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UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 20-F


|           |  |                                                                                                   
|---------- |  | --------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                   
|o          |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934          
|           |  | For the fiscal year ended December 31, 2006                                                       
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
     OF THE SECURITIES EXCHANGE ACT OF 1934     
|           |  | For the transition period
    from           to                                                   
|o          |  | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   
|           |  | Date of event requiring this shell company report                                                 

Commission file number: 1-14251





SAP AG


(Exact name of Registrant as specified in its charter)


SAP CORPORATION


(Translation of Registrants name into English)


Federal Republic of Germany


(Jurisdiction of incorporation or organization)





Dietmar-Hopp-Allee 16


69190 Walldorf


Federal Republic of Germany


(Address of principal executive offices)


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


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

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


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




|                                                                       |  |              
|---------------------------------------------------------------------- |  | -------------
|Ordinary Shares, without nominal value (as of December 31,
    2006)** |  | 1,267,537,248



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



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





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

12b-2


þ o o




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

12b-2


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





|   |                                      
|-- | -------------------------------------
|** | Including 49,250,676 treasury shares.









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TABLE OF CONTENTS


|                                   |                                                                   |                                                                        |   |    |    | 
|---------------------------------- | ----------------------------------------------------------------- | ---------------------------------------------------------------------- | - | -- | -- | 
|                                   |                                                                   | Page                                                                   |  
|                                   |                                                                   |                                                                        |  
|INTRODUCTION                       |                                                                   |                                                                        | 1 |   
|FORWARD-LOOKING INFORMATION        |                                                                   |                                                                        | 2 |   
|USE OF NON-GAAP FINANCIAL MEASURES |                                                                   |                                                                        | 3 |   
|PART I                             |                                                                   |                                                                        | 7 |   
|                                   | ITEM 1. IDENTITY OF DIRECTORS, SENIOR
    MANAGEMENT AND ADVISERS |                                                                        |   | 7  |   
|                                   | ITEM 2. OFFER STATISTICS AND EXPECTED
    TIMETABLE               |                                                                        |   | 7  |   
|                                   | ITEM 3. KEY INFORMATION                                           |                                                                        |   | 7  |   
|                                   |                                                                   | Selected Financial Data                                                |   |    | 7  | 
|                                   |                                                                   | Exchange Rates                                                         |   |    | 8  | 
|                                   |                                                                   | Dividends                                                              |   |    | 9  | 
|                                   |                                                                   | Risk Factors                                                           |   |    | 10 | 
|                                   | ITEM 4. INFORMATION ABOUT SAP                                     |                                                                        |   | 23 |   
|                                   |                                                                   | Description of the Business                                            |   |    | 24 | 
|                                   |                                                                   | Our Software Solutions and Services
    Offerings                      |   |    | 29 | 
|                                   |                                                                   | Seasonality                                                            |   |    | 32 | 
|                                   |                                                                   | Business by Region                                                     |   |    | 32 | 
|                                   |                                                                   | Revenue by Industry Sector                                             |   |    | 33 | 
|                                   |                                                                   | Sales, Marketing and Distribution                                      |   |    | 34 | 
|                                   |                                                                   | Partnerships, Alliances and Acquisitions                               |   |    | 34 | 
|                                   |                                                                   | Intellectual Property, Proprietary Rights
    and Licenses             |   |    | 36 | 
|                                   |                                                                   | Organizational Structure                                               |   |    | 36 | 
|                                   |                                                                   | Description of Property                                                |   |    | 37 | 
|                                   | ITEM 4A. UNRESOLVED STAFF COMMENTS                                |                                                                        |   | 39 |   
|                                   | ITEM 5. OPERATING AND FINANCIAL REVIEW AND
    PROSPECTS          |                                                                        |   | 39 |   
|                                   |                                                                   | Overview                                                               |   |    | 39 | 
|                                   |                                                                   | Key Factors                                                            |   |    | 40 | 
|                                   |                                                                   | Operating Results                                                      |   |    | 42 | 
|                                   |                                                                   | Segment Discussion                                                     |   |    | 53 | 
|                                   |                                                                   | Outlook 2007                                                           |   |    | 57 | 
|                                   |                                                                   | Foreign Currency Exchange Rate Exposure                                |   |    | 59 | 
|                                   |                                                                   | Critical Accounting Policies                                           |   |    | 59 | 
|                                   |                                                                   | New Accounting Standards Not Yet Adopted                               |   |    | 65 | 
|                                   |                                                                   | Liquidity and Capital Resources                                        |   |    | 65 | 
|                                   |                                                                   | Off-Balance Sheet Arrangements                                         |   |    | 67 | 
|                                   |                                                                   | Research and Development                                               |   |    | 69 | 
|                                   | ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND
    EMPLOYEES            |                                                                        |   | 71 |   
|                                   |                                                                   | Supervisory Board                                                      |   |    | 71 | 
|                                   |                                                                   | Executive Board                                                        |   |    | 72 | 
|                                   |                                                                   | Compensation, Shareholding, and Dealings of
    Directors and Officers |   |    | 74 | 
|                                   |                                                                   | Employees                                                              |   |    | 85 | 
|                                   |                                                                   | Share Ownership                                                        |   |    | 86 | 
|                                   |                                                                   | Stock-Based Compensation Plans                                         |   |    | 87 | 

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|             |                                                                                           |                                                                             |     |     |     | 
|------------ | ----------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | --- | --- | --- | 
|             |                                                                                           | Page                                                                        |    
|             |                                                                                           |                                                                             |    
|             | ITEM 7. MAJOR SHAREHOLDERS AND
    RELATED-PARTY TRANSACTIONS                             |                                                                             |     | 90  |    
|             |                                                                                           | Major Shareholders                                                          |     |     | 90  | 
|             |                                                                                           | Related-Party Transactions                                                  |     |     | 92  | 
|             | ITEM 8. FINANCIAL INFORMATION                                                             |                                                                             |     | 92  |    
|             |                                                                                           | Consolidated Financial Statements                                           |     |     | 92  | 
|             |                                                                                           | Other Financial Information                                                 |     |     | 92  | 
|             | ITEM 9. THE OFFER AND LISTING                                                             |                                                                             |     | 92  |    
|             | ITEM 10. ADDITIONAL INFORMATION                                                           |                                                                             |     | 96  |    
|             |                                                                                           | Articles of Incorporation                                                   |     |     | 96  | 
|             |                                                                                           | Corporate Governance                                                        |     |     | 96  | 
|             |                                                                                           | Change in Control                                                           |     |     | 100 | 
|             |                                                                                           | Change in Share Capital                                                     |     |     | 101 | 
|             |                                                                                           | Rights Accompanying Our Shares                                              |     |     | 101 | 
|             |                                                                                           | Taxation                                                                    |     |     | 103 | 
|             |                                                                                           | Documents on Display                                                        |     |     | 109 | 
|             | ITEM 11. QUANTITATIVE AND QUALITATIVE
    DISCLOSURES ABOUT MARKET RISK                   |                                                                             |     | 110 |    
|             |                                                                                           | Foreign Currency Risk                                                       |     |     | 110 | 
|             |                                                                                           | Interest Rate Risk                                                          |     |     | 112 | 
|             |                                                                                           | Equity Price Risk                                                           |     |     | 112 | 
|             | ITEM 12. DESCRIPTION OF SECURITIES OTHER
    THAN EQUITY SECURITIES                       |                                                                             |     | 113 |    
|PART II      |                                                                                           |                                                                             | 114 |    
|             | ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES                              |                                                                             |     | 114 |    
|             | ITEM 14. MATERIAL MODIFICATIONS TO THE
    RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |                                                                             |     | 114 |    
|             | ITEM 15. CONTROLS AND PROCEDURES                                                          |                                                                             |     | 114 |    
|             |                                                                                           | Evaluation of Disclosure Controls and
    Procedures                        |     |     | 114 | 
|             |                                                                                           | Managements Annual Report on Internal
    Control Over Financial Reporting |     |     | 114 | 
|             |                                                                                           | Change in Internal Control Over Financial
    Reporting                     |     |     | 115 | 
|             |                                                                                           | Attestation Report of the Independent
    Registered Public Accounting Firm |     |     | 115 | 
|             | ITEM 16. [RESERVED]                                                                       |                                                                             |     | 116 |    
|             | ITEM 16A. AUDIT COMMITTEE FINANCIAL
    EXPERT                                            |                                                                             |     | 116 |    
|             | ITEM 16B. CODE OF ETHICS                                                                  |                                                                             |     | 116 |    
|             | ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND
    SERVICES                                      |                                                                             |     | 117 |    
|             |                                                                                           | Audit Fees, Audit-related Fees, Tax Fees
    and All Other Fees             |     |     | 117 | 
|             |                                                                                           | Audit Committees Pre-approval
    Policies and Procedures                  |     |     | 117 | 
|             | ITEM 16D. EXEMPTIONS FROM THE LISTING
    STANDARDS FOR AUDIT COMMITTEES                  |                                                                             |     | 118 |    
|             | ITEM 16E. PURCHASES OF EQUITY SECURITIES BY
    THE ISSUER AND AFFILIATED PURCHASERS      |                                                                             |     | 118 |    
|PART III     |                                                                                           |                                                                             | 120 |    
|             | ITEM 17. FINANCIAL STATEMENTS                                                             |                                                                             |     | 120 |    
|             | ITEM 18. FINANCIAL STATEMENTS                                                             |                                                                             |     | 120 |    
|             | ITEM 19. EXHIBITS                                                                         |                                                                             |     | 120 |    
|Exhibit 8   
|Exhibit 12.1
|Exhibit 12.2
|Exhibit 13  
|Exhibit 15  



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INTRODUCTION


Aktiengesellschaft 20-F, 20-F


20-F:  20-F 20-F,


 


20-F 20-F


20-F


1



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FORWARD-LOOKING INFORMATION


20-F 20-F




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

20-F. 20-F 20-F.


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USE OF NON-GAAP FINANCIAL MEASURES












| |   |                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Stock-based compensation, including expenses for stock-based
    compensation as defined under U.S. GAAP as well as expenses
    related to the settlement of stock-based compensation plans in
    the context of mergers and acquisitions.
|
| |  | Acquisition-related charges, including amortization of
    identifiable intangible assets acquired in acquisitions of
    businesses or intellectual property.                                                                              
|
| |  | Impairment-related charges, including other-than-temporary
    impairment charges on minority equity investments.                                                                                                                           

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|                         |  |            |       |                |              |  |    |                     |  |  |          |  |  |  |       | 
|------------------------ |  | ---------- | ----- | -------------- | ------------ |  | -- | ------------------- |  |  | -------- |  |  |  | ----- | 
|                         |  |            |       | Reconciliation |              |  |   
|                         |  |            |       |                |              |  |   
|                         |  |            |       | Stock-based    |              |  |    |                     | 
|                         |  | U.S. GAAP  |       |                | compensation |  |    | Acquisition-related |  |  | Adjusted | 
|                         |  | Measure    |       |                | expenses     |  |    | charges             |  |  | Measure  | 
|                         |  |            |       |                |              |  |    |                     |  |  |          | 
|                         |  |  millions |      
|2006                     |  |            |       |                |              |  |    |                     |  |  |          |  |  |  |       | 
|Total operating expenses |  |            | 6,837 |                |              |  | 99 |                     |  |  | 43       |  |  |  | 6,695 | 
|Operating income         |  |            | 2,565 |                |              |  | 99 |                     |  |  | 43       |  |  |  | 2,707 | 
|2005                     |  |            |       |                |              |  |    |                     |  |  |          |  |  |  |       | 
|Total operating expenses |  |            | 6,182 |                |              |  | 45 |                     |  |  | 34       |  |  |  | 6,103 | 
|Operating income         |  |            | 2,331 |                |              |  | 45 |                     |  |  | 34       |  |  |  | 2,410 | 
|2004                     |  |            |       |                |              |  |    |                     |  |  |          |  |  |  |       | 
|Total operating expenses |  |            | 5,496 |                |              |  | 38 |                     |  |  | 30       |  |  |  | 5,428 | 
|Operating income         |  |            | 2,018 |                |              |  | 38 |                     |  |  | 30       |  |  |  | 2,086 | 



|                             |  |           |       |                 |              |  |      |                     |  |  |                    |  |  |          |      |  |  |  |       | 
|---------------------------- |  | --------- | ----- | --------------- | ------------ |  | ---- | ------------------- |  |  | ------------------ |  |  | -------- | ---- |  |  |  | ----- | 
|                             |  |           |       | Reconciliation  |              |  |     
|                             |  |           |       | (net after tax) |              |  |     
|                             |  |           |       |                 |              |  |     
|                             |  |           |       | Stock-based     |              |  |      |                     | 
|                             |  | U.S. GAAP |       |                 | compensation |  |      | Acquisition-related |  |  | Impairment-related |  |  | Adjusted |     
|                             |  | Measure   |       |                 | expenses     |  |      | charges             |  |  | charges            |  |  | Measure  |     
|                             |  |           |       |                 |              |  |      |                     |  |  |                    |  |  |          |     
|2006                         |  |           |       |                 |              |  |      |                     |  |  |                    |  |  |          |      |  |  |  |       | 
|Net income in 
    millions |  |           | 1,871 |                 |              |  | 71   |                     |  |  | 27                 |  |  |          | 1    |  |  |  | 1,970 | 
|Earnings per share in       |  |           | 1.53  |                 |              |  | 0.06 |                     |  |  | 0.02               |  |  |          | 0.00 |  |  |  | 1.61  | 
|2005                         |  |           |       |                 |              |  |      |                     |  |  |                    |  |  |          |      |  |  |  |       | 
|Net income in 
    millions |  |           | 1,496 |                 |              |  | 31   |                     |  |  | 21                 |  |  |          | 4    |  |  |  | 1,552 | 
|Earnings per share in       |  |           | 1.21  |                 |              |  | 0.02 |                     |  |  | 0.02               |  |  |          | 0.00 |  |  |  | 1.25  | 
|2004                         |  |           |       |                 |              |  |      |                     |  |  |                    |  |  |          |      |  |  |  |       | 
|Net income in 
    millions |  |           | 1,311 |                 |              |  | 24   |                     |  |  | 18                 |  |  |          | 5    |  |  |  | 1,358 | 
|Earnings per share in       |  |           | 1.05  |                 |              |  | 0.02 |                     |  |  | 0.02               |  |  |          | 0.00 |  |  |  | 1.09  | 







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|                                 |                           |                                   |    |    |                   |  |    |          |    |  |    |    |    |  
|-------------------------------- | ------------------------- | --------------------------------- | -- | -- | ----------------- |  | -- | -------- | -- |  | -- | -- | -- | -
|                                 |                           | Percentage change                 |    |    | Constant currency |  |    |         
|                                 |                           | from 2005 to 2006                 |    |    | percentage change |  |    | Currency |   
|                                 |                           | as reported                       |    |    | from 2005 to 2006 |  |    | effect   |   
|                                 |                           |                                   |    |    |                   |  |    |          |   
|                                 |                           | %                                 |    |    | %                 |  |    | %        |   
|Software revenue                 |                           |                                   | 10 |    |                   |  | 12 |          |    |  | (2 | ) 
|Maintenance revenue              |                           |                                   | 11 |    |                   |  | 12 |          |    |  | (1 | ) 
|Software and maintenance revenue |                           |                                   | 11 |    |                   |  | 12 |          |    |  | (1 | ) 
|Consulting revenue               |                           |                                   | 9  |    |                   |  | 10 |          |    |  | (1 | ) 
|Training revenue                 |                           |                                   | 12 |    |                   |  | 12 |          |    |  | 0  |   
|Service revenue                  |                           |                                   | 10 |    |                   |  | 10 |          |    |  | 0  |   
|Total revenue by
    Region(1):  |                           |                                   |    |    |                   |  |    |          |    |  |    |   
|                                 | EMEA region               |                                   |    | 9  |                   |  |    | 9        |    |  |    | 0  |   
|                                 |                           | United States                     |    |    | 12                |  |    |          | 14 |  |    |    | (2 | )
|                                 |                           | Rest of Americas region           |    |    | 18                |  |    |          | 16 |  |    |    | 2  |  
|                                 | Americas region           |                                   |    | 13 |                   |  |    | 14       |    |  |    | (1 | ) 
|                                 |                           | Japan                             |    |    | 6                 |  |    |          | 14 |  |    |    | (8 | )
|                                 |                           | Rest of Asia Pacific Japan region |    |    | 14                |  |    |          | 16 |  |    |    | (2 | )
|                                 | Asia Pacific Japan region |                                   |    | 11 |                   |  |    | 15       |    |  |    | (4 | ) 
|Total revenue                    |                           |                                   | 10 |    |                   |  | 11 |          |    |  | (1 | ) 






|    |                           
|--- | --------------------------
|(1) | Based on customer location

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PART I





ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISERS







ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE







ITEM 3. KEY INFORMATION







Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans Share-Based Payment




|                                                     |                                                  |                                   |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      |  |           |           |  |  |           |           | 
|---------------------------------------------------- | ------------------------------------------------ | --------------------------------- | ---------- | --------- | ---- |  | --------- | --------- |  |  | --------- | --------- |  | ---- | --------- | --------- | ---- |  | --------- | --------- |  |  | --------- | --------- | 
|                                                     |                                                  | Year Ended December 31,           |           
|                                                     |                                                  |                                   |           
|                                                     |                                                  | 2006                              |            |           | 2006 |  |           | 2005      |  |  | 2004      |           |  | 2003 |           |           | 2002 | 
|                                                     |                                                  |                                   |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      | 
|                                                     |                                                  | US$(1)                            |            |           |     |  |           |          |  |  |          |           |  |     |           |           |     | 
|                                                     |                                                  | (In thousands, except share data) |           
|Income Statement Data:                               |                                                  |                                   |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      |  |           |           |  |  |           |          
|Total revenue                                        |                                                  |                                   | 12,407,982 |           |      |  | 9,402,123 |           |  |  | 8,512,429 |           |  |      | 7,514,493 |           |      |  | 7,024,606 |           |  |  | 7,412,838 |          
|Operating income                                     |                                                  |                                   | 3,385,550  |           |      |  | 2,565,394 |           |  |  | 2,330,732 |           |  |      | 2,018,381 |           |      |  | 1,724,019 |           |  |  | 1,625,678 |          
|                                                     | Income before income taxes and minority interest |                                   |            | 3,529,932 |      |  |           | 2,674,799 |  |  |           | 2,316,356 |  |      |           | 2,072,642 |      |  |           | 1,776,615 |  |  |           | 1,107,698 | 
|Net income                                           |                                                  |                                   | 2,469,656  |           |      |  | 1,871,377 |           |  |  | 1,496,407 |           |  |      | 1,310,521 |           |      |  | 1,077,063 |           |  |  | 508,614   |          
|Earnings per
    share(2)                            |                                                  |                                   |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      |  |           |           |  |  |           |          
|                                                     | Basic                                            |                                   |            | 2.02      |      |  |           | 1.53      |  |  |           | 1.21      |  |      |           | 1.05      |      |  |           | 0.87      |  |  |           | 0.41      | 
|                                                     | Diluted                                          |                                   |            | 2.01      |      |  |           | 1.52      |  |  |           | 1.20      |  |      |           | 1.05      |      |  |           | 0.87      |  |  |           | 0.41      | 
|Other Data:                                          |                                                  |                                   |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      |  |           |           |  |  |           |          
|Weighted average number of shares
    outstanding(2) |                                                  |                                   |            |           |      |  |           |           |  |  |           |           |  |      |           |           |      |  |           |           |  |  |           |          
|                                                     | Basic                                            |                                   |            | 1,226,263 |      |  |           | 1,226,263 |  |  |           | 1,239,264 |  |      |           | 1,243,209 |      |  |           | 1,243,124 |  |  |           | 1,252,064 | 
|                                                     | Diluted                                          |                                   |            | 1,231,650 |      |  |           | 1,231,650 |  |  |           | 1,243,342 |  |      |           | 1,248,623 |      |  |           | 1,245,636 |  |  |           | 1,255,920 | 

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|                                 |  |                                   |            |  |      |  |           |      |  |  |           |  |  |      |           |  |      |  |           |  |  |  |           | 
|-------------------------------- |  | --------------------------------- | ---------- |  | ---- |  | --------- | ---- |  |  | --------- |  |  | ---- | --------- |  | ---- |  | --------- |  |  |  | --------- | 
|                                 |  | Year Ended December 31,           |           
|                                 |  |                                   |           
|                                 |  | 2006                              |            |  | 2006 |  |           | 2005 |  |  | 2004      |  |  | 2003 |           |  | 2002 | 
|                                 |  |                                   |            |  |      |  |           |      |  |  |           |  |  |      |           |  |      | 
|                                 |  | US$(1)                            |            |  |     |  |           |     |  |  |          |  |  |     |           |  |     | 
|                                 |  | (In thousands, except share data) |           
|Balance Sheet Data:              |  |                                   |            |  |      |  |           |      |  |  |           |  |  |      |           |  |      |  |           |  |  |  |           | 
|Cash and cash equivalents        |  |                                   | 3,165,605  |  |      |  | 2,398,731 |      |  |  | 2,064,074 |  |  |      | 1,505,793 |  |      |  | 838,737   |  |  |  | 897,285   | 
|Total assets                     |  |                                   | 12,540,763 |  |      |  | 9,502,738 |      |  |  | 9,039,904 |  |  |      | 7,585,472 |  |      |  | 6,325,865 |  |  |  | 5,608,463 | 
|Shareholders equity             |  |                                   | 8,097,488  |  |      |  | 6,135,855 |      |  |  | 5,782,238 |  |  |      | 4,594,253 |  |      |  | 3,709,445 |  |  |  | 2,872,091 | 
|Subscribed capital               |  |                                   | 1,672,769  |  |      |  | 1,267,537 |      |  |  | 316,458   |  |  |      | 316,004   |  |      |  | 315,414   |  |  |  | 314,963   | 
|Short-term financial
    debt(3) |  |                                   | 40,870     |  |      |  | 30,969    |      |  |  | 22,308    |  |  |      | 25,851    |  |      |  | 19,043    |  |  |  | 22,657    | 
|Long-term financial
    debt(3)  |  |                                   | 3,719      |  |      |  | 2,818     |      |  |  | 10,622    |  |  |      | 11,116    |  |      |  | 12,933    |  |  |  | 11,462    | 






|    |                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts presented in US$ have been translated for the
    convenience of the reader at
    1.00 to
    US$1.3197, the Noon Buying Rate for converting
    1.00 into
    dollars on December 29, 2006. See
     Exchange Rates for recent exchange rates
    between the euro and the dollar.                                                                             
|   
|(2) | Amounts are retrospectively adjusted for all periods presented
    for the effect of the December 15, 2006 fourfold increase
    in the number of shares under a capital increase pursuant to
    German law. See Item 9. The Offer and
    Listing  General for more detail of the share
    increase.                                                                    
|   
|(3) | Financial debt represents bank loans, overdrafts and capital
    lease obligations. Short-term means a remaining life of one year
    or shorter; long-term, beyond one year. The balances include
    convertible bonds issued pursuant to stock-based compensation
    plans. See Item 6. Directors, Senior Management and
    Employees  Stock-Based Compensation Plans.













|     |  |            |        |  |      |  |        |     |  |  |        | 
|---- |  | ---------- | ------ |  | ---- |  | ------ | --- |  |  | ------ | 
|Year |  | Average(1) |        |  | High |  |        | Low | 
|     |  |            |        |  |      |  |        |     | 
|2002 |  |            | 0.9495 |  |      |  | 1.0485 |     |  |  | 0.8594 | 
|2003 |  |            | 1.1411 |  |      |  | 1.2597 |     |  |  | 1.0361 | 
|2004 |  |            | 1.2478 |  |      |  | 1.3625 |     |  |  | 1.1801 | 
|2005 |  |            | 1.2400 |  |      |  | 1.3476 |     |  |  | 1.1667 | 
|2006 |  |            | 1.2661 |  |      |  | 1.3327 |     |  |  | 1.1860 | 

8



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|      |                                |      |  |        |     |  |  |        | 
|----- | ------------------------------ | ---- |  | ------ | --- |  |  | ------ | 
|Month |                                | High |  |        | Low | 
|      |                                |      |  |        |     | 
|2006  |                                |      |  |        |     |  |  |       
|      | July                           |      |  | 1.2822 |     |  |  | 1.2500 | 
|      | August                         |      |  | 1.2914 |     |  |  | 1.2735 | 
|      | September                      |      |  | 1.2833 |     |  |  | 1.2648 | 
|      | October                        |      |  | 1.2773 |     |  |  | 1.2502 | 
|      | November                       |      |  | 1.3261 |     |  |  | 1.2705 | 
|      | December                       |      |  | 1.3327 |     |  |  | 1.3073 | 
|2007  |                                |      |  |        |     |  |  |       
|      | January                        |      |  | 1.3286 |     |  |  | 1.2904 | 
|      | February                       |      |  | 1.3246 |     |  |  | 1.2933 | 
|      | March (through March 14, 2007) |      |  | 1.3227 |     |  |  | 1.3094 | 






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






Aufsichtsrat Vorstand




|                        |  |               |      |     |     |  |      |          
|----------------------- |  | ------------- | ---- | --- | --- |  | ---- | ---------
|                        |  | Dividend Paid |     
|                        |  | per Ordinary  |     
|                        |  | Share         |     
|                        |  |               |     
|Year Ended December 31, |  |              |      |     | US$ | 
|                        |  |               |      |     |     | 
|2002                    |  |               | 0.15 |     |     |  | 0.17 | (1)(4)   
|2003                    |  |               | 0.20 |     |     |  | 0.24 | (1)(4)   
|2004                    |  |               | 0.28 |     |     |  | 0.35 | (1)(4)   
|2005                    |  |               | 0.36 |     |     |  | 0.43 | (1)(4)   
|2006 (proposed)         |  |               | 0.46 | (2) |     |  | 0.61 | (2)(3)(4)






|    |                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Translated for the convenience of the reader from euro into
    dollars at the Noon Buying Rate for converting euro into dollars
    on the dividend payment date. The depositary is required to
    convert any dividend payments received from SAP as promptly as
    practicable upon receipt.                                                                                      
|   
|(2) | Subject to approval of the Annual General Meeting of
    Shareholders of SAP AG to be held on May 10, 2007.                                                                                                                                                                                                                                                                            
|   
|(3) | Translated for the convenience of the reader from euro into
    dollars at the Noon Buying Rate for converting euro into dollars
    on March 14, 2007 of US$1.3227 per
    1.00. The
    depositary is required to convert any dividend payments received
    from SAP as promptly as practicable upon receipt. The dividend
    paid may differ due to changes in the exchange rate.

9



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|    |                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | One SAP ADS currently represents one SAP AG ordinary share.
    Accordingly, the final dividend per ADS is equal to the dividend
    for one SAP AG ordinary share and is dependent on the
    euro/dollar exchange rate.










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








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




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






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





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.






11



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




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






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




12



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




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




13



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




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




We are subject to significantly increased governance-related
regulatory requirements both in Germany and the United States




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




14



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




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




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




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






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







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



16



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






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.




17



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




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




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






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

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






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








19



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






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



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




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




20



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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.




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




21



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






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



22



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We may incur losses in connection with venture capital
investments.




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




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







ITEM 4. INFORMATION ABOUT SAP


Aktiengesellschaft


23



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20-F www.sap.com 20-F,



























24



---



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Building a Business Process Platform










25



---



##### Table of Contents



Solutions for Information Workers








CRM Development Milestones








New Capabilities for SAP Business One




New Version of SAP All-in-One Solutions




26



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Solutions Targeted for Smaller Midmarket Companies






Trends and Orientation












| |   |                                                                
| | - | ---------------------------------------------------------------
| |  | To be innovative                                               
|
| |  | To succeed with their business strategy                        
|
| |  | To lift the productivity of their employees                    
|
| |  | To comply with laws and regulations that apply to their efforts



Expanding Our Traditional Core Business




27



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Developing New Midmarket Business








Strategy for Growth






| |   |                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Organic growth: By supporting our growth strategy principally
    through organic development of our product portfolio.                                                                                                                                                            
|
| |  | Co-innovation: By expanding our partner ecosystem to accelerate
    innovation by supporting the development of solutions and
    enterprise services built on the SAP NetWeaver platform and to
    leverage sales forces to address the various market and customer
    segments.
|
| |  | Smart acquisitions: By targeting strategic fill-in
    acquisitions to add to our broad solution offering within
    industries or across industries by gaining specific technologies
    and capabilities that meet the needs of our customers.                                 

28



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | For large enterprises, we offer more than 25 tailored solution
    portfolios for industries. Solution portfolios for industries
    are created by SAP through the assembly of general-purpose
    applications, industry-specific applications, service-enabled
    composite applications, and, potentially, partner products.
    These portfolios support industry-specific business processes
    using software that is tailored to various roles in a business.

29



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



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | For small and midsize enterprises, we offer the SAP Business One
    application and SAP All-in-One solutions. SAP Business One
    targets small businesses with fewer than one hundred employees
    and offers capabilities for various work involved in managing a
    small business such as bookkeeping, reporting, sales and
    marketing, purchasing, and warehousing and inventory. It is
    developed by SAP and delivered by SAP channel partners who
    provide local services and support. SAP All-in-One solutions are
    designed to meet the requirements of midsize companies of up to
    2,500 employees, and offer preconfigured industry-specific
    solutions for rapid deployment. SAP All-in-One solutions are
    developed and sold by SAP, and deployed and supported by either
    SAP or an experienced partner.

SAP Applications








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

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | SAP xApps composite applications. These perform
    functions spanning multiple applications, departments, and
    organizations. These applications are designed to reuse,
    integrate, and orchestrate enterprise services that are provided
    by SAP NetWeaver. They can be general-purpose or
    industry-specific, and can be categorized into the following
    families: SAP xApps composite applications for analytics; SAP
    xApps composite applications for governance, risk, and
    compliance; SAP xApps composite applications for mobile
    business; and SAP xApps composition applications for personal
    productivity. Our software and consulting partners can also
    develop and offer SAP xApps Certified composite
    applications.

The SAP NetWeaver Platform




SAP Services






Software-Related Services




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | SAP Custom Development.The SAP Custom Development
    organization develops custom solutions that address
    customers unique business requirements on the SAP
    NetWeaver platform. The service portfolio includes development
    services that help customers to extend and enhance existing SAP
    solutions or build new and innovative business solutions, and
    maintenance services to protect their custom solutions and SAP
    investment as their business evolves over time.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | SAP Active Global Support.The SAP Active Global
    Support organization offers a broad range of services to support
    customers before, during and after implementation of our
    software solutions, providing around-the-clock technical support
    for high-priority messages to resolve issues as well as
    proactive, preventative services to mitigate potential problems
    before they get out of hand. Key offerings of SAP Active Global
    Support include the SAP Standard Support option which provides
    the knowledge, tools, and functions to keep customers SAP
    environment up-to-date and running efficiently, and the SAP
    Premium Support option through which SAPs experts take a
    more active role in establishing support operations. As part of
    the SAP Standard Support, customers are entitled to unspecified
    upgrades and enhancements to the software products they licensed.

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Professional and Other Services




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | SAP Consulting.The SAP Consulting organization
    offers consulting, implementation, and optimization services
    that aim at delivering business value in all phases of the
    solution life-cycle, from the planning phase through building
    and running the solutions. SAP Consulting advises and supports
    customers on designing business processes and IT infrastructure,
    helps customers with project management, solution implementation
    and integration, and helps with solution and IT landscape
    optimization to adapt to changing business needs of customers.
|
| |  | SAP Education.The SAP Education organization
    provides the training and tools required to assist SAP customers
    and partners in maximizing the benefits attained from SAP
    solutions. SAP Education services include education needs
    analysis, education delivery via classroom or e-learning,
    assessment certification and continuous improvement.                                                                                                                                                                                                                          
|
| |  | SAP Managed Services.The SAP Managed Services
    organization provides a comprehensive portfolio of services,
    which include application management services and hosting
    services, running and managing SAP solutions on behalf of
    customers.                                                                                                                                                                                                                                                                                                                                     




SEASONALITY







BUSINESS BY REGION






|                           |  |                 |         |  |      |  |         |      |  |  |         | 
|-------------------------- |  | --------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                           |  | 2006            |         |  | 2005 |  |         | 2004 | 
|                           |  |                 |         |  |      |  |         |      | 
|                           |  | (In  millions) |        
|Germany                    |  |                 | 1,907.4 |  |      |  | 1,810.4 |      |  |  | 1,780.1 | 
|Rest of EMEA               |  |                 | 2,994.3 |  |      |  | 2,702.4 |      |  |  | 2,443.4 | 
|                           |  |                 |         |  |      |  |         |      | 
|Total EMEA                 |  |                 | 4,901.7 |  |      |  | 4,512.8 |      |  |  | 4,223.5 | 
|                           |  |                 |         |  |      |  |         |      | 
|United States              |  |                 | 2,617.0 |  |      |  | 2,342.8 |      |  |  | 1,893.7 | 
|Rest of Americas           |  |                 | 776.3   |  |      |  | 656.8   |      |  |  | 530.1   | 
|                           |  |                 |         |  |      |  |         |      | 
|Total Americas             |  |                 | 3,393.3 |  |      |  | 2,999.6 |      |  |  | 2,423.8 | 
|                           |  |                 |         |  |      |  |         |      | 
|Japan                      |  |                 | 431.3   |  |      |  | 406.2   |      |  |  | 387.4   | 
|Rest of Asia Pacific Japan |  |                 | 675.8   |  |      |  | 593.8   |      |  |  | 479.8   | 
|                           |  |                 |         |  |      |  |         |      | 
|Total Asia Pacific Japan   |  |                 | 1,107.1 |  |      |  | 1,000.0 |      |  |  | 867.2   | 
|                           |  |                 |         |  |      |  |         |      | 
|Total revenue              |  |                 | 9,402.1 |  |      |  | 8,512.4 |      |  |  | 7,514.5 | 
|                           |  |                 |         |  |      |  |         |      | 

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EMEA.   


Americas.    


