##### Table of Contents





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 1934þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 
    OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December
    31, 2007o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period
    from          too

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934Date 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 registeredAmerican Depositary Shares, each representing
    one Ordinary Share, without nominal value

New York Stock ExchangeOrdinary Shares, without nominal value

New York Stock Exchange*  Securities
    registered or to be registered pursuant to Section 12(g) of
    the Act: None
 Securities for which there is a
    reporting obligation pursuant to Section 15(d) of the Act: None
 Indicate
    the number of outstanding shares of each of the issuers
    classes of capital or common stock as of the close of the period
    covered by the annual report:
  Ordinary Shares, without nominal value (as of December 31,
    2007)**

1,246,258,408  Indicate
    by check mark if the registrant is a well-known seasoned issuer,
    as defined in Rule 405 of the Securities Act.
 Yes þ

No o  If
    this report is an annual or transition report, indicate by check
    mark if the registrant is not required to file reports pursuant
    to Section 13 or 15(d) of the Securities Exchange Act of
    1934.
 Yes o

No þ  Note 
    Checking the box above will not relieve any registrant required
    to file reports pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934 from their obligations under
    those Sections.
 Indicate
    by check mark whether the registrant (1) has filed all
    reports required to be filed by Section 13 or 15(d) of the
    Securities Exchange Act of 1934 during the preceding
    12 months (or for such shorter period that the registrant
    was required to file such reports), and (2) has been
    subject to such filing requirements for the past 90 days.
 Yes þ

No o  Indicate
    by check mark whether the registrant is a large accelerated
    filer, an accelerated filer, or a non-accelerated filer. See
    definition of accelerated filer and large accelerated
    filer in
    Rule 12b-2
    of the Exchange Act. (Check one):
 Large
    accelerated
    filer þ     Accelerated
    filer o     Non-accelerated
    filer o
 Indicate
    by check mark which basis of accounting the registrant has used
    to prepare the financial statements included in this filing:
 U.S. GAAP þ     International
    Financial Reporting Standards as issued by the International
    Accounting Standards
    Board o     Other o
 If
    other has been checked in response to the previous
    question, indicate by check mark which financial statement item
    the registrant has elected to follow.
 Item 17 o

Item 18 o  If
    this is an annual report, indicate by check mark whether the
    registrant is a shell company (as defined in
    Rule 12b-2
    of the Exchange Act).
 Yes o

No þ   * Not for trading, but
    only in connection with the registration of American Depositary
    Shares representing such ordinary shares.
  ** Including 48,064,829
    treasury shares.




---



##### Table of Contents





[THIS
    PAGE INTENTIONALLY LEFT BLANK]




---



##### Table of Contents



TABLE OF
    CONTENTS
   PageINTRODUCTION


1FORWARD-LOOKING INFORMATION


2USE OF NON-GAAP FINANCIAL MEASURES


3PART I


8ITEM 1. IDENTITY OF DIRECTORS, SENIOR
    MANAGEMENT AND ADVISERS


8ITEM 2. OFFER STATISTICS AND EXPECTED
    TIMETABLE


8ITEM 3. KEY INFORMATION


8Selected Financial Data


8Exchange Rates


9Dividends


10Risk Factors


11ITEM 4. INFORMATION ABOUT SAP


24Description of the Business


25Our Software Solutions and Services Offerings


31Seasonality


33Business by Region


34Revenue by Industry Sector


35Sales, Marketing and Distribution


35Partnerships, Alliances and Acquisitions


36Intellectual Property, Proprietary Rights and
    Licenses


37Organizational Structure


37Description of Property


38ITEM 4A. UNRESOLVED STAFF COMMENTS


40ITEM 5. OPERATING AND FINANCIAL REVIEW AND
    PROSPECTS


40Overview


40Key Factors


42Operating Results


43Segment Discussions


52Outlook 2008


56Foreign Currency Exchange Rate Exposure


58Critical Accounting Policies


59New Accounting Standards Not Yet Adopted


64Liquidity and Capital Resources


64Off-Balance Sheet Arrangements


67Research and Development


68ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND
    EMPLOYEES


70Supervisory Board


70Executive Board


71Compensation Report


73Employees


85Share Ownership


87Share-Based Compensation Plans


87 i




---



##### Table of Contents



PageITEM 7. MAJOR SHAREHOLDERS AND RELATED-PARTY
    TRANSACTIONS


90Major Shareholders


90Related-Party Transactions


91ITEM 8. FINANCIAL INFORMATION


92Consolidated Financial Statements


92Other Financial Information


92ITEM 9. THE OFFER AND LISTING


93ITEM 10. ADDITIONAL INFORMATION


95Articles of Incorporation


95Corporate Governance


95Change in Control


99Change in Share Capital


100Rights Accompanying Our Shares


100Taxation


102Material Contracts


109Documents on Display


109ITEM 11. QUANTITATIVE AND QUALITATIVE
    DISCLOSURES ABOUT MARKET RISK


109Foreign Currency Exchange Rate Risk


109Interest Rate Risk


110Equity Price Risk


112ITEM 12. DESCRIPTION OF SECURITIES OTHER
    THAN EQUITY SECURITIES


112PART II


113ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES


113ITEM 14. MATERIAL MODIFICATIONS TO THE
    RIGHTS OF SECURITY HOLDERS AND  USE OF PROCEEDS


113ITEM 15. CONTROLS AND PROCEDURES


113Evaluation of Disclosure Controls and
    Procedures


113Managements Annual Report on Internal
    Control Over Financial Reporting


113Change in Internal Control Over Financial
    Reporting


114Attestation Report of the Independent Registered
    Public Accounting Firm


114ITEM 16. [RESERVED]


115ITEM 16A. AUDIT COMMITTEE FINANCIAL
    EXPERT


115ITEM 16B. CODE OF ETHICS


115ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND
    SERVICES


115Audit Fees, Audit-related Fees, Tax Fees and All
    Other Fees


115Audit Committees Pre-approval Policies and
    Procedures


115ITEM 16D. EXEMPTIONS FROM THE LISTING
    STANDARDS FOR AUDIT COMMITTEES


116ITEM 16E. PURCHASES OF EQUITY SECURITIES BY
    THE ISSUER AND AFFILIATED PURCHASERS


117PART III


118ITEM 17. FINANCIAL STATEMENTS


118ITEM 18. FINANCIAL STATEMENTS


118ITEM 19. EXHIBITS


118Exhibit 4.4Exhibit 4.4.1Exhibit 8Exhibit 12.1Exhibit 12.2Exhibit 13Exhibit 15   ii




---



##### Table of Contents



INTRODUCTION Aktiengesellschaft Form 20-F, Form 20-F
  Form 20-F: Form 20-F
    Form 20-F Form 20-F
  Form 20-F
 1




---



##### Table of Contents



FORWARD-LOOKING
    INFORMATION Form 20-F Form 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.  Form 20-F. Form 20-F Form 20-F.
   2




---



##### Table of Contents



USE OF
    NON-GAAP FINANCIAL MEASURES   Non-GAAP
    software and software-related service revenue and Non-GAAP
    operating margin
  non-U.S. GAAP non-U.S. GAAP
     3




---



##### Table of Contents




    Amortization expense related to intangible assets acquired in
    business combination and standalone purchases of intellectual
    property;
    Expense related to purchased in-process research and
    development, which is recorded at fair value at the acquisition
    date and is immediately expensed; and
    Restructuring charges to the extent they were incurred in
    connection with business combinations but accounted for under
    Statement of Financial Accounting Standards No. 146,
    Accounting for Costs Associated with Exit or Disposal
    Activities, in SAPs U.S. GAAP financial
    statements.        Business ObjectsSupport Revenue Not



Non-GAAPU.S. GAAP Financial

Recorded Under U.S.

Acquisition-Related

Financial2007

Measure

GAAP

Charges

Measure millions, except operating marginSoftware and software-related service revenue


7,427











7,427Total
    revenue(1)


10,242











10,242Operating
    income(1)


2,732







61



2,793Operating margin on continuing operations


26.7
%






0.6
%


27.3
%     (1)
    
    These financial measures are the
    numerator or the denominator in the calculation of our Non-GAAP
    operating margin and the comparable U.S. GAAP operating margin,
    and are included in this table for the convenience of the reader.   4




---



##### Table of Contents



Constant Currency
    Period-Over-Period Changes
       5




---



##### Table of Contents



Percentage change

Constant currencyfrom 2006 to 2007

percentage change

Currencyas reported

from 2006 to 2007

effect%

%

%Software revenue


13



18



(5
)Support revenue


11



15



(4
)Software and software-related service revenue


13



17



(4
)Consulting revenue


(1
)


2



(3
)Training revenue


7



11



(4
)Other service revenue


18



23



(5
)Professional service and other service revenue


1



4



(3
)Total software revenue by
    Region(1):EMEA region


14



15



(1
)Americas region


8



16



(8
)Asia Pacific Japan region


28



32



(4
)Total revenue by
    Region(1):United States


4



13



(9
)Rest of Americas region


12



15



(3
)Japan


4



14



(10
)Rest of Asia Pacific Japan region


22



24



(2
)Total revenue


9



13



(4
)Operating expense


10



14



(4
)Segments:Product segment revenue


11



15



(4
)Software revenue


12



16



(4
)Support revenue


9



14



(5
)Subscription and other software-related service revenue


41



45



(4
)Product segment expense


18



21



(3
)Product segment contribution


7



11



(4
)Consulting segment revenue


3



7



(4
)Americas region


3



11



(8
)Consulting segment expense


2



6



(4
)Consulting segment contribution


6



10



(4
)Training segment revenue


12



16



(4
)   6




---



##### Table of Contents



Percentage change

Constant currencyfrom 2005 to 2006

percentage change

Currencyas reported

from 2005 to 2006

effect%

%

%Software revenue


9



11



(2
)Support revenue


9



10



(1
)Software and software-related service revenue


11



12



(1
)Other service revenue


35



36



(1
)Total revenue by
    Region(1):United States


11



14



(3
)Rest of Americas region


18



16



2Japan


6



14



(8
)Rest of Asia Pacific Japan region


15



16



(1
)Total revenue


10



11



(1
)Operating expense


10



11



(1
)Segments:Product segment revenue


10



11



(1
)Software revenue


9



11



(2
)Support revenue


10



11



(1
)Product segment expense


7



8



(1
)Product segment contribution


12



14



(2
)Consulting segment contribution


30



32



(2
)Training segment revenue


16



17



(1
)     (1)
    
    Based on customer location 7




---



##### Table of Contents



PART I ITEM 1. IDENTITY
    OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS  ITEM 2. OFFER
    STATISTICS AND EXPECTED TIMETABLE  ITEM 3. KEY
    INFORMATION  SELECTED
    FINANCIAL DATA Accounting for Defined Benefit Pension and
    Other Postretirement Plans Share-Based Payment
  Year Ended December 31,2007


2007


2006


2005


2004(4)


2003(4)US$(1)














In millions, except earnings per share dataIncome Statement Data:Total revenue


14,957



10,242



9,393



8,509



7,514



7,025Operating income


3,991



2,732



2,578



2,337



2,018



1,724Income from continuing operations before income taxes and
    minority interest


4,173



2,857



2,688



2,323



2,073



1,777Net income


2,825



1,934



1,881



1,502



1,311



1,077Earnings per share based on Net
    income(2)Basic


2.32



1.59



1.53



1.21



1.05



0.87Diluted


2.32



1.59



1.52



1.20



1.05



0.87Earnings per share based on Income from continuing
    operations(2)Basic


2.34



1.60



1.53



1.21



1.05



0.87Diluted


2.34



1.60



1.53



1.21



1.05



0.87Other Data:Weighted-average number of shares
    outstanding(2)Basic


1,207



1,207



1,226



1,239



1,243



1,243Diluted


1,210



1,210



1,231



1,243



1,249



1,246 8




---



##### Table of Contents



Year Ended December 31,2007


2007


2006


2005


2004(4)


2003(4)US$(1)














In millions, except earnings per share dataBalance Sheet Data:Cash and cash equivalents (excluding restricted cash)


2,348



1,608



2,399



2,064



1,506



839Total
    assets(4)


15,138



10,366



9,503



9,040



7,585



6,326Shareholders equity


9,497



6,503



6,136



5,782



4,594



3,709Subscribed capital


1,820



1,246



1,268



316



316



315Short-term financial
    debt(3)


47



32



31



22



26



19Long-term financial
    debt(3)


9



6



3



11



11



13     (1)
    
    Amounts presented in US$ have been
    translated for the convenience of the reader at 1.00 to
    US$1.4603, the Noon Buying Rate for converting 1.00 into
    dollars on December 31, 2007. See
     Exchange Rates for recent exchange rates
    between the euro and the dollar.(2)
    
    Amounts are retrospectively
    adjusted for all periods presented for the effect of the
    December 15, 2006 fourfold increase in the number of shares
    under a capital increase pursuant to German law. Furthermore,
    the 2007 figures reflect cancellation of 23,000,000 treasury
    shares effective September 7, 2007. See Item 9.
    The Offer and Listing  General for more detail
    of the share increase and the cancellation of shares.(3)
    
    Financial debt represents bank
    loans, overdrafts and capital lease obligations. Short-term
    means a remaining life of one year or shorter; long-term, beyond
    one year. The balances include convertible bonds issued pursuant
    to share-based compensation plans. See Item 6.
    Directors, Senior Management and Employees 
    Share-Based Compensation Plans.(4)
    
    Total assets in 2007 include
    assets held for sale which represent net assets of the
    discontinued operations. See Note 11 to our consolidated
    financial statements in Item 18. Financial
    Statements for further discussion on the discontinued
    operations. The discontinued operations were acquired by us in
    2005 so income statement and balance sheet data in 2004 and 2003
    does not reflect any discontinued operation. EXCHANGE RATES    9




---



##### Table of Contents



Year

Average(1)


High


Low2003


1.1411



1.2597



1.03612004


1.2478



1.3625



1.18012005


1.2400



1.3476



1.16672006


1.2661



1.3327



1.18602007


1.3797



1.4862



1.2904   Month

High


Low2007July


1.3831



1.3592August


1.3808



1.3402September


1.4219



1.3606October


1.4468



1.4092November


1.4862



1.4435December


1.4759



1.43442008January


1.4877



1.4574February


1.5187



1.4495March (through March 14, 2008)


1.5604



1.5195     (1)
    
    The average of the applicable Noon
    Buying Rates on the last day of each month during the relevant
    period.   DIVIDENDS Aufsichtsrat Vorstand
 10




---



##### Table of Contents



Dividend Paidper OrdinaryShareYear Ended December 31,




US$2003


0.20



0.24
(1)(4)2004


0.28



0.35
(1)(4)2005


0.36



0.43
(1)(4)2006


0.46



0.62
(1)(4)2007 (proposed)


0.50
(2)


0.78
(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 Meeting of Shareholders of SAP AG to be held on
    June 3, 2008.(3)
    
    Translated for the convenience of
    the reader from euro into dollars at the Noon Buying Rate for
    converting euro into dollars on March 14, 2008 of US$1.5604
    per 1.00. The depositary is required to convert any
    dividend payments received from SAP as promptly as practicable
    upon receipt. The dividend paid may differ due to changes in the
    exchange rate.(4)
    
    One SAP ADS currently represents
    one SAP AG ordinary share. Accordingly, the final dividend per
    ADS is equal to the dividend for one SAP AG ordinary share and
    is dependent on the euro/dollar exchange rate.   RISK FACTORS Economic Risks
  A
    downturn in the economic conditions in the regions in which we
    operate, in the software markets in those regions or in our
    customers specific industries has in the past resulted,
    and may in the future result, in a significant fluctuation of
    demand for our products, causing our revenues and profitability
    to suffer.
     11




---



##### Table of Contents



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.
    
    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, regulation
    of the Internet, and additional requirements for the design and
    for the distribution of software and services.    Market Risks
  Consolidation
    in the software industry may result in instability of software
    demand and stronger peer companies in the long term.
   12




---



##### Table of Contents



Due to
    intense competition, our market share and financial performance
    could suffer.
          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.
    Strategic Planning
    Risks
  Demand
    for our newly introduced products such as SAP Business ByDesign
    targeted for midsize companies may not develop as planned and
    our midmarket strategy with the new business model may not be
    successful.
   13




---



##### Table of Contents



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.
      Human Capital Risks
  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.
   14




---



##### Table of Contents



If we do
    not effectively manage our growth, our existing personnel and
    systems may be strained and our business may not operate
    efficiently.
  and/or
  Organizational and
    Governance-related Risks
  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 United States
   15




---



##### Table of Contents



U.S.
    judgments may be difficult or impossible to enforce against us
    or our Board members.
  non-U.S. resident non-U.S. resident
  Communication and
    Information Risks
  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.
   16




---



##### Table of Contents



Wide
    acceptance of the use of Web-based transactions may be hindered
    due to privacy concerns.
  e-commerce
  Financial Risks
  Because
    we conduct our operations throughout the world, our results of
    operations may be affected by currency fluctuations.
  period-to-period
    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.   17




---



##### Table of Contents




    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.    Our
    revenue mix may vary and may negatively affect our profit
    margins.
      The cost
    of derivative instruments for hedging of the STAR Plan may
    exceed the benefits of those arrangements.
   18




---



##### Table of Contents



Managements
    use of estimates may affect our results of operations and
    financial position.
    Revenue
    recognition accounting pronouncements and interpretations 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. 19




---



##### Table of Contents



Project Risks
  Customer
    implementation and installation of our products involves
    significant resources and is subject to significant
    risks.
    Product 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 products.
       20




---



##### Table of Contents



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.
    Our SAP
    NetWeaver platform strategy may not succeed or may make certain
    of our products less desirable.
   21




---



##### Table of Contents



Other Operational
    Risks
  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,
    including integrating different business and licensing models;
    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 of
    the acquired business;
    dilution of existing equity holders caused by capital stock
    issuances to the stockholders of acquired companies;
    assumption of unknown material liabilities of acquired companies;
    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 22




---



##### Table of Contents




    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.
    We may
    not be able to adequately obtain, enforce, or protect
    intellectual property rights.
  day-to-day
  Third
    parties may claim we infringe their intellectual property
    rights.
   23




---



##### Table of Contents



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.
   ITEM 4. INFORMATION
    ABOUT SAP (1972-1976) (1976-1988). Aktiengesellschaft +49-6227-7-47474. c/o SAP
 24




---



##### Table of Contents



Form 20-F www.sap.com Form 20-F,
 DESCRIPTION OF THE
    BUSINESS Overview
        Evolution of SAP
    Solutions
           25




---



##### Table of Contents



ready-to-execute
      Newly Introduced
    Products and Product Versions
    Enterprise
    Application and Industry Solutions Offerings Expanded
    
    SAP ERP: In July, we announced the availability of the second
    enhancement package for the SAP ERP application. Next to
    functional enhancements, the package included specific
    innovations for the media, utilities, telecommunications, and
    retail industries. We announced the third enhancement package in
    December. It delivers reporting, financial, human resource
    management, and quality management capabilities. These
    enhancement packages enable customers to quickly and cost
    effectively take advantage of key innovations without moving to
    a new SAP ERP release. 26




