##### 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 1934
|          
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934          
|           |  | For the fiscal year ended December 31, 2004                                                       
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934      
|          
|           |  | For the transition period
    from           to                                                   

Commission file number: 1-14251





SAP AKTIENGESELLSCHAFT


SYSTEME, ANWENDUNGEN, PRODUKTE IN DER DATENVERARBEITUNG


(Exact name of registrant as specified in its charter)


SAP CORPORATION


SYSTEMS, APPLICATIONS AND PRODUCTS IN DATA PROCESSING


(Translation of Registrants name into English)


Federal Republic of Germany


(Jurisdiction of incorporation or organization)





Neurottstrasse 16


69190 Walldorf


Federal Republic of Germany


(Address of principal executive offices)


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


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

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


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




|                                                                       |  |            
|---------------------------------------------------------------------- |  | -----------
|Ordinary Shares, without nominal value (as of December 31,
    2004)** |  | 316,003,600



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



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





|   |                                     
|-- | ------------------------------------
|** | Including 5,363,000 treasury shares.









---



##### Table of Contents










TABLE OF CONTENTS


|                            |                                                                    |                                                                        |   |    |    | 
|--------------------------- | ------------------------------------------------------------------ | ---------------------------------------------------------------------- | - | -- | -- | 
|                            |                                                                    | Page                                                                   |  
|                            |                                                                    |                                                                        |  
|INTRODUCTION                |                                                                    |                                                                        | 1 |   
|FORWARD-LOOKING INFORMATION |                                                                    |                                                                        | 2 |   
|PART I                      |                                                                    |                                                                        | 3 |   
|                            | Item 1. Identity of Directors, Senior
    Management and Advisers* |                                                                        |   | 3  |   
|                            | Item 2. Offer Statistics and Expected
    Timetable*               |                                                                        |   | 3  |   
|                            | Item 3. Key Information                                            |                                                                        |   | 3  |   
|                            |                                                                    | Selected Financial Data                                                |   |    | 3  | 
|                            |                                                                    | Exchange Rates                                                         |   |    | 4  | 
|                            |                                                                    | Dividends                                                              |   |    | 5  | 
|                            |                                                                    | Risk Factors                                                           |   |    | 6  | 
|                            | Item 4. Information about SAP                                      |                                                                        |   | 21 |   
|                            |                                                                    | Availability of this Report                                            |   |    | 21 | 
|                            |                                                                    | Description of the Business                                            |   |    | 21 | 
|                            |                                                                    | Organizational Structure                                               |   |    | 42 | 
|                            |                                                                    | Description of Property                                                |   |    | 42 | 
|                            |                                                                    | Capital Expenditures                                                   |   |    | 44 | 
|                            | Item 5. Operating and Financial Review
    and Prospects           |                                                                        |   | 45 |   
|                            |                                                                    | Overview                                                               |   |    | 45 | 
|                            |                                                                    | Key Factors                                                            |   |    | 46 | 
|                            |                                                                    | Operating Results                                                      |   |    | 47 | 
|                            |                                                                    | Outlook 2005                                                           |   |    | 63 | 
|                            |                                                                    | Foreign Currency Exchange Rate Exposure                                |   |    | 64 | 
|                            |                                                                    | Critical Accounting Policies                                           |   |    | 65 | 
|                            |                                                                    | New Accounting Standards not yet Adopted                               |   |    | 72 | 
|                            |                                                                    | Liquidity and Capital Resources                                        |   |    | 72 | 
|                            |                                                                    | Authorized Capital                                                     |   |    | 74 | 
|                            |                                                                    | Off-Balance Sheet Arrangements                                         |   |    | 74 | 
|                            |                                                                    | Research and Development                                               |   |    | 76 | 
|                            | Item 6. Directors, Senior Management
    and Employees             |                                                                        |   | 77 |   
|                            |                                                                    | Supervisory Board                                                      |   |    | 77 | 
|                            |                                                                    | Executive Board                                                        |   |    | 78 | 
|                            |                                                                    | Compensation, Shareholding, and Dealings of
    Directors and Officers |   |    | 80 | 
|                            |                                                                    | Employees                                                              |   |    | 88 | 
|                            |                                                                    | Share Ownership                                                        |   |    | 89 | 
|                            | Item 7. Major Shareholders and Related
    Party Transactions      |                                                                        |   | 94 |   
|                            |                                                                    | Major Shareholders                                                     |   |    | 94 | 
|                            |                                                                    | Related Party Transactions                                             |   |    | 95 | 
|                            | Item 8. Financial Information                                      |                                                                        |   | 96 |   
|                            |                                                                    | Consolidated Financial Statements                                      |   |    | 96 | 
|                            |                                                                    | Other Financial Information                                            |   |    | 96 | 
|                            | Item 9. The Offer and Listing                                      |                                                                        |   | 97 |   
|                            |                                                                    | General                                                                |   |    | 97 | 

i



---



##### Table of Contents



|             |                                                                                            |                                                                        |     |     |     | 
|------------ | ------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------- | --- | --- | --- | 
|             |                                                                                            | Page                                                                   |    
|             |                                                                                            |                                                                        |    
|             | Item 10. Additional Information                                                            |                                                                        |     | 101 |    
|             |                                                                                            | Articles of Incorporation                                              |     |     | 101 | 
|             |                                                                                            | Material Contracts                                                     |     |     | 107 | 
|             |                                                                                            | Exchange Controls and Other Limitations
    Affecting Security Holders |     |     | 108 | 
|             |                                                                                            | Taxation                                                               |     |     | 109 | 
|             |                                                                                            | Documents on Display                                                   |     |     | 116 | 
|             | Item 11. Quantitative and Qualitative
    Disclosures About Market Risk                    |                                                                        |     | 117 |    
|             |                                                                                            | Foreign Currency Risk                                                  |     |     | 117 | 
|             |                                                                                            | Interest Rate Risk                                                     |     |     | 118 | 
|             |                                                                                            | Equity Price Risk                                                      |     |     | 119 | 
|             | Item 12. Description of Securities
    Other than Equity Securities*                       |                                                                        |     | 120 |    
|PART II      |                                                                                            |                                                                        | 121 |    
|             | Item 13. Defaults, Dividend Arrearages
    and Delinquencies*                              |                                                                        |     | 121 |    
|             | Item 14. Material Modifications to the
    Rights of Security Holders and Use of Proceeds* |                                                                        |     | 121 |    
|             | Item 15. Controls and Procedures                                                           |                                                                        |     | 121 |    
|             | Item 16. [Reserved]                                                                        |                                                                        |     | 121 |    
|             | Item 16A. Audit Committee Financial
    Expert                                             |                                                                        |     | 121 |    
|             | Item 16B. Code of Ethics                                                                   |                                                                        |     | 121 |    
|             | Item 16C. Principal Accountant Fees
    and Services                                       |                                                                        |     | 122 |    
|             |                                                                                            | Audit Committees Pre-Approval
    Policies and Procedures             |     |     | 122 | 
|             | Item 16D. Exemptions from the Listing
    Standards for Audit Committees*                  |                                                                        |     | 123 |    
|             | Item 16E. Purchases of Equity
    Securities by the Issuer and Affiliated Purchasers       |                                                                        |     | 124 |    
|PART III     |                                                                                            |                                                                        | 126 |    
|             | Item 17. Financial Statements**                                                            |                                                                        |     | 126 |    
|             | Item 18. Financial Statements                                                              |                                                                        |     | 126 |    
|             | Item 19. Exhibits                                                                          |                                                                        |     | 127 |    
|EXHIBIT 4.11
|EXHIBIT 4.14
|EXHIBIT 4.15
|EXHIBIT 4.16
|EXHIBIT 4.17
|EXHIBIT 4.18
|EXHIBIT 4.19
|EXHIBIT 4.20
|EXHIBIT 4.21
|EXHIBIT 4.22
|EXHIBIT 4.23
|EXHIBIT 8   
|EXHIBIT 12.1
|EXHIBIT 12.2
|EXHIBIT 13  
|EXHIBIT 15  








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

ii



---



##### Table of Contents






INTRODUCTION


Aktiengesellschaft





 










1



---



##### Table of Contents






FORWARD-LOOKING INFORMATION






| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | 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;                                                           
|
| |  | regulatory and political conditions;                                                                            
|
| |  | 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 requirements with customers; and                                                                    
|
| |  | other risks and uncertainties, some of which we describe under
    Item 3. Key Information  Risk
    Factors.



2



---



##### 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











3



---



##### Table of Contents





|                                                        |                                                                           |                                                         |            |           |      |  |           |           |  |  |           |           |  |      |           |           |         |  |           |           |  |  |           |           | 
|------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------------------------------------- | ---------- | --------- | ---- |  | --------- | --------- |  |  | --------- | --------- |  | ---- | --------- | --------- | ------- |  | --------- | --------- |  |  | --------- | --------- | 
|                                                        |                                                                           | Year Ended December 31,                                 |           
|                                                        |                                                                           |                                                         |           
|                                                        |                                                                           | 2004                                                    |            |           | 2004 |  |           | 2003      |  |  | 2002      |           |  | 2001 |           |           | 2000(2) | 
|                                                        |                                                                           |                                                         |            |           |      |  |           |           |  |  |           |           |  |      |           |           |         | 
|                                                        |                                                                           | U.S.$(1)                                                |            |           |     |  |           |          |  |  |          |           |  |     |           |           |        | 
|                                                        |                                                                           | (in thousands, except per share and exchange rate data) |           
|Income Statement Data:                                  |                                                                           |                                                         |            |           |      |  |           |           |  |  |           |           |  |      |           |           |         |  |           |           |  |  |           |          
|Total revenue                                           |                                                                           |                                                         | 10,173,121 |           |      |  | 7,514,493 |           |  |  | 7,024,606 |           |  |      | 7,412,838 |           |         |  | 7,340,804 |           |  |  | 6,264,595 |          
|Operating income                                        |                                                                           |                                                         | 2,732,484  |           |      |  | 2,018,381 |           |  |  | 1,724,019 |           |  |      | 1,625,678 |           |         |  | 1,312,374 |           |  |  | 802,658   |          
|                                                        | Income before income taxes, minority interest, and extraordinary
    gain |                                                         |            | 2,805,943 |      |  |           | 2,072,642 |  |  |           | 1,776,615 |  |      |           | 1,107,698 |         |  |           | 1,068,757 |  |  |           | 1,012,869 | 
|Net income                                              |                                                                           |                                                         | 1,774,183  |           |      |  | 1,310,521 |           |  |  | 1,077,063 |           |  |      | 508,614   |           |         |  | 581,136   |           |  |  | 615,732   |          
|Earnings per
    share(3)                               |                                                                           |                                                         |            |           |      |  |           |           |  |  |           |           |  |      |           |           |         |  |           |           |  |  |           |          
|                                                        | Basic                                                                     |                                                         |            | 5.71      |      |  |           | 4.22      |  |  |           | 3.47      |  |      |           | 1.62      |         |  |           | 1.85      |  |  |           | 1.96      | 
|                                                        | Diluted                                                                   |                                                         |            | 5.69      |      |  |           | 4.20      |  |  |           | 3.46      |  |      |           | 1.62      |         |  |           | 1.85      |  |  |           | 1.95      | 
|Other Data:                                             |                                                                           |                                                         |            |           |      |  |           |           |  |  |           |           |  |      |           |           |         |  |           |           |  |  |           |          
|Weighted average number of shares
    outstanding(3)(4) |                                                                           |                                                         |            |           |      |  |           |           |  |  |           |           |  |      |           |           |         |  |           |           |  |  |           |          
|                                                        | Basic                                                                     |                                                         |            | 310,802   |      |  |           | 310,802   |  |  |           | 310,781   |  |      |           | 313,016   |         |  |           | 314,309   |  |  |           | 314,423   | 
|                                                        | Diluted                                                                   |                                                         |            | 312,156   |      |  |           | 312,156   |  |  |           | 311,409   |  |      |           | 313,980   |         |  |           | 314,412   |  |  |           | 315,737   | 
|Balance Sheet Data:                                     |                                                                           |                                                         |            |           |      |  |           |           |  |  |           |           |  |      |           |           |         |  |           |           |  |  |           |          
|Total assets                                            |                                                                           |                                                         | 10,269,212 |           |      |  | 7,585,472 |           |  |  | 6,325,865 |           |  |      | 5,608,463 |           |         |  | 6,195,604 |           |  |  | 5,618,971 |          
|Shareholders equity                                    |                                                                           |                                                         | 6,219,700  |           |      |  | 4,594,253 |           |  |  | 3,709,445 |           |  |      | 2,872,091 |           |         |  | 3,109,513 |           |  |  | 2,517,081 |          
|Subscribed capital                                      |                                                                           |                                                         | 427,806    |           |      |  | 316,004   |           |  |  | 315,414   |           |  |      | 314,963   |           |         |  | 314,826   |           |  |  | 314,715   |          
|Short-term bank loans and overdrafts                    |                                                                           |                                                         | 34,997     |           |      |  | 25,851    |           |  |  | 19,043    |           |  |      | 22,657    |           |         |  | 458,266   |           |  |  | 146,877   |          
|Long-term financial
    debt(5)                         |                                                                           |                                                         | 12,470     |           |      |  | 9,211     |           |  |  | 11,948    |           |  |      | 11,318    |           |         |  | 7,375     |           |  |  | 6,543     |          






|    |                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts in the column are unaudited and translated for the
    convenience of the reader at
    1.00 to
    U.S.$1.3538, the Noon Buying Rate for converting
    1.00 into
    dollars on December 31, 2004. See
     Exchange Rates for recent exchange rates
    between the euro and the dollar. Our auditors have not audited
    these converted dollar amounts.
|   
|(2) | The 2000 figures have been adjusted for the effect of the change
    in the investment in Commerce One, Inc. (Commerce
    One) to the equity method. See Note 4 of
    Item 18. Financial Statements.                                                                                                                                                                
|   
|(3) | Amounts are adjusted for our one-for-one conversion of
    preference shares to ordinary shares in 2001 and the
    three-for-one stock split in 2000.                                                                                                                                                                                                                    
|   
|(4) | Includes preference and ordinary shares for periods prior to
    June 18, 2001, the effective date of the conversion of the
    preference shares into ordinary shares on a share-for-share
    basis.                                                                                                                                                                    
|   
|(5) | Long-term financial debt represents financial liabilities with a
    remaining life beyond one year, which is comprised of bank loans
    and overdrafts and convertible bonds issued pursuant to
    stock-based compensation plans. See Item 6.
    Directors, Senior Management and Employees  Share
    Ownership  Stock-Based Compensation Plans.                








4



---



##### Table of Contents










|     |  |            |        |  |      |  |        |     |  |  |            |  |  |  |        | 
|---- |  | ---------- | ------ |  | ---- |  | ------ | --- |  |  | ---------- |  |  |  | ------ | 
|Year |  | Average(1) |        |  | High |  |        | Low |  |  | Period-End | 
|     |  |            |        |  |      |  |        |     |  |  |            | 
|2000 |  |            | 0.9207 |  |      |  | 1.0335 |     |  |  | 0.8270     |  |  |  | 0.9388 | 
|2001 |  |            | 0.8909 |  |      |  | 0.9535 |     |  |  | 0.8370     |  |  |  | 0.8901 | 
|2002 |  |            | 0.9495 |  |      |  | 1.0485 |     |  |  | 0.8594     |  |  |  | 1.0485 | 
|2003 |  |            | 1.1411 |  |      |  | 1.2597 |     |  |  | 1.0361     |  |  |  | 1.2597 | 
|2004 |  |            | 1.2478 |  |      |  | 1.3625 |     |  |  | 1.1801     |  |  |  | 1.3538 | 

|      |                               |      |  |        |     |  |  |            |  |  |  |        | 
|----- | ----------------------------- | ---- |  | ------ | --- |  |  | ---------- |  |  |  | ------ | 
|Month |                               | High |  |        | Low |  |  | Period-End | 
|      |                               |      |  |        |     |  |  |            | 
|2004  |                               |      |  |        |     |  |  |            |  |  |  |       
|      | July                          |      |  | 1.2437 |     |  |  | 1.2032     |  |  |  | 1.2032 | 
|      | August                        |      |  | 1.2368 |     |  |  | 1.2025     |  |  |  | 1.2183 | 
|      | September                     |      |  | 1.2417 |     |  |  | 1.2052     |  |  |  | 1.2417 | 
|      | October                       |      |  | 1.2783 |     |  |  | 1.2271     |  |  |  | 1.2746 | 
|      | November                      |      |  | 1.3288 |     |  |  | 1.2703     |  |  |  | 1.3259 | 
|      | December                      |      |  | 1.3625 |     |  |  | 1.3224     |  |  |  | 1.3538 | 
|2005  |                               |      |  |        |     |  |  |            |  |  |  |       
|      | January                       |      |  | 1.3476 |     |  |  | 1.2954     |  |  |  | 1.3049 | 
|      | February                      |      |  | 1.3274 |     |  |  | 1.2773     |  |  |  | 1.3274 | 
|      | March (through March 8, 2005) |      |  | 1.3342 |     |  |  | 1.3127     |  |  |  | 1.3342 | 






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









Aufsichtsrat Vorstand


5



---



##### Table of Contents





|                        |  |                   |      |     |                   |  |      |           |  |  |       |  |  |  |      |    
|----------------------- |  | ----------------- | ---- | --- | ----------------- |  | ---- | --------- |  |  | ----- |  |  |  | ---- | ---
|                        |  | Dividend Paid per |      |     | Dividend Paid per | 
|Year Ended December 31, |  | Ordinary Share    |      |     | Preference Share  | 
|                        |  |                   |      |     |                   | 
|                        |  |                  |      |     | U.S.$             |  |      |          |  |  | U.S.$ | 
|2000                    |  |                   | 0.57 |     |                   |  | 0.52 | (1)(4)    |  |  | 0.58  |  |  |  | 0.53 | (1)
|2001                    |  |                   | 0.58 |     |                   |  | 0.53 | (1)(4)    |  |  | N/A   |  |  |  | N/A  |    
|2002                    |  |                   | 0.60 |     |                   |  | 0.69 | (1)(4)    |  |  | N/A   |  |  |  | N/A  |    
|2003                    |  |                   | 0.80 |     |                   |  | 0.95 | (1)(4)    |  |  | N/A   |  |  |  | N/A  |    
|2004 (proposed)         |  |                   | 1.10 | (2) |                   |  | 1.47 | (2)(3)(4) |  |  | N/A   |  |  |  | N/A  |    






|    |                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Translated for the convenience of the reader from euro into
    dollars at the Noon Buying Rate for converting euro into dollars
    on the dividend payment date. The depositary is required to
    convert any dividend payments received from SAP as promptly as
    practicable upon receipt.                                                                                                
|   
|(2) | Subject to approval of the Annual General Shareholders
    Meeting of SAP AG to be held on May 12, 2005.                                                                                                                                                                                                                                                                                        
|   
|(3) | Translated for the convenience of the reader from euro into
    dollars at the Noon Buying Rate for converting euro into dollars
    on March 8, 2005 of U.S.$1.3342 per
    1.00. The
    depositary is required to convert any dividend payments received
    from SAP as promptly as practicable upon receipt. The dividend
    paid can actually differ due to changes in the exchange rate.
|   
|(4) | One SAP ADS represents one-fourth of SAP AGs ordinary
    share. Accordingly, the final dividend per ADS is calculated as
    one-fourth of the dividend for one SAP AG share and is dependent
    on the euro/dollar exchange rate.                                                                                                                                                            

 









Our sales are subject to quarterly fluctuations.






| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | 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;
|
| |  | the potential for delay of customer implementations of SAP
    software products;                   

6



---



##### Table of Contents





| |   |                                                      
| | - | -----------------------------------------------------
| |  | changes in customer budgets;                         
|
| |  | seasonality of a customers technology purchases; and
|
| |  | other general economic and market conditions.        







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



Our sales forecasts may not be accurate.




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




7



---



##### Table of Contents





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.




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




Recently effected changes in financial accounting standards
regarding the accounting for stock based compensation will have
an adverse effect on our reported results of operations.




8



---



##### Table of Contents







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




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






| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the announcement of new products or product enhancements by us
    or our competitors;                                                                       
|
| |  | technological innovation by us or our competitors;                                                                                                           
|
| |  | quarterly variations in our competitors 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.                                                          



9



---



##### Table of Contents





Currency fluctuations may impact the value of our ADSs.






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




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








10



---



##### Table of Contents













11



---



##### Table of Contents



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




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






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




12



---



##### 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.



13



---



##### Table of Contents



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 integration and application platform
strategy may not succeed or may make certain of our products
less desirable.






Substantial, prolonged declines in the Americas and Asia and
slow or weak recovery of technology and software markets in
Europe resulting from general adverse economic conditions may
cause our revenues and profitability to suffer.




14



---



##### Table of Contents







Terrorist attacks and risk of war or international
hostilities 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, governmental
    regulations such as regulations of the Internet, and additional
    requirements for the design and for the distribution of software
    and services.





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




15



---



##### Table of Contents









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




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




16



---



##### Table of Contents







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




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




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




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




17



---



##### Table of Contents







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






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






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




18



---



##### Table of Contents



Some of our competitors may have been more aggressive than us
in applying for or obtaining patent protection for innovative
proprietary technologies.




Our IT Security measures may be breached or compromised and
we may sustain unplanned IT system unavailabilities.




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.




19



---



##### Table of Contents







| |   |                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | inability to successfully integrate the acquired business;                                                                                                                                              
|
| |  | inability to integrate the acquired technologies or products
    with our current products and technologies;                                                                                            
|
| |  | potential disruption of our ongoing business;                                                                                                                                                           
|
| |  | inability to retain key technical and managerial personnel;                                                                                                                                             
|
| |  | dilution of existing equity holders caused by capital stock
    issuances to the stockholders of acquired companies or capital
    stock issuances to retain employees of the acquired companies;       
|
| |  | assumption of unknown material liabilities of acquired companies;                                                                                                                                       
|
| |  | incurrence of debt and/or significant cash expenditure;                                                                                                                                                 
|
| |  | difficulty in maintaining controls, procedures and policies;                                                                                                                                            
|
| |  | potential adverse impact on our relationships with partner
    companies or third-party providers of technology or products;                                                                            
|
| |  | regulatory constraints;                                                                                                                                                                                 
|
| |  | impairment of relationships with employees and customers; and                                                                                                                                           
|
| |  | problems with product quality, product architecture, legal
    contingencies, product development issues or other significant
    issues that may not be detected through the due diligence
    process.



We may incur losses in connection with venture capital
investments.




20



---



##### 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.







ITEM 4. INFORMATION ABOUT SAP


Aktiengesellschaft



















21



---



##### Table of Contents



        




















22



---



##### Table of Contents



















23



---



##### Table of Contents















Four strategic priorities for 2005




| |   |                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We will focus on revenue growth and, in particular, on growth in
    software sales.                                                                                                                    
|
| |  | We will focus on establishing ourselves as a leading player in
    the applistructure arena. We will seek to develop SAP NetWeaver
    from a technology platform into a platform for business processes

24



---



##### Table of Contents



| |   |                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | (Business Process Platform). It is
    our aim to complete the transition of our complete solution
    portfolio to Enterprise Services Architecture by 2007, which
    means that our goal is for all of SAPs applications to run
    on Business Process Platform by then.
|
| |  | In the small and mid-market
    segments, we want to extend our position as a leading supplier
    of solutions for these segments.                                                                                                                                          
|
| |  | Internally, we want to ensure that
    we operate as effectively and efficiently as possible so that we
    have more freedom to invest.                                                                                                                                     








25



---



##### Table of Contents















|  |                            
|- | ---------------------------
|* | For installed Customer Base







26



---



##### Table of Contents









| |                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | mySAP CRM helps organizations manage virtually every aspect of
    their relationships with customers. It includes a complete set
    of capabilities that help maximize the value delivered to and
    the value derived from customers throughout the customer
    interaction cycle.                                                                                               
|
| | Key functions of mySAP CRM include support for sales, marketing,
    channel management, interaction center, and service management.
    In addition, mySAP CRM offers analytics that allow an
    organization to leverage customer data for better and quicker
    business decisions. Through these capabilities, mySAP CRM
    continuously enhances an organizations ability to:
|
| |  identify and engage potential customers;                                                                                                                                                                                                                                                                                                                                            
|
| |  perform business transactions with customers;                                                                                                                                                                                                                                                                                                                                       
|
| |  fulfill individual customer needs as contracted; and                                                                                                                                                                                                                                                                                                                                
|
| |  provide after-sales care such as customer service
    and product maintenance.                                                                                                                                                                                                                                                                                                      





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | mySAP ERP is an enterprise resource planning (ERP) solution
    that aims at enabling organizations to run their core business
    functions, including analytics, human resources, financials,
    operations, corporate services, and planning. The solutions
    formerly sold under the names mySAP Financials and mySAP Human
    Resources have been renamed mySAP ERP Financials and mySAP ERP
    Human Capital Management, respectively. They are components of
    mySAP ERP. mySAP ERP runs on the SAP NetWeaver technology
    platform.
|
| | mySAP ERP addresses customer needs for an expandable enterprise
    resource planning environment. As such, it is available as an
    individual solution or as a part of mySAP Business Suite.
    Customers can upgrade from mySAP ERP to the full mySAP Business
    Suite  either in a single step or incrementally as
    their business needs change. As a result, mySAP ERP offers a
    path to the more comprehensive business solutions suite.                                                                                           
|
| | The following capabilities are integrated into mySAP ERP:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | mySAP ERP Financials is a finance, analytics, and accounting
    solution that is designed to help organizations handle financial
    transactions and process and interpret financial and business
    data. In addition, it aims at helping organizations achieve
    efficient management of profitability, business performance, and
    growth. It also is designed to enable organization-wide control
    over the business information that is essential to strategic and
    operational decision-making. This includes the ability to track
    financial accounting data within an international framework of
    multiple companies, organizations, languages, currencies, and
    books of accounts.
|
| | Key functional areas of mySAP ERP Financials include general
    ledger, special purpose ledger and subledger, cost management,
    and profitability analysis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  





| |                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | mySAP ERP HCM is designed to provide comprehensive tools to help
    an organization optimize its investment in its employees. It
    aims at supporting human resources professionals in

27



---



##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | managing employee capabilities all the way down to the
    line-management level. It also combines strategic human capital
    management features with workforce analytics. In addition, its
    employee transaction management capabilities aim at allowing an
    organization to streamline a wide range of essential HR
    transactions and processes, including compliance with global
    regulatory requirements.
|
| | Key functional areas of mySAP ERP HCM include administration,
    payroll, benefits, legal reporting, online recruiting, blended
    learning, organizational management, compensation, manager
    self-services, employee collaboration, and workforce analytics.                                                                                                                                                        





| |                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | mySAP PLM is designed to help organizations manage the complete
    life cycle of a product, from initial concept, through design
    and engineering, production, product change management, and
    service and maintenance. It aims at allowing organizations and
    their suppliers to collaborate in such key processes as
    engineering, custom product development, and the management of
    projects, assets, and quality.
|
| | Key functional areas of mySAP PLM include product, project, and
    portfolio management; research and development (including:
    development collaboration and quality engineering); life-cycle
    data management; and corporate services (including audit
    management, emissions management, and environment, health and
    safety). mySAP PLM runs on the SAP NetWeaver integration and
    application platform.           
|
| | We believe that mySAP PLM is particularly valuable to industries
    that require product innovation and rapid product development,
    such as high-tech, industrial manufacturing, construction,
    aerospace and defense, and automotive. Process, consumer
    products, and service industries can also benefit from the
    functions of mySAP PLM.                                                                            





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | mySAP SCM is designed to help organizations in their need to
    become more adaptive in the overall management of materials,
    information, and profitability within the entire supply chain
    network. It is designed to support the many processes involved
    in the sourcing, manufacturing, distribution, and fulfillment of
    customer requirements. It also helps synchronize and integrate
    these processes both within an enterprise and among a network of
    suppliers, customers, and business partners.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | Key functions of mySAP SCM include supply chain planning,
    execution, collaboration, and coordination. Through these
    functions, mySAP SCM aims at enabling organizations and their
    partners to easily view inventory levels, orders, supplier and
    customer allocations, forecasts, production plans, and key
    performance indicators so that they can work collaboratively
    toward an efficient supply chain network. mySAP SCM is also
    designed to support customer process needs for advanced
    planning, fulfillment, logistics, warehousing, and
    transportation processes. It is also designed to monitor these
    processes with sense-and-respond capabilities that can control
    the execution of supply chain activities, and create alerts in
    the event of deviation from plans. We believe that this helps an
    organization react quickly and remain flexible when faced with
    sudden changes in customer demand or production requirements.
    mySAP SCM runs on the SAP NetWeaver integration and application
    platform.





| |                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | mySAP SRM is designed to help organizations manage their
    spending practices to achieve lower costs and higher
    profitability. It is also designed to help organizations connect
    their suppliers through

28



---



##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | automated bidding and procurement processes. It aims at allowing
    organizations to involve suppliers earlier in the sourcing
    cycle, so that they can provide more innovative and
    cost-effective solutions. As a result, it offers immediate
    insights into spending trends while helping to reduce the cost
    of goods and services organization-wide.                       
|
| | From strategy to execution, mySAP SRM is designed to cover the
    full supply cycle, helping organizations optimize supplier
    selection, increase collaboration, and compress purchasing cycle
    times. By standardizing key purchasing processes, mySAP SRM
    helps ensure that all buyers throughout the organization follow
    established rules and contract pricing guidelines.
|
| | mySAP SRM aims at a full integration with other
    procurement-related business processes, including supply chain
    management, product life-cycle management, customer relationship
    management, and ERP. mySAP SRM runs on the SAP NetWeaver
    integration and application platform.                                                                                               











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

29



---



##### Table of Contents









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





| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | First, at the lower end of the segment, are those organizations
    that require pre-packaged business solutions, and
|
| |  | Second, at the higher end of the segment, are those
    organizations that require more sophisticated solutions.     





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | two families of solutions (mySAP All-in-One and SAP Business
    One) that are specifically designed for small and midsize
    businesses. Both offerings provide integrated solutions that are
    designed for quick implementation and priced for the small and
    mid-market segments. They are targeted primarily to independent
    small and midsize businesses, but are also of interest to
    subsidiaries of larger corporations in which the corporate level
    applications are SAP solutions. SAP serves these solutions to
    the small and midsize businesses segment through a network of
    approved SAP business partners. SAP also collaborates with
    partners such as IBM, HP, American Express, and Dell, leveraging
    the distribution models of these companies to extend the
    customer and channel reach of mySAP All-in-One and SAP Business
    One solutions worldwide.
|
| |  | my SAP Business Suite solutions which are predominantly
    delivered through SAPs direct sales and support
    organization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 







| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | mySAP All-in-One solutions are software applications created and
    delivered through a network of approved SAP business partners.
    These solutions meet the needs of companies that require a high
    degree of industry-specific functionality. mySAP All-in-One
    solutions are based on components of mySAP Business Suite
    solutions and incorporate pre-defined business process knowledge
    that can be tailored to the specific needs of a customer. There
    are currently over 350 mySAP All-in-One certified solutions
    available worldwide.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Business One is an easy-to-use business management software
    solution designed specifically for small and midsize
    organizations that aims at enabling emerging businesses to
    streamline their operational and managerial processes and gain
    better control of their organizations. Through its intuitive
    user interface, SAP Business One helps deliver on-demand access
    to critical real-time information. In addition, it supports
    standard horizontal (non-industry specific) business processes
    such as financial management, warehouse management, purchasing,
    inventory management, payment, and sales force automation. SAP
    Business One targets organizations with up to 250 employees, and
    is based on the technology gained through SAPs 2002
    acquisition of TopManage.

30



---



##### Table of Contents







| |                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In addition to mySAP All-in-One and SAP Business One, many small
    and midsize businesses organizations find that mySAP Business
    Suite offers scalable solutions that fit their requirements and
    budgets. These organizations are served predominantly through
    the SAP direct sales organization.         
|
| | In particular, mySAP ERP offers small and midsize businesses a
    complete enterprise resource planning solution that can be
    readily expanded to include extended capabilities 
    including the capabilities of other mySAP Business Suite
    solutions such as mySAP CRM, mySAP SCM, mySAP PLM, and mySAP SRM.



















31



---



##### Table of Contents





















| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Business Intelligence is an information management component
    that includes a business intelligence platform, a set of data
    management tools, which we believe is comprehensive, and
    enterprise data warehousing capabilities. It is designed to
    enable organizations to access, analyze, and disseminate
    relevant and timely information. Key features of SAP Business
    Intelligence include data warehousing, online analytical
    processing of information, report design and creation, and
    business planning and simulation capabilities, as well as
    comprehensive data models for a variety of applications and
    industries.





| |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Enterprise Portal is a user-focused, Web-based solution
    designed to promote collaboration, speed information sharing,
    improve decision making, and enhance productivity. SAP EP brings
    together tools that include an open portal infrastructure,
    knowledge management for organizing, the ability to search and
    publish unstructured information, and real-time, team-based
    collaboration tools.
|
| | SAP EP is designed to allow a wide range of users to access
    simultaneously many types of information and applications,
    including SAP, third-party, and legacy applications; databases
    and data warehouses; document repositories and desktop files;
    and collaboration and groupware tools.  This access
    is achieved through a unified and personalized user interface.                                  

32



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP EP also includes patented Drag and Relate
    technology that aims at allowing users to access information
    from diverse software applications and data sources without the
    user experiencing any negative effects associated with using
    diverse sources. Packaged business content available with SAP EP
    allows faster deployment of portal-based business processes
    while reducing the need for custom software code development.





| |                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Exchange Infrastructure is designed to provide open
    integration technologies that support SAP and non-SAP software
    components working together, whether those solutions are being
    run by the same or different organizations.





| |                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Mobile Infrastructure is the foundation for all SAP
    solutions for mobile business. It provides an open and secure
    platform that permits mobile computing users to access software
    and data  in either a connected or disconnected mode.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Master Data Management is a standardized offering designed
    to solve the challenges of data integration from multiple
    systems, physical locations, and vendors. SAP Master Data
    Management helps achieve information integrity across a network
    of suppliers and customers by allowing companies with different
    IT systems, including different software systems, to
    consolidate, harmonize, and centrally control data.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The SAP Auto-ID Infrastructure is a component of the SAP
    NetWeaver platform that utilizes real-time Radio Frequency
    Identification (RFID) data by converting it to
    human-readable business information, and automating all
    associated transactions and processes. RFID is a technology that
    incorporates the use of certain radio frequencies to uniquely
    identify an object, animal, or person. SAP Auto-ID provides the
    ability to manage large volumes of streaming RFID data, manage
    Electronic Product Code (EPC) number creation and
    commission RFID tags for items to be identified. It also allows
    integration of high-volume RFID data with back-end business
    processes.
|
| | SAP Auto-ID includes features and functions to pick, pack,
    receive, track, and trace inventory, promoting improved
    inventory visibility, high-responsive replenishments, and
    improved returns and claims management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Web Application Server is the application platform of SAP
    NetWeaver. It is designed to allow an organization to gain more
    value from its existing IT assets by permitting the organization
    to deploy flexible solutions and develop new applications based
    on existing applications. It is also designed to facilitate the
    creation of Web-based services. This flexibility supports the
    exchange of data between different organizations, and the
    creation of business applications and processes that incorporate
    solutions from multiple entities IT systems with which the
    customer interfaces in its business.

33



---



##### Table of Contents



















| |                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Consulting offers consulting, implementation, and
    optimization services that aim at minimizing risk and maximizing
    the return on an organizations investment in SAP software.                                                                                                                                                                                                     
|
| | SAP Consulting brings together SAP specialists, SAP product
    development professionals, and certified partners to provide a
    single point of contact for customers seeking assistance with
    their SAP solutions at every phase of the solution life cycle.
    SAP Consulting offers the delivery of consistent services and
    methodologies at customer locations around the world.
|
| | SAP Consulting covers:                                                                                                                                                                                                                                                                                                                                                                         



| |   |                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------
| |  | strategic consulting services  to ensure that an
    organizations IT infrastructure supports its business
    goals;
|
| |  | solution delivery services  to get software up and
    running quickly and cost-effectively;                          
|
| |  | operations services  to enable solutions to grow and
    adapt with changing customer needs; and                      
|
| |  | life-cycle management services  to cover every phase
    of deploying and operating a customers solution.            





| |                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Education provides training required to assist SAP customers
    and partners in maximizing the benefits attained from SAP
    systems. SAP Education services include education needs
    analysis, education delivery, assessment and certification, and
    continuous improvement.    
|
| | SAP Educations curriculum includes approximately 300
    different courses, ranging from overview courses to expert
    courses. These courses are offered in more than 18 languages at
    more than 80 training centers worldwide, with more than
    250,000 course participants per year.

34



---



##### Table of Contents











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





| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Hosting aims at allowing organizations to move to SAP
    software solutions quickly, easily, and cost effectively. Its
    services include:



| |   |                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Application hosting: Provides infrastructure, implementation,
    operational, and ongoing support for selected applications that
    can be accessed by the customer through a Web browser.                                                                                                                                                                                        
|
| |  | Marketplace hosting: Includes hosting of marketplaces, private
    exchanges, auction sites, and specific, customized applications.                                                                                                                                                                                                                                                 
|
| |  | Application service provider (ASP) solutions:
    Combine software, infrastructure, service, support, and rapid
    implementation for turnkey solutions. These solutions are
    delivered to customers as services from a single provider. With
    ASP solutions, customers do not obtain a perpetual license, but
    subscribe to the application service for a periodic fee.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In addition to its traditional direct license model and reseller
    channels, SAP engages with leading Business Process Outsourcing
    (BPO) providers that base the provisioning of their
    services to end customers on SAP solutions. These BPO providers
    typically enter into a global partner agreement with SAP that
    includes a term license permitting the use of SAP solutions in
    selected markets to support and augment various business
    services provided to the end customer, such as outsourced human
    resources services. As part of the license grant to a BPO
    provider, SAP seeks to have the SAP solutions branded as
    Powered by SAP. SAP does not offer BPO services
    itself, but contributes to the successful BPO-deployments of its
    customers and partners through marketing, pre-sales, and partner
    management as well as implementation and quality-assurance
    support.





| |                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SAP Custom Development (formerly known as SAP Global Custom
    Development Services) aims at delivering custom designed
    solutions to solve a customers unique business needs. SAP
    Custom Developments service portfolio includes not only
    full-scale custom development projects, but also

35



---



##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | spot-services such as custom development strategic planning,
    project management, and quality and risk assessment services for
    those customers that may already have development teams at hand.
    The services portfolio also includes continuous improvement
    services, such as maintenance, to ensure the long-term health of
    our customers custom-developed solutions, as well as SAP
    Modification Clearing for those customers who are ready to
    remove existing software modifications as they move to newer
    releases of SAP software.












