ATOSS Software AG — Interim / Quarterly Report 2010

Nov 15, 2010

2010.3 Quarterly Report Q3.2010

Photo ATOSS Customer Voglauer

"The market for workforce management will continue to hold tremendous growth potential."

Dear Shareholders, Ladies and Gentlemen,

In this current financial year we have achieved our best ninemonthly result in the company's history. Once again we have succeeded in substantially improving our earnings quality. With sales developing on a stable course, our operating profit (EBIT) grew by 20 percent to EUR 5.3 million. And with business on a robust footing, we have raised our fullyear forecast: We now anticipate EBIT to be well in excess of EUR 6 million. ATOSS remains on track for continuing success with the prospect of a fifth record result in succession.

We are delighted at the achievements of our employees and we see the company's performance as further confirmation that our corporate strategy is correct. Clearly, the ATOSS message is being heard: The direction in which we have specifically targeted the development of the business over an extended period is now increasingly distinguishing us from our competitors. The numerous attractive new orders we have acquired in the current year are proof positive. The priority now is to create the foundations for continuing success in the year to come.

Only first-class products and solutions will prevail in the long term

ATOSS is a company with a long-term view. That is a fact of which both our shareholders and our customers are aware. Our already high level of expenditure on research and development has been further increased this year, not least because the continuing development of our products and solutions is of decisive importance for our business. In the highly fragmented market for workforce management, innovation, dependability, sound strength and the breadth and performance of existing installations are major factors influencing customer choice. These are our distinguishing features!

In the second half of 2010 ATOSS is presenting the latest developments in its solutions at two trade fairs. Our enterprise solution, the ATOSS Staff Efficiency Suite 6.2, made its debut at the "Zukunft Personal 2010" fair in August. User convenience has been substantially enhanced and performance significantly expanded – the Employee & Manager Self Service module is a case in point. Meanwhile at "Medica 2010" in Düsseldorf in November, ATOSS will be presenting its Medical Solution 6.2. which offers a host of new features to support demand-oriented staff scheduling in the healthcare sector. As with all our solutions, the principal function is to maximize customer benefits, user friendliness and performance.

Research and development are the cornerstones of our success. In the first nine months of 2010, we have invested EUR 4.3 million in this field. That is six percent more than in 2009, and around 20 percent of our turnover.

Successful projects - our best calling cards

This year we have continued to acquire more high-profile customers in our core sectors. Our penetration of the retail sector has been hugely boosted with the acquisition of prominent chains such as Douglas, coop, Hornbach, s. Oliver, famila, Combi, Eurotrade, Body Shop and Land's End, while in the health care sector, clinic and health center operators such as Medical Park have opted for our ATOSS Medical Solution. Our broad base and our record of projects successfully completed are major factors in the acquisition of new customers.

The market for workforce management offers huge potential for growth. We shall therefore consistently pursue our strategy and make certain that ATOSS Software AG remains a reliable partner to its customers, shareholders and employees. With our portfolio of products and services and our first-class team, we are ideally equipped to seize the opportunities available to us.

Letter to Shareholders

Andreas F.J. Obereder and Christof Leiber, ATOSS Software AG

Yours truly,

Andreas F.J. Obereder Christof Leiber Chief Executive Officer Member of the

Board of Management

Facts Overview

Economic background

Economy remains stable in 2010 BITKOM index for the IT market in Germany climbs to a 10-year high Strongest growth expected in the market for software and IT services

ATOSS Software AG

ATOSS achieves best-ever nine-month result Forecast for 2010 operating profits raised to well over EUR 6 million

	CONSOLIDATED OVERVIEW AS PER IFRS: 9-MONTH COMPARISON IN EUR '000
	01.01.2010 - 30.09.2010	Proportion of total revenues	01.01.2009 - 30.09.2009	Proportion of total revenues	Change 2010 / 2009
Sales	21,443	100%	21,391	100%	0%
Software	13,195	62%	12,440	58%	6%
Software licenses	4,831	23%	4,550	21%	6%
Software maintenance	8,364	39%	7,890	37%	6%
Consulting	5,710	27%	6,136	29%	-7%
Hardware	1,643	8%	1,575	7%	4%
Others	895	4%	1,240	6%	-28%
EBITDA	5,606	26%	4,664	22%	20%
EBIT	5,258	25%	4,388	21%	20%
EBT	5,316	25%	4,595	21%	16%
Net income	3,616	17%	3,098	14%	17%
Cash flow	6,963	32%	7,225	34%	-4%
Liquidity 1,2	21,980		19,182		15%
EPS (EUR)	0.91		0.78		17%
Employees 3	247		232		6%

