Ubs Investment Banking Pitchbook

UBS Technology M&A
March 2005
Discussion of Current Industry Trends
STRICTLY CONFIDENTIAL
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1
Table of Contents
SECTION 1 M&A Market Conditions 2
SECTION 2 M&A Drivers and Considerations 8
SECTION 3 UBS Overview 14

SECTION 1
M&A Market Conditions
3
M&A Volume in the US
Large, strategic combinations are backProctor & Gamble / Gillette, JPMorgan / BankOne, Cingular / AT&T Wireless, Sprint / Nextel,
Oracle / PeopleSoft, Symantec / Veritas, Johnson & Johnson / Guidant and Wachovia / SunTrust
Significant financial sponsor activity in the middle market
Taking advantage of depressed market conditions and attractive debt markets
Current rebound in activity across all industries is reflective of a return to a healthier market
608
433
529
1,045
1,411
1,219
1,328
530
407
296
154
116
110
97
0
250
500
750
1,000
1,250
1,500
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
(
$

i
n

b
i
l
l
i
o
n
)
Volume up 41% in 2004
vs. 2003
Source: Securities Data Corporation
4
Technology M&A Activity
Technology M&A Volume Has Increased Steadily Since 2002 Lows
58 58
98
157
65
46 47
65
26
60
148
233
36
19 17
25
24
$85
$143
$485
$124
$64
15
22
65
95
$65
$311
$103
0
50
100
150
200
250
300
350
400
450
500
1997 1998 1999 2000 2001 2002 2003 2004
D
e
a
l

V
a
l
u
e

(
U
S
$

B
i
l
l
i
o
n
s
)
0
500
1,000
1,500
2,000
2,500
3,000
N
o
.

o
f

D
e
a
l
s
> $10bn
$1bn - $10bn
< $1bn
No. of Deals
1997 1998 1999 2000 2001 2002 2003 2004
No. of Deals 1,133 1,409 1,862 2,648 1,705 1,318 1,329 1,508
Source: Securities Data Corporation
Note: Oracle/PeopleSoft included as 2004 transaction, original hostile offer was first launched in Q3 2003
5
M&A Deal Activity is Intensifying
Market recovery in 2003 and stability in 2004 have increased corporate confidence and created an
environment conducive to M&A transactions
Technology companies are exiting defensive, "survive the downturn" mentality and reviewing strategic options
Recalibrating under invested businesses
Capturing upside as economic conditions continue to improve
Technology M&A deal volume increased 60% in 2004
M&A pipeline is expected to be strong for 2005
281
325
352
371 370
394
345
399
100
200
300
400
500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2003 2004
102.6
$64.2
$64.9
40
60
80
100
120
2002 2003 2004
(1%)
60%
Number of Announced Transactions
1
Technology M&A Deal Volume (US$ Billions)
1
179 additional transactions were announced in 2004 compared with 2003
Volume of discussions has intensified drastically
Source: Security Data Corporation
Note:
1 Oracle/PeopleSoft included as 2004 transaction, original hostile offer was first launched in Q2 2003
6
Current Trends in Technology M&A
TREND OVERVIEW RECENT TRANSACTIONS
Resurgence in
Deal Activity
A recovery in technology stock prices and increased corporate confidence have driven
M&A activity
Companies have restructured their businesses and increased earnings
Companies are eager to make acquisitions to capture upside as market conditions improve
2004 marked the return of the Technology M&A mega-deals
Deals over $1 billion represented 36% of deal value in 2004, versus 27% in 2003
Return of landscape shaping deals such as Symantec/Veritas, ARM/Artisan and the
completion of Oracle/PeopleSoft
IBM / Ascential ($1,100mm)
Symantec / Veritas ($13,521mm)
Lenovo Group / IBM PC Business
($1,300mm)
CA / Netegrity ($451mm)
Juniper / Netscreen ($3,816mm)
Oracle / Peoplesoft ($10,300mm)
ARM / Artisan ($933mm)