---



##### Table of Contents




    SAP Customer Relationship Management (SAP CRM): In December, we
    introduced a new version of SAP CRM, which offers new
    enhancements, such as real-time offer management, trade
    promotions management, business communications, and pipeline
    performance management. By acquiring Wicom Communications, a
    provider of all-Internet Protocol software solutions, and
    integrating the Wicom capabilities with related SAP
    applications, we can now offer more efficient and powerful
    contact center and enterprise communications functions in the
    SAP Business Communications Management software.
    SAP Product Lifecycle Management (SAP PLM): We enhanced our
    product lifecycle management software. With the enhancements to
    SAP PLM, manufacturers can better address two dominant business
    trends  the accelerated speed of change and the need
    to achieve competitive differentiation by collaboratively
    innovating within their business network.
    SAP Supply Chain Management (SAP SCM): SAP SCM 2007 extended our
    supply chain management offering, with its new functionalities
    for supply network collaboration, extended warehouse management,
    transportation management, and sales and operations planning.
    SAP Supplier Relationship Management (SAP SRM): In 2007, we
    introduced an on-demand electronic purchasing solution.
    Companies can use the SAP
    E-Sourcing
    on-demand solution for their sourcing and procurement processes,
    such as online auctions and responding to requests for
    proposals. We also launched an application for contract
    life-cycle management and a spend analytics application that
    enables companies to more effectively manage procurement costs
    and compliance.
    SAP Auto-ID Infrastructure: Customers can use our new SAP
    Auto-ID Infrastructure offering for product tracking and
    authentication to collect and process product data from RFID
    tags. This is designed to enable them to pinpoint the exact
    location of any object at any time.
    SAP Manufacturing: As a result of acquiring Factory Logic in
    late 2006, we added the SAP Lean Planning and Operations
    application to our offering for the manufacturing industry. It
    helps manufacturers adapt more effectively and more flexibly to
    the changing demands of their customers. In addition, as a
    result of our acquisition of Lighthammer in 2005, in the new
    version of the SAP Manufacturing Integration and Intelligence
    application plant employees have better, personalized access to
    the information they need for decision making.  Enhanced
    functionality of the SAP NetWeaver technology platform
    
    SAP NetWeaver Composition Environment: We released the SAP
    NetWeaver Composition Environment offering, a lean, integrated,
    standards-based development, modeling, and runtime environment.
    Software developers and technical consultants can use it to
    extend application logic and, depending on users needs,
    compose new views and applications based on SAP software.
    SAP NetWeaver Process Integration: Companies use new functions
    in the SAP NetWeaver Process Integration offering to make their
    business processes more flexible and to manage enterprise
    services. At its heart is the Enterprise Services Repository,
    which is used to define all enterprise services and manage them
    through their life cycle.
    SAP NetWeaver Business Rules Management (BRM): In 2007, we
    acquired Yasu, a vendor of business rules management systems,
    and embedded its solutions in our SAP NetWeaver technology
    platform, helping our customers to apply their business rules
    consistently to all of their business processes in heterogeneous
    IT landscapes, and to update them as necessary. 27




---



##### Table of Contents




    SAP NetWeaver Identity Management: We acquired MaXware in May
    2007. We integrated its identity management solution in the SAP
    NetWeaver technology platform and enhanced it to help companies
    save time and money by optimizing the administration of user
    accounts and passwords.
    SAP NetWeaver Enterprise Search: In August 2007, we released the
    SAP NetWeaver Enterprise Search offering. It is designed to
    provide secure, seamless access to information and processes in
    SAP and non-SAP systems to help information workers navigate to
    key business data. It delivers highly relevant results and
    suggested actions that reflect the users role in the
    enterprise, and recognizes the business context of the search
    query.
    SAP NetWeaver Mobile: A new version of the SAP NetWeaver Mobile
    offering provides new, scalable middleware to simplify the
    management of mobile devices, and improved security functions.
    New development tools help build mobile applications with very
    little programming work.  Solutions
    for the Midmarket
    
    SAP Business
    All-in-One:
    We released a new version of the SAP Business
    All-in-One
    solutions. Based on SAP ERP and SAP CRM, the solutions leverage
    the power of an enterprise SOA to offer midsize customers
    flexibility and simplicity in their use.
    SAP Business ByDesign: In September, we launched SAP Business
    ByDesign. It is a business solution we developed for businesses
    with 100 to 500 employees  fast growing
    companies that typically have not experienced integrated
    business solutions before. SAP Business ByDesign is designed to
    deliver simplicity, adaptability, and a wide range of functions
    at low running cost. Initially we offer SAP Business ByDesign as
    an on-demand solution; we intend to make other deployment models
    available in the future.
    SAP Business One: In 2007, we added new capabilities to SAP
    Business One such as financial capabilities from reconciliation
    to reporting and new Web-based capabilities such as Web CRM and
    e-commerce.  Expansion
    of Business User Portfolio
    
    SAP solutions for governance, risk, and compliance: We delivered
    new or enhanced versions of SAP solutions for governance, risk,
    and compliance, which include the SAP GRC Global Trade Services
    application, the SAP Customs Processing for Automated Export
    Systems (AES) application, the SAP GRC Process Control
    application, the SAP GRC Risk Management application, and the
    SAP GRC Access Control application. These applications help
    customers perform risk analysis, manage internal controls, and
    comply with regulations.
    Analytic blueprints from SAP: By acquiring Pilot Software we
    added a critical piece of new technology that is now integrated
    into our portfolio of analytic applications. We now offer
    customers tools to foster the alignment of their business
    strategy across all of their organizations.
    SAP Strategy Management: We acquired Pilot Software to enhance
    our portfolio of strategy management software. Customers use the
    SAP Strategy Management application to continuously manage and
    assess the three cornerstones of business
    performance  metrics, decisions, and goals.
    SAP Business Planning and Consolidation: Our acquisition of
    OutlookSoft, a specialist company providing financial and
    strategy performance measurement solutions, extended our
    portfolio of solutions to help chief financial officers (CFOs).
    With its integrated planning, budgeting, forecasting, and
    consolidation capabilities, it is a solution that provides an
    effective control and planning toolbox. 28




---



##### Table of Contents




    Mobile business: Responding to growing interest in mobile
    business processes, we developed new mobile solutions and
    enhancements to existing mobile applications. Employees with
    mobile devices can be given access to core business processes.
    Duet: Duet, which has been available since 2006, enables
    information workers to use SAP business data and business
    process software in the familiar Microsoft Office environment.
    In March 2007, we delivered a value pack with new scenarios for
    sales management, travel management, and demand planning. It
    comes with new configuration tools for the system administrator,
    and with more languages.  SAPs Strategy
  Trends
    and Orientation
        
    Accelerated innovation: In the next few years, we expect IT will
    play an increasingly key part in the development of new business
    models. SAP has the applications we believe companies will need.
    Rapid strategic implementation: SAPs solutions are imbued
    with our decades of experience of the business processes and
    requirements in specific industries. Our expertise helps our
    customers to optimize their procedures for maximum efficiency.
    Building a business process platform based on enterprise
    service-oriented architecture (enterprise SOA), SAP solutions
    offer a much more rapid way to implement new strategies than was
    possible with any earlier approach.
    Return on human capital investment: SAP applications help our
    customers deploy their most important capital assets more
    profitably. Examples include efficient personnel development,
    teamwork across multiple locations on complex projects, and
    support for globally dispersed staff.
    Responsible management with a global footing: SAP applications
    support legal compliance and responsible, value-driven
    governance, risk assessment, and control.    Expanding
    Our Traditional Core Business
  All-in-One
 29




---



##### Table of Contents



All-in-One ready-to-run
    Developing
    New Business with Smaller Midmarket Companies
  All-In-One All-in-One
        Strategy
    for Growth
    
    Organic growth: Our growth strategy is based primarily on the
    internal development of our own product portfolio.
    Co-innovation: We are expanding our partner ecosystem. This
    accelerates innovation by supporting the development of
    solutions built on the SAP NetWeaver technology platform, and
    leverages more sales channels to address the various market and
    customer segments.
    Smart acquisitions: With targeted strategic fill-in
    acquisitions that add to our broad solution offering for
    individual industries or across industries, we gain specific
    technologies and capabilities that meet the needs of our
    customers. To accelerate our growth in the field of business
    intelligence, we have acquired Business Objects in January 2008.
    It is an acquisition that positions us to lead the market for
    business performance management with more innovative products. 30




---



##### Table of Contents



OUR SOFTWARE
    SOLUTIONS AND SERVICES OFFERINGS   
  go-to-market
  SAP Solution
    Portfolio
  SAP
    Applications
    
    General-purpose applications.  These
    include the SAP Business Suite family of business applications
    which consists of SAP ERP (which is made up of the following
    solutions: SAP ERP Human Capital Management (SAP ERP HCM), SAP
    ERP Financials, SAP ERP Operations, and SAP ERP Corporate
    Services), SAP Customer Relationship Management (SAP CRM), SAP
    Product Lifecycle Management (SAP PLM), SAP Supply Chain
    Management (SAP SCM), and SAP Supplier Relationship Management
    (SAP SRM). These applications can be licensed individually or
    together as a suite, and in some cases, such as with customer
    relationship management, customers can choose to license the
    software as on-demand solutions. In addition, we offer various
    cross-industry optional applications such as SAP Global Trade
    Management, Environment, Health & Safety, Duet, and
    SAP solutions for radio frequency identification (RFID).
    Industry-specific applications. These perform
    defined business functions in particular industries. These
    applications often are delivered as add-ons to general-purpose
    applications, particularly to the SAP ERP application. Some
    industry-specific applications may run stand-alone, and others
    require SAP ERP or other SAP Business Suite applications.
    Examples of industry-specific applications include the SAP
    Apparel and Footwear application for the consumer products
    industry and the SAP Reinsurance Management application for the
    insurance industry. 31




---



##### Table of Contents



Process Industries Chemicals
     Mill Products
     Oil & Gas
     MiningDiscrete Industries Aerospace & Defense
     Automotive
     Engineering, Construction & Operations
     High Tech
     Industrial Machinery & ComponentsConsumer Industries Consumer Products
     Retail
     Wholesale Distribution
     Life Sciences

Services Industries Media
     Logistics Service Providers
     Postal Services
     Railways
     Telecommunications
     Utilities
     Professional ServicesFinancial Services Banking
     InsurancePublic Services Healthcare
     Higher Education & Research
     Public Sector
     Defense & Security   All-in-One All-in-One All-in-One
  The SAP
    NetWeaver Technology Platform
    SAP
    Services
   32




---



##### Table of Contents



Software-Related
    Services
  
    SAP Custom Development.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.
    SAP Active Global Support.The SAP Active Global
    Support organization offers a broad range of services to support
    customers before, during and after implementation of our
    software solutions, providing
    around-the-clock
    technical support for high-priority messages to resolve issues
    as well as proactive, preventative support services to mitigate
    potential problems before they get out of hand. 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, and the SAP Premium Support option
    through which SAPs experts take a more active role in
    establishing support operations. As part of the SAP Standard
    Support, customers are entitled to unspecified upgrades and
    enhancements to the software products they licensed.  Professional
    and Other Services
  
    SAP Consulting.The SAP Consulting organization
    offers consulting, implementation, and optimization services
    that aim at delivering business value in all phases of the
    solution life-cycle, from the planning phase through building
    and running the solutions. SAP Consulting advises and supports
    customers on designing business processes and IT infrastructure,
    helps customers with project management, solution implementation
    and integration, and helps with solution and IT landscape
    optimization to adapt to changing business needs of customers.
    SAP Education. 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.
    SAP Managed Services.The SAP Managed Services
    organization provides a comprehensive portfolio of services
    which include application management services and hosting
    services, running and managing SAP solutions on behalf of
    customers. SEASONALITY  33




---



##### Table of Contents



BUSINESS BY REGION     2007


2006


2005 millionsGermany


2,004



1,907



1,810Rest of EMEA


3,386



2,994



2,709Total EMEA


5,390



4,901



4,519United States


2,706



2,609



2,340Rest of Americas


871



776



656Total Americas


3,577



3,385



2,996Japan


447



431



406Rest of APJ


828



676



588Total APJ


1,275



1,107



994Total revenue


10,242



9,393



8,509   EMEA.
      Americas.
    APJ.
 34




---



##### Table of Contents



REVENUE BY INDUSTRY
    SECTOR   2007


2006


2005 millionsProcess Industries


2,135



1,995



1,766Discrete Industries


2,222



2,179



1,986Consumer Industries


1,949



1,665



1,456Service Industries


2,371



2,132



1,945Financial Services


678



590



543Public Services


887



832



813Total revenue


10,242



9,393



8,509  SALES, MARKETING AND
    DISTRIBUTION   All-in-One
     35




---



##### Table of Contents



PARTNERSHIPS,
    ALLIANCES AND ACQUISITIONS     and/or
       36




---



##### Table of Contents



INTELLECTUAL
    PROPERTY, PROPRIETARY RIGHTS AND LICENSES   and/or and/or
     ORGANIZATIONAL
    STRUCTURE  37




---



##### Table of Contents



Ownership

Country ofName of Subsidiary

%

Incorporation

FunctionGermanySAP Deutschland AG & Co. KG, Walldorf

100

Germany

Sales, consulting and trainingRest of Europe/Middle East/AfricaSAP (UK) Limited, Feltham

100

Great Britain

Sales, consulting and trainingSAP (Schweiz) AG, Biel

100

Switzerland

Sales, consulting and trainingSAP France S.A., Paris

100

France

Sales, consulting and trainingSAP ITALIA SISTEMI, APPLICAZIONI, PRODOTTI IN DATA PROCESSING
    S.P.A., Milan

100

Italy

Sales, consulting and trainingSAP Nederland B.V.,s-Hertogenbosch

100

The Netherlands

Sales, consulting and trainingAmericasSAP America, Inc., Newtown Square

100

USA

Sales, consulting and trainingSAP Canada Inc., Toronto

100

Canada

Sales, consulting, training,and research and
    developmentAsia/PacificSAP JAPAN Co., Ltd., Tokyo

100

Japan

Sales, consulting training,and research and
    development  DESCRIPTION OF
    PROPERTY        38




---



##### Table of Contents



Capital Expenditures
               39




---



##### Table of Contents



ITEM 4A. UNRESOLVED
    STAFF COMMENTS  ITEM 5. OPERATING
    AND FINANCIAL REVIEW AND PROSPECTS OVERVIEW         Form 20-F
   40




---



##### Table of Contents




    We expect year-over-year software and software-related service
    revenue growth in the range of 12% to 14% on a constant currency
    basis. The corresponding rate of growth in 2006 on a constant
    currency basis was 12%. We expect subscription and other
    software-related services to account for approximately 2% to 4%
    of total software and software-related services revenue.
    To tap new business in the lower midmarket in the coming years,
    over a period of eight quarters we intend to invest about
    300 million to 400 million in sales
    channels, process, infrastructure, and human resources, all
    oriented toward new customer relationships and a big,
    diversified partner ecosystem. We plan to fund these capital
    expenditures by using our operating cash flow. Depending on when
    we actually make these investments, in 2007 we expect to
    reinvest the equivalent of about one to two operating margin
    percentage points in preparing for additional future growth
    opportunities. Therefore, we assume our 2007 operating margin
    will be in the range 26.0% to 27.0%. Our 2006 operating margin
    was 27.4%.
    We plan to increase our headcount by 3,500 FTEs in 2007.
    We plan to continue to buy back shares in the open market. If
    the Annual General Meeting of Shareholders in May 2007 so
    resolves, we expect to pay a dividend that provides a payout
    ratio of about 30%.
    We assume an effective tax rate in the range of 32.5% to 33.0%            
    key factors that impacted our performance; 41




---



##### Table of Contents




    discussion of our operating results for 2007 compared to 2006
    and for 2006 compared to 2005; and
    our outlook for 2008.   KEY FACTORS Global Economic
    Trends
            IT Market in 2007
   42




---



##### Table of Contents



OPERATING RESULTS Total Revenue
  Change


Change2007


2006


2005


2007 vs. 2006


2006 vs. 2005 millionsTotal revenue


10,242



9,393



8,509



9
%


10
%   2007 compared with 2006.
 43




---



##### Table of Contents



Date

Period-EndDecember 2006


1.3197March 2007


1.3374June 2007


1.3520September 2007


1.4219December 2007


1.4603     2006 compared with 2005.
  Date

Period-EndDecember 2005


1.1842March 2006


1.2139June 2006


1.2779September 2006


1.2687December 2006


1.3197     Software and
    software-related service revenue
  Change


Change2007


2006


2005


2007 vs. 2006


2006 vs. 2005 millionsSoftware revenue


3,407



3,003



2,743



13
%


9
%Support revenue


3,838



3,464



3,170



11
%


9
%Subscription and other software-related service revenue


182



129



42



41
%


207
%Software and software-related service revenue


7,427



6,596



5,955



13
%


11
%    44




---



##### Table of Contents



2007 compared with 2006.
            2006 compared with 2005.
       45




---



##### Table of Contents



Professional
    services and other service revenue
  Change


Change2007


2006


2005


2007 vs. 2006


2006 vs. 2005 millionsConsulting revenue


2,221



2,249



2,071



(1
)%


9
%Training revenue


410



383



342



7
%


12
%Other service revenue


113



96



71



18
%


35
%Professional services and other service revenue


2,744



2,728



2,484



1
%


10
%   2007 compared with 2006.
      E-Learning
   46




---



##### Table of Contents



2006 compared with 2005.
          Total Operating
    Expenses and Operating Income
  Change


Change2007


2006


2005


2007 vs. 2006


2006 vs. 2005 millionsTotal operating expenses


7,510



6,815



6,172



10
%


10
%Operating income


2,732



2,578



2,337



6
%


10
%Operating margin (Operating income as a percentage of total
    revenue)


26.7
%


27.4
%


27.5
%   2007 compared with 2006.
      
    In 2007 we increased our personnel expenses by
    356 million or 9% to 4,174 million, which
    is the result of the overall headcount increase in 2007 of 4,663
    FTE or 12% to 43,861 FTE as of December 31, 2007. 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. In total, 35% of the headcount increase in 2007
    was realized in India, China and Bulgaria. The share of
    employees in these three countries has increased from 14% in
    2006 to 16% as of December 31, 2007. Personnel expenses as
    percentage of total operating expenses remained stable at 56%.
    As a result of the strong increase in software and
    software-related service revenue, cost of purchased licenses
    (e.g. databases) increased in 2007 by 27%. 47




---



##### Table of Contents




    The incremental headcount and the increase in business activity
    in 2007 resulted in 54 million or 13% higher travel
    expenses compared to 2006.
    Our accelerated investments in connection with SAP Business
    ByDesign.  2006 compared with 2005.
      
