software ag investor roadshow usa july 2003. 2investor roadshow usa july 2003 software ag profile...

Software AGInvestor Roadshow USA

July 2003

Investor Roadshow USA July 2003 2

Software AG Profile

Germany’s second largest software vendor

In the high-end, mission-critical IT business since 1969

Worldwide customer base of several thousand blue chip

companies and public sector organizations

Leader in XML system technology (DBMS and

integration)

System integrator for own products and solutions

Listed at Frankfurt stock exchange (TecDAX)

Market Cap 325 mio. € / 375 mio. $ - Free Float: 68.4%


3

1985

Established First Platform

Independent Language

1983

TAPS (Trade Analysis & Process System) World’s Largest Clearing House System

1998

Introduced First XML Server

1997

First company to port DCOM to Mainframe

2000

First Mobile Fleet Mgmt System

2001

SCP Award Received 5 years in a row

2002

Over 5000 Customers Worldwide

2001/2002

Named Global Market Leader for XML Servers, IDC Profitable

2001

First Database to Utilize IBM’s New 64 bit Virtual Storage Architecture for Mainframe

1979

First Mainframe 4GL

1969

Software AG Foundedin Darmstadt

1991

Introduced First Service Broker for Distributed Applications

1971

First MainframeDatabase

1973

Software AG

AmericasFormed

Our History


Global Business

Four Business Regions (share of revenue 2002):

Americas (35%)

Southern/ Western Europe (26%)

Central/ Eastern Europe (24%)

Asia/Northern Europe (15%)


Source of Revenue / Business Lines

Project Services(Consulting and Implementation)

Licensing of Software ProductsMaintenance (24x7 world wide)

Product Business

0

20

40

60

80

100

120

140

160

180

1999 2000 2001* 2002 2003

(in mio. euros)

* first consolidation of US acquisition


1999 2000 2001* 2002

Results

(in mio. euros)

* first consolidation of US acquisition

-40

-20

0

20

40

60

80

100

6669

91

38

67

39

70

-19

83

62 62

110

54

3234

41

366 417 589 475

Operating result Net profit Op. cash flowOp. EBITARevenue

Strategy


Positioning of Software AG

Focus on product business

Licensing of software products

Excellent maintenance services

Global presence

Technology leader in XML

Expansion of the product portfolio to include

standardized solutions

System integrator for own products and solutions


XML Server

- native XML server

- Storage, management, publishing and exchange of XML documents

- Extremely fast and reliable database

- Available on all major platforms

- For large and mission-critical applications

- Integration server

- Leveraging legacy systems for use in new (e-)business solutions

- Development platform

- For large-scale (e-)business applications

Core Products


Number 2 worldwide market share for mainframe DBMS

Customers are predominantly blue chip companies and

large public authorities

Adabas and Natural currently account for about ¾ of

product revenue

Adabas and Natural being continuously enhanced:

Support for new platforms and technologies (Linux, 64 bit, XML,

SQL) protects customers’ software investment

1/3 of R&D resources are allocated for Adabas and Natural

(20 mio. euros in 2002)

Adabas and Natural remain the main sources of revenue


Tamino XML Server sold more than 500 times

Great success with XML technology in projects

Daimler Chrysler – content management system (xDWS)

Local government in UK – e-government portal (IESD)

Vodafone – document management

North American Logistics (Van Lines) – Mobile field service application

California State Board of Equalization – e-filing

EntireX serves as (XML) integration server

Technologically and economically very attractive customer

solutions will be converted into standardized solutions

Strategy Realignment


Software AG PortfolioEvolving from Technology to Solutions

Products Capabilities Solutions

• Tamino

• Communicator

• Mediator

• Adabas/Natural

• Partners

• Content

Management

• Digital Library

• Mobile

• Data Exchange

• Web Enablement

• Data Integration

• Self-Service Portals

• Content Suite

• Mobile Suite

• Partner Solutions

• Regional Solutions

• Individual Customer

Solutions

Committed to delivering value for our customers


Current solution-business situation

Expansion of Portfolio with Solutions

Future solution business

Business Lines

Develop a custom application

Core products (Tamino, EntireX,Adabas/Natural)

Delivery to customer

Project services/system integration

Product business

(Licensing and Maintenance)

Standardized solution platform

Modify a solution to meet customer requirements

Core products (Tamino, EntireX,Adabas/Natural)

Marketing and Sales


The New Software AG Sales Approach

Customer First is: Understanding our customers’

business and finding out how we can provide solutions that meet their needs

A fundamental change, not only in our culture, but in the entire software industry

Equally applicable to our installed base of customers or new prospects

The way we will do business

Customer First Strategy

Move from Product and “Event” go to market strategy to a proactive consultative sales process focused on understanding client business issues and positioning Software AG solutions/capabilities to meet those needs.


