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UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 20-F


|           |  |                                                                                                       
|---------- |  | ------------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                       
|o          |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
    (g)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934              
|           |  | For the fiscal year ended December 31, 2005                                                           
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
     OF THE SECURITIES EXCHANGE ACT OF 1934         
|           |  | For the transition period
    from           to                                                       
|o          |  | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934       
|           |  | Date of event requiring this shell company report                                                     

Commission file number: 1-14251





SAP AG


(Exact name of registrant as specified in its charter)


SAP CORPORATION


(Translation of Registrants name into English)


Federal Republic of Germany


(Jurisdiction of incorporation or organization)





Dietmar-Hopp-Allee 16


69190 Walldorf


Federal Republic of Germany


(Address of principal executive offices)


Securities registered or to be registered pursuant to
Section 12(b) of the Act:


|                                                                                                          |  |                                          
|--------------------------------------------------------------------------------------------------------- |  | -----------------------------------------
|Title of each class                                                                                       |  | Name of each exchange on which registered
|                                                                                                          |  |                                          
|American Depositary Shares, each representing one-fourth
    of one Ordinary Share, without nominal value |  | New York Stock Exchange                  
|Ordinary Shares, without nominal value                                                                    |  | New York Stock Exchange*                 

Securities
registered or to be registered pursuant to Section 12(g) of
the Act:


Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act:




|                                                                       |  |            
|---------------------------------------------------------------------- |  | -----------
|Ordinary Shares, without nominal value (as of December 31,
    2005)** |  | 316,457,821



|      |  |     
|----- |  | ----
|Yes þ |  | No o



|      |  |     
|----- |  | ----
|Yes o |  | No þ





|      |  |     
|----- |  | ----
|Yes þ |  | No o

12b-2


þ o o




|          |  |          
|--------- |  | ---------
|Item 17 o |  | Item 18 þ

12b-2


|      |  |     
|----- |  | ----
|Yes o |  | No þ





|   |                                     
|-- | ------------------------------------
|** | Including 6,678,656 treasury shares.









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TABLE OF CONTENTS


|                            |                                                                    |                                                                        |   |    |    | 
|--------------------------- | ------------------------------------------------------------------ | ---------------------------------------------------------------------- | - | -- | -- | 
|                            |                                                                    | Page                                                                   |  
|                            |                                                                    |                                                                        |  
|INTRODUCTION                |                                                                    |                                                                        | 1 |   
|FORWARD-LOOKING INFORMATION |                                                                    |                                                                        | 2 |   
|PART I.                     |                                                                    |                                                                        | 3 |   
|                            | Item 1. Identity of Directors, Senior
    Management and Advisers* |                                                                        |   | 3  |   
|                            | Item 2. Offer Statistics and Expected
    Timetable*               |                                                                        |   | 3  |   
|                            | Item 3. Key Information                                            |                                                                        |   | 3  |   
|                            |                                                                    | Selected Financial Data                                                |   |    | 3  | 
|                            |                                                                    | Exchange Rates                                                         |   |    | 4  | 
|                            |                                                                    | Dividends                                                              |   |    | 5  | 
|                            |                                                                    | Risk Factors                                                           |   |    | 6  | 
|                            | Item 4. Information about SAP                                      |                                                                        |   | 20 |   
|                            |                                                                    | Availability of this Report                                            |   |    | 20 | 
|                            |                                                                    | Description of the Business                                            |   |    | 20 | 
|                            |                                                                    | Organizational Structure                                               |   |    | 41 | 
|                            |                                                                    | Description of Property                                                |   |    | 41 | 
|                            |                                                                    | Capital Expenditures                                                   |   |    | 43 | 
|                            | Item 4A. Unresolved Staff Comments*                                |                                                                        |   | 43 |   
|                            | Item 5. Operating and Financial Review
    and Prospects           |                                                                        |   | 44 |   
|                            |                                                                    | Overview                                                               |   |    | 44 | 
|                            |                                                                    | Key Factors                                                            |   |    | 45 | 
|                            |                                                                    | Operating Results                                                      |   |    | 46 | 
|                            |                                                                    | Outlook 2006                                                           |   |    | 61 | 
|                            |                                                                    | Foreign Currency Exchange Rate Exposure                                |   |    | 64 | 
|                            |                                                                    | Critical Accounting Policies                                           |   |    | 65 | 
|                            |                                                                    | New Accounting Standards not yet Adopted                               |   |    | 72 | 
|                            |                                                                    | Liquidity and Capital Resources                                        |   |    | 72 | 
|                            |                                                                    | Authorized Capital                                                     |   |    | 74 | 
|                            |                                                                    | Off-Balance Sheet Arrangements                                         |   |    | 74 | 
|                            |                                                                    | Research and Development                                               |   |    | 75 | 
|                            | Item 6. Directors, Senior Management
    and Employees             |                                                                        |   | 77 |   
|                            |                                                                    | Supervisory Board                                                      |   |    | 77 | 
|                            |                                                                    | Executive Board                                                        |   |    | 79 | 
|                            |                                                                    | Compensation, Shareholding, and Dealings of
    Directors and Officers |   |    | 80 | 
|                            |                                                                    | Employees                                                              |   |    | 88 | 
|                            |                                                                    | Share Ownership                                                        |   |    | 90 | 
|                            | Item 7. Major Shareholders and Related
    Party Transactions      |                                                                        |   | 95 |   
|                            |                                                                    | Major Shareholders                                                     |   |    | 95 | 
|                            |                                                                    | Related Party Transactions                                             |   |    | 97 | 
|                            | Item 8. Financial Information                                      |                                                                        |   | 97 |   
|                            |                                                                    | Consolidated Financial Statements                                      |   |    | 97 | 
|                            |                                                                    | Other Financial Information                                            |   |    | 97 | 
|                            | Item 9. The Offer and Listing                                      |                                                                        |   | 98 |   
|                            |                                                                    | General                                                                |   |    | 98 | 

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|             |                                                                                            |                                                                        |     |     |     | 
|------------ | ------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------- | --- | --- | --- | 
|             |                                                                                            | Page                                                                   |    
|             |                                                                                            |                                                                        |    
|             | Item 10. Additional Information                                                            |                                                                        |     | 102 |    
|             |                                                                                            | Articles of Incorporation                                              |     |     | 102 | 
|             |                                                                                            | Material Contracts                                                     |     |     | 110 | 
|             |                                                                                            | Exchange Controls and Other Limitations
    Affecting Security Holders |     |     | 111 | 
|             |                                                                                            | Taxation                                                               |     |     | 111 | 
|             |                                                                                            | Documents on Display                                                   |     |     | 118 | 
|             | Item 11. Quantitative and Qualitative
    Disclosures About Market Risk                    |                                                                        |     | 119 |    
|             |                                                                                            | Foreign Currency Risk                                                  |     |     | 119 | 
|             |                                                                                            | Interest Rate Risk                                                     |     |     | 121 | 
|             |                                                                                            | Equity Price Risk                                                      |     |     | 121 | 
|             | Item 12. Description of Securities
    Other than Equity Securities*                       |                                                                        |     | 123 |    
|PART II.     |                                                                                            |                                                                        | 124 |    
|             | Item 13. Defaults, Dividend Arrearages
    and Delinquencies*                              |                                                                        |     | 124 |    
|             | Item 14. Material Modifications to the
    Rights of Security Holders and Use of Proceeds* |                                                                        |     | 124 |    
|             | Item 15. Controls and Procedures                                                           |                                                                        |     | 124 |    
|             | Item 16. [Reserved]                                                                        |                                                                        |     | 124 |    
|             | Item 16A. Audit Committee Financial
    Expert                                             |                                                                        |     | 124 |    
|             | Item 16B. Code of Ethics                                                                   |                                                                        |     | 124 |    
|             | Item 16C. Principal Accountant Fees
    and Services                                       |                                                                        |     | 125 |    
|             |                                                                                            | Audit Fees, Audit-Related Fees, Tax Fees
    and All Other Fees        |     |     | 125 | 
|             |                                                                                            | Audit Committees Pre-Approval
    Policies and Procedures             |     |     | 125 | 
|             | Item 16D. Exemptions from the Listing
    Standards for Audit Committees                   |                                                                        |     | 126 |    
|             | Item 16E. Purchases of Equity
    Securities by the Issuer and Affiliated Purchasers       |                                                                        |     | 126 |    
|PART III.    |                                                                                            |                                                                        | 127 |    
|             | Item 17. Financial Statements**                                                            |                                                                        |     | 128 |    
|             | Item 18. Financial Statements                                                              |                                                                        |     | 128 |    
|             | Item 19. Exhibits                                                                          |                                                                        |     | 129 |    
|EXHIBIT 1   
|EXHIBIT 2.1 
|EXHIBIT 4.5 
|EXHIBIT 4.6 
|EXHIBIT 4.7 
|EXHIBIT 8   
|EXHIBIT 12.1
|EXHIBIT 12.2
|EXHIBIT 13  
|EXHIBIT 15  








|   |                                                                          
|-- | -------------------------------------------------------------------------
|*  | Omitted because the Item is not applicable or the answer is
    negative.
|  
|** | The Registrant has responded to Item 18 in lieu of this
    Item.        

ii



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INTRODUCTION


Aktiengesellschaft 20-F, 20-F


20-F:  20-F 20-F,


 


20-F 20-F


20-F


1



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FORWARD-LOOKING INFORMATION


20-F 20-F




| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | general economic and business conditions;                                                                       
|
| |  | attracting and retaining personnel;                                                                             
|
| |  | competition in the software industry;                                                                           
|
| |  | implementing our business strategy;                                                                             
|
| |  | developing and introducing new services and products;                                                           
|
| |  | freedom to use intellectual property;                                                                           
|
| |  | regulatory and political conditions;                                                                            
|
| |  | adapting to technological developments;                                                                         
|
| |  | obtaining and expanding market acceptance of our services and
    products;                                     
|
| |  | terrorist attacks or other acts of violence or war;                                                             
|
| |  | integrating newly acquired businesses;                                                                          
|
| |  | meeting our customers requirements; and                                                                        
|
| |  | other risks and uncertainties, some of which we describe under
    Item 3. Key Information  Risk
    Factors.

20-F. 20-F 20-F.


2



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PART I





ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
AND ADVISERS







ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE







ITEM 3. KEY INFORMATION











|                                                        |                                                  |                                       |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      |  |           |           |  |  |           |           | 
|------------------------------------------------------- | ------------------------------------------------ | ------------------------------------- | ---------- | --------- | ---- |  | --------- | --------- |  |  | --------- | --------- |  | ---- | --------- | --------- | ---- |  | --------- | --------- |  |  | --------- | --------- | 
|                                                        |                                                  | Year Ended December 31,               |           
|                                                        |                                                  |                                       |           
|                                                        |                                                  | 2005                                  |            |           | 2005 |  |           | 2004      |  |  | 2003      |           |  | 2002 |           |           | 2001 | 
|                                                        |                                                  |                                       |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      | 
|                                                        |                                                  | U.S.$(1)                              |            |           |     |  |           |          |  |  |          |           |  |     |           |           |     | 
|                                                        |                                                  | (in thousands, except per share data) |           
|Income Statement Data:                                  |                                                  |                                       |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      |  |           |           |  |  |           |          
|Total revenue                                           |                                                  |                                       | 10,080,418 |           |      |  | 8,512,429 |           |  |  | 7,514,493 |           |  |      | 7,024,606 |           |      |  | 7,412,838 |           |  |  | 7,340,804 |          
|Operating income                                        |                                                  |                                       | 2,760,053  |           |      |  | 2,330,732 |           |  |  | 2,018,381 |           |  |      | 1,724,019 |           |      |  | 1,625,678 |           |  |  | 1,312,374 |          
|                                                        | Income before income taxes and minority interest |                                       |            | 2,743,029 |      |  |           | 2,316,356 |  |  |           | 2,072,642 |  |      |           | 1,776,615 |      |  |           | 1,107,698 |  |  |           | 1,068,757 | 
|Net income                                              |                                                  |                                       | 1,772,045  |           |      |  | 1,496,407 |           |  |  | 1,310,521 |           |  |      | 1,077,063 |           |      |  | 508,614   |           |  |  | 581,136   |          
|Earnings per
    share(2)                               |                                                  |                                       |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      |  |           |           |  |  |           |          
|                                                        | Basic                                            |                                       |            | 5.72      |      |  |           | 4.83      |  |  |           | 4.22      |  |      |           | 3.47      |      |  |           | 1.62      |  |  |           | 1.85      | 
|                                                        | Diluted                                          |                                       |            | 5.70      |      |  |           | 4.81      |  |  |           | 4.20      |  |      |           | 3.46      |      |  |           | 1.62      |  |  |           | 1.85      | 
|Other Data:                                             |                                                  |                                       |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      |  |           |           |  |  |           |          
|Weighted average number of shares
    outstanding(2)(3) |                                                  |                                       |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      |  |           |           |  |  |           |          
|                                                        | Basic                                            |                                       |            | 309,816   |      |  |           | 309,816   |  |  |           | 310,802   |  |      |           | 310,781   |      |  |           | 313,016   |  |  |           | 314,309   | 
|                                                        | Diluted                                          |                                       |            | 310,836   |      |  |           | 310,836   |  |  |           | 312,156   |  |      |           | 311,409   |      |  |           | 313,980   |  |  |           | 314,412   | 
|Balance Sheet Data:                                     |                                                  |                                       |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      |  |           |           |  |  |           |          
|Total assets                                            |                                                  |                                       | 10,732,099 |           |      |  | 9,062,742 |           |  |  | 7,585,472 |           |  |      | 6,325,865 |           |      |  | 5,608,463 |           |  |  | 6,195,604 |          
|Shareholders equity                                    |                                                  |                                       | 6,847,326  |           |      |  | 5,782,238 |           |  |  | 4,594,253 |           |  |      | 3,709,445 |           |      |  | 2,872,091 |           |  |  | 3,109,513 |          
|Subscribed capital                                      |                                                  |                                       | 374,750    |           |      |  | 316,458   |           |  |  | 316,004   |           |  |      | 315,414   |           |      |  | 314,963   |           |  |  | 314,826   |          
|Short-term bank loans and overdrafts                    |                                                  |                                       | 26,417     |           |      |  | 22,308    |           |  |  | 25,851    |           |  |      | 19,043    |           |      |  | 22,657    |           |  |  | 458,266   |          
|Long-term financial
    debt(4)                         |                                                  |                                       | 10,562     |           |      |  | 8,919     |           |  |  | 9,211     |           |  |      | 11,948    |           |      |  | 11,318    |           |  |  | 7,375     |          

3



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|    |                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts in the column are unaudited and translated for the
    convenience of the reader at U.S.$1.1842 to
    1.00, the Noon
    Buying Rate for converting
    1.00 into
    dollars on December 31, 2005. See
     Exchange Rates for recent exchange rates
    between the euro and the dollar. Our auditors have not audited
    these converted dollar amounts.
|   
|(2) | Amounts are adjusted for our one-for-one conversion of
    preference shares to ordinary shares effective as of
    June 18, 2001.                                                                                                                                                                                                                                        
|   
|(3) | Includes preference and ordinary shares for periods prior to
    June 18, 2001, the effective date of the conversion of the
    preference shares into ordinary shares on a share-for-share
    basis.                                                                                                                                                                    
|   
|(4) | Long-term financial debt represents financial liabilities with a
    remaining life beyond one year, which is comprised of bank loans
    and overdrafts and convertible bonds issued pursuant to
    stock-based compensation plans. See Item 6.
    Directors, Senior Management and Employees  Share
    Ownership  Stock-Based Compensation Plans.                













|     |  |            |        |  |      |  |        |     |  |  |            |  |  |  |        | 
|---- |  | ---------- | ------ |  | ---- |  | ------ | --- |  |  | ---------- |  |  |  | ------ | 
|Year |  | Average(1) |        |  | High |  |        | Low |  |  | Period-End | 
|     |  |            |        |  |      |  |        |     |  |  |            | 
|2001 |  |            | 0.8909 |  |      |  | 0.9535 |     |  |  | 0.8370     |  |  |  | 0.8901 | 
|2002 |  |            | 0.9495 |  |      |  | 1.0485 |     |  |  | 0.8594     |  |  |  | 1.0485 | 
|2003 |  |            | 1.1411 |  |      |  | 1.2597 |     |  |  | 1.0361     |  |  |  | 1.2597 | 
|2004 |  |            | 1.2478 |  |      |  | 1.3625 |     |  |  | 1.1801     |  |  |  | 1.3538 | 
|2005 |  |            | 1.2400 |  |      |  | 1.3476 |     |  |  | 1.1667     |  |  |  | 1.1842 | 

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|      |                                |      |  |        |     |  |  |            |  |  |  |        | 
|----- | ------------------------------ | ---- |  | ------ | --- |  |  | ---------- |  |  |  | ------ | 
|Month |                                | High |  |        | Low |  |  | Period-End | 
|      |                                |      |  |        |     |  |  |            | 
|2005  |                                |      |  |        |     |  |  |            |  |  |  |       
|      | July                           |      |  | 1.2200 |     |  |  | 1.1917     |  |  |  | 1.2129 | 
|      | August                         |      |  | 1.2434 |     |  |  | 1.2147     |  |  |  | 1.2330 | 
|      | September                      |      |  | 1.2538 |     |  |  | 1.2011     |  |  |  | 1.2058 | 
|      | October                        |      |  | 1.2148 |     |  |  | 1.1914     |  |  |  | 1.1995 | 
|      | November                       |      |  | 1.2067 |     |  |  | 1.1667     |  |  |  | 1.1790 | 
|      | December                       |      |  | 1.2041 |     |  |  | 1.1699     |  |  |  | 1.1842 | 
|2006  |                                |      |  |        |     |  |  |            |  |  |  |       
|      | January                        |      |  | 1.2287 |     |  |  | 1.1980     |  |  |  | 1.2158 | 
|      | February                       |      |  | 1.2100 |     |  |  | 1.1860     |  |  |  | 1.1925 | 
|      | March (through March 10, 2006) |      |  | 1.2028 |     |  |  | 1.1886     |  |  |  | 1.1886 | 






|    |                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------
|(1) | The average of the applicable Noon Buying Rates on the last day
    of each month during the relevant period.






Aufsichtsrat Vorstand




|                        |  |                   |      |       |  |  |         |        
|----------------------- |  | ----------------- | ---- | ----- |  |  | ------- | -------
|                        |  | Dividend Paid per
|Year Ended December 31, |  | Ordinary Share   
|                        |  |                  
|                        |  |                  |      | U.S.$
|2001                    |  |                   | 0.58 |       |  |  | 0.53 (1 | )(4)   
|2002                    |  |                   | 0.60 |       |  |  | 0.69 (1 | )(4)   
|2003                    |  |                   | 0.80 |       |  |  | 0.95 (1 | )(4)   
|2004                    |  |                   | 1.10 |       |  |  | 1.39 (1 | )(4)   
|2005 (proposed)         |  |                   | 1.45 | (2)   |  |  | 1.72 (2 | )(3)(4)






|    |                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Translated for the convenience of the reader from euro into
    dollars at the Noon Buying Rate for converting euro into dollars
    on the dividend payment date. The depositary is required to
    convert any dividend payments received from SAP as promptly as
    practicable upon receipt.                                                                                                  
|   
|(2) | Subject to approval of the Annual General Shareholders
    Meeting of SAP AG to be held on May 9, 2006.                                                                                                                                                                                                                                                                                           
|   
|(3) | Translated for the convenience of the reader from euro into
    dollars at the Noon Buying Rate for converting euro into dollars
    on March 10, 2006, of U.S.$1.1886 per
    1.00. The
    depositary is required to convert any dividend payments received
    from SAP as promptly as practicable upon receipt. The dividend
    paid can actually differ due to changes in the exchange rate.
|   
|(4) | One SAP ADS currently represents one-fourth of SAP AGs
    ordinary share. Accordingly, the final dividend per ADS is
    calculated as one-fourth of the dividend for one SAP AG share
    and is dependent on the euro/dollar exchange rate.                                                                                                                                                    

5



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A downturn in the economic conditions in the regions in which
we operate or in the software markets in those regions or in our
customers specific industries has in the past resulted,
and may result in the future, in a significant fluctuation of
demand for our products, causing our revenues and profitability
to suffer.








Social and political instabilities including those caused by
terrorist attacks, the risk of war or international hostilities
as well as the risk of pandemic disease outbreaks could
adversely impact our business.




Because we expect to continue to expand globally, we may face
specific economic and regulatory challenges that we may not be
able to meet.




6



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




| |   |                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | general economic or political conditions in each country or
    region;                                                                                                                                                    
|
| |  | the overlap of differing tax structures;                                                                                                                                                                                   
|
| |  | the management of an organization spread over various
    jurisdictions;                                                                                                                                                   
|
| |  | exchange rate fluctuations; and                                                                                                                                                                                            
|
| |  | regulatory constraints such as export restrictions, governmental
    regulations such as regulations of the Internet, and additional
    requirements for the design and for the distribution of software
    and services.





Consolidation in the software industry may result in
instability of software demand and stronger peer companies in
the long term.




Due to intense competition, our market share and financial
performance could suffer.








7



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The market in which we compete continues to evolve and, if it
does not grow rapidly in the long term, our business will be
adversely affected.




Our future revenue is dependent in part upon our installed
customer base continuing to license additional products, renew
maintenance agreements and purchase additional professional
services.






Our failure to develop new relationships and enhance existing
relationships with third-party distributors, software suppliers,
system integrators and value-added resellers that help sell our
services and products may adversely affect our revenues.




8



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If we were to lose the services of members of management and
employees or fail to attract new personnel who possess
specialized knowledge and technology skills, we may not be able
to manage our operations effectively or develop new products and
services.




If we do not effectively manage our growth, our existing
personnel and systems may be strained and our business may not
operate efficiently.




9



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Principal shareholders may be able to exert control over our
future direction and operations.




Sales of ordinary shares by principal shareholders could
adversely affect the price of our capital stock.




We are subject to significantly increased governance-related
regulatory requirements both in Germany and the U.S.




10



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U.S. judgments may be difficult or impossible to enforce
against us or our Board members.






We may not be able to prevent harmful information leakage
about future strategies, technologies and products.




Our IT security measures may be breached or compromised and
we may sustain unplanned IT system unavailability.




Wide acceptance of the use of Web-based transactions may be
hindered due to privacy concerns.


e-commerce


11



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Our sales are subject to quarterly fluctuations and our sales
forecast may not be accurate.






| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | the relatively long sales cycles for our products;                                                  
|
| |  | the size and timing of individual license transactions;                                             
|
| |  | the timing of the introduction of new products or product
    enhancements by us or our competitors;
|
| |  | changes in customer budgets;                                                                        
|
| |  | seasonality of a customers technology purchases; and                                               
|
| |  | other general economic and market conditions.                                                       







| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | expansion of our operations;                                                                            
|
| |  | research and development directed towards new products and
    product enhancements; and                
|
| |  | development of new distribution and resale channels,
    particularly for small and midsize enterprises.



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Because we conduct our operations throughout the world, our
results of operations may be affected by currency
fluctuations.


period-to




Our revenue mix may vary and may negatively affect our profit
margins.


right-to on-demand




The cost of derivative instruments for hedging of the STAR
Plan may exceed the benefits of those arrangements.




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Managements use of estimates may affect our results of
operations and financial position.




Revenue recognition accounting pronouncements may adversely
affect our reported results of operations.




The market price for our ADSs and ordinary shares may remain
volatile.






| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the announcement of new products or product enhancements by us
    or our competitors;                                                                       
|
| |  | technological innovation by us or our competitors;                                                                                                           
|
| |  | quarterly variations in our results of operations;                                                                                                           
|
| |  | changes in revenue and revenue growth rates on a consolidated
    basis or for specific geographic areas, business units, products
    or product categories;
|
| |  | speculation in the press or financial community;                                                                                                             
|
| |  | general market conditions specific to particular industries;                                                                                                 
|
| |  | general and country-specific economic or political conditions
    (particularly wars, terrorist attacks etc.); and                                           
|
| |  | proposed and completed acquisitions or other significant
    transactions by us or our competitors.                                                          

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Customer implementation and installation of our products
involves significant resources and is subject to significant
risks.






Undetected errors, shortcomings in our security features or
delays in new products and product enhancements may result in
increased costs to us and delayed demand for our new
products.






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If we are unable to keep up with rapid technological changes,
we may not be able to compete effectively.






| |   |                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | continue to enhance and expand our existing products and
    services;                                                                                                                                                    
|
| |  | provide best-in-class
    business solutions and services; and                                                                                                                                                            
|
| |  | develop and introduce new products and provide new services that
    satisfy increasingly sophisticated customer requirements, that
    keep pace with technological developments and that are accepted
    in the market.



We depend on technology licensed to us by third parties, and
the loss of this technology could delay implementation of our
products or force us to pay higher license fees.




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Our strategy to position SAP NetWeaver as a business process
platform may not succeed or may make certain of our products
less desirable.














We may not be able to protect our intellectual property
rights, which may cause us to incur significant costs in
litigation and erosion in the value of our brands and
products.




17



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Some of our competitors or entities focusing on patent
acquisition and licensing may have been more aggressive than we
have in applying for or obtaining patent protection for
innovative proprietary technologies.




If we acquire other companies, we may not be able to
integrate their operations effectively and, if we enter into
strategic alliances, we may not work successfully with our
alliance partners.






| |   |                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | inability to successfully integrate the acquired business;                                                                                                                                       
|
| |  | inability to integrate the acquired technologies or products
    with our current products and technologies;                                                                                     
|
| |  | potential disruption of our ongoing business;                                                                                                                                                    
|
| |  | inability to retain key technical and managerial personnel;                                                                                                                                      
|
| |  | dilution of existing equity holders caused by capital stock
    issuances to the stockholders of acquired companies or capital
    stock issuances to retain employees of the acquired companies;
|
| |  | assumption of unknown material liabilities of acquired companies;                                                                                                                                

18



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| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | incurrence of debt or significant cash expenditure;                                                                                                                                                
|
| |  | difficulty in implementing or maintaining controls, procedures
    and policies;                                                                                                                   
|
| |  | potential adverse impact on our relationships with partner
    companies or third-party providers of technology or products;                                                                       
|
| |  | impairment of relationships with employees and customers;                                                                                                                                          
|
| |  | regulatory constraints; and                                                                                                                                                                        
|
| |  | problems with product quality, product architecture, legal
    contingencies, product development issues or other significant
    risks that may not be detected through the due diligence process.



We may incur losses in connection with venture capital
investments.




Our insurance coverage may not be sufficient to avoid
negative impacts on our financial position or results of
operations resulting from the settlement of claims.




We are subject to claims and lawsuits against us that may
result in adverse outcomes.




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ITEM 4. INFORMATION ABOUT SAP


Aktiengesellschaft







20-F 20-F,

















| |   |                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | mySAP Business Suite applications, which help enterprises
    improve business operations ranging from supplier relationships
    to production to warehouse management, sales, and all
    administrative functions, through to customer relationships
|
| |  | Qualified mySAP
    All-in-One partner
    solutions and the SAP Business One applications for small and
    midsize enterprises (SMEs)                                                                                                                
|
| |  | Specific solutions for more than 25 industries in industry
    sectors such as financial services, consumer products, public
    service, process industry, service industry and discrete
    industry sectors                                         

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e-business






21



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time-to


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ramp-up






®














| |   |                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | To increase our market share, especially in the SME segment                                                               
|
| |  | To focus on increasing profitability by improving productivity
    in all areas                                           
|
| |  | To better serve SAP users with new products such as Mendocino,
    SAP CRM on-demand solutions and analytical applications
|
| |  | To help customers transition to and gain benefits from ESA                                                                

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24



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25



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| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| |  | Identify and engage potential customers;                                      
|
| |  | Perform business transactions with customers;                                 
|
| |  | Fulfill individual customer needs as contracted; and                          
|
| |  | Provide after-sales care such as customer service and product
    maintenance.









| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The mySAP ERP Financials solution is a finance, analytics,
    accounting, and financial compliance solution that is designed
    to help organizations handle financial transactions, process and
    interpret financial and business data and implement financial
    reporting controls for corporate governance.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The mySAP ERP HCM solution is designed to help organizations
    optimize their investment in their employees. It enables
    organizations to enhance workforce performance by helping to
    streamline a wide range of essential human resources
    transactions and processes, including compliance with global
    regulatory requirements. It supports administration, payroll,
    benefits, legal reporting, online recruiting, blended learning,
    organizational management, compensation, manager self-services,
    employee collaboration and workforce analytics.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The mySAP ERP Corporate Services solution helps organizations
    support and streamline administrative processes in the areas of
    project portfolio management; quality management; audit
    management; environment, health and safety; travel management;
    and real estate management. Although these processes exist in
    most enterprises, they are often viewed as not differentiating
    an entity from its peers. Therefore, our customers seek to
    conduct these processes with the utmost efficiency. mySAP ERP
    Corporate Services is designed to optimize these services
    through greater visibility into performance, greater control,
    and reduced financial and environmental risks.

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| |                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The mySAP ERP Operations solution provides functions for
    automating and streamlining procurement and logistics execution,
    product development and manufacturing and sales and service. The
    solution also provides tools for analyzing data for better
    decision-making, as well as functions to promote individual
    employee productivity.



ramp-up
















27



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP xApps composite applications for mobile business are
    designed to allow users of the mySAP Business Suite applications
    to access required business processes through standard mobile
    devices, such as personal digital assistants (PDAs) and mobile
    phones. SAP currently delivers the following composite
    applications for mobile business: SAP xApp Mobile Sales, SAP
    xApp Mobile Service, SAP xApp Mobile Asset Management, and SAP
    xApp Mobile Time and Travel. These composite applications run in
    an occasionally connected mode, which allows users
    to run their business processes with or without a network
    connection. The underlying technology which enables this
    capability is SAP NetWeaver Mobile, one of the components of the
    SAP NetWeaver platform.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The SAP xApp Analytics composite application is designed to help
    business users take appropriate actions based on comprehensive
    views of their business data. SAP xApp Analytics allows users to
    analyze data from disparate sources, including third-party
    applications, legacy systems and externally syndicated
    information sources. SAP xApp Analytics also allows users to
    extend existing functionality, as well as to create their own
    analytic applications.



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|                                                     |  |                                      
|---------------------------------------------------- |  | -------------------------------------
|Process Industries                                   |  | Services Industries                  
| SAP for Chemicals                                  |  |  SAP for Media                      
| SAP for Mill Products                              |  |  SAP for Logistics Service Providers
| SAP for Oil & Gas                                  |  |  SAP for Postal Services            
| SAP for Mining                                     |  |  SAP for Railways                   
|                                                     |  |  SAP for Telecommunications         
|Discrete Industries                                  |  |  SAP for Utilities                  
| SAP for Aerospace & Defense                        |  |  SAP for Professional Services      
| SAP for Automotive                                 |  |                                      
| SAP for Engineering, Construction &
    Operations |  | Financial Services                   
| SAP for High Tech                                  |  |  SAP for Banking                    
| SAP for Industrial Machinery & Components          |  |  SAP for Insurance                  
|                                                    
|Consumer Industries                                  |  | Public Services                      
| SAP for Consumer Products                          |  |  SAP for Healthcare                 
| SAP for Retail                                     |  |  SAP for Higher Education & Research
| SAP for Wholesale Distribution                     |  |  SAP for Public Sector              
| SAP for Life Sciences                              |  |  SAP for Defense & Security         







| |   |                                               
| | - | ----------------------------------------------
| |  | company revenue;                              
|
| |  | number of employees;                          
|
| |  | standardized versus more custom solutions; and
|
| |  | level of desired partner involvement.         





| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | In the lower-end segment are those companies that require
    prepackaged business solutions, and      
|
| |  | In the higher-end segment are those companies that require more
    preconfigured and custom solutions.

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The SAP Business One application is a business management
    application designed specifically for small businesses to enable
    them to integrate and automate their business processes via a
    single application. In addition, SAP Business One is targeted
    for subsidiaries of larger corporations which have adopted SAP
    solutions. It contains an intuitive user interface and supports
    business processes such as financial management, customer
    relationship management, purchasing, inventory management and
    manufacturing. It can be extended via a software development kit
    by customers and local partners for industry specific
    applications. SAP Business One is based on the technology gained
    through SAPs 2002 acquisition of TopManage.

All-in




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Qualified mySAP
    All-in-One partner
    solutions, which are delivered through a network of approved SAP
    channel partners, are based on mySAP Business Suite applications
    and SAP Best Practices that provide predefined business
    processes, and are designed to help customers and partners
    implement the software easily and quickly. SAP channel partners
    that offer mySAP
    All-in-One partner
    solutions build upon the foundation of the best practices
    incorporated into the product and provide additional support for
    other industry-specific best practices based on their unique
    knowledge and expertise. Qualified mySAP
    All-in-One partner
    solutions are sold, deployed, and supported exclusively by SAP
    channel partners as a defined-scope implementation with
    consulting services. There are currently over 550 qualified
    mySAP All-in-One
    partner solutions available worldwide.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We offer SAP packaged solutions based on mySAP Business Suite
    and pre-configured SAP Best Practices. We offer several types of
    SAP packaged solutions, including: general-purpose SAP ERP
    packaged solutions; SAP ERP packaged solutions that address the
    needs of a particular industry, such as the SAP ERP Automotive
    Supplier packaged solution; and the SAP Marketing and Campaign
    Management packaged solution.











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| |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP NetWeaver promotes enhanced collaboration, optimized
    knowledge management, enterprise search, business task
    management and personalized access to critical applications and
    data using Web-based portals and mobile interfaces. These IT
    activities are enabled by the SAP NetWeaver Portal component,
    including its knowledge management and collaboration
    functionality, and the SAP NetWeaver Mobile component.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP NetWeaver helps IT organizations ensure that all master
    data, including user-defined data and data related to customers,
    suppliers and employees, is accurate, free of duplicate records
    and normalized. Data unification can be achieved through
    master-data consolidation, master-data harmonization, central
    master-data management, enterprise data warehousing, product
    content management, and global data synchronization. These IT
    activities are enabled by SAP NetWeaver components such as SAP
    NetWeaver Master Data Management (SAP NetWeaver MDM), SAP
    NetWeaver Exchange Infrastructure (SAP NetWeaver XI), and SAP
    NetWeaver Business Intelligence (SAP NetWeaver BI).





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | With the SAP NetWeaver platform, IT organizations can increase
    the visibility and reach of structured and unstructured
    enterprise data and help people at various levels and locations
    turn disparate raw data into integrated, meaningful, and
    actionable information. Business information management can be
    achieved through enterprise reporting, query, and analysis;
    business planning and analytical services; enterprise data
    warehousing; enterprise knowledge management; and enterprise
    search. These IT activities are enabled by SAP NetWeaver
    components such as SAP NetWeaver BI, SAP NetWeaver XI, and the
    knowledge management functionality of SAP NetWeaver Portal.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | With the SAP NetWeaver platform, organizations can manage
    business events by monitoring business activity, managing
    business tasks and enabling an Auto-ID
    infrastructure  integrating automated communication
    and sensing devices including radio frequency identification
    (RFID) readers and printers, Bluetooth devices, embedded
    systems, and bar-code devices. These IT activities are enabled
    by SAP NetWeaver components such as SAP NetWeaver Portal, SAP
    NetWeaver BI, SAP NetWeaver XI, and SAP Auto-ID Infrastructure.

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End-to




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | With the SAP NetWeaver platform, IT organizations can make
    disparate applications and business partners systems work
    together consistently to perform business processes, exchanging
    information and executing transactions.
    End-to-end process
    integration can be provided through
    application-to-application
    processes,
    business-to-business
    processes, business process management, business task management
    and platform interoperability. These IT activities are enabled
    by SAP NetWeaver components and related applications such as SAP
    NetWeaver XI, adapters, and ARIS for SAP NetWeaver.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | With the SAP NetWeaver platform, IT organizations can extract
    new value from existing investments in technology and skills by
    creating new, enterprise-scale applications. Organizations can
    develop, configure and adapt applications, as well as enable
    interoperability of different technology platforms. These IT
    activities are enabled by SAP NetWeaver components such as SAP
    NetWeaver Application Server (SAP NetWeaver AS) and tools such
    as SAP NetWeaver Developer Studio, SAP NetWeaver Visual Composer
    and SAP Composite Application Framework.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | With the SAP NetWeaver platform, IT organizations can automate
    software application management processes to help optimize all
    facets of a software applications life cycle to permit
    continuous operations and faster reaction to changing business
    requirements. These IT activities are enabled by SAP NetWeaver
    components and tools such as SAP NetWeaver AS, SAP NetWeaver
    Administrator, the Adaptive Computing Controller tool and SAP
    Solution Manager.





| |                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | With the SAP NetWeaver platform, organizations can govern
    applications and manage IT security through integrated user and
    access management, as well as authentication and single sign-on.
    These IT activities are enabled by SAP NetWeaver components such
    as SAP NetWeaver AS, SAP NetWeaver XI, and SAP NetWeaver Portal.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The SAP NetWeaver platform helps organizations consolidate user
    interfaces, information, and processes through the use of ESA.
    IT projects that support consolidation include master-data
    consolidation, enterprise data warehousing, enterprise knowledge
    management, platform interoperability and SAP NetWeaver
    operations. These IT activities are enabled by SAP NetWeaver
    components such as SAP NetWeaver Portal, SAP NetWeaver BI, SAP
    NetWeaver MDM, and SAP NetWeaver XI.





| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | With the SAP NetWeaver platform, organizations can create new,
    distinctive business processes flexibly.



ramp-up


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| |                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Consulting offers consulting, implementation, and
    optimization services that aim at delivering business value in
    all phases of the solution life-cycle.                                                                                                                                                                                 
|
| | SAP Consulting brings together SAP specialists, SAP product
    development professionals and certified partners to provide a
    single point of contact for customers seeking assistance with
    their SAP solutions. SAP Consulting offers the delivery of
    consistent services and methodologies at customer locations
    around the world.
|
| | SAP Consulting advises and supports customers during the entire
    solution life cycle, from the planning phase through building
    and running the solutions:                                                                                                                                                                                    



| |   |                                                                                                 
| | - | ------------------------------------------------------------------------------------------------
| |  | Planning phase: Ensure that an organizations IT
    infrastructure supports its business goals;
|
| |  | Building phase: Get software up and running quickly and
    cost-effectively; and               
|
| |  | Running phase: Enable solutions to grow and adapt with changing
    customer needs.             





| |                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The SAP Education organization provides the training and tools
    required to assist SAP customers and partners in maximizing the
    benefits attained from SAP solutions. SAP Education services
    include education needs analysis, education delivery via
    classroom or
    e-learning, assessment
    certification and continuous improvement.
|
| | The curriculum includes approximately 300 different courses,
    ranging from overview courses to expert courses. These courses
    are offered in more than 18 languages at more than 70
    training centers worldwide, with more than 200,000 course
    participants per year.                                                                        









| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The SAP Active Global Support organization offers a broad range
    of services to support customers with planning, implementation,
    operations, upgrades and continuous improvement.                                                                                                                                                                                                                                                                                   
|
| | SAP Active Global Support aims at ensuring the optimum
    performance of customers SAP solutions and the maximum
    benefit to their business. For example, SAP experts advise
    customers on choosing and deploying the support structures and
    processes that best meet their needs. In addition, these experts
    can resolve system issues before the customers system goes
    live. As a result, customers benefit from optimized
    system performance.
|
| | Once a customers SAP solution is up and running, support
    and maintenance continue with help-desk services, online
    monitoring, remote maintenance, and
    on-site assistance. SAP
    Active Global                                                                                                                                                                                                                                                               

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| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Support can help customers spot bottlenecks, plan resources, and
    migrate to new releases and technologies.
|
| | Key offerings of SAP Active Global Support include:                                                           



| |   |                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The SAP Standard Support option which provides the knowledge,
    tools, and functions to keep customers SAP environment
    up-to-date and running
    efficiently. It is designed to prevent bottlenecks and system
    downtime and to bring timely issue resolution.                                                                
|
| |  | The SAP Premium Support option through which SAPs experts
    taking a more active role in establishing support operations. It
    provides a guaranteed service-level agreement (SLA) for
    response and corrective action and delivers an annual assessment
    that gives a detailed plan focused on the customers
    priorities;





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Ramp-Up is the standardized process for introducing SAP
    products to the market. All SAP application software products in
    all countries are introduced using this process. When a solution
    is ready for productive use, it enters the SAP Ramp-Up process.
    SAP Ramp-Up is designed to ensure the quality of SAP solutions
    by increasing process control and feeding field and customer
    experience directly into product development. It benefits
    customers by providing accelerated support channels and
    dedicated coaches with direct lines to SAP product development
    groups, SAP Consulting and SAP Active Global Support. SAP
    Ramp-Up is also designed to reduce the cost, time, and risk of
    both SAP Ramp-Up implementations and regular, mass-market
    implementations.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The SAP Managed Services organization provides a comprehensive
    portfolio of services, running and managing SAP solutions on
    behalf of customers. More than 300 customers benefit from SAP
    Managed Services global reach, direct and continued access
    to SAP expertise, increased service and support, greater
    financial predictability, and the ability to free internal
    resources to focus on core competencies. SAP Managed Services
    offers:
|
| | Application Management Services                                                                                                                                                                                                                                                                                                                                                                                                                                            



| |   |                                                   
| | - | --------------------------------------------------
| |  | Second and third level application support        
|
| |  | Application enhancements                          
|
| |  | Application evolution                             
|
| |  | Performance monitoring and optimization services  
|
| |  | Global delivery engagement model for 24x7 coverage



| |                 
| | ----------------
| | Hosting Services



| |   |                                      
| | - | -------------------------------------
| |  | SAP Evaluation Hosting               
|
| |  | SAP Implementation Hosting           
|
| |  | SAP Application Hosting              
|
| |  | SAP Upgrade Hosting                  
|
| |  | SAP Ramp-up Hosting                  
|
| |  | SAP Development and Prototype Hosting
|
| |  | SAP Hosted E-Learning                
|
| |  | SAP Remote Application Operation     



| |                                          
| | -----------------------------------------
| | Managed solutions for business ecosystems

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In addition to its traditional direct license model and reseller
    channels, SAP engages with leading business process outsourcing
    (BPO) providers that deliver their services to end
    customers on platforms based on SAP applications and services.
    These BPO providers typically enter into an agreement with SAP
    that includes a license agreement permitting the use of
    specified SAP applications in selected markets for the provision
    of BPO services to the end customer, such as outsourced human
    resources services, for a predefined duration. We do not offer
    BPO services, but contribute to better BPO deployments for our
    customers and partners through BPO-ready solutions and services
    such as implementation support and quality assurance.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The SAP Custom Development organization develops custom
    solutions that address customers unique business
    requirements on the SAP NetWeaver platform. The service
    portfolio includes development services that help customers to
    extend and enhance existing SAP solutions or build new and
    innovative business solutions, and maintenance services to
    protect their custom solutions and SAP investment as their
    business evolves over time.