36



---



##### Table of Contents





|                     |  |                 |         |  |      |  |         |      |  |  |         | 
|-------------------- |  | --------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                     |  | 2004            |         |  | 2003 |  |         | 2002 | 
|                     |  |                 |         |  |      |  |         |      | 
|                     |  | (in  millions) |        
|Germany              |  |                 | 1,780.1 |  |      |  | 1,670.3 |      |  |  | 1,654.1 | 
|Rest of EMEA         |  |                 | 2,443.4 |  |      |  | 2,299.6 |      |  |  | 2,394.1 | 
|                     |  |                 |         |  |      |  |         |      | 
|Total EMEA           |  |                 | 4,223.5 |  |      |  | 3,969.9 |      |  |  | 4,048.2 | 
|                     |  |                 |         |  |      |  |         |      | 
|United States        |  |                 | 1,893.7 |  |      |  | 1,736.0 |      |  |  | 1,969.7 | 
|Rest of Americas     |  |                 | 530.1   |  |      |  | 480.2   |      |  |  | 531.9   | 
|                     |  |                 |         |  |      |  |         |      | 
|Total Americas       |  |                 | 2,423.8 |  |      |  | 2,216.2 |      |  |  | 2,501.6 | 
|                     |  |                 |         |  |      |  |         |      | 
|Japan                |  |                 | 387.4   |  |      |  | 441.5   |      |  |  | 485.9   | 
|Rest of Asia-Pacific |  |                 | 479.8   |  |      |  | 397.0   |      |  |  | 377.1   | 
|                     |  |                 |         |  |      |  |         |      | 
|Total Asia-Pacific   |  |                 | 867.2   |  |      |  | 838.5   |      |  |  | 863.0   | 
|                     |  |                 |         |  |      |  |         |      | 
|Total revenue        |  |                 | 7,514.5 |  |      |  | 7,024.6 |      |  |  | 7,412.8 | 
|                     |  |                 |         |  |      |  |         |      | 

EMEA.  


Americas.    


Asia-Pacific.    


37



---



##### Table of Contents









|                                                          |  |                 |         |  |      |  |         |      |  |  |         | 
|--------------------------------------------------------- |  | --------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                          |  | 2004            |         |  | 2003 |  |         | 2002 | 
|                                                          |  |                 |         |  |      |  |         |      | 
|                                                          |  | (in  millions) |        
|ERP                                                       |  |                 | 990.0   |  |      |  | 801.2   |      |  |  | 927.0   | 
|SCM                                                       |  |                 | 480.0   |  |      |  | 477.1   |      |  |  | 464.0   | 
|CRM                                                       |  |                 | 501.0   |  |      |  | 440.1   |      |  |  | 473.0   | 
|PLM                                                       |  |                 | 166.9   |  |      |  | 156.1   |      |  |  | 168.0   | 
|Business Intelligence/ Enterprise Portal/SRM/Marketplaces |  |                 | n/a     |  |      |  | 273.1   |      |  |  | 259.0   | 
|SRM                                                       |  |                 | 147.1   |  |      |  | n/a     |      |  |  | n/a     | 
|Other                                                     |  |                 | 76.0    |  |      |  | n/a     |      |  |  | n/a     | 
|                                                          |  |                 |         |  |      |  |         |      | 
|Total software revenue                                    |  |                 | 2,361.0 |  |      |  | 2,147.6 |      |  |  | 2,291.0 | 
|                                                          |  |                 |         |  |      |  |         |      | 



38



---



##### Table of Contents







|                    |  |                 |         |  |      |  |         |      |  |  |         | 
|------------------- |  | --------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                    |  | 2004            |         |  | 2003 |  |         | 2002 | 
|                    |  |                 |         |  |      |  |         |      | 
|                    |  | (in  millions) |        
|Process Industries  |  |                 | 1,469.1 |  |      |  | 1,381.3 |      |  |  | 1,537.0 | 
|Discrete Industries |  |                 | 1,807.9 |  |      |  | 1,659.4 |      |  |  | 1,764.1 | 
|Consumer Industries |  |                 | 1,349.8 |  |      |  | 1,243.8 |      |  |  | 1,299.7 | 
|Service Industries  |  |                 | 1,673.9 |  |      |  | 1,664.5 |      |  |  | 1,765.9 | 
|Financial Services  |  |                 | 519.1   |  |      |  | 474.1   |      |  |  | 514.8   | 
|Public Services     |  |                 | 694.7   |  |      |  | 601.5   |      |  |  | 531.3   | 
|                    |  |                 |         |  |      |  |         |      | 
|Total revenue       |  |                 | 7,514.5 |  |      |  | 7,024.6 |      |  |  | 7,412.8 | 
|                    |  |                 |         |  |      |  |         |      | 













39



---



##### Table of Contents





















40



---



##### Table of Contents





















41



---



##### Table of Contents











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








42



---



##### Table of Contents



 













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

43



---



##### Table of Contents



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








   


  


44



---



##### Table of Contents






ITEM 5. OPERATING AND FINANCIAL REVIEW AND
PROSPECTS

















        


45



---



##### Table of Contents







| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | key factors that impacted our performance;                                                          
|
| |  | discussion of our operating results for 2004 compared to 2003
    and for 2003 compared to 2002; and
|
| |  | our outlook for 2005.                                                                               
























46



---



##### Table of Contents


















Total Revenue.


  





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

 


47



---



##### Table of Contents








Product Revenue.   


  




  




Service Revenue.   


48



---



##### Table of Contents



  




 


Total Operating Expenses.


     




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We intentionally increased our sales and marketing expenses in
    2004 to support our revenue growth targets. Sales and marketing
    costs increased by
    112.7 million,
    or 8.0% compared to 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Additional use of third parties: In 2004, we significantly
    expanded the use of third parties in our consulting and research
    and development departments on an interim basis to support our
    own resources with an associated increased cost of
    33.3 million
    compared to 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Our growing workforce resulted in an increase in personnel
    expenses, which went up from
    2,936.6 million
    in 2003 to
    2,968.0 million
    in 2004, or 1.1%. This moderate increase in personnel expenses
    was achieved even though the overall headcount increased from
    29,610 full time equivalents as per December 31, 2003, to
    32,205 full time equivalents as per December 31, 2004, an
    increase of 7.3%. We continued to keep a tight control on
    personnel expenses due to minimal fixed salary increases as well
    as by adding additional headcount primarily in low cost
    locations. The share of resources in low cost locations
    increased from 4.9% in 2003 to 8.2% in 2004.
|
| |  | The rise in the headcount and overall increase in business
    activity during 2004 resulted in higher travel expenses compared
    to 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

 


Pro Forma Operating Income.




49



---



##### Table of Contents







  




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

Cost of Product.




| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | customer support costs (message handling and bug
    fixing  delivered by the Global Support Organization
    and Development Support); and             
|
| |  | license fees and commissions paid to third parties for databases
    and the other complementary third-party products sublicensed by
    us to customers.

 




Cost of Services.  


50



---



##### Table of Contents



 




Research and Development.




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

 




Sales and Marketing.  


 


General and Administrative.  


Other Operating Expenses, Net.    




51



---



##### Table of Contents





|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             |  |      |   |  |  |        | 
|------------------ |  | ----------- | ------ |  | -------- |  | ------- | -------- |  |  | ----------- | - |  | -------- | ------ | - | ----------- |  | ---- | - |  |  | ------ | 
|                   |  | 2004        |       
|                   |  |             |       
|                   |  | Balance     |        |  |          |  | Balance |         
|                   |  | as of 01/01 |        |  | Expenses |  |         | Payments |  |  | Adjustments |   |  | Currency |        |   | as of 31/12 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             | 
|                   |  |  (000)     |        |  |  (000)  |  |         |  (000)  |  |  |  (000)     |   |  |  (000)  |        |   |  (000)     | 
|Unused lease space |  |             | 17,691 |  |          |  | 2,625   |          |  |  | (7,557      | ) |  |          | (1,415 | ) |             |  | (779 | ) |  |  | 10,565 | 
|Severance payments |  |             | 3,529  |  |          |  | 6,972   |          |  |  | (3,668      | ) |  |          | (1,176 | ) |             |  | 13   |   |  |  | 5,670  | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             | 
|                   |  |             | 21,220 |  |          |  | 9,597   |          |  |  | (11,225     | ) |  |          | (2,591 | ) |             |  | (766 | ) |  |  | 16,235 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             | 

|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             |  |        |   |  |  |        | 
|------------------ |  | ----------- | ------ |  | -------- |  | ------- | -------- |  |  | ----------- | - |  | -------- | ------ | - | ----------- |  | ------ | - |  |  | ------ | 
|                   |  | 2003        |       
|                   |  |             |       
|                   |  | Balance     |        |  |          |  | Balance |         
|                   |  | as of 01/01 |        |  | Expenses |  |         | Payments |  |  | Adjustments |   |  | Currency |        |   | as of 31/12 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             | 
|                   |  |  (000)     |        |  |  (000)  |  |         |  (000)  |  |  |  (000)     |   |  |  (000)  |        |   |  (000)     | 
|Unused lease space |  |             | 7,577  |  |          |  | 17,164  |          |  |  | (5,544      | ) |  |          | 0      |   |             |  | (1,506 | ) |  |  | 17,691 | 
|Severance payments |  |             | 11,159 |  |          |  | 3,384   |          |  |  | (9,347      | ) |  |          | (1,001 | ) |             |  | (666   | ) |  |  | 3,529  | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             | 
|                   |  |             | 18,736 |  |          |  | 20,548  |          |  |  | (14,891     | ) |  |          | (1,001 | ) |             |  | (2,172 | ) |  |  | 21,220 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             | 

|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |   |  |             |  |        |   |  |  |        | 
|------------------ |  | ----------- | ------ |  | -------- |  | ------- | -------- |  |  | ----------- | - |  | -------- | - |  | ----------- |  | ------ | - |  |  | ------ | 
|                   |  | 2002        |       
|                   |  |             |       
|                   |  | Balance     |        |  |          |  | Balance |         
|                   |  | as of 01/01 |        |  | Expenses |  |         | Payments |  |  | Adjustments |   |  | Currency |   |  | as of 31/12 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |   |  |             | 
|                   |  |  (000)     |        |  |  (000)  |  |         |  (000)  |  |  |  (000)     |   |  |  (000)  |   |  |  (000)     | 
|Unused lease space |  |             | 2,874  |  |          |  | 12,960  |          |  |  | (7,262      | ) |  |          | 0 |  |             |  | (995   | ) |  |  | 7,577  | 
|Severance payments |  |             | 10,121 |  |          |  | 33,148  |          |  |  | (30,739     | ) |  |          | 0 |  |             |  | (1,371 | ) |  |  | 11,159 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |   |  |             | 
|                   |  |             | 12,995 |  |          |  | 46,108  |          |  |  | (38,001     | ) |  |          | 0 |  |             |  | (2,366 | ) |  |  | 18,736 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |   |  |             | 

  


Financial Income/ Expense, Net.


      


Income Taxes.




52



---



##### Table of Contents



Net Income.


         


Segment Discussion.


 


 






Product segment.


53



---



##### Table of Contents







| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | line of business sales is a profit center organization that
    covers software revenue and the corresponding sales resources;
|
| |  | line of business marketing is a cost center organization;                                                                     
|
| |  | line of business service and support is a profit and cost center
    organization, based on the activity.                     

     


 


 


Consulting segment.


 


 


 


54



---



##### Table of Contents





Training segment.


  


  


 




Total Revenue.





|               |  |            |        | 
|-------------- |  | ---------- | ------ | 
|Date           |  | Period-End |       
|               |  |            |       
|December 2002  |  |            | 1.0485 | 
|March 2003     |  |            | 1.0900 | 
|June 2003      |  |            | 1.1502 | 
|September 2003 |  |            | 1.1650 | 
|December 2003  |  |            | 1.2597 | 
|March 9, 2004  |  |            | 1.2428 | 

   


55



---



##### Table of Contents










Product Revenue.   


  




  




Service Revenue.   


56



---



##### Table of Contents



 




 


Total Operating Expenses.


   


   




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our continued careful hiring policy: The overall headcount rose
    in the first half year of 2003 by 164, in the second half by 649
    full time equivalents. Despite a growing workforce, we managed
    to keep a tight control on personnel expenses due to minimal
    fixed salary increases as well as by shifting headcount from
    high cost locations to low cost locations. This resulted in an
    overall modest growth of personnel expenses, that were
    overcompensated by positive currency effects.
|
| |  | Focus on improving profitability in consulting: third party
    expenses in consulting went down due to a priority of
    profitability over revenue growth in a smaller and more
    competitive consulting services segment.                                                                                                                                                                                                                                                                                           
|
| |  | Additional replacements of third parties: We continued to
    replace third parties in our support and development departments
    by deploying our own resources and renegotiated vendor contracts.                                                                                                                                                                                                                                                                                                                     
|
| |  | Other stringent continued expense savings measures: Due to tight
    cost management, other expense items including travel dropped
    also on a constant currency basis. Furthermore we faced much
    lower restructuring expenses with
    18.2 million
    in 2003 compared to
    46.1 million
    in 2002.                                                                                                                                                                                                       




Pro Forma Operating Income.




57



---



##### Table of Contents







  




|                                                                                                  |                                                                                             |                    |       |     |      |  |       |    | 
|------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------ | ----- | --- | ---- |  | ----- | -- | 
|                                                                                                  |                                                                                             | 2003               |       |     | 2002 | 
|                                                                                                  |                                                                                             |                    |       |     |      | 
|                                                                                                  |                                                                                             | (in millions of ) |      
|U.S. GAAP Operating income                                                                        |                                                                                             |                    | 1,724 |     |      |  | 1,626 |   
|Acquisition-related charges                                                                       |                                                                                             |                    | 26    |     |      |  | 26    |   
|                                                                                                  |                                                                                             |                    |       |     |      | 
|                                                                                                  | LTI 2000 Plan/ STAR Plan                                                                    |                    |       | 125 |      |  |       | 9  | 
|                                                                                                  | Settlement of stock-based compensation plans in the context of
    mergers and acquisitions |                    |       | 5   |      |  |       | 27 | 
|                                                                                                  |                                                                                             |                    |       |     |      | 
|Total stock-based compensation                                                                    |                                                                                             |                    | 130   |     |      |  | 36    |   
|                                                                                                  |                                                                                             |                    |       |     |      | 
|Pro forma operating income excluding stock-based compensation
    and acquisition-related charges |                                                                                             |                    | 1,880 |     |      |  | 1,688 |   
|                                                                                                  |                                                                                             |                    |       |     |      | 

Cost of Product.




| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | customer support costs (message handling and bug
    fixing  delivered by the Global Support Organization
    and Development Support); and             
|
| |  | license fees and commissions paid to third parties for databases
    and the other complementary third-party products sublicensed by
    us to customers.

 


   


Cost of Services.  


58



---



##### Table of Contents



    


Research and Development.




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

  


 


Sales and Marketing.  


     


General and Administrative.      


Other Operating Expenses, Net.    


59



---



##### Table of Contents







| |   |                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Reduction of our workforce across all segments, including
    reductions related to the consolidation of our sales force
    organization; and   
|
| |  | consolidation of additional facilities, including ceasing
    operations in certain geographic locations, especially in the
    training segment.



|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             |  |        |   |  |  |        | 
|------------------ |  | ----------- | ------ |  | -------- |  | ------- | -------- |  |  | ----------- | - |  | -------- | ------ | - | ----------- |  | ------ | - |  |  | ------ | 
|                   |  | 2003        |       
|                   |  |             |       
|                   |  | Balance     |        |  |          |  | Balance |         
|                   |  | as of 01/01 |        |  | Expenses |  |         | Payments |  |  | Adjustments |   |  | Currency |        |   | as of 31/12 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             | 
|                   |  |  (000)     |        |  |  (000)  |  |         |  (000)  |  |  |  (000)     |   |  |  (000)  |        |   |  (000)     | 
|Unused lease space |  |             | 7,577  |  |          |  | 17,164  |          |  |  | (5,544      | ) |  |          | 0      |   |             |  | (1,506 | ) |  |  | 17,691 | 
|Severance payments |  |             | 11,159 |  |          |  | 3,384   |          |  |  | (9,347      | ) |  |          | (1,001 | ) |             |  | (666   | ) |  |  | 3,529  | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             | 
|                   |  |             | 18,736 |  |          |  | 20,548  |          |  |  | (14,891     | ) |  |          | (1,001 | ) |             |  | (2,172 | ) |  |  | 21,220 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |        |   |             | 

|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |   |  |             |  |        |   |  |  |        | 
|------------------ |  | ----------- | ------ |  | -------- |  | ------- | -------- |  |  | ----------- | - |  | -------- | - |  | ----------- |  | ------ | - |  |  | ------ | 
|                   |  | 2002        |       
|                   |  |             |       
|                   |  | Balance     |        |  |          |  | Balance |         
|                   |  | as of 01/01 |        |  | Expenses |  |         | Payments |  |  | Adjustments |   |  | Currency |   |  | as of 31/12 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |   |  |             | 
|                   |  |  (000)     |        |  |  (000)  |  |         |  (000)  |  |  |  (000)     |   |  |  (000)  |   |  |  (000)     | 
|Unused lease space |  |             | 2,874  |  |          |  | 12,960  |          |  |  | (7,262      | ) |  |          | 0 |  |             |  | (995   | ) |  |  | 7,577  | 
|Severance payments |  |             | 10,121 |  |          |  | 33,148  |          |  |  | (30,739     | ) |  |          | 0 |  |             |  | (1,371 | ) |  |  | 11,159 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |   |  |             | 
|                   |  |             | 12,995 |  |          |  | 46,108  |          |  |  | (38,001     | ) |  |          | 0 |  |             |  | (2,366 | ) |  |  | 18,736 | 
|                   |  |             |        |  |          |  |         |          |  |  |             |   |  |          |   |  |             | 

 


Financial Income/ Expense, Net.


      


60



---



##### Table of Contents



Income Taxes.




Net Income.


           


Segment Discussion.


 


 






Product segment.    


61



---



##### Table of Contents



 


   


  


Consulting segment.  


   


 


Training segment.  


  


 


62



---



##### Table of Contents
















Modest growth


Focal areas




Strategically positioned for 2005


Operational goals of increasing software revenue and
profitability








| |   |                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We expect software revenue to increase in a range of 10%-12%
    compared to 2004. The growth would be driven by the Americas and
    Asia-Pacific.                                                                                                                 
|
| |  | We expect the pro-forma operating margin, which excludes
    stock-based compensation and acquisition-related charges, to
    increase in a range of 0.0-0.5 percentage points compared
    to 2004.                                                                
|
| |  | We expect pro-forma earnings per share, which exclude
    stock-based compensation, acquisition-related charges, and
    impairment-related charges, to be in the range of
    4.70 to
    4.80 per share.
    We assume the effective tax rate will be under 36%.

63



---



##### Table of Contents





















   


64



---



##### Table of Contents



 











| |   |                                                                            
| | - | ---------------------------------------------------------------------------
| |  | Revenue Recognition;                                                       
|
| |  | Valuation of Accounts Receivable;                                          
|
| |  | Accounting for Stock Based Compensation;                                   
|
| |  | Accounting for Income Taxes and Other Income Tax Related
    Judgments; and
|
| |  | Realizability of Strategic and Venture Capital Investments.                











65



---



##### Table of Contents



























66



---



##### Table of Contents











| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | the customer cannot take possession of the software at any time
    during the hosting period without significant penalty; or
|
| |  | the customer cannot contract with another hosting provider
    without significant effort or expenditure; or                 
|
| |  | the softwares functionality is compromised by the
    termination of our hosting services.                                  







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





67



---



##### Table of Contents







     


  




|                                                                              |  |         |     |  |         |  |      |         |  |  |      |  
|----------------------------------------------------------------------------- |  | ------- | --- |  | ------- |  | ---- | ------- |  |  | ---- | -
|                                                                              |  | 2004    |     |  | 2003    |  |      | 2002    | 
|                                                                              |  |         |     |  |         |  |      |         | 
|                                                                              |  |  (mio) |     |  |  (mio) |  |      |  (mio) | 
|Specific customer credit loss risks                                           |  |         | 0.0 |  |         |  | 12.4 |         |  |  | 12.9 |  
|Customer credit loss risks based on aging of the receivables                  |  |         | 1.7 |  |         |  | (5.4 | )       |  |  | (5.3 | )
|                                                                              |  |         |     |  |         |  |      |         | 
|Total provisions for allowances for doubtful accounts charged to
    earnings |  |         | 1.7 |  |         |  | 7.0  |         |  |  | 7.6  |  
|                                                                              |  |         |     |  |         |  |      |         | 

  








68



---



##### Table of Contents







|                                                                                   |  |         |           |  |         |  |           |         |  |  |         | 
|---------------------------------------------------------------------------------- |  | ------- | --------- |  | ------- |  | --------- | ------- |  |  | ------- | 
|                                                                                   |  | 2004    |           |  | 2003    |  |           | 2002    | 
|                                                                                   |  |         |           |  |         |  |           |         | 
|                                                                                   |  |  (mio) |           |  |  (mio) |  |           |  (mio) | 
|As reported                                                                        |  |         | 1,310,521 |  |         |  | 1,077,063 |         |  |  | 508,614 | 
|Add: Expense for stock-based compensation, net of tax according
    to APB 25.     |  |         | 23,445    |  |         |  | 85,700    |         |  |  | 5,600   | 
|Deduct: Expense for stock-based compensation, net of tax
    according to FAS 123. |  |         | 181,323   |  |         |  | 205,109   |         |  |  | 138,203 | 
|                                                                                   |  |         |           |  |         |  |           |         | 
|Pro forma                                                                          |  |         | 1,152,643 |  |         |  | 957,654   |         |  |  | 376,011 | 
|                                                                                   |  |         |           |  |         |  |           |         | 



|                      |  |         |      |  |         |  |      |         |  |  |      | 
|--------------------- |  | ------- | ---- |  | ------- |  | ---- | ------- |  |  | ---- | 
|                      |  | 2004    |      |  | 2003    |  |      | 2002    | 
|                      |  |         |      |  |         |  |      |         | 
|                      |  |  (mio) |      |  |  (mio) |  |      |  (mio) | 
|Basic  as reported   |  |         | 4,22 |  |         |  | 3.47 |         |  |  | 1.62 | 
|Diluted  as reported |  |         | 4,20 |  |         |  | 3.46 |         |  |  | 1.62 | 
|Basic  pro forma     |  |         | 3,71 |  |         |  | 3.08 |         |  |  | 1.20 | 
|Diluted  pro forma   |  |         | 3,70 |  |         |  | 3.08 |         |  |  | 1.20 | 





69



---



##### Table of Contents











|                                                                |  |                    |       |  |     |  |       |     |  |  |       |   |  |  |       |  
|--------------------------------------------------------------- |  | ------------------ | ----- |  | --- |  | ----- | --- |  |  | ----- | - |  |  | ----- | -
|Assumed change in volatility in percentage-points               |  | -10%               |       |  | -5% |  |       | +5% |  |  | +10%  |  
|                                                                |  |                    |       |  |     |  |       |     |  |  |       |  
|                                                                |  | (in millions of ) |      
|Effect on pro forma net income for volatility assumption change |  |                    | 26    |  |     |  | 13    |     |  |  | (13   | ) |  |  | (25   | )
|Pro forma net income using revised volatility assumption        |  |                    | 1,179 |  |     |  | 1,166 |     |  |  | 1,140 |   |  |  | 1,128 |  





        


70



---



##### Table of Contents







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





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










    


71



---



##### Table of Contents




















|                                                                                        |  |        |           |  |      |  |           | 
|--------------------------------------------------------------------------------------- |  | ------ | --------- |  | ---- |  | --------- | 
|                                                                                        |  | 2004   |           |  | 2003 | 
|                                                                                        |  |        |           |  |      | 
|                                                                                        |  | (000) |          
|Cash at banks                                                                           |  |        | 458,909   |  |      |  | 326,305   | 
|Liquid investments with original maturities of 3 months or
    less                     |  |        | 1,054,226 |  |      |  | 658,090   | 
|                                                                                        |  |        |           |  |      | 
|Cash and cash equivalents                                                               |  |        | 1,513,135 |  |      |  | 984,395   | 
|                                                                                        |  |        |           |  |      | 
|Liquid investments with original maturities exceeding
    3 months and less than 1 year |  |        | 546,272   |  |      |  | 588,472   | 
|Liquid investments with original maturities exceeding 1 year                            |  |        | 1,137,135 |  |      |  | 448,784   | 
|Restricted cash with original maturity exceeding 1 year                                 |  |        | 0         |  |      |  | 74,305    | 
|                                                                                        |  |        |           |  |      | 
|                                                                                        |  |        | 3,196,542 |  |      |  | 2,095,956 | 
|                                                                                        |  |        |           |  |      | 

  


 




   


72



---



##### Table of Contents






      


      




 







   


73



---



##### Table of Contents









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | up to a total amount of
    60 million
    through the issuance of new ordinary shares in return for
    contributions in cash until May 1, 2006 (Authorized
    Capital I). The issuance of Authorized Capital I
    is subject to the statutory subscription rights of existing
    shareholders;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | up to a total amount of
    60 million
    through the issuance of new ordinary shares in return for
    contributions in cash or in kind until May 1, 2006
    (Authorized Capital II). Subject to certain
    preconditions and the consent of the Supervisory Board, the
    Executive Board is authorized to exclude the shareholders
    statutory subscription rights for the issuance of Authorized
    Capital II; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | up to an aggregate amount of
    15 million
    against contribution in cash by issuing new ordinary shares
    until May 1, 2007 (Authorized
    Capital III). The new shares may be subscribed by a
    credit institution only, and only to the extent that such credit
    institution, releasing SAP from its corresponding obligation,
    satisfies the conversion and subscription rights granted under
    the SAP AG 2000 Long Term Incentive Plan (LTI 2000
    Plan) or SAP Stock Option Plan 2002 (SAP SOP
    2002), respectively. The shareholders statutory
    subscription rights are excluded from this capital increase. The
    Executive Board may exercise this authorization only to the
    extent that the capital stock attributable to the new shares
    issued from this Authorized Capital III together with new
    shares from contingent capital and treasury shares issued or
    transferred for the purposes of satisfying subscription rights
    does not amount to more than 10% of the capital stock at the
    time of adoption of the authorization.











|                       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            |  |  |        |  |  |  |         | 
|---------------------- |  | ------ | --------- |  | ---- |  | ------- | ---- |  |  | ------- |  |  | ---- | ------ |  | ---- |  | ------ | ---------- |  |  | ------ |  |  |  | ------- | 
|Contractual Obligation |  | Total  |           |  | 2005 |  |         | 2006 |  |  | 2007    |  |  | 2008 |        |  | 2009 |  |        | thereafter | 
|                       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            | 
|                       |  | (000) |          
|Off-balance sheet      |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            |  |  |        |  |  |  |         | 
|Operating Leases       |  |        | 563,479   |  |      |  | 134,085 |      |  |  | 100,856 |  |  |      | 72,400 |  |      |  | 58,473 |            |  |  | 51,255 |  |  |  | 146,410 | 
|Purchase Commitments   |  |        | 26,068    |  |      |  | 25,504  |      |  |  | 362     |  |  |      | 163    |  |      |  | 39     |            |  |  |       |  |  |  |        | 
|Other Commitments      |  |        | 27,752    |  |      |  | 20,053  |      |  |  | 6,986   |  |  |      | 203    |  |      |  | 148    |            |  |  | 112    |  |  |  | 250     | 
|                       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            | 
|On-balance sheet       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            |  |  |        |  |  |  |         | 
|Bonds                  |  |        | 7,277     |  |      |  |        |      |  |  |        |  |  |      |       |  |      |  |       |            |  |  |       |  |  |  | 7,277   | 
|Other Liabilities      |  |        | 728,838   |  |      |  | 695,345 |      |  |  | 2,680   |  |  |      |       |  |      |  |       |            |  |  |       |  |  |  | 30,813  | 
|                       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            | 
|Total                  |  |        | 1,353,414 |  |      |  | 874,987 |      |  |  | 110,884 |  |  |      | 72,766 |  |      |  | 58,660 |            |  |  | 51,367 |  |  |  | 184,750 | 
|                       |  |        |           |  |      |  |         |      |  |  |         |  |  |      |        |  |      |  |        |            | 

74



---



##### Table of Contents



  


  










 


 








75



---



##### Table of Contents








  










Areas of Current and Future Research and Development
Efforts






| |   |                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The enablement of our solutions based on Enterprise Services
    Architecture;                                                                                                                         
|
| |  | The enhancement of our technology and application platform (SAP
    NetWeaver) towards a Business Process Platform;                                                                                    
|
| |  | SAP software solutions offering, including mySAP CRM, mySAP SCM,
    mySAP ERP, mySAP PLM, mySAP SRM, mySAP Enterprise Portal, mySAP
    Mobile Business, xApps, mySAP All-in-One and SAP Business One;
|
| |  | The continuous innovation of Industry Solutions; and                                                                                                                                                   
|
| |  | The focus on new and innovative technologies.                                                                                                                                                          



76



---



##### Table of Contents






ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND
EMPLOYEES









|                                                                    |  |     |    |  |                      |                                                                                                                       |         |  |      |         |  |  |      | 
|------------------------------------------------------------------- |  | --- | -- |  | -------------------- | --------------------------------------------------------------------------------------------------------------------- | ------- |  | ---- | ------- |  |  | ---- | 
|                                                                    |  |     |    |  |                      | Year                                                                                                                  |         |  | Year |        
|                                                                    |  |     |    |  |                      | First                                                                                                                 |         |  | Term |        
|Name                                                                |  | Age |    |  | Principal Occupation |                                                                                                                       | Elected |  |      | Expires | 
|                                                                    |  |     |    |  |                      |                                                                                                                       |         |  |      |         | 
|Prof. Dr. h.c. mult. Hasso Plattner,
    Chairperson(2)(3)(5)(7)(8) |  |     | 61 |  |                      | Chairperson of the Supervisory Board                                                                                  |         |  | 2003 |         |  |  | 2007 | 
|Pekka
    Ala-Pietilä(1)(8)                                         |  |     | 48 |  |                      | President of Nokia Corporation                                                                                        |         |  | 2002 |         |  |  | 2007 | 
|Prof. Dr. Wilhelm Haarmann
    (1)(3)(4)(5)(9)                      |  |     | 54 |  |                      | Attorney at Law, Certified Public Auditor and Certified Tax
    Advisor; Haarmann, Hemmelrath & Partner               |         |  | 1988 |         |  |  | 2007 | 
|Dietmar
    Hopp(1)(6)                                              |  |     | 64 |  |                      | Managing Director, Dietmar Hopp Stiftung GmbH                                                                         |         |  | 1998 |         |  |  | 2007 | 
|Dr. h.c. Hartmut Mehdorn
    (1)(7)                                 |  |     | 62 |  |                      | Chairperson of Executive Board, Deutsche Bahn AG                                                                      |         |  | 1998 |         |  |  | 2007 | 
|Prof. Dr. Dr. h.c. mult. August-Wilhelm
    Scheer(1)(6)(8)         |  |     | 63 |  |                      | Director of the Institute for Information Systems at the German
    Research Center of Artificial Intelligence (DFKI) |         |  | 2002 |         |  |  | 2007 | 
|Dr. Dieter
    Spöri(1)(5)                                          |  |     | 61 |  |                      | Head of Corporate Representation Federal Affairs,
    DaimlerChrysler AG                                              |         |  | 1998 |         |  |  | 2007 | 
|Dr. h.c. Klaus
    Tschira(1)(4)                                    |  |     | 64 |  |                      | Managing Director, Klaus Tschira Stiftung gGmbH                                                                       |         |  | 1998 |         |  |  | 2007 | 
|Helga Classen, Vice
    Chairperson(5)(7)(10)                       |  |     | 54 |  |                      | Employee, Development Architect                                                                                       |         |  | 1993 |         |  |  | 2007 | 
|Willi
    Burbach(7)(8)(10)                                         |  |     | 42 |  |                      | Employee, Developer                                                                                                   |         |  | 1993 |         |  |  | 2007 | 
|Bernhard
    Koller(4)(10)                                          |  |     | 55 |  |                      | Employee, Manager of Idea Management                                                                                  |         |  | 1989 |         |  |  | 2007 | 
|Christiane Kuntz-Mayr
    (5)(8)(10)                                |  |     | 42 |  |                      | Employee, Development Manager                                                                                         |         |  | 2002 |         |  |  | 2007 | 
|Lars
    Lamadé(6)(10)                                              |  |     | 33 |  |                      | Employee, Risk Manager Service & Support                                                                              |         |  | 2002 |         |  |  | 2007 | 
|Dr. Gerhard
    Maier(3)(6)(10)                                     |  |     | 51 |  |                      | Employee, Development Project Manager                                                                                 |         |  | 1989 |         |  |  | 2007 | 
|Dr. Barbara Schennerlein
    (5)(10)                                |  |     | 48 |  |                      | Employee, Principal Consultant                                                                                        |         |  | 1998 |         |  |  | 2007 | 
|Stefan
    Schulz(4)(8)(10)                                         |  |     | 35 |  |                      | Employee, Development Project Manager                                                                                 |         |  | 2002 |         |  |  | 2007 | 






|    |                                                 
|--- | ------------------------------------------------
|(1) | Elected by SAP AGs shareholders on May 3, 2002.

77



---



##### Table of Contents





|     |                                                                                                                                                                                                                                                                                                                                                            
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | Elected by SAP AGs shareholders on May 9, 2003.                                                                                                                                                                                                                                                                                                           
|    
|(3)  | Member of the Compensation Committee.                                                                                                                                                                                                                                                                                                                      
|    
|(4)  | Member of the Audit Committee.                                                                                                                                                                                                                                                                                                                             
|    
|(5)  | Member of the General Committee.                                                                                                                                                                                                                                                                                                                           
|    
|(6)  | Member of the Finance and Investment Committee.                                                                                                                                                                                                                                                                                                            
|    
|(7)  | Member of the Mediation Committee.                                                                                                                                                                                                                                                                                                                         
|    
|(8)  | Member of the Technology Committee.                                                                                                                                                                                                                                                                                                                        
|    
|(9)  | Wilhelm Haarmann is a partner in Haarmann, Hemmelrath &
    Partner, which serves as special German tax counsel to SAP AG
    and counsels SAP with regard to other legal matters. Wilhelm
    Haarmann has been determined to be the Audit Committees
    financial expert. Please refer to Item 16A. Audit
    Committee Financial Expert for details.
|    
|(10) | Elected by SAP AGs employees on April 9, 2002.                                                                                                                                                                                                                                                                                                            





Mitbestimmungsgesetz









|                                 |  |            |      |  |              |  |      | 
|-------------------------------- |  | ---------- | ---- |  | ------------ |  | ---- | 
|                                 |  | Year First |      |  | Year Current | 
|Name                             |  | Appointed  |      |  | Term Expires | 
|                                 |  |            |      |  |              | 
|Prof. Dr. Henning Kagermann, CEO |  |            | 1991 |  |              |  | 2007 | 
|Dr. Peter Zencke                 |  |            | 1993 |  |              |  | 2006 | 
|Prof. Dr. Claus Heinrich         |  |            | 1996 |  |              |  | 2010 | 
|Gerhard Oswald                   |  |            | 1996 |  |              |  | 2010 | 
|Dr. Werner Brandt                |  |            | 2001 |  |              |  | 2009 | 
|Shai Agassi                      |  |            | 2002 |  |              |  | 2010 | 
|Léo Apotheker                    |  |            | 2002 |  |              |  | 2010 | 

78



---



##### Table of Contents










Henning Kagermann




| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Responsibilities before realignment: overall responsibility for
    SAPs strategy and business development, marketing, global
    communications, consulting, customer development; Business
    Solutions Group (BSG) Financial & Public Services
|
| |  | Responsibilities since realignment: Overall responsibility for
    SAPs strategy and business development, global
    communications, global intellectual property, internal audit,
    top talent management                                     

Shai Agassi




| |   |                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |  | Responsibilities before realignment: development of the
    integration and application platform SAP NetWeaver, mySAP SRM
    and SAP xApps
|
| |  | Responsibilities since realignment: product development and
    technology, industry solutions, product and industry marketing             

Léo Apotheker




| |   |                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | Responsibilities before realignment: global field operations,
    i.e. the sales, consulting, and education activities of the
    company.
|
| |  | Responsibilities since realignment: global field operations,
    global marketing, field marketing                                        

Werner Brandt


79



---



##### Table of Contents





| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Responsibilities before realignment: finance and administration,
    shared services, SAP Ventures
|
| |  | Responsibilities since realignment: unchanged                                                     

Claus Heinrich




| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Responsibilities before realignment: Business Solutions Group
    (BSG) Manufacturing Industries, human resources, labor relations.                         
|
| |  | Responsibilities since realignment: global human resources
    (including labor relations), quality management, internal IT,
    development labs (SAP Labs)

Gerhard Oswald




| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | Responsibilities before realignment: global support, IT
    infrastructure            
|
| |  | Responsibilities since realignment: global service and support,
    custom development

Peter Zencke




| |   |                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Responsibilities before realignment: development of SAPs
    Enterprise Services Architecture and platform, global research
    activities, development labs (SAP Labs)
|
| |  | Responsibilities since realignment: research, application
    platform                                                                                                  




















80



---



##### Table of Contents









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The fixed element is paid as a monthly salary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | The directors profit-sharing element depends on the SAP
    Groups success in achieving its target for operating
    income before stock-based compensation expenses and
    acquisition-related charges and on software revenue growth. On
    February 9, 2005 the Supervisory Boards Compensation
    Committee assessed the Companys performance against the
    agreed target and determined how much directors
    profit-sharing was payable. The Company will make the payment
    after the Annual General Meeting of Shareholders in May.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Stock-based compensation takes the form of share options issued
    under SAP SOP 2002, a plan that the SAP Annual General Meeting
    of Shareholders approved on May 3, 2002. Details of the
    plan and the terms of options under it are set out in Note 23 to
    our consolidated financial statements in Item 18.
    Financial Statements. For options granted to members of
    the Executive Board in and from February 2004, the SAP SOP 2002
    plan conditions provide for a potential limitation on the
    subscription rights to the extent that the Supervisory Board
    determines that, by exercising the rights, the option holder
    would make a profit that would be characterized as a windfall
    by, combined with the profit from earlier exercises of
    subscription rights issued to the option holder at the same
    issuing date, exceeding twice the product of (i) the number
    of subscription rights received by the option holder and
    (ii) the exercise price. Such profit is determined as the
    total of the differences, calculated individually for each
    exercised subscription right, between the closing price of the
    share on the exercise day and the exercise price. SAP AG
    undertakes to pay back to the option holders any expenses they
    may incur through fees, taxes, or deductions related to the
    limit on achievable income. The subscription rights shall only
    be limited if the Supervisory Board determines that the windfall
    results from significant extraordinary, unforeseeable
    developments that the Executive Board is not responsible for.
|
| |  | The number of stock options to be issued to each individual
    member of the Executive Board was decided by the Compensation
    Committee at its meeting on February 17, 2004 and reflected
    the fair value of the options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         



|                                                                         |  |        |     |            |         |  |       |         |  |  |       |  |  |      |        |  |  |  |        | 
|------------------------------------------------------------------------ |  | ------ | --- | ---------- | ------- |  | ----- | ------- |  |  | ----- |  |  | ---- | ------ |  |  |  | ------ | 
|                                                                         |  | 2004   |     |            |        
|                                                                         |  |        |     |            |        
|                                                                         |  |        |     | Directors |         |  |       |         | 
|                                                                         |  |        |     | profit     |         |  |       |         | 
|                                                                         |  | Salary |     |            | sharing |  |       | Others* |  |  | Total |  |  | 2003 |       
|                                                                         |  |        |     |            |         |  |       |         |  |  |       |  |  |      |       
|                                                                         |  | (000) |    
|Prof. Dr Henning Kagermann (CEO)                                         |  |        | 600 |            |         |  | 2,461 |         |  |  | 17    |  |  |      | 3,078  |  |  |  | 3,383  | 
|Shai Agassi                                                              |  |        | 405 |            |         |  | 1,641 |         |  |  | 46    |  |  |      | 2,092  |  |  |  | 2,200  | 
|Léo Apotheker                                                            |  |        | 400 |            |         |  | 1,641 |         |  |  | 0     |  |  |      | 2,041  |  |  |  | 2,246  | 
|Dr. Werner Brandt                                                        |  |        | 350 |            |         |  | 1,436 |         |  |  | 15    |  |  |      | 1,801  |  |  |  | 1,864  | 
|Prof. Dr. Claus E. Heinrich                                              |  |        | 400 |            |         |  | 1,641 |         |  |  | 16    |  |  |      | 2,057  |  |  |  | 2,260  | 
|Gerhard Oswald                                                           |  |        | 400 |            |         |  | 1,641 |         |  |  | 9     |  |  |      | 2,050  |  |  |  | 2,252  | 
|Dr. Peter Zencke                                                         |  |        | 400 |            |         |  | 1,641 |         |  |  | 20    |  |  |      | 2,061  |  |  |  | 2,271  | 
|Prof. Dr. h. c. Hasso Plattner (Co-CEO and member until
    May 9, 2003) |  |        |     |            |         |  |       |         |  |  |       |  |  |      |        |  |  |  | 1,450  | 
|                                                                         |  |        |     |            |         |  |       |         |  |  |       |  |  |      |       
|                                                                         |  |        |     |            |         |  |       |         |  |  |       |  |  |      | 15,180 |  |  |  | 17,926 | 
|                                                                         |  |        |     |            |         |  |       |         |  |  |       |  |  |      |       






|  |                                                                                             
|- | --------------------------------------------------------------------------------------------
|* | Payout pension contributions, insurance contributions, non-cash
    benefits (company cars).

