Software AG Reports Major Growth in 2001.Business Editors/Hi-Tech Writers RESTON, Va.--(BUSINESS WIRE)--Feb. 14, 2002 -- Operating earnings up 71 percent from last year -- Operating margin hits target of 20 percent -- 41 percent total revenue growth to 588.5 million euros ($521.4 million US) -- Growth spurred by US acquisition -- Product portfolio geared toward high-growth markets -- Entry into solutions market -- Licensing for TBI products expected to grow 30 percent in 2002 Software AG, Inc., the U.S. subsidiary of Software AG, Europe's largest systems software provider and a pioneer in XML XML in full Extensible Markup Language. Markup language developed to be a simplified and more structural version of SGML. It incorporates features of HTML (e.g., hypertext linking), but is designed to overcome some of HTML's limitations. technologies, today announced that Software AG has reported fourth-quarter 2001 revenue growth of 36 percent to 159.6 (2000: 117.4) million euros (141.4 million USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. (2000: 110.6)). Based on consolidated preliminary (unaudited) financial data, earnings before interest, tax, depreciation and amortization (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) totaled 37.2 million euros (2000: 22.8 m euros) (33 million USD (2000: 21.5)) adjusted for extraordinary income from equity sales). This represents growth of 63 percent over the same quarter last year. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improved to 23 percent (2000: 19%). Software AG grew its full-year 2001 revenue by 41 percent to 588.5 (2000: 416.6) million euros (521.4 million USD (2000: 392.5)). The company's EBITDA before acquisition-related extraordinary charges (20.2 m euros) increased 71 percent to 120.6 million euros (106.9 million USD). Last year's figure (adjusted for extraordinary income from equity sales) totaled 70.4 million euros (66.3 million USD). The operating margin rose to 20 percent (2000: 17%). "Despite unfavorable market conditions, 2001 was Software AG's most successful fiscal year in its over 30-year history," commented Software AG's CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Dr. Erwin Konigs. Software AG's 2001 pre tax profit - totaling 70.3 million euros (62.3 million USD) - included 40.0 million euros (35.4 million USD) in extraordinary items for restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and goodwill amortization associated with its acquisition of former US distribution partner, SAGA Saga, city, Japan Saga (sä`gä), city (1990 pop. 169,963), capital of Saga prefecture, W Kyushu, Japan. It is a railroad and coal-distribution center. Cotton textiles and ceramics are produced in the city. , on February 1, 2001. Last year's pre tax profit of 112.9 million euros (106.4 million USD), in contrast, benefited from one-time earnings from equity sales totaling 49.7 million euros (46.8 million USD). As a result, net earnings for 2001 were posted at 38.7 (2000: 66.6) million euros (34.3 million US (2000: 62.7)). Earnings per share totaled 0.60 euros (2000: 0.88) (0.53 USD (2000: 0.83)) in the fourth quarter and 1.44 (2000: 2.55) euros (1.28 USD (2000: 2.4)) in fiscal year 2001. Earnings per share as calculated according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. DVFA DVFA Deutsche Vereinigung für Finanzanalyse und Anlagenberatung (German) / SG were 0.77 (2000: 0.60) euros (0.68 USD (2000: 0.57)) in the fourth quarter and 1.33 (2000: 1.51) euros (1.18 USD (2000:1.4)) in fiscal year 2001. Revenue Growth with Classic Products Total fourth-quarter 2001 revenue was posted at 159.6 million euros (141.4 million USD). At 52.5 (2000: 32.9) million euros (46.5 million USD (2000: 30.99)), maintenance again proved to be a very reliable business. It grew 59 percent and was the second-largest contributor to total revenue. The focus of Software AG's professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. on higher-margin businesses was intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: , and revenue from this division went up 17 percent to 50.4 (2000: 43.1) million euros (44.7 million USD (2000: 40.6)). Licensing accounted for the largest percentage of revenue, up 34 percent to 55.5 (2000: 41.3) million euros (49.2 million USD (2000: 38.9)). Mainframe-based enterprise transaction technology - the company's traditional product line - generated 36.2 (2000: 23.5) million euros (32.1 million USD (2000: 22.1)). Thanks to their worldwide usage by major corporations, these products have benefited strongly from the current industry trend to improve productivity of existing IT systems and to achieve higher business automation. Robust growth was reported for this product line in the USA, as the current American customer base works predominantly with Software AG's classic products. New Process Integration Products for Growth Market In order to offset the on-going reluctance of organizations to invest in electronic business projects, Software AG has expanded