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Software AG Investor R oadshow USA. July 2003. 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

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Software ag investor r oadshow usa

Software AGInvestor Roadshow USA

July 2003


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%

Investor Roadshow USA July 2003


Our History

1969

Software AG Foundedin Darmstadt

1991

Introduced FirstService Broker for Distributed Applications

2000

FirstMobile Fleet Mgmt System

1997

First company to port DCOM to Mainframe

1979

FirstMainframe 4GL

2001

SCP AwardReceived 5 years in a row

1985

Established First Platform Independent Language

1998

Introduced First XML Server

2002

Over 5000 Customers Worldwide

1973

Software AGAmericasFormed

1971

First MainframeDatabase

2001

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

1983

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

2001/2002

Named Global Market Leader for XML Servers, IDCProfitable

Investor Roadshow USA July 2003

3


Four Business Regions (share of revenue 2002):

  • Americas (35%)

  • Southern/ Western Europe (26%)

  • Central/ Eastern Europe (24%)

  • Asia/Northern Europe (15%)

Global Business

Investor Roadshow USA July 2003


Product Business

Project Services(Consulting and Implementation)

Licensing of Software Products

Maintenance (24x7 world wide)

Source of Revenue / Business Lines

(in mio. euros)

1999 2000 2001* 2002 2003

* first consolidation of US acquisition

Investor Roadshow USA July 2003


Results

417

366

475

589

(in mio. euros)

110

100

91

83

80

69

70

67

66

62

62

60

54

39

41

38

34

40

32

20

-19

0

1999 2000 2001* 2002

-20

* first consolidation of US acquisition

Revenue

Op. EBITA

Op. cash flow

Net profit

Operating result

-40

Investor Roadshow USA July 2003



Positioning of software ag
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

Investor Roadshow USA July 2003


- 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

XML Server

- native XML server

- Storage, management, publishing and exchange of XML documents

Investor Roadshow USA July 2003


Adabas and natural remain the main sources of revenue
Adabas and Natural remain the main sources of revenue

  • 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)

Investor Roadshow USA July 2003


Strategy realignment
Strategy Realignment

  • 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

  • Investor Roadshow USA July 2003


    Software ag portfolio evolving from technology to solutions
    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

    Investor Roadshow USA July 2003


    Expansion of portfolio with solutions

    Standardized

    solution platform

    Expansion of Portfolio with Solutions

    Current solution-business situation

    Future solution business

    Business Lines

    Modify a solution to meet customer requirements

    Project services/

    system integration

    Develop a custom application

    Delivery to customer

    Product business (Licensing and Maintenance)

    Core products (Tamino, EntireX,

    Adabas/Natural)

    Core products (Tamino, EntireX,

    Adabas/Natural)

    Investor Roadshow USA July 2003



    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

    The New Software AG Sales Approach

    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.

    Investor Roadshow USA July 2003


    Focus on industries
    Focus on Industries

    • Financial Services

    • Manufacturing

    • Pharma

    • Trade and Logistics

    • Media

    • Public Administration

    Regions will focus on their most important segments

    Investor Roadshow USA July 2003


    PennDOT: CRASH Accident System

    • American Samoa

    • Alaska

    • Arizona

    • California

    • Colorado

    • Delaware

    • Florida

    • Guam

    • Idaho

    • Illinois

    • Louisiana

    • Los Angeles, CA

    • Massachusetts

    • Minnesota

    • Mississippi

    • New Jersey

    • New York City, NY

    Digital Drivers License

    • 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

    CRIS: Rehabilitation System

    DMV :

    Department of Motor Vehicles

    SPARRS: Statewide HR System

    Software AG Experiencewith States and Cities

    Investor Roadshow USA July 2003


    Creating a technology vision to leverage existing it investments

    Deliver Solutions to New Business Challenges

    Increase

    Productivity & Profitability

    Migrate or Outsource

    Creating a Technology Vision to Leverage Existing IT Investments

    Improve Performance

    Open & Extend

    Existing Applications

    Investor Roadshow USA July 2003


    Techno logy vision strategy

    How We Build the Vision

    • Add New Solutions

    • Client Communication Management

    • Insurance Coverage Reporting

    • Pension Statement Management

    • XML Enablement

    • Content & Document Management

    • Case Management

    • Open Systems

    • XML Access

    • Web Services

    • Desktop Access

    • Data Exchange

    • Web Enablement

    • Data Integration

    • Self-Service Portals

    • Digital Library

    • Application Development

    Value to Customer

    Optimize

    • 24x7 Availability

    • Administration

    • Performance

    • Security

    • Application Maintenance

    • Application Re-Engineering

    Partner Offerings

    Software AG Technology Vision

    Technology Vision Strategy

    Quick Wins

    Investor Roadshow USA July 2003


    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/challenges

    • Order receiving and logistics tracking

    • Order to invoice time cycle

    • Logistics centers turnaround

    • Systems support for new services (ie. installation)

    Investor Roadshow USA July 2003


    Nal mobile project phase 2

    EntireX

    Tamino

    Cellular

    ViaPhone

    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, Yes

      • Partnering with Extended Systems, Inc. for mobile solution called One Bridge

      • Our Extended System partner brought valuable expertise in mobile and was key to securing this phase of nAL’s business

      • Integrated the One Bridge Toolset with EntireX and Tamino

    LEGACY SYSTEMS

    Bill of Lading

    Asset Mgmt

    Warehouse Mgmt

    Product Tracking

    Investor Roadshow USA July 2003


    Tamino in projects daimlerchrysler
    Tamino in Projects:DaimlerChrysler

    • “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).