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|                     |  |                 |         |  |      |  |         |      |  |  |         | 
|-------------------- |  | --------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                     |  | 2005            |         |  | 2004 |  |         | 2003 | 
|                     |  |                 |         |  |      |  |         |      | 
|                     |  | (in  millions) |        
|Germany              |  |                 | 1,810.4 |  |      |  | 1,780.1 |      |  |  | 1,670.3 | 
|Rest of EMEA         |  |                 | 2,702.4 |  |      |  | 2,443.4 |      |  |  | 2,299.6 | 
|                     |  |                 |         |  |      |  |         |      | 
|Total EMEA           |  |                 | 4,512.8 |  |      |  | 4,223.5 |      |  |  | 3,969.9 | 
|                     |  |                 |         |  |      |  |         |      | 
|United States        |  |                 | 2,342.8 |  |      |  | 1,893.7 |      |  |  | 1,736.0 | 
|Rest of Americas     |  |                 | 656.8   |  |      |  | 530.1   |      |  |  | 480.2   | 
|                     |  |                 |         |  |      |  |         |      | 
|Total Americas       |  |                 | 2,999.6 |  |      |  | 2,423.8 |      |  |  | 2,216.2 | 
|                     |  |                 |         |  |      |  |         |      | 
|Japan                |  |                 | 406.2   |  |      |  | 387.4   |      |  |  | 441.5   | 
|Rest of Asia-Pacific |  |                 | 593.8   |  |      |  | 479.8   |      |  |  | 397.0   | 
|                     |  |                 |         |  |      |  |         |      | 
|Total Asia-Pacific   |  |                 | 1,000.0 |  |      |  | 867.2   |      |  |  | 838.5   | 
|                     |  |                 |         |  |      |  |         |      | 
|Total revenue        |  |                 | 8,512.4 |  |      |  | 7,514.5 |      |  |  | 7,024.6 | 
|                     |  |                 |         |  |      |  |         |      | 

EMEA.  


Americas.     


Asia-Pacific.   


36



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|                                                            |  |                 |         |  |      |  |         |      |  |  |         | 
|----------------------------------------------------------- |  | --------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                            |  | 2005            |         |  | 2004 |  |         | 2003 | 
|                                                            |  |                 |         |  |      |  |         |      | 
|                                                            |  | (in  millions) |        
|ERP                                                         |  |                 | 1,157.6 |  |      |  | 990.0   |      |  |  | 801.2   | 
|CRM                                                         |  |                 | 602.6   |  |      |  | 501.0   |      |  |  | 440.1   | 
|SCM                                                         |  |                 | 508.9   |  |      |  | 480.0   |      |  |  | 477.1   | 
|PLM                                                         |  |                 | 161.6   |  |      |  | 166.9   |      |  |  | 156.1   | 
|Business Intelligence/ Enterprise Portal/ SRM/ Marketplaces |  |                 | n/a     |  |      |  | n/a     |      |  |  | 273.1   | 
|SRM                                                         |  |                 | 176.0   |  |      |  | 147.1   |      |  |  | n/a     | 
|SAP NetWeaver and other related components                  |  |                 | 176.0   |  |      |  | 76.0    |      |  |  | n/a     | 
|                                                            |  |                 |         |  |      |  |         |      | 
|Total software revenue                                      |  |                 | 2,782.7 |  |      |  | 2,361.0 |      |  |  | 2,147.6 | 
|                                                            |  |                 |         |  |      |  |         |      | 





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|                    |  |                 |         |  |      |  |         |      |  |  |         | 
|------------------- |  | --------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                    |  | 2005            |         |  | 2004 |  |         | 2003 | 
|                    |  |                 |         |  |      |  |         |      | 
|                    |  | (in  millions) |        
|Process Industries  |  |                 | 1,765.9 |  |      |  | 1,469.1 |      |  |  | 1,381.3 | 
|Discrete Industries |  |                 | 1,986.1 |  |      |  | 1,807.9 |      |  |  | 1,659.4 | 
|Consumer Industries |  |                 | 1,457.0 |  |      |  | 1,349.8 |      |  |  | 1,243.8 | 
|Service Industries  |  |                 | 1,946.0 |  |      |  | 1,673.9 |      |  |  | 1,664.5 | 
|Financial Services  |  |                 | 543.4   |  |      |  | 519.1   |      |  |  | 474.1   | 
|Public Services     |  |                 | 814.0   |  |      |  | 694.7   |      |  |  | 601.5   | 
|                    |  |                 |         |  |      |  |         |      | 
|Total revenue       |  |                 | 8,512.4 |  |      |  | 7,514.5 |      |  |  | 7,024.6 | 
|                    |  |                 |         |  |      |  |         |      | 





All-in








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 








39



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##### Table of Contents

















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|                                                                                |  |           |     |  |               |                 |          |                                                         
|------------------------------------------------------------------------------- |  | --------- | --- |  | ------------- | --------------- | -------- | --------------------------------------------------------
|                                                                                |  | Ownership |     |  | Country of    |                 |         
|Name of Subsidiary                                                              |  | %         |     |  | Incorporation |                 | Function
|                                                                                |  |           |     |  |               |                 |         
|Germany                                                                         |  |           |     |  |               |                 |          |                                                         
|SAP Deutschland AG & Co. KG, Walldorf                                           |  |           | 100 |  |               | Germany         |          | Sales, consulting and training                          
|Rest of Europe/ Middle East/ Africa                                             |  |           |     |  |               |                 |          |                                                         
|SAP (UK) Limited, Feltham                                                       |  |           | 100 |  |               | Great Britain   |          | Sales, consulting and training                          
|SAP (Schweiz) AG, Biel                                                          |  |           | 100 |  |               | Switzerland     |          | Sales, consulting and training                          
|SAP France S.A., Paris                                                          |  |           | 100 |  |               | France          |          | Sales, consulting and training                          
|SAP ITALIA SISTEMI, APPLICAZIONI, PRODOTTI IN DATA PROCESSING
    S.P.A., Milan |  |           | 100 |  |               | Italy           |          | Sales, consulting and training                          
|SAP Nederland B.V.,s-Hertogenbosch                                             |  |           | 100 |  |               | The Netherlands |          | Sales, consulting and training                          
|Americas                                                                        |  |           |     |  |               |                 |          |                                                         
|SAP America, Inc., Newtown Square                                               |  |           | 100 |  |               | USA             |          | Sales, consulting and training                          
|SAP Canada Inc., Toronto                                                        |  |           | 100 |  |               | Canada          |          | Sales, consulting and training                          
|Asia/Pacific                                                                    |  |           |     |  |               |                 |          |                                                         
|SAP JAPAN Co., Ltd., Tokyo                                                      |  |           | 100 |  |               | Japan           |          | Sales, consulting and training, research and development














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20-F






|                               |  |                                                                 
|------------------------------ |  | ----------------------------------------------------------------
|Country, City                  |  | Facility Description                                            
|                               |  |                                                                 
|Austria, Vienna                |  | Sales, consulting, training, marketing and customer support     
|Belgium, Brussels              |  | Sales, consulting and training                                  
|Brazil, São Paulo              |  | Sales, consulting and training                                  
|Bulgaria, Sofia                |  | Sales and development                                           
|Canada, Toronto, Ontario       |  | Sales, consulting, training and marketing                       
|China, Shanghai                |  | Research and development                                        
|Czech Republic, Prague         |  | Sales, consulting and training                                  
|Denmark, Copenhagen            |  | Sales, consulting, training and customer support                
|France, Paris                  |  | Sales, consulting, training and marketing                       
|Germany, Berlin                |  | Research and development, sales and consulting                  
|Germany, Dresden               |  | Consulting and customer support                                 
|Germany, Freiberg              |  | Consulting                                                      
|Germany, Munich                |  | Research and development, sales and consulting                  
|Germany, Hamburg               |  | Sales, consulting and training                                  
|Germany, Bensheim              |  | Sales and consulting                                            
|Germany, Ratingen              |  | Sales and consulting                                            
|Germany, St. Ingbert (owned)   |  | Research and development, sales and consulting                  
|Germany, Walldorf (owned)      |  | Sales, consulting, research and development and customer support
|Germany, St. Leon-Rot (owned)  |  | Research and development and customer support                   
|Germany, Mannheim              |  | Consulting and IT                                               
|Hungary, Budapest              |  | Sales, consulting, training and customer support                
|India, Bangalore (owned)       |  | Research and development                                        
|India, Gurgaon                 |  | Customer support                                                
|Ireland, Dublin                |  | Customer support                                                
|Ireland, Galway                |  | Research and customer support                                   
|Israel, Raanana               |  | Research and development, sales and consulting                  
|Italy, Milan                   |  | Sales, consulting and training                                  
|Japan, Tokyo                   |  | Sales, marketing and training                                   
|The Netherlands, Hertogenbosch |  | Sales, consulting and training                                  
|Russia, Moscow                 |  | Sales and consulting                                            

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|                                                               |  |                                                                               
|-------------------------------------------------------------- |  | ------------------------------------------------------------------------------
|Country, City                                                  |  | Facility Description                                                          
|                                                               |  |                                                                               
|Singapore, Singapore                                           |  | Sales, customer support and research and development                          
|South Africa, Johannesburg                                     |  | Sales, consulting, training, customer support, research and
    development   
|South Korea, Seoul                                             |  | Sales and consulting                                                          
|Spain, Madrid                                                  |  | Sales, consulting, training, research and development and
    customer support
|Sweden, Stockholm                                              |  | Sales, consulting, training, marketing and customer support                   
|Switzerland, Biel (owned)                                      |  | Sales and marketing                                                           
|Switzerland, Regensdorf                                        |  | Training                                                                      
|United Kingdom, Feltham (owned)                                |  | Sales, consulting, training and customer support                              
|United States, Palo Alto, California                           |  | Research and development, sales and consulting                                
|United States, Waltham, Massachusetts                          |  | Sales, consulting and training                                                
|United States, Chicago, Illinois                               |  | Sales, marketing, consulting, training and research and
    development       
|United States, Newtown Square, Pennsylvania (owned and leased) |  | Sales, consulting, training, research and development and
    customer support
|United States, New York, New York                              |  | Sales, marketing, and consulting                                              
|United States, Foster City, California                         |  | Training                                                                      
|United States, Atlanta, Georgia                                |  | Sales, marketing, consulting and training                                     








   


  





ITEM 4A. UNRESOLVED STAFF COMMENTS




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ITEM 5. OPERATING AND FINANCIAL REVIEW AND
PROSPECTS















        






| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | key factors that impacted our performance;                                                          
|
| |  | discussion of our operating results for 2005 compared to 2004
    and for 2004 compared to 2003; and
|
| |  | our outlook for 2006.                                                                               

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Global economy continues to grow






Europe lags behind global growth








Trend in IT industry remains stable






45



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##### Table of Contents





U.S. IT market grows almost 5%













Total Revenue.


  


    


|               |  |            |        | 
|-------------- |  | ---------- | ------ | 
|Date           |  | Period-End |       
|               |  |            |       
|December 2004  |  |            | 1.3538 | 
|March 2005     |  |            | 1.2969 | 
|June 2005      |  |            | 1.2098 | 
|September 2005 |  |            | 1.2058 | 
|December 2005  |  |            | 1.1842 | 
|March 10, 2006 |  |            | 1.1886 | 

 


46



---



##### Table of Contents








Product Revenue.   


  






  




Service Revenue.   


47



---



##### Table of Contents



  




 


  


Total Operating Expenses.


     






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We increased our sales and marketing expenses in 2005 by
    222.6 million,
    or 14.6%, compared to 2004, reflecting additional investment in
    aligning our operations to volume business and in our sales
    organization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Our growing workforce resulted in an increase in personnel
    expenses, which went up from
    2,968.0 million
    in 2004 to
    3,371.5 million
    in 2005, or 13.6%. This increase in personnel expenses is the
    result of the overall headcount increase from
    32,205 full-time equivalents as of December 31, 2004,
    to 35,873 full-time equivalents as of December 31,
    2005, an increase of 11.4%. The biggest increase in headcount
    was in research and development, in which the worldwide
    full-time equivalent count rose 18% to 11,629. The increase is
    consistent with our organic growth strategy and commitment to
    meet product release schedules. We continued to keep a tight
    control on personnel expenses due to minimal fixed salary
    increases as well as by adding additional headcount primarily in
    the major emerging markets with modest salary levels such as
    China and India. The share of resources in low cost locations
    (Bulgaria, China, and India) increased from 8.2% in 2004 to
    10.9% in 2005.
|
| |  | The rise in the headcount and overall increase in business
    activity during 2005 resulted in higher travel expenses compared
    to 2004 (an increase of
    55.8 million
    or 17.5%).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



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 


Pro-Forma Operating Income.






  




|                                                                                                  |                                                                                             |                    |       |    |      |  |       |    | 
|------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------ | ----- | -- | ---- |  | ----- | -- | 
|                                                                                                  |                                                                                             | 2005               |       |    | 2004 | 
|                                                                                                  |                                                                                             |                    |       |    |      | 
|                                                                                                  |                                                                                             | (in millions of ) |      
|U.S. GAAP operating income                                                                        |                                                                                             |                    | 2,331 |    |      |  | 2,018 |   
|Acquisition-related charges                                                                       |                                                                                             |                    | 34    |    |      |  | 30    |   
|                                                                                                  |                                                                                             |                    |       |    |      | 
|                                                                                                  | LTI 2000 Plan/ STAR Plan                                                                    |                    |       | 45 |      |  |       | 37 | 
|                                                                                                  | Settlement of stock-based compensation plans in the context of
    mergers and acquisitions |                    |       | 0  |      |  |       | 1  | 
|                                                                                                  |                                                                                             |                    |       |    |      | 
|Total stock-based compensation                                                                    |                                                                                             |                    | 45    |    |      |  | 38    |   
|                                                                                                  |                                                                                             |                    |       |    |      | 
|Pro forma operating income excluding stock-based compensation
    and acquisition-related charges |                                                                                             |                    | 2,410 |    |      |  | 2,086 |   
|                                                                                                  |                                                                                             |                    |       |    |      | 



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Detail of Operating Expenses.


Cost of Product.




| |   |                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | customer support costs which include 24x7 message handling,
    services for upgrades, SAP EarlyWatch services, SAP GoingLive
    services and premium maintenance services (SAP Safeguarding
    services, SAP Empowering services and SAP MaxAttention support
    option)  delivered by the SAP Active Global Support
    organization;
|
| |  | license fees and commissions paid to third parties for databases
    and the other complementary third-party products sublicensed by
    us to customers; and                                                                                                                                                                              
|
| |  | costs of developing custom solutions that address
    customers unique business requirements.                                                                                                                                                                                                                                             

 




Cost of Services.  


 


Research and Development.




| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | personnel expenses related to our research and development
    employees;                                          
|
| |  | amortization of computer hardware used in our research and
    development activities; and                         
|
| |  | costs incurred for independent contractors retained by us to
    assist in our research and development activities.

 




Sales and Marketing.  


50



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 


General and Administrative.  


Other Operating Income/ Expense, Net.    




Financial Income/ Expense, Net.


      


Income Taxes.




Net Income.


        


51



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Segment Discussion.


 


 


 


Product segment.


     


 


 


52



---



##### Table of Contents



Consulting segment.


 


 




 


Training segment. e-learning.


   e-learning


 


 




Total Revenue.


  


53



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##### Table of Contents








|               |  |            |        | 
|-------------- |  | ---------- | ------ | 
|Date           |  | Period-End |       
|               |  |            |       
|December 2003  |  |            | 1.2597 | 
|March 2004     |  |            | 1.2292 | 
|June 2004      |  |            | 1.2179 | 
|September 2004 |  |            | 1.2417 | 
|December 2004  |  |            | 1.3538 | 
|March 8, 2005  |  |            | 1.3342 | 

 







Product Revenue.   


  




54



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  




Service Revenue.   


  




  on-site e-learning.


Total Operating Expenses.


     




| |   |                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We intentionally increased our sales and marketing expenses in
    2004 to support our revenue growth targets. Sales and marketing
    costs increased by
    112.7 million,
    or 8.0% compared to 2003.                                                                                      
|
| |  | Additional use of third parties: In 2004, we significantly
    expanded the use of third parties in our consulting and research
    and development departments on an interim basis to support our
    own resources with an associated increased cost of
    33.3 million
    compared to 2003.

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our growing workforce resulted in an increase in personnel
    expenses, which went up from
    2,936.6 million
    in 2003 to
    2,968.0 million
    in 2004, or 1.1%. This moderate increase in personnel expenses
    was achieved even though the overall headcount increased from
    29,610 full-time equivalents as per December 31, 2003,
    to 32,205 full-time equivalents as per December 31,
    2004, an increase of 7.3%. We continued to keep a tight control
    on personnel expenses due to minimal fixed salary increases as
    well as by adding additional headcount primarily in low cost
    locations. The share of resources in low cost locations
    increased from 4.9% in 2003 to 8.2% in 2004.
|
| |  | The rise in the headcount and overall increase in business
    activity during 2004 resulted in higher travel expenses compared
    to 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

 


Pro Forma Operating Income.






  


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|                                                                                                  |                                                                                             |                    |       |    |      |  |       |     | 
|------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------ | ----- | -- | ---- |  | ----- | --- | 
|                                                                                                  |                                                                                             | 2004               |       |    | 2003 | 
|                                                                                                  |                                                                                             |                    |       |    |      | 
|                                                                                                  |                                                                                             | (in millions of ) |      
|U.S. GAAP Operating income                                                                        |                                                                                             |                    | 2,018 |    |      |  | 1,724 |    
|Acquisition-related charges                                                                       |                                                                                             |                    | 30    |    |      |  | 26    |    
|                                                                                                  |                                                                                             |                    |       |    |      | 
|                                                                                                  | LTI 2000 Plan/ STAR Plan                                                                    |                    |       | 37 |      |  |       | 125 | 
|                                                                                                  | Settlement of stock-based compensation plans in the context of
    mergers and acquisitions |                    |       | 1  |      |  |       | 5   | 
|                                                                                                  |                                                                                             |                    |       |    |      | 
|Total stock-based compensation                                                                    |                                                                                             |                    | 38    |    |      |  | 130   |    
|                                                                                                  |                                                                                             |                    |       |    |      | 
|Pro forma operating income excluding stock-based compensation
    and acquisition-related charges |                                                                                             |                    | 2,086 |    |      |  | 1,880 |    
|                                                                                                  |                                                                                             |                    |       |    |      | 



Cost of Product.




| |   |                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | customer support costs which include 24x7 message handling,
    services for upgrades, SAP EarlyWatch services, SAP GoingLive
    services and premium maintenance services (SAP Safeguarding
    services, SAP Empowering services and SAP MaxAttention support
    option)  delivered by the SAP Active Global Support
    organization;
|
| |  | license fees and commissions paid to third parties for databases
    and the other complementary third-party products sublicensed by
    us to customers; and                                                                                                                                                                              
|
| |  | costs of developing custom solutions that address
    customers unique business requirements.                                                                                                                                                                                                                                             

 




Cost of Services.  


  ramp-up




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##### Table of Contents



Research and Development.




| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | personnel expenses related to our research and development
    employees;                                          
|
| |  | amortization of computer hardware used in our research and
    development activities; and                         
|
| |  | costs incurred for independent contractors retained by us to
    assist in our research and development activities.

 




Sales and Marketing.  


 


General and Administrative.  


Other Operating Income/ Expenses, Net.    




  


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Financial Income/ Expense, Net.


      


Income Taxes.




Net Income.


         


Segment Discussion.




 


 


59



---



##### Table of Contents







Product segment.


     


 


 


Consulting segment.


 


60



---



##### Table of Contents





 


 


Training segment. e-learning.


   e-learning.


  


 













61



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Red Herring Red Herring












Red Herring


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Operational goals for 2006: profitable growth






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | To provide additional transparency, we are providing for the
    first time an outlook for product revenues, which is comprised
    of software and maintenance revenues. We expect full-year 2006
    product revenues to increase in the range of 13% to 15% compared
    to 2005. This growth rate is based on our expectation for
    full-year 2006 software revenue growth in the range of 15% to
    17% compared to 2005. As in 2005, the growth is expected to be
    driven by the Americas and Asia-Pacific. Low single-digit
    revenue growth in Germany is likely, while high single-digit
    growth is expected for the rest of the EMEA region. Consulting
    and training revenues are expected to grow more slowly than
    product revenue.
|
| |  | We expect the full-year 2006 pro-forma operating margin, which
    excludes stock-based compensation and acquisition-related
    charges, to increase in the range of 0.5 to 1.0 percentage
    points compared to 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | We expect full-year 2006 pro-forma earnings per share, which
    exclude stock-based compensation, acquisition-related charges
    and impairment-related charges, to be in the range of
    5.80 to
    6.00 per
    share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   







| |   |                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The economy is stable.                                                                                                                                                                                                                                                         
|
| |  | The buying behavior of customers will conform to the usual
    seasonal pattern, with revenue at its strongest in the fourth
    quarter.                                                                                                                                      
|
| |  | The average U.S. dollar to euro exchange rate is
    $1.23 per
    1.00.                                                                                                                                                                                                      
|
| |  | The effective group tax rate is 34.5%, which takes in account
    among other things an anticipated favorable effect of the
    municipal trade tax rate change enacted in January 2006 for the
    City of Walldorf, Germany, where our corporate headquarters is
    located.
|
| |  | In 2006, SAP intends to continue seeking opportunities to step
    up stock repurchasing from the 2005 previous level. The outlook
    for pro-forma EPS is based on 307 million shares.                                                                                       



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Prospects through 2010


All-in









period-to


     


20-F,


64



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20-F.




| |   |                                                                       
| | - | ----------------------------------------------------------------------
| |  | Revenue recognition                                                   
|
| |  | Valuation of accounts receivable                                      
|
| |  | Accounting for stock-based compensation                               
|
| |  | Accounting for income taxes and other income tax related
    judgments
|
| |  | Realizability of strategic and venture capital investments            







Software
Revenue Recognition 97-2), Software Revenue Recognition
With Respect to Certain Transactions Accounting for Performance of Construction-type and Certain
Production-type Contracts Revenue
Recognition Revenue Arrangements with Multiple Deliverables 00-21); 03-5, Applicability of AICPA Statement of Position 97-2 to
Non-Software Deliverables in an Arrangement Containing
More-Than-Incidental Software


97-2


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97-2,












97-2 20-F.


20-F.










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20-F.




out-of






| |   |                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the determination that it is probable that the customer will pay
    for the products and services purchased is inherently judgmental;                                                                                  
|
| |  | the allocation of proceeds to certain elements in
    multiple-element arrangements is complex;                                                                                                                         
|
| |  | the determination of whether a service is essential to the
    functionality of the software is complex;                                                                                                                
|
| |  | establishing company-specific fair values of elements in
    multiple-element arrangements requires adjustments from
    time-to-time to reflect
    recent prices charged when each element is sold
    separately; and
|
| |  | the determination of the stage of completion for certain
    consulting and development arrangements is complex.                                                                                                        





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     


  




|                                                                              |  |         |      |  |         |  |     |         |  |  |      |  
|----------------------------------------------------------------------------- |  | ------- | ---- |  | ------- |  | --- | ------- |  |  | ---- | -
|                                                                              |  | 2005    |      |  | 2004    |  |     | 2003    | 
|                                                                              |  |         |      |  |         |  |     |         | 
|                                                                              |  |  (mio) |      |  |  (mio) |  |     |  (mio) | 
|Specific customer credit loss risks                                           |  |         | 9.0  |  |         |  | 0.0 |         |  |  | 12.4 |  
|Customer credit loss risks based on aging of the receivables                  |  |         | 3.4  |  |         |  | 1.7 |         |  |  | (5.4 | )
|                                                                              |  |         |      |  |         |  |     |         | 
|Total provisions for allowances for doubtful accounts charged to
    earnings |  |         | 12.4 |  |         |  | 1.7 |         |  |  | 7.0  |  
|                                                                              |  |         |      |  |         |  |     |         | 

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Accounting for Stock Issued to
Employees


Accounting for Stock-Based Compensation Accounting
for Stock-Based Compensation  Transition and
Disclosure, an amendment of FASB Statement No. 123


Net Income


|                                                                                  |  |         |           |  |         |  |           |         |  |  |           | 
|--------------------------------------------------------------------------------- |  | ------- | --------- |  | ------- |  | --------- | ------- |  |  | --------- | 
|                                                                                  |  | 2005    |           |  | 2004    |  |           | 2003    | 
|                                                                                  |  |         |           |  |         |  |           |         | 
|                                                                                  |  |  (000) |           |  |  (000) |  |           |  (000) | 
|As reported                                                                       |  |         | 1,496,407 |  |         |  | 1,310,521 |         |  |  | 1,077,063 | 
|Add: Expense for stock-based compensation, net of tax according
    to APB 25     |  |         | 31,130    |  |         |  | 23,445    |         |  |  | 85,700    | 
|Deduct: Expense for stock-based compensation, net of tax
    according to FAS 123 |  |         | 138,468   |  |         |  | 181,323   |         |  |  | 205,109   | 
|                                                                                  |  |         |           |  |         |  |           |         | 
|Pro forma                                                                         |  |         | 1,389,069 |  |         |  | 1,152,643 |         |  |  | 957,654   | 
|                                                                                  |  |         |           |  |         |  |           |         | 

Earnings Per Share


|                      |  |      |      |  |      |  |      |      |  |  |      | 
|--------------------- |  | ---- | ---- |  | ---- |  | ---- | ---- |  |  | ---- | 
|                      |  | 2005 |      |  | 2004 |  |      | 2003 | 
|                      |  |      |      |  |      |  |      |      | 
|                      |  |     |      |  |     |  |      |     | 
|Basic  as reported   |  |      | 4.83 |  |      |  | 4.22 |      |  |  | 3.47 | 
|Diluted  as reported |  |      | 4.81 |  |      |  | 4.20 |      |  |  | 3.46 | 
|Basic  pro forma     |  |      | 4.48 |  |      |  | 3.71 |      |  |  | 3.08 | 
|Diluted  pro forma   |  |      | 4.48 |  |      |  | 3.70 |      |  |  | 3.08 | 



Share-Based Payment


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


|                                                                |  |                    |       |  |     |  |       |     |  |  |       |   |  |  |       |  
|--------------------------------------------------------------- |  | ------------------ | ----- |  | --- |  | ----- | --- |  |  | ----- | - |  |  | ----- | -
|Assumed change in volatility in percentage-points               |  | 10%               |       |  | 5% |  |       | +5% |  |  | +10%  |  
|                                                                |  |                    |       |  |     |  |       |     |  |  |       |  
|                                                                |  | (in millions of ) |      
|Effect on pro forma net income for volatility assumption change |  |                    | 23    |  |     |  | 12    |     |  |  | (10   | ) |  |  | (21   | )
|Pro forma net income using revised volatility assumption        |  |                    | 1,412 |  |     |  | 1,401 |     |  |  | 1,379 |   |  |  | 1,368 |  





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| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to generate future taxable income;                                                                                                              
|
| |  | managements interpretation of applicable tax laws;                                                                                                         
|
| |  | managements assumptions and judgments regarding the use of
    tax planning strategies in certain tax jurisdictions; and                                   
|
| |  | assumptions about whether our results of future operations will
    generate sufficient taxable income to utilize our remaining net
    deferred tax assets.





| |   |                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our judgments regarding future taxable income are based upon
    expectations of market conditions and other facts and
    circumstances. Any adverse change to the underlying facts or our
    assumptions could require that we reduce the carrying value of
    our net deferred tax assets; and                
|
| |  | our use of different estimates, assumptions and judgments in
    connection with tax planning strategies and tax uncertainties
    could result in materially different carrying values of our
    income tax asset and liability amounts and therefore could
    adversely impact our recorded income tax amounts.

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start-up


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|                                                                                                             |  |        |           |  |      |  |           | 
|------------------------------------------------------------------------------------------------------------ |  | ------ | --------- |  | ---- |  | --------- | 
|                                                                                                             |  | 2005   |           |  | 2004 | 
|                                                                                                             |  |        |           |  |      | 
|                                                                                                             |  | (000) |          
|Cash at banks                                                                                                |  |        | 455,522   |  |      |  | 458,909   | 
|Cash equivalents                                                                                             |  |        | 1,608,552 |  |      |  | 1,046,884 | 
|                                                                                                             |  |        |           |  |      | 
|Cash and cash equivalents                                                                                    |  |        | 2,064,074 |  |      |  | 1,505,793 | 
|                                                                                                             |  |        |           |  |      | 
|Liquid investments with original maturities exceeding
    3 months and remaining maturities less than 1 year |  |        | 910,850   |  |      |  | 918,272   | 
|Liquid investments with remaining maturities exceeding
    1 year                                            |  |        | 238,648   |  |      |  | 772,477   | 
|                                                                                                             |  |        |           |  |      | 
|                                                                                                             |  |        | 3,213,572 |  |      |  | 3,196,542 | 
|                                                                                                             |  |        |           |  |      | 

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     12-month


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






















|                       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            |  |  |        |  |  |  |         | 
|---------------------- |  | ------ | --------- |  | ---- |  | ------- | ---- |  |  | ------- |  |  | ---- | ------ |  | ---- |  | ------ | ---------- |  |  | ------ |  |  |  | ------- | 
|Contractual Obligation |  | Total  |           |  | 2006 |  |         | 2007 |  |  | 2008    |  |  | 2009 |        |  | 2010 |  |        | thereafter | 
|                       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            | 
|                       |  | (000) |          
|Off-balance sheet      |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            |  |  |        |  |  |  |         | 
|Operating Leases       |  |        | 687,487   |  |      |  | 148,738 |      |  |  | 109,190 |  |  |      | 91,066 |  |      |  | 71,556 |            |  |  | 59,629 |  |  |  | 207,308 | 
|Purchase Commitments   |  |        | 78,783    |  |      |  | 78,598  |      |  |  | 140     |  |  |      | 45     |  |      |  |       |            |  |  |       |  |  |  |        | 
|Other Commitments      |  |        | 38,820    |  |      |  | 23,386  |      |  |  | 2,031   |  |  |      | 1,759  |  |      |  | 1,633  |            |  |  | 1,603  |  |  |  | 8,408   | 
|                       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            | 
|On-balance sheet       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            |  |  |        |  |  |  |         | 
|Bonds                  |  |        | 6,927     |  |      |  |        |      |  |  |        |  |  |      |       |  |      |  |       |            |  |  | 1,686  |  |  |  | 5,241   | 
|Other Liabilities      |  |        | 838,778   |  |      |  | 749,243 |      |  |  | 42,723  |  |  |      |       |  |      |  |       |            |  |  |       |  |  |  | 46,812  | 
|                       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            | 
|Total                  |  |        | 1,650,795 |  |      |  | 999,965 |      |  |  | 154,084 |  |  |      | 92,870 |  |      |  | 73,189 |            |  |  | 62,918 |  |  |  | 267,769 | 
|                       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            | 

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  










| |   |                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | enablement of our solutions based on enterprise services
    architecture;                                                                              
|
| |  | evolution of the SAP NetWeaver platform towards a business
    process platform;                                                                        
|
| |  | SAP software offerings, including mySAP CRM, mySAP SCM, mySAP
    ERP, mySAP PLM, mySAP SRM, SAP xApps composite applications, and
    SAP Business One;
|
| |  | continuous innovation of SAP industry solution portfolios;                                                                                              
|
| |  | increased focus on solutions targeted for small and midsize
    enterprises and business users; and                                                     
|
| |  | new and innovative technologies.                                                                                                                        

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND
EMPLOYEES









|                                                                     |  |     |    |  |                      |                                                                                                                                                                   |         |  |      |         |  |  |      | 
|-------------------------------------------------------------------- |  | --- | -- |  | -------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- |  | ---- | ------- |  |  | ---- | 
|                                                                     |  |     |    |  |                      | Year                                                                                                                                                              |         |  | Year |        
|                                                                     |  |     |    |  |                      | First                                                                                                                                                             |         |  | Term |        
|Name                                                                 |  | Age |    |  | Principal Occupation |                                                                                                                                                                   | Elected |  |      | Expires | 
|                                                                     |  |     |    |  |                      |                                                                                                                                                                   |         |  |      |         | 
|Prof. Dr. h.c. mult. Hasso Plattner, Chairperson
    (2)(3)(5)(7)(8) |  |     | 62 |  |                      | Chairperson of the Supervisory Board                                                                                                                              |         |  | 2003 |         |  |  | 2007 | 
|Pekka
    Ala-Pietilä(1)(8)                                          |  |     | 49 |  |                      | Executive Advisor to the CEO of Nokia Corporation                                                                                                                 |         |  | 2002 |         |  |  | 2007 | 
|Prof. Dr. Wilhelm Haarmann
    (1)(3)(5)(9)                          |  |     | 55 |  |                      | Attorney at Law, Certified Public Auditor and Certified Tax
    Advisor; HAARMANN Partnerschaftsgesellschaft,
    Rechtsanwälte, Steuerberater, Wirtschaftsprüfer |         |  | 1988 |         |  |  | 2007 | 
|Dr. h.c. Hartmut Mehdorn
    (1)(7)                                  |  |     | 63 |  |                      | Chairperson of Executive Board, Deutsche Bahn AG                                                                                                                  |         |  | 1998 |         |  |  | 2007 | 
|Prof. Dr. Dr. h.c. mult. August-Wilhelm
    Scheer(1)(6)(8)          |  |     | 64 |  |                      | Professor at Saarland University                                                                                                                                  |         |  | 2002 |         |  |  | 2007 | 
|Dr. Erhard
    Schipporeit(11)                                       |  |     | 57 |  |                      | Member of the Executive Board, E.ON AG                                                                                                                            |         |  | 2005 |         |  |  | 2007 | 
|Dr. Dieter
    Spöri(1)(5)                                           |  |     | 62 |  |                      | Head of Corporate Representation Federal Affairs,
    DaimlerChrysler AG                                                                                          |         |  | 1998 |         |  |  | 2007 | 
|Dr. h.c. Klaus
    Tschira(1)(4)                                     |  |     | 65 |  |                      | Managing Director, Klaus Tschira Stiftung gGmbH                                                                                                                   |         |  | 1998 |         |  |  | 2007 | 
|Helga Classen, Vice
    Chairperson(5)(7)(10)                        |  |     | 55 |  |                      | Employee, Deputy Data Protection Officer                                                                                                                          |         |  | 1993 |         |  |  | 2007 | 
|Willi
    Burbach(7)(8)(10)                                          |  |     | 43 |  |                      | Employee, Developer                                                                                                                                               |         |  | 1993 |         |  |  | 2007 | 
|Bernhard
    Koller(4)(10)                                           |  |     | 56 |  |                      | Employee, Manager of Idea Management                                                                                                                              |         |  | 1989 |         |  |  | 2007 | 
|Christiane Kuntz-Mayr
    (5)(8)(10)                                 |  |     | 43 |  |                      | Employee, Development Manager                                                                                                                                     |         |  | 2002 |         |  |  | 2007 | 
|Lars
    Lamadé(6)(10)                                               |  |     | 34 |  |                      | Employee, Risk Manager Service & Support                                                                                                                          |         |  | 2002 |         |  |  | 2007 | 
|Dr. Gerhard
    Maier(3)(6)(10)                                      |  |     | 52 |  |                      | Employee, Development Project Manager                                                                                                                             |         |  | 1989 |         |  |  | 2007 | 
|Dr. Barbara Schennerlein
    (5)(10)                                 |  |     | 49 |  |                      | Employee, Principal Consultant                                                                                                                                    |         |  | 1998 |         |  |  | 2007 | 
|Stefan
    Schulz(4)(8)(10)                                          |  |     | 36 |  |                      | Employee, Development Project Manager                                                                                                                             |         |  | 2002 |         |  |  | 2007 | 

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|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)  | Elected by SAP AGs shareholders on May 3, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|(2)  | Elected by SAP AGs shareholders on May 9, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|(3)  | Member of the Compensation Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    
|(4)  | Member of the Audit Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    
|(5)  | Member of the General Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|(6)  | Member of the Finance and Investment Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    
|(7)  | Member of the Mediation Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    
|(8)  | Member of the Technology Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|(9)  | Until January 1, 2006, Wilhelm Haarmann practiced as a
    partner of Haarmann Hemmelrath which served as special German
    tax counsel to SAP AG and counseled SAP with regard to other
    legal matters. On January 1, 2006, he joined HAARMANN
    Partnerschaftsgesellschaft in Frankfurt. Wilhelm Haarmann was
    determined to be the Audit Committees financial expert
    until July 2005. Please refer to Item 16A. Audit
    Committee Financial Expert for details.
|    
|(10) | Elected by SAP AGs employees on April 9, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    
|(11) | Elected by SAP AGs shareholders on May 12, 2005,
    replacing Dietmar Hopp who resigned from the Supervisory Board
    on the same day. Member of the Audit Committee, and determined
    to be the Audit Committee Financial Expert, replacing Wilhelm
    Haarmann.                                                                                                                                                                                                             





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|                                 |  |            |      |  |              |  |      | 
|-------------------------------- |  | ---------- | ---- |  | ------------ |  | ---- | 
|                                 |  | Year First |      |  | Year Current | 
|Name                             |  | Appointed  |      |  | Term Expires | 
|                                 |  |            |      |  |              | 
|Prof. Dr. Henning Kagermann, CEO |  |            | 1991 |  |              |  | 2007 | 
|Dr. Peter Zencke                 |  |            | 1993 |  |              |  | 2008 | 
|Prof. Dr. Claus Heinrich         |  |            | 1996 |  |              |  | 2010 | 
|Gerhard Oswald                   |  |            | 1996 |  |              |  | 2010 | 
|Dr. Werner Brandt                |  |            | 2001 |  |              |  | 2009 | 
|Shai Agassi                      |  |            | 2002 |  |              |  | 2010 | 
|Léo Apotheker                    |  |            | 2002 |  |              |  | 2010 | 








Henning Kagermann Vorstandssprecher


Shai Agassi


Léo Apotheker


Werner Brandt


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Claus Heinrich


Gerhard Oswald


Peter Zencke





















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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The fixed element is paid as a monthly salary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | The amount of performance-related compensation to be paid out in
    respect of 2005 depends on the SAP Groups achievement of
    its targets for pro-forma operating income before stock-based
    compensation expenses and acquisition-related charges and on
    software revenue growth. On February 3, 2006 the
    Supervisory Boards compensation committee assessed
    SAPs performance against the agreed targets and determined
    how much performance-related compensation was payable. SAP will
    make the payment after the Annual General Shareholders
    Meeting in May 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | The long-term incentive element takes the form of stock options
    issued on the terms of the SAP Stock Option Plan 2002 (SAP SOP
    2002) that the Annual General Shareholders Meeting
    approved on May 3, 2002. The number of stock options to be
    issued to each individual member of the Executive Board was
    decided by the compensation committee at its meeting on
    February 10, 2005 and reflected the fair value of the
    options. Details of the plan and the terms of options under it
    are set out in Note 22 to our consolidated financial
    statements in Item 18. Financial Statements.
    For options granted to members of the Executive Board in and
    from February 2004, the SAP SOP 2002 plan terms provide that the
    Supervisory Board can cap subscription rights if it believes
    that an option holder would make a windfall profit by exercising
    them. If the total profit from the exercise at all times of
    rights under options issued to that holder at the same time
    exceeds two times the product of (i) the number of
    subscription rights received by that option holder; and
    (ii) the exercise price, that total profit is a windfall
    profit. It is determined by reference to the total of the
    differences, calculated individually for each exercised
    subscription right, between the closing price of the share on
    the exercise day and the exercise price. SAP bears any expenses
    incurred by the option holder through fees, taxes, or deductions
    related to the cap. The Supervisory Board can only cap
    subscription rights if it decides the windfall profits are due
    to not inconsequential, extraordinary, unforeseen appreciation
    for which the Executive Board is not responsible.





