SAS REVENUE SURPASSES $1 BILLION

SAS Institute, a industry leader in integrated data warehousing and decision support, announced that revenue for 1999 grew by 17 percent to a record high of $1.02 billion. Continued growth in SAS data warehousing software, which accounted for 60 percent of total revenue, was bolstered by demand for analytic customer relationship management (CRM) and data mining solutions.

The SAS Solution for CRM was the company's leading business solution in 1999, responsible for 38 percent of new software and services revenue. SAS continued to dominate the data mining and analytical market with revenue of $210 million in this segment, between 40 and 50 percent more than the total revenue of its nearest competitors.

Bob Moran, research vice president and managing director for decisionsupport research at Aberdeen Group, said, "SAS continues to demonstrate superior strength in analytical CRM, data warehousing and data mining. With its ability to apply these disciplines in an 'e' context as well, SAS is enabling its customers to obtain a complete picture - as a prelude to satisfying the requirements - of their own customers, suppliers and internal audiences."

Solving Real Business Problems

SAS Institute's 23rd consecutive year of growth reflects the company's success in moving into packaged business intelligence solutions. In 1999, more than 400 customers - including industry leaders like Bank of America, First Union, U S West, EMI Music and Sav-A-Centre - used the SAS Solution for CRM to better understand and, as a result, better serve their customers. Customers began using the SAS Solution for Supplier Relationship Management (SRM) to determine who their suppliers are, how reliable they are, and how their businesses can cut purchasing costs as much as 15 percent. Well received particularly with global corporations, CFO Vision software is a consolidation and reporting solution for financial management that provides control over the production of timely, accurate financial statements, ad hoc and business intelligence reporting.

Hundreds of businesses, including Cigna Systems, MCI, Bank of Montreal, Glaxo Wellcome and Nortel were using SAS' IT Service Vision solution to analyze the performance and anticipate the needs of computer servers, telecommunications capacity, Websites and related services. Hundreds more were using SAS software to measure the performance of their entire business through a balanced scorecard approach to management. And just introduced in 1999, SAS Institute's HR Vision software, the only true human resources decision-support system on the market, was named one of the top 10 human resource products of the year by Human Resource Executive magazine.

These solutions are built on the foundation of SAS Institute's award-winning data warehousing and decision-support software. In 1999 SAS released Version 8 of the SAS System, which was the culmination of a five-year project to rearchitect the system for e-business. Key to this release are Enterprise Integration Technologies that allow organizations to pull data in from any operational system (from enterprise resource planning applications to campaign management systems to Web logs), add intelligence to it and push the resulting information out to users in their desired format, whatever their location. Both Enterprise Integration Technologies, and the Version 8 "information anywhere" platform underpin SAS Institute's new e-Intelligence solution, announced in February.

Complementing the "information anywhere" initiative was the launch of the first of a series of business intelligence portals, which allow people to reduce information overload by tailoring the information interface to their needs. Collaborative business intelligence allows users to capture and manage data-based business intelligence with relevant documents and other information that provide context to decision makers through a customizable portal.

Strategic Alliances

SAS aggressively pursued complementary technology, industry expertise and data to add value to its solutions. Relationships announced in 1999 include:

• Dun & Bradstreet - for an enterprise procurement solution including D&B's customer purchasing data and SAS' SRM solution.
• Ernst & Young LLP - to combine Ernst & Young's CRM methodology and the SAS Solution for Customer Relationship Management for strategic customer segmentation, valuation and other CRM activities.
• Pine Cone Systems - for supplementing SAS data warehouse performance evaluation solutions - including performance tuning, capacity planning, accounting and chargeback, and service-level compliance - with detail-level metrics of warehouse activity.
• Candle Corp. - for a solution that enables organizations to improve the effectiveness of Web marketing programs and deliver service-level agreements that are critical to e-business success.

