Compuware Corp. - Company Profile

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Compuware Corp.

(313) 227-7300

One Campus Martius

Sales

$1.3 billion

Business Description

We provide software products and professional services designed to increase the
productivity of the information technology, or IT, departments of businesses
worldwide. In the early years of our company, we focused on offering
professional services and mainframe products in the testing and implementation
environment where we gained extensive experience and established long-term
customer relationships. Over the past several years, we have expanded our
presence into products and professional services in the application development
and integration, quality assurance, production readiness and production
availability areas of the application life cycle. We extended our offerings to
include application services by acquiring certain assets of Covisint LLC
(Covisint) effective March 1, 2004. Covisint provides business-to-business
applications and communication services that connect the global automotive
industry. Additionally, we acquired Changepoint Corporation in May 2004.
Changepoint offerings help IT organizations by providing critical insight into
IT spending, operations and management. Initial technology integration plans,
while still under development, suggest outstanding synergy between Compuware's
application development, testing and performance management tools and
Changepoint's IT governance solution. This combined solution will offer Chief
Information Officers unmatched insight and visibility into their people,
projects, resources and applications, helping technology leaders align IT
investments with business priorities.

We were incorporated in Michigan in 1973. Our executive offices are located at
One Campus Martius, Detroit, Michigan 48226-5099, and our telephone number is
(313) 227-7300.

We operate in two business segments in the software and technology services
industries: products and professional services

COMPUWARE SOFTWARE PRODUCTS AND THE APPLICATION LIFE CYCLE

Our software products enhance every step in the application life cycle, from
application development and quality assurance to production readiness and
availability, for mainframe and distributed platforms.

APPLICATION DEVELOPMENT AND INTEGRATION--Customers use our Abend-AID,
DevPartner, File-AID, Optimal, QACenter, STROBE, UNIFACE, Vantage and XPEDITER
products to achieve productivity gains.

QUALITY ASSURANCE--The Abend-AID, DevPartner, File-AID, QACenter, STROBE and
XPEDITER tools are used to automate the multiple, complex steps of thorough
application testing.

PRODUCTION READINESS--The Abend-AID, DevPartner, File-AID, QACenter, STROBE and
Vantage product lines are used to ready applications for production.

PRODUCTION AVAILABILITY--The Abend-AID, File-AID, QACenter, STROBE, Vantage and
XPEDITER product lines are used to find and fix application, server and/or
network performance problems before they affect end users.

IT GOVERNANCE--IT Governance by Changepoint allows IT organizations to evaluate
all of these projects providing Chief Information Officers with critical insight
into IT spending, operations and management.

MAINFRAME MARKET

We believe that the market for mainframe products is well defined, and that our
mainframe products will continue to be in demand as the drive to extend legacy
applications into distributed environments continues to emphasize the need for
reliable, high-volume servers.

We intend to remain focused on developing, marketing and supporting high quality
software tools both to support traditional uses of the mainframe and to enhance
the efforts of IT staff who are working to web-enable their legacy applications
portfolio. We believe that our longstanding customer relationships and brand
equity in this arena will help us continue to improve the benefits our customers
receive from our mainframe products. In addition, we continue to pursue product
integration opportunities to increase the value that our customers obtain from
the use of our products, to enhance the synergy among the functional groups
working on key application projects and to make the entire process more
streamlined, automated and repeatable.

MAINFRAME SOFTWARE PRODUCTS

Our mainframe products focus on improving the productivity of developers and
analysts in analysis, unit testing, functional testing, performance testing,
defect removal, fault management, file and data management and application
performance management in the OS/390 and z/OS series environments.

Our mainframe products are functionally rich, are focused on user needs and
require minimal user training. We strive to ensure a common look and feel across
our products and emphasize ease of use in all aspects of product design and
functionality. Most products can be used immediately without modification of
customer development practices and standards and can be quickly integrated into
day-to-day testing, debugging and maintenance activities.

Our mainframe products are grouped into the following five product lines:

FILE-AID PRODUCTS

File-AID products provide a consistent, familiar and secure method for IT
professionals to access, analyze, edit, compare, move and transform data across
all strategic environments. File-AID is used to quickly resolve production data
problems and manage ongoing changes to data and databases at any stage of the
application life cycle.

ABEND-AID PRODUCTS

Abend-AID products assist IT professionals to quickly diagnose and resolve
application and system failures. The products automatically collect program and
environmental information, analyze the information and present diagnostic and
supporting data in a way that can be easily understood by all levels of IT
staff.

