##### 



Exhibit 99.1
 
  Investors:
    
    Media:James Trouba
    
    Michelle JonesTel: (248) 848-8896
    
    Tel: (248) 848-2269jtrouba@covansys.com
    
    mjones@covansys.com
 FOR IMMEDIATE RELEASE
 COVANSYS REPORTS SOLID FOURTH QUARTER
AND FULL YEAR 2005 RESULTS
 Remediation of Previously Identified Material Weaknesses Completed




---



##### 




    
    Completed the remediation of all material weaknesses identified in 2004;
    
    Added five new strategic accounts to our client portfolio from the life sciences and
financial services industries, all with the potential for significant growth; and
    
    Successfully completed the sale and transfer of PeopleSoft development center in
Bangalore, India to Oracle Corporation.
 Additional Financial Results




---



##### 



Managements Report on Internal Control over Financial Reporting
  Outlook
   Conference Call




---



##### 



About Covansys
  Safe Harbor Statement




---



##### 



COVANSYS CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited, in thousands except per share amounts)
 Three Months Ended December 31,
    
    
    Year Ended December 31,2005
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    2005
    
    
    
    
    
    
    2004Revenue
    
    
    
    
    
    $
    109,961
    
    
    
    
    
    
    $
    99,171
    
    
    
    
    
    
    $
    434,120
    
    
    
    
    
    
    $
    374,373Cost of revenue
    
    
    
    
    
    
    81,676
    
    
    
    
    
    
    
    72,182
    
    
    
    
    
    
    
    316,109
    
    
    
    
    
    
    
    281,114Gross profit
    
    
    
    
    
    
    28,285
    
    
    
    
    
    
    
    26,989
    
    
    
    
    
    
    
    118,011
    
    
    
    
    
    
    
    93,259Selling, general and administrative
    
    
    
    
    
    
    17,445
    
    
    
    
    
    
    
    16,562
    
    
    
    
    
    
    
    72,097
    
    
    
    
    
    
    
    72,342Income from operations
    
    
    
    
    
    
    10,840
    
    
    
    
    
    
    
    10,427
    
    
    
    
    
    
    
    45,914
    
    
    
    
    
    
    
    20,917Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    245
    
    
    
    
    
    
    
    495
    
    
    
    
    
    
    
    245Other income(expense), net
    
    
    
    
    
    
    2,079
    
    
    
    
    
    
    
    (485
    )
    
    
    
    
    
    
    3,507
    
    
    
    
    
    
    
    1,317Income before income taxes
    
    
    
    
    
    
    12,919
    
    
    
    
    
    
    
    9,697
    
    
    
    
    
    
    
    48,926
    
    
    
    
    
    
    
    21,989Provision for income taxes
    
    
    
    
    
    
    3,296
    
    
    
    
    
    
    
    473
    
    
    
    
    
    
    
    11,388
    
    
    
    
    
    
    
    4,485Net income available for shareholders
    
    
    
    
    
    
    9,623
    
    
    
    
    
    
    
    9,224
    
    
    
    
    
    
    
    37,538
    
    
    
    
    
    
    
    17,504Convertible redeemable preferred
stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,221Redemption of convertible redeemable
preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,674Net income (loss) available to
common shareholders
    
    
    
    
    
    $
    9,623
    
    
    
    
    
    
    $
    9,224
    
    
    
    
    
    
    $
    37,538
    
    
    
    
    
    
    ($
    14,391
    )Earnings Per Share:Basic
    
    Diluted
    
    Basic
    
    Diluted
    
    Basic
    
    Diluted
    
    Basic
    
    DilutedNet income (loss) available
to common
shareholders
    
    $
    0.26
    
    
    $
    0.25
    
    
    $
    0.25
    
    
    $
    0.24
    
    
    $
    1.00
    
    
    $
    0.99
    
    
    ($
    0.48
    )
    
    ($
    0.48
    )Weighted average
common shares
    
    
    37,388
    
    
    
    38,033
    
    
    
    37,425
    
    
    
    37,988
    
    
    
    37,364
    
    
    
    37,960
    
    
    
    29,971
    
    
    
    29,971
 MORE




---



##### 



COVANSYS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited, in thousands)
 December 31,
    
    
    December 31,2005
    
    
    2004Current Assets:Cash and cash equivalents
    
    $
    58,030
    
    
    $
    49,841Short-term investments
    
    
    23,332
    
    
    
    21,40981,362
    
    
    