Asia Pacific Japan.   









|                    |  |                 |         |  |      |  |         |      |  |  |         | 
|------------------- |  | --------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                    |  | 2006            |         |  | 2005 |  |         | 2004 | 
|                    |  |                 |         |  |      |  |         |      | 
|                    |  | (In  millions) |        
|Process Industries  |  |                 | 1,996.4 |  |      |  | 1,765.9 |      |  |  | 1,469.1 | 
|Discrete Industries |  |                 | 2,180.9 |  |      |  | 1,986.1 |      |  |  | 1,807.9 | 
|Consumer Industries |  |                 | 1,666.7 |  |      |  | 1,457.0 |      |  |  | 1,349.8 | 
|Service Industries  |  |                 | 2,134.5 |  |      |  | 1,946.0 |      |  |  | 1,673.9 | 
|Financial Services  |  |                 | 590.8   |  |      |  | 543.4   |      |  |  | 519.1   | 
|Public Services     |  |                 | 832.8   |  |      |  | 814.0   |      |  |  | 694.7   | 
|                    |  |                 |         |  |      |  |         |      | 
|Total revenue       |  |                 | 9,402.1 |  |      |  | 8,512.4 |      |  |  | 7,514.5 | 
|                    |  |                 |         |  |      |  |         |      | 

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




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














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 


 


  


 


      


     




38



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##### Table of Contents






ITEM 4A. UNRESOLVED STAFF COMMENTS







ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS













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








| |   |                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We increased our expected full-year 2006 guidance for Adjusted
    earnings per share, which excluded stock based compensation,
    acquisition-related charges and impairment-related charges. We
    then expected Adjusted earnings per share to be slightly above
    the previously communicated range of
    1.45 to
    1.50 per share.
|
| |  | We reaffirmed that we expected full-year 2006 software and
    maintenance revenue to increase in a range of 13% to 15%
    compared to 2005. This growth rate was based on our expectation
    for full-year                                                                                                                                   

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| |   |                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | 2006 software revenue growth in
    a range of 15% to 17% compared to 2005. We announced that it
    appeared less likely that software and maintenance revenue
    growth as well as software revenue growth would reach the upper
    end of the aforementioned ranges.                                                                                                                     
|
| |  | We reaffirmed that we expected
    the full-year 2006 Adjusted operating margin, which excludes
    stock-based compensation and acquisition-related charges, to
    increase in a range of 0.5 to 1.0 percentage points compared to
    2005. We announced it appeared less likely that the Adjusted
    operating margin increase would be at the upper end of the
    aforementioned range.
|
| |  | The outlook continued to be
    based on an U.S. dollar to euro exchange rate of $1.23 per
    1.00.                                                                                                                                                                                                                                                                                         

     




     


    






| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | key factors that impacted our performance;                                                          
|
| |  | discussion of our operating results for 2006 compared to 2005
    and for 2005 compared to 2004; and
|
| |  | our outlook for 2007.                                                                               














40



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41



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|              |  |      |           |            |      |  |           |        |  |  |               |  |  |               |       |  |  |  |       | 
|------------- |  | ---- | --------- | ---------- | ---- |  | --------- | ------ |  |  | ------------- |  |  | ------------- | ----- |  |  |  | ----- | 
|              |  |      |           |            |      |  |           | Change |  |  | Change        | 
|              |  | 2006 |           |            | 2005 |  |           | 2004   |  |  | 2006 vs. 2005 |  |  | 2005 vs. 2004 |      
|              |  |      |           |            |      |  |           |        |  |  |               |  |  |               |      
|              |  |      |           | (In 000s) |      |  |           |        |  |  |              
|Total revenue |  |      | 9,402,123 |            |      |  | 8,512,429 |        |  |  | 7,514,493     |  |  |               | 10.5% |  |  |  | 13.3% | 

2006 compared with 2005.   


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  


|               |  |            |        | 
|-------------- |  | ---------- | ------ | 
|Date           |  | Period-End |       
|               |  |            |       
|December 2005  |  |            | 1.1842 | 
|March 2006     |  |            | 1.2139 | 
|June 2006      |  |            | 1.2779 | 
|September 2006 |  |            | 1.2687 | 
|December 2006  |  |            | 1.3197 | 



2005 compared with 2004.   


    


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







|                                 |                     |      |           |            |      |  |           |           |  |  |               |           |  |               |       |       |  |  |       |       | 
|-------------------------------- | ------------------- | ---- | --------- | ---------- | ---- |  | --------- | --------- |  |  | ------------- | --------- |  | ------------- | ----- | ----- |  |  | ----- | ----- | 
|                                 |                     |      |           |            |      |  |           | Change    |  |  | Change        |          
|                                 |                     | 2006 |           |            | 2005 |  |           | 2004      |  |  | 2006 vs. 2005 |           |  | 2005 vs. 2004 |      
|                                 |                     |      |           |            |      |  |           |           |  |  |               |           |  |               |      
|                                 |                     |      |           | (In 000s) |      |  |           |           |  |  |              
|                                 | Software revenue    |      |           | 3,071,291  |      |  |           | 2,782,751 |  |  |               | 2,361,012 |  |               |       | 10.4% |  |  |       | 17.9% | 
|                                 | Maintenance revenue |      |           | 3,533,282  |      |  |           | 3,175,642 |  |  |               | 2,823,189 |  |               |       | 11.3% |  |  |       | 12.5% | 
|Software and maintenance revenue |                     |      | 6,604,573 |            |      |  | 5,958,393 |           |  |  | 5,184,201     |           |  |               | 10.8% |       |  |  | 14.9% |      



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2006 compared with 2005.   


  




   







  




2005 compared with 2004.   


  


44



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##### Table of Contents







  






|                |                    |      |           |            |      |  |           |           |  |  |               |           |  |               |     |      |   |  |     |      |  
|--------------- | ------------------ | ---- | --------- | ---------- | ---- |  | --------- | --------- |  |  | ------------- | --------- |  | ------------- | --- | ---- | - |  | --- | ---- | -
|                |                    |      |           |            |      |  |           | Change    |  |  | Change        |          
|                |                    | 2006 |           |            | 2005 |  |           | 2004      |  |  | 2006 vs. 2005 |           |  | 2005 vs. 2004 |    
|                |                    |      |           |            |      |  |           |           |  |  |               |           |  |               |    
|                |                    |      |           | (In 000s) |      |  |           |           |  |  |              
|                | Consulting revenue |      |           | 2,340,268  |      |  |           | 2,138,941 |  |  |               | 1,970,606 |  |               |     | 9.4  | % |  |     | 8.5  | %
|                | Training revenue   |      |           | 382,830    |      |  |           | 342,466   |  |  |               | 302,443   |  |               |     | 11.8 | % |  |     | 13.2 | %
|Service revenue |                    |      | 2,723,098 |            |      |  | 2,481,407 |           |  |  | 2,273,049     |           |  |               | 9.7 | %    |   |  | 9.2 | %   

2006 compared with 2005.   


 




 


 


45



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##### Table of Contents



2005 compared with 2004.   


 




 


 




|                                                                         |  |      |           |            |      |  |           |        |  |  |               |  |  |               |       |  |  |  |       | 
|------------------------------------------------------------------------ |  | ---- | --------- | ---------- | ---- |  | --------- | ------ |  |  | ------------- |  |  | ------------- | ----- |  |  |  | ----- | 
|                                                                         |  |      |           |            |      |  |           | Change |  |  | Change        | 
|                                                                         |  | 2006 |           |            | 2005 |  |           | 2004   |  |  | 2006 vs. 2005 |  |  | 2005 vs. 2004 |      
|                                                                         |  |      |           |            |      |  |           |        |  |  |               |  |  |               |      
|                                                                         |  |      |           | (In 000s) |      |  |           |        |  |  |              
|Total operating expenses                                                 |  |      | 6,836,729 |            |      |  | 6,181,697 |        |  |  | 5,496,112     |  |  |               | 10.6% |  |  |  | 12.5% | 
|Operating income                                                         |  |      | 2,565,394 |            |      |  | 2,330,732 |        |  |  | 2,018,381     |  |  |               | 10.1% |  |  |  | 15.5% | 
|Operating margin (Operating income as a percentage of total
    revenue) |  |      | 27.3%     |            |      |  | 27.4%     |        |  |  | 26.9%         |  |  |               |       |  |  |  |       | 

2006 compared with 2005.


  






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We increased our research and development expenses in 2006 by
    246.2 million,
    or 22.6%, compared to 2005.                                                                                                                                                                                                                                                                                                                   
|
| |  | Our growing workforce resulted in an increase in personnel
    expenses, which went up from
    3,371.5 million
    in 2005 to
    3,833.1 million
    in 2006, or 13.7%. This increase in personnel expenses is the
    result of the overall headcount increase from 35,873 full-time
    equivalents as of December 31, 2005, to 39,355 full-time
    equivalents as of December 31, 2006, an increase of 9.7%.
    The biggest

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | increase in headcount was in
    research and development, in which the worldwide full-time
    equivalent count rose 15.5% to 11,801. The increase is
    consistent with our organic growth strategy and commitment to
    meet product release schedules. We continued to keep a tight
    control on personnel expenses due to minimal fixed salary
    increases as well as by adding additional headcount primarily in
    the major emerging markets with modest salary levels such as
    China and India. The share of resources in low-cost locations
    (Bulgaria, China, and India) increased from 10.9% in 2005 to
    13.8% in 2006.
|
| |  | Cost of purchased licenses
    increased due to the strong growth in software and maintenance
    revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | We had higher travel expenses
    due to increased business activity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

 


2005 compared with 2004.      






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We increased our sales and marketing expenses in 2005 by
    222.6 million,
    or 14.6% compared to 2004, reflecting additional investment in
    aligning our operations to volume business and in our sales
    organization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Our growing workforce resulted in an increase in personnel
    expenses, which went up from
    2,968.0 million
    in 2004 to
    3,371.5 million
    in 2005, or 13.6%. This increase in personnel expenses is the
    result of the overall headcount increased from 32,205 full-time
    equivalents as of December 31, 2004, to 35,873 full-time
    equivalents as of December 31, 2005, an increase of 11.4%.
    The biggest increase in headcount was in research and
    development, in which the worldwide full-time equivalent count
    rose 18% to 11,629. The increase is consistent with our organic
    growth strategy and commitment to meet product release
    schedules. We continued to keep a tight control on personnel
    expenses due to minimal fixed salary increases as well as by
    adding additional headcount primarily in the major emerging
    markets with modest salary levels such as China and India. The
    share of resources in low-cost locations (Bulgaria, China, and
    India) increased from 8.2% in 2004 to 10.9% in 2005.
|
| |  | The rise in the headcount and overall increase in business
    activity during 2005 resulted in higher travel expenses compared
    to 2004 (an increase of
    55.8 million
    or 17.5%).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | As a result of the strong software and maintenance revenue
    growth, cost of purchased licenses increased by 19.5%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

 


47



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##### Table of Contents





|                          |  |      |           |            |      |  |           |        |  |  |               |  |  |               |       |  |  |  |       | 
|------------------------- |  | ---- | --------- | ---------- | ---- |  | --------- | ------ |  |  | ------------- |  |  | ------------- | ----- |  |  |  | ----- | 
|                          |  |      |           |            |      |  |           | Change |  |  | Change        | 
|                          |  | 2006 |           |            | 2005 |  |           | 2004   |  |  | 2006 vs. 2005 |  |  | 2005 vs. 2004 |      
|                          |  |      |           |            |      |  |           |        |  |  |               |  |  |               |      
|                          |  |      |           | (In 000s) |      |  |           |        |  |  |              
|Adjusted operating income |  |      | 2,707,924 |            |      |  | 2,409,339 |        |  |  | 2,086,125     |  |  |               | 12.4% |  |  |  | 15.5% | 
|Adjusted operating margin |  |      | 28.8%     |            |      |  | 28.3%     |        |  |  | 27.8%         |  |  |               |       |  |  |  |       | 



2006 compared with 2005.


  


2005 compared with 2004.


  




Cost of Software and Maintenance


|                                                    |  |      |           |            |      |  |         |        |  |  |               |  |  |               |       |  |  |  |      | 
|--------------------------------------------------- |  | ---- | --------- | ---------- | ---- |  | ------- | ------ |  |  | ------------- |  |  | ------------- | ----- |  |  |  | ---- | 
|                                                    |  |      |           |            |      |  |         | Change |  |  | Change        | 
|                                                    |  | 2006 |           |            | 2005 |  |         | 2004   |  |  | 2006 vs. 2005 |  |  | 2005 vs. 2004 |      
|                                                    |  |      |           |            |      |  |         |        |  |  |               |  |  |               |      
|                                                    |  |      |           | (In 000s) |      |  |         |        |  |  |              
|Cost of software and maintenance                    |  |      | 1,099,966 |            |      |  | 993,227 |        |  |  | 916,278       |  |  |               | 10.7% |  |  |  | 8.4% | 
|As a percentage of software and maintenance revenue |  |      | 16.7%     |            |      |  | 16.7%   |        |  |  | 17.7%         |  |  |               |       |  |  |  |      | 





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

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2006 compared with 2005.  




2005 compared with 2004.  


Cost of Services


|                                   |  |      |           |            |      |  |           |        |  |  |               |  |  |               |      |  |  |  |      | 
|---------------------------------- |  | ---- | --------- | ---------- | ---- |  | --------- | ------ |  |  | ------------- |  |  | ------------- | ---- |  |  |  | ---- | 
|                                   |  |      |           |            |      |  |           | Change |  |  | Change        | 
|                                   |  | 2006 |           |            | 2005 |  |           | 2004   |  |  | 2006 vs. 2005 |  |  | 2005 vs. 2004 |     
|                                   |  |      |           |            |      |  |           |        |  |  |               |  |  |               |     
|                                   |  |      |           | (In 000s) |      |  |           |        |  |  |              
|Cost of services                   |  |      | 2,078,011 |            |      |  | 1,924,614 |        |  |  | 1,783,453     |  |  |               | 8.0% |  |  |  | 7.9% | 
|As a percentage of service revenue |  |      | 76.3%     |            |      |  | 77.6%     |        |  |  | 78.5%         |  |  |               |      |  |  |  |      | 



2006 compared with 2005.  


 


2005 compared with 2004.  


 


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##### Table of Contents



Research and Development


|                                 |  |      |           |            |      |  |           |        |  |  |               |  |  |               |       |  |  |  |       | 
|-------------------------------- |  | ---- | --------- | ---------- | ---- |  | --------- | ------ |  |  | ------------- |  |  | ------------- | ----- |  |  |  | ----- | 
|                                 |  |      |           |            |      |  |           | Change |  |  | Change        | 
|                                 |  | 2006 |           |            | 2005 |  |           | 2004   |  |  | 2006 vs. 2005 |  |  | 2005 vs. 2004 |      
|                                 |  |      |           |            |      |  |           |        |  |  |               |  |  |               |      
|                                 |  |      |           | (In 000s) |      |  |           |        |  |  |              
|Research and development         |  |      | 1,334,815 |            |      |  | 1,088,632 |        |  |  | 908,056       |  |  |               | 22.6% |  |  |  | 19.9% | 
|As a percentage of total revenue |  |      | 14.2%     |            |      |  | 12.8%     |        |  |  | 12.1%         |  |  |               |       |  |  |  |       | 





| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | 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.

2006 compared with 2005.  






2005 compared with 2004.  




Sales and Marketing


|                                 |  |      |           |            |      |  |           |        |  |  |               |  |  |               |      |  |  |  |       | 
|-------------------------------- |  | ---- | --------- | ---------- | ---- |  | --------- | ------ |  |  | ------------- |  |  | ------------- | ---- |  |  |  | ----- | 
|                                 |  |      |           |            |      |  |           | Change |  |  | Change        | 
|                                 |  | 2006 |           |            | 2005 |  |           | 2004   |  |  | 2006 vs. 2005 |  |  | 2005 vs. 2004 |     
|                                 |  |      |           |            |      |  |           |        |  |  |               |  |  |               |     
|                                 |  |      |           | (In 000s) |      |  |           |        |  |  |              
|Sales and marketing              |  |      | 1,915,441 |            |      |  | 1,746,221 |        |  |  | 1,523,662     |  |  |               | 9.7% |  |  |  | 14.6% | 
|As a percentage of total revenue |  |      | 20.4%     |            |      |  | 20.5%     |        |  |  | 20.3%         |  |  |               |      |  |  |  |       | 

2006 compared with 2005.  


50



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 


2005 compared with 2004.  


 


General and Administration


|                                 |  |      |         |            |      |  |         |        |  |  |               |  |  |               |      |  |  |  |       | 
|-------------------------------- |  | ---- | ------- | ---------- | ---- |  | ------- | ------ |  |  | ------------- |  |  | ------------- | ---- |  |  |  | ----- | 
|                                 |  |      |         |            |      |  |         | Change |  |  | Change        | 
|                                 |  | 2006 |         |            | 2005 |  |         | 2004   |  |  | 2006 vs. 2005 |  |  | 2005 vs. 2004 |     
|                                 |  |      |         |            |      |  |         |        |  |  |               |  |  |               |     
|                                 |  |      |         | (In 000s) |      |  |         |        |  |  |              
|General and administration       |  |      | 464,966 |            |      |  | 435,185 |        |  |  | 366,425       |  |  |               | 6.8% |  |  |  | 18.8% | 
|As a percentage of total revenue |  |      | 4.9%    |            |      |  | 5.1%    |        |  |  | 4.9%          |  |  |               |      |  |  |  |       | 

2006 compared with 2005.  




2005 compared with 2004.  




|                                    |  |      |        |            |      |  |       |        |  |  |               |  |  |               |        |  |  |  |        | 
|----------------------------------- |  | ---- | ------ | ---------- | ---- |  | ----- | ------ |  |  | ------------- |  |  | ------------- | ------ |  |  |  | ------ | 
|                                    |  |      |        |            |      |  |       | Change |  |  | Change        | 
|                                    |  | 2006 |        |            | 2005 |  |       | 2004   |  |  | 2006 vs. 2005 |  |  | 2005 vs. 2004 |       
|                                    |  |      |        |            |      |  |       |        |  |  |               |  |  |               |       
|                                    |  |      |        | (In 000s) |      |  |       |        |  |  |              
|Other operating income/expense, net |  |      | 56,470 |            |      |  | 6,182 |        |  |  | 1,762         |  |  |               | 813.5% |  |  |  | 250.9% | 
|As a percentage of total revenue    |  |      | 0.6%   |            |      |  | 0.1%  |        |  |  | 0.0%          |  |  |               |        |  |  |  |        | 



2006 compared with 2005.    


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2005 compared with 2004.    




|                                 |  |      |         |            |      |  |        |        |  |  |               |  |  |               |          |  |  |  |       |   
|-------------------------------- |  | ---- | ------- | ---------- | ---- |  | ------ | ------ |  |  | ------------- |  |  | ------------- | -------- |  |  |  | ----- | --
|                                 |  |      |         |            |      |  |        | Change |  |  | Change        | 
|                                 |  | 2006 |         |            | 2005 |  |        | 2004   |  |  | 2006 vs. 2005 |  |  | 2005 vs. 2004 |         
|                                 |  |      |         |            |      |  |        |        |  |  |               |  |  |               |         
|                                 |  |      |         | (In 000s) |      |  |        |        |  |  |              
|Financial income/expense, net    |  |      | 121,708 |            |      |  | 10,785 |        |  |  | 40,987        |  |  |               | 1,028.5% |  |  |  | (73.7 | )%
|As a percentage of total revenue |  |      | 1.3%    |            |      |  | 0.1%   |        |  |  | 0.5%          |  |  |               |          |  |  |  |       |   



2006 compared with 2005.        


2005 compared with 2004.       




|                                                                        |  |            |         |  |      |  |         |        |  |  |               |  |  |               |      |    |  |  |      | 
|----------------------------------------------------------------------- |  | ---------- | ------- |  | ---- |  | ------- | ------ |  |  | ------------- |  |  | ------------- | ---- | -- |  |  | ---- | 
|                                                                        |  |            |         |  |      |  |         | Change |  |  | Change        | 
|                                                                        |  | 2006       |         |  | 2005 |  |         | 2004   |  |  | 2006 vs. 2005 |  |  | 2005 vs. 2004 |     
|                                                                        |  |            |         |  |      |  |         |        |  |  |               |  |  |               |     
|                                                                        |  | (In 000s) |         |  |      |  |        
|Income taxes                                                            |  |            | 801,612 |  |      |  | 817,053 |        |  |  | 757,269       |  |  |               | (1.9 | )% |  |  | 7.9% | 
|As a percentage of Income before income taxes and minority
    interest |  |            | 30.0%   |  |      |  | 35.3%   |        |  |  | 36.5%         |  |  |               |      |    |  |  |      | 

2006 compared with 2005.


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2005 compared with 2004.









  


 


  




|                      |  |      |        |   |      |  |        |        |  |  |               |   |  |                       |       |                         |  |  |       | 
|--------------------- |  | ---- | ------ | - | ---- |  | ------ | ------ |  |  | ------------- | - |  | --------------------- | ----- | ----------------------- |  |  | ----- | 
|                      |  |      |        |   |      |  |        | Change |  |  | Change        |  
|Product Segment       |  | 2006 |        |   | 2005 |  |        | 2004   |  |  | 2006 vs. 2005 |   |  | 2005 vs. 2004         |      
|                      |  |      |        |   |      |  |        |        |  |  |               |   |  |                       |      
|External revenue      |  |      | 6,652  |   |      |  | 6,044  |        |  |  | 5,293         |   |  |                       | 10.1% |                         |  |  | 14.2% | 
|Segment expenses      |  |      | (2,628 | ) |      |  | (2,452 | )      |  |  | (2,058        | ) |  |                       | 7.2%  |                         |  |  | 19.2% | 
|Segment contribution  |  |      | 4,024  |   |      |  | 3,592  |        |  |  | 3,235         |   |  |                       | 12.0% |                         |  |  | 11.0% | 
|Segment profitability |  |      | 60.5%  |   |      |  | 59.4%  |        |  |  | 61.1%         |   |  | 1.1 percentage points |       | (1.7) percentage points

|                      |  |      |        |   |      |  |        |        |  |  |               |   |  |                       |       |                         |  |  |      | 
|--------------------- |  | ---- | ------ | - | ---- |  | ------ | ------ |  |  | ------------- | - |  | --------------------- | ----- | ----------------------- |  |  | ---- | 
|                      |  |      |        |   |      |  |        | Change |  |  | Change        |  
|Consulting Segment    |  | 2006 |        |   | 2005 |  |        | 2004   |  |  | 2006 vs. 2005 |   |  | 2005 vs. 2004         |      
|                      |  |      |        |   |      |  |        |        |  |  |               |   |  |                       |      
|External revenue      |  |      | 2,300  |   |      |  | 2,078  |        |  |  | 1,910         |   |  |                       | 10.7% |                         |  |  | 8.8% | 
|Segment expenses      |  |      | (1,703 | ) |      |  | (1,619 | )      |  |  | (1,484        | ) |  |                       | 5.2%  |                         |  |  | 9.1% | 
|Segment contribution  |  |      | 597    |   |      |  | 459    |        |  |  | 426           |   |  |                       | 30.2% |                         |  |  | 7.7% | 
|Segment profitability |  |      | 26.0%  |   |      |  | 22.1%  |        |  |  | 22.3%         |   |  | 3.9 percentage points |       | (0.2) percentage points

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|                      |  |      |       |   |      |  |       |        |  |  |               |   |  |                       |       |                       |  |  |       | 
|--------------------- |  | ---- | ----- | - | ---- |  | ----- | ------ |  |  | ------------- | - |  | --------------------- | ----- | --------------------- |  |  | ----- | 
|                      |  |      |       |   |      |  |       | Change |  |  | Change        |  
|Training Segment      |  | 2006 |       |   | 2005 |  |       | 2004   |  |  | 2006 vs. 2005 |   |  | 2005 vs. 2004         |      
|                      |  |      |       |   |      |  |       |        |  |  |               |   |  |                       |      
|External revenue      |  |      | 440   |   |      |  | 380   |        |  |  | 307           |   |  |                       | 15.8% |                       |  |  | 24.0% | 
|Segment expenses      |  |      | (273  | ) |      |  | (248  | )      |  |  | (209          | ) |  |                       | 10.0% |                       |  |  | 18.6% | 
|Segment contribution  |  |      | 167   |   |      |  | 132   |        |  |  | 98            |   |  |                       | 26.7% |                       |  |  | 35.5% | 
|Segment profitability |  |      | 38.1% |   |      |  | 34.8% |        |  |  | 31.8%         |   |  | 3.3 percentage points |       | 3.0 percentage points





2006 compared with 2005.      


 


 


2005 compared with 2004.      


54



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 


 






2006 compared with 2005.  


 




 


2005 compared with 2004.  


 




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 




e-learning.


2006 compared with 2005.  


 


 


2005 compared with 2004.  


 


 


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








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We expect year-over-year software and software-related service
    revenue growth in the range of 12% to 14% on a constant currency
    basis. The corresponding rate of growth in 2006 on a constant
    currency basis was 12%. We expect subscription and other
    software-related services to account for approximately 2% to 4%
    of total software and software-related services revenue.                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | To tap new business in the lower midmarket in the coming years,
    over a period of eight quarters we intend to invest about
    300 million
    to
    400 million
    in sales channels, process, infrastructure, and human resources,
    all oriented toward new customer relationships and a big,
    diversified partner ecosystem. We plan to fund these capital
    expenditures by using our operating cash flow. Depending on when
    we actually make these investments, in 2007 we expect to
    reinvest the equivalent of about one to two operating margin
    percentage points in preparing for additional future growth
    opportunities. Therefore, we assume our 2007 operating margin
    will be in the range 26.0% to 27.0%. Our 2006 operating margin
    was 27.3%.
|
| |  | We plan to increase our headcount by 3,500 full-time equivalents
    in 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | We plan to continue to buy back shares in the open market. If
    the Annual General Meeting of Shareholders in May 2007 so
    resolves, we expect to pay a dividend that provides a payout
    ratio of about 30%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



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     


20-F,







20-F.


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##### Table of Contents







| |   |                                                                       
| | - | ----------------------------------------------------------------------
| |  | Revenue recognition                                                   
|
| |  | Valuation of accounts receivable                                      
|
| |  | Accounting for stock-based compensation                               
|
| |  | Accounting for income taxes and other income tax related
    judgments
|
| |  | Impairment assessments                                                
|
| |  | Legal contingencies                                                   





Software Revenue Recognition








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##### Table of Contents





97-2,




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









      





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|                                                                                   |  |                 |       |   |      |  |      |      |  |  |     | 
|---------------------------------------------------------------------------------- |  | --------------- | ----- | - | ---- |  | ---- | ---- |  |  | --- | 
|                                                                                   |  | 2006            |       |   | 2005 |  |      | 2004 | 
|                                                                                   |  |                 |       |   |      |  |      |      | 
|                                                                                   |  | (In  millions) |      
|Specific customer credit loss risks                                                |  |                 | 2.6   |   |      |  | 9.0  |      |  |  | 0.0 | 
|Customer credit loss risks based on aging of the receivables                       |  |                 | (43.0 | ) |      |  | 3.4  |      |  |  | 1.7 | 
|                                                                                   |  |                 |       |   |      |  |      |      | 
|Total amounts charged to expense/(income) for allowances for
    doubtful accounts |  |                 | (40.4 | ) |      |  | 12.4 |      |  |  | 1.7 | 
|                                                                                   |  |                 |       |   |      |  |      |      | 

  




Share-Based Payment


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






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




Goodwill and intangible assets


Goodwill and
Other Intangible Assets    


Equity investments


 


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  




Accounting for Contingencies






















|                          |  |                 |       |  |      |  |       |          |  |  |       |   
|------------------------- |  | --------------- | ----- |  | ---- |  | ----- | -------- |  |  | ----- | --
|                          |  | 2006            |       |  | 2005 |  |       | % change | 
|                          |  |                 |       |  |      |  |       |          | 
|                          |  | (In  millions) |       |  |     
|Cash and cash equivalents |  |                 | 2,399 |  |      |  | 2,064 |          |  |  | 16.2% |   
|Short-term investments    |  |                 | 931   |  |      |  | 1,782 |          |  |  | (47.8 | )%
|                          |  |                 |       |  |      |  |       |          | 
|Total                     |  |                 | 3,330 |  |      |  | 3,846 |          |  |  | (13.4 | )%



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  




 




|                                          |  |                          |        |   |        |  |       |        |  |  |               |   |  |               |      |    |  |  |     |   
|----------------------------------------- |  | ------------------------ | ------ | - | ------ |  | ----- | ------ |  |  | ------------- | - |  | ------------- | ---- | -- |  |  | --- | --
|                                          |  | Years ended December 31, |        |   |        |  |      
|                                          |  |                          |        |   | Change |  |       | Change | 
|                                          |  | 2006                     |        |   | 2005   |  |       | 2004   |  |  | 2006 vs. 2005 |   |  | 2005 vs. 2004 |     
|                                          |  |                          |        |   |        |  |       |        |  |  |               |   |  |               |     
|                                          |  | (In  millions)          |        |   |        |  |      
|Net cash provided by operating activities |  |                          | 1,847  |   |        |  | 1,608 |        |  |  | 1,845         |   |  |               | 15%  |    |  |  | (13 | )%
|Net cash used in investing activities     |  |                          | (134   | ) |        |  | (583  | )      |  |  | (748          | ) |  |               | (77  | )% |  |  | (22 | )%
|Net cash used in financing activities     |  |                          | (1,375 | ) |        |  | (555  | )      |  |  | (388          | ) |  |               | 148% |    |  |  | 43% |   

          


 


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          




 







  













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Consolidation of Variable Interest
Entities  an interpretation of ARB No. 51.






|                                                                  |  |                        |     |  |                  |  |     |           |  |  |           |  |  |                   |     |  |  |  |     | 
|----------------------------------------------------------------- |  | ---------------------- | --- |  | ---------------- |  | --- | --------- |  |  | --------- |  |  | ----------------- | --- |  |  |  | --- | 
|                                                                  |  | Payments due by period |    
|                                                                  |  |                        |    
|Contractual obligations                                           |  | Total                  |     |  | Less than 1 year |  |     | 1-3 years |  |  | 3-5 years |  |  | More than 5 years |    
|                                                                  |  |                        |     |  |                  |  |     |           |  |  |           |  |  |                   |    
|                                                                  |  | (In  millions)        |    
|Long-term debt
    obligations(1)                                 |  |                        | 2   |  |                  |  | 1   |           |  |  | 1         |  |  |                   |    |  |  |  |    | 
|Capital (finance) lease
    obligations(2)                        |  |                        | 1   |  |                  |  | 1   |           |  |  |          |  |  |                   |    |  |  |  |    | 
|Operating lease
    obligations(3)                                |  |                        | 657 |  |                  |  | 149 |           |  |  | 205       |  |  |                   | 134 |  |  |  | 169 | 
|Purchase
    obligations(4)                                       |  |                        | 197 |  |                  |  | 142 |           |  |  | 46        |  |  |                   | 9   |  |  |  |    | 
|Other long-term liabilities reflected on the balance
    sheet(5) |  |                        | 78  |  |                  |  |    |           |  |  | 72        |  |  |                   | 4   |  |  |  | 2   | 
|                                                                  |  |                        |     |  |                  |  |     |           |  |  |           |  |  |                   |    
|Total                                                             |  |                        | 935 |  |                  |  | 293 |           |  |  | 324       |  |  |                   | 147 |  |  |  | 171 | 






|    |                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This represents a bank loan.                                                                                                                                                                                                                                                                                                  
|   
|(2) | This mainly represents capital leases of computer equipment and
    cars.                                                                                                                                                                                                                                                     
|   
|(3) | We have operating leases for office facilities for most of our
    subsidiaries, cars, computer hardware and certain other
    equipment. Rental expense for operating leases in 2006 was
    182 million
    (2005:
    165 million;
    2004:
    153 million).                                                          
|   
|(4) | Purchase obligations represent agreements to purchase goods or
    services that are enforceable and legally binding on us that
    specify all significant terms, including: fixed or minimum
    quantities to be purchased, fixed; minimum or variable price
    provisions; and the approximate timing of the transaction.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The outstanding obligations include the construction of
    facilities, office equipment and car purchase commitments, food
    and security services and other facility commitments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | Our expected contributions to our pension and other
    postemployment benefit plans are not included in the table
    above. We expect to contribute in 2007 statutory minimum and
    discretionary amounts of
    1.8 million
    to our German defined benefit plans and
    45.6 million
    to our foreign defined benefit plans, all of which are expected
    to be paid as cash contributions. Our contributions to our
    German and foreign defined contribution plans have ranged from
    76 million
    to
    92 million
    in 2004 through 2006; we expect similar contributions to be made
    in 2007. See Note 21(a) to our consolidated financial
    statements in Item 18. Financial Statements for
    additional information.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | Amounts mainly consist of income tax payable
    (67 million),
    restructuring and other accruals
    (10 million)
    and trade accounts payable
    (0.4 million).
    Other noncurrent liabilities on the balance sheet such as
    pension and other postemployment benefit liabilities, deferred
    compensation, deferred income, deferred tax liabilities, and
    deferred rent are not included in this table. Please see
    Notes 20 and 21 to our consolidated financial statements in
    Item 18. Financial Statements.