|                                  |  |                |       |              |              |  |           |          |  |  |         |  |  |       |         |  |       |  |          |  |  |  |          | 
|--------------------------------- |  | -------------- | ----- | ------------ | ------------ |  | --------- | -------- |  |  | ------- |  |  | ----- | ------- |  | ----- |  | -------- |  |  |  | -------- | 
|                                  |  | 2005           |       |              | 2004         | 
|                                  |  |                |       |              |              | 
|                                  |  |                |       | Performance- |              |  | Long-term |          |  |  |         | 
|                                  |  |                |       | related      |              |  | incentive |          |  |  |         | 
|                                  |  | Fixed elements |       |              | compensation |  |           | elements |  |  |         |  | 
|                                  |  |                |       |              |              |  |           |          |  |  |         |  | 
|                                  |  |                |       | Directors   |              |  |           |          |  |  |        
|                                  |  |                |       | profit       |              |  | Stock     |          |  |  |         | 
|                                  |  | Salary         |       |              | Others*      |  |           | sharing  |  |  | options |  |  | Total |         |  | Total | 
|                                  |  |                |       |              |              |  |           |          |  |  |         |  |  |       |         |  |       | 
|                                  |  | (000)         |      
|Prof. Dr. Henning Kagermann (CEO) |  |                | 618.0 |              |              |  | 18.3      |          |  |  | 4,104.0 |  |  |       | 1,344.5 |  |       |  | 6,084.8  |  |  |  | 5,258.7  | 
|Shai Agassi                       |  |                | 412.0 |              |              |  | 100.2     |          |  |  | 2,736.0 |  |  |       | 752.9   |  |       |  | 4,001.1  |  |  |  | 3,312.4  | 
|Léo Apotheker                     |  |                | 412.0 |              |              |  | 0.2       |          |  |  | 2,736.0 |  |  |       | 752.9   |  |       |  | 3,901.1  |  |  |  | 3,262.0  | 
|Dr. Werner Brandt                 |  |                | 412.0 |              |              |  | 41.3      |          |  |  | 2,736.0 |  |  |       | 752.9   |  |       |  | 3,942.2  |  |  |  | 3,046.7  | 
|Prof. Dr. Claus E. Heinrich       |  |                | 412.0 |              |              |  | 20.0      |          |  |  | 2,736.0 |  |  |       | 752.9   |  |       |  | 3,920.9  |  |  |  | 3,277.8  | 
|Gerhard Oswald                    |  |                | 412.0 |              |              |  | 14.2      |          |  |  | 2,736.0 |  |  |       | 752.9   |  |       |  | 3,915.1  |  |  |  | 3,270.4  | 
|Dr. Peter Zencke                  |  |                | 412.0 |              |              |  | 21.9      |          |  |  | 2,736.0 |  |  |       | 752.9   |  |       |  | 3,922.8  |  |  |  | 3,281.8  | 
|                                  |  |                |       |              |              |  |           |          |  |  |         |  |  |       |         |  |       | 
|Total                             |  |                |       |              |              |  |           |          |  |  |         |  |  |       |         |  |       |  | 29,688.0 |  |  |  | 24,709.8 | 
|                                  |  |                |       |              |              |  |           |          |  |  |         |  |  |       |         |  |       | 






|  |                                                                                                                                                             
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Retirement pension plan contributions, insurance contributions,
    benefits in kind, compensation from seats on other governing
    bodies in the SAP Group

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 


|                                  |  |               |         | 
|--------------------------------- |  | ------------- | ------- | 
|                                  |  | Stock options |        
|                                  |  |               |        
|Prof. Dr. Henning Kagermann (CEO) |  |               | 66,955  | 
|Shai Agassi                       |  |               | 37,495  | 
|Léo Apotheker                     |  |               | 37,495  | 
|Dr. Werner Brandt                 |  |               | 37,495  | 
|Prof. Dr. Claus E. Heinrich       |  |               | 37,495  | 
|Gerhard Oswald                    |  |               | 37,495  | 
|Dr. Peter Zencke                  |  |               | 37,495  | 
|                                  |  |               |        
|Total                             |  |               | 291,925 | 
|                                  |  |               |        

End-of






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12-month






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®


|                                  |  |          |        |                   |            |  |                   |         |  |       |            |           |  |         |         |  |            |  |      |         |  |  |         |  |  |  |      | 
|--------------------------------- |  | -------- | ------ | ----------------- | ---------- |  | ----------------- | ------- |  | ----- | ---------- | --------- |  | ------- | ------- |  | ---------- |  | ---- | ------- |  |  | ------- |  |  |  | ---- | 
|                                  |  |          |        | Vested as of      |            |  | Not vested as of  |         |  |      
|                                  |  |          |        | December 31, 2005 |            |  | December 31, 2005 |         |  | Total |           
|                                  |  |          |        |                   |            |  |                   |         |  |       |           
|                                  |  | Exercise |        |                   |            |  | Remaining         |         |  |       |            | Remaining |  |         |         |  | Remaining  | 
|                                  |  | price    |        |                   | Number     |  |                   | term    |  |       | Number     |           |  | term    |         |  | Number     |  |      | term    | 
|                                  |  | ()      |        |                   | of options |  |                   | (years) |  |       | of options |           |  | (years) |         |  | of options |  |      | (years) | 
|                                  |  |          |        |                   |            |  |                   |         |  |       |            |           |  |         |         |  |            |  |      |         | 
|Prof. Dr. Henning Kagermann (CEO) |  |          | 90.37  |                   |            |  | 80,000            |         |  |       | 2.16       |           |  |         |        |  |            |  |     |         |  |  | 80,000  |  |  |  | 2.16 | 
|                                  |  |          | 149.99 |                   |            |  |                  |         |  |       |           |           |  |         | 50,000  |  |            |  | 3.13 |         |  |  | 50,000  |  |  |  | 3.13 | 
|                                  |  |          | 134.20 |                   |            |  |                  |         |  |       |           |           |  |         | 66,955  |  |            |  | 4.11 |         |  |  | 66,955  |  |  |  | 4.11 | 
|Shai Agassi                       |  |          | 90.37  |                   |            |  | 30,000            |         |  |       | 2.16       |           |  |         |        |  |            |  |     |         |  |  | 30,000  |  |  |  | 2.16 | 
|                                  |  |          | 99.13  |                   |            |  | 30,000            |         |  |       | 2.33       |           |  |         |        |  |            |  |     |         |  |  | 30,000  |  |  |  | 2.33 | 
|                                  |  |          | 149.99 |                   |            |  |                  |         |  |       |           |           |  |         | 28,000  |  |            |  | 3.13 |         |  |  | 28,000  |  |  |  | 3.13 | 
|                                  |  |          | 134.20 |                   |            |  |                  |         |  |       |           |           |  |         | 37,495  |  |            |  | 4.11 |         |  |  | 37,495  |  |  |  | 4.11 | 
|Léo Apotheker                     |  |          | 90.37  |                   |            |  | 30,000            |         |  |       | 2.16       |           |  |         |        |  |            |  |     |         |  |  | 30,000  |  |  |  | 2.16 | 
|                                  |  |          | 149.99 |                   |            |  |                  |         |  |       |           |           |  |         | 28,000  |  |            |  | 3.13 |         |  |  | 28,000  |  |  |  | 3.13 | 
|                                  |  |          | 134.20 |                   |            |  |                  |         |  |       |           |           |  |         | 37,495  |  |            |  | 4.11 |         |  |  | 37,495  |  |  |  | 4.11 | 
|Dr. Werner Brandt                 |  |          | 149.99 |                   |            |  |                  |         |  |       |           |           |  |         | 28,000  |  |            |  | 3.13 |         |  |  | 28,000  |  |  |  | 3.13 | 
|                                  |  |          | 134.20 |                   |            |  |                  |         |  |       |           |           |  |         | 37,495  |  |            |  | 4.11 |         |  |  | 37,495  |  |  |  | 4.11 | 
|Prof. Dr. Claus E. Heinrich       |  |          | 90.37  |                   |            |  | 45,000            |         |  |       | 2.16       |           |  |         |        |  |            |  |     |         |  |  | 45,000  |  |  |  | 2.16 | 
|                                  |  |          | 149.99 |                   |            |  |                  |         |  |       |           |           |  |         | 28,000  |  |            |  | 3.13 |         |  |  | 28,000  |  |  |  | 3.13 | 
|                                  |  |          | 134.20 |                   |            |  |                  |         |  |       |           |           |  |         | 37,495  |  |            |  | 4.11 |         |  |  | 37,495  |  |  |  | 4.11 | 
|Gerhard Oswald                    |  |          | 149.99 |                   |            |  |                  |         |  |       |           |           |  |         | 28,000  |  |            |  | 3.13 |         |  |  | 28,000  |  |  |  | 3.13 | 
|                                  |  |          | 134.20 |                   |            |  |                  |         |  |       |           |           |  |         | 37,495  |  |            |  | 4.11 |         |  |  | 37,495  |  |  |  | 4.11 | 
|Dr. Peter Zencke                  |  |          | 90.37  |                   |            |  | 45,000            |         |  |       | 2.16       |           |  |         |        |  |            |  |     |         |  |  | 45,000  |  |  |  | 2.16 | 
|                                  |  |          | 149.99 |                   |            |  |                  |         |  |       |           |           |  |         | 28,000  |  |            |  | 3.13 |         |  |  | 28,000  |  |  |  | 3.13 | 
|                                  |  |          | 134.20 |                   |            |  |                  |         |  |       |           |           |  |         | 37,495  |  |            |  | 4.11 |         |  |  | 37,495  |  |  |  | 4.11 | 
|                                  |  |          |        |                   |            |  |                   |         |  |       |            |           |  |         |         |  |            |  |      |         | 
|Total                             |  |          |        |                   |            |  | 260,000           |         |  |       |            |           |  |         | 509,925 |  |            |  |      |         |  |  | 769,925 |  |  |  |      | 
|                                  |  |          |        |                   |            |  |                   |         |  |       |            |           |  |         |         |  |            |  |      |         | 





|                  |  |           |        |                  |                    |  |       | 
|----------------- |  | --------- | ------ | ---------------- | ------------------ |  | ----- | 
|                  |  |           |        | Weighted average |                   
|                  |  | Number of |        |                  | exercise price per | 
|                  |  | options   |        |                  | option ()         | 
|                  |  |           |        |                  |                    | 
|Dr. Werner Brandt |  |           | 30,000 |                  |                    |  | 90.37 | 
|Gerhard Oswald    |  |           | 45,000 |                  |                    |  | 90.37 | 
|                  |  |           |        |                  |                    | 
|Total             |  |           | 75,000 |                  |                    |  |       | 
|                  |  |           |        |                  |                    | 

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|                                  |  |           |        |                   |            |  |                   |              |  |       |            |  |  |              |        |  |            |  |      |              |  |  |         |  |  |  |      | 
|--------------------------------- |  | --------- | ------ | ----------------- | ---------- |  | ----------------- | ------------ |  | ----- | ---------- |  |  | ------------ | ------ |  | ---------- |  | ---- | ------------ |  |  | ------- |  |  |  | ---- | 
|                                  |  |           |        | Vested as of      |            |  | Not vested as of  |              |  |      
|                                  |  |           |        | December 31, 2005 |            |  | December 31, 2005 |              |  | Total |           
|                                  |  |           |        |                   |            |  |                   |              |  |       |           
|                                  |  | Exercise  |        |                   | Number     |  |                   | Remaining    |  |       | Number     |  |  | Remaining    |        |  | Number     |  |      | Remaining    | 
|                                  |  | price () |        |                   | of options |  |                   | term (years) |  |       | of options |  |  | term (years) |        |  | of options |  |      | term (years) | 
|                                  |  |           |        |                   |            |  |                   |              |  |       |            |  |  |              |        |  |            |  |      |              | 
|Prof. Dr. Henning Kagermann (CEO) |  |           | 77.95  |                   |            |  | 28,032            |              |  |       | 4.14       |  |  |              |       |  |            |  |     |              |  |  | 28,032  |  |  |  | 4.14 | 
|                                  |  |           | 94.72  |                   |            |  | 39,375            |              |  |       | 5.14       |  |  |              |       |  |            |  |     |              |  |  | 39,375  |  |  |  | 5.14 | 
|Shai Agassi                       |  |           |       |                   |            |  |                  |              |  |       |           |  |  |              |       |  |            |  |     |              |  |  |        |  |  |  |     | 
|Léo Apotheker                     |  |           | 117.02 |                   |            |  | 14,437            |              |  |       | 6.14       |  |  |              | 7,438  |  |            |  | 6.14 |              |  |  | 21,875  |  |  |  | 6.14 | 
|Dr. Werner Brandt                 |  |           |       |                   |            |  |                  |              |  |       |           |  |  |              |       |  |            |  |     |              |  |  |        |  |  |  |     | 
|Prof. Dr. Claus E. Heinrich       |  |           | 77.95  |                   |            |  | 20,532            |              |  |       | 4.14       |  |  |              |       |  |            |  |     |              |  |  | 20,532  |  |  |  | 4.14 | 
|                                  |  |           | 94.72  |                   |            |  | 27,500            |              |  |       | 5.14       |  |  |              |       |  |            |  |     |              |  |  | 27,500  |  |  |  | 5.14 | 
|Gerhard Oswald                    |  |           | 117.02 |                   |            |  |                  |              |  |       |           |  |  |              | 10,625 |  |            |  | 6.14 |              |  |  | 10,625  |  |  |  | 6.14 | 
|Dr. Peter Zencke                  |  |           | 77.95  |                   |            |  | 6,981             |              |  |       | 4.14       |  |  |              |       |  |            |  |     |              |  |  | 6,981   |  |  |  | 4.14 | 
|                                  |  |           | 94.72  |                   |            |  | 18,425            |              |  |       | 5.14       |  |  |              |       |  |            |  |     |              |  |  | 18,425  |  |  |  | 5.14 | 
|                                  |  |           |        |                   |            |  |                   |              |  |       |            |  |  |              |        |  |            |  |      |              | 
|                                  |  |           |        |                   |            |  | 155,282           |              |  |       |            |  |  |              | 18,063 |  |            |  |      |              |  |  | 173,345 |  |  |  |      | 
|                                  |  |           |        |                   |            |  |                   |              |  |       |            |  |  |              |        |  |            |  |      |              | 

84



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|                                  |  |           |        |                   |           |  |                   |              |  |       |          |  |  |              |        |  |          |  |      |              |  |  |         |  |  |  |      | 
|--------------------------------- |  | --------- | ------ | ----------------- | --------- |  | ----------------- | ------------ |  | ----- | -------- |  |  | ------------ | ------ |  | -------- |  | ---- | ------------ |  |  | ------- |  |  |  | ---- | 
|                                  |  |           |        | Vested as of      |           |  | Not vested as of  |              |  |      
|                                  |  |           |        | December 31, 2005 |           |  | December 31, 2005 |              |  | Total |         
|                                  |  |           |        |                   |           |  |                   |              |  |       |         
|                                  |  | Exercise  |        |                   | Number of |  |                   | Remaining    |  |       | Number   |  |  | Remaining    |        |  | Number   |  |      | Remaining    | 
|                                  |  | price () |        |                   | bonds     |  |                   | term (years) |  |       | of bonds |  |  | term (years) |        |  | of bonds |  |      | term (years) | 
|                                  |  |           |        |                   |           |  |                   |              |  |       |          |  |  |              |        |  |          |  |      |              | 
|Prof. Dr. Henning Kagermann (CEO) |  |           | 290.32 |                   |           |  | 22,425            |              |  |       | 4.14     |  |  |              |       |  |          |  |     |              |  |  | 22,425  |  |  |  | 4.14 | 
|                                  |  |           | 191.25 |                   |           |  | 31,500            |              |  |       | 5.14     |  |  |              |       |  |          |  |     |              |  |  | 31,500  |  |  |  | 5.14 | 
|                                  |  |           | 151.50 |                   |           |  | 59,400            |              |  |       | 6.14     |  |  |              | 30,600 |  |          |  | 6.14 |              |  |  | 90,000  |  |  |  | 6.14 | 
|Shai Agassi                       |  |           |       |                   |           |  |                  |              |  |       |         |  |  |              |       |  |          |  |     |              |  |  |        |  |  |  |     | 
|Léo Apotheker                     |  |           | 334.67 |                   |           |  | 23,850            |              |  |       | 4.19     |  |  |              |       |  |          |  |     |              |  |  | 23,850  |  |  |  | 4.19 | 
|                                  |  |           | 191.25 |                   |           |  | 30,000            |              |  |       | 5.14     |  |  |              |       |  |          |  |     |              |  |  | 30,000  |  |  |  | 5.14 | 
|                                  |  |           | 151.50 |                   |           |  | 11,550            |              |  |       | 6.14     |  |  |              | 5,950  |  |          |  | 6.14 |              |  |  | 17,500  |  |  |  | 6.14 | 
|Dr. Werner Brandt                 |  |           | 191.25 |                   |           |  | 5,000             |              |  |       | 5.14     |  |  |              |       |  |          |  |     |              |  |  | 5,000   |  |  |  | 5.14 | 
|                                  |  |           | 151.50 |                   |           |  | 19,800            |              |  |       | 6.14     |  |  |              | 10,200 |  |          |  | 6.14 |              |  |  | 30,000  |  |  |  | 6.14 | 
|Prof. Dr. Claus E. Heinrich       |  |           | 290.32 |                   |           |  | 16,425            |              |  |       | 4.14     |  |  |              |       |  |          |  |     |              |  |  | 16,425  |  |  |  | 4.14 | 
|                                  |  |           | 191.25 |                   |           |  | 22,000            |              |  |       | 5.14     |  |  |              |       |  |          |  |     |              |  |  | 22,000  |  |  |  | 5.14 | 
|                                  |  |           | 151.50 |                   |           |  | 33,000            |              |  |       | 6.14     |  |  |              | 17,000 |  |          |  | 6.14 |              |  |  | 50,000  |  |  |  | 6.14 | 
|Gerhard Oswald                    |  |           | 290.32 |                   |           |  | 16,425            |              |  |       | 4.14     |  |  |              |       |  |          |  |     |              |  |  | 16,425  |  |  |  | 4.14 | 
|                                  |  |           | 191.25 |                   |           |  | 22,000            |              |  |       | 5.14     |  |  |              |       |  |          |  |     |              |  |  | 22,000  |  |  |  | 5.14 | 
|                                  |  |           | 151.50 |                   |           |  | 16,500            |              |  |       | 6.14     |  |  |              | 8,500  |  |          |  | 6.14 |              |  |  | 25,000  |  |  |  | 6.14 | 
|Dr. Peter Zencke                  |  |           | 290.32 |                   |           |  | 16,425            |              |  |       | 4.14     |  |  |              |       |  |          |  |     |              |  |  | 16,425  |  |  |  | 4.14 | 
|                                  |  |           | 191.25 |                   |           |  | 22,000            |              |  |       | 5.14     |  |  |              |       |  |          |  |     |              |  |  | 22,000  |  |  |  | 5.14 | 
|                                  |  |           | 151.50 |                   |           |  | 33,000            |              |  |       | 6.14     |  |  |              | 17,000 |  |          |  | 6.14 |              |  |  | 50,000  |  |  |  | 6.14 | 
|                                  |  |           |        |                   |           |  |                   |              |  |       |          |  |  |              |        |  |          |  |      |              | 
|                                  |  |           |        |                   |           |  | 401,300           |              |  |       |          |  |  |              | 89,250 |  |          |  |      |              |  |  | 490,550 |  |  |  |      | 
|                                  |  |           |        |                   |           |  |                   |              |  |       |          |  |  |              |        |  |          |  |      |              | 



|                  |  |               |        |          |                   |  |       |          |          |  |                |  |  |  |   | 
|----------------- |  | ------------- | ------ | -------- | ----------------- |  | ----- | -------- | -------- |  | -------------- |  |  |  | - | 
|                  |  | Stock Options |        |          |                  
|                  |  |               |        |          | Convertible Bonds | 
|                  |  |               |        | Weighted |                   |  |       |         
|                  |  |               |        | average  |                   |  |       |          | Weighted | 
|                  |  |               |        | exercise |                   |  |       |          | average  | 
|                  |  | Number        |        |          | price per         |  |       | Number   |          |  | exercise price | 
|                  |  | of options    |        |          | option ()        |  |       | of bonds |          |  | per bond ()   | 
|                  |  |               |        |          |                   |  |       |          |          |  |                | 
|Dr. Werner Brandt |  |               | 2,125  |          |                   |  | 88.12 |          |          |  |               |  |  |  |  | 
|Gerhard Oswald    |  |               | 19,663 |          |                   |  | 99.00 |          |          |  |               |  |  |  |  | 
|                  |  |               |        |          |                   |  |       |          |          |  |                | 
|                  |  |               | 21,788 |          |                   |  |       |          |          |  |               |  |  |  |   | 
|                  |  |               |        |          |                   |  |       |          |          |  |                | 

85



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##### Table of Contents











|                  |  |                   |  |                                 |  |        |  |             
|----------------- |  | ----------------- |  | ------------------------------- |  | ------ |  | ------------
|Notifying party   |  | Transaction date  |  | Transaction                     |  | Number |  | Unit price  
|                  |  |                   |  |                                 |  |        |  |             
|Shai Agassi       |  | February 4, 2005  |  | Purchase of ADRs                |  | 25,500 |  | U.S.$39.1249
|Dr. Werner Brandt |  | December 12, 2005 |  | Exercise of subscription rights |  | 20,000 |  | 90.37      
|                  |  | December 12, 2005 |  | Sale of shares                  |  | 20,000 |  | 155.03     
|                  |  | December 12, 2005 |  | Purchase of shares              |  | 1,000  |  | 154.80     
|                  |  | June 10, 2005     |  | Exercise of subscription rights |  | 2,125  |  | 88.1236    
|                  |  | June 10, 2005     |  | Exercise of subscription rights |  | 10,000 |  | 90.37      
|                  |  | June 10, 2005     |  | Sale of shares                  |  | 12,125 |  | 138.17302  
|Gerhard Oswald    |  | June 10, 2005     |  | Exercise of subscription rights |  | 10,313 |  | 108.8686   
|                  |  | June 10, 2005     |  | Exercise of subscription rights |  | 45,000 |  | 90.37      
|                  |  | June 10, 2005     |  | Exercise of subscription rights |  | 9,350  |  | 88.1236    
|                  |  | June 10, 2005     |  | Sale of shares                  |  | 64,663 |  | 138.17302  







86



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##### Table of Contents









  


    


  






|                                                   |  |                  |       |  |              |  |       |       |  |       |              |  |          |              |       |  |       |  |       |  |  |  |       | 
|-------------------------------------------------- |  | ---------------- | ----- |  | ------------ |  | ----- | ----- |  | ----- | ------------ |  | -------- | ------------ | ----- |  | ----- |  | ----- |  |  |  | ----- | 
|                                                   |  | 2005             |       |  | 2004         | 
|                                                   |  |                  |       |  |              | 
|                                                   |  | Fixed            |       |  | Variable     |  |       |       |  | Fixed |              |  | Variable |              |       | 
|                                                   |  | compensation     |       |  | compensation |  |       | Total |  |       | compensation |  |          | compensation |       |  | Total | 
|                                                   |  |                  |       |  |              |  |       |       |  |       |              |  |          |              |       |  |       | 
|                                                   |  | (in  thousands) |      
|Prof. Dr. h. c. mult. Hasso Plattner (Chairperson) |  |                  | 50.0  |  |              |  | 50.0  |       |  |       | 100.0        |  |          |              | 50.0  |  |       |  | 50.0  |  |  |  | 100.0 | 
|Helga Classen (Deputy Chairperson)                 |  |                  | 37.5  |  |              |  | 37.5  |       |  |       | 75.0         |  |          |              | 37.5  |  |       |  | 37.5  |  |  |  | 75.0  | 
|Willi Burbach                                      |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Prof. Dr. Wilhelm Haarmann                         |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Dietmar Hopp (until May 12, 2005)                  |  |                  | 10.4  |  |              |  | 10.4  |       |  |       | 20.8         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Bernhard Koller                                    |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Christiane Kuntz-Mayr                              |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Lars Lamadé                                        |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Dr. Gerhard Maier                                  |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Dr. h. c. Hartmut Mehdorn                          |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Pekka Ala-Pietilä                                  |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Prof. Dr. Dr. h. c. August-Wilhelm Scheer          |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Dr. Barbara Schennerlein                           |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Dr. Erhard Schipporeit (since May 12, 2005)        |  |                  | 16.7  |  |              |  | 16.7  |       |  |       | 33.4         |  |          |              | 0.0   |  |       |  | 0.0   |  |  |  | 0.0   | 
|Stefan Schulz                                      |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Dr. Dieter Spöri                                   |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|Dr. h. c. Klaus Tschira                            |  |                  | 25.0  |  |              |  | 25.0  |       |  |       | 50.0         |  |          |              | 25.0  |  |       |  | 25.0  |  |  |  | 50.0  | 
|                                                   |  |                  |       |  |              |  |       |       |  |       |              |  |          |              |       |  |       | 
|Total                                              |  |                  | 439.6 |  |              |  | 439.6 |       |  |       | 879.2        |  |          |              | 437.5 |  |       |  | 437.5 |  |  |  | 875.0 | 
|                                                   |  |                  |       |  |              |  |       |       |  |       |              |  |          |              |       |  |       | 

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|                                                                   |  |                   |  |                                               |  |         |  |            |            | 
|------------------------------------------------------------------ |  | ----------------- |  | --------------------------------------------- |  | ------- |  | ---------- | ---------- | 
|Transactions in SAP Shares and American Depositary Receipts (ADRs) | 
|                                                                   | 
|Notifying party                                                    |  | Transaction date  |  | Transaction                                   |  | Number  |  | Unit price |           
|                                                                   |  |                   |  |                                               |  |         |  |            |           
|Hasso Plattner GmbH & Co. Beteiligungs-KG                          |  | December 28, 2005 |  | Acquisition of shares by way of security loan |  | 410,000 |  |            | Variable*  | 
|Bernhard Koller                                                    |  | August 1, 2005    |  | Purchase of shares                            |  | 1,000   |  |            | 140.23    | 
|                                                                   |  | May 24, 2005      |  | Purchase of shares                            |  | 350     |  |            | 131.47    | 
|Christiane Kuntz-Mayr                                              |  | October 31, 2005  |  | Purchase of shares                            |  | 325     |  |            | 142.18821 | 






|  |                                                                                                                                                                                                             
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | at an original price of 0.35% of
    153.16 per
    annum and additionally the payment of a sum of 140% of any cash
    disbursements received on the share loan with an original value
    of 219,784.60.







Executive Board:
Other Information









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|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        |  |  |  |       |  |  |  |       |  |  |  |        | 
|-------------------------- |  | ---------------------------- | ------ |  | -------- |  | ----- | ---- |  |  | ----- |  |  | ---- | ------ |  | -------- |  | ------ | ---- |  |  | ----- |  |  | ---- | ----- |  | -------- |  | ------ | ---- |  |  | ------ |  |  |  | ----- |  |  |  | ----- |  |  |  | ------ | 
|                           |  | Employees as of December 31, |       
|                           |  |                              |       
|                           |  | 2005                         |        |  | 2004     |  |       | 2003 | 
|                           |  |                              |        |  |          |  |       |      | 
|FTEs                       |  | EMEA                         |        |  | Americas |  |       | Asia |  |  | Total |  |  | EMEA |        |  | Americas |  |        | Asia |  |  | Total |  |  | EMEA |       |  | Americas |  |        | Asia |  |  | Total  | 
|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        | 
|Customer Service & Support |  |                              | 8,370  |  |          |  | 3,705 |      |  |  | 2,315 |  |  |      | 14,390 |  |          |  | 8,340  |      |  |  | 3,136 |  |  |      | 2,029 |  |          |  | 13,505 |      |  |  | 7,950  |  |  |  | 2,873 |  |  |  | 1,710 |  |  |  | 12,533 | 
|Research & Development     |  |                              | 7,834  |  |          |  | 1,274 |      |  |  | 2,521 |  |  |      | 11,629 |  |          |  | 7,173  |      |  |  | 1,084 |  |  |      | 1,625 |  |          |  | 9,882  |      |  |  | 6,810  |  |  |  | 1,074 |  |  |  | 970   |  |  |  | 8,854  | 
|Sales & Marketing          |  |                              | 3,186  |  |          |  | 2,135 |      |  |  | 928   |  |  |      | 6,249  |  |          |  | 3,042  |      |  |  | 1,730 |  |  |      | 811   |  |          |  | 5,583  |      |  |  | 3,022  |  |  |  | 1,432 |  |  |  | 716   |  |  |  | 5,170  | 
|General & Administrative   |  |                              | 2,339  |  |          |  | 839   |      |  |  | 427   |  |  |      | 3,605  |  |          |  | 2,103  |      |  |  | 734   |  |  |      | 398   |  |          |  | 3,235  |      |  |  | 2,052  |  |  |  | 677   |  |  |  | 324   |  |  |  | 3,053  | 
|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        | 
|SAP Group                  |  |                              | 21,729 |  |          |  | 7,953 |      |  |  | 6,191 |  |  |      | 35,873 |  |          |  | 20,658 |      |  |  | 6,684 |  |  |      | 4863  |  |          |  | 32,205 |      |  |  | 19,834 |  |  |  | 6,056 |  |  |  | 3,720 |  |  |  | 29,610 | 
|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        | 

|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        |  |  |  |       |  |  |  |       |  |  |  |        | 
|-------------------------- |  | ---------------------------- | ------ |  | -------- |  | ----- | ---- |  |  | ----- |  |  | ---- | ------ |  | -------- |  | ------ | ---- |  |  | ----- |  |  | ---- | ----- |  | -------- |  | ------ | ---- |  |  | ------ |  |  |  | ----- |  |  |  | ----- |  |  |  | ------ | 
|                           |  | Employees as of December 31, |       
|                           |  |                              |       
|                           |  | 2005                         |        |  | 2004     |  |       | 2003 | 
|                           |  |                              |        |  |          |  |       |      | 
|Headcounts                 |  | EMEA                         |        |  | Americas |  |       | Asia |  |  | Total |  |  | EMEA |        |  | Americas |  |        | Asia |  |  | Total |  |  | EMEA |       |  | Americas |  |        | Asia |  |  | Total  | 
|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        | 
|Customer Service & Support |  |                              | 8,544  |  |          |  | 3,712 |      |  |  | 2,317 |  |  |      | 14,573 |  |          |  | 8,500  |      |  |  | 3,144 |  |  |      | 2,029 |  |          |  | 13,673 |      |  |  | 8,111  |  |  |  | 2,881 |  |  |  | 1,721 |  |  |  | 12,713 | 
|Research & Development     |  |                              | 8,096  |  |          |  | 1,280 |      |  |  | 2,523 |  |  |      | 11,899 |  |          |  | 7,412  |      |  |  | 1,091 |  |  |      | 1,626 |  |          |  | 10,129 |      |  |  | 7,042  |  |  |  | 1,084 |  |  |  | 974   |  |  |  | 9,100  | 
|Sales & Marketing          |  |                              | 3,264  |  |          |  | 2,135 |      |  |  | 929   |  |  |      | 6,328  |  |          |  | 3,113  |      |  |  | 1,731 |  |  |      | 814   |  |          |  | 5,658  |      |  |  | 3,112  |  |  |  | 1,434 |  |  |  | 721   |  |  |  | 5,267  | 
|General & Administrative   |  |                              | 2,449  |  |          |  | 841   |      |  |  | 428   |  |  |      | 3,718  |  |          |  | 2,205  |      |  |  | 737   |  |  |      | 400   |  |          |  | 3,342  |      |  |  | 2,163  |  |  |  | 681   |  |  |  | 327   |  |  |  | 3,171  | 
|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        | 
|SAP Group                  |  |                              | 22,353 |  |          |  | 7,968 |      |  |  | 6,197 |  |  |      | 36,518 |  |          |  | 21,230 |      |  |  | 6,703 |  |  |      | 4,869 |  |          |  | 32,802 |      |  |  | 20,428 |  |  |  | 6,080 |  |  |  | 3,743 |  |  |  | 30,251 | 
|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        | 















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SAP SOP 2002




®






90



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Long Term Incentive 2000 Plan






® 


91



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® ®








STAR Plan




92



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|                     |  |                  |    |   |               |                      |                  |  |    |  
|-------------------- |  | ---------------- | -- | - | ------------- | -------------------- | ---------------- |  | -- | -
|Quarter Ended        |  | Weighting Factor |    |   | Quarter Ended |                      | Weighting Factor | 
|                     |  |                  |    |   |               |                      |                  | 
|March 31, Year 1     |  |                  | 5  | % |               | March 31, Year 2     |                  |  | 10 | %
|June 30, Year 1      |  |                  | 5  | % |               | June 30, Year 2      |                  |  | 10 | %
|September 30, Year 1 |  |                  | 10 | % |               | September 30, Year 2 |                  |  | 10 | %
|December 31, Year 1  |  |                  | 20 | % |               | December 31, Year 2  |                  |  | 30 | %




 ®  ®


 





 ®  ®


 


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 


 






German Employee Stock Purchase Plans





U.S. Employee Stock Purchase Plans




94



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Other Foreign Stock Purchase Plans







ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS









Wertpapierhandelsgesetz


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|                                                                                                                                                                                       |  |                    |            |      |             |  |        |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | ---- | ----------- |  | ------ | -
|                                                                                                                                                                                       |  | Ordinary Shares    |           
|                                                                                                                                                                                       |  | Beneficially Owned |           
|                                                                                                                                                                                       |  |                    |           
|                                                                                                                                                                                       |  |                    |            | % of |            
|Principal Shareholders                                                                                                                                                                 |  | Number             |            |      | Outstanding | 
|                                                                                                                                                                                       |  |                    |            |      |             | 
|Dietmar Hopp Stiftung GmbH                                                                                                                                                             |  |                    | 27,467,300 |      |             |  | 8.672  | %
|Golf-Club St. Leon-Rot GmbH & Co. Betriebs oHG                                                                                                                                         |  |                    | 3,650,000  |      |             |  | 1.152  | %
|                                                                                                                                                                                       |  |                    |            |      |             | 
|Dietmar Hopp,
    collectively(1)                                                                                                                                                      |  |                    | 31,117,300 |      |             |  | 9.824  | %
|Hasso Plattner GmbH & Co.
    Beteiligungs-KG(2)                                                                                                                                       |  |                    | 29,779,740 |      |             |  | 9.402  | %
|Hasso Plattner Förderstiftung GmbH                                                                                                                                                     |  |                    | 4,580,573  |      |             |  | 1.446  | %
|Hasso Plattner (24,100 ADRs)                                                                                                                                                           |  |                    | 6,025      |      |             |  | 0.002  | %
|                                                                                                                                                                                       |  |                    |            |      |             | 
|Hasso Plattner, Chairperson Supervisory Board,
    collectively(3)                                                                                                                     |  |                    | 34,366,338 |      |             |  | 10.850 | %
|Dr. h.c. Klaus Tschira Beteiligungs GmbH & Co. KG                                                                                                                                      |  |                    | 15,832,660 |      |             |  | 4.999  | %
|Klaus Tschira Stiftung gGmbH                                                                                                                                                           |  |                    | 15,285,843 |      |             |  | 4.826  | %
|Klaus Tschira, Member Supervisory Board                                                                                                                                                |  |                    | 500,000    |      |             |  | 0.158  | %
|                                                                                                                                                                                       |  |                    |            |      |             | 
|Klaus Tschira, Member Supervisory Board,
    collectively(4)                                                                                                                           |  |                    | 31,618,503 |      |             |  | 9.982  | %
|Executive Board Members as a group (7
    persons)(5)                                                                                                                                  |  |                    | 31,346     |      |             |  | 0.010  | %
|Supervisory Board Members as a group (16 persons)                                                                                                                                      |  |                    | 65,988,924 |      |             |  | 20.833 | %
|                                                                                                                                                                                       |  |                    |            |      |             | 
|Executive Board Members and Supervisory Board Members as a
    group (23 persons)                                                                                                      |  |                    | 66,020,270 |      |             |  | 20.843 | %
|Options and convertible bonds that are vested and exercisable
    within 60 days of March 10, 2006, held by Executive
    Board Members and Supervisory Board Members, collectively(5) |  |                    | 1,111,058  |      |             |  | N/A    |  






|    |                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Dietmar Hopp exercises sole voting and dispositive power in
    Dietmar Hopp Stiftung GmbH and Golf-Club St. Leon-Rot
    GmbH & Co. Betriebs oHG.         
|   
|(2) | Hasso Plattner owns a 100% partnership interest in and controls
    Hasso Plattner GmbH & Co. Beteiligungs-KG.                                             
|   
|(3) | Hasso Plattner exercises sole voting and dispositive power in
    Hasso Plattner GmbH & Co. Beteiligungs-KG and in Hasso
    Plattner Förderstiftung gGmbH.
|   
|(4) | Klaus Tschira exercises shared voting and dispositive power in
    Klaus Tschira Stiftung gGmbH and Dr. h.c. Tschira
    Beteiligungs GmbH & Co. KG.       
|   
|(5) | Includes 631,383 stock options and 479,675 convertible bonds.                                                                                              



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ITEM 8. FINANCIAL INFORMATION







S-1.









U.S.-based


U.S.-based








97



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ITEM 9. THE OFFER AND LISTING







over-the Freiverkehr








®  over-the


amtliche
Kursmakler


98



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® ® ® ® ® ® ®


99



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®


|                              |                                |                   |        |        |         |  |        |        |  |  |          |          |  |  |          |          | 
|----------------------------- | ------------------------------ | ----------------- | ------ | ------ | ------- |  | ------ | ------ |  |  | -------- | -------- |  |  | -------- | -------- | 
|                              |                                | Price per         |        |        |        
|                              |                                | Ordinary Share(1) |        |        | DAX®(2) | 
|                              |                                |                   |        |        |         | 
|                              |                                | High              |        |        | Low     |  |        | High   |  |  | Low      |         
|                              |                                |                   |        |        |         |  |        |        |  |  |          |         
|                              |                                | (in )            |        |        |         |  |       
|Annual Highs and Lows         |                                |                   |        |        |         |  |        |        |  |  |          |          |  |  |          |         
|2001                          |                                |                   | 180.90 |        |         |  | 100.00 |        |  |  | 6,795.14 |          |  |  | 3,787.23 |         
|2002                          |                                |                   | 176.30 |        |         |  | 41.65  |        |  |  | 5,462.55 |          |  |  | 2,597.88 |         
|2003                          |                                |                   | 134.00 |        |         |  | 67.65  |        |  |  | 3,965.16 |          |  |  | 2,202.96 |         
|2004                          |                                |                   | 142.70 |        |         |  | 116.12 |        |  |  | 4,261.79 |          |  |  | 3,646.99 |         
|2005                          |                                |                   | 155.80 |        |         |  | 114.50 |        |  |  | 5,458.58 |          |  |  | 4,178.10 |         
|Quarterly Highs and Lows 2004 |                                |                   |        |        |         |  |        |        |  |  |          |          |  |  |          |         
|                              | First Quarter                  |                   |        | 142.70 |         |  |        | 120.45 |  |  |          | 4,151.83 |  |  |          | 3,726.07 | 
|                              | Second Quarter                 |                   |        | 138.31 |         |  |        | 122.44 |  |  |          | 4,134.10 |  |  |          | 3,754.37 | 
|                              | Third Quarter                  |                   |        | 136.02 |         |  |        | 116.12 |  |  |          | 4,035.02 |  |  |          | 3,646.99 | 
|                              | Fourth Quarter                 |                   |        | 139.49 |         |  |        | 126.55 |  |  |          | 4,261.79 |  |  |          | 3,854.41 | 
|2005                          |                                |                   |        |        |         |  |        |        |  |  |          |          |  |  |          |         
|                              | First Quarter                  |                   |        | 133.34 |         |  |        | 118.00 |  |  |          | 4,428.09 |  |  |          | 4,201.81 | 
|                              | Second Quarter                 |                   |        | 144.01 |         |  |        | 114.50 |  |  |          | 4,627.48 |  |  |          | 4,178.10 | 
|                              | Third Quarter                  |                   |        | 147.78 |         |  |        | 135.93 |  |  |          | 5,048.74 |  |  |          | 4,530.18 | 
|                              | Fourth Quarter                 |                   |        | 155.80 |         |  |        | 140.05 |  |  |          | 5,458.58 |  |  |          | 4,806.05 | 
|Monthly Highs and Lows 2005   |                                |                   |        |        |         |  |        |        |  |  |          |          |  |  |          |         
|                              | July                           |                   |        | 147.78 |         |  |        | 139.12 |  |  |          | 4,892.50 |  |  |          | 4,530.18 | 
|                              | August                         |                   |        | 142.20 |         |  |        | 135.93 |  |  |          | 4,990.57 |  |  |          | 4,783.80 | 
|                              | September                      |                   |        | 144.16 |         |  |        | 137.80 |  |  |          | 5,048.74 |  |  |          | 4,837.81 | 
|                              | October                        |                   |        | 147.05 |         |  |        | 140.05 |  |  |          | 5,138.02 |  |  |          | 4,806.05 | 
|                              | November                       |                   |        | 153.35 |         |  |        | 142.36 |  |  |          | 5,199.48 |  |  |          | 4,922.55 | 
|                              | December                       |                   |        | 155.80 |         |  |        | 152.95 |  |  |          | 5,458.58 |  |  |          | 5,266.55 | 
|2006                          |                                |                   |        |        |         |  |        |        |  |  |          |          |  |  |          |         
|                              | January                        |                   |        | 168.50 |         |  |        | 146.00 |  |  |          | 5,674.15 |  |  |          | 5,334.30 | 
|                              | February                       |                   |        | 175.25 |         |  |        | 166.21 |  |  |          | 5,915.15 |  |  |          | 5,649.60 | 
|                              | March (through March 10, 2006) |                   |        | 173.45 |         |  |        | 170.30 |  |  |          | 5,866.61 |  |  |          | 5,673.36 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Since January 1, 2000, ordinary share prices are obtained
    from
    Xetra®.                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(2) | The
    DAX®
    is a continuously updated, capital-weighted performance index of
    30 German blue chip companies. In principle, the shares included
    in the
    DAX®
    are selected on the basis of their stock exchange turnover and
    the issuers market capitalization. Adjustments to the
    DAX®
    are made for capital changes, subscription rights and dividends.
    Subsequent to June 18, 1999, the highs and lows of the
    DAX®
    are disclosed on
    Xetra®.




