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Software AG Investor R oadshow USA

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

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  1. Software AGInvestor 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% Investor Roadshow USA July 2003

  3. 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

  4. 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

  5. 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

  6. 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

  7. Strategy

  8. 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

  9. - 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. Marketing and Sales

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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

  21. 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

  22. 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

  23. 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

  24. 1st Quarter 2003Financial Report

  25. 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

  26. 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

  27. 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

  28. 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

  29. 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

  30. Result Q1 2002/2003 (in mio. euros) Investor Roadshow USA July 2003

  31. Balance Sheet (in mio. euros) Investor Roadshow USA July 2003

  32. Cash flow Q1 2002/2003 (in mio. euros) Investor Roadshow USA July 2003

  33. 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

  34. 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

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

  36. 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

  37. 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

  38. Top Ten TecDAXas of June 30, 2003 (in euros) Investor Roadshow USA July 2003

  39. Key Figures per Share (in euros) Investor Roadshow USA July 2003

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