Compuware Reports $.35 Cents Per Share in Q3 as Revenue Climbs 47.2%

FARMINGTON HILLS, Mich. -- January 25, 2000 -- Compuware Corporation (NASDAQ:CPWR), today announced financial results for its third quarter ended December 31, 1999.

Compuware reports third quarter revenues of $637.4 million, an increase of 47.2 percent from $433.1 million in the third quarter of the previous fiscal year.

Software license fees increased 33.8 percent to $250.5 million during the third quarter from $187.3 million in the same period of the previous fiscal year. Maintenance fees increased 30.0 percent to $113.8 million from $87.5 million during the same period last year. Revenue from professional services grew 72.5 percent during the quarter to $273.0 million from $158.3 million in the third quarter of the previous fiscal year.

Net income before special charges and amortization expense (diluted computation) increased 34.1 percent to $133.4 million. Before special charges and amortization expense, earnings per share (diluted computation) were $.35 versus $.25 in the same quarter of last year based upon 386.5 and 403.1 million shares outstanding, respectively. Inclusive of special charges and amortization expense, earnings per share (diluted computation) were $.32 versus $.24 in the same quarter last year.

"Our total revenues for the quarter grew more than 47 percent compared to the same quarter last year," said Beth Chappell, Executive Vice President, Compuware Corporation. "Despite a tight quarter, we exceeded the analysts' consensus estimate for EPS. We experienced a shortfall in software upgrade revenues late in the quarter, which was a result of our clients' understandable reluctance to make system changes prior to the end of the calendar year. We believe this was an anomaly and expect software upgrade revenues to return to appropriate levels this quarter."

Chappell continued: "Our services margins this quarter were lower than expected. We attribute this to the increased focus we are placing on retraining our professional services personnel and the reluctance of clients to start new projects prior to the end of the year. We are steadfast in our resolve not to lay off any unassigned personnel. Instead, we are retraining these employees at twice our prior rate to be in a position to bring value to our clients' large-scale e-commerce projects. E-commerce continues to be a big opportunity for us. We realized more than $100 million this quarter in e-commerce-related revenues, making us one of the world's largest e-commerce businesses."

Concluding, Chappell said: "Our revenues are as broad-based as the technologies our clients continue to utilize and support. In addition to growing e-commerce opportunities, we continue to see strength in our traditional lines of business."

Compuware Corporation

With trailing 12-month revenues of more than $2 billion, Compuware is a world leader in the practical implementation of enterprise and e-commerce solutions. Compuware productivity solutions help 14,000 of the world's largest corporations more efficiently maintain and enhance their most critical business applications. Providing immediate and measurable return on information technology investments, Compuware products and services improve quality, lower costs and increase the speed at which systems can be developed, implemented and supported. Compuware employs more than 15,000 information technology professionals worldwide. For more information about Compuware, please contact the corporate offices at 800-521-9353. You may also visit Compuware on the World Wide Web at www.compuware.com.