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|                         |                |               |       |       |     |  |       |       | 
|------------------------ | -------------- | ------------- | ----- | ----- | --- |  | ----- | ----- | 
|                         |                | Price per ADS |      
|                         |                |               |      
|                         |                | High          |       |       | Low | 
|                         |                |               |       |       |     | 
|                         |                | (in U.S.$)    |      
|Annual Highs and Lows    |                |               |       |       |     |  |       |      
|2001                     |                |               | 47.64 |       |     |  | 23.00 |      
|2002                     |                |               | 38.84 |       |     |  | 10.05 |      
|2003                     |                |               | 41.80 |       |     |  | 18.46 |      
|2004                     |                |               | 45.45 |       |     |  | 35.50 |      
|2005                     |                |               | 46.43 |       |     |  | 36.96 |      
|Quarterly Highs and Lows |                |               |       |       |     |  |       |      
|2001                     |                |               |       |       |     |  |       |      
|                         | First Quarter  |               |       | 47.64 |     |  |       | 28.59 | 
|                         | Second Quarter |               |       | 40.99 |     |  |       | 24.39 | 
|                         | Third Quarter  |               |       | 37.73 |     |  |       | 23.00 | 
|                         | Fourth Quarter |               |       | 34.80 |     |  |       | 25.09 | 
|2002                     |                |               |       |       |     |  |       |      
|                         | First Quarter  |               |       | 38.84 |     |  |       | 32.41 | 
|                         | Second Quarter |               |       | 38.30 |     |  |       | 22.68 | 
|                         | Third Quarter  |               |       | 23.51 |     |  |       | 11.25 | 
|                         | Fourth Quarter |               |       | 22.65 |     |  |       | 10.05 | 
|2003                     |                |               |       |       |     |  |       |      
|                         | First Quarter  |               |       | 25.00 |     |  |       | 18.46 | 
|                         | Second Quarter |               |       | 33.40 |     |  |       | 19.18 | 
|                         | Third Quarter  |               |       | 34.50 |     |  |       | 27.56 | 
|                         | Fourth Quarter |               |       | 41.80 |     |  |       | 31.13 | 

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|                       |                                |               |  |       |     |  |  |       | 
|---------------------- | ------------------------------ | ------------- |  | ----- | --- |  |  | ----- | 
|                       |                                | Price per ADS | 
|                       |                                |               | 
|                       |                                | High          |  |       | Low | 
|                       |                                |               |  |       |     | 
|                       |                                | (in U.S.$)    | 
|2004                   |                                |               |  |       |     |  |  |      
|                       | First Quarter                  |               |  | 45.27 |     |  |  | 36.97 | 
|                       | Second Quarter                 |               |  | 41.95 |     |  |  | 36.71 | 
|                       | Third Quarter                  |               |  | 41.68 |     |  |  | 35.50 | 
|                       | Fourth Quarter                 |               |  | 45.45 |     |  |  | 39.20 | 
|2005                   |                                |               |  |       |     |  |  |      
|                       | First Quarter                  |               |  | 44.04 |     |  |  | 38.52 | 
|                       | Second Quarter                 |               |  | 43.42 |     |  |  | 36.96 | 
|                       | Third Quarter                  |               |  | 44.92 |     |  |  | 41.82 | 
|                       | Fourth Quarter                 |               |  | 46.43 |     |  |  | 42.08 | 
|Monthly Highs and Lows |                                |               |  |       |     |  |  |      
|2005                   |                                |               |  |       |     |  |  |      
|                       | July                           |               |  | 44.92 |     |  |  | 41.82 | 
|                       | August                         |               |  | 43.74 |     |  |  | 41.83 | 
|                       | September                      |               |  | 44.33 |     |  |  | 41.90 | 
|                       | October                        |               |  | 43.98 |     |  |  | 42.38 | 
|                       | November                       |               |  | 45.15 |     |  |  | 42.08 | 
|                       | December                       |               |  | 46.43 |     |  |  | 45.07 | 
|2006                   |                                |               |  |       |     |  |  |      
|                       | January                        |               |  | 51.37 |     |  |  | 44.00 | 
|                       | February                       |               |  | 52.22 |     |  |  | 49.25 | 
|                       | March (through March 10, 2006) |               |  | 52.10 |     |  |  | 50.91 | 






ITEM 10. ADDITIONAL INFORMATION









Aktiengesetz Handelsregister






102



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| |   |                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | developing and marketing integrated product and service
    solutions for e-commerce;                                                                                                                  
|
| |  | developing software for information technology and the licensing
    of its use to others;                                                                                                             
|
| |  | organization and deployment consulting, as well as user
    training, for
    e-commerce and other
    software solutions;                                                                             
|
| |  | selling, leasing, renting and arranging the procurement and
    provision of all other forms of use of information technology
    systems and related equipment; and                                   
|
| |  | making capital investments in enterprises active in the field of
    information technology to promote the opening and advancement of
    international markets in the field of information technology.





Introduction.






103



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Satzung


The Supervisory Board.






Mitbestimmungsgesetz






104



---



##### Table of Contents









Audit Committee






General Committee


Compensation Committee


Finance and Investment Committee


Mediation Committee


Technology Committee


105



---



##### Table of Contents







The Executive Board.














106



---



##### Table of Contents



The Annual General Shareholders Meeting.









Share Capital.











| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Capital Increases. The capital stock may be increased in
    consideration of contributions in cash or in kind, or by
    establishing authorized capital or contingent capital or by an
    increase of the companys capital reserves. Authorized
    capital provides the Executive Board with the flexibility to
    issue new shares for a period of up to five years, generally to
    preserve liquidity. The Executive Board must obtain the approval
    of the Supervisory Board before issuing new shares with regard
    to the authorized capital. Contingent capital allows the
    issuance of new shares for specified purposes, including
    employee stock option plans and the issuance of shares upon
    conversion of convertible bonds and exercise of stock options.
    By law, the Executive Board may only issue new shares with
    regard to the contingent capital for the specified purposes.
    Capital increases require an approval by 75% of the issued
    shares present at the Annual General Shareholders Meeting
    at which the increase is proposed and require an amendment to
    the Articles of Incorporation.
|
| |  | Authorized and Contingent Capital. SAPs Articles of
    Incorporation authorize the Executive Board of SAP AG to
    increase the subscribed capital as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | up to a total amount of
    60 million
    through the issuance of new ordinary shares in return for
    contributions in cash until May 11, 2010 (Authorized
    Capital I). The issuance is subject to the statutory
    subscription rights of existing shareholders;                                                                                                                                                                   
|
| |  | up to a total amount of
    60 million
    through the issuance of new ordinary shares in return for
    contributions in cash or in kind until May 11, 2010
    (Authorized Capital II). Subject to certain
    preconditions and the consent of the Supervisory Board, the
    Executive Board is authorized to exclude the shareholders
    statutory subscription rights for issuance of up to
    10      % of the capital stock; and

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | up to an aggregate amount of
    15 million
    against contribution in cash by issuing new ordinary shares
    until May 1, 2007 (Authorized
    Capital III). The new shares may be subscribed by a
    credit institution only, and only to the extent that such credit
    institution, releasing SAP from its corresponding obligation,
    satisfies the conversion and subscription rights granted under
    the SAP AG 2000 Long Term Incentive Plan (LTI 2000
    Plan) or SAP Stock Option Plan 2002 (SAP SOP
    2002), respectively. The shareholders statutory
    subscription rights are excluded from this capital increase. The
    Executive Board may exercise this authorization only to the
    extent that the capital stock attributable to the new shares
    issued from this Authorized Capital III together with new
    shares from contingent capital and treasury shares issued or
    transferred for the purposes of satisfying subscription rights
    does not amount to more than 10% of the capital stock at the
    time of adoption of the authorization.



| |  |                                                                                                                                    
| |  | -----------------------------------------------------------------------------------------------------------------------------------
| |  | More information regarding our
    authorized and contingent capital is included in Note 21 in
    Item 18. Financial Statements.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Capital Reduction. The share capital may be reduced by an
    amendment of the Articles of Incorporation approved by 75% of
    the issued shares present at the Annual General
    Shareholders Meeting.                                                                                                                                                                                                                                                                                                                            
|
| |  | Preemptive Rights. Shareholders have preemptive rights to
    subscribe (Bezugsrecht) for any issue of additional
    shares in proportion to their shareholdings in the issued
    capital. The preemptive rights may be excluded under certain
    circumstances by a shareholders resolution (approved by
    75% of the issued shares present at the Annual General
    Shareholders Meeting) or by the Executive Board authorized
    by such shareholders resolution and subject to the consent
    of the Supervisory Board.
|
| |  | Liquidation. If SAP AG were to be liquidated, any
    liquidation proceeds remaining after all of our liabilities were
    paid would be distributed to our shareholders in proportion to
    their shareholdings.                                                                                                                                                                                                                                                                                                                    
|
| |  | No Limitation on the Right to Own Securities, including on
    Foreign Ownership. With the exception of buying back
    treasury stock by a stock corporation, which is limited to 10%
    of the share capital, there are no limitations under German law
    or in SAP AGs Articles of Incorporation on the right to
    own securities, including on the right of persons who are not
    citizens or residents of Germany to hold or vote ordinary shares.                                                                       





 




108



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 




Voting Rights.






| |   |                                                                             
| | - | ----------------------------------------------------------------------------
| |  | changing the objectives provision in the articles of
    incorporation;     
|
| |  | capital increases and capital decreases;                                    
|
| |  | excluding preemptive rights of shareholders to subscribe for new
    shares;
|
| |  | dissolution;                                                                
|
| |  | a merger into, or a consolidation with, another company;                    
|
| |  | a transfer of all or virtually all of the assets; and                       
|
| |  | a change of corporate form.                                                 

Change in Control.




Wertpapiererwerbs-und Übernahmegesetz (Bundesanstalt
für Finanzdienstleistungsaufsicht


109



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Disclosure of Share Holdings.


Wertpapierhandelsgesetz

























20-F;


110



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20-F











   













111



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20-F














e.g.




112



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U.S.-German










113



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114



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U.S.-German










20-F.


115



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116



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U.S.-source






non-U.S. e.g.


117



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mark-to


pro rata


mark-to mark-to mark-to











20-F


118



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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK















119



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|                                                  |              |               |         |       |              |  |         |                  |  |  |          |        | 
|------------------------------------------------- | ------------ | ------------- | ------- | ----- | ------------ |  | ------- | ---------------- |  |  | -------- | ------ | 
|                                                  |              | Contract      |         |       |              |  |        
|                                                  |              | Notional      |         |       |              |  |        
|                                                  |              | Amounts       |         |       |              |  |        
|                                                  |              | Expected      |         |       | Fair Value   |  |         | Weighted Average | 
|                                                  |              | Maturity Date |         |       | December 31, |  |         | Contractual      | 
|Foreign Currency Risk                             |              | 2006          |         |       | 2005(1)      |  |         | Exchange Rate    | 
|                                                  |              |               |         |       |              |  |         |                  | 
|                                                  |              | (000)        |         |       | (000)       |  |         |                 
|Derivatives used to manage firm commitments       |              |               |         |       |              |  |         |                  |  |  |          |       
|Foreign Currency Forward Contracts                |              |               |         |       |              |  |         |                  |  |  |          |       
|(Receive Local Currency, Sell euro)               |              |               |         |       |              |  |         |                  |  |  |          |       
|Japanese Yen                                      |              |               | 157,018 |       |              |  | (591    | )                |  |  | 136.9271 |       
|Israeli Shekels                                   |              |               | 65,000  |       |              |  | 1074    |                  |  |  | 5.5500   |       
|Czech Korunas                                     |              |               | 12,000  |       |              |  | (9      | )                |  |  | 28.9810  |       
|Mexican Pesos                                     |              |               | 10,093  |       |              |  | 253     |                  |  |  | 12.9100  |       
|Swiss Francs                                      |              |               | 3,331   |       |              |  | (47     | )                |  |  | 1.5313   |       
|Singapore dollars                                 |              |               | 2,808   |       |              |  | 246     |                  |  |  | 2.1365   |       
|U.S. dollars                                      |              |               | 2,273   |       |              |  | 12      |                  |  |  | 1.1878   |       
|British Pounds                                    |              |               | 1,882   |       |              |  | 12      |                  |  |  | 0.6908   |       
|Canadian dollars                                  |              |               | 1,442   |       |              |  | 14      |                  |  |  | 1.3869   |       
|Foreign Currency Forward Contracts                |              |               |         |       |              |  |         |                  |  |  |          |       
|(Receive euro, Sell Local Currency)               |              |               |         |       |              |  |         |                  |  |  |          |       
|U.S. dollars                                      |              |               | 580,566 |       |              |  | (20,539 | )                |  |  | 1.2340   |       
|Israeli Shekels                                   |              |               | 65,000  |       |              |  | (572    | )                |  |  | 5.5076   |       
|Canadian dollars                                  |              |               | 53,660  |       |              |  | (1,520  | )                |  |  | 1.4143   |       
|Japanese Yen                                      |              |               | 25,985  |       |              |  | 1       |                  |  |  | 138.5432 |       
|British Pounds                                    |              |               | 24,425  |       |              |  | 248     |                  |  |  | 0.6796   |       
|Swiss Francs                                      |              |               | 11,036  |       |              |  | 25      |                  |  |  | 1.5495   |       
|Australian dollars                                |              |               | 4,863   |       |              |  | (28     | )                |  |  | 1.6246   |       
|Singapore dollars                                 |              |               | 2,804   |       |              |  | (250    | )                |  |  | 2.1400   |       
|Mexican Pesos                                     |              |               | 169     |       |              |  | (4      | )                |  |  | 12.8975  |       
|Foreign Currency Forward Contracts                |              |               |         |       |              |  |         |                  |  |  |          |       
|(Receive Canadian dollars, Sell U.S. dollars)     |              |               |         |       |              |  |         |                  |  |  |          |       
|                                                  | U.S. dollars |               |         | 8,477 |              |  |         | 343              |  |  |          | 0.8595 | 
|Derivatives used to manage anticipated Cash Flows |              |               |         |       |              |  |         |                  |  |  |          |       
|Foreign Currency Forward Contracts                |              |               |         |       |              |  |         |                  |  |  |          |       
|(Receive euro, Sell Local Currency)               |              |               |         |       |              |  |         |                  |  |  |          |       
|U.S. dollars                                      |              |               | 246,727 |       |              |  | (13,177 | )                |  |  | 1.2581   |       
|British Pounds                                    |              |               | 100,995 |       |              |  | (539    | )                |  |  | 0.6966   |       
|Japanese Yen                                      |              |               | 75,175  |       |              |  | 1,952   |                  |  |  | 133.2890 |       
|Swiss Francs                                      |              |               | 61,273  |       |              |  | 659     |                  |  |  | 1.5268   |       
|Canadian dollars                                  |              |               | 57,832  |       |              |  | (4,350  | )                |  |  | 1.4862   |       
|Australian dollars                                |              |               | 39,135  |       |              |  | (988    | )                |  |  | 1.6775   |       






|    |                                                      
|--- | -----------------------------------------------------
|(1) | Amounts included on SAPs consolidated balance sheet.

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|                                      |  |                        |         |   |              |  |         |      |  |  |        |  |  |      |        |  |            |  |   |       |  |  |       |   |  |  |         |  |  |  |         | 
|------------------------------------- |  | ---------------------- | ------- | - | ------------ |  | ------- | ---- |  |  | ------ |  |  | ---- | ------ |  | ---------- |  | - | ----- |  |  | ----- | - |  |  | ------- |  |  |  | ------- | 
|                                      |  | Expected maturity Date |         |   | Fair Value   | 
|( (000), unless otherwise indicated) |  |                        |         |   | December 31, | 
|Marketable debt securities            |  | 2006                   |         |   | 2007         |  |         | 2008 |  |  | 2009   |  |  | 2010 |        |  | Thereafter |  |   | Total |  |  | 2005  |  
|                                      |  |                        |         |   |              |  |         |      |  |  |        |  |  |      |        |  |            |  |   |       |  |  |       |  
|Fixed rate                            |  |                        | 125,711 |   |              |  | 462,437 |      |  |  |       |  |  |      |       |  |            |  |  |       |  |  | 5,572 |   |  |  | 593,720 |  |  |  | 556,899 | 
|Average interest rate                 |  |                        | 2.76    | % |              |  | 4.23    | %    |  |  |       |  |  |      |       |  |            |  |  |       |  |  | 6.47  | % |  |  |         |  |  |  |         | 
|Variable rate                         |  |                        | 13,509  |   |              |  | 23      |      |  |  | 40,037 |  |  |      | 20,000 |  |            |  |  |       |  |  |      |   |  |  | 73,569  |  |  |  | 73,539  | 
|                                      |  |                        |         |   |              |  |         |      |  |  |        |  |  |      |        |  |            |  |   |       |  |  |       |  
|Total investments                     |  |                        | 139,220 |   |              |  | 462,460 |      |  |  | 40,037 |  |  |      | 20,000 |  |            |  |  |       |  |  | 5,572 |   |  |  | 667,289 |  |  |  | 630,438 | 
|                                      |  |                        |         |   |              |  |         |      |  |  |        |  |  |      |        |  |            |  |   |       |  |  |       |  






|                                               |  |      |        |  
|---------------------------------------------- |  | ---- | ------ | -
|Bank loans and overdrafts                      |  | 2005 |       
|                                               |  |      |       
|Fixed rate bank loans
    (000)               |  |      | 19,445 |  
|Average interest rate of fixed rate bank loans |  |      | 7.22   | %
|Overdrafts (000)                              |  |      | 4,855  |  
|                                               |  |      |       
|Total bank loans and overdrafts                |  |      | 24,300 |  
|                                               |  |      |       










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    








|                                                              |  |                                 |           |  |              |  |        | 
|------------------------------------------------------------- |  | ------------------------------- | --------- |  | ------------ |  | ------ | 
|                                                              |  | Hedge of 3.8 million 2005 STARs |          
|                                                              |  |                                 |          
|                                                              |  | Number of call                  |           |  |             
|Buy/sell                                                      |  | options                         |           |  | Strike price | 
|                                                              |  |                                 |           |  |              | 
|Buy                                                           |  |                                 | 3,800,000 |  |              |  | 121.87 | 
|Sell                                                          |  |                                 | 1,900,000 |  |              |  | 171.87 | 
|Sell                                                          |  |                                 | 950,000   |  |              |  | 221.87 | 
|Fair value as of December 31, 2005 in
    (000):
    107,358 |  |                                 |           |  |              |  |        | 

|                                                         |  |                                 |           |  |              |  |        | 
|-------------------------------------------------------- |  | ------------------------------- | --------- |  | ------------ |  | ------ | 
|                                                         |  | Hedge of 3.0 million 2004 STARs |          
|                                                         |  |                                 |          
|                                                         |  | Number of call                  |           |  |             
|Buy/sell                                                 |  | options                         |           |  | Strike price | 
|                                                         |  |                                 |           |  |              | 
|Buy                                                      |  |                                 | 3,000,000 |  |              |  | 134.35 | 
|Sell                                                     |  |                                 | 1,500,000 |  |              |  | 184.35 | 
|Sell                                                     |  |                                 | 750,000   |  |              |  | 234.35 | 
|Fair value as of December 31, 2005 in
    (000): 22,453 |  |                                 |           |  |              |  |        | 

|                                                         |  |                                 |           |  |              |  |        | 
|-------------------------------------------------------- |  | ------------------------------- | --------- |  | ------------ |  | ------ | 
|                                                         |  | Hedge of 2.0 million 2003 STARs |          
|                                                         |  |                                 |          
|                                                         |  | Number of call                  |           |  |             
|Buy/sell                                                 |  | options                         |           |  | Strike price | 
|                                                         |  |                                 |           |  |              | 
|Buy                                                      |  |                                 | 2,000,000 |  |              |  | 84.91  | 
|Sell                                                     |  |                                 | 1,000,000 |  |              |  | 134.91 | 
|Sell                                                     |  |                                 | 500,000   |  |              |  | 184.91 | 
|Fair value as of December 31, 2005 in
    (000): 39,302 |  |                                 |           |  |              |  |        | 

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 







ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN
EQUITY SECURITIES




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PART II





ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND
DELINQUENCIES







ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF
SECURITY HOLDERS AND USE OF PROCEEDS







ITEM 15. CONTROLS AND PROCEDURES


20-F





ITEM 16. [RESERVED]





ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT









ITEM 16B. CODE OF ETHICS




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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES




















| |    |                                                                                                                                                                                                                                                                                                                     
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | Prohibited services: This category includes services
    that our independent auditors must not be engaged to perform.
    These are services that are not permitted by applicable law or
    that would be inconsistent with maintaining the auditors
    independence.                                         
|
| | 2. | Services requiring universal approval: Services of
    this category may be provided by our independent auditors up to
    a certain aggregate amount in fees per year that is determined
    annually by the Audit Committee.                                                                                    
|
| | 3. | Services requiring individual approval: Services of
    this category may only be provided by our independent auditors
    if they have been individually (specifically) pre-approved
    by the Audit Committee or an Audit Committee member who is
    authorized by the Audit Committee to make such approvals.

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ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES






126



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ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER
AND AFFILIATED PURCHASERS




|                            |  |              |           |     |               |  |        |                        |  |     |                       |  |  |  |            | 
|--------------------------- |  | ------------ | --------- | --- | ------------- |  | ------ | ---------------------- |  | --- | --------------------- |  |  |  | ---------- | 
|                            |  |              |           | (b) |               |  | (c)    |                        |  | (d) |                      
|                            |  | (a)          |           |     | Average Price |  |        | Total Number of Shares |  |     | Maximum Number of     | 
|                            |  | Total Number |           |     | Paid per      |  |        | Purchased as Part of   |  |     | Shares that May Yet   | 
|                            |  | of Shares    |           |     | Share         |  |        | Publicly Announced     |  |     | Be Purchased Under    | 
|Period                      |  | Purchased    |           |     | (in )        |  |        | Plans or Programs      |  |     | the Plans or Programs | 
|                            |  |              |           |     |               |  |        |                        |  |     |                       | 
|January 1/1/05  1/31/05    |  |              | 955,086   |     |               |  | 119.75 |                        |  |     | 955,086               |  |  |  | 25,294,404 | 
|February 2/1/05  2/28/05   |  |              | 307,510   |     |               |  | 123.26 |                        |  |     | 307,510               |  |  |  | 25,001,902 | 
|March 3/1/05  3/31/05      |  |              | 13,249    |     |               |  | 122.73 |                        |  |     | 13,249                |  |  |  | 25,594,123 | 
|April 4/1/05  4/30/05      |  |              | 510,945   |     |               |  | 121.41 |                        |  |     | 510,945               |  |  |  | 25,097,123 | 
|May 5/1/05  5/31/05        |  |              | 344,389   |     |               |  | 128.19 |                        |  |     | 344,022               |  |  |  | 24,835,276 | 
|June 6/1/05  6/30/05       |  |              | 223,894   |     |               |  | 137.79 |                        |  |     | 221,510               |  |  |  | 25,071,239 | 
|July 7/1/05  7/31/05       |  |              | 21,050    |     |               |  | 144.97 |                        |  |     | 21,050                |  |  |  | 25,061,239 | 
|August 8/1/05  8/31/05     |  |              | 512,798   |     |               |  | 137.96 |                        |  |     | 512,798               |  |  |  | 24,879,677 | 
|September 9/1/05  9/30/05  |  |              | 11,298    |     |               |  | 143.56 |                        |  |     | 11,298                |  |  |  | 24,939,684 | 
|October 10/1/05  10/31/05  |  |              | 114,206   |     |               |  | 142.08 |                        |  |     | 114,206               |  |  |  | 25,058,815 | 
|November 11/1/05  11/30/05 |  |              | 11,345    |     |               |  | 146.55 |                        |  |     | 11,345                |  |  |  | 25,119,475 | 
|December 12/1/05  12/31/05 |  |              | 370,147   |     |               |  | 154.63 |                        |  |     | 370,147               |  |  |  | 24,967,126 | 
|                            |  |              |           |     |               |  |        |                        |  |     |                       | 
|Total                       |  |              | 3,395,917 |     |               |  | 130.00 |                        |  |     | 3,393,166             |  |  |  |            | 
|                            |  |              |           |     |               |  |        |                        |  |     |                       | 





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|                            |  |              |         |     |               |  |       |                      |  |     |                       |  |  |  |     | 
|--------------------------- |  | ------------ | ------- | --- | ------------- |  | ----- | -------------------- |  | --- | --------------------- |  |  |  | --- | 
|                            |  |              |         | (b) |               |  | (c)   |                      |  | (d) |                      
|                            |  | (a)          |         |     | Average Price |  |       | Total Number of ADSs |  |     | Maximum Number of     | 
|                            |  | Total Number |         |     | Paid per      |  |       | Purchased as Part of |  |     | ADSs that May Yet     | 
|                            |  | of ADSs      |         |     | ADS           |  |       | Publicly Announced   |  |     | Be Purchased Under    | 
|Period                      |  | Purchased    |         |     | (in U.S.$)    |  |       | Plans or Programs    |  |     | the Plans or Programs | 
|                            |  |              |         |     |               |  |       |                      |  |     |                       | 
|January 1/1/05  1/31/05    |  |              | 21,106  |     |               |  | 41.06 |                      |  |     | 21,106                |  |  |  | N/A | 
|February 2/1/05  2/28/05   |  |              | 29,030  |     |               |  | 39.67 |                      |  |     | 29,030                |  |  |  | N/A | 
|March 3/1/05  3/31/05      |  |              | 92,001  |     |               |  | 41.11 |                      |  |     | 92,001                |  |  |  | N/A | 
|April 4/1/05  4/30/05      |  |              | 26,035  |     |               |  | 39.05 |                      |  |     | 26,035                |  |  |  | N/A | 
|May 5/1/05  5/31/05        |  |              | 31,948  |     |               |  | 41.55 |                      |  |     | 31,948                |  |  |  | N/A | 
|June 6/1/05  6/30/05       |  |              | 24,175  |     |               |  | 41.99 |                      |  |     | 24,175                |  |  |  | N/A | 
|July 7/1/05  7/31/05       |  |              | 24,149  |     |               |  | 42.91 |                      |  |     | 24,149                |  |  |  | N/A | 
|August 8/1/05  8/31/05     |  |              | 35,593  |     |               |  | 42.61 |                      |  |     | 35,593                |  |  |  | N/A | 
|September 9/1/05  9/30/05  |  |              | 24,612  |     |               |  | 43.51 |                      |  |     | 24,612                |  |  |  | N/A | 
|October 10/1/05  10/31/05  |  |              | 24,859  |     |               |  | 43.36 |                      |  |     | 24,859                |  |  |  | N/A | 
|November 11/1/05  11/30/05 |  |              | 32,475  |     |               |  | 42.85 |                      |  |     | 32,475                |  |  |  | N/A | 
|December 12/1/05  12/31/05 |  |              | 24,868  |     |               |  | 44.33 |                      |  |     | 24,868                |  |  |  | N/A | 
|                            |  |              |         |     |               |  |       |                      |  |     |                       | 
|Total                       |  |              | 388,851 |     |               |  | 41.84 |                      |  |     | 388,851               |  |  |  |     | 
|                            |  |              |         |     |               |  |       |                      |  |     |                       | 




PART III





ITEM 17. FINANCIAL STATEMENTS







ITEM 18. FINANCIAL STATEMENTS




20-F:


















128



---



##### Table of Contents






ITEM 19. EXHIBITS


20-F:


| |      |  |  |                                                                                                                                                                                                                                                                                                                       
| | ---- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1    |  |  | Articles of Incorporation (Satzung) of SAP AG, as amended to
    date (English translation).                                                                                                                                                                                                                          
| | 2.1  |  |  | Form of global share certificate for ordinary shares (English
    translation).                                                                                                                                                                                                                                       
| | 2.2  |  |  | Form of American Depositary Receipt.(1)                                                                                                                                                                                                                                                                               
| | 4.1  |  |  | Form of Amended and Restated Deposit Agreement among SAP AG,
    Deutsche Bank Trust Company Americas, as Depositary, and all
    owners and holders from time to time of American Depositary
    Receipts issued thereunder, including the form of American
    Depositary Receipts, dated as of December 3, 2004.(2)
| | 4.2  |  |  | Credit Facility Agreement among SAP as Borrower; ABN AMRO Bank
    N.V., BNP Paribas, Deutsche Bank AG and J.P. Morgan plc as
    Mandated Lead Arrangers; ABN AMRO N.V. London Branch as Agent;
    and the lenders named in the Credit Agreement, dated as of
    November 5, 2004.(3)                              
| | 4.3  |  |  | Agreement and Plan of Merger dated as of February 28, 2005,
    among SAP America, Inc., Sapphire Expansion Corporation and
    Retek Inc.(4)                                                                                                                                                                         
| | 4.4  |  |  | Amendment dated as of March 16, 2005 to Agreement and Plan
    of Merger dated as of February 28, 2005 among SAP America,
    Inc., Sapphire Expansion Corporation and Retek Inc.(5)                                                                                                                                  
| | 4.5  |  |  | Employment Contract for Executive Board Member Shai Agassi,
    dated May 5, 2005.                                                                                                                                                                                                                                    
| | 4.6  |  |  | Form of Employment Contract for Executive Board Members (other
    than Shai Agassi).                                                                                                                                                                                                                                 
| | 4.7  |  |  | Bonus Schedule Board Members 2005, dated February 9, 2005.                                                                                                                                                                                                                                                            
| | 8    |  |  | Subsidiaries, Equity Method Investments, and Other Investments
    of SAP AG.                                                                                                                                                                                                                                         
| | 12.1 |  |  | Certification of Chief Executive Officer required by
    Rule 13a-14(a) or Rule 15d-14(a).                                                                                                                                                                                                                            
| | 12.2 |  |  | Certification of Chief Financial Officer required by
    Rule 13a-14(a) or Rule 15d-14(a).                                                                                                                                                                                                                            
| | 13   |  |  | Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                
| | 15   |  |  | Consent of Registered Independent Public Accounting Firm.                                                                                                                                                                                                                                                             






|    |                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to
    Form 8-A of SAP
    AG, filed on May 3, 2001.                                                                                                 
|   
|(2) | Incorporated by reference to the Current Report on
    Form 6-K of SAP
    AG, filed on December 13, 2004.                                                                     
|   
|(3) | Incorporated by reference to the Annual Report on
    Form 20-F of SAP
    AG, filed March 22, 2005.                                                                           
|   
|(4) | Incorporated by reference to the Tender Offer Statement on
    Schedule TO, filed by SAP America, Inc. and Sapphire
    Expansion Corporation on March 4, 2005.                
|   
|(5) | Incorporated by reference to Amendment No. 4 to Tender
    Offer Statement on Schedule TO, filed on March 17,
    2005 by SAP America, Inc. and Sapphire Expansion Corporation.

129



---



##### Table of Contents



SIGNATURE


20-F




| |                                  
| | ---------------------------------
| | SAP AG                           
| | (Registrant)                     
|
| | By: /s/ HENNING KAGERMANN        
| |                                  
| | Name: Prof. Dr. Henning Kagermann
| | Title: Chief Executive Officer   





| |                               
| | ------------------------------
| | By: /s/ WERNER BRANDT         
| |                               
| | Name: Dr. Werner Brandt       
| | Title: Chief Financial Officer



130



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##### Table of Contents



SAP AG AND SUBSIDIARIES


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                   |                                                                                                                         |      |     |     | 
|------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------- | ---- | --- | --- | 
|                                                                   |                                                                                                                         | Page |    
|                                                                   |                                                                                                                         |      |    
|Report of Independent Public Accounting Firm                       |                                                                                                                         |      | F-1 |    
|Consolidated Financial Statements                                  |                                                                                                                         |      |     |    
|                                                                   | Consolidated Statements of Income for the years ended
    December 31, 2005, 2004 and 2003                              |      |     | F-2 | 
|                                                                   | Consolidated Balance Sheets as of
    December 31, 2005, 2004 and 2003                                                  |      |     | F-3 | 
|                                                                   | Consolidated Statements of Changes in Shareholders
    Equity for the years ended December 31, 2005, 2004
    and 2003 |      |     | F-4 | 
|                                                                   | Consolidated Statements of Cash Flows for the years ended
    December 31, 2005, 2004 and 2003                          |      |     | F-6 | 
|                                                                   | Notes to Consolidated Financial Statements                                                                              |      |     | F-7 | 
|Schedule for the years ended December 31, 2005,
    2004 and 2003: |                                                                                                                         |      |     |    
|                                                                   | Schedule II  Valuation and Qualifying
    Accounts and Reserves                                                        |      |     | S-1 | 



---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




three-year




three-year












F-1



---



##### Table of Contents



CONSOLIDATED FINANCIAL STATEMENTS


CONSOLIDATED STATEMENTS OF INCOME






|                                                 |                                          |                     |     |           |         |  |            |            |           |         |            |            |           |      |            |            |           |  |            |            |           | 
|------------------------------------------------ | ---------------------------------------- | ------------------- | --- | --------- | ------- |  | ---------- | ---------- | --------- | ------- | ---------- | ---------- | --------- | ---- | ---------- | ---------- | --------- |  | ---------- | ---------- | --------- | 
|                                                 |                                          | Note                |     |           | 2005(1) |  |            | 2005       |           |         | 2004       |            |           | 2003 |           
|                                                 |                                          |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|                                                 |                                          |                     |     | US$ (000) |         |  |  (000)    |            |           |  (000) |            |            |  (000)   |     
|                                                 |                                          | Software revenue    |     |           |         |  |            |            | 3,295,334 |         |            |            | 2,782,751 |      |            |            | 2,361,012 |  |            |            | 2,147,591 | 
|                                                 |                                          | Maintenance revenue |     |           |         |  |            |            | 3,760,595 |         |            |            | 3,175,642 |      |            |            | 2,823,189 |  |            |            | 2,568,807 | 
|                                                 | Product revenue                          |                     |     |           |         |  |            | 7,055,929  |           |         |            | 5,958,393  |           |      |            | 5,184,201  |           |  |            | 4,716,398  |          
|                                                 |                                          | Consulting revenue  |     |           |         |  |            |            | 2,532,934 |         |            |            | 2,138,941 |      |            |            | 1,970,606 |  |            |            | 1,953,459 | 
|                                                 |                                          | Training revenue    |     |           |         |  |            |            | 405,548   |         |            |            | 342,466   |      |            |            | 302,443   |  |            |            | 299,331   | 
|                                                 | Service revenue                          |                     |     |           |         |  |            | 2,938,482  |           |         |            | 2,481,407  |           |      |            | 2,273,049  |           |  |            | 2,252,790  |          
|                                                 | Other revenue                            |                     |     |           |         |  |            | 86,007     |           |         |            | 72,629     |           |      |            | 57,243     |           |  |            | 55,418     |          
|                                                 |                                          |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Total revenue                                    |                                          |                     | (5  | )         |         |  | 10,080,418 |            |           |         | 8,512,429  |            |           |      | 7,514,493  |            |           |  | 7,024,606  |           
|                                                 |                                          |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|                                                 | Cost of product                          |                     |     |           |         |  |            | (1,176,179 | )         |         |            | (993,227   | )         |      |            | (916,278   | )         |  |            | (962,757   | )        
|                                                 | Cost of service                          |                     |     |           |         |  |            | (2,279,128 | )         |         |            | (1,924,614 | )         |      |            | (1,783,453 | )         |  |            | (1,694,062 | )        
|                                                 | Research and development                 |                     |     |           |         |  |            | (1,289,158 | )         |         |            | (1,088,632 | )         |      |            | (908,056   | )         |  |            | (872,225   | )        
|                                                 | Sales and marketing                      |                     |     | (6        | )       |  |            | (2,067,875 | )         |         |            | (1,746,221 | )         |      |            | (1,523,662 | )         |  |            | (1,411,004 | )        
|                                                 | General and administration               |                     |     |           |         |  |            | (515,346   | )         |         |            | (435,185   | )         |      |            | (366,425   | )         |  |            | (354,043   | )        
|                                                 | Other operating income/ expense, net     |                     |     | (7        | )       |  |            | 7,321      |           |         |            | 6,182      |           |      |            | 1,762      |           |  |            | (6,496     | )        
|                                                 |                                          |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Total operating expenses                         |                                          |                     | (8  | )         |         |  | (7,320,365 | )          |           |         | (6,181,697 | )          |           |      | (5,496,112 | )          |           |  | (5,300,587 | )         
|                                                 |                                          |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Operating income                                 |                                          |                     |     |           |         |  | 2,760,053  |            |           |         | 2,330,732  |            |           |      | 2,018,381  |            |           |  | 1,724,019  |           
|                                                 |                                          |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|                                                 | Other non-operating income/ expense, net |                     |     | (9        | )       |  |            | (29,796    | )         |         |            | (25,161    | )         |      |            | 13,274     |           |  |            | 36,309     |          
|                                                 | Financial income/ expense, net           |                     |     | (10       | )       |  |            | 12,772     |           |         |            | 10,785     |           |      |            | 40,987     |           |  |            | 16,287     |          
|                                                 |                                          |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Income before income taxes and minority interest |                                          |                     |     |           |         |  | 2,743,029  |            |           |         | 2,316,356  |            |           |      | 2,072,642  |            |           |  | 1,776,615  |           
|                                                 |                                          |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|                                                 | Income taxes                             |                     |     | (11       | )       |  |            | (967,554   | )         |         |            | (817,053   | )         |      |            | (757,269   | )         |  |            | (692,640   | )        
|                                                 | Minority interest                        |                     |     |           |         |  |            | (3,429     | )         |         |            | (2,896     | )         |      |            | (4,852     | )         |  |            | (6,912     | )        
|                                                 |                                          |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Net income                                       |                                          |                     |     |           |         |  | 1,772,046  |            |           |         | 1,496,407  |            |           |      | 1,310,521  |            |           |  | 1,077,063  |           
|                                                 |                                          |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Earnings per share  basic in
                  |                                          |                     | (12 | )         |         |  | 5.72       |            |           |         | 4.83       |            |           |      | 4.22       |            |           |  | 3.47       |           
|Earnings per share  diluted in
                |                                          |                     | (12 | )         |         |  | 5.70       |            |           |         | 4.81       |            |           |      | 4.20       |            |           |  | 3.46       |           






|    |                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The 2005 figures have been translated solely for the convenience
    of the reader at an exchange rate of US$ 1.1842 to
     1.00, the
    Noon Buying Rate certified by the Federal Reserve Bank of New
    York on December 31, 2005.