XPEDITER PRODUCTS

XPEDITER interactive debugging products help developers integrate enterprise
applications, build new applications and web-enable legacy ones, satisfying
corporate scalability, reliability and security requirements. XPEDITER tools
deliver powerful analysis and testing capabilities across multiple environments,
helping developers test more accurately and reliably, in less time.

QACENTER MAINFRAME PRODUCTS

QACenter Mainframe products deliver complete testing functionality for
automating test creation and execution, test results analysis and documentation.
The products simulate the on-line systems environment, allowing programmers to
test these applications under production conditions without requiring actual
users at terminals. Its powerful functions and features enhance unit,
concurrency, integration, migration, capacity and stress testing.

STROBE PRODUCTS

Our STROBE MVS Application Performance Management and iSTROBE Application
Performance Analysis System products work together to help clients locate and
eliminate sources of excessive resource demands during every phase of an
application's life cycle. Features in both products support an extensive array
of subsystems, databases and languages.

DISTRIBUTED SYSTEMS MARKET

In contrast to the mainframe market, the distributed systems market is
characterized by multiple hardware, software and network configurations.
Combined with the more recent push to web-enable applications, IT organizations
find themselves under increasing pressure to rapidly create reliable,
top-performing applications, despite an exponential increase in environment
complexity. We believe our distributed and web products address these challenges
and that we are well positioned to market distributed development, integration,
functional and performance testing and application management software to our
target markets.

DISTRIBUTED SOFTWARE PRODUCTS

Our distributed products focus on improving the productivity of the entire
development team, including architects, developers, testers and operating
analysts. These products support requirements management, application
development, unit and functional testing and application performance analysis.
Our distributed products also help the development team in application profiling
and rapid new application rollout, as well as in managing server and network
application availability on multiple platforms including Microsoft Windows and
Microsoft .NET, J2EE, AIX, Solaris and DC2000.

Our distributed systems software products are grouped into five product lines:
UNIFACE and Optimal, DevPartner, QACenter and File-AID/CS, Vantage and IT
Governance by Changepoint.

UNIFACE AND OPTIMAL PRODUCTS

UNIFACE, our distributed systems application development product, is designed to
assist software developers in the creation, integration, deployment and
maintenance of complex distributed applications. UNIFACE enables software
developers to create applications that are not tied to any specific hardware
platform, operating system, database management system or graphical user
interface. Application objects are captured in a central repository, which
permits their reuse in the development of technology-independent applications
and allows for easier management and maintenance of applications. In addition,
UNIFACE insulates application development and deployment from the individual
technical components that comprise a computing environment. This reduces
development and maintenance costs and allows applications to be developed
rapidly using existing, proven legacy code.

OptimalJ is our Java development product. OptimalJ accelerates application
delivery by simplifying Java development, allowing developers of varying
experience levels to rapidly produce reliable J2EE business applications.
OptimalJ generates complete, working applications directly from a visual model,
using sophisticated patterns to implement accepted best practices for coding to
J2EE specifications.

UnifaceView is our business integration portal product. As a packaged, web-based
portal application, UnifaceView enables customers to quickly implement an
integrating platform to help bring together the diverse array of custom-built
and packaged applications and web services that many companies have assembled
over a period of time. UnifaceView brings these applications together in a
single desktop portal with powerful integration and administrative functions,
making it possible for a customer's IT department to effectively manage the
"home-base" desktop of every employee in its organization.

UnifaceFlow is our business process automation and business process modeling
product that automates the execution of business tasks running within and across
an organization. UnifaceFlow helps solution architects model and automate
business processes and tasks by aligning and
connecting the process to the application environment for improved workflow
execution. This creates a more efficient and effective organization that
benefits from faster process-cycle times, improved time-to-market, greater cost
effectiveness and better customer service through improved response times.

DEVPARTNER PRODUCTS

DevPartner Studio helps developers build reliable, high-performance applications
and components for Microsoft .NET and for native Windows by quickly solving
problems with .NET migration, legacy integration, locating errors in application
code and memory, tuning runtime performance across distributed applications, and
assuring thorough testing.

DevPartner Studio Enterprise Edition combines powerful error detection,
performance, memory, coverage and requirements management with comprehensive
project tracking, defect management, task management and workflow automation.
DevPartner Studio Enterprise Edition supports development of high-performing
applications and components for Microsoft .NET and for native Windows.

DevPartner Java Edition pinpoints runtime errors, memory problems and
performance bottlenecks and identifies code coverage/stability across all tiers
of a Java application environment. Using DevPartner Java Edition, developers and
testers can quickly prioritize and focus on solving the complexity, quality and
performance problems associated with Java development.

