3. Financial position

Cash flow triples in value

Operating cash flow amounted to €36.0 million in the third quarter. This is nearly triple the level achieved in the previous year (Q3 2007: €12.3 million). Our receivables management contributed to this improvement. Free cash flow performed very well in the third quarter, reaching €34.2 million to exceed the previous year’s figure by 229 percent (Q3 2007: €10.4 million). Free cash flow as a percentage of net income attained a level of 19 percent for the third quarter and 18 percent for the first nine months.

Total assets and capital expenditure

Total assets of Software AG rose from €1,025.7 million as of September 30, 2007 to €1,073.9 million as of September 30, 2008. Cash and cash equivalents increased from €71.0 million to €83.1 million. Equity improved by 18 percent, from €442.9 million to €524.7 million. The equity-to-assets ratio rose accordingly from 43 percent to 49 percent as of September 30, 2008. We continued to reduce the borrowings taken out in the previous year to fund acquisitions. Financial liabilities declined from €227.9 million as of September 30, 2007 to €192.4 million as of September 30, 2008. Net debt decreased to €109.3 million (September 30, 2007: €156.9 million). Software AG therefore remains in a strong position to further develop business activities.