F-2



---



##### Table of Contents



CONSOLIDATED BALANCE SHEETS




|                                      |                          |      |     |           |         |  |            |           |  |         |           |           |  |  |           |           | 
|------------------------------------- | ------------------------ | ---- | --- | --------- | ------- |  | ---------- | --------- |  | ------- | --------- | --------- |  |  | --------- | --------- | 
|                                      |                          | Note |     |           | 2005(2) |  |            | 2005      |  |         | 2004      |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|                                      |                          |      |     | US$ (000) |         |  |  (000)    |           |  |  (000) |          
|Assets                                |                          |      |     |           |         |  |            |           |  |         |           |           |  |  |           |          
|Goodwill                              |                          |      | (13 | )         |         |  | 741,956    |           |  |         | 626,546   |           |  |  | 456,707   |          
|Other intangible assets               |                          |      | (13 | )         |         |  | 165,429    |           |  |         | 139,697   |           |  |  | 68,186    |          
|Property, plant, and equipment        |                          |      | (14 | )         |         |  | 1,296,658  |           |  |         | 1,094,965 |           |  |  | 999,083   |          
|Financial assets                      |                          |      | (15 | )         |         |  | 632,546    |           |  |         | 534,155   |           |  |  | 100,382   |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|Fixed assets                          |                          |      |     |           |         |  | 2,836,589  |           |  |         | 2,395,363 |           |  |  | 1,624,358 |          
|Inventories                           |                          |      | (16 | )         |         |  | 22,945     |           |  |         | 19,376    |           |  |  | 11,692    |          
|                                      | Accounts receivable, net |      |     | (17       | )       |  |            | 2,665,666 |  |         |           | 2,251,027 |  |  |           | 1,929,100 | 
|                                      | Other assets             |      |     | (18       | )       |  |            | 752,623   |  |         |           | 635,554   |  |  |           | 537,645   | 
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|Accounts receivable and other assets  |                          |      |     |           |         |  | 3,418,289  |           |  |         | 2,886,581 |           |  |  | 2,466,745 |          
|Marketable securities                 |                          |      | (15 | )         |         |  | 248,167    |           |  |         | 209,565   |           |  |  | 10,164    |          
|Liquid assets                         |                          |      | (19 | )         |         |  | 3,805,512  |           |  |         | 3,213,572 |           |  |  | 3,196,542 |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|Non-fixed assets                      |                          |      |     |           |         |  | 7,494,913  |           |  |         | 6,329,094 |           |  |  | 5,685,143 |          
|Deferred taxes                        |                          |      | (11 | )         |         |  | 296,877    |           |  |         | 250,698   |           |  |  | 205,601   |          
|Prepaid expenses and deferred charges |                          |      | (20 | )         |         |  | 103,721    |           |  |         | 87,587    |           |  |  | 70,370    |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|Total assets                          |                          |      |     |           |         |  | 10,732,099 |           |  |         | 9,062,742 |           |  |  | 7,585,472 |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|thereof total current assets          |                          |      |     |           |         |  | 7,390,740  |           |  |         | 6,241,125 |           |  |  | 4,849,537 |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          

|                                           |                                             |      |     |           |      |  |            |           |  |         |           |           |  |  |           |           | 
|------------------------------------------ | ------------------------------------------- | ---- | --- | --------- | ---- |  | ---------- | --------- |  | ------- | --------- | --------- |  |  | --------- | --------- | 
|                                           |                                             | Note |     |           | 2005 |  |            | 2005      |  |         | 2004      |          
|                                           |                                             |      |     |           |      |  |            |           |  |         |           |          
|                                           |                                             |      |     | US$ (000) |      |  |  (000)    |           |  |  (000) |          
|Shareholders Equity and Liabilities       |                                             |      |     |           |      |  |            |           |  |         |           |           |  |  |           |          
|Subscribed
    capital(1)                  |                                             |      |     |           |      |  | 374,750    |           |  |         | 316,458   |           |  |  | 316,004   |          
|Treasury stock                             |                                             |      |     |           |      |  | (918,132   | )         |  |         | (775,318  | )         |  |  | (569,166  | )        
|Additional paid-in capital                 |                                             |      |     |           |      |  | 441,431    |           |  |         | 372,767   |           |  |  | 322,660   |          
|Retained earnings                          |                                             |      |     |           |      |  | 7,088,841  |           |  |         | 5,986,186 |           |  |  | 4,830,156 |          
|Accumulated other comprehensive loss       |                                             |      |     |           |      |  | (139,564   | )         |  |         | (117,855  | )         |  |  | (305,401  | )        
|Shareholders equity                       |                                             |      | (21 | )         |      |  | 6,847,326  |           |  |         | 5,782,238 |           |  |  | 4,594,253 |          
|Minority interests                         |                                             |      |     |           |      |  | 9,018      |           |  |         | 7,615     |           |  |  | 21,971    |          
|                                           | Pension liabilities and similar obligations |      |     | (23       | )    |  |            | 217,442   |  |         |           | 183,619   |  |  |           | 139,690   | 
|                                           | Other reserves and accrued liabilities      |      |     | (24       | )    |  |            | 2,177,910 |  |         |           | 1,839,140 |  |  |           | 1,768,723 | 
|                                           |                                             |      |     |           |      |  |            |           |  |         |           |          
|Reserves and accrued liabilities           |                                             |      |     |           |      |  | 2,395,352  |           |  |         | 2,022,759 |           |  |  | 1,908,413 |          
|                                           | Bonds                                       |      |     |           |      |  |            | 8,203     |  |         |           | 6,927     |  |  |           | 7,277     | 
|                                           | Other liabilities                           |      |     | (25       | )    |  |            | 993,280   |  |         |           | 838,778   |  |  |           | 728,838   | 
|                                           |                                             |      |     |           |      |  |            |           |  |         |           |          
|Other liabilities                          |                                             |      |     |           |      |  | 1,001,483  |           |  |         | 845,705   |           |  |  | 736,115   |          
|Deferred income                            |                                             |      | (26 | )         |      |  | 478,920    |           |  |         | 404,425   |           |  |  | 324,720   |          
|                                           |                                             |      |     |           |      |  |            |           |  |         |           |          
|Total shareholders equity and liabilities |                                             |      |     |           |      |  | 10,732,099 |           |  |         | 9,062,742 |           |  |  | 7,585,472 |          
|                                           |                                             |      |     |           |      |  |            |           |  |         |           |          
|thereof current liabilities                |                                             |      |     |           |      |  | 3,294,071  |           |  |         | 2,781,685 |           |  |  | 2,591,872 |          
|                                           |                                             |      |     |           |      |  |            |           |  |         |           |          






|    |                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Contingent capital
     52,930
    thousand (2004:
     55,247
    thousand)                                                                                                                                                          
|   
|(2) | The 2005 figures have been translated solely for the convenience
    of the reader at an exchange rate of US$ 1.1842 to
     1.00, the
    Noon Buying Rate certified by the Federal Reserve Bank of New
    York on December 31, 2005.



F-3



---



##### Table of Contents



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY




|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |   |  |  |           |           | 
|--------------------------------------------- | ------------------------------------------- | --------------- | ------- |  | ---------- |  | ---------- | ------- |  |  | -------- | - |  |  | --------- | --------- | 
|                                              |                                             | Number of       |         |  |            |  | Additional |         |  | 
|                                              |                                             | shares issued   |         |  | Subscribed |  |            | paid-in |  |  | Retained |  
|                                              |                                             | and outstanding |         |  | capital    |  |            | capital |  |  | earnings |  
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|                                              |                                             | (000)           |         |  |  (000)    |  |            |  (000) |  |  |  (000)  |  
|December 31, 2002                             |                                             |                 | 314,963 |  |            |  | 314,963    |         |  |  | 185,180  |   |  |  | 2,871,106 |          
|                                              | Net income                                  |                 |         |  |            |  |            |         |  |  |          |   |  |  |           | 1,077,063 | 
|                                              | Other comprehensive income/loss, net of tax |                 |         |  |            |  |            |         |  |  |          |   |  |  |           |           | 
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|Total Comprehensive income                    |                                             |                 |         |  |            |  |            |         |  |  |          |   |  |  |           |          
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|Stock-based compensation                      |                                             |                 |         |  |            |  |            |         |  |  | 101,173  |   |  |  |           |          
|Dividends                                     |                                             |                 |         |  |            |  |            |         |  |  |          |   |  |  | (186,346  | )        
|Treasury Stock transactions                   |                                             |                 |         |  |            |  |            |         |  |  | (36      | ) |  |  |           |          
|Convertible bonds and stock options exercised |                                             |                 | 451     |  |            |  | 451        |         |  |  | 12,243   |   |  |  |           |          
|Other                                         |                                             |                 |         |  |            |  |            |         |  |  | (2,005   | ) |  |  | (737      | )        
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|December 31, 2003                             |                                             |                 | 315,414 |  |            |  | 315,414    |         |  |  | 296,555  |   |  |  | 3,761,086 |          
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|                                              | Net income                                  |                 |         |  |            |  |            |         |  |  |          |   |  |  |           | 1,310,521 | 
|                                              | Other comprehensive income/loss, net of tax |                 |         |  |            |  |            |         |  |  |          |   |  |  |           |           | 
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|Total Comprehensive income                    |                                             |                 |         |  |            |  |            |         |  |  |          |   |  |  |           |          
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|Stock-based compensation                      |                                             |                 |         |  |            |  |            |         |  |  | 186      |   |  |  |           |          
|Dividends                                     |                                             |                 |         |  |            |  |            |         |  |  |          |   |  |  | (248,716  | )        
|Treasury Stock transactions                   |                                             |                 |         |  |            |  |            |         |  |  | 8,881    |   |  |  |           |          
|Convertible bonds and stock options exercised |                                             |                 | 590     |  |            |  | 590        |         |  |  | 21,389   |   |  |  |           |          
|Other                                         |                                             |                 |         |  |            |  |            |         |  |  | (4,351   | ) |  |  | 7,265     |          
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|December 31, 2004                             |                                             |                 | 316,004 |  |            |  | 316,004    |         |  |  | 322,660  |   |  |  | 4,830,156 |          
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|                                              | Net income                                  |                 |         |  |            |  |            |         |  |  |          |   |  |  |           | 1,496,407 | 
|                                              | Other comprehensive income/loss, net of tax |                 |         |  |            |  |            |         |  |  |          |   |  |  |           |           | 
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|Total Comprehensive income                    |                                             |                 |         |  |            |  |            |         |  |  |          |   |  |  |           |          
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|Stock-based compensation                      |                                             |                 |         |  |            |  |            |         |  |  | (36,356  | ) |  |  |           |          
|Dividends                                     |                                             |                 |         |  |            |  |            |         |  |  |          |   |  |  | (340,425  | )        
|Treasury Stock transactions                   |                                             |                 |         |  |            |  |            |         |  |  | 48,136   |   |  |  |           |          
|Convertible bonds and stock options exercised |                                             |                 | 454     |  |            |  | 454        |         |  |  | 42,294   |   |  |  |           |          
|Other                                         |                                             |                 |         |  |            |  |            |         |  |  | (3,967   | ) |  |  | 48        |          
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  
|December 31, 2005                             |                                             |                 | 316,458 |  |            |  | 316,458    |         |  |  | 372,767  |   |  |  | 5,986,186 |          
|                                              |                                             |                 |         |  |            |  |            |         |  |  |          |  



F-4



---



##### Table of Contents





| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  |           |  
| |  | ------------------------------------------- | -------- | ---------------- | ------------- |  | ---------- | --------- |  | ---------- | -------------- | - |  | ---------------- | ----------------- | --------- | ------------ |  | ------- | -------- |  |  | ------- | - |  |  | -------- | - |  |  | --------- | -
| |  | Accumulated other comprehensive income/loss |          |                  |               |  |           
| |  |                                             |          |                  |               |  |           
| |  |                                             |          | Currency effects |               |  |            |           | 
| |  |                                             |          | Unrealized       |               |  | Additional |           |  | Unrealized |                |   |  |                  | from intercompany |           |              |  |         |         
| |  | Currency                                    |          |                  | gains/ losses |  |            | minimum   |  |            | gains/         |   |  |                  |                   | long-term |              |  |         |          | 
| |  | translation                                 |          |                  | on marketable |  |            | pension   |  |            | losses on cash |   |  | Unrealized gains |                   |           | investment   |  |         | Treasury |  |  |        
| |  | adjustment                                  |          |                  | securities    |  |            | liability |  |            | flow hedges    |   |  | on STAR hedges   |                   |           | transactions |  |         | Stock    |  |  | Total   |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |  (000)                                     |          |                  |  (000)       |  |            |  (000)   |  |            |  (000)        |   |  |  (000)          |                   |           |  (000)      |  |         |  (000)  |  |  |  (000) |  
| |  |                                             | (103,249 | )                |               |  | (3,139     | )         |  |            | (20,005        | ) |  |                  | 712               |           |              |  | 0       |          |  |  | 0       |   |  |  | (373,477 | ) |  |  | 2,872,091 |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 1,077,063 |  
| |  |                                             | (148,424 | )                |               |  | 19,118     |           |  |            | 16,283         |   |  |                  | 12,729            |           |              |  | 23,996  |          |  |  |         |   |  |  |          |   |  |  | (76,298   | )
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 1,000,765 |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 101,173   |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | (186,346  | )
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  | (88,154  | ) |  |  | (88,190   | )
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 12,694    |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | (2,742    | )
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |                                             | (251,673 | )                |               |  | 15,979     |           |  |            | (3,722         | ) |  |                  | 13,441            |           |              |  | 23,996  |          |  |  | 0       |   |  |  | (461,631 | ) |  |  | 3,709,445 |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 1,310,521 |  
| |  |                                             | (70,723  | )                |               |  | (7,678     | )         |  |            | (7,019         | ) |  |                  | (131              | )         |              |  | (15,398 | )        |  |  | (2,473  | ) |  |  |          |   |  |  | (103,422  | )
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 1,207,099 |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 186       |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | (248,716  | )
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  | (107,535 | ) |  |  | (98,654   | )
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 21,979    |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 2,914     |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |                                             | (322,396 | )                |               |  | 8,301      |           |  |            | (10,741        | ) |  |                  | 13,310            |           |              |  | 8,598   |          |  |  | (2,473  | ) |  |  | (569,166 | ) |  |  | 4,594,253 |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 1,496,407 |  
| |  |                                             | 120,136  |                  |               |  | 2,867      |           |  |            | 766            |   |  |                  | (22,273           | )         |              |  | 42,814  |          |  |  | 43,236  |   |  |  |          |   |  |  | 187,546   |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 1,683,953 |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | (36,356   | )
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | (340,425  | )
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  | (206,152 | ) |  |  | (158,016  | )
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | 42,748    |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |   |  |  |          |   |  |  | (3,919    | )
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  
| |  |                                             | (202,260 | )                |               |  | 11,168     |           |  |            | (9,975         | ) |  |                  | (8,963            | )         |              |  | 51,412  |          |  |  | 40,763  |   |  |  | (775,318 | ) |  |  | 5,782,238 |  
| |  |                                             |          |                  |               |  |            |           |  |            |                |   |  |                  |                   |           |              |  |         |          |  |  |         |  



F-5



---



##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS




|                                                                                                  |  |      |     |           |         |  |           |      |  |         |           |   |         |      |           |   |  |  |            |  
|------------------------------------------------------------------------------------------------- |  | ---- | --- | --------- | ------- |  | --------- | ---- |  | ------- | --------- | - | ------- | ---- | --------- | - |  |  | ---------- | -
|                                                                                                  |  | Note |     |           | 2005(1) |  |           | 2005 |  |         | 2004      |   |         | 2003 |          
|                                                                                                  |  |      |     |           |         |  |           |      |  |         |           |   |         |      |          
|                                                                                                  |  |      |     | US$ (000) |         |  |  (000)   |      |  |  (000) |           |   |  (000) |     
|Net income                                                                                        |  |      |     |           |         |  | 1,772,045 |      |  |         | 1,496,407 |   |         |      | 1,310,521 |   |  |  | 1,077,063  |  
|Minority interest                                                                                 |  |      |     |           |         |  | 3,430     |      |  |         | 2,896     |   |         |      | 4,852     |   |  |  | 6,912      |  
|                                                                                                  |  |      |     |           |         |  |           |      |  |         |           |   |         |      |          
|Income before minority interests                                                                  |  |      |     |           |         |  | 1,775,475 |      |  |         | 1,499,303 |   |         |      | 1,315,373 |   |  |  | 1,083,975  |  
|Adjustments to reconcile income from operations to net cash
    provided by operating activities: |  |      |     |           |         |  |           |      |  |         |           |   |         |      |           |   |  |  |            |  
|Depreciation and amortization                                                                     |  |      |     |           |         |  | 241,038   |      |  |         | 203,545   |   |         |      | 209,669   |   |  |  | 215,517    |  
|Result from equity investments, net                                                               |  |      | (10 | )         |         |  | (722      | )    |  |         | (610      | ) |         |      | 342       |   |  |  | 234        |  
|Gains on disposal of property, plant, and equipment and equity
    securities                     |  |      |     |           |         |  | (6,870    | )    |  |         | (5,801    | ) |         |      | (13,485   | ) |  |  | (3,987     | )
|Write-downs of financial assets, net                                                              |  |      |     |           |         |  | 16,009    |      |  |         | 13,519    |   |         |      | 17,800    |   |  |  | 15,421     |  
|Impacts of STAR hedging                                                                           |  |      |     |           |         |  | 8,762     |      |  |         | 7,399     |   |         |      | (7,428    | ) |  |  | 2,967      |  
|Stock-based compensation including income tax benefits                                            |  |      |     |           |         |  | 59,324    |      |  |         | 50,096    |   |         |      | 18,828    |   |  |  | 110,280    |  
|Change in accounts receivable and other assets                                                    |  |      |     |           |         |  | (429,924  | )    |  |         | (363,050  | ) |         |      | (164,798  | ) |  |  | 64,329     |  
|Change in reserves and liabilities                                                                |  |      |     |           |         |  | 195,954   |      |  |         | 165,474   |   |         |      | 433,545   |   |  |  | (44,284    | )
|Deferred tax expense/benefit                                                                      |  |      |     |           |         |  | (19,023   | )    |  |         | (16,064   | ) |         |      | 19,205    |   |  |  | 92,622     |  
|Change in other assets                                                                            |  |      |     |           |         |  | (26,935   | )    |  |         | (22,745   | ) |         |      | (3,545    | ) |  |  | 21,024     |  
|Change in deferred income                                                                         |  |      |     |           |         |  | 90,987    |      |  |         | 76,834    |   |         |      | 19,821    |   |  |  | (58,609    | )
|                                                                                                  |  |      |     |           |         |  |           |      |  |         |           |   |         |      |          
|Net cash provided by operating activities                                                         |  |      | (27 | )         |         |  | 1,904,075 |      |  |         | 1,607,900 |   |         |      | 1,845,327 |   |  |  | 1,499,489  |  
|                                                                                                  |  |      |     |           |         |  |           |      |  |         |           |   |         |      |          
|Acquisition of minorities in subsidiaries                                                         |  |      |     |           |         |  | (71,008   | )    |  |         | (59,964   | ) |         |      | (168,103  | ) |  |  | (8,971     | )
|Other acquisitions, net of cash and cash equivalents acquired                                     |  |      |     |           |         |  | (209,424  | )    |  |         | (176,849  | ) |         |      | (19,181   | ) |  |  | (54,192    | )
|Purchase of intangible assets and property, plant, and equipment                                  |  |      |     |           |         |  | (309,979  | )    |  |         | (261,762  | ) |         |      | (192,682  | ) |  |  | (218,820   | )
|Purchase of financial assets                                                                      |  |      |     |           |         |  | (542,546  | )    |  |         | (458,154  | ) |         |      | (42,749   | ) |  |  | (29,308    | )
|Proceeds from disposal of fixed assets                                                            |  |      |     |           |         |  | 37,212    |      |  |         | 31,424    |   |         |      | 116,735   |   |  |  | 35,275     |  
|Purchase of marketable securities                                                                 |  |      |     |           |         |  | (236,131  | )    |  |         | (199,401  | ) |         |      | (8,812    | ) |  |  | (3         | )
|Change in liquid assets (maturities exceeding 3 months)                                           |  |      |     |           |         |  | 640,949   |      |  |         | 541,251   |   |         |      | (433,530  | ) |  |  | (916,607   | )
|                                                                                                  |  |      |     |           |         |  |           |      |  |         |           |   |         |      |          
|Net cash used in investing activities                                                             |  |      |     |           |         |  | (690,927  | )    |  |         | (583,455  | ) |         |      | (748,322  | ) |  |  | (1,192,626 | )
|                                                                                                  |  |      |     |           |         |  |           |      |  |         |           |   |         |      |          
|Dividends paid                                                                                    |  |      |     |           |         |  | (403,131  | )    |  |         | (340,425  | ) |         |      | (248,716  | ) |  |  | (186,346   | )
|Purchase of treasury stock                                                                        |  |      |     |           |         |  | (538,049  | )    |  |         | (454,357  | ) |         |      | (175,018  | ) |  |  | (127,215   | )
|Proceeds from reissuance of Treasury Stock                                                        |  |      |     |           |         |  | 243,583   |      |  |         | 205,695   |   |         |      | 55,856    |   |  |  | 27,435     |  
|Proceeds from issuance of common stock (Stock-based compensation)                                 |  |      |     |           |         |  | 50,622    |      |  |         | 42,748    |   |         |      | 15,395    |   |  |  | 6,944      |  
|Proceeds from bonds                                                                               |  |      |     |           |         |  | 0         |      |  |         | 0         |   |         |      | 0         |   |  |  | 846        |  
|Repayment of bonds                                                                                |  |      |     |           |         |  | (414      | )    |  |         | (350      | ) |         |      | (2,806    | ) |  |  | (430       | )
|Proceeds from convertible bonds                                                                   |  |      |     |           |         |  | 0         |      |  |         | 0         |   |         |      | 6,754     |   |  |  | 5,749      |  
|Proceeds from short-term and long-term debt                                                       |  |      |     |           |         |  | 69        |      |  |         | 58        |   |         |      | 3,909     |   |  |  | 775        |  
|Repayments made of short-term and long-term debt                                                  |  |      |     |           |         |  | (795      | )    |  |         | (671      | ) |         |      | (491      | ) |  |  | (3,963     | )
|Proceeds from the exercise of equity derivative instruments
    (STAR hedge)                      |  |      |     |           |         |  | 46,513    |      |  |         | 39,278    |   |         |      | 0         |   |  |  | 0          |  
|Acquisition of derivative equity instruments (STAR hedge)                                         |  |      |     |           |         |  | (55,496   | )    |  |         | (46,864   | ) |         |      | (43,041   | ) |  |  | (38,800    | )
|                                                                                                  |  |      |     |           |         |  |           |      |  |         |           |   |         |      |          
|Net cash used in financing activities                                                             |  |      |     |           |         |  | (657,098  | )    |  |         | (554,888  | ) |         |      | (388,158  | ) |  |  | (315,005   | )
|                                                                                                  |  |      |     |           |         |  |           |      |  |         |           |   |         |      |          
|Effect of foreign exchange rates on cash                                                          |  |      |     |           |         |  | 105,067   |      |  |         | 88,724    |   |         |      | (41,791   | ) |  |  | (50,406    | )
|Net increase in cash and cash equivalents                                                         |  |      |     |           |         |  | 661,117   |      |  |         | 558,281   |   |         |      | 667,056   |   |  |  | (58,548    | )
|Cash and cash equivalents at the beginning of the year                                            |  |      |     |           |         |  | 1,783,160 |      |  |         | 1,505,793 |   |         |      | 838,737   |   |  |  | 897,285    |  
|                                                                                                  |  |      |     |           |         |  |           |      |  |         |           |   |         |      |          
|Cash and cash equivalents at the end of the year                                                  |  |      | (19 | )         |         |  | 2,444,277 |      |  |         | 2,064,074 |   |         |      | 1,505,793 |   |  |  | 838,737    |  
|                                                                                                  |  |      |     |           |         |  |           |      |  |         |           |   |         |      |          






|    |                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The 2005 figures have been translated solely for the convenience
    of the reader at an exchange rate of US$ 1.1842 to
     1.00. the
    Noon Buying Rate certified by the Federal Reserve Bank of New
    York on December 31, 2005.



F-6



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A. BASIS OF PRESENTATION












 








F-7



---



##### Table of Contents







|                  |  |        |    |  |         |  |    |       |  |  |     | 
|----------------- |  | ------ | -- |  | ------- |  | -- | ----- |  |  | --- | 
|                  |  | German |    |  | Foreign |  |    | Total | 
|                  |  |        |    |  |         |  |    |       | 
|December 31, 2004 |  |        | 15 |  |         |  | 73 |       |  |  | 88  | 
|Additions         |  |        | 2  |  |         |  | 14 |       |  |  | 16  | 
|Disposals         |  |        | 0  |  |         |  | 1  |       |  |  | 1   | 
|                  |  |        |    |  |         |  |    |       | 
|December 31, 2005 |  |        | 17 |  |         |  | 86 |       |  |  | 103 | 
|                  |  |        |    |  |         |  |    |       | 











| |   |                                                       
| | - | ------------------------------------------------------
| |  | SAP Deutschland AG & Co. KG, Walldorf                 
|
| |  | SAP Hosting AG Co. KG, St Leon-Rot                    
|
| |  | Steeb Anwendungssysteme GmbH, Abstatt                 
|
| |  | SAP Passau GmbH & Co. KG, Passau                      
|
| |  | SAP Projektverwaltungs und Beteiligungs GmbH, Walldorf
|
| |  | SAP Beteiligungsverwaltung GmbH, Walldorf             
|
| |  | SAP Administrations Beteiligungs GmbH, Walldorf.      







F-8



---



##### Table of Contents















|                  |  |  |     |                 |  |  |                              |  |  |           |        |  |           |  |        |           |  |  |        |  |  |  |        | 
|----------------- |  |  | --- | --------------- |  |  | ---------------------------- |  |  | --------- | ------ |  | --------- |  | ------ | --------- |  |  | ------ |  |  |  | ------ | 
|                  |  |  |     | Closing rate at |  |  |                             
|                  |  |  |     | December 31     |  |  | Annual average exchange rate | 
|                  |  |  |     |                 |  |  |                              | 
|                  |  |  |     | to  1.00       |  |  | to  1.00                    |  |  | to  1.00 |        |  | to  1.00 |  |        | to  1.00 | 
|                  |  |  |     | 2005            |  |  | 2004                         |  |  | 2005      |        |  | 2004      |  |        | 2003      | 
|                  |  |  |     |                 |  |  |                              |  |  |           |        |  |           |  |        |           | 
|U.S. dollar       |  |  | US$ |                 |  |  | 1.1797                       |  |  |           | 1.3621 |  |           |  | 1.2360 |           |  |  | 1.2490 |  |  |  | 1.1394 | 
|Japanese yen      |  |  | JPY |                 |  |  | 138.90                       |  |  |           | 139.65 |  |           |  | 137.08 |           |  |  | 134.73 |  |  |  | 130.98 | 
|British pound     |  |  | GBP |                 |  |  | 0.6853                       |  |  |           | 0.7051 |  |           |  | 0.6827 |           |  |  | 0.6795 |  |  |  | 0.6936 | 
|Canadian dollar   |  |  | CAD |                 |  |  | 1.3725                       |  |  |           | 1.6416 |  |           |  | 1.4908 |           |  |  | 1.6163 |  |  |  | 1.5835 | 
|Australian dollar |  |  | AUD |                 |  |  | 1.6109                       |  |  |           | 1.7459 |  |           |  | 1.6246 |           |  |  | 1.7003 |  |  |  | 1.7307 | 
|Swiss franc       |  |  | CHF |                 |  |  | 1.5551                       |  |  |           | 1.5429 |  |           |  | 1.5478 |           |  |  | 1.5421 |  |  |  | 1.5226 | 





Software
Revenue Recognition


F-9



---



##### Table of Contents









| |    |                                             
| | -- | --------------------------------------------
| | 1. | Persuasive evidence of an arrangement exists
|
| | 2. | Delivery has occurred                       
|
| | 3. | The fee is fixed or determinable, and       
|
| | 4. | Collectibility is probable.                 















F-10



---



##### Table of Contents





























F-11



---



##### Table of Contents



















|                                 |  |                              
|-------------------------------- |  | -----------------------------
|                                 |  | Useful lives of property,    
|                                 |  | plant, and equipment         
|                                 |  |                              
|Buildings                        |  | 25 to 50 years               
|Leasehold improvements           |  | Based upon the lease contract
|Information technology equipment |  | 3 to 5 years                 
|Office furniture                 |  | 4 to 20 years                
|Automobiles                      |  | 5 years                      







F-12



---



##### Table of Contents



















F-13



---



##### Table of Contents



































F-14



---



##### Table of Contents

















Employers Accounting for
Pensions






Accounting for Stock Issued to Employees


Accounting for Stock-Based Compensation, Accounting for
Stock-Based Compensation  Transition and Disclosure,
an amendment of FASB Statement No. 123


F-15



---



##### Table of Contents





|                                                                                   |  |      |           |  |      |  |           |      |  |  |           | 
|---------------------------------------------------------------------------------- |  | ---- | --------- |  | ---- |  | --------- | ---- |  |  | --------- | 
|                                                                                   |  | 2005 |           |  | 2004 |  |           | 2003 | 
|                                                                                   |  |      |           |  |      |  |           |      | 
|Net income (in
    (000))                                                         |  |      |           |  |      |  |           |      |  |  |           | 
|As reported                                                                        |  |      | 1,496,407 |  |      |  | 1,310,521 |      |  |  | 1,077,063 | 
|Add: Expense for stock-based compensation, net of tax according
    to APB 25      |  |      | 31,130    |  |      |  | 23,445    |      |  |  | 85,700    | 
|Deduct: Expense for stock-based compensation, net of tax
    according to SFAS 123 |  |      | 138,468   |  |      |  | 181,323   |      |  |  | 205,109   | 
|                                                                                   |  |      |           |  |      |  |           |      | 
|Pro-forma                                                                          |  |      | 1,389,069 |  |      |  | 1,152,643 |      |  |  | 957,654   | 
|                                                                                   |  |      |           |  |      |  |           |      | 
|Earnings per share (in
    )                                                      |  |      |           |  |      |  |           |      |  |  |           | 
|Basic  as reported                                                                |  |      | 4.83      |  |      |  | 4.22      |      |  |  | 3.47      | 
|Diluted  as reported                                                              |  |      | 4.81      |  |      |  | 4.20      |      |  |  | 3.46      | 
|Basic  pro-forma                                                                  |  |      | 4.48      |  |      |  | 3.71      |      |  |  | 3.08      | 
|Diluted  pro-forma                                                                |  |      | 4.48      |  |      |  | 3.70      |      |  |  | 3.08      | 





Accounting for Derivative
Instruments and Hedging Activities












F-16



---



##### Table of Contents







Accounting for
Early Retirement or Postemployment Programs with Specific
Features (Such As Terms Specified in Altersteilzeit Early
Retirement Arrangements) Employers Accounting for Postemployment
Benefits  an amendment of FASB Statements No. 5
and 43 (SFAS 112) Accounting Changes and
Error Corrections  a Replacement of APB Opinion
No. 20 and FASB Statement No. 3




Share-Based Payment


F-17



---



##### Table of Contents





Business
Combinations (SFAS 141)          


     






|                                        |  |           |      |                  |                 |  |                  | 
|--------------------------------------- |  | --------- | ---- | ---------------- | --------------- |  | ---------------- | 
|                                        |  |           |      | Estimated useful |                
|                                        |  |  million |      |                  | life (in years) | 
|                                        |  |           |      |                  |                 | 
|Customer contracts                      |  |           | 12.1 |                  |                 |  | 2 - 10           | 
|Intellectual Property                   |  |           | 80.7 |                  |                 |  | 3 - 12           | 
|In-process research and development     |  |           | 0.3  |                  |                 |  | expensed at the  | 
|                                        |  |           |      |                  |                 |  | acquisition date | 
|                                        |  |           |      |                  |                 | 
|Identifiable intangible assets acquired |  |           | 93.1 |                  |                 |  |                  | 
|                                        |  |           |      |                  |                 | 

    


F-18



---



##### Table of Contents



  


B. NOTES TO THE CONSOLIDATED STATEMENTS OF INCOME








  






|                                            |  |         |        |   |         |  |         |         |  |  |         |  
|------------------------------------------- |  | ------- | ------ | - | ------- |  | ------- | ------- |  |  | ------- | -
|                                            |  | 2005    |        |   | 2004    |  |         | 2003    | 
|                                            |  |         |        |   |         |  |         |         | 
|                                            |  |  (000) |        |   |  (000) |  |         |  (000) | 
|Bad debt expense                            |  |         | (3,409 | ) |         |  | (1,791  | )       |  |  | 0       |  
|Restructuring costs  severance obligations |  |         | (899   | ) |         |  | (5,796  | )       |  |  | (3,384  | )
|Restructuring costs  unused lease space    |  |         | (632   | ) |         |  | (1,210  | )       |  |  | (17,164 | )
|Expenses to obtain rental income            |  |         | 0      |   |         |  | (1,517  | )       |  |  | (3,297  | )
|Other                                       |  |         | (2,983 | ) |         |  | (2,834  | )       |  |  | (835    | )
|                                            |  |         |        |   |         |  |         |         | 
|Other operating expense                     |  |         | (7,923 | ) |         |  | (13,148 | )       |  |  | (24,680 | )
|                                            |  |         |        |   |         |  |         |         | 
|Rental income                               |  |         | 6,811  |   |         |  | 7,135   |         |  |  | 9,870   |  
|Receipt of insurance proceeds               |  |         | 1,618  |   |         |  | 4,318   |         |  |  | 2,002   |  
|Reductions of bad debt allowance            |  |         | 0      |   |         |  | 0       |         |  |  | 5,368   |  
|Other                                       |  |         | 5,676  |   |         |  | 3,457   |         |  |  | 944     |  
|                                            |  |         |        |   |         |  |         |         | 
|Other operating income                      |  |         | 14,105 |   |         |  | 14,910  |         |  |  | 18,184  |  
|                                            |  |         |        |   |         |  |         |         | 
|                                            |  |         | 6,182  |   |         |  | 1,762   |         |  |  | (6,496  | )
|                                            |  |         |        |   |         |  |         |         | 

  








F-19



---



##### Table of Contents







|                                            |  |         |         |  |         |  |         |         |  |  |         | 
|------------------------------------------- |  | ------- | ------- |  | ------- |  | ------- | ------- |  |  | ------- | 
|                                            |  | 2005    |         |  | 2004    |  |         | 2003    | 
|                                            |  |         |         |  |         |  |         |         | 
|                                            |  |  (000) |         |  |  (000) |  |         |  (000) | 
|Raw materials and supplies, purchased goods |  |         | 30,030  |  |         |  | 27,124  |         |  |  | 26,052  | 
|Purchased services                          |  |         | 827,831 |  |         |  | 722,727 |         |  |  | 643,815 | 
|                                            |  |         |         |  |         |  |         |         | 
|                                            |  |         | 857,861 |  |         |  | 749,851 |         |  |  | 669,867 | 
|                                            |  |         |         |  |         |  |         |         | 





|                |  |         |           |  |         |  |           |         |  |  |           | 
|--------------- |  | ------- | --------- |  | ------- |  | --------- | ------- |  |  | --------- | 
|                |  | 2005    |           |  | 2004    |  |           | 2003    | 
|                |  |         |           |  |         |  |           |         | 
|                |  |  (000) |           |  |  (000) |  |           |  (000) | 
|Salaries        |  |         | 2,882,828 |  |         |  | 2,513,791 |         |  |  | 2,479,416 | 
|Social costs    |  |         | 379,240   |  |         |  | 350,052   |         |  |  | 346,579   | 
|Pension expense |  |         | 109,479   |  |         |  | 104,175   |         |  |  | 110,595   | 
|                |  |         |           |  |         |  |           |         | 
|                |  |         | 3,371,547 |  |         |  | 2,968,018 |         |  |  | 2,936,590 | 
|                |  |         |           |  |         |  |           |         | 





|                                   |  |      |        |  |      |  |        |      |  |  |        | 
|---------------------------------- |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                   |  | 2005 |        |  | 2004 |  |        | 2003 | 
|                                   |  |      |        |  |      |  |        |      | 
|Employees in full-time equivalents |  |      | 34,550 |  |      |  | 31,224 |      |  |  | 29,098 | 





|                         |  |            |            |   |            |  |          |          |  |            |          |   |  |            |          |   |          |  |          |   |  |  |          |  
|------------------------ |  | ---------- | ---------- | - | ---------- |  | -------- | -------- |  | ---------- | -------- | - |  | ---------- | -------- | - | -------- |  | -------- | - |  |  | -------- | -
|                         |  | 2004       |            |   | 2003       | 
|                         |  |            |            |   |            | 
|                         |  | As         |            |   |            |  | As       |          |  |           
|                         |  | previously |            |   |            |  | As       |          |  | previously |          |   |  |            | As       |  
|                         |  | reported   |            |   | Adjustment |  |          | adjusted |  |            | reported |   |  | Adjustment |          |   | adjusted | 
|                         |  |            |            |   |            |  |          |          |  |            |          |   |  |            |          |   |          | 
|                         |  |  (000)    |            |   |  (000)    |  |          |  (000)  |  |            |  (000)  |   |  |  (000)    |          |   |  (000)  | 
|Cost of product          |  |            | (804,312   | ) |            |  | (111,966 | )        |  |            | (916,278 | ) |  |            | (839,041 | ) |          |  | (123,716 | ) |  |  | (962,757 | )
|Research and development |  |            | (1,020,022 | ) |            |  | 111,966  |          |  |            | (908,056 | ) |  |            | (995,941 | ) |          |  | 123,716  |   |  |  | (872,225 | )

F-20



---



##### Table of Contents







|                                   |  |         |          |   |         |  |          |         |  |  |          |  
|---------------------------------- |  | ------- | -------- | - | ------- |  | -------- | ------- |  |  | -------- | -
|                                   |  | 2005    |          |   | 2004    |  |          | 2003    | 
|                                   |  |         |          |   |         |  |          |         | 
|                                   |  |  (000) |          |   |  (000) |  |          |  (000) | 
|Foreign currency losses            |  |         | (116,628 | ) |         |  | (140,881 | )       |  |  | (255,749 | )
|Losses on disposal of fixed assets |  |         | (2,915   | ) |         |  | (6,696   | )       |  |  | (3,474   | )
|Other                              |  |         | (16,406  | ) |         |  | (8,830   | )       |  |  | (6,585   | )
|                                   |  |         |          |   |         |  |          |         | 
|Other non-operating expenses       |  |         | (135,949 | ) |         |  | (156,407 | )       |  |  | (265,808 | )
|                                   |  |         |          |   |         |  |          |         | 
|Foreign currency gains             |  |         | 77,987   |   |         |  | 152,831  |         |  |  | 284,288  |  
|Gains on disposal of fixed assets  |  |         | 7,641    |   |         |  | 6,147    |         |  |  | 5,237    |  
|Other                              |  |         | 25,160   |   |         |  | 10,703   |         |  |  | 12,592   |  
|                                   |  |         |          |   |         |  |          |         | 
|Other non-operating income         |  |         | 110,788  |   |         |  | 169,681  |         |  |  | 302,117  |  
|                                   |  |         |          |   |         |  |          |         | 
|                                   |  |         | (25,161  | ) |         |  | 13,274   |         |  |  | 36,309   |  
|                                   |  |         |          |   |         |  |          |         | 





|                                                                |  |         |         |   |         |  |         |         |  |  |         |  
|--------------------------------------------------------------- |  | ------- | ------- | - | ------- |  | ------- | ------- |  |  | ------- | -
|                                                                |  | 2005    |         |   | 2004    |  |         | 2003    | 
|                                                                |  |         |         |   |         |  |         |         | 
|                                                                |  |  (000) |         |   |  (000) |  |         |  (000) | 
|Interest and similar income                                     |  |         | 93,778  |   |         |  | 63,880  |         |  |  | 46,988  |  
|Interest and similar expenses                                   |  |         | (3,859  | ) |         |  | (8,122  | )       |  |  | (3,999  | )
|                                                                |  |         |         |   |         |  |         |         | 
|Interest income, net                                            |  |         | 89,919  |   |         |  | 55,758  |         |  |  | 42,989  |  
|                                                                |  |         |         |   |         |  |         |         | 
|Gain from investments, net                                      |  |         | 855     |   |         |  | 1,842   |         |  |  | 22      |  
|                                                                |  |         |         |   |         |  |         |         | 
| thereof from equity method investments                        |  |         | 610     |   |         |  | (342    | )       |  |  | (234    | )
|Income from marketable securities and loans of financial assets |  |         | 64,791  |   |         |  | 2,865   |         |  |  | 3,084   |  
|Write-down of financial assets                                  |  |         | (12,559 | ) |         |  | (15,329 | )       |  |  | (7,806  | )
|Impairment-related charges                                      |  |         | (4,026  | ) |         |  | (5,074  | )       |  |  | (14,857 | )
|Gains on sales of equity securities                             |  |         | 1,075   |   |         |  | 14,034  |         |  |  | 2,224   |  
|Unrealized losses on STAR hedge                                 |  |         | (66,166 | ) |         |  | (14,558 | )       |  |  | (15,213 | )
|Other financial income/expense                                  |  |         | (63,104 | ) |         |  | 1,449   |         |  |  | 5,844   |  
|                                                                |  |         |         |   |         |  |         |         | 
|Other financial loss from investments, net                      |  |         | (79,989 | ) |         |  | (16,613 | )       |  |  | (26,724 | )
|                                                                |  |         |         |   |         |  |         |         | 
|                                                                |  |         | 10,785  |   |         |  | 40,987  |         |  |  | 16,287  |  
|                                                                |  |         |         |   |         |  |         |         | 






F-21



---



##### Table of Contents







|                         |  |         |         |   |         |  |         |         |  |  |         | 
|------------------------ |  | ------- | ------- | - | ------- |  | ------- | ------- |  |  | ------- | 
|                         |  | 2005    |         |   | 2004    |  |         | 2003    | 
|                         |  |         |         |   |         |  |         |         | 
|                         |  |  (000) |         |   |  (000) |  |         |  (000) | 
|Current taxes  Germany  |  |         | 514,836 |   |         |  | 470,473 |         |  |  | 382,786 | 
|Current taxes  Foreign  |  |         | 318,281 |   |         |  | 267,591 |         |  |  | 217,232 | 
|                         |  |         |         |   |         |  |         |         | 
|                         |  |         | 833,117 |   |         |  | 738,064 |         |  |  | 600,018 | 
|Deferred taxes  Germany |  |         | 15,317  |   |         |  | 22,120  |         |  |  | 90,925  | 
|Deferred taxes  Foreign |  |         | (31,381 | ) |         |  | (2,915  | )       |  |  | 1,697   | 
|                         |  |         |         |   |         |  |         |         | 
|                         |  |         | (16,064 | ) |         |  | 19,205  |         |  |  | 92,622  | 
|Income tax expense       |  |         | 817,053 |   |         |  | 757,269 |         |  |  | 692,640 | 
|                         |  |         |         |   |         |  |         |         | 





|        |  |         |           |  |         |  |           |         |  |  |           | 
|------- |  | ------- | --------- |  | ------- |  | --------- | ------- |  |  | --------- | 
|        |  | 2005    |           |  | 2004    |  |           | 2003    | 
|        |  |         |           |  |         |  |           |         | 
|        |  |  (000) |           |  |  (000) |  |           |  (000) | 
|Germany |  |         | 1,454,675 |  |         |  | 1,352,200 |         |  |  | 1,179,891 | 
|Foreign |  |         | 861,681   |  |         |  | 720,442   |         |  |  | 596,724   | 
|        |  |         |           |  |         |  |           |         | 
|        |  |         | 2,316,356 |  |         |  | 2,072,642 |         |  |  | 1,776,615 | 
|        |  |         |           |  |         |  |           |         | 



|                                                                          |  |         |           |   |         |  |           |         |  |  |           |  
|------------------------------------------------------------------------- |  | ------- | --------- | - | ------- |  | --------- | ------- |  |  | --------- | -
|                                                                          |  | 2005    |           |   | 2004    |  |           | 2003    | 
|                                                                          |  |         |           |   |         |  |           |         | 
|                                                                          |  |  (000) |           |   |  (000) |  |           |  (000) | 
|Income before income taxes                                                |  |         | 2,316,356 |   |         |  | 2,072,642 |         |  |  | 1,776,615 |  
|Expected income taxes 36.32% in 2005 (36.20% in 2004, 37.71% in
    2003) |  |         | 841,300   |   |         |  | 750,296   |         |  |  | 669,961   |  
|Foreign tax rate differential                                             |  |         | (5,717    | ) |         |  | (7,800    | )       |  |  | (14,735   | )
|Tax on non-deductible expenses                                            |  |         | 12,776    |   |         |  | 12,631    |         |  |  | 28,564    |  
|Tax effect on losses                                                      |  |         | 6,593     |   |         |  | (471      | )       |  |  | (1,507    | )
|Tax effect on equity investments and securities                           |  |         | (34,626   | ) |         |  | (7,795    | )       |  |  | 7,110     |  
|Other                                                                     |  |         | (3,273    | ) |         |  | 10,408    |         |  |  | 3,247     |  
|                                                                          |  |         |           |   |         |  |           |         | 
|Actual income tax expense                                                 |  |         | 817,053   |   |         |  | 757,269   |         |  |  | 692,640   |  
|                                                                          |  |         |           |   |         |  |           |         | 