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  




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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES









|                                                                         |  |     |    |  |                      |                                                                                                                                                                   |         |  |      |         |  |  |      | 
|------------------------------------------------------------------------ |  | --- | -- |  | -------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- |  | ---- | ------- |  |  | ---- | 
|                                                                         |  |     |    |  |                      | Year                                                                                                                                                              |         |  | Year |        
|                                                                         |  |     |    |  |                      | First                                                                                                                                                             |         |  | Term |        
|Name                                                                     |  | Age |    |  | Principal Occupation |                                                                                                                                                                   | Elected |  |      | Expires | 
|                                                                         |  |     |    |  |                      |                                                                                                                                                                   |         |  |      |         | 
|Prof. Dr. h.c. mult. Hasso Plattner,
    Chairperson(2)
    (3)(5)(7)(8) |  |     | 63 |  |                      | Chairperson of the Supervisory Board                                                                                                                              |         |  | 2003 |         |  |  | 2007 | 
|Pekka
    Ala-Pietilä(1)(8)                                              |  |     | 50 |  |                      | Executive Advisor to the CEO of Nokia Corporation (until
    January 31, 2006) Co-founder and CEO Blyk Ltd. (from
    April 12, 2006)                             |         |  | 2002 |         |  |  | 2007 | 
|Prof. Dr. Wilhelm
    Haarmann(1)
    (3)(5)(9)                          |  |     | 56 |  |                      | Attorney at Law, Certified Public Auditor and Certified Tax
    Advisor; HAARMANN Partnerschaftsgesellschaft,
    Rechtsanwälte, Steuerberater, Wirtschaftsprüfer |         |  | 1988 |         |  |  | 2007 | 
|Dr. h.c. Hartmut
    Mehdorn(1)
    (7)                                  |  |     | 64 |  |                      | Chairperson of Executive Board, Deutsche Bahn AG                                                                                                                  |         |  | 1998 |         |  |  | 2007 | 
|Prof. Dr. Dr. h.c. mult. August-Wilhelm
    Scheer(1)
    (6)(8)         |  |     | 65 |  |                      | Professor at Saarland University                                                                                                                                  |         |  | 2002 |         |  |  | 2007 | 
|Dr. Erhard
    Schipporeit(11)                                           |  |     | 58 |  |                      | Former member of the Executive Board, EON AG, Management
    consultant                                                                                           |         |  | 2005 |         |  |  | 2007 | 
|Dr. Dieter
    Spöri(1)(5)                                               |  |     | 63 |  |                      | Head of Corporate Representation Federal Affairs,
    DaimlerChrysler AG                                                                                          |         |  | 1998 |         |  |  | 2007 | 
|Dr. h.c. Klaus
    Tschira(1)
    (4)                                    |  |     | 66 |  |                      | Managing Director, Klaus Tschira Stiftung gGmbH                                                                                                                   |         |  | 1998 |         |  |  | 2007 | 
|Helga Classen, Vice Chairperson
    (5)(7)(10)                           |  |     | 56 |  |                      | Employee, Chairperson of the Works Council of SAP AG and SAP
    Hosting AG & Co. KG                                                                              |         |  | 1993 |         |  |  | 2007 | 
|Willi
    Burbach(7)(8)(10)                                              |  |     | 44 |  |                      | Employee, Developer                                                                                                                                               |         |  | 1993 |         |  |  | 2007 | 
|Bernhard
    Koller(4)(10)                                               |  |     | 57 |  |                      | Employee, Manager of Idea Management                                                                                                                              |         |  | 1989 |         |  |  | 2007 | 
|Christiane
    Kuntz-Mayr(5)
    (8)(10)                                 |  |     | 44 |  |                      | Employee, Development Architect                                                                                                                                   |         |  | 2002 |         |  |  | 2007 | 
|Lars
    Lamadé(6)(10)                                                   |  |     | 35 |  |                      | Employee, Project Manager Service & Support                                                                                                                       |         |  | 2002 |         |  |  | 2007 | 
|Dr. Gerhard
    Maier(3)
    (6)(10)                                     |  |     | 53 |  |                      | Employee, Development Project Manager                                                                                                                             |         |  | 1989 |         |  |  | 2007 | 
|Dr. Barbara Schennerlein
    (5)(10)                                     |  |     | 50 |  |                      | Employee, Principal Consultant                                                                                                                                    |         |  | 1998 |         |  |  | 2007 | 
|Stefan
    Schulz(4)(8)(10)                                              |  |     | 37 |  |                      | Employee, Development Project Manager                                                                                                                             |         |  | 2002 |         |  |  | 2007 | 






|    |                                                 
|--- | ------------------------------------------------
|(1) | Elected by SAP AGs shareholders on May 3, 2002.
|   
|(2) | Elected by SAP AGs shareholders on May 9, 2003.

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





Mitbestimmungsgesetz









|                                 |  |            |      |  |              |  |      |    
|-------------------------------- |  | ---------- | ---- |  | ------------ |  | ---- | ---
|                                 |  | Year First |      |  | Year Current | 
|Name                             |  | Appointed  |      |  | Term Expires | 
|                                 |  |            |      |  |              | 
|Prof. Dr. Henning Kagermann, CEO |  |            | 1991 |  |              |  | 2009 |    
|Dr. Peter Zencke                 |  |            | 1993 |  |              |  | 2008 |    
|Prof. Dr. Claus Heinrich         |  |            | 1996 |  |              |  | 2010 |    
|Gerhard Oswald                   |  |            | 1996 |  |              |  | 2010 |    
|Dr. Werner Brandt                |  |            | 2001 |  |              |  | 2009 |    
|Shai Agassi                      |  |            | 2002 |  |              |  | 2007 | (1)
|Léo Apotheker                    |  |            | 2002 |  |              |  | 2010 |    






|    |                                                                            
|--- | ---------------------------------------------------------------------------
|(1) | Resigned effective April 1, 2007. Additional information
    located below.

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Henning Kagermann, CEO Vorstandssprecher


Shai Agassi,


Léo Apotheker,


Werner Brandt,


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Claus Heinrich,


Gerhard Oswald,


Peter Zencke,









COMPENSATION, SHAREHOLDING, AND DEALINGS OF DIRECTORS AND
OFFICERS




Compensation for Executive Board Members


Compensation Package










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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The fixed element is paid as a monthly salary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | The amount of performance-related compensation to be paid out in
    respect of 2006 depends on the Groups achievement of its
    targets for Adjusted operating income that is, before
    stock-based compensation expenses and acquisition-related
    charges and on software revenue growth. On February 14,
    2007 the Supervisory Boards compensation committee
    assessed SAPs performance against the agreed targets and
    determined how much performance-related compensation was
    payable. The payment will be made after the Annual General
    Meeting of Shareholders in May 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | The regular form of stock-based compensation is the issue of
    stock options under the terms of SAP SOP 2002 that the Annual
    General Meeting of Shareholders approved on May 3, 2002.
    The terms and detail of SAP SOP 2002 are reported in
    Note 29 to our consolidated financial statements in
    Item 18. Financial Statements. For options
    granted to members of the Executive Board in and from February
    2004, the SAP SOP 2002 plan terms provide that the Supervisory
    Board can cap subscription rights if it believes that an option
    holder would make a windfall profit by exercising them. If the
    total profit from the exercise at all times of rights under
    options issued to that holder at the same time exceeds two times
    the product of (i) the number of subscription rights
    received by that option holder; and (ii) the exercise
    price, that total profit is a windfall profit. It is determined
    by reference to the total of the differences, calculated
    individually for each exercised subscription right, between the
    closing price of the share on the exercise day and the exercise
    price. SAP bears any expenses incurred by the option holder
    through fees, taxes, or deductions related to the cap. The
    Supervisory Board can only cap subscription rights if it decides
    the windfall profits are due to not inconsequential,
    extraordinary, unforeseen appreciation for which the Executive
    Board is not responsible.
|
| |  | The additional nonrecurring stock-based compensation awarded in
    2006 is comprised of STARs for the Incentive Plan 2010
    stock-based compensation plan. This plan is a nonrecurring
    incentive with a term of up to five years, intended to give more
    encouragement than hitherto for originality and to ensure the
    Executive Board actions remain focused on a long-term goal.
    Incentive Plan 2010 is a stock-based compensation plan intended
    to reward a substantial increase in our market capitalization.
    The Executive Board will qualify for payout under the plan only
    if, not later than the end of 2010, SAPs average market
    capitalization during the last six months of a year is not less
    than 50% greater than its average value between July 1 and July
    31, 2005 and SAP stock outperforms the GSTI Software Index over
    the same period. Payouts are scaled as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | If market capitalization does not increase by 50% or more, the
    Executive Board will receive no payout.                                                   
|
| |  | If market capitalization increases by more than 50% but less
    than 100%, target achievement will be measured progressively.                               
|
| |  | If SAPs market capitalization increases not less than
    twofold during the said period, the Executive Board will receive
    a payout of
    100 million.



75



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Amount of Compensation




|                                  |  |                |       |            |              |              |              |          |              |           |              |             |              |           |       |  |              |  |          |       |  |  |         |  |  |  |          |  |  |  |          | 
|--------------------------------- |  | -------------- | ----- | ---------- | ------------ | ------------ | ------------ | -------- | ------------ | --------- | ------------ | ----------- | ------------ | --------- | ----- |  | ------------ |  | -------- | ----- |  |  | ------- |  |  |  | -------- |  |  |  | -------- | 
|                                  |  |                |       |            |              | 2006         |              |          | 2005         |          
|                                  |  |                |       |            |              |              |              |          |              |          
|                                  |  |                |       |            |              |              |              | Regular  |              |           |              |             | Nonrecurring |           |       |  |              | 
|                                  |  |                |       |            |              | Performance- |              |          | Long-Term    |           |              |             |              | Long-Term |       |  |              |  |         
|                                  |  |                |       | Related    |              |              | Incentive    |          |              |           |              | Incentive   |              |           |       |  |             
|                                  |  | Fixed Elements |       |            | Compensation |              |              | Elements |              |           |              |             | Element      |           |       |  |              | 
|                                  |  |                |       |            |              |              |              |          |              |           | Total Before |             |              |           |       |  |              |  |         
|                                  |  |                |       |            |              | Stock-Based  |              |          | Nonrecurring |           |              | Stock-Based |              |           |       |  |             
|                                  |  |                |       | Directors |              |              | Compensation |          |              | Long-Term |              |             | Compensation |           |       |  |              | 
|                                  |  |                |       | Profit     |              |              | (SAP SOP     |          |              | Incentive |              |             | (Incentive   |           |       |  |              | 
|                                  |  | Salary         |       |            | Other*       |              |              | Sharing  |              |           | 2002)**      |             |              | Element   |       |  | Plan 2010)** |  |          | Total |  |  | Total   | 
|                                  |  |                |       |            |              |              |              |          |              |           |              |             |              |           |       |  |              |  |          |       |  |  |         | 
|                                  |  | (000)         |      
|Prof. Dr. Henning Kagermann (CEO) |  |                | 710.7 |            |              |              | 17.0         |          |              |           | 2,673.7      |             |              |           | 949.0 |  |              |  | 4,350.4  |       |  |  | 4,680.1 |  |  |  | 9,030.5  |  |  |  | 6,084.8  | 
|Shai Agassi                       |  |                | 474.4 |            |              |              | 59.5         |          |              |           | 1,782.5      |             |              |           | 632.7 |  |              |  | 2,949.1  |       |  |  | 3,120.1 |  |  |  | 6,069.2  |  |  |  | 4,001.1  | 
|Léo Apotheker                     |  |                | 473.8 |            |              |              | 0.3          |          |              |           | 1,782.5      |             |              |           | 632.7 |  |              |  | 2,889.3  |       |  |  | 3,120.1 |  |  |  | 6,009.4  |  |  |  | 3,901.1  | 
|Dr. Werner Brandt                 |  |                | 432.6 |            |              |              | 41.3         |          |              |           | 1,627.5      |             |              |           | 577.7 |  |              |  | 2,679.1  |       |  |  | 1,560.0 |  |  |  | 4,239.1  |  |  |  | 3,942.2  | 
|Prof. Dr. Claus E. Heinrich       |  |                | 432.6 |            |              |              | 20.0         |          |              |           | 1,627.5      |             |              |           | 577.7 |  |              |  | 2,657.8  |       |  |  | 1,560.0 |  |  |  | 4,217.8  |  |  |  | 3,920.9  | 
|Gerhard Oswald                    |  |                | 432.6 |            |              |              | 14.8         |          |              |           | 1,627.5      |             |              |           | 577.7 |  |              |  | 2,652.6  |       |  |  | 1,560.0 |  |  |  | 4,212.6  |  |  |  | 3,915.1  | 
|Dr. Peter Zencke                  |  |                | 432.6 |            |              |              | 27.7         |          |              |           | 1,627.5      |             |              |           | 577.7 |  |              |  | 2,665.5  |       |  |  | 1,560.0 |  |  |  | 4,225.5  |  |  |  | 3,922.8  | 
|                                  |  |                |       |            |              |              |              |          |              |           |              |             |              |           |       |  |              |  |          |       |  |  |         | 
|Total                             |  |                |       |            |              |              |              |          |              |           |              |             |              |           |       |  |              |  | 20,843.8 |       |  |  |         |  |  |  | 38,004.1 |  |  |  | 29,688.0 | 
|                                  |  |                |       |            |              |              |              |          |              |           |              |             |              |           |       |  |              |  |          |       |  |  |         | 






|   |                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------
|*  | Insurance contributions, benefits in kind, compensation from
    seats on other governing bodies in the SAP Group
|  
|** | Fair value at the time of allocation                                                                             



|                                  |  |                     |         |            |                     |          |       |            |            |        |          |          |  |          |       |  |  |  |          | 
|--------------------------------- |  | ------------------- | ------- | ---------- | ------------------- | -------- | ----- | ---------- | ---------- | ------ | -------- | -------- |  | -------- | ----- |  |  |  | -------- | 
|                                  |  | 2006                |         |            |                    
|                                  |  |                     |         |            |                    
|                                  |  | Regular Stock-Based |         |            | Nonrecurring Stock- |          |       |           
|                                  |  | Compensation        |         |            | Based Compensation  |          |       |           
|                                  |  |                     |         |            |                     |          |       | Total Fair |           
|                                  |  |                     |         |            |                     | Value Of |      
|                                  |  | SAP SOP 2002        |         |            | Incentive Plan 2010 |          |       | Long-Term  |           
|                                  |  |                     |         |            |                     |          |       | Incentive  |           
|                                  |  |                     |         | Fair Value |                     |          |       |            | Fair Value |        |          | Elements | 
|                                  |  |                     |         | At Time    |                     |          |       |            | At Time    |        |          | At Time  | 
|                                  |  | Quantity            |         |            | Of Grant            |          |       | Quantity   |            |        | Of Grant |          |  | Of Grant |      
|                                  |  |                     |         |            |                     |          |       |            |            |        |          |          |  |          |      
|                                  |  |                     |         |           |                     |          |       |            |           |        |          |         
|                                  |  |                     |         |            |                     |          |       |            |            | (000) |         
|Prof. Dr. Henning Kagermann (CEO) |  |                     | 35,851  |            |                     |          | 26.47 |            |            |        | 188,182  |          |  |          | 24.87 |  |  |  | 5,629.1  | 
|Shai Agassi                       |  |                     | 23,901  |            |                     |          | 26.47 |            |            |        | 125,455  |          |  |          | 24.87 |  |  |  | 3,752.7  | 
|Léo Apotheker                     |  |                     | 23,901  |            |                     |          | 26.47 |            |            |        | 125,455  |          |  |          | 24.87 |  |  |  | 3,752.7  | 
|Dr. Werner Brandt                 |  |                     | 21,823  |            |                     |          | 26.47 |            |            |        | 62,727   |          |  |          | 24.87 |  |  |  | 2,137.7  | 
|Prof. Dr. Claus E. Heinrich       |  |                     | 21,823  |            |                     |          | 26.47 |            |            |        | 62,727   |          |  |          | 24.87 |  |  |  | 2,137.7  | 
|Gerhard Oswald                    |  |                     | 21,823  |            |                     |          | 26.47 |            |            |        | 62,727   |          |  |          | 24.87 |  |  |  | 2,137.7  | 
|Dr. Peter Zencke                  |  |                     | 21,823  |            |                     |          | 26.47 |            |            |        | 62,727   |          |  |          | 24.87 |  |  |  | 2,137.7  | 
|                                  |  |                     |         |            |                     |          |       |            |            |        |          |          |  |          |      
|Total                             |  |                     | 170,945 |            |                     |          |       |            |            |        | 690,000  |          |  |          |       |  |  |  | 21,685.3 | 
|                                  |  |                     |         |            |                     |          |       |            |            |        |          |          |  |          |      

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|                                  |  |                     |         |            |                     |          |       |            |            |  |          |          |  |          |   |  |  |  |         | 
|--------------------------------- |  | ------------------- | ------- | ---------- | ------------------- | -------- | ----- | ---------- | ---------- |  | -------- | -------- |  | -------- | - |  |  |  | ------- | 
|                                  |  | 2005                |         |            |                    
|                                  |  |                     |         |            |                    
|                                  |  | Regular Stock-Based |         |            | Nonrecurring Stock- |          |       |           
|                                  |  | Compensation        |         |            | Based Compensation  |          |       |           
|                                  |  |                     |         |            |                     |          |       | Total Fair |           
|                                  |  |                     |         |            |                     | Value Of |      
|                                  |  | SAP SOP 2002        |         |            | Incentive Plan 2010 |          |       | Long-Term  |           
|                                  |  |                     |         |            |                     |          |       | Incentive  |           
|                                  |  |                     |         | Fair Value |                     |          |       |            | Fair Value |  |          | Elements | 
|                                  |  |                     |         | At Time    |                     |          |       |            | At Time    |  |          | At Time  | 
|                                  |  | Quantity            |         |            | Of Grant            |          |       | Quantity   |            |  | Of Grant |          |  | Of Grant |  
|                                  |  |                     |         |            |                     |          |       |            |            |  |          |          |  |          |  
|                                  |  |                     |         |           |                     |          |       |            |           |  |          | (000)   | 
|Prof. Dr. Henning Kagermann (CEO) |  |                     | 66,955  |            |                     |          | 20.08 |            |            |  |         |          |  |          |  |  |  |  | 1,344.5 | 
|Shai Agassi                       |  |                     | 37,495  |            |                     |          | 20.08 |            |            |  |         |          |  |          |  |  |  |  | 752.9   | 
|Léo Apotheker                     |  |                     | 37,495  |            |                     |          | 20.08 |            |            |  |         |          |  |          |  |  |  |  | 752.9   | 
|Dr. Werner Brandt                 |  |                     | 37,495  |            |                     |          | 20.08 |            |            |  |         |          |  |          |  |  |  |  | 752.9   | 
|Prof. Dr. Claus E. Heinrich       |  |                     | 37,495  |            |                     |          | 20.08 |            |            |  |         |          |  |          |  |  |  |  | 752.9   | 
|Gerhard Oswald                    |  |                     | 37,495  |            |                     |          | 20.08 |            |            |  |         |          |  |          |  |  |  |  | 752.9   | 
|Dr. Peter Zencke                  |  |                     | 37,495  |            |                     |          | 20.08 |            |            |  |         |          |  |          |  |  |  |  | 752.9   | 
|                                  |  |                     |         |            |                     |          |       |            |            |  |          |          |  |          |  
|Total                             |  |                     | 291.925 |            |                     |          |       |            |            |  |          |          |  |          |   |  |  |  | 5,861.9 | 
|                                  |  |                     |         |            |                     |          |       |            |            |  |          |          |  |          |  



|                                                    |  |               |        |                   |  |  |        | 
|--------------------------------------------------- |  | ------------- | ------ | ----------------- |  |  | ------ | 
|                                                    |  | Fair Value At |        | Fair Value On    
|                                                    |  | Time Of Grant |        | December 31, 2006
|                                                    |  |               |        |                  
|SAP SOP 2002 Stock Options (February 6, 2006 grant) |  |               | 26.47 |                   |  |  | 18.23 | 
|Incentive Plan 2010 STARs (March 6, 2006 grant)     |  |               | 24.87 |                   |  |  | 14.02 | 

End-of-Service Undertakings


Retirement
Pension Plan










77



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|                                                |  |           |           |           |  |            |          |           |  |         |         |           |  |       |           |   |  |  |           |   |  |  |           |   |  |  |            |  
|----------------------------------------------- |  | --------- | --------- | --------- |  | ---------- | -------- | --------- |  | ------- | ------- | --------- |  | ----- | --------- | - |  |  | --------- | - |  |  | --------- | - |  |  | ---------- | -
|                                                |  | Prof. Dr. |           |           |  |            |          |           |  |         |         |           |  |      
|                                                |  | Henning   |           |           |  |            |          | Prof. Dr. |  |         |         |           |  |      
|                                                |  | Kagermann |           | Léo       |  | Dr. Werner |          | Claus E.  |  | Gerhard |         | Dr. Peter |  |      
|                                                |  | (CEO)     |           | Apotheker |  | Brandt     |          | Heinrich  |  | Oswald  |         | Zencke    |  | Total
|                                                |  |           |           |           |  |            |          |           |  |         |         |           |  |      
|                                                |  |          |           |          |  |           |          |          |  |        |         |          |  |     
|PBO January 1, 2006                             |  |           | 5,592,058 |           |  |            | 462,069  |           |  |         | 529,437 |           |  |       | 3,252,434 |   |  |  | 3,525,780 |   |  |  | 4,127,569 |   |  |  | 17,489,347 |  
|less Plan assets market value January 1, 2006   |  |           | 3,952,372 |           |  |            | 579,113  |           |  |         | 313,834 |           |  |       | 1,512,327 |   |  |  | 1,732,440 |   |  |  | 2,559,739 |   |  |  | 10,649,825 |  
|                                                |  |           |           |           |  |            |          |           |  |         |         |           |  |       |           |   |  |  |           |   |  |  |           |   |  |  |            |  
|Accrued January 1, 2006                         |  |           | 1,639,686 |           |  |            | (117,044 | )         |  |         | 215,603 |           |  |       | 1,740,107 |   |  |  | 1,793,340 |   |  |  | 1,567,830 |   |  |  | 6,839,522  |  
|PBO change in 2006                              |  |           | (257,394  | )         |  |            | (16,752  | )         |  |         | 63,897  |           |  |       | (237,154  | ) |  |  | (241,536  | ) |  |  | (251,614  | ) |  |  | (940,553   | )
|Plan assets change in 2006                      |  |           | 630,102   |           |  |            | 24,274   |           |  |         | 94,352  |           |  |       | 251,077   |   |  |  | 282,635   |   |  |  | 387,276   |   |  |  | 1,669,716  |  
|PBO December 31, 2006                           |  |           | 5,334,664 |           |  |            | 445,317  |           |  |         | 593,334 |           |  |       | 3,015,280 |   |  |  | 3,284,244 |   |  |  | 3,875,955 |   |  |  | 16,548,794 |  
|less Plan assets market value December 31, 2006 |  |           | 4,582,474 |           |  |            | 603,387  |           |  |         | 408,186 |           |  |       | 1,763,404 |   |  |  | 2,015,075 |   |  |  | 2,947,015 |   |  |  | 12,319,541 |  
|                                                |  |           |           |           |  |            |          |           |  |         |         |           |  |       |           |   |  |  |           |   |  |  |           |   |  |  |            |  
|Accrued December 31, 2006                       |  |           | 752,190   |           |  |            | (158,070 | )         |  |         | 185,148 |           |  |       | 1,251,876 |   |  |  | 1,269,169 |   |  |  | 928,940   |   |  |  | 4,229,253  |  



|                                                                     |  |           |          |           |  |            |         |              |  |         |         |           |  |  |          |  |  |  |          |  |  |  |          | 
|-------------------------------------------------------------------- |  | --------- | -------- | --------- |  | ---------- | ------- | ------------ |  | ------- | ------- | --------- |  |  | -------- |  |  |  | -------- |  |  |  | -------- | 
|                                                                     |  | Prof. Dr. |          |           |  |            |         |              |  |         |         |          
|                                                                     |  | Henning   |          |           |  |            |         | Prof.        |  |         |         |          
|                                                                     |  | Kagermann |          | Léo       |  | Dr. Werner |         | Dr. Claus E. |  | Gerhard |         | Dr. Peter
|                                                                     |  | (CEO)     |          | Apotheker |  | Brandt     |         | Heinrich     |  | Oswald  |         | Zencke   
|                                                                     |  |           |          |           |  |            |         |              |  |         |         |          
|Annual pension entitlement at age 60 vested on December 31,
    2006 |  |           | 289,827 |           |  |            | 45,487 |              |  |         | 34,364 |           |  |  | 165,487 |  |  |  | 184,553 |  |  |  | 207,188 | 



   


Early
Termination






78



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##### Table of Contents







Long-Term Incentives for the Executive Board




SAP
SOP 2002






79



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##### Table of Contents



|                                  |  |                            |       |                   |           |  |                   |         |  |       |           |           |  |         |           |  |           |  |      |         |  |  |           |  |  |  |      | 
|--------------------------------- |  | -------------------------- | ----- | ----------------- | --------- |  | ----------------- | ------- |  | ----- | --------- | --------- |  | ------- | --------- |  | --------- |  | ---- | ------- |  |  | --------- |  |  |  | ---- | 
|                                  |  | SAP SOP 2002 Stock Options |      
|                                  |  |                            |      
|                                  |  |                            |       | Vested On         |           |  | Not Vested On     |         |  |      
|                                  |  |                            |       | December 31, 2006 |           |  | December 31, 2006 |         |  | Total |          
|                                  |  | Exercise                   |       |                   |           |  |                   |         |  |       |           |          
|                                  |  | Price                      |       |                   |           |  | Remaining         |         |  |       |           | Remaining |  |         |           |  | Remaining | 
|                                  |  | per                        |       |                   | Quantity  |  |                   | Term In |  |       | Quantity  |           |  | Term In |           |  | Quantity  |  |      | Term In | 
|                                  |  | Share ()                  |       |                   | of Shares |  |                   | Years   |  |       | of Shares |           |  | Years   |           |  | of Shares |  |      | Years   | 
|                                  |  |                            |       |                   |           |  |                   |         |  |       |           |           |  |         |           |  |           |  |      |         | 
|Prof. Dr. Henning Kagermann (CEO) |  |                            | 22.59 |                   |           |  | 320,000           |         |  |       | 1.16      |           |  |         |          |  |           |  |     |         |  |  | 320,000   |  |  |  | 1.16 | 
|                                  |  |                            | 37.50 |                   |           |  | 200,000           |         |  |       | 2.13      |           |  |         |          |  |           |  |     |         |  |  | 200,000   |  |  |  | 2.13 | 
|                                  |  |                            | 33.55 |                   |           |  |                  |         |  |       |          |           |  |         | 267,820   |  |           |  | 3.11 |         |  |  | 267,820   |  |  |  | 3.11 | 
|                                  |  |                            | 46.48 |                   |           |  |                  |         |  |       |          |           |  |         | 143,404   |  |           |  | 4.10 |         |  |  | 143,404   |  |  |  | 4.10 | 
|Shai Agassi                       |  |                            | 22.59 |                   |           |  | 120,000           |         |  |       | 1.16      |           |  |         |          |  |           |  |     |         |  |  | 120,000   |  |  |  | 1.16 | 
|                                  |  |                            | 24.78 |                   |           |  | 120,000           |         |  |       | 1.33      |           |  |         |          |  |           |  |     |         |  |  | 120,000   |  |  |  | 1.33 | 
|                                  |  |                            | 37.50 |                   |           |  | 112,000           |         |  |       | 2.13      |           |  |         |          |  |           |  |     |         |  |  | 112,000   |  |  |  | 2.13 | 
|                                  |  |                            | 33.55 |                   |           |  |                  |         |  |       |          |           |  |         | 149,980   |  |           |  | 3.11 |         |  |  | 149,980   |  |  |  | 3.11 | 
|                                  |  |                            | 46.48 |                   |           |  |                  |         |  |       |          |           |  |         | 95,604    |  |           |  | 4.10 |         |  |  | 95,604    |  |  |  | 4.10 | 
|Léo Apotheker                     |  |                            | 37.50 |                   |           |  | 112,000           |         |  |       | 2.13      |           |  |         |          |  |           |  |     |         |  |  | 112,000   |  |  |  | 2.13 | 
|                                  |  |                            | 33.55 |                   |           |  |                  |         |  |       |          |           |  |         | 149,980   |  |           |  | 3.11 |         |  |  | 149,980   |  |  |  | 3.11 | 
|                                  |  |                            | 46.48 |                   |           |  |                  |         |  |       |          |           |  |         | 95,604    |  |           |  | 4.10 |         |  |  | 95,604    |  |  |  | 4.10 | 
|Dr. Werner Brandt                 |  |                            | 37.50 |                   |           |  | 112,000           |         |  |       | 2.13      |           |  |         |          |  |           |  |     |         |  |  | 112,000   |  |  |  | 2.13 | 
|                                  |  |                            | 33.55 |                   |           |  |                  |         |  |       |          |           |  |         | 149,980   |  |           |  | 3.11 |         |  |  | 149,980   |  |  |  | 3.11 | 
|                                  |  |                            | 46.48 |                   |           |  |                  |         |  |       |          |           |  |         | 87,292    |  |           |  | 4.10 |         |  |  | 87,292    |  |  |  | 4.10 | 
|Prof. Dr. Claus E. Heinrich       |  |                            | 22.59 |                   |           |  | 180,000           |         |  |       | 1.16      |           |  |         |          |  |           |  |     |         |  |  | 180,000   |  |  |  | 1.16 | 
|                                  |  |                            | 37.50 |                   |           |  | 112,000           |         |  |       | 2.13      |           |  |         |          |  |           |  |     |         |  |  | 112,000   |  |  |  | 2.13 | 
|                                  |  |                            | 33.55 |                   |           |  |                  |         |  |       |          |           |  |         | 149,980   |  |           |  | 3.11 |         |  |  | 149,980   |  |  |  | 3.11 | 
|                                  |  |                            | 46.48 |                   |           |  |                  |         |  |       |          |           |  |         | 87,292    |  |           |  | 4.10 |         |  |  | 87,292    |  |  |  | 4.10 | 
|Gerhard Oswald                    |  |                            | 33.55 |                   |           |  |                  |         |  |       |          |           |  |         | 149,980   |  |           |  | 3.11 |         |  |  | 149,980   |  |  |  | 3.11 | 
|                                  |  |                            | 46.48 |                   |           |  |                  |         |  |       |          |           |  |         | 87,292    |  |           |  | 4.10 |         |  |  | 87,292    |  |  |  | 4.10 | 
|Dr. Peter Zencke                  |  |                            | 22.59 |                   |           |  | 180,000           |         |  |       | 1.16      |           |  |         |          |  |           |  |     |         |  |  | 180,000   |  |  |  | 1.16 | 
|                                  |  |                            | 37.50 |                   |           |  | 112,000           |         |  |       | 2.13      |           |  |         |          |  |           |  |     |         |  |  | 112,000   |  |  |  | 2.13 | 
|                                  |  |                            | 33.55 |                   |           |  |                  |         |  |       |          |           |  |         | 149,980   |  |           |  | 3.11 |         |  |  | 149,980   |  |  |  | 3.11 | 
|                                  |  |                            | 46.48 |                   |           |  |                  |         |  |       |          |           |  |         | 87,292    |  |           |  | 4.10 |         |  |  | 87,292    |  |  |  | 4.10 | 
|                                  |  |                            |       |                   |           |  |                   |         |  |       |           |           |  |         |           |  |           |  |      |         | 
|Total                             |  |                            |       |                   |           |  | 1,680,000         |         |  |       |           |           |  |         | 1,851,480 |  |           |  |      |         |  |  | 3,531,480 |  |  |  |      | 
|                                  |  |                            |       |                   |           |  |                   |         |  |       |           |           |  |         |           |  |           |  |      |         | 



|                  |  |                                      |        |                  |                      |  |        |          |                  |  |           |  |  |  |       | 
|----------------- |  | ------------------------------------ | ------ | ---------------- | -------------------- |  | ------ | -------- | ---------------- |  | --------- |  |  |  | ----- | 
|                  |  | SAP SOP 2002 Stock Options Exercised |       
|                  |  |                                      |       
|                  |  | Stock Options  2006                 |        |                  | Stock Options  2005 | 
|                  |  |                                      |        |                  |                      | 
|                  |  |                                      |        | Average Exercise |                      |  |        |          | Average Exercise | 
|                  |  | Quantity                             |        |                  | Price ()            |  |        | Quantity |                  |  | Price () | 
|                  |  |                                      |        |                  |                      |  |        |          |                  |  |           | 
|Léo Apotheker     |  |                                      | 30,000 |                  |                      |  | 90.37  |          |                  |  |          |  |  |  |      | 
|Dr. Werner Brandt |  |                                      |       |                  |                      |  |       |          |                  |  | 30,000    |  |  |  | 90.37 | 
|Gerhard Oswald    |  |                                      | 28,000 |                  |                      |  | 149.99 |          |                  |  | 45,000    |  |  |  | 90.37 | 
|                  |  |                                      |        |                  |                      |  |        |          |                  |  |           | 
|Total             |  |                                      | 58,000 |                  |                      |  |        |          |                  |  | 75,000    |  |  |  |       | 
|                  |  |                                      |        |                  |                      |  |        |          |                  |  |           | 

LTI
Plan 2000




80



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|                                  |  |                             |       |                   |           |  |                   |         |  |       |           |           |  |         |   |  |           |  |   |         |  |  |         |  |  |  |      | 
|--------------------------------- |  | --------------------------- | ----- | ----------------- | --------- |  | ----------------- | ------- |  | ----- | --------- | --------- |  | ------- | - |  | --------- |  | - | ------- |  |  | ------- |  |  |  | ---- | 
|                                  |  | LTI Plan 2000 Stock Options |      
|                                  |  |                             |      
|                                  |  |                             |       | Vested On         |           |  | Not Vested On     |         |  |      
|                                  |  |                             |       | December 31, 2006 |           |  | December 31, 2006 |         |  | Total |          
|                                  |  | Exercise                    |       |                   |           |  |                   |         |  |       |           |          
|                                  |  | Price                       |       |                   |           |  | Remaining         |         |  |       |           | Remaining |  |         |   |  | Remaining | 
|                                  |  | per                         |       |                   | Quantity  |  |                   | Term In |  |       | Quantity  |           |  | Term In |   |  | Quantity  |  |   | Term In | 
|                                  |  | Share ()                   |       |                   | of Shares |  |                   | Years   |  |       | of Shares |           |  | Years   |   |  | of Shares |  |   | Years   | 
|                                  |  |                             |       |                   |           |  |                   |         |  |       |           |           |  |         |   |  |           |  |   |         | 
|Prof. Dr. Henning Kagermann (CEO) |  |                             | 19.35 |                   |           |  | 112,128           |         |  |       | 3.14      |           |  |         |  |  |           |  |  |         |  |  | 112,128 |  |  |  | 3.14 | 
|                                  |  |                             | 23.51 |                   |           |  | 157,500           |         |  |       | 4.14      |           |  |         |  |  |           |  |  |         |  |  | 157,500 |  |  |  | 4.14 | 
|Léo Apotheker                     |  |                             | 29.05 |                   |           |  | 87,500            |         |  |       | 5.14      |           |  |         |  |  |           |  |  |         |  |  | 87,500  |  |  |  | 5.14 | 
|Dr. Peter Zencke                  |  |                             | 19.35 |                   |           |  | 27,924            |         |  |       | 3.14      |           |  |         |  |  |           |  |  |         |  |  | 27,924  |  |  |  | 3.14 | 
|                                  |  |                             | 23.51 |                   |           |  | 73,700            |         |  |       | 4.14      |           |  |         |  |  |           |  |  |         |  |  | 73,700  |  |  |  | 4.14 | 
|                                  |  |                             |       |                   |           |  |                   |         |  |       |           |           |  |         |   |  |           |  |   |         | 
|Total                             |  |                             |       |                   |           |  | 458,752           |         |  |       |           |           |  |         |   |  |           |  |   |         |  |  | 458,752 |  |  |  |      | 
|                                  |  |                             |       |                   |           |  |                   |         |  |       |           |           |  |         |   |  |           |  |   |         | 