CONSOLIDATED OVERVIEW AS PER IFRS: QUARTERLY COMPARISON IN EUR '000
	Q3/10	Q2/10	Q1/10	Q4/09	Q3/09
Sales	7,178	7,118	7,148	7,969	7,233
Software	4,384	4,459	4,352	4,331	4,090
Software licenses	1,544	1,658	1,628	1,590	1,425
Software maintenance	2,840	2,801	2,724	2,741	2,666
Consulting	1,928	1,894	1,889	2,382	1,986
Hardware	502	601	540	726	666
Others	364	164	367	257	491
EBITDA	1,928	1,894	1,785	1,239	1,557
EBIT	1,815	1,779	1,663	1,132	1,463
EBIT margin	25%	25%	23%	15%	20%
EBT	1,831	1,792	1,693	1,260	1,516
Net income	1,243	1,220	1,153	867	1,023
Cash flow	4,250	-403	3,116	386	3,695
Liquidity 1,2	21,980	17,789	20,249	19,328	19,182
EPS (EUR)	0.31	0.31	0.29	0.22	0.26
Employees 3	247	242	236	234	232

1 Cash and marketable securities; 2 Dividend of EUR 0.50 per share paid on May 3, 2010 amounting to TEUR 1,981 (previous year: EUR 0.44); 3 At the end of the quarter

ATOSS share price well ahead of the comparative index In the first nine months of 2010 the price of ATOSS stock has

clearly outstripped the relevant comparative DAXSubsector Software Performance index. On September 30 the ATOSS share price stood at EUR 14.80, up 21 percent on the start of the year (January 4, 2010: EUR 12.28). Meanwhile over the same period the comparative index has risen by just 12 percent. Key figures such as cash flow, liquidity and earnings per share have again improved substantially.

This development reflects not only the positive course of business at ATOSS, but also the fruits of the company's reliable forecasting. This reliability has been clearly rewarded by the market and forms an essential component of our strategy.

Analysts maintain their buy recommendation, raise the upside target

Following publication of the provisional quarterly figures for the first nine months on October 12, 2010, Warburg Research again rated ATOSS stock as a buy with particular reference to the increased full-year earnings forecast and the strong sales margin of 25 percent. On the one hand, this margin derived from the high level of license sales that continued in the third quarter with a positive effect on earnings quality. On the other hand, the company has also been cautious this year in investing in sales and marketing capacities. The analysts raised the upside target from EUR 19.30 to EUR 19.60.

Communications policy is rewarded

We receive a lot of positive feedback for our transparent communications policy. The reports on ATOSS published by the media and stock market information services are both consistently positive and increasing in volume. We are delighted at this response. It is a matter of great concern to us that our record of communication should be perceived by market participants as dependable, reliable and sound. The fact that our share price is so far ahead of the comparative index and has continued to gain strength in October proves that this is so.

For further information visit: www.atoss.com

Investor Relations

CONSOLIDATED OVERVIEW AS PER IFRS: QUARTERLY COMPARISON IN EUR
	Q3/10	Q2/10	Q1/10	Q4/09	Q3/09
High	16.90	16.80	15.49	13.80	12.65
Low	14.06	13.02	11.85	11.60	8.85
Share price at end of quarter	14.80	16.80	15.25	12.15	12.65
Treasury stock	57,099	64,099	64,099	65,099	65,099
Dividend paid per share	0.00	0.5 0	0.00	0.00	0.00
Cash flow per share	1.07	-0.10	0.79	0.10	0.93
Liquidity per share	5.55	4.49	5.11	4.80	4.85
EPS	0.31	0.31	0.29	0.22	0.26
EPS (diluted)	0.31	0.31	0.29	0.22	0.26

"Based on consistent, ongoing investments in research and development we are continuously expanding our strong market position."