Sector
Consolidation
Sector consolidation continues to drive M&A
As companies refocus on growth, they are seeking opportunities to expand product
offerings, acquire new technology and achieve critical mass
Regulatory environments created product opportunities for acquirors and at the same time
forced smaller listed firms to re-assess the pros and cons of operating on a standalone basis
3Com / TippingPoint ($408mm)
Credence / NPTest ($663mm)
Serena / Merant ($380mm)
Cisco / NetSolve ($137mm)
Mm)

Stock
Consideration
Stock consideration has become a more favorable M&A currency as technology stock
prices have recovered
Most technology companies have been trading at or close to their three-year highs
In some recent deals, cash consideration has been linked to stock consideration as acquirors
tap into the equity markets to raise funds for acquisitions
Improvements in capital markets have allowed companies to raise cash at a low cost through
convertibles or straight equity
Symantec / Veritas ($13,521mm)
Safenet / Rainbow ($463mm)
Credence / NPTest ($663mm)
Issued convertible
Serena / Merant ($380mm)
Issued convertible

Private Equity
Activity
Private equity players continue to show interest in acquiring technology companies
Some technology stocks have enjoyed only limited participation in the market recovery
Low interest rates have enabled private equity players to borrow at low costs to fund
acquisitions
The downturn has created companies with lower cost structures and higher profitability
The recent market recovery has provided private equity players with better exit opportunities
Carlyle / Insight ($2,100mm)
Golden Gate Capital / Blue Martini
($54mm)
Veritas Capital / DynCorp from
CSC ($850mm)
Bain Capital, Silver Lake Partners,
Warbug Pincus / UGSPLM from
EDS($2,050mm)

7
M&A and IPO Activity in the Technology Sector
Number of Announced M&A Transactions and IPO Filings
Source: Securities Data Corporation and UBS Equity Capital Markets Group
Note: Oracle/PeopleSoft included as 2004 M&A transaction, original hostile offer was first launched in Q3 2003
1,133
1,409
1,862
2,648
1,705
1,318
1,508
1,329
124
100
309
235
23
19
21
60
0
500
1,000
1,500
2,000
2,500
3,000
1997 1998 1999 2000 2001 2002 2003 2004
N
o
.

o
f

A
n
n
o
u
n
c
e
d

M
&
A

D
e
a
l
s
0
50
100
150
200
250
300
350
N
o
.

o
f

I
P
O
s

F
i
l
e
d
M&A IPO
SECTION 2
M&A Drivers and Considerations
9
Principal Drivers of Technology M&A
Achieve
Scale

Critical mass and financial strength
Customer leverage
Increased distribution and sales support
Market position consolidation
Leapfrog competition

Expand
Product
Offering

New market entry product or geography
Capture new customer bases
Buy vs. make time to market
Engineering talent and/or management acquisition
Off-income statement R&D

Offer
Complete
Solution

Fill product gaps
Capitalize on installed base
Accelerate time to market
Strengthen channel partnerships
Offer one-stop shop
10
M&A Considerations
Business
Rationale

Compelling strategic rationale
Create or consolidate market leadership position
Essential new technologies, markets or products

Financial
Considerations

Transaction multiples compared to public comparables and precedent transactions
Impact on combined company revenue and earnings growth trajectories
Effect on margins
Revenue and cost synergies
EPS accretion / dilution

Market
Reaction

Market perception of target company / merger partner
Consistent, simple to understand story
Financial parameter clarity
Price paid / consideration mix

Execution
Risk

Time to closure
Anti-trust / regulatory
Tight contract terms
Integration strategy