    71,250Accounts receivable, net
    
    
    82,526
    
    
    
    75,388Revenues earned in excess of billing, net
    
    
    25,632
    
    
    
    24,613Prepaid expenses and other
    
    
    15,117
    
    
    
    12,331Total current assets
    
    
    204,637
    
    
    
    183,582Property and equipment, net
    
    
    36,656
    
    
    
    33,468Goodwill, net
    
    
    21,893
    
    
    
    19,148Other assets
    
    
    8,075
    
    
    
    12,604Total Assets
    
    $
    271,261
    
    
    $
    248,802Current liabilities
    
    $
    59,727
    
    
    $
    71,149Other liabilities
    
    
    3,674
    
    
    
    3,462Shareholders equity
    
    
    207,860
    
    
    
    174,191Total Liabilities and Shareholders Equity
    
    $
    271,261
    
    
    $
    248,802
 COVANSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 Year Ended December 31,2005
    
    
    2004Net income
    
    $
    37,538
    
    
    $
    17,504Adjustments to reconcile net income to net cash used by
operating activities:Depreciation and amortization
    
    
    13,145
    
    
    
    13,391Loss on disposal and obsolescence of property and equipment
    
    
    155
    
    
    
    1,395Provision for and write-off of doubtful accounts
    
    
    63
    
    
    
    892Provision for deferred income taxes
    
    
    1,316
    
    
    
    770Impairment of long-lived assets
    
    
    52
    
    
    
    1,225Gain from sale of development center
    
    
    (1,000
    )
    
    
    Loss(gain) from sale of short-term investments
    
    
    5
    
    
    
    (153
    )Other
    
    
    (6
    )
    
    
    271Change in assets and liabilities
    
    
    421
    
    
    
    4,096Net cash provided by operating activities
    
    
    51,689
    
    
    
    39,391Cash flows from investing activities:Investment in property, equipment and other
    
    
    (16,991
    )
    
    
    (10,167
    )Proceeds from sale of development center
    
    
    800
    
    
    
    Proceeds from sale of available-for-sale securities
    
    
    130,642
    
    
    
    112,750Purchases of available-for-sale securities
    
    
    (131,833
    )
    
    
    (95,427
    )Investment in computer software
    
    
    (83
    )
    
    
    (208
    )Business acquisitions net of cash acquired
    
    
    (7,022
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    (24,487
    )
    
    
    6,948Cash flows from financing activities:Repayment of subordinated notes
    
    
    (17,500
    )
    
    
    Net proceeds from issuance of common stock
    
    
    
    
    
    
    93,906Net proceeds from exercise of stock options and other, net
    
    
    3,509
    
    
    
    1,385Redemption of convertible redeemable preferred stock
    
    
    
    
    
    
    (179,139
    )Repurchases of common stock
    
    
    (4,803
    )
    
    
    (2,408
    )Net cash (used in) financing activities
    
    
    (18,794
    )
    
    
    (86,256
    )Effect of exchange rate changes on cash
    
    
    (219
    )
    
    
    87Increase (decrease) in cash and cash equivalents
    
    
    8,189
    
    
    
    (39,830
    )Cash and cash equivalents at beginning of period
    
    
    49,841
    
    
    
    89,671Cash and cash equivalents at end of period
    
    $
    58,030
    
    
    $
    49,841
 ###




---



##### 



COVANSYS CORPORATION
ADJUSTED STATEMENTS OF OPERATIONS ELIMINATING THE STATE AND LOCAL PRACTICE
(Unaudited, in thousands except per share amounts)
 Year Ended December 31
    
    
    Year Ended December 312005
    
    
    2004State &
    
    
    
    
    
    
    
    
    
    
    State &Local
    
    
    
    
    
    
    
    
    
    
    LocalActual
    
    
    Practice
    
    
    Adjusted
    
    
    Actual
    
    
    Practice
    
    
    Adjusted(in thousands)
    
    
    
    
    
    
    
    
    
    
    (in thousands)Revenue
    
    $
    434,120
    
    
    $
    75,741
    
    
    $
    358,379
    
    
    $
    374,373
    
    
    $
    62,994
    
    
    $
    311,379Cost of Revenue
    
    
    316,109
    
    
    
    65,529
    
    
    
    250,580
    
    
    
    281,114
    
    
    
    59,605
    
    
    
    221,509Gross Profit
    
    
    118,011
    
    
    
    10,212
    
    
    