Photo ATOSS Customer Dyneon

Group Management Report

The company continues to refrain from capitalizing the expense of developing new products. All expenditure for this purpose is recognized in the income statement in the period in which it is incurred.

4. Employees

Over the past twelve months the number of employees has risen from 232 to 247. On September 30, 2010 ATOSS employed 105 software developers (previous year: 94), with a further 70 staff employed in consulting (previous year: 68), 34 in sales and marketing (previous year: 35) and 38 in administration (previous year: 35).

Personnel costs for the first nine months of the current financial year declined slightly to EUR 10.5 million (previous year: EUR 10.9 million).

5. Risks associated with future development

There has been no change in the company's risk structure relative to the description contained in the consolidated financial statements to December 31, 2009.

As in the past, the company's investment policy continues to focus on preserving the value of freely available resources.

6. Events after the reporting period

There have been no reportable events of particular significance since September 30, 2010.

7. Outlook

With all of the key figures for the development in business remaining highly positive in both Q4 2009 and the first nine months of 2010, the Management Board has raised its fullyear earnings forecast. The Board now expects an operating result for 2010 of well over EUR 6.0 million (previous year EUR 5.5 million). ATOSS is hence on course for its fifth record result in succession.

1. Business and conditions: BITKOM index climbs to a 10-year high

The German economy is experiencing an upturn. In fact, it is well on the way to making up the production lost during the crisis. The recovery is also developing across a broad front. Expansion is no longer being driven solely by an increase in exports and inventory replenishment: The domestic economy, too, is growing. This year has seen a marked increase in both consumer spending and corporate investments. According to the Joint Economic Forecast for Autumn 2010 published by the Ifo Institute, gross domestic product is set to rise by 3.5 percent in real terms in 2010 and by a further 2.0 percent in 2011. The employment situation is also expected to improve, with the number of unemployed in 2011 likely to sink to an annual average of less than 3 million for the first time since 1992. The deficit ratio is predicted to be 2.7 percent.

In a continuation of the consistent upward trend seen in previous months, the business climate index for Germany's manufacturing industry, also published by the Ifo Institute, showed a further rise in October. Germany's businesses once again take a more positive view of both the current situation and expected future developments.

The results of a survey conducted by high-tech industry association BITKOM also reveal that the mood in the ITC sector is much improved. In the third quarter of 2010, 78 percent of companies surveyed reported an increase in sales.

While these comparisons both at the macroeconomic level and in the IT environment reflect increases that compare with a severely contracted baseline in the preceding year, ATOSS has in the past year recorded substantial growth. Against this background the company is content with the stable development in business thus far. Our expectations for 2010 have been confirmed. In fact in the field of software licensing, the company has latterly achieved sales growth of 6 percent.

Earnings situation: New record highs repeat last year's success

In the first nine months of financial year 2010, in a repeat of last year's record performance, ATOSS recorded sales revenues totaling EUR 21.4 million (previous year EUR 21.4 million). Sales of software licenses rose by 6 percent from EUR 4.6 million to EUR 4.8 million. Software maintenance, too, continued to develop positively with turnover also increasing by 6 percent from EUR 7.9 million to EUR 8.4 million. By comparison the strong growth in consulting seen in previous years has eased, with revenues slipping by 7 percent compared to last year, from EUR 6.1 million to EUR 5.7 million.

The operating profit (EBIT) at EUR 5.3 million developed strongly, increasing by 20 percent over the previous year's figure of EUR 4.4 million.

Earnings after taxes to September 30, 2010 came in at EUR 3.6 million, representing growth of 17 percent relative to the EUR 3.1 million recorded in the same period last year. Earnings per share accordingly increased from EUR 0.78 to EUR 0.91.

Orders on hand for software licenses as of September 30, 2010 amounted to EUR 2.7 million (previous year EUR 3.2 million).

2. Net assets and financial position

In the first nine months, cash flow from operations declined from EUR 7.2 million last year to EUR 7.0 million. Liquidity (cash and marketable securities) was increased from EUR 19.2 million to EUR 22.0 million, despite the outflow of EUR 2.1 million at the beginning of January to cover the purchase of our business premises in Meerbusch.

Liquidity per share on September 30, 2010 accordingly stood at EUR 5.55 (previous year EUR 4.85).