A number of factors to consider in pursuing any M&A transaction
11
Process Considerations
Public Offering Versus Sale
Initial Public Offering Sale of Business
PROS:
Primary shareholders retain voting control and existing
management continues to execute the strategic vision of the
business
Proceeds from an IPO can be used to increase scale through
acquisitions or fuel organic growth
Shareholders can participate in potential upside should the
business continue to execute and market conditions remain
favorable
CONS
The organization must take on the costs associated with
public filing and compliance requirements while managing
greater scrutiny by investors
An IPO lock-up prevents current shareholders from achieving
immediate liquidity
There is a high degree of uncertainty in future capital market
conditions
There is the potential for a downside in valuation should the
business lose traction
PROS:
Reduces or eliminates execution risks of the current
business plan as well as future capital market uncertainties
M&A valuation includes control premium
Can offer a more immediate path to liquidity for current
shareholders
Avoids the costs associated with being a public company
Partnering increases opportunity to cross-sell and up-sell
through larger distribution platform and gain rapid critical
mass to better compete
CONS:
Primary shareholders relinquish voting control and new
management executes the strategic vision of the company
Cash transactions eliminate the upside participation in the
pro forma company
Integration and execution risk of combined business
12
30%
36%
39%
40%
52%
61%
0% 10% 20% 30% 40% 50% 60% 70%
ERP
Business Intelligence
Record Management
Process Control
Storage
Security
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2003 2004 2005 2006 2007
(
$

m
i
l
l
i
o
n
s
)
Advisory Services IT Spending
Sarbanes-Oxley 404 Compliance
Benefits Costs
Intended to restore investor confidence in U.S. public
markets
Drives greater consistency and transparency in reported
filings
Increased executive accountability over financial reporting
Increased spending at the CFO and CTO level to meet
compliance criteria
Increased cost of being public, especially small cap companies
Entails significant allocation of resources
Not meeting SOX deadline requirements or announcing
inadequacies in significant controls can have negative effect on
stock price
UTStarcom
Chordiant Software
Interpublic Group
Advisory Services Vs. IT Spending Mix for SOX Compliance
Anticipated Technology Spending to Support SOX
Compliance

Source: Forrester Research survey of 454 technology decision-makers Source: Gartner 2004 estimates
13
Typical Timing of an M&A Transaction
Illustrative Timeline of a Sell-Side Controlled Auction Engagement
Negotiations
and Closing
Negotiate and sign definitive agreement
Closing
Due
Diligence
and
Preparation
Marketing
Preparation of management
presentation
Initiate contact with buyers
Activity
Due diligence meetings
Information Memorandum
Finalize buyer list
Deliver Information Memorandum
Finalize management presentation and data room
Buyer due diligence
Receipt and review of final proposals
Organizational meetings
Action
Weeks
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
SECTION 3
UBS Overview
15
UBSA Leading Global Financial Services Firm

Wall Street
Powerhouse
FORBES 2004

The UBS Way
BLOOMBERG 2004

Worlds Best
Investment Bank
EUROMONEY 2004
Worlds Best Bank
EUROMONEY 2003

Best Investment Bank
THE ECONOMIST 2003

Worlds Best
Investment Bank
INVESTMENT
DEALERS DIGEST 2002

UBS is a banking giant but, a Wall Street powerhouse? Oh
Yes.
This is a house thats grown out of its regional shell to
assume premier proportions in world finance. But its the push
into the rarified realm of Investment Banking that sets UBS
apart.

BIG KID ON THE BLOCK
FORBES

UBS has achieved what once seemed impossible for any
European investment bank: it has broken into the front rank in
the US market, source of roughly half the global investment
banking fee pool. In the 12 months ending in April 2004, it
doubled its share in announced US M&A deals.

WORLDS BEST INVESTMENT BANK
EUROMONEY 2004
Our strength is backed by industry accolades
16
UBSA Leading M&A Advisor with Rapid Improvement in Market
Share
20032004

