Ubs Investment Banking Pitchbook

UBS Technology M&AMarch 2005Discussion of Current Industry TrendsSTRICTLY CONFIDENTIAL

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*Table of ContentsSECTION 1M&A Market Conditions2SECTION 2M&A Drivers and Considerations8SECTION 3UBS Overview14

SECTION 1M&A Market Conditions


*M&A Volume in the USLarge, strategic combinations are backProctor & Gamble / Gillette, JPMorgan / BankOne, Cingular / AT&T Wireless, Sprint / Nextel, Oracle / PeopleSoft, Symantec / Veritas, Johnson & Johnson / Guidant and Wachovia / SunTrustSignificant financial sponsor activity in the middle marketTaking advantage of depressed market conditions and attractive debt marketsCurrent rebound in activity across all industries is reflective of a return to a healthier marketSource: Securities Data Corporation


*Technology M&A ActivityTechnology M&A Volume Has Increased Steadily Since 2002 LowsSource: Securities Data CorporationNote: Oracle/PeopleSoft included as 2004 transaction, original hostile offer was first launched in Q3 2003

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


*M&A Deal Activity is IntensifyingMarket recovery in 2003 and stability in 2004 have increased corporate confidence and created an environment conducive to M&A transactionsTechnology companies are exiting defensive, "survive the downturn" mentality and reviewing strategic options Recalibrating under invested businessesCapturing upside as economic conditions continue to improveTechnology M&A deal volume increased 60% in 2004M&A pipeline is expected to be strong for 2005Number of Announced Transactions 1Technology M&A Deal Volume (US$ Billions) 1179 additional transactions were announced in 2004 compared with 2003Volume of discussions has intensified drasticallySource: Security Data CorporationNote: 1 Oracle/PeopleSoft included as 2004 transaction, original hostile offer was first launched in Q2 2003


*Current Trends in Technology M&A

TREND

OVERVIEW

RECENT TRANSACTIONS

Resurgence inDeal 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)

SectorConsolidation

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)

StockConsideration

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 / UGS PLM from EDS ($2,050mm)


*M&A and IPO Activity in the Technology SectorNumber of Announced M&A Transactions and IPO FilingsSource: Securities Data Corporation and UBS Equity Capital Markets GroupNote: Oracle/PeopleSoft included as 2004 M&A transaction, original hostile offer was first launched in Q3 2003

SECTION 2M&A Drivers and Considerations


*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


*M&A ConsiderationsA number of factors to consider in pursuing any M&A transaction

BusinessRationale

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

MarketReaction

Market perception of target company / merger partner

Consistent, simple to understand story

Financial parameter clarity

Price paid / consideration mix

ExecutionRisk

Time to closure

Anti-trust / regulatory

Tight contract terms

Integration strategy


*Process ConsiderationsPublic Offering Versus SaleInitial Public OfferingSale of BusinessPROS:Primary shareholders retain voting control and existing management continues to execute the strategic vision of the businessProceeds from an IPO can be used to increase scale through acquisitions or fuel organic growthShareholders can participate in potential upside should the business continue to execute and market conditions remain favorableCONSThe organization must take on the costs associated with public filing and compliance requirements while managing greater scrutiny by investorsAn IPO lock-up prevents current shareholders from achieving immediate liquidityThere is a high degree of uncertainty in future capital market conditionsThere is the potential for a downside in valuation should the business lose tractionPROS:Reduces or eliminates execution risks of the current business plan as well as future capital market uncertaintiesM&A valuation includes control premiumCan offer a more immediate path to liquidity for current shareholdersAvoids the costs associated with being a public companyPartnering increases opportunity to cross-sell and up-sell through larger distribution platform and gain rapid critical mass to better competeCONS:Primary shareholders relinquish voting control and new management executes the strategic vision of the companyCash transactions eliminate the upside participation in the pro forma companyIntegration and execution risk of combined business


*Sarbanes-Oxley 404 Compliance BenefitsCostsIntended to restore investor confidence in U.S. public marketsDrives greater consistency and transparency in reported filingsIncreased executive accountability over financial reportingIncreased spending at the CFO and CTO level to meet compliance criteriaIncreased cost of being public, especially small cap companiesEntails significant allocation of resourcesNot meeting SOX deadline requirements or announcing inadequacies in significant controls can have negative effect on stock priceUTStarcomChordiant SoftwareInterpublic GroupAdvisory Services Vs. IT Spending Mix for SOX ComplianceAnticipated Technology Spending to Support SOX ComplianceSource: Forrester Research survey of 454 technology decision-makers Source: Gartner 2004 estimates


*Typical Timing of an M&A TransactionIllustrative Timeline of a Sell-Side Controlled Auction Engagement

SECTION 3UBS Overview


*UBSA Leading Global Financial Services FirmWall Street Powerhouse FORBES 2004

The UBS Way BLOOMBERG 2004

Worlds Best Investment Bank EUROMONEY 2004Worlds Best Bank EUROMONEY 2003

Best Investment Bank THE ECONOMIST 2003

Worlds Best Investment Bank INVESTMENT DEALERS DIGEST 2002

Our strength is backed by industry accolades

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 BLOCKFORBES

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 BANKEUROMONEY 2004


*UBSA Leading M&A Advisor with Rapid Improvement in Market Share20032004 # of Transactions / Market Share 120032004 Market Share versus 20002002Notes: 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 repurchases1Market 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


*Overview of UBS Technology M&A GroupStrong technology-focused M&A presence with deep industry knowledge and company relationshipsExperienced in a wide range of advisory assignmentsBuyer advisorySeller advisoryCross-border transactionsMerger of equalsShareholder value protectionLeveraged transactionsTechnology M&A Expertise2004 Technology M&A Transactions Less Than $1 BillionSelected Recent Transactions

February 2005

US$415 millionSale to eBay

February 2005

US$850 millionSale of Selected DynCorp Units to Veritas Capital

November 2004

US$137millionSale to Cisco Systems

July 2004

US$170 millionSale to FindWhat.com

May 2004

US$663 millionAcquisition of NPTest

May 2004

US$380 millionSale to Serena Software

March 2004

US$463 millionSale to SafeNet

January 2004

US$601 millionSale to Manpower

January 2004

US$467 millionFinancial Restructuring

November 2003

US$295 millionSale to NetScreen

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

JP Morgan

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

Source: SDC


*Contact InformationUBS Securities LLC555 California Street Suite 4650 San Francisco CA 94104 Tel. +1-415-352 5650www.ubs.comUBS Investment Bank is a business group of UBS AG UBS Securities LLC is a subsidiary of UBS AGThis 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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