Compuware Annual Report 2001

Compuware Corporation and Subsidiaries
Consolidated Financial Statements
Notes to Consolidated Financial Statements

2. ACQUISITIONS

Fiscal 2001 Acquisitions:

In July 2000, the Company acquired substantially all the assets and certain labilities of Optimal Networks Corporation (Optimal), a developer of e-business performance measurement tools for $5,000,000 in cash and assumed liabilities. The acquisition has been accounted for as a purchase, and, accordingly, assets and liabilities acquired have been recorded at fair value as of the date of acquisition. The amount by which the acquisition cost exceeded the fair value of the net assets acquired was approximately $2,300,000 and is being amortized over a 10-year period on a straight-line basis.

In May 2000 the Company acquired Nomex, Inc. (Nomex), a privately held provider of web design and development services located in Montreal Canada for approximately $8,900,000 in cash. The acquisition has been accounted for as a purchase, and, accordingly, assets and liabilities acquired have been recorded at fair value as of the date of acquisition. The amount by which the acquisition cost exceeded the fair value of the net assets acquired was approxtmateiy $8,200,000 and is being amortized over a 10-year period on a straight line basis.

Fiscal 2000 Acquisitions:

During fiscal 2000, the Company completed the acquisition of certain professional services companies for a combined total of $522,500,000, the largest of which was Data Processing Resources Corporation for $499,500,000. The Company also completed four product-related acquisitions during the year for a combined total of $180,850,000, the largest of which was Programart Corporation for $126,100,000. All of the acquisitions were accounted for as purchases and, accordingly assets and liabilities acquired have been recorded at fair value as of their respective acquisition dates. Of the total purchase price, $56,500,000 was capitalized as purchased software, $11,200,000 was allocated to other intangible assets and $17,900,000 was allocated to in process research and development and expensed as of the purchase date. The aggregate amount by which the acquisition cost exceeded the fair value of the net assets acquired was approximately $600,200,000 and is being amortized on a straight-line basis, over periods ranging from 10 to 20 years.

The following pro forma unaudited consolidated results of operations assume the acquisitions occurred as of the beginning of each of the periods presented (in thousands, except per share amounts):

YEAR ENDED MARCH 31,

2000 1999

 Revenues $ 2,394,482   $ 2,030,594  



 Net Income 341,508   327,171  



 Diluted earnings
   per share 0.89   0.81  



The pro forma results include the amortization of the goodwill and interest expense on debt assumed to finance these purchases. These amounts do not reflect any benefit from the reduction in costs for certain corporate functions from combined operations. The pro forma results are not necessarily indicative of what actually would have occurred if the acquisitions had been completed as of the beginning of each of the fiscal years presented, nor are they necessarily indicative of future consolidated results.

Fiscal 1999 Acquisitions:

During fiscal 1999, the Company completed the acquisition of a professional services firm and certain software products for an aggregate cost of approximately $40,350,000, including $31,100,000 in Compuware stock and $9,250,000 in cash and short-term notes payable. All of the acquisitions have been accounted for as purchases and, accordingly, assets and liabilities acquired have been recorded at fair value as of the date of acquisition. Of the total purchase price, $4,350,000 was allocated to in-process research and development and expensed as of the purchase date. The amount by which the acquisition cost exceeded the fair value of the net assets acquired was approximately $31,888,000 and is being amortized over a 15-year period on a straight-line basis.