DriverStudio products help developers create code that enables operating systems
to communicate with peripheral devices such as printers, scanners and the
Internet. The DriverStudio product line includes DriverStudio and SoftICE Driver
Suite.

QACENTER DISTRIBUTED PRODUCTS

QACenter delivers a unique offering of automated testing products and solutions
designed to validate applications running in the full spectrum of environments,
isolate and correct problems and ensure that systems can handle anticipated load
before applications go live. QACenter products include:

QARun and TestPartner--Functional test automation tools that allow organizations
to validate business-critical applications whether distributed, e-commerce
(web/Java) or CRM/ERP.

QADirector--Provides the framework for managing the entire testing process from
design through execution to analysis.

TrackRecord--A defect management solution that serves as a central repository
and communication hub for all development-related activities and test-related
activities and data.

Reconcile--An enterprise-wide requirements management system. Reconcile allows
project teams to create, change, track, evaluate and report project
requirements.

QALoad--An automated load testing solution for distributed, ERP and e-commerce
applications.

Compuware Application Reliability Solution (CARS)--Combines Compuware software
products and professional services into a defined process used to instill
discipline, automate processes and ensure consistency and repeatability
throughout the testing life cycle. Results are reported to IT management through
the application quality workbench.

FILE-AID/CLIENT SERVER

File-AID/Client Server is a comprehensive test data management tool designed to
help developers, QA teams and DBAs work efficiently with data as they develop,
test and support distributed applications. With File-AID/CS application
developers can extract, load, copy, convert, transform, compare and edit all
their data without having to be an expert in each database environment. All data
related tasks are performed through an easy to use interface eliminating the
need to write programs or scripts, code SQL or use multiple utilities.

VANTAGE PRODUCTS

Vantage products allow IT professionals to manage, analyze and improve the
performance of distributed applications in a variety of environments. The
Vantage suite also helps IT organizations plan for and manage new distributed
application rollout. Vantage products include:

ClientVantage--Monitors the performance and availability of critical business
applications at the point of delivery--the client user interface.

NetworkVantage--Shows how users and applications consume critical shared network
resources; provides the information necessary to troubleshoot problems related
to unplanned use, unauthorized use, or poor configuration of the network;
supports WAN bandwidth sizing decisions; and provides historical trending data
for use in network growth management.

ServerVantage--Provides monitoring, alerting, troubleshooting and automated
response throughout the server infrastructure.

VantageView--Performance dashboard that provides an overall enterprise view of
application performance and availability across the customers infrastructure as
well as access to the underlying performance metrics.

Application Vantage--Pinpoints the source of poor transaction performance.
Provides real-time application performance troubleshooting, analyzing the
interaction between the application, the network and the supporting server
infrastructure. Application Vantage is also integrated with the ClientVantage
product for 24-hour a day, seven days a week exception-based performance
analysis.

Application Expert--Helps ensure successful deployment of new applications.
Analyzes transactions before applications are deployed and predicts how they
will perform under production conditions--helping to diagnose where potential
problems will occur. The WAN provisioning module determines the aggregate
network loading from a defined population of users and application workloads to
permit the "rightsizing" of expensive WAN links.

Predictor--Predicts enterprise network behavior based on various scenarios such
as changes in application mix, transaction volume, device outages and deployment
of additional bandwidth.

IT GOVERNANCE

IT Governance by Changepoint--Helps IT organizations by providing critical
insight into IT spending, operations and management. Combined with our other
products, we offer Chief Information Officers insight and visibility into their
people, projects, resources and applications, helping technology leaders align
IT investments with business priorities.

PRODUCT MAINTENANCE AND CUSTOMER SUPPORT

We believe that effective support of our customers and products during both the
trial period and for the license term is a substantial factor in product
acceptance and subsequent new product sales. We believe our installed base is a
significant asset and intend to continue to provide high levels of customer
support and product upgrades to assure a continuing high level of customer
satisfaction. In fiscal year 2004, we continued to experience a high customer
maintenance renewal rate.

All customers who subscribe to our maintenance and support services are entitled
to receive technical support and advice, including problem resolution services
and support in product installation, error corrections and any product
enhancements released by us during the maintenance period. Maintenance and
support services are provided online, through our FrontLine technical support
web site, by telephone access to technical personnel located in our development
labs and by support personnel in the offices of our foreign subsidiaries and
distributors.