In addition to net earnings of EUR 3.6 million, the EUR 7.0 million in cash flow also received a positive boost from a reduction in receivables at EUR 2.1 million and an increase in deferred revenues at EUR 1.7 million.

As a result of the gratifying development in business, the equity ratio rose to 58 percent of total capital. The company thus remains extremely well capitalized, with solvency assured at all times.

3. Product development

A high level of expenditure on research & development remains an important component of the ATOSS growth strategy with the goal of further extending the company's strong position as a technological leader in workforce management. Research and development costs rose by 6 percent in the first nine months to stand at EUR 4.3 million. R&D expenditure as a proportion of overall sales amounted to 20 percent (previous year 19 percent).

12 Q u a r t e r l y R e p o r t Q 3 . 2 0 1 0 G r o u p M a n a g e m e n t R e p o r t 13

CONSOLIDATED BALANCE SHEET TO 30.09.2010 IN EUR
Assets	30.09.2010	31.12.2009
Non-current assets
Tangible fixed assets (net)	2,809,043	794,681
Intangible assets (net)	116,825	113,214
Deferred taxes	0	249,984
Total non-current assets	2,925,868	1,157,879
Current assets
Inventories	11,304	8,712
Trade accounts receivable (net)	2,197,233	4,281,893
Other current assets	1,231,830	923,700
Cash and cash equivalents	21,979,728	19,328,060
Total current assets	25,420,095	24,542,365
Total assets	28,345,963	25,700,244
Equity and liabilities	30.09.2010	31.12.2009
Capital and reserves
Subscribed capital	4,025,667	4,025,667
Capital reserve	-366,423	-301,013
Treasury stock	-389,034	-491,034
Unappropriated net income	13,112,954	11,478,130
Total equity	16,383,164	14,711,750
Non-current liabilities
Convertible bonds	8,000	16,000
Pension provisions	1,910,141	1,882,275
Deferred taxes	1,667,144	753,508
Total non-current liabilities	3,585,285	2,651,783
Current liabilities
Trade accounts payable	283,911	685,546
Short-term accruals	2,848,585	3,735,599
Deferred revenues	4,854,219	3,204,066
Tax provisions	0	100,129
Other current liabilities	390,799	611,371
Total current liabilities	8,377,514	8,336,711
Total equity and liabilities	28,345,963	25,700,244

Balance Sheet

Photo ATOSS Customer eurotrade

Cash Flow Statement

CONSOLIDATED CASH FLOW STATEMENT FROM 01.01. TO 30.09.2010 IN EUR

	01.01.2010 - 30.09.2010	01.01.2009 - 30.09.2009
Net profit	3,615,608	3,097,530
Depreciation of fixed assets	348,689	275,845
Gain/loss on the disposal of fixed assets	511	-41,467
Changes in deferred taxes	1,163,619	379,278
Provisions for pension commitments	-41,135	719,723
Change in net current assets
Trade accounts receivable	2,084,659	-512,198
Inventories and other current assets	-381,621	298,708
Trade accounts payable	95,962	425,317
Short-term accruals	-887,014	-436,677
Deferred revenues	1,152,557	3,025,618
Tax provisions	39,772	-151,202
Other current liabilities	-228,572	144,993
Cash flow generated through business operations (1)	6,963,035	7,225,468
Cash flow from investment activities
Acquisition of tangible and intangible assets	-2,367,173	-358,430
Disposal of tangible fixed assets	0	42,200
Cash flow generated through investment activities (2)	-2,367,173	-316,230
Cash flow from financing activities
Expenditure for the purchase of treasury stock	0	-30,417
Income from the sale of treasury stock	36,590	41,440
Dividend payments	-1,980,784	-1,739,130
Cash flow generated through financing activities (3)	-1,944,194	-1,728,107
Changes in liquidity 1 – total of (1) to (3)	2,651,668	5,181,131
Liquidity 1 at the beginning of the period	19,328,060	14,000,412
Liquidity 1 at the end of the period	21,979,728	19,181,543

