Beta Systems Software AG

ots Ad hoc-Service: BETA Systems Software AG BETA Systems Software Announces Preliminary 1999 Annual Results

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    Berlin  (ots Ad hoc-Service) -      BETA Systems Software Announces
Preliminary 1999 Annual Results

    * Sales increase 18% to approximately DM 90 million with new license revenue growth at 37% * Significant steps taken to improve profitability in North America

    BETA Systems Software AG (Neuer Markt: BSS), a leading provider of innovative systems management software, announced preliminary (unaudited) results for the year ended December 31, 1999. Revenues in 1999 were approximately DM 90 million, up 18% over 1998. The Company reported a net loss of DM 2.9 million after application of a tax credit of DM 1.9 million. In 1998, the Company reported a net loss of DM 18.6 million which included a one-time charge of DM 19.6 million related to an acquisition.

    Sales of new licenses, the core component driving the Company's revenue growth, rose by 37% to approximately DM 23 million due in large part to the contribution of the storage management solutions of BETA Systems of Canada (formerly Harbor Systems, which was acquired in December 1998). Revenues from version upgrades decreased as expected, since the majority of Y2K-compliant product versions were delivered in 1998. Maintenance revenue was up 28% over 1998. Revenue from CPU upgrades was behind expectations due to a significant slowdown in hardware purchases related to customers' Y2K concerns. The revenue shortfall and high overhead cost levels in the Company's North American operations, incurred in building an infrastructure for future revenue growth there, combined to produce a pre-tax loss of DM 4.8 million for the year. The Company has taken significant steps to improve the revenue growth and profitability of its operations in the US and Canada. As an indicator of the Company's current expectation of future profits in North America resulting from restructuring actions discussed below, the Company was able to utilize its losses there to generate an income tax credit.

    The Company made significant inroads in 1999 in implementing its strategy to expand the market reach and depth of its product portfolio for cross-platform solutions to secure future revenue growth. In August, the Company concluded an agreement with e-Security, Inc., Naples, Florida whereby it will market in Europe its unique enterprise security software solution. In November, the Company acquired the rights to distribute Sysclone, which extends the Company's product line of administration tools for OS/390. In 1999, the Company also expanded its capability in the market of cross-platform solutions with the introduction of BETA 52 Network Storage Manager for NT, a software solution for storage management in distributed environments and BETA 99 Distributed Document Library, both developed in house.

    In order to improve profitability in the current year, the Company began implementing in 1999 a number of restructuring measures announced at the annual meeting of shareholders. Effective January 17, 2000, the Company sold the assets of its US subsidiaries (sales and development), including its workload product suite which it will continue to distribute in Europe. The majority of the workforce was transferred to the purchaser, Allen Systems Group ("ASG"), a major supplier of enterprise productivity software. Simultaneously, the Company entered into an extensive distribution partnership with ASG whereby it will offer ASG's products in Europe, and ASG will distribute the Company's products in North America. In a separate action, the Company moved its storage management business unit, acquired through the acquisition of Harbor Systems, into a new subsidiary based in the Denver, Colorado area and hired new management to run the company. The new company will focus on the development, sales and marketing of complete solutions for storage management worldwide. In commenting on the restructuring actions, member of the management board Christiane Hotz-Firlus said, "The restructuring of our US operations combined with the ASG partnership and the realignment of our storage management business under new management positions the North American operations for a return to profitability. In addition, the expansion of our product portfolio through strategic partnerships and the introduction of new cross-platform solutions will contribute to the growth and profitability this year of our operations both in Europe and the US."

    The Company expects to report detailed results of operations for 1999 in the middle of March.


    Gudrun König Manager Public Relations / Investor Relations

    Phone: ++49 (30) 399 26-307 Fax: ++49 (30) 399 26-294 EMail:

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