    107,799
    
    
    
    93,259
    
    
    
    3,389
    
    
    
    89,870Gross Profit %
    
    
    27.2
    %
    
    
    13.5
    %
    
    
    30.1
    %
    
    
    24.9
    %
    
    
    5.4
    %
    
    
    28.9
    %Operating Expenses
    
    
    72,097
    
    
    
    7,419
    
    
    
    64,678
    
    
    
    72,342
    
    
    
    10,186
    
    
    
    62,156Contribution Margin
    
    
    45,914
    
    
    
    2,793
    
    
    
    43,121
    
    
    
    20,917
    
    
    
    (6,797
    )
    
    
    27,714Contribution Margin %
    
    
    10.6
    %
    
    
    3.7
    %
    
    
    12.0
    %
    
    
    5.6
    %
    
    
    -10.8
    %
    
    
    8.9
    %Interest Income and Other
    
    
    3,012
    
    
    
    
    
    
    
    3,012
    
    
    
    1,072
    
    
    
    
    
    
    
    1,072Income before provision for income taxes
    
    
    48,926
    
    
    
    2,793
    
    
    
    46,133
    
    
    
    21,989
    
    
    
    (6,797
    )
    
    
    28,786Tax Provision
    
    
    11,388
    
    
    
    1,117
    
    
    
    10,271
    
    
    
    4,485
    
    
    
    (2,719
    )
    
    
    7,204Net Income
    
    
    37,538
    
    
    
    1,676
    
    
    
    35,862
    
    
    
    17,504
    
    
    
    (4,078
    )
    
    
    21,582Convertible redeemable preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,221
    )
    
    
    
    
    
    
    (3,221
    )Loss on redemption of convertible redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,674
    
    
    
    
    
    
    
    28,674Net income (loss) available to common shareholders
    
    $
    37,538
    
    
    $
    1,676
    
    
    $
    35,862
    
    
    $
    (14,391
    )
    
    $
    (4,078
    )
    
    $
    (10,313
    )Earnings Per ShareBasic
    
    $
    1.00
    
    
    
    
    
    
    $
    0.96
    
    
    $
    (0.48
    )
    
    
    
    
    
    $
    (0.34
    )Fully Diluted
    
    $
    0.99
    
    
    
    
    
    
    $
    0.94
    
    
    $
    (0.48
    )
    
    
    
    
    
    $
    (0.34
    )Basic weighted average shares
    
    
    37,364
    
    
    
    
    
    
    
    37,364
    
    
    
    29,971
    
    
    
    
    
    
    
    29,971Dilutive effect of options
    
    
    596
    
    
    
    
    
    
    
    596Diluted weighted average shares
    
    
    37,960
    
    
    
    
    
    
    
    37,960
    
    
    
    29,971
    
    
    
    
    
    
    
    29,971
  
 1
    
    The income (loss) for the state and local practice, which is included in the Public
Sector segment for reporting purposes, includes costs directly attributable to the business.
Certain operating expenses which are indirectly attributable to the business are centrally
managed at the corporate level and have not been allocated.2
    
    The tax rate assumed for the state & local practice is 40%.




---



##### 



COVANSYS CORPORATION
ADJUSTED STATEMENTS OF OPERATIONS ELIMINATING THE STATE AND LOCAL PRACTICE
(Unaudited, in thousands except per share amounts)
 4th Quarter
    
    
    4th Quarter
    
    
    3rd Quarter2005
    
    
    2004
    
    
    2005State &
    
    
    
    
    
    
    
    
    
    
    State &
    
    
    
    
    
    
    
    
    
    
    State &Local
    
    
    
    
    
    
    
    
    
    
    Local
    
    
    
    
    
    
    
    
    
    
    LocalActual
    
    
    Practice
    
    
    Adjusted
    
    
    Actual
    
    
    Practice
    
    
    Adjusted
    
    
    Actual
    
    
    Practice
    
    
    Adjusted(in thousands)
    
    
    
    
    
    
    
    
    
    
    (in thousands)
    
    
    
    
    
    
    
    
    
    
    (in thousands)Revenue
    
    $
    109,961
    
    
    $
    14,422
    
    
    $
    95,539
    
    
    $
    99,171
    
    
    $
    14,480
    
    
    $
    84,691
    
    
    $
    111,178
    
    
    $
    20,424
    
    
    $
    90,754Cost of Revenue
    
    
    81,676
    
    
    
    14,355
    
    
    