81



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|                                  |  |                                 |       |                   |  |                   |           |           |  |           |      |           |  |           |   |  |  |  |   |  |  |  |           |  |  |  |      | 
|--------------------------------- |  | ------------------------------- | ----- | ----------------- |  | ----------------- | --------- | --------- |  | --------- | ---- | --------- |  | --------- | - |  |  |  | - |  |  |  | --------- |  |  |  | ---- | 
|                                  |  | LTI Plan 2000 Convertible Bonds
|                                  |  |                                
|                                  |  |                                 |       | Vested On         |  | Not Vested On     |           |          
|                                  |  |                                 |       | December 31, 2006 |  | December 31, 2006 |           | Total    
|                                  |  |                                 |       |                   |  |                   |           |          
|                                  |  | Exercise                        |       |                   |  | Remaining         |           |           |  | Remaining |      |           |  | Remaining
|                                  |  | Price per                       |       | Quantity          |  | Term In           |           | Quantity  |  | Term In   |      | Quantity  |  | Term In  
|                                  |  | Share ()                       |       | of Shares         |  | Years             |           | of Shares |  | Years     |      | of Shares |  | Years    
|                                  |  |                                 |       |                   |  |                   |           |           |  |           |      |           |  |          
|Prof. Dr. Henning Kagermann (CEO) |  |                                 | 72.58 |                   |  |                   | 89,700    |           |  |           | 3.14 |           |  |           |  |  |  |  |  |  |  |  | 89,700    |  |  |  | 3.14 | 
|                                  |  |                                 | 47.81 |                   |  |                   | 126,000   |           |  |           | 4.14 |           |  |           |  |  |  |  |  |  |  |  | 126,000   |  |  |  | 4.14 | 
|                                  |  |                                 | 37.88 |                   |  |                   | 360,000   |           |  |           | 5.14 |           |  |           |  |  |  |  |  |  |  |  | 360,000   |  |  |  | 5.14 | 
|Léo Apotheker                     |  |                                 | 83.67 |                   |  |                   | 95,400    |           |  |           | 3.19 |           |  |           |  |  |  |  |  |  |  |  | 95,400    |  |  |  | 3.19 | 
|                                  |  |                                 | 47.81 |                   |  |                   | 120,000   |           |  |           | 4.14 |           |  |           |  |  |  |  |  |  |  |  | 120,000   |  |  |  | 4.14 | 
|                                  |  |                                 | 37.88 |                   |  |                   | 70,000    |           |  |           | 5.14 |           |  |           |  |  |  |  |  |  |  |  | 70,000    |  |  |  | 5.14 | 
|Dr. Werner Brandt                 |  |                                 | 47.81 |                   |  |                   | 20,000    |           |  |           | 4.14 |           |  |           |  |  |  |  |  |  |  |  | 20,000    |  |  |  | 4.14 | 
|                                  |  |                                 | 37.88 |                   |  |                   | 120,000   |           |  |           | 5.14 |           |  |           |  |  |  |  |  |  |  |  | 120,000   |  |  |  | 5.14 | 
|Prof. Dr. Claus E. Heinrich       |  |                                 | 72.58 |                   |  |                   | 65,700    |           |  |           | 3.14 |           |  |           |  |  |  |  |  |  |  |  | 65,700    |  |  |  | 3.14 | 
|                                  |  |                                 | 47.81 |                   |  |                   | 88,000    |           |  |           | 4.14 |           |  |           |  |  |  |  |  |  |  |  | 88,000    |  |  |  | 4.14 | 
|                                  |  |                                 | 37.88 |                   |  |                   | 200,000   |           |  |           | 5.14 |           |  |           |  |  |  |  |  |  |  |  | 200,000   |  |  |  | 5.14 | 
|Gerhard Oswald                    |  |                                 | 72.58 |                   |  |                   | 65,700    |           |  |           | 3.14 |           |  |           |  |  |  |  |  |  |  |  | 65,700    |  |  |  | 3.14 | 
|                                  |  |                                 | 47.81 |                   |  |                   | 88,000    |           |  |           | 4.14 |           |  |           |  |  |  |  |  |  |  |  | 88,000    |  |  |  | 4.14 | 
|Dr. Peter Zencke                  |  |                                 | 72.58 |                   |  |                   | 65,700    |           |  |           | 3.14 |           |  |           |  |  |  |  |  |  |  |  | 65,700    |  |  |  | 3.14 | 
|                                  |  |                                 | 47.81 |                   |  |                   | 88,000    |           |  |           | 4.14 |           |  |           |  |  |  |  |  |  |  |  | 88,000    |  |  |  | 4.14 | 
|                                  |  |                                 | 37.88 |                   |  |                   | 200,000   |           |  |           | 5.14 |           |  |           |  |  |  |  |  |  |  |  | 200,000   |  |  |  | 5.14 | 
|                                  |  |                                 |       |                   |  |                   |           |           |  |           |      |           |  |           |   |  |  |  |   |  |  |  |           |  |  |  |      | 
|                                  |  |                                 |       |                   |  |                   | 1,862,200 |           |  |           |      |           |  |           |   |  |  |  |   |  |  |  | 1,862,200 |  |  |  |      | 
|                                  |  |                                 |       |                   |  |                   |           |           |  |           |      |           |  |           |   |  |  |  |   |  |  |  |           |  |  |  |      | 



|                            |  |                                       |        |                      |  |          |        |                  |  |  |        |  |  |  |       | 
|--------------------------- |  | ------------------------------------- | ------ | -------------------- |  | -------- | ------ | ---------------- |  |  | ------ |  |  |  | ----- | 
|                            |  | LTI Plan 2000 Stock Options Exercised
|                            |  |                                      
|                            |  | Stock Options  2006                  |        | Stock Options  2005
|                            |  |                                       |        |                     
|                            |  |                                       |        | Average Exercise     |  |          |        | Average Exercise
|                            |  | Quantity                              |        | Price ()            |  | Quantity |        | Price ()       
|                            |  |                                       |        |                      |  |          |        |                 
|Dr. Werner Brandt           |  |                                       |       |                      |  |          |       |                  |  |  | 2,125  |  |  |  | 88.12 | 
|Prof. Dr. Claus E. Heinrich |  |                                       | 48,032 |                      |  |          | 74.07  |                  |  |  |       |  |  |  |      | 
|Gerhard Oswald              |  |                                       | 10,625 |                      |  |          | 116.04 |                  |  |  | 19,663 |  |  |  | 99.00 | 
|                            |  |                                       |        |                      |  |          |        |                  |  |  |        |  |  |  |       | 
|                            |  |                                       | 58,657 |                      |  |          |        |                  |  |  | 21,788 |  |  |  |       | 
|                            |  |                                       |        |                      |  |          |        |                  |  |  |        |  |  |  |       | 

|               |  |                                           |        |                          |  |          |        |                  |  |  |   |  |  |  |   | 
|-------------- |  | ----------------------------------------- | ------ | ------------------------ |  | -------- | ------ | ---------------- |  |  | - |  |  |  | - | 
|               |  | LTI Plan 2000 Convertible Bonds Exercised
|               |  |                                          
|               |  | Convertible Bonds  2006                  |        | Convertible Bonds  2005
|               |  |                                           |        |                         
|               |  |                                           |        | Average Exercise         |  |          |        | Average Exercise
|               |  | Quantity                                  |        | Price ()                |  | Quantity |        | Price ()       
|               |  |                                           |        |                          |  |          |        |                 
|Gerhard Oswald |  |                                           | 25,000 |                          |  |          | 151.50 |                  |  |  |  |  |  |  |  | 
|               |  |                                           |        |                          |  |          |        |                  |  |  |   |  |  |  |   | 
|               |  |                                           | 25,000 |                          |  |          |        |                  |  |  |  |  |  |  |  | 
|               |  |                                           |        |                          |  |          |        |                  |  |  |   |  |  |  |   | 

Stock Held By Executive Board Members






82



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##### Table of Contents



|                            |  |                                     |  |                                 |  |          |        |  |                |  |           | 
|--------------------------- |  | ----------------------------------- |  | ------------------------------- |  | -------- | ------ |  | -------------- |  | --------- | 
|                            |  | Transactions in SAP Shares and ADRs | 
|                            |  |                                     | 
|Notifying Party             |  | Transaction Date                    |  | Transaction                     |  | Quantity |        |  | Unit Price () | 
|                            |  |                                     |  |                                 |  |          |        |  |                | 
|Léo Apotheker               |  | November 15, 2006                   |  | Exercise of Subscription Rights |  |          | 30,000 |  |                |  | 90.37     | 
|Dr. Werner Brandt           |  | July 17, 2006                       |  | Stock purchase                  |  |          | 500    |  |                |  | 147.48    | 
|Prof. Dr. Claus E. Heinrich |  | June 12, 2006                       |  | Exercise of subscription rights |  |          | 20,532 |  |                |  | 65.9461   | 
|                            |  | June 12, 2006                       |  | Exercise of subscription rights |  |          | 27,500 |  |                |  | 80.1342   | 
|                            |  | June 12, 2006                       |  | Stock sale                      |  |          | 48,032 |  |                |  | 157.1696  | 
|Gerhard Oswald              |  | March 10, 2006                      |  | Exercise of subscription rights |  |          | 25,000 |  |                |  | 151.50    | 
|                            |  | March 10, 2006                      |  | Exercise of subscription rights |  |          | 28,000 |  |                |  | 149.99    | 
|                            |  | March 10, 2006                      |  | Exercise of subscription rights |  |          | 10,625 |  |                |  | 116.0380  | 
|                            |  | March 10, 2006                      |  | Stock sale                      |  |          | 63,625 |  |                |  | 172.54184 | 

Executive Board: Other Information








Compensation Package






    


    


83



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##### Table of Contents



  




Amount of Compensation




|                                                  |  |              |       |              |              |  |         |               |  |  |        |  |       |              |         |          |              |  |       |        |  |  |       |  |  |  |       | 
|------------------------------------------------- |  | ------------ | ----- | ------------ | ------------ |  | ------- | ------------- |  |  | ------ |  | ----- | ------------ | ------- | -------- | ------------ |  | ----- | ------ |  |  | ----- |  |  |  | ----- | 
|                                                  |  | 2006         |       |              | 2005         | 
|                                                  |  |              |       |              |              | 
|                                                  |  |              |       | Compensation |              |  |         |               | 
|                                                  |  | Fixed        |       |              | Variable     |  |         | For Committee |  |  |        |  | Fixed |              |         | Variable |              |  |      
|                                                  |  | Compensation |       |              | Compensation |  |         | Work          |  |  | Total  |  |       | Compensation |         |          | Compensation |  |       | Total  | 
|                                                  |  |              |       |              |              |  |         |               |  |  |        |  |       |              |         |          |              |  |       |        | 
|                                                  |  | (000)       |       |              | (000)       |  |         | (000)        |  |  | (000) |  |       | (000)       |         |          | (000)       |  |       | (000) | 
|Prof. Dr. h.c. mult. Hasso Plattner (chairperson) |  |              | 75.0  |              |              |  | 125.0   |               |  |  | 15.0   |  |       |              | 215.0   |          |              |  | 50.0  |        |  |  | 50.0  |  |  |  | 100.0 | 
|Helga Classen (deputy chairperson)                |  |              | 50.0  |              |              |  | 100.0   |               |  |  | 2.5    |  |       |              | 152.5   |          |              |  | 37.5  |        |  |  | 37.5  |  |  |  | 75.0  | 
|Willi Burbach                                     |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 2.5    |  |       |              | 102.5   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Prof. Dr. Wilhelm Haarmann                        |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 7.5    |  |       |              | 107.5   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Dietmar Hopp (until May 12, 2005)                 |  |              | 0.0   |              |              |  | 0.0     |               |  |  | 0.0    |  |       |              | 0.0     |          |              |  | 10.4  |        |  |  | 10.4  |  |  |  | 20.8  | 
|Bernhard Koller                                   |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 2.5    |  |       |              | 102.5   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Christiane Kuntz-Mayr                             |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 5.0    |  |       |              | 105.0   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Lars Lamadé                                       |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 2.5    |  |       |              | 102.5   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Dr. Gerhard Maier                                 |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 5.0    |  |       |              | 105.0   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Dr. h.c. Hartmut Mehdorn                          |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 0.0    |  |       |              | 100.0   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Pekka Ala-Pietilä                                 |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 2.5    |  |       |              | 102.5   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Prof. Dr. Dr. h.c. August-Wilhelm Scheer          |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 7.5    |  |       |              | 107.5   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Dr. Barbara Schennerlein                          |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 2.5    |  |       |              | 102.5   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Dr. Erhard Schipporeit (from May 12, 2005)        |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 5.0    |  |       |              | 105.0   |          |              |  | 16.7  |        |  |  | 16.7  |  |  |  | 33.3  | 
|Stefan Schulz                                     |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 5.0    |  |       |              | 105.0   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Dr. Dieter Spöri                                  |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 2.5    |  |       |              | 102.5   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|Dr. h.c. Klaus Tschira                            |  |              | 37.5  |              |              |  | 62.5    |               |  |  | 2.5    |  |       |              | 102.5   |          |              |  | 25.0  |        |  |  | 25.0  |  |  |  | 50.0  | 
|                                                  |  |              |       |              |              |  |         |               |  |  |        |  |       |              |         |          |              |  |       |        | 
|Total                                             |  |              | 650.0 |              |              |  | 1,100.0 |               |  |  | 70.0   |  |       |              | 1,820.0 |          |              |  | 439.6 |        |  |  | 439.6 |  |  |  | 879.2 | 
|                                                  |  |              |       |              |              |  |         |               |  |  |        |  |       |              |         |          |              |  |       |        | 



Long-Term Incentives For The Supervisory Board




Supervisory Board Members Shareholdings




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|                                          |  |                                     |  |                                                                  |  |          |           |  |            |  |               |  
|----------------------------------------- |  | ----------------------------------- |  | ---------------------------------------------------------------- |  | -------- | --------- |  | ---------- |  | ------------- | -
|                                          |  | Transactions in SAP Shares and ADRs | 
|                                          |  |                                     | 
|Notifying Party                           |  | Transaction Date                    |  | Transaction                                                      |  | Quantity |           |  | Unit Price | 
|                                          |  |                                     |  |                                                                  |  |          |           |  |            | 
|Klaus Tschira                             |  | December 14, 2006                   |  | Assignment of a reassignment right relating to a securities loan |  |          | 1,500,000 |  |            |  | Not disclosed |  
|                                          |  | December 14, 2006                   |  | Premature cancellation of a
    derivative(1)                    |  |          | 1,125,000 |  |            |  | 127.65       |  
|Hasso Plattner GmbH & Co. Beteiligungs-KG |  | November 28, 2006                   |  | Stock sale                                                       |  |          | 1,350,000 |  |            |  | 155.95       |  
|                                          |  | March 2, 2006                       |  | Stock sale                                                       |  |          | 1,460,000 |  |            |  | 172.82       |  
|                                          |  | March 2, 2006                       |  | Repayment of security loan                                       |  |          | 500,000   |  |            |  | Not disclosed |  
|                                          |  | February 10, 2006                   |  | Stock acquisition by way of a security loan                      |  |          | 90,000    |  |            |  | Variable(2    | )






|    |                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Derivative hedging a reassignment right relating to securities
    loan                                                                                                                             
|   
|(2) | Original price of 0.35% of
    167.00 per annum
    and additionally the payment of a sum of 140% of any cash
    disbursements received on the share loan with an original value
    of 52,605.00

Supervisory Board: Other Information

















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|                         |  |                              |        |  |          |  |       |        |  |  |       |  |  |      |        |  |          |  |        |        |  |  |       |  |  |      |       |  |          |  |        |        |  |  |        |  |  |  |       |  |  |  |       |  |  |  |        | 
|------------------------ |  | ---------------------------- | ------ |  | -------- |  | ----- | ------ |  |  | ----- |  |  | ---- | ------ |  | -------- |  | ------ | ------ |  |  | ----- |  |  | ---- | ----- |  | -------- |  | ------ | ------ |  |  | ------ |  |  |  | ----- |  |  |  | ----- |  |  |  | ------ | 
|                         |  | Employees as of December 31, |       
|                         |  |                              |       
|                         |  | 2006                         |        |  | 2005     |  |       | 2004   | 
|                         |  |                              |        |  |          |  |       |        | 
|FTEs                     |  | EMEA                         |        |  | Americas |  |       | APJ(*) |  |  | Total |  |  | EMEA |        |  | Americas |  |        | APJ(*) |  |  | Total |  |  | EMEA |       |  | Americas |  |        | APJ(*) |  |  | Total  | 
|                         |  |                              |        |  |          |  |       |        |  |  |       |  |  |      |        |  |          |  |        |        |  |  |       |  |  |      |       |  |          |  |        |        |  |  |        | 
|Product                  |  |                              | 2,854  |  |          |  | 900   |        |  |  | 1,613 |  |  |      | 5,368  |  |          |  | 2,508  |        |  |  | 684   |  |  |      | 1,267 |  |          |  | 4,460  |        |  |  | 2,231  |  |  |  | 450   |  |  |  | 966   |  |  |  | 3,647  | 
|Service                  |  |                              | 6,336  |  |          |  | 3,364 |        |  |  | 1,818 |  |  |      | 11,518 |  |          |  | 6,636  |        |  |  | 3,204 |  |  |      | 1,590 |  |          |  | 11,430 |        |  |  | 6,759  |  |  |  | 2,876 |  |  |  | 1,480 |  |  |  | 11,114 | 
|Development              |  |                              | 7,508  |  |          |  | 1,530 |        |  |  | 2,764 |  |  |      | 11,801 |  |          |  | 7,063  |        |  |  | 1,151 |  |  |      | 2,001 |  |          |  | 10,215 |        |  |  | 6,523  |  |  |  | 974   |  |  |  | 1,246 |  |  |  | 8,744  | 
|Sales & Marketing        |  |                              | 3,336  |  |          |  | 2,628 |        |  |  | 1,118 |  |  |      | 7,082  |  |          |  | 3,302  |        |  |  | 2,189 |  |  |      | 936   |  |          |  | 6,426  |        |  |  | 3,149  |  |  |  | 1,750 |  |  |  | 822   |  |  |  | 5,721  | 
|General & Administration |  |                              | 1,613  |  |          |  | 523   |        |  |  | 337   |  |  |      | 2,472  |  |          |  | 1,504  |        |  |  | 470   |  |  |      | 287   |  |          |  | 2,261  |        |  |  | 1,308  |  |  |  | 379   |  |  |  | 250   |  |  |  | 1,937  | 
|Infrastructure           |  |                              | 713    |  |          |  | 281   |        |  |  | 120   |  |  |      | 1,114  |  |          |  | 715    |        |  |  | 256   |  |  |      | 110   |  |          |  | 1,081  |        |  |  | 688    |  |  |  | 255   |  |  |  | 99    |  |  |  | 1,042  | 
|                         |  |                              |        |  |          |  |       |        |  |  |       |  |  |      |        |  |          |  |        |        |  |  |       |  |  |      |       |  |          |  |        |        |  |  |        | 
|SAP Group                |  |                              | 22,360 |  |          |  | 9,225 |        |  |  | 7,770 |  |  |      | 39,355 |  |          |  | 21,729 |        |  |  | 7,953 |  |  |      | 6,191 |  |          |  | 35,873 |        |  |  | 20,658 |  |  |  | 6,684 |  |  |  | 4,863 |  |  |  | 32,205 | 
|                         |  |                              |        |  |          |  |       |        |  |  |       |  |  |      |        |  |          |  |        |        |  |  |       |  |  |      |       |  |          |  |        |        |  |  |        | 






|    |                   
|--- | ------------------
|(*) | Asia Pacific Japan




















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




88



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  







89



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ITEM 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS









Wertpapierhandelsgesetz


90



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|                                                                                                                                                                                       |  |                    |             |      |             |  |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | ---- | ----------- |  | ------- | 
|                                                                                                                                                                                       |  | Ordinary Shares    |            
|                                                                                                                                                                                       |  | Beneficially Owned |            
|                                                                                                                                                                                       |  |                    |            
|                                                                                                                                                                                       |  |                    |             | % of |            
|Principal Shareholders                                                                                                                                                                 |  | Number             |             |      | Outstanding | 
|                                                                                                                                                                                       |  |                    |             |      |             | 
|Dietmar Hopp Stiftung GmbH                                                                                                                                                             |  |                    | 109,869,200 |      |             |  | 8.668%  | 
|DH Besitzgesellschaft mbH & Co. KG                                                                                                                                                     |  |                    | 8,404,000   |      |             |  | 0.663%  | 
|                                                                                                                                                                                       |  |                    |             |      |             | 
|Dietmar Hopp, collectively(1)                                                                                                                                                          |  |                    | 118,273,200 |      |             |  | 9.331%  | 
|Hasso Plattner GmbH & Co. Beteiligungs-KG(2)                                                                                                                                           |  |                    | 113,718,960 |      |             |  | 8.972%  | 
|Hasso Plattner Förderstiftung GmbH                                                                                                                                                     |  |                    | 15,244,922  |      |             |  | 1.203%  | 
|Hasso Plattner (24,100 ADRs)                                                                                                                                                           |  |                    | 24,100      |      |             |  | 0.002%  | 
|                                                                                                                                                                                       |  |                    |             |      |             | 
|Hasso Plattner, Chairperson Supervisory Board,
    collectively(3)                                                                                                                     |  |                    | 128,987,982 |      |             |  | 10.176% | 
|Dr. h.c. Klaus Tschira Beteiligungs GmbH & Co. KG                                                                                                                                      |  |                    | 63,330,640  |      |             |  | 4.996%  | 
|Klaus Tschira Stiftung gGmbH                                                                                                                                                           |  |                    | 64,144,048  |      |             |  | 5.060%  | 
|Gerda Tschira                                                                                                                                                                          |  |                    | 440,000     |      |             |  | 0.035%  | 
|Klaus Tschira                                                                                                                                                                          |  |                    | 1,560,000   |      |             |  | 0.123%  | 
|                                                                                                                                                                                       |  |                    |             |      |             | 
|Klaus Tschira, Member Supervisory Board, collectively(4)                                                                                                                               |  |                    | 129,474,688 |      |             |  | 10.215% | 
|Executive Board Members as a group (7 persons)                                                                                                                                         |  |                    | 289,384     |      |             |  | 0.023%  | 
|Supervisory Board Members as a group (16 persons)                                                                                                                                      |  |                    | 258,479,378 |      |             |  | 20.392% | 
|                                                                                                                                                                                       |  |                    |             |      |             | 
|Executive Board Members and Supervisory Board Members as a
    group (23 persons)                                                                                                      |  |                    | 258,768,762 |      |             |  | 20.415% | 
|Options and convertible bonds that are vested and exercisable
    within 60 days of March 14, 2007, held by Executive
    Board Members and Supervisory Board Members, collectively(5) |  |                    | 1,325,638   |      |             |  | N/A     | 






|    |                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Dietmar Hopp exercises sole voting and dispositive power in
    Dietmar Hopp Stiftung GmbH and DH Besitzgesellschaft mbH
    & Co. KG.                                                                     
|   
|(2) | Hasso Plattner exercises sole voting and dispositive power in
    Hasso Plattner GmbH & Co. Beteiligungs-KG.                                                                                               
|   
|(3) | Hasso Plattner exercises sole voting and dispositive power in
    Hasso Plattner GmbH & Co. Beteiligungs-KG and in Hasso
    Plattner Förderstiftung gGmbH.                                                
|   
|(4) | Klaus Tschira exercises shared voting and dispositive power in
    Klaus Tschira Stiftung gGmbH and Dr. h.c. Tschira
    Beteiligungs GmbH & Co. KG.                                                       
|   
|(5) | Includes 845,963 stock options and 479,675 convertible
    bonds. Each of these stock options and convertible bonds
    entitles the holder, if exercised or converted, to four SAP AG
    ordinary shares.



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ITEM 8. FINANCIAL INFORMATION



























ITEM 9. THE OFFER AND LISTING




Freiverkehr




92



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AktG  






93



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|                         |                                |                   |       |       |        |  |       |       |  |  |          |          |  |  |          |          | 
|------------------------ | ------------------------------ | ----------------- | ----- | ----- | ------ |  | ----- | ----- |  |  | -------- | -------- |  |  | -------- | -------- | 
|                         |                                | Price per         |       |       |       
|                         |                                | Ordinary Share(1) |       |       | DAX(2) | 
|                         |                                |                   |       |       |        | 
|                         |                                | High              |       |       | Low    |  |       | High  |  |  | Low      |         
|                         |                                |                   |       |       |        |  |       |       |  |  |          |         
|                         |                                | (In )            |       |       |        |  |      
|Annual Highs and Lows    |                                |                   |       |       |        |  |       |       |  |  |          |          |  |  |          |         
|2002                     |                                |                   | 44.08 |       |        |  | 10.41 |       |  |  | 5,462.55 |          |  |  | 2,597.88 |         
|2003                     |                                |                   | 33.50 |       |        |  | 16.91 |       |  |  | 3,965.16 |          |  |  | 2,202.96 |         
|2004                     |                                |                   | 35.68 |       |        |  | 29.03 |       |  |  | 4,261.79 |          |  |  | 3,646.99 |         
|2005                     |                                |                   | 38.95 |       |        |  | 28.63 |       |  |  | 5,458.58 |          |  |  | 4,178.10 |         
|2006                     |                                |                   | 46.86 |       |        |  | 34.56 |       |  |  | 6,611.81 |          |  |  | 5,292.14 |         
|Quarterly Highs and Lows |                                |                   |       |       |        |  |       |       |  |  |          |          |  |  |          |         
|2005                     |                                |                   |       |       |        |  |       |       |  |  |          |          |  |  |          |         
|                         | First Quarter                  |                   |       | 33.34 |        |  |       | 29.50 |  |  |          | 4,428.09 |  |  |          | 4,201.81 | 
|                         | Second Quarter                 |                   |       | 36.00 |        |  |       | 28.63 |  |  |          | 4,627.48 |  |  |          | 4,178.10 | 
|                         | Third Quarter                  |                   |       | 36.95 |        |  |       | 33.98 |  |  |          | 5,048.74 |  |  |          | 4,530.18 | 
|                         | Fourth Quarter                 |                   |       | 38.95 |        |  |       | 35.01 |  |  |          | 5,458.58 |  |  |          | 4,806.05 | 
|2006                     |                                |                   |       |       |        |  |       |       |  |  |          |          |  |  |          |         
|                         | First Quarter                  |                   |       | 44.75 |        |  |       | 36.50 |  |  |          | 5,984.19 |  |  |          | 5,334.30 | 
|                         | Second Quarter                 |                   |       | 46.86 |        |  |       | 38.49 |  |  |          | 6,140.72 |  |  |          | 5,292.14 | 
|                         | Third Quarter                  |                   |       | 41.85 |        |  |       | 34.56 |  |  |          | 6,004.33 |  |  |          | 5,396.85 | 
|                         | Fourth Quarter                 |                   |       | 41.40 |        |  |       | 38.38 |  |  |          | 6,611.81 |  |  |          | 5,992.22 | 
|Monthly Highs and Lows   |                                |                   |       |       |        |  |       |       |  |  |          |          |  |  |          |         
|2006                     |                                |                   |       |       |        |  |       |       |  |  |          |          |  |  |          |         
|                         | July                           |                   |       | 41.85 |        |  |       | 34.56 |  |  |          | 5,729.01 |  |  |          | 5,396.85 | 
|                         | August                         |                   |       | 37.58 |        |  |       | 34.58 |  |  |          | 5,867.53 |  |  |          | 5,596.74 | 
|                         | September                      |                   |       | 39.50 |        |  |       | 36.20 |  |  |          | 6,004.33 |  |  |          | 5,773.72 | 
|                         | October                        |                   |       | 41.40 |        |  |       | 38.65 |  |  |          | 6,284.19 |  |  |          | 5,992.22 | 
|                         | November                       |                   |       | 40.73 |        |  |       | 38.38 |  |  |          | 6,476.13 |  |  |          | 6,223.33 | 
|                         | December                       |                   |       | 40.26 |        |  |       | 38.46 |  |  |          | 6,611.81 |  |  |          | 6,241.13 | 
|2007                     |                                |                   |       |       |        |  |       |       |  |  |          |          |  |  |          |         
|                         | January                        |                   |       | 42.27 |        |  |       | 35.41 |  |  |          | 6,789.11 |  |  |          | 6,566.56 | 
|                         | February                       |                   |       | 36.33 |        |  |       | 34.81 |  |  |          | 7,027.59 |  |  |          | 6,715.44 | 
|                         | March (through March 14, 2007) |                   |       | 36.13 |        |  |       | 33.77 |  |  |          | 6,716.52 |  |  |          | 6,447.70 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Share prices for December 2006 and prior are retrospectively
    adjusted for the effect of the December 15, 2006 fourfold
    increase in the number of shares resulting from the capital
    increase which became effective December 15, 2006 (see a
    section above with the heading GENERAL for more
    detail of the share increase).                                                                                                          
|   
|(2) | The DAX is a continuously updated, capital-weighted performance
    index of 30 German blue chip companies. In principle, the shares
    included in the DAX are selected on the basis of their stock
    exchange turnover and the issuers market capitalization.
    Adjustments to the DAX are made for capital changes,
    subscription rights and dividends. Subsequent to June 18,
    1999, the highs and lows of the DAX are disclosed on Xetra.

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






|                         |                                |               |       |       |     |  |       |       | 
|------------------------ | ------------------------------ | ------------- | ----- | ----- | --- |  | ----- | ----- | 
|                         |                                | Price per ADS |      
|                         |                                |               |      
|                         |                                | High          |       |       | Low | 
|                         |                                |               |       |       |     | 
|                         |                                | (In US$)      |      
|Annual Highs and Lows    |                                |               |       |       |     |  |       |      
|2002                     |                                |               | 38.84 |       |     |  | 10.05 |      
|2003                     |                                |               | 41.80 |       |     |  | 18.46 |      
|2004                     |                                |               | 45.45 |       |     |  | 35.50 |      
|2005                     |                                |               | 46.43 |       |     |  | 36.96 |      
|2006                     |                                |               | 57.00 |       |     |  | 43.57 |      
|Quarterly Highs and Lows |                                |               |       |       |     |  |       |      
|2005                     |                                |               |       |       |     |  |       |      
|                         | First Quarter                  |               |       | 44.04 |     |  |       | 38.52 | 
|                         | Second Quarter                 |               |       | 43.42 |     |  |       | 36.96 | 
|                         | Third Quarter                  |               |       | 44.92 |     |  |       | 41.82 | 
|                         | Fourth Quarter                 |               |       | 46.43 |     |  |       | 42.08 | 
|2006                     |                                |               |       |       |     |  |       |      
|                         | First Quarter                  |               |       | 54.32 |     |  |       | 44.00 | 
|                         | Second Quarter                 |               |       | 57.00 |     |  |       | 48.58 | 
|                         | Third Quarter                  |               |       | 53.42 |     |  |       | 43.57 | 
|                         | Fourth Quarter                 |               |       | 53.12 |     |  |       | 49.04 | 
|Monthly Highs and Lows   |                                |               |       |       |     |  |       |      
|2006                     |                                |               |       |       |     |  |       |      
|                         | July                           |               |       | 53.42 |     |  |       | 43.57 | 
|                         | August                         |               |       | 48.26 |     |  |       | 43.92 | 
|                         | September                      |               |       | 50.08 |     |  |       | 46.26 | 
|                         | October                        |               |       | 52.07 |     |  |       | 49.11 | 
|                         | November                       |               |       | 52.75 |     |  |       | 49.04 | 
|                         | December                       |               |       | 53.12 |     |  |       | 51.38 | 
|2007                     |                                |               |       |       |     |  |       |      
|                         | January                        |               |       | 55.71 |     |  |       | 46.20 | 
|                         | February                       |               |       | 47.63 |     |  |       | 45.16 | 
|                         | March (through March 14, 2007) |               |       | 47.52 |     |  |       | 45.00 | 



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ITEM 10. ADDITIONAL INFORMATION









Aktiengesetz Handelsregister www.ebundesanzeiger.de








| |   |                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.












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www.sap.com




Satzung








Mitbestimmungsgesetz




97



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Audit Committee
(Bilanzprüfungsausschuss)






General Committee (Präsidialausschuss)


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Compensation Committee (Personalausschuss)


Finance and Investment Committee (Finanz- und
Investitionsausschuss)


Mitbestimmungsgesetz Mediation Committee
(Vermittlungsausschuss)


Technology Committee (Technologieausschuss)












Prokurist




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Wertpapiererwerbs- und
Übernahmegesetz Bundesanstalt für
Finanzdienstleistungsaufsicht


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| |   |                                                                             
| | - | ----------------------------------------------------------------------------
| |  | 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.                                                 







Bezugsrecht








Wertpapierhandelsgesetz




 


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 













20-F








German Taxation of Dividends




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e.g.






Refund of German Tax to U.S. Holders


U.S.-German




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http://www.bzst.bund.de










Refund of German Tax to Holders of ADSs or Ordinary Shares in
Other Countries




German Taxation of Capital Gains








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Upcoming German Tax Reform for Dividend and Capital Gains
Taxation




Other German Taxes




German Estate and Gift Taxes










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20-F.






Distributions






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Sale or Exchange






Foreign Tax Credit








Passive Foreign Investment Company Considerations


Classification as a PFIC.


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Consequences of PFIC Status.