F-22



---



##### Table of Contents





|                                     |  |         |         |   |         |  |         |  
|------------------------------------ |  | ------- | ------- | - | ------- |  | ------- | -
|                                     |  | 2005    |         |   | 2004    | 
|                                     |  |         |         |   |         | 
|                                     |  |  (000) |         |   |  (000) | 
|Deferred tax assets                  |  |         |         |   |         |  |         |  
|Intangibles                          |  |         | 8,753   |   |         |  | 34,181  |  
|Property, plant, and equipment       |  |         | 38      |   |         |  | 3,278   |  
|Financial assets                     |  |         | 14,714  |   |         |  | 7,206   |  
|Accounts receivable                  |  |         | 9,684   |   |         |  | 4,099   |  
|Net operating loss carryforwards     |  |         | 9,427   |   |         |  | 11,993  |  
|Pension provisions                   |  |         | 28,687  |   |         |  | 18,332  |  
|Stock-based compensation             |  |         | 12,892  |   |         |  | 8,371   |  
|Other liabilities                    |  |         | 140,474 |   |         |  | 91,422  |  
|Deferred income                      |  |         | 32,829  |   |         |  | 28,106  |  
|Other                                |  |         | 127     |   |         |  | 61      |  
|                                     |  |         |         |   |         | 
|                                     |  |         | 257,625 |   |         |  | 207,049 |  
|                                     |  |         |         |   |         | 
|Less: Valuation allowance            |  |         | (6,927  | ) |         |  | (1,448  | )
|                                     |  |         |         |   |         | 
|Deferred tax assets                  |  |         | 250,698 |   |         |  | 205,601 |  
|                                     |  |         |         |   |         | 
|Deferred tax liabilities             |  |         |         |   |         |  |         |  
|Intangibles                          |  |         | 17,572  |   |         |  | 0       |  
|Property plant, and equipment        |  |         | 3,123   |   |         |  | 7,718   |  
|Financial assets                     |  |         | 28,996  |   |         |  | 8,944   |  
|Accounts receivable                  |  |         | 41,307  |   |         |  | 44,204  |  
|Other provisions                     |  |         | 3,453   |   |         |  | 3,130   |  
|Other                                |  |         | 20      |   |         |  | 206     |  
|                                     |  |         |         |   |         | 
|Deferred tax liabilities             |  |         | 94,471  |   |         |  | 64,202  |  
|                                     |  |         |         |   |         | 
|Net deferred tax assets/ liabilities |  |         | 156,227 |   |         |  | 141,399 |  
|                                     |  |         |         |   |         | 



|                         |  |         |         |  |         |  |         | 
|------------------------ |  | ------- | ------- |  | ------- |  | ------- | 
|                         |  | 2005    |         |  | 2004    | 
|                         |  |         |         |  |         | 
|                         |  |  (000) |         |  |  (000) | 
|Deferred tax assets      |  |         |         |  |         |  |         | 
|Short-term               |  |         | 144,542 |  |         |  | 96,132  | 
|Long-term                |  |         | 106,156 |  |         |  | 109,469 | 
|                         |  |         |         |  |         | 
|                         |  |         | 250,698 |  |         |  | 205,601 | 
|                         |  |         |         |  |         | 
|Deferred tax liabilities |  |         |         |  |         |  |         | 
|Short-term               |  |         | 42,399  |  |         |  | 47,557  | 
|Long-term                |  |         | 52,072  |  |         |  | 16,645  | 
|                         |  |         |         |  |         | 
|                         |  |         | 94,471  |  |         |  | 64,202  | 
|                         |  |         |         |  |         | 

   


F-23



---



##### Table of Contents



 


 


   


     




|                                                             |  |         |         |  |         |  |         |         |  |  |         | 
|------------------------------------------------------------ |  | ------- | ------- |  | ------- |  | ------- | ------- |  |  | ------- | 
|                                                             |  | 2005    |         |  | 2004    |  |         | 2003    | 
|                                                             |  |         |         |  |         |  |         |         | 
|                                                             |  |  (000) |         |  |  (000) |  |         |  (000) | 
|Income tax expense before additional Paid-in Capital effects |  |         | 794,018 |  |         |  | 741,517 |         |  |  | 678,957 | 
|Additional Paid-in Capital                                   |  |         | 23,035  |  |         |  | 15,752  |         |  |  | 13,683  | 
|                                                             |  |         |         |  |         |  |         |         | 
|Income tax expense                                           |  |         | 817,053 |  |         |  | 757,269 |         |  |  | 692,640 | 
|                                                             |  |         |         |  |         |  |         |         | 
|Tax effect on items of Other comprehensive income/loss       |  |         | 7,792   |  |         |  | (11,262 | )       |  |  | 31,750  | 
|                                                             |  |         |         |  |         |  |         |         | 
|                                                             |  |         | 824,845 |  |         |  | 746,007 |         |  |  | 724,390 | 
|                                                             |  |         |         |  |         |  |         |         | 







F-24



---



##### Table of Contents



|                                     |  |                                     |           |  |      |  |           |      |  |  |           | 
|------------------------------------ |  | ----------------------------------- | --------- |  | ---- |  | --------- | ---- |  |  | --------- | 
|                                     |  | 2005                                |           |  | 2004 |  |           | 2003 | 
|                                     |  |                                     |           |  |      |  |           |      | 
|                                     |  | In thousands, except per share data |          
|Net
    income ()                   |  |                                     | 1,496,407 |  |      |  | 1,310,521 |      |  |  | 1,077,063 | 
|Weighted average shares  basic      |  |                                     | 309,816   |  |      |  | 310,802   |      |  |  | 310,781   | 
|Stock options                        |  |                                     | 1,020     |  |      |  | 1,354     |      |  |  | 628       | 
|                                     |  |                                     |           |  |      |  |           |      | 
|Weighted average shares  diluted    |  |                                     | 310,836   |  |      |  | 312,156   |      |  |  | 311,409   | 
|                                     |  |                                     |           |  |      |  |           |      | 
|Earnings per share 
    basic ()   |  |                                     | 4.83      |  |      |  | 4.22      |      |  |  | 3.47      | 
|                                     |  |                                     |           |  |      |  |           |      | 
|Earnings per share 
    diluted () |  |                                     | 4.81      |  |      |  | 4.20      |      |  |  | 3.46      | 
|                                     |  |                                     |           |  |      |  |           |      | 

C. NOTES TO THE CONSOLIDATED BALANCE SHEETS




|                                     |  |                       |         |   |          |  |         |         |  |  |           |  
|------------------------------------ |  | --------------------- | ------- | - | -------- |  | ------- | ------- |  |  | --------- | -
|                                     |  | Licenses, trademarks, |         |   |          |  |        
|                                     |  | similar rights        |         |   |          |  |        
|                                     |  | and other             |         |   |          |  |        
|                                     |  | intangibles           |         |   | Goodwill |  |         | Total   | 
|                                     |  |                       |         |   |          |  |         |         | 
|                                     |  |  (000)               |         |   |  (000)  |  |         |  (000) | 
|Purchase cost                        |  |                       |         |   |          |  |         |         |  |  |           |  
|1/1/2005                             |  |                       | 262,011 |   |          |  | 552,303 |         |  |  | 814,314   |  
|Exchange rate differences            |  |                       | 14,722  |   |          |  | 31,091  |         |  |  | 45,813    |  
|Change in the scope of consolidation |  |                       | 2,010   |   |          |  | 0       |         |  |  | 2,010     |  
|Additions                            |  |                       | 114,129 |   |          |  | 143,246 |         |  |  | 257,375   |  
|Retirements/ disposals               |  |                       | (13,158 | ) |          |  | 0       |         |  |  | (13,158   | )
|Reclassifications                    |  |                       | 31      |   |          |  | 0       |         |  |  | 31        |  
|                                     |  |                       |         |   |          |  |         |         | 
|12/31/2005                           |  |                       | 379,745 |   |          |  | 726,640 |         |  |  | 1,106,385 |  
|                                     |  |                       |         |   |          |  |         |         | 
|Accumulated amortization             |  |                       |         |   |          |  |         |         |  |  |           |  
|1/1/2005                             |  |                       | 193,825 |   |          |  | 95,596  |         |  |  | 289,421   |  
|Exchange rate differences            |  |                       | 11,758  |   |          |  | 4,498   |         |  |  | 16,256    |  
|Change in the scope of consolidation |  |                       | 1,731   |   |          |  | 0       |         |  |  | 1,731     |  
|Additions                            |  |                       | 45,839  |   |          |  | 0       |         |  |  | 45,839    |  
|Retirements/ disposals               |  |                       | (13,105 | ) |          |  | 0       |         |  |  | (13,105   | )
|                                     |  |                       |         |   |          |  |         |         | 
|12/31/2005                           |  |                       | 240,048 |   |          |  | 100,094 |         |  |  | 340,142   |  
|                                     |  |                       |         |   |          |  |         |         | 
|Carrying value 12/31/2005            |  |                       | 139,697 |   |          |  | 626,546 |         |  |  | 766,243   |  
|                                     |  |                       |         |   |          |  |         |         | 
|Carrying value 12/31/2004            |  |                       | 68,186  |   |          |  | 456,707 |         |  |  | 524,893   |  
|                                     |  |                       |         |   |          |  |         |         | 



F-25



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##### Table of Contents






|                                             |  |                                            |         |  |            |  |         |       |                       |                    |                   |  |  |  |         | 
|-------------------------------------------- |  | ------------------------------------------ | ------- |  | ---------- |  | ------- | ----- | --------------------- | ------------------ | ----------------- |  |  |  | ------- | 
|                                             |  | Software and                               |         |  |            |  |         |       | Licenses, trademarks, |                   
|                                             |  | database                                   |         |  | Acquired   |  |         |       |                       | similar rights and |                  
|                                             |  | licenses                                   |         |  | technology |  |         | Other |                       |                    | other intangibles | 
|                                             |  |                                            |         |  |            |  |         |       |                       |                    |                   | 
|                                             |  | in  (000), except for amortization period |        
|12/31/2005                                   |  |                                            |         |  |            |  |         |       |                       |                    |                   |  |  |  |         | 
|Purchase cost                                |  |                                            | 160,425 |  |            |  | 194,217 |       |                       |                    | 25,103            |  |  |  | 379,745 | 
|Accumulated amortization                     |  |                                            | 124,432 |  |            |  | 108,738 |       |                       |                    | 6,878             |  |  |  | 240,048 | 
|thereof additions in 2005                    |  |                                            |         |  |            |  |         |       |                       |                    |                   |  |  |  |         | 
|Purchase cost                                |  |                                            | 20,609  |  |            |  | 80,663  |       |                       |                    | 12,857            |  |  |  | 114,129 | 
|Weighed average amortization period in years |  |                                            | 3.0     |  |            |  | 6.0     |       |                       |                    | 8.0               |  |  |  |        | 
|12/31/2004                                   |  |                                            |         |  |            |  |         |       |                       |                    |                   |  |  |  |         | 
|Purchase cost                                |  |                                            | 139,533 |  |            |  | 110,036 |       |                       |                    | 12,442            |  |  |  | 262,011 | 
|Accumulated amortization                     |  |                                            | 112,264 |  |            |  | 73,350  |       |                       |                    | 8,211             |  |  |  | 193,825 | 







|           |  |         |        | 
|---------- |  | ------- | ------ | 
|           |  |  (000) |       
|           |  |         |       
|2006       |  |         | 40,686 | 
|2007       |  |         | 29,626 | 
|2008       |  |         | 21,975 | 
|2009       |  |         | 18,419 | 
|2010       |  |         | 12,423 | 
|thereafter |  |         | 16,141 | 





|           |  |            |         |              |         |  |         |            |              |  |         |  |  |  |         | 
|---------- |  | ---------- | ------- | ------------ | ------- |  | ------- | ---------- | ------------ |  | ------- |  |  |  | ------- | 
|           |  |            |         | thereof      |         |  |         |            | thereof      | 
|           |  |            |         | additions in |         |  |         |            | additions in | 
|           |  | 12/31/2005 |         |              | 2005    |  |         | 12/31/2004 |              |  | 2004    | 
|           |  |            |         |              |         |  |         |            |              |  |         | 
|           |  |  (000)    |         |              |  (000) |  |         |  (000)    |              |  |  (000) | 
|Product    |  |            | 308,647 |              |         |  | 84,185  |            |              |  | 198,046 |  |  |  | 1,745   | 
|Consulting |  |            | 304,934 |              |         |  | 56,995  |            |              |  | 252,675 |  |  |  | 125,190 | 
|Training   |  |            | 12,965  |              |         |  | 2,066   |            |              |  | 5,986   |  |  |  | 0       | 
|           |  |            |         |              |         |  |         |            |              |  |         | 
|Total      |  |            | 626,546 |              |         |  | 143,246 |            |              |  | 456,707 |  |  |  | 126,935 | 
|           |  |            |         |              |         |  |         |            |              |  |         | 



F-26



---



##### Table of Contents





|                                     |  |                      |         |   |                 |  |           |              |  |  |         |   |  |  |           |  
|------------------------------------ |  | -------------------- | ------- | - | --------------- |  | --------- | ------------ |  |  | ------- | - |  |  | --------- | -
|                                     |  | Land, leasehold      |         |   |                 |  |           |              | 
|                                     |  | improvements, and    |         |   |                 |  | Payments  |              |  | 
|                                     |  | buildings, including |         |   | Other property, |  |           | and con-     |  |  |        
|                                     |  | buildings on third-  |         |   | plant, and      |  |           | struction in |  |  |        
|                                     |  | party land           |         |   | equipment       |  |           | progress     |  |  | Total   |  
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|                                     |  |  (000)              |         |   |  (000)         |  |           |  (000)      |  |  |  (000) |  
|Purchase cost                        |  |                      |         |   |                 |  |           |              |  |  |         |   |  |  |           |  
|1/1/2005                             |  |                      | 918,907 |   |                 |  | 938,530   |              |  |  | 4,515   |   |  |  | 1,861,952 |  
|Exchange rate differences            |  |                      | 26,501  |   |                 |  | 23,543    |              |  |  | 102     |   |  |  | 50,146    |  
|Change in the scope of consolidation |  |                      | 244     |   |                 |  | 4,074     |              |  |  | 0       |   |  |  | 4,318     |  
|Additions                            |  |                      | 19,737  |   |                 |  | 181,068   |              |  |  | 39,875  |   |  |  | 240,680   |  
|Retirements/ disposals               |  |                      | (10,893 | ) |                 |  | (101,352  | )            |  |  | (10     | ) |  |  | (112,255  | )
|Reclassifications                    |  |                      | 487     |   |                 |  | 494       |              |  |  | (1,012  | ) |  |  | (31       | )
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|12/31/2005                           |  |                      | 954,983 |   |                 |  | 1,046,357 |              |  |  | 43,470  |   |  |  | 2,044,810 |  
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|Accumulated depreciation             |  |                      |         |   |                 |  |           |              |  |  |         |   |  |  |           |  
|1/1/2005                             |  |                      | 253,144 |   |                 |  | 609,725   |              |  |  | 0       |   |  |  | 862,869   |  
|Exchange rate differences            |  |                      | 8,782   |   |                 |  | 17,556    |              |  |  | 0       |   |  |  | 26,338    |  
|Change in the scope of consolidation |  |                      | 132     |   |                 |  | 3,157     |              |  |  | 0       |   |  |  | 3,289     |  
|Additions                            |  |                      | 35,607  |   |                 |  | 122,099   |              |  |  | 0       |   |  |  | 157,706   |  
|Retirements/ disposals               |  |                      | (10,269 | ) |                 |  | (90,088   | )            |  |  | 0       |   |  |  | (100,357  | )
|Reclassifications                    |  |                      | (60     | ) |                 |  | 60        |              |  |  | 0       |   |  |  | 0         |  
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|12/31/2005                           |  |                      | 287,336 |   |                 |  | 662,509   |              |  |  | 0       |   |  |  | 949,845   |  
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|Carrying value 12/31/2005            |  |                      | 667,647 |   |                 |  | 383,848   |              |  |  | 43,470  |   |  |  | 1,094,965 |  
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|Carrying value 12/31/2004            |  |                      | 665,763 |   |                 |  | 328,805   |              |  |  | 4,515   |   |  |  | 999,083   |  
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  







|                                   |                                                 |              |         |        |                  |  |         |         |  |  |         |   |  |         |        |   |         |  |         |        |  |  |         |        | 
|---------------------------------- | ----------------------------------------------- | ------------ | ------- | ------ | ---------------- |  | ------- | ------- |  |  | ------- | - |  | ------- | ------ | - | ------- |  | ------- | ------ |  |  | ------- | ------ | 
|                                   |                                                 | Fixed Assets |         |        | Non-fixed Assets |  |         | Total   | 
|                                   |                                                 |              |         |        |                  |  |         |         | 
|                                   |                                                 | 2005         |         |        | 2004             |  |         | 2005    |  |  | 2004    |   |  | 2005    |        |   | 2004    | 
|                                   |                                                 |              |         |        |                  |  |         |         |  |  |         |   |  |         |        |   |         | 
|                                   |                                                 |  (000)      |         |        |  (000)          |  |         |  (000) |  |  |  (000) |   |  |  (000) |        |   |  (000) | 
|Equity method investments          |                                                 |              | 1,407   |        |                  |  | 1,595   |         |  |  | 0       |   |  |         | 0      |   |         |  | 1,407   |        |  |  | 1,595   |       
|                                   | Marketable equity securities available-for-sale |              |         | 23,080 |                  |  |         | 17,328  |  |  |         | 0 |  |         |        | 0 |         |  |         | 23,080 |  |  |         | 17,328 | 
|                                   | Equity securities at cost                       |              |         | 28,262 |                  |  |         | 25,924  |  |  |         | 0 |  |         |        | 0 |         |  |         | 28,262 |  |  |         | 25,924 | 
|Equity securities                  |                                                 |              | 51,342  |        |                  |  | 43,252  |         |  |  | 0       |   |  |         | 0      |   |         |  | 51,342  |        |  |  | 43,252  |       
|Debt securities available-for-sale |                                                 |              | 431,128 |        |                  |  | 231     |         |  |  | 199,310 |   |  |         | 242    |   |         |  | 630,438 |        |  |  | 473     |       
|Investment fund securities         |                                                 |              | 1,994   |        |                  |  | 1,984   |         |  |  | 10,255  |   |  |         | 9,922  |   |         |  | 12,249  |        |  |  | 11,906  |       
|Loans                              |                                                 |              | 48,284  |        |                  |  | 53,320  |         |  |  | 0       |   |  |         | 0      |   |         |  | 48,284  |        |  |  | 53,320  |       
|                                   |                                                 |              |         |        |                  |  |         |         |  |  |         |   |  |         |        |   |         | 
|Total                              |                                                 |              | 534,155 |        |                  |  | 100,382 |         |  |  | 209,565 |   |  |         | 10,164 |   |         |  | 743,720 |        |  |  | 110,546 |       
|                                   |                                                 |              |         |        |                  |  |         |         |  |  |         |   |  |         |        |   |         | 

   


F-27



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##### Table of Contents







|                                                  |  |                           |         |  |                  |                                        |        |                  |  |  |            |  |  |         |       |  |            |  |   |         |  |  |            |  |  |  |         |  |  |  |       | 
|------------------------------------------------- |  | ------------------------- | ------- |  | ---------------- | -------------------------------------- | ------ | ---------------- |  |  | ---------- |  |  | ------- | ----- |  | ---------- |  | - | ------- |  |  | ---------- |  |  |  | ------- |  |  |  | ----- | 
|                                                  |  |                           |         |  |                  | Marketable securities in loss position |       
|                                                  |  |                           |         |  |                 
|                                                  |  | Marketable securities not |         |  |                  |                                        |        |                  | 
|                                                  |  | in loss position          |         |  | for less than 12 |                                        |        | for more than 12 |  |  | total      | 
|                                                  |  |                           |         |  |                  |                                        |        |                  |  |  |            | 
|                                                  |  | Fair                      |         |  | unrealized       |                                        |        | Fair             |  |  | unrealized |  |  | Fair    |       |  | unrealized |  |   | Fair    |  |  | unrealized | 
|                                                  |  | value                     |         |  | gains            |                                        |        | value            |  |  | losses     |  |  | value   |       |  | losses     |  |   | value   |  |  | losses     | 
|                                                  |  |                           |         |  |                  |                                        |        |                  |  |  |            |  |  |         |       |  |            |  |   |         |  |  |            | 
|                                                  |  |  (000)                   |         |  |  (000)          |                                        |        |  (000)          |  |  |  (000)    |  |  |  (000) |       |  |  (000)    |  |   |  (000) |  |  |  (000)    | 
|2005                                              |  |                           |         |  |                  |                                        |        |                  |  |  |            |  |  |         |       |  |            |  |   |         |  |  |            |  |  |  |         |  |  |  |       | 
|Marketable equity securities (available-for-sale) |  |                           | 23,080  |  |                  |                                        | 13,787 |                  |  |  | 0          |  |  |         | 0     |  |            |  | 0 |         |  |  | 0          |  |  |  | 0       |  |  |  | 0     | 
|Marketable debt securities (available-for-sale)   |  |                           | 174,312 |  |                  |                                        | 2      |                  |  |  | 456,126    |  |  |         | 3,643 |  |            |  | 0 |         |  |  | 0          |  |  |  | 456,126 |  |  |  | 3,643 | 
|Investment fund securities                        |  |                           | 2,329   |  |                  |                                        | 19     |                  |  |  | 9,920      |  |  |         | 79    |  |            |  | 0 |         |  |  | 0          |  |  |  | 9,920   |  |  |  | 79    | 
|2004                                              |  |                           |         |  |                  |                                        |        |                  |  |  |            |  |  |         |       |  |            |  |   |         |  |  |            |  |  |  |         |  |  |  |       | 
|Marketable equity securities (available-for-sale) |  |                           | 14,910  |  |                  |                                        | 9,006  |                  |  |  | 2,418      |  |  |         | 569   |  |            |  | 0 |         |  |  | 0          |  |  |  | 2,418   |  |  |  | 569   | 
|Marketable debt securities (available-for-sale)   |  |                           | 0       |  |                  |                                        | 0      |                  |  |  | 473        |  |  |         | 133   |  |            |  | 0 |         |  |  | 0          |  |  |  | 473     |  |  |  | 133   | 
|Investment fund securities                        |  |                           | 1,984   |  |                  |                                        | 31     |                  |  |  | 9,922      |  |  |         | 77    |  |            |  | 0 |         |  |  | 0          |  |  |  | 9,922   |  |  |  | 77    | 

  


    






|                       |  |         |        |  |         |  |        | 
|---------------------- |  | ------- | ------ |  | ------- |  | ------ | 
|                       |  | 2005    |        |  | 2004    | 
|                       |  |         |        |  |         | 
|                       |  |  (000) |        |  |  (000) | 
|Loans to employees     |  |         | 47,846 |  |         |  | 42,824 | 
|Loans to third parties |  |         | 438    |  |         |  | 10,496 | 
|                       |  |         |        |  |         | 
|                       |  |         | 48,284 |  |         |  | 53,320 | 
|                       |  |         |        |  |         | 



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##### Table of Contents









 


 


|                          |  |         |           |  |         |  |           | 
|------------------------- |  | ------- | --------- |  | ------- |  | --------- | 
|                          |  | 2005    |           |  | 2004    | 
|                          |  |         |           |  |         | 
|                          |  |  (000) |           |  |  (000) | 
|Due within 1 year         |  |         | 2,249,482 |  |         |  | 1,928,557 | 
|Due between 1 and 5 years |  |         | 1,545     |  |         |  | 543       | 
|                          |  |         |           |  |         | 
|                          |  |         | 2,251,027 |  |         |  | 1,929,100 | 
|                          |  |         |           |  |         | 





|                                                                                                                  |  |         |         |  |         |  |         | 
|----------------------------------------------------------------------------------------------------------------- |  | ------- | ------- |  | ------- |  | ------- | 
|                                                                                                                  |  | 2005    |         |  | 2004    | 
|                                                                                                                  |  |         |         |  |         | 
|                                                                                                                  |  |  (000) |         |  |  (000) | 
|Fair value of STAR hedge and other derivatives                                                                    |  |         | 175,256 |  |         |  | 191,716 | 
|Investments in insurance policies held for employee-financed
    pension plans, semiretirement, and time accounts |  |         | 181,366 |  |         |  | 134,003 | 
|Income tax receivables                                                                                            |  |         | 75,408  |  |         |  | 52,161  | 
|Prepaid pensions                                                                                                  |  |         | 38,595  |  |         |  | 32,035  | 
|Rent deposits                                                                                                     |  |         | 27,364  |  |         |  | 22,823  | 
|Others                                                                                                            |  |         | 137,565 |  |         |  | 104,907 | 
|                                                                                                                  |  |         |         |  |         | 
|Total other assets                                                                                                |  |         | 635,554 |  |         |  | 537,645 | 
|                                                                                                                  |  |         |         |  |         | 
| thereof with a remaining term exceeding 1 year                                                                  |  |         | 307,710 |  |         |  | 224,829 | 
|                                                                                                                  |  |         |         |  |         | 



F-29



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##### Table of Contents







|                                                                                                             |  |        |           |  |        |  |           | 
|------------------------------------------------------------------------------------------------------------ |  | ------ | --------- |  | ------ |  | --------- | 
|                                                                                                             |  | 2005   |           |  | 2004   | 
|                                                                                                             |  |        |           |  |        | 
|                                                                                                             |  | (000) |           |  | (000) | 
|Cash at banks                                                                                                |  |        | 455,522   |  |        |  | 458,909   | 
|Cash equivalents                                                                                             |  |        | 1,608,552 |  |        |  | 1,046,884 | 
|                                                                                                             |  |        |           |  |        | 
|Cash and cash equivalents                                                                                    |  |        | 2,064,074 |  |        |  | 1,505,793 | 
|                                                                                                             |  |        |           |  |        | 
|Liquid investments with original maturities exceeding
    3 months and remaining maturities less than 1 year |  |        | 910,850   |  |        |  | 918,272   | 
|Liquid investments with remaining maturities exceeding
    1 year                                            |  |        | 238,648   |  |        |  | 772,477   | 
|                                                                                                             |  |        |           |  |        | 
|                                                                                                             |  |        | 3,213,572 |  |        |  | 3,196,542 | 
|                                                                                                             |  |        |           |  |        | 





|                                                                  |  |            |           |   |            |  |          |          |  |            |           |   |  |            |            |   |          |  |          |   |  |  |            |  
|----------------------------------------------------------------- |  | ---------- | --------- | - | ---------- |  | -------- | -------- |  | ---------- | --------- | - |  | ---------- | ---------- | - | -------- |  | -------- | - |  |  | ---------- | -
|                                                                  |  | 2004       |           |   | 2003       | 
|                                                                  |  |            |           |   |            | 
|                                                                  |  | As         |           |   |            |  | As       |          |  |           
|                                                                  |  | Previously |           |   |            |  | As       |          |  | Previously |           |   |  |            | As         |  
|                                                                  |  | Reported   |           |   | Adjustment |  |          | Adjusted |  |            | Reported  |   |  | Adjustment |            |   | Adjusted | 
|                                                                  |  |            |           |   |            |  |          |          |  |            |           |   |  |            |            |   |          | 
|                                                                  |  | (000)     |           |   | (000)     |  |          | (000)   |  |            | (000)    |   |  | (000)     |            |   | (000)   | 
|Change in liquid assets (maturities exceeding 3 months)           |  |            | (571,846  | ) |            |  | 138,316  |          |  |            | (433,530  | ) |  |            | (868,718   | ) |          |  | (47,889  | ) |  |  | (916,607   | )
|Net cash used in investing activities                             |  |            | (886,638  | ) |            |  | 138,316  |          |  |            | (748,322  | ) |  |            | (1,144,737 | ) |          |  | (47,889  | ) |  |  | (1,192,626 | )
|Net increase in cash and cash equivalents                         |  |            | 528,740   |   |            |  | 138,316  |          |  |            | 667,056   |   |  |            | (10,659    | ) |          |  | (47,889  | ) |  |  | (58,548    | )
|Cash and cash equivalents at the beginning of the year            |  |            | 984,395   |   |            |  | (145,658 | )        |  |            | 838,737   |   |  |            | 995,054    |   |          |  | (97,769  | ) |  |  | 897,285    |  
|Cash and cash equivalents at the end of the year                  |  |            | 1,513,135 |   |            |  | (7,342   | )        |  |            | 1,505,793 |   |  |            | 984,395    |   |          |  | (145,658 | ) |  |  | 838,737    |  
|Liquid investments with remaining maturities exceeding
    1 year |  |            | 765,135   |   |            |  | 7,342    |          |  |            | 772,477   |   |  |            | 523,089    |   |          |  | 145,658  |   |  |  | 668,747    |  





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##### Table of Contents















|                                               |  |           |         |  |            |  |        |           |  |  |            |  |  |  |        | 
|---------------------------------------------- |  | --------- | ------- |  | ---------- |  | ------ | --------- |  |  | ---------- |  |  |  | ------ | 
|                                               |  | 2005      |         |  | 2004       | 
|                                               |  |           |         |  |            | 
|                                               |  | Number of |         |  | % of       |  |        | Number of |  |  | % of       | 
|                                               |  | shares    |         |  | subscribed |  |        | shares    |  |  | subscribed | 
|                                               |  | (000)     |         |  | capital    |  |        | (000)     |  |  | capital    | 
|                                               |  |           |         |  |            |  |        |           |  |  |            | 
|Hasso Plattner GmbH&Co. Beteiligungs-KG        |  |           | 31,650  |  |            |  | 10.0%  |           |  |  | 31,240     |  |  |  | 9.9%   | 
|Dietmar Hopp Stiftung GmbH                     |  |           | 27,467  |  |            |  | 8.7%   |           |  |  | 28,017     |  |  |  | 8.9%   | 
|Klaus Tschira Stiftung gGmbH                   |  |           | 17,641  |  |            |  | 5.6%   |           |  |  | 21,155     |  |  |  | 6.7%   | 
|Dr. h.c. Tschira Beteiligungs GmbH&Co. KG      |  |           | 15,833  |  |            |  | 5.0%   |           |  |  | 15,833     |  |  |  | 5.0%   | 
|Hasso Plattner Förderstiftung gGmbH            |  |           | 4,763   |  |            |  | 1.5%   |           |  |  | 5,229      |  |  |  | 1.6%   | 
|Golf Club St. Leon-Rot GmbH & Co. Betriebs OHG |  |           | 4,061   |  |            |  | 1.3%   |           |  |  | 4,811      |  |  |  | 1.5%   | 
|Treasury Stock                                 |  |           | 6,679   |  |            |  | 2.1%   |           |  |  | 5,363      |  |  |  | 1.7%   | 
|Free float                                     |  |           | 208,364 |  |            |  | 65.8%  |           |  |  | 204,356    |  |  |  | 64.7%  | 
|                                               |  |           |         |  |            |  |        |           |  |  |            | 
|                                               |  |           | 316,458 |  |            |  | 100.0% |           |  |  | 316,004    |  |  |  | 100.0% | 
|                                               |  |           |         |  |            |  |        |           |  |  |            | 









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | up to a total amount of
    60 million
    through the issuance of new common shares in return for
    contributions in cash until May 11, 2010 (Authorized
    Capital I). The issuance is subject to the statutory
    subscription rights of existing shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | up to a total amount of
    60 million
    through the issuance of new common shares in return for
    contributions in cash or in kind until May 11, 2010
    (Authorized Capital II). Subject to certain
    preconditions and the consent of the Supervisory Board, the
    Executive Board is authorized to exclude the shareholders
    statutory subscription rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | up to an aggregate amount of
    15 million
    against contribution in cash by issuing new common shares until
    May 1, 2007 (Authorized Capital III). The new
    shares may be subscribed by a credit institution only, and only
    to the extent that such credit institution, releasing SAP from
    its corresponding obligation, satisfies the conversion and
    subscription rights granted under the SAP AG 2000 Long Term
    Incentive Plan (LTI 2000 Plan) or SAP Stock Option
    Plan 2002 (SAP SOP 2002), respectively. The
    shareholders statutory subscription rights are excluded
    from this capital increase. The Executive Board may exercise
    this authorization only to the extent that the capital stock
    attributable to the new shares issued from this Authorized
    Capital III together with new shares from contingent capital and
    treasury shares issued or transferred for the purposes of
    satisfying subscription rights does not amount to more than 10%
    of the capital stock at the time of adoption of the
    authorization.

F-31



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##### Table of Contents









|               |  |            |        |  
|-------------- |  | ---------- | ------ | -
|               |  | Contingent |       
|               |  | capital    |       
|               |  |            |       
|               |  | (000)      |       
|12/31/2003     |  |            | 55,837 |  
|               |  |            |       
|Exercise       |  |            | (590   | )
|New authorized |  |            | 0      |  
|Reduction      |  |            | 0      |  
|               |  |            |       
|12/31/2004     |  |            | 55,247 |  
|               |  |            |       
|Exercise       |  |            | (454   | )
|Cancellation   |  |            | (32    | )
|New authorized |  |            | 0      |  
|Reduction      |  |            | (1,831 | )
|               |  |            |       
|12/31/2005     |  |            | 52,930 |  
|               |  |            |       





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F-32



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##### Table of Contents







|                                                                         |                                                                           |         |         |         |            |  |        |         |   |  |          |         |   |            |          |         |         |     |        |         |   |  |            |         |   |         |          |        |   |  |         |         |   |  |          |        |  
|------------------------------------------------------------------------ | ------------------------------------------------------------------------- | ------- | ------- | ------- | ---------- |  | ------ | ------- | - |  | -------- | ------- | - | ---------- | -------- | ------- | ------- | --- | ------ | ------- | - |  | ---------- | ------- | - | ------- | -------- | ------ | - |  | ------- | ------- | - |  | -------- | ------ | -
|                                                                         |                                                                           | 2005    |         |         | 2004       |  |        | 2003    |  
|                                                                         |                                                                           |         |         |         |            |  |        |         |  
|                                                                         |                                                                           |         |         | Tax     |            |  |        |         |   |  | Tax      |         |   |            |          |         |         | Tax |        |         |  
|                                                                         |                                                                           | Pre-tax |         |         | (expense)  |  |        | Net     |   |  | Pre-tax  |         |   | (expense)  |          |         | Net     |     |        | Pre-tax |   |  | (expense)  |         |   | Net     |         
|                                                                         |                                                                           | amount  |         |         | or benefit |  |        | amount  |   |  | amount   |         |   | or benefit |          |         | amount  |     |        | amount  |   |  | or benefit |         |   | amount  |         
|                                                                         |                                                                           |         |         |         |            |  |        |         |   |  |          |         |   |            |          |         |         |     |        |         |   |  |            |         |   |         |         
|                                                                         |                                                                           |  (000) |         |         |  (000)    |  |        |  (000) |   |  |  (000)  |         |   |  (000)    |          |         |  (000) |     |        |  (000) |   |  |  (000)    |         |   |  (000) |         
|Unrealized gains/ losses on marketable securities:                       |                                                                           |         |         |         |            |  |        |         |   |  |          |         |   |            |          |         |         |     |        |         |   |  |            |         |   |         |          |        |   |  |         |         |   |  |          |       
|                                                                         | Unrealized holding gains/ losses                                          |         |         | 1,571   |            |  |        | 1,153   |   |  |          | 2,724   |   |            |          | (699    | )       |     |        | 774     |   |  |            | 75      |   |         |          | 14,365 |   |  |         | (814    | ) |  |          | 13,551 |  
|                                                                         | Reclassification adjustments for gains/ losses included in net
    income |         |         | 220     |            |  |        | (77     | ) |  |          | 143     |   |            |          | (8,020  | )       |     |        | 267     |   |  |            | (7,753  | ) |         |          | 5,574  |   |  |         | (7      | ) |  |          | 5,567  |  
|                                                                         | Net unrealized gains/ losses on marketable securities                     |         |         | 1,791   |            |  |        | 1,076   |   |  |          | 2,867   |   |            |          | (8,719  | )       |     |        | 1,041   |   |  |            | (7,678  | ) |         |          | 19,939 |   |  |         | (821    | ) |  |          | 19,118 |  
|Currency translation adjustments                                         |                                                                           |         | 120,136 |         |            |  | 0      |         |   |  | 120,136  |         |   |            | (70,723  | )       |         |     | 0      |         |   |  | (70,723    | )       |   |         | (148,424 | )      |   |  | 0       |         |   |  | (148,424 | )     
|Additional minimum pension liability adjustments                         |                                                                           |         | (737    | )       |            |  | 1,503  |         |   |  | 766      |         |   |            | (9,089   | )       |         |     | 2,070  |         |   |  | (7,019     | )       |   |         | 27,249   |        |   |  | (10,966 | )       |   |  | 16,283   |       
|Unrealized gains/ losses on cash flow hedges:                            |                                                                           |         |         |         |            |  |        |         |   |  |          |         |   |            |          |         |         |     |        |         |   |  |            |         |   |         |          |        |   |  |         |         |   |  |          |       
|                                                                         | Unrealized cash flow hedge gains/ losses                                  |         |         | (30,323 | )          |  |        | (10,992 | ) |  |          | (19,331 | ) |            |          | 11,691  |         |     |        | 1,681   |   |  |            | 10,010  |   |         |          | 20,261 |   |  |         | 7,300   |   |  |          | 12,961 |  
|                                                                         | Reclassification adjustments for gains/ losses included in net
    income |         |         | (4,614  | )          |  |        | (1,672  | ) |  |          | (2,942  | ) |            |          | (11,844 | )       |     |        | (1,703  | ) |  |            | (10,141 | ) |         |          | (363   | ) |  |         | (131    | ) |  |          | (232   | )
|                                                                         | Net unrealized cash flow hedge gains/ losses                              |         |         | (34,937 | )          |  |        | 12,664  |   |  |          | (22,273 | ) |            |          | (153    | )       |     |        | 22      |   |  |            | (131    | ) |         |          | 19,898 |   |  |         | (7,169  | ) |  |          | 12,729 |  
|Unrealized gains/ losses on
    STAR hedge:                              |                                                                           |         |         |         |            |  |        |         |   |  |          |         |   |            |          |         |         |     |        |         |   |  |            |         |   |         |          |        |   |  |         |         |   |  |          |       
|                                                                         | Unrealized gains/ losses on
    STAR hedge                                |         |         | 78,376  |            |  |        | (27,417 | ) |  |          | 50,959  |   |            |          | (1,094  | )       |     |        | 378     |   |  |            | (716    | ) |         |          | 36,790 |   |  |         | (12,794 | ) |  |          | 23,996 |  
|                                                                         | Reclassification adjustments for gains/ losses included in net
    income |         |         | (12,527 | )          |  |        | 4,382   |   |  |          | (8,145  | ) |            |          | (22,433 | )       |     |        | 7,751   |   |  |            | (14,682 | ) |         |          | 0      |   |  |         | 0       |   |  |          | 0      |  
|                                                                         | Net unrealized gains/ losses on STAR hedge                                |         |         | 65,849  |            |  |        | (23,035 | ) |  |          | 42,814  |   |            |          | (23,527 | )       |     |        | 8,129   |   |  |            | (15,398 | ) |         |          | 36,790 |   |  |         | (12,794 | ) |  |          | 23,996 |  
|Currency effects from intercompany long-term investment
    transactions |                                                                           |         | 43,236  |         |            |  | 0      |         |   |  | 43,236   |         |   |            | (2,473   | )       |         |     | 0      |         |   |  | (2,473     | )       |   |         | 0        |        |   |  | 0       |         |   |  | 0        |       
|                                                                         |                                                                           |         |         |         |            |  |        |         |   |  |          |         |   |            |          |         |         |     |        |         |   |  |            |         |   |         |         
|Other comprehensive income/loss                                          |                                                                           |         | 195,338 |         |            |  | (7,792 | )       |   |  | 187,546  |         |   |            | (114,684 | )       |         |     | 11,262 |         |   |  | (103,422   | )       |   |         | (44,548  | )      |   |  | (31,750 | )       |   |  | (76,298  | )     
|                                                                         |                                                                           |         |         |         |            |  |        |         |   |  |          |         |   |            |          |         |         |     |        |         |   |  |            |         |   |         |         
|Accumulated other comprehensive income/loss at beginning of
    period   |                                                                           |         |         |         |            |  |        |         |   |  | (305,401 | )       |   |            |          |         |         |     |        |         |   |  | (201,979   | )       |   |         |          |        |   |  |         |         |   |  | (125,681 | )     
|Accumulated other comprehensive income/loss at end of
    period         |                                                                           |         |         |         |            |  |        |         |   |  | (117,855 | )       |   |            |          |         |         |     |        |         |   |  | (305,401   | )       |   |         |          |        |   |  |         |         |   |  | (201,979 | )     






