Telelogic Strengthens its Position in the Embedded Market through the Acquisition of I-Logix

$80 million deal boosts Telelogic’s modeling offering and secures a leading position in the embedded space

------------------------------------------ Invitation to press/analyst meeting A presentation of the acquisition for analyst and media will take place today, March 6, at 14.00 CET as a webinar/phone conference. For details, see press release below. ------------------------------------------ MALMÖ, Sweden—March 6, 2006—Telelogic AB (Stockholm Exchange: TLOG), the leading provider of software solutions that align advanced systems and software development with business objectives, today announced the acquisition of privately-held I-Logix, a leading provider of modeling tools for the embedded market. Under the terms of the agreement, the consideration of USD 80 million will be paid in cash. I-Logix’s revenue 2005 was USD 26.8 million with 11% in operating margin. I-Logix currently employs 133 people. Background and Reasons for the Acquisition Telelogic has communicated its vision for growth over the coming five-year period. This is to be achieved both organically and by extending and complementing our comprehensive product portfolio through selective acquisitions. Today Telelogic has a market leading ALM offering and is one of the global market leaders in the area of systems and software modeling with Telelogic TAU. Telelogic has identified I-Logix as a highly successful, fast growing company with a market leading product that ideally complements Telelogic’s offering in the modeling space as well as many of our other products, especially those with focus on embedded applications. I-Logix develops and sells solutions for Model-Driven Development (MDD). These solutions allow engineers, operating in either small or large teams, to graphically model the requirements, behavior, and functionality of embedded systems. The design is iteratively analyzed, validated, and tested throughout the development process and production-quality code can be automatically generated at any stage, in a variety of languages. While Telelogic TAU G2 is strong in the general modeling space, I-Logix has focused on the embedded space where it has created a very strong market position. “We are acquiring the fastest growing supplier of modeling tools for the embedded market,” said Anders Lidbeck, President and CEO of Telelogic. “I-Logix has become a tough competitor the past years with a strong modeling offer focused on embedded systems and software development. Their products have an edge in embedded development and have managed to secure a top position in that market. By combining our two companies, Telelogic will be able to even better address our customers’ needs for developing advanced systems and software, for both the enterprise and projects. We will undoubtedly be number one in this space.” ”Telelogic and I-Logix both have a long tradition of focusing very carefully on user needs. We also share a common technology view and a commitment toward standards ranging from UML to SysML and DoDAF” says Gene Robinson, CEO of I-Logix. ”I-Logix’s products strongly complement Telelogic’s and together our combined solutions and resources will benefit all of our customers. We chose to become a part of Telelogic family because we believe in their vision to assemble the broadest array of “dream-team” products and solutions for our combined market. We have had excellent growth with increasing profitability and we are now at a point where the business vision can best be realized and customer needs most effectively addressed by merging with a larger complementary organization with greater financial resources and extensive global reach. Being a part of Telelogic will create significantly better prospects for our users and our employees.” Strengthened market position I-Logix is the fastest growing supplier of modeling tools for development of embedded applications. Telelogic is very strong in the telecommunication market with its TAU G1 offering, and during the past couple of years, Telelogic’s modeling solution, TAU G2, has had its strongest acceptance outside the embedded market. With the acquisition, Telelogic can offer a comprehensive modeling solution for all types of development of advanced software and systems. With I-Logix Telelogic will also strengthen its position within aerospace/defense, government, automotive, telecom, consumer products and medical segments. Complementary product focus Telelogic develops and markets tools for requirements management, modeling, test, configuration management and change management. I-Logix’s tools compete with Telelogic’s modeling solutions, but have a stronger focus on development of embedded applications. The two companies’ modeling products will live side by side with focus on its respective markets, creating the strongest modeling offer on the market. Financial effects I-Logix’s revenue for 2005 was USD 26.8 million, a 29.5% growth compared to 2004. Pre-tax profit for 2005 was USD 2.9 million. At the time of the acquisition, I-Logix had 133 employees in total, of which 67 in the US, 38 in Israel, 25 in Europe & the Far East and 3 in Asia. The acquisition will have a positive impact on Telelogic’s cash flow and a positive effect on the operating margin for 2006. The acquisition will have a negative effect on the EPS for 2006. For 2007, the EPS effect is estimated to be positive. The IFRS related depreciations are estimated to 35 MSEK for 2006 and to 15 MSEK for 2007. Telelogic anticipates the acquisition of I-Logix to be final by end of March, 2006. Financial terms The consideration of USD 80 million will be paid through cash, of which 140 MSEK will be financed from current liquid funds and 500 MSEK though a bank loan. Press/Analyst meeting A presentation of the acquisition for analyst and media will take place today, March 6, at 14.00 CET as a webinar/phone conference. At the time of the meeting, use the following link to see the slide presentation. URL: https://www.livemeeting.com/cc/telelogic/join?id=KKS4TJ&role=attend Please state your name, no password is required. To listen to the presentation, dial +44 207 769 6404. Please be prepared to state your name and company. More information Telelogic will provide more details on the transaction on its website www.telelogic.com/investors. A document with questions and answers will be available on the time of the announcement. A recording and a slide presentation will be made available after the press/analyst meeting.