20-F


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www.sec.gov www.sap.com





ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK















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|                                                  |  |                   |         |  |              |  |        |                  |  |  |          | 
|------------------------------------------------- |  | ----------------- | ------- |  | ------------ |  | ------ | ---------------- |  |  | -------- | 
|                                                  |  | Contract Notional |         |  |              |  |       
|                                                  |  | Amounts Expected  |         |  | Fair Value   |  |        | Weighted Average | 
|                                                  |  | Maturity Date     |         |  | December 31, |  |        | Contractual      | 
|Foreign Currency Risk                             |  | 2007              |         |  | 2006(1)      |  |        | Exchange Rate    | 
|                                                  |  |                   |         |  |              |  |        |                  | 
|                                                  |  | (000)            |         |  | (000)       |  |        |                 
|Derivatives used to manage firm commitments       |  |                   |         |  |              |  |        |                  |  |  |          | 
|Foreign Currency Forward Contracts                |  |                   |         |  |              |  |        |                  |  |  |          | 
|(Receive Local Currency, Sell euro)               |  |                   |         |  |              |  |        |                  |  |  |          | 
|Japanese Yen                                      |  |                   | 188,872 |  |              |  | (8,094 | )                |  |  | 148.2487 | 
|British Pounds                                    |  |                   | 87,091  |  |              |  | 265    |                  |  |  | 0.6775   | 
|U.S. dollars                                      |  |                   | 58,626  |  |              |  | (17    | )                |  |  | 1.3185   | 
|Australian dollars                                |  |                   | 52,151  |  |              |  | 1,234  |                  |  |  | 1.7257   | 
|Czech Korunas                                     |  |                   | 28,059  |  |              |  | 521    |                  |  |  | 27.8699  | 
|Mexican Pesos                                     |  |                   | 24,335  |  |              |  | (432   | )                |  |  | 14.0950  | 
|Danish krone                                      |  |                   | 11,398  |  |              |  | (5     | )                |  |  | 7.4573   | 
|New Zealand dollars                               |  |                   | 10,164  |  |              |  | 350    |                  |  |  | 1.9677   | 
|Singapore dollars                                 |  |                   | 7,809   |  |              |  | (22    | )                |  |  | 2.0105   | 
|Hong Kong dollars                                 |  |                   | 7,616   |  |              |  | (98    | )                |  |  | 10.1109  | 
|South African Rand                                |  |                   | 3,572   |  |              |  | 7      |                  |  |  | 9.7011   | 
|Swedish krona                                     |  |                   | 2,511   |  |              |  | 37     |                  |  |  | 9.1600   | 
|Swiss Francs                                      |  |                   | 2,314   |  |              |  | (8     | )                |  |  | 1.5993   | 
|Foreign Currency Forward Contracts                |  |                   |         |  |              |  |        |                  |  |  |          | 
|(Receive euro, Sell Local Currency)               |  |                   |         |  |              |  |        |                  |  |  |          | 
|U.S. dollars                                      |  |                   | 884,618 |  |              |  | 11,473 |                  |  |  | 1.3097   | 
|British Pounds                                    |  |                   | 34,177  |  |              |  | 14     |                  |  |  | 0.6730   | 
|Japanese Yen                                      |  |                   | 30,254  |  |              |  | 318    |                  |  |  | 154.8555 | 
|Canadian dollars                                  |  |                   | 20,340  |  |              |  | 60     |                  |  |  | 1.5241   | 
|Swiss Francs                                      |  |                   | 10,569  |  |              |  | 37     |                  |  |  | 1.5990   | 
|Australian dollars                                |  |                   | 9,489   |  |              |  | (53    | )                |  |  | 1.6861   | 
|Singapore dollars                                 |  |                   | 9,166   |  |              |  | (53    | )                |  |  | 2.0260   | 
|Czech Korunas                                     |  |                   | 820     |  |              |  | (2     | )                |  |  | 27.4300  | 
|South African Rand                                |  |                   | 472     |  |              |  | (17    | )                |  |  | 10.0333  | 
|Derivatives used to manage anticipated Cash Flows |  |                   |         |  |              |  |        |                  |  |  |          | 
|Foreign Currency Forward Contracts                |  |                   |         |  |              |  |        |                  |  |  |          | 
|(Receive euro, Sell Local Currency)               |  |                   |         |  |              |  |        |                  |  |  |          | 
|U.S. dollars                                      |  |                   | 239,971 |  |              |  | 6,211  |                  |  |  | 1.2939   | 
|British Pounds                                    |  |                   | 124,385 |  |              |  | (2,124 | )                |  |  | 0.6890   | 
|Japanese Yen                                      |  |                   | 68,820  |  |              |  | 4,744  |                  |  |  | 143.1262 | 
|Swiss Francs                                      |  |                   | 67,290  |  |              |  | 1,641  |                  |  |  | 1.5530   | 
|Canadian dollars                                  |  |                   | 59,415  |  |              |  | 3,757  |                  |  |  | 1.4323   | 
|Australian dollars                                |  |                   | 40,620  |  |              |  | (450   | )                |  |  | 1.7134   | 






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

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|                           |  |                                    |         |  |      |  |              |      |  |  |      |  |  |      |    |  |            |  |   |       |  |  |      |  |  |  |         |  |  |  |         | 
|-------------------------- |  | ---------------------------------- | ------- |  | ---- |  | ------------ | ---- |  |  | ---- |  |  | ---- | -- |  | ---------- |  | - | ----- |  |  | ---- |  |  |  | ------- |  |  |  | ------- | 
|                           |  | Expected Maturity Date             |         |  |      |  |             
|                           |  | (000), unless otherwise indicated |         |  |      |  | Fair Value   |     
|                           |  |                                    |         |  |      |  | December 31, |     
|Marketable debt securities |  | 2007                               |         |  | 2008 |  |              | 2009 |  |  | 2010 |  |  | 2011 |    |  | Thereafter |  |   | Total |  |  | 2006 | 
|                           |  |                                    |         |  |      |  |              |      |  |  |      |  |  |      |    |  |            |  |   |       |  |  |      | 
|Fixed rate                 |  |                                    | 341,374 |  |      |  | 433,648      |      |  |  |     |  |  |      |   |  |            |  |  |       |  |  |     |  |  |  | 775,022 |  |  |  | 699,412 | 
|Average interest rate      |  |                                    | 4.16%   |  |      |  | 4.58%        |      |  |  |     |  |  |      |   |  |            |  |  |       |  |  |     |  |  |  |         |  |  |  |         | 
|Variable rate              |  |                                    | 303     |  |      |  | 15,913       |      |  |  |     |  |  |      | 54 |  |            |  |  |       |  |  | 158  |  |  |  | 16,428  |  |  |  | 16,511  | 
|                           |  |                                    |         |  |      |  |              |      |  |  |      |  |  |      |    |  |            |  |   |       |  |  |      | 
|Total investments          |  |                                    | 341,677 |  |      |  | 449,561      |      |  |  |     |  |  |      | 54 |  |            |  |  |       |  |  | 158  |  |  |  | 791,450 |  |  |  | 715,923 | 
|                           |  |                                    |         |  |      |  |              |      |  |  |      |  |  |      |    |  |            |  |   |       |  |  |      | 

   




|                                               |  |      |        | 
|---------------------------------------------- |  | ---- | ------ | 
|Bank loans and overdrafts                      |  | 2006 |       
|                                               |  |      |       
|Fixed rate bank loans
    (000)               |  |      | 17,966 | 
|Average interest rate of fixed rate bank loans |  |      | 8.08%  | 
|Overdrafts (000)                              |  |      | 8,204  | 
|                                               |  |      |       
|Total bank loans and overdrafts
    (000)     |  |      | 26,170 | 
|                                               |  |      |       










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    









ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY
SECURITIES




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PART II





ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES







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







ITEM 15. CONTROLS AND PROCEDURES














13a-15(e)








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20-F

















.


115



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ITEM 16. [RESERVED]





ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT


10A-3





ITEM 16B. CODE OF ETHICS








116



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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES




















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







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


10A-3(b)(1)(iv)(C)


10A-3.





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




|                            |  |              |            |     |               |  |       |                        |  |     |                       |  |  |  |            | 
|--------------------------- |  | ------------ | ---------- | --- | ------------- |  | ----- | ---------------------- |  | --- | --------------------- |  |  |  | ---------- | 
|                            |  |              |            | (b) |               |  | (c)   |                        |  | (d) |                      
|                            |  | (a)          |            |     | Average Price |  |       | Total Number of Shares |  |     | Maximum Number of     | 
|                            |  | Total Number |            |     | Paid per      |  |       | Purchased as Part of   |  |     | Shares that May Yet   | 
|                            |  | of Shares    |            |     | Share         |  |       | Publicly Announced     |  |     | Be Purchased Under    | 
|Period                      |  | Purchased    |            |     | (in )        |  |       | Plans or Programs      |  |     | the Plans or Programs | 
|                            |  |              |            |     |               |  |       |                        |  |     |                       | 
|January 1/1/06  1/31/06    |  |              | 2,399,340  |     |               |  | 39.34 |                        |  |     | 2,399,340             |  |  |  | 97,551,141 | 
|February 2/1/06  2/28/06   |  |              | 5,757,308  |     |               |  | 42.34 |                        |  |     | 5,757,308             |  |  |  | 92,961,307 | 
|March 3/1/06  3/31/06      |  |              | 2,065,500  |     |               |  | 43.26 |                        |  |     | 2,065,500             |  |  |  | 93,331,722 | 
|April 4/1/06  4/30/06      |  |              | 911,396    |     |               |  | 44.12 |                        |  |     | 911,396               |  |  |  | 92,451,722 | 
|May 5/1/06  5/31/06        |  |              | 7,066,180  |     |               |  | 41.52 |                        |  |     | 7,066,180             |  |  |  | 85,568,330 | 
|June 6/1/06  6/30/06       |  |              | 4,627,416  |     |               |  | 39.95 |                        |  |     | 4,627,416             |  |  |  | 81,495,246 | 
|July 7/1/06  7/31/06       |  |              | 600,000    |     |               |  | 36.80 |                        |  |     | 600,000               |  |  |  | 80,948,454 | 
|August 8/1/06  8/31/06     |  |              | 40         |     |               |  | 36.84 |                        |  |     | 40                    |  |  |  | 81,142,054 | 
|September 9/1/06  9/30/06  |  |              | 0          |     |               |  |      |                        |  |     | 0                     |  |  |  | 81,352,915 | 
|October 10/1/06  10/31/06  |  |              | 3,175,200  |     |               |  | 39.39 |                        |  |     | 3,175,200             |  |  |  | 78,363,460 | 
|November 11/1/06  11/30/06 |  |              | 1,216,800  |     |               |  | 38.83 |                        |  |     | 1,216,800             |  |  |  | 77,360,297 | 
|December 12/1/06  12/31/06 |  |              | 229,624    |     |               |  | 39.01 |                        |  |     | 229,624               |  |  |  | 77,503,049 | 
|                            |  |              |            |     |               |  |       |                        |  |     |                       | 
|Total                       |  |              | 28,048,804 |     |               |  | 40.97 |                        |  |     | 28,048,804            |  |  |  |            | 
|                            |  |              |            |     |               |  |       |                        |  |     |                       | 





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PART III





ITEM 17. FINANCIAL STATEMENTS







ITEM 18. FINANCIAL STATEMENTS




20-F:




| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | Report of Independent Registered Public Accounting Firm.                                                                              
|
| |  | Consolidated Statements of Income for the years ended 2006, 2005
    and 2004.                                                        
|
| |  | Consolidated Balance Sheets as of December 31, 2006 and
    2005.                                                                     
|
| |  | Consolidated Statements of Shareholders Equity and
    Comprehensive Income for the years ended December 31, 2006,
    2005 and 2004.
|
| |  | Consolidated Statements of Cash Flows for the years ended
    December 31, 2006, 2005 and 2004.                                       
|
| |  | Notes to Consolidated Financial Statements.                                                                                           





| |   |                                                                  
| | - | -----------------------------------------------------------------
| |  | Schedule II  Valuation and Qualifying Accounts
    and Reserves.




ITEM 19. EXHIBITS


20-F:


| |    |    |  |                                                                                                                                                                                                                                                                                                                                      
| | -- | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1  |    |  | Articles of Incorporation (Satzung) of SAP AG, as amended
    to date (English
    translation).(1)                                                                                                                                                                                                                                  
| | 2  | .1 |  | Form of global share certificate for ordinary shares (English
    translation).(1)                                                                                                                                                                                                                                                   
| | 2  | .2 |  | Form of American Depositary
    Receipt.(2)                                                                                                                                                                                                                                                                                          
| | 4  | .1 |  | Form of Amended and Restated Deposit Agreement among SAP AG,
    Deutsche Bank Trust Company Americas, as Depositary, and
    all owners and holders from time to time of American Depositary
    Receipts issued thereunder, including the form of American
    Depositary Receipts, dated as of December 3,
    2004.(3)           
| | 4  | .2 |  | Amendment No. 1 dated as of December 20, 2006 to
    Amended and Restated Deposit Agreement among SAP AG, Deutsche
    Bank Trust Company Americas, as Depository, and all owners
    and holders from time to time of American Depositary Receipts
    issued thereunder, including the form of American Depositary
    Receipts.(2)
| | 8  |    |  | Subsidiaries, Equity Method Investments, and Other Investments
    of SAP AG.                                                                                                                                                                                                                                                        
| | 12 | .1 |  | Certification of Chief Executive Officer required by
    Rule 13a-14(a) or Rule 15d-14(a).                                                                                                                                                                                                                                           
| | 12 | .2 |  | Certification of Chief Financial Officer required by
    Rule 13a-14(a) or Rule 15d-14(a).                                                                                                                                                                                                                                           
| | 13 |    |  | Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                               
| | 15 |    |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                                            






|    |                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to the Annual Report on
    Form 20-F of SAP
    AG filed on March 22, 2006.    
|   
|(2) | Incorporated by reference to Post Effective Amendment No 1 to
    Form F-6 filed on
    December 20, 2006.
|   
|(3) | Incorporated by reference to the Current Report on
    Form 6-K of SAP
    AG, filed on December 13, 2004.

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SIGNATURES


20-F




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





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



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SAP AG AND SUBSIDIARIES


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                   |                                                                                                                                       |      |     |     | 
|------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------- | ---- | --- | --- | 
|                                                                   |                                                                                                                                       | Page |    
|                                                                   |                                                                                                                                       |      |    
|Report of Independent Registered Public Accounting Firm            |                                                                                                                                       |      | F-1 |    
|Consolidated Financial Statements:                                 |                                                                                                                                       |      |     |    
|                                                                   | Consolidated Statements of Income for the years ended
    December 31, 2006, 2005 and 2004                                            |      |     | F-2 | 
|                                                                   | Consolidated Balance Sheets as of December 31, 2006 and 2005                                                                          |      |     | F-3 | 
|                                                                   | Consolidated Statements of Shareholders Equity and
    Comprehensive Income for the years ended December 31, 2006,
    2005 and 2004 |      |     | F-4 | 
|                                                                   | Consolidated Statements of Cash Flows for the years ended
    December 31, 2006, 2005 and 2004                                        |      |     | F-6 | 
|                                                                   | Notes to Consolidated Financial Statements                                                                                            |      |     | F-7 | 
|Schedule for the years ended December 31, 2006, 2005 and
    2004: |                                                                                                                                       |      |     |    
|                                                                   | Schedule II  Valuation and Qualifying Accounts
    and Reserves                                                                      |      |     | S-1 | 



---



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




three-year






Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans stock-based Share-Based Payment












F-1



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##### Table of Contents



SAP AG AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF INCOME




|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |            |            |           |  |            |            |           | 
|------------------------------------------------ | --------------------------------------- | ------------------- | --- | -------- | ------- | --- | ---------- | ---------- | --------- | ------ | ---------- | ---------- | --------- | ---- | ---------- | ---------- | --------- |  | ---------- | ---------- | --------- | 
|                                                 |                                         | Note                |     |          | 2006(1) |     |            | 2006       |           |        | 2005       |            |           | 2004 |           
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|                                                 |                                         |                     |     | US$(000) |         |     | (000)     |            |           | (000) |            |            | (000)    |     
|                                                 |                                         | Software revenue    |     |          |         |     |            |            | 4,053,183 |        |            |            | 3,071,291 |      |            |            | 2,782,751 |  |            |            | 2,361,012 | 
|                                                 |                                         | Maintenance revenue |     |          |         |     |            |            | 4,662,872 |        |            |            | 3,533,282 |      |            |            | 3,175,642 |  |            |            | 2,823,189 | 
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|                                                 | Software and maintenance revenue        |                     |     |          |         |     |            | 8,716,055  |           |        |            | 6,604,573  |           |      |            | 5,958,393  |           |  |            | 5,184,201  |          
|                                                 |                                         | Consulting revenue  |     |          |         |     |            |            | 3,088,452 |        |            |            | 2,340,268 |      |            |            | 2,138,941 |  |            |            | 1,970,606 | 
|                                                 |                                         | Training revenue    |     |          |         |     |            |            | 505,221   |        |            |            | 382,830   |      |            |            | 342,466   |  |            |            | 302,443   | 
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|                                                 | Service revenue                         |                     |     |          |         |     |            | 3,593,673  |           |        |            | 2,723,098  |           |      |            | 2,481,407  |           |  |            | 2,273,049  |          
|                                                 | Other revenue                           |                     |     |          |         |     |            | 98,254     |           |        |            | 74,452     |           |      |            | 72,629     |           |  |            | 57,243     |          
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|Total revenue                                    |                                         |                     | (5  | )        |         |     | 12,407,982 |            |           |        | 9,402,123  |            |           |      | 8,512,429  |            |           |  | 7,514,493  |           
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|                                                 | Cost of software and maintenance        |                     |     |          |         |     |            | (1,451,625 | )         |        |            | (1,099,966 | )         |      |            | (993,227   | )         |  |            | (916,278   | )        
|                                                 | Cost of service                         |                     |     |          |         |     |            | (2,742,351 | )         |        |            | (2,078,011 | )         |      |            | (1,924,614 | )         |  |            | (1,783,453 | )        
|                                                 | Research and development                |                     |     |          |         |     |            | (1,761,555 | )         |        |            | (1,334,815 | )         |      |            | (1,088,632 | )         |  |            | (908,056   | )        
|                                                 | Sales and marketing                     |                     |     | (6       | )       |     |            | (2,527,807 | )         |        |            | (1,915,441 | )         |      |            | (1,746,221 | )         |  |            | (1,523,662 | )        
|                                                 | General and administration              |                     |     |          |         |     |            | (613,616   | )         |        |            | (464,966   | )         |      |            | (435,185   | )         |  |            | (366,425   | )        
|                                                 | Other operating income, net             |                     |     | (7       | )       |     |            | 74,523     |           |        |            | 56,470     |           |      |            | 6,182      |           |  |            | 1,762      |          
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|Total operating expenses                         |                                         |                     |     |          |         |     | (9,022,431 | )          |           |        | (6,836,729 | )          |           |      | (6,181,697 | )          |           |  | (5,496,112 | )         
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|Operating income                                 |                                         |                     |     |          |         |     | 3,385,551  |            |           |        | 2,565,394  |            |           |      | 2,330,732  |            |           |  | 2,018,381  |           
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|                                                 | Other non-operating income/expense, net |                     |     | (9       | )       |     |            | (16,236    | )         |        |            | (12,303    | )         |      |            | (25,161    | )         |  |            | 13,274     |          
|                                                 | Financial income, net                   |                     |     | (10      | )       |     |            | 160,618    |           |        |            | 121,708    |           |      |            | 10,785     |           |  |            | 40,987     |          
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|Income before income taxes and minority interest |                                         |                     |     |          |         |     | 3,529,933  |            |           |        | 2,674,799  |            |           |      | 2,316,356  |            |           |  | 2,072,642  |           
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|                                                 | Income taxes                            |                     |     | (11      | )       |     |            | (1,057,887 | )         |        |            | (801,612   | )         |      |            | (817,053   | )         |  |            | (757,269   | )        
|                                                 | Minority interest                       |                     |     |          |         |     |            | (2,389     | )         |        |            | (1,810     | )         |      |            | (2,896     | )         |  |            | (4,852     | )        
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|Net income                                       |                                         |                     |     |          |         |     | 2,469,657  |            |           |        | 1,871,377  |            |           |      | 1,496,407  |            |           |  | 1,310,521  |           
|                                                 |                                         |                     |     |          |         |     |            |            |           |        |            |            |           |      |           
|Earnings per share  basic                       |                                         |                     | (12 | )        |         | US$ | 2.02       |            |           |        | 1.53      |            |           |      | 1.21      |            |           |  | 1.05      |           
|Earnings per share  diluted                     |                                         |                     | (12 | )        |         | US$ | 2.01       |            |           |        | 1.52      |            |           |      | 1.20      |            |           |  | 1.05      |           






|    |                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The 2006 figures have been translated solely for the convenience
    of the reader at an exchange rate of US$1.3197 to
    1.00, the Noon
    Buying Rate certified by the Federal Reserve Bank of New York on
    December 29, 2006.



F-2



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SAP AG AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS




|                  |                                     |      |  |          |         |  |            |           |  |        |           |           |  |  |           |           | 
|----------------- | ----------------------------------- | ---- |  | -------- | ------- |  | ---------- | --------- |  | ------ | --------- | --------- |  |  | --------- | --------- | 
|                  |                                     | Note |  |          | 2006(1) |  |            | 2006      |  |        | 2005      |          
|                  |                                     |      |  |          |         |  |            |           |  |        |           |          
|                  |                                     |      |  | US$(000) |         |  | (000)     |           |  | (000) |          
|Assets            |                                     |      |  |          |         |  |            |           |  |        |           |           |  |  |           |          
|                  | Cash and cash equivalents           |      |  | (13      | )       |  |            | 3,165,605 |  |        |           | 2,398,731 |  |  |           | 2,064,074 | 
|                  | Short-term investments              |      |  | (13      | )       |  |            | 1,228,575 |  |        |           | 930,950   |  |  |           | 1,782,318 | 
|                  | Accounts receivables, net           |      |  | (14      | )       |  |            | 3,220,316 |  |        |           | 2,440,188 |  |  |           | 2,249,482 | 
|                  | Inventories                         |      |  | (15      | )       |  |            | 5,248     |  |        |           | 3,977     |  |  |           | 19,377    | 
|                  | Other assets                        |      |  | (16      | )       |  |            | 484,768   |  |        |           | 367,332   |  |  |           | 211,565   | 
|                  | Deferred income taxes               |      |  | (11      | )       |  |            | 141,888   |  |        |           | 107,515   |  |  |           | 129,336   | 
|                  | Prepaid expenses/deferred charges   |      |  | (17      | )       |  |            | 99,487    |  |        |           | 75,386    |  |  |           | 63,708    | 
|                  |                                     |      |  |          |         |  |            |           |  |        |           |          
|Current assets    |                                     |      |  |          |         |  | 8,345,887  |           |  |        | 6,324,079 |           |  |  | 6,519,860 |          
|                  | Goodwill                            |      |  | (18      | )       |  |            | 1,303,317 |  |        |           | 987,586   |  |  |           | 626,546   | 
|                  | Intangible assets, net              |      |  | (18      | )       |  |            | 346,529   |  |        |           | 262,582   |  |  |           | 139,697   | 
|                  | Property, plant, and equipment, net |      |  | (19      | )       |  |            | 1,591,816 |  |        |           | 1,206,195 |  |  |           | 1,094,965 | 
|                  | Investments                         |      |  | (13      | )       |  |            | 125,346   |  |        |           | 94,981    |  |  |           | 62,614    | 
|                  | Accounts receivable, net            |      |  | (14      | )       |  |            | 3,530     |  |        |           | 2,675     |  |  |           | 1,545     | 
|                  | Other assets                        |      |  | (16      | )       |  |            | 703,781   |  |        |           | 533,289   |  |  |           | 472,562   | 
|                  | Deferred income taxes               |      |  | (11      | )       |  |            | 90,385    |  |        |           | 68,489    |  |  |           | 98,238    | 
|                  | Prepaid expenses/deferred charges   |      |  | (17      | )       |  |            | 30,171    |  |        |           | 22,862    |  |  |           | 23,877    | 
|                  |                                     |      |  |          |         |  |            |           |  |        |           |          
|Noncurrent assets |                                     |      |  |          |         |  | 4,194,875  |           |  |        | 3,178,659 |           |  |  | 2,520,044 |          
|                  |                                     |      |  |          |         |  |            |           |  |        |           |          
|Total assets      |                                     |      |  |          |         |  | 12,540,762 |           |  |        | 9,502,738 |           |  |  | 9,039,904 |          
|                  |                                     |      |  |          |         |  |            |           |  |        |           |          

|                                                                   |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  |            |            |   |        |           |            |   |  |           |           |   | 
|------------------------------------------------------------------ | ------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | -------- | ------- |  | ---------- | ---------- | - | ------ | --------- | ---------- | - |  | --------- | --------- | - | 
|                                                                   |                                      | Note                                                                                                                                                                                                                                                                       |     |          | 2006(1) |  |            | 2006       |   |        | 2005      |           
|                                                                   |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  |            |            |   |        |           |           
|                                                                   |                                      |                                                                                                                                                                                                                                                                            |     | US$(000) |         |  | (000)     |            |   | (000) |          
|Liabilities, Minority interests and Shareholders
    equity       |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  |            |            |   |        |           |            |   |  |           |          
|                                                                   | Accounts payable                     |                                                                                                                                                                                                                                                                            |     | (20      | )       |  |            | 805,061    |   |        |           | 610,033    |   |  |           | 546,447   |  
|                                                                   | Income taxes payable                 |                                                                                                                                                                                                                                                                            |     |          |         |  |            | 343,949    |   |        |           | 260,627    |   |  |           | 365,319   |  
|                                                                   | Other liabilities                    |                                                                                                                                                                                                                                                                            |     | (20      | )       |  |            | 1,713,323  |   |        |           | 1,298,267  |   |  |           | 1,280,271 |  
|                                                                   | Provisions current                   |                                                                                                                                                                                                                                                                            |     | (21      | )       |  |            | 215,429    |   |        |           | 163,241    |   |  |           | 159,642   |  
|                                                                   | Deferred income taxes                |                                                                                                                                                                                                                                                                            |     | (11      | )       |  |            | 47,430     |   |        |           | 35,940     |   |  |           | 44,326    |  
|                                                                   | Deferred income                      |                                                                                                                                                                                                                                                                            |     | (22      | )       |  |            | 534,680    |   |        |           | 405,153    |   |  |           | 346,966   |  
|                                                                   |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  |            |            |   |        |           |           
|Current liabilities                                                |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  | 3,659,872  |            |   |        | 2,773,261 |            |   |  | 2,742,971 |          
|                                                                   | Accounts payable                     |                                                                                                                                                                                                                                                                            |     | (20      | )       |  |            | 45,326     |   |        |           | 34,346     |   |  |           | 40,359    |  
|                                                                   | Accrued income taxes                 |                                                                                                                                                                                                                                                                            |     |          |         |  |            | 88,487     |   |        |           | 67,051     |   |  |           | 41,320    |  
|                                                                   | Other liabilities                    |                                                                                                                                                                                                                                                                            |     | (20      | )       |  |            | 96,149     |   |        |           | 72,857     |   |  |           | 56,310    |  
|                                                                   | Provisions noncurrent                |                                                                                                                                                                                                                                                                            |     | (21      | )       |  |            | 446,664    |   |        |           | 338,459    |   |  |           | 284,611   |  
|                                                                   | Deferred income taxes                |                                                                                                                                                                                                                                                                            |     | (11      | )       |  |            | 21,672     |   |        |           | 16,422     |   |  |           | 27,020    |  
|                                                                   | Deferred income                      |                                                                                                                                                                                                                                                                            |     | (22      | )       |  |            | 72,626     |   |        |           | 55,032     |   |  |           | 57,460    |  
|                                                                   |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  |            |            |   |        |           |           
|Total liabilities                                                  |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  | 4,430,796  |            |   |        | 3,357,428 |            |   |  | 3,250,051 |          
|                                                                   |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  |            |            |   |        |           |           
|Minority interests                                                 |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  | 12,478     |            |   |        | 9,455     |            |   |  | 7,615     |          
|                                                                   | Common stock, no par value           |                                                                                                                                                                                                                                                                            |     |          |         |  |            | 1,672,769  |   |        |           | 1,267,537  |   |  |           | 316,458   |  
|                                                                   |                                      | Authorized  Not issued or outstanding:
    495 million shares at December 31, 2006 and
    135 million shares at December 31, 2005
    Authorized  Issued and outstanding:
    1,268 million shares at December 31, 2006 and
    316 million shares at December 31, 2005 |     |          |         |  |            |            |   |        |           |            |   |  |           |           |   | 
|                                                                   | Treasury stock                       |                                                                                                                                                                                                                                                                            |     |          |         |  |            | (2,298,667 | ) |        |           | (1,741,810 | ) |  |           | (775,318  | )
|                                                                   | Additional paid-in capital           |                                                                                                                                                                                                                                                                            |     |          |         |  |            | 465,382    |   |        |           | 352,642    |   |  |           | 372,767   |  
|                                                                   | Retained earnings                    |                                                                                                                                                                                                                                                                            |     |          |         |  |            | 8,703,169  |   |        |           | 6,594,809  |   |  |           | 5,986,186 |  
|                                                                   | Accumulated other comprehensive loss |                                                                                                                                                                                                                                                                            |     |          |         |  |            | (445,165   | ) |        |           | (337,323   | ) |  |           | (117,855  | )
|                                                                   |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  |            |            |   |        |           |           
|Shareholders equity                                               |                                      |                                                                                                                                                                                                                                                                            | (23 | )        |         |  | 8,097,488  |            |   |        | 6,135,855 |            |   |  | 5,782,238 |          
|                                                                   |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  |            |            |   |        |           |           
|Total liabilities, Minority interests and Shareholders
    equity |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  | 12,540,762 |            |   |        | 9,502,738 |            |   |  | 9,039,904 |          
|                                                                   |                                      |                                                                                                                                                                                                                                                                            |     |          |         |  |            |            |   |        |           |           






|    |                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The 2006 figures have been translated solely for the convenience
    of the reader at an exchange rate of US$1.3197 to
    1.00, the Noon
    Buying Rate certified by the Federal Reserve Bank of New York on
    December 29, 2006.