F-33



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##### Table of Contents





|                          |  |      |      |  |      |  |      | 
|------------------------- |  | ---- | ---- |  | ---- |  | ---- | 
|                          |  | 2004 |      |  | 2003 | 
|                          |  |      |      |  |      | 
|                          |  |     |      |  |     | 
|Dividend per common share |  |      | 1.10 |  |      |  | 0.80 | 



  








  


|                 |    |  |         |  |    |         |  |  |         |  |  |          |     |  |         |  |     |         |  |  |         |  |  |  |     |  |  |  |     | 
|---------------- | -- |  | ------- |  | -- | ------- |  |  | ------- |  |  | -------- | --- |  | ------- |  | --- | ------- |  |  | ------- |  |  |  | --- |  |  |  | --- | 
|Weighting factor |   
|Quarter ended    |   
|                 |   
|March 31         |    |  | June 30 |  |    | Sep. 30 |  |  | Dec. 31 |  |  | March 31 |     |  | June 30 |  |     | Sep. 30 |  |  | Dec. 31 | 
|                 |    |  |         |  |    |         |  |  |         |  |  |          |     |  |         |  |     |         |  |  |         | 
|                 | 5% |  |         |  | 5% |         |  |  | 10%     |  |  |          | 20% |  |         |  | 10% |         |  |  | 10%     |  |  |  | 10% |  |  |  | 30% | 

® ®


 




F-34



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    






®









F-35



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##### Table of Contents





|                             |  |                  |        |           |             |  |                  |                |  |  |        | 
|---------------------------- |  | ---------------- | ------ | --------- | ----------- |  | ---------------- | -------------- |  |  | ------ | 
|                             |  |                  |        | Number of |             |  | Weighted average |               
|                             |  | Shares available |        |           | options     |  |                  | exercise price | 
|                             |  | for grant        |        |           | outstanding |  |                  | per option     | 
|                             |  |                  |        |           |             |  |                  |                | 
|                             |  | (000)            |        |           | (000)       |  |                  |               | 
|12/31/2002                   |  |                  | 19,015 |           |             |  |                 |                |  |  |       | 
|Additional shares authorized |  |                  |       |           |             |  |                 |                |  |  |       | 
|Granted                      |  |                  | 3,737  |           |             |  | 3,737            |                |  |  | 90.48  | 
|Exercised                    |  |                  |       |           |             |  |                 |                |  |  |       | 
|Forfeited                    |  |                  |       |           |             |  | 109              |                |  |  | 90.37  | 
|12/31/2003                   |  |                  | 15,278 |           |             |  | 3,628            |                |  |  | 90.48  | 
|Additional shares authorized |  |                  |       |           |             |  |                 |                |  |  |       | 
|Granted                      |  |                  | 2,105  |           |             |  | 2,105            |                |  |  | 149.99 | 
|Exercised                    |  |                  |       |           |             |  |                 |                |  |  |       | 
|Forfeited                    |  |                  |       |           |             |  | 99               |                |  |  | 105.86 | 
|12/31/2004                   |  |                  | 13,173 |           |             |  | 5,634            |                |  |  | 112.44 | 
|Additional shares authorized |  |                  |       |           |             |  |                 |                |  |  |       | 
|Granted                      |  |                  | 2,916  |           |             |  | 2,916            |                |  |  | 134.20 | 
|Exercised                    |  |                  |       |           |             |  | 1,714            |                |  |  | 90.37  | 
|Forfeited                    |  |                  |       |           |             |  | 167              |                |  |  | 136.62 | 
|                             |  |                  |        |           |             |  |                  |                | 
|12/31/2005                   |  |                  | 10,257 |           |             |  | 6,669            |                |  |  | 127.02 | 
|                             |  |                  |        |           |             |  |                  |                | 



|                         |  |               |       |          |                  |  |          |          |  |  |               |          |  |          |       |  |  |  |       | 
|------------------------ |  | ------------- | ----- | -------- | ---------------- |  | -------- | -------- |  |  | ------------- | -------- |  | -------- | ----- |  |  |  | ----- | 
|                         |  | Outstanding   |       |          | Exercisable      | 
|                         |  |               |       |          |                  | 
|                         |  |               |       | Weighted |                  |  | Weighted |          |  |  |               | Weighted | 
|                         |  |               |       | average  |                  |  | average  |          |  |  |               | average  | 
|                         |  | Number of     |       |          | remaining        |  |          | exercise |  |  | Number of     |          |  | exercise |      
|Range of exercise prices |  | stock options |       |          | contractual life |  |          | price    |  |  | stock options |          |  | price    |      
|                         |  |               |       |          |                  |  |          |          |  |  |               |          |  |          |      
|                        |  | (000)         |       |          | years            |  |          |         |  |  | (000)         |          |  |         |      
|90.37                    |  |               | 1,778 |          |                  |  | 2.16     |          |  |  | 90.37         |          |  |          | 1,778 |  |  |  | 90.37 | 
|99.13                    |  |               | 45    |          |                  |  | 2.33     |          |  |  | 99.13         |          |  |          | 45    |  |  |  | 99.13 | 
|134.20                   |  |               | 2,843 |          |                  |  | 4.11     |          |  |  | 134.20        |          |  |          |      |  |  |  |      | 
|149.99                   |  |               | 2,003 |          |                  |  | 3.13     |          |  |  | 149.99        |          |  |          |      |  |  |  |      | 
|                         |  |               |       |          |                  |  |          |          |  |  |               |          |  |          |      
|90.37-149.99             |  |               | 6,669 |          |                  |  | 3.28     |          |  |  | 127.02        |          |  |          | 1,823 |  |  |  | 90.59 | 
|                         |  |               |       |          |                  |  |          |          |  |  |               |          |  |          |      








F-36



---



##### Table of Contents











|                                                         |  |           |   |               |             |          |                   |                |  |  |             |  |  |                |       |  |  |  |        | 
|-------------------------------------------------------- |  | --------- | - | ------------- | ----------- | -------- | ----------------- | -------------- |  |  | ----------- |  |  | -------------- | ----- |  |  |  | ------ | 
|                                                         |  |           |   | Stock options |             |          | Convertible bonds |               
|                                                         |  |           |   |               |             |          |                   |               
|                                                         |  |           |   |               |             | Weighted |                   |                |  |  | Weighted    | 
|                                                         |  | Shares    |   |               | Number of   |          |                   | average        |  |  | Number of   |  |  | average        |      
|                                                         |  | available |   |               | options     |          |                   | exercise price |  |  | bonds       |  |  | exercise price |      
|                                                         |  | for grant |   |               | outstanding |          |                   | per option     |  |  | outstanding |  |  | per bond       |      
|                                                         |  |           |   |               |             |          |                   |                |  |  |             |  |  |                |      
|                                                         |  | (000)     |   |               | (000)       |          |                   |               |  |  | (000)       |  |  |               |      
|12/31/2002                                               |  |           | 0 |               |             |          | 3,067             |                |  |  | 72.51       |  |  |                | 7,803 |  |  |  | 200.74 | 
|                                                         |  |           |   |               |             |          |                   |                |  |  |             |  |  |                |      
|Additional shares authorized                             |  |           |  |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Granted                                                  |  |           |  |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Reduction due to option/bond ratio (25% of bonds issued) |  |           |  |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Exercised                                                |  |           |  |               |             |          | 217               |                |  |  | 73.93       |  |  |                |      |  |  |  |       | 
|Forfeited                                                |  |           |  |               |             |          | 161               |                |  |  | 94.45       |  |  |                | 226   |  |  |  | 185.05 | 
|                                                         |  |           |   |               |             |          |                   |                |  |  |             |  |  |                |      
|12/31/2003                                               |  |           | 0 |               |             |          | 2,689             |                |  |  | 91.10       |  |  |                | 7,577 |  |  |  | 201.21 | 
|                                                         |  |           |   |               |             |          |                   |                |  |  |             |  |  |                |      
|Additional shares authorized                             |  |           |  |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Granted                                                  |  |           |  |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Reduction due to option/bond ratio (25% of bonds issued) |  |           |  |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Exercised                                                |  |           |  |               |             |          | 511               |                |  |  | 90.11       |  |  |                |      |  |  |  |       | 
|Forfeited                                                |  |           |  |               |             |          | 63                |                |  |  | 100.53      |  |  |                | 307   |  |  |  | 222.95 | 
|                                                         |  |           |   |               |             |          |                   |                |  |  |             |  |  |                |      
|12/31/2004                                               |  |           | 0 |               |             |          | 2,115             |                |  |  | 97.19       |  |  |                | 7,270 |  |  |  | 200.29 | 
|                                                         |  |           |   |               |             |          |                   |                |  |  |             |  |  |                |      
|Additional shares authorized                             |  |           |  |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Granted                                                  |  |           |  |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Reduction due to option/bond ratio (25% of bonds issued) |  |           |  |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Exercised                                                |  |           |  |               |             |          | 607               |                |  |  | 104.94      |  |  |                | 31    |  |  |  | 150.56 | 
|Forfeited                                                |  |           |  |               |             |          | 41                |                |  |  | 114.01      |  |  |                | 314   |  |  |  | 204.85 | 
|                                                         |  |           |   |               |             |          |                   |                |  |  |             |  |  |                |      
|12/31/2005                                               |  |           | 0 |               |             |          | 1,467             |                |  |  | 107.44      |  |  |                | 6,925 |  |  |  | 200.31 | 
|                                                         |  |           |   |               |             |          |                   |                |  |  |             |  |  |                |      

  


F-37



---



##### Table of Contents





|                         |  |                           |       |          |                           |  |          |                |  |  |               |          |  |                |     |  |  |  |        | 
|------------------------ |  | ------------------------- | ----- | -------- | ------------------------- |  | -------- | -------------- |  |  | ------------- | -------- |  | -------------- | --- |  |  |  | ------ | 
|                         |  | Outstanding stock options |       |          | Exercisable stock options | 
|                         |  |                           |       |          |                           | 
|                         |  |                           |       | Weighted |                           |  |          |                | 
|                         |  |                           |       | average  |                           |  | Weighted |                |  |  |               | Weighted | 
|                         |  | Number of                 |       |          | remaining                 |  |          | average        |  |  | Number of     |          |  | average        |    
|Range of exercise prices |  | stock options             |       |          | contractual life          |  |          | exercise price |  |  | stock options |          |  | exercise price |    
|                         |  |                           |       |          |                           |  |          |                |  |  |               |          |  |                |    
|                        |  | (000)                     |       |          | years                     |  |          |               |  |  | (000)         |          |  |               |    
|73.19  77.95            |  |                           | 175   |          |                           |  | 4.14     |                |  |  | 77.90         |          |  |                | 175 |  |  |  | 77.90  | 
|92.44  94.72            |  |                           | 320   |          |                           |  | 5.15     |                |  |  | 94.68         |          |  |                | 320 |  |  |  | 94.68  | 
|105.73                   |  |                           | 7     |          |                           |  | 5.57     |                |  |  | 105.73        |          |  |                | 7   |  |  |  | 105.73 | 
|117.02                   |  |                           | 965   |          |                           |  | 6.14     |                |  |  | 117.02        |          |  |                | 485 |  |  |  | 117.02 | 
|                         |  |                           |       |          |                           |  |          |                |  |  |               |          |  |                |    
|73.19  117.02           |  |                           | 1,467 |          |                           |  | 5.69     |                |  |  | 107.44        |          |  |                | 987 |  |  |  | 102.79 | 
|                         |  |                           |       |          |                           |  |          |                |  |  |               |          |  |                |    

|                         |  |                               |       |          |                               |  |          |                |  |  |           |          |  |                |       |  |  |  |        | 
|------------------------ |  | ----------------------------- | ----- | -------- | ----------------------------- |  | -------- | -------------- |  |  | --------- | -------- |  | -------------- | ----- |  |  |  | ------ | 
|                         |  | Outstanding convertible bonds |       |          | Exercisable convertible bonds | 
|                         |  |                               |       |          |                               | 
|                         |  |                               |       | Weighted |                               |  |          |                | 
|                         |  |                               |       | average  |                               |  | Weighted |                |  |  |           | Weighted | 
|                         |  | Number of                     |       |          | remaining                     |  |          | average        |  |  | Number of |          |  | average        |      
|Range of exercise prices |  | bonds                         |       |          | contractual life              |  |          | exercise price |  |  | bonds     |          |  | exercise price |      
|                         |  |                               |       |          |                               |  |          |                |  |  |           |          |  |                |      
|                        |  | (000)                         |       |          | years                         |  |          |               |  |  | (000)     |          |  |               |      
|131.81  159.99          |  |                               | 2,639 |          |                               |  | 6.13     |                |  |  | 151.58    |          |  |                | 1,755 |  |  |  | 152.01 | 
|183.67  191.25          |  |                               | 2,609 |          |                               |  | 5.14     |                |  |  | 191.22    |          |  |                | 2,609 |  |  |  | 191.22 | 
|234.79  247.00          |  |                               | 18    |          |                               |  | 4.70     |                |  |  | 242.09    |          |  |                | 18    |  |  |  | 242.09 | 
|290.32                   |  |                               | 1,609 |          |                               |  | 4.14     |                |  |  | 290.32    |          |  |                | 1,609 |  |  |  | 290.32 | 
|334.67                   |  |                               | 50    |          |                               |  | 4.19     |                |  |  | 334.67    |          |  |                | 50    |  |  |  | 334.67 | 
|                         |  |                               |       |          |                               |  |          |                |  |  |           |          |  |                |      
|131.81  334.67          |  |                               | 6,925 |          |                               |  | 5.28     |                |  |  | 200.31    |          |  |                | 6,041 |  |  |  | 207.57 | 
|                         |  |                               |       |          |                               |  |          |                |  |  |           |          |  |                |      







|                         |  |      |           |  |      |  |           |      |  |  |           | 
|------------------------ |  | ---- | --------- |  | ---- |  | --------- | ---- |  |  | --------- | 
|                         |  | 2005 |           |  | 2004 |  |           | 2003 | 
|                         |  |      |           |  |      |  |           |      | 
|Expected life (in years) |  |      | 3.5 years |  |      |  | 2.5 years |      |  |  | 2.5 years | 
|Risk-free interest rate  |  |      | 2.82%     |  |      |  | 2.65%     |      |  |  | 2.61%     | 
|Expected volatility      |  |      | 24%       |  |      |  | 57%       |      |  |  | 68%       | 
|Expected dividend ratio  |  |      | 0.65%     |  |      |  | 0.45%     |      |  |  | 0.73%     | 

  




(23) PENSION LIABILITIES AND SIMILAR OBLIGATIONS




F-38



---



##### Table of Contents





|                                      |  |         |         |  |         |  |         | 
|------------------------------------- |  | ------- | ------- |  | ------- |  | ------- | 
|                                      |  | 2005    |         |  | 2004    | 
|                                      |  |         |         |  |         | 
|                                      |  |  (000) |         |  |  (000) | 
|Domestic benefit plans                |  |         | 13,410  |  |         |  | 5,368   | 
|Foreign benefit plans                 |  |         | 19,280  |  |         |  | 22,315  | 
|Employee financed plans               |  |         | 146,123 |  |         |  | 109,079 | 
|Other pension and similar obligations |  |         | 4,806   |  |         |  | 2,928   | 
|                                      |  |         |         |  |         | 
|                                      |  |         | 183,619 |  |         |  | 139,690 | 
|                                      |  |         |         |  |         | 







|                                                       |  |         |         |   |         |  |        |  
|------------------------------------------------------ |  | ------- | ------- | - | ------- |  | ------ | -
|                                                       |  | 2005    |         |   | 2004    | 
|                                                       |  |         |         |   |         | 
|                                                       |  |  (000) |         |   |  (000) | 
|Change in benefit obligation                           |  |         |         |   |         |  |        |  
|Benefit obligation at beginning of year                |  |         | 33,236  |   |         |  | 30,349 |  
|Service costs                                          |  |         | 300     |   |         |  | 301    |  
|Interest costs                                         |  |         | 1,640   |   |         |  | 1,587  |  
|Actuarial gain/loss                                    |  |         | 8,361   |   |         |  | 1,609  |  
|Benefits paid                                          |  |         | (792    | ) |         |  | (610   | )
|                                                       |  |         |         |   |         | 
|Benefit obligation at end of year                      |  |         | 42,745  |   |         |  | 33,236 |  
|                                                       |  |         |         |   |         | 
|Change in plan assets                                  |  |         |         |   |         |  |        |  
|Fair value of plan assets at beginning of year         |  |         | 27,536  |   |         |  | 25,761 |  
|Actual return on plan assets                           |  |         | 295     |   |         |  | 199    |  
|Employer contributions                                 |  |         | 1,683   |   |         |  | 2,186  |  
|Benefits paid                                          |  |         | (740    | ) |         |  | (492   | )
|Assets transferred to defined contribution plan        |  |         | (52     | ) |         |  | (118   | )
|                                                       |  |         |         |   |         | 
|Fair value of plan assets at end of year               |  |         | 28,722  |   |         |  | 27,536 |  
|                                                       |  |         |         |   |         | 
|Funded status                                          |  |         | 14,023  |   |         |  | 5,700  |  
|Unrecognized transition assets                         |  |         | (448    | ) |         |  | (490   | )
|Unrecognized net actuarial loss                        |  |         | (16,115 | ) |         |  | (7,239 | )
|                                                       |  |         |         |   |         | 
|Net amount recognized                                  |  |         | (2,540  | ) |         |  | (2,029 | )
|                                                       |  |         |         |   |         | 
|Amounts recognized in the consolidated balance sheets: |  |         |         |   |         |  |        |  
|Prepaid benefit cost                                   |  |         | (6      | ) |         |  | 0      |  
|Accrued benefit liability                              |  |         | 13,410  |   |         |  | 5,368  |  
|Intangible assets                                      |  |         | (427    | ) |         |  | (25    | )
|Accumulated other comprehensive income                 |  |         | (15,517 | ) |         |  | (7,372 | )
|                                                       |  |         |         |   |         | 
|Net amount recognized                                  |  |         | (2,540  | ) |         |  | (2,029 | )
|                                                       |  |         |         |   |         | 

F-39



---



##### Table of Contents





|                      |  |      |     |  |      |  |     |      |  |  |     | 
|--------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                      |  | 2005 |     |  | 2004 |  |     | 2003 | 
|                      |  |      |     |  |      |  |     |      | 
|                      |  | %    |     |  | %    |  |     | %    | 
|Discount rate         |  |      | 4.0 |  |      |  | 5.0 |      |  |  | 5.3 | 
|compensation increase |  |      | 2-7 |  |      |  | 2-7 |      |  |  | 2-7 | 



|                               |  |         |        |   |         |  |        |         |  |  |        |  
|------------------------------ |  | ------- | ------ | - | ------- |  | ------ | ------- |  |  | ------ | -
|                               |  | 2005    |        |   | 2004    |  |        | 2003    | 
|                               |  |         |        |   |         |  |        |         | 
|                               |  |  (000) |        |   |  (000) |  |        |  (000) | 
|Service cost                   |  |         | 300    |   |         |  | 301    |         |  |  | 409    |  
|Interest cost                  |  |         | 1,640  |   |         |  | 1,587  |         |  |  | 1,624  |  
|Expected return on plan assets |  |         | (1,572 | ) |         |  | (1,638 | )       |  |  | (1,529 | )
|Net amortization               |  |         | 804    |   |         |  | 545    |         |  |  | 484    |  
|                               |  |         |        |   |         |  |        |         | 
|                               |  |         | 1,172  |   |         |  | 795    |         |  |  | 795    |  
|                               |  |         |        |   |         |  |        |         | 



|                               |  |      |     |  |      |  |     |      |  |  |     | 
|------------------------------ |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                               |  | 2005 |     |  | 2004 |  |     | 2003 | 
|                               |  |      |     |  |      |  |     |      | 
|                               |  | %    |     |  | %    |  |     | %    | 
|Discount rate                  |  |      | 5.0 |  |      |  | 5.3 |      |  |  | 5.8 | 
|Expected return on plan assets |  |      | 5.5 |  |      |  | 6.0 |      |  |  | 5.9 | 
|Rate of compensation increase  |  |      | 2-7 |  |      |  | 2-7 |      |  |  | 2-7 | 







F-40



---



##### Table of Contents





|                                                       |  |         |         |   |         |  |         |  
|------------------------------------------------------ |  | ------- | ------- | - | ------- |  | ------- | -
|                                                       |  | 2005    |         |   | 2004    | 
|                                                       |  |         |         |   |         | 
|                                                       |  |  (000) |         |   |  (000) | 
|Change in benefit obligation                           |  |         |         |   |         |  |         |  
|Benefit obligation at beginning of year                |  |         | 189,838 |   |         |  | 174,792 |  
|Service costs                                          |  |         | 29,872  |   |         |  | 30,220  |  
|Interest costs                                         |  |         | 9,021   |   |         |  | 7,817   |  
|Employee contributions                                 |  |         | 2,965   |   |         |  | 0       |  
|Actuarial loss / gain                                  |  |         | 15,064  |   |         |  | (11,722 | )
|Benefits paid                                          |  |         | (7,853  | ) |         |  | (5,710  | )
|Foreign currency exchange rate changes                 |  |         | 17,751  |   |         |  | (7,527  | )
|Other changes                                          |  |         | 0       |   |         |  | 1,968   |  
|                                                       |  |         |         |   |         | 
|Benefit obligation at end of year                      |  |         | 256,658 |   |         |  | 189,838 |  
|                                                       |  |         |         |   |         | 
|Change in plan assets:                                 |  |         |         |   |         |  |         |  
|Fair value of plan assets at beginning of year         |  |         | 185,628 |   |         |  | 157,449 |  
|Actual return on plan assets                           |  |         | 18,087  |   |         |  | 8,994   |  
|Employer contributions                                 |  |         | 20,385  |   |         |  | 30,095  |  
|Employee contributions                                 |  |         | 2,965   |   |         |  | 2,064   |  
|Benefits paid                                          |  |         | (6,554  | ) |         |  | (4,519  | )
|Foreign currency exchange rate changes                 |  |         | 21,131  |   |         |  | (10,423 | )
|Other changes                                          |  |         | 0       |   |         |  | 1,968   |  
|                                                       |  |         |         |   |         | 
|Fair value of plan assets at end of year               |  |         | 241,642 |   |         |  | 185,628 |  
|                                                       |  |         |         |   |         | 
|Funded status                                          |  |         | 15,016  |   |         |  | 4,210   |  
|Unrecognized transition assets                         |  |         | (1,888  | ) |         |  | (2,074  | )
|Unrecognized prior service cost                        |  |         | 1,331   |   |         |  | 1,281   |  
|Unrecognized net actuarial loss                        |  |         | (32,767 | ) |         |  | (20,099 | )
|                                                       |  |         |         |   |         | 
|Net amount recognized                                  |  |         | (18,308 | ) |         |  | (16,682 | )
|                                                       |  |         |         |   |         | 
|Amounts recognized in the consolidated balance sheets: |  |         |         |   |         |  |         |  
|Prepaid benefit cost                                   |  |         | (37,588 | ) |         |  | (31,547 | )
|Accrued benefit liability                              |  |         | 19,280  |   |         |  | 22,315  |  
|Intangible assets                                      |  |         | 0       |   |         |  | 0       |  
|Accumulated other comprehensive income                 |  |         | 0       |   |         |  | (7,450  | )
|                                                       |  |         |         |   |         | 
|Net amount recognized                                  |  |         | (18,308 | ) |         |  | (16,682 | )
|                                                       |  |         |         |   |         | 





|                              |  |      |     |  |      |  |     |      |  |  |     | 
|----------------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                              |  | 2005 |     |  | 2004 |  |     | 2003 | 
|                              |  |      |     |  |      |  |     |      | 
|                              |  | %    |     |  | %    |  |     | %    | 
|Discount rate                 |  |      | 4.2 |  |      |  | 4.5 |      |  |  | 4.7 | 
|Rate of compensation increase |  |      | 4.9 |  |      |  | 4.9 |      |  |  | 4.7 | 

F-41



---



##### Table of Contents





|                               |  |         |         |   |         |  |         |         |  |  |        |  
|------------------------------ |  | ------- | ------- | - | ------- |  | ------- | ------- |  |  | ------ | -
|                               |  | 2005    |         |   | 2004    |  |         | 2003    | 
|                               |  |         |         |   |         |  |         |         | 
|                               |  |  (000) |         |   |  (000) |  |         |  (000) | 
|Service cost                   |  |         | 29,872  |   |         |  | 30,220  |         |  |  | 29,503 |  
|Interest cost                  |  |         | 9,021   |   |         |  | 7,817   |         |  |  | 7,691  |  
|Expected return on plan assets |  |         | (14,270 | ) |         |  | (11,959 | )       |  |  | (9,189 | )
|Net amortization               |  |         | 184     |   |         |  | 849     |         |  |  | 1,646  |  
|                               |  |         |         |   |         |  |         |         | 
|                               |  |         | 24,807  |   |         |  | 26,927  |         |  |  | 29,651 |  
|                               |  |         |         |   |         |  |         |         | 



|                               |  |      |     |  |      |  |     |      |  |  |     | 
|------------------------------ |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                               |  | 2005 |     |  | 2004 |  |     | 2003 | 
|                               |  |      |     |  |      |  |     |      | 
|                               |  | %    |     |  | %    |  |     | %    | 
|Discount rate                  |  |      | 4.5 |  |      |  | 4.7 |      |  |  | 5.2 | 
|Expected return on plan assets |  |      | 6.9 |  |      |  | 6.9 |      |  |  | 6.5 | 
|Rate of compensation increase  |  |      | 5.0 |  |      |  | 4.7 |      |  |  | 4.8 | 



|                   |  |                 |       |  |                  |  |       |                 |  |  |                  |  |  |  |       | 
|------------------ |  | --------------- | ----- |  | ---------------- |  | ----- | --------------- |  |  | ---------------- |  |  |  | ----- | 
|                   |  | Target asset    |       |  | Actual % of 2005 |  |       | Target asset    |  |  | Actual % of 2004 | 
|Asset category     |  | allocation 2006 |       |  | plan assets      |  |       | allocation 2005 |  |  | plan assets      | 
|                   |  |                 |       |  |                  |  |       |                 |  |  |                  | 
|Equity             |  |                 | 53.8  |  |                  |  | 57.2  |                 |  |  | 59.0             |  |  |  | 58.1  | 
|Fixed income       |  |                 | 37.2  |  |                  |  | 31.8  |                 |  |  | 39.7             |  |  |  | 38.4  | 
|Real Estate        |  |                 | 2.9   |  |                  |  | 0.4   |                 |  |  | 0.0              |  |  |  | 0.0   | 
|Insurance Policies |  |                 | 5.5   |  |                  |  | 3.7   |                 |  |  | 0.0              |  |  |  | 0.0   | 
|Other              |  |                 | 0.6   |  |                  |  | 6.9   |                 |  |  | 1.3              |  |  |  | 3.5   | 
|                   |  |                 |       |  |                  |  |       |                 |  |  |                  | 
|Total              |  |                 | 100.0 |  |                  |  | 100.0 |                 |  |  | 100.0            |  |  |  | 100.0 | 
|                   |  |                 |       |  |                  |  |       |                 |  |  |                  | 





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F-42



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##### Table of Contents





|                                               |  |            |        |  |            |  |        |         |  |          |         |  |         |         |        |  |         |  |        |  |  |  |         | 
|---------------------------------------------- |  | ---------- | ------ |  | ---------- |  | ------ | ------- |  | -------- | ------- |  | ------- | ------- | ------ |  | ------- |  | ------ |  |  |  | ------- | 
|                                               |  | 12/31/2005 |        |  | 12/31/2004 | 
|                                               |  |            |        |  |            | 
|                                               |  | Domestic   |        |  | Foreign    |  |        |         |  | Domestic |         |  | Foreign |         |        | 
|                                               |  | plans      |        |  | plans      |  |        | Total   |  |          | plans   |  |         | plans   |        |  | Total   | 
|                                               |  |            |        |  |            |  |        |         |  |          |         |  |         |         |        |  |         | 
|                                               |  |  (000)    |        |  |  (000)    |  |        |  (000) |  |          |  (000) |  |         |  (000) |        |  |  (000) | 
|Projected benefit obligation                   |  |            | 42,745 |  |            |  | 21,578 |         |  |          | 64,323  |  |         |         | 33,141 |  |         |  | 78,821 |  |  |  | 111,962 | 
|Accumulated benefit obligation                 |  |            | 42,147 |  |            |  | 16,686 |         |  |          | 58,833  |  |         |         | 32,667 |  |         |  | 71,823 |  |  |  | 104,490 | 
|Fair value of plan assets                      |  |            | 28,722 |  |            |  | 0      |         |  |          | 28,722  |  |         |         | 27,447 |  |         |  | 51,915 |  |  |  | 79,362  | 
|Underfunding of accumulated benefit obligation |  |            | 13,425 |  |            |  | 16,686 |         |  |          | 30,111  |  |         |         | 5,220  |  |         |  | 19,908 |  |  |  | 25,128  | 



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|          |  |          |       |  |         |  |         |         |  |  |         | 
|--------- |  | -------- | ----- |  | ------- |  | ------- | ------- |  |  | ------- | 
|          |  | Domestic |       |  | Foreign |  |         |        
|          |  | plans    |       |  | plans   |  |         | Total   | 
|          |  |          |       |  |         |  |         |         | 
|          |  |  (000)  |       |  |  (000) |  |         |  (000) | 
|2006      |  |          | 976   |  |         |  | 8,580   |         |  |  | 9,556   | 
|2007      |  |          | 1,135 |  |         |  | 9,932   |         |  |  | 11,067  | 
|2008      |  |          | 1,345 |  |         |  | 12,027  |         |  |  | 13,372  | 
|2009      |  |          | 1,374 |  |         |  | 13,347  |         |  |  | 14,721  | 
|2010      |  |          | 1,557 |  |         |  | 14,680  |         |  |  | 16,237  | 
|2011-2015 |  |          | 9,501 |  |         |  | 104,349 |         |  |  | 113,850 | 



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|                                       |  |         |           |  |         |  |           | 
|-------------------------------------- |  | ------- | --------- |  | ------- |  | --------- | 
|                                       |  | 2005    |           |  | 2004    | 
|                                       |  |         |           |  |         | 
|                                       |  |  (000) |           |  |  (000) | 
|Current and deferred taxes             |  |         | 523,504   |  |         |  | 632,033   | 
|Other reserves and accrued liabilities |  |         | 1,315,636 |  |         |  | 1,136,690 | 
|                                       |  |         |           |  |         | 
|                                       |  |         | 1,839,140 |  |         |  | 1,768,723 | 
|                                       |  |         |           |  |         | 

F-43



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##### Table of Contents



   




|                                                      |  |         |           |  |         |  |           | 
|----------------------------------------------------- |  | ------- | --------- |  | ------- |  | --------- | 
|                                                      |  | 2005    |           |  | 2004    | 
|                                                      |  |         |           |  |         | 
|                                                      |  |  (000) |           |  |  (000) | 
|Other obligations to employees                        |  |         | 736,234   |  |         |  | 611,567   | 
|Obligations to suppliers                              |  |         | 180,456   |  |         |  | 183,069   | 
|Vacation and other absences                           |  |         | 171,687   |  |         |  | 145,293   | 
|STAR obligations                                      |  |         | 122,240   |  |         |  | 108,910   | 
|Fair value of foreign exchange contracts              |  |         | 43,919    |  |         |  | 5,255     | 
|Restructuring costs                                   |  |         | 9,525     |  |         |  | 16,235    | 
|Contribution to employees accident insurance account |  |         | 7,677     |  |         |  | 6,584     | 
|Customer claims                                       |  |         | 6,735     |  |         |  | 10,902    | 
|Auditing and reporting costs                          |  |         | 6,688     |  |         |  | 5,889     | 
|Warranty and service costs                            |  |         | 2,900     |  |         |  | 3,852     | 
|Other                                                 |  |         | 27,575    |  |         |  | 39,134    | 
|                                                      |  |         |           |  |         | 
|                                                      |  |         | 1,315,636 |  |         |  | 1,136,690 | 
|                                                      |  |         |           |  |         | 

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F-44



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##### Table of Contents







|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |        |   |          |  |        |   |  |  |        | 
|------------------------------------ |  | ---------- | ------ |  | --------- |  | ------ | ----------- |  |  | ------- | - | ---------- | -------- | ------ | - | -------- |  | ------ | - |  |  | ------ | 
|                                     |  | Balance as |        |  |           |  |        |             |  |  |         |   | Balance as |         
|                                     |  | of 1/1     |        |  | Additions |  |        | Utilization |  |  | Release |   |            | Currency |        |   | of 12/31 | 
|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |        |   |          | 
|                                     |  |  (000)    |        |  |  (000)   |  |        |  (000)     |  |  |  (000) |   |            |  (000)  |        |   |  (000)  | 
|Unused Lease space                   |  |            | 7,577  |  |           |  | 17,164 |             |  |  | (5,544  | ) |            |          | 0      |   |          |  | (1,506 | ) |  |  | 17,691 | 
|Severance payments for restructuring |  |            | 11,159 |  |           |  | 3,384  |             |  |  | (9,347  | ) |            |          | (1,001 | ) |          |  | (666   | ) |  |  | 3,529  | 
|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |        |   |          | 
|                                     |  |            | 18,736 |  |           |  | 20,548 |             |  |  | (14,891 | ) |            |          | (1,001 | ) |          |  | (2,172 | ) |  |  | 21,220 | 
|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |        |   |          | 



|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          |  |      |   |  |  |        | 
|------------------------------------ |  | ---------- | ------ |  | --------- |  | ----- | ----------- |  |  | ------- | - | ---------- | -------- | ------ | - | -------- |  | ---- | - |  |  | ------ | 
|                                     |  | Balance as |        |  |           |  |       |             |  |  |         |   | Balance as |         
|                                     |  | of 1/1     |        |  | Additions |  |       | Utilization |  |  | Release |   |            | Currency |        |   | of 12/31 | 
|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          | 
|                                     |  |  (000)    |        |  |  (000)   |  |       |  (000)     |  |  |  (000) |   |            |  (000)  |        |   |  (000)  | 
|Unused Lease space                   |  |            | 17,691 |  |           |  | 2,625 |             |  |  | (7,557  | ) |            |          | (1,415 | ) |          |  | (779 | ) |  |  | 10,565 | 
|Severance payments for restructuring |  |            | 3,529  |  |           |  | 6,972 |             |  |  | (3,668  | ) |            |          | (1,176 | ) |          |  | 13   |   |  |  | 5,670  | 
|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          | 
|                                     |  |            | 21,220 |  |           |  | 9,597 |             |  |  | (11,225 | ) |            |          | (2,591 | ) |          |  | (766 | ) |  |  | 16,235 | 
|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          | 



|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          |  |     |   |  |  |       | 
|------------------------------------ |  | ---------- | ------ |  | --------- |  | ----- | ----------- |  |  | ------- | - | ---------- | -------- | ------ | - | -------- |  | --- | - |  |  | ----- | 
|                                     |  | Balance as |        |  |           |  |       |             |  |  |         |   | Balance as |         
|                                     |  | of 1/1     |        |  | Additions |  |       | Utilization |  |  | Release |   |            | Currency |        |   | of 12/31 | 
|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          | 
|                                     |  |  (000)    |        |  |  (000)   |  |       |  (000)     |  |  |  (000) |   |            |  (000)  |        |   |  (000)  | 
|Unused Lease space                   |  |            | 10,565 |  |           |  | 2,379 |             |  |  | (4,404  | ) |            |          | (1,547 | ) |          |  | 833 |   |  |  | 7,826 | 
|Severance payments for restructuring |  |            | 5,670  |  |           |  | 4,203 |             |  |  | (4,846  | ) |            |          | (3,304 | ) |          |  | (24 | ) |  |  | 1,699 | 
|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          | 
|                                     |  |            | 16,235 |  |           |  | 6,582 |             |  |  | (9,250  | ) |            |          | (4,851 | ) |          |  | 809 |   |  |  | 9,525 | 
|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          | 

Accounting for Costs
Associated with Exit or Disposal Activities




F-45



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##### Table of Contents







|                           |  |           |         |  |             |  |        |           |  |  |            |  |  |            |         |  |  |  |         | 
|-------------------------- |  | --------- | ------- |  | ----------- |  | ------ | --------- |  |  | ---------- |  |  | ---------- | ------- |  |  |  | ------- | 
|                           |  | Term less |         |  | Term        |  |        | Term more |  |  |            |  | 
|                           |  | than 1    |         |  | between 1   |  |        | than      |  |  | Balance on |  |  | Balance on |        
|                           |  | year      |         |  | and 5 years |  |        | 5 years   |  |  | 12/31/2005 |  |  | 12/31/2004 |        
|                           |  |           |         |  |             |  |        |           |  |  |            |  |  |            |        
|                           |  |  (000)   |         |  |  (000)     |  |        |  (000)   |  |  |  (000)    |  |  |  (000)    |        
|Bank loans and overdrafts  |  |           | 22,308  |  |             |  | 0      |           |  |  | 1,992      |  |  |            | 24,300  |  |  |  | 27,785  | 
|Advanced payments received |  |           | 29,812  |  |             |  | 40,113 |           |  |  | 0          |  |  |            | 69,925  |  |  |  | 53,537  | 
|Accounts payable           |  |           | 383,191 |  |             |  | 246    |           |  |  | 0          |  |  |            | 383,437 |  |  |  | 340,461 | 
|Taxes                      |  |           | 210,020 |  |             |  | 0      |           |  |  | 0          |  |  |            | 210,020 |  |  |  | 175,248 | 
|Social security            |  |           | 46,788  |  |             |  | 0      |           |  |  | 0          |  |  |            | 46,788  |  |  |  | 43,988  | 
|Other liabilities          |  |           | 57,124  |  |             |  | 2,364  |           |  |  | 44,820     |  |  |            | 104,308 |  |  |  | 87,819  | 
|                           |  |           |         |  |             |  |        |           |  |  |            |  |  |            |        
|                           |  |           | 749,243 |  |             |  | 42,723 |           |  |  | 46,812     |  |  |            | 838,778 |  |  |  | 728,838 | 
|                           |  |           |         |  |             |  |        |           |  |  |            |  |  |            |        



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D. ADDITIONAL INFORMATION




     


F-46



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##### Table of Contents















     


Accounting for Leases
(SFAS 13)




F-47



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##### Table of Contents





|               |  |         |         | 
|-------------- |  | ------- | ------- | 
|               |  |  (000) |        
|               |  |         |        
|Due 2006       |  |         | 148,738 | 
|Due 2007       |  |         | 109,190 | 
|Due 2008       |  |         | 91,066  | 
|Due 2009       |  |         | 71,556  | 
|Due 2010       |  |         | 59,629  | 
|Due thereafter |  |         | 207,308 | 

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F-48



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##### Table of Contents









|                                                  |  |          |         |   |            |  |          |         |  |  |            |   |  |  |         |  
|------------------------------------------------- |  | -------- | ------- | - | ---------- |  | -------- | ------- |  |  | ---------- | - |  |  | ------- | -
|                                                  |  | 2005     |         |   | 2004       | 
|                                                  |  |          |         |   |            | 
|                                                  |  | Carrying |         |   |            |  | Carrying |         |  | 
|                                                  |  | value    |         |   | Fair value |  |          | value   |  |  | Fair value |  
|                                                  |  |          |         |   |            |  |          |         |  |  |            |  
|                                                  |  |  (000)  |         |   |  (000)    |  |          |  (000) |  |  |  (000)    |  
|Marketable equity securities  available-for-sale |  |          | 23,080  |   |            |  | 23,080   |         |  |  | 17,328     |   |  |  | 17,328  |  
|Marketable debt securities  available-for-sale   |  |          | 630,438 |   |            |  | 630,438  |         |  |  | 473        |   |  |  | 473     |  
|Marketable fund securities  available-for-sale   |  |          | 12,249  |   |            |  | 12,249   |         |  |  | 11,906     |   |  |  | 11,906  |  
|Other loans                                       |  |          | 48,284  |   |            |  | 48,284   |         |  |  | 53,320     |   |  |  | 53,320  |  
|Bank loans and overdrafts                         |  |          | (24,300 | ) |            |  | (24,300  | )       |  |  | (27,785    | ) |  |  | (27,785 | )
|Derivative financial instruments                  |  |          |         |   |            |  |          |         |  |  |            |   |  |  |         |  
|Forward exchange contracts                        |  |          | (37,776 | ) |            |  | (37,776  | )       |  |  | 81,653     |   |  |  | 81,653  |  
|Call options (STAR hedge)                         |  |          | 169,113 |   |            |  | 169,113  |         |  |  | 104,808    |   |  |  | 104,808 |  
|                                                  |  |          |         |   |            |  |          |         |  |  |            |  
|                                                  |  |          | 821,088 |   |            |  | 821,088  |         |  |  | 241,703    |   |  |  | 241,703 |  
|                                                  |  |          |         |   |            |  |          |         |  |  |            |  





| |   |                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Marketable debt and equity securities: The fair values of
    Marketable debt and equity securities are based upon available
    quoted market prices on December 31.                                                                                                            
|
| |  | Other loans, Bank loans and overdrafts: The fair values of Other
    loans, Bank loans and overdrafts approximate their carrying
    values. The interest-free, below-market-rate employee loans
    included in other loans are discounted based on prevailing
    market rates.
|
| |  | Derivative financial instruments: The fair value of derivatives
    generally reflects the estimated amounts the Company would pay
    or receive to terminate the contracts on the reporting date.                                                                              