its product offering. The common platform for all its new products is XML (Extensible Markup Language See XML. (language, text) Extensible Markup Language - (XML) An initiative from the W3C defining an "extremely simple" dialect of SGML suitable for use on the World-Wide Web. http://w3.org/XML/. ), the new format standard that significantly simplifies the exchange of data for electronic business processes. Software AG is considered the pioneer of XML technology and - with Tamino (now in its third version) - the market leader in XML servers. In October 2001, a widely enhanced release of the EntireX integration software was launched, which is designed to integrate business processes beyond company boundaries. This "integration server" will also support the XML standard. Gartner Group (company) Gartner Group - One of the biggest IT industry research firms. Address: Connecticut, USA. predicts that the market segment termed as TBI TBI 1. Thyroxine-binding index 2. Total body irradiation (Total Business Integration) will see particularly dynamic growth of some 33 percent annually over the next few years. To complete its product portfolio and continue to accelerate the pace of XML adoption, Software AG will develop and market comprehensive vertical solutions in cooperation with partners. Agreements have already been signed with Tridion, based in the Netherlands, and Stellent, a US vendor, for content management solutions. A product campaign targeted at the emerging TBI market was launched in Fall 2001 and will only start to have an impact on revenue in the course of 2002. In the fourth quarter of 2001, revenue from the electronic business products was significantly below expectations at 13.9 (2000: 13.8) million euros (12.3 million USD (2000: 13.0)), the EntireX product family generated 7.7 million euros (6.8 million USD) and Tamino 6.2 million (5.5 million USD). Together, these products represented a quarter of total licensing revenue. U.S. Acquisition--A Major Factor in Fiscal Year 2001 Revenue for the full year 2001 showed similar characteristics to those of the fourth quarter, growing 41 percent to hit an all-time high of 588.5 (2000: 416.6) million euros ($521.4 million USD (2000: 392.5)) mainly due to the acquisition of SAGA Systems The SAGA System is a role-playing game system that uses "fate cards" to determine the effects of actions. The cards have numbers, suits, positive and negative states, and role-playing cues that guide the gamemaster in telling the story and administering the game. (SAGA), in the U.S. Licensing revenue rose 50 percent to 199.1 (2000: 132.9) million euros (176.4 million USD (2000: 125.2)). Specifically, revenue from the classic products jumped 50 percent to 116.6 (2000: 77.5) million euros (103.3 million USD (2000: 73.0)). The electronic business products contributed 64.0 million euros (2000: 39.2) (56.7 million USD (2000: 36.9)), which represents a 63 percent growth. Their revenue barely profited from the US market, as sales only really started in the second half of the year. Maintenance revenue grew 53 percent to reach a record high of 196.0 million euros (2000: 127.9) (173.7 million USD (2000: 120.5)). Services achieved growth of 23 percent and contributed 190.3 million euros (2000: 154.9) (168.6 million USD (2000: 145.9)) to total revenue for 2001. The integration of SAGA, based in Reston, Virginia Reston is an internationally known planned community whose goal was to revolutionize post-World War II concepts of land use and residential/corporate development in American suburbia. , which was acquired by Software AG on February 1, 2001, has been concluded. The acquisition was well received by U.S. customers which is proven by the strong revenue figures for the classic products. In contrast, sales of the electronic business products - launched in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. in the second quarter of 2001 - got off to a slow start and stayed clearly below expectations. The acquisition, 327 million dollars in cash, was completely financed with Software AG's funds. "The U.S. arm of the company is dedicated to contributing to the success of Software AG by providing our customers, not only with the best quality products and services, but also the best solutions for new growth markets," said Gary Voight, Software AG, Inc.'s President and CEO. "We recently announced plans to market and sell the Stellent Content Management system along with our Tamino XML Server, providing customers with an integrated XML content management solution," Voight continued. "We also have formed the Trusted Content Alliance, a consortium spearheaded by Software AG, Inc., Lexign, Inc. and AuthentiDate, dedicated to the development of industry standards for secure, digital content management." One-Third of Revenue from USA Due to the acquisition, the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market represented 35 percent of worldwide revenue, up from last year's 13 percent. This has affected the total geographical