    We increased our research and development expenses in 2006 by
    246 million, or 23%, compared to 2005.
    Our growing workforce resulted in an increase in personnel
    expenses, which went up from 3,365 million in 2005 to
    3,818 million in 2006, or 13%. This increase in
    personnel expenses is the result of the overall headcount
    increase from 35,778 FTEs as of December 31, 2005, to
    39,198 FTEs as of December 31, 2006, an increase of 10%.
    The biggest increase in headcount was in research and
    development, in which the worldwide FTE count rose 16% to
    11,801. 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
    11% in 2005 to 14% in 2006.
    Cost of purchased licenses increased due to the strong growth in
    software and software-related service revenue and the increase
    in amortization of acquired intellectual property.
    We had higher travel expenses due to increased business activity.    OPERATING EXPENSES
  Cost of software and
    software-related services
  Change

Change2007

2006

2005

2007 vs. 2006

2006 vs. 2005 millionsCost of software and software-related services


1,310



1,091



983



20%



11%As a percentage of software and software-related service revenue


18%



17%



17%     
    Customer support costs which include:  
    Standard support (e.g., 24x7 customer problem resolution, remote
    service delivery) 48




---



##### Table of Contents




    SAP Premium Support (Increased value on standard services)
    Optimized implementation and ongoing management of End-to-end
    Solution Operations (costs and risks control by managing
    customers applications end-to-end)
    SAP MaxAttention Support (comprehensive support tailored to
    customer needs)
    SAP Safeguarding (Reduced implementation or upgrade risk)    
    Costs of developing custom solutions that address
    customers unique business requirements.
    License fees and commissions paid to third parties for databases
    and the other complementary third-party products sublicensed by
    us to customers.  2007 compared with 2006.
    2006 compared with 2005.
  Cost of professional
    services and other services
  Change

Change2007

2006

2005

2007 vs. 2006

2006 vs. 2005 millionsCost of professional services and other services


2,091



2,073



1,925



1%



8%As a percentage of Professional services and other service
    revenue


76%



76%



77%     2007 compared with 2006.
    2006 compared with 2005.
 49




---



##### Table of Contents



Research and
    Development
  Change

Change2007

2006

2005

2007 vs. 2006

2006 vs. 2005 millionsResearch and development


1,458



1,335



1,089



9%



23%As a percentage of total revenue


14%



14%



13%     
    Personnel expenses related to our research and development
    employees;
    Costs incurred for independent contractors retained by us to
    assist in our research and development activities; and
    Amortization of computer hardware and software used in our
    research and development activities.  2007 compared with 2006.
    2006 compared with 2005.
      Sales and Marketing
  Change

Change2007

2006

2005

2007 vs. 2006

2006 vs. 2005 millionsSales and marketing


2,162



1,908



1,746



13%



9%As a percentage of total revenue


21%



20%



21%   2007 compared with 2006.
 50




---



##### Table of Contents



2006 compared with 2005.
    General and
    Administration
  Change

Change2007

2006

2005

2007 vs. 2006

2006 vs. 2005 millionsGeneral and administration


506



464



435



9%



7%As a percentage of total revenue


5%



5%



5%   2007 compared with 2006.
    2006 compared with 2005.
    Financial
    Income/Expense, Net
  Change

Change2007

2006

2005

2007 vs. 2006

2006 vs. 2005 millionsFinancial income/expense, net


124



122



11



2%



1,009%As a percentage of total revenue


1%



1%



0%     2007 compared with 2006.
 51




---



##### Table of Contents



2006 compared with 2005.
  Income Taxes
  Change

Change2007

2006

2005

2007 vs. 2006

2006 vs. 2005 millionsIncome taxes


921



805



818



14%



(2
)%As a percentage of Income from continuing operations before
    income taxes


32%



30%



35%   2007 compared with 2006.
  2006 compared with 2005.
 SEGMENT DISCUSSIONS      52




---



##### Table of Contents



Change

ChangeProduct Segment

2007


2006


2005


2007 vs. 2006

2006 vs. 2005External revenue


7,369



6,643



6,041


11%

10%Segment expenses


(3,069
)


(2,609
)


(2,447
)

18%

7%Segment contribution


4,300



4,034



3,594


7%

12%Segment profitability


58%



61%



59%


(3) percentage
    points

2 percentage
    points   Change

ChangeConsulting Segment

2007


2006


2005


2007 vs. 2006

2006 vs. 2005External revenue


2,369



2,300



2,078


3%

11%Segment expenses


(1,738
)


(1,704
)


(1,620
)

2%

5%Segment contribution


631



596



458


6%

30%Segment profitability


27%



26%



22%


1 percentage
    points

4 percentage
    points   Change

ChangeTraining Segment

2007


2006


2005


2007 vs. 2006

2006 vs. 2005External revenue


493



440



380


12%

16%Segment expenses


(284
)


(273
)


(248
)

4%

10%Segment contribution


209



167



132


25%

27%Segment profitability


42%



38%



35%


4 percentage
    points

3 percentage
    points   Product Segment
    2007 compared with 2006.
   53




---



##### Table of Contents



2006 compared with 2005.
      Consulting Segment
    2007 compared with 2006.
   54




---



##### Table of Contents



2006 compared with 2005.
        Training Segment
  e-learning.
  2007 compared with 2006. e-learning, e-learning
      2006 compared with 2005. e-learning
     55




---



##### Table of Contents



OUTLOOK 2008 Global Economic
    Outlook
                IT Market: Outlook
    for 2008
       56




---



##### Table of Contents



Outlook for SAP
      
    We expect full-year 2008 Non-GAAP software and software-related
    service revenue to increase between 24% and 27% on a constant
    currency basis (2007: 7.427 billion). This full-year
    projection excludes an estimated 180 million of
    support revenue that Business Objects would have been able to
    recognize had it remained a standalone entity but that will not
    be recognized by SAP due to purchase accounting adjustments
    under U.S. GAAP. We expect SAPs business, excluding
    the contribution from Business Objects, to contribute 12 to
    14 percentage points to this growth.
    We expect our full-year 2008 Non-GAAP operating margin, which
    excludes the Business Objects support revenue mentioned above as
    well as acquisition-related charges, to be between 27.5% and
    28.0% on a constant currency basis (2007 Non-GAAP operating
    margin: 27.3%).
    The 2008 Non-GAAP operating margin outlook includes accelerated
    investments of 175 to 225 million (2007:
    125 million) in building a business around the new
    SAP Business ByDesign solution to address new, untapped segments
    in the midmarket.
    We plan to increase our headcount by about 4,000 FTEs in 2008
    and we expect 10% of the new jobs to be in Germany. Those
    numbers do not include the headcount increase resulting from the
    acquisition of Business Objects. 57




---



##### Table of Contents




    For the benefit of our shareholders, we will continue to buy
    back shares in 2008 and, if approved at the Annual General
    Meeting of Shareholders on June 3, 2008, we will pay a
    dividend that provides a payout ratio of about 31%.      Prospects through
    2010
         FOREIGN CURRENCY
    EXCHANGE RATE EXPOSURE    58




---



##### Table of Contents



Form 20-F,
 CRITICAL ACCOUNTING
    POLICIES Form 20-F.
  
    Revenue recognition
    Valuation of accounts receivable
    Accounting for share-based compensation
    Accounting for income taxes and other income tax related
    judgments
    Impairment assessments
    Legal contingencies    Revenue Recognition
  97-2, Software Revenue Recognition (SOP 97-2),
 59




---



##### Table of Contents



catch-up
  SOP 97-2,
            Valuation of
    Accounts Receivable
     60




---



##### Table of Contents



2007


2006


2005 millionsSpecific customer credit loss risks


9



3



9Customer credit loss risks based on aging of the
    receivables  charged to expense/(income)


(3
)


(43
)


3Total amounts charged to expense/(income) for allowances for
    doubtful accounts


6



(40
)


12     Accounting for
    Share-Based Compensation
  Share-Based Payment
  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
 61




---



##### Table of Contents



Accounting for
    Income Taxes and Other Income Tax Related Judgments
   62




---



##### Table of Contents



Impairment
    Assessments
  Goodwill
    and intangible assets
  Goodwill and
    Other Intangible Assets
  Equity
    investments
  start-up and/or
   63




---



##### Table of Contents



Legal Contingencies
  Accounting for Contingencies
 NEW ACCOUNTING
    STANDARDS NOT YET ADOPTED  LIQUIDITY AND
    CAPITAL RESOURCES      64




---



##### Table of Contents



2007


2006


% change millionsCash and cash equivalents


1,608



2,399



(33
)%Restricted
    cash(1)


550







Short-term investments


598



931



(36
)%Total


2,756



3,330



(17
)%     (1)
    The balance as of December 31, 2007 represents restricted
    cash of 550 million which was a security deposit that
    served as collateral for the credit facility entered into in
    connection with the acquisition of Business Objects.          Analysis of
    Consolidated Statements of Cash Flow
  Years ended December 31,


Change


Change2007


2006


2005


2007 vs. 2006


2006 vs. 2005 millionsNet cash provided by operating activities


1,950



1,855



1,612



5
%


15
%Net cash used in investing activities


(1,392
)


(132
)


(574
)


955
%


(77
)%Net cash used in financing activities


(1,287
)


(1,375
)


(555
)


(6
)%


148
%   12-month
 65




---



##### Table of Contents



12-month
  Credit Lines
           66




---



##### Table of Contents



Authorized Capital
   OFF-BALANCE SHEET
    ARRANGEMENTS   Consolidation of Variable Interest
    Entities  an interpretation of ARB No. 51.
  Contractual
    Obligations
    Payments due by periodContractual obligations

Total


Less than 1 year


1-3 years


3-5 years


More than 5 years millionsLong-term debt
    obligations(1)


2







2







Capital (finance) lease
    obligations(2)


3







2



1



Operating lease
    obligations(3)


649



157



216



139



137Purchase
    obligations(4)


201



137



48



12



4Other long-term liabilities reflected on the balance
    sheet(5)


106







100



4



2Total


961



294



368



156



143     (1)
    This represents a bank loan.(2)
    This mainly represents capital leases of computer equipment and
    cars.(3)
    We have operating leases for office facilities for most of our
    subsidiaries, cars, computer hardware and certain other
    equipment. Rental expense for operating leases in 2007 was
    209 million (2006: 181 million; 2005:
    164 million).(4)
    Purchase obligations represent agreements to purchase goods or
    services that are enforceable and legally binding on us that
    specify all significant terms, including: fixed or minimum
    quantities to be purchased; fixed, minimum or variable price
    provisions; and the approximate timing of the transaction. The
    outstanding obligations include the construction of facilities,
    office equipment and car purchase commitments, food and security
    services and other facility commitments.  Our expected contributions to our
    pension and other post employment benefit plans are not included
    in the table above. We expect to contribute in 2008 statutory
    minimum and discretionary amounts of 2 million to our
    German defined benefit plans and 5 million to our
    foreign defined benefit plans, all of which are expected to be
    paid as cash contributions. Our contributions to our German and
    foreign defined contribution plans have ranged from
    82 million to 93 million in 2005 through
    2007; we expect similar contributions to be made in 2008. See
    Note 19a to our consolidated financial statements in
    Item 18. Financial Statements for additional
    information on estimated future pension benefits to be paid.
  (5)
    Amounts mainly consist of income tax payable
    (90 million) which includes provisions for
    uncertainties in income taxes, restructuring and other accruals
    (10 million) and trade accounts payable
    (6 million). Other noncurrent 67




---



##### Table of Contents



liabilities on the balance sheet
    such as pension and other postemployment benefit liabilities,
    deferred compensation, deferred income, deferred tax
    liabilities, and deferred rent are not included in this table.
    Please see Notes 18 and 19b to our consolidated financial
    statements in Item 18. Financial Statements.    Obligations under
    Indemnifications and Guarantees
       RESEARCH AND
    DEVELOPMENT       All-in-One
 68




---



##### Table of Contents



69




---



##### Table of Contents



ITEM 6. DIRECTORS,
    SENIOR MANAGEMENT AND EMPLOYEES SUPERVISORY BOARD   Year

YearFirst

TermName

Age

Principal Occupation

Elected

ExpiresProf. Dr. h.c. mult. Hasso Plattner,
    Chairman(1)(2)(4)(6)(7)(8)


64


Chairman of the Supervisory Board


2003



2012Pekka
    Ala-Pietilä(1)(7)(8)


51


Co-founder and CEO Blyk Ltd.


2002



2012Prof. Dr. Wilhelm
    Haarmann(1)(2)(4)(5)(9)


57


Attorney at Law, Certified Public Auditor and Certified Tax
    Advisor; HAARMANN Partnerschaftsgesellschaft,
    Rechtsanwälte, Steuerberater, Wirtschaftsprüfer


1988



2012Dr. h.c. Hartmut
    Mehdorn(1)(6)


65


Chairperson of Executive Board, Deutsche Bahn AG


1998



2012Prof. Dr.-Ing. Dr. h.c. mult. Dr.-Ing. E.h. mult. Joachim
    Milberg(1)(2)(4)(7)(8)


64


Chairman of the Supervisory Board of BMW AG


2007



2012Prof. Dr. Dr. h.c. mult. August-Wilhelm
    Scheer(1)(3)(5)


66


Professor at Saarland University


2002



2012Dr. Erhard
    Schipporeit(1)(3)(11)


59


Management Consultant


2005



2012Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus
    Wucherer(1)(7)


63


Member of the Corporate Executive Committee of Siemens AG


2007



2012Lars Lamadé, Vice
    Chairman(4)(6)(10)


36


Employee, Project Manager Service & Support


2002



2012Thomas
    Bamberger(3)(10)


40


Employee, Chief Controlling Officer Research & Breakthrough
    Innovation, Chief Controlling Officer Global Service &
    Support


2007



2012Panagiotis
    Bissiritsas(2)(5)(10)


39


Employee, Support Expert


2007



2012Willi
    Burbach(4)(7)(10)


45


Employee, Developer


1993



2012Helga
    Classen(4)(6)(10)


57


Employee, Chairperson of the Works Council of SAP AG and SAP
    Hosting AG & Co. KG


1993



2012Peter
    Koop(7)(10)


41


Employee, Industry Business Development Expert


2007



2012Dr. Gerhard
    Maier(2)(3)(10)


54


Employee, Development Project Manager


1989



2012Stefan
    Schulz(5)(7)(10)


38


Employee, Development Project Manager


2002



2012     (1)
    
    Elected by SAP AGs
    shareholders on May 10, 2007.(2)
    
    Member of the Compensation
    Committee.(3)
    
    Member of the Audit Committee. 70




---



##### Table of Contents



(4)
    
    Member of the General Committee.(5)
    
    Member of the Finance and
    Investment Committee.(6)
    
    Member of the Mediation Committee.(7)
    
    Member of the Technology Committee.(8)
    
    Member of the Nomination 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 founded HAARMANN
    Partnerschaftsgesellschaft in Frankfurt.  (10)
    
    Elected by SAP AGs employees
    on April 23, 2007.(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.      Mitbestimmungsgesetz
 EXECUTIVE BOARD   Year First


Year CurrentName

Appointed


Term ExpiresProf. Dr. Henning Kagermann, CEO


1991



2009Dr. Peter Zencke


1993



2008Prof. Dr. Claus Heinrich


1996



2010Gerhard Oswald


1996



2010Dr. Werner Brandt


2001



2009Léo Apotheker


2002



2010John Schwarz


2008



2010      71




---



##### Table of Contents



Henning Kagermann, CEO Vorstandssprecher
  Léo Apotheker, Deputy CEO stellvertretender
    Vorstandssprecher
  Werner Brandt,
  Claus Heinrich,
  Gerhard Oswald,
  John Schwarz
  Peter Zencke,
   72




---



##### Table of Contents



COMPENSATION
    REPORT    Compensation for
    Executive Board Members
  Compensation
    Package
            
    The fixed element is paid as a monthly salary.
    The amount of performance-related compensation to be paid out in
    respect of 2007 depends on the SAP Groups achievement of
    its targets operating income based on
    U.S. GAAP, on software and software-related revenue
    growth at constant currencies, and on the operating margin
    according to U.S. GAAP. On February 12, 2008, the
    Supervisory Boards Compensation Committee assessed
    SAPs performance against the agreed targets and determined
    how much performance-related compensation was payable. The
    payment will be made after the Annual General Meeting of
    Shareholders in June 2008.
    The regular form of share-based compensation is the issue of
    virtual stock options under the terms of the 2007 stock option
    plan (SAP SOP 2007). The terms and details of SAP SOP 2007
    are reported in Note 27 to our consolidated financial
    statements in Item 18. Financial Statements.   73




---



##### Table of Contents



Amount of
    Compensation
    Performance-Related


Regular Long-TermFixed Elements


Element


Incentive ElementsDirectors


Share-BasedProfit-


CompensationSalary


Other*


Sharing


(SAP SOP 2007)**


Total(000)Prof. Dr. Henning Kagermann (CEO)


728.5



16.0



4,219.7



949.1



5,913.3Shai Agassi (member until March 31, 2007)****


161.3



3.1



446.8
***






611.2Léo Apotheker


485.6



59.0



2,813.1



632.7



3,990.4Dr. Werner Brandt


443.4



41.3



2,568.5



577.7



3,630.9Prof. Dr. Claus E. Heinrich


443.4



20.2



2,568.5



577.7



3,609.8Gerhard Oswald


443.4



14.8



2,568.5



577.7



3,604.4Dr. Peter Zencke


443.4



28.0



2,568.5



577.7



3,617.6Total


3,149.0



182.4



17,753.6



3,892.6



24,977.6     *
    
    Insurance contributions, benefits
    in kind, expenses for maintenance of two households due to work
    abroad, compensation from seats on other governing bodies in the
    SAP Group.**
    
    Fair value at the time of
    allocation.***
    
    The portion of the directors
    profit-sharing for January through March 2007 was calculated on
    the basis of the actual directors profit-sharing paid in
    2006.****
    
    Shai Agassi left the Executive
    Board on March 31, 2007. His employment contract with SAP
    ended on April 30, 2007. Details of the benefits paid due
    to early contract termination are set out in the
    End-of-Service
    Undertakings section.    NonrecurringRegular





Long-TermPerformance-


Long-Term





IncentiveRelated


Incentive





ElementFixed Elements


Element


Elements





Share-BasedDirectors


Share-Based


Total Before


CompensationProfit-


Compensation


Nonrecurring


(Incentive PlanSalary


Other*


Sharing


(SAP SOP 2002)**


Element


2010)**


Total(000)Prof. Dr. Henning Kagermann (CEO)


710.7



17.0



2,673.7



949.0



4,350.4



4,680.1



9,030.5Shai Agassi


474.4



59.5



1,782.5



632.7



2,949.1



3,120.1



6,069.2Léo Apotheker


473.8



0.3



1,782.5



632.7



2,889.3



3,120.1



6,009.4Dr. Werner Brandt


432.6



41.3



1,627.5



577.7



2,679.1



1,560.0



4,239.1Prof. Dr. Claus E. Heinrich


432.6



20.0



1,627.5



577.7



2,657.8



1,560.0



4,217.8Gerhard Oswald


432.6



14.8



1,627.5



577.7



2,652.6



1,560.0



4,212.6Dr. Peter Zencke


432.6



27.7



1,627.5



577.7



2,665.5



1,560.0



4,225.5Total


















20,843.8







38,004.1     *
    
    Insurance contributions, benefits
    in kind, compensation from seats on other governing bodies in
    the SAP Group.**
    
    Fair value at the time of
    allocation. 74




---



##### Table of Contents



Total FairValue ofLong-TermFair Value


Incentive


Fair Valueof Right


Elements


of Right on


Total Value onat Time of


at Time of


December 31,


December 31,Quantity


Grant


Grant


2007


2007


(000)





(000)Prof. Dr. Henning Kagermann (CEO)


118,637



8.00



949.1



8.53



1,012.0Shai Agassi










0Léo Apotheker


79,093



8.00



632.7



8.53



674.7Dr. Werner Brandt


72,216



8.00



577.7



8.53



616.0Prof. Dr. Claus E. Heinrich


72,216



8.00



577.7



8.53



616.0Gerhard Oswald


72,216



8.00



577.7



8.53



616.0Dr. Peter Zencke


72,216



8.00



577.7



8.53



616.0Total


486,594







3,892.6







4,150.7     Total FairValue ofRegular Share-Based Compensation


Nonrecurring Share-Based Compensation


Long-TermSAP SOP 2002


Incentive Plan 2010


IncentiveFair Value








Fair Value





Elements atat Time of








at Time of





Time ofQuantity


Grant


Total


Quantity


Grant


Total


Grant


(000)








(000)


(000)Prof. Dr. Henning Kagermann (CEO)


35,851



26.47



949.0



188,182



24.87



4,680.1



5,629.1Shai Agassi


23,901



26.47



632.7



125,455



24.87



3,120.0



3,752.7Léo Apotheker


23,901



26.47



632.7



125,455



24.87



3,120.0



3,752.7Dr. Werner Brandt


21,823



26.47



577.7



62,727



24.87



1,560.0



2,137.7Prof. Dr. Claus E. Heinrich


21,823



26.47



577.7



62,727



24.87



1,560.0



2,137.7Gerhard Oswald


21,823



26.47



577.7



62,727



24.87



1,560.0



2,137.7Dr. Peter Zencke


21,823



26.47



577.7



62,727



24.87



1,560.0



2,137.7Total


170,945







4,525.2



690,000







17,160.1



21,685.3   End-of-Service
    Undertakings
  Retirement
    Pension Plan
     75




---



##### Table of Contents



Prof. Dr.Henning











Prof. Dr.Kagermann





Léo


Dr. Werner


Claus E.