Licensees have the option of renewing their maintenance agreements each year for
an annual fee based on the license or list price of the product. They also have
the option of committing to maintenance for longer terms, generally up to five
years, on a contractual basis. For fiscal years 2004, 2003 and 2002, maintenance
fees represented approximately 32.3%, 30.0%, and 24.9%, respectively, of our
total revenues.

TECHNOLOGY DEVELOPMENT AND SUPPORT

Technology development and support includes, primarily, the costs of programming
personnel associated with product development and support less the amount of
software development costs capitalized during the period. Personnel costs
associated with developing and maintaining internal systems and
hardware/software costs required to support technology initiatives are also
included here.

We have been successful in developing acquired products and technologies into
marketable software for our distribution channels. We believe that our future
growth lies in part in continuing to identify promising technologies from all
potential sources, including independent software developers, customers, small
startup companies and internal research and development.

Product development is performed primarily at our headquarters in Detroit,
Michigan; and at our development labs in Amsterdam, The Netherlands; Toronto,
Canada; Cambridge, Massachusetts; La Jolla, California; and Nashua, New
Hampshire.

Total technology development and support costs were $175.0 million, $154.7
million and $177.6 million during fiscal 2004, 2003 and 2002, respectively, of
which $11.3 million, $11.4 million and $13.3 million, respectively, were
capitalized.

Our software products are distributed as object code on standard magnetic
cartridges, diskettes and CDs, together with printed documentation. We also
distribute product electronically. We purchase cartridges, diskettes, CDs and
documentation printing from outside vendors. The product duplication, packaging
and distribution to our customers is performed at our production center in West
Bloomfield, Michigan.

PROFESSIONAL SERVICES

We offer a broad range of IT services for distributed systems and mainframe
environments. Our offerings include IT technical staffing and project
assistance, e-business and wireless development, NearShore development services
and ERP implementation. We also provide application life cycle management
assistance for outsourcing customers' application development and maintenance
activities as well as services for Compuware-owned products that enhance their
value.

We believe that the demand for professional services will continue to be driven
by the need to control costs, the significant level of resources necessary to
support complex and rapidly changing hardware, software and communication
technologies and the need for a larger technical staff for ongoing maintenance.
Our business approach to professional services delivery emphasizes hiring
experienced staff, extensive ongoing training, high staff utilization and
immediate, productive deployment of new personnel at client accounts.

Our objective in the professional services division is to create long term
relationships with customers in which our professional staff joins with the
customer's IT organization to plan, design, program, implement and maintain
technology-based solutions that achieve customer business goals. Typically, the
professional services staff is integrated with the customer's development team
on a specific application or project. Professional services staff work primarily
at customer sites or at our professional services offices located throughout
North America and Europe. We also have professional services

operations in other international locations. In addition, Compuware offers a
NearShore Development Center that serves customers looking for flexible,
cost-effective and high-quality application services delivered remotely from our
facility in Montreal.

APPLICATION SERVICES

Professional services includes our business-to-business applications and
communication services, called the Automotive Industry Operating System (AIOS).
The AIOS provides our customers with a common connection to their suppliers and
customers. We work with manufacturers, suppliers and industry trade groups
worldwide to define and implement effective common processes for the global
automotive industry. Once connected through our system, customers are able to
reduce costs, increase efficiency, enhance quality and improve time to market
using Covisint Communicate Portal Solutions and Covisint Connect data messaging.

Covisint Communicate

Communicate Portal Solutions enables industry participants to access Original
Equipment Manufacturers (OEM) applications, supplier applications and our
applications via one common infrastructure, built on specifications developed
with input from suppliers and OEM customers. This Communicate Portal serves as
the framework for OEM-to-Supplier and Supplier-to-Supplier communications.
Individual users gain the synergistic advantage of coming to the Communicate
Portal using one user I.D. and password to access an entire industry in a single
consistent user interface.

Covisint Connect

Connect is a data messaging service that provides a single connection for a
company's computers to exchange data with the computers of its partners that can
handle both EDI and XML technologies in one environment. The single connection
will permit transfer of data to customers and suppliers in the format that makes
the most sense for their company. This approach reduces the complexity of
managing multiple formats that have been dictated by customers and the multitude
of protocols and connection points that are required to conduct business. The
service integrates industry standard eBusiness applications and is built from
state-of-the-art technology designed for today's eBusiness. Connect gives our
customer the flexibility to rapidly deploy new business processes to solve
industry specific problems and can be used to exchange data between a company's
current enterprise applications and its suppliers' applications.

CUSTOMERS

Our products and professional services are used by the IT departments of a wide
variety of commercial and government organizations. Our application services are
used by global automotive industry OEMs and suppliers.