81



---



##### Table of Contents



   




 




|                                  |  |               |         | 
|--------------------------------- |  | ------------- | ------- | 
|                                  |  | Stock options |        
|                                  |  |               |        
|Prof. Dr. Henning Kagermann (CEO) |  |               | 50,000  | 
|Shai Agassi                       |  |               | 28,000  | 
|Léo Apotheker                     |  |               | 28,000  | 
|Dr. Werner Brandt                 |  |               | 28,000  | 
|Prof. Dr. Claus E. Heinrich       |  |               | 28,000  | 
|Gerhard Oswald                    |  |               | 28,000  | 
|Dr. Peter Zencke                  |  |               | 28,000  | 
|                                  |  |               |        
|                                  |  |               | 218,000 | 
|                                  |  |               |        








  












82



---



##### Table of Contents





|                                  |  |          |        |                   |            |  |                   |         |  |       |            |           |  |         |         |  |            |  |      |         |  |  |         |  |  |  |      | 
|--------------------------------- |  | -------- | ------ | ----------------- | ---------- |  | ----------------- | ------- |  | ----- | ---------- | --------- |  | ------- | ------- |  | ---------- |  | ---- | ------- |  |  | ------- |  |  |  | ---- | 
|                                  |  |          |        | Vested as of      |            |  | Not vested as of  |         |  |      
|                                  |  |          |        | December 31, 2004 |            |  | December 31, 2004 |         |  | Total |           
|                                  |  |          |        |                   |            |  |                   |         |  |       |           
|                                  |  | Exercise |        |                   |            |  | Remaining         |         |  |       |            | Remaining |  |         |         |  | Remaining  | 
|                                  |  | price    |        |                   | Number     |  |                   | term    |  |       | Number     |           |  | term    |         |  | Number     |  |      | term    | 
|                                  |  | ()      |        |                   | of options |  |                   | (years) |  |       | of options |           |  | (years) |         |  | of options |  |      | (years) | 
|                                  |  |          |        |                   |            |  |                   |         |  |       |            |           |  |         |         |  |            |  |      |         | 
|Prof. Dr. Henning Kagermann (CEO) |  |          | 90.37  |                   |            |  |                  |         |  |       |           |           |  |         | 80,000  |  |            |  | 3.16 |         |  |  | 80,000  |  |  |  | 3.16 | 
|                                  |  |          | 149.99 |                   |            |  |                   |         |  |       |            |           |  |         | 50,000  |  |            |  | 4.13 |         |  |  | 50,000  |  |  |  | 4.13 | 
|Shai Agassi                       |  |          | 90.37  |                   |            |  |                  |         |  |       |           |           |  |         | 30,000  |  |            |  | 3.16 |         |  |  | 30,000  |  |  |  | 3.16 | 
|                                  |  |          | 99.13  |                   |            |  |                  |         |  |       |           |           |  |         | 30,000  |  |            |  | 3.67 |         |  |  | 30,000  |  |  |  | 3.67 | 
|                                  |  |          | 149.99 |                   |            |  |                   |         |  |       |            |           |  |         | 28,000  |  |            |  | 4.13 |         |  |  | 28,000  |  |  |  | 4.13 | 
|Léo Apotheker                     |  |          | 90.37  |                   |            |  |                  |         |  |       |           |           |  |         | 30,000  |  |            |  | 3.16 |         |  |  | 30,000  |  |  |  | 3.16 | 
|                                  |  |          | 149.99 |                   |            |  |                   |         |  |       |            |           |  |         | 28,000  |  |            |  | 4.13 |         |  |  | 28,000  |  |  |  | 4.13 | 
|Dr. Werner Brandt                 |  |          | 90.37  |                   |            |  |                  |         |  |       |           |           |  |         | 30,000  |  |            |  | 3.16 |         |  |  | 30,000  |  |  |  | 3.16 | 
|                                  |  |          | 149.99 |                   |            |  |                   |         |  |       |            |           |  |         | 28,000  |  |            |  | 4.13 |         |  |  | 28,000  |  |  |  | 4.13 | 
|Prof. Dr. Claus E. Heinrich       |  |          | 90.37  |                   |            |  |                  |         |  |       |           |           |  |         | 45,000  |  |            |  | 3.16 |         |  |  | 45,000  |  |  |  | 3.16 | 
|                                  |  |          | 149.99 |                   |            |  |                   |         |  |       |            |           |  |         | 28,000  |  |            |  | 4.13 |         |  |  | 28,000  |  |  |  | 4.13 | 
|Gerhard Oswald                    |  |          | 90.37  |                   |            |  |                  |         |  |       |           |           |  |         | 45,000  |  |            |  | 3.16 |         |  |  | 45,000  |  |  |  | 3.16 | 
|                                  |  |          | 149.99 |                   |            |  |                   |         |  |       |            |           |  |         | 28,000  |  |            |  | 4.13 |         |  |  | 28,000  |  |  |  | 4.13 | 
|Dr. Peter Zencke                  |  |          | 90.37  |                   |            |  |                  |         |  |       |           |           |  |         | 45,000  |  |            |  | 3.16 |         |  |  | 45,000  |  |  |  | 3.16 | 
|                                  |  |          | 149.99 |                   |            |  |                   |         |  |       |            |           |  |         | 28,000  |  |            |  | 4.13 |         |  |  | 28,000  |  |  |  | 4.13 | 
|                                  |  |          |        |                   |            |  |                   |         |  |       |            |           |  |         |         |  |            |  |      |         | 
|                                  |  |          |        |                   |            |  |                  |         |  |       |            |           |  |         | 553,000 |  |            |  |      |         |  |  | 553,000 |  |  |  |      | 
|                                  |  |          |        |                   |            |  |                   |         |  |       |            |           |  |         |         |  |            |  |      |         | 











83



---



##### Table of Contents



|                                  |  |           |        |                   |            |  |                   |              |  |       |            |  |  |              |        |  |            |  |      |              |  |  |         |  |  |  |      | 
|--------------------------------- |  | --------- | ------ | ----------------- | ---------- |  | ----------------- | ------------ |  | ----- | ---------- |  |  | ------------ | ------ |  | ---------- |  | ---- | ------------ |  |  | ------- |  |  |  | ---- | 
|                                  |  |           |        | Vested as of      |            |  | Not vested as of  |              |  |      
|                                  |  |           |        | December 31, 2004 |            |  | December 31, 2004 |              |  | Total |           
|                                  |  |           |        |                   |            |  |                   |              |  |       |           
|                                  |  | Exercise  |        |                   | Number     |  |                   | Remaining    |  |       | Number     |  |  | Remaining    |        |  | Number     |  |      | Remaining    | 
|                                  |  | price () |        |                   | of options |  |                   | term (years) |  |       | of options |  |  | term (years) |        |  | of options |  |      | term (years) | 
|                                  |  |           |        |                   |            |  |                   |              |  |       |            |  |  |              |        |  |            |  |      |              | 
|Prof. Dr. Henning Kagermann (CEO) |  |           | 70.90  |                   |            |  | 28,032            |              |  |       | 5.14       |  |  |              | 0      |  |            |  |     |              |  |  | 28,032  |  |  |  | 5.14 | 
|                                  |  |           | 86.16  |                   |            |  | 25,987            |              |  |       | 6.14       |  |  |              | 13,388 |  |            |  | 6.14 |              |  |  | 39,375  |  |  |  | 6.14 | 
|Shai Agassi                       |  |           |       |                   |            |  |                  |              |  |       |           |  |  |              |       |  |            |  |     |              |  |  |        |  |  |  |     | 
|Léo Apotheker                     |  |           | 106.44 |                   |            |  | 7,218             |              |  |       | 7.14       |  |  |              | 14,657 |  |            |  | 7.14 |              |  |  | 21,875  |  |  |  | 7.14 | 
|Dr. Werner Brandt                 |  |           | 86.16  |                   |            |  | 0                 |              |  |       |           |  |  |              | 2,125  |  |            |  | 6.14 |              |  |  | 2,125   |  |  |  | 6.14 | 
|Prof. Dr. Claus E. Heinrich       |  |           | 70.90  |                   |            |  | 20,532            |              |  |       | 5.14       |  |  |              | 0      |  |            |  |     |              |  |  | 20,532  |  |  |  | 5.14 | 
|                                  |  |           | 86.16  |                   |            |  | 18,150            |              |  |       | 6.14       |  |  |              | 9,350  |  |            |  | 6.14 |              |  |  | 27,500  |  |  |  | 6.14 | 
|Gerhard Oswald                    |  |           | 86.16  |                   |            |  | 0                 |              |  |       |           |  |  |              | 9,350  |  |            |  | 6.14 |              |  |  | 9,350   |  |  |  | 6.14 | 
|                                  |  |           | 106.44 |                   |            |  |                  |              |  |       |           |  |  |              | 20,938 |  |            |  | 7.14 |              |  |  | 20,938  |  |  |  | 7.14 | 
|Dr. Peter Zencke                  |  |           | 70.90  |                   |            |  | 6,981             |              |  |       | 5.14       |  |  |              | 0      |  |            |  |     |              |  |  | 6,981   |  |  |  | 5.14 | 
|                                  |  |           | 86.16  |                   |            |  | 9,075             |              |  |       | 6.14       |  |  |              | 9,350  |  |            |  | 6.14 |              |  |  | 18,425  |  |  |  | 6.14 | 
|                                  |  |           |        |                   |            |  |                   |              |  |       |            |  |  |              |        |  |            |  |      |              | 
|                                  |  |           |        |                   |            |  | 115,975           |              |  |       |            |  |  |              | 79,158 |  |            |  |      |              |  |  | 195,133 |  |  |  |      | 
|                                  |  |           |        |                   |            |  |                   |              |  |       |            |  |  |              |        |  |            |  |      |              | 







|                                  |  |           |        |                   |          |  |                   |              |  |       |          |  |  |              |         |  |          |  |      |              |  |  |         |  |  |  |      | 
|--------------------------------- |  | --------- | ------ | ----------------- | -------- |  | ----------------- | ------------ |  | ----- | -------- |  |  | ------------ | ------- |  | -------- |  | ---- | ------------ |  |  | ------- |  |  |  | ---- | 
|                                  |  |           |        | Vested as of      |          |  | Not vested as of  |              |  |      
|                                  |  |           |        | December 31, 2004 |          |  | December 31, 2004 |              |  | Total |         
|                                  |  |           |        |                   |          |  |                   |              |  |       |         
|                                  |  | Exercise  |        |                   | Number   |  |                   | Remaining    |  |       | Number   |  |  | Remaining    |         |  | Number   |  |      | Remaining    | 
|                                  |  | price () |        |                   | of bonds |  |                   | term (years) |  |       | of bonds |  |  | term (years) |         |  | of bonds |  |      | term (years) | 
|                                  |  |           |        |                   |          |  |                   |              |  |       |          |  |  |              |         |  |          |  |      |              | 
|Prof. Dr. Henning Kagermann (CEO) |  |           | 290.32 |                   |          |  | 22,425            |              |  |       | 5.14     |  |  |              | 0       |  |          |  |     |              |  |  | 22,425  |  |  |  | 5.14 | 
|                                  |  |           | 191.25 |                   |          |  | 20,790            |              |  |       | 6.14     |  |  |              | 10,710  |  |          |  | 6.14 |              |  |  | 31,500  |  |  |  | 6.14 | 
|                                  |  |           | 151.50 |                   |          |  | 29,700            |              |  |       | 7.14     |  |  |              | 60,300  |  |          |  | 7.14 |              |  |  | 90,000  |  |  |  | 7.14 | 
|Shai Agassi                       |  |           |       |                   |          |  |                  |              |  |       |         |  |  |              |        |  |          |  |     |              |  |  |        |  |  |  |     | 
|Léo Apotheker                     |  |           | 334.67 |                   |          |  | 23,850            |              |  |       | 5.14     |  |  |              | 0       |  |          |  |     |              |  |  | 23,850  |  |  |  | 5.14 | 
|                                  |  |           | 191.25 |                   |          |  | 19,800            |              |  |       | 6.14     |  |  |              | 10,200  |  |          |  | 6.14 |              |  |  | 30,000  |  |  |  | 6.14 | 
|                                  |  |           | 151.50 |                   |          |  | 5,775             |              |  |       | 7.14     |  |  |              | 11,725  |  |          |  | 7.14 |              |  |  | 17,500  |  |  |  | 7.14 | 
|Dr. Werner Brandt                 |  |           | 191.25 |                   |          |  | 3,300             |              |  |       | 6.14     |  |  |              | 1,700   |  |          |  | 6.14 |              |  |  | 5,000   |  |  |  | 6.14 | 
|                                  |  |           | 151.50 |                   |          |  | 9,900             |              |  |       | 7.14     |  |  |              | 20,100  |  |          |  | 7.14 |              |  |  | 30,000  |  |  |  | 7.14 | 
|Prof. Dr. Claus E. Heinrich       |  |           | 290.32 |                   |          |  | 16,425            |              |  |       | 5.14     |  |  |              | 0       |  |          |  |     |              |  |  | 16,425  |  |  |  | 5.14 | 
|                                  |  |           | 191.25 |                   |          |  | 14,520            |              |  |       | 6.14     |  |  |              | 7,480   |  |          |  | 6.14 |              |  |  | 22,000  |  |  |  | 6.14 | 
|                                  |  |           | 151.50 |                   |          |  | 16,500            |              |  |       | 7.14     |  |  |              | 33,500  |  |          |  | 7.14 |              |  |  | 50,000  |  |  |  | 7.14 | 
|Gerhard Oswald                    |  |           | 290.32 |                   |          |  | 16,425            |              |  |       | 5.14     |  |  |              | 0       |  |          |  |     |              |  |  | 16,425  |  |  |  | 5.14 | 
|                                  |  |           | 191.25 |                   |          |  | 14,520            |              |  |       | 6.14     |  |  |              | 7,480   |  |          |  | 6.14 |              |  |  | 22,000  |  |  |  | 6.14 | 
|                                  |  |           | 151.50 |                   |          |  | 8,250             |              |  |       | 7.14     |  |  |              | 16,750  |  |          |  | 7.14 |              |  |  | 25,000  |  |  |  | 7.14 | 
|Dr. Peter Zencke                  |  |           | 290.32 |                   |          |  | 16,425            |              |  |       | 5.14     |  |  |              | 0       |  |          |  |     |              |  |  | 16,425  |  |  |  | 5.14 | 
|                                  |  |           | 191.25 |                   |          |  | 14,520            |              |  |       | 6.14     |  |  |              | 7,480   |  |          |  | 6.14 |              |  |  | 22,000  |  |  |  | 6.14 | 
|                                  |  |           | 151.50 |                   |          |  | 16,500            |              |  |       | 7.14     |  |  |              | 33,500  |  |          |  | 7.14 |              |  |  | 50,000  |  |  |  | 7.14 | 
|                                  |  |           |        |                   |          |  |                   |              |  |       |          |  |  |              |         |  |          |  |      |              | 
|                                  |  |           |        |                   |          |  | 269,625           |              |  |       |          |  |  |              | 220,925 |  |          |  |      |              |  |  | 490,550 |  |  |  |      | 
|                                  |  |           |        |                   |          |  |                   |              |  |       |          |  |  |              |         |  |          |  |      |              | 

84



---



##### Table of Contents





|                  |  |               |        |          |                   |  |       |          |          |  |                |  |  |  |   | 
|----------------- |  | ------------- | ------ | -------- | ----------------- |  | ----- | -------- | -------- |  | -------------- |  |  |  | - | 
|                  |  | Stock Options |        |          | Convertible Bonds | 
|                  |  |               |        |          |                   | 
|                  |  |               |        | Weighted |                   |  |       |          | Weighted | 
|                  |  |               |        | average  |                   |  |       |          | average  | 
|                  |  | Number        |        |          | exercise price    |  |       | Number   |          |  | exercise price | 
|                  |  | of options    |        |          | per option ()    |  |       | of bonds |          |  | per bond ()   | 
|                  |  |               |        |          |                   |  |       |          |          |  |                | 
|Gerhard Oswald    |  |               | 26,368 |          |                   |  | 88.02 |          |          |  |               |  |  |  |  | 
|Dr. Werner Brandt |  |               | 4,125  |          |                   |  | 76.56 |          |          |  |               |  |  |  |  | 
|                  |  |               |        |          |                   |  |       |          |          |  |                | 
|                  |  |               | 30,493 |          |                   |  | 86.47 |          |          |  |               |  |  |  |  | 
|                  |  |               |        |          |                   |  |       |          |          |  |                | 









|                  |  |                  |  |                                |  |        |  |             
|----------------- |  | ---------------- |  | ------------------------------ |  | ------ |  | ------------
|Notifying party   |  | Transaction date |  | Transaction                    |  | Number |  | Unit price  
|                  |  |                  |  |                                |  |        |  |             
|Shai Agassi       |  | October 28, 2004 |  | Purchase of ADRs               |  | 70,000 |  | U.S.$42.5593
|Dr. Werner Brandt |  | July 30, 2004    |  | Exercise of subscription right |  | 4,125  |  | 76.5640    
|                  |  | July 30, 2004    |  | Sale of shares                 |  | 4,125  |  | 132.4160   
|Gerhard Oswald    |  | May 17, 2004     |  | Exercise of subscription right |  | 6,981  |  | 69.3009    
|                  |  | May 17, 2004     |  | Exercise of subscription right |  | 10,312 |  | 104.0341   
|                  |  | May 17, 2004     |  | Exercise of subscription right |  | 9,075  |  | 84.2106    
|                  |  | May 17, 2004     |  | Sale of shares                 |  | 26,368 |  | 122.63     







85



---



##### Table of Contents













  


    


  


86



---



##### Table of Contents





|                                                                                                  |  |              |       |  |              |  |       |              |  |  |              |  |  |  |       | 
|------------------------------------------------------------------------------------------------- |  | ------------ | ----- |  | ------------ |  | ----- | ------------ |  |  | ------------ |  |  |  | ----- | 
|                                                                                                  |  | 2004         |       |  |             
|                                                                                                  |  |              |       |  | 2003         | 
|                                                                                                  |  | Fixed        |       |  | Variable     |  |       | Total        |  |  | Total        | 
|                                                                                                  |  | compensation |       |  | compensation |  |       | compensation |  |  | compensation | 
|                                                                                                  |  |              |       |  |              |  |       |              |  |  |              | 
|                                                                                                  |  | (000)       |      
|Prof. Dr. h. c. mult. Hasso Plattner (Chairperson) (Member and
    Chairperson since May 9, 2003) |  |              | 50.0  |  |              |  | 50.0  |              |  |  | 100.0        |  |  |  | 66.7  | 
|Helga Classen (Deputy Chairperson)                                                                |  |              | 37.5  |  |              |  | 37.5  |              |  |  | 75.0         |  |  |  | 75.0  | 
|Willi Burbach                                                                                     |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Prof. Dr. Wilhelm Haarmann                                                                        |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Dietmar Hopp (Chairperson until May 9, 2003)                                                      |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 70.8  | 
|Bernhard Koller                                                                                   |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Christiane Kuntz-Mayr                                                                             |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Klaus-Dieter Laidig (Member until May 9, 2003)                                                    |  |              | 0     |  |              |  | 0     |              |  |  | 0            |  |  |  | 20.8  | 
|Lars Lamadé                                                                                       |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Dr. Gerhard Maier                                                                                 |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Dr. h. c. Hartmut Mehdorn                                                                         |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Pekka Ala-Pietilä                                                                                 |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Prof. Dr. Dr. h. c. August-Wilhelm Scheer                                                         |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Dr. Barbara Schennerlein                                                                          |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Stefan Schulz                                                                                     |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Dr. Dieter Spöri                                                                                  |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|Dr. h. c. Klaus Tschira                                                                           |  |              | 25.0  |  |              |  | 25.0  |              |  |  | 50.0         |  |  |  | 50.0  | 
|                                                                                                  |  |              |       |  |              |  |       |              |  |  |              | 
|Total                                                                                             |  |              | 437.5 |  |              |  | 437.5 |              |  |  | 875.0        |  |  |  | 883.3 | 
|                                                                                                  |  |              |       |  |              |  |       |              |  |  |              | 












87



---



##### Table of Contents





|                                                  |  |                   |  |                                                                           |  |           |  |            |         | 
|------------------------------------------------- |  | ----------------- |  | ------------------------------------------------------------------------- |  | --------- |  | ---------- | ------- | 
|Transactions in SAP Shares and ADRs               | 
|                                                  | 
|Notifying party                                   |  | Transaction date  |  | Transaction                                                               |  | Number    |  | Unit price |        
|                                                  |  |                   |  |                                                                           |  |           |  |            |        
|Hasso Plattner Förderstiftung, gemeinnützige GmbH |  | December 14, 2004 |  | Sale of shares                                                            |  | 745,546   |  |            | 134.13 | 
|Dr. h.c. Klaus Tschira                            |  | July 27, 2004     |  | Security loan transfer of shares                                          |  | 1,500,000 |  |            |         | 
|                                                  |  | July 27, 2004     |  | Right and duty to accept return of shares                                 |  | 1,500,000 |  |            |         | 
|                                                  |  | July 27, 2004     |  | Purchase of single derivative instrument (Number = shares
    underlying) |  | 1,125,000 |  |            | 127.65 | 














|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        |  |  |  |       |  |  |  |       |  |  |  |        | 
|-------------------------- |  | ---------------------------- | ------ |  | -------- |  | ----- | ---- |  |  | ----- |  |  | ---- | ------ |  | -------- |  | ------ | ---- |  |  | ----- |  |  | ---- | ----- |  | -------- |  | ------ | ---- |  |  | ------ |  |  |  | ----- |  |  |  | ----- |  |  |  | ------ | 
|                           |  | Employees as of December 31, |       
|                           |  |                              |       
|                           |  | 2004                         |        |  | 2003     |  |       | 2002 | 
|                           |  |                              |        |  |          |  |       |      | 
|                           |  | EMEA                         |        |  | Americas |  |       | Asia |  |  | Total |  |  | EMEA |        |  | Americas |  |        | Asia |  |  | Total |  |  | EMEA |       |  | Americas |  |        | Asia |  |  | Total  | 
|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        | 
|Customer Service & Support |  |                              | 8,500  |  |          |  | 3,144 |      |  |  | 2,029 |  |  |      | 13,673 |  |          |  | 8,111  |      |  |  | 2,881 |  |  |      | 1,721 |  |          |  | 12,713 |      |  |  | 8,318  |  |  |  | 3,014 |  |  |  | 1,607 |  |  |  | 12,939 | 
|Research & Development     |  |                              | 7,412  |  |          |  | 1,091 |      |  |  | 1,626 |  |  |      | 10,129 |  |          |  | 7,042  |      |  |  | 1,084 |  |  |      | 974   |  |          |  | 9,100  |      |  |  | 6,277  |  |  |  | 1,194 |  |  |  | 702   |  |  |  | 8,173  | 
|Sales & Marketing          |  |                              | 3,113  |  |          |  | 1,731 |      |  |  | 814   |  |  |      | 5,658  |  |          |  | 3,112  |      |  |  | 1,434 |  |  |      | 721   |  |          |  | 5,267  |      |  |  | 3,075  |  |  |  | 1,427 |  |  |  | 641   |  |  |  | 5,143  | 
|General & Administrative   |  |                              | 2,205  |  |          |  | 737   |      |  |  | 400   |  |  |      | 3,342  |  |          |  | 2,163  |      |  |  | 681   |  |  |      | 327   |  |          |  | 3,171  |      |  |  | 2,090  |  |  |  | 710   |  |  |  | 319   |  |  |  | 3,119  | 
|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        | 
|SAP Group                  |  |                              | 21,230 |  |          |  | 6,703 |      |  |  | 4,869 |  |  |      | 32,802 |  |          |  | 20,428 |      |  |  | 6,080 |  |  |      | 3,743 |  |          |  | 30,251 |      |  |  | 19,760 |  |  |  | 6,345 |  |  |  | 3,269 |  |  |  | 29,374 | 
|                           |  |                              |        |  |          |  |       |      |  |  |       |  |  |      |        |  |          |  |        |      |  |  |       |  |  |      |       |  |          |  |        |      |  |  |        | 



 


88



---



##### Table of Contents






















SAP SOP 2002








89



---



##### Table of Contents









LTI Plan











90



---



##### Table of Contents











STAR Plan




91



---



##### Table of Contents







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




 


 





 


 


92



---



##### Table of Contents





 






1994 Bonds




German Employee Stock Purchase Plans





U.S. Employee Stock Purchase Plans




93



---



##### Table of Contents





Other Foreign Stock Purchase Plans







ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS









Wertpapierhandelsgesetz




94



---



##### Table of Contents



|                                                                                                                                                                                          |  |                    |             |      |             |  |        |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | ---- | ----------- |  | ------ | -
|                                                                                                                                                                                          |  | Ordinary Shares    |            
|                                                                                                                                                                                          |  | Beneficially Owned |            
|                                                                                                                                                                                          |  |                    |            
|                                                                                                                                                                                          |  |                    |             | % of |            
|Principal Shareholders                                                                                                                                                                    |  | Number             |             |      | Outstanding | 
|                                                                                                                                                                                          |  |                    |             |      |             | 
|Dietmar Hopp Stiftung GmbH                                                                                                                                                                |  |                    | 28,017,300  |      |             |  | 8.862  | %
|Golf-Club St. Leon-Rot GmbH & Co. Betriebs oHG                                                                                                                                            |  |                    | 4,811,495   |      |             |  | 1.522  | %
|                                                                                                                                                                                          |  |                    |             |      |             | 
|Dietmar Hopp, Member Supervisory Board,
    collectively(1)                                                                                                                               |  |                    | 32,828,795  |      |             |  | 10.384 | %
|Hasso Plattner GmbH & Co.
    Beteiligungs-KG(2)                                                                                                                                          |  |                    | 31,239,740  |      |             |  | 9.881  | %
|Hasso Plattner Förderstiftung GmbH                                                                                                                                                        |  |                    | 5,254,454   |      |             |  | 1.662  | %
|                                                                                                                                                                                          |  |                    |             |      |             | 
|Hasso Plattner, Chairperson Supervisory Board,
    collectively(3)                                                                                                                        |  |                    | 36,494,194  |      |             |  | 11.544 | %
|Dr. h.c. Klaus Tschira Beteiligungs GmbH & Co. KG                                                                                                                                         |  |                    | 15,832,660  |      |             |  | 5.008  | %
|Klaus Tschira Stiftung gGmbH                                                                                                                                                              |  |                    | 16,154,800  |      |             |  | 5.110  | %
|Klaus Tschira, Member Supervisory Board                                                                                                                                                   |  |                    | 500,000     |      |             |  | 0.158  | %
|                                                                                                                                                                                          |  |                    |             |      |             | 
|Klaus Tschira, Member Supervisory Board,
    collectively(4)                                                                                                                              |  |                    | 32,487,460  |      |             |  | 10.276 | %
|Executive Board Members as a group
    (7 persons)(5)                                                                                                                                     |  |                    | 30,346      |      |             |  | 0.010  | %
|Supervisory Board Members as a group (16 persons)                                                                                                                                         |  |                    | 101,814,837 |      |             |  | 32.205 | %
|                                                                                                                                                                                          |  |                    |             |      |             | 
|Executive Board Members and Supervisory Board Members as a
    group (23 persons)                                                                                                         |  |                    | 101,845,183 |      |             |  | 32.215 | %
|Options and convertible bonds that are vested and exercisable
    within 60 days of March 8, 2005, held by Executive
    Board Members and Supervisory Board Members,
    collectively(5) |  |                    | 943,301     |      |             |  | N/A    |  






|    |                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Dietmar Hopp exercises sole voting and dispositive power in
    Dietmar Hopp Stiftung GmbH and Golf-Club St. Leon-Rot
    GmbH & Co. Betriebs oHG.         
|   
|(2) | Hasso Plattner owns a 100% partnership interest in and controls
    Hasso Plattner GmbH & Co. Beteiligungs-KG.                                             
|   
|(3) | Hasso Plattner exercises sole voting and dispositive power in
    Hasso Plattner GmbH & Co. Beteiligungs-KG and in Hasso
    Plattner Förderstiftung gGmbH.
|   
|(4) | Klaus Tschira exercises shared voting and dispositive power in
    Klaus Tschira Stiftung gGmbH and Dr. h.c. Tschira Beteiligungs
    GmbH & Co. KG.       
|   
|(5) | Includes 529,202 stock options and 414,099 convertible bonds.                                                                                              












95



---



##### Table of Contents






ITEM 8. FINANCIAL INFORMATION































96



---



##### Table of Contents






ITEM 9. THE OFFER AND LISTING




Freiverkehr











amtliche
Kursmakler






97



---



##### Table of Contents







|                         |                         |                   |        |        |                        |  |        |        |  |  |        |     |  |      |        |     |     |  |          |          |  |  |          |          | 
|------------------------ | ----------------------- | ----------------- | ------ | ------ | ---------------------- |  | ------ | ------ |  |  | ------ | --- |  | ---- | ------ | --- | --- |  | -------- | -------- |  |  | -------- | -------- | 
|                         |                         | Price per         |        |        | Price per              |  |        |       
|                         |                         | Ordinary Share(1) |        |        | Preference Share(1)(2) |  |        | DAX(3) | 
|                         |                         |                   |        |        |                        |  |        |        | 
|                         |                         | High              |        |        | Low                    |  |        | High   |  |  | Low    |     |  | High |        |     | Low | 
|                         |                         |                   |        |        |                        |  |        |        |  |  |        |     |  |      |        |     |     | 
|                         |                         | (in )            |        |        | (in )                 |  |        |        |  | 
|Annual Highs and Lows    |                         |                   |        |        |                        |  |        |        |  |  |        |     |  |      |        |     |     |  |          |          |  |  |          |         
|2000                     |                         |                   | 286.33 |        |                        |  | 112.65 |        |  |  | 349.96 |     |  |      | 140.94 |     |     |  | 8,064.97 |          |  |  | 6,200.71 |         
|2001                     |                         |                   | 180.90 |        |                        |  | 100.00 |        |  |  | N/A    |     |  |      | N/A    |     |     |  | 6,795.14 |          |  |  | 3,787.23 |         
|2002                     |                         |                   | 176.30 |        |                        |  | 41.65  |        |  |  | N/A    |     |  |      | N/A    |     |     |  | 5,462.55 |          |  |  | 2,597.88 |         
|2003                     |                         |                   | 134.00 |        |                        |  | 67.65  |        |  |  | N/A    |     |  |      | N/A    |     |     |  | 3,965.16 |          |  |  | 2,202.96 |         
|2004                     |                         |                   | 142.70 |        |                        |  | 116.12 |        |  |  | N/A    |     |  |      | N/A    |     |     |  | 4,261.79 |          |  |  | 3,646.99 |         
|Quarterly Highs and Lows |                         |                   |        |        |                        |  |        |        |  |  |        |     |  |      |        |     |     |  |          |          |  |  |          |         
|2003                     |                         |                   |        |        |                        |  |        |        |  |  |        |     |  |      |        |     |     |  |          |          |  |  |          |         
|                         | First Quarter           |                   |        | 93.74  |                        |  |        | 67.65  |  |  |        | N/A |  |      |        | N/A |     |  |          | 3,157.25 |  |  |          | 2,202.96 | 
|                         | Second Quarter          |                   |        | 112.30 |                        |  |        | 70.50  |  |  |        | N/A |  |      |        | N/A |     |  |          | 3,304.15 |  |  |          | 2,450.19 | 
|                         | Third Quarter           |                   |        | 126.26 |                        |  |        | 97.36  |  |  |        | N/A |  |      |        | N/A |     |  |          | 3,668.67 |  |  |          | 3,146.55 | 
|                         | Fourth Quarter          |                   |        | 134.00 |                        |  |        | 105.95 |  |  |        | N/A |  |      |        | N/A |     |  |          | 3,965.16 |  |  |          | 3,276.64 | 
|2004                     |                         |                   |        |        |                        |  |        |        |  |  |        |     |  |      |        |     |     |  |          |          |  |  |          |         
|                         | First Quarter           |                   |        | 142.70 |                        |  |        | 120.45 |  |  |        | N/A |  |      |        | N/A |     |  |          | 4,151.83 |  |  |          | 3,726.07 | 
|                         | Second Quarter          |                   |        | 138.31 |                        |  |        | 122.44 |  |  |        | N/A |  |      |        | N/A |     |  |          | 4,134.10 |  |  |          | 3,754.37 | 
|                         | Third Quarter           |                   |        | 136.02 |                        |  |        | 116.12 |  |  |        | N/A |  |      |        | N/A |     |  |          | 4,035.02 |  |  |          | 3,646.99 | 
|                         | Fourth Quarter          |                   |        | 139.49 |                        |  |        | 126.55 |  |  |        | N/A |  |      |        | N/A |     |  |          | 4,261.79 |  |  |          | 3,854.41 | 
|Monthly Highs and Lows   |                         |                   |        |        |                        |  |        |        |  |  |        |     |  |      |        |     |     |  |          |          |  |  |          |         
|2004                     |                         |                   |        |        |                        |  |        |        |  |  |        |     |  |      |        |     |     |  |          |          |  |  |          |         
|                         | July                    |                   |        | 136.02 |                        |  |        | 123.35 |  |  |        | N/A |  |      |        | N/A |     |  |          | 4,035.02 |  |  |          | 3,752.59 | 
|                         | August                  |                   |        | 132.03 |                        |  |        | 116.12 |  |  |        | N/A |  |      |        | N/A |     |  |          | 3,877.32 |  |  |          | 3,646.99 | 
|                         | September               |                   |        | 130.20 |                        |  |        | 120.78 |  |  |        | N/A |  |      |        | N/A |     |  |          | 3,991.02 |  |  |          | 3,817.62 | 
|                         | October                 |                   |        | 133.53 |                        |  |        | 126.55 |  |  |        | N/A |  |      |        | N/A |     |  |          | 4,049.66 |  |  |          | 3,854.41 | 
|                         | November                |                   |        | 139.49 |                        |  |        | 134.45 |  |  |        | N/A |  |      |        | N/A |     |  |          | 4,183.41 |  |  |          | 4,012.64 | 
|                         | December                |                   |        | 137.20 |                        |  |        | 130.00 |  |  |        | N/A |  |      |        | N/A |     |  |          | 4,261.79 |  |  |          | 4,150.41 | 
|2005                     |                         |                   |        |        |                        |  |        |        |  |  |        |     |  |      |        |     |     |  |          |          |  |  |          |         
|                         | January                 |                   |        | 133.34 |                        |  |        | 118.00 |  |  |        | N/A |  |      |        | N/A |     |  |          | 4,316.40 |  |  |          | 4,201.81 | 
|                         | February                |                   |        | 125.28 |                        |  |        | 118.60 |  |  |        | N/A |  |      |        | N/A |     |  |          | 4,402.03 |  |  |          | 4,279.97 | 
|                         | March (through March 8) |                   |        | 124.00 |                        |  |        | 122.75 |  |  |        | N/A |  |      |        | N/A |     |  |          | 4,428.09 |  |  |          | 4,373.27 | 






|    |                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Since January 1, 2000, ordinary share prices are obtained
    from XETRA. Similarly, preference share prices between
    January 1, 2000 and June 18, 2001 were obtained from
    XETRA.