F-49



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##### Table of Contents













  




STAR Hedge




F-50



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##### Table of Contents





|                                |      |  |         |  |           |              |  |  |        | 
|------------------------------- | ---- |  | ------- |  | --------- | ------------ |  |  | ------ | 
|2005                            |     
|                                |     
|Hedge of 3.8 million 2005 STARs |     
|                                |     
|Buy/sell                        |      |  | options |  |           | Strike price | 
|                                |      |  |         |  |           |              | 
|                                | Buy  |  |         |  | 3,800,000 |              |  |  | 121.87 | 
|                                | Sell |  |         |  | 1,900,000 |              |  |  | 171.87 | 
|                                | Sell |  |         |  | 950,000   |              |  |  | 221.87 | 

Fair value as of December 31, 2005, in (000): 107,358


|                                |      |                |         |  |           |              |  |  |        | 
|------------------------------- | ---- | -------------- | ------- |  | --------- | ------------ |  |  | ------ | 
|Hedge of 3.0 million 2004 STARs |     
|                                |     
|                                |      | Number of call |         |  |          
|Buy/sell                        |      |                | options |  |           | Strike price | 
|                                |      |                |         |  |           |              | 
|                                | Buy  |                |         |  | 3,000,000 |              |  |  | 134.35 | 
|                                | Sell |                |         |  | 1,500,000 |              |  |  | 184.35 | 
|                                | Sell |                |         |  | 750,000   |              |  |  | 234.35 | 

Fair value as of December 31, 2005, in (000): 22,453


|                                |      |                |         |  |           |              |  |  |        | 
|------------------------------- | ---- | -------------- | ------- |  | --------- | ------------ |  |  | ------ | 
|Hedge of 2.0 million 2003 STARs |     
|                                |     
|                                |      | Number of call |         |  |          
|Buy/sell                        |      |                | options |  |           | Strike price | 
|                                |      |                |         |  |           |              | 
|                                | Buy  |                |         |  | 2,000,000 |              |  |  | 84.91  | 
|                                | Sell |                |         |  | 1,000,000 |              |  |  | 134.91 | 
|                                | Sell |                |         |  | 500,000   |              |  |  | 184.91 | 

Fair value as of December 31, 2005, in (000): 39,302


|                                |      |  |         |  |           |              |  |  |        | 
|------------------------------- | ---- |  | ------- |  | --------- | ------------ |  |  | ------ | 
|2004                            |     
|                                |     
|Hedge of 3.0 million 2004 STARs |     
|                                |     
|Buy/sell                        |      |  | options |  |           | Strike price | 
|                                |      |  |         |  |           |              | 
|                                | Buy  |  |         |  | 3,000,000 |              |  |  | 134.35 | 
|                                | Sell |  |         |  | 1,500,000 |              |  |  | 184.35 | 
|                                | Sell |  |         |  | 750,000   |              |  |  | 234.35 | 

Fair value as of December 31, 2004, in (000): 22,308


|                                |      |                |         |  |           |              |  |  |        | 
|------------------------------- | ---- | -------------- | ------- |  | --------- | ------------ |  |  | ------ | 
|Hedge of 2.0 million 2003 STARs |     
|                                |     
|                                |      | Number of call |         |  |          
|Buy/sell                        |      |                | options |  |           | Strike price | 
|                                |      |                |         |  |           |              | 
|                                | Buy  |                |         |  | 2,000,000 |              |  |  | 84.91  | 
|                                | Sell |                |         |  | 1,000,000 |              |  |  | 134.91 | 
|                                | Sell |                |         |  | 500,000   |              |  |  | 184.91 | 

Fair value as of December 31, 2004, in (000): 82,500


 






F-51



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##### Table of Contents



        




|                           |        |          |           |           |            |  |          |         |   |  |            |           |  |  |         |        |  
|-------------------------- | ------ | -------- | --------- | --------- | ---------- |  | -------- | ------- | - |  | ---------- | --------- |  |  | ------- | ------ | -
|                           |        | 2005     |           |           | 2004       | 
|                           |        |          |           |           |            | 
|                           |        | Notional |           |           |            |  | Notional |         |   | 
|                           |        | value    |           |           | Fair value |  |          | value   |   |  | Fair value |          
|                           |        |          |           |           |            |  |          |         |   |  |            |          
|                           |        |  (000)  |           |           |  (000)    |  |          |  (000) |   |  |  (000)    |          
|Forward exchange contracts |        |          |           |           |            |  |          |         |   |  |            |           |  |  |         |       
|                           | Gains  |          |           | 435,659   |            |  |          | 6,143   |   |  |            | 1,226,531 |  |  |         | 86,908 |  
|                           | Losses |          |           | 1,178,309 |            |  |          | (43,919 | ) |  |            | 222,487   |  |  |         | (5,255 | )
|                           |        |          |           |           |            |  |          |         |   |  |            |          
|                           |        |          | 1,613,968 |           |            |  | (37,776  | )       |   |  | 1,449,018  |           |  |  | 81,653  |       
|Call options (STAR hedge)  |        |          | n/a       |           |            |  | 169,113  |         |   |  | n/a        |           |  |  | 104,808 |       







Disclosures about Segments of an Enterprise
and Related Disclosures










F-52



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##### Table of Contents



|                      |  |         |            |   |            |  |            |          |  |  |          |   |  |  |            |  
|--------------------- |  | ------- | ---------- | - | ---------- |  | ---------- | -------- |  |  | -------- | - |  |  | ---------- | -
|                      |  | 2005    |           
|                      |  |         |           
|                      |  | Product |            |   | Consulting |  |            | Training |  |  | Total    |  
|                      |  |         |            |   |            |  |            |          |  |  |          |  
|                      |  |  (000) |            |   |  (000)    |  |            |  (000)  |  |  |  (000)  |  
|External revenue      |  |         | 6,044,338  |   |            |  | 2,078,091  |          |  |  | 380,209  |   |  |  | 8,502,638  |  
|Segment expenses      |  |         | (2,452,470 | ) |            |  | (1,619,034 | )        |  |  | (247,968 | ) |  |  | (4,319,472 | )
|                      |  |         |            |   |            |  |            |          |  |  |          |  
|Segment contribution  |  |         | 3,591,868  |   |            |  | 459,057    |          |  |  | 132,241  |   |  |  | 4,183,166  |  
|Segment profitability |  |         | 59.4       | % |            |  | 22.1       | %        |  |  | 34.8     | % |  |  |            |  

|                      |  |         |            |   |            |  |            |          |  |  |          |   |  |  |            |  
|--------------------- |  | ------- | ---------- | - | ---------- |  | ---------- | -------- |  |  | -------- | - |  |  | ---------- | -
|                      |  | 2004    |           
|                      |  |         |           
|                      |  | Product |            |   | Consulting |  |            | Training |  |  | Total    |  
|                      |  |         |            |   |            |  |            |          |  |  |          |  
|                      |  |  (000) |            |   |  (000)    |  |            |  (000)  |  |  |  (000)  |  
|External revenue      |  |         | 5,292,941  |   |            |  | 1,910,292  |          |  |  | 306,591  |   |  |  | 7,509,824  |  
|Segment expenses      |  |         | (2,058,099 | ) |            |  | (1,483,993 | )        |  |  | (209,001 | ) |  |  | (3,751,093 | )
|                      |  |         |            |   |            |  |            |          |  |  |          |  
|Segment contribution  |  |         | 3,234,842  |   |            |  | 426,299    |          |  |  | 97,590   |   |  |  | 3,758,731  |  
|Segment profitability |  |         | 61.1       | % |            |  | 22.3       | %        |  |  | 31.8     | % |  |  |            |  

|                      |  |         |            |   |            |  |            |          |  |  |          |   |  |  |            |  
|--------------------- |  | ------- | ---------- | - | ---------- |  | ---------- | -------- |  |  | -------- | - |  |  | ---------- | -
|                      |  | 2003    |           
|                      |  |         |           
|                      |  | Product |            |   | Consulting |  |            | Training |  |  | Total    |  
|                      |  |         |            |   |            |  |            |          |  |  |          |  
|                      |  |  (000) |            |   |  (000)    |  |            |  (000)  |  |  |  (000)  |  
|External revenue      |  |         | 4,797,827  |   |            |  | 1,884,801  |          |  |  | 316,088  |   |  |  | 6,998,716  |  
|Segment expenses      |  |         | (1,862,679 | ) |            |  | (1,442,398 | )        |  |  | (221,783 | ) |  |  | (3,526,860 | )
|                      |  |         |            |   |            |  |            |          |  |  |          |  
|Segment contribution  |  |         | 2,935,148  |   |            |  | 442,403    |          |  |  | 94,305   |   |  |  | 3,471,856  |  
|Segment profitability |  |         | 61.2       | % |            |  | 23.5       | %        |  |  | 29.8     | % |  |  |            |  

















F-53



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##### Table of Contents





|                                      |  |         |           |   |         |  |           |         |  |  |           |  
|------------------------------------- |  | ------- | --------- | - | ------- |  | --------- | ------- |  |  | --------- | -
|                                      |  | 2005    |           |   | 2004    |  |           | 2003    | 
|                                      |  |         |           |   |         |  |           |         | 
|                                      |  |  (000) |           |   |  (000) |  |           |  (000) | 
|Total revenue for reportable segments |  |         | 8,502,638 |   |         |  | 7,509,824 |         |  |  | 6,998,716 |  
|Other external revenues               |  |         | 10,349    |   |         |  | 4,474     |         |  |  | 26,074    |  
|Other differences                     |  |         | (558      | ) |         |  | 195       |         |  |  | (184      | )
|                                      |  |         |           |   |         |  |           |         | 
|                                      |  |         | 8,512,429 |   |         |  | 7,514,493 |         |  |  | 7,024,606 |  
|                                      |  |         |           |   |         |  |           |         | 





  




|                                                             |  |         |            |   |         |  |            |         |  |  |            |  
|------------------------------------------------------------ |  | ------- | ---------- | - | ------- |  | ---------- | ------- |  |  | ---------- | -
|                                                             |  | 2005    |            |   | 2004    |  |            | 2003    | 
|                                                             |  |         |            |   |         |  |            |         | 
|                                                             |  |  (000) |            |   |  (000) |  |            |  (000) | 
|Total contribution for reportable segments                   |  |         | 4,183,166  |   |         |  | 3,758,731  |         |  |  | 3,471,856  |  
|Contribution from activities outside the reportable segments |  |         | (1,773,325 | ) |         |  | (1,672,252 | )       |  |  | (1,591,996 | )
|Acquisition-related charges                                  |  |         | (33,664    | ) |         |  | (30,221    | )       |  |  | (25,735    | )
|Stock-based compensation expenses                            |  |         | (45,042    | ) |         |  | (38,126    | )       |  |  | (130,044   | )
|Other differences                                            |  |         | (403       | ) |         |  | 249        |         |  |  | (62        | )
|                                                             |  |         |            |   |         |  |            |         | 
|Operating income                                             |  |         | 2,330,732  |   |         |  | 2,018,381  |         |  |  | 1,724,019  |  
|                                                             |  |         |            |   |         |  |            |         | 
|Other non-operating income/ expenses, net                    |  |         | (25,161    | ) |         |  | 13,274     |         |  |  | 36,309     |  
|Finance income, net                                          |  |         | 10,785     |   |         |  | 40,987     |         |  |  | 16,287     |  
|                                                             |  |         |            |   |         |  |            |         | 
|Income before income taxes and minority interest             |  |         | 2,316,356  |   |         |  | 2,072,642  |         |  |  | 1,776,615  |  
|                                                             |  |         |            |   |         |  |            |         | 



F-54



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##### Table of Contents

















|                     |  |                              |           |  |                      |  |           |         |  |  |           |  |  |         |           |  |         |  |           |  |  |  |           | 
|-------------------- |  | ---------------------------- | --------- |  | -------------------- |  | --------- | ------- |  |  | --------- |  |  | ------- | --------- |  | ------- |  | --------- |  |  |  | --------- | 
|                     |  | Revenue by sales destination |           |  | Revenue by operation | 
|                     |  |                              |           |  |                      | 
|                     |  | 2005                         |           |  | 2004                 |  |           | 2003    |  |  | 2005      |  |  | 2004    |           |  | 2003    | 
|                     |  |                              |           |  |                      |  |           |         |  |  |           |  |  |         |           |  |         | 
|                     |  |  (000)                      |           |  |  (000)              |  |           |  (000) |  |  |  (000)   |  |  |  (000) |           |  |  (000) | 
|Germany              |  |                              | 1,810,342 |  |                      |  | 1,780,128 |         |  |  | 1,670,261 |  |  |         | 1,906,018 |  |         |  | 1,875,081 |  |  |  | 1,771,289 | 
|Rest of
    EMEA(1)  |  |                              | 2,702,429 |  |                      |  | 2,443,383 |         |  |  | 2,299,581 |  |  |         | 2,670,304 |  |         |  | 2,411,294 |  |  |  | 2,238,387 | 
|                     |  |                              |           |  |                      |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total EMEA           |  |                              | 4,512,771 |  |                      |  | 4,223,511 |         |  |  | 3,969,842 |  |  |         | 4,576,322 |  |         |  | 4,286,375 |  |  |  | 4,009,676 | 
|                     |  |                              |           |  |                      |  |           |         |  |  |           |  |  |         |           |  |         | 
|United States        |  |                              | 2,342,808 |  |                      |  | 1,893,746 |         |  |  | 1,736,080 |  |  |         | 2,343,466 |  |         |  | 1,880,247 |  |  |  | 1,728,008 | 
|Rest of Americas     |  |                              | 656,789   |  |                      |  | 530,043   |         |  |  | 480,150   |  |  |         | 653,938   |  |         |  | 513,586   |  |  |  | 472,142   | 
|                     |  |                              |           |  |                      |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total Americas       |  |                              | 2,999,597 |  |                      |  | 2,423,789 |         |  |  | 2,216,230 |  |  |         | 2,997,404 |  |         |  | 2,393,833 |  |  |  | 2,200,150 | 
|                     |  |                              |           |  |                      |  |           |         |  |  |           |  |  |         |           |  |         | 
|Japan                |  |                              | 406,173   |  |                      |  | 387,443   |         |  |  | 441,557   |  |  |         | 402,226   |  |         |  | 385,013   |  |  |  | 440,226   | 
|Rest of Asia-Pacific |  |                              | 593,888   |  |                      |  | 479,750   |         |  |  | 396,977   |  |  |         | 536,477   |  |         |  | 449,272   |  |  |  | 374,554   | 
|                     |  |                              |           |  |                      |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total Asia-Pacific   |  |                              | 1,000,061 |  |                      |  | 867,193   |         |  |  | 838,534   |  |  |         | 938,703   |  |         |  | 834,285   |  |  |  | 814,780   | 
|                     |  |                              |           |  |                      |  |           |         |  |  |           |  |  |         |           |  |         | 
|                     |  |                              | 8,512,429 |  |                      |  | 7,514,493 |         |  |  | 7,024,606 |  |  |         | 8,512,429 |  |         |  | 7,514,493 |  |  |  | 7,024,606 | 
|                     |  |                              |           |  |                      |  |           |         |  |  |           |  |  |         |           |  |         | 






|    |                            
|--- | ---------------------------
|(1) | Europe, Middle East, Africa

F-55



---



##### Table of Contents



|                     |  |                             |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         |  |           |  |  |  |           | 
|-------------------- |  | --------------------------- | --------- |  | ------------ |  | --------- | ------- |  |  | --------- |  |  | ------- | --------- |  | ------- |  | --------- |  |  |  | --------- | 
|                     |  | Income before income tax(2) |           |  | Total assets | 
|                     |  |                             |           |  |              | 
|                     |  | 2005                        |           |  | 2004         |  |           | 2003    |  |  | 2005      |  |  | 2004    |           |  | 2003    | 
|                     |  |                             |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|                     |  |  (000)                     |           |  |  (000)      |  |           |  (000) |  |  |  (000)   |  |  |  (000) |           |  |  (000) | 
|Germany              |  |                             | 2,001,816 |  |              |  | 1,528,052 |         |  |  | 1,368,735 |  |  |         | 4,202,554 |  |         |  | 3,567,090 |  |  |  | 2,597,173 | 
|Rest of
    EMEA(1)  |  |                             | 345,573   |  |              |  | 335,768   |         |  |  | 285,565   |  |  |         | 1,368,949 |  |         |  | 1,376,879 |  |  |  | 1,295,265 | 
|                     |  |                             |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total EMEA           |  |                             | 2,347,389 |  |              |  | 1,863,820 |         |  |  | 1,654,300 |  |  |         | 5,571,503 |  |         |  | 4,943,969 |  |  |  | 3,892,438 | 
|                     |  |                             |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|United States        |  |                             | 417,124   |  |              |  | 265,344   |         |  |  | 178,372   |  |  |         | 2,361,033 |  |         |  | 1,866,987 |  |  |  | 1,710,432 | 
|Rest of Americas     |  |                             | 68,821    |  |              |  | 21,593    |         |  |  | 40,170    |  |  |         | 528,741   |  |         |  | 288,370   |  |  |  | 318,451   | 
|                     |  |                             |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total Americas       |  |                             | 485,945   |  |              |  | 286,937   |         |  |  | 218,542   |  |  |         | 2,889,774 |  |         |  | 2,155,357 |  |  |  | 2,028,883 | 
|                     |  |                             |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|Japan                |  |                             | 39,176    |  |              |  | 38,752    |         |  |  | 61,891    |  |  |         | 153,137   |  |         |  | 151,712   |  |  |  | 163,616   | 
|Rest of Asia-Pacific |  |                             | 93,717    |  |              |  | 62,027    |         |  |  | 23,618    |  |  |         | 448,328   |  |         |  | 334,434   |  |  |  | 240,928   | 
|                     |  |                             |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total Asia-Pacific   |  |                             | 132,893   |  |              |  | 100,779   |         |  |  | 85,509    |  |  |         | 601,465   |  |         |  | 486,146   |  |  |  | 404,544   | 
|                     |  |                             |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|                     |  |                             | 2,966,227 |  |              |  | 2,251,536 |         |  |  | 1,958,351 |  |  |         | 9,062,742 |  |         |  | 7,585,472 |  |  |  | 6,325,865 | 
|                     |  |                             |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 






|    |                                                               
|--- | --------------------------------------------------------------
|(1) | Europe, Middle East, Africa                                   
|   
|(2) | Figures of the unconsolidated stand-alone Financial Statements

|                     |  |                                |           |  |                      |  |         |         |  |  |           |  |  |         |         |  |         |  |         |  |  |  |         | 
|-------------------- |  | ------------------------------ | --------- |  | -------------------- |  | ------- | ------- |  |  | --------- |  |  | ------- | ------- |  | ------- |  | ------- |  |  |  | ------- | 
|                     |  | Property, plant, and equipment |           |  | Capital expenditures | 
|                     |  |                                |           |  |                      | 
|                     |  | 2005                           |           |  | 2004                 |  |         | 2003    |  |  | 2005      |  |  | 2004    |         |  | 2003    | 
|                     |  |                                |           |  |                      |  |         |         |  |  |           |  |  |         |         |  |         | 
|                     |  |  (000)                        |           |  |  (000)              |  |         |  (000) |  |  |  (000)   |  |  |  (000) |         |  |  (000) | 
|Germany              |  |                                | 764,175   |  |                      |  | 702,500 |         |  |  | 699,863   |  |  |         | 170,358 |  |         |  | 117,187 |  |  |  | 159,019 | 
|Rest of
    EMEA(1)  |  |                                | 129,427   |  |                      |  | 128,347 |         |  |  | 128,872   |  |  |         | 27,586  |  |         |  | 27,003  |  |  |  | 17,460  | 
|                     |  |                                |           |  |                      |  |         |         |  |  |           |  |  |         |         |  |         | 
|Total EMEA           |  |                                | 893,602   |  |                      |  | 830,847 |         |  |  | 828,735   |  |  |         | 197,944 |  |         |  | 144,190 |  |  |  | 176,479 | 
|                     |  |                                |           |  |                      |  |         |         |  |  |           |  |  |         |         |  |         | 
|United States        |  |                                | 154,650   |  |                      |  | 132,590 |         |  |  | 158,805   |  |  |         | 22,030  |  |         |  | 11,689  |  |  |  | 9,009   | 
|Rest of Americas     |  |                                | 8,531     |  |                      |  | 5,371   |         |  |  | 4,244     |  |  |         | 4,568   |  |         |  | 3,226   |  |  |  | 2,145   | 
|                     |  |                                |           |  |                      |  |         |         |  |  |           |  |  |         |         |  |         | 
|Total Americas       |  |                                | 163,181   |  |                      |  | 137,961 |         |  |  | 163,049   |  |  |         | 26,598  |  |         |  | 14,915  |  |  |  | 11,154  | 
|                     |  |                                |           |  |                      |  |         |         |  |  |           |  |  |         |         |  |         | 
|Japan                |  |                                | 4,383     |  |                      |  | 5,377   |         |  |  | 7,518     |  |  |         | 1,981   |  |         |  | 1,959   |  |  |  | 1,840   | 
|Rest of Asia-Pacific |  |                                | 33,799    |  |                      |  | 24,898  |         |  |  | 20,355    |  |  |         | 14,157  |  |         |  | 10,924  |  |  |  | 14,217  | 
|                     |  |                                |           |  |                      |  |         |         |  |  |           |  |  |         |         |  |         | 
|Total Asia-Pacific   |  |                                | 38,182    |  |                      |  | 30,275  |         |  |  | 27,873    |  |  |         | 16,138  |  |         |  | 12,883  |  |  |  | 16,057  | 
|                     |  |                                |           |  |                      |  |         |         |  |  |           |  |  |         |         |  |         | 
|                     |  |                                | 1,094,965 |  |                      |  | 999,083 |         |  |  | 1,019,657 |  |  |         | 240,680 |  |         |  | 171,988 |  |  |  | 203,690 | 
|                     |  |                                |           |  |                      |  |         |         |  |  |           |  |  |         |         |  |         | 






|    |                            
|--- | ---------------------------
|(1) | Europe, Middle East, Africa

F-56



---



##### Table of Contents



|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      |  |        |  |  |  |        | 
|-------------------- |  | ------------ | ------- | ---------------------------- | ------------------------ |  | ------- | ------- |  |  | ------- |  |  | ---- | ------ |  | ---- |  | ------ |  |  |  | ------ | 
|                     |  |              |         | Employees as of December 31, |                         
|                     |  | Depreciation |         |                              | in full-time equivalents | 
|                     |  |              |         |                              |                          | 
|                     |  | 2005         |         |                              | 2004                     |  |         | 2003    |  |  | 2005    |  |  | 2004 |        |  | 2003 | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|                     |  |  (000)      |         |                              |  (000)                  |  |         |  (000) |  |  |         |  |  |      |       
|Germany              |  |              | 101,097 |                              |                          |  | 109,714 |         |  |  | 105,797 |  |  |      | 13,916 |  |      |  | 13,525 |  |  |  | 13,026 | 
|Rest of
    EMEA(1)  |  |              | 24,916  |                              |                          |  | 24,862  |         |  |  | 27,895  |  |  |      | 7,813  |  |      |  | 7,133  |  |  |  | 6,808  | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|Total EMEA           |  |              | 126,013 |                              |                          |  | 134,576 |         |  |  | 133,692 |  |  |      | 21,729 |  |      |  | 20,658 |  |  |  | 19,834 | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|United States        |  |              | 18,001  |                              |                          |  | 18,211  |         |  |  | 24,022  |  |  |      | 6,019  |  |      |  | 5,143  |  |  |  | 4,621  | 
|Rest of Americas     |  |              | 2,798   |                              |                          |  | 1,985   |         |  |  | 2,673   |  |  |      | 1,934  |  |      |  | 1,541  |  |  |  | 1,435  | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|Total Americas       |  |              | 20,799  |                              |                          |  | 20,196  |         |  |  | 26,695  |  |  |      | 7,953  |  |      |  | 6,684  |  |  |  | 6,056  | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|Japan                |  |              | 2,958   |                              |                          |  | 3,778   |         |  |  | 4,587   |  |  |      | 1,264  |  |      |  | 1,340  |  |  |  | 1,350  | 
|Rest of Asia-Pacific |  |              | 7,936   |                              |                          |  | 5,916   |         |  |  | 5,038   |  |  |      | 4,927  |  |      |  | 3,523  |  |  |  | 2,370  | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|Asia-Pacific         |  |              | 10,894  |                              |                          |  | 9,694   |         |  |  | 9,625   |  |  |      | 6,191  |  |      |  | 4,863  |  |  |  | 3,720  | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|                     |  |              | 157,706 |                              |                          |  | 164,466 |         |  |  | 170,012 |  |  |      | 35,873 |  |      |  | 32,205 |  |  |  | 29,610 | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 






|    |                            
|--- | ---------------------------
|(1) | Europe, Middle East, Africa





|                    |  |                                   |           |  |                                          |  |           |         |  |  |           |  |  |         |           |  |         |  |           |  |  |  |           | 
|------------------- |  | --------------------------------- | --------- |  | ---------------------------------------- |  | --------- | ------- |  |  | --------- |  |  | ------- | --------- |  | ------- |  | --------- |  |  |  | --------- | 
|                    |  | Total revenue by industry sectors |           |  | Software revenues by industry sectors(1) | 
|                    |  |                                   |           |  |                                          | 
|                    |  | 2005                              |           |  | 2004                                     |  |           | 2003    |  |  | 2005      |  |  | 2004    |           |  | 2003    | 
|                    |  |                                   |           |  |                                          |  |           |         |  |  |           |  |  |         |           |  |         | 
|                    |  |  (000)                           |           |  |  (000)                                  |  |           |  (000) |  |  |  (000)   |  |  |  (000) |           |  |  (000) | 
|Process industries  |  |                                   | 1,765,909 |  |                                          |  | 1,469,136 |         |  |  | 1,381,279 |  |  |         | 659,346   |  |         |  | 489,024   |  |  |  | 404,409   | 
|Discrete industries |  |                                   | 1,986,113 |  |                                          |  | 1,807,871 |         |  |  | 1,659,334 |  |  |         | 638,441   |  |         |  | 550,444   |  |  |  | 496,127   | 
|Consumer industries |  |                                   | 1,457,006 |  |                                          |  | 1,349,825 |         |  |  | 1,243,809 |  |  |         | 463,504   |  |         |  | 426,547   |  |  |  | 359,958   | 
|Service industries  |  |                                   | 1,946,026 |  |                                          |  | 1,673,901 |         |  |  | 1,664,525 |  |  |         | 552,120   |  |         |  | 455,054   |  |  |  | 525,061   | 
|Financial services  |  |                                   | 543,360   |  |                                          |  | 519,115   |         |  |  | 474,135   |  |  |         | 179,046   |  |         |  | 197,511   |  |  |  | 172,544   | 
|Public services     |  |                                   | 814,015   |  |                                          |  | 694,645   |         |  |  | 601,524   |  |  |         | 290,294   |  |         |  | 242,432   |  |  |  | 189,492   | 
|                    |  |                                   |           |  |                                          |  |           |         |  |  |           |  |  |         |           |  |         | 
|                    |  |                                   | 8,512,429 |  |                                          |  | 7,514,493 |         |  |  | 7,024,606 |  |  |         | 2,782,751 |  |         |  | 2,361,012 |  |  |  | 2,147,591 | 
|                    |  |                                   |           |  |                                          |  |           |         |  |  |           |  |  |         |           |  |         | 






|    |                                     
|--- | ------------------------------------
|(1) | Based on actual customer assignment.



|                                                            |  |         |           |  |         |  |           |         |  |  |           | 
|----------------------------------------------------------- |  | ------- | --------- |  | ------- |  | --------- | ------- |  |  | --------- | 
|                                                            |  | 2005    |           |  | 2004    |  |           | 2003    | 
|                                                            |  |         |           |  |         |  |           |         | 
|                                                            |  |  (000) |           |  |  (000) |  |           |  (000) | 
|Enterprise Resource Planning (ERP)                          |  |         | 1,157,569 |  |         |  | 989,972   |         |  |  | 801,221   | 
|Customer Relationship Management (CRM)                      |  |         | 602,629   |  |         |  | 501,007   |         |  |  | 440,121   | 
|Supply Chain Management (SCM)                               |  |         | 508,884   |  |         |  | 479,993   |         |  |  | 477,131   | 
|Product Lifecycle Management (PLM)                          |  |         | 161,635   |  |         |  | 166,924   |         |  |  | 156,043   | 
|Business Intelligence/ Enterprise Portal/ SRM/ Marketplaces |  |         | n/a       |  |         |  | n/a       |         |  |  | 273,075   | 
|SRM                                                         |  |         | 175,983   |  |         |  | 147,091   |         |  |  | n/a       | 
|SAP NetWeaver and other related components                  |  |         | 176,051   |  |         |  | 76,025    |         |  |  | n/a       | 
|                                                            |  |         |           |  |         |  |           |         | 
|                                                            |  |         | 2,782,751 |  |         |  | 2,361,012 |         |  |  | 2,147,591 | 
|                                                            |  |         |           |  |         |  |           |         | 

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|                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                   |  | Membership on supervisory boards and other comparable governing                                                                                                                                                                                           
|                                                                                                                                                                                                   |  | bodies of enterprises, other than subsidiaries of the Company, in                                                                                                                                                                                         
|                                                                                                                                                                                                   |  | Germany and other countries, on December 31, 2005(1)                                                                                                                                                                                                      
|                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                           
|Prof. Dr. Henning Kagermann                                                                                                                                                                        |  |                                                                                                                                                                                                                                                           
|Chief Executive Officer
    Overall responsibility for SAPs strategy and business
    development, Global Communications, Global Intellectual
    Property, Internal Audit, Top Talent Management |  | Supervisory Board, Deutsche Bank AG, Frankfurt am Main,
    Germany
    Supervisory Board, DaimlerChrysler Financial Services AG,
    Berlin, Germany
    Supervisory Board, Münchener
    Rückversicherungs-Gesellschaft AG, Munich, Germany             
|Shai AgassiProduct development and technology,
    Industry solutions
    Product and industry marketing                                                                                           |  |                                                                                                                                                                                                                                                           
|Léo Apotheker                                                                                                                                                                                      |  |                                                                                                                                                                                                                                                           
|Sales, Consulting, Education, Marketing                                                                                                                                                            |  | Board of Directors, Enigma, Inc., Burlington, Massachusetts,
    United States (until December 31, 2005)
    Supervisory Board, AXA, Paris, France (from February 23,
    2005)
    Supervisory Board, Ginger Group, Paris, France (from
    June 2, 2005)
|Dr. Werner Brandt                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                           
|Chief Financial Officer
    Finance and Administration, Shared Services, SAP Ventures                                                                                                              |  | Supervisory Board, LSG Lufthansa Service Holding AG,
    Neu-Isenburg, Germany                                                                                                                                                                            
|Prof. Dr. Claus E. HeinrichLabor Relations Director
    Global Human Resources, Quality Management, Internal IT, SAP Labs                                                                          |  |                                                                                                                                                                                                                                                           
|Gerhard OswaldGlobal Service and Support, Custom Development                                                                                                                                       |  |                                                                                                                                                                                                                                                           
|Dr. Peter Zencke                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                           
|Research, Application Platform                                                                                                                                                                     |  | Supervisory Board, SupplyOn AG, Hallbergmoos, Germany                                                                                                                                                                                                     






|    |                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|(1) | Memberships on supervisory boards and comparable governing
    bodies of subsidiaries can be obtained from the Company upon
    request.

F-58



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|                                                                                                                                                                                              |  |                                                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                              |  | Membership on other supervisory boards and comparable                                                                                                  
|                                                                                                                                                                                              |  | governing bodies of enterprises other than the Company, in                                                                                             
|                                                                                                                                                                                              |  | Germany and other countries on December 31, 2005                                                                                                       
|                                                                                                                                                                                              |  |                                                                                                                                                        
|Prof. Dr. h.c. mult. Hasso Plattner
    (2), (4),
    (5), (7)Chairman of the Supervisory Board                                                                                               |  |                                                                                                                                                        
|Helga
    Classen(1),
    (4), (7)Deputy Chairperson
    Deputy Data Protection Officer                                                                                                       |  |                                                                                                                                                        
|Pekka
    Ala-Pietilä(5)Executive Advisor to the CEO of Nokia Corporation,
    Espoo, Finland                                                                                                 |  |                                                                                                                                                        
|Willi
    Burbach(1),
    (4), (5)Developer                                                                                                                                                   |  |                                                                                                                                                        
|Prof. Dr. Wilhelm
    Haarmann(2),
    (6), (7)                                                                                                                                               |  |                                                                                                                                                        
|Attorney-at-law, certified public auditor, certified tax
    advisor
    HAARMANN Partnerschaftsgesellschaft, Rechtsanwälte,
    Steuerberater, Wirtschaftsprüfer, Frankfurt am Main, Germany |  | Supervisory Board, Aareon AG (formerly Depfa IT Services),
    Mainz, Germany
    Supervisory Board, Vodafone Deutschland GmbH, Düsseldorf,
    Germany
|Bernhard
    Koller(1),
    (3)Manager of idea management                                                                                                                                     |  |                                                                                                                                                        
|Christiane
    Kuntz-Mayr(1),
    (5), (7)Development manager                                                                                                                                 |  |                                                                                                                                                        
|Lars
    Lamadé(1),
    (6)Risk Manager Service & Support                                                                                                                                     |  |                                                                                                                                                        
|Dr. Gerhard
    Maier(1),
    (2), (6)Development project manager                                                                                                                             |  |                                                                                                                                                        

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|                                                                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                       |  | Membership on other supervisory boards and comparable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                       |  | governing bodies of enterprises other than the Company, in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                       |  | Germany and other countries on December 31, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Dr. h.c. Hartmut
    Mehdorn(4)                                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Chairman of the Executive Board,
    Deutsche Bahn AG, Berlin, Germany |  | Supervisory Board, DB Station & Service AG, Frankfurt am
    Main, Germany (until April 28, 2005)
    Supervisory Board, Stinnes AG, Berlin, Germany (until
    April 28, 2005)
    Supervisory Board, DB Personenverkehr GmbH, Berlin, Germany
    (until April 28, 2005)
    Supervisory Board, DB Netz AG, Frankfurt am Main, Germany
    Supervisory Board, DEVK Deutsche Eisenbahn Versicherung
    Lebensversicherungsverein a.G., Cologne, Germany
    Supervisory Board, DEVK Deutsche Eisenbahn Versicherung
    Sach- und HUK-Versicherungsverein a.G., Cologne, Germany
    Supervisory Board, Dresdner Bank AG, Frankfurt am Main,
    Germany
    Supervisory Board, Bayerische
    Magnetbahnvorbereitungsgesellschaft mbH, Munich, Germany (until
    October 4, 2005)
|Prof. Dr. Dr. h.c. mult. August-
    Wilhelm
    Scheer(5),
    (6)    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Professor at Saarland University, Saarbrücken, Germany                 |  | Supervisory Board, IDS Scheer AG, Saarbrücken, Germany
    Supervisory Board, imc information multimedia communication AG,
    Saarbrücken, Germany
    Board of Trustees, Hasso Plattner Stiftung für
    Softwaresystemtechnik, Potsdam, Germany
    Supervisory Board, Saarbrücker Zeitung Verlag und Druckerei
    GmbH, Saarbrücken, Germany (from April 26, 2005)
    Member of the Senate, Fraunhofer-Gesellschaft zur Förderung
    der angewandten Forschung e.V., Munich, Germany (from
    January 1, 2005)                                                                                                                                                                                                                                                               
|Dr. Barbara
    Schennerlein(1),
    (7)Principal consultant           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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|                                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                          |  | Membership on other supervisory boards and comparable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                          |  | governing bodies of enterprises other than the Company, in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                          |  | Germany and other countries on December 31, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Dr. Erhard
    Schipporeit(3)                                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Member of the Executive Board,
    E.ON AG, Düsseldorf, Germany                           |  | Supervisory Board, Commerzbank AG, Frankfurt am Main, Germany
    Supervisory Board, Degussa AG, Hamburg, Germany
    Supervisory Board, Deutsche Börse AG, Frankfurt am Main,
    Germany (from October 7, 2005)
    Supervisory Board, Talanx AG, Hanover, Germany
    Supervisory Board, E.ON Ruhrgas AG, Essen, Germany
    Supervisory Board, E.ON IS GmbH, Hanover, Germany (from
    January 11, 2005)
    Supervisory Board, HDI V.a.G., Hanover, Germany
    Supervisory Board, E.ON Risk Consulting GmbH, Düsseldorf,
    Germany
    Supervisory Board, E.ON Audit Services, Düsseldorf,
    Germany
    Supervisory Board, E.ON UK plc, Coventry, UK
    Supervisory Board, E.ON US Investment Corp., Delaware, USA
|Stefan
    Schulz(1),
    (3), (5)Development Project Manager                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Dr. Dieter
    Spöri(7)                                                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Head of Corporate Representation
    Federal Affairs, DaimlerChrysler AG, Berlin, Germany |  | Advisory Council, Contraf Nicotex Tobacco GmbH, Heilbronn,
    Germany                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Dr. h.c. Klaus
    Tschira(3)                                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Managing Director, Klaus Tschira Foundation gGmbH, Heidelberg,
    Germany                |  | Supervisory Board, SRH Learnlife AG, Heidelberg, Germany
    Member of the Senate, Max-Planck-Gesellschaft zur Förderung
    der Wissenschaften e.V., Munich, Germany                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          






|    |                                                          
|--- | ---------------------------------------------------------
|(1) | Elected by the employees.                                
|   
|(2) | Member of the Companys Compensation Committee.          
|   
|(3) | Member of the Companys Audit Committee.                 
|   
|(4) | Member of the Companys Mediation Committee.             
|   
|(5) | Member of the Companys Technology Committee.            
|   
|(6) | Member of the Companys Finance and Investment Committee.
|   
|(7) | Member of the Companys General Committee.               

   


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  


   














   




  


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  




 






|                   |  |         |       |  |         |  |       |         |  |  |       | 
|------------------ |  | ------- | ----- |  | ------- |  | ----- | ------- |  |  | ----- | 
|                   |  | 2005    |       |  | 2004    |  |       | 2003    | 
|                   |  |         |       |  |         |  |       |         | 
|                   |  |  (000) |       |  |  (000) |  |       |  (000) | 
|Audit fees         |  |         | 5,234 |  |         |  | 4,328 |         |  |  | 3,670 | 
|Audit related fees |  |         | 1,090 |  |         |  | 888   |         |  |  | 569   | 
|Tax fees           |  |         | 154   |  |         |  | 1,198 |         |  |  | 84    | 
|All other fees     |  |         | 196   |  |         |  | 38    |         |  |  | 239   | 
|                   |  |         |       |  |         |  |       |         | 
|                   |  |         | 6,674 |  |         |  | 6,452 |         |  |  | 4,562 | 
|                   |  |         |       |  |         |  |       |         | 



   






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F-65



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SCHEDULE II


Valuation and Qualifying Accounts and Reserves


Years ended December 31, 2005, 2004, and 2003


|                                       |  |                         |        |   |         |  |        |         |  |  |         |  
|-------------------------------------- |  | ----------------------- | ------ | - | ------- |  | ------ | ------- |  |  | ------- | -
|                                       |  | Year ended December 31, |       
|                                       |  |                         |       
|                                       |  | 2005                    |        |   | 2004    |  |        | 2003    | 
|                                       |  |                         |        |   |         |  |        |         | 
|                                       |  |  (000)                 |        |   |  (000) |  |        |  (000) | 
|Balance at beginning of year           |  |                         | 63,362 |   |         |  | 71,011 |         |  |  | 92,511  |  
|Charged to costs and expenses(*)       |  |                         | 12,383 |   |         |  | 1,742  |         |  |  | 6,969   |  
|Amounts written off                    |  |                         | (8,053 | ) |         |  | (7,700 | )       |  |  | (22,939 | )
|Currency translation and other changes |  |                         | 5,197  |   |         |  | (1,691 | )       |  |  | (5,530  | )
|                                       |  |                         |        |   |         |  |        |         | 
|Balance at end of year                 |  |                         | 72,889 |   |         |  | 63,362 |         |  |  | 71,011  |  
|                                       |  |                         |        |   |         |  |        |         | 






|    |                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(*) | Includes the provision of bad debt expense based on aging
    charged (credited) to other operating income/(expense) of
    (3,409)
    thousand,
    (1,791)
    thousand, and
    5,368 thousand
    in 2005, 2004, and 2003, respectively.

S-1