In January 2007, Software AG restructured its executive areas of responsibility for the purpose of further promoting profitable growth.

ETS, the traditional database business, has been upgraded to a division headed by David Broadbent who is responsible for product management and marketing as well as research and development within the ETS business line. He has also assumed responsibility for the Asia/Pacific region.

The upgrade of ETS to a separate division is a sign of recognition of the significance and upward business trend of the traditional database business. ETS is the second business line after Crossvision that is represented directly in the boardroom. Starting in 2007, Software AG will report financial figures for the two business lines ETS and Crossvision.

Christian Barrios Marchant left the Executive Board effective January 8, 2007. He was responsible for the regions of Southern and Western Europe/Latin America. This market has been allocated to two separate sales regions as part of the reorganization of Executive Board areas of responsibilities.

The international composition of top management is a reflection of Software AG’s global orientation. Our new organizational structure as of January 2007 is illustrated below:

K.-H. Streibich CEO	A. Zinnhardt CFO	M. Edwards Region 1	A. Pfaff Region 2	Dr. P. Krpick Crossvision	D. Broadbent ETS
Strategic Marketing	Finance & Controlling	USA/Canada	Region DACH: Germany Austria Switzerland	Product management	Product management
Professional Services Management	Global Purchasing	UK	Netherlands	Product marketing	Product marketing
Human Resources	Global IT/Support	France	Italy	Research & Development	Research & Development
			Turkey
			Israel
			Greece
Distribution Strategys and Methods	Compliance & Auditing	South Africa	Nordic Denmark Sweden Norway Finland/ Baltics	Region Belux: Belgium Luxembourg	Value Sales Management
Press & Public relations	Investor Relations	Latin America	Eastern Europe		Region JACA: Japan Asia China Australia
Spain	M&A		Middle East
	Legal

The new Executive Board structure strengthens Software AG’s capabilities to develop innovative products and solutions for our customers.

Software AG’s segment reporting is prepared in accordance with IAS 14 (Segment Reporting).

In fiscal 2006, Software AG was organized along regional lines in accordance with the Groups internal control and reporting system. The geographical segments of Software AG were composed as follows as of December 31, 2006:

North America/Northern Europe segment with the following countries and regions

USA, Canada, the UK, Scandinavia, South Africa, France, Italy

Southern and Western Europe/Latin America segment with the following countries and regions

Spain, Latin America, Middle East including Israel and the regional sales partner SPL-Israel, and Middle Eastern countries such as Bahrain, Kuwait, Saudi Arabia and the United Arab Emirates

Central and Eastern Europe/Asia segment with the following countries

Germany, Austria, Switzerland, the Netherlands, Poland, the Czech Republic, Russia, Australia, China, Hong Kong, Japan and Singapore.

The business lines of Software AG consist of Enterprise Transaction Systems and Crossvision. A distinction is made within these business lines between revenue from license fees, maintenance business, and Professional Services.

The corporate structure of Software AG includes 57 subsidiaries (please refer to the Notes). As a wholly-owned Software AG subsidiary, SAG Systemhaus GmbH is responsible for all sales, marketing, and service activities of Software AG in Germany. The company currently has 250 employees and maintains seven business centers in Germany. The Professional Services line was transferred from SAG Systemhaus GmbH to SAG Consulting Service GmbH (previously SQL Datenbanksysteme GmbH) in fiscal 2006. In addition, Software AG has key subsidiaries in the USA, the UK, and Spain.