98



---



##### Table of Contents





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | All amounts for the preference shares shown reflect the highs
    and lows through June 18, 2001 due to the conversion of
    preference shares to ordinary shares.                                                                                                                                                                                                                                                                                       
|   
|(3) | The DAX is a continuously updated, capital-weighted performance
    index of 30 German blue chip companies. In principle, the shares
    included in the DAX are selected on the basis of their stock
    exchange turnover and the issuers market capitalization.
    Adjustments to the DAX are made for capital changes,
    subscription rights and dividends. Subsequent to June 18,
    1999, the highs and lows of the DAX are disclosed on XETRA.








99



---



##### Table of Contents





|                         |                         |               |       |       |     |  |       |       | 
|------------------------ | ----------------------- | ------------- | ----- | ----- | --- |  | ----- | ----- | 
|                         |                         | Price per ADS |      
|                         |                         |               |      
|                         |                         | High          |       |       | Low | 
|                         |                         |               |       |       |     | 
|                         |                         | (in U.S.$)    |      
|Annual Highs and Lows    |                         |               |       |       |     |  |       |      
|2000                     |                         |               | 83.94 |       |     |  | 31.75 |      
|2001                     |                         |               | 47.64 |       |     |  | 23.00 |      
|2002                     |                         |               | 38.84 |       |     |  | 10.05 |      
|2003                     |                         |               | 41.80 |       |     |  | 18.46 |      
|2004                     |                         |               | 45.45 |       |     |  | 35.50 |      
|Quarterly Highs and Lows |                         |               |       |       |     |  |       |      
|2000                     |                         |               |       |       |     |  |       |      
|                         | First Quarter           |               |       | 83.94 |     |  |       | 44.87 | 
|                         | Second Quarter          |               |       | 59.19 |     |  |       | 40.94 | 
|                         | Third Quarter           |               |       | 67.81 |     |  |       | 46.06 | 
|                         | Fourth Quarter          |               |       | 62.19 |     |  |       | 31.75 | 
|2001                     |                         |               |       |       |     |  |       |      
|                         | First Quarter           |               |       | 47.64 |     |  |       | 28.59 | 
|                         | Second Quarter          |               |       | 40.99 |     |  |       | 24.39 | 
|                         | Third Quarter           |               |       | 37.73 |     |  |       | 23.00 | 
|                         | Fourth Quarter          |               |       | 34.80 |     |  |       | 25.09 | 
|2002                     |                         |               |       |       |     |  |       |      
|                         | First Quarter           |               |       | 38.84 |     |  |       | 32.41 | 
|                         | Second Quarter          |               |       | 38.30 |     |  |       | 22.68 | 
|                         | Third Quarter           |               |       | 23.51 |     |  |       | 11.25 | 
|                         | Fourth Quarter          |               |       | 22.65 |     |  |       | 10.05 | 
|2003                     |                         |               |       |       |     |  |       |      
|                         | First Quarter           |               |       | 25.00 |     |  |       | 18.46 | 
|                         | Second Quarter          |               |       | 33.40 |     |  |       | 19.18 | 
|                         | Third Quarter           |               |       | 34.50 |     |  |       | 27.56 | 
|                         | Fourth Quarter          |               |       | 41.80 |     |  |       | 31.13 | 
|2004                     |                         |               |       |       |     |  |       |      
|                         | First Quarter           |               |       | 45.27 |     |  |       | 36.97 | 
|                         | Second Quarter          |               |       | 41.95 |     |  |       | 36.71 | 
|                         | Third Quarter           |               |       | 41.68 |     |  |       | 35.50 | 
|                         | Fourth Quarter          |               |       | 45.45 |     |  |       | 39.20 | 
|Monthly Highs and Lows   |                         |               |       |       |     |  |       |      
|2004                     |                         |               |       |       |     |  |       |      
|                         | July                    |               |       | 41.68 |     |  |       | 37.96 | 
|                         | August                  |               |       | 40.05 |     |  |       | 35.50 | 
|                         | September               |               |       | 40.25 |     |  |       | 36.39 | 
|                         | October                 |               |       | 42.65 |     |  |       | 39.20 | 
|                         | November                |               |       | 45.35 |     |  |       | 42.78 | 
|                         | December                |               |       | 45.45 |     |  |       | 43.05 | 
|2005                     |                         |               |       |       |     |  |       |      
|                         | January                 |               |       | 44.04 |     |  |       | 38.52 | 
|                         | February                |               |       | 40.75 |     |  |       | 38.58 | 
|                         | March (through March 8) |               |       | 41.23 |     |  |       | 40.02 | 

100



---



##### Table of Contents








ITEM 10. ADDITIONAL INFORMATION









Aktiengesetz Handelsregister








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





Introduction.




101



---



##### Table of Contents









Satzung


The Supervisory Board.






Mitbestimmungsgesetz


102



---



##### Table of Contents















Audit Committee






General Committee


103



---



##### Table of Contents



Compensation Committee


Finance and Investment Committee


Mediation Committee


Technology Committee






The Executive Board.










104



---



##### Table of Contents









The Annual General Shareholder Meeting.





Share Capital.











| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Capital Increases. The capital stock may be increased in
    consideration of contributions in cash or in kind, or by
    establishing authorized capital or contingent capital or by an
    increase of the companys capital reserves. Authorized
    capital provides the Executive Board with the flexibility to
    issue new shares for a period of up to five years, generally to
    preserve liquidity. The Executive Board must obtain the approval
    of the Supervisory Board before issuing new shares with regard
    to the authorized capital. Contingent capital allows the
    issuance of new shares for specified purposes, including
    employee stock option plans and the issuance of shares upon
    conversion of convertible bonds and exercise of stock options.
    The Executive Board may only issue new shares with regard to the
    contingent capital for the specified purposes by law. Capital
    increases require an approval by 75% of the issued shares
    present at the Shareholders Meeting at which the increase
    is proposed and require an amendment to the Articles of
    Incorporation.
|
| |  | Authorized and Contingent Capital. Information regarding
    our authorized and contingent capital is included in Note 22 in
    Item 18. Financial Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

105



---



##### Table of Contents





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



Voting Rights.






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

Shareholder Meetings.







106



---



##### Table of Contents







Change in Control.




Wertpapiererwerbs- und
Übernahmegesetz (Bundesanstalt für
Finanzdienstleistungsaufsicht


Disclosure of Share Holdings.


Wertpapierhandelsgesetz

















107



---



##### Table of Contents

































108



---



##### Table of Contents



  























109



---



##### Table of Contents









e.g.












110



---



##### Table of Contents























111



---



##### Table of Contents



























112



---



##### Table of Contents

















113



---



##### Table of Contents























114



---



##### Table of Contents









pro rata








e.g.






115



---



##### Table of Contents





pro rata

















116



---



##### Table of Contents






ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK















117



---



##### Table of Contents





|                                                         |  |                  |         |  |              |  |        |                  |  |  |        | 
|-------------------------------------------------------- |  | ---------------- | ------- |  | ------------ |  | ------ | ---------------- |  |  | ------ | 
|                                                         |  | Contract         |         |  |              |  |       
|                                                         |  | Notional Amounts |         |  |              |  |       
|                                                         |  | Expected         |         |  | Fair Value   |  |        | Weighted Average | 
|                                                         |  | Maturity Date    |         |  | December 31, |  |        | Contractual      | 
|Foreign Currency Risk                                    |  | 2005             |         |  | 2004(1)      |  |        | Exchange Rate    | 
|                                                         |  |                  |         |  |              |  |        |                  | 
|                                                         |  | (000)           |        
|Derivatives used to manage firm commitments              |  |                  |         |  |              |  |        |                  |  |  |        | 
|Foreign Currency Forward Contracts                       |  |                  |         |  |              |  |        |                  |  |  |        | 
|(Receive Local Currency, Sell euro)                      |  |                  |         |  |              |  |        |                  |  |  |        | 
|U.S. dollars                                             |  |                  | 33,826  |  |              |  | (868   | )                |  |  | 1.3303 | 
|Japanese Yen                                             |  |                  | 120,899 |  |              |  | (3,914 | )                |  |  | 132.34 | 
|British Pounds                                           |  |                  | 9,500   |  |              |  | (5     | )                |  |  | 0.7047 | 
|Israeli Shekels                                          |  |                  | 40,000  |  |              |  | 90     |                  |  |  | 5.8900 | 
|Foreign Currency Forward Contracts                       |  |                  |         |  |              |  |        |                  |  |  |        | 
|(Receive euro, Sell Local Currency)                      |  |                  |         |  |              |  |        |                  |  |  |        | 
|U.S. dollars                                             |  |                  | 629,511 |  |              |  | 65,314 |                  |  |  | 1.2224 | 
|Japanese Yen                                             |  |                  | 17,538  |  |              |  | (38    | )                |  |  | 139.70 | 
|British Pounds                                           |  |                  | 15,628  |  |              |  | 344    |                  |  |  | 0.6911 | 
|Swiss Francs                                             |  |                  | 9,928   |  |              |  | 64     |                  |  |  | 1.5310 | 
|Canadian dollars                                         |  |                  | 5,292   |  |              |  | (5     | )                |  |  | 1.6439 | 
|Australian dollars                                       |  |                  | 3,974   |  |              |  | (25    | )                |  |  | 1.7615 | 
|Foreign Currency Forward Contracts                       |  |                  |         |  |              |  |        |                  |  |  |        | 
|(Receive British Pounds, Sell U.S. dollars) U.S. dollars |  |                  | 587     |  |              |  | 5      |                  |  |  | 1.9150 | 
|Derivatives used to manage anticipated Cash Flows        |  |                  |         |  |              |  |        |                  |  |  |        | 
|Foreign Currency Forward Contracts                       |  |                  |         |  |              |  |        |                  |  |  |        | 
|(Receive euro, Sell Local Currency)                      |  |                  |         |  |              |  |        |                  |  |  |        | 
|U.S. dollars                                             |  |                  | 249,878 |  |              |  | 12,938 |                  |  |  | 1.2966 | 
|Japanese Yen                                             |  |                  | 78,829  |  |              |  | 3,415  |                  |  |  | 131.88 | 
|British Pounds                                           |  |                  | 94,798  |  |              |  | 2,420  |                  |  |  | 0.6973 | 
|Swiss Francs                                             |  |                  | 67,205  |  |              |  | 539    |                  |  |  | 1.5177 | 
|Canadian dollars                                         |  |                  | 43,559  |  |              |  | 802    |                  |  |  | 1.6150 | 
|Australian dollars                                       |  |                  | 28,068  |  |              |  | 577    |                  |  |  | 1.7386 | 






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








118



---



##### Table of Contents



  




|                                               |  |      |        |  
|---------------------------------------------- |  | ---- | ------ | -
|Bank loans and overdrafts                      |  | 2004 |       
|                                               |  |      |       
|Fixed rate bank loans
    (000)               |  |      | 20,058 |  
|Average interest rate of fixed rate bank loans |  |      | 6.14   | %
|Overdrafts (000)                              |  |      | 7,727  |  
|                                               |  |      |       
|Total bank loans and overdrafts                |  |      | 27,785 |  
|                                               |  |      |       










     


119



---



##### Table of Contents









|                                                         |  |                                 |           |  |              |  |        | 
|-------------------------------------------------------- |  | ------------------------------- | --------- |  | ------------ |  | ------ | 
|                                                         |  | Hedge of 3.0 million 2004 STARs |          
|                                                         |  |                                 |          
|                                                         |  | Number of call                  |           |  |             
|Buy/sell                                                 |  | options                         |           |  | Strike price | 
|                                                         |  |                                 |           |  |              | 
|Buy                                                      |  |                                 | 3,000,000 |  |              |  | 134.35 | 
|Sell                                                     |  |                                 | 1,500,000 |  |              |  | 184.35 | 
|Sell                                                     |  |                                 | 750,000   |  |              |  | 234.35 | 
|Fair value as of December 31, 2004 in
    (000): 22,308 |  |                                 |           |  |              |  |        | 

|                                                         |  |                                 |           |  |              |  |        | 
|-------------------------------------------------------- |  | ------------------------------- | --------- |  | ------------ |  | ------ | 
|                                                         |  | Hedge of 2.0 million 2003 STARs |          
|                                                         |  |                                 |          
|                                                         |  | Number of call                  |           |  |             
|Buy/sell                                                 |  | options                         |           |  | Strike price | 
|                                                         |  |                                 |           |  |              | 
|Buy                                                      |  |                                 | 2,000,000 |  |              |  | 84.91  | 
|Sell                                                     |  |                                 | 1,000,000 |  |              |  | 134.91 | 
|Sell                                                     |  |                                 | 500,000   |  |              |  | 184.91 | 
|Fair value as of December 31, 2004 in
    (000): 82,500 |  |                                 |           |  |              |  |        | 

 







ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN
EQUITY SECURITIES




120



---



##### 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







ITEM 16. [RESERVED]





ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT









ITEM 16B. CODE OF ETHICS




121



---



##### Table of Contents












ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES




|                   |  |                    |     |  |      |  |     | 
|------------------ |  | ------------------ | --- |  | ---- |  | --- | 
|                   |  | 2004               |     |  | 2003 | 
|                   |  |                    |     |  |      | 
|                   |  | (in millions of ) |    
|Audit Fees         |  |                    | 4.3 |  |      |  | 3.7 | 
|Audit-Related Fees |  |                    | 0.9 |  |      |  | 0.6 | 
|Tax Fees           |  |                    | 1.2 |  |      |  | 0.1 | 
|All Other Fees     |  |                    | 0.0 |  |      |  | 0.2 | 
|                   |  |                    |     |  |      | 
|                   |  |                    | 6.4 |  |      |  | 4.6 | 
|                   |  |                    |     |  |      | 







122



---



##### 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




123



---



##### Table of Contents






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




|                            |  |              |           |  |               |     |        |                        |     |  |                       |  |  |  |            | 
|--------------------------- |  | ------------ | --------- |  | ------------- | --- | ------ | ---------------------- | --- |  | --------------------- |  |  |  | ---------- | 
|                            |  |              |           |  |               | (c) |        |                        | (d) | 
|                            |  | (a)          |           |  | (b)           |     |        | Total Number of Shares |     |  | Maximum Number of     | 
|                            |  | Total Number |           |  | Average Price |     |        | Purchased as Part of   |     |  | Shares that May Yet   | 
|                            |  | of Shares    |           |  | Paid per      |     |        | Publicly Announced     |     |  | Be Purchased Under    | 
|Period                      |  | Purchased    |           |  | Share         |     |        | Plans or Programs      |     |  | the Plans or Programs | 
|                            |  |              |           |  |               |     |        |                        |     |  |                       | 
|January 1/1/04  1/31/04    |  |              | 23,910    |  |               |     | 133.89 |                        |     |  | 23,910                |  |  |  | 26,976,355 | 
|February 2/1/04  2/29/04   |  |              | 10,614    |  |               |     | 135.51 |                        |     |  | 10,614                |  |  |  | 26,990,964 | 
|March 3/1/04  3/31/04      |  |              | 12,110    |  |               |     | 124.38 |                        |     |  | 12,110                |  |  |  | 27,126,391 | 
|April 4/1/04  3/30/04      |  |              | 11,200    |  |               |     | 132.45 |                        |     |  | 11,200                |  |  |  | 27,126,391 | 
|May 5/1/04  5/31/04        |  |              | 383,557   |  |               |     | 127.37 |                        |     |  | 383,557               |  |  |  | 26,827,096 | 
|June 6/1/04  3/30/04       |  |              | 11,691    |  |               |     | 134.57 |                        |     |  | 11,691                |  |  |  | 26,916,356 | 
|July 7/1/04  7/31/04       |  |              | 537,230   |  |               |     | 126.74 |                        |     |  | 537,230               |  |  |  | 26,407,273 | 
|August 8/1/04  8/31/04     |  |              | 223,804   |  |               |     | 118.74 |                        |     |  | 223,804               |  |  |  | 26,220,533 | 
|September 9/1/04  9/30/04  |  |              | 21,552    |  |               |     | 124.72 |                        |     |  | 21,552                |  |  |  | 26,220,244 | 
|October 10/1/04  10/31/04  |  |              | 11,765    |  |               |     | 130.03 |                        |     |  | 11,765                |  |  |  | 26,220,244 | 
|November 11/1/04  11/30/04 |  |              | 10,973    |  |               |     | 137.04 |                        |     |  | 10,973                |  |  |  | 26,266,277 | 
|December 12/1/04  12/31/04 |  |              | 54,347    |  |               |     | 130.79 |                        |     |  | 54,347                |  |  |  | 26,237,117 | 
|                            |  |              |           |  |               |     |        |                        |     |  |                       | 
|Total                       |  |              | 1,312,753 |  |               |     | 126.11 |                        |     |  | 1,312,753             |  |  |  |            | 
|                            |  |              |           |  |               |     |        |                        |     |  |                       | 





124



---



##### Table of Contents





|                            |  |              |         |  |               |     |       |                        |     |  |                       |  |  |  |     | 
|--------------------------- |  | ------------ | ------- |  | ------------- | --- | ----- | ---------------------- | --- |  | --------------------- |  |  |  | --- | 
|                            |  |              |         |  |               | (c) |       |                        | (d) | 
|                            |  | (a)          |         |  | (b)           |     |       | Total Number of Shares |     |  | Maximum Number of     | 
|                            |  | Total Number |         |  | Average Price |     |       | Purchased as Part of   |     |  | Shares that May Yet   | 
|                            |  | of Shares    |         |  | Paid per      |     |       | Publicly Announced     |     |  | Be Purchased Under    | 
|Period                      |  | Purchased    |         |  | Share         |     |       | Plans or Programs      |     |  | the Plans or Programs | 
|                            |  |              |         |  |               |     |       |                        |     |  |                       | 
|January 1/1/04  1/31/04    |  |              | 16,476  |  |               |     | 43.66 |                        |     |  | 16,476                |  |  |  | N/A | 
|February 2/1/04  2/29/04   |  |              | 22,728  |  |               |     | 41.88 |                        |     |  | 22,728                |  |  |  | N/A | 
|March 3/1/04  3/31/04      |  |              | 66,312  |  |               |     | 40.47 |                        |     |  | 66,312                |  |  |  | N/A | 
|April 4/1/04  3/30/04      |  |              | 18,960  |  |               |     | 40.05 |                        |     |  | 18,960                |  |  |  | N/A | 
|May 5/1/04  5/31/04        |  |              | 18,924  |  |               |     | 37.93 |                        |     |  | 18,924                |  |  |  | N/A | 
|June 6/1/04  3/30/04       |  |              | 17,834  |  |               |     | 40.81 |                        |     |  | 17,834                |  |  |  | N/A | 
|July 7/1/04  7/31/04       |  |              | 18,965  |  |               |     | 39.39 |                        |     |  | 18,965                |  |  |  | N/A | 
|August 8/1/04  8/31/04     |  |              | 33,752  |  |               |     | 37.45 |                        |     |  | 33,752                |  |  |  | N/A | 
|September 9/1/04  9/30/04  |  |              | 19,776  |  |               |     | 38.50 |                        |     |  | 19,776                |  |  |  | N/A | 
|October 10/1/04  10/31/04  |  |              | 18,338  |  |               |     | 41.27 |                        |     |  | 18,338                |  |  |  | N/A | 
|November 11/1/04  11/30/04 |  |              | 19,319  |  |               |     | 44.40 |                        |     |  | 19,319                |  |  |  | N/A | 
|December 12/1/04  12/31/04 |  |              | 18,464  |  |               |     | 44.67 |                        |     |  | 18,464                |  |  |  | N/A | 
|                            |  |              |         |  |               |     |       |                        |     |  |                       | 
|Total                       |  |              | 289,848 |  |               |     | 40.61 |                        |     |  | 289,848               |  |  |  | N/A | 
|                            |  |              |         |  |               |     |       |                        |     |  |                       | 

125



---



##### Table of Contents






PART III





ITEM 17. FINANCIAL STATEMENTS







ITEM 18. FINANCIAL STATEMENTS






















126



---



##### Table of Contents






ITEM 19. EXHIBITS




| |      |  |  |                                                                                                                                                                                                                                                                                             
| | ---- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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).(2)                                                                                                                                                                                                          
| | 2.2  |  |  | Form of American Depositary
    Receipt.(3)                                                                                                                                                                                                                                                 
| | 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.(4)
| | 4.2  |  |  | Share Purchase Agreement by and among Commerce One, Inc., New
    Commerce One Holding Inc. and SAP AG, dated as of June 28,
    2001.(5)                                                                                                                                                   
| | 4.3  |  |  | Amended and Restated Standstill and Stock Restriction Agreement
    by and among Commerce One, Inc., New Commerce One Holding, Inc.
    and SAP AG, dated as of June 28,
    2001.(6)                                                                                                       
| | 4.4  |  |  | Investor Rights Agreement by and among Commerce One, Inc., New
    Commerce One Holding, Inc. and SAP AG, dated as of June 28,
    2001.(7)                                                                                                                                                 
| | 4.5  |  |  | Strategic Alliance Agreement by and among Commerce One, Inc.,
    SAP Markets, Inc. and SAP AG, dated as of September 18,
    2000.(8)                                                                                                                                                      
| | 4.6  |  |  | Strategic Alliance Agreement Amendment No. 2 by and among
    Commerce One, Inc., SAP Markets, Inc. and SAP AG, dated as of
    June 29,
    2001.(9)                                                                                                                                       
| | 4.7  |  |  | Strategic Alliance Agreement Amendment No. 3 by and among
    Commerce One, Inc., SAP Markets, Inc. and SAP AG, dated as of
    June 29,
    2001.(9)                                                                                                                                       
| | 4.8  |  |  | Strategic Alliance Agreement Amendment No. 4 by and among
    Commerce One, Inc., SAP Markets, Inc. and SAP AG, dated as of
    January 1,
    2002.(10)                                                                                                                                    
| | 4.9  |  |  | Strategic Alliance Agreement Amendment No. 5 by and among
    Commerce One, Inc., SAP Markets, Inc. and SAP AG, dated as of
    December 20,
    2002.(11)                                                                                                                                  
| | 4.10 |  |  | Strategic Alliance Agreement Amendment No. 6 by and among
    Commerce One, Inc., SAP Markets, Inc. and SAP AG, dated as of
    September 29,
    2003.(12)                                                                                                                                 
| | 4.11 |  |  | Credit Facility Agreement among SAP as Borrower; ABN AMRO Bank
    N.V., BNP Paribas, Deutsche Bank AG and J.P. Morgan plc as
    Mandated Lead Arrangers; ABN AMRO N.V. London Branch as Agent;
    and the lenders named in the Credit Agreement, dated as of
    November 5, 2004.       
| | 4.12 |  |  | Agreement and Plan of Merger dated as of February 28, 2005,
    among SAP America, Inc., Sapphire Expansion Corporation and
    Retek
    Inc.(13)                                                                                                                                          
| | 4.13 |  |  | Amendment dated as of March 16, 2005 to Agreement and Plan
    of Merger dated as of February 28, 2005 among SAP America,
    Inc., Sapphire Expansion Corporation and Retek
    Inc.(14)                                                                                                   
| | 4.14 |  |  | Employment Contract for Executive Board Member Henning
    Kagermann, dated February 17, 2005.                                                                                                                                                                                              
| | 4.15 |  |  | Employment Contract for Executive Board Member Shai Agassi,
    dated April 17, 2002.                                                                                                                                                                                                       
| | 4.16 |  |  | Employment Contract for Executive Board Member Leo Apotheker,
    dated July 25, 2002.                                                                                                                                                                                                      
| | 4.17 |  |  | Employment Contract for Executive Board Member Werner Brandt,
    dated February 19, 2005.                                                                                                                                                                                                  
| | 4.18 |  |  | Employment Contract for Executive Board Member Claus Heinrich,
    dated March 8, 1996.                                                                                                                                                                                                     
| | 4.19 |  |  | Employment Contract for Executive Board Member Gerhard Oswald,
    dated March 8, 1996.                                                                                                                                                                                                     
| | 4.20 |  |  | Employment Contract for Executive Board Member Peter Zencke,
    dated March 7, 2005.                                                                                                                                                                                                       
| | 4.21 |  |  | Bonus Schedule Board Members 2004, dated February 17, 2004.                                                                                                                                                                                                                                 
| | 4.22 |  |  | Supplement to Employment Contract for Executive Board Member
    Claus Heinrich, dated February 12, 2001.                                                                                                                                                                                   

127



---



##### Table of Contents



| |      |  |  |                                                                                                                                                                                       
| | ---- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.23 |  |  | Supplement to Employment Contract for Executive Board Member
    Gerhard Oswald, dated February 12, 2001.                                                                             
| | 8    |  |  | Subsidiaries, Associated Companies and Other Investments of
    SAP AG.                                                                                                               
| | 12.1 |  |  | Certification of Chief Executive Officer required by
    Rule 13a-14(a) or Rule 15d-14(a).                                                                                            
| | 12.2 |  |  | Certification of Chief Financial Officer required by
    Rule 13a-14(a) or Rule 15d-14(a).                                                                                            
| | 13   |  |  | Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | 15   |  |  | Consent of Registered Independent Public Accounting Firm.                                                                                                                             






|     |                                                                                                                                                                               
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)  | Incorporated by reference to the Annual Report on Form 20-F
    of SAP AG, filed March 23, 2004.                                                                              
|    
|(2)  | Incorporated by reference to Form 8-A of SAP AG, filed
    on May 3, 2001.                                                                                                    
|    
|(3)  | Incorporated by reference to Form 8-A of SAP AG, filed
    on May 3, 2001.                                                                                                    
|    
|(4)  | Incorporated by reference to the Current Report on Form 6-K
    of SAP AG, filed on December 13, 2004.                                                                        
|    
|(5)  | Incorporated by reference to the Current Report on Form 8-K
    of Commerce One, Inc., filed on July 10, 2001.                                                                
|    
|(6)  | Incorporated by reference to the Current Report on Form 8-K
    of Commerce One, Inc., filed on July 10, 2001.                                                                
|    
|(7)  | Incorporated by reference to the Current Report on Form 8-K
    of Commerce One, Inc., filed on July 10, 2001.                                                                
|    
|(8)  | Incorporated by reference to the Quarterly Report on
    Form 10-Q of Commerce One, Inc., filed on November 14,
    2000.                                                     
|    
|(9)  | Incorporated by reference to the Quarterly Report on
    Form 10-Q of Commerce One, Inc., filed on August 14,
    2001.                                                       
|    
|(10) | Incorporated by reference to the Annual Report on Form 10-K
    of Commerce One, Inc., filed April 1, 2002.                                                                   
|    
|(11) | Incorporated by reference to the Annual Report on Form 10-K
    of Commerce One, Inc., filed March 31, 2003.                                                                  
|    
|(12) | Incorporated by reference to the Quarterly Report on
    Form 10-Q of Commerce One, Inc., filed on November 14,
    2003.                                                     
|    
|(13) | Incorporated by reference to the Tender Offer Statement on
    Schedule TO, filed by SAP America, Inc. and Sapphire
    Expansion Corporation on March 4, 2005.               
|    
|(14) | Incorporated by reference to Amendment No. 4 to Tender
    Offer Statement on Schedule TO filed on March 17, 2005
    by SAP America, Inc. and Sapphire Expansion Corporation.

128



---



##### Table of Contents



SIGNATURE






| |                                  
| | ---------------------------------
| | SAP AKTIENGESELLSCHAFT SYSTEME,  
| | ANWENDUNGEN, PRODUKTE IN DER     
| | DATENVERARBEITUNG                
| | (Registrant)                     
|
| | By: /s/ HENNING KAGERMANN        
| |                                  
| | Name: Prof. Dr. Henning Kagermann
| | Title: Chief Executive Officer   





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



129



---



##### Table of Contents



SAP AKTIENGESELLSCHAFT AND SUBSIDIARIES


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                   |                                                                                                                         |      |     |     | 
|------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------- | ---- | --- | --- | 
|                                                                   |                                                                                                                         | Page |    
|                                                                   |                                                                                                                         |      |    
|Report of Independent Public Accounting Firm                       |                                                                                                                         |      | F-1 |    
|Consolidated Financial Statements                                  |                                                                                                                         |      |     |    
|                                                                   | Consolidated Statements of Income for the years ended
    December 31, 2004, 2003 and 2002                              |      |     | F-2 | 
|                                                                   | Consolidated Balance Sheets as of
    December 31, 2004, 2003 and 2002                                                  |      |     | F-3 | 
|                                                                   | Consolidated Statements of Changes in Shareholders
    Equity for the years ended December 31, 2004, 2003
    and 2002 |      |     | F-4 | 
|                                                                   | Consolidated Statements of Cash Flows for the years ended
    December 31, 2004, 2003 and 2002                          |      |     | F-5 | 
|                                                                   | Notes to Consolidated Financial Statements                                                                              |      |     | F-6 | 
|Schedule for the years ended December 31, 2004,
    2003 and 2002: |                                                                                                                         |      |     |    
|                                                                   | Schedule II  Valuation and Qualifying
    Accounts and Reserves                                                        |      |     | S-1 | 



---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






















F-1



---



##### Table of Contents



CONSOLIDATED FINANCIAL STATEMENTS


CONSOLIDATED STATEMENTS OF INCOME







|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |            |            |           |  |            |            |           | 
|------------------------------------------------------------------------- | --------------------------------------- | ------------------- | --- | --------- | ------- |  | ---------- | ---------- | --------- | ------- | ---------- | ---------- | --------- | ---- | ---------- | ---------- | --------- |  | ---------- | ---------- | --------- | 
|                                                                          |                                         | Note                |     |           | 2004(1) |  |            | 2004       |           |         | 2003       |            |           | 2002 |           
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|                                                                          |                                         |                     |     | US$ (000) |         |  |  (000)    |            |           |  (000) |            |            |  (000)   |     
|                                                                          |                                         | Software revenue    |     |           |         |  |            |            | 3,196,338 |         |            |            | 2,361,012 |      |            |            | 2,147,591 |  |            |            | 2,290,834 | 
|                                                                          |                                         | Maintenance revenue |     |           |         |  |            |            | 3,822,033 |         |            |            | 2,823,189 |      |            |            | 2,568,807 |  |            |            | 2,422,786 | 
|                                                                          | Product revenue                         |                     |     |           |         |  |            | 7,018,371  |           |         |            | 5,184,201  |           |      |            | 4,716,398  |           |  |            | 4,713,620  |          
|                                                                          |                                         | Consulting revenue  |     |           |         |  |            |            | 2,667,807 |         |            |            | 1,970,606 |      |            |            | 1,953,459 |  |            |            | 2,204,191 | 
|                                                                          |                                         | Training revenue    |     |           |         |  |            |            | 409,447   |         |            |            | 302,443   |      |            |            | 299,331   |  |            |            | 413,904   | 
|                                                                          | Service revenue                         |                     |     |           |         |  |            | 3,077,254  |           |         |            | 2,273,049  |           |      |            | 2,252,790  |           |  |            | 2,618,095  |          
|                                                                          | Other revenue                           |                     |     |           |         |  |            | 77,496     |           |         |            | 57,243     |           |      |            | 55,418     |           |  |            | 81,123     |          
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Total revenue                                                             |                                         |                     | (5  | )         |         |  | 10,173,121 |            |           |         | 7,514,493  |            |           |      | 7,024,606  |            |           |  | 7,412,838  |           
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|                                                                          | Cost of product                         |                     |     |           |         |  |            | (1,088,878 | )         |         |            | (804,312   | )         |      |            | (839,041   | )         |  |            | (860,373   | )        
|                                                                          | Cost of service                         |                     |     |           |         |  |            | (2,414,438 | )         |         |            | (1,783,453 | )         |      |            | (1,694,062 | )         |  |            | (1,955,785 | )        
|                                                                          | Research and development                |                     |     |           |         |  |            | (1,380,906 | )         |         |            | (1,020,022 | )         |      |            | (995,941   | )         |  |            | (909,390   | )        
|                                                                          | Sales and marketing                     |                     |     | (6        | )       |  |            | (2,062,733 | )         |         |            | (1,523,662 | )         |      |            | (1,411,004 | )         |  |            | (1,627,235 | )        
|                                                                          | General and administration              |                     |     |           |         |  |            | (496,066   | )         |         |            | (366,425   | )         |      |            | (354,043   | )         |  |            | (399,269   | )        
|                                                                          | Other operating expense, net            |                     |     | (7        | )       |  |            | 2,385      |           |         |            | 1,762      |           |      |            | (6,496     | )         |  |            | (35,108    | )        
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Total operating expenses                                                  |                                         |                     | (8  | )         |         |  | (7,440,636 | )          |           |         | (5,496,112 | )          |           |      | (5,300,587 | )          |           |  | (5,787,160 | )         
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Operating income                                                          |                                         |                     |     |           |         |  | 2,732,484  |            |           |         | 2,018,381  |            |           |      | 1,724,019  |            |           |  | 1,625,678  |           
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|                                                                          | Other non-operating income/expense, net |                     |     | (9        | )       |  |            | 17,971     |           |         |            | 13,274     |           |      |            | 36,309     |           |  |            | 37,319     |          
|                                                                          | Financial income/expense, net           |                     |     | (10       | )       |  |            | 55,488     |           |         |            | 40,987     |           |      |            | 16,287     |           |  |            | (555,299   | )        
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Income before income taxes, minority interest, and extraordinary
    gain |                                         |                     |     |           |         |  | 2,805,943  |            |           |         | 2,072,642  |            |           |      | 1,776,615  |            |           |  | 1,107,698  |           
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|                                                                          | Income taxes                            |                     |     | (11       | )       |  |            | (1,025,191 | )         |         |            | (757,269   | )         |      |            | (692,640   | )         |  |            | (598,705   | )        
|                                                                          | Minority interest                       |                     |     |           |         |  |            | (6,568     | )         |         |            | (4,852     | )         |      |            | (6,912     | )         |  |            | (6,155     | )        
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Income before extraordinary gain                                          |                                         |                     |     |           |         |  | 1,774,183  |            |           |         | 1,310,521  |            |           |      | 1,077,063  |            |           |  | 502,838    |           
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|                                                                          | Extraordinary gain, net of tax          |                     |     | (12       | )       |  |            | 0          |           |         |            | 0          |           |      |            | 0          |           |  |            | 5,776      |          
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Net income                                                                |                                         |                     |     |           |         |  | 1,774,183  |            |           |         | 1,310,521  |            |           |      | 1,077,063  |            |           |  | 508,614    |           
|                                                                          |                                         |                     |     |           |         |  |            |            |           |         |            |            |           |      |           
|Earnings per share  basic                                                |                                         |                     | (13 | )         |         |  | 5,71       |            |           |         | 4,22       |            |           |      | 3,47       |            |           |  | 1,62       |           
|Earnings per share  diluted                                              |                                         |                     | (13 | )         |         |  | 5,69       |            |           |         | 4,20       |            |           |      | 3,46       |            |           |  | 1,62       |           






|    |                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The 2004 figures have been translated solely for the convenience
    of the reader at an exchange rate of
     1.00 to
    US$ 1.3538 the Noon Buying Rate certified by the Federal
    Reserve Bank of New York on December 31, 2004.



F-2



---



##### Table of Contents



CONSOLIDATED BALANCE SHEETS




|                                      |                          |      |     |           |         |  |            |           |  |         |           |           |  |  |           |           | 
|------------------------------------- | ------------------------ | ---- | --- | --------- | ------- |  | ---------- | --------- |  | ------- | --------- | --------- |  |  | --------- | --------- | 
|                                      |                          | Note |     |           | 2004(2) |  |            | 2004      |  |         | 2003      |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|                                      |                          |      |     | US$ (000) |         |  |  (000)    |           |  |  (000) |          
|Assets                                |                          |      |     |           |         |  |            |           |  |         |           |           |  |  |           |          
|Intangible assets                     |                          |      | (14 | )         |         |  | 710,600    |           |  |         | 524,893   |           |  |  | 421,336   |          
|Property, plant and equipment         |                          |      | (15 | )         |         |  | 1,352,559  |           |  |         | 999,083   |           |  |  | 1,019,657 |          
|Financial assets                      |                          |      | (16 | )         |         |  | 135,897    |           |  |         | 100,382   |           |  |  | 167,988   |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|Fixed assets                          |                          |      |     |           |         |  | 2,199,056  |           |  |         | 1,624,358 |           |  |  | 1,608,981 |          
|Inventories                           |                          |      | (17 | )         |         |  | 15,829     |           |  |         | 11,692    |           |  |  | 10,375    |          
|                                      | Accounts receivable, net |      |     | (18       | )       |  |            | 2,611,615 |  |         |           | 1,929,100 |  |  |           | 1,770,715 | 
|                                      | Other assets             |      |     | (19       | )       |  |            | 727,864   |  |         |           | 537,645   |  |  |           | 505,891   | 
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|Accounts receivable and other assets  |                          |      |     |           |         |  | 3,339,479  |           |  |         | 2,466,745 |           |  |  | 2,276,606 |          
|Marketable securities                 |                          |      | (16 | )         |         |  | 13,760     |           |  |         | 10,164    |           |  |  | 1,352     |          
|Liquid assets                         |                          |      | (20 | )         |         |  | 4,327,479  |           |  |         | 3,196,542 |           |  |  | 2,095,956 |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|Non-fixed assets                      |                          |      |     |           |         |  | 7,696,547  |           |  |         | 5,685,143 |           |  |  | 4,384,289 |          
|Deferred taxes                        |                          |      | (11 | )         |         |  | 278,342    |           |  |         | 205,601   |           |  |  | 264,453   |          
|Prepaid expenses and deferred charges |                          |      | (21 | )         |         |  | 95,267     |           |  |         | 70,370    |           |  |  | 68,142    |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|Total assets                          |                          |      |     |           |         |  | 10,269,212 |           |  |         | 7,585,472 |           |  |  | 6,325,865 |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          
|thereof total current assets          |                          |      |     |           |         |  | 6,061,690  |           |  |         | 4,477,537 |           |  |  | 3,822,084 |          
|                                      |                          |      |     |           |         |  |            |           |  |         |           |          

|                                           |                                             |      |     |     |      |  |            |           |  |  |           |           |  |  |           |           | 
|------------------------------------------ | ------------------------------------------- | ---- | --- | --- | ---- |  | ---------- | --------- |  |  | --------- | --------- |  |  | --------- | --------- | 
|                                           |                                             | Note |     |     | 2004 |  |            | 2004      |  |  | 2003      |          
|                                           |                                             |      |     |     |      |  |            |           |  |  |           |          
|                                           |                                             |      |     |     |      |  |            |          | 
|                                           |                                             |      |     | US$ |      |  |           |           |  | 
|Shareholders Equity and Liabilities       |                                             |      |     |     |      |  |            |           |  |  |           |           |  |  |           |          
|Subscribed
    capital(1)                  |                                             |      |     |     |      |  | 427,806    |           |  |  | 316,004   |           |  |  | 315,414   |          
|Treasury stock                             |                                             |      |     |     |      |  | (770,537   | )         |  |  | (569,166  | )         |  |  | (461,631  | )        
|Additional paid-in capital                 |                                             |      |     |     |      |  | 436,817    |           |  |  | 322,660   |           |  |  | 296,555   |          
|Retained earnings                          |                                             |      |     |     |      |  | 6,539,066  |           |  |  | 4,830,156 |           |  |  | 3,761,086 |          
|Accumulated other comprehensive loss       |                                             |      |     |     |      |  | (413,452   | )         |  |  | (305,401  | )         |  |  | (201,979  | )        
|Shareholders equity                       |                                             |      | (22 | )   |      |  | 6,219,700  |           |  |  | 4,594,253 |           |  |  | 3,709,445 |          
|Minority interests                         |                                             |      |     |     |      |  | 29,744     |           |  |  | 21,971    |           |  |  | 58,703    |          
|                                           | Pension liabilities and similar obligations |      |     | (24 | )    |  |            | 189,112   |  |  |           | 139,690   |  |  |           | 97,535    | 
|                                           | Other reserves and accrued liabilities      |      |     | (25 | )    |  |            | 2,394,498 |  |  |           | 1,768,723 |  |  |           | 1,469,055 | 
|                                           |                                             |      |     |     |      |  |            |           |  |  |           |          
|Reserves and accrued liabilities           |                                             |      |     |     |      |  | 2,583,610  |           |  |  | 1,908,413 |           |  |  | 1,566,590 |          
|                                           | Bonds                                       |      |     |     |      |  |            | 9,851     |  |  |           | 7,277     |  |  |           | 10,084    | 
|                                           | Other liabilities                           |      |     | (26 | )    |  |            | 986,701   |  |  |           | 728,838   |  |  |           | 676,144   | 
|                                           |                                             |      |     |     |      |  |            |           |  |  |           |          
|Other liabilities                          |                                             |      |     |     |      |  | 996,552    |           |  |  | 736,115   |           |  |  | 686,228   |          
|Deferred income                            |                                             |      | (27 | )   |      |  | 439,606    |           |  |  | 324,720   |           |  |  | 304,899   |          
|                                           |                                             |      |     |     |      |  |            |           |  |  |           |          
|Total shareholders equity and liabilities |                                             |      |     |     |      |  | 10,269,212 |           |  |  | 7,585,472 |           |  |  | 6,325,865 |          
|                                           |                                             |      |     |     |      |  |            |           |  |  |           |          
|thereof current liabilities                |                                             |      |     |     |      |  | 3,486,149  |           |  |  | 2,575,084 |           |  |  | 2,251,354 |          
|                                           |                                             |      |     |     |      |  |            |           |  |  |           |          






|    |                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Contingent capital
     55,247
    thousand (2003:
     55,837
    thousand)                                                                                                                                                         
|   
|(2) | The 2004 figures have been translated solely for the convenience
    of the reader at an exchange rate of
     1.00 to
    US$ 1.3538 the Noon Buying Rate certified by the Federal
    Reserve Bank of New York on December 31, 2004.



