % | $ | 111,413 | (4.1 | %) | ||||||||||
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Deferred License Fees
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Current
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$ | 37,226 | $ | 46,168 | (19.4 | %) | $ | 41,725 | (10.8 | %) | ||||||||||
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Long-term
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$ | 19,374 | $ | 36,424 | (46.8 | %) | $ | 24,345 | (20.4 | %) | ||||||||||
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Deferred During Quarter
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$ | 2,875 | $ | 7,000 | (58.9 | %) | $ | 8,103 | (64.5 | %) | ||||||||||
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Recognized During Quarter
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$ | 13,566 | $ | 15,271 | (11.2 | %) | $ | 14,704 | (7.7 | %) | ||||||||||
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Professional Services:
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Professional Services Fees
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$ | 53,572 | $ | 45,157 | 18.6 | % | $ | 52,626 | 1.8 | % | ||||||||||
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Application Services Fees
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16,167 | 11,239 | 43.8 | % | 17,245 | (6.3 | %) | |||||||||||||
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Total Professional Services Fees
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$ | 69,739 | $ | 56,396 | 23.7 | % | $ | 69,871 | (0.2 | %) | ||||||||||
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Professional Services Contribution Margin
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15.8 | % | 10.9 | % | 15.9 | % | ||||||||||||||
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Application Services Contribution Margin
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-4.1 | % | 6.8 | % | 2.3 | % | ||||||||||||||
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Total Professional Services Fees Contribution Margin
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11.2 | % | 10.1 | % | 12.5 | % | ||||||||||||||
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Billable Professional Services Headcount
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1,335 | 1,171 | 14.0 | % | 1,312 | 1.8 | % | |||||||||||||
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Application Services Headcount
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329 | 309 | 6.5 | % | 300 | 9.7 | % | |||||||||||||
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Other:
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Total Company Headcount
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4,497 | 4,256 | 5.7 | % | 4,396 | 2.3 | % | |||||||||||||
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Total DSO (Billed)
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64.7 | 64.3 | 79.8 | |||||||||||||||||
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Total DSO
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164.4 | 174.3 | 171.1 | |||||||||||||||||
PRODUCT COMMITMENTS
(In Thousands)
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QUARTER ENDED
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JUNE 30,
2011
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JUNE 30,
2010
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License fees
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$ | 34,126 | $ | 33,330 | ||||
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Change in deferred license fees
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(10,691 | ) | (8,271 | ) | ||||
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License contracts entered into during period
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23,435 | 25,059 | ||||||
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Maintenance and subscription fees
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126,109 | 116,759 | ||||||
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Change in deferred maintenance and subscription fees
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(40,882 | ) | (57,515 | ) | ||||
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Maintenance and subscription contracts & renewals entered into during period
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85,227 | 59,244 | ||||||
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Total products commitments during period
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$ | 108,662 | $ | 84,303 | ||||
Maintenance and subscription arrangements and certain license arrangements are recognized ratably over the contract term. Therefore to understand the health of Compuware's software business, we believe it is important to also consider the amount of product commitments during the reported periods.
COMPUWARE CORPORATION AND SUBSIDIARIES
BUSINESS UNIT RESULTS OF OPERATIONS
(In Thousands)
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Three Months Ended:
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APM
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Changepoint
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Mainframe
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Uniface
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Professional
Services |
Application
Services |
Unallocated
Expenses (1) |
Total
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June 30, 2011
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Software license fees
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$ | 11,453 | $ | 1,994 | $ | 18,698 | $ | 1,981 | $ | - | $ | - | $ | - | $ | 34,126 | ||||||||||||||||
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Maintenance and subscription fees
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37,094 | 4,302 | 76,975 | 7,738 | - | - | - | 126,109 | ||||||||||||||||||||||||
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Professional services fees
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6,966 | 3,670 | 1,833 | 1,206 | 39,897 | 16,167 | - | 69,739 | ||||||||||||||||||||||||
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Total revenues
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55,513 | 9,966 | 97,506 | 10,925 | 39,897 | 16,167 | - | 229,974 | ||||||||||||||||||||||||
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Operating expenses
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69,439 | 11,362 | 24,076 | 5,400 | 31,589 | 16,834 | 51,657 | 210,357 | ||||||||||||||||||||||||
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Income (loss) from operations
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$ | (13,926 | ) | $ | (1,396 | ) | $ | 73,430 | $ | 5,525 | $ | 8,308 | $ | (667 | ) | $ | (51,657 | ) | $ | 19,617 | ||||||||||||
(1) Unallocated expenses include costs associated with finance, human resources, legal, administration, internal technology and other corporate expenses.