Gerhard


Dr. Peter(CEO)


Shai Agassi


Apotheker


Brandt


Heinrich


Oswald


Zencke


Total(000)PBO January 1, 2006


5,592.1



172.0



462.1



529.4



3,252.4



3,525.8



4,127.5



17,661.3Less plan assets market value January 1, 2006


3,952.4



113.6



579.1



313.8



1,512.3



1,732.5



2,559.7



10,763.4Accrued January 1, 2006


1,639.7



58.4



(117.0
)


215.6



1,740.1



1,793.3



1,567.8



6,897.9PBO change in 2006


(257.4
)


184.8



(16.7
)


63.9



(237.1
)


(241.5
)


(251.6
)


(755.6
)Plan assets change in 2006


630.1



132.8



24.3



94.4



251.1



282.6



387.3



1,802.6PBO December 31, 2006


5,334.7



356.8



445.4



593.3



3,015.3



3,284.3



3,875.9



16,905.7Less plan assets market value December 31, 2006


4,582.5



246.4



603.4



408.2



1,763.4



2,015.1



2,947.0



12,566.0Accrued December 31, 2006


752.2



110.4



(158.0
)


185.1



1,251.9



1,269.2



928.9



4,339.7PBO change in 2007


530.5



(320.9
)


(22.9
)


20.4



(284.4
)


(269.5
)


(228.4
)


(575.2
)Plan assets change in 2007


645.5



(199.0
)


27.0



102.5



265.3



301.3



407.9



1,550.5PBO December 31, 2007


5,865.2



35.9



422.5



613.7



2,730.9



3,014.8



3,647.5



16,330.5Less plan assets market value December 31, 2007


5,228.0



47.4



630.4



510.7



2,028.7



2,316.4



3,354.9



14,116.5Accrued December 31, 2007


637.2



(11.5
)


(207.9
)


103.0



702.2



698.4



292.6



2,214.0  76




---



##### Table of Contents



Vested on


Vested onDecember 31,


December 31,2007


2006(000)Prof. Dr. Henning Kagermann (CEO)


322.7
*


289.8Shai Agassi


13.2



13.5Léo Apotheker


45.5



45.5Dr. Werner Brandt


41.0



34.4Prof. Dr. Claus E. Heinrich


175.2



165.5Gerhard Oswald


192.8



184.6Dr. Peter Zencke


216.9



207.2     *
    
    Due to the extension of Henning
    Kagermanns contract beyond his 60th birthday, this value
    represents the retirement pension entitlement that he would
    receive after his current Executive Board contract expires on
    May 31, 2009, based on the entitlements vested on
    December 31, 2007.      Early
    Termination
      12-month
   77




---



##### Table of Contents



LONG-TERM
    INCENTIVES FOR THE EXECUTIVE BOARD
    SAP
    SOP 2007
      SAP
    SOP 2007 Stock Options
  Holding onDecember 31,





Fair Value  of2007


Fair Value of


Unit on


Accrual onQuantity of


Unit at Time of


December 31,


December 31,Options


Grant


2007


2007





(000)Prof. Dr. Henning Kagermann (CEO)


118,637



8.00



8.53



379.5Léo Apotheker


79,093



8.00



8.53



253.0Dr. Werner Brandt


72,216



8.00



8.53



231.0Prof. Dr. Claus E. Heinrich


72,216



8.00



8.53



231.0Gerhard Oswald


72,216



8.00



8.53



231.0Dr. Peter Zencke


72,216



8.00



8.53



231.0Total


486,594











1,556.5   Incentive Plan
    2010
    
    If market capitalization does not increase by 50% or more, the
    Executive Board will not receive a payout.
    If market capitalization increases by more than 50% but less
    than 100%, target achievement will be measured progressively.
    If SAPs market capitalization increases not less than
    twofold during the said period, the Executive Board will receive
    a payout of 100 million.   78




---



##### Table of Contents



Nonrecurring
    Share-Based Compensation: Incentive Plan 2010
  OriginalQuantity





Fair Value ofGranted


Fair Value of


Unit on


Accrual onNumber of


Unit at Time of


December 31,


December 31,Rights


Grant


2007


2007





(000)Prof. Dr. Henning Kagermann (CEO)


188,182



24.87



8.06



575.3Shai Agassi


125,455
*


24.87



8.06



0.0Léo Apotheker


125,455



24.87



8.06



383.5Dr. Werner Brandt


62,727



24.87



8.06



191.8Prof. Dr. Claus E. Heinrich


62,727



24.87



8.06



191.8Gerhard Oswald


62,727



24.87



8.06



191.8Dr. Peter Zencke


62,727



24.87



8.06



191.8Total


690,000











1,726.0     *
    
    The rights expired in the
    reporting period. 79




---



##### Table of Contents



SAP
    SOP 2002
    one-to-three
  RightsHolding on


Exercised





Holding onJanuary 1, 2007


in 2007





December 31, 2007Exercise





Remaining





Price on





RemainingPrice per


Quantity


Term in


Quantity of


Exercise


Quantity of


Term inShare


of Shares


Years


Shares


Day


Shares


Years











Prof. Dr. Henning Kagermann (CEO)


22.59



320,000



1.16



320,000



38.7071







37.50



200,000



2.13











200,000



1.1333.55



267,820



3.11











267,820



2.1146.48



143,404
(2)


4.10











143,404



3.10Shai
    Agassi(1)


22.59



120,000



1.16



120,000



36.805







24.78



120,000



1.33



120,000



36.805







37.50



112,000



2.13











112,000



1.1333.55



149,980



3.11











149,980



1.3346.48



95,604
(2)


4.10











95,604



1.33Léo Apotheker


37.50



112,000



2.13











112,000



1.1333.55



149,980



3.11











149,980



2.1146.48



95,604
(2)


4.10











95,604



3.10Dr. Werner Brandt


37.50



112,000



2.13











112,000



1.1333.55



149,980



3.11











149,980



2.1146.48



87,292
(2)


4.10











87,292



3.10Prof. Dr. Claus E. Heinrich


22.59



180,000



1.16



180,000



38.7071







37.50



112,000



2.13











112,000



1.1333.55



149,980



3.11











149,980



2.1146.48



87,292
(2)


4.10











87,292



3.10Gerhard Oswald


33.55



149,980



3.11











149,980



2.1146.48



87,292
(2)


4.10











87,292



3.10Dr. Peter Zencke


22.59



180,000



1.16



180,000



38.7071







37.50



112,000



2.13











112,000



1.1333.55



149,980



3.11











149,980



2.1146.48



87,292
(2)


4.10











87,292



3.10Total






3,531,480







920,000







2,611,480     (1)
    
    Shai Agassi can exercise his
    outstanding stock options under SAP SOP 2002 within the
    agreed two-year grace period in accordance with the applicable
    plan terms. The rights exercised in 2007 were exercised by Shai
    Agassi after he left the Executive Board.(2)
    
    These rights could not be
    exercised on December 31, 2007.    LTI Plan 2000
   80




---



##### Table of Contents



one-to-three
  LTI
    Plan 2000 Stock Options
  RightsHolding on


Exercised in





Holding on December 31,January 1, 2007


2007





2007Exercise





Remaining





Price on





RemainingPrice per


Quantity


Term in


Quantity of


Exercise


Quantity of


Term inShare


of Shares


Years


Shares


Day*


Shares


Years











Prof. Dr. Henning Kagermann (CEO)


20.09



112,128



3.14











112,128



2.1424.41



157,500



4.14











157,500



3.14Léo Apotheker


30.16



87,500



5.14











87,500



4.14Dr. Peter Zencke


20.09



27,924



3.14











27,924



2.1424.41



73,700



4.14











73,700



3.14Total






458,752















458,752     *
    
    In 2007, no stock options under
    the LTI Plan were exercised. Therefore, the exercise price is
    not given here because it is variable and is only calculated on
    the exercise day. 81




---



##### Table of Contents



one-to-three
  LTI
    Plan 2000 Convertible Bonds
  Holding on


Rights





Holding on December 31,January 1, 2007


Exercised in





2007Exercise





Remaining


2007


Price on





RemainingPrice per


Quantity


Term


Quantity of


Exercise


Quantity


TermShare


of Shares


in Years


Shares


Day


of Shares


in Years











Prof. Dr. Henning Kagermann (CEO)


72.58



89,700



3.14











89,700



2.1447.81



126,000



4.14











126,000



3.1437.88



360,000



5.14











360,000



4.14Léo Apotheker


83.67



95,400



3.19











95,400



2.1947.81



120,000



4.14











120,000



3.1437.88



70,000



5.14











70,000



4.14Dr. Werner Brandt


47.81



20,000



4.14











20,000



3.1437.88



120,000



5.14











120,000



4.14Prof. Dr. Claus E. Heinrich


72.58



65,700



3.14











65,700



2.1447.81



88,000



4.14











88,000



3.1437.88



200,000



5.14











200,000



4.14Gerhard Oswald


72.58



65,700



3.14











65,700



2.1447.81



88,000



4.14











88,000



3.14Dr. Peter Zencke


72.58



65,700



3.14











65,700



2.1447.81



88,000



4.14











88,000



3.1437.88



200,000



5.14











200,000



4.14Total






1,862,200















1,862,200   Total
    Expense for Share-Based Compensation
    2007


2006(000)Prof. Dr. Henning Kagermann (CEO)


1,047.5



1,699.1Shai Agassi


85.8



1,045.8Léo Apotheker


690.3



1,045.8Dr. Werner Brandt


601.4



868.6Prof. Dr. Claus E. Heinrich


601.4



868.6Gerhard Oswald


601.4



868.6Dr. Peter Zencke


601.4



868.6Total


4,229.2



7,265.1  82




---



##### Table of Contents



STOCK HELD BY
    EXECUTIVE BOARD MEMBERS
      Transaction in SAP SharesTransaction Date

Transaction

Quantity


Unit Price Léo Apotheker

April 23, 2007

Stock sale


120,000



38.5188October 19, 2007

Stock purchase


1,000



38.09Dr. Werner Brandt

February 5, 2007

Stock purchase


2,000



35.58October 18, 2007

Stock purchase


1,000



38.20Prof. Dr. Claus E. Heinrich

August 15, 2007

Stock sale


180,000



38.7071Prof. Dr. Henning Kagermann

August 15, 2007

Stock sale


292,069



38.7071August 15, 2007

Stock purchase*


27,931



22.5925Dr. Peter Zencke

August 15, 2007

Stock sale


180,000



38.7071     *
    
    Shares acquired by exercising SAP
    SOP 2002 stock options.  Executive
    Board: Other Information
      Compensation for
    Supervisory Board Members
  Compensation
    Package
         83




---



##### Table of Contents



Amount of
    Compensation
    2007


2006Compensation











CompensationFixed


Variable


for Committee





Fixed


Variable


for CommitteeCompensation


Compensation


Work


Total


Compensation


Compensation


Work


Total(000)Prof. Dr. h.c. mult. Hasso Plattner (chairperson)


75.0



125.0



15.0



215.0



75.0



125.0



15.0



215.0Lars Lamadé (deputy chairperson from May 10, 2007)


49.0



80.2



2.5



131.7



37.5



62.5



2.5



102.5Pekka Ala-Pietilä


37.5



62.5



2.5



102.5



37.5



62.5



2.5



102.5Thomas Bamberger (from May 10, 2007)


25.0



41.7



1.7



68.3



0.0



0.0



0.0



0.0Panagiotis Bissiritsas (from May 10, 2007)


25.0



41.7



3.3



70.0



0.0



0.0



0.0



0.0Willi Burbach


37.5



62.5



4.2



104.2



37.5



62.5



2.5



102.5Helga Classen (deputy chairperson until May 10, 2007)


45.8



75.0



2.5



123.3



50.0



100.0



2.5



152.5Prof. Dr. Wilhelm Haarmann


37.5



62.5



7.5



107.5



37.5



62.5



7.5



107.5Peter Koop (from May 10, 2007)


25.0



41.7



1.6



68.3



0.0



0.0



0.0



0.0Bernhard Koller (until May 10, 2007)


15.6



26.0



1.0



42.7



37.5



62.5



2.5



102.5Christiane Kuntz-Mayr (until May 10, 2007)


15.6



26.0



2.1



43.8



37.5



62.5



5.0



105.0Dr. Gerhard Maier


37.5



62.5



5.0



105.0



37.5



62.5



5.0



105.0Dr. h.c. Hartmut Mehdorn


37.5



62.5



0.0



100.0



37.5



62.5



0.0



100.0Prof. Dr.-Ing. Dr. h.c. Dr.-Ing. E.h. Joachim Milberg (from
    May 10, 2007)


25.0



41.7



5.0



71.7



0.0



0.0



0.0



0.0Prof. Dr. Dr. h.c. August-Wilhelm Scheer


37.5



62.5



7.5



107.5



37.5



62.5



7.5



107.5Dr. Barbara Schennerlein (until May 10, 2007)


15.6



26.0



1.0



42.7



37.5



62.5



2.5



102.5Dr. Erhard Schipporeit


37.5



62.5



5.0



105.0



37.5



62.5



5.0



105.0Stefan Schulz


37.5



62.5



5.0



105.0



37.5



62.5



5.0



105.0Dr. Dieter Spöri (until May 10, 2007)


15.6



26.0



1.0



42.7



37.5



62.5



2.5



102.5Dr. h.c. Klaus Tschira (until May 10, 2007)


15.6



26.0



1.0



42.7



37.5



62.5



2.5



102.5Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer (from May 10,
    2007)


25.0



41.7



1.7



68.3



0.0



0.0



0.0



0.0Total


672.9



1,118.8



76.3



1,867.9



650.0



1,100.0



70.0



1,820.0    84




---



##### Table of Contents



Long-Term
    Incentives for The Supervisory Board
    Supervisory
    Board Members Shareholdings
      Transactions in SAP SharesNotifying Party

Transaction Date


Transaction


Quantity


Unit Price in Peter Koop


August 13, 2007



Stock purchase



141



40.231Dr. Gerhard Maier


October 30, 2007



Stock sale



7,600



37.4157Helga Classen


December 10, 2007



Stock sale



7,556



35.7999   Supervisory
    Board: Other Information
       EMPLOYEES (continued
    operation)  85




---



##### Table of Contents



Employees as of December 31, continued operations2007


2006


2005FTEs

EMEA


Americas


APJ(*)


Total


EMEA


Americas


APJ(*)


Total


EMEA


Americas


APJ(*)


TotalProduct


3,022



1,002



1,807



5,831



2,840



808



1,595



5,243



2,494



613



1,262



4,369Service


6,558



3,893



2,334



12,785



6,336



3,363



1,819



11,518



6,636



3,203



1,591



11,430Development


7,787



1,749



3,415



12,951



7,507



1,530



2,764



11,801



7,063



1,151



2,001



10,215Sales & Marketing


3,688



3,129



1,465



8,282



3,330



2,604



1,116



7,050



3,302



2,189



934



6,425General & Administration


1,810



571



416



2,797



1,613



523



336



2,472



1,504



470



286



2,260Infrastructure


789



285



141



1,215



713



281



120



1,114



715



256



108



1,079SAP Group


23,654



10,629



9,578



43,861



22,339



9,109



7,750



39,198



21,714



7,882



6,182



35,778     (*)
    Asia Pacific Japan             86




---



##### Table of Contents



SHARE OWNERSHIP Beneficial Ownership
    of Shares
   SHARE-BASED
    COMPENSATION PLANS SAP Stock Option
    Plan 2002
         87




---



##### Table of Contents



Long Term Incentive
    2000 Plan
         88




---



##### Table of Contents



Stock Appreciation
    Rights (STAR) Plans
    Incentive Plan 2010
    Virtual Stock Option
    Plan 2007
    German Employee
    Stock Purchase Plans
   89




---



##### Table of Contents



U.S. Employee Stock
    Purchase Plans
    Other Foreign Stock
    Purchase Plans
   ITEM 7. MAJOR
    SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS MAJOR SHAREHOLDERS   Wertpapierhandelsgesetz
 90




---



##### Table of Contents



Ordinary SharesBeneficially Owned% ofMajor Shareholders

Number


OutstandingDietmar Hopp Stiftung GmbH


109,869,200



8.814
%DH Besitzgesellschaft mbH & Co. KG


6,404,000



0.514
%Dietmar Hopp,
    collectively(1)


116,273,200



9.327
%Hasso Plattner GmbH & Co.
    Beteiligungs-KG(2)


113,718,960



8.122
%Hasso Plattner Förderstiftung GmbH


15,244,922



1.223
%Hasso Plattner (24,100 ADRs)


24,100



0.002
%Hasso Plattner, Chairperson Supervisory Board,
    collectively(3)


128,987,982



10.347
%Dr. h.c. Klaus Tschira Beteiligungs GmbH & Co. KG


32,830,640



2.634
%Klaus Tschira Stiftung gGmbH


78,474,048



6.295
%Gerda Tschira


440,000



0.035
%Klaus Tschira


2,738,000



0.220
%Klaus Tschira,
    collectively(4)


114,482,688



9.184
%Executive Board Members as a group (7 persons)


86,515



0.007
%Supervisory Board Members as a group (16 persons)


128,993,699



10.348
%Executive Board Members and Supervisory Board Members as a
    group (23 persons)


129,080,214



10.355
%Options and convertible bonds that are vested and exercisable
    within 60 days of March 14, 2008, held by Executive
    Board Members and Supervisory Board Members,
    collectively(5)


1,165,253



N/A     (1)
    Dietmar Hopp exercises sole voting and dispositive power in
    Dietmar Hopp Stiftung GmbH and DH Besitzgesellschaft
    mbH & Co. KG.(2)
    Hasso Plattner exercises sole voting and dispositive power in
    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 691,053 stock options and 474,200 convertible bonds.
    Each of these stock options and convertible bonds entitles the
    holder, if exercised or converted, to four SAP AG ordinary
    shares.   RELATED-PARTY
    TRANSACTIONS  91




---



##### Table of Contents



ITEM 8. FINANCIAL
    INFORMATION CONSOLIDATED
    FINANCIAL STATEMENTS  OTHER FINANCIAL
    INFORMATION Legal Proceedings
      Dividend Policy
    Significant Changes
   92




---



##### Table of Contents



ITEM 9. THE
    OFFER AND LISTING GENERAL
  Freiverkehr
  AktG
         93




---



##### Table of Contents



TRADING ON THE
    FRANKFURT STOCK EXCHANGE AND THE NYSE
    Price perOrdinary Share(1)


DAX(2)


Price per ADSHigh


Low


Low


Low


High


LowIn 








In US$Annual Highs and Lows2003


33.50



16.91



3,965.16



2,202.96



41.80



18.462004


35.68



29.03



4,261.79



3,646.99



45.45



35.502005


38.95



28.63



5,458.58



4,178.10



46.43



36.962006


46.86



34.56



6,611.81



5,292.14



57.00



43.572007


42.27



33.37



8,105.69



6,447.70



59.86



44.45Quarterly Highs and Lows2006First Quarter


44.75



36.50



5,984.19



5,334.30



54.32



44.00Second Quarter


46.86



38.49



6,140.72



5,292.14



57.00



48.58Third Quarter


41.85



34.56



6,004.33



5,396.85



53.42



43.57Fourth Quarter


41.40



38.38



6,611.81



5,992.22



53.12



49.042007First Quarter


42.27



33.37



7,027.59



6,447.70



55.71



44.45Second Quarter


38.15



33.65



8,090.49



6,937.17



51.35



45.08Third Quarter


41.76



36.61



8,105.69



7,270.07



58.67



49.85Fourth Quarter


41.66



34.31



8,076.12



7,511.97



59.86



50.05Monthly Highs and Lows2007July


41.14



36.61



8,105.69



7,451.68



57.20



49.85August


40.15



38.02



7,638.17



7,270.07



55.28



51.58September


41.76



39.29



7,861.51



7,375.44



58.67



53.80October


41.66



37.14



8,041.26



7,794.94



59.86



53.36November


36.95



34.31



7,880.85



7,511.97



53.53



50.13December


36.46



35.25



8,076.12



7,808.94



52.92



50.052008January


34.88



29.96



7949.11



6439.21



50.73



45.77February


33.51



31.61



7,002.29



6,733.72



49.44



46.35March (through March 14, 2008)