F-3



---



##### Table of Contents



SAP AG AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
COMPREHENSIVE INCOME




|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |   |  |  |           |           | 
|--------------------------------------------- | ------------------------------------------- | --------------- | --------- |  | ------ |  | ---------- | ------- |  |  | -------- | - |  |  | --------- | --------- | 
|                                              |                                             | Number of       |           |  |        |  | Additional |         |  | 
|                                              |                                             | shares issued   |           |  | Common |  |            | paid-in |  |  | Retained |  
|                                              |                                             | and outstanding |           |  | stock  |  |            | capital |  |  | earnings |  
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|                                              |                                             | (000)           |           |  | (000) |  |            | (000)  |  |  | (000)   |  
|December 31, 2003                             |                                             |                 | 315,414   |  |        |  | 315,414    |         |  |  | 296,555  |   |  |  | 3,761,086 |          
|                                              | Net income                                  |                 |           |  |        |  |            |         |  |  |          |   |  |  |           | 1,310,521 | 
|                                              | Other comprehensive income/loss, net of tax |                 |           |  |        |  |            |         |  |  |          |   |  |  |           |           | 
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|Total comprehensive income/loss               |                                             |                 |           |  |        |  |            |         |  |  |          |   |  |  |           |          
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|Stock-based compensation                      |                                             |                 |           |  |        |  |            |         |  |  | 186      |   |  |  |           |          
|Dividends                                     |                                             |                 |           |  |        |  |            |         |  |  |          |   |  |  | (248,716  | )        
|Treasury stock transactions                   |                                             |                 |           |  |        |  |            |         |  |  | 8,881    |   |  |  |           |          
|Convertible bonds and stock options exercised |                                             |                 | 590       |  |        |  | 590        |         |  |  | 21,389   |   |  |  |           |          
|Other                                         |                                             |                 |           |  |        |  |            |         |  |  | (4,351   | ) |  |  | 7,265     |          
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|December 31, 2004                             |                                             |                 | 316,004   |  |        |  | 316,004    |         |  |  | 322,660  |   |  |  | 4,830,156 |          
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|                                              | Net income                                  |                 |           |  |        |  |            |         |  |  |          |   |  |  |           | 1,496,407 | 
|                                              | Other comprehensive income/loss, net of tax |                 |           |  |        |  |            |         |  |  |          |   |  |  |           |           | 
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|Total comprehensive income/loss               |                                             |                 |           |  |        |  |            |         |  |  |          |   |  |  |           |          
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|Stock-based compensation                      |                                             |                 |           |  |        |  |            |         |  |  | (36,356  | ) |  |  |           |          
|Dividends                                     |                                             |                 |           |  |        |  |            |         |  |  |          |   |  |  | (340,425  | )        
|Treasury stock transactions                   |                                             |                 |           |  |        |  |            |         |  |  | 48,136   |   |  |  |           |          
|Convertible bonds and stock options exercised |                                             |                 | 454       |  |        |  | 454        |         |  |  | 42,294   |   |  |  |           |          
|Other                                         |                                             |                 |           |  |        |  |            |         |  |  | (3,967   | ) |  |  | 48        |          
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|December 31, 2005                             |                                             |                 | 316,458   |  |        |  | 316,458    |         |  |  | 372,767  |   |  |  | 5,986,186 |          
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|                                              | Net income                                  |                 |           |  |        |  |            |         |  |  |          |   |  |  |           | 1,871,377 | 
|                                              | Other comprehensive income/loss, net of tax |                 |           |  |        |  |            |         |  |  |          |   |  |  |           |           | 
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|Total comprehensive income/loss               |                                             |                 |           |  |        |  |            |         |  |  |          |   |  |  |           |          
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|Stock-based compensation                      |                                             |                 |           |  |        |  |            |         |  |  | 17,611   |   |  |  |           |          
|Dividends                                     |                                             |                 |           |  |        |  |            |         |  |  |          |   |  |  | (447,219  | )        
|Treasury stock transactions                   |                                             |                 |           |  |        |  |            |         |  |  | 44,434   |   |  |  |           |          
|Convertible bonds and stock options exercised |                                             |                 | 426       |  |        |  | 426        |         |  |  | 48,940   |   |  |  |           |          
|Issuance of common stock                      |                                             |                 | 950,653   |  |        |  | 950,653    |         |  |  | (134,768 | ) |  |  | (815,885  | )        
|Other                                         |                                             |                 |           |  |        |  |            |         |  |  | 3,658    |   |  |  | 350       |          
|Impact of first-time adoption of SFAS 158     |                                             |                 |           |  |        |  |            |         |  |  |          |   |  |  |           |          
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  
|December 31, 2006                             |                                             |                 | 1,267,537 |  |        |  | 1,267,537  |         |  |  | 352,642  |   |  |  | 6,594,809 |          
|                                              |                                             |                 |           |  |        |  |            |         |  |  |          |  



F-4



---



##### Table of Contents







| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  |           |  
| |  | ------------------------------------------- | -------- | ---------- | ------------- |  | ------ | ------------ | ---------------- | ------------ | ------- | - | ---------- | --------------- | ----------------- | --------- | ------------ |  | ------- | -------- |  |  | ------- | - |  |  | ---------- | - |  |  | --------- | -
| |  | Accumulated other comprehensive income/loss |          |            |               |  |       
| |  |                                             |          |            |               |  |       
| |  |                                             |          | Unrealized |               |  |        |              | Currency effects |              |         |   |            |                
| |  | Foreign                                     |          |            | Unrealized    |  |        |              |                  | gains/losses |         |   |            |                 | from intercompany |           |              |  |         |         
| |  | currency                                    |          |            | gains/losses  |  |        |              |                  | on cash      |         |   | Unrealized |                 |                   | long-term |              |  |         |          | 
| |  | translation                                 |          |            | on marketable |  |        | Unrecognized |                  |              | flow    |   |            | gains/losses on |                   |           | investment   |  |         | Treasury |  |  |        
| |  | adjustment                                  |          |            | securities    |  |        | pension cost |                  |              | hedges  |   |            | STAR hedges     |                   |           | transactions |  |         | stock    |  |  | Total   |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  | (000)                                      |          |            | (000)        |  |        | (000)       |                  |              | (000)  |   |            | (000)          |                   |           | (000)       |  |         | (000)   |  |  | (000)  |  
| |  |                                             | (251,673 | )          |               |  | 15,979 |              |                  |              | (3,722  | ) |            |                 | 13,441            |           |              |  | 23,996  |          |  |  | 0       |   |  |  | (461,631   | ) |  |  | 3,709,445 |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 1,310,521 |  
| |  |                                             | (70,723  | )          |               |  | (7,678 | )            |                  |              | (7,019  | ) |            |                 | (131              | )         |              |  | (15,398 | )        |  |  | (2,473  | ) |  |  |            |   |  |  | (103,422  | )
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 1,207,099 |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 186       |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | (248,716  | )
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  | (107,535   | ) |  |  | (98,654   | )
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 21,979    |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 2,914     |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  |                                             | (322,396 | )          |               |  | 8,301  |              |                  |              | (10,741 | ) |            |                 | 13,310            |           |              |  | 8,598   |          |  |  | (2,473  | ) |  |  | (569,166   | ) |  |  | 4,594,253 |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 1,496,407 |  
| |  |                                             | 120,136  |            |               |  | 2,867  |              |                  |              | 766     |   |            |                 | (22,273           | )         |              |  | 42,814  |          |  |  | 43,236  |   |  |  |            |   |  |  | 187,546   |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 1,683,953 |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | (36,356   | )
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | (340,425  | )
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  | (206,152   | ) |  |  | (158,016  | )
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 42,748    |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | (3,919    | )
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  |                                             | (202,260 | )          |               |  | 11,168 |              |                  |              | (9,975  | ) |            |                 | (8,963            | )         |              |  | 51,412  |          |  |  | 40,763  |   |  |  | (775,318   | ) |  |  | 5,782,238 |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 1,871,377 |  
| |  |                                             | (148,568 | )          |               |  | (6,692 | )            |                  |              |         |   |            |                 | 19,546            |           |              |  | (47,966 | )        |  |  | (26,022 | ) |  |  |            |   |  |  | (209,702  | )
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 1,661,675 |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 17,611    |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | (447,219  | )
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  | (966,492   | ) |  |  | (922,058  | )
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 49,366    |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 0         |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | 4,008     |  
| |  |                                             |          |            |               |  |        |              |                  |              | (9,766  | ) |            |                 |                   |           |              |  |         |          |  |  |         |   |  |  |            |   |  |  | (9,766    | )
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  
| |  |                                             | (350,828 | )          |               |  | 4,476  |              |                  |              | (19,741 | ) |            |                 | 10,583            |           |              |  | 3,446   |          |  |  | 14,741  |   |  |  | (1,741,810 | ) |  |  | 6,135,855 |  
| |  |                                             |          |            |               |  |        |              |                  |              |         |   |            |                 |                   |           |              |  |         |          |  |  |         |  



F-5



---



##### Table of Contents



SAP AG AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS




|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |            |           |  |  |            |           | 
|----------------------------------------------------------------------------------------------------------- | ------------------ | ---- | --- | -------- | ------- |  | ---------- | --------- |  | ------ | ---------- | --------- | ------ | ---- | ---------- | --------- |  |  | ---------- | --------- | 
|                                                                                                            |                    | Note |     |          | 2006(1) |  |            | 2006      |  |        | 2005       |           |        | 2004 |           
|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |           
|                                                                                                            |                    |      |     | US$(000) |         |  | (000)     |           |  | (000) |            |           | (000) |     
|                                                                                                            | Net income         |      |     |          |         |  |            | 2,469,656 |  |        |            | 1,871,377 |        |      |            | 1,496,407 |  |  |            | 1,310,521 | 
|                                                                                                            | Minority interests |      |     |          |         |  |            | 2,389     |  |        |            | 1,810     |        |      |            | 2,896     |  |  |            | 4,852     | 
|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |           
|Income before minority interests                                                                            |                    |      |     |          |         |  | 2,472,045  |           |  |        | 1,873,187  |           |        |      | 1,499,303  |           |  |  | 1,315,373  |          
|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |           
|Adjustments to reconcile income before minority interests to net
    cash provided by operating activities: |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |            |           |  |  |            |          
|Depreciation and amortization                                                                               |                    |      |     |          |         |  | 282,736    |           |  |        | 214,243    |           |        |      | 203,545    |           |  |  | 209,669    |          
|Loss (income) from equity investees                                                                         |                    |      | (10 | )        |         |  | 887        |           |  |        | 672        |           |        |      | (610       | )         |  |  | 342        |          
|Gains/losses on disposal of property, plant, and equipment                                                  |                    |      |     |          |         |  | (2,790     | )         |  |        | (2,114     | )         |        |      | (4,726     | )         |  |  | 549        |          
|Gains on disposal of investments                                                                            |                    |      |     |          |         |  | (393       | )         |  |        | (298       | )         |        |      | (1,075     | )         |  |  | (14,034    | )        
|Writeups/downs of financial assets                                                                          |                    |      |     |          |         |  | 505        |           |  |        | 383        |           |        |      | 13,519     |           |  |  | 17,800     |          
|Impacts of STAR hedging                                                                                     |                    |      |     |          |         |  | (104,892   | )         |  |        | (79,482    | )         |        |      | 7,399      |           |  |  | (7,428     | )        
|Stock-based compensation including income tax benefits                                                      |                    |      |     |          |         |  | 107,957    |           |  |        | 81,804     |           |        |      | 50,096     |           |  |  | 18,828     |          
|Excess tax benefit from stock-based compensation                                                            |                    |      |     |          |         |  | (3,786     | )         |  |        | (2,869     | )         |        |      | 0          |           |  |  | 0          |          
|Change in accounts receivables                                                                              |                    |      |     |          |         |  | (356,620   | )         |  |        | (270,228   | )         |        |      | (321,926   | )         |  |  | (158,385   | )        
|Change in accrued and other liabilities                                                                     |                    |      |     |          |         |  | 175,065    |           |  |        | 132,655    |           |        |      | 165,474    |           |  |  | 433,545    |          
|Deferred income taxes                                                                                       |                    |      |     |          |         |  | (2,803     | )         |  |        | (2,124     | )         |        |      | (16,064    | )         |  |  | 19,205     |          
|Change in other assets                                                                                      |                    |      |     |          |         |  | (288,876   | )         |  |        | (218,895   | )         |        |      | (63,869    | )         |  |  | (9,958     | )        
|Change in deferred income                                                                                   |                    |      |     |          |         |  | 158,207    |           |  |        | 119,881    |           |        |      | 76,834     |           |  |  | 19,821     |          
|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |           
|Net cash provided by operating activities                                                                   |                    |      | (24 | )        |         |  | 2,437,242  |           |  |        | 1,846,815  |           |        |      | 1,607,900  |           |  |  | 1,845,327  |          
|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |           
|Acquisition of minority interests in subsidiaries                                                           |                    |      |     |          |         |  | 0          |           |  |        | 0          |           |        |      | (59,964    | )         |  |  | (168,103   | )        
|Business combinations, net of cash and cash equivalents acquired                                            |                    |      |     |          |         |  | (665,508   | )         |  |        | (504,287   | )         |        |      | (176,849   | )         |  |  | (19,181    | )        
|Purchase of intangible assets and property, plant, and equipment                                            |                    |      |     |          |         |  | (483,980   | )         |  |        | (366,735   | )         |        |      | (261,762   | )         |  |  | (192,682   | )        
|Proceeds from disposal of intangible assets and property, plant,
    and equipment                          |                    |      |     |          |         |  | 38,277     |           |  |        | 29,004     |           |        |      | 17,243     |           |  |  | 21,381     |          
|Purchase of investments                                                                                     |                    |      |     |          |         |  | (2,712,399 | )         |  |        | (2,055,315 | )         |        |      | (4,484,582 | )         |  |  | (3,540,598 | )        
|Sales of investments                                                                                        |                    |      |     |          |         |  | 3,649,398  |           |  |        | 2,765,324  |           |        |      | 4,386,854  |           |  |  | 3,155,661  |          
|Purchase of other financial assets                                                                          |                    |      |     |          |         |  | (22,391    | )         |  |        | (16,967    | )         |        |      | (17,104    | )         |  |  | (30,759    | )        
|Sales of other financial assets                                                                             |                    |      |     |          |         |  | 19,999     |           |  |        | 15,154     |           |        |      | 12,709     |           |  |  | 25,959     |          
|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |           
|Net cash used in investing activities                                                                       |                    |      |     |          |         |  | (176,604   | )         |  |        | (133,822   | )         |        |      | (583,455   | )         |  |  | (748,322   | )        
|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |           
|Dividends paid                                                                                              |                    |      |     |          |         |  | (590,195   | )         |  |        | (447,219   | )         |        |      | (340,425   | )         |  |  | (248,716   | )        
|Purchase of treasury stock                                                                                  |                    |      |     |          |         |  | (1,516,579 | )         |  |        | (1,149,185 | )         |        |      | (454,357   | )         |  |  | (175,018   | )        
|Proceeds from reissuance of treasury stock                                                                  |                    |      |     |          |         |  | 217,889    |           |  |        | 165,105    |           |        |      | 205,695    |           |  |  | 55,856     |          
|Proceeds from issuance of common stock (stock-based compensation)                                           |                    |      |     |          |         |  | 65,148     |           |  |        | 49,366     |           |        |      | 42,748     |           |  |  | 15,395     |          
|Excess tax benefit from stock-based compensation                                                            |                    |      |     |          |         |  | 3,786      |           |  |        | 2,869      |           |        |      | 0          |           |  |  | 0          |          
|Repayment of bonds                                                                                          |                    |      |     |          |         |  | (678       | )         |  |        | (514       | )         |        |      | (350       | )         |  |  | (2,806     | )        
|Proceeds from convertible bonds                                                                             |                    |      |     |          |         |  | 0          |           |  |        | 0          |           |        |      | 0          |           |  |  | 6,754      |          
|Proceeds from short-term and long-term debt                                                                 |                    |      |     |          |         |  | 57,751     |           |  |        | 43,761     |           |        |      | 338,558    |           |  |  | 107,807    |          
|Repayments of short-term and long-term debt                                                                 |                    |      |     |          |         |  | (57,019    | )         |  |        | (43,206    | )         |        |      | (339,171   | )         |  |  | (104,389   | )        
|Proceeds from the exercise of equity-based derivative
    instruments (STAR hedge)                          |                    |      |     |          |         |  | 75,719     |           |  |        | 57,376     |           |        |      | 39,278     |           |  |  | 0          |          
|Purchase of equity-based derivative instruments (STAR hedge)                                                |                    |      |     |          |         |  | (70,282    | )         |  |        | (53,256    | )         |        |      | (46,864    | )         |  |  | (43,041    | )        
|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |           
|Net cash used in financing activities                                                                       |                    |      |     |          |         |  | (1,814,460 | )         |  |        | (1,374,903 | )         |        |      | (554,888   | )         |  |  | (388,158   | )        
|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |           
|Effect of foreign exchange rates on cash and cash equivalents                                               |                    |      |     |          |         |  | (4,531     | )         |  |        | (3,433     | )         |        |      | 88,724     |           |  |  | (41,791    | )        
|Net increase in cash and cash equivalents                                                                   |                    |      |     |          |         |  | 441,647    |           |  |        | 334,657    |           |        |      | 558,281    |           |  |  | 667,056    |          
|Cash and cash equivalents at the beginning of the period                                                    |                    |      |     |          |         |  | 2,723,958  |           |  |        | 2,064,074  |           |        |      | 1,505,793  |           |  |  | 838,737    |          
|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |           
|Cash and cash equivalents at the end of the period                                                          |                    |      | (13 | )        |         |  | 3,165,605  |           |  |        | 2,398,731  |           |        |      | 2,064,074  |           |  |  | 1,505,793  |          
|                                                                                                            |                    |      |     |          |         |  |            |           |  |        |            |           |        |      |           






|    |                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The 2006 figures have been translated solely for the convenience
    of the reader at an exchange rate of US$1.3197 to
    1.00, the Noon
    Buying Rate certified by the Federal Reserve Bank of New York on
    December 29, 2006.



F-6



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##### Table of Contents



SAP AG AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2006


A. BASIS OF PRESENTATION





















F-7



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##### Table of Contents







|                  |  |        |    |   |         |  |    |       |  |  |     |  
|----------------- |  | ------ | -- | - | ------- |  | -- | ----- |  |  | --- | -
|                  |  | German |    |   | Foreign |  |    | Total | 
|                  |  |        |    |   |         |  |    |       | 
|December 31, 2005 |  |        | 17 |   |         |  | 86 |       |  |  | 103 |  
|Additions         |  |        | 5  |   |         |  | 14 |       |  |  | 19  |  
|Disposals         |  |        | (1 | ) |         |  | (6 | )     |  |  | (7  | )
|                  |  |        |    |   |         |  |    |       | 
|December 31, 2006 |  |        | 21 |   |         |  | 94 |       |  |  | 115 |  
|                  |  |        |    |   |         |  |    |       | 



















F-8



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##### Table of Contents









|                |  |     |  |                 |        |  |                              |  |        |       |  |  |        |  |  |       |        |  |  |  |        | 
|--------------- |  | --- |  | --------------- | ------ |  | ---------------------------- |  | ------ | ----- |  |  | ------ |  |  | ----- | ------ |  |  |  | ------ | 
|                |  |     |  | Closing rate at |        |  |                             
|                |  |     |  | December 31     |        |  | Annual average exchange rate | 
|                |  |     |  |                 |        |  |                              | 
|                |  |     |  | 2006            |        |  | 2005                         |  |        | 2006  |  |  | 2005   |  |  | 2004  |       
|                |  |     |  | to 1           |        |  | to 1                        |  |        | to 1 |  |  | to 1  |  |  | to 1 |       
|                |  |     |  |                 |        |  |                              |  |        |       |  |  |        |  |  |       |       
|U.S. dollar     |  | USD |  |                 | 1.3170 |  |                              |  | 1.1797 |       |  |  | 1.2611 |  |  |       | 1.2360 |  |  |  | 1.2490 | 
|Pound sterling  |  | GBP |  |                 | 0.6715 |  |                              |  | 0.6853 |       |  |  | 0.6800 |  |  |       | 0.6827 |  |  |  | 0.6795 | 
|Japanese yen    |  | JPY |  |                 | 156.93 |  |                              |  | 138.90 |       |  |  | 147.02 |  |  |       | 137.08 |  |  |  | 134.73 | 
|Swiss franc     |  | CHF |  |                 | 1.6069 |  |                              |  | 1.5551 |       |  |  | 1.5757 |  |  |       | 1.5478 |  |  |  | 1.5421 | 
|Canadian dollar |  | CAD |  |                 | 1.5281 |  |                              |  | 1.3725 |       |  |  | 1.4296 |  |  |       | 1.4908 |  |  |  | 1.6163 | 
|Brazilian real  |  | BRL |  |                 | 2.8202 |  |                              |  | 2.7691 |       |  |  | 2.7313 |  |  |       | 2.9240 |  |  |  | 3.6361 | 





97-2, Software Revenue Recognition 97-2), 97-2


97-2,












F-9



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##### Table of Contents





















F-10



---



##### Table of Contents

































F-11



---



##### Table of Contents

















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







F-12



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##### Table of Contents











 










F-13



---



##### Table of Contents





























F-14



---



##### Table of Contents

















Employers Accounting for
Defined Benefit Pension and Other Postretirement
Plans  an amendment of FASB Statements No. 87,
88, 106, and 132(R) Employers Accounting for Pensions








F-15



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##### Table of Contents





Share-Based Payment


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




|                                                                                   |  |        |           |  |        |  |           | 
|---------------------------------------------------------------------------------- |  | ------ | --------- |  | ------ |  | --------- | 
|                                                                                   |  | 2005   |           |  | 2004   | 
|                                                                                   |  |        |           |  |        | 
|                                                                                   |  | (000) |           |  | (000) | 
|As reported                                                                        |  |        | 1,496,407 |  |        |  | 1,310,521 | 
|Add: Expense for stock-based compensation, net of tax according
    to APB 25      |  |        | 31,130    |  |        |  | 23,445    | 
|Deduct: Expense for stock-based compensation, net of tax
    according to SFAS 123 |  |        | 138,468   |  |        |  | 181,323   | 
|                                                                                   |  |        |           |  |        | 
|Adjusted                                                                           |  |        | 1,389,069 |  |        |  | 1,152,643 | 
|                                                                                   |  |        |           |  |        | 



|                      |  |      |      |  |      |  |      | 
|--------------------- |  | ---- | ---- |  | ---- |  | ---- | 
|                      |  | 2005 |      |  | 2004 | 
|                      |  |      |      |  |      | 
|                      |  |     |      |  |     | 
|Basic  as reported   |  |      | 1.21 |  |      |  | 1.05 | 
|Diluted  as reported |  |      | 1.20 |  |      |  | 1.05 | 
|Basic  adjusted      |  |      | 1.12 |  |      |  | 0.93 | 
|Diluted  adjusted    |  |      | 1.12 |  |      |  | 0.92 | 







F-16



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##### Table of Contents



Accounting for Derivative Instruments and
Hedging Activities














Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement 109


Fair Value
Measurements


F-17



---



##### Table of Contents





The Fair
Value Option for Financial Assets and Financial Liabilities,
including an amendment of FASB Statement No. 115




| |   |                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Recognized financial assets and financial liabilities unless a
    special exception applies                                                          
|
| |  | Firm commitments that would otherwise not be recognized at
    inception and that involve only financial instruments                                  
|
| |  | Non-financial insurance contracts                                                                                                                     
|
| |  | Host financial instruments resulting from separation of an
    embedded non-financial derivative instrument from a
    non-financial hybrid instrument





         


Business Combinations 





F-18



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##### Table of Contents







|                                        |  |           |       |                  |               |                                 |        | 
|--------------------------------------- |  | --------- | ----- | ---------------- | ------------- | ------------------------------- | ------ | 
|                                        |  |           |       | Estimated useful |              
|                                        |  |  million |       |                  | lives (years) |                                
|                                        |  |           |       |                  |               |                                
|Customer contracts                      |  |           | 17.1  |                  |               |                                 | 2 - 11 | 
|Intellectual property                   |  |           | 118.3 |                  |               |                                 | 5 - 10 | 
|In-process research and development     |  |           | 1.5   |                  |               | expensed at theacquisition date
|                                        |  |           |       |                  |               |                                
|Identifiable intangible assets acquired |  |           | 136.9 |                  |               |                                 |        | 
|                                        |  |           |       |                  |               |                                

        


    





B. NOTES TO THE CONSOLIDATED STATEMENTS OF INCOME






F-19



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##### Table of Contents











  






|                                            |  |        |        |   |        |  |        |        |  |  |         |  
|------------------------------------------- |  | ------ | ------ | - | ------ |  | ------ | ------ |  |  | ------- | -
|                                            |  | 2006   |        |   | 2005   |  |        | 2004   | 
|                                            |  |        |        |   |        |  |        |        | 
|                                            |  | (000) |        |   | (000) |  |        | (000) | 
|Bad debt expense                            |  |        | 0      |   |        |  | (3,409 | )      |  |  | (1,791  | )
|Restructuring costs  severance obligations |  |        | (302   | ) |        |  | (899   | )      |  |  | (5,796  | )
|Restructuring costs  unused lease space    |  |        | (274   | ) |        |  | (832   | )      |  |  | (1,210  | )
|Expenses to obtain rental income            |  |        | 0      |   |        |  | 0      |        |  |  | (1,517  | )
|Miscellaneous other operating expenses      |  |        | (38    | ) |        |  | (2,783 | )      |  |  | (2,834  | )
|                                            |  |        |        |   |        |  |        |        | 
|Other operating expense                     |  |        | (614   | ) |        |  | (7,923 | )      |  |  | (13,148 | )
|Bad debt income                             |  |        | 43,004 |   |        |  | 0      |        |  |  | 0       |  
|Rental income                               |  |        | 5,222  |   |        |  | 6,811  |        |  |  | 7,135   |  
|Receipt of insurance proceeds               |  |        | 1,751  |   |        |  | 1,618  |        |  |  | 4,318   |  
|Miscellaneous other operating income        |  |        | 7,107  |   |        |  | 5,676  |        |  |  | 3,457   |  
|                                            |  |        |        |   |        |  |        |        | 
|Other operating income                      |  |        | 57,084 |   |        |  | 14,105 |        |  |  | 14,910  |  
|                                            |  |        |        |   |        |  |        |        | 
|                                            |  |        | 56,470 |   |        |  | 6,182  |        |  |  | 1,762   |  
|                                            |  |        |        |   |        |  |        |        | 

  


   






   


F-20



---



##### Table of Contents









|                                            |  |        |         |  |        |  |         |        |  |  |         | 
|------------------------------------------- |  | ------ | ------- |  | ------ |  | ------- | ------ |  |  | ------- | 
|                                            |  | 2006   |         |  | 2005   |  |         | 2004   | 
|                                            |  |        |         |  |        |  |         |        | 
|                                            |  | (000) |         |  | (000) |  |         | (000) | 
|Raw materials and supplies, purchased goods |  |        | 31,599  |  |        |  | 30,030  |        |  |  | 27,124  | 
|Purchased services                          |  |        | 879,064 |  |        |  | 827,831 |        |  |  | 722,727 | 
|                                            |  |        |         |  |        |  |         |        | 
|                                            |  |        | 910,663 |  |        |  | 857,861 |        |  |  | 749,851 | 
|                                            |  |        |         |  |        |  |         |        | 





|                      |  |        |           |  |        |  |           |        |  |  |           | 
|--------------------- |  | ------ | --------- |  | ------ |  | --------- | ------ |  |  | --------- | 
|                      |  | 2006   |           |  | 2005   |  |           | 2004   | 
|                      |  |        |           |  |        |  |           |        | 
|                      |  | (000) |           |  | (000) |  |           | (000) | 
|Salaries              |  |        | 3,290,044 |  |        |  | 2,882,828 |        |  |  | 2,513,791 | 
|Social security costs |  |        | 417,001   |  |        |  | 379,240   |        |  |  | 350,052   | 
|Pension expense       |  |        | 126,037   |  |        |  | 109,479   |        |  |  | 104,175   | 
|                      |  |        |           |  |        |  |           |        | 
|                      |  |        | 3,833,082 |  |        |  | 3,371,547 |        |  |  | 2,968,018 | 
|                      |  |        |           |  |        |  |           |        | 





|                                   |  |      |        |  |      |  |        |      |  |  |        | 
|---------------------------------- |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                   |  | 2006 |        |  | 2005 |  |        | 2004 | 
|                                   |  |      |        |  |      |  |        |      | 
|Employees in full-time equivalents |  |      | 38,053 |  |      |  | 34,550 |      |  |  | 31,224 | 



F-21



---



##### Table of Contents







|                                   |  |        |          |   |        |  |          |        |  |  |          |  
|---------------------------------- |  | ------ | -------- | - | ------ |  | -------- | ------ |  |  | -------- | -
|                                   |  | 2006   |          |   | 2005   |  |          | 2004   | 
|                                   |  |        |          |   |        |  |          |        | 
|                                   |  | (000) |          |   | (000) |  |          | (000) | 
|Foreign currency losses            |  |        | (254,971 | ) |        |  | (116,628 | )      |  |  | (140,881 | )
|Losses on disposal of fixed assets |  |        | (5,139   | ) |        |  | (2,915   | )      |  |  | (6,696   | )
|Other                              |  |        | (14,715  | ) |        |  | (16,406  | )      |  |  | (8,830   | )
|                                   |  |        |          |   |        |  |          |        | 
|Other non-operating expenses       |  |        | (274,825 | ) |        |  | (135,949 | )      |  |  | (156,407 | )
|                                   |  |        |          |   |        |  |          |        | 
|Foreign currency gains             |  |        | 250,668  |   |        |  | 77,987   |        |  |  | 152,831  |  
|Gains on disposal of fixed assets  |  |        | 7,253    |   |        |  | 7,641    |        |  |  | 6,147    |  
|Other                              |  |        | 4,601    |   |        |  | 25,160   |        |  |  | 10,703   |  
|                                   |  |        |          |   |        |  |          |        | 
|Other non-operating income         |  |        | 262,522  |   |        |  | 110,788  |        |  |  | 169,681  |  
|                                   |  |        |          |   |        |  |          |        | 
|                                   |  |        | (12,303  | ) |        |  | (25,161  | )      |  |  | 13,274   |  
|                                   |  |        |          |   |        |  |          |        | 





|                                                                |  |        |          |   |        |  |         |        |  |  |         |  
|--------------------------------------------------------------- |  | ------ | -------- | - | ------ |  | ------- | ------ |  |  | ------- | -
|                                                                |  | 2006   |          |   | 2005   |  |         | 2004   | 
|                                                                |  |        |          |   |        |  |         |        | 
|                                                                |  | (000) |          |   | (000) |  |         | (000) | 
|Interest and similar income                                     |  |        | 124,026  |   |        |  | 93,778  |        |  |  | 63,880  |  
|Interest and similar expenses                                   |  |        | (4,218   | ) |        |  | (3,859  | )      |  |  | (8,122  | )
|                                                                |  |        |          |   |        |  |         |        | 
|Interest income, net                                            |  |        | 119,808  |   |        |  | 89,919  |        |  |  | 55,758  |  
|                                                                |  |        |          |   |        |  |         |        | 
|Gain/loss from investments, net                                 |  |        | (578     | ) |        |  | 855     |        |  |  | 1,842   |  
| thereof from equity method investments                        |  |        | (672     | ) |        |  | 610     |        |  |  | (342    | )
|Income from marketable securities and loans of financial assets |  |        | 157,303  |   |        |  | 64,791  |        |  |  | 2,865   |  
|Impairment on minority equity investments                       |  |        | (1,186   | ) |        |  | (4,026  | )      |  |  | (5,074  | )
|Other write-downs of financial assets                           |  |        | (3,391   | ) |        |  | (12,559 | )      |  |  | (15,329 | )
|Gains on sales of equity securities                             |  |        | 298      |   |        |  | 1,075   |        |  |  | 14,034  |  
|Unrealized gains/losses on STAR hedge                           |  |        | 7,330    |   |        |  | (66,166 | )      |  |  | (14,558 | )
|Other financial income/expense                                  |  |        | (157,876 | ) |        |  | (63,104 | )      |  |  | 1,449   |  
|                                                                |  |        |          |   |        |  |         |        | 
|Other financial loss from investments, net                      |  |        | 2,478    |   |        |  | (79,989 | )      |  |  | (16,613 | )
|                                                                |  |        |          |   |        |  |         |        | 
|                                                                |  |        | 121,708  |   |        |  | 10,785  |        |  |  | 40,987  |  
|                                                                |  |        |          |   |        |  |         |        | 

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F-22



---



##### Table of Contents







|                         |  |        |         |   |        |  |         |        |  |  |         |  
|------------------------ |  | ------ | ------- | - | ------ |  | ------- | ------ |  |  | ------- | -
|                         |  | 2006   |         |   | 2005   |  |         | 2004   | 
|                         |  |        |         |   |        |  |         |        | 
|                         |  | (000) |         |   | (000) |  |         | (000) | 
|Current taxes  Germany  |  |        | 426,328 |   |        |  | 514,836 |        |  |  | 470,473 |  
|Current taxes  Foreign  |  |        | 377,408 |   |        |  | 318,281 |        |  |  | 267,591 |  
|                         |  |        |         |   |        |  |         |        | 
|                         |  |        | 803,736 |   |        |  | 833,117 |        |  |  | 738,064 |  
|Deferred taxes  Germany |  |        | (357    | ) |        |  | 15,317  |        |  |  | 22,120  |  
|Deferred taxes  Foreign |  |        | (1,767  | ) |        |  | (31,381 | )      |  |  | (2,915  | )
|                         |  |        |         |   |        |  |         |        | 
|                         |  |        | (2,124  | ) |        |  | (16,064 | )      |  |  | 19,205  |  
|                         |  |        |         |   |        |  |         |        | 
|Income tax expense       |  |        | 801,612 |   |        |  | 817,053 |        |  |  | 757,269 |  
|                         |  |        |         |   |        |  |         |        | 





|        |  |        |           |  |        |  |           |        |  |  |           | 
|------- |  | ------ | --------- |  | ------ |  | --------- | ------ |  |  | --------- | 
|        |  | 2006   |           |  | 2005   |  |           | 2004   | 
|        |  |        |           |  |        |  |           |        | 
|        |  | (000) |           |  | (000) |  |           | (000) | 
|Germany |  |        | 1,519,182 |  |        |  | 1,454,675 |        |  |  | 1,352,200 | 
|Foreign |  |        | 1,155,617 |  |        |  | 861,681   |        |  |  | 720,442   | 
|        |  |        |           |  |        |  |           |        | 
|        |  |        | 2,674,799 |  |        |  | 2,316,356 |        |  |  | 2,072,642 | 
|        |  |        |           |  |        |  |           |        | 



|                                                                          |  |        |           |   |        |  |           |        |  |  |           |  
|------------------------------------------------------------------------- |  | ------ | --------- | - | ------ |  | --------- | ------ |  |  | --------- | -
|                                                                          |  | 2006   |           |   | 2005   |  |           | 2004   | 
|                                                                          |  |        |           |   |        |  |           |        | 
|                                                                          |  | (000) |           |   | (000) |  |           | (000) | 
|Income before income taxes                                                |  |        | 2,674,799 |   |        |  | 2,316,356 |        |  |  | 2,072,642 |  
|Expected income taxes 35.66% in 2006 (36.32% in 2005, 36.20% in
    2004) |  |        | 953,833   |   |        |  | 841,300   |        |  |  | 750,296   |  
|Foreign tax rate differential                                             |  |        | (25,708   | ) |        |  | (5,717    | )      |  |  | (7,800    | )
|Tax effect on non-deductible expenses                                     |  |        | 17,644    |   |        |  | 12,776    |        |  |  | 12,631    |  
|Prior year taxes                                                          |  |        | (80,069   | ) |        |  | (5,787    | )      |  |  | 11,422    |  
|Tax effect on equity investments and securities                           |  |        | (71,540   | ) |        |  | (34,626   | )      |  |  | (7,795    | )
|Other                                                                     |  |        | 7,452     |   |        |  | 9,107     |        |  |  | (1,485    | )
|                                                                          |  |        |           |   |        |  |           |        | 
|Actual income tax expense                                                 |  |        | 801,612   |   |        |  | 817,053   |        |  |  | 757,269   |  
|                                                                          |  |        |           |   |        |  |           |        | 

F-23



---



##### Table of Contents





|                                 |  |        |         |   |        |  |         |  
|-------------------------------- |  | ------ | ------- | - | ------ |  | ------- | -
|                                 |  | 2006   |         |   | 2005   | 
|                                 |  |        |         |   |        | 
|                                 |  | (000) |         |   | (000) | 
|Deferred tax assets              |  |        |         |   |        |  |         |  
|Intangibles                      |  |        | 15,216  |   |        |  | 12,276  |  
|Property, plant, and equipment   |  |        | 8,027   |   |        |  | 7,785   |  
|Financial assets                 |  |        | 23,762  |   |        |  | 30,131  |  
|Accounts receivable              |  |        | 11,614  |   |        |  | 27,982  |  
|Net operating loss carryforwards |  |        | 8,574   |   |        |  | 9,427   |  
|Pension provisions               |  |        | 45,121  |   |        |  | 39,739  |  
|Stock-based compensation         |  |        | 34,004  |   |        |  | 27,858  |  
|Other provisions                 |  |        | 121,697 |   |        |  | 135,145 |  
|Deferred income                  |  |        | 33,246  |   |        |  | 38,789  |  
|Other                            |  |        | 4,021   |   |        |  | 4,015   |  
|                                 |  |        |         |   |        | 
|                                 |  |        | 305,282 |   |        |  | 333,147 |  
|                                 |  |        |         |   |        | 
|Less: Valuation allowance        |  |        | (9,502  | ) |        |  | (6,927  | )
|                                 |  |        |         |   |        | 
|Deferred tax assets              |  |        | 295,780 |   |        |  | 326,220 |  
|                                 |  |        |         |   |        | 
|Deferred tax liabilities         |  |        |         |   |        |  |         |  
|Intangibles                      |  |        | 37,578  |   |        |  | 22,164  |  
|Property, plant, and equipment   |  |        | 23,720  |   |        |  | 13,600  |  
|Financial assets                 |  |        | 22,579  |   |        |  | 34,620  |  
|Accounts receivable              |  |        | 34,529  |   |        |  | 36,411  |  
|Pension provisions               |  |        | 17,411  |   |        |  | 13,034  |  
|Stock-based compensation         |  |        | 7,384   |   |        |  | 198     |  
|Other provisions                 |  |        | 5,115   |   |        |  | 8,626   |  
|Deferred income                  |  |        | 4,844   |   |        |  | 7,415   |  
|Other                            |  |        | 18,978  |   |        |  | 33,924  |  
|                                 |  |        |         |   |        | 
|Deferred tax liabilities         |  |        | 172,138 |   |        |  | 169,992 |  
|                                 |  |        |         |   |        | 
|Net deferred tax assets          |  |        | 123,642 |   |        |  | 156,228 |  
|                                 |  |        |         |   |        | 



      


F-24



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##### Table of Contents






 