revenue split. The second largest market is Germany with 17 percent (2000: 27%). The percentage of revenue from the other European countries declined to 39 percent, as compared to 51 percent in 2000. The rest of the world, including Asia, Australia, Africa and the Middle East, accounted for 10 percent (2000: 9%). Outlook For the current fiscal year, at least for the first half of 2002, Software AG does not expect any major changes in global economic conditions. Customers are expected to continue to invest predominantly in the improvement of their existing IT infrastructures in order to maximize productivity, cut costs and fully automate processes with their business partners. In this context, Software AG's classic products performed well in 2001 giving reason for expected revenue growth in 2002. The persisting trend of Total Business Integration will open up further growth potential for the new server products (Tamino; EntireX), which are increasingly being incorporated into partner solutions. As Software AG's servers are among the first in the world to use the XML standard, the corporation expects growing interest from distribution partners. All in all, Software AG expects licensing revenue from this segment to grow by around 30 percent. Demand for Web applications will see a gradual upward trend this year and will have a noticeable effect on the market in 2003. The robust performance of maintenance business is expected to continue in fiscal year 2002. The demand for systems maintenance for mission-critical processes along with the internationally acclaimed ac·claim v. ac·claimed, ac·claim·ing, ac·claims v.tr. 1. To praise enthusiastically and often publicly; applaud. See Synonyms at praise. 2. services of Software AG ensure stable income - even during difficult economic cycles. Software AG is now focusing on higher-margin projects for its services with specific offerings for vertical business segments with attractive IT budgets. Depending on an economic upswing Upswing An upward turn in a security's price after a period of falling prices. in the second half of the year, Software AG expects moderate growth in its services division for 2002. Software AG is targeting a single-digit total revenue growth in 2002. The corporation expects its operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before to hit 20 percent of revenue again for the current fiscal year. With measures such as tight cost management and cautious personnel growth, the corporation sets its priority on increased earnings over revenue growth. For more information on Software AG and to view the key figures, please visit http://www.softwareag.com/investor/engl/info/interim.htm#. About Software AG, Inc. Based in Reston, Va., Software AG, Inc. is a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Software AG, Europe's largest system software provider and a major global player offering cutting edge technology for data management and electronic business. Since 1998 the company has focused its development activities on XML products for the Internet. With about 3,500 employees and representatives in over 70 countries, Software AG had revenues of 588 million euros in 2001. Its distribution and technology partners include market leaders such as IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , Microsoft and Hewlett-Packard as well as innovative IT solutions providers like Extensibility, Softquad and Citrix. Software AG's products control the central IT processes of thousands of renowned companies worldwide to include Lufthansa, ZDF ZDF Zweites Deutsches Fernsehen ZDF Z-Firm Document Folder ZDF Zone Definition File , Dresdner Bank Dresdner Bank AG is one of Germany's largest banking corporations and is based in Frankfurt. History 19th century Dresdner Bank was established on 12 November 1872 through the conversion of financial institution Michael Kaskel. AG, DaimlerChrysler, Deutsche Bahn Deutsche Bahn AG (abbr. DB AG, DBAG or simply DB) is the successor of the former state railways of Germany: the Deutsche Bundesbahn of West Germany, the Deutsche Reichsbahn of the German Democratic Republic and the West Berlin VdeR. AG (German Rail), BP and VIAG Interkom. Software AG is listed on the Frankfurt Stock Exchange Frankfurt Stock Exchange The largest of Germany's eight securities exchanges, operated by Deutsche Borse AS. (MDAX MDAX Mid Cap Dax (German stock index) , Security identification number 724264 / SOWGn.F). For additional information, go to http://www.softwareagusa.com. Software AG, Tamino, and EntireX are trademarks of Software AG. All other product, service or company names mentioned are used for identification purposes only, and may be trademarks or service marks of their respective owners. Source of conversion rate information: http://www.oanda.com/convert/classic Conversion rate: 1 Euro = 0.88600 US Dollar on Monday, December 31, 2001 Conversion rate: 1 Euro = 0.94210 US Dollar on Sunday, December 31, 2000 |
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