Focus on Industries

Financial Services

Manufacturing

Pharma

Trade and Logistics

Media

Public Administration

Regions will focus on their most important segments


• American Samoa• Alaska• Arizona• California• Colorado• Delaware• Florida• Guam• Idaho• Illinois• Louisiana• Los Angeles, CA• Massachusetts• Minnesota• Mississippi

• New Jersey

• New York City, NY

• North Dakota

• Pennsylvania

• Philadelphia, PA

• Puerto Rico

• Rhode Island

• South Carolina

• South Dakota

• Texas

• Washington

• Utah

• Vermont

• Virginia

• Washington, D.C.

• West Virginia

• Wyoming

BOE: 2nd Largest Tax System

SPARRS: Statewide HR

System

Digital Drivers License

PennDOT: CRASH Accident System

CRIS: Rehabilitation

System

DMV :Department of Motor Vehicles

Software AG Experiencewith States and Cities


Creating a Technology Vision to Leverage Existing IT Investments

IncreaseProductivity &

Profitability

Deliver Solutions to New Business

Challenges

Open & Extend Existing

Applications

Migrate or Outsource

Improve Performance


Quick Wins

Technology Vision Strategy

How We Build the Vision

Val

ue

t o C

us t

om

er

Software AG Technology Vision

Open Systems XML Access Web Services Desktop Access Data Exchange Web Enablement Data Integration Self-Service

Portals Digital Library Application

Development

Add New Solutions

Client Communication Management

Insurance Coverage

Reporting

Pension Statement

Management

XML Enablement

Content & Document

Management

Case Management

Optimize 24x7 AvailabilityAdministrationPerformance SecurityApplication MaintenanceApplication Re-Engineering

Partner Offerings


North American Van Lines

North American Logistics is focused on high touch, high service levels and high value segment Major clients include Hewlett Packard, Compaq and Dell Services include transportation, distribution, manufacturing support and business controls Business growing at 10-20% per year, mostly through new, additional services

Business problems/challengesOrder receiving and logistics trackingOrder to invoice time cycleLogistics centers turnaround

Systems support for new services (ie. installation)


nAL Mobile project (Phase 2)

Project size: $710K (License $280K, PS $430K)

Description:

Mobile field service application integrated with SAG and non-SAG backend systems

Repeatable, YesPartnering with Extended Systems, Inc. for mobile solution called One BridgeOur Extended System partner brought valuable expertise in mobile and was key to securing this phase of nAL’s businessIntegrated the One Bridge Toolset with EntireX and Tamino

Cellular

EntireX

ViaPhoneTamino

Bill of Lading

Asset Mgmt

Warehouse Mgmt

Product Tracking

LEGACY SYSTEMS


“Diogenes” / xDWS Project size

Licenses: 285 K€ PS: 1.3 mio. €

ProblemReduce the effort and expense to maintain and adapt automation and test systems in the areas of development, production and service.

Solution Seamless development of automotive electronic control units with function

prototyping, production code generation and hardware-in-the-loop test based on common XML based DTD’s (xDWS / Tamino).

BenefitsTight integration of all supply-chain-members. Cost-reduction. Better Quality. FASTER development!

Tamino in Projects:DaimlerChrysler


Tamino in Projects:Vodafone Spain

Project size : 2.2 mio. €

Licenses: 1.4 mio. € PS: 740 K€

Description: Electronic Bills Presentation Solution Phase: A system that enables its clients and its internal

users to see their invoices and the billing information through Internet, using XML technology (Tamino XML Server).

Archiving System Solution Phase: Prepare a corporate platform to archive different types of documents coming from other applications (SAP, Lotus Notes, MS Exchange,…) using Ixos products.

1st Quarter 2003Financial Report


Revenue Q1 2002/2003

30.6

40.0 -24%

(-21%)

47.4

21.9

0.3

0.3

51.5

24.6

-8%

(+3%)

-11%

(-2%)

116.4 100.2

Q1 2002 Q1 2003

-14%(-6%)

(...) in constant currencies

(in mio. euros)

Other

Project Services(Consulting and Implementation)

Maintenance(24x7 world wide)

Licensing of Software Products

Product Business


Licensing Revenue by Product Group Q1 2002/2003

Q1 2002 Q1 2003

Solutions

Tamino

EntireX

Enterprise Transaction

Other

11%

4%

60%

15%

10%

56%

18%

8%

8%

24.6 21.9

10%

(in mio. euros)


Revenue by Region Q1 2002/2003

33.139.5

Americas Southern / Western Europe

Northern EuropeAsia-SA

Central / Eastern Europe

Actual Q1 2002

Actual Q1 2003

7.8

24.4

7.2

0.1

Project ServicesMaintenance Licensing Other

4.1

21.3

7.4

0.3

Actual Q1 2002

Actual Q1 2003

Actual Q1 2002

Actual Q1 2003

Actual Q1 2002

Actual Q1 2003

28.029.3 16.917.5 23.030.4

18.6

6.8

3.8

0.1

16.8

6.7

4.5

3.5

9.7

4.3

1.8

9.4

5.6

0.1

10.4

10.6

9.3

0.1

8.3

10.2

4.4

0.1

0.0

0.0

(in mio. euros)