    67,321
    
    
    
    72,182
    
    
    
    13,912
    
    
    
    58,270
    
    
    
    82,182
    
    
    
    18,225
    
    
    
    63,957Gross Profit
    
    
    28,285
    
    
    
    67
    
    
    
    28,218
    
    
    
    26,989
    
    
    
    568
    
    
    
    26,421
    
    
    
    28,996
    
    
    
    2,199
    
    
    
    26,797Gross Profit %
    
    
    25.7
    %
    
    
    0.5
    %
    
    
    29.5
    %
    
    
    27.2
    %
    
    
    3.9
    %
    
    
    31.2
    %
    
    
    26.1
    %
    
    
    10.8
    %
    
    
    29.5
    %Operating Expenses
    
    
    17,445
    
    
    
    1,405
    
    
    
    16,040
    
    
    
    16,562
    
    
    
    1,534
    
    
    
    15,028
    
    
    
    17,650
    
    
    
    1,623
    
    
    
    16,027Contribution Margin
    
    
    10,840
    
    
    
    (1,338
    )
    
    
    12,178
    
    
    
    10,427
    
    
    
    (966
    )
    
    
    11,393
    
    
    
    11,346
    
    
    
    576
    
    
    
    10,770Contribution Margin %
    
    
    9.9
    %
    
    
    -9.3
    %
    
    
    12.7
    %
    
    
    10.5
    %
    
    
    -6.7
    %
    
    
    13.5
    %
    
    
    10.2
    %
    
    
    2.8
    %
    
    
    11.9
    %Interest Income and Other
    
    
    2,079
    
    
    
    
    
    
    
    2,079
    
    
    
    (730
    )
    
    
    
    
    
    
    (730
    )
    
    
    595
    
    
    
    
    
    
    
    595Income before provision for income taxes
    
    
    12,919
    
    
    
    (1,338
    )
    
    
    14,257
    
    
    
    9,697
    
    
    
    (966
    )
    
    
    10,663
    
    
    
    11,941
    
    
    
    576
    
    
    
    11,365Tax Provision
    
    
    3,296
    
    
    
    (535
    )
    
    
    3,831
    
    
    
    473
    
    
    
    (386
    )
    
    
    859
    
    
    
    3,331
    
    
    
    230
    
    
    
    3,101Net Income
    
    
    9,623
    
    
    
    (803
    )
    
    
    10,426
    
    
    
    9,224
    
    
    
    (580
    )
    
    
    9,804
    
    
    
    8,610
    
    
    
    346
    
    
    
    8,264Convertible redeemable preferred stock
dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss on redemption of convertible
redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss) available to common
shareholders
    
    $
    9,623
    
    
    $
    (803
    )
    
    $
    10,426
    
    
    $
    9,224
    
    
    $
    (580
    )
    
    $
    9,804
    
    
    $
    8,610
    
    
    $
    346
    
    
    $
    8,264Earnings Per ShareBasic
    
    $
    0.26
    
    
    
    
    
    
    $
    0.28
    
    
    $
    0.25
    
    
    
    
    
    
    $
    0.26
    
    
    $
    0.23
    
    
    
    
    
    
    $
    0.22Fully Diluted
    
    $
    0.25
    
    
    
    
    
    
    $
    0.27
    
    
    $
    0.24
    
    
    
    
    
    
    $
    0.26
    
    
    $
    0.23
    
    
    
    
    
    
    $
    0.22Basic weighted average shares
    
    
    37,388
    
    
    
    
    
    
    
    37,388
    
    
    
    37,425
    
    
    
    
    
    
    
    37,425
    
    
    
    37,281
    
    
    
    
    
    
    
    37,281Dilutive effect of options
    
    
    645
    
    
    
    
    
    
    
    645
    
    
    
    563
    
    
    
    
    
    
    
    563
    
    
    
    668
    
    
    
    
    
    
    
    668Diluted weighted average shares
    
    
    38,033
    
    
    
    
    
    
    
    38,033
    
    
    
    37,988
    
    
    
    
    
    
    
    37,988
    
    
    
    37,949
    
    
    
    
    
    
    
    37,949
  
 1
    
    The income (loss) for the state and local practice, which is included in the Public Sector
segment for reporting purposes, includes costs directly attributable to the business. Certain
operating expenses which are indirectly attributable to the business are centrally managed at
the corporate level and have not been allocated.2
    
    The tax rate assumed for the state & local practice is 40%.