Telelogic interim report July-September 2003

Telelogic Announces Pre-Tax Profit for Third Quarter 2003 MALMÖ, Sweden - October 21, 2003 - Telelogic (Stockholm Exchange: TLOG), the leading global provider of solutions for advanced systems and software development, today announced financial results for the third quarter 2003, ending September 30. Pre-tax profit amounted to US$0.6 million (SEK 5.1 million) compared to US$-2.5 million (SEK -23.3 million) for the same quarter last year. Total costs, excluding taxes, continued to decline during the quarter and decreased 7 percent compared to the previous quarter. Revenue for Q303 amounted to US$28.2 million (SEK 228.2 million) a 2 percent sequential growth over Q203 and 6 percent over Q103 at constant exchange rates. New licenses and maintenance revenues totaled to US$23.2 million (SEK 188.2 million) during the third quarter. Compared with the previous quarter, this figure represented a 4 percent increase at constant exchange rates and was identical to the same quarter in 2002. Sales of new licenses and maintenance accounted for 82 percent of total revenues, which was a slight increase over the previous quarter. Services revenues amounted to US$4.9 million (SEK 40.0 million) which was 31 percent lower than Q302 at constant exchange rates. This can be attributed to a refocusing of the company's services operations on high margin product- related business. "This quarter's results represent a very significant step in the financial turnaround that we have been pushing hard for since Q201. A combination of judicious financial management as well as continued focused investments in our customer relationships and leading product portfolio, has resulted in positive earnings, despite the fact that the third quarter is typically the weakest due to seasonality effects," said Anders Lidbeck, president and CEO for Telelogic. "We are seeing a stabilization of demand in all segments of our business. Even though we also posted sequential as well as year-over-year growth in both North America and Asia, we continue to have a conservative outlook on the year, even though we are more positive now than we were 3 months ago." Telelogic's gross margin increased to 77.6 percent for the quarter compared with 72.7 percent for the same period 2002. Telelogic's operations in America and Asia continue to deliver strong results compared with the previous quarter and the third quarter last year. The increase in revenues is primarily due to strong license sales and profitability in both regions is robust. In Europe, the company's restructuring measures combined with solid revenues that only decreased marginally compared with the previous quarter, has had a significant positive effect on profitability. The assessment is that no further cost reduction measures are necessary in order for Europe to generate profitability on the same levels as America and Asia going forward. "Our license and maintanance business was robust in the quarter, especially in the defense and aerospace industry," said Lidbeck. "Revenues from this industry increased 11 percent at constant exchange rates compared with the previous quarter. Following steady demand in the first half of 2003, Telelogic's market leading requirements management tool DOORS® increased sales by 8 percent compared with the previous quarter at constant exchange rates. Revenues for TAU® and SYNERGY(TM) were almost identical compared with the same quarter last year. All in all and given the circumstances, we had a very succesful quarter," Lidbeck concluded. Outlook for 2003 The underlying demand in the market is assessed as good and is expected to return to growth when the general investment climate improves. During 2003, Telelogic will take measures to strengthen growth in the U.S. and Asian markets. The company´s goal is to strenghten its market position in these markets and to at least retain its position in the global market. During 2003, the company will focus on improving operating earnings and measures will be taken to achieve Telelogic's goal of a 20 percent operating margin, which was set in 1999. A prerequisite for achieving this goal during 2004 is, however, increased demand. The forecast is that pre-tax profit for 2003 will improve in comparison with the previous year. During 2003, Telelogic will report any restructuring costs as part of current expenses. Telelogic has a satisfactory financial position. Cash flow is estimated to be negative during 2003 but is expected to improve as pre-tax profit improves. Cash flow is forecast to be positive in 2004. Note: The results presented are based on Swedish Accounting Principles. This report has not been subject to special review by Telelogic's auditors. During the quarter, restructuring expenses have been reported as a part of current expenses. Besides this, there has been no change to the accounting principles. For additional information and the detailed quarterly report, please refer to: http://www.telelogic.com/about/investors/finance/other/q32003.cfm Safe Harbor Statement The foregoing, including the discussion regarding the company's future prospects, contains certain forward-looking statements that involve risks and uncertainties, including uncertainties associated with economic conditions in the high-tech industry, particularly in the principal industry sectors served by the company, changes in customer requirements, the ability of the company to assimilate acquired businesses and to achieve the anticipated benefits of such acquisitions, competition and technological change. The company's actual results of operations may differ significantly from those contemplated by such forward-looking statements as a result of these and other factors, including factors set forth in the company's Annual Report. About Telelogic Founded in 1983, Telelogic® is the leading global provider of solutions for advanced systems and software development. The company's integrated best-in-class software tools, supported by professional services, enable companies to automate their entire development lifecycle, resulting in improved quality and predictability with reduced time-to-market and overall costs. To ensure interoperability with third-party tools, Telelogic's products are built on an open architecture and standardized languages. As an industry leader and technology visionary, Telelogic is actively involved in shaping the future of advanced systems and software development by participating in industry organizations like ETSI, INCOSE, ITU-T, OMG and others. With U.S. headquarters in Irvine, California, Telelogic has offices in 17 counties worldwide. Customers include Alcatel, BAE SYSTEMS, BMW, Boeing, DaimlerChrysler, Deutsche Bank, Ericsson, General Motors, Lockheed Martin, Motorola, NEC, Nokia, Philips, Siemens and Thales. For more information, please visit www.telelogic.com. Telelogic, Telelogic DOORS, Telelogic DocExpress, and Telelogic TAU are the registered trademarks of Telelogic. Telelogic TAU Architect, Developer, Tester, SYNERGY and Active CM are trademarks of Telelogic. All other trademarks are the properties of respective holders. Contacts: Catharina Paulcén Fredrik Sjöholm Vice President Corporate Director Investor Relations Communications Phone: +46 705 17 47 30 Phone: +46 40 650 65 22 E-mail: E-mail: catharina.paulcén@telelogic.com fredrik.sjoholm@telelogic.com ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2003/10/21/20031021BIT00100/wkr0001.doc The full report http://www.waymaker.net/bitonline/2003/10/21/20031021BIT00100/wkr0002.pdf The full report

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Telelogic is a leading global provider of solutions for advanced systems and software development. Telelogic's intuitive, best-in-class software tools automate and support best practices throughout the development lifecycle, leaving development teams free to concentrate on core competencies and apply their skills and energy to value-added tasks. By optimizing each phase of development, Telelogic enables companies to deliver higher quality systems and software with greater predictability, reduced time-to-market and lower overall costs. To ensure interoperability with third-party tools, Telelogic's products are built on an open architecture and standardized languages.

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