SSA Global

SSA Global

March 16, 2005 16:05 ET

SSA Global Reports Second Quarter 2005 Results



MARCH 16, 2005 - 16:05 ET

SSA Global Reports Second Quarter 2005 Results

CHICAGO--(CCNMatthews - Mar 16, 2005) -

SSA Global™, a leading provider of extended enterprise solutions and
services, today announced financial results for the second quarter ended
January 31, 2005.

Total revenue for the second quarter rose to $178.0 million, an increase
of 14 percent from $156.0 million in the second quarter of last year.
Software license revenue was $51.0 million, up 35 percent from the
second quarter last year. Software license revenue represented 29
percent of total revenue for the quarter ended January 31, 2005 compared
to 24 percent for the second quarter last year.

Earnings before interest expense, income taxes, depreciation and
amortization (EBITDA) for the second quarter was $32.0 million, an
increase of 2 percent, compared to $31.4 million in the prior year
quarter. The growth percentage in EBITDA was lower than total revenue
growth during the second quarter largely as a result of investments in
market initiatives to meet the company's intermediate and long-term
business objectives. Net income for the second quarter 2005 was $8.0
million this year compared to $8.3 million for the second quarter last

During the second quarter, North America contributed 42 percent of total
revenue, while Europe, Middle East and Africa (EMEA) contributed 41
percent and Asia-Pacific/Japan and Latin America contributed the
remaining 17 percent of total revenue. In the quarter ended January 31,
2005, 660 software license contracts were signed, including 66 new
customers purchasing extended enterprise resource planning solutions.

"As demonstrated in our 2005 second quarter results, we have continued
to execute on our corporate strategy to acquire market share and develop
customer share while making key investments in SSA Global's future,"
said Mike Greenough, chairman, president and CEO of SSA Global. "Our
growth in software license revenue, both organically and via earlier
acquisition activity, continues to provide evidence of our customers'
commitment to SSA Global," added Greenough.

About SSA Global

SSA Global™ is a leading provider of extended ERP solutions for
manufacturing, distribution, retail, services and public organizations
worldwide. In addition to core ERP applications, SSA Global offers a
full range of integrated extension solutions including corporate
performance management, customer relationship management, product
lifecycle management, supply chain management and supplier relationship
management. Headquartered in Chicago, SSA Global has 63 locations
worldwide and its product offerings are used by approximately 13,000
active customers in over 90 countries. For additional information, visit
the SSA Global web site at

SSA Global™ is the new corporate brand for product lines and
subsidiaries of SSA Global Technologies, Inc. SSA Global, SSA Global
Technologies and SSA GT are trademarks of SSA Global Technologies, Inc.
Other products mentioned in this document are registered, trademarked or
service marked by their respective owners.

Presentation of Non-GAAP Financial Measures

The non-GAAP financial measure presented in the text of this press
release, EBITDA, is intended to provide a useful supplement to cash flow
from operations in understanding cash flows generated from operations
that are available for debt service (interest and principal payments)
and further investment in research and development and acquisitions. We
believe EBITDA provides meaningful additional information that enables
management to monitor our ability to generate cash and provides
investors an understanding of cash flow performance over comparative
periods. We also believe EBITDA reflects the underlying economics of our
business and aligns with the operating cash flow performance of our
company as measured under GAAP. However, EBITDA is not a measure of cash
flow performance under GAAP and should not be considered in isolation or
as a substitute for cash flows from operations, or other cash flow
statement data prepared in accordance with GAAP, as a measure of
liquidity or as indicative of whether cash flows will be sufficient to
fund our future cash requirements. Moreover, EBITDA is not a
standardized measure and may be calculated in a number of ways.
Accordingly, the EBITDA information provided in this press release might
not be comparable to other similarly titled measures provided by other

Forward-Looking Statements

These materials may contain "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Any statements that are not statements of historical fact
(including without limitation statements to the effect that SSA Global
or its management "believes," "expects," "anticipates," "plans," "looks
forward" and similar expressions) should be considered forward-looking
statements. Any "forward-looking statements" in these materials are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those stated. Many important factors
could cause SSA Global's actual results to differ materially from those
expressed in the forward-looking statements made by or on behalf of SSA
Global, including, without limitation, the size and timing of license
transactions, the effect of economic conditions on the spending patterns
of SSA Global's customers, the impact of competitive products and
services, the effect of fluctuations in the economy and local currency,
the ability of SSA Global to accurately forecast revenue, the ability to
maintain adequate cash flow, the ability to maintain a satisfactory
credit facility, the relationship between SSA Global and its affiliates
and suppliers, the ability to manage costs and expenses, the
availability of qualified resources, the ability to develop and enhance
products, and other unknown risks including those as may be detailed in
other SSA Global filings, reports and releases. SSA Global undertakes no
obligation to revise or publicly update these forward-looking
statements, whether as a result of new information or otherwise.

SSA Global Technologies, Inc. and Subsidiaries
Three and Six Months Ended January 31, 2005 and 2004 (in millions)

Three Months Ended Six Months Ended
January 31, January 31,
-------------------- -----------------
2005 2004 2005 2004
---------- -------- ------- --------
License fees $51.0 $37.8 $92.4 $68.0
Support 86.9 81.6 172.3 158.3
Services and other 40.1 36.6 79.8 71.4
---------- -------- ------- --------
Total revenues 178.0 156.0 344.5 297.7

Cost of revenues:
Cost of license fees 10.3 8.0 20.5 14.9
Cost of support, services and
other 49.1 42.5 95.7 79.4
---------- -------- ------- --------
Total cost of revenues 59.4 50.5 116.2 94.3
---------- -------- ------- --------
Gross margin 118.6 105.5 228.3 203.4

Operating expenses:
Sales and marketing 46.6 37.0 90.9 72.1
Research and development 25.5 23.7 49.8 46.1
General and administrative 23.1 20.7 45.6 43.6
Amortization of other
intangible assets 6.4 5.7 12.8 11.4
Restructuring charge (benefit) - 1.1 (1.5) 1.3
---------- -------- ------- --------
Total operating expenses 101.6 88.2 197.6 174.5
---------- -------- ------- --------
Operating income 17.0 17.3 30.7 28.9

Other income (expense):
Interest expense - related
parties (4.1) (3.4) (8.0) (6.4)
Interest income - other 0.1 - 0.1 0.1
Other income 0.2 1.3 1.2 0.3
---------- -------- ------- --------
Total other expense (3.8) (2.1) (6.7) (6.0)
---------- -------- ------- --------
Income before provision for
income taxes 13.2 15.2 24.0 22.9
Provision for income taxes 5.2 6.9 9.6 9.2
---------- -------- ------- --------
Net income $8.0 $8.3 $14.4 $13.7
========== ======== ======= ========

SSA Global Technologies, Inc. and Subsidiaries
Three and Six Months Ended January 31, 2005 and 2004 (in millions)

Three Months Ended Six Months Ended
January 31, January 31,
-------------------- -----------------
2005 2004 2005 2004
--------- -------------------- ------

EBITDA $32.0 $31.4 $62.0 $54.2
Interest paid (2.3) (1.8) (4.6) (3.2)
Income taxes paid (0.4) (0.8) (1.1) (1.2)
Working capital changes (4.0) 1.0 (36.1) (34.3)
--------- --------- -------- ------
Cash provided by operations $25.3 $29.8 $20.2 $15.5
========= ========= ======== ======


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