Annual Report 2002 - Software AG

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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
euros to 149.2 million euros. This item primarily comprises the cost of subcontractors employed on a project-by-project basis, third-party sales commissions, travel expenses and in-house IT costs. Restructuring charges amounted to 17.6 million euros. The company posted a slight negative financial result in 2002. The streamlining of our equity portfolio led to financial assets being written down by 3.3 million euros. Despite the poor market environment, Software AG posted operating income before taxes of 31.6 million euros. Income before taxes of 50.7 million euros includes proceeds from the sale of holdings in SAP SI AG to a value of 36.7 million euros, and restructuring costs of 17.6 million euros. Reconciliation of income before taxes to operating income before taxes MANAGEMENT REPORT EBITDA (earnings before interest, tax, deprecation and amortization) margin increased, adjusted for income and expenses attributable to other accounting periods, rose slightly from 17.1 in 2001 to 17.4 percent in 2002. Consolidated net income for the year was 33.5 million euros, with a slightly improved margin of 7.1 percent. The Company posted earnings per share of 1.23 euros. in million EUR 2002 2001 Change in % Income before taxes 50.7 70.3 -27.9 Net proceeds from the sale of SAP SI AG shares 36.7 - - Restructuring costs 17.6 20.7 -15.0 Operating income before taxes 31.6 91.0 -65.3 EBITDA and Income before taxes EBITDA Income before taxes 2002 2001 2000 1999 50.7 70.3 70.1 66.3 82.7 100.4 114.1 112.9 31
Page 1 and 2: Annual Report 2002
Page 3 and 4: Table of Contents Letter to our sto
Page 5 and 6: Planning is the key to realizing yo
Page 7 and 8: Professional services and sales org
Page 9 and 10: Aug. 1 Natural Engineer WebStar mak
Page 11 and 12: today’s quoted companies. Softwar
Page 13 and 14: tions. The Swiss company leverages
Page 15 and 16: ister. The new solution is a signif
Page 17 and 18: One step ahead In today’s fast-mo
Page 19 and 20: transparency in business processes,
Page 21 and 22: do not simply offer software compon
Page 23 and 24: importance in the optimization of b
Page 25 and 26: Web-enabling Natural-built applicat
Page 27 and 28: Sales and marketing: Broadening the
Page 29: training for customers implementing
Page 33 and 34: Breakdown of costs in million EUR 2
Page 35 and 36: and furnishings. Investment in soft
Page 37 and 38: Employees: Our most important resou
Page 39 and 40: Research and development: Keeping o
Page 41 and 42: Events subsequent to the balance-sh
Page 43 and 44: There´s more than one way to pot t
Page 45 and 46: Equity and liabilities FINANCIAL ST
Page 47 and 48: Statement of Fixed Asset Movements
Page 49 and 50: On January 1, 2002, the Company acq
Page 51 and 52: Consolidated balance sheet and cons
Page 53 and 54: B. Notes to the consolidated balanc
Page 55 and 56: Frankfurt Stock Exchange over the f
Page 57 and 58: C. Notes to the consolidated income
Page 59 and 60: Europe Western Europe Southern Euro
Page 61 and 62: Notes to the cash flow statement
Page 63 and 64: Dietrich-Kurt Frowein Place of resi
Page 65 and 66: Financial Calendar 2003 April 24, 2
Page 67 and 68: workbench) for designing, developin

Annual Report 2002 - Software AG

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