CONSOLIDATED INCOME STATEMENT FROM 01.01. TO 30.09.2010 IN EUR
		Quarterly report		9-month report
	01.07.2010 - 30.09.2010	01.07.2009 - 30.09.2009	01.01.2010 - 30.09.2010	01.01.2009 - 30.09.2009
Sales revenues	7,177,868	7,233,467	21,443,315	21,390,895
Cost of sales	-2,179,939	-2,463,197	-6,524,709	-6,821,979
Gross profit on sales	4,997,929	4,770,270	14,918,606	14,568,916
Selling costs	-1,133,453	-1,489,117	-3,598,484	-4,329,637
Administration costs	-613,126	-551,991	-1,830,545	-1,786,152
Research and development costs	-1,470,201	-1,345,675	-4,331,778	-4,082,712
Other operating income	22,572	12,287	102,493	37,776
Other operating expenses	11,523	67,312	-2,739	-19,911
Operating result (EBIT)	1,815,244	1,462,599	5,257,553	4,388,280
Interest and similar income	35,116	67,190	115,791	241,106
Interest and similar expenses	-19,127	-13,594	-57,216	-34,700
Earnings before taxes	1,831,233	1,516,196	5,316,128	4,594,686
Taxes on income and earnings	-588,217	-493,460	-1,700,520	-1,497,156
Net profit	1,243,016	1,022,736	3,615,608	3,097,530
Earnings per share (undiluted)	0.31	0.26	0.91	0.78
Earnings per share (diluted)	0.31	0.26	0.91	0.78
Average number of shares in circulation (undiluted)	3,967,318	3,959,894	3,963,312	3,956,748
Average number of shares in circulation (diluted)	3,978,057	3,978,253	3,977,070	3,975,565

Income Statement

Statement of Comprehensive Income

¹ CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FROM 01.01. TO 30.09.2010 IN EUR Liquidity: Cash and marketable securities

	01.01.2010 - 30.09.2010	01.01.2009 - 30.09.2009
Net income for the year	3,615,608	3,097,530
Changes in equity not recognized in profit and loss	36,590	19,024
Other income for the period after taxes	36,590	19,024
Comprehensive income after taxes	3,652,198	3,116,554

CHANGES IN CONSOLIDATED EQUITY AS OF 30.09.2010 IN EUR
	Subscribed capital	Capital reserve	Treasury stock	Unapp. ret. earnings	Total
As of 01.01.2009	4,025,667	-248,453	-562,618	9,252,962	12,467,558
Net income	0	0	0	3,097,530	3,097,530
Sale of treasury stock	0	-11,735	61,175	0	49,440
Purchase of treasury stock	0	0	-30,416	0	-30,416
Dividend	0	0	0	-1,739,130	-1,739,130
As of 30.09.2009	4,025,667	-260,188	-531,859	10,611,362	13,844,982
As of 01.01.2010	4,025,667	-301,013	-491,034	11,478,130	14,711,750
Net income	0	0	0	3,615,608	3,615,608
Sale of treasury stock	0	-65,410	102,000	0	36,590
Purchase of treasury stock	0	0	0	0	0
Dividend	0	0	0	-1,980,784	-1,980,784
As of 30.09.2010	4,025,667	-366,423	-389,034	13,112,954	16,383,164

One share represents EUR 1 of subscribed capital.

Statement of Changes in Equity

1. General

The present report has been prepared in accordance with International Financial Reporting Standards (IFRS) in compliance with IAS 1.14. In particular the report complies with the provisions contained in IAS 34 "Interim Financial Reporting". The requirements contained in German Accounting Standard (DRS) No. 6 regarding interim reporting have likewise been fulfilled.

In accordance with IAS 34.20, the present statements include a consolidated balance sheet, consolidated income statement, consolidated statement of comprehensive income, consolidated cash flow statement, a statement of changes in consolidated equity and explanatory notes to the consolidated statements.

The same financial accounting, valuation and computation methods have been applied as in the case of the annual financial statements.

The Management Board is satisfied that the impression of the economic situation of the company, its net assets, financial position, earnings situation and cash flow conveyed by the present quarterly financial statements accords with the true facts. This interim report has not undergone an auditor's inspection or statutory audit.

2. Reporting period

The present interim report was prepared to September 30, 2010, for the reporting period from January 01, 2010 to that date.

1. Currency

All figures are stated in euro. Figures are rounded up to whole euro units.

