1. Significant events during the reporting period

1/2 forward

Software AG has maintained its financial success despite the difficult market conditions. In the third quarter of 2008, we expanded our technology, our customer base, our market presence and increased our financial strength. A highlight on the product side was our new version of CentraSite SOA Active. This product is the heart of the webMethods division – its integration software. With regard to our customer base, an outstanding example of the progress made was the continuation of our successful direct market presence in Brazil. In addition, we reinforced our market presence in our new webMethods division by holding events for customers, media, and trade specialists in New York, Boston, London, Stockholm, and Darmstadt. Our successful, stable business model forms the basis for all of our activities. Even in the current atmosphere of overall economic decline, this model helped us increase our revenue, profit, and margins in the third quarter.

Product portfolio expanded

We take a “total customer orientation” approach in developing and upgrading our software solutions. Our goal of becoming the world market leader in service-oriented architecture (SOA) and business process management (BPM) leads right to the customer. To this end, we conducted a survey of US customers on the topic of SOA application practice. One major finding of the study, published in July, was that companies regard SOA governance as a crucial component of sustainable SOA implementation: More than 90 percent of companies surveyed have at least started SOA planning. More than half have already succeeded in implementing projects on an SOA basis and/or corporate-wide SOA. The most significant expectations related to the introduction of SOA were an increase in flexibility for the company, simplification of integration, and support for BPM projects. The survey also found that more than half of those interviewed believe that SOA governance should be introduced before the first service is provided.

As previously announced, at the end of September 2008 Software AG presented CentraSite ActiveSOA – our new SOA control center and likely our most important new development of the year. CentraSite Active SOA combines SOA governance and lifecycle management, supplying our customers with a variety of new functions and a new user interface. Customers benefit from process automation, life cycle management for IT systems, simplified cooperation with different user groups, and a new user interface. The new product is another major success in our integration of webMethods Inc.: Software AG launched CentraSite Active SOA – the Company’s first webMethods-based, integrated software solution – on the market within a year of integrating webMethods. The former CentraSite Enterprise Edition (previously CentraSite) was combined with the CentraSite Governance Edition (previously webMethods Infravio) to create a mature, all-in-one solution for SOA governance and lifecycle management. CentraSite ActiveSOA is expected to be delivered in the second quarter of 2009.

Early in the third quarter, we presented webMethods Insight, an addition to our webMethods Suite. Development of the product was based on a new strategic OEM (original equipment manufacturer) partnership with IT service provider Progress Actional, a US-based software firm. webMethods Insight helps companies to monitor runtime services and to implement policies. The new product has been available for sale since October 1, 2008.