# of Transactions / Market Share
1
20032004 Market Share
versus 20002002

Notes: Data represents all M&A deals worldwide greater than $100 million in transaction value. Full credit given to acquiror and target advisor(s). Excludes withdrawn deals, equity carveouts,
exchange offers, and open market repurchases
1 Market share based on number of transactions. Market shares do not sum to 100% due to multiple advisors on each transaction (e.g., target advisor and acquiror advisor)
UBS has positioned itself as one of the leading M&A advisors worldwide and has unprecedented
momentum, capturing more market share than any other bank since 2002
6.4%
8.1%
8.5%
8.6%
10.4%
10.8%
12.2%
13.0%
13.8%
14.8%
Lazard
Lehman Bros
Merrill Lynch
Deutsche Bank
CSFB
Morgan Stanley
Citigroup
JPMorgan
Goldman Sachs 459
426
403
377
333
322
265
262
252
197
(38%)
(23%)
(11%)
(5%)
(2%)
(1%)
+3%
+6%
+9%
+23%
CSFB
Merrill Lynch
Morgan Stanley
JPMorgan
Citigroup
Goldman Sachs
Lazard
Deutsche Bank
Lehman Bros
17

February 2005
US$415 million
Sale to eBay
February 2005
US$850 million
Sale of Selected DynCorp
Units to Veritas Capital
November 2004
US$137million
Sale to Cisco Systems

July 2004
US$170 million
Sale to FindWhat.com
May 2004
US$663 million
Acquisition of NPTest

May 2004
US$380 million
Sale to Serena Software
March 2004
US$463 million
Sale to SafeNet
January 2004
US$601 million
Sale to Manpower
January 2004
US$467 million
Financial Restructuring
November 2003
US$295 million
Sale to NetScreen
Overview of UBS Technology M&A Group
Strong technology-focused M&A presence
with deep industry knowledge and
company relationships
Experienced in a wide range of advisory
assignments
Buyer advisory
Seller advisory
Cross-border transactions
Merger of equals
Shareholder value protection
Leveraged transactions
Technology M&A Expertise 2004 Technology M&A Transactions Less Than $1 Billion
Source: SDC
Financial Advisor Rank Value ($mm) No. of Deals
Goldman Sachs & Co 1 7,168.2 17
Morgan Stanley 2 6,025.4 22
Credit Suisse First Boston 3 5,187.3 15
UBS 4 4,476.8 11
JPMorgan 5 4,375.4 14
Banc of America Securities LLC 6 2,148.2 5
Citigroup 7 2,114.1 12
Jefferies & Co 8 2,093.0 21
Lehman Brothers 9 1,560.4 9
Rothschild 10 1,492.6 3
Selected Recent Transactions

18
Contact Information
UBS Securities LLC
555 California Street
Suite 4650
San Francisco CA 94104
Tel. +1-415-352 5650
www.ubs.com
UBS Investment Bank is a business group of UBS AG
UBS Securities LLC is a subsidiary of UBS AG
This presentation has been prepared by UBS Securities LLC (UBS) for the exclusive use of recipient (together with its subsidiaries and affiliates, the company) using information provided by the company and other publicly available information. UBS
has not independently verified the information contained herein, nor does UBS make any representation or warranty, either express or implied, as to the accuracy, completeness or reliability of the information contained in this presentation. Any estimates
or projections as to events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based upon the best judgment of UBS from the information provided by the company and other publicly available
information as of the date of this presentation. There is no guarantee that any of these estimates or projections will be achieved. Actual results will vary from the projections and such variations may be material. Nothing contained herein is, or shall be
relied upon as, a promise or representation as to the past or future. UBS expressly disclaims any and all liability relating or resulting from the use of this presentation.

This presentation has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The company should not construe the contents of this presentation
as legal, tax, accounting or investment advice or a recommendation. The company should consult its own counsel, tax and financial advisors as to legal and related matters concerning any transaction described herein. This presentation does not purport
to be all-inclusive or to contain all of the information which the company may require. No investment, divestment or other financial decisions or actions should be based solely on the information in this presentation.

This presentation has been prepared on a confidential basis solely for the use and benefit of the company; provided that the company and any of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to the company relating to such tax treatment and tax structure. Distribution of this presentation to any
person other than the company and those persons retained to advise the company is unauthorized. This material must not be copied, reproduced, distributed or passed to others at any time without the prior written consent of UBS.

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