Compuware Corp. (CPWR, Financial) filed Quarterly Report for the period ended 2012-09-30.
Compuware Corporation has a market cap of $1.82 billion; its shares were traded at around $9.03 with a P/E ratio of 26.3 and P/S ratio of 1.8. Compuware Corporation had an annual average earning growth of 11% over the past 10 years.
Software license fees (“license fees”) decreased $30.0 million during the second quarter of 2013 and $30.2 million during the first six months of 2013, which included a negative impact from foreign currency fluctuations of $1.1 million and $2.7 million for the second quarter and the first six months of 2013, respectively. Excluding the impact from foreign currency fluctuations, license fees declined $28.9 million and $27.5 million for the second quarter and first six months of 2013, respectively. These decreases were primarily due to a decline in mainframe license revenue. The decrease for the first six months of 2013 was partially offset by an increase in APM software license revenue (see the discussion within “Software Solutions by Business Segment” for more details).
Maintenance fees decreased $6.9 million during the second quarter of 2013 and $10.9 million during the first six months of 2013, which included a negative impact from foreign currency fluctuations of $4.6 million and $9.0 million for the second quarter and first six months of 2013, respectively. Excluding the impact from foreign currency fluctuations, maintenance fees declined $2.3 million and $1.9 million for the second quarter and first six months of 2013, respectively. Although we continue to experience a high maintenance renewal rate with our current mainframe customers, the decline in mainframe license transactions throughout the past several years is impacting mainframe maintenance revenue as new or growth customers are not entirely replacing the maintenance revenue loss from the non-renewed or reduced capacity mainframe maintenance arrangements. The declines in mainframe maintenance fees in both periods were partially offset by an increase in APM and Changepoint maintenance fees.
We continue to monitor the risk of future goodwill impairment for the professional services reporting unit, which has a goodwill balance of $115.0 million at September 30, 2012. We believe the decline in revenue and margin for the first half of 2013 compared to the first half of 2012 is temporary due to the expiration of certain projects as discussed in “Professional Services” above. However, if we are unable to increase both revenues and margins, we may have a triggering event and we could be required to reduce the value of goodwill associated with the professional services reporting unit. The contribution margin percentage for the first six months of 2013 was 17.0% as compared to 20.4%, 16.1%, 16.7% and 10.0% for the first six months of 2012, fiscal years 2012, 2011 and 2010, respectively. There has been no triggering event since March 31, 2012.
Net cash provided by operating activities during the first six months of 2013 was $16.3 million, which represents a $15.4 million decline from the first six months of 2012. The decrease was primarily due to a $17.7 million reduction in cash received from customers resulting from the decrease in revenue as compared to the prior year, a $2.2 million reduction in net interest received due to a large interest payment received from ForeSee Results, Inc. during the first quarter of 2012 and a $2.3 million increase in cash paid for income taxes in 2013. The decrease was partially offset by a $6.3 million reduction in cash paid to suppliers primarily related to fewer subcontractors.
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Compuware Corporation has a market cap of $1.82 billion; its shares were traded at around $9.03 with a P/E ratio of 26.3 and P/S ratio of 1.8. Compuware Corporation had an annual average earning growth of 11% over the past 10 years.
Highlight of Business Operations:
Software solutions revenue declined $37.2 million or 18.3% for the second quarter of 2013 as compared to the second quarter of 2012 due primarily to a $39.2 million decline in mainframe revenue partially offset by a $4.2 million increase in APM revenue. Software solutions contribution margin declined to 34.1% during the second quarter of 2013 from 41.0% during the second quarter of 2012 due to the decline in mainframe revenue which generates higher margins than other segments.Software license fees (“license fees”) decreased $30.0 million during the second quarter of 2013 and $30.2 million during the first six months of 2013, which included a negative impact from foreign currency fluctuations of $1.1 million and $2.7 million for the second quarter and the first six months of 2013, respectively. Excluding the impact from foreign currency fluctuations, license fees declined $28.9 million and $27.5 million for the second quarter and first six months of 2013, respectively. These decreases were primarily due to a decline in mainframe license revenue. The decrease for the first six months of 2013 was partially offset by an increase in APM software license revenue (see the discussion within “Software Solutions by Business Segment” for more details).
Maintenance fees decreased $6.9 million during the second quarter of 2013 and $10.9 million during the first six months of 2013, which included a negative impact from foreign currency fluctuations of $4.6 million and $9.0 million for the second quarter and first six months of 2013, respectively. Excluding the impact from foreign currency fluctuations, maintenance fees declined $2.3 million and $1.9 million for the second quarter and first six months of 2013, respectively. Although we continue to experience a high maintenance renewal rate with our current mainframe customers, the decline in mainframe license transactions throughout the past several years is impacting mainframe maintenance revenue as new or growth customers are not entirely replacing the maintenance revenue loss from the non-renewed or reduced capacity mainframe maintenance arrangements. The declines in mainframe maintenance fees in both periods were partially offset by an increase in APM and Changepoint maintenance fees.
We continue to monitor the risk of future goodwill impairment for the professional services reporting unit, which has a goodwill balance of $115.0 million at September 30, 2012. We believe the decline in revenue and margin for the first half of 2013 compared to the first half of 2012 is temporary due to the expiration of certain projects as discussed in “Professional Services” above. However, if we are unable to increase both revenues and margins, we may have a triggering event and we could be required to reduce the value of goodwill associated with the professional services reporting unit. The contribution margin percentage for the first six months of 2013 was 17.0% as compared to 20.4%, 16.1%, 16.7% and 10.0% for the first six months of 2012, fiscal years 2012, 2011 and 2010, respectively. There has been no triggering event since March 31, 2012.
Net cash provided by operating activities during the first six months of 2013 was $16.3 million, which represents a $15.4 million decline from the first six months of 2012. The decrease was primarily due to a $17.7 million reduction in cash received from customers resulting from the decrease in revenue as compared to the prior year, a $2.2 million reduction in net interest received due to a large interest payment received from ForeSee Results, Inc. during the first quarter of 2012 and a $2.3 million increase in cash paid for income taxes in 2013. The decrease was partially offset by a $6.3 million reduction in cash paid to suppliers primarily related to fewer subcontractors.
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