    • Benefits

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

    Investor Roadshow USA July 2003


    Tamino in projects vodafone spain
    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.

    Investor Roadshow USA July 2003


    1 st quarter 2003 financial report

    1st Quarter 2003Financial Report


    Other

    Revenue Q1 2002/2003

    (in mio. euros)

    -14%

    (-6%)

    116.4

    100.2

    Project Services(Consulting and Implementation)

    0.3

    0.3

    -24%

    (-21%)

    40.0

    Product Business

    Licensing of Software Products

    30.6

    Maintenance(24x7 world wide)

    24.6

    -11%

    (-2%)

    21.9

    51.5

    -8%

    (+3%)

    47.4

    (...) in constant currencies

    Q1 2003

    Q1 2002

    Investor Roadshow USA July 2003


    Licensing revenue by product group q1 2002 2003
    Licensing Revenue by Product Group Q1 2002/2003

    (in mio. euros)

    Solutions

    Tamino

    EntireX

    Enterprise TransactionOther

    24.6

    21.9

    4%

    8%

    11%

    10%

    15%

    18%

    60%

    56%

    10%

    8%

    Q1 2002

    Q1 2003

    Investor Roadshow USA July 2003


    Revenue by region q1 2002 2003
    Revenue by Region Q1 2002/2003

    (in mio. euros)

    Americas

    Southern / Western Europe

    Northern EuropeAsia-SA

    Central / Eastern Europe

    39.5

    33.1

    29.3

    28.0

    17.5

    16.9

    30.4

    23.0

    0.1

    0.3

    7.8

    0.1

    0.1

    4.1

    0.0

    7.2

    7.4

    0.1

    10.4

    16.8

    8.3

    18.6

    0.0

    0.1

    3.5

    1.8

    9.3

    24.4

    21.3

    4.4

    5.6

    4.3

    3.8

    4.5

    10.6

    10.2

    9.4

    9.7

    6.8

    6.7

    Actual

    Q1 2002

    Actual

    Q1 2003

    Actual

    Q1 2002

    Actual

    Q1 2003

    Actual

    Q1 2002

    Actual

    Q1 2003

    Actual

    Q1 2002

    Actual

    Q1 2003

    Maintenance

    Licensing

    Project Services

    Other

    Investor Roadshow USA July 2003


    Operating ebita by region q1 2002 2003
    Operating EBITA by Region Q1 2002/2003

    (in mio. euros)

    Americas

    Southern / Western Europe

    Northern EuropeAsia-SA

    Central / Eastern Europe

    +82%

    +9%

    +0%

    -65%

    7.5

    6.9

    4.0

    2.9

    2.9

    3.4

    2.2

    1.2

    Q1 2002

    Q1 2003

    Investor Roadshow USA July 2003


    R d by product group
    R&D by Product Group

    (in mio. euros)

    Solutions

    Tamino

    EntireX

    Enterprise TransactionOther

    18.0

    15.2

    0%

    4%

    30%

    24%

    20%

    25%

    36%

    35%

    16%

    10%

    Q1 2002

    Q1 2003

    Investor Roadshow USA July 2003


    Result q1 2002 2003
    Result Q1 2002/2003

    (in mio. euros)

    Investor Roadshow USA July 2003


    Balance sheet
    Balance Sheet

    (in mio. euros)

    Investor Roadshow USA July 2003


    Cash flow q1 2002 2003
    Cash flow Q1 2002/2003

    (in mio. euros)

    Investor Roadshow USA July 2003


    Rightsizing of the company
    Rightsizing of the Company

    • 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

    Investor Roadshow USA July 2003


    Outlook 2003
    Outlook 2003

    • 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

    Investor Roadshow USA July 2003


    Sof tware ag stock information as of june 30 2003

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


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

    Shareholder Structure

    Free Float by Region

    Software-AG-Foundation

    31.6%

    Institutional

    Investors

    56.9%

    USA

    13.1%

    Germany

    36.2%

    Rest of Europe

    35.7%

    Private Investors

    11.5%

    UK

    14.9%

    Rest of World: 0.1%

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

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

    Investor Roadshow USA July 2003


    Software AG

    MDAX

    Nemax/TecDAX

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

    24.03.03 Entry in TecDAX

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

    Investor Roadshow USA July 2003


    Top Ten TecDAXas of June 30, 2003

    (in euros)

    Investor Roadshow USA July 2003


    Key figures per share
    Key Figures per Share

    (in euros)

    Investor Roadshow USA July 2003


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