Software AG

2. Quarterly Report 2008

3. Financial position

Particularly strong growth in cash flow

Operating cash flow in Q2 2008 was €24.0 million, compared to €11.0 million in Q2 2007, and thus improved by an outstanding 118 percent. A further reduction of the average period allowed for payment to 89 days in Q2 2008 (Q2 2007: 101 days) contributed to this outcome. Free cash flow was €23.0 million (Q2 2007: €11.8 million). The share of group revenue thus amounted to 13.6 percent, compared to 7.8 percent in Q2 2007.

Increase in total assets and capital expenditure

Total assets of the Software AG Group declined from €1,092.4 million (June 30, 2007) to €1,001.2 million (June 30, 2008). Cash and cash equivalents declined from €114.5 million to €59.4 million due to the acquisitions and dividend payments. Equity rose by 4 percent, from €441.1 million to €457.3 million. The equity-to-assets ratio increased accordingly, from 40 percent on June 30, 2007 to 46 percent on June 30, 2008. On the other hand, a portion of the debt incurred through the acquisitions in the previous year was reduced from €279 million to the present level of €204 million. Non-current liabilities therefore decreased considerably, from €351.9 million to €273.1 million. Current liabilities declined compared to the previous year, from €299.4 million to €270.8 million.