32.02



31.28



6,689.95



6,448.08



50.20



47.87     (1)
    Share prices for 2006 and prior are retrospectively adjusted for
    the effect of the fourfold increase in the number of shares
    resulting from the capital increase which became effective
    December 15, 2006 (see the immediately preceding section
     General for more detail of the share
    increase).(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.   94




---



##### Table of Contents



ITEM 10. ADDITIONAL
    INFORMATION ARTICLES OF
    INCORPORATION Organization and
    Register
  Aktiengesetz Handelsregister www.ebundesanzeiger.de
  Objectives and
    purposes
    
    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.   CORPORATE GOVERNANCE Introduction
  www.sap.com/about/governance/statutes/declarationofimplementation.epx
 95




---



##### Table of Contents



www.sap.com
      Satzung
  The Supervisory Board
      Mitbestimmungsgesetz
 96




---



##### Table of Contents



97




---



##### Table of Contents



General Committee (Präsidialausschuss)
  Compensation Committee (Personalausschuss)
  Finance and Investment Committee (Finanz- und
    Investitionsausschuss)
  Mitbestimmungsgesetz Mediation Committee
    (Vermittlungsausschuss)
  Technology Committee (Technologieausschuss)
  Nomination Committee (Nominierungsausschuss)
      The Executive Board
      Prokurist
 98




---



##### Table of Contents



The Annual General
    Meeting of Shareholders
       CHANGE IN CONTROL   Wertpapiererwerbs- und
    Übernahmegesetz Bundesanstalt für
 99




---



##### Table of Contents



Finanzdienstleistungsaufsicht
  www.sap.com
 CHANGE IN SHARE
    CAPITAL      RIGHTS ACCOMPANYING
    OUR SHARES  100




---



##### Table of Contents



Voting Rights
    
    changing the corporate purpose of the Company set out 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.  Dividend Rights
    Preemptive Rights
  Bezugsrecht
  Liquidation
    Disclosure of Share
    Holdings
  Wertpapierhandelsgesetz
 101




---



##### Table of Contents



Exchange Controls
    and Other Limitations Affecting Security Holders
   TAXATION General
    German Taxation of
    Holders of ADSs or Ordinary Shares
  Form 20-F
     102




---



##### Table of Contents



German
    Taxation of Dividends
      e.g.
      Refund of
    German Tax to U.S. Holders
  U.S.-German 1186-1212,
 103




---



##### Table of Contents



http://www.bzst.bund.de
  19101-2530 19720-2425.
        Refund of
    German Tax to Holders of ADSs or Ordinary Shares in Other
    Countries
    German
    Taxation of Capital Gains
     104




---



##### Table of Contents



Reform of
    the Taxation of Dividends and Capital Gains
        Other
    German Taxes
    German
    Estate and Gift Taxes
  U.S.-German
 105




---



##### Table of Contents



U.S. Taxation of
    U.S. Holders of Ordinary Shares or ADSs
      Form 20-F.
  FORM 20-F
    Distributions
   106




---



##### Table of Contents



Sale or
    Exchange
      Foreign
    Tax Credit
   107




---



##### Table of Contents



U.S.-source
    Passive
    Foreign Investment Company Considerations
  Classification as a PFIC. non-U.S. corporation,
    Consequences of PFIC Status.
     108




---



##### Table of Contents



Taxation of Holders
    of ADSs or Ordinary Shares in Other Countries
   MATERIAL CONTRACTS  DOCUMENTS ON DISPLAY Form 20-F www.sec.gov www.sap.com
 ITEM 11. QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    FOREIGN CURRENCY
    EXCHANGE RATE RISK  109




---



##### Table of Contents



value-at-risk
  value-at-risk
  2007


200612/31


High


Low


Yearly average


12/31


High


Low


Yearly average millionsValue at risk


12



16



12



14



4



11



4



9   value-at-risk value-at-risk
 INTEREST RATE RISK     110




---



##### Table of Contents



Fair Value2007

Expected Maturity Date





December 31,Marketable debt securities

2008


2009


2010


2011


2012


Thereafter


Total


2007 millions, unless otherwise indicatedFixed rate


332



101



















433



432Average interest rate


4.43
%


4.81
%














Variable rate


115



















4



119



117Total investments


447



101















4



552



549   Fair Value2006






















December 31,Marketable debt securities

2007


2008


2009


2010


2011


Thereafter


Total


2006 millions, unless otherwise indicatedFixed rate


341



434



















775



699Average interest rate


4.16
%


4.58
%














Variable rate






16



















16



17Total investments


341



450



















791



716       Bank loans and overdrafts

2007


2006Fixed rate bank loans ( millions)


17



18Average interest rate of fixed rate bank loans


8.03
%


8.08
%Overdrafts ( millions)


10



8Total bank loans and overdrafts ( millions)


27



26          111




---



##### Table of Contents



EQUITY PRICE RISK       STAR Hedge
       ITEM 12. DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES  112




---



##### Table of Contents



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 EVALUATION OF
    DISCLOSURE CONTROLS AND PROCEDURES  MANAGEMENTS
    ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Rules 13a-15(f) 15d-15(f)
       113




---



##### Table of Contents



CHANGE IN INTERNAL
    CONTROL OVER FINANCIAL REPORTING Form 20-F
 ATTESTATION REPORT
    OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM              114




---



##### Table of Contents



ITEM 16. [RESERVED] ITEM 16A. AUDIT
    COMMITTEE FINANCIAL EXPERT Rule 10A-3
 ITEM 16B. CODE
    OF ETHICS   www.sap.com/corpgovernance
 ITEM 16C. PRINCIPAL
    ACCOUNTANT FEES AND SERVICES AUDIT FEES,
    AUDIT-RELATED FEES, TAX FEES AND ALL OTHER FEES  AUDIT
    COMMITTEES PRE-APPROVAL POLICIES AND PROCEDURES    115




---



##### Table of Contents



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.       ITEM 16D. EXEMPTIONS
    FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Rule 10A-3(b)(1)(iv)(C)
  Rule 10A-3.
 116




---



##### Table of Contents



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


(c)


(d)(a)


Average


Total Number of Shares


Maximum Number ofTotal Number


Price Paid


Purchased as Part of


Shares that May Yetof Shares


per Share


Publicly Announced


Be Purchased UnderPeriod

Purchased


(in )


Plans or Programs


the Plans or ProgramsJanuary 1/1/07  1/31/07


1,585,000



36.21



1,585,000



75,987,136February 2/1/07  2/28/07


4,115,500



35.48



4,115,500



72,019,941March 3/1/07  3/31/07


3,939,140



34.40



3,939,140



68,478,033April 4/1/07  4/30/07


6,000



33.27



6,000



68,516,784May 5/1/07  5/31/07


1,695,284



35.39



1,695,284



66,894,112June 6/1/07  6/30/07


2,846,960



37.35



2,846,960



64,799,590July 7/1/07  7/31/07


760,000



39.46



760,000



65,799,644August 8/1/07  8/31/07


2,100,000



39.11



2,100,000



64,348,231September 9/1/07  9/30/07


3,345,293



41.24



3,345,293



82,409,125October 10/1/07  10/31/07


2,639,800



37.52



2,639,800



80,073,886November 11/1/07  11/30/07


1,682,217



34.90



1,682,217



78,602,385December 12/1/07  12/31/07


2,551,045



35.83



2,551,045



76,561,012Total


27,266,239



36.85



27,266,239            117




---



##### Table of Contents



PART III ITEM 17. FINANCIAL
    STATEMENTS  ITEM 18. FINANCIAL
    STATEMENTS   Form 20-F:
  
    Report of Independent Registered Public Accounting Firm.
    Consolidated Statements of Income for the years ended 2007, 2006
    and 2005.
    Consolidated Balance Sheets as of December 31, 2007 and
    2006.
    Consolidated Statements of Shareholders Equity for the
    years ended December 31, 2007, 2006 and 2005.
    Consolidated Statements of Comprehensive Income for the years
    ended December 31, 2007, 2006 and 2005.
    Consolidated Statements of Cash Flows for the years ended
    December 31, 2007, 2006 and 2005.
    Notes to Consolidated Financial Statements. ITEM 19. EXHIBITS Form 20-F:
  1


Articles of Incorporation (Satzung) of SAP AG, as amended
    to date (English
    translation).(1)2
.1

Form of global share certificate for ordinary shares (English
    translation).(1)2
.2

Form of American Depositary
    Receipt.(2)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.(3)4
.2

Amendment No. 1 dated as of December 20, 2006 to
    Amended and Restated Deposit Agreement among SAP AG, Deutsche
    Bank Trust Company Americas, as Depository, and all owners and
    holders from time to time of American Depositary Receipts issued
    thereunder, including the form of American Depositary
    Receipts.(2)4
.3

Tender Offer Agreement dated as of October 7, 2007 between
    SAP AG and Business Objects
    S.A.(4)4
.3.1

Assignment and Assumption Agreement dated as of October 22,
    2007 between SAP AG and SAP France
    S.A.(4)4
.4

Amendment and Restatement Agreement relating to the
    5,000,000,000 (subsequently reduced to
    2,947,679,513.45) Syndicated Multicurrency Term Loan
    Facility Agreement dated October 1, 2007 by and among SAP
    AG (Borrower), Deutsche Bank AG, ABN Amro Bank N.V.,
    Niederlassung Deutschland, BNP Paribas S.A., Commerzbank
    Aktiengesellschaft, J.P. Morgan plc and Sumitomo Mitsui
    Banking Corporation (Mandated Lead Arrangers), Deutsche Bank AG
    Paris Branch (Offer Guarantor), Deutsche Bank Luxemburg S.A.
    (Agent) and Certain Financial Institutions (Lenders). 118




---



##### Table of Contents



4
.4.1

Accession Agreement relating to the 5,000,000,000
    (subsequently reduced to 2,947,679,513.45) Syndicated
    Multicurrency Term Loan Facility Agreement dated October 1,
    2007 by and among SAP AG (Borrower), Deutsche Bank AG, ABN Amro
    Bank N.V., Niederlassung Deutscheland, BNP PARIBAS S.A.,
    Commerzbank Aktiengesellschaft, J.P. Morgan plc and Sumitomo
    Mitsui Banking Corporation (Mandated Lead Arrangers), Deutsche
    Bank AG Paris Branch (Offer Guarantor), certain financial
    institutions (Existing Lenders), certain financial institutions
    (New Lenders), and Deutsche Bank Luxembourg S.A. (Agent).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 Independent Registered Public Accounting Firm.     (1)
    
    Incorporated by reference to the Annual Report on
    Form 20-F
    of SAP AG filed on March 22, 2006.(2)
    
    Incorporated by reference to Post Effective Amendment No 1 to
    Form F-6
    filed on December 20, 2006.(3)
    
    Incorporated by reference to the Current Report on
    Form 6-K
    of SAP AG, filed on December 13, 2004.(4)
    
    Incorporated by reference to the Tender Offer Statement on
    Schedule TO filed with the SEC by SAP France S.A. on
    December 4, 2007. 119




---



##### Table of Contents



SIGNATURES
  Form 20-F
                120




---



##### Table of Contents



SAP AG AND
    SUBSIDIARIES
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   PageReport of Independent Registered Public Accounting Firm


F-1Consolidated Financial Statements:Consolidated Statements of Income for the years ended
    December 31, 2007, 2006 and 2005


F-2Consolidated Balance Sheets as of December 31, 2007 and 2006


F-3Consolidated Statements of Shareholders Equity for the
    years ended December 31, 2007, 2006 and 2005


F-4Consolidated Statements of Comprehensive Income for the years
    ended December 31, 2007, 2006 and 2005


F-5Consolidated Statements of Cash Flows for the years ended
    December 31, 2007, 2006 and 2005


F-6Notes to Consolidated Financial Statements


F-7




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                   F-1




---



##### Table of Contents



SAP AG AND
    SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
 for
    the years ended December 31,
  Note


2007(1)


2007


2006


2005US$ millions


 millions


 millions


 millionsSoftware revenue






4,975



3,407



3,003



2,743Support revenue






5,605



3,838



3,464



3,170Subscription and other software-related service revenue






266



182



129



42Software and software-related service revenue






10,846



7,427



6,596



5,955Consulting revenue






3,243



2,221



2,249



2,071Training revenue






599



410



383



342Other service revenue






165



113



96



71Professional services and other service revenue






4,007



2,744



2,728



2,484Other revenue






104



71



69



70Total revenue


(5
)


14,957



10,242



9,393



8,509Cost of software and software-related services






(1,913
)


(1,310
)


(1,091
)


(983
)Cost of professional services and other services






(3,053
)


(2,091
)


(2,073
)


(1,925
)Research and development






(2,129
)


(1,458
)


(1,335
)


(1,089
)Sales and marketing


(6
)


(3,157
)


(2,162
)


(1,908
)


(1,746
)General and administration






(739
)


(506
)


(464
)


(435
)Other operating income, net


(7
)


25



17



56



6Total operating expenses






(10,966
)


(7,510
)


(6,815
)


(6,172
)Operating income






3,991



2,732



2,578



2,337Other non-operating income/expense, net


(8
)


1



1



(12
)


(25
)Financial income, net


(9
)


181



124



122



11Income from continuing operations before income taxes






4,173



2,857



2,688



2,323Income taxes


(10
)


(1,345
)


(921
)


(805
)


(818
)Minority interests






(3
)


(2
)


(2
)


(3
)Income from continuing operations






2,825



1,934



1,881



1,502Loss from discontinued operations, net of tax


(11
)


(22
)


(15
)


(10
)


(6
)Net income






2,803



1,919



1,871



1,496Earnings per share from continuing operations 
    basic


(12
)

US$
2.34



1.60



1.53



1.21Earnings per share from continuing operations 
    diluted


(12
)

US$
2.34



1.60



1.53



1.21Earnings per share from net income  basic


(12
)

US$
2.32



1.59



1.53



1.21Earnings per share from net income  diluted


(12
)

US$
2.32



1.59



1.52



1.20     (1)
    
    The 2007 figures have been
    translated solely for the convenience of the reader at an
    exchange rate of US$1.4603 to 1.00, the Noon Buying Rate
    certified by the Federal Reserve Bank of New York on
    December 31, 2007.  The accompanying Notes are an
    integral part of these Consolidated Financial Statements.
 F-2




---



##### Table of Contents



SAP AG AND
    SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
 as
    of December 31,
  Note


2007(1)


2007


2006US$ millions


 millions


 millionsAssetsCash and cash equivalents


(13
)


2,348



1,608



2,399Restricted cash


(13
)


803



550



0Short-term investments


(13
)


873



598



931Accounts receivable, net


(14
)


4,228



2,895



2,440Other assets


(15
)


790



541



371Deferred income taxes


(10
)


183



125



108Prepaid expenses/deferred charges






111



76



75Assets held for sale


(11
)


22



15



0Current assets






9,358



6,408



6,324Goodwill


(16
)


2,078



1,423



987Intangible assets, net


(16
)


589



403



263Property, plant, and equipment, net


(17
)


1,922



1,316



1,206Investments


(13
)


130



89



95Accounts receivable, net


(14
)


4



3



3Other assets


(15
)


810



555



533Deferred income taxes


(10
)


213



146



69Prepaid expenses/deferred charges






34



23



23Noncurrent assets






5,780



3,958



3,179Total assets






15,138



10,366



9,503   Note


2007(1)


2007


2006US$ millions


 millions


 millionsLiabilities, Minority interests and Shareholders
    equityAccounts payable


(18
)


1,044



715



610Income tax obligations






498



341



261Other liabilities


(18
)


2,126



1,456



1,298Provisions


(19
)


225



154



163Deferred income taxes


(10
)


69



47



36Deferred income


(5
)


697



477



405Liabilities held for sale


(11
)


13



9



0Current liabilities






4,672



3,199



2,773Accounts payable


(18
)


15



10



34Income tax obligations






131



90



67Other liabilities


(18
)


115



79



73Provisions


(19
)


539



369



339Deferred income taxes


(10
)


107



73



16Deferred income


(5
)


61



42



55Noncurrent liabilities






968



663



584Total liabilities






5,640



3,862



3,357Minority interests






1



1



10Common stock, no par value






1,820



1,246



1,268Authorized  Not issued or outstanding:
    480 million and 495 million shares at
    December 31, 2007 and 2006Authorized  Issued and outstanding:
    1.246 million and 1.268 million shares at
    December 31, 2007 and 2006Treasury stock






(2,532
)


(1,734
)


(1,742
)Additional paid-in capital






507



347



332Retained earnings






10,454



7,159



6,589Accumulated other comprehensive loss






(752
)


(515
)


(311
)Shareholders equity


(20
)


9,497



6,503



6,136Total liabilities, Minority interests and Shareholders
    equity






15,138



10,366



9,503    (1)
    
    The 2007 figures have been
    translated solely for the convenience of the reader at an
    exchange rate of US$1.4603 to 1.00, the Noon Buying Rate
    certified by the Federal Reserve Bank of New York on
    December 31, 2007.  The accompanying Notes are an
    integral part of these Consolidated Financial Statements.
 F-3




---



##### Table of Contents



SAP AG AND
    SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
 for
    the years ended December 31,
  AccumulatedAdditional





otherCommon


paid-in


Retained


comprehensive


Treasurystock


capital


earnings


income


stock


Total millionsJanuary 1, 2005


316



302



4,824



(279
)


(569
)


4,594Net income


0



0



1,496



0



0



1,496Other comprehensive income/loss, net of tax


0



0



0



188



0



188Total comprehensive income/loss


0



0



1,496



188



0



1,684Share-based compensation


0



(36
)


0



0



0



(36
)Dividends


0



0



(340
)


0



0



(340
)Cancellation of treasury stock


0



0



0



0



0



0Other treasury stock transactions


0



48



0



0



(206
)


(158
)Convertible bonds and stock options exercised


0



42



0



0



0



42Other


0



(4
)


0



0



0



(4
)December 31, 2005


316



352



5,980



(91
)


(775
)


5,782Net income


0



0



1,871



0



0



1,871Other comprehensive income/loss, net of tax


0



0



0



(220
)


0



(220
)Total comprehensive income/loss


0



0



1,871



(220
)


0



1,651Share-based compensation


0



18



0



0



0



18Dividends


0



0



(447
)


0



0



(447
)Cancellation of treasury stock


0



0



0



0



0



0Other treasury stock transactions


0



44



0



0



(967
)


(923
)Convertible bonds and stock options exercised


1



49



0



0



0



50Issuance of common stock


951



(135
)


(816
)


0



0



0Other


0



4



1



0



0



5December 31, 2006


1,268



332



6,589



(311
)


(1,742
)


6,136Net income


0



0



1,919



0



0



1,919Other comprehensive income/loss, net of tax


0



0



0



(204
)


0



(204
)Total comprehensive income/loss


0



0



1,919



(204
)


0



1,715Share-based compensation


0



(40
)


0



0



0



(40
)Dividends


0



0



(556
)


0



0



(556
)Cancellation of treasury stock


(23
)


0



(796
)


0



819



0Other treasury stock transactions


0



12



0



0



(811
)


(799
)Convertible bonds and stock options exercised


1



43



0



0



0



44Other


0



0



3



0



0



3December 31, 2007


1,246



347



7,159



(515
)


(1,734
)


6,503   This Statement is an integral part
    of Note 20.
 F-4




---



##### Table of Contents



SAP AG AND
    SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF COMPREHENSIVE INCOME
 for
    the years ended December 31,
  2007


