Cash and cash equivalents of €184,774 thousand are composed of the balance sheet items cash on hand and bank balances (€163,199 thousand) and securities (€21,575 thousand). The securities include short-term, highly liquid financial instruments subject only to insignificant risk of changes in value.

Net cash from operating activities includes interest payments in the amount of €4,379 thousand as well as interest receipts of €11,724 thousand. Cash outflows for investments in property, plant and equipment and intangible assets are primarily due to the acquisition of hardware and software as well as office and operating equipment.

In 2006, the Company made acquisitions under finance leases totaling €8 thousand. These non-cash transactions are not included in the statement of cash flows.

In fiscal 2006, the items repayments of current acquisition-related liabilities and repayments of financial liabilities totaling €3,457 thousand related exclusively to the repayment of liabilities under finance leases.

Changes in the value of cash and cash equivalents resulting from an increase in key exchange rates are reported separately under effect of foreign exchange rate changes on cash and cash equivalents (€ - 8,678 thousand).

Software AG defines free cash flow as cash flow from operating activities less cash flow from investing activities excluding investments in consolidated companies.

€ thousands	2006	2005
Net cash provided by operating activities	61,390	55,702
less net cash used in investing activities	-5,787	-19,043
zplus investments in consolidated companies	+597	+8,989
Free cash flow	56,200	45,648

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