F-3



---



##### Table of Contents



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY




|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|--------------------------------------------- | ------------------------------------------- | ------------------------------------------------------------------------ | ------- |  | ------------- | ----------- | --------- | ------------- | -------- | - | -------- | ---------- | - | ------- | --------- | - | -------- |  | ------- | ---------- |  |  | -------- | - |  |  | ------- |  |  |  | --------- | -------- | - | 
|                                              |                                             |                                                                          |         |  |               | Accumulated |           |               |          |   |          |            |   |         |           |   |         
|                                              |                                             | Number of                                                                |         |  |               |             | other     |               |          |   |          | Additional |   |         |           |   |          |  |        
|                                              |                                             | shares issued                                                            |         |  | Comprehensive |             |           | comprehensive |          |   | Retained |            |   | paid-in |           |   | Treasury |  |         | Subscribed |  |  |         
|                                              |                                             | and outstanding                                                          |         |  | income        |             |           | income/loss   |          |   | earnings |            |   | capital |           |   | stock    |  |         | capital    |  |  | Total    |  
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|                                              |                                             | (000)                                                                    |         |  |  (000)       |             |           |  (000)       |          |   |  (000)  |            |   |  (000) |           |   |  (000)  |  |         |  (000)    |  |  |  (000)  |  
|December 31, 2001                             |                                             |                                                                          | 314,826 |  |               |             |           |               |          |   | 178,761  |            |   |         | 2,547,419 |   |          |  | 162,719 |            |  |  | (94,212  | ) |  |  | 314,826 |  |  |  | 3,109,513 |         
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|Net income                                    |                                             |                                                                          |         |  |               |             | 508,614   |               |          |   |          |            |   |         | 508,614   |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  | 508,614   |         
|                                              | Other comprehensive income/loss, net of tax |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |  
|                                              |                                             | Unrealized losses on marketable securities                               |         |  |               |             |           |               | (3,946   | ) |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Currency translation adjustment                                          |         |  |               |             |           |               | (289,750 | ) |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Additional minimum pension liability                                     |         |  |               |             |           |               | (11,458  | ) |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Unrealized gains on cash flow hedges                                     |         |  |               |             |           |               | 712      |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              | Other comprehensive loss                    |                                                                          |         |  |               |             |           | (304,442      | )        |   |          | (304,442   | ) |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           | (304,442 | )
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|Comprehensive income                          |                                             |                                                                          |         |  |               |             | 204,172   |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |         
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|Stock-based compensation                      |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  | 29,709  |            |  |  |          |   |  |  |         |  |  |  | 29,709    |         
|Dividends                                     |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         | (182,319  | ) |          |  |         |            |  |  |          |   |  |  |         |  |  |  | (182,319  | )       
|Change in treasury stock                      |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  | (279,265 | ) |  |  |         |  |  |  | (279,265  | )       
|Convertible bonds and stock options exercised |                                             |                                                                          | 137     |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  | 4,342   |            |  |  |          |   |  |  | 137     |  |  |  | 4,479     |         
|Other                                         |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         | (2,608    | ) |          |  | (11,590 | )          |  |  |          |   |  |  |         |  |  |  | (14,198   | )       
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|December 31, 2002                             |                                             |                                                                          | 314,963 |  |               |             |           |               |          |   | (125,681 | )          |   |         | 2,871,106 |   |          |  | 185,180 |            |  |  | (373,477 | ) |  |  | 314,963 |  |  |  | 2,872,091 |         
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|Net income                                    |                                             |                                                                          |         |  |               |             | 1,077,063 |               |          |   |          |            |   |         | 1,077,063 |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  | 1,077,063 |         
|                                              | Other comprehensive income/loss, net of tax |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |  
|                                              |                                             | Unrealized gains on marketable securities                                |         |  |               |             |           |               | 19,118   |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Currency translation adjustment                                          |         |  |               |             |           |               | (148,424 | ) |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Additional minimum pension liability                                     |         |  |               |             |           |               | 16,283   |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Unrealized gains on cash flow hedges                                     |         |  |               |             |           |               | 12,729   |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Unrealized gains on STAR hedges                                          |         |  |               |             |           |               | 23,996   |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              | Other comprehensive loss                    |                                                                          |         |  |               |             |           | (76,298       | )        |   |          | (76,298    | ) |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           | (76,298  | )
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|Comprehensive income                          |                                             |                                                                          |         |  |               |             | 1,000,765 |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |         
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|Stock-based compensation                      |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  | 101,173 |            |  |  |          |   |  |  |         |  |  |  | 101,173   |         
|Dividends                                     |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         | (186,346  | ) |          |  |         |            |  |  |          |   |  |  |         |  |  |  | (186,346  | )       
|Change in treasury stock                      |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  | (88,154  | ) |  |  |         |  |  |  | (88,154   | )       
|Convertible bonds and stock options exercised |                                             |                                                                          | 451     |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  | 12,243  |            |  |  |          |   |  |  | 451     |  |  |  | 12,694    |         
|Other                                         |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         | (737      | ) |          |  | (2,041  | )          |  |  |          |   |  |  |         |  |  |  | (2,778    | )       
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|December 31, 2003                             |                                             |                                                                          | 315,414 |  |               |             |           |               |          |   | (201,979 | )          |   |         | 3,761,086 |   |          |  | 296,555 |            |  |  | (461,631 | ) |  |  | 315,414 |  |  |  | 3,709,445 |         
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|Net income                                    |                                             |                                                                          |         |  |               |             | 1,310,521 |               |          |   |          |            |   |         | 1,310,521 |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  | 1,310,521 |         
|                                              | Other comprehensive income/loss, net of tax |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |  
|                                              |                                             | Unrealized losses on marketable securities                               |         |  |               |             |           |               | (7,678   | ) |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Currency translation adjustment                                          |         |  |               |             |           |               | (70,723  | ) |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Additional minimum pension liability                                     |         |  |               |             |           |               | (7,019   | ) |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Unrealized losses on cash flow hedges                                    |         |  |               |             |           |               | (131     | ) |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Unrealized losses on STAR hedges                                         |         |  |               |             |           |               | (15,398  | ) |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              |                                             | Currency effects from intercompany long-term investment
    transactions |         |  |               |             |           |               | (2,473   | ) |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |          |   | 
|                                              | Other comprehensive loss                    |                                                                          |         |  |               |             |           | (103,422      | )        |   |          | (103,422   | ) |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           | (103,422 | )
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|Comprehensive income                          |                                             |                                                                          |         |  |               |             | 1,207,099 |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |   |  |  |         |  |  |  |           |         
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|Stock-based compensation                      |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  | 186     |            |  |  |          |   |  |  |         |  |  |  | 186       |         
|Dividends                                     |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         | (248,716  | ) |          |  |         |            |  |  |          |   |  |  |         |  |  |  | (248,716  | )       
|Change in treasury stock                      |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  | (107,535 | ) |  |  |         |  |  |  | (107,535  | )       
|Convertible bonds and stock options exercised |                                             |                                                                          | 590     |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  | 21,389  |            |  |  |          |   |  |  | 590     |  |  |  | 21,979    |         
|Other                                         |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         | 7,265     |   |          |  | 4,530   |            |  |  |          |   |  |  |         |  |  |  | 11,795    |         
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  
|December 31, 2004                             |                                             |                                                                          | 316,004 |  |               |             |           |               |          |   | (305,401 | )          |   |         | 4,830,156 |   |          |  | 322,660 |            |  |  | (569,166 | ) |  |  | 316,004 |  |  |  | 4,594,253 |         
|                                              |                                             |                                                                          |         |  |               |             |           |               |          |   |          |            |   |         |           |   |          |  |         |            |  |  |          |  



F-4



---



##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS




|                                                                                                  |  |      |     |           |         |  |            |      |  |         |           |   |         |         |            |   |  |  |           |  
|------------------------------------------------------------------------------------------------- |  | ---- | --- | --------- | ------- |  | ---------- | ---- |  | ------- | --------- | - | ------- | ------- | ---------- | - |  |  | --------- | -
|                                                                                                  |  | Note |     |           | 2004(1) |  |            | 2004 |  |         | 2003(2)   |   |         | 2002(2) |           
|                                                                                                  |  |      |     |           |         |  |            |      |  |         |           |   |         |         |           
|                                                                                                  |  |      |     | US $(000) |         |  |  (000)    |      |  |  (000) |           |   |  (000) |        
|Net income                                                                                        |  |      |     |           |         |  | 1,774,183  |      |  |         | 1,310,521 |   |         |         | 1,077,063  |   |  |  | 508,614   |  
|Minority interest                                                                                 |  |      |     |           |         |  | 6,569      |      |  |         | 4,852     |   |         |         | 6,912      |   |  |  | 6,155     |  
|Extraordinary gain                                                                                |  |      |     |           |         |  | 0          |      |  |         | 0         |   |         |         | 0          |   |  |  | (5,776    | )
|                                                                                                  |  |      |     |           |         |  |            |      |  |         |           |   |         |         |           
|Net income before minority interests                                                              |  |      |     |           |         |  | 1,780,752  |      |  |         | 1,315,373 |   |         |         | 1,083,975  |   |  |  | 508,993   |  
|Adjustments to reconcile income from operations to net cash
    provided by operating activities: |  |      |     |           |         |  |            |      |  |         |           |   |         |         |            |   |  |  |           |  
|Depreciation and amortization                                                                     |  |      |     |           |         |  | 283,850    |      |  |         | 209,669   |   |         |         | 215,517    |   |  |  | 221,214   |  
|Losses from equity investments, net                                                               |  |      | (10 | )         |         |  | 463        |      |  |         | 342       |   |         |         | 234        |   |  |  | 394,589   |  
|Gains on disposal of property, plant and equipment and
    marketable equity securities, net      |  |      |     |           |         |  | (18,256    | )    |  |         | (13,485   | ) |         |         | (3,987     | ) |  |  | (3,903    | )
|Write-downs of financial assets, net                                                              |  |      |     |           |         |  | 24,098     |      |  |         | 17,800    |   |         |         | 15,421     |   |  |  | 126,407   |  
|Impacts of hedging                                                                                |  |      |     |           |         |  | (10,056    | )    |  |         | (7,428    | ) |         |         | 2,967      |   |  |  | 58,909    |  
|Change in accounts receivable and other assets                                                    |  |      |     |           |         |  | (223,104   | )    |  |         | (164,798  | ) |         |         | 55,425     |   |  |  | 138,181   |  
|Changes in deferred stock compensation                                                            |  |      |     |           |         |  | 252        |      |  |         | 186       |   |         |         | 101,173    |   |  |  | 23,949    |  
|Change in reserves and liabilities                                                                |  |      |     |           |         |  | 588,947    |      |  |         | 435,033   |   |         |         | (36,529    | ) |  |  | 64,057    |  
|Change in deferred taxes                                                                          |  |      |     |           |         |  | 24,337     |      |  |         | 17,977    |   |         |         | 107,156    |   |  |  | 103,761   |  
|Change in other non-fixed assets                                                                  |  |      |     |           |         |  | (4,799     | )    |  |         | (3,545    | ) |         |         | 20,122     |   |  |  | 60,278    |  
|Change in deferred income                                                                         |  |      |     |           |         |  | 26,834     |      |  |         | 19,821    |   |         |         | (56,558    | ) |  |  | (15,949   | )
|                                                                                                  |  |      |     |           |         |  |            |      |  |         |           |   |         |         |           
|Net cash provided by operating activities                                                         |  |      | (28 | )         |         |  | 2,473,318  |      |  |         | 1,826,945 |   |         |         | 1,504,916  |   |  |  | 1,680,486 |  
|                                                                                                  |  |      |     |           |         |  |            |      |  |         |           |   |         |         |           
|Acquisition of minorities in subsidiaries                                                         |  |      |     |           |         |  | (227,578   | )    |  |         | (168,103  | ) |         |         | (8,971     | ) |  |  | 0         |  
|Purchase of intangible assets and property, plant and equipment                                   |  |      |     |           |         |  | (286,820   | )    |  |         | (211,863  | ) |         |         | (270,202   | ) |  |  | (308,747  | )
|Purchase of financial assets                                                                      |  |      |     |           |         |  | (57,874    | )    |  |         | (42,749   | ) |         |         | (29,308    | ) |  |  | (43,491   | )
|Change in the scope of consolidation                                                              |  |      |     |           |         |  | 0          |      |  |         | 0         |   |         |         | (2,535     | ) |  |  | 1,612     |  
|Proceeds from disposal of fixed assets                                                            |  |      |     |           |         |  | 158,036    |      |  |         | 116,735   |   |         |         | 35,275     |   |  |  | 45,003    |  
|Investment in Commerce One                                                                        |  |      |     |           |         |  | 0          |      |  |         | 0         |   |         |         | 0          |   |  |  | (1,920    | )
|Change in liquid assets (maturities greater than 90 days)
    and marketable securities           |  |      |     |           |         |  | (786,095   | )    |  |         | (580,658  | ) |         |         | (868,721   | ) |  |  | (18,844   | )
|                                                                                                  |  |      |     |           |         |  |            |      |  |         |           |   |         |         |           
|Net cash used in investing activities                                                             |  |      |     |           |         |  | (1,200,331 | )    |  |         | (886,638  | ) |         |         | (1,144,462 | ) |  |  | (326,387  | )
|                                                                                                  |  |      |     |           |         |  |            |      |  |         |           |   |         |         |           
|Dividends paid                                                                                    |  |      |     |           |         |  | (336,711   | )    |  |         | (248,716  | ) |         |         | (186,346   | ) |  |  | (182,319  | )
|Change in treasury stock                                                                          |  |      |     |           |         |  | (145,581   | )    |  |         | (107,535  | ) |         |         | (88,154    | ) |  |  | (279,265  | )
|Change in bonds, net                                                                              |  |      |     |           |         |  | 25,955     |      |  |         | 19,172    |   |         |         | 13,110     |   |  |  | 6,850     |  
|Other changes to additional paid-in capital                                                       |  |      |     |           |         |  | 6,133      |      |  |         | 4,530     |   |         |         | (2,041     | ) |  |  | (10,494   | )
|Proceeds from line of credit and long-term debt                                                   |  |      |     |           |         |  | 5,292      |      |  |         | 3,909     |   |         |         | 775        |   |  |  | 1,571     |  
|Principal payments made on line of credit and long-term debt                                      |  |      |     |           |         |  | (665       | )    |  |         | (491      | ) |         |         | (3,963     | ) |  |  | (428,896  | )
|Effect of STAR hedge                                                                              |  |      |     |           |         |  | (58,269    | )    |  |         | (43,041   | ) |         |         | (38,800    | ) |  |  | (43,331   | )
|                                                                                                  |  |      |     |           |         |  |            |      |  |         |           |   |         |         |           
|Net cash used in financing activities                                                             |  |      |     |           |         |  | (503,846   | )    |  |         | (372,172  | ) |         |         | (305,419   | ) |  |  | (935,884  | )
|                                                                                                  |  |      |     |           |         |  |            |      |  |         |           |   |         |         |           
|Effect of foreign exchange rates on cash                                                          |  |      |     |           |         |  | (53,333    | )    |  |         | (39,395   | ) |         |         | (65,694    | ) |  |  | (162,005  | )
|Net increase in cash and cash equivalents                                                         |  |      |     |           |         |  | 715,808    |      |  |         | 528,740   |   |         |         | (10,659    | ) |  |  | 256,210   |  
|Cash and cash equivalents at the beginning of the year                                            |  |      |     |           |         |  | 1,332,674  |      |  |         | 984,395   |   |         |         | 995,054    |   |  |  | 738,844   |  
|                                                                                                  |  |      |     |           |         |  |            |      |  |         |           |   |         |         |           
|Cash and cash equivalents at the end of the year                                                  |  |      | (20 | )         |         |  | 2,048,482  |      |  |         | 1,513,135 |   |         |         | 984,395    |   |  |  | 995,054   |  
|                                                                                                  |  |      |     |           |         |  |            |      |  |         |           |   |         |         |           






|    |                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The 2004 figures have been translated solely for the convenience
    of the reader at an exchange rate of
     1.00 to
    US$ 1.3538, the Noon Buying Rate certified by the Federal
    Reserve Bank of New York on December 31, 2004.
|   
|(2) | See Note 20.                                                                                                                                                                                                                            



F-5



---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A. BASIS OF PRESENTATION








 












|                  |  |        |    |  |         |  |    |       |  |  |    | 
|----------------- |  | ------ | -- |  | ------- |  | -- | ----- |  |  | -- | 
|                  |  | German |    |  | Foreign |  |    | Total | 
|                  |  |        |    |  |         |  |    |       | 
|December 31, 2003 |  |        | 21 |  |         |  | 75 |       |  |  | 96 | 
|Additions         |  |        | 0  |  |         |  | 2  |       |  |  | 2  | 
|Disposals         |  |        | 6  |  |         |  | 4  |       |  |  | 10 | 
|                  |  |        |    |  |         |  |    |       | 
|December 31, 2004 |  |        | 15 |  |         |  | 73 |       |  |  | 88 | 
|                  |  |        |    |  |         |  |    |       | 

F-6



---



##### Table of Contents













| |   |                                      
| | - | -------------------------------------
| |  | SAP Hosting AG & Co. KG, St. Leon-Rot
|
| |  | SAP Deutschland AG & Co. KG, Walldorf















F-7



---



##### Table of Contents







|                  |  |  |     |                 |  |  |                              |  |  |           |        |  |           |  |        |           |  |  |        |  |  |  |        | 
|----------------- |  |  | --- | --------------- |  |  | ---------------------------- |  |  | --------- | ------ |  | --------- |  | ------ | --------- |  |  | ------ |  |  |  | ------ | 
|                  |  |  |     | Closing rate at |  |  |                             
|                  |  |  |     | December 31,    |  |  | Annual average exchange rate | 
|                  |  |  |     |                 |  |  |                              | 
|                  |  |  |     | to  1.00       |  |  | to  1.00                    |  |  | to  1.00 |        |  | to  1.00 |  |        | to  1.00 | 
|                  |  |  |     | 2004            |  |  | 2003                         |  |  | 2004      |        |  | 2003      |  |        | 2002      | 
|                  |  |  |     |                 |  |  |                              |  |  |           |        |  |           |  |        |           | 
|U.S. dollar       |  |  | US$ |                 |  |  | 1.3621                       |  |  |           | 1.2630 |  |           |  | 1.2490 |           |  |  | 1.1394 |  |  |  | 0.9499 | 
|Japanese yen      |  |  | JPY |                 |  |  | 139.65                       |  |  |           | 135.05 |  |           |  | 134.73 |           |  |  | 130.98 |  |  |  | 118.83 | 
|British pound     |  |  | GBP |                 |  |  | 0.7051                       |  |  |           | 0.7048 |  |           |  | 0.6795 |           |  |  | 0.6936 |  |  |  | 0.6305 | 
|Canadian dollar   |  |  | CAD |                 |  |  | 1.6416                       |  |  |           | 1.6234 |  |           |  | 1.6163 |           |  |  | 1.5835 |  |  |  | 1.4906 | 
|Australian dollar |  |  | AUD |                 |  |  | 1.7459                       |  |  |           | 1.6802 |  |           |  | 1.7003 |           |  |  | 1.7307 |  |  |  | 1.7425 | 
|Swiss franc       |  |  | CHF |                 |  |  | 1.5429                       |  |  |           | 1.5579 |  |           |  | 1.5421 |           |  |  | 1.5226 |  |  |  | 1.4672 | 











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





F-8



---



##### Table of Contents





















F-9



---



##### Table of Contents































F-10



---



##### Table of Contents







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

















F-11



---



##### Table of Contents





























F-12



---



##### Table of Contents































F-13



---



##### Table of Contents





|                                                                                   |  |      |           |  |      |  |           |      |  |  |         | 
|---------------------------------------------------------------------------------- |  | ---- | --------- |  | ---- |  | --------- | ---- |  |  | ------- | 
|                                                                                   |  | 2004 |           |  | 2003 |  |           | 2002 | 
|                                                                                   |  |      |           |  |      |  |           |      | 
|Net income (in thousands of
    )                                                 |  |      |           |  |      |  |           |      |  |  |         | 
|As reported                                                                        |  |      | 1,310,521 |  |      |  | 1,077,063 |      |  |  | 508,614 | 
|Add: Expense for stock-based compensation, net of tax according
    to APB 25      |  |      | 23,445    |  |      |  | 85,700    |      |  |  | 5,600   | 
|Deduct: Expense for stock-based compensation, net of tax
    according to SFAS 123 |  |      | 181,323   |  |      |  | 205,109   |      |  |  | 138,203 | 
|                                                                                   |  |      |           |  |      |  |           |      | 
|Pro-forma                                                                          |  |      | 1,152,643 |  |      |  | 957,654   |      |  |  | 376,011 | 
|                                                                                   |  |      |           |  |      |  |           |      | 
|Earnings per share (in
    )                                                      |  |      |           |  |      |  |           |      |  |  |         | 
|Basic  as reported                                                                |  |      | 4.22      |  |      |  | 3.47      |      |  |  | 1.62    | 
|Diluted  as reported                                                              |  |      | 4.20      |  |      |  | 3.46      |      |  |  | 1.62    | 
|Basic  pro-forma                                                                  |  |      | 3.71      |  |      |  | 3.08      |      |  |  | 1.20    | 
|Diluted  pro-forma                                                                |  |      | 3.70      |  |      |  | 3.08      |      |  |  | 1.20    | 













F-14



---



##### Table of Contents





















F-15



---



##### Table of Contents





  










      






|                                        |  |           |      |                  |                 |  |                  | 
|--------------------------------------- |  | --------- | ---- | ---------------- | --------------- |  | ---------------- | 
|                                        |  |           |      | Estimated useful |                
|                                        |  |  million |      |                  | life (in years) | 
|                                        |  |           |      |                  |                 | 
|Customer contracts                      |  |           | 9.9  |                  |                 |  | 0.5 - 6.5        | 
|Intellectual Property                   |  |           | 12.4 |                  |                 |  | 3 - 5            | 
|In-process research and development     |  |           | 0.5  |                  |                 |  | expensed at the  | 
|                                        |  |           |      |                  |                 |  | acquisition date | 
|                                        |  |           |      |                  |                 | 
|Identifiable intangible assets acquired |  |           | 22.8 |                  |                 |  |                  | 
|                                        |  |           |      |                  |                 | 

  


F-16



---



##### Table of Contents






B. NOTES TO THE CONSOLIDATED STATEMENTS OF INCOME








  






|                                            |  |         |         |   |         |  |         |         |  |  |         |  
|------------------------------------------- |  | ------- | ------- | - | ------- |  | ------- | ------- |  |  | ------- | -
|                                            |  | 2004    |         |   | 2003    |  |         | 2002    | 
|                                            |  |         |         |   |         |  |         |         | 
|                                            |  |  (000) |         |   |  (000) |  |         |  (000) | 
|Restructuring costs  severance obligations |  |         | (5,796  | ) |         |  | (3,384  | )       |  |  | (33,148 | )
|Bad debt expense                            |  |         | (1,791  | ) |         |  | 0       |         |  |  | 0       |  
|Expenses to obtain rental income            |  |         | (1,517  | ) |         |  | (3,297  | )       |  |  | (4,989  | )
|Restructuring costs  unused lease space    |  |         | (1,210  | ) |         |  | (17,164 | )       |  |  | (12,960 | )
|Other                                       |  |         | (2,834  | ) |         |  | (835    | )       |  |  | (1,536  | )
|                                            |  |         |         |   |         |  |         |         | 
|Other operating expense                     |  |         | (13,148 | ) |         |  | (24,680 | )       |  |  | (52,633 | )
|                                            |  |         |         |   |         |  |         |         | 
|Rental income                               |  |         | 7,135   |   |         |  | 9,870   |         |  |  | 9,228   |  
|Receipt of insurance proceeds               |  |         | 4,318   |   |         |  | 2,002   |         |  |  | 2,246   |  
|Reductions of bad debt allowance            |  |         | 0       |   |         |  | 5,368   |         |  |  | 5,288   |  
|Other                                       |  |         | 3,457   |   |         |  | 944     |         |  |  | 763     |  
|                                            |  |         |         |   |         |  |         |         | 
|Other operating income                      |  |         | 14,910  |   |         |  | 18,184  |         |  |  | 17,525  |  
|                                            |  |         |         |   |         |  |         |         | 
|                                            |  |         | 1,762   |   |         |  | (6,496  | )       |  |  | (35,108 | )
|                                            |  |         |         |   |         |  |         |         | 

  




F-17



---



##### Table of Contents











|                                            |  |         |         |  |         |  |         |         |  |  |         | 
|------------------------------------------- |  | ------- | ------- |  | ------- |  | ------- | ------- |  |  | ------- | 
|                                            |  | 2004    |         |  | 2003    |  |         | 2002    | 
|                                            |  |         |         |  |         |  |         |         | 
|                                            |  |  (000) |         |  |  (000) |  |         |  (000) | 
|Raw materials and supplies, purchased goods |  |         | 27,124  |  |         |  | 26,052  |         |  |  | 23,515  | 
|Purchased services                          |  |         | 722,727 |  |         |  | 643,815 |         |  |  | 824,752 | 
|                                            |  |         |         |  |         |  |         |         | 
|                                            |  |         | 749,851 |  |         |  | 669,867 |         |  |  | 848,267 | 
|                                            |  |         |         |  |         |  |         |         | 





|                |  |         |           |  |         |  |           |         |  |  |           | 
|--------------- |  | ------- | --------- |  | ------- |  | --------- | ------- |  |  | --------- | 
|                |  | 2004    |           |  | 2003    |  |           | 2002    | 
|                |  |         |           |  |         |  |           |         | 
|                |  |  (000) |           |  |  (000) |  |           |  (000) | 
|Salaries        |  |         | 2,513,791 |  |         |  | 2,479,416 |         |  |  | 2,519,054 | 
|Social costs    |  |         | 350,052   |  |         |  | 346,579   |         |  |  | 345,798   | 
|Pension expense |  |         | 104,175   |  |         |  | 110,595   |         |  |  | 100,397   | 
|                |  |         |           |  |         |  |           |         | 
|                |  |         | 2,968,018 |  |         |  | 2,936,590 |         |  |  | 2,965,249 | 
|                |  |         |           |  |         |  |           |         | 





|                                   |  |      |        |  |      |  |        |      |  |  |        | 
|---------------------------------- |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                   |  | 2004 |        |  | 2003 |  |        | 2002 | 
|                                   |  |      |        |  |      |  |        |      | 
|Employees in full-time equivalents |  |      | 31,224 |  |      |  | 29,098 |      |  |  | 29,054 | 



F-18



---



##### Table of Contents







|                                   |  |         |          |   |         |  |          |         |  |  |          |  
|---------------------------------- |  | ------- | -------- | - | ------- |  | -------- | ------- |  |  | -------- | -
|                                   |  | 2004    |          |   | 2003    |  |          | 2002    | 
|                                   |  |         |          |   |         |  |          |         | 
|                                   |  |  (000) |          |   |  (000) |  |          |  (000) | 
|Foreign currency losses            |  |         | (140,881 | ) |         |  | (255,749 | )       |  |  | (201,097 | )
|Losses on disposal of fixed assets |  |         | (6,696   | ) |         |  | (3,474   | )       |  |  | (3,850   | )
|Other                              |  |         | (8,830   | ) |         |  | (6,585   | )       |  |  | (7,552   | )
|                                   |  |         |          |   |         |  |          |         | 
|Other non-operating expenses       |  |         | (156,407 | ) |         |  | (265,808 | )       |  |  | (212,499 | )
|                                   |  |         |          |   |         |  |          |         | 
|Foreign currency gains             |  |         | 152,831  |   |         |  | 284,288  |         |  |  | 236,401  |  
|Gains on disposal of fixed assets  |  |         | 6,147    |   |         |  | 5,237    |         |  |  | 4,696    |  
|Other                              |  |         | 10,703   |   |         |  | 12,592   |         |  |  | 8,721    |  
|                                   |  |         |          |   |         |  |          |         | 
|Other non-operating income         |  |         | 169,681  |   |         |  | 302,117  |         |  |  | 249,818  |  
|                                   |  |         |          |   |         |  |          |         | 
|                                   |  |         | 13,274   |   |         |  | 36,309   |         |  |  | 37,319   |  
|                                   |  |         |          |   |         |  |          |         | 





|                                                                |  |         |         |   |         |  |         |         |  |  |          |  
|--------------------------------------------------------------- |  | ------- | ------- | - | ------- |  | ------- | ------- |  |  | -------- | -
|                                                                |  | 2004    |         |   | 2003    |  |         | 2002    | 
|                                                                |  |         |         |   |         |  |         |         | 
|                                                                |  |  (000) |         |   |  (000) |  |         |  (000) | 
|Interest and similar income                                     |  |         | 64,393  |   |         |  | 47,436  |         |  |  | 38,311   |  
|Interest and similar expenses                                   |  |         | (8,122  | ) |         |  | (3,999  | )       |  |  | (13,524  | )
|                                                                |  |         |         |   |         |  |         |         | 
|Interest income, net                                            |  |         | 56,271  |   |         |  | 43,437  |         |  |  | 24,787   |  
|                                                                |  |         |         |   |         |  |         |         | 
|Gain/loss from investments, net                                 |  |         | 1,842   |   |         |  | 22      |         |  |  | (394,039 | )
|                                                                |  |         |         |   |         |  |         |         | 
| thereof from associated companies                             |  |         | (342    | ) |         |  | (234    | )       |  |  | (394,589 | )
|Income from marketable securities and loans of financial assets |  |         | 2,352   |   |         |  | 2,636   |         |  |  | 2,647    |  
|Write-down of financial assets                                  |  |         | (20,403 | ) |         |  | (22,663 | )       |  |  | (133,098 | )
|Gains on sales of equity securities                             |  |         | 14,034  |   |         |  | 2,224   |         |  |  | 3,057    |  
|Unrealized losses on STAR hedge                                 |  |         | (14,558 | ) |         |  | (15,213 | )       |  |  | (58,909  | )
|Other net                                                       |  |         | 1,449   |   |         |  | 5,844   |         |  |  | 256      |  
|                                                                |  |         |         |   |         |  |         |         | 
|Other financial gain/loss from investments, net                 |  |         | (17,126 | ) |         |  | (27,172 | )       |  |  | (186,047 | )
|                                                                |  |         |         |   |         |  |         |         | 
|                                                                |  |         | 40,987  |   |         |  | 16,287  |         |  |  | (555,299 | )
|                                                                |  |         |         |   |         |  |         |         | 



 


F-19



---



##### Table of Contents







|                         |  |         |         |   |         |  |         |         |  |  |         | 
|------------------------ |  | ------- | ------- | - | ------- |  | ------- | ------- |  |  | ------- | 
|                         |  | 2004    |         |   | 2003    |  |         | 2002    | 
|                         |  |         |         |   |         |  |         |         | 
|                         |  |  (000) |         |   |  (000) |  |         |  (000) | 
|Current taxes  Germany  |  |         | 470,473 |   |         |  | 382,786 |         |  |  | 302,533 | 
|Current taxes  Foreign  |  |         | 267,591 |   |         |  | 217,232 |         |  |  | 221,452 | 
|                         |  |         |         |   |         |  |         |         | 
|                         |  |         | 738,064 |   |         |  | 600,018 |         |  |  | 523,985 | 
|Deferred taxes  Germany |  |         | 22,120  |   |         |  | 90,925  |         |  |  | 56,155  | 
|Deferred taxes  Foreign |  |         | (2,915  | ) |         |  | 1,697   |         |  |  | 18,565  | 
|                         |  |         |         |   |         |  |         |         | 
|                         |  |         | 19,205  |   |         |  | 92,622  |         |  |  | 74,720  | 
|                         |  |         |         |   |         |  |         |         | 
|Income tax expense       |  |         | 757,269 |   |         |  | 692,640 |         |  |  | 598,705 | 
|                         |  |         |         |   |         |  |         |         | 







|        |  |         |           |  |         |  |           |         |  |  |           | 
|------- |  | ------- | --------- |  | ------- |  | --------- | ------- |  |  | --------- | 
|        |  | 2004    |           |  | 2003    |  |           | 2002    | 
|        |  |         |           |  |         |  |           |         | 
|        |  |  (000) |           |  |  (000) |  |           |  (000) | 
|Germany |  |         | 1,352,200 |  |         |  | 1,179,891 |         |  |  | 450,864   | 
|Foreign |  |         | 720,442   |  |         |  | 596,724   |         |  |  | 656,834   | 
|        |  |         |           |  |         |  |           |         | 
|        |  |         | 2,072,642 |  |         |  | 1,776,615 |         |  |  | 1,107,698 | 
|        |  |         |           |  |         |  |           |         | 



F-20



---



##### Table of Contents



|                                                                          |  |         |           |   |         |  |           |         |  |  |           |  
|------------------------------------------------------------------------- |  | ------- | --------- | - | ------- |  | --------- | ------- |  |  | --------- | -
|                                                                          |  | 2004    |           |   | 2003    |  |           | 2002    | 
|                                                                          |  |         |           |   |         |  |           |         | 
|                                                                          |  |  (000) |           |   |  (000) |  |           |  (000) | 
|Income before income taxes                                                |  |         | 2,072,642 |   |         |  | 1,776,615 |         |  |  | 1,107,698 |  
|Expected income taxes 36.20% in 2004 (37.71% in 2003,
    36.39% in 2002) |  |         | 750,296   |   |         |  | 669,961   |         |  |  | 403,091   |  
|Foreign tax rate differential                                             |  |         | (7,800    | ) |         |  | (14,735   | )       |  |  | (4,316    | )
|Tax on non-deductible expenses                                            |  |         | 12,631    |   |         |  | 28,564    |         |  |  | 11,450    |  
|Tax effect on losses                                                      |  |         | (471      | ) |         |  | (1,507    | )       |  |  | (130      | )
|Tax effect on equity investments and securities                           |  |         | (7,795    | ) |         |  | 7,110     |         |  |  | 177,639   |  
|Other                                                                     |  |         | 10,408    |   |         |  | 3,247     |         |  |  | 10,971    |  
|                                                                          |  |         |           |   |         |  |           |         | 
|Actual income tax expense                                                 |  |         | 757,269   |   |         |  | 692,640   |         |  |  | 598,705   |  
|                                                                          |  |         |           |   |         |  |           |         | 



|                                    |  |         |         |   |         |  |         |  
|----------------------------------- |  | ------- | ------- | - | ------- |  | ------- | -
|                                    |  | 2004    |         |   | 2003    | 
|                                    |  |         |         |   |         | 
|                                    |  |  (000) |         |   |  (000) | 
|Deferred tax assets                 |  |         |         |   |         |  |         |  
|Intangibles                         |  |         | 34,181  |   |         |  | 90,286  |  
|Property, plant, and equipment      |  |         | 3,278   |   |         |  | (3,159  | )
|Financial assets                    |  |         | 7,206   |   |         |  | 14,125  |  
|Accounts receivable                 |  |         | 4,099   |   |         |  | 7,761   |  
|Net operating loss carryforwards    |  |         | 11,993  |   |         |  | 17,914  |  
|Pension provisions                  |  |         | 18,332  |   |         |  | 12,337  |  
|Stock-based compensation            |  |         | 8,371   |   |         |  | 12,099  |  
|Other liabilities                   |  |         | 91,422  |   |         |  | 78,537  |  
|Deferred income                     |  |         | 28,106  |   |         |  | 35,942  |  
|Other                               |  |         | 61      |   |         |  | 115     |  
|                                    |  |         |         |   |         | 
|                                    |  |         | 207,049 |   |         |  | 265,957 |  
|                                    |  |         |         |   |         | 
|Less: Valuation allowance           |  |         | (1,448  | ) |         |  | (1,504  | )
|                                    |  |         |         |   |         | 
|Deferred tax assets                 |  |         | 205,601 |   |         |  | 264,453 |  
|                                    |  |         |         |   |         | 
|Deferred tax liabilities            |  |         |         |   |         |  |         |  
|Intangibles                         |  |         | 0       |   |         |  | 1,096   |  
|Property plant, and equipment       |  |         | 7,718   |   |         |  | 2,119   |  
|Financial assets                    |  |         | 8,944   |   |         |  | 21,396  |  
|Accounts receivable                 |  |         | 44,204  |   |         |  | 86,490  |  
|Other provisions                    |  |         | 3,130   |   |         |  | 320     |  
|Deferred income                     |  |         | 0       |   |         |  | 9       |  
|Other                               |  |         | 206     |   |         |  | 550     |  
|                                    |  |         |         |   |         | 
|Deferred tax liabilities            |  |         | 64,202  |   |         |  | 111,980 |  
|                                    |  |         |         |   |         | 
|Net deferred tax assets/liabilities |  |         | 141,399 |   |         |  | 152,473 |  
|                                    |  |         |         |   |         | 