2006


2005 million, unless otherwise statedNet Income


1,919



1,871



1,496Currency translation adjustments
    (tax 2007: 0; 2006: 0; 2005: 0)


(194
)


(149
)


121Unrealized holding gains/losses on marketable securities
    (tax 2007: 0; 2006: 0; 2005: 1)


(2
)


(8
)


2Reclassification adjustments on marketable securities for
    gains/losses included in net income
    (tax 2007: 0; 2006: (1); 2005: 0)


(1
)


2



0Net unrealized gains/losses on marketable securities


(3
)


(6
)


2Unrecognized pension costs
    (tax 2007: 1; 2006: 2; 2005: 2)


(1
)


(12
)


(1
)Unrealized foreign currency cash flow hedge gains/losses 
    (tax 2007: (6); 2006: (15); 2005: 11)


55



41



(30
)Reclassification foreign currency cash flow hedge adjustments
    for gains included in net income 
    (tax 2007: 4; 2006: 4; 2005: 2)


(43
)


(10
)


(5
)Net unrealized foreign currency cash flow hedge
    gains/losses


12



31



(35
)Unrealized gains on STAR hedge 
    (tax 2007: (3); 2006: (13); 2005: (27))


10



37



78Reclassification adjustments on STAR hedge for gains included in
    net income
    (tax 2007: 9; 2006: 39; 2005: 4)


(28
)


(111
)


(13
)Net unrealized gains/losses on STAR hedge


(18
)


(74
)


65Currency effects from intercompany long-term investment
    transactions 
    (tax 2007: 0; 2006: 0; 2005: 0)


(5
)


(26
)


43Tax on income and expense recognised directly in equity


5



16



(7
)Other comprehensive income/loss


(204
)


(220
)


188Total comprehensive income


1,715



1,651



1,684   The accompanying Notes are an
    integral part of these Consolidated Financial Statements.
 F-5




---



##### Table of Contents



SAP AG AND
    SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 for
    the years ended December 31,
  2007(1)


2007


2006


2005US$ millions


 millions


 millions


 millionsNet income


2,803



1,919



1,871



1,496Net income from discontinued operations


22



15



10



6Minority interests


3



2



2



3Income from continuing operations before minority
    interests


2,828



1,936



1,883



1,505Adjustments to reconcile income before minority interests to net
    cash provided by operating activities:Depreciation and amortization


381



261



214



204Gains/losses from equity investees


1



1



1



(1
)Gains/losses on disposal of intangible assets and property,
    plant, and equipment


1



1



(2
)


(5
)Losses on disposal of investments


(3
)


(2
)


0



(1
)Writeups/downs of financial assets


12



8



0



14Allowances for doubtful accounts


0



0



(40
)


(25
)Impacts of STAR hedging


31



21



(79
)


7Stock-based compensation including income tax benefits


19



13



82



50Excess tax benefit from stock-based compensation


0



0



(3
)


0Deferred income taxes


12



8



(2
)


(16
)Change in accounts receivable


(761
)


(521
)


(230
)


(295
)Change in other assets


(470
)


(322
)


(216
)


(63
)Change in accrued and other liabilities


618



423



130



164Change in deferred income


180



123



117



74Net cash provided by operating activities from continuing
    operations


2,849



1,950



1,855



1,612Acquisition of minority interests in subsidiaries


(70
)


(48
)


0



(60
)Business combinations, net of cash and cash equivalents acquired


(981
)


(672
)


(504
)


(177
)Purchase of intangible assets and property, plant, and equipment


(586
)


(401
)


(365
)


(253
)Proceeds from disposal of intangible assets and property, plant,
    and equipment


39



27



29



17Cash transferred to restricted cash accounts


(803
)


(550
)


0



0Purchase of investments


(1,122
)


(768
)


(2,055
)


(4,485
)Sales of investments


1,497



1,025



2,765



4,388Purchase of other financial assets


(29
)


(20
)


(17
)


(17
)Sales of other financial assets


22



15



15



13Net cash used in investing activities from continuing
    operations


(2,033
)


(1,392
)


(132
)


(574
)Dividends paid


(812
)


(556
)


(447
)


(340
)Purchase of treasury stock


(1,468
)


(1,005
)


(1,149
)


(454
)Proceeds from reissuance of treasury stock


228



156



165



205Proceeds from issuance of common stock (stock-based compensation)


64



44



49



43Excess tax benefit from stock-based compensation


0



0



3



0Repayment of bonds


0



0



(1
)


0Proceeds from short-term and long-term debt


69



47



44



338Repayments of short-term and long-term debt


(70
)


(48
)


(43
)


(339
)Proceeds from the exercise of equity-based derivative
    instruments (STAR hedge)


110



75



57



39Purchase of equity-based derivative instruments (STAR hedge)


0



0



(53
)


(47
)Net cash used in financing activities from continuing
    operations


(1,879
)


(1,287
)


(1,375
)


(555
)Effect of foreign exchange rates on cash and cash equivalents


(72
)


(49
)


(3
)


88Net cash used in operating activities from discontinued
    operations


(18
)


(12
)


(8
)


(4
)Net cash used in investing activities from discontinued
    operations


(1
)


(1
)


(2
)


(9
)Net cash used in financing activities from discontinued
    operations


0



0



0



0Net cash used in discontinued operations


(19
)


(13
)


(10
)


(13
)Net change in cash and cash equivalents


(1,154
)


(791
)


335



558Cash and cash equivalents at the beginning of the period


3,502



2,399



2,064



1,506Cash and cash equivalents at the end of the period


2,348



1,608



2,399



2,064     (1)
    
    The 2007 figures have been
    translated solely for the convenience of the reader at an
    exchange rate of US$1.4603 to 1.00, the Noon Buying Rate
    certified by the Federal Reserve Bank of New York on
    December 31, 2007.  The accompanying Notes are an
    integral part of these Consolidated Financial Statements.
 F-6




---



##### Table of Contents



NOTES TO THE
    CONSOLIDATED FINANCIAL STATEMENTS 2007
  A. BASIS OF
    PRESENTATION
  (1) GENERAL
             F-7




---



##### Table of Contents



(2)
    SCOPE OF
    CONSOLIDATION        Number of Legal
    Entities Consolidated in the Financial Statements
  German


Foreign


Total12/31/2006


21



94



115Additions


2



24



26Disposals


0



(2
)


(2
)12/31/2007


23



116



139     Equity Method
    Investments
    (3)
    SUMMARY OF
    SIGNIFICANT ACCOUNTING POLICIES  Use of Estimates
     F-8




---



##### Table of Contents



Basis of Measurement
    
    Derivative financial instruments are measured at fair value
    Available for sale financial assets are measured at fair value
    Liabilities for cash-settled share-based payment arrangements
    are measured at fair value    Business Combinations
    Foreign Currencies
       F-9




---



##### Table of Contents



Exchange Rates
    Closing rate as atDecember 31,


Annual average exchange rate2007


2006


2007


2006


2005Equivalent to 1




to 1


to 1


to 1


to 1


to 1U.S. dollar


USD



1.4721



1.3170



1.3777



1.2611



1.2360Pound sterling


GBP



0.7334



0.6715



0.6890



0.6800



0.6827Japanese yen


JPY



164.93



156.93



161.43



147.02



137.08Swiss franc


CHF



1.6547



1.6069



1.6446



1.5757



1.5478Canadian dollar


CAD



1.4449



1.5281



1.4623



1.4296



1.4908Australian dollar


AUD



1.6757



1.6691



1.6368



1.6715



1.6246   Revenue Recognition
    97-2, (SOP 97-2), SOP 97-2
  SOP 97-2,
             F-10




---



##### Table of Contents



SOP 97-2
          time-and-materials
  time-and-materials
     F-11




---



##### Table of Contents



catch-up
    out-of-pocket out-of-pocket
      Research and
    Development
    Government Grants
    Advertising Costs
    Leases
     F-12




---



##### Table of Contents



Income Taxes
          Accounting for Uncertainty in
    Income Taxes  an Interpretation of FASB Statement 109
  Share-Based
    Compensation
  Share-Based Payment
  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-13




---



##### Table of Contents



2005 millionsNet IncomeAs reported


1,496Add: Expense for share-based compensation, net of tax according
    to APB 25


31Deduct: Expense for share-based compensation, net of tax
    according to SFAS 123


138Adjusted


1,389Earnings per share ()Basic  as reported


1.21Diluted  as reported


1.20Basic  adjusted


1.12Diluted  adjusted


1.12     Comprehensive
    Income/Loss
    available-for-sale.
  Earnings per Share
    Cash and Cash
    Equivalents
    Investments
   F-14




---



##### Table of Contents



available-for-sale held-to-maturity, available-for-sale available-for-sale available-for-sale held-to-maturity
    step-up
  other-than-temporary, other-than-temporary,
    Accounts Receivable
  time-and-material
 F-15




---



##### Table of Contents



Financial and Other
    Assets
        Goodwill
      Other Intangible
    Assets
      Property, Plant, and
    Equipment
      F-16




---



##### Table of Contents



Useful lives of property,plant, and equipment in yearsBuildings

25 to 50Leasehold improvements

Based on the lease contractInformation technology equipment

3 to 5Office furniture

4 to 20Automobiles

5     Impairment of
    Long-Lived Assets
    Assets and
    Liabilities Held for Sale
    Discontinued
    Operations
    Prepaid Expenses and
    Deferred Charges
   F-17




---



##### Table of Contents



Commitments and
    Contingencies
      Pension Benefit
    Liabilities
  projected-unit-credit Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans  an amendment of FASB Statements No. 87,
    88, 106, and 132(R) Employers Accounting for Pensions
    Deferred Income
    Derivative Financial
    Instruments
    Accounting for Derivative Instruments and
    Hedging Activities
 F-18




---



##### Table of Contents



Treasury Stock
    New Accounting
    Standards Not Yet Adopted
  Fair Value
    Measurements SFAS 157-2
  The Fair
    Value Option for Financial Assets and Financial Liabilities,
    Including an amendment of FASB Statement No. 115
  
    Recognized financial assets and financial liabilities unless a
    special exception applies
    Firm commitments that would otherwise not be recognized at
    inception and that involve only financial instruments
    Non-financial insurance contracts
    Host financial instruments resulting from separation of an
    embedded non-financial derivative instrument from a
    non-financial hybrid instrument    Business Combinations
 F-19




---



##### Table of Contents



Noncontrolling Interests in Consolidated Financial
    Statements, an amendment of ARB No. 51
  EITF 07-1, Accounting for Collaborative Arrangements (EITF 07-1), EITF 07-1 EITF 07-1 EITF 07-1
  (4) ACQUISITIONS
    Acquired Businesses

Sector

Acquired business

Acquisition datePilot Software Inc., Mountain View, CA (USA)

Privately held provider of strategy management software

100% of shares

02/14/2007Wicom Communication Ltd, Espoo (Finland)

Privately held provider of all-IP contact center and enterprise
    communications software

100% of shares

05/07/2007MaXware AS, Lysaker (Norway)

Privately held provider of identity management software

100% of shares

05/21/2007OutlookSoft Corp., Stamford, CT (USA)

Privately held provider of integrated planning, budgeting,
    forecasting and consolidation software

100% of shares

6/1/2007YASU Technologies Private Ltd., India

Privately held leader in business rules management systems

Asset purchase

10/18/2007Arabian Company for Systems, Applications and Products in
    Data Processing Ltd., Jeddah, Kingdom of Saudi Arabia

Privately held exclusive reseller of SAP software in the
    Arab region

Asset purchase

10/31/2007Silk Europe N.V., Belgium

Privately held reseller of OutlookSoft software in Belgium and
    Netherlands

100% of shares

11/28/2007  F-20




---



##### Table of Contents



and/or
            Estimated useful millions


lives (years)Customer contracts


51



4 to 12Intellectual property


82



5 to 10Distribution right


37



6Tradename


4



1 to 2In-process research and development


1



Expensed at the
    acquisition dateTotal


175      F-21




---



##### Table of Contents



Goodwill and Other Intangible Assets
      Estimated useful millions


lives (years)Customer contracts


17



2 to 11Intellectual property


118



5 to 10In-process research and development


2



Expensed at the
    acquisition dateTotal


137  F-22




---



##### Table of Contents



B. NOTES TO
    THE CONSOLIDATED STATEMENTS OF INCOME
  (5) REVENUE
                (6) FUNCTIONAL
    COSTS AND OTHER EXPENSES
   F-23




---



##### Table of Contents



Services and
    Materials
    2007


2006


2005 millionsPurchased services


862



879



828Raw materials and supplies, purchased goods


37



32



30899



911



858   Sales and Marketing
    Personnel
    Expenses/Number of Employees
    2007


2006


2005 millionsSalaries


3,603



3,277



2,877Social security costs


449



416



379Pension expense


122



125



1094,174



3,818



3,365       Full-time equivalents

2007


2006


2005Employees from continuing operations


42,129



37,919



34,483from discontinued operations


173



134



67     Government Grants
    
 F-24




---



##### Table of Contents



(7)
    OTHER OPERATING
    INCOME, NET    2007


2006


2005 millionsBad debt expense


0



0



(3
)Restructuring costs  severance obligations


0



(1
)


(1
)Restructuring costs  unused lease space


0



0



(1
)Miscellaneous other operating expenses


(1
)


0



(3
)Other operating expense


(1
)


(1
)


(8
)Bad debt income


3



43



0Rental income


5



5



7Receipt of insurance proceeds


3



2



1Miscellaneous other operating income


7



7



6Other operating income


18



57



1417



56



6       (8)
    OTHER NON-OPERATING
    INCOME/EXPENSE, NET    2007


2006


2005 millionsForeign currency losses


(379
)


(255
)


(117
)Other non-operating expenses


(16
)


(20
)


(19
)Total other non-operating expenses


(395
)


(275
)


(136
)Foreign currency gains


385



251



78Other non-operating income


11



12



33Total other non-operating income


396



263



111Other non-operating income/expense, net


1



(12
)


(25
)  F-25




---



##### Table of Contents



(9)
    FINANCIAL INCOME, NET    2007


2006


2005 millionsInterest and similar income


142



124



94Interest and similar expenses


(7
)


(4
)


(4
)Income from securities, net


240



154



63Expenses from other financial assets and loans


(244
)


(157
)


(74
)Gains/losses on STAR hedge


0



7



(66
)Loss from other investments


(6
)


(1
)


(3
)Other financial income/expense, net


(10
)


3



(80
)Share of loss/gain of associates accounted for using the equity
    method


(1
)


(1
)


1Financial income, net


124



122



11         (10)
    INCOME TAXES    2007


2006


2005 millionsCurrent taxes  Germany


498



426



515Current taxes  Foreign


416



381



319914



807



834Deferred taxes  Germany


33



0



15Deferred taxes  Foreign


(26
)


(2
)


(31
)7



(2
)


(16
)Income tax expense


921



805



818    F-26




---



##### Table of Contents



2007


2006


2005 millionsGermany


1,639



1,519



1,455Foreign


1,218



1,169



8682,857



2,688



2,323     2007


2006


2005 millionsIncome from continuing operations before income taxes


2,857



2,688



2,323Expected income taxes 35.49% in 2007 (35.66% in 2006, 36.32% in
    2005)


1,014



958



844Foreign tax rate differential


(47
)


(26
)


(6
)Tax effect on non-deductible expenses


49



23



19Prior year taxes


(18
)


(80
)


(6
)Tax effect on tax exempt income


(77
)


(72
)


(40
)Other


0



2



7Actual income tax expense


921



805



818     2007


2006 millionsDeferred tax assetsIntangible assets, net


58



15Property, plant, and equipment, net


7



8Financial assets


39



24Receivables


15



12Net operating loss carryforwards


18



9Pension provisions


39



45Share-based compensation


23



34Other provisions


109



122Deferred income


31



33Other


29



4368



306Less: Valuation allowance


(8
)


(10
)Deferred tax assets


360



296 F-27




---



##### Table of Contents



2007


2006 millionsDeferred tax liabilitiesIntangible assets, net


55



37Property, plant, and equipment, net


31



24Financial assets


54



23Receivables


14



34Pension provisions


27



17Share-based compensation


2



7Other provisions


6



5Deferred income


3



5Other


17



19Deferred tax liabilities


209



171Deferred tax assets, net


151



125          F-28




---



##### Table of Contents



2007


2006


2005 millionsIncome tax


921



805



818Income tax from discontinued operations


(7
)


(4
)


(1
)Income tax recognized in Additional paid in capital related to
    share-based compensation


0



(11
)


(23
)Income tax recognized in other comprehensive income/loss


(5
)


(16
)


7909



774



801         2007 millionsUnrecognized income tax benefits on 1/1/2007


72Additions related to the current year


8Additions related to prior year


18Settlements with tax authorities


0Exchange rate differences


(2
)Unrecognized income tax benefits on 12/31/2007


96       (11) ASSETS AND
    LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS
     F-29




---



##### Table of Contents



2007


2006


2005 millionsTotal revenue


14



9



3Total operating expense


(36
)


(23
)


(10
)Operating loss before taxes


(22
)


(14
)


(7
)Income taxes


7



4



1Net loss from discontinued operations


(15
)


(10
)


(6
)     2007 millionsAccounts receivable, net


2Other assets


4Current assets


6Goodwill


7Property, plant, and equipment, net


1Other assets


1Noncurrent assets


9Total Assets held for sale


15Accounts payable


1Provisions


3Deferred income


5Current liabilities


9Total Liabilities held for sale


9  F-30




---



##### Table of Contents



(12)
    EARNINGS PER SHARE    2007


2006


2005Income from continuing operations in  millions


1,934



1,881



1,502Weighted average number of shares in millions 
    basic


1,207



1,226



1,239Dilutive effect of stock options/convertible bonds in millions


3



5



4Weighted average number of shares in millions 
    diluted


1,210



1,231



1,243Earnings per share from continuing operations 
    basic in 


1.60



1.53



1.21Earnings per share from continuing operations 
    diluted in 


1.60



1.53



1.21Income from discontinued operations, net of tax in
     millions


(15
)


(10
)


(6
)Earnings per share  basic (from discontinued
    operations) in 


(0.01
)


0.00



0.00Earnings per share  diluted (from discontinued
    operations) in 


(0.01
)


(0.01
)


0.00Net income in  million


1,919



1,871



1,496Earnings per share from net income  basic in 


1.59



1.53



1.21Earnings per share from net income  diluted in 


1.59



1.52



1.20  F-31




---



##### Table of Contents



C.
    NOTES TO THE
    CONSOLIDATED BALANCE SHEETS  (13)
    CASH AND CASH
    EQUIVALENTS, RESTRICTED CASH AND INVESTMENTS    Cash and








Equity andcash





Short-term


otherequivalents


Restricted cash


investments


investments2007


2006


2007


2006


2007


2006


2007


2006 millionsCash


546



478



0



0



0



0



0



0Time deposits


376



1,598



0



0



35



19



0



0Money market funds


686



204



0



0



0



0



0



0Commercial paper


0



119



0



0



0



0



0



0Restricted cash


0



0



550



0



0



0



0



0Fund securities (at fair value)


0



0



0



0



8



0



0



12Auction rate securities


0



0



0



0



0



155



0



0Variable rate demand notes


0



0



0



0



0



34



0



0Other debt securities


0



0



0



0



549



716



0



0Debt securities (at fair value)


0



0



0



0



549



905



0



0Marketable equity securities (at fair value)


0



0



0



0



0



4



7



10Equity securities at cost


0



0



0



0



6



3



63



55Equity method securities


0



0



0



0



0



0



19



18Total


1,608



2,399



550



0



598



931



89



95   Restricted Cash
    Debt Securities and
    Marketable Equity Securities
   F-32




---



##### Table of Contents



Securities not


Securities inin loss position


loss position


Total SecuritiesFair


Unrealized


Fair


Unrealized


Fair


Unrealizedvalue


gains


value


losses


value


gains/losses (net) millions2007Marketable equity securities (available-for-sale)