1. Group of consolidated companies

In addition to the parent company ATOSS Software AG, Munich, the consolidated financial statements to September 30, 2010 also include all subsidiary companies:

ATOSS CSD Software GmbH, Cham, Germany ATOSS Software Ges.mbH, Vienna, Austria ATOSS Software AG, Zurich, Switzerland ATOSS Software S.R.L., Timisoara, Romania

These companies are fully consolidated.

5. Changes in equity

The development in equity is evident from the statement of changes in consolidated equity.

Notes to the Consolidated Financial Statements

"ATOSS is oriented to long term aims and objectives – for the benefit of our customers, employees and shareholders."

6. Treasury stock

In the first nine months of the financial year 8,000 treasury shares were dispensed in response to the exercise of convertible bonds. On September 30, 2010 the company held 57,099 treasury shares acquired at an average price of EUR 6.81. Treasury stock is reported as a separate equity item at cost of acquisition.

7. Sales revenues

The company's sales revenues were composed as follows:

EUR	01.01.2010 - 30.09.2010	01.01.2009 - 30.09.2009
Software licenses	4,830,536	4,550,109
Software maintenance	8,364,932	7,890,212
Total software	13,195,468	12,440,321
Consulting	5,709,796	6,135,649
Hardware	1,643,051	1,575,072
Others	895,000	1,239,853
Total sales revenues	21,443,315	21,390,895

The geographic breakdown of sales revenues was as follows:

EUR	01.01.2010 - 30.09.2010	01.01.2009 - 30.09.2009
Germany	19,577,895	19,674,813
Austria	1,161,989	1,066,625
Switzerland	394,398	349,802
German-speaking territories in total	21,134,282	21,091,240
Other countries	309,033	299,655
Total sales revenues	21,443,315	21,390,895

8. Personnel costs

The consolidated personnel costs to September 30, 2010 were composed as follows:

EUR	01.01.2010 - 30.09.2010	01.01.2009 - 30.09.2009
Wages and salaries	8,679,571	8,509,185
Social security contributions, expenditure on retirement pensions and welfare	1,864,079	2,341,476
Total personnel costs	10,543,650	10,850,662

The decline in social security contributions and expenditure on retirement pensions and welfare relative to the preceding year is attributable to the one-time increase in pensions provisions that took place in 2009.

9. Other operating income and expenses

In the first nine months of the current financial year the company recorded other operating income in the amount of EUR 102,493 (previous year: EUR 37,776). This income was essentially accounted for by exchange rate differences amounting to EUR 38,402 (previous year EUR -16,443), rental income of EUR 21,930 (previous year EUR 25,056), income of EUR 16,035 (previous year EUR 4,298) deriving from the markdown of reserves for bad debts and EUR 6,601 (previous year EUR 3,267) from the liquidation of provisions. The other operating expenses amounting to EUR 2,739 (previous year EUR 19,911) were composed primarily of bad debts amounting to EUR 2,152 (previous year EUR 4,939).

10. Financial investment income and expenditure

In the first nine months of the current financial year the company recorded income in the amount of EUR 115,791 (previous year EUR 241,106) from financial investments. This essentially comprised interest on fixed-term deposits.

The company also recorded expenses amounting as of September 30, 2010 to EUR 57,216 (previous year: EUR 34,700). This essentially concerned expenditure in connection with pension provisions.

11. Tax expenses

Consolidated tax expenses to September 30, 2010 were comprised as follows:

EUR	01.01.2010 - 30.09.2010	01.01.2009 - 30.09.2009
Pre-tax earnings as per IFRS	5,316,128	4,594,686
Expected tax charge (2010: 32.98%, 2009: 32.98%)	-1,753,259	-1,515,328
Non-deductible operating expenses	-10,296	-11,270
Tax refunds for previous years	4,658	0
Differences in tax rates at consolidated companies	58,377	29,442
Actual group tax charge	-1,700,520	-1,497,156

12. Earnings per share

The figure for earnings per share is arrived at by dividing the result for the period in the amount of EUR 3,615,608 by the weighted average number of shares outstanding. From January 01 to September 30, 2010 there were an average of 3,963,312 shares in circulation. Thus earnings per share for this period amounted to EUR 0.91, in comparison with EUR 0.78 in the first nine months of last year.