F-21



---



##### Table of Contents





|                         |  |         |         |  |         |  |         | 
|------------------------ |  | ------- | ------- |  | ------- |  | ------- | 
|                         |  | 2004    |         |  | 2003    | 
|                         |  |         |         |  |         | 
|                         |  |  (000) |         |  |  (000) | 
|Deferred tax assets      |  |         |         |  |         |  |         | 
|Short-term               |  |         | 96,132  |  |         |  | 84,873  | 
|Long-term                |  |         | 109,469 |  |         |  | 179,580 | 
|                         |  |         |         |  |         | 
|                         |  |         | 205,601 |  |         |  | 264,453 | 
|                         |  |         |         |  |         | 
|Deferred tax liabilities |  |         |         |  |         |  |         | 
|Short-term               |  |         | 47,557  |  |         |  | 94,868  | 
|Long-term                |  |         | 16,645  |  |         |  | 17,112  | 
|                         |  |         |         |  |         | 
|                         |  |         | 64,202  |  |         |  | 111,980 | 
|                         |  |         |         |  |         | 

     


 


 


     




|                                              |  |         |         |   |         |  |         |         |  |  |         |  
|--------------------------------------------- |  | ------- | ------- | - | ------- |  | ------- | ------- |  |  | ------- | -
|                                              |  | 2004    |         |   | 2003    |  |         | 2002    | 
|                                              |  |         |         |   |         |  |         |         | 
|                                              |  |  (000) |         |   |  (000) |  |         |  (000) | 
|Income tax expense from continuous operations |  |         | 757,269 |   |         |  | 692,640 |         |  |  | 598,705 |  
|Tax on Other comprehensive income/loss        |  |         | (11,262 | ) |         |  | 31,750  |         |  |  | (5,486  | )
|                                              |  |         |         |   |         |  |         |         | 
|                                              |  |         | 746,007 |   |         |  | 724,390 |         |  |  | 593,219 |  
|                                              |  |         |         |   |         |  |         |         | 



F-22



---



##### Table of Contents











|                                             |                                              |                                     |           |      |      |  |           |      |  |  |         |      | 
|-------------------------------------------- | -------------------------------------------- | ----------------------------------- | --------- | ---- | ---- |  | --------- | ---- |  |  | ------- | ---- | 
|                                             |                                              | 2004                                |           |      | 2003 |  |           | 2002 | 
|                                             |                                              |                                     |           |      |      |  |           |      | 
|                                             |                                              | In thousands, except per share data |          
|Net income before extraordinary gain
    () |                                              |                                     | 1,310,521 |      |      |  | 1,077,063 |      |  |  | 502,838 |     
|Extraordinary gain, net of tax
    ()       |                                              |                                     | 0         |      |      |  | 0         |      |  |  | 5,776   |     
|                                             |                                              |                                     |           |      |      |  |           |      | 
|Net income
    ()                           |                                              |                                     | 1,310,521 |      |      |  | 1,077,063 |      |  |  | 508,614 |     
|                                             |                                              |                                     |           |      |      |  |           |      | 
|Weighted average shares  basic              |                                              |                                     | 310,802   |      |      |  | 310,781   |      |  |  | 313,016 |     
|Stock options                                |                                              |                                     | 1,354     |      |      |  | 628       |      |  |  | 964     |     
|                                             |                                              |                                     |           |      |      |  |           |      | 
|Weighted average shares  diluted            |                                              |                                     | 312,156   |      |      |  | 311,409   |      |  |  | 313,980 |     
|                                             |                                              |                                     |           |      |      |  |           |      | 
|Earnings per share  basic
    ()           |                                              |                                     |           |      |      |  |           |      |  |  |         |     
|                                             | Net income before extraordinary gain
    () |                                     |           | 4.22 |      |  |           | 3.47 |  |  |         | 1.60 | 
|                                             | Extraordinary gain, net of tax
    ()       |                                     |           | 0.00 |      |  |           | 0.00 |  |  |         | 0.02 | 
|                                             |                                              |                                     |           |      |      |  |           |      | 
|                                             | Net income
    ()                           |                                     |           | 4.22 |      |  |           | 3.47 |  |  |         | 1.62 | 
|                                             |                                              |                                     |           |      |      |  |           |      | 
|Earnings per share  diluted
    ()         |                                              |                                     |           |      |      |  |           |      |  |  |         |     
|                                             | Net income before extraordinary gain
    () |                                     |           | 4.20 |      |  |           | 3.46 |  |  |         | 1.60 | 
|                                             | Extraordinary gain, net of tax
    ()       |                                     |           | 0.00 |      |  |           | 0.00 |  |  |         | 0.02 | 
|                                             |                                              |                                     |           |      |      |  |           |      | 
|                                             | Net income
    ()                           |                                     |           | 4.20 |      |  |           | 3.46 |  |  |         | 1.62 | 
|                                             |                                              |                                     |           |      |      |  |           |      | 

F-23



---



##### Table of Contents



C. NOTES TO THE CONSOLIDATED BALANCE SHEETS




|                          |  |                       |         |   |          |  |         |       |  |  |         |  
|------------------------- |  | --------------------- | ------- | - | -------- |  | ------- | ----- |  |  | ------- | -
|                          |  | Licenses, trademarks, |         |   |          |  |        
|                          |  | similar rights        |         |   |          |  |        
|                          |  | and other             |         |   |          |  |        
|                          |  | intangibles           |         |   | Goodwill |  |         | Total | 
|                          |  |                       |         |   |          |  |         |       | 
|                          |  |  (000)               |        
|Purchase cost             |  |                       |         |   |          |  |         |       |  |  |         |  
|1/1/04                    |  |                       | 232,645 |   |          |  | 444,880 |       |  |  | 677,525 |  
|Exchange rate differences |  |                       | (7,229  | ) |          |  | (19,512 | )     |  |  | (26,741 | )
|Additions                 |  |                       | 39,021  |   |          |  | 126,935 |       |  |  | 165,956 |  
|Retirements/disposals     |  |                       | (2,426  | ) |          |  | 0       |       |  |  | (2,426  | )
|Reclassifications         |  |                       | 0       |   |          |  | 0       |       |  |  | 0       |  
|                          |  |                       |         |   |          |  |         |       | 
|12/31/04                  |  |                       | 262,011 |   |          |  | 552,303 |       |  |  | 814,314 |  
|                          |  |                       |         |   |          |  |         |       | 
|Accumulated amortization  |  |                       |         |   |          |  |         |       |  |  |         |  
|1/1/04                    |  |                       | 156,430 |   |          |  | 99,759  |       |  |  | 256,189 |  
|Exchange rate differences |  |                       | (5,775  | ) |          |  | (4,163  | )     |  |  | (9,938  | )
|Additions                 |  |                       | 45,203  |   |          |  | 0       |       |  |  | 45,203  |  
|Retirements/disposals     |  |                       | (2,033  | ) |          |  | 0       |       |  |  | (2,033  | )
|Reclassifications         |  |                       | 0       |   |          |  | 0       |       |  |  | 0       |  
|                          |  |                       |         |   |          |  |         |       | 
|12/31/04                  |  |                       | 193,825 |   |          |  | 95,596  |       |  |  | 289,421 |  
|                          |  |                       |         |   |          |  |         |       | 
|Book value 12/31/04       |  |                       | 68,186  |   |          |  | 456,707 |       |  |  | 524,893 |  
|                          |  |                       |         |   |          |  |         |       | 
|Book value 12/31/03       |  |                       | 76,215  |   |          |  | 345,121 |       |  |  | 421,336 |  
|                          |  |                       |         |   |          |  |         |       | 






|                                             |  |                                                   |         |  |            |  |         |       |                       |                    |                   |  |  |  |         | 
|-------------------------------------------- |  | ------------------------------------------------- | ------- |  | ---------- |  | ------- | ----- | --------------------- | ------------------ | ----------------- |  |  |  | ------- | 
|                                             |  | Software and                                      |         |  |            |  |         |       | Licenses, trademarks, |                   
|                                             |  | database                                          |         |  | Acquired   |  |         |       |                       | similar rights and |                  
|                                             |  | licenses                                          |         |  | technology |  |         | Other |                       |                    | other intangibles | 
|                                             |  |                                                   |         |  |            |  |         |       |                       |                    |                   | 
|                                             |  | in thousands of , except for amortization period |        
|December 31, 2004                            |  |                                                   |         |  |            |  |         |       |                       |                    |                   |  |  |  |         | 
|Purchase cost                                |  |                                                   | 139,533 |  |            |  | 110,036 |       |                       |                    | 12,442            |  |  |  | 262,011 | 
|Accumulated amortization                     |  |                                                   | 112,264 |  |            |  | 73,350  |       |                       |                    | 8,211             |  |  |  | 193,825 | 
|thereof additions in 2004                    |  |                                                   |         |  |            |  |         |       |                       |                    |                   |  |  |  |         | 
|Purchase cost                                |  |                                                   | 16,699  |  |            |  | 12,402  |       |                       |                    | 9,920             |  |  |  | 39,021  | 
|Weighed average amortization period in years |  |                                                   | 3.0     |  |            |  | 4.8     |       |                       |                    | 3.0               |  |  |  |        | 
|December 31, 2003                            |  |                                                   |         |  |            |  |         |       |                       |                    |                   |  |  |  |         | 
|Purchase cost                                |  |                                                   | 125,056 |  |            |  | 96,422  |       |                       |                    | 11,167            |  |  |  | 232,645 | 
|Accumulated amortization                     |  |                                                   | 98,360  |  |            |  | 53,651  |       |                       |                    | 4,419             |  |  |  | 156,430 | 



F-24



---



##### Table of Contents







|           |  |         |        | 
|---------- |  | ------- | ------ | 
|           |  |  (000) |       
|           |  |         |       
|2005       |  |         | 31,591 | 
|2006       |  |         | 17,897 | 
|2007       |  |         | 7,111  | 
|2008       |  |         | 3,480  | 
|2009       |  |         | 2,341  | 
|thereafter |  |         | 5,741  | 







|           |  |            |         |              |         |  |         |            |              |  |         |  |  |  |        | 
|---------- |  | ---------- | ------- | ------------ | ------- |  | ------- | ---------- | ------------ |  | ------- |  |  |  | ------ | 
|           |  |            |         | thereof      |         |  |         |            | thereof      | 
|           |  |            |         | additions in |         |  |         |            | additions in | 
|           |  | 31/12/2004 |         |              | 2004    |  |         | 31/12/2003 |              |  | 2003    | 
|           |  |            |         |              |         |  |         |            |              |  |         | 
|           |  |  (000)    |         |              |  (000) |  |         |  (000)    |              |  |  (000) | 
|Product    |  |            | 198,046 |              |         |  | 1,745   |            |              |  | 215,062 |  |  |  | 13,467 | 
|Consulting |  |            | 252,675 |              |         |  | 125,190 |            |              |  | 119,921 |  |  |  | 36,441 | 
|Training   |  |            | 5,986   |              |         |  | 0       |            |              |  | 10,138  |  |  |  | 0      | 
|           |  |            |         |              |         |  |         |            |              |  |         | 
|Total      |  |            | 456,707 |              |         |  | 126,935 |            |              |  | 345,121 |  |  |  | 49,908 | 
|           |  |            |         |              |         |  |         |            |              |  |         | 



F-25



---



##### Table of Contents





|                          |  |                      |         |   |                 |  |          |              |  |  |         |   |  |  |           |  
|------------------------- |  | -------------------- | ------- | - | --------------- |  | -------- | ------------ |  |  | ------- | - |  |  | --------- | -
|                          |  | Land, leasehold      |         |   |                 |  |          |              | 
|                          |  | improvements, and    |         |   |                 |  | Payments |              |  | 
|                          |  | buildings, including |         |   | Other property, |  |          | and con-     |  |  |        
|                          |  | buildings on third-  |         |   | plant, and      |  |          | struction in |  |  |        
|                          |  | party land           |         |   | equipment       |  |          | progress     |  |  | Total   |  
|                          |  |                      |         |   |                 |  |          |              |  |  |         |  
|                          |  |  (000)              |         |   |  (000)         |  |          |  (000)      |  |  |  (000) |  
|Purchase cost             |  |                      |         |   |                 |  |          |              |  |  |         |   |  |  |           |  
|1/1/04                    |  |                      | 928,845 |   |                 |  | 886,987  |              |  |  | 12,660  |   |  |  | 1,828,492 |  
|Exchange rate differences |  |                      | (11,819 | ) |                 |  | (7,199   | )            |  |  | (82     | ) |  |  | (19,100   | )
|Additions                 |  |                      | 18,510  |   |                 |  | 152,683  |              |  |  | 795     |   |  |  | 171,988   |  
|Retirements/disposals     |  |                      | (21,836 | ) |                 |  | (98,230  | )            |  |  | 0       |   |  |  | (120,066  | )
|Reclassifications         |  |                      | 5,207   |   |                 |  | 4,289    |              |  |  | (8,858  | ) |  |  | 638       |  
|                          |  |                      |         |   |                 |  |          |              |  |  |         |  
|12/31/04                  |  |                      | 918,907 |   |                 |  | 938,530  |              |  |  | 4,515   |   |  |  | 1,861,952 |  
|                          |  |                      |         |   |                 |  |          |              |  |  |         |  
|Accumulated depreciation  |  |                      |         |   |                 |  |          |              |  |  |         |   |  |  |           |  
|1/1/04                    |  |                      | 225,004 |   |                 |  | 583,831  |              |  |  | 0       |   |  |  | 808,835   |  
|Exchange rate differences |  |                      | (3,515  | ) |                 |  | (6,374   | )            |  |  | 0       |   |  |  | (9,889    | )
|Additions                 |  |                      | 42,587  |   |                 |  | 121,879  |              |  |  | 0       |   |  |  | 164,466   |  
|Retirements/disposals     |  |                      | (11,007 | ) |                 |  | (90,174  | )            |  |  | 0       |   |  |  | (101,181  | )
|Reclassifications         |  |                      | 75      |   |                 |  | 563      |              |  |  | 0       |   |  |  | 638       |  
|                          |  |                      |         |   |                 |  |          |              |  |  |         |  
|12/31/04                  |  |                      | 253,144 |   |                 |  | 609,725  |              |  |  | 0       |   |  |  | 862,869   |  
|                          |  |                      |         |   |                 |  |          |              |  |  |         |  
|Book value 12/31/04       |  |                      | 665,763 |   |                 |  | 328,805  |              |  |  | 4,515   |   |  |  | 999,083   |  
|                          |  |                      |         |   |                 |  |          |              |  |  |         |  
|Book value 12/31/03       |  |                      | 703,841 |   |                 |  | 303,156  |              |  |  | 12,660  |   |  |  | 1,019,657 |  
|                          |  |                      |         |   |                 |  |          |              |  |  |         |  







|                                   |                                                 |              |         |        |                  |  |         |         |  |  |         |   |  |         |       |   |         |  |         |        |  |  |         |        | 
|---------------------------------- | ----------------------------------------------- | ------------ | ------- | ------ | ---------------- |  | ------- | ------- |  |  | ------- | - |  | ------- | ----- | - | ------- |  | ------- | ------ |  |  | ------- | ------ | 
|                                   |                                                 | Fixed Assets |         |        | Non-fixed Assets |  |         | Total   | 
|                                   |                                                 |              |         |        |                  |  |         |         | 
|                                   |                                                 | 2004         |         |        | 2003             |  |         | 2004    |  |  | 2003    |   |  | 2004    |       |   | 2003    | 
|                                   |                                                 |              |         |        |                  |  |         |         |  |  |         |   |  |         |       |   |         | 
|                                   |                                                 |  (000)      |         |        |  (000)          |  |         |  (000) |  |  |  (000) |   |  |  (000) |       |   |  (000) | 
|Equity method investments          |                                                 |              | 1,595   |        |                  |  | 1,799   |         |  |  | 0       |   |  |         | 0     |   |         |  | 1,595   |        |  |  | 1,799   |       
|                                   | Marketable equity securities available-for-sale |              |         | 17,328 |                  |  |         | 24,457  |  |  |         | 0 |  |         |       | 0 |         |  |         | 17,328 |  |  |         | 24,457 | 
|                                   | Equity securities at cost                       |              |         | 25,924 |                  |  |         | 26,841  |  |  |         | 0 |  |         |       | 0 |         |  |         | 25,924 |  |  |         | 26,841 | 
|Equity securities                  |                                                 |              | 43,252  |        |                  |  | 51,298  |         |  |  | 0       |   |  |         | 0     |   |         |  | 43,252  |        |  |  | 51,298  |       
|Debt securities available-for-sale |                                                 |              | 231     |        |                  |  | 53,023  |         |  |  | 242     |   |  |         | 3     |   |         |  | 473     |        |  |  | 53,026  |       
|Investment fund securities         |                                                 |              | 1,984   |        |                  |  | 654     |         |  |  | 9,922   |   |  |         | 1,349 |   |         |  | 11,906  |        |  |  | 2,003   |       
|Loans                              |                                                 |              | 53,320  |        |                  |  | 61,214  |         |  |  | 0       |   |  |         | 0     |   |         |  | 53,320  |        |  |  | 61,214  |       
|                                   |                                                 |              |         |        |                  |  |         |         |  |  |         |   |  |         |       |   |         | 
|Total                              |                                                 |              | 100,382 |        |                  |  | 167,988 |         |  |  | 10,164  |   |  |         | 1,352 |   |         |  | 110,546 |        |  |  | 169,340 |       
|                                   |                                                 |              |         |        |                  |  |         |         |  |  |         |   |  |         |       |   |         | 

     


F-26



---



##### Table of Contents





    


|                             |  |           |          |  
|---------------------------- |  | --------- | -------- | -
|                             |  | 2002      |         
|                             |  |           |         
|                             |  | US$ (000) |         
|Net revenues                 |  |           | 105,529  |  
|Loss from operations         |  |           | (594,216 | )
|Net loss                     |  |           | (589,836 | )
|Current assets               |  |           | 125,189  |  
|Non-current assets           |  |           | 34,233   |  
|                             |  |           |         
|Total assets                 |  |           | 159,422  |  
|                             |  |           |         
|Current liabilities          |  |           | 64,781   |  
|Non-current liabilities      |  |           | 47,151   |  
|Shareholders equity         |  |           | 47,490   |  
|                             |  |           |         
|Total liabilities and equity |  |           | 159,422  |  
|                             |  |           |         

F-27



---



##### Table of Contents







|                                                  |  |                       |        |  |               |                                        |        |               |  |  |            |  |  |         |     |  |            |  |   |         |  |  |            |  |  |  |       |  |  |  |     | 
|------------------------------------------------- |  | --------------------- | ------ |  | ------------- | -------------------------------------- | ------ | ------------- |  |  | ---------- |  |  | ------- | --- |  | ---------- |  | - | ------- |  |  | ---------- |  |  |  | ----- |  |  |  | --- | 
|                                                  |  |                       |        |  |               | Marketable securities in loss position |       
|                                                  |  |                       |        |  |               |                                        |       
|                                                  |  | Marketable securities |        |  | for less than |                                        |        | for more than |  |  |           
|                                                  |  | not in loss position  |        |  | 12 months     |                                        |        | 12 months     |  |  | total      | 
|                                                  |  |                       |        |  |               |                                        |        |               |  |  |            | 
|                                                  |  | Fair                  |        |  | unrealized    |                                        |        | Fair          |  |  | unrealized |  |  | Fair    |     |  | unrealized |  |   | Fair    |  |  | unrealized | 
|                                                  |  | value                 |        |  | gains         |                                        |        | value         |  |  | losses     |  |  | value   |     |  | losses     |  |   | value   |  |  | losses     | 
|                                                  |  |                       |        |  |               |                                        |        |               |  |  |            |  |  |         |     |  |            |  |   |         |  |  |            | 
|                                                  |  |  (000)               |        |  |  (000)       |                                        |        |  (000)       |  |  |  (000)    |  |  |  (000) |     |  |  (000)    |  |   |  (000) |  |  |  (000)    | 
|2004                                              |  |                       |        |  |               |                                        |        |               |  |  |            |  |  |         |     |  |            |  |   |         |  |  |            |  |  |  |       |  |  |  |     | 
|Marketable equity securities (available-for-sale) |  |                       | 14,910 |  |               |                                        | 9,006  |               |  |  | 2,418      |  |  |         | 569 |  |            |  | 0 |         |  |  | 0          |  |  |  | 2,418 |  |  |  | 569 | 
|Marketable debt securities (available-for-sale)   |  |                       | 0      |  |               |                                        | 0      |               |  |  | 473        |  |  |         | 133 |  |            |  | 0 |         |  |  | 0          |  |  |  | 473   |  |  |  | 133 | 
|Investment fund securities                        |  |                       | 1,984  |  |               |                                        | 31     |               |  |  | 9,922      |  |  |         | 77  |  |            |  | 0 |         |  |  | 0          |  |  |  | 9,922 |  |  |  | 77  | 
|2003                                              |  |                       |        |  |               |                                        |        |               |  |  |            |  |  |         |     |  |            |  |   |         |  |  |            |  |  |  |       |  |  |  |     | 
|Marketable equity securities (available-for-sale) |  |                       | 23,864 |  |               |                                        | 15,374 |               |  |  | 593        |  |  |         | 73  |  |            |  | 0 |         |  |  | 0          |  |  |  | 593   |  |  |  | 73  | 
|Marketable debt securities (available-for-sale)   |  |                       | 53,026 |  |               |                                        | 1,651  |               |  |  | 0          |  |  |         | 0   |  |            |  | 0 |         |  |  | 0          |  |  |  | 0     |  |  |  | 0   | 
|Investment fund securities                        |  |                       | 2,003  |  |               |                                        | 25     |               |  |  | 0          |  |  |         | 0   |  |            |  | 0 |         |  |  | 0          |  |  |  | 0     |  |  |  | 0   | 

 





    


F-28



---



##### Table of Contents







|                       |  |         |        |  |         |  |        | 
|---------------------- |  | ------- | ------ |  | ------- |  | ------ | 
|                       |  | 2004    |        |  | 2003    | 
|                       |  |         |        |  |         | 
|                       |  |  (000) |        |  |  (000) | 
|Loans to employees     |  |         | 42,824 |  |         |  | 37,777 | 
|Loans to third parties |  |         | 10,496 |  |         |  | 23,437 | 
|                       |  |         |        |  |         | 
|                       |  |         | 53,320 |  |         |  | 61,214 | 
|                       |  |         |        |  |         | 









 


 


|                          |  |         |           |  |         |  |           | 
|------------------------- |  | ------- | --------- |  | ------- |  | --------- | 
|                          |  | 2004    |           |  | 2003    | 
|                          |  |         |           |  |         | 
|                          |  |  (000) |           |  |  (000) | 
|Due within 1 year         |  |         | 1,928,557 |  |         |  | 1,761,195 | 
|Due between 1 and 5 years |  |         | 543       |  |         |  | 9,520     | 
|                          |  |         |           |  |         | 
|                          |  |         | 1,929,100 |  |         |  | 1,770,715 | 
|                          |  |         |           |  |         | 



F-29



---



##### Table of Contents





|                                                                                                                  |  |         |         |  |         |  |         | 
|----------------------------------------------------------------------------------------------------------------- |  | ------- | ------- |  | ------- |  | ------- | 
|                                                                                                                  |  | 2004    |         |  | 2003    | 
|                                                                                                                  |  |         |         |  |         | 
|                                                                                                                  |  |  (000) |         |  |  (000) | 
|Fair value of STAR hedge and other derivatives                                                                    |  |         | 191,716 |  |         |  | 256,758 | 
|Investments in insurance policies held for employee-financed
    pension plans, semiretirement, and time accounts |  |         | 134,003 |  |         |  | 94,407  | 
|Income tax receivables                                                                                            |  |         | 52,161  |  |         |  | 32,060  | 
|Prepaid pensions                                                                                                  |  |         | 32,035  |  |         |  | 27,221  | 
|Rent deposits                                                                                                     |  |         | 22,823  |  |         |  | 23,130  | 
|Others                                                                                                            |  |         | 104,907 |  |         |  | 72,315  | 
|                                                                                                                  |  |         |         |  |         | 
|Total other assets                                                                                                |  |         | 537,645 |  |         |  | 505,891 | 
|                                                                                                                  |  |         |         |  |         | 
| thereof with a remaining term greater than 1 year                                                               |  |         | 224,829 |  |         |  | 166,634 | 
|                                                                                                                  |  |         |         |  |         | 







|                                                                                        |  |         |           |  |         |  |           | 
|--------------------------------------------------------------------------------------- |  | ------- | --------- |  | ------- |  | --------- | 
|                                                                                        |  | 2004    |           |  | 2003    | 
|                                                                                        |  |         |           |  |         | 
|                                                                                        |  |  (000) |           |  |  (000) | 
|Cash at banks                                                                           |  |         | 458,909   |  |         |  | 326,305   | 
|Liquid investments with original maturities of 3 months or
    less                     |  |         | 1,054,226 |  |         |  | 658,090   | 
|                                                                                        |  |         |           |  |         | 
|Cash and cash equivalents                                                               |  |         | 1,513,135 |  |         |  | 984,395   | 
|                                                                                        |  |         |           |  |         | 
|Liquid investments with original maturities exceeding
    3 months and less than 1 year |  |         | 546,272   |  |         |  | 588,472   | 
|Liquid investments with original maturities exceeding 1 year                            |  |         | 1,137,135 |  |         |  | 448,784   | 
|Restricted cash with original maturity exceeding 1 year                                 |  |         | 0         |  |         |  | 74,305    | 
|                                                                                        |  |         |           |  |         | 
|                                                                                        |  |         | 3,196,542 |  |         |  | 2,095,956 | 
|                                                                                        |  |         |           |  |         | 







F-30



---



##### Table of Contents





|                                                                                        |  |               |           |   |            |  |               |             |  |  |            |   |  |            |           |   |             |  |          |   |  |  |          |  
|--------------------------------------------------------------------------------------- |  | ------------- | --------- | - | ---------- |  | ------------- | ----------- |  |  | ---------- | - |  | ---------- | --------- | - | ----------- |  | -------- | - |  |  | -------- | -
|                                                                                        |  | 2003          |           |   | 2002       | 
|                                                                                        |  |               |           |   |            | 
|                                                                                        |  | as previously |           |   |            |  | as previously |             |  | 
|                                                                                        |  | reported      |           |   | Adjustment |  |               | as adjusted |  |  | reported   |   |  | Adjustment |           |   | as adjusted | 
|                                                                                        |  |               |           |   |            |  |               |             |  |  |            |   |  |            |           |   |             | 
|                                                                                        |  |  (000)       |           |   |  (000)    |  |               |  (000)     |  |  |  (000)    |   |  |  (000)    |           |   |  (000)     | 
|Change in liquid assets (maturities exceeding 3 months) and
    marketable securities   |  |               | (639,379  | ) |            |  | (229,342      | )           |  |  | (868,721   | ) |  |            | 91,703    |   |             |  | (110,547 | ) |  |  | (18,844  | )
|Net cash used in investing activities                                                   |  |               | (915,120  | ) |            |  | (229,342      | )           |  |  | (1,144,462 | ) |  |            | (215,840  | ) |             |  | (110,547 | ) |  |  | (326,387 | )
|Net increase in cash and cash equivalents                                               |  |               | 218,683   |   |            |  | (229,342      | )           |  |  | (10,659    | ) |  |            | 366,757   |   |             |  | (110,547 | ) |  |  | 256,210  |  
|Cash and cash equivalents at the beginning of the year                                  |  |               | 1,121,708 |   |            |  | (126,654      | )           |  |  | 995,054    |   |  |            | 754,951   |   |             |  | (16,107  | ) |  |  | 738,844  |  
|Cash and cash equivalents at the end of the year                                        |  |               | 1,340,391 |   |            |  | (355,996      | )           |  |  | 984,395    |   |  |            | 1,121,708 |   |             |  | (126,654 | ) |  |  | 995,054  |  
|Liquid investments with original maturities exceeding 3 months
    and less than 1 year |  |               | 680,891   |   |            |  | (92,419       | )           |  |  | 588,472    |   |  |            | 26,281    |   |             |  | (9,515   | ) |  |  | 16,766   |  
|Liquid investments with original maturities exceeding 1 year                            |  |               | 74,674    |   |            |  | 448,415       |             |  |  | 523,089    |   |  |            | 89,908    |   |             |  | 136,169  |   |  |  | 226,077  |  

















|                                                  |  |           |         |  |            |  |        |           |  |  |            |  |  |  |        | 
|------------------------------------------------- |  | --------- | ------- |  | ---------- |  | ------ | --------- |  |  | ---------- |  |  |  | ------ | 
|                                                  |  | 2004      |         |  | 2003       | 
|                                                  |  |           |         |  |            | 
|                                                  |  | Number of |         |  | % of       |  |        | Number of |  |  | % of       | 
|                                                  |  | shares    |         |  | subscribed |  |        | shares    |  |  | subscribed | 
|                                                  |  | (000)     |         |  | capital    |  |        | (000)     |  |  | capital    | 
|                                                  |  |           |         |  |            |  |        |           |  |  |            | 
|Hasso Plattner GmbH&Co. Beteiligungs-KG           |  |           | 31,240  |  |            |  | 9.9%   |           |  |  | 31,240     |  |  |  | 9.9%   | 
|Dietmar Hopp Stiftung GmbH                        |  |           | 28,017  |  |            |  | 8.9%   |           |  |  | 28,017     |  |  |  | 8.9%   | 
|Klaus Tschira Stiftung gGmbH                      |  |           | 21,155  |  |            |  | 6.7%   |           |  |  | 21,155     |  |  |  | 6.7%   | 
|Dr. h.c. Tschira Beteiligungs GmbH&Co. KG         |  |           | 15,833  |  |            |  | 5.0%   |           |  |  | 15,833     |  |  |  | 5.0%   | 
|Hasso Plattner Förderstiftung gemeinnützige GmbH  |  |           | 5,229   |  |            |  | 1.6%   |           |  |  | 6,000      |  |  |  | 1.9%   | 
|Golfplatz St. Leon-Rot GmbH & Co. Beteiligungs-KG |  |           | 4,811   |  |            |  | 1.5%   |           |  |  | 4,811      |  |  |  | 1.5%   | 
|Treasury Stock                                    |  |           | 5,363   |  |            |  | 1.7%   |           |  |  | 4,565      |  |  |  | 1.5%   | 
|Free float                                        |  |           | 204,356 |  |            |  | 64.7%  |           |  |  | 203,793    |  |  |  | 64.6%  | 
|                                                  |  |           |         |  |            |  |        |           |  |  |            | 
|                                                  |  |           | 316,004 |  |            |  | 100.0% |           |  |  | 315,414    |  |  |  | 100.0% | 
|                                                  |  |           |         |  |            |  |        |           |  |  |            | 

F-31



---



##### Table of Contents
























|               |  |            |        |  
|-------------- |  | ---------- | ------ | -
|               |  | Contingent |       
|               |  | capital    |       
|               |  |            |       
|               |  | (000)      |       
|12/31/2002     |  |            | 56,288 |  
|               |  |            |       
|Exercise       |  |            | (451   | )
|New authorized |  |            | 0      |  
|Reduction      |  |            | 0      |  
|               |  |            |       
|12/31/2003     |  |            | 55,837 |  
|               |  |            |       
|Exercise       |  |            | (590   | )
|New authorized |  |            | 0      |  
|Reduction      |  |            | 0      |  
|               |  |            |       
|12/31/2004     |  |            | 55,247 |  
|               |  |            |       

F-32



---



##### Table of Contents







         


F-33



---



##### Table of Contents







|                                                                         |                                                                            |         |          |         |               |  |        |         |   |  |          |         |   |               |          |        |         |  |         |         |   |  |          |        |  
|------------------------------------------------------------------------ | -------------------------------------------------------------------------- | ------- | -------- | ------- | ------------- |  | ------ | ------- | - |  | -------- | ------- | - | ------------- | -------- | ------ | ------- |  | ------- | ------- | - |  | -------- | ------ | -
|                                                                         |                                                                            | 2004    |          |         | 2003          | 
|                                                                         |                                                                            |         |          |         |               | 
|                                                                         |                                                                            | Pre-tax |          |         | Tax (expense) |  |        | Net     |   |  | Pre-tax  |         |   | Tax (expense) |          |        | Net     | 
|                                                                         |                                                                            | amount  |          |         | or benefit    |  |        | amount  |   |  | amount   |         |   | or benefit    |          |        | amount  | 
|                                                                         |                                                                            |         |          |         |               |  |        |         |   |  |          |         |   |               |          |        |         | 
|                                                                         |                                                                            |  (000) |          |         |  (000)       |  |        |  (000) |   |  |  (000)  |         |   |  (000)       |          |        |  (000) | 
|Unrealized gains (losses) on marketable securities:                      |                                                                            |         |          |         |               |  |        |         |   |  |          |         |   |               |          |        |         |  |         |         |   |  |          |       
|                                                                         | Unrealized holding gains (losses)                                          |         |          | (699    | )             |  |        | 774     |   |  |          | 75      |   |               |          | 14,365 |         |  |         | (814    | ) |  |          | 13,551 |  
|                                                                         | Reclassification adjustments for (gains) losses included in net
    income |         |          | (8,020  | )             |  |        | 267     |   |  |          | (7,753  | ) |               |          | 5,574  |         |  |         | (7      | ) |  |          | 5,567  |  
|                                                                         | Net unrealized gains (losses) on marketable securities                     |         |          | (8,719  | )             |  |        | 1,041   |   |  |          | (7,678  | ) |               |          | 19,939 |         |  |         | (821    | ) |  |          | 19,118 |  
|Currency translation adjustments                                         |                                                                            |         | (70,723  | )       |               |  | 0      |         |   |  | (70,723  | )       |   |               | (148,424 | )      |         |  | 0       |         |   |  | (148,424 | )     
|Additional minimum pension liability adjustments                         |                                                                            |         | (9,089   | )       |               |  | 2,070  |         |   |  | (7,019   | )       |   |               | 27,249   |        |         |  | (10,966 | )       |   |  | 16,283   |       
|Unrealized gains (losses) on cash flow hedges:                           |                                                                            |         |          |         |               |  |        |         |   |  |          |         |   |               |          |        |         |  |         |         |   |  |          |       
|                                                                         | Unrealized cash flow hedge gains (losses)                                  |         |          | 11,691  |               |  |        | 1,681   |   |  |          | 10,010  |   |               |          | 20,261 |         |  |         | 7,300   |   |  |          | 12,961 |  
|                                                                         | Reclassification adjustments for (gains) losses included in net
    income |         |          | (11,844 | )             |  |        | (1,703  | ) |  |          | (10,141 | ) |               |          | (363   | )       |  |         | (131    | ) |  |          | (232   | )
|                                                                         | Net unrealized cash flow hedge gains (losses)                              |         |          | (153    | )             |  |        | 22      |   |  |          | (131    | ) |               |          | 19,898 |         |  |         | (7,169  | ) |  |          | 12,729 |  
|Unrealized gains (losses) on STAR hedge:                                 |                                                                            |         |          |         |               |  |        |         |   |  |          |         |   |               |          |        |         |  |         |         |   |  |          |       
|                                                                         | Unrealized gains (losses) on STAR hedge                                    |         |          | (1,094  | )             |  |        | 378     |   |  |          | (716    | ) |               |          | 36,790 |         |  |         | (12,794 | ) |  |          | 23,996 |  
|                                                                         | Reclassification adjustments for (gains) losses included in net
    income |         |          | (22,433 | )             |  |        | 7,751   |   |  |          | (14,682 | ) |               |          | 0      |         |  |         | 0       |   |  |          | 0      |  
|                                                                         | Net unrealized gains (losses) on STAR hedge                                |         |          | (23,527 | )             |  |        | 8,129   |   |  |          | (15,398 | ) |               |          | 36,790 |         |  |         | (12,794 | ) |  |          | 23,996 |  
|Currency effects from intercompany long-term investment
    transactions |                                                                            |         | (2,473   | )       |               |  | 0      |         |   |  | (2,473   | )       |   |               | 0        |        |         |  | 0       |         |   |  | 0        |       
|                                                                         |                                                                            |         |          |         |               |  |        |         |   |  |          |         |   |               |          |        |         | 
|Other comprehensive income (loss)                                        |                                                                            |         | (114,684 | )       |               |  | 11,262 |         |   |  | (103,422 | )       |   |               | (44,548  | )      |         |  | (31,750 | )       |   |  | (76,298  | )     
|                                                                         |                                                                            |         |          |         |               |  |        |         |   |  |          |         |   |               |          |        |         | 

           






F-34



---



##### Table of Contents






|                          |  |      |      |  |      |  |      | 
|------------------------- |  | ---- | ---- |  | ---- |  | ---- | 
|                          |  | 2003 |      |  | 2002 | 
|                          |  |      |      |  |      | 
|                          |  |     |      |  |     | 
|Dividend per common share |  |      | 0.80 |  |      |  | 0.60 | 



  








 


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



 




F-35



---



##### Table of Contents





   












