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Operating income up 53 percent
Revenue up 36 percent
US sales exceed expectations
International revenue accounts for some 80 percent
Distribution agreement with IBM Global Services for Tamino

Bracknell, UK, 08 May 2001 — Software AG, Darmstadt, has announced significant revenue and earnings growth for the first quarter of 2001. Despite a rather difficult climate in the IT industry as a whole, the company was able to continue growth in line with expectations. Following its February takeover of US distribution partner Saga Systems, Inc., the successful integration of the new subsidiary led to a strong increase in US sales, accounting for more than 30 percent of total group revenue. Furthermore, a recently signed distribution agreement with IBM Global Services represents the entry point for Software AG's e-business products into the offering of the world's largest systems integrator.

First-quarter earnings were particularly positive. Operating income (earnings before interest, tax, depreciation, amortisation and one-time effects) grew 53 percent to 21.4 million euros (previous year 14.0 million euros). A major contributing factor to this growth was the successful integration of US distribution partner Saga Systems, Inc., which was acquired by Software AG in February 2001. As previously announced, Software AG recognised a one-time restructuring charge of 20 million euros in the first quarter.

Furthermore, goodwill for the Saga takeover was amortised for the first time; the amount for the first quarter was 3.6 million euros. These items caused a total net loss of 1.5 million euros for the first quarter 2001.

Software AG achieved first-quarter revenue of 128.4 million euros, up 36 percent from the first quarter of 2000 (94.5 million euros). With a 52 percent increase over last year software license revenue showed the highest growth at 42.6 million euros (previous year 28.1 million euros). This amount includes 4.1 million euros generated from the sale of software technology acquired with Saga.

Maintenance revenue grew 41 percent to 41.9 million euros (previous year 29.7 million euros). The seamless integration of long-standing US customers had a very positive impact here as well. The professional services division continued to focus on high-margin projects and grew 19 percent to 43.4 million euros (previous year 36.6 million euros).

Through its expanded sales force in the US, Europe's largest system software vendor has broadened its presence on a global scale. North America accounted for 31 percent of first-quarter revenue (previous year 14%); Europe, excluding Germany, accounted for 38 percent (previous 45 %), Germany 22 percent (previous year 29%) and the rest of the world 9 percent (previous year 12%).

Mark Edwards, Managing Director, Software AG UK, comments, “In the UK we have witnessed significant upturn in the company’s revenue to the extent that we are now a major contributor to the European figures. Our new UK distribution partners cannot fail to be encouraged by these results, and we are committed to identifying and developing e-Business and integration opportunities with them.“

Software AG's strategically most important segment – software licenses – reported continued dynamic growth in the first quarter. Performance of classical products Adabas and Natural was particularly strong. Revenue from these products achieved a 56 percent increase over the same quarter last year totaling 25.7 million euros (16.5 million euros in 2000). This figure represents 60.5 percent (previous year 58.9%) of total license revenue. This growth, which is significantly higher than expected, can be attributed to the fact that Software AG's customers intensified the rationalisation and automation of their business processes.

Due to forecasts of an increasingly deteriorating economy, many companies are preparing themselves for difficult market conditions by investing more than expected in their existing IT infrastructures. For this reason, Software AG’s mainframe products were not affected by the frequently quoted decline of the IT-market. This was also the case in the USA.

The company's new electronic business products also achieved good growth, up 79 percent. At 13.4 million euros (7.5 million in 2000), they accounted for 31.3 percent (26.6% in 2000) of license revenue. Due to revised priorities, many companies reduced or postponed their investments in Internet-based e-commerce projects. As a result, first-quarter revenue from Tamino XML Database only came close to that of last year. Software AG expects interest in the XML platform to regain strong momentum during the course of the current year. In contrast, sales of EntireX – software for integrating Internet applications and enterprises' internal IT systems – were considerably higher than last year. Significant enhancements to this product's functionality are currently being made, including the addition of the adapter technology acquired with Saga. Customers will soon be able to develop Internet-enabled applications that can access data in standard business applications like ERP or CRM syst!
ems with no further programming necessary. According to market analysts, Software AG's developments in this area will make it a major player in the Total Business Integration arena – an important growth market.

Software AG announced a major expansion of its partnership with IBM. A recently signed cooperation agreement provides for the inclusion of Software AG's e-business products in IBM Global Services' product and service offering. For the first time the two companies have agreed to market Tamino with IBM’s WebSphere Application Server and to cooperate on the implementation of joint customer solutions. Tamino XML Database provides the foundation for the new alliance.

Software AG will optimise its product for the WebSphere Application Server, which will be bundled with Tamino and offered to customers as a package. This offering provides developers with a high-performance technology platform – enhanced by XML technology – on which to develop next-generation e-Business applications. The cooperation also includes products Tamino™ X-Bridge, Tamino™ X-Studio and EntireX.

Software AG is currently forecasting strong revenue growth of around 50 percent for the second quarter 2001 along with a very positive operating income.

about Software AG

Software AG, Darmstadt, Germany, is 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 some 3,500 employees and representatives in over 70 countries, Software AG expects revenues to exceed euros 600 million in 2001. Its distribution and technology partners include market leaders such as IBM, Microsoft and SCO as well as innovative IT solutions providers like Extensibility, Softquad and Sequoia. Software AG’s products control the central IT processes of thousands of renowned companies worldwide. Some examples of these are Lufthansa, British Sky Broadcasting, ZDF, Dresdner Bank AG, Swiss Post, DaimlerChrysler, Deutsche Bahn AG (German Rail), BP and VIAG Interkom. Software AG is listed on the Frankfurt Stock Exchange (MDAX, Security identification number 724264 / SOWGn.F). Software AG’!
s UK offices are located in Bracknell and Derby. More information at

For more information on Software AG, please contact:

Julia Davis
Software AG
Marketing Manager
Tel: 01344 403 800

Robert Lyszyk/Tamsin Keynton
MCC International
Tel: +44 (0)1962 888100
Fax: +44 (0)1962 888125

This press release was distributed by ResponseSource Press Release Wire on behalf of MCC International Ltd in the following categories: Consumer Technology, Personal Finance, Business & Finance, Computing & Telecoms, for more information visit