7



2



0



0



7



2Debt securities (available-for-sale)


172



0



377



2



549



(2
)Investment fund securities (available-for-sale)


8



0



0



0



8



02006Marketable equity securities (available-for-sale)


11



6



3



0



14



6Debt securities (available-for-sale)


227



1



678



2



905



(1
)Investment fund securities (available-for-sale)


0



0



12



0



12



0     Securities in loss positionfor less than 12 months


for more than 12 monthsFair


Unrealized


Fair


Unrealizedvalue


losses


value


losses millions2007Marketable equity securities (available-for-sale)


0



0



0



0Debt securities (available-for-sale)


363



2



14



0Investment fund securities (available-for-sale)


0



0



0



02006Marketable equity securities (available-for-sale)


3



0



0



0Debt securities (available-for-sale)


452



1



226



1Investment fund securities (available-for-sale)


12



0



0



0      F-33




---



##### Table of Contents



2007


2006 millionsDue within 1 year


449



457Due 1 year through 2 years


100



448Total of auction rate securities, variable rate demand notes
    and debt securities


549



905   Equity Securities at
    Cost
      Equity Method
    Investments
        (14)
    ACCOUNTS RECEIVABLE,
    NET   F-34




---



##### Table of Contents



2007


2006 millionsGross carrying amount


2,957



2,505Sales allowances


(38
)


(37
)Allowance for doubtful accounts charged to expenses


(21
)


(25
)Carrying amount, net, of accounts receivable


2,898



2,443     2007


2006


2005 millionsBalance as at 1/1


25



73



63Utilization


(8
)


(5
)


(8
)Addition


11



7



17Release


(5
)


(48
)


(4
)Exchange rate effects and other changes


(2
)


(2
)


5Balance as at 12/31


21



25



73     2007


2006 millionsAccounts receivable, neither past due nor impaired


2,337



2,004Accounts receivable, past due, impaired individually


33



35Accounts receivable, past due, impaired on a portfolio basis


587



466Accounts receivable, impaired on a portfolio basis


587



466less than 45 days past due


344



27346 to 90 days past due


83



7891 to 180 days past due


57



54181 to 365 days past due


71



37366 and more days past due


32



24   SOP 97-2.
     F-35




---



##### Table of Contents



2007


2006 millionsCurrent


2,895



2,440Noncurrent


3



32,898



2,443     (15) OTHER
    ASSETS
  2007


2006Current


Noncurrent


Total


Current


Noncurrent


Total millionsInvestments in insurance policies held for employee-financed
    pension plans, and semiretirement


0



342



342



0



278



278Income tax receivables


283



36



319



164



12



176Fair value of STAR hedge and other derivatives


146



1



147



117



87



204Other receivables


48



49



97



41



41



82Prepaid pensions


0



56



56



0



46



46Loans to employees


9



43



52



8



43



51Miscellaneous other assets


50



0



50



36



0



36Rent deposits


0



24



24



0



26



26Loans to third parties


0



4



4



1



0



1Inventories


5



0



5



4



0



4541



555



1,096



371



533



904         2007


2006


2005 millionsBalance as at 1/1


1



16



15Utilization


0



10



0Addition


0



0



3Release


1



5



2Balance as at 12/31


0



1



16  F-36




---



##### Table of Contents



(16) GOODWILL
    AND INTANGIBLE ASSETS
  Software and


Acquired


OtherGoodwill


database licenses


technology


intangibles


Total millionsPurchase cost1/1/2007


1,084



202



216



37



1,539Exchange rate differences


(81
)


(1
)


(12
)


(5
)


(99
)Additions


520



65



83



90



758Retirements/disposals


0



(2
)


0



(2
)


(4
)Reclassifications to current assets


(7
)


0



0



0



(7
)12/31/2007


1,516



264



287



120



2,187Accumulated amortization1/1/2007


97



128



53



11



289Exchange rate differences


(4
)


(1
)


(1
)


(1
)


(7
)Additions


0



26



45



11



82Retirements/disposals


0



(2
)


0



(1
)


(3
)12/31/2007


93



151



97



20



361Carrying value 12/31/2007


1,423



113



190



100



1,826Weighted average amortization period in years


N/A



3.0



5.2



7.0



5.3Purchase cost1/1/2006


727



160



194



25



1,106Exchange rate differences


(50
)


0



(13
)


(3
)


(66
)Additions


407



53



120



16



596Retirements/disposals


0



(11
)


(85
)


(1
)


(97
)12/31/2006


1,084



202



216



37



1,539Accumulated amortization1/1/2006


100



124



109



7



340Exchange rate differences


(3
)


(1
)


(8
)


(1
)


(13
)Additions


0



16



37



6



59Retirements/disposals


0



(11
)


(85
)


(1
)


(97
)12/31/2006


97



128



53



11



289Carrying value 12/31/2006


987



74



163



26



1,250        F-37




---



##### Table of Contents



 millions2008


962009


962010


712011


492012


36Thereafter


55     Thereof





Thereofadditions





additions12/31/2007


in 2007


12/31/2006


in 2006 millionsProduct


974



430



618



350Consulting


409



76



340



40Training


40



14



29



17Total


1,423



520



987



407    F-38




---



##### Table of Contents



(17) PROPERTY,
    PLANT, AND EQUIPMENT
  Land, leaseholdimprovements, andbuildings, including


Other property,


Advance paymentsbuildings on


plant, and


and constructionthird-party land


equipment


in progress


Total millionsPurchase cost1/1/2007


975



1,099



109



2,183Exchange rate differences


(22
)


(15
)


(2
)


(39
)Additions


82



244



16



342Retirements/disposals


(10
)


(120
)


0



(130
)Reclassifications to Assets held for sale


0



(3
)


0



(3
)Reclassifications


83



8



(91
)


012/31/2007


1,108



1,213



32



2,353Accumulated depreciation1/1/2007


296



681



0



977Exchange rate differences


(7
)


(8
)


0



(15
)Additions


32



147



0



179Retirements/disposals


(10
)


(92
)


0



(102
)Reclassifications to Assets held for sale


0



(2
)


0



(2
)12/31/2007


311



726



0



1,037Carrying value 12/31/2007


797



487



32



1,316Purchase cost1/1/2006


955



1,046



43



2,044Exchange rate differences


(24
)


(19
)


(1
)


(44
)Additions


33



191



92



316Retirements/disposals


(12
)


(121
)


0



(133
)Reclassifications


23



2



(25
)


012/31/2006


975



1,099



109



2,183Accumulated depreciation1/1/2006


287



662



0



949Exchange rate differences


(8
)


(12
)


0



(20
)Additions


28



128



0



156Retirements/disposals


(11
)


(97
)


0



(108
)12/31/2006


296



681



0



977Carrying value 12/31/2006


679



418



109



1,206        F-39




---



##### Table of Contents



(18) ACCOUNTS
    PAYABLE AND OTHER LIABILITIES
    Term less


Term


Term morethan


between 1


than


Balance on


Balance on1 year


and 5 years


5 years


12/31/2007


12/31/2006 millionsPayables to suppliers


688



6



0



694



581Advanced payments received


27



4



0



31



63715



10



0



725



644Other employee-related liabilities


1,060



6



49



1,115



999Other taxes


262



0



0



262



220Other financial liabilities


57



4



0



61



40Other liabilities


52



11



7



70



86Bank loans and overdraft


25



2



0



27



261,456



23



56



1,535



1,3712,171



33



56



2,260



2,015              F-40




---



##### Table of Contents



(19) PROVISIONS
    2007


2006Current


Noncurrent


Total


Current


Noncurrent


Total millionsPension plans and similar obligations
    (see Note 19a)


1



275



276



1



231



232Other obligations (see Note 19b)


153



94



247



162



108



270154



369



523



163



339



502   a) Pension
    Plans and Similar Obligations
      2007


2006 millionsDomestic benefit plans


2



8Foreign benefit plans


38



33Total defined benefit plans


40



41Employee financed plans


236



191Total pension plans


276



232      F-41




---



##### Table of Contents



2007


2006 millionsPresent value of funded benefit obligations


(306
)


(297
)Present value of unfunded benefit obligations


(25
)


(19
)Total present value of benefit obligations


(331
)


(316
)Fair value of plan assets


347



321Net amount recognized


16



5Pension liability (unfunded or underfunded)


(40
)


(41
) thereof principal pension benefit liability


(39
)


(41
) thereof insignificant pension benefit liability


(1
)


0Prepaid pension asset (overfunded)


56



46 thereof principal prepaid pension asset


55



45 thereof insignificant prepaid pension asset


1



1 thereof pension cost recognized in Accumulated other
    comprehensive income


29



28   Defined Benefit
    Pension Plans and Similar Obligations
       F-42




---



##### Table of Contents



Domestic plans


Foreign plans


Total2007


2006


2007


2006


2007


2006 millionsChange in benefit obligationBenefit obligation at beginning of year


41



43



275



257



316



300Additional plans included in pension disclosure


0



1



7



5



7



6Service cost


0



0



38



36



38



36Interest cost


1



2



11



10



12



12Employee contributions


0



0



3



3



3



3Benefits paid


(1
)


(1
)


(15
)


(7
)


(16
)


(8
)Actuarial loss/gain


(4
)


(4
)


0



(5
)


(4
)


(9
)Curtailments/Settlements


0



0



(5
)


0



(5
)


0Other changes


1



0



0



1



1



1Foreign currency exchange rates


0



0



(21
)


(25
)


(21
)


(25
)Benefit obligation at year end


38



41



293



275



331



316Change in plan assetsFair value of plan assets at beginning of year


33



29



288



242



321



271Additional plans included in pension disclosure


0



0



0



5



0



5Actual return on plan assets


2



2



11



27



13



29Employer contributions


2



3



53



42



55



45Employee contributions


(1
)


0



3



3



2



3Benefits paid


0



(1
)


(13
)


(7
)


(13
)


(8
)Curtailments/Settlements


0



0



(4
)


0



(4
)


0Foreign currency exchange rates


0



0



(27
)


(24
)


(27
)


(24
)Fair value of plan assets at year end


36



33



311



288



347



321Funded status at year end


(2
)


(8
)


18



13



16



5Amounts recognized in the consolidated balance sheets:Noncurrent pension assets


0



0



55



45



55



45Accrued benefit liability (current)


0



0



(1
)


(1
)


(1
)


(1
)Accrued benefit liability (noncurrent)


(2
)


(8
)


(36
)


(31
)


(38
)


(39
)(2
)


(8
)


18



13



16



5     Domestic plans


Foreign plans2007


2006


2005


2007


2006


2005PercentDiscount rate


5.5



4.5



4.0



5.0



4.4



4.2Rate of compensation increase


2 to 5



2 to 5



2 to 7



5.0



4.6



4.9  F-43




---



##### Table of Contents



Domestic plans


Foreign plans


Total2007


2006


2005


2007


2006


2005


2007


2006


2005 millionsService cost


0



0



0



38



36



30



38



36



30Interest cost


1



2



2



11



10



9



12



12



11Expected return on plan assets


(1
)


(1
)


(2
)


(21
)


(17
)


(14
)


(22
)


(18
)


(16
)Amortization of prior service cost


0



0



1



0



0



0



0



0



1Amortization of net loss


1



2



0



0



1



0



1



3



0Net periodic benefit cost


1



3



1



28



30



25



29



33



26Other changes in plan assets and benefit obligations
    recognized in other comprehensive incomeInitial net transition obligation


0



0







0



2







0



2



Net gain/loss


(4
)


10







6



16







2



26



Amortization of net loss


(1
)


0







0



0







(1
)


0



Total recognized in other comprehensive income


(5
)


10







6



18



0



1



28



0Total pension cost


(4
)


13



1



34



48



25



30



61



26     Domestic plans


Foreign plans


Total2007


2006


2007


2006


2007


2006 millionsInitial net transition obligation


0



0



2



2



2



2Prior service cost


0



0



0



0



0



0Net loss


5



10



22



16



27



26Total unrecognized pension cost


5



10



24



18



29



28     Domestic plans


Foreign plans2007


2006


2005


2007


2006


2005PercentDiscount rate


4.5



4.0



5.0



4.4



4.2



4.5Expected return on plan assets


4.0



4.3



5.5



7.0



6.9



6.9Rate of compensation increase


2 to 5



2 to 5



2 to 7



5.0



4.5



5.0  F-44




---



##### Table of Contents



Additional
    Information on Estimated Recognition of Components of Net
    Periodic Benefit Costs and
    Other Amounts Recognized in Other Comprehensive Income
    Pension Assets
      Foreign pension plans and otherpost-employment obligationsActual





ActualTarget


allocation


Target


allocationasset


of plan


asset


of planallocation


assets in


allocation


assets inAsset category

for 2008


2007


for 2007


2006PercentEquity


55



54



55



58Fixed income


35



36



41



40Real estate


3



1



3



1Insurance policies


5



6



0



0Other


2



3



1



1Total


100



100



100



100    F-45




---



##### Table of Contents



Additional
    Information on Funded Status for Domestic and Foreign Plans
    2007Domestic


Foreignplans


plans


Total millionsProjected benefit obligation


38



114



152Accumulated benefit obligation


38



106



144Fair value of plan assets


36



84



120Underfunding of accumulated benefit obligation


2



22



24   2006Domestic


Foreignplans


plans


Total millionsProjected benefit obligation


41



109



150Accumulated benefit obligation


40



101



141Fair value of plan assets


33



77



110Underfunding of accumulated benefit obligation


7



24



31   Expected Future
    Contributions and Benefits
      Domestic


Foreignplans


plans


Total millions2008


1



12



132009


1



13



142010


2



15



172011


2



17



192012


2



19



212013 to 2017


12



129



141   Defined Contribution
    Pension Plans
    Employee-Financed
    Pension Plan
   F-46




---



##### Table of Contents



b)
    Other Obligations    2007


2006Current


Noncurrent


Total


Current


Noncurrent


Total millionsEmployee-related obligationsObligations related to share-based compensation programs


60



38



98



83



51



134Other employee-related obligations


56



46



102



46



47



93Customer-related obligations


28



0



28



26



0



26Restructuring obligations


1



2



3



2



4



6Warranty obligations


3



0



3



3



0



3Other obligations


5



8



13



2



6



8153



94



247



162



108



270     Employers Accounting for Postemployment Benefits
    2007


2006 millionsBalance as at 1/1


3



3Additions


3



3Utilization


3



3Release


0



0Balance as at 12/31


3



3   Accounting for Costs Associated with Exit and
    Disposal Activities
 F-47




---



##### Table of Contents



SeveranceUnused


payments forlease space


re-structuring


Total millions1/1/2007


5



1



6Additions


1



0



1Utilization


(2
)


(1
)


(3
)Release


(1
)


0



(1
)12/31/2007


3



0



3 thereof current


1



0



1 thereof noncurrent


2



0



21/1/2006


8



2



10Additions


3



2



5Utilization


(3
)


(1
)


(4
)Release


(3
)


(2
)


(5
)12/31/2006


5



1



6 thereof current


2



0



2 thereof noncurrent


3



1



41/1/2005


11



6



17Additions


2



4



6Utilization


(4
)


(5
)


(9
)Release


(2
)


(3
)


(5
)Currency


1



0



112/31/2005


8



2



10 thereof current


2



2



4 thereof noncurrent


6



0



6     (20)
    SHAREHOLDERS
    EQUITY  Common Stock
     F-48




---



##### Table of Contents



2007


2006Number of


Percent of


Number of


Percent ofshares


common


shares


common(000)


stock


(000)


stockHasso Plattner GmbH & Co. Beteiligungs-KG


113,719



9.1
%


113,719



9.0
%Dietmar Hopp Stiftung GmbH


109,869



8.8
%


109,869



8.7
%Klaus Tschira Stiftung gGmbH


78,474



6.3
%


67,472



5.3
%Dr. h.c. Tschira Beteiligungs GmbH & Co. KG


32,831



2.6
%


63,331



5.0
%Hasso Plattner Förderstiftung gGmbH


15,245



1.2
%


16,062



1.2
%DH-Besitzgesellschaft mbH & Co.
    KG(1)


6,404



0.5
%


10,200



0.8
%Dr. h.c. Tschira and wife


3,178



0.3
%


2,000



0.2
%Treasury stock


48,065



3.9
%


49,251



3.9
%Free float


838,473



67.3
%


835,633



65.9
%1,246,258



100.0
%


1,267,537



100.0
%       Authorized Capital
    
    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 180 million through the
    issuance of new common shares in return for contributions in
    cash until May 8, 2011 (Authorized Capital Ia).
    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). This capital increase could also be executed
    as a result of a business combination. 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 a total amount of 180 million through the
    issuance of new common shares in return for contributions in
    cash or in kind until May 8, 2011 (Authorized Capital
    IIa). This capital increase could also be executed as a
    result of a business combination. Subject to certain
    preconditions and the consent of the Supervisory Board, the
    Executive Board is authorized to exclude the shareholders
    statutory subscription rights.   F-49




---



##### Table of Contents



Contingent Capital
    Contingentcapital millions1/1/2006


53Exercised


(1
)New authorized


100Increase in consequence of capital increase


83Reduction/cancellation


(25
)12/31/2006


210Exercised


(1
)New authorized


0Reduction/cancellation


012/31/2007


209     Treasury Stock
     F-50




---



##### Table of Contents



Accumulated Other
    Comprehensive Income/Loss
    Gains





CurrencyUnrealized





/losses on





effectsCurrency


gains


Unrecog-


foreign


Gains


from inter-translation


/losses on


nized


currency


/losses on


company


Total otheradjust-


marketable


pension


cash flow


STAR


long-term


componentsments


securities


costs


hedges


hedge


investments


of equity millions1/1/2005


(296
)


8



(11
)


13



9



(2
)


(279
)Current-period change, net of tax


121



3



1



(22
)


42



43



18812/31/2005


(175
)


11



(10
)


(9
)


51



41



(91
)Current-period change, net of tax


(149
)


(7
)


(10
)


20



(48
)


(26
)


(220
)12/31/2006


(324
)


4



(20
)


11



3



15



(311
)Current-period change, net of tax


(194
)


(3
)


0



10



(12
)


(5
)


(204
)12/31/2007


(518
)


1



(20
)


21



(9
)


10



(515
)     available-for-sale
          Miscellaneous
  Aktiengesetz Handelsgesetzbuch
   F-51




---



##### Table of Contents



D. ADDITIONAL
    INFORMATION
  (21) SUPPLEMENTAL
    CASH FLOW INFORMATION
      available-for-sale
  (22)
    CONTINGENT
    LIABILITIES          (23)
    OTHER FINANCIAL
    COMMITMENTS   F-52




---



##### Table of Contents



Operating


Purchaseleases


commitments millionsDue 2008


157



137Due 2009


119



29Due 2010


98



19Due 2011


80



10Due 2012


58



2Due thereafter


137



4       (24) LITIGATION
    AND CLAIMS
  Intellectual
    Property Litigation
  U.S.-based
  U.S.-based
    U.S.-based
 F-53




---



##### Table of Contents



U.S.-based
  U.S.-based
  U.S.-based
  U.S.-based
    U.S.-based
    Other Litigation
   F-54




---



##### Table of Contents



U.S.-based
      (25)
    DERIVATIVE FINANCIAL
    INSTRUMENTS    2007


2006 millionsAssets:Derivatives without a hedging relationship


60



15thereof forward exchange contracts


59



15thereof interest rate swaps


1



0Derivatives with a hedging relationship (hedge accounting)


87



189thereof forward exchange contracts


29



18thereof call options (STAR hedge)


58



171Liabilities:Derivatives without a hedging relationship


(30
)


(10
)thereof forward exchange contracts


(30
)