In order to calculate diluted earnings per share, the result for the period must be adjusted to allow for the interest cost relating to convertible bonds in the amount of EUR 311 (previous year EUR 447). In addition the average number of shares outstanding is increased with the inclusion of shares potentially issued as a result of convertible bonds. From January 01 to September 30, 2010 there were an average of 13,758 convertible bonds in circulation. Thus the diluted earnings per share for this period amounted to EUR 0.91, in comparison with EUR 0.78 in the preceding year.

13. Segment reporting

The company has only one uniform business segment which comprises the creation, sale and implementation of software solutions directed towards the efficient deployment of personnel.

The individual software solutions comprise:

ATOSS Staff Efficiency Suite (ASES) and ATOSS Startup Edition (ASE):

ASES and ASE are working time management and personnel resource planning solutions for customers of all sizes in all industries. These software solutions are generally accompanied by other services covering implementation and training. In addition, consulting services are rendered with the object of making meaningful use of the available scope and developing optimum solutions for the efficient deployment of personnel under specific operating conditions and in consideration of works agreements and industry-wide pay deals. The company also sells hardware components for time recording and access control purposes. ASES/ASE software is used in conjunction with all major standard system platforms and databases. Moreover thanks to the extensive facility to define customer-specific parameters, these solutions are capable of satisfying even the most sophisticated requirements of customers of all sizes in all industries.

ATOSS Time Control (ATC):

ATC offers a software solution to working time management and personnel resource planning for small and medium-sized customers, as well as large but decentrally organized clients. Likewise, in conjunction with ATC, ATOSS offers software implementation and training as well as consulting services. Merchandise including hardware and recording media is also available. ATC software is installed on the Microsoft Windows system platform in association with standard SQL databases and is particularly user-friendly and convenient for small to medium-sized customers as well as large decentralized organizations.

EUR	01.01.2010 - 30.09.2010	01.01.2009 - 30.09.2009
Sales revenues
ATOSS Staff Efficiency Suite (ASES) and ATOSS Startup Edition (ASE)	19,739,233	19,861,281
ATOSS Time Control (ATC)	1,704,082	1,529,614
Total sales revenues	21,443,315	21,390,895
Operating result (EBIT)
ATOSS Staff Efficiency Suite (ASES) and ATOSS Startup Edition (ASE)	4,924,911	4,164,680
ATOSS Time Control (ATC)	332,642	223,600
Total operating result (EBIT)	5,257,553	4,388,280

14. Employees

On September 30, 2010 the company had 247 employees.

	30.09.2010	30.09.2009
Development	105	94
Consulting	70	68
Sales and marketing	34	35
Administration	38	35
Total	247	232

15. Board of Management

The company's Management Board continued to comprise two members:

Andreas F.J. Obereder	Chief Executive Officer
Christof Leiber	Member of the Board of Management

16. Supervisory Board

The company's Supervisory Board as of September 30, 2010 comprised three members:

Peter Kirn	Chairman
Fritz Fleischmann	Deputy Chairman
Rolf Baron Vielhauer von Hohenhau	Member of the Supervisory Board

17. Shares held by board members

On the reporting date of September 30, 2010 board members held the following numbers of ATOSS shares:

	30.09.2010	30.06.2010	31.03.2010	31.12.2009	30.09.2009
Andreas F.J. Obereder	1,981,184	1,981,184	1,981,184	1,981,184	1,981,184
Peter Kirn	19,760	19,760	19,760	19,760	29,760

18. Convertible bonds held by board members

As of September 30, 2010 no board members held bonds convertible into ATOSS shares.

19. Convertible bonds

As of September 30, 2010 some 8,000 convertible bonds had been exercised. A further 8,000 convertible bonds were outstanding.

Details of outstanding convertible bonds held by board members and employees are summarized in the following table:

	Exercise price in EUR	Outstanding options	Contractual validity in years	Possible rights remaining to be exercised as of 30.09.2010
Employees
	3.97	2,000	1.1	2,000
	6.18	6,000	0.7	6,000
Total		8,000		8,000

20. Notifiable participating interests

In the first nine months of financial year 2010 the following notifiable securities transactions pursuant to §§ 21 ff. of the German Securities Trading Act came to the company's attention:

On June 21, 2010 MainFirst SICAF of Luxembourg acquired shares in excess of the voting rights threshold of 3 percent of nominal capital; MainFirst SICAF now has a holding of 3.1 percent.