     




|                                                                                                     |  |        |         |   |        |  |         |        |  |  |         |  
|---------------------------------------------------------------------------------------------------- |  | ------ | ------- | - | ------ |  | ------- | ------ |  |  | ------- | -
|                                                                                                     |  | 2006   |         |   | 2005   |  |         | 2004   | 
|                                                                                                     |  |        |         |   |        |  |         |        | 
|                                                                                                     |  | (000) |         |   | (000) |  |         | (000) | 
|Income tax from continuing operations                                                                |  |        | 801,612 |   |        |  | 817,053 |        |  |  | 757,269 |  
|Stockholders equity for items in additional paid in
    capital related to stock-based compensation |  |        | (10,822 | ) |        |  | (23,035 | )      |  |  | (15,752 | )
|Stockholders equity for items in Other comprehensive
    income/loss                                |  |        | (16,522 | ) |        |  | 7,792   |        |  |  | (11,262 | )
|                                                                                                     |  |        |         |   |        |  |         |        | 
|                                                                                                     |  |        | 774,268 |   |        |  | 801,810 |        |  |  | 730,255 |  
|                                                                                                     |  |        |         |   |        |  |         |        | 







|                                  |  |                                       |            |  |      |  |            |      |  |  |            | 
|--------------------------------- |  | ------------------------------------- | ---------- |  | ---- |  | ---------- | ---- |  |  | ---------- | 
|                                  |  | 2006                                  |            |  | 2005 |  |            | 2004 | 
|                                  |  |                                       |            |  |      |  |            |      | 
|                                  |  | (in thousands, except per share data) |           
|Net income                        |  |                                       | 1,871,377 |  |      |  | 1,496,407 |      |  |  | 1,310,521 | 
|Weighted average shares  basic   |  |                                       | 1,226,263  |  |      |  | 1,239,264  |      |  |  | 1,243,209  | 
|Stock options/ Convertible bonds  |  |                                       | 5,387      |  |      |  | 4,078      |      |  |  | 5,414      | 
|                                  |  |                                       |            |  |      |  |            |      | 
|Weighted average shares  diluted |  |                                       | 1,231,650  |  |      |  | 1,243,342  |      |  |  | 1,248,623  | 
|                                  |  |                                       |            |  |      |  |            |      | 
|Earnings per share  basic        |  |                                       | 1.53      |  |      |  | 1.21      |      |  |  | 1.05      | 
|                                  |  |                                       |            |  |      |  |            |      | 
|Earnings per share  diluted      |  |                                       | 1.52      |  |      |  | 1.20      |      |  |  | 1.05      | 
|                                  |  |                                       |            |  |      |  |            |      | 

1-to-3


F-25



---



##### Table of Contents



C. NOTES TO THE CONSOLIDATED BALANCE SHEETS






|                                                |  |                           |           |  |                        |                  |           |             |  |  |         |  |  |        |           |  |        |  |        |  |  |  |        | 
|----------------------------------------------- |  | ------------------------- | --------- |  | ---------------------- | ---------------- | --------- | ----------- |  |  | ------- |  |  | ------ | --------- |  | ------ |  | ------ |  |  |  | ------ | 
|                                                |  |                           |           |  |                        | Equity and other |          
|                                                |  | Cash and cash equivalents |           |  | Short-term investments |                  |           | investments | 
|                                                |  |                           |           |  |                        |                  |           |             | 
|                                                |  | 2006                      |           |  | 2005                   |                  |           | 2006        |  |  | 2005    |  |  | 2006   |           |  | 2005   | 
|                                                |  |                           |           |  |                        |                  |           |             |  |  |         |  |  |        |           |  |        | 
|                                                |  | (000)                    |           |  | (000)                 |                  |           | (000)      |  |  | (000)  |  |  | (000) |           |  | (000) | 
|Cash                                            |  |                           | 477,820   |  |                        |                  | 455,523   |             |  |  |         |  |  |        |           |  |        |  |        |  |  |  |        | 
|Money market funds/ Fund securities             |  |                           | 203,788   |  |                        |                  | 381,909   |             |  |  |         |  |  |        | 335       |  |        |  | 11,898 |  |  |  | 11,914 | 
|Time deposits                                   |  |                           | 1,598,522 |  |                        |                  | 1,226,642 |             |  |  | 19,028  |  |  |        | 910,851   |  |        |  |        |  |  |  |        | 
|Commercial paper                                |  |                           | 118,601   |  |                        |                  |           |             |  |  |         |  |  |        |           |  |        |  |        |  |  |  |        | 
|Auction rate securities                         |  |                           |           |  |                        |                  |           |             |  |  | 154,822 |  |  |        |           |  |        |  |        |  |  |  |        | 
|Variable rate demand notes                      |  |                           |           |  |                        |                  |           |             |  |  | 33,721  |  |  |        | 238,648   |  |        |  |        |  |  |  |        | 
|Other debt securities available-for-sale        |  |                           |           |  |                        |                  |           |             |  |  | 715,677 |  |  |        | 625,162   |  |        |  | 246    |  |  |  | 5,275  | 
|Marketable equity securities available-for-sale |  |                           |           |  |                        |                  |           |             |  |  | 4,537   |  |  |        | 6,594     |  |        |  | 9,901  |  |  |  | 16,486 | 
|Equity securities at cost                       |  |                           |           |  |                        |                  |           |             |  |  | 3,165   |  |  |        | 728       |  |        |  | 54,579 |  |  |  | 27,532 | 
|Equity method securities                        |  |                           |           |  |                        |                  |           |             |  |  |         |  |  |        |           |  |        |  | 18,357 |  |  |  | 1,407  | 
|                                                |  |                           |           |  |                        |                  |           |             |  |  |         |  |  |        |           |  |        | 
|                                                |  |                           | 2,398,731 |  |                        |                  | 2,064,074 |             |  |  | 930,950 |  |  |        | 1,782,318 |  |        |  | 94,981 |  |  |  | 62,614 | 
|                                                |  |                           |           |  |                        |                  |           |             |  |  |         |  |  |        |           |  |        | 



|                                                                                     |  |        |         |  |        |  |         | 
|------------------------------------------------------------------------------------ |  | ------ | ------- |  | ------ |  | ------- | 
|                                                                                     |  | 2006   |         |  | 2005   | 
|                                                                                     |  |        |         |  |        | 
|                                                                                     |  | (000) |         |  | (000) | 
|Due within 1 year                                                                    |  |        | 456,304 |  |        |  | 204,041 | 
|Due 1 year through 2 years                                                           |  |        | 447,916 |  |        |  | 421,121 | 
|Due after 2 years                                                                    |  |        | 246     |  |        |  | 243,923 | 
|                                                                                     |  |        |         |  |        | 
|Total of auction rate securities, variable rate demand notes
    and debt securities |  |        | 904,466 |  |        |  | 869,085 | 
|                                                                                     |  |        |         |  |        | 

        


F-26



---



##### 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)     | 
|2006                                              |  |                       |         |  |               |                                        |        |               |  |  |            |  |  |        |       |  |            |  |         |        |  |  |            |  |  |  |         |  |  |  |       | 
|Marketable equity securities (available-for-sale) |  |                       | 11,440  |  |               |                                        | 5,939  |               |  |  | 2,998      |  |  |        | 391   |  |            |  |         |        |  |  |            |  |  |  | 2,998   |  |  |  | 391   | 
|Marketable debt securities (available-for-sale)   |  |                       | 226,415 |  |               |                                        | 720    |               |  |  | 451,819    |  |  |        | 1,145 |  |            |  | 226,232 |        |  |  | 1,084      |  |  |  | 678,051 |  |  |  | 2,229 | 
|Investment fund securities                        |  |                       |         |  |               |                                        |        |               |  |  | 11,898     |  |  |        | 78    |  |            |  |         |        |  |  |            |  |  |  | 11,898  |  |  |  | 78    | 
|2005                                              |  |                       |         |  |               |                                        |        |               |  |  |            |  |  |        |       |  |            |  |         |        |  |  |            |  |  |  |         |  |  |  |       | 
|Marketable equity securities (available-for-sale) |  |                       | 23,080  |  |               |                                        | 13,787 |               |  |  |            |  |  |        |       |  |            |  |         |        |  |  |            |  |  |  |         |  |  |  |       | 
|Marketable debt securities (available-for-sale)   |  |                       | 412,959 |  |               |                                        | 2      |               |  |  | 456,126    |  |  |        | 3,643 |  |            |  |         |        |  |  |            |  |  |  | 456,126 |  |  |  | 3,643 | 
|Investment fund securities                        |  |                       | 2,329   |  |               |                                        | 19     |               |  |  | 9,920      |  |  |        | 79    |  |            |  |         |        |  |  |            |  |  |  | 9,920   |  |  |  | 79    | 

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##### Table of Contents





|           |  |        |           |  |        |  |           | 
|---------- |  | ------ | --------- |  | ------ |  | --------- | 
|           |  | 2006   |           |  | 2005   | 
|           |  |        |           |  |        | 
|           |  | (000) |           |  | (000) | 
|Current    |  |        | 2,440,188 |  |        |  | 2,249,482 | 
|Noncurrent |  |        | 2,675     |  |        |  | 1,545     | 
|           |  |        |           |  |        | 
|           |  |        | 2,442,863 |  |        |  | 2,251,027 | 
|           |  |        |           |  |        | 











|                                                                                                   |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        |  |         |  |  |  |         | 
|-------------------------------------------------------------------------------------------------- |  | ------- | ------- |  | ---------- |  | ------- | ------ |  |  | ------- |  |  | ---------- | ------- |  | ------ |  | ------- |  |  |  | ------- | 
|                                                                                                   |  | 2006    |         |  | 2005       | 
|                                                                                                   |  |         |         |  |            | 
|                                                                                                   |  | Current |         |  | Noncurrent |  |         | Total  |  |  | Current |  |  | Noncurrent |         |  | Total  | 
|                                                                                                   |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        | 
|                                                                                                   |  | (000)  |         |  | (000)     |  |         | (000) |  |  | (000)  |  |  | (000)     |         |  | (000) | 
|Investments in insurance policies held for employee-financed
    pension plans, and semiretirement |  |         | 0       |  |            |  | 278,061 |        |  |  | 278,061 |  |  |            | 0       |  |        |  | 210,966 |  |  |  | 210,966 | 
|Income tax receivables                                                                             |  |         | 160,543 |  |            |  | 12,268  |        |  |  | 172,811 |  |  |            | 72,025  |  |        |  | 4,430   |  |  |  | 76,455  | 
|Fair value of STAR hedge and other derivatives                                                     |  |         | 117,102 |  |            |  | 87,332  |        |  |  | 204,434 |  |  |            | 57,490  |  |        |  | 117,766 |  |  |  | 175,256 | 
|Other receivables                                                                                  |  |         | 41,319  |  |            |  | 40,724  |        |  |  | 82,043  |  |  |            | 35,227  |  |        |  | 30,437  |  |  |  | 65,664  | 
|Loans to employees                                                                                 |  |         | 8,337   |  |            |  | 42,169  |        |  |  | 50,506  |  |  |            | 5,773   |  |        |  | 42,215  |  |  |  | 47,988  | 
|Prepaid pensions                                                                                   |  |         | 0       |  |            |  | 45,663  |        |  |  | 45,663  |  |  |            | 0       |  |        |  | 38,595  |  |  |  | 38,595  | 
|Rent deposits                                                                                      |  |         | 0       |  |            |  | 26,388  |        |  |  | 26,388  |  |  |            | 0       |  |        |  | 27,364  |  |  |  | 27,364  | 
|Loans to third parties                                                                             |  |         | 538     |  |            |  | 341     |        |  |  | 879     |  |  |            | 488     |  |        |  | 438     |  |  |  | 926     | 
|Miscellaneous other assets                                                                         |  |         | 39,493  |  |            |  | 343     |        |  |  | 39,836  |  |  |            | 40,562  |  |        |  | 351     |  |  |  | 40,913  | 
|                                                                                                   |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        | 
|Total other financial assets and other assets                                                      |  |         | 367,332 |  |            |  | 533,289 |        |  |  | 900,621 |  |  |            | 211,565 |  |        |  | 472,562 |  |  |  | 684,127 | 
|                                                                                                   |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        | 



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F-28



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##### Table of Contents





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|                                     |  |                       |         |   |          |  |           |        |  |  |           |  
|------------------------------------ |  | --------------------- | ------- | - | -------- |  | --------- | ------ |  |  | --------- | -
|                                     |  | Licenses, trademarks, |         |   |          |  |          
|                                     |  | similar rights, and   |         |   |          |  |          
|                                     |  | other intangibles     |         |   | Goodwill |  |           | Total  | 
|                                     |  |                       |         |   |          |  |           |        | 
|                                     |  | (000)                |         |   | (000)   |  |           | (000) | 
|Purchase cost                        |  |                       |         |   |          |  |           |        |  |  |           |  
|1/1/2006                             |  |                       | 379,745 |   |          |  | 726,640   |        |  |  | 1,106,385 |  
|Exchange rate differences            |  |                       | (17,037 | ) |          |  | (49,872   | )      |  |  | (66,909   | )
|Change in the scope of consolidation |  |                       | 908     |   |          |  | 0         |        |  |  | 908       |  
|Additions                            |  |                       | 189,088 |   |          |  | 407,407   |        |  |  | 596,495   |  
|Retirements/disposals                |  |                       | (99,333 | ) |          |  | 0         |        |  |  | (99,333   | )
|Reclassifications                    |  |                       | 911     |   |          |  | 0         |        |  |  | 911       |  
|                                     |  |                       |         |   |          |  |           |        | 
|12/31/2006                           |  |                       | 454,282 |   |          |  | 1,084,175 |        |  |  | 1,538,457 |  
|                                     |  |                       |         |   |          |  |           |        | 
|Accumulated amortization             |  |                       |         |   |          |  |           |        |  |  |           |  
|1/1/2006                             |  |                       | 240,048 |   |          |  | 100,094   |        |  |  | 340,142   |  
|Exchange rate differences            |  |                       | (8,894  | ) |          |  | (3,505    | )      |  |  | (12,399   | )
|Change in the scope of consolidation |  |                       | 0       |   |          |  | 0         |        |  |  | 0         |  
|Additions                            |  |                       | 58,708  |   |          |  | 0         |        |  |  | 58,708    |  
|Retirements/disposals                |  |                       | (98,167 | ) |          |  | 0         |        |  |  | (98,167   | )
|Reclassifications                    |  |                       | 5       |   |          |  | 0         |        |  |  | 5         |  
|                                     |  |                       |         |   |          |  |           |        | 
|12/31/2006                           |  |                       | 191,700 |   |          |  | 96,589    |        |  |  | 288,289   |  
|                                     |  |                       |         |   |          |  |           |        | 
|Carrying value 12/31/2006            |  |                       | 262,582 |   |          |  | 987,586   |        |  |  | 1,250,168 |  
|                                     |  |                       |         |   |          |  |           |        | 
|Carrying value 12/31/2005            |  |                       | 139,697 |   |          |  | 626,546   |        |  |  | 766,243   |  
|                                     |  |                       |         |   |          |  |           |        | 

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F-29



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##### Table of Contents





|                                              |  |              |         |  |            |  |         |        |                       |                     |                   |  |  |  |         | 
|--------------------------------------------- |  | ------------ | ------- |  | ---------- |  | ------- | ------ | --------------------- | ------------------- | ----------------- |  |  |  | ------- | 
|                                              |  | Software and |         |  |            |  |         |        | Licenses, trademarks, |                    
|                                              |  | database     |         |  | Acquired   |  |         |        |                       | similar rights, and |                  
|                                              |  | licenses     |         |  | technology |  |         | Other  |                       |                     | other intangibles | 
|                                              |  |              |         |  |            |  |         |        |                       |                     |                   | 
|                                              |  | (000)       |         |  | (000)     |  |         | (000) |                       |                     | (000)            | 
|12/31/2006                                    |  |              |         |  |            |  |         |        |                       |                     |                   |  |  |  |         | 
|Purchase cost                                 |  |              | 200,603 |  |            |  | 214,076 |        |                       |                     | 39,603            |  |  |  | 454,282 | 
| thereof additions in 2006                   |  |              | 52,148  |  |            |  | 118,347 |        |                       |                     | 18,593            |  |  |  | 189,088 | 
|Accumulated amortization                      |  |              | 127,468 |  |            |  | 50,465  |        |                       |                     | 13,767            |  |  |  | 191,700 | 
| thereof amortization in 2006                |  |              | 15,627  |  |            |  | 34,860  |        |                       |                     | 8,221             |  |  |  | 58,708  | 
|                                              |  |              |         |  |            |  |         |        |                       |                     |                   | 
|Carrying value                                |  |              | 73,135  |  |            |  | 163,611 |        |                       |                     | 25,836            |  |  |  | 262,582 | 
|                                              |  |              |         |  |            |  |         |        |                       |                     |                   | 
|Weighted average amortization period in years |  |              | 3.0     |  |            |  | 9.0     |        |                       |                     | 7.5               |  |  |  |         | 
|12/31/2005                                    |  |              |         |  |            |  |         |        |                       |                     |                   |  |  |  |         | 
|Purchase cost                                 |  |              | 160,425 |  |            |  | 194,217 |        |                       |                     | 25,103            |  |  |  | 379,745 | 
|Accumulated amortization                      |  |              | 124,432 |  |            |  | 108,738 |        |                       |                     | 6,878             |  |  |  | 240,048 | 
|                                              |  |              |         |  |            |  |         |        |                       |                     |                   | 
|Carrying value                                |  |              | 35,993  |  |            |  | 85,479  |        |                       |                     | 18,225            |  |  |  | 139,697 | 
|                                              |  |              |         |  |            |  |         |        |                       |                     |                   | 

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|           |  |        |        | 
|---------- |  | ------ | ------ | 
|           |  | (000) |       
|           |  |        |       
|2007       |  |        | 58,400 | 
|2008       |  |        | 50,952 | 
|2009       |  |        | 45,006 | 
|2010       |  |        | 34,961 | 
|2011       |  |        | 21,955 | 
|thereafter |  |        | 51,308 | 



|           |  |            |         |           |         |  |         |            |           |  |         |  |  |  |         | 
|---------- |  | ---------- | ------- | --------- | ------- |  | ------- | ---------- | --------- |  | ------- |  |  |  | ------- | 
|           |  |            |         | Thereof   |         |  |         |            | Thereof   | 
|           |  |            |         | additions |         |  |         |            | additions | 
|Segment    |  | 12/31/2006 |         |           | in 2006 |  |         | 12/31/2005 |           |  | in 2005 | 
|           |  |            |         |           |         |  |         |            |           |  |         | 
|           |  | (000)     |         |           | (000)  |  |         | (000)     |           |  | (000)  | 
|Product    |  |            | 618,397 |           |         |  | 350,444 |            |           |  | 308,647 |  |  |  | 84,185  | 
|Consulting |  |            | 340,338 |           |         |  | 39,725  |            |           |  | 304,934 |  |  |  | 56,995  | 
|Training   |  |            | 28,851  |           |         |  | 17,238  |            |           |  | 12,965  |  |  |  | 2,066   | 
|           |  |            |         |           |         |  |         |            |           |  |         | 
|           |  |            | 987,586 |           |         |  | 407,407 |            |           |  | 626,546 |  |  |  | 143,246 | 
|           |  |            |         |           |         |  |         |            |           |  |         | 

F-30



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##### Table of Contents





|                                     |  |                      |         |   |                 |  |           |              |  |  |         |   |  |  |           |  
|------------------------------------ |  | -------------------- | ------- | - | --------------- |  | --------- | ------------ |  |  | ------- | - |  |  | --------- | -
|                                     |  | Land, leasehold      |         |   |                 |  |           |              | 
|                                     |  | improvements, and    |         |   |                 |  |           |              | 
|                                     |  | buildings, including |         |   | Other property, |  |           | Payments and |  |  |        
|                                     |  | buildings on         |         |   | plant, and      |  |           | construction |  |  |        
|                                     |  | third-party land     |         |   | equipment       |  |           | in progress  |  |  | Total   |  
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|                                     |  | (000)               |         |   | (000)          |  |           | (000)       |  |  | (000)  |  
|Purchase cost                        |  |                      |         |   |                 |  |           |              |  |  |         |   |  |  |           |  
|1/1/2006                             |  |                      | 954,983 |   |                 |  | 1,046,357 |              |  |  | 43,470  |   |  |  | 2,044,810 |  
|Exchange rate differences            |  |                      | (23,617 | ) |                 |  | (18,879   | )            |  |  | (628    | ) |  |  | (43,124   | )
|Change in the scope of consolidation |  |                      | 389     |   |                 |  | 4,207     |              |  |  | 0       |   |  |  | 4,596     |  
|Additions                            |  |                      | 33,178  |   |                 |  | 186,792   |              |  |  | 91,835  |   |  |  | 311,805   |  
|Retirements/disposals                |  |                      | (11,987 | ) |                 |  | (121,586  | )            |  |  | 0       |   |  |  | (133,573  | )
|Reclassifications                    |  |                      | 22,606  |   |                 |  | 1,910     |              |  |  | (25,427 | ) |  |  | (911      | )
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|12/31/2006                           |  |                      | 975,552 |   |                 |  | 1,098,801 |              |  |  | 109,250 |   |  |  | 2,183,603 |  
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|Accumulated depreciation             |  |                      |         |   |                 |  |           |              |  |  |         |   |  |  |           |  
|1/1/2006                             |  |                      | 287,336 |   |                 |  | 662,509   |              |  |  | 0       |   |  |  | 949,845   |  
|Exchange rate differences            |  |                      | (7,877  | ) |                 |  | (12,241   | )            |  |  | 0       |   |  |  | (20,118   | )
|Change in the scope of consolidation |  |                      | 0       |   |                 |  | 0         |              |  |  | 0       |   |  |  | 0         |  
|Additions                            |  |                      | 27,774  |   |                 |  | 127,761   |              |  |  | 0       |   |  |  | 155,535   |  
|Retirements/disposals                |  |                      | (10,956 | ) |                 |  | (96,893   | )            |  |  | 0       |   |  |  | (107,849  | )
|Reclassifications                    |  |                      | 0       |   |                 |  | (5        | )            |  |  | 0       |   |  |  | (5        | )
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|12/31/2006                           |  |                      | 296,277 |   |                 |  | 681,131   |              |  |  | 0       |   |  |  | 977,408   |  
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|Carrying value 12/31/2006            |  |                      | 679,275 |   |                 |  | 417,670   |              |  |  | 109,250 |   |  |  | 1,206,195 |  
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  
|Carrying value 12/31/2005            |  |                      | 667,647 |   |                 |  | 383,848   |              |  |  | 43,470  |   |  |  | 1,094,965 |  
|                                     |  |                      |         |   |                 |  |           |              |  |  |         |  





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F-31



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##### Table of Contents







|                                   |  |             |           |      |               |  |        |                |  |  |            |  |  |            |           |  |  |  |           | 
|---------------------------------- |  | ----------- | --------- | ---- | ------------- |  | ------ | -------------- |  |  | ---------- |  |  | ---------- | --------- |  |  |  | --------- | 
|                                   |  |             |           | Term |               |  |        |                |  |  |           
|                                   |  | Term less   |           |      | between       |  |        | Term more than |  |  | Balance on |  |  | Balance on |          
|                                   |  | than 1 year |           |      | 1 and 5 years |  |        | 5 years        |  |  | 12/31/2006 |  |  | 12/31/2005 |          
|                                   |  |             |           |      |               |  |        |                |  |  |            |  |  |            |          
|                                   |  | (000)      |           |      | (000)        |  |        | (000)         |  |  | (000)     |  |  | (000)     |          
|Other employee-related liabilities |  |             | 948,628   |      |               |  | 0      |                |  |  | 50,513     |  |  |            | 999,141   |  |  |  | 926,546   | 
|Payables to suppliers              |  |             | 580,966   |      |               |  | 403    |                |  |  | 0          |  |  |            | 581,369   |  |  |  | 516,881   | 
|Other taxes                        |  |             | 220,236   |      |               |  | 0      |                |  |  | 0          |  |  |            | 220,236   |  |  |  | 232,700   | 
|Advanced payments received         |  |             | 29,067    |      |               |  | 33,943 |                |  |  | 0          |  |  |            | 63,010    |  |  |  | 69,925    | 
|Bank loans and overdraft           |  |             | 24,556    |      |               |  | 0      |                |  |  | 1,614      |  |  |            | 26,170    |  |  |  | 24,300    | 
|Other financial liabilities        |  |             | 18,128    |      |               |  | 1,204  |                |  |  | 0          |  |  |            | 19,332    |  |  |  | 52,548    | 
|Other liabilities                  |  |             | 86,719    |      |               |  | 12,301 |                |  |  | 7,225      |  |  |            | 106,245   |  |  |  | 100,487   | 
|                                   |  |             |           |      |               |  |        |                |  |  |            |  |  |            |          
|                                   |  |             | 1,908,300 |      |               |  | 47,851 |                |  |  | 59,352     |  |  |            | 2,015,503 |  |  |  | 1,923,387 | 
|                                   |  |             |           |      |               |  |        |                |  |  |            |  |  |            |          



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|                                                     |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        |  |         |  |  |  |         | 
|---------------------------------------------------- |  | ------- | ------- |  | ---------- |  | ------- | ------ |  |  | ------- |  |  | ---------- | ------- |  | ------ |  | ------- |  |  |  | ------- | 
|                                                     |  | 2006    |         |  | 2005       | 
|                                                     |  |         |         |  |            | 
|                                                     |  | Current |         |  | Noncurrent |  |         | Total  |  |  | Current |  |  | Noncurrent |         |  | Total  | 
|                                                     |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        | 
|                                                     |  | (000)  |         |  | (000)     |  |         | (000) |  |  | (000)  |  |  | (000)     |         |  | (000) | 
|Pension plans and similar obligations (see Note 21a) |  |         | 991     |  |            |  | 230,648 |        |  |  | 231,639 |  |  |            | 0       |  |        |  | 183,619 |  |  |  | 183,619 | 
|Other obligations (see Note 21b)                     |  |         | 162,250 |  |            |  | 107,811 |        |  |  | 270,061 |  |  |            | 159,642 |  |        |  | 100,992 |  |  |  | 260,634 | 
|                                                     |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        | 
|                                                     |  |         | 163,241 |  |            |  | 338,459 |        |  |  | 501,700 |  |  |            | 159,642 |  |        |  | 284,611 |  |  |  | 444,253 | 
|                                                     |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        | 





F-32



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##### Table of Contents







|                                                     |  |        |         |  |        |  |         | 
|---------------------------------------------------- |  | ------ | ------- |  | ------ |  | ------- | 
|                                                     |  | 2006   |         |  | 2005   | 
|                                                     |  |        |         |  |        | 
|                                                     |  | (000) |         |  | (000) | 
|Domestic benefit plans                               |  |        | 8,174   |  |        |  | 13,410  | 
|Foreign benefit plans                                |  |        | 32,630  |  |        |  | 19,280  | 
|Other defined benefit plans not included in footnote |  |        | 285     |  |        |  | 4,806   | 
|                                                     |  |        |         |  |        | 
|Total defined benefit plans                          |  |        | 41,089  |  |        |  | 37,496  | 
|Employee financed plans                              |  |        | 190,550 |  |        |  | 146,123 | 
|                                                     |  |        |         |  |        | 
|Total pension plans                                  |  |        | 231,639 |  |        |  | 183,619 | 
|                                                     |  |        |         |  |        | 







|                                          |  |                |         |   |             |  |                |          |  |  |         |  
|----------------------------------------- |  | -------------- | ------- | - | ----------- |  | -------------- | -------- |  |  | ------- | -
|                                          |  | Before         |         |   |             |  | After          |         
|                                          |  | application of |         |   |             |  | application of |         
|                                          |  | SFAS 158       |         |   | Adjustments |  |                | SFAS 158 | 
|                                          |  |                |         |   |             |  |                |          | 
|                                          |  | (000)         |         |   | (000)      |  |                | (000)   | 
|Intangible assets                         |  |                | 262,155 |   |             |  | 427            |          |  |  | 262,582 |  
|Deferred tax assets (noncurrent)          |  |                | 66,164  |   |             |  | 2,325          |          |  |  | 68,489  |  
|Pension liabilities and other obligations |  |                | (28,621 | ) |             |  | (12,468        | )        |  |  | (41,089 | )
|Deferred tax liability (noncurrent)       |  |                | (16,372 | ) |             |  | (50            | )        |  |  | (16,422 | )
|Accumulated other comprehensive income    |  |                | 327,557 |   |             |  | 9,766          |          |  |  | 337,323 |  

F-33



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##### Table of Contents





|                                                                                        |  |        |         |   |        |  |         |  
|--------------------------------------------------------------------------------------- |  | ------ | ------- | - | ------ |  | ------- | -
|                                                                                        |  | 2006   |         |   | 2005   | 
|                                                                                        |  |        |         |   |        | 
|                                                                                        |  | (000) |         |   | (000) | 
|Pension assets                                                                          |  |        | 45,663  |   |        |  | 38,595  |  
| thereof principal pension benefit plans                                               |  |        | 45,221  |   |        |  | 37,594  |  
| thereof insignificant pension benefit plans not
    included in notes                 |  |        | 442     |   |        |  | 1,001   |  
|Accumulated other comprehensive income                                                  |  |        | 27,701  |   |        |  | 15,660  |  
| thereof principal pension benefit plans                                               |  |        | 28,214  |   |        |  | 15,517  |  
| thereof insignificant pension benefit plans not
    included in notes                 |  |        | (513    | ) |        |  | 143     |  
|Less income tax effect (deferred income tax assets net of
    deferred tax liabilities) |  |        | 7,960   |   |        |  | 5,685   |  
| thereof principal pension benefit plans                                               |  |        | 7,994   |   |        |  | 5,633   |  
| thereof insignificant pension benefit plans not
    included in notes                 |  |        | (34     | ) |        |  | 52      |  
|Accumulated other comprehensive income net of income taxes                              |  |        | 19,741  |   |        |  | 9,975   |  
| thereof principal pension benefit plans                                               |  |        | 20,220  |   |        |  | 9,884   |  
| thereof insignificant pension benefit plans not
    included in notes                 |  |        | (479    | ) |        |  | 91      |  
|Accrued pension benefit liability                                                       |  |        | (41,089 | ) |        |  | (33,876 | )
| thereof principal pension benefit plans                                               |  |        | (40,804 | ) |        |  | (32,690 | )
| thereof insignificant pension benefit plans not
    included in notes                 |  |        | (285    | ) |        |  | (1,186  | )





F-34



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##### Table of Contents





|                                                       |  |        |        |   |        |  |         |  
|------------------------------------------------------ |  | ------ | ------ | - | ------ |  | ------- | -
|                                                       |  | 2006   |        |   | 2005   | 
|                                                       |  |        |        |   |        | 
|                                                       |  | (000) |        |   | (000) | 
|Change in benefit obligation                           |  |        |        |   |        |  |         |  
|Benefit obligation at beginning of year                |  |        | 42,745 |   |        |  | 33,236  |  
|Additional plans included in pension disclosure        |  |        | 715    |   |        |  | 0       |  
|Service cost                                           |  |        | 394    |   |        |  | 300     |  
|Interest cost                                          |  |        | 1,719  |   |        |  | 1,640   |  
|Actuarial gain/loss                                    |  |        | (3,695 | ) |        |  | 8,361   |  
|Benefits paid                                          |  |        | (999   | ) |        |  | (792    | )
|                                                       |  |        |        |   |        | 
|Benefit obligation at year end                         |  |        | 40,879 |   |        |  | 42,745  |  
|                                                       |  |        |        |   |        | 
|Change in plan assets                                  |  |        |        |   |        |  |         |  
|Fair value of plan assets at beginning of year         |  |        | 28,722 |   |        |  | 27,536  |  
|Additional plans included in pension disclosure        |  |        | 163    |   |        |  | 0       |  
|Actual return on plan assets                           |  |        | 1,597  |   |        |  | 295     |  
|Employer contributions                                 |  |        | 3,222  |   |        |  | 1,683   |  
|Benefits paid                                          |  |        | (999   | ) |        |  | (740    | )
|Assets transferred to defined contribution plan        |  |        | 0      |   |        |  | (52     | )
|                                                       |  |        |        |   |        | 
|Fair value of plan assets at year end                  |  |        | 32,705 |   |        |  | 28,722  |  
|                                                       |  |        |        |   |        | 
|Funded status at year end                              |  |        | (8,174 | ) |        |  | (14,023 | )
|Amounts recognized in the consolidated balance sheets: |  |        |        |   |        |  |         |  
|Noncurrent pension assets                              |  |        | 0      |   |        |  | 6       |  
|Accrued benefit liability (current)                    |  |        | 0      |   |        |  | 0       |  
|Accrued benefit liability (noncurrent)                 |  |        | (8,174 | ) |        |  | (13,410 | )
|                                                       |  |        |        |   |        | 
|Net amount recognized                                  |  |        | (8,174 | ) |        |  | (13,404 | )
|                                                       |  |        |        |   |        | 





|                      |  |      |     |  |      |  |     |      |  |  |     | 
|--------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                      |  | 2006 |     |  | 2005 |  |     | 2004 | 
|                      |  |      |     |  |      |  |     |      | 
|                      |  | %    |     |  | %    |  |     | %    | 
|Discount rate         |  |      | 4.5 |  |      |  | 4.0 |      |  |  | 5.0 | 
|Compensation increase |  |      | 2-5 |  |      |  | 2-7 |      |  |  | 2-7 | 

F-35



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##### Table of Contents





|                                       |  |        |        |   |        |  |        |        |  |  |        |  
|-------------------------------------- |  | ------ | ------ | - | ------ |  | ------ | ------ |  |  | ------ | -
|                                       |  | 2006   |        |   | 2005   |  |        | 2004   | 
|                                       |  |        |        |   |        |  |        |        | 
|                                       |  | (000) |        |   | (000) |  |        | (000) | 
|Service cost                           |  |        | 394    |   |        |  | 300    |        |  |  | 301    |  
|Interest cost                          |  |        | 1,719  |   |        |  | 1,640  |        |  |  | 1,587  |  
|Expected return on plan assets         |  |        | (1,274 | ) |        |  | (1,572 | )      |  |  | (1,638 | )
|Amortization of initial net obligation |  |        | 42     |   |        |  | 42     |        |  |  | 42     |  
|Amortization of prior service cost     |  |        | 0      |   |        |  | 762    |        |  |  | 503    |  
|Amortization of net loss               |  |        | 2,306  |   |        |  | 0      |        |  |  | 0      |  
|                                       |  |        |        |   |        |  |        |        | 
|Net periodic benefit cost              |  |        | 3,187  |   |        |  | 1,172  |        |  |  | 795    |  
|                                       |  |        |        |   |        |  |        |        | 



|                                  |  |        |        | 
|--------------------------------- |  | ------ | ------ | 
|                                  |  | 2006   |       
|                                  |  |        |       
|                                  |  | (000) |       
|Initial net transition obligation |  |        | 406    | 
|Net loss                          |  |        | 10,131 | 
|                                  |  |        |       
|Total unrecognized pension cost   |  |        | 10,537 | 
|                                  |  |        |       



|                               |  |      |      |  |      |  |     |      |  |  |     | 
|------------------------------ |  | ---- | ---- |  | ---- |  | --- | ---- |  |  | --- | 
|                               |  | 2006 |      |  | 2005 |  |     | 2004 | 
|                               |  |      |      |  |      |  |     |      | 
|                               |  | %    |      |  | %    |  |     | %    | 
|Discount rate                  |  |      | 4.0  |  |      |  | 5.0 |      |  |  | 5.3 | 
|Expected return on plan assets |  |      | 4.25 |  |      |  | 5.5 |      |  |  | 6.0 | 
|Rate of compensation increase  |  |      | 2-5  |  |      |  | 2-7 |      |  |  | 2-7 | 







