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Accounting Policies


Basis of presentation
Software AG’s consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) as promulgated by the International Accounting Standards Board (IASB). The IAS/IFRSs applicable as of December 31, 2005 were observed, as were the corresponding interpretations of the International Financial Reporting Interpretations Committee (IFRIC – formerly SIC). The same accounting policies have been applied in these interim financial statements as in the 2005 financial statements. Therefore, the accounting policies are not explained in detail in these quarterly financial statements. These quarterly financial statements have been prepared in accordance with IAS 34, Interim Financial Statements.

The consolidated financial statements of Software AG are expressed in thousands of euros unless otherwise stated.

Changes in consolidated group
The following changes in the consolidated group have occurred since December 31, 2005:

Software AG, Ltd., Japan, which was established on February 23, 2006 as a subsidiary of Software AG, USA with a share capital of €72 thousand (JPY 10 million), was initially consolidated as of the date of foundation of the company.

There were no other changes in the consolidated group compared to December 31, 2005.

Earnings per share
Earnings per share were calculated by dividing net income for the period attributable to Software AG’s shareholders by the weighted average number of shares outstanding during the reporting period and have been presented accordingly. Software AG has only issued common shares. In the first quarter of 2006, the weighted average number of shares amounted to 28,037,634.
All three criteria for exercising options as set out in the first stock option plan for members of the Executive Board, officers and other employees were also met in the first quarter of 2006. A total of 3,250 of the outstanding options under this stock option plan were exercised during the first quarter. The remaining 108,386 options under this plan may be exercised until 2008, provided the share price is at least €30 at the time the options are exercised. The diluted earnings per share were calculated for these potential shares using the treasury stock method and presented for the reporting period. Diluted earnings per share were calculated by dividing net income for the period attributable to Software AG’s shareholders by the number of shares in issue and the exercisable stock options.

  Interim Report Q1/06 (PDF)
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