F-36



---



##### Table of Contents







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



|                         |  |               |       |          |                  |  |          |          |  |  |               |          |  |          |   |  |  |  |   | 
|------------------------ |  | ------------- | ----- | -------- | ---------------- |  | -------- | -------- |  |  | ------------- | -------- |  | -------- | - |  |  |  | - | 
|                         |  | Outstanding   |       |          | Exercisable      | 
|                         |  |               |       |          |                  | 
|                         |  |               |       | Weighted |                  |  | Weighted |          |  |  |               | Weighted | 
|                         |  |               |       | average  |                  |  | average  |          |  |  |               | average  | 
|                         |  | Number of     |       |          | remaining        |  |          | exercise |  |  | Number of     |          |  | exercise |  
|Range of exercise prices |  | stock options |       |          | contractual life |  |          | price    |  |  | stock options |          |  | price    |  
|                         |  |               |       |          |                  |  |          |          |  |  |               |          |  |          |  
|                        |  | (000)         |       |          | years            |  |          |         |  |  | (000)         |          |  |         |  
|90.37-99.13              |  |               | 3,555 |          |                  |  | 3.16     |          |  |  | 90.48         |          |  |          |  |  |  |  |  | 
|149.99                   |  |               | 2,079 |          |                  |  | 4.13     |          |  |  | 149.99        |          |  |          |  |  |  |  |  | 
|                         |  |               |       |          |                  |  |          |          |  |  |               |          |  |          |  
|90.37-149.99             |  |               | 5,634 |          |                  |  | 3.52     |          |  |  | 112.44        |          |  |          |  |  |  |  |  | 
|                         |  |               |       |          |                  |  |          |          |  |  |               |          |  |          |  



Long Term Incentive 2000 Plan





F-37



---



##### Table of Contents











|                                                         |  |           |       |               |             |          |                   |                |  |  |             |  |  |                |       |  |  |  |        | 
|-------------------------------------------------------- |  | --------- | ----- | ------------- | ----------- | -------- | ----------------- | -------------- |  |  | ----------- |  |  | -------------- | ----- |  |  |  | ------ | 
|                                                         |  |           |       | Stock options |             |          | Convertible bonds |               
|                                                         |  |           |       |               |             |          |                   |               
|                                                         |  |           |       |               |             | Weighted |                   |                |  |  | Weighted    | 
|                                                         |  | Shares    |       |               | Number of   |          |                   | average        |  |  | Number of   |  |  | average        |      
|                                                         |  | available |       |               | options     |          |                   | exercise price |  |  | bonds       |  |  | exercise price |      
|                                                         |  | for grant |       |               | outstanding |          |                   | per option     |  |  | outstanding |  |  | per bond       |      
|                                                         |  |           |       |               |             |          |                   |                |  |  |             |  |  |                |      
|                                                         |  | (000)     |       |               | (000)       |          |                   |               |  |  | (000)       |  |  |               |      
|January 1, 2002                                          |  |           | 9,839 |               |             |          | 1,578             |                |  |  | 132.73      |  |  |                | 5,191 |  |  |  | 229.40 | 
|                                                         |  |           |       |               |             |          |                   |                |  |  |             |  |  |                |      
|Additional shares authorized                             |  |           |      |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Granted                                                  |  |           | 4,807 |               |             |          | 1,787             |                |  |  | 81.39       |  |  |                | 3,020 |  |  |  | 151.50 | 
|Reduction due to option/bond ratio (25% of bonds issued) |  |           | 755   |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Exercised                                                |  |           |       |               |             |          | 76                |                |  |  | 94.53       |  |  |                |      |  |  |  |       | 
|Forfeited                                                |  |           | 4,277 |               |             |          | 222               |                |  |  | 72.81       |  |  |                | 408   |  |  |  | 200.78 | 
|                                                         |  |           |       |               |             |          |                   |                |  |  |             |  |  |                |      
|December 31, 2002                                        |  |           | 0     |               |             |          | 3,067             |                |  |  | 72.51       |  |  |                | 7,803 |  |  |  | 200.74 | 
|                                                         |  |           |       |               |             |          |                   |                |  |  |             |  |  |                |      
|Additional shares authorized                             |  |           |      |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Granted                                                  |  |           |      |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Reduction due to option/bond ratio (25% of bonds issued) |  |           |      |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Exercised                                                |  |           |      |               |             |          | 217               |                |  |  | 73.93       |  |  |                |      |  |  |  |       | 
|Forfeited                                                |  |           |      |               |             |          | 161               |                |  |  | 94.45       |  |  |                | 226   |  |  |  | 185.05 | 
|                                                         |  |           |       |               |             |          |                   |                |  |  |             |  |  |                |      
|December 31, 2003                                        |  |           | 0     |               |             |          | 2,689             |                |  |  | 91.10       |  |  |                | 7,577 |  |  |  | 201.21 | 
|                                                         |  |           |       |               |             |          |                   |                |  |  |             |  |  |                |      
|Additional shares authorized                             |  |           |      |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Granted                                                  |  |           |      |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Reduction due to option/bond ratio (25% of bonds issued) |  |           |      |               |             |          |                  |                |  |  |            |  |  |                |      |  |  |  |       | 
|Exercised                                                |  |           |      |               |             |          | 511               |                |  |  | 90.11       |  |  |                |      |  |  |  |       | 
|Forfeited                                                |  |           |      |               |             |          | 63                |                |  |  | 100.53      |  |  |                | 307   |  |  |  | 222.95 | 
|                                                         |  |           |       |               |             |          |                   |                |  |  |             |  |  |                |      
|December 31, 2004                                        |  |           | 0     |               |             |          | 2,115             |                |  |  | 97.19       |  |  |                | 7,270 |  |  |  | 200.29 | 
|                                                         |  |           |       |               |             |          |                   |                |  |  |             |  |  |                |      

  


F-38



---



##### Table of Contents





|                         |  |                           |       |          |                           |  |          |                |  |  |               |          |  |                |     |  |  |  |        | 
|------------------------ |  | ------------------------- | ----- | -------- | ------------------------- |  | -------- | -------------- |  |  | ------------- | -------- |  | -------------- | --- |  |  |  | ------ | 
|                         |  | Outstanding stock options |       |          | Exercisable stock options | 
|                         |  |                           |       |          |                           | 
|                         |  |                           |       | Weighted |                           |  |          |                | 
|                         |  |                           |       | average  |                           |  | Weighted |                |  |  |               | Weighted | 
|                         |  | Number of                 |       |          | remaining                 |  |          | average        |  |  | Number of     |          |  | average        |    
|Range of exercise prices |  | stock options             |       |          | contractual life          |  |          | exercise price |  |  | stock options |          |  | exercise price |    
|                         |  |                           |       |          |                           |  |          |                |  |  |               |          |  |                |    
|                        |  | (000)                     |       |          | years                     |  |          |               |  |  | (000)         |          |  |               |    
|52.72  59.15            |  |                           | 3     |          |                           |  | 5.50     |                |  |  | 59.15         |          |  |                | 3   |  |  |  | 59.15  | 
|66.57  86.16            |  |                           | 775   |          |                           |  | 5.88     |                |  |  | 81.59         |          |  |                | 500 |  |  |  | 79.10  | 
|96.17  106.44           |  |                           | 1,337 |          |                           |  | 7.82     |                |  |  | 106.32        |          |  |                | 323 |  |  |  | 106.12 | 
|52.72  106.44           |  |                           | 2,115 |          |                           |  | 7.11     |                |  |  | 97.19         |          |  |                | 826 |  |  |  | 89.61  | 

|                         |  |                               |       |          |                               |  |          |                |  |   |           |          |  |                |       |  |  |  |        | 
|------------------------ |  | ----------------------------- | ----- | -------- | ----------------------------- |  | -------- | -------------- |  | - | --------- | -------- |  | -------------- | ----- |  |  |  | ------ | 
|                         |  | Outstanding convertible bonds |       |          | Exercisable convertible bonds | 
|                         |  |                               |       |          |                               | 
|                         |  |                               |       | Weighted |                               |  |          |                | 
|                         |  |                               |       | average  |                               |  | Weighted |                |  |   |           | Weighted | 
|                         |  | Number of                     |       |          | remaining                     |  |          | average        |  |   | Number of |          |  | average        |      
|Range of exercise prices |  | bonds                         |       |          | contractual life              |  |          | exercise price |  |   | bonds     |          |  | exercise price |      
|                         |  |                               |       |          |                               |  |          |                |  |   |           |          |  |                |      
|                         |  |                               |       |          |                               |  |          |                |  |  |          
|                        |  | (000)                         |       |          | years                         |  |          |               |  |   | (000)     |          |  |               
|131.81  183.67          |  |                               | 2,783 |          |                               |  | 7.15     |                |  |   | 151.68    |          |  |                | 945   |  |  |  | 151.95 | 
|191.25  247.00          |  |                               | 2,748 |          |                               |  | 6.16     |                |  |   | 191.72    |          |  |                | 1,824 |  |  |  | 191.96 | 
|290.32  334.67          |  |                               | 1,739 |          |                               |  | 5.17     |                |  |   | 291.65    |          |  |                | 1,739 |  |  |  | 291.65 | 
|131.81  334.67          |  |                               | 7,270 |          |                               |  | 6.30     |                |  |   | 200.29    |          |  |                | 4,508 |  |  |  | 222.02 | 










F-39



---



##### Table of Contents







|                         |                         |                     |           |       |       |  |           |       |       |  |           |       |       | 
|------------------------ | ----------------------- | ------------------- | --------- | ----- | ----- |  | --------- | ----- | ----- |  | --------- | ----- | ----- | 
|                         |                         | 2004                |           |       | 2003  |  |           | 2002  |      
|                         |                         |                     |           |       |       |  |           |       |      
|Expected life (in years) |                         |                     | 2.5 years |       |       |  | 2.5 years |       |       |  | 4.5 years |      
|                         | Risk-free interest rate |                     |           | 2.65% |       |  |           | 2.61% |       |  |           | 4.68% |      
|                         |                         | Expected volatility |           |       | 57%   |  |           |       | 68%   |  |           |       | 50%   | 
|                         |                         | Expected dividends  |           |       | 0.45% |  |           |       | 0.73% |  |           |       | 0.38% | 

 


 








|                                      |  |         |         |  |         |  |        | 
|------------------------------------- |  | ------- | ------- |  | ------- |  | ------ | 
|                                      |  | 2004    |         |  | 2003    | 
|                                      |  |         |         |  |         | 
|                                      |  |  (000) |         |  |  (000) | 
|Domestic benefit plans                |  |         | 5,368   |  |         |  | 5,044  | 
|Foreign benefit plans                 |  |         | 22,315  |  |         |  | 13,129 | 
|Employee financed plans               |  |         | 109,079 |  |         |  | 77,768 | 
|Other pension and similar obligations |  |         | 2,928   |  |         |  | 1,594  | 
|                                      |  |         |         |  |         | 
|                                      |  |         | 139,690 |  |         |  | 97,535 | 
|                                      |  |         |         |  |         | 





F-40



---



##### Table of Contents





|                                                       |  |         |        |   |         |  |        |  
|------------------------------------------------------ |  | ------- | ------ | - | ------- |  | ------ | -
|                                                       |  | 2004    |        |   | 2003    | 
|                                                       |  |         |        |   |         | 
|                                                       |  |  (000) |        |   |  (000) | 
|Change in benefit obligation                           |  |         |        |   |         |  |        |  
|Benefit obligation at beginning of year                |  |         | 30,349 |   |         |  | 28,351 |  
|Service costs                                          |  |         | 301    |   |         |  | 409    |  
|Interest costs                                         |  |         | 1,587  |   |         |  | 1,624  |  
|Settlement                                             |  |         | 0      |   |         |  | (300   | )
|Actuarial gain/loss                                    |  |         | 1,609  |   |         |  | 502    |  
|Benefits paid                                          |  |         | (610   | ) |         |  | (237   | )
|                                                       |  |         |        |   |         | 
|Benefit obligation at end of year                      |  |         | 33,236 |   |         |  | 30,349 |  
|                                                       |  |         |        |   |         | 
|Change in plan assets                                  |  |         |        |   |         |  |        |  
|Fair value of plan assets at beginning of year         |  |         | 25,761 |   |         |  | 23,658 |  
|Actual return on plan assets                           |  |         | 199    |   |         |  | 1,175  |  
|Employer contributions                                 |  |         | 2,186  |   |         |  | 2,162  |  
|Benefits paid                                          |  |         | (492   | ) |         |  | (1,049 | )
|Assets transferred to defined contribution plan        |  |         | (118   | ) |         |  | (185   | )
|                                                       |  |         |        |   |         | 
|Fair value of plan assets at end of year               |  |         | 27,536 |   |         |  | 25,761 |  
|                                                       |  |         |        |   |         | 
|Funded status                                          |  |         | 5,700  |   |         |  | 4,588  |  
|Unrecognized transition assets                         |  |         | (490   | ) |         |  | (532   | )
|Unrecognized net actuarial loss                        |  |         | (7,239 | ) |         |  | (4,694 | )
|                                                       |  |         |        |   |         | 
|Net amount recognized                                  |  |         | (2,029 | ) |         |  | (638   | )
|                                                       |  |         |        |   |         | 
|Amounts recognized in the consolidated balance sheets: |  |         |        |   |         |  |        |  
|Accrued benefit liability                              |  |         | 5,368  |   |         |  | 5,044  |  
|Intangible assets                                      |  |         | (25    | ) |         |  | (29    | )
|Accumulated other comprehensive income                 |  |         | (7,372 | ) |         |  | (5,653 | )
|                                                       |  |         |        |   |         | 
|Net amount recognized                                  |  |         | (2,029 | ) |         |  | (638   | )
|                                                       |  |         |        |   |         | 



|                              |  |      |     |  |      |  |     |      |  |  |     | 
|----------------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                              |  | 2004 |     |  | 2003 |  |     | 2002 | 
|                              |  |      |     |  |      |  |     |      | 
|                              |  | %    |     |  | %    |  |     | %    | 
|Discount rate                 |  |      | 5.0 |  |      |  | 5.3 |      |  |  | 5.8 | 
|Rate of compensation increase |  |      | 2.7 |  |      |  | 3.9 |      |  |  | 3.9 | 



|                               |  |         |        |   |         |  |        |         |  |  |        |  
|------------------------------ |  | ------- | ------ | - | ------- |  | ------ | ------- |  |  | ------ | -
|                               |  | 2004    |        |   | 2003    |  |        | 2002    | 
|                               |  |         |        |   |         |  |        |         | 
|                               |  |  (000) |        |   |  (000) |  |        |  (000) | 
|Service cost                   |  |         | 301    |   |         |  | 409    |         |  |  | 561    |  
|Interest cost                  |  |         | 1,587  |   |         |  | 1,624  |         |  |  | 1,631  |  
|Expected return on plan assets |  |         | (1,638 | ) |         |  | (1,529 | )       |  |  | (1,399 | )
|Net amortization               |  |         | 545    |   |         |  | 484    |         |  |  | 456    |  
|                               |  |         |        |   |         |  |        |         | 
|                               |  |         | 795    |   |         |  | 988    |         |  |  | 1,249  |  
|                               |  |         |        |   |         |  |        |         | 

F-41



---



##### Table of Contents





|                               |  |      |     |  |      |  |     |      |  |  |     | 
|------------------------------ |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                               |  | 2004 |     |  | 2003 |  |     | 2002 | 
|                               |  |      |     |  |      |  |     |      | 
|                               |  | %    |     |  | %    |  |     | %    | 
|Discount rate                  |  |      | 5.3 |  |      |  | 5.8 |      |  |  | 6.6 | 
|Expected return on plan assets |  |      | 6.0 |  |      |  | 5.9 |      |  |  | 6.5 | 
|Rate of compensation increase  |  |      | 3.9 |  |      |  | 3.9 |      |  |  | 4.0 | 







F-42



---



##### Table of Contents





|                                                       |  |         |         |   |         |  |         |  
|------------------------------------------------------ |  | ------- | ------- | - | ------- |  | ------- | -
|                                                       |  | 2004    |         |   | 2003    | 
|                                                       |  |         |         |   |         | 
|                                                       |  |  (000) |         |   |  (000) | 
|Change in benefit obligation                           |  |         |         |   |         |  |         |  
|Benefit obligation at beginning of year                |  |         | 174,792 |   |         |  | 159,402 |  
|Service costs                                          |  |         | 30,220  |   |         |  | 29,503  |  
|Interest costs                                         |  |         | 7,817   |   |         |  | 7,691   |  
|Employee contributions                                 |  |         | 0       |   |         |  | 1,907   |  
|Actuarial loss/gain                                    |  |         | (11,722 | ) |         |  | 4,118   |  
|Benefits paid                                          |  |         | (5,710  | ) |         |  | (5,036  | )
|Foreign currency exchange rate changes                 |  |         | (7,527  | ) |         |  | (22,793 | )
|Other changes                                          |  |         | 1,968   |   |         |  | 0       |  
|                                                       |  |         |         |   |         | 
|Benefit obligation at end of year                      |  |         | 189,838 |   |         |  | 174,792 |  
|                                                       |  |         |         |   |         | 
|Change in plan assets:                                 |  |         |         |   |         |  |         |  
|Fair value of plan assets at beginning of year         |  |         | 157,449 |   |         |  | 130,191 |  
|Actual return on plan assets                           |  |         | 8,994   |   |         |  | 11,858  |  
|Employer contributions                                 |  |         | 30,095  |   |         |  | 39,490  |  
|Employee contributions                                 |  |         | 2,064   |   |         |  | 1,907   |  
|Benefits paid                                          |  |         | (4,519  | ) |         |  | (4,359  | )
|Foreign currency exchange rate changes                 |  |         | (10,423 | ) |         |  | (21,638 | )
|Other changes                                          |  |         | 1,968   |   |         |  | 0       |  
|                                                       |  |         |         |   |         | 
|Fair value of plan assets at end of year               |  |         | 185,628 |   |         |  | 157,449 |  
|                                                       |  |         |         |   |         | 
|Funded status                                          |  |         | 4,210   |   |         |  | 17,343  |  
|Unrecognized transition assets                         |  |         | (2,074  | ) |         |  | (2,242  | )
|Unrecognized prior service cost                        |  |         | 1,281   |   |         |  | 1,519   |  
|Unrecognized net actuarial loss                        |  |         | (20,099 | ) |         |  | (30,919 | )
|                                                       |  |         |         |   |         | 
|Net amount recognized                                  |  |         | (16,682 | ) |         |  | (14,299 | )
|                                                       |  |         |         |   |         | 
|Amounts recognized in the consolidated balance sheets: |  |         |         |   |         |  |         |  
|Prepaid benefit cost                                   |  |         | (31,547 | ) |         |  | (26,847 | )
|Accrued benefit liability                              |  |         | 22,315  |   |         |  | 13,129  |  
|Intangible assets                                      |  |         | 0       |   |         |  | (387    | )
|Accumulated other comprehensive income                 |  |         | (7,450  | ) |         |  | (194    | )
|                                                       |  |         |         |   |         | 
|Net amount recognized                                  |  |         | (16,682 | ) |         |  | (14,299 | )
|                                                       |  |         |         |   |         | 





|                              |  |      |     |  |      |  |     |      |  |  |     | 
|----------------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                              |  | 2004 |     |  | 2003 |  |     | 2002 | 
|                              |  |      |     |  |      |  |     |      | 
|                              |  | %    |     |  | %    |  |     | %    | 
|Discount rate                 |  |      | 4.5 |  |      |  | 4.7 |      |  |  | 5.2 | 
|Rate of compensation increase |  |      | 4.9 |  |      |  | 4.7 |      |  |  | 4.8 | 

F-43



---



##### Table of Contents





|                               |  |         |         |   |         |  |        |         |  |  |        |  
|------------------------------ |  | ------- | ------- | - | ------- |  | ------ | ------- |  |  | ------ | -
|                               |  | 2004    |         |   | 2003    |  |        | 2002    | 
|                               |  |         |         |   |         |  |        |         | 
|                               |  |  (000) |         |   |  (000) |  |        |  (000) | 
|Service cost                   |  |         | 30,220  |   |         |  | 29,503 |         |  |  | 31,100 |  
|Interest cost                  |  |         | 7,817   |   |         |  | 7,691  |         |  |  | 8,146  |  
|Expected return on plan assets |  |         | (11,959 | ) |         |  | (9,189 | )       |  |  | (8,020 | )
|Net amortization               |  |         | 849     |   |         |  | 1,646  |         |  |  | 674    |  
|                               |  |         |         |   |         |  |        |         | 
|                               |  |         | 26,927  |   |         |  | 29,651 |         |  |  | 31,900 |  
|                               |  |         |         |   |         |  |        |         | 



|                               |  |      |     |  |      |  |     |      |  |  |     | 
|------------------------------ |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                               |  | 2004 |     |  | 2003 |  |     | 2002 | 
|                               |  |      |     |  |      |  |     |      | 
|                               |  | %    |     |  | %    |  |     | %    | 
|Discount rate                  |  |      | 4.7 |  |      |  | 5.2 |      |  |  | 6.6 | 
|Expected return on plan assets |  |      | 6.9 |  |      |  | 6.5 |      |  |  | 8.0 | 
|Rate of compensation increase  |  |      | 4.7 |  |      |  | 4.8 |      |  |  | 6.0 | 



|               |  |                 |       |  |                  |  |       |                 |  |  |                  |  |  |  |       | 
|-------------- |  | --------------- | ----- |  | ---------------- |  | ----- | --------------- |  |  | ---------------- |  |  |  | ----- | 
|               |  | Target asset    |       |  | Actual % of 2004 |  |       | Target asset    |  |  | Actual % of 2003 | 
|Asset category |  | allocation 2005 |       |  | plan assets      |  |       | allocation 2004 |  |  | plan assets      | 
|               |  |                 |       |  |                  |  |       |                 |  |  |                  | 
|               |  | %               |       |  | %                |  |       | %               |  |  | %                | 
|Equity         |  |                 | 59.0  |  |                  |  | 58.1  |                 |  |  | 54.1             |  |  |  | 58.1  | 
|Fixed income   |  |                 | 39.7  |  |                  |  | 38.4  |                 |  |  | 42.3             |  |  |  | 35.8  | 
|Real Estate    |  |                 | 0.0   |  |                  |  | 0.0   |                 |  |  | 0.0              |  |  |  | 4.5   | 
|Other          |  |                 | 1.3   |  |                  |  | 3.5   |                 |  |  | 3.6              |  |  |  | 1.6   | 
|               |  |                 |       |  |                  |  |       |                 |  |  |                  | 
|Total          |  |                 | 100.0 |  |                  |  | 100.0 |                 |  |  | 100.0            |  |  |  | 100.0 | 
|               |  |                 |       |  |                  |  |       |                 |  |  |                  | 





   


F-44



---



##### Table of Contents





|                                               |  |            |        |  |            |  |        |         |  |          |         |  |         |         |        |  |         |  |        |  |  |  |        | 
|---------------------------------------------- |  | ---------- | ------ |  | ---------- |  | ------ | ------- |  | -------- | ------- |  | ------- | ------- | ------ |  | ------- |  | ------ |  |  |  | ------ | 
|                                               |  | 31/12/2004 |        |  | 31/12/2003 | 
|                                               |  |            |        |  |            | 
|                                               |  | Domestic   |        |  | Foreign    |  |        |         |  | Domestic |         |  | Foreign |         |        | 
|                                               |  | plans      |        |  | plans      |  |        | Total   |  |          | plans   |  |         | plans   |        |  | Total   | 
|                                               |  |            |        |  |            |  |        |         |  |          |         |  |         |         |        |  |         | 
|                                               |  |  (000)    |        |  |  (000)    |  |        |  (000) |  |          |  (000) |  |         |  (000) |        |  |  (000) | 
|Projected benefit obligation                   |  |            | 33,141 |  |            |  | 78,821 |         |  |          | 111,962 |  |         |         | 30,271 |  |         |  | 18,507 |  |  |  | 48,778 | 
|Accumulated benefit obligation                 |  |            | 32,667 |  |            |  | 71,823 |         |  |          | 104,490 |  |         |         | 29,752 |  |         |  | 13,129 |  |  |  | 42,881 | 
|Fair value of plan assets                      |  |            | 27,447 |  |            |  | 51,915 |         |  |          | 79,362  |  |         |         | 25,686 |  |         |  | 0      |  |  |  | 25,686 | 
|Underfunding of accumulated benefit obligation |  |            | 5,220  |  |            |  | 19,908 |         |  |          | 25,128  |  |         |         | 4,066  |  |         |  | 13,129 |  |  |  | 17,195 | 



 




|          |  |          |       |  |         |  |        |         |  |  |        | 
|--------- |  | -------- | ----- |  | ------- |  | ------ | ------- |  |  | ------ | 
|          |  | Domestic |       |  | Foreign |  |        |        
|          |  | plans    |       |  | plans   |  |        | Total   | 
|          |  |          |       |  |         |  |        |         | 
|          |  |  (000)  |       |  |  (000) |  |        |  (000) | 
|2005      |  |          | 876   |  |         |  | 6,973  |         |  |  | 7,849  | 
|2006      |  |          | 971   |  |         |  | 8,055  |         |  |  | 9,026  | 
|2007      |  |          | 1,138 |  |         |  | 9,596  |         |  |  | 10,734 | 
|2008      |  |          | 1,337 |  |         |  | 11,250 |         |  |  | 12,587 | 
|2009      |  |          | 1,374 |  |         |  | 12,653 |         |  |  | 14,027 | 
|2010-2014 |  |          | 8,799 |  |         |  | 77,457 |         |  |  | 86,256 | 



  








|                                       |  |         |           |  |         |  |           | 
|-------------------------------------- |  | ------- | --------- |  | ------- |  | --------- | 
|                                       |  | 2004    |           |  | 2003    | 
|                                       |  |         |           |  |         | 
|                                       |  |  (000) |           |  |  (000) | 
|Current and deferred taxes             |  |         | 632,033   |  |         |  | 455,499   | 
|Other reserves and accrued liabilities |  |         | 1,136,690 |  |         |  | 1,013,556 | 
|                                       |  |         |           |  |         | 
|                                       |  |         | 1,768,723 |  |         |  | 1,469,055 | 
|                                       |  |         |           |  |         | 

F-45



---



##### Table of Contents



   




|                                                      |  |         |           |  |         |  |           | 
|----------------------------------------------------- |  | ------- | --------- |  | ------- |  | --------- | 
|                                                      |  | 2004    |           |  | 2003    | 
|                                                      |  |         |           |  |         | 
|                                                      |  |  (000) |           |  |  (000) | 
|Other obligations to employees                        |  |         | 617,237   |  |         |  | 557,118   | 
|Obligations to suppliers                              |  |         | 183,069   |  |         |  | 179,698   | 
|Vacation and other absences                           |  |         | 145,293   |  |         |  | 137,191   | 
|STAR obligations                                      |  |         | 108,910   |  |         |  | 50,948    | 
|Restructuring costs                                   |  |         | 16,235    |  |         |  | 21,220    | 
|Customer claims                                       |  |         | 10,902    |  |         |  | 36,103    | 
|Contribution to employees accident insurance account |  |         | 6,584     |  |         |  | 8,561     | 
|Auditing and reporting costs                          |  |         | 5,889     |  |         |  | 5,312     | 
|Fair value of foreign exchange contracts              |  |         | 5,255     |  |         |  | 1,644     | 
|Warranty and service costs                            |  |         | 3,852     |  |         |  | 7,600     | 
|Other                                                 |  |         | 33,464    |  |         |  | 8,161     | 
|                                                      |  |         |           |  |         | 
|                                                      |  |         | 1,136,690 |  |         |  | 1,013,556 | 
|                                                      |  |         |           |  |         | 

 


 


     






F-46



---



##### Table of Contents







|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |   |  |          |  |        |   |  |  |        | 
|------------------------------------ |  | ---------- | ------ |  | --------- |  | ------ | ----------- |  |  | ------- | - | ---------- | -------- | - |  | -------- |  | ------ | - |  |  | ------ | 
|                                     |  | Balance as |        |  |           |  |        |             |  |  |         |   | Balance as |         
|                                     |  | of 01/01   |        |  | Additions |  |        | Utilization |  |  | Release |   |            | Currency |   |  | of 31/12 | 
|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |   |  |          | 
|                                     |  |  (000)    |        |  |  (000)   |  |        |  (000)     |  |  |  (000) |   |            |  (000)  |   |  |  (000)  | 
|Unused Lease space                   |  |            | 2,874  |  |           |  | 12,960 |             |  |  | (7,262  | ) |            |          | 0 |  |          |  | (995   | ) |  |  | 7,577  | 
|Severance payments for restructuring |  |            | 10,121 |  |           |  | 33,148 |             |  |  | (30,739 | ) |            |          | 0 |  |          |  | (1,371 | ) |  |  | 11,159 | 
|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |   |  |          | 
|                                     |  |            | 12,995 |  |           |  | 46,108 |             |  |  | (38,001 | ) |            |          | 0 |  |          |  | (2,366 | ) |  |  | 18,736 | 
|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |   |  |          | 



|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |        |   |          |  |        |   |  |  |        | 
|------------------------------------ |  | ---------- | ------ |  | --------- |  | ------ | ----------- |  |  | ------- | - | ---------- | -------- | ------ | - | -------- |  | ------ | - |  |  | ------ | 
|                                     |  | Balance as |        |  |           |  |        |             |  |  |         |   | Balance as |         
|                                     |  | of 01/01   |        |  | Additions |  |        | Utilization |  |  | Release |   |            | Currency |        |   | of 31/12 | 
|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |        |   |          | 
|                                     |  |  (000)    |        |  |  (000)   |  |        |  (000)     |  |  |  (000) |   |            |  (000)  |        |   |  (000)  | 
|Unused Lease space                   |  |            | 7,577  |  |           |  | 17,164 |             |  |  | (5,544  | ) |            |          | 0      |   |          |  | (1,506 | ) |  |  | 17,691 | 
|Severance payments for restructuring |  |            | 11,159 |  |           |  | 3,384  |             |  |  | (9,347  | ) |            |          | (1,001 | ) |          |  | (666   | ) |  |  | 3,529  | 
|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |        |   |          | 
|                                     |  |            | 18,736 |  |           |  | 20,548 |             |  |  | (14,891 | ) |            |          | (1,001 | ) |          |  | (2,172 | ) |  |  | 21,220 | 
|                                     |  |            |        |  |           |  |        |             |  |  |         |   |            |          |        |   |          | 



|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          |  |      |   |  |  |        | 
|------------------------------------ |  | ---------- | ------ |  | --------- |  | ----- | ----------- |  |  | ------- | - | ---------- | -------- | ------ | - | -------- |  | ---- | - |  |  | ------ | 
|                                     |  | Balance as |        |  |           |  |       |             |  |  |         |   | Balance as |         
|                                     |  | of 01/01   |        |  | Additions |  |       | Utilization |  |  | Release |   |            | Currency |        |   | of 31/12 | 
|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          | 
|                                     |  |  (000)    |        |  |  (000)   |  |       |  (000)     |  |  |  (000) |   |            |  (000)  |        |   |  (000)  | 
|Unused Lease space                   |  |            | 17,691 |  |           |  | 2,625 |             |  |  | (7,557  | ) |            |          | (1,415 | ) |          |  | (779 | ) |  |  | 10,565 | 
|Severance payments for restructuring |  |            | 3,529  |  |           |  | 6,972 |             |  |  | (3,668  | ) |            |          | (1,176 | ) |          |  | 13   |   |  |  | 5,670  | 
|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          | 
|                                     |  |            | 21,220 |  |           |  | 9,597 |             |  |  | (11,225 | ) |            |          | (2,591 | ) |          |  | (766 | ) |  |  | 16,235 | 
|                                     |  |            |        |  |           |  |       |             |  |  |         |   |            |          |        |   |          | 





F-47



---



##### Table of Contents







|                           |  |           |         |  |             |  |       |           |  |  |            |  |  |            |         |  |  |  |         | 
|-------------------------- |  | --------- | ------- |  | ----------- |  | ----- | --------- |  |  | ---------- |  |  | ---------- | ------- |  |  |  | ------- | 
|                           |  | Term less |         |  | Term        |  |       | Term more |  |  |            |  | 
|                           |  | than      |         |  | between 1   |  |       | than      |  |  | Balance on |  |  | Balance on |        
|                           |  | 1 year    |         |  | and 5 years |  |       | 5 years   |  |  | 12/31/2004 |  |  | 12/31/2003 |        
|                           |  |           |         |  |             |  |       |           |  |  |            |  |  |            |        
|                           |  |  (000)   |         |  |  (000)     |  |       |  (000)   |  |  |  (000)    |  |  |  (000)    |        
|Bank loans and overdrafts  |  |           | 25,851  |  |             |  | 0     |           |  |  | 1,934      |  |  |            | 27,785  |  |  |  | 21,467  | 
|Advanced payments received |  |           | 53,537  |  |             |  | 0     |           |  |  | 0          |  |  |            | 53,537  |  |  |  | 42,441  | 
|Accounts payable           |  |           | 340,455 |  |             |  | 6     |           |  |  | 0          |  |  |            | 340,461 |  |  |  | 286,862 | 
|Taxes                      |  |           | 175,248 |  |             |  | 0     |           |  |  | 0          |  |  |            | 175,248 |  |  |  | 165,037 | 
|Social security            |  |           | 43,988  |  |             |  | 0     |           |  |  | 0          |  |  |            | 43,988  |  |  |  | 33,766  | 
|Other liabilities          |  |           | 56,266  |  |             |  | 2,674 |           |  |  | 28,879     |  |  |            | 87,819  |  |  |  | 126,571 | 
|                           |  |           |         |  |             |  |       |           |  |  |            |  |  |            |        
|                           |  |           | 695,345 |  |             |  | 2,680 |           |  |  | 30,813     |  |  |            | 728,838 |  |  |  | 676,144 | 
|                           |  |           |         |  |             |  |       |           |  |  |            |  |  |            |        



 







 


   






D. ADDITIONAL INFORMATION




     


F-48



---



##### Table of Contents













     








|               |  |         |         | 
|-------------- |  | ------- | ------- | 
|               |  |  (000) |        
|               |  |         |        
|Due 2005       |  |         | 134,085 | 
|Due 2006       |  |         | 100,856 | 
|Due 2007       |  |         | 72,400  | 
|Due 2008       |  |         | 58,473  | 
|Due 2009       |  |         | 51,255  | 
|Due thereafter |  |         | 146,410 | 

F-49



---



##### Table of Contents



  
















|                                                  |  |          |         |   |            |  |          |         |  |  |            |   |  |  |         |  
|------------------------------------------------- |  | -------- | ------- | - | ---------- |  | -------- | ------- |  |  | ---------- | - |  |  | ------- | -
|                                                  |  | 2004     |         |   | 2003       | 
|                                                  |  |          |         |   |            | 
|                                                  |  | Carrying |         |   |            |  | Carrying |         |  | 
|                                                  |  | value    |         |   | Fair value |  |          | value   |  |  | Fair value |  
|                                                  |  |          |         |   |            |  |          |         |  |  |            |  
|                                                  |  |  (000)  |         |   |  (000)    |  |          |  (000) |  |  |  (000)    |  
|Marketable equity securities  available-for-sale |  |          | 17,328  |   |            |  | 17,328   |         |  |  | 24,457     |   |  |  | 24,457  |  
|Marketable debt securities  available-for-sale   |  |          | 473     |   |            |  | 473      |         |  |  | 53,026     |   |  |  | 53,026  |  
|Marketable securities                             |  |          | 11,906  |   |            |  | 11,906   |         |  |  | 2,003      |   |  |  | 2,003   |  
|Other loans                                       |  |          | 53,320  |   |            |  | 53,320   |         |  |  | 61,214     |   |  |  | 61,214  |  
|Bank loans and overdrafts                         |  |          | (27,785 | ) |            |  | (27,785  | )       |  |  | (21,467    | ) |  |  | (21,467 | )
|Derivative financial instruments                  |  |          |         |   |            |  |          |         |  |  |            |   |  |  |         |  
|Forward exchange contracts                        |  |          | 81,653  |   |            |  | 81,653   |         |  |  | 177,297    |   |  |  | 177,297 |  
|Call options (STAR hedge)                         |  |          | 104,808 |   |            |  | 104,808  |         |  |  | 77,817     |   |  |  | 77,817  |  
|                                                  |  |          |         |   |            |  |          |         |  |  |            |  
|                                                  |  |          | 241,703 |   |            |  | 241,703  |         |  |  | 374,347    |   |  |  | 374,347 |  
|                                                  |  |          |         |   |            |  |          |         |  |  |            |  







F-50



---



##### Table of Contents























F-51



---



##### Table of Contents



  




STAR Hedge






|                                                               |  |                                                                 |                                 |  |              |  |        |            |                |         |  |  |              |  |  |  |        | 
|-------------------------------------------------------------- |  | --------------------------------------------------------------- | ------------------------------- |  | ------------ |  | ------ | ---------- | -------------- | ------- |  |  | ------------ |  |  |  | ------ | 
|2004                                                           | 
|                                                               | 
|Hedge of 3.0 million 2004 STARs                                |  |                                                                 | Hedge of 2.0 million 2003 STARs | 
|                                                               |  |                                                                 |                                 | 
|                                                               |  | Number of call                                                  |                                 |  |              |  |        |            | Number of call |         |  | 
|Buy / sell                                                     |  | options                                                         |                                 |  | Strike price |  |        | Buy / sell |                | options |  |  | Strike price | 
|                                                               |  |                                                                 |                                 |  |              |  |        |            |                |         |  |  |              | 
|Buy                                                            |  |                                                                 | 3,000,000                       |  |              |  | 134.35 |            |                | Buy     |  |  | 2,000,000    |  |  |  | 84.91  | 
|Sell                                                           |  |                                                                 | 1,500,000                       |  |              |  | 184.35 |            |                | Sell    |  |  | 1,000,000    |  |  |  | 134.91 | 
|Sell                                                           |  |                                                                 | 750,000                         |  |              |  | 234.35 |            |                | Sell    |  |  | 500,000      |  |  |  | 184.91 | 
|Fair value as of December 31, 2004, in
     (000):
    22,308 |  | Fair value as of December 31,  2004, in
     (000):
    82,500



| | 
| | 
| | 

|                                                               |  |                                                        |                                 |  |              |  |        |            |                |         |  |  |              |  |  |  |        | 
|-------------------------------------------------------------- |  | ------------------------------------------------------ | ------------------------------- |  | ------------ |  | ------ | ---------- | -------------- | ------- |  |  | ------------ |  |  |  | ------ | 
|2003                                                           | 
|                                                               | 
|Hedge of 2.0 million 2003 STARs                                |  |                                                        | Hedge of 3.0 million 2002 STARs | 
|                                                               |  |                                                        |                                 | 
|                                                               |  | Number of call                                         |                                 |  |              |  |        |            | Number of call |         |  | 
|Buy / sell                                                     |  | options                                                |                                 |  | Strike price |  |        | Buy / sell |                | options |  |  | Strike price | 
|                                                               |  |                                                        |                                 |  |              |  |        |            |                |         |  |  |              | 
|Buy                                                            |  |                                                        | 2,000,000                       |  |              |  | 84.91  |            |                | Buy     |  |  | 3,000,000    |  |  |  | 158.80 | 
|Sell                                                           |  |                                                        | 1,000,000                       |  |              |  | 134.91 |            |                | Sell    |  |  | 1,500,000    |  |  |  | 208.80 | 
|Sell                                                           |  |                                                        | 500,000                         |  |              |  | 184.91 |            |                | Sell    |  |  | 750,000      |  |  |  | 258.80 | 
|Fair value as of December 31, 2003, in
     (000):
    77,790 |  | Fair value as of December 31, 2003, in
     (000): 27

