Annual Report 2002 - Software AG

30
Financial position and result of operations
Lower revenue
Total consolidated revenue fell 19 percent to 475.0
million euros in 2002. License sales, maintenance
and professional services experienced contrasting
fortunes.
Maintenance revenue grew from 196.0 million
euros to 200.9 million euros. However, when comparing
year-on-year results, it is important to note
that our American-based subsidiary contributed to
consolidated revenue for only eleven months of
2001. This was matched in 2002 by currency translation
differences impacting revenue by around the
same value. Maintenance revenue is an important
indicator of customer satisfaction and loyalty. In the
current poor climate in the IT industry, Software AG
is one the few companies to be bolstered by a longestablished
customer base and a service portfolio
that has gradually expanded over a number of years.
We posted software license sales of 113.0 million
euros in 2002, a drop of 43 percent in comparison
to the record year of 2001. This is a result
of weak demand for both new electronic business
technology and for updates and upgrades of existing
software systems operated by long-standing customers.
Enterprise transaction products accounted for
83.6 million euros, or 74 percent, of license sales.
The remaining 26 percent, totaling 29.4 million euros,
were generated by our electronic business prod-
Revenue 1999 - 2002
(in million EUR)
Professional Services
Maintenance
Licensing
Other revenue
Total revenue
ucts, with Tamino XML Server contributing 11.6 million
euros and EntireX 15.2 million euros.
159.6 million euros of total revenue are attributable
to professional services, 16 percent less than
in fiscal 2001. This is a result of low demand, and
corresponding excess capacity, in the IT services
market. As a result, we withdrew from unprofitable
segments, leading to the closure of a professional
services unit in the US. We were also able to adjust
capacity by reducing the use of subcontractors, who
are employed on a project-by-project basis.
Regional breakdown of revenue largely
unchanged
As in the past, Software AG's largest single market
was the US. Despite a weakening dollar, this region
contributed 33 percent of total consolidated revenue.
Europe accounted for 58 percent, with Germany
leading the field with more than 17 percent
of total revenue. The regional pattern remained very
similar to 2001.
Earnings per share of 1.23 euros
The Company responded to falling revenue in fiscal
2002 with a restructuring program. As a result, cost
of materials dropped 20.8 percent from 52.3 million
euros to 41.4 million euros. Personnel expenses
fell 8.3 percent to 258.0 million euros.
Other operating expenses declined 6.9 million
2002
2001
2000
1999
159.6 200.9
475.0
113.0
190.3 196.0 199.1 3.1
588.5
154.9 127.9
416.6
128.1 122.5 113.7
365.9
132.9
1.6
0.9
1.4