(10
)Derivatives with a hedging relationship (hedge accounting)


(1
)


(2
)thereof forward exchange contracts


(1
)


(2
)   Foreign Exchange
    Forward Contracts
   F-55




---



##### Table of Contents



STAR Hedges
   F-56




---



##### Table of Contents



2007Hedge of 12.0 million 2006 STARsBuy/sell

Options


Strike price in Buy


12,000,000



42.12Sell


6,000,000



54.62Sell


3,000,000



67.12  Fair value as at
    December 31, 2007:  2 million
  2007Hedge of 15.2 million 2005 STARsBuy/sell

Options


Strike price in Buy


15,200,000



30.47Sell


7,600,000



42.97Sell


3,800,000



55.47  Fair value as at
    December 31, 2007:  56 million
  2006Hedge of 12.0 million 2006 STARsBuy/sell

Options


Strike price in Buy


12,000,000



42.12Sell


6,000,000



54.62Sell


3,000,000



67.12  Fair value as at
    December 31, 2006:  21 million
  2006Hedge of 15.2 million 2005 STARsBuy/sell

Options


Strike price in Buy


15,200,000



30.47Sell


7,600,000



42.97Sell


3,800,000



55.47  Fair value as at
    December 31, 2006:  132 million
  2006Hedge of 12.0 million 2004 STARsBuy/sell

Options


Strike price in Buy


12,000,000



33.59Sell


6,000,000



46.09Sell


3,000,000



58.59  Fair value as at
    December 31, 2006:  18 million


F-57




---



##### Table of Contents



Derivative Interest
    Rate Contracts
          (26)
    FINANCIAL RISK
    MANAGEMENT      Foreign Exchange Risk
    value-at-risk value-at-risk
  2007





20062007


Yearly


2006


Yearly12/31


average


12/31


average millionsValue at risk


12



14



4



9  F-58




---



##### Table of Contents



Interest Rate Risk
      Equity Price Risk
      Credit Risk
        Liquidity Risk
     F-59




---



##### Table of Contents



Fair Value of
    Financial Instruments
    2007


2006Carrying


Fair


Carrying


Fairvalue


value


value


value millionsAssets:Debt and equity securities


652



652



1,007



1,007Cash and cash equivalents


1,608



1,608



2,399



2,399Restricted cash


550



550



0



0Time deposits


35



35



19



19Loans


57



57



51



51DerivativesForward exchange contracts


88



88



33



33Call options (STAR hedge)


58



58



171



171Other derivatives


1



1



0



0Liabilities:Bank loans and overdrafts


(27
)


(27
)


(26
)


(26
)Other financial liabilities (excluding derivatives)


(11
)


(11
)


(8
)


(8
)DerivativesForward exchange contracts


(31
)


(31
)


(12
)


(12
)     
    Debt and equity securities: The fair values of debt and equity
    securities are based on available quoted market prices, except
    that quoted market prices are not available for 69 million
    of equity securities at cost and 19 million of equity
    method investments, for which there were no indication of
    impairment at December 31, 2007 or 2006.
    Cash and cash equivalents, Restricted cash, time deposits: Due
    to their short maturities, the book value of cash and cash
    equivalents and time deposits approximates fair value.
    Loans, bank loans and overdrafts, other financial liabilities:
    The fair values of loans to third parties, bank loans and
    overdrafts and other financial liabilities are determined by
    discounting estimated cash flows using appropriate interest
    rates adjusted to reflect the inherent credit risk. Most loans
    to third parties, bank loans and overdrafts are of a short term
    nature. Accordingly, the net carrying values approximate their
    fair values.
    Non-interest-bearing or below market-rate employee loans are
    discounted to their present value using the prevailing interest
    rate the employee would have to pay to a bank for a similar loan.
    Derivatives: The fair value of forward foreign exchange
    contracts is based on forward exchange rates. The fair value of
    the derivatives entered into to hedge our STAR programs and the
    fair values of our F-60




---



##### Table of Contents



contingent derivative interest rate contracts is based on market
    data that reflect current market expectations.    (27)
    SHARE-BASED PAYMENT
    PLANS    a)
    Employee Discounted
    Stock Purchase Programs    b)
    Cash-Settled
    Share-Based Payment Plans  1)
    Stock Appreciation
    Rights (STAR) Plans    Weighting factor for valuation calculation of STAR awards,
    quarter endingMarch 31

June 30


Sep. 30


Dec. 31


March 31


June 30


Sep. 30


Dec. 315%


5%



10%



20%



10%



10%



10%



30%      F-61




---



##### Table of Contents



Risk-free interest rate:

3.99% to 4.16% (depending on maturity)Expected volatility:

27.3%Expected dividend ratio:

1.37%             2)
    Incentive Plan 2010     F-62




---



##### Table of Contents



Calculation


Incrementalof payout


maximum


Incrementalas percentage


payout as


maximumper point


percentage of


payout perIncrease in market capitalization

increase


base value


right in 0% to 50%


0.00



0
%


0.00> 50% to 80%


0.67



20
%


28.92> 80% to 90%


3.00



30
%


43.38> 90% to 99.99%


5.00



50
%


72.30Total






100
%


144.60         Risk-free interest rate:

3.99% to 4.36% (depending on maturity)Expected volatility:

29.6%Expected dividend ratio:

1.37%      F-63




---



##### Table of Contents



3)
    Virtual Stock Option
    Plan 2007            Expected life:

5 yearsRisk-free interest rate:

3.99% to 4.36% (depending on maturity)Expected volatility:

31.2%Expected dividend ratio:

1.37%       c)
    Equity Settled
    Share-Based Payment Plans  1)
    Stock Option Plan
    2002   F-64




---



##### Table of Contents



2006


2005Expected life in years


3.50%



3.50%Risk-free interest rate


3.10%



2.82%Expected volatility


24.00%



24.00%Expected dividend ratio


0.87%



0.65%     WeightedNumber


Weighted average


averageof options


exercise price


remaining


Aggregateoutstanding


per option


contractual term


intrinsic value(000)


in 


in years


 millions1/1/2007


7,446



142.57



2.8



182Granted














Exercised


1,451



110.87







Forfeited or expired


182



172.51







12/31/2007


5,813



149.54



2.0



41Fully vested options as at 31.12.2007


4,160



135.08



1.5



41  F-65




---



##### Table of Contents



Weighted averageNumber of


grant-dateoptions


fair value(000)


Nonvested as at 1/1/2006


4,846



29.81Granted


1,842



26.47Vested


(2,000
)


43.61Forfeited


(147
)


23.21Nonvested as at 12/31/2006


4,541



22.59Granted






Vested


(2,756
)


20.08Forfeited


(132
)


26.26Nonvested as at 12/31/2007


1,653



26.47     2) Long Term
    Incentive 2000 Plan
     F-66




---



##### Table of Contents



Number





Weightedof options/


Weighted average


averageconvertible bonds


exercise price


remaining


Aggregateoutstanding


per option


contractual term


intrinsic value(000)


in 


in years


 millionsStock options1/1/2007


1,010



106.15



4.7



55Granted














Exercised


(119
)


112.33







Forfeited


(13
)


111.14







12/31/2007


879



109.92



3.6



28Convertible bonds1/1/2007


6,411



202.20



4.2



22Granted














Exercised


(68
)


150.98







Forfeited


(194
)


207.12







12/31/2007


6,149



202.61



3.2



0         (28) SEGMENT
    AND GEOGRAPHIC INFORMATION
       F-67




---



##### Table of Contents



project-by-project
    2007Product


Consulting


Training


Total millionsExternal revenue from reportable segments


7,369



2,369



493



10,231Other














11Total consolidated revenue














10,242Segment result


4,300



631



209



5,140Unallocated corporate revenue and expenses














(2,408
)Operating income














2,732Other non-operating income/expense, net














1Financial income, net














124Income before income taxes and minority interests














2,857Other informationDepreciation and amortization


(98
)


(33
)


(4
)   2006Product


Consulting


Training


Total millionsExternal revenue from reportable segments


6,643



2,300



440



9,383Other














10Total consolidated revenue














9,393Segment result


4,034



596



167



4,797Unallocated corporate revenue and expenses














(2,219
)Operating income














2,578Other non-operating income/expense, net














(12
)Financial income, net














122Income before income taxes and minorityinterests














2,688Other informationDepreciation and amortization


(86
)


(24
)


(7
)   F-68




---



##### Table of Contents



2005Product


Consulting


Training


Total millionsExternal revenue from reportable segments


6,041



2,078



380



8,499Other














10Total consolidated revenue














8,509Segment result


3,594



458



132



4,184Unallocated corporate revenue and expenses














(1,847
)Operating income














2,337Other non-operating income/expense, net














(25
)Financial income, net














11Income before income taxes and minority interests














2,323Other informationDepreciation and amortization


(84
)


(25
)


(7
)   Revenues
      Segment Result
       F-69




---



##### Table of Contents



2007


2006


2005 millionsUnallocated corporate revenue and expenses:External revenue from services provided outside of the
    reportable segments


(11
)


(10
)


(10
)Development expense  Management view


1,769



1,642



1,339Administration and other corporate expenses  Management
    view


555



488



473Share-based compensation expenses


95



99



452,408



2,219



1,847     Segment Assets
    Geographic
    Information
    Revenue by location of customers


Revenue by location of companies2007


2006


2005


2007


2006


2005 millionsGermany


2,004



1,907



1,810



2,146



2,031



1,906Rest of
    EMEA(1)


3,386



2,994



2,709



3,327



2,959



2,670Total EMEA


5,390



4,901



4,519



5,473



4,990



4,576United States


2,706



2,609



2,340



2,689



2,588



2,340Rest of Americas


871



776



656



865



753



654Total Americas


3,577



3,385



2,996



3,554



3,341



2,994Japan


447



431



406



443



429



402Rest of Asia Pacific Japan


828



676



588



772



633



537Total Asia Pacific Japan


1,275



1,107



994



1,215



1,062



93910,242



9,393



8,509



10,242



9,393



8,509       F-70




---



##### Table of Contents



Software and software-related service revenue by location of
    customers


Software and software-related service revenue by location of
    companies2007


2006


2005


2007


2006


2005 millionsGermany


1,432



1,342



1,237



1,526



1,421



1,303Rest of
    EMEA(1)


2,541



2,169



1,957



2,523



2,169



1,943Total EMEA


3,973



3,511



3,194



4,049



3,590



3,246United States


1,838



1,726



1,553



1,825



1,710



1,557Rest of Americas


657



556



469



650



534



466Total Americas


2,495



2,282



2,022



2,475



2,244



2,023Japan


340



308



294



336



306



291Rest of Asia Pacific Japan


619



495



445



567



456



395Total Asia Pacific Japan


959



803



739



903



762



6867,427



6,596



5,955



7,427



6,596



5,955   Property, plant, and equipment, net


Intangible assets, net2007


2006


2005


2007


2006


2005 millionsGermany


923



858



764



216



149



87Rest of
    EMEA(1)


135



133



129



35



1



0Total EMEA


1,058



991



893



251



150



87United States


167



152



155



138



95



14Rest of Americas


13



10



9



14



18



33Total Americas


180



162



164



152



113



47Japan


4



4



4



0



0



0Rest of Asia Pacific Japan


74



49



34



0



0



6Total Asia Pacific Japan


78



53



38



0



0



61,316



1,206



1,095



403



263



140        F-71




---



##### Table of Contents



(29)
    BOARD OF DIRECTORS  EXECUTIVE BOARD
  Membership on supervisory boards and other comparablegoverning bodies of enterprises, other than subsidiaries of
    SAP onDecember 31,
    2007(1)
    (excluding former Executive Board members)Prof. Dr. Henning KagermannChief Executive Officer
    Overall responsibility for SAPs strategy and
    business development, product development for large
    enterprises, Global Communications, Internal Audit, Top Talent
    Management

Supervisory Board, Deutsche Bank AG,
    Frankfurt am Main, Germany
    Supervisory Board, Münchener
    Rückversicherungs-Gesellschaft AG, Munich, Germany
    Board of Directors, Nokia Corporation,
    Espoo, Finland (from May 3, 2007)Léo ApothekerDeputy Chief Executive Officer
    Sales, Consulting, Education, Marketing,
    Partner Management

Supervisory Board, AXA, Paris, FranceDr. Werner BrandtChief Financial Officer
    Finance and Administration, Shared Services, SAP Ventures,
    Global Intellectual Property, Mergers & Acquisitions

Supervisory Board, LSG Lufthansa Service Holding AG,
    Neu-Isenburg, Germany
    Supervisory Board, QIAGEN N.V.,
    Venlo, The Netherlands (from June 20, 2007)Prof. Dr. Claus E. HeinrichLabor Relations Director
    Global Human Resources, Internal SAP IT, SAP Labs network,
    Internal Business ProcessesGerhard OswaldGlobal Service and Support, SAP Business ByDesignJohn Schwarz (from March 1, 2008)Chief Executive Officer of Business Objects
    Business Objects business unit, including product development,
    go-to-market
    activities, and services and support

Board of Directors, Synopsys, Inc.,
    Mountain View, California, USADr. Peter ZenckeApplication Platform, Research, SAP Business ByDesign, SAP
    Business One

Supervisory Board, SupplyOn AG,
    Hallbergmoos, Germany
    Supervisory Board, MeVis Medical Solutions AG, Bremen, Germany
    (from August 22, 2007)Shai Agassi (until March 31, 2007)Product development and technology, Industry solutions Product
    and industry marketing       (1)
    Memberships on supervisory boards and comparable governing
    bodies of SAPs subsidiaries can be obtained from the
    Company on request. F-72




---



##### Table of Contents



SUPERVISORY BOARD
  Membership on other supervisory boards and comparablegoverning bodies of enterprises other than SAP on December
    31, 2007(excluding former Supervisory Board members)Prof. Dr. h.c. mult. Hasso
    Plattner(2),
    (4), (5), (7)Chairman of the Supervisory BoardLars
    Lamadé(1),
    (4),
    (7)Deputy Chairman
    Project Manager Service & SupportPekka
    Ala-Pietilä(5)Co-founder and CEO Blyk Ltd.
    London, Great Britain

Board of Directors, Pöyry Plc, Vantaa, Finland
    Board of Directors, CVON Group Limited,
    London, Great Britain
    Board of Directors, CVON Limited, 
    London, Great Britain
    Board of Directors, CVON Innovations Limited, London, Great
    Britain
    Board of Directors, Blyk Services Oy,
    Helsinki, Finland
    Board of Directors, CVON Innovation Services Oy, Turku, Finland
    (from February 9, 2007)
    Board of Directors, CVON Future Limited,
    London, UK (from February 5, 2007)
    Board of Directors, HelloSoft Inc., San José, USA
    (from February 1, 2007)Thomas Bamberger (from May 10,
    2007)(1),
    (3)Head of Operations Global Service & SupportChief Controlling Officer Research &
    Breakthrough InnovationChief Controlling Officer Global Service & SupportPanagiotis Bissiritsas (from May 10,
    2007)(1),
    (2), (6)Support ExpertWilli
    Burbach(1),
    (5), (7)DeveloperHelga
    Classen(1),
    (4), (7)Chairperson of the Works Council of SAP AG and SAP Hosting
    AG & Co. KGProf. 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, Mainz, Germany
    Supervisory Board, Vodafone Holding GmbH, Düsseldorf,
    GermanyPeter Koop (from May 10,
    2007)(1),
    (5)Industry Business Development ExpertDr. Gerhard
    Maier(1),
    (2),
    (3)Development project manager F-73




---



##### Table of Contents



Membership on other supervisory boards and comparablegoverning bodies of enterprises other than SAP on December
    31, 2007(excluding former Supervisory Board members)Dr. h.c. Hartmut
    Mehdorn(4)Chairman of the Executive Board,
    Deutsche Bahn AG, Berlin, Germany

Supervisory Board, DB Netz AG,
    Frankfurt am Main, Germany
    Supervisory Board, DEVK Deutsche Eisenbahn Versicherung
    Lebensversicherungsverein a.G., and
    DEVK Deutsche Eisenbahn Versicherung
    Sach- und HUK-Versicherungsverein a.G.,
    Cologne, Germany
    Supervisory Board, Dresdner Bank AG,
    Frankfurt am Main, Germany
    Supervisory Board, DB Magnetbahn GmbH,
    Munich, GermanyProf. Dr.-Ing. Dr. h.c. Dr. Ing. E.h. Joachim
    Milberg (from May 10,
    2007)(2),
    (5), (7)Chairman of the Supervisory Board BMW AG,
    Munich, Germany

Supervisory Board, Bertelsmann AG,
    Gütersloh, Germany
    Supervisory Board, Festo AG, Esslingen, Germany
    Board of Directors, Deere & Company,
    Moline, Illinois, USA
    Supervisory Board. MAN AG, Munich, Germany (until May 10, 2007)Prof. Dr. Dr. h.c. mult. August-Wilhelm
    Scheer(3),
    (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
    Member of the Senate, Fraunhofer-Gesellschaft zur Förderung
    der angewandten Forschung e.V., Munich, Germany
    Supervisory Board, Deutsche Messe AG,
    Hanover, Germany (from August 28, 2007) F-74




---



##### Table of Contents



Membership on other supervisory boards and comparablegoverning bodies of enterprises other than SAP on December
    31, 2007(excluding former Supervisory Board members)Dr. Erhard
    Schipporeit(3)Management Consultant

Supervisory Board, Commerzbank AG,
    Frankfurt am Main, Germany
    (until January 31, 2007)
    Supervisory Board, Talanx AG, Hanover, Germany
    Supervisory Board, Deutsche Börse AG,
    Frankfurt am Main, Germany
    Supervisory Board, HDI V.a.G., Hanover, Germany
    Supervisory Board, Hannover Rückversicherung AG, Hanover,
    Germany (from May 3, 2007)
    Supervisory Board, Career Concept AG,
    Munich, Germany (from December 7, 2007)
    Board of Directors, TUI Travel PLC,
    London, Great Britain (from October 21, 2007)Stefan
    Schulz(1),
    (5), (6)Development Project ManagerProf. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer (from
    May 10,
    2007)(5)Member of the Corporate Executive Committee of Siemens AG,
    Munich, Germany

Supervisory Board, BSH Bosch und Siemens Hausgeräte GmbH,
    Munich, Germany
    Supervisory Board, Deutsche Messe AG,
    Hanover, Germany
    Supervisory Board, Infineon Technologies AG, Munich, Germany
    Chairman of the Advisory Board, Siemens S.A., Lisbon,
    Portugal
    Chairman of the Advisory Board, Siemens Ltd., Beijing, China
    Supervisory Board, Siemens Ltd., Mumbai, India
    Supervisory Board, LEONI AG, Nürnberg, Germany (from May 3,
    2007) F-75




---



##### Table of Contents



Membership on other supervisory boards and comparablegoverning bodies of enterprises other than SAP on December
    31, 2007(excluding former Supervisory Board members)MEMBERS OF THE SUPERVISORY BOARDUNTIL MAY 10, 2007Bernhard KollerManager of idea managementChristiane Kuntz-MayrDevelopment architectDr. Barbara SchennerleinPrincipal consultantDr. Dieter SpöriHead of Corporate RepresentationFederal Affairs, Daimler AG,Berlin, GermanyDr. h.c. Klaus TschiraManaging Director, Klaus TschiraFoundation gGmbH, Heidelberg, Germany                    F-76




---



##### Table of Contents



Form 20-F
  (30)
    RELATED PARTY
    TRANSACTIONS    out-of-pocket
       F-77




---



##### Table of Contents



(31)
    PRINCIPAL ACCOUNTANT
    FEES AND SERVICES    2007


2006


2005 millionsAudit fees


8.3



7.4



5.2Audit related fees


0.2



0.6



1.1Tax fees


0.0



0.1



0.2Other fees


0.3



0.4



0.28.8



8.5



6.7      F-78