21. Business transactions with closely related persons

Payment in the amount of EUR 2,050,000 plus ancillary costs was made in January 2010 for the purchase of the real estate property acquired in the preceding year from the wife of the Chief Executive Officer. An expert report was obtained to ascertain the value of the property. The purchase of this property and the resulting positive impact on results were discussed at a meeting of the Supervisory Board on December 1, 2009. The Supervisory Board passed a resolution approving the purchase. Ownership and liability transferred to the company on January 1, 2010 at which point in time the lease came to an end.

Moreover the wife of the Chief Executive Officer provides services to the company. In the first nine months of the financial year 2010 the value of these services amounted to EUR 2,392 (previous year: EUR 5,980).

The company is satisfied that the terms agreed for these transactions are standard market terms.

22. Events after the reporting period

There have been no reportable events of particular significance since September 30, 2010.

N o t e s

We hereby give an assurance to the best of our knowledge and belief that in accordance with the applicable interim reporting standards these interim consolidated financial statements convey an impression of the net assets, financial position and earnings situation of the Group which accords with the true facts; and that the development in business including the results and the situation of the Group are so described in the interim consolidated management report as to convey an impression which likewise accords with the true facts; and that the essential opportunities and risks associated with the anticipated development of the Group in the remainder of the financial year are so described.

This report contains forward-looking statements that are based on the conviction of the Management Board of ATOSS Software AG and reflect current assumptions and estimations. These forward-looking statements are subject to risks and uncertainties. Many facts that cannot currently be predicted may cause the actual performance and earnings of ATOSS Software AG to develop in a different manner. This could for example include the non-acceptance of newly introduced products or services, changes in the general economic and business climate, a failure to achieve efficiency and cost-reduction targets or changes in business strategy.

The Management Board is firmly convinced that the expectations embodied in these forward-looking statements are sound and realistic. Should, however, the above-mentioned or other unforeseeable risks materialize, ATOSS Software AG cannot guarantee that the expressed expectations will prove to be correct.

Munich, November 15, 2010

Andreas F.J. Obereder Christof Leiber Chief Executive Officer Member of the Board

of Management

Declaration by the Disclaimer Legal Representatives

OTHER OFFICES Düsseldorf

Fon +49.21 50.9 65-0

Frankfurt Fon +49.69.66 05 99-0

Hamburg Fon +49.40.27 81 63-0

Stuttgart Fon +49.711.7 28 73 20-0

SUBSIDIARIES Germany ATOSS CSD Software GmbH, Cham Fon +49.99 71.85 18-0

Austria ATOSS Software Ges.mbH, Vienna Fon +43.1.7 17 28-334

Switzerland ATOSS Software AG, Zurich Fon +41.44.308 39-56

31.01.2011 Press release announcing preliminary results for 2010	RESPONSIBLE
11.03.2011 Publication of the annual report for 2010	ATOSS Software AG
	Am Moosfeld 3
11.03.2011 Balance sheet press conference	D-81829 Munich
	Fon +49.89.4 27 71-0
26.04.2011 Press release announcing the 3-monthly statements	Fax +49.89.4 27 71-100
	www.atoss.com
03.05.2011 General meeting
16.05.2011 Publication of the 3-monthly financial statements	INVESTOR RELATIONS CONTACT
25.07.2011 Press release announcing the 6-monthly statements	ATOSS Software AG
	Investor Relations
15.08.2011 Publication of the 6-monthly financial statements	Christof Leiber
	Fon +49.89.4 27 71-0
24.10.2011 Press release announcing the 9-monthly statements	Fax +49.89.4 27 71-100
	Christof.Leiber@atoss.com
14.11.2011 Publication of the 9-monthly financial statements

Romania ATOSS Software SRL, Timisoara Fon +40.356.71 01 82

Corporate Calendar Imprint

ATOSS Software AG

Am Moosfeld 3 D-81829 Munich Fon +49.89.4 27 71-0 Fax +49.89.4 27 71-100

info@atoss.com www.atoss.com