Industries and Markets

With a long-standing global presence, half of SAS Institute's revenue is generated outside the U.S., with 37 percent coming from Europe, the Middle East & Africa (EMEA); 10 percent from Asia-Pacific/Latin America (APLA), and 53 percent from North America. In 1999, North American revenue increased by 20 percent (in U.S. dollars); EMEA revenue was up 20 percent (in local currency), and APLA revenue climbed 21 percent (in U.S. dollars).

SAS delivers solutions that cross a multitude of industries, with revenue coming primarily from banking/finance, 20 percent; manufacturing, 17 percent; government, 13 percent; insurance, 11 percent; telecom/utilities, 10 percent; sales/service, 10 percent; and healthcare, 10 percent.

Consulting Services

SAS Institute's consulting business, representing 6 percent of total revenue, grew by a third, slightly outpacing the percentage of revenue growth in software licenses. The company's goal is to provide quality consulting to support major corporate initiatives and solutions, while maintaining its focus on software development. SAS Institute's business alliances with management consultants, systems integrators and more than 300 Quality Partners support customer consulting needs. In January 2000 SAS entered a significant relationship with IBM, in which IBM Global Services formed a consulting practice specializing in SAS solutions.

In 1999 SAS launched a certification program, well received among consulting partners, to verify the skill level of SAS programmers. To date, more than 1,200 individuals have received certification.

Outlook for 2000

In SAS Institute's theory of "e-volution" for new-millennium businesses, the massive amounts of data generated from Internet applications - whether from eCRM, e-supply chain, e-R&D, or any other aspect of e-business - will become one of the most prized assets of any organization. SAS president and CEO Jim Goodnight said, "As organizations begin to accumulate vast amounts of data from Web interactions, they'll need a scalable, trusted e-intelligence solution to gain and share knowledge from that information. The leading focus for SAS is rolling out e-intelligence solutions that will give our customers the power to know."

In February SAS announced plans to deliver the SAS Solution for eIntelligence. The flagship offering in the solution, code-named e-Discovery, addresses customer and supplier relationships. This offering allows organizations to increase the likelihood of response to targeted promotions by basing marketing programs on target-group information gathered from multiple contact points. The integrated solution helps turn Web visitors into customers by helping organizations design sites that lead to sales in the fewest number of clicks. To minimize risks inherent in online supplier relationships, eDiscovery analyzes data from multiple channels and delivers e-intelligence to guide decision makers. In addition to e-Discovery, the IT Service Vision offering addresses IT service levels and the WebHound offering addresses clickstream analysis.

SAS also will continue its work on packaged business solutions, which will be enhanced with greater integration and collaborative capabilities.

In 1999 SAS launched the first in a series of CRM solutions, introducing the Churn Management Solution, soon to be followed by solutions for fraud analysis and cross-selling. SAS is also completing work on a packaged balanced scorecard solution, Strategic Vision, with availability expected before the end of 2000. The SAS Solution for Balanced Scorecard provides software and services to monitor strategic internal- and external-facing processes as they relate to corporate health. It is the first balanced scorecard solution to not only foster company-wide communication, but also provide the means for employees to collaborate with each other and management.

SAS Institute's commitment to advancing its software and solutions is reflected in the company's extraordinary investment in research and development. In 1999 SAS reinvested 30 percent of revenue into R&D, more than double the 14 percent industry average of the top 50 software vendors.¹

About SAS Institute

SAS Institute, the world's largest privately held software company, is a leader in decision support and data warehousing, providing integrated enterprise information-delivery and e-business solutions. Founded in 1976, the Institute markets packaged business solutions for vertical industry and departmental applications, as well as an integrated suite of software tools and consulting services. These allow departments and agencies to transform the wide variety of data within their organizations into information that business users and researchers need to make better decisions. SAS software and services are used at more than 33,000 business, government, and university sites in 115 countries. SAS Institute's 1999 revenues totaled $1.02 billion.

Please visit SAS Institute's Website: www.sas.com.

Contact SAS Institute Inc, Pamela Meek or Les Hamashima 919-677-8000, ext. 7883 pamela.meek@sas.com.

¹Calculated from figures reported in the Software Magazine 1999 Software 500.