Operating EBITA by Region Q1 2002/2003

Q1 2002 Q1 2003

7.5

6.9

+9%

2.9 2.9 3.4

1.2

2.2

4.0

+0% +82% -65%

Americas Southern / Western Europe

Northern EuropeAsia-SA

Central / Eastern Europe

(in mio. euros)


R&D by Product Group

Q1 2002 Q1 2003

30%

35%

25%

10%

36%

20%

16%

4%

18.0 15.2

24%

0%

Solutions

Tamino

EntireX

Enterprise Transaction

Other

(in mio. euros)


Result Q1 2002/2003

2003 2002 Operating EBI TDA 9.0 5.6

Depreciation -2.2 -2.7

Operating EBI TA 6.8 2.9

Goodwill Amortization -5.5 -5.5

Financial income +1.0 +0.6

Operating result 2.3 -2.0

I ncome from investments 0.0 +9.3

Restructuring expenses -23.8 -11.3

Profit before tax -21.5 -4.0

Taxes +11.8 +1.6

Net income -9.7 -2.4

Earnings per share (in euro) -0.36 -0.09

(in mio. euros)


Assets March 31, 2003

Dec. 31, 2002

Liabilities March 31, 2003

Dec. 31 2002

Fixed Assets

215.7

221.1

Shareholders’ equity

216.9

214.5

I nventories 5.7 4.6 Provisions 124.9 108.7

Trade receivables and other assets

125.2 132.6 Liabilities to Banks 0.0 0.0

Cash and cash equivalents

80.9

75.4

Other liabilities 29.9 35.9

Prepaid expenses

40.5

7.1

Deferred income

96.3

81.7

Total

468.0

440.8

Total

468.0

440.8

Balance Sheet(in mio. euros)


Cash flow Q1 2002/2003

Q1 2003

Q1 2002

Net cash used in / provided by operating activities

11.5 12.1

Net cash used in / provided by investing activities

-2.0 5.6

Net cash used in / provided by financing activities

-2.9 -27.0

Change in cash funds from exchange rate movements, changes in group structure for cash funds

-1.1 0.1

Net change in cash and cash equivalents

5.5 -9.2

Cash and cash equivalents as of December 31 75.4

50.3

Cash and cash equivalents as of March 31

80.9

41.1

Operating cash flow per share

0.42

0.44

(in mio. euros)


Our medium-term goal is a Profit Margin of 15%

(operating result = PbT excluding one-time effects)

Savings potential of 55 to 60 million euros annually

Increase in profitability

Alignment of the organization in the regions

Focusing R&D on the future portfolio

Reduction of overhead

Headcount reduction ca. FTE 300

Approx. 1/3 of the savings will be reinvested in the

development of new solutions

Cost cuts in 2003 cover the restructuring expenses

Rightsizing of the Company


Full year product revenue same level as 2002

(at constant currency)

Maintenance ensuring about 45% of total revenue

Project services continue to show weakness

Positive operating result (about the amount of 2002)

Positive operating cash flow

Positive net income

Outlook 2003

Software AG Stock information(as of June 30, 2003)


Shareholder Structureas of June 30, 2003 (Number of Shares: 27,3 mio.)

Software-AG-Foundation

31.6%

Private Investors

11.5%

InstitutionalInvestors

56.9%

Germany36.2%

UK14.9%

Rest of Europe35.7%

USA13.1%

Shareholder Structure Free Float by Region

Market Cap: 325 mio. euros Free Float: 68.4%

Major Funds:Classic Fund Aktiengesellschaft, LiechtensteinCapital Group Companies, Inc., USAFidelity International Ltd., USA

Rest of World: 0.1%


24.03.03 Entry in TecDAX

Software AG

MDAX

Nemax/TecDAX

Share Price Developmentas of June 30, 2002 – June 30, 2003

SAG share price:30.06.02: 14.30 €30.06.03: 11.90 €


Top Ten TecDAX as of June 30, 2003

Stock Turnover (in Euro)

I ndex Weight (in % )

EPCOS AG

2,491,266,923 7.81

T-ONLINE INTERN.

2,200,613,731 10.93

QIAGEN

1,022,178,127

9.96

SINGULUS

951,385,894 7.92

MOBILCOM AG

690,050,909 2.00

AIXTRON AG

577,685,595 3.14

BB BIOTECH

370,149,580 9.69

UTD.INTERNET AG

239,853,722 5.15

Software AG

235,174,363 3.15

NORDEX 175,905,977

0.48

(in euros)


Key Figures per Share(in euros)

2002 2001 2000 1999 Earnings

1.23 1.44 2.55 1.47

Operating cash flow

1.49 3.05 -0.71 2.70

Dividend 0.00 0.43 0.38 0.28

Price High

44.10 87.00 167.00 63.55

Price Low

8.41 35.90 57.00 22.50

Price / earnings ratio at fiscal year-end

7 30 32 41

software ag investor roadshow usa july 2003. 2investor roadshow usa july 2003 software ag profile...

Documents

business customer

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adabasnatural slide

strategy slide

global business

sales slide

history slide

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