 






F-52



---



##### Table of Contents





    




|                           |        |          |           |           |            |  |          |         |   |  |            |           |  |  |         |         |  
|-------------------------- | ------ | -------- | --------- | --------- | ---------- |  | -------- | ------- | - |  | ---------- | --------- |  |  | ------- | ------- | -
|                           |        | 2004     |           |           | 2003       | 
|                           |        |          |           |           |            | 
|                           |        | Notional |           |           |            |  | Notional |         |   | 
|                           |        | value    |           |           | Fair value |  |          | value   |   |  | Fair value |          
|                           |        |          |           |           |            |  |          |         |   |  |            |          
|                           |        |  (000)  |           |           |  (000)    |  |          |  (000) |   |  |  (000)    |          
|Forward exchange contracts |        |          |           |           |            |  |          |         |   |  |            |           |  |  |         |        
|                           | Gains  |          |           | 1,226,531 |            |  |          | 86,908  |   |  |            | 1,302,790 |  |  |         | 178,941 |  
|                           | Losses |          |           | 222,487   |            |  |          | (5,255  | ) |  |            | 8,990     |  |  |         | (1,644  | )
|                           |        |          |           |           |            |  |          |         |   |  |            |          
|                           |        |          | 1,449,018 |           |            |  | 81,653   |         |   |  | 1,311,780  |           |  |  | 177,297 |        
|Call options (STAR hedge)  |        |          | n/a       |           |            |  | 104,808  |         |   |  | n/a        |           |  |  | 77,817  |        















F-53



---



##### Table of Contents







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

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

|                       |  |         |            |   |            |  |            |          |  |  |          |   |  |  |            |  
|---------------------- |  | ------- | ---------- | - | ---------- |  | ---------- | -------- |  |  | -------- | - |  |  | ---------- | -
|                       |  | 2003    |           
|                       |  |         |           
|As previously reported |  | Product |            |   | Consulting |  |            | Training |  |  | Total    |  
|                       |  |         |            |   |            |  |            |          |  |  |          |  
|                       |  |  (000) |            |   |  (000)    |  |            |  (000)  |  |  |  (000)  |  
|External revenue       |  |         | 4,797,827  |   |            |  | 1,884,801  |          |  |  | 316,088  |   |  |  | 6,998,716  |  
|Internal revenue       |  |         | 448,486    |   |            |  | 507,244    |          |  |  | 65,981   |   |  |  | 1,021,711  |  
|                       |  |         |            |   |            |  |            |          |  |  |          |  
|Total revenue          |  |         | 5,246,313  |   |            |  | 2,392,045  |          |  |  | 382,069  |   |  |  | 8,020,427  |  
|Segment expenses       |  |         | (2,322,564 | ) |            |  | (1,927,112 | )        |  |  | (287,470 | ) |  |  | (4,537,146 | )
|                       |  |         |            |   |            |  |            |          |  |  |          |  
|Segment contribution   |  |         | 2,923,749  |   |            |  | 464,933    |          |  |  | 94,599   |   |  |  | 3,483,281  |  
|Segment profitability  |  |         | 55.7       | % |            |  | 19.4       | %        |  |  | 24.8     | % |  |  |            |  

|                      |  |         |            |   |            |  |            |          |  |  |          |   |  |  |            |  
|--------------------- |  | ------- | ---------- | - | ---------- |  | ---------- | -------- |  |  | -------- | - |  |  | ---------- | -
|                      |  | 2002    |           
|                      |  |         |           
|As restated           |  | Product |            |   | Consulting |  |            | Training |  |  | Total    |  
|                      |  |         |            |   |            |  |            |          |  |  |          |  
|                      |  |  (000) |            |   |  (000)    |  |            |  (000)  |  |  |  (000)  |  
|External revenue      |  |         | 4,805,339  |   |            |  | 2,141,154  |          |  |  | 435,098  |   |  |  | 7,381,591  |  
|Segment expenses      |  |         | (2,109,955 | ) |            |  | (1,631,986 | )        |  |  | (292,664 | ) |  |  | (4,034,605 | )
|                      |  |         |            |   |            |  |            |          |  |  |          |  
|Segment contribution  |  |         | 2,695,384  |   |            |  | 509,168    |          |  |  | 142,434  |   |  |  | 3,346,986  |  
|Segment profitability |  |         | 56.1       | % |            |  | 23.8       | %        |  |  | 32.7     | % |  |  |            |  

F-54



---



##### Table of Contents



|                       |  |         |            |   |            |  |            |          |  |  |          |   |  |  |            |  
|---------------------- |  | ------- | ---------- | - | ---------- |  | ---------- | -------- |  |  | -------- | - |  |  | ---------- | -
|                       |  | 2002    |           
|                       |  |         |           
|As previously reported |  | Product |            |   | Consulting |  |            | Training |  |  | Total    |  
|                       |  |         |            |   |            |  |            |          |  |  |          |  
|                       |  |  (000) |            |   |  (000)    |  |            |  (000)  |  |  |  (000)  |  
|External revenue       |  |         | 4,805,339  |   |            |  | 2,141,154  |          |  |  | 435,098  |   |  |  | 7,381,591  |  
|Internal revenue       |  |         | 464,669    |   |            |  | 513,064    |          |  |  | 83,860   |   |  |  | 1,061,593  |  
|                       |  |         |            |   |            |  |            |          |  |  |          |  
|Total revenue          |  |         | 5,270,008  |   |            |  | 2,654,218  |          |  |  | 518,958  |   |  |  | 8,443,184  |  
|Segment expenses       |  |         | (2,584,305 | ) |            |  | (2,128,383 | )        |  |  | (376,378 | ) |  |  | (5,089,066 | )
|                       |  |         |            |   |            |  |            |          |  |  |          |  
|Segment contribution   |  |         | 2,685,703  |   |            |  | 525,835    |          |  |  | 142,580  |   |  |  | 3,354,118  |  
|Segment profitability  |  |         | 51.0       | % |            |  | 19.8       | %        |  |  | 27.5     | % |  |  |            |  



















|                                      |  |         |           |      |             |               |           |          |  |  |               |   |  |          |           |  |  |  |            |  
|------------------------------------- |  | ------- | --------- | ---- | ----------- | ------------- | --------- | -------- |  |  | ------------- | - |  | -------- | --------- |  |  |  | ---------- | -
|                                      |  |         |           | 2003 |             |               | 2002      |         
|                                      |  |         |           |      |             |               |           |         
|                                      |  |         |           |      |             | As previously |           |          |  |  | As previously |  
|                                      |  | 2004    |           |      | As restated |               |           | reported |  |  | As restated   |   |  | reported |          
|                                      |  |         |           |      |             |               |           |          |  |  |               |   |  |          |          
|                                      |  |  (000) |           |      |  (000)     |               |           |  (000)  |  |  |  (000)       |   |  |  (000)  |          
|Total revenue for reportable segments |  |         | 7,509,824 |      |             |               | 6,998,716 |          |  |  | 8,020,427     |   |  |          | 7,381,591 |  |  |  | 8,443,184  |  
|Elimination of internal revenues      |  |         | 0         |      |             |               | 0         |          |  |  | (1,021,711    | ) |  |          | 0         |  |  |  | (1,061,593 | )
|Other external revenues               |  |         | 4,474     |      |             |               | 26,074    |          |  |  | 26,074        |   |  |          | 31,225    |  |  |  | 31,225     |  
|Other differences                     |  |         | 195       |      |             |               | (184      | )        |  |  | (184          | ) |  |          | 22        |  |  |  | 22         |  
|                                      |  |         |           |      |             |               |           |          |  |  |               |   |  |          |          
|                                      |  |         | 7,514,493 |      |             |               | 7,024,606 |          |  |  | 7,024,606     |   |  |          | 7,412,838 |  |  |  | 7,412,838  |  
|                                      |  |         |           |      |             |               |           |          |  |  |               |   |  |          |          



F-55



---



##### Table of Contents









|                                                                          |  |         |            |      |             |               |            |          |  |  |               |   |  |          |            |   |  |  |            |  
|------------------------------------------------------------------------- |  | ------- | ---------- | ---- | ----------- | ------------- | ---------- | -------- |  |  | ------------- | - |  | -------- | ---------- | - |  |  | ---------- | -
|                                                                          |  |         |            | 2003 |             |               | 2002       |         
|                                                                          |  |         |            |      |             |               |            |         
|                                                                          |  |         |            |      |             | As previously |            |          |  |  | As previously |  
|                                                                          |  | 2004    |            |      | As restated |               |            | reported |  |  | As restated   |   |  | reported |           
|                                                                          |  |         |            |      |             |               |            |          |  |  |               |   |  |          |           
|                                                                          |  |  (000) |            |      |  (000)     |               |            |  (000)  |  |  |  (000)       |   |  |  (000)  |           
|Total contribution for reportable segments                                |  |         | 3,758,731  |      |             |               | 3,471,856  |          |  |  | 3,483,281     |   |  |          | 3,346,986  |   |  |  | 3,354,118  |  
|Contribution from activities outside the reportable segments              |  |         | (1,672,252 | )    |             |               | (1,591,996 | )        |  |  | (1,628,877    | ) |  |          | (1,657,996 | ) |  |  | (1,692,548 | )
|Acquisition-related charges                                               |  |         | (30,221    | )    |             |               | (25,735    | )        |  |  | 0             |   |  |          | (27,478    | ) |  |  | 0          |  
|Stock-based compensation expenses                                         |  |         | (38,126    | )    |             |               | (130,044   | )        |  |  | (130,044      | ) |  |          | (35,868    | ) |  |  | (35,868    | )
|Other differences                                                         |  |         | 249        |      |             |               | (62        | )        |  |  | (341          | ) |  |          | 34         |   |  |  | (24        | )
|                                                                          |  |         |            |      |             |               |            |          |  |  |               |   |  |          |           
|Operating income                                                          |  |         | 2,018,381  |      |             |               | 1,724,019  |          |  |  | 1,724,019     |   |  |          | 1,625,678  |   |  |  | 1,625,678  |  
|                                                                          |  |         |            |      |             |               |            |          |  |  |               |   |  |          |           
|Other non-operating income/expenses, net                                  |  |         | 13,274     |      |             |               | 36,309     |          |  |  | 36,309        |   |  |          | 37,319     |   |  |  | 37,319     |  
|Finance income, net                                                       |  |         | 40,987     |      |             |               | 16,287     |          |  |  | 16,287        |   |  |          | (555,299   | ) |  |  | (555,299   | )
|                                                                          |  |         |            |      |             |               |            |          |  |  |               |   |  |          |           
|Income before income taxes, minority interest, and
    extraordinary gain |  |         | 2,072,642  |      |             |               | 1,776,615  |          |  |  | 1,776,615     |   |  |          | 1,107,698  |   |  |  | 1,107,698  |  
|                                                                          |  |         |            |      |             |               |            |          |  |  |               |   |  |          |           















F-56



---



##### Table of Contents





|                     |  |                      |           |  |                    |  |           |         |  |  |           |  |  |         |           |  |         |  |           |  |  |  |           | 
|-------------------- |  | -------------------- | --------- |  | ------------------ |  | --------- | ------- |  |  | --------- |  |  | ------- | --------- |  | ------- |  | --------- |  |  |  | --------- | 
|                     |  | Sales by destination |           |  | Sales by operation | 
|                     |  |                      |           |  |                    | 
|                     |  | 2004                 |           |  | 2003               |  |           | 2002    |  |  | 2004      |  |  | 2003    |           |  | 2002    | 
|                     |  |                      |           |  |                    |  |           |         |  |  |           |  |  |         |           |  |         | 
|                     |  |  (000)              |           |  |  (000)            |  |           |  (000) |  |  |  (000)   |  |  |  (000) |           |  |  (000) | 
|Germany              |  |                      | 1,780,128 |  |                    |  | 1,670,261 |         |  |  | 1,654,144 |  |  |         | 1,875,081 |  |         |  | 1,771,289 |  |  |  | 1,793,961 | 
|Rest of
    EMEA1)   |  |                      | 2,443,383 |  |                    |  | 2,299,581 |         |  |  | 2,394,011 |  |  |         | 2,411,294 |  |         |  | 2,238,387 |  |  |  | 2,301,660 | 
|                     |  |                      |           |  |                    |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total EMEA           |  |                      | 4,223,511 |  |                    |  | 3,969,842 |         |  |  | 4,048,155 |  |  |         | 4,286,375 |  |         |  | 4,009,676 |  |  |  | 4,095,621 | 
|                     |  |                      |           |  |                    |  |           |         |  |  |           |  |  |         |           |  |         | 
|United States        |  |                      | 1,893,746 |  |                    |  | 1,736,080 |         |  |  | 1,969,748 |  |  |         | 1,880,247 |  |         |  | 1,728,008 |  |  |  | 1,954,427 | 
|Rest of Americas     |  |                      | 530,043   |  |                    |  | 480,150   |         |  |  | 531,880   |  |  |         | 513,586   |  |         |  | 472,142   |  |  |  | 525,657   | 
|                     |  |                      |           |  |                    |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total Americas       |  |                      | 2,423,789 |  |                    |  | 2,216,230 |         |  |  | 2,501,628 |  |  |         | 2,393,833 |  |         |  | 2,200,150 |  |  |  | 2,480,084 | 
|                     |  |                      |           |  |                    |  |           |         |  |  |           |  |  |         |           |  |         | 
|Japan                |  |                      | 387,443   |  |                    |  | 441,557   |         |  |  | 485,939   |  |  |         | 385,013   |  |         |  | 440,226   |  |  |  | 485,605   | 
|Rest of Asia-Pacific |  |                      | 479,750   |  |                    |  | 396,977   |         |  |  | 377,116   |  |  |         | 449,272   |  |         |  | 374,554   |  |  |  | 351,528   | 
|                     |  |                      |           |  |                    |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total Asia-Pacific   |  |                      | 867,193   |  |                    |  | 838,534   |         |  |  | 863,055   |  |  |         | 834,285   |  |         |  | 814,780   |  |  |  | 837,133   | 
|                     |  |                      |           |  |                    |  |           |         |  |  |           |  |  |         |           |  |         | 
|                     |  |                      | 7,514,493 |  |                    |  | 7,024,606 |         |  |  | 7,412,838 |  |  |         | 7,514,493 |  |         |  | 7,024,606 |  |  |  | 7,412,838 | 
|                     |  |                      |           |  |                    |  |           |         |  |  |           |  |  |         |           |  |         | 






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

|                     |  |                            |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         |  |           |  |  |  |           | 
|-------------------- |  | -------------------------- | --------- |  | ------------ |  | --------- | ------- |  |  | --------- |  |  | ------- | --------- |  | ------- |  | --------- |  |  |  | --------- | 
|                     |  | Income before income tax2) |           |  | Total assets | 
|                     |  |                            |           |  |              | 
|                     |  | 2004                       |           |  | 2003         |  |           | 2002    |  |  | 2004      |  |  | 2003    |           |  | 2002    | 
|                     |  |                            |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|                     |  |  (000)                    |           |  |  (000)      |  |           |  (000) |  |  |  (000)   |  |  |  (000) |           |  |  (000) | 
|Germany              |  |                            | 1,528,052 |  |              |  | 1,368,735 |         |  |  | 1,281,148 |  |  |         | 3,567,090 |  |         |  | 2,597,173 |  |  |  | 1,967,167 | 
|Rest of
    EMEA1)   |  |                            | 335,768   |  |              |  | 285,565   |         |  |  | 312,278   |  |  |         | 1,376,879 |  |         |  | 1,295,265 |  |  |  | 1,301,115 | 
|                     |  |                            |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total EMEA           |  |                            | 1,863,820 |  |              |  | 1,654,300 |         |  |  | 1,593,426 |  |  |         | 4,943,969 |  |         |  | 3,892,438 |  |  |  | 3,268,282 | 
|                     |  |                            |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|United States        |  |                            | 265,344   |  |              |  | 178,372   |         |  |  | 268,043   |  |  |         | 1,866,987 |  |         |  | 1,710,432 |  |  |  | 1,616,408 | 
|Rest of Americas     |  |                            | 21,593    |  |              |  | 40,170    |         |  |  | 80,340    |  |  |         | 288,370   |  |         |  | 318,451   |  |  |  | 326,496   | 
|                     |  |                            |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total Americas       |  |                            | 286,937   |  |              |  | 218,542   |         |  |  | 348,383   |  |  |         | 2,155,357 |  |         |  | 2,028,883 |  |  |  | 1,942,904 | 
|                     |  |                            |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|Japan                |  |                            | 38,752    |  |              |  | 61,891    |         |  |  | 82,071    |  |  |         | 151,712   |  |         |  | 163,616   |  |  |  | 177,624   | 
|Rest of Asia-Pacific |  |                            | 62,027    |  |              |  | 23,618    |         |  |  | 36,441    |  |  |         | 334,434   |  |         |  | 240,928   |  |  |  | 219,653   | 
|                     |  |                            |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|Total Asia-Pacific   |  |                            | 100,779   |  |              |  | 85,509    |         |  |  | 118,512   |  |  |         | 486,146   |  |         |  | 404,544   |  |  |  | 397,277   | 
|                     |  |                            |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 
|                     |  |                            | 2,251,536 |  |              |  | 1,958,351 |         |  |  | 2,060,321 |  |  |         | 7,585,472 |  |         |  | 6,325,865 |  |  |  | 5,608,463 | 
|                     |  |                            |           |  |              |  |           |         |  |  |           |  |  |         |           |  |         | 






|   |                                               
|-- | ----------------------------------------------
|1) | Europe, Middle East, Africa                   
|  
|2) | Figures of the Standalone Financial Statements

F-57



---



##### Table of Contents



|                     |  |                                |         |  |                      |  |           |         |  |  |           |  |  |         |         |  |         |  |         |  |  |  |         | 
|-------------------- |  | ------------------------------ | ------- |  | -------------------- |  | --------- | ------- |  |  | --------- |  |  | ------- | ------- |  | ------- |  | ------- |  |  |  | ------- | 
|                     |  | Property, plant, and equipment |         |  | Capital expenditures | 
|                     |  |                                |         |  |                      | 
|                     |  | 2004                           |         |  | 2003                 |  |           | 2002    |  |  | 2004      |  |  | 2003    |         |  | 2002    | 
|                     |  |                                |         |  |                      |  |           |         |  |  |           |  |  |         |         |  |         | 
|                     |  |  (000)                        |         |  |  (000)              |  |           |  (000) |  |  |  (000)   |  |  |  (000) |         |  |  (000) | 
|Germany              |  |                                | 702,500 |  |                      |  | 699,863   |         |  |  | 648,828   |  |  |         | 117,187 |  |         |  | 159,019 |  |  |  | 201,799 | 
|Rest of
    EMEA1)   |  |                                | 128,347 |  |                      |  | 128,872   |         |  |  | 148,564   |  |  |         | 27,003  |  |         |  | 17,460  |  |  |  | 23,924  | 
|                     |  |                                |         |  |                      |  |           |         |  |  |           |  |  |         |         |  |         | 
|Total EMEA           |  |                                | 830,847 |  |                      |  | 828,735   |         |  |  | 797,392   |  |  |         | 144,190 |  |         |  | 176,479 |  |  |  | 225,723 | 
|                     |  |                                |         |  |                      |  |           |         |  |  |           |  |  |         |         |  |         | 
|United States        |  |                                | 132,590 |  |                      |  | 158,805   |         |  |  | 208,466   |  |  |         | 11,689  |  |         |  | 9,009   |  |  |  | 21,423  | 
|Rest of Americas     |  |                                | 5,371   |  |                      |  | 4,244     |         |  |  | 4,876     |  |  |         | 3,226   |  |         |  | 2,145   |  |  |  | 2,235   | 
|                     |  |                                |         |  |                      |  |           |         |  |  |           |  |  |         |         |  |         | 
|Total Americas       |  |                                | 137,961 |  |                      |  | 163,049   |         |  |  | 213,342   |  |  |         | 14,915  |  |         |  | 11,154  |  |  |  | 23,658  | 
|                     |  |                                |         |  |                      |  |           |         |  |  |           |  |  |         |         |  |         | 
|Japan                |  |                                | 5,377   |  |                      |  | 7,518     |         |  |  | 11,019    |  |  |         | 1,959   |  |         |  | 1,840   |  |  |  | 2,424   | 
|Rest of Asia-Pacific |  |                                | 24,898  |  |                      |  | 20,355    |         |  |  | 12,464    |  |  |         | 10,924  |  |         |  | 14,217  |  |  |  | 7,693   | 
|                     |  |                                |         |  |                      |  |           |         |  |  |           |  |  |         |         |  |         | 
|Total Asia-Pacific   |  |                                | 30,275  |  |                      |  | 27,873    |         |  |  | 23,483    |  |  |         | 12,883  |  |         |  | 16,057  |  |  |  | 10,117  | 
|                     |  |                                |         |  |                      |  |           |         |  |  |           |  |  |         |         |  |         | 
|                     |  |                                | 999,083 |  |                      |  | 1,019,657 |         |  |  | 1,034,217 |  |  |         | 171,988 |  |         |  | 203,690 |  |  |  | 259,498 | 
|                     |  |                                |         |  |                      |  |           |         |  |  |           |  |  |         |         |  |         | 






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

|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      |  |        |  |  |  |        | 
|-------------------- |  | ------------ | ------- | ---------------------------- | ------------------------ |  | ------- | ------- |  |  | ------- |  |  | ---- | ------ |  | ---- |  | ------ |  |  |  | ------ | 
|                     |  |              |         | Employees as of December 31, |                         
|                     |  | Depreciation |         |                              | in full-time equivalents | 
|                     |  |              |         |                              |                          | 
|                     |  | 2004         |         |                              | 2003                     |  |         | 2002    |  |  | 2004    |  |  | 2003 |        |  | 2002 | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|                     |  |  (000)      |         |                              |  (000)                  |  |         |  (000) |  |  |         |  |  |      |       
|Germany              |  |              | 109,714 |                              |                          |  | 105,797 |         |  |  | 92,509  |  |  |      | 13,525 |  |      |  | 13,026 |  |  |  | 12,580 | 
|Rest of
    EMEA1)   |  |              | 24,862  |                              |                          |  | 27,895  |         |  |  | 31,513  |  |  |      | 7,133  |  |      |  | 6,808  |  |  |  | 6,655  | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|Total EMEA           |  |              | 134,576 |                              |                          |  | 133,692 |         |  |  | 124,022 |  |  |      | 20,658 |  |      |  | 19,834 |  |  |  | 19,235 | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|United States        |  |              | 18,211  |                              |                          |  | 24,022  |         |  |  | 31,773  |  |  |      | 5,143  |  |      |  | 4,621  |  |  |  | 4,885  | 
|Rest of Americas     |  |              | 1,985   |                              |                          |  | 2,673   |         |  |  | 4,009   |  |  |      | 1,541  |  |      |  | 1,435  |  |  |  | 1,426  | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|Total Americas       |  |              | 20,196  |                              |                          |  | 26,695  |         |  |  | 35,782  |  |  |      | 6,684  |  |      |  | 6,056  |  |  |  | 6,311  | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|Japan                |  |              | 3,778   |                              |                          |  | 4,587   |         |  |  | 5,093   |  |  |      | 1,340  |  |      |  | 1,350  |  |  |  | 1,248  | 
|Rest of Asia-Pacific |  |              | 5,916   |                              |                          |  | 5,038   |         |  |  | 6,909   |  |  |      | 3,523  |  |      |  | 2,370  |  |  |  | 2,003  | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|Asia-Pacific         |  |              | 9,694   |                              |                          |  | 9,625   |         |  |  | 12,002  |  |  |      | 4,863  |  |      |  | 3,720  |  |  |  | 3,251  | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 
|                     |  |              | 164,466 |                              |                          |  | 170,012 |         |  |  | 171,806 |  |  |      | 32,205 |  |      |  | 29,610 |  |  |  | 28,797 | 
|                     |  |              |         |                              |                          |  |         |         |  |  |         |  |  |      |        |  |      | 






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



F-58



---



##### Table of Contents





|                    |  |                                   |           |  |                                         |  |           |         |  |  |           |  |  |         |           |  |         |  |           |  |  |  |           | 
|------------------- |  | --------------------------------- | --------- |  | --------------------------------------- |  | --------- | ------- |  |  | --------- |  |  | ------- | --------- |  | ------- |  | --------- |  |  |  | --------- | 
|                    |  | Total revenue by industry sectors |           |  | Software revenues by industry sectors1) | 
|                    |  |                                   |           |  |                                         | 
|                    |  | 2004                              |           |  | 2003                                    |  |           | 2002    |  |  | 2004      |  |  | 2003    |           |  | 2002    | 
|                    |  |                                   |           |  |                                         |  |           |         |  |  |           |  |  |         |           |  |         | 
|                    |  |  (000)                           |           |  |  (000)                                 |  |           |  (000) |  |  |  (000)   |  |  |  (000) |           |  |  (000) | 
|Process industries  |  |                                   | 1,469,136 |  |                                         |  | 1,381,279 |         |  |  | 1,537,033 |  |  |         | 489,024   |  |         |  | 404,409   |  |  |  | 469,992   | 
|Discrete industries |  |                                   | 1,807,871 |  |                                         |  | 1,659,334 |         |  |  | 1,764,154 |  |  |         | 550,444   |  |         |  | 496,127   |  |  |  | 490,304   | 
|Consumer industries |  |                                   | 1,349,825 |  |                                         |  | 1,243,809 |         |  |  | 1,299,694 |  |  |         | 426,547   |  |         |  | 359,958   |  |  |  | 412,353   | 
|Service industries  |  |                                   | 1,673,901 |  |                                         |  | 1,664,525 |         |  |  | 1,765,903 |  |  |         | 455,054   |  |         |  | 525,061   |  |  |  | 563,470   | 
|Financial services  |  |                                   | 519,115   |  |                                         |  | 474,135   |         |  |  | 514,760   |  |  |         | 197,511   |  |         |  | 172,544   |  |  |  | 176,457   | 
|Public services     |  |                                   | 694,645   |  |                                         |  | 601,524   |         |  |  | 531,294   |  |  |         | 242,432   |  |         |  | 189,492   |  |  |  | 178,258   | 
|                    |  |                                   |           |  |                                         |  |           |         |  |  |           |  |  |         |           |  |         | 
|                    |  |                                   | 7,514,493 |  |                                         |  | 7,024,606 |         |  |  | 7,412,838 |  |  |         | 2,361,012 |  |         |  | 2,147,591 |  |  |  | 2,290,834 | 
|                    |  |                                   |           |  |                                         |  |           |         |  |  |           |  |  |         |           |  |         | 






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



|                                                                   |  |         |           |  |         |  |           |         |  |  |           | 
|------------------------------------------------------------------ |  | ------- | --------- |  | ------- |  | --------- | ------- |  |  | --------- | 
|                                                                   |  | 2004    |           |  | 2003    |  |           | 2002    | 
|                                                                   |  |         |           |  |         |  |           |         | 
|                                                                   |  |  (000) |           |  |  (000) |  |           |  (000) | 
|Enterprise Resource Planning (ERP)                                 |  |         | 989,972   |  |         |  | 801,221   |         |  |  | 926,933   | 
|Supply Chain Management (SCM)                                      |  |         | 479,993   |  |         |  | 477,131   |         |  |  | 463,966   | 
|Customer Relationship Management (CRM)                             |  |         | 501,007   |  |         |  | 440,121   |         |  |  | 472,966   | 
|Product Lifecycle Management (PLM)                                 |  |         | 166,924   |  |         |  | 156,043   |         |  |  | 167,988   | 
|Business Intelligence / Enterprise Portal / SRM /
    Marketplaces |  |         | n/a       |  |         |  | 273,075   |         |  |  | 258,981   | 
|SRM                                                                |  |         | 147,091   |  |         |  | n/a       |         |  |  | n/a       | 
|Other                                                              |  |         | 76,025    |  |         |  | n/a       |         |  |  | n/a       | 
|                                                                   |  |         |           |  |         |  |           |         | 
|                                                                   |  |         | 2,361,012 |  |         |  | 2,147,591 |         |  |  | 2,290,834 | 
|                                                                   |  |         |           |  |         |  |           |         | 



F-59



---



##### Table of Contents







|                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                |  | Membership on supervisory boards and other comparable governing                                                                                                                                                                            
|                                                                                                                                                                                                                                |  | bodies of enterprises, other than subsidiaries of the Company, in                                                                                                                                                                          
|                                                                                                                                                                                                                                |  | Germany and other countries, on December 31, 2004(1)                                                                                                                                                                                       
|                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                            
|Prof. Dr. Henning KagermannCEO
    Overall responsibility for SAPs strategy and business
    development, marketing, global communications, customer
    development, Business Solutions Group Financial &
    Public Services |  | Supervisory Board, Deutsche Bank AG, Frankfurt am Main,
    Germany
    Supervisory Board, DaimlerChrysler Services (debis) AG, Berlin,
    Germany
    Supervisory Board, Münchener
    Rückversicherungs-Gesellschaft AG, Munich, Germany
|Shai AgassiDevelopment of the technology platform
    SAP NetWeaver, mySAP Supplier Relationship Management, SAP
    Business One, and SAP xApps                                                                                |  |                                                                                                                                                                                                                                            
|Léo ApothekerGlobal Field Operations
    (sales, consulting, education)                                                                                                                                                         |  | Board of Directors, Enigma, Inc., Burlington, Massachusetts,
    United States                                                                                                                                                             
|Dr. Werner BrandtChief Financial Officer                                                                                                                                                                                        |  | Supervisory Board, LSG Lufthansa Service Holding AG,
    Neu-Isenburg, Germany                                                                                                                                                             
|Prof. Dr. Claus E. HeinrichBusiness Solutions Group
    Manufacturing Industries, human resources, labor relations                                                                                                              |  |                                                                                                                                                                                                                                            
|Gerhard OswaldGlobal support, IT infrastructure                                                                                                                                                                                 |  |                                                                                                                                                                                                                                            
|Dr. Peter ZenckeDevelopment organization of SAPs Enterprise Services
    Architecture and Platform, global research activities,
    development labs                                                                           |  | Supervisory Board, SupplyOn AG, Hallbergmoos, Germany
    Supervisory Board, SuSE Linux AG, Nuremberg, Germany (until
    January 12, 2004)                                                                                                






|    |                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Memberships on supervisory boards and comparable governing
    bodies of subsidiaries and changes in other membership that
    occurred during the year are shown in the financial statements
    of SAP AG, which can be obtained from the Company upon request.

F-60



---



##### Table of Contents







|                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                            
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                     |  | Membership on other supervisory boards and comparable                                                                                                                                                                                      
|                                                                                                                                                                                                     |  | governing bodies of enterprises other than the Company, in                                                                                                                                                                                 
|                                                                                                                                                                                                     |  | Germany and other countries on December 31, 2004                                                                                                                                                                                           
|                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                            
|Prof. Dr. h.c. mult. Hasso Plattner
    (2), (4),
    (5), (7)Chairperson
    Chairman of the Supervisory Board                                                                                      |  |                                                                                                                                                                                                                                            
|Helga
    Classen(1),
    (4), (7)Deputy Chairperson
    Development architect                                                                                                                       |  |                                                                                                                                                                                                                                            
|Pekka
    Ala-Pietilä(5)President Nokia Corporation, Espoo, Finland                                                                                                                                  |  |                                                                                                                                                                                                                                            
|Willi
    Burbach(1),
    (4), (5)Developer                                                                                                                                                          |  |                                                                                                                                                                                                                                            
|Prof. Dr. Wilhelm
    Haarmann(2),
    (3), (7)Attorney-at-law, certified public auditor, certified
    tax advisor Managing Partner, Haarmann, Hemmelrath &
    Partner, Frankfurt am Main, Germany |  | Supervisory Board, Häussler AG, Stuttgart, Germany (until
    January 13, 2004)
    Supervisory Board, Aareon AG (formerly Depfa IT Services),
    Mainz, Germany
    Supervisory Board, Vodafone Deutschland GmbH, Düsseldorf,
    Germany
|Dietmar
    Hopp(6)Managing Director, Dietmar Hopp
    Stiftung GmbH, Walldorf, Germany                                                                                                              |  |                                                                                                                                                                                                                                            
|Bernhard
    Koller(1),
    (3)Manager of idea management                                                                                                                                            |  |                                                                                                                                                                                                                                            
|Christiane
    Kuntz-Mayr(1),
    (5), (7)Development manager                                                                                                                                        |  |                                                                                                                                                                                                                                            
|Lars
    Lamadé(1),
    (6)Risk Manager Service & Support                                                                                                                                            |  |                                                                                                                                                                                                                                            
|Dr. Gerhard
    Maier(1),
    (2), (6)Development project manager                                                                                                                                    |  |                                                                                                                                                                                                                                            

F-61



---



##### Table of Contents



|                                                                                                                                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                         |  | Membership on other supervisory boards and comparable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                         |  | governing bodies of enterprises other than the Company, in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                         |  | Germany and other countries on December 31, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Dr. h.c. Hartmut
    Mehdorn(4)Chairman of the Executive Board, Deutsche Bahn AG,
    Berlin, Germany                                                                                                    |  | Supervisory Board, DB Station & Service AG, Frankfurt
    am Main, Germany
    Supervisory Board, DB Reise & Touristik AG, Frankfurt
    am Main, Germany (until April 19, 2004)
    Supervisory Board, DB Regio AG, Frankfurt am Main, Germany
    (until April 19, 2004)
    Supervisory Board, Stinnes AG, Berlin, Germany, Supervisory
    Board, DB Personenverkehr GmbH, Berlin (from April 15,
    2004) Supervisory Board, DB Netz AG, Frankfurt am Main,
    Germany
    Supervisory Board, DEVK Deutsche Eisenbahn Versicherung
    Lebensversicherungsverein a.G., Cologne, Germany
    Supervisory Board, DEVK Deutsche Eisenbahn Versicherung
    Sach- und HUK-Versicherungsverein a.G., Cologne, Germany
    Supervisory Board, Dresdner Bank AG, Frankfurt am Main,
    Germany
    Supervisory Board, Bayerische
    Magnetbahnvorbereitungsgesellschaft mbH, Munich, Germany
    Advisory Council, Railog GmbH, Kriftel, Germany
    Supervisory Board, Projektgesellschaft METRORAPID mbH, Duisburg,
    Germany (until March 31, 2004)
    Advisory Council, DB Akademie GmbH, Berlin, Germany
|Prof. Dr. Dr. h.c. mult. August-Wilhelm
    Scheer(5),(6)Director of the Institute for Information Systems at
    the German Research Center of Artificial Intelligence (DFKI),
    Saarbrücken, Germany |  | Supervisory Board, IDS Scheer AG, Saarbrücken, Germany
    Supervisory Board, abaXX Technology AG, Stuttgart, Germany
    (until June 30, 2004)
    Supervisory Board, imc information multimedia communication AG,
    Saarbrücken, Germany
    Board of Trustees, Hasso Plattner Stiftung für
    Softwaresystemtechnik, Potsdam, Germany                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Dr. Barbara
    Schennerlein(1),
    (7)Principal consultant                                                                                                                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Stefan
    Schulz(1),
    (3), (5)Development Project Manager                                                                                                                                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Dr. Dieter
    Spöri(7)Head of Corporate Representation Federal Affairs,
    DaimlerChrysler AG, Berlin, Germany                                                                                         |  | Advisory Council, Contraf Nicotex Tobacco GmbH, Heilbronn,
    Germany                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-62



---



##### Table of Contents



|                                                                           |  |                                                                                                         
|-------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------
|                                                                           |  | Membership on other supervisory boards and comparable                                                   
|                                                                           |  | governing bodies of enterprises other than the Company, in                                              
|                                                                           |  | Germany and other countries on December 31, 2004                                                        
|                                                                           |  |                                                                                                         
|Dr. h.c. Klaus
    Tschira(3)                                              |  | Supervisory Board, SRH Learnlife AG, Heidelberg, Germany                                                
|Managing Director, Klaus Tschira Foundation gGmbH, Heidelberg,
    Germany |  | Member of the Senate, Max-Planck-Gesellschaft zur Förderung
    der Wissenschaften e.V., Munich, Germany






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

  


  


   












F-63



---



##### Table of Contents







 


     






 


F-64



---



##### Table of Contents

















F-65



---



##### Table of Contents

















F-66



---



##### Table of Contents



SCHEDULE II


Valuation and Qualifying Accounts and Reserves


Years ended December 31, 2004, 2003 and 2002


|                                       |  |                         |        |   |      |  |         |      |  |  |         |  
|-------------------------------------- |  | ----------------------- | ------ | - | ---- |  | ------- | ---- |  |  | ------- | -
|                                       |  | Year ended December 31, |       
|                                       |  |                         |       
|                                       |  | 2004                    |        |   | 2003 |  |         | 2002 | 
|                                       |  |                         |        |   |      |  |         |      | 
|                                       |  |  (000)                 |       
|Balance at beginning of year           |  |                         | 71,011 |   |      |  | 92,511  |      |  |  | 110,269 |  
|Charged to costs and expenses (*)      |  |                         | 1,742  |   |      |  | 6,969   |      |  |  | 7,621   |  
|Amounts written off                    |  |                         | (7,700 | ) |      |  | (22,939 | )    |  |  | (21,222 | )
|Currency translation and other changes |  |                         | (1,691 | ) |      |  | (5,530  | )    |  |  | (4,157  | )
|                                       |  |                         |        |   |      |  |         |      | 
|Balance at end of year                 |  |                         | 63,362 |   |      |  | 71,011  |      |  |  | 92,511  |  
|                                       |  |                         |        |   |      |  |         |      | 






|    |                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(*) | includes the provision of bad debt expense based on aging
    charged (credited) to other operating income/(expense) of
    (1,791)
    thousand, 5,368
    thousand, and
    5,288 thousand
    in 2004, 2003, and 2002, respectively.

S-1