F-36



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##### Table of Contents





|                                                       |  |        |         |   |        |  |         |  
|------------------------------------------------------ |  | ------ | ------- | - | ------ |  | ------- | -
|                                                       |  | 2006   |         |   | 2005   | 
|                                                       |  |        |         |   |        | 
|                                                       |  | (000) |         |   | (000) | 
|Change in benefit obligation                           |  |        |         |   |        |  |         |  
|Benefit obligation at beginning of year                |  |        | 256,658 |   |        |  | 189,838 |  
|Additional plans included in pension disclosure        |  |        | 5,061   |   |        |  | 0       |  
|Service cost                                           |  |        | 35,911  |   |        |  | 29,872  |  
|Interest cost                                          |  |        | 10,358  |   |        |  | 9,021   |  
|Employee contributions                                 |  |        | 3,271   |   |        |  | 2,965   |  
|Actuarial loss/gain                                    |  |        | (4,925  | ) |        |  | 15,064  |  
|Benefits paid                                          |  |        | (7,338  | ) |        |  | (7,853  | )
|Foreign currency exchange rate changes                 |  |        | (24,687 | ) |        |  | 17,751  |  
|Other changes                                          |  |        | 740     |   |        |  | 0       |  
|                                                       |  |        |         |   |        | 
|Benefit obligation at year end                         |  |        | 275,049 |   |        |  | 256,658 |  
|                                                       |  |        |         |   |        | 
|Change in plan assets                                  |  |        |         |   |        |  |         |  
|Fair value of plan assets at beginning of year         |  |        | 241,642 |   |        |  | 185,628 |  
|Additional plans included in pension disclosure        |  |        | 4,700   |   |        |  | 0       |  
|Actual return on plan assets                           |  |        | 26,702  |   |        |  | 18,087  |  
|Employer contributions                                 |  |        | 41,874  |   |        |  | 20,385  |  
|Employee contributions                                 |  |        | 3,271   |   |        |  | 2,965   |  
|Benefits paid                                          |  |        | (7,158  | ) |        |  | (6,554  | )
|Foreign currency exchange rate changes                 |  |        | (23,391 | ) |        |  | 21,131  |  
|Other changes                                          |  |        | 0       |   |        |  | 0       |  
|                                                       |  |        |         |   |        | 
|Fair value of plan assets at year end                  |  |        | 287,640 |   |        |  | 241,642 |  
|                                                       |  |        |         |   |        | 
|Funded status at year end                              |  |        | 12,591  |   |        |  | (15,016 | )
|Amounts recognized in the consolidated balance sheets: |  |        |         |   |        |  |         |  
|Prepaid benefit cost                                   |  |        | 45,221  |   |        |  | 37,588  |  
|Accrued benefit liability (current)                    |  |        | (991    | ) |        |  | 0       |  
|Accrued benefit liability (noncurrent)                 |  |        | (31,639 | ) |        |  | (19,280 | )
|                                                       |  |        |         |   |        | 
|Net amount recognized                                  |  |        | 12,591  |   |        |  | 18,308  |  
|                                                       |  |        |         |   |        | 







|                              |  |      |     |  |      |  |     |      |  |  |     | 
|----------------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                              |  | 2006 |     |  | 2005 |  |     | 2004 | 
|                              |  |      |     |  |      |  |     |      | 
|                              |  | %    |     |  | %    |  |     | %    | 
|Discount rate                 |  |      | 4.4 |  |      |  | 4.2 |      |  |  | 4.5 | 
|Rate of compensation increase |  |      | 4.6 |  |      |  | 4.9 |      |  |  | 4.9 | 

F-37



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##### Table of Contents





|                                       |  |        |         |   |        |  |         |        |  |  |         |  
|-------------------------------------- |  | ------ | ------- | - | ------ |  | ------- | ------ |  |  | ------- | -
|                                       |  | 2006   |         |   | 2005   |  |         | 2004   | 
|                                       |  |        |         |   |        |  |         |        | 
|                                       |  | (000) |         |   | (000) |  |         | (000) | 
|Service cost                           |  |        | 35,911  |   |        |  | 29,872  |        |  |  | 30,220  |  
|Interest cost                          |  |        | 10,358  |   |        |  | 9,021   |        |  |  | 7,817   |  
|Expected return on plan assets         |  |        | (17,000 | ) |        |  | (14,270 | )      |  |  | (11,959 | )
|Amortization of initial net obligation |  |        | 189     |   |        |  | 175     |        |  |  | 176     |  
|Amortization of prior service cost     |  |        | (139    | ) |        |  | (141    | )      |  |  | (139    | )
|Amortization of net loss               |  |        | 808     |   |        |  | 150     |        |  |  | 812     |  
|Other                                  |  |        | 253     |   |        |  | 0       |        |  |  | 0       |  
|                                       |  |        |         |   |        |  |         |        | 
|Net periodic benefit cost              |  |        | 30,380  |   |        |  | 24,807  |        |  |  | 26,927  |  
|                                       |  |        |         |   |        |  |         |        | 



|                                  |  |        |        |  
|--------------------------------- |  | ------ | ------ | -
|                                  |  | 2006   |       
|                                  |  |        |       
|                                  |  | (000) |       
|Initial net transition obligation |  |        | 1,690  |  
|Prior service credit              |  |        | (356   | )
|Net loss                          |  |        | 16,343 |  
|                                  |  |        |       
|Total unrecognized pension cost   |  |        | 17,677 |  
|                                  |  |        |       



|                               |  |      |     |  |      |  |     |      |  |  |     | 
|------------------------------ |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                               |  | 2006 |     |  | 2005 |  |     | 2004 | 
|                               |  |      |     |  |      |  |     |      | 
|                               |  | %    |     |  | %    |  |     | %    | 
|Discount rate                  |  |      | 4.1 |  |      |  | 4.5 |      |  |  | 4.7 | 
|Expected return on plan assets |  |      | 6.9 |  |      |  | 6.9 |      |  |  | 6.9 | 
|Rate of compensation increase  |  |      | 4.5 |  |      |  | 5.0 |      |  |  | 4.7 | 



F-38



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##### Table of Contents





|                   |  |            |       |  |             |  |        |            |  |  |             |  |  |  |       | 
|------------------ |  | ---------- | ----- |  | ----------- |  | ------ | ---------- |  |  | ----------- |  |  |  | ----- | 
|                   |  | Target     |       |  |             |  | Target |            |  | 
|                   |  | asset      |       |  | Actual %    |  |        | asset      |  |  | Actual %    | 
|                   |  | allocation |       |  | of 2006     |  |        | allocation |  |  | of 2005     | 
|Asset category     |  | 2007       |       |  | plan assets |  |        | 2006       |  |  | plan assets | 
|                   |  |            |       |  |             |  |        |            |  |  |             | 
|                   |  | %          |       |  | %           |  |        | %          |  |  | %           | 
|Equity             |  |            | 54.7  |  |             |  | 57.4   |            |  |  | 53.8        |  |  |  | 57.2  | 
|Fixed income       |  |            | 41.0  |  |             |  | 40.8   |            |  |  | 37.2        |  |  |  | 31.8  | 
|Real estate        |  |            | 3.2   |  |             |  | 1.4    |            |  |  | 2.9         |  |  |  | 0.4   | 
|Insurance policies |  |            | 0.0   |  |             |  | 0.0    |            |  |  | 5.5         |  |  |  | 3.7   | 
|Other              |  |            | 1.1   |  |             |  | 0.4    |            |  |  | 0.6         |  |  |  | 6.9   | 
|                   |  |            |       |  |             |  |        |            |  |  |             | 
|                   |  |            | 100.0 |  |             |  | 100.0  |            |  |  | 100.0       |  |  |  | 100.0 | 
|                   |  |            |       |  |             |  |        |            |  |  |             | 





   


|               |  |            |         |  |             |  |         |             |  |  |             |  |  |  |        | 
|-------------- |  | ---------- | ------- |  | ----------- |  | ------- | ----------- |  |  | ----------- |  |  |  | ------ | 
|               |  |            |         |  |             |  |         | Under-      | 
|               |  |            |         |  |             |  |         | funding of  | 
|               |  | Projected  |         |  | Accumulated |  |         | Fair        |  |  | accumulated | 
|               |  | benefit    |         |  | benefit     |  |         | value of    |  |  | benefit     | 
|               |  | obligation |         |  | obligation  |  |         | plan assets |  |  | obligation  | 
|               |  |            |         |  |             |  |         |             |  |  |             | 
|               |  | (000)     |         |  | (000)      |  |         | (000)      |  |  | (000)      | 
|12/31/2006     |  |            |         |  |             |  |         |             |  |  |             |  |  |  |        | 
|Domestic plans |  |            | 40,879  |  |             |  | 40,394  |             |  |  | 32,705      |  |  |  | 7,689  | 
|Foreign plans  |  |            | 109,196 |  |             |  | 101,270 |             |  |  | 77,768      |  |  |  | 23,502 | 
|               |  |            |         |  |             |  |         |             |  |  |             | 
|Total          |  |            | 150,075 |  |             |  | 141,664 |             |  |  | 110,473     |  |  |  | 31,191 | 
|               |  |            |         |  |             |  |         |             |  |  |             | 
|12/31/2005     |  |            |         |  |             |  |         |             |  |  |             |  |  |  |        | 
|Domestic plans |  |            | 42,745  |  |             |  | 42,147  |             |  |  | 28,722      |  |  |  | 13,425 | 
|Foreign plans  |  |            | 21,578  |  |             |  | 16,686  |             |  |  | 0           |  |  |  | 16,686 | 
|               |  |            |         |  |             |  |         |             |  |  |             | 
|Total          |  |            | 64,323  |  |             |  | 58,833  |             |  |  | 28,722      |  |  |  | 30,111 | 
|               |  |            |         |  |             |  |         |             |  |  |             | 

F-39



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##### Table of Contents







|                                                                                   |  |        |       |  
|---------------------------------------------------------------------------------- |  | ------ | ----- | -
|                                                                                   |  | 2007   |      
|                                                                                   |  |        |      
|                                                                                   |  | (000) |      
|Estimated amounts expected to be recognized from OCI over the
    next fiscal year |  |        |       |  
|Initial net obligation                                                             |  |        | 106   |  
|Prior service credit                                                               |  |        | (58   | )
|Net loss                                                                           |  |        | 1,619 |  
|                                                                                   |  |        |      
|                                                                                   |  |        | 1,667 |  
|                                                                                   |  |        |      



 




|          |  |          |        |  |         |  |         |        |  |  |         | 
|--------- |  | -------- | ------ |  | ------- |  | ------- | ------ |  |  | ------- | 
|          |  | Domestic |        |  | Foreign |  |         |       
|          |  | plans    |        |  | plans   |  |         | Total  | 
|          |  |          |        |  |         |  |         |        | 
|          |  | (000)   |        |  | (000)  |  |         | (000) | 
|2007      |  |          | 1,184  |  |         |  | 9,313   |        |  |  | 10,497  | 
|2008      |  |          | 1,392  |  |         |  | 11,121  |        |  |  | 12,513  | 
|2009      |  |          | 1,419  |  |         |  | 12,676  |        |  |  | 14,095  | 
|2010      |  |          | 1,610  |  |         |  | 14,115  |        |  |  | 15,725  | 
|2011      |  |          | 1,691  |  |         |  | 16,147  |        |  |  | 17,838  | 
|2012-2016 |  |          | 10,540 |  |         |  | 112,413 |        |  |  | 122,953 | 



  




 


F-40



---



##### Table of Contents







|                             |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        |  |         |  |  |  |         | 
|---------------------------- |  | ------- | ------- |  | ---------- |  | ------- | ------ |  |  | ------- |  |  | ---------- | ------- |  | ------ |  | ------- |  |  |  | ------- | 
|                             |  | 2006    |         |  | 2005       | 
|                             |  |         |         |  |            | 
|                             |  | Current |         |  | Noncurrent |  |         | Total  |  |  | Current |  |  | Noncurrent |         |  | Total  | 
|                             |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        | 
|                             |  | (000)  |         |  | (000)     |  |         | (000) |  |  | (000)  |  |  | (000)     |         |  | (000) | 
|STAR obligations             |  |         | 82,534  |  |            |  | 50,792  |        |  |  | 133,326 |  |  |            | 73,966  |  |        |  | 48,274  |  |  |  | 122,240 | 
|Employee-related obligations |  |         | 46,553  |  |            |  | 46,726  |        |  |  | 93,279  |  |  |            | 33,869  |  |        |  | 41,636  |  |  |  | 75,505  | 
|Customer-related obligations |  |         | 26,141  |  |            |  | 0       |        |  |  | 26,141  |  |  |            | 43,404  |  |        |  | 0       |  |  |  | 43,404  | 
|Restructuring obligations    |  |         | 1,951   |  |            |  | 3,527   |        |  |  | 5,478   |  |  |            | 3,997   |  |        |  | 5,528   |  |  |  | 9,525   | 
|Warranty obligations         |  |         | 2,700   |  |            |  | 0       |        |  |  | 2,700   |  |  |            | 2,900   |  |        |  | 0       |  |  |  | 2,900   | 
|Other obligations            |  |         | 2,371   |  |            |  | 6,766   |        |  |  | 9,137   |  |  |            | 1,506   |  |        |  | 5,554   |  |  |  | 7,060   | 
|                             |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        | 
|                             |  |         | 162,250 |  |            |  | 107,811 |        |  |  | 270,061 |  |  |            | 159,642 |  |        |  | 100,992 |  |  |  | 260,634 | 
|                             |  |         |         |  |            |  |         |        |  |  |         |  |  |            |         |  |        | 

Employee-related semi-retirement, one-time post-employment




|                    |  |        |       |  |        |  |       |        |  |  |       | 
|------------------- |  | ------ | ----- |  | ------ |  | ----- | ------ |  |  | ----- | 
|                    |  | 2006   |       |  | 2005   |  |       | 2004   | 
|                    |  |        |       |  |        |  |       |        | 
|                    |  | (000) |       |  | (000) |  |       | (000) | 
|Balance as of 1/1   |  |        | 2,900 |  |        |  | 3,852 |        |  |  | 7,600 | 
|Additions           |  |        | 2,700 |  |        |  | 2,849 |        |  |  | 3,852 | 
|Utilization         |  |        | 2,900 |  |        |  | 2,737 |        |  |  | 4,366 | 
|Release             |  |        | 0     |  |        |  | 1,064 |        |  |  | 3,234 | 
|                    |  |        |       |  |        |  |       |        | 
|Balance as of 31/12 |  |        | 2,700 |  |        |  | 2,900 |        |  |  | 3,852 | 
|                    |  |        |       |  |        |  |       |        | 



F-41



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##### Table of Contents





|                         |  |             |        |           |               |  |        |        |  |  |         |  
|------------------------ |  | ----------- | ------ | --------- | ------------- |  | ------ | ------ |  |  | ------- | -
|                         |  |             |        | Severance |               |  |       
|                         |  | Unused      |        |           | payments for  |  |        |       
|                         |  | lease space |        |           | restructuring |  |        | Total  | 
|                         |  |             |        |           |               |  |        |        | 
|                         |  | (000)      |        |           | (000)        |  |        | (000) | 
|Balance as of 1/1/2004   |  |             | 17,691 |           |               |  | 3,529  |        |  |  | 21,220  |  
|Additions                |  |             | 2,625  |           |               |  | 6,972  |        |  |  | 9,597   |  
|Utilization              |  |             | (7,557 | )         |               |  | (3,668 | )      |  |  | (11,225 | )
|Release                  |  |             | (1,415 | )         |               |  | (1,176 | )      |  |  | (2,591  | )
|Currency                 |  |             | (779   | )         |               |  | 13     |        |  |  | (766    | )
|                         |  |             |        |           |               |  |        |        | 
|Balance as of 12/31/2004 |  |             | 10,565 |           |               |  | 5,670  |        |  |  | 16,235  |  
|                         |  |             |        |           |               |  |        |        | 
| thereof current        |  |             | 4,404  |           |               |  | 4,846  |        |  |  | 9,250   |  
| thereof noncurrent     |  |             | 6,161  |           |               |  | 824    |        |  |  | 6,985   |  
|Balance as of 1/1/2005   |  |             | 10,565 |           |               |  | 5,670  |        |  |  | 16,235  |  
|Additions                |  |             | 2,379  |           |               |  | 4,203  |        |  |  | 6,582   |  
|Utilization              |  |             | (4,404 | )         |               |  | (4,846 | )      |  |  | (9,250  | )
|Release                  |  |             | (1,547 | )         |               |  | (3,304 | )      |  |  | (4,851  | )
|Currency                 |  |             | 833    |           |               |  | (24    | )      |  |  | 809     |  
|                         |  |             |        |           |               |  |        |        | 
|Balance as of 12/31/2005 |  |             | 7,826  |           |               |  | 1,699  |        |  |  | 9,525   |  
|                         |  |             |        |           |               |  |        |        | 
| thereof current        |  |             | 2,418  |           |               |  | 1,579  |        |  |  | 3,997   |  
| thereof noncurrent     |  |             | 5,408  |           |               |  | 120    |        |  |  | 5,528   |  
|Balance as of 1/1/2006   |  |             | 7,826  |           |               |  | 1,699  |        |  |  | 9,525   |  
|Additions                |  |             | 2,589  |           |               |  | 2,161  |        |  |  | 4,750   |  
|Utilization              |  |             | (2,770 | )         |               |  | (1,492 | )      |  |  | (4,262  | )
|Release                  |  |             | (2,315 | )         |               |  | (1,859 | )      |  |  | (4,174  | )
|Currency                 |  |             | (341   | )         |               |  | (20    | )      |  |  | (361    | )
|Balance as of 12/31/2006 |  |             | 4,989  |           |               |  | 489    |        |  |  | 5,478   |  
| thereof current        |  |             | 1,919  |           |               |  | 32     |        |  |  | 1,951   |  
|                         |  |             |        |           |               |  |        |        | 
| thereof noncurrent     |  |             | 3,070  |           |               |  | 457    |        |  |  | 3,527   |  
|                         |  |             |        |           |               |  |        |        | 

Accounting for Costs Associated with Exit or
Disposal Activities








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##### Table of Contents










  




|                                            |  |           |           |  |            |  |       |           |  |  |            |  |  |  |       | 
|------------------------------------------- |  | --------- | --------- |  | ---------- |  | ----- | --------- |  |  | ---------- |  |  |  | ----- | 
|                                            |  | 2006      |           |  | 2005       | 
|                                            |  |           |           |  |            | 
|                                            |  | Number of |           |  | Subscribed |  |       | Number of |  |  | Subscribed | 
|                                            |  | shares    |           |  | capital    |  |       | shares    |  |  | capital    | 
|                                            |  | (000)     |           |  | %          |  |       | (000)     |  |  | %          | 
|                                            |  |           |           |  |            |  |       |           |  |  |            | 
|Hasso Plattner GmbH & Co. Beteiligungs-KG   |  |           | 113,719   |  |            |  | 9.0   |           |  |  | 31,650     |  |  |  | 10.0  | 
|Dietmar Hopp Stiftung GmbH                  |  |           | 109,869   |  |            |  | 8.7   |           |  |  | 27,467     |  |  |  | 8.7   | 
|Klaus Tschira Stiftung gGmbH                |  |           | 67,472    |  |            |  | 5.3   |           |  |  | 17,641     |  |  |  | 5.6   | 
|Dr. h.c. Tschira Beteiligungs GmbH & Co. KG |  |           | 63,331    |  |            |  | 5.0   |           |  |  | 15,833     |  |  |  | 5.0   | 
|Hasso Plattner Förderstiftung gGmbH         |  |           | 16,062    |  |            |  | 1.2   |           |  |  | 4,763      |  |  |  | 1.5   | 
|DH-Besitzgesellschaft mbH & Co.
    KG(1)   |  |           | 10,200    |  |            |  | 0.8   |           |  |  | 4,061      |  |  |  | 1.3   | 
|Dr. h.c. Tschira and wife                   |  |           | 2,000     |  |            |  | 0.2   |           |  |  | 500        |  |  |  | 0.2   | 
|Treasury stock                              |  |           | 49,251    |  |            |  | 3.9   |           |  |  | 6,679      |  |  |  | 2.1   | 
|Free float                                  |  |           | 835,633   |  |            |  | 65.9  |           |  |  | 207,864    |  |  |  | 65.6  | 
|                                            |  |           |           |  |            |  |       |           |  |  |            | 
|                                            |  |           | 1,267,537 |  |            |  | 100.0 |           |  |  | 316,458    |  |  |  | 100.0 | 
|                                            |  |           |           |  |            |  |       |           |  |  |            | 






|    |                                                                        
|--- | -----------------------------------------------------------------------
|(1) | DH-Besitzgesellschaft mbH & Co. KG is wholly owned by
    Dietmar Hopp.







| |   |                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | up to a total amount of
    60 million
    through the issuance of new common shares in return for
    contributions in cash until May 11, 2010 (Authorized
    Capital I). The issuance is subject to the statutory
    subscription rights of existing shareholders                                                                                                      
|
| |  | up to a total amount of
    180 million
    through the issuance of new common shares in return for
    contributions in cash until May 8, 2011 (Authorized
    Capital Ia). The issuance is subject to the statutory
    subscription rights of existing shareholders                                                                                                     
|
| |  | up to a total amount of
    60 million
    through the issuance of new common shares in return for
    contributions in cash or in kind until May 11, 2010
    (Authorized Capital II). Subject to certain
    preconditions and the consent of the Supervisory Board, the
    Executive Board is authorized to exclude the shareholders
    statutory subscription rights

F-43



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | up to a total amount of
    180 million
    through the issuance of new common shares in return for
    contributions in cash or in kind until May 8, 2011
    (Authorized Capital IIa). Subject to certain
    preconditions and the consent of the Supervisory Board, the
    Executive Board is authorized to exclude the shareholders
    statutory subscription rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | up to an aggregate amount of
    15 million
    against contribution in cash by issuing new common shares until
    May 1, 2007 (Authorized Capital III). The
    new shares may be subscribed to 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







|                                            |  |            |         |  
|------------------------------------------- |  | ---------- | ------- | -
|                                            |  | Contingent |        
|                                            |  | capital    |        
|                                            |  |            |        
|                                            |  | (000)     |        
|12/31/2004                                  |  |            | 55,247  |  
|Exercise                                    |  |            | (454    | )
|New authorized                              |  |            | 0       |  
|Reduction/cancellation                      |  |            | (1,863  | )
|                                            |  |            |        
|12/31/2005                                  |  |            | 52,930  |  
|                                            |  |            |        
|Exercise                                    |  |            | (426    | )
|New authorized                              |  |            | 100,000 |  
|Increase in consequence of capital increase |  |            | 82,575  |  
|Reduction/cancellation                      |  |            | (25,000 | )
|                                            |  |            |        
|12/31/2006                                  |  |            | 210,079 |  
|                                            |  |            |        








F-44



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##### Table of Contents





      






|                                                                                   |                                                                          |         |  |        |            |  |  |        |   |  |         |        |   |            |  |       |        |     |  |         |   |  |            |       |  |        |  |        |   |  |  |       |  |  |        |        |  
|---------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ------- |  | ------ | ---------- |  |  | ------ | - |  | ------- | ------ | - | ---------- |  | ----- | ------ | --- |  | ------- | - |  | ---------- | ----- |  | ------ |  | ------ | - |  |  | ----- |  |  | ------ | ------ | -
|                                                                                   |                                                                          | 2006    |  |        | 2005       |  |  | 2004   |  
|                                                                                   |                                                                          |         |  |        |            |  |  |        |  
|                                                                                   |                                                                          |         |  | Tax    |            |  |  |        |   |  | Tax     |        |   |            |  |       |        | Tax |  |         |  
|                                                                                   |                                                                          | Pre-tax |  |        | (expense)  |  |  | Net    |   |  | Pre-tax |        |   | (expense)  |  |       | Net    |     |  | Pre-tax |   |  | (expense)  |       |  | Net    | 
|                                                                                   |                                                                          | amount  |  |        | or benefit |  |  | amount |   |  | amount  |        |   | or benefit |  |       | amount |     |  | amount  |   |  | or benefit |       |  | amount | 
|                                                                                   |                                                                          |         |  |        |            |  |  |        |   |  |         |        |   |            |  |       |        |     |  |         |   |  |            |       |  |        | 
|                                                                                   |                                                                          | (000)  |  |        | (000)     |  |  | (000) |   |  | (000)  |        |   | (000)     |  |       | (000) |     |  | (000)  |   |  | (000)     |       |  | (000) | 
|Accumulated unrealized gains/losses on marketable securities
    as of January 1   |                                                                          |         |  |        |            |  |  |        |   |  | 11,168  |        |   |            |  |       |        |     |  |         |   |  | 8,301      |       |  |        |  |        |   |  |  |       |  |  | 15,979 |       
|                                                                                   | Unrealized gains/losses on marketable securities                         |         |  |        |            |  |  |        |   |  |         |        |   |            |  |       |        |     |  |         |   |  |            |       |  |        |  |        |   |  |  |       |  |  |        |        |  
|                                                                                   | Unrealized holding gains/losses                                          |         |  | (7,637 | )          |  |  | (137   | ) |  |         | (7,774 | ) |            |  | 1,571 |        |     |  | 1,153   |   |  |            | 2,724 |  |        |  | (699   | ) |  |  | 774   |  |  |        | 75     |  
|                                                                                   | Reclassification adjustments for gains/losses included in net
    income |         |  | 1,587  |            |  |  | (505   | ) |  |         | 1,082  |   |            |  | 220   |        |     |  | (77     | ) |  |            | 143   |  |        |  | (8,020 | ) |  |  | 267   |  |  |        | (7,753 | )
|                                                                                   |                                                                          |         |  |        |            |  |  |        |   |  |         |        |   |            |  |       |        |     |  |         |   |  |            |       |  |        | 
|                                                                                   | Net unrealized gains/losses on marketable securities                     |         |  | (6,050 | )          |  |  | (642   | ) |  |         | (6,692 | ) |            |  | 1,791 |        |     |  | 1,076   |   |  |            | 2,867 |  |        |  | (8,719 | ) |  |  | 1,041 |  |  |        | (7,678 | )
|Accumulated unrealized gains/losses on marketable securities
    as of December 31 |                                                                          |         |  |        |            |  |  |        |   |  | 4,476   |        |   |            |  |       |        |     |  |         |   |  | 11,168     |       |  |        |  |        |   |  |  |       |  |  | 8,301  |       

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##### Table of Contents



|                                                                                           |                                                                          |         |  |          |            |  |  |         |   |  |          |          |   |            |  |         |        |     |  |         |   |  |            |         |   |        |  |         |   |  |  |        |   |  |          |         |  
|------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------ | ------- |  | -------- | ---------- |  |  | ------- | - |  | -------- | -------- | - | ---------- |  | ------- | ------ | --- |  | ------- | - |  | ---------- | ------- | - | ------ |  | ------- | - |  |  | ------ | - |  | -------- | ------- | -
|                                                                                           |                                                                          | 2006    |  |          | 2005       |  |  | 2004    |  
|                                                                                           |                                                                          |         |  |          |            |  |  |         |  
|                                                                                           |                                                                          |         |  | Tax      |            |  |  |         |   |  | Tax      |          |   |            |  |         |        | Tax |  |         |  
|                                                                                           |                                                                          | Pre-tax |  |          | (expense)  |  |  | Net     |   |  | Pre-tax  |          |   | (expense)  |  |         | Net    |     |  | Pre-tax |   |  | (expense)  |         |   | Net    | 
|                                                                                           |                                                                          | amount  |  |          | or benefit |  |  | amount  |   |  | amount   |          |   | or benefit |  |         | amount |     |  | amount  |   |  | or benefit |         |   | amount | 
|                                                                                           |                                                                          |         |  |          |            |  |  |         |   |  |          |          |   |            |  |         |        |     |  |         |   |  |            |         |   |        | 
|                                                                                           |                                                                          | (000)  |  |          | (000)     |  |  | (000)  |   |  | (000)   |          |   | (000)     |  |         | (000) |     |  | (000)  |   |  | (000)     |         |   | (000) | 
|Accumulated currency translation adjustments as of
    January 1                           |                                                                          |         |  |          |            |  |  |         |   |  | (202,260 | )        |   |            |  |         |        |     |  |         |   |  | (322,396   | )       |   |        |  |         |   |  |  |        |   |  | (251,673 | )      
|                                                                                           | Currency translation adjustments                                         |         |  | (148,568 | )          |  |  | 0       |   |  |          | (148,568 | ) |            |  | 120,136 |        |     |  | 0       |   |  |            | 120,136 |   |        |  | (70,723 | ) |  |  | 0      |   |  |          | (70,723 | )
|                                                                                           |                                                                          |         |  |          |            |  |  |         |   |  |          |          |   |            |  |         |        |     |  |         |   |  |            |         |   |        | 
|Accumulated currency translation adjustments as of
    December 31                         |                                                                          |         |  |          |            |  |  |         |   |  | (350,828 | )        |   |            |  |         |        |     |  |         |   |  | (202,260   | )       |   |        |  |         |   |  |  |        |   |  | (322,396 | )      
|Accumulated additional minimum pension liability as of
    January 1                       |                                                                          |         |  |          |            |  |  |         |   |  | (9,975   | )        |   |            |  |         |        |     |  |         |   |  | (10,741    | )       |   |        |  |         |   |  |  |        |   |  | (3,722   | )      
|                                                                                           | Additional minimum pension liability adjustments                         |         |  |          |            |  |  |         |   |  |          |          |   |            |  | (737    | )      |     |  | 1,503   |   |  |            | 766     |   |        |  | (9,089  | ) |  |  | 2,070  |   |  |          | (7,019  | )
|                                                                                           |                                                                          |         |  |          |            |  |  |         |   |  |          |          |   |            |  |         |        |     |  |         |   |  |            |         |   |        | 
|Accumulated additional minimum pension liability as of
    December 31                     |                                                                          |         |  |          |            |  |  |         |   |  | (9,975   | ) *      |   |            |  |         |        |     |  |         |   |  | (9,975     | )       |   |        |  |         |   |  |  |        |   |  | (10,741  | )      
|Accumulated unrealized gains/losses on cash flow hedges as of
    January 1                |                                                                          |         |  |          |            |  |  |         |   |  | (8,963   | )        |   |            |  |         |        |     |  |         |   |  | 13,310     |         |   |        |  |         |   |  |  |        |   |  | 13,441   |        
|                                                                                           | Unrealized gains/losses on cash flow hedges                              |         |  |          |            |  |  |         |   |  |          |          |   |            |  |         |        |     |  |         |   |  |            |         |   |        |  |         |   |  |  |        |   |  |          |         |  
|                                                                                           | Unrealized cash flow hedge gains/losses                                  |         |  | 40,543   |            |  |  | (14,567 | ) |  |          | 25,976   |   |            |  | (30,323 | )      |     |  | 10,992  |   |  |            | (19,331 | ) |        |  | 11,691  |   |  |  | (1,681 | ) |  |          | 10,010  |  
|                                                                                           | Reclassification adjustments for gains/losses included in net
    income |         |  | (10,035  | )          |  |  | 3,605   |   |  |          | (6,430   | ) |            |  | (4,614  | )      |     |  | 1,672   |   |  |            | (2,942  | ) |        |  | (11,844 | ) |  |  | 1,703  |   |  |          | (10,141 | )
|                                                                                           |                                                                          |         |  |          |            |  |  |         |   |  |          |          |   |            |  |         |        |     |  |         |   |  |            |         |   |        | 
|                                                                                           | Net unrealized cash flow hedge gains/losses                              |         |  | 30,508   |            |  |  | (10,962 | ) |  |          | 19,546   |   |            |  | (34,937 | )      |     |  | 12,664  |   |  |            | (22,273 | ) |        |  | (153    | ) |  |  | 22     |   |  |          | (131    | )
|Accumulated unrealized gains/losses on cash flow hedges as of
    December 31              |                                                                          |         |  |          |            |  |  |         |   |  | 10,583   |          |   |            |  |         |        |     |  |         |   |  | (8,963     | )       |   |        |  |         |   |  |  |        |   |  | 13,310   |        
|Accumulated unrealized gains/losses on STAR hedge as of
    January 1                      |                                                                          |         |  |          |            |  |  |         |   |  | 51,412   |          |   |            |  |         |        |     |  |         |   |  | 8,598      |         |   |        |  |         |   |  |  |        |   |  | 23,996   |        
|                                                                                           | Unrealized gains/losses on STAR hedge                                    |         |  |          |            |  |  |         |   |  |          |          |   |            |  |         |        |     |  |         |   |  |            |         |   |        |  |         |   |  |  |        |   |  |          |         |  
|                                                                                           | Unrealized gains/losses on STAR hedge                                    |         |  | 48,139   |            |  |  | (16,754 | ) |  |          | 31,385   |   |            |  | 78,376  |        |     |  | (27,417 | ) |  |            | 50,959  |   |        |  | (1,094  | ) |  |  | 378    |   |  |          | (716    | )
|                                                                                           | Reclassification adjustments for gains/losses included in net
    income |         |  | (121,711 | )          |  |  | 42,360  |   |  |          | (79,351  | ) |            |  | (12,527 | )      |     |  | 4,382   |   |  |            | (8,145  | ) |        |  | (22,433 | ) |  |  | 7,751  |   |  |          | (14,682 | )
|                                                                                           |                                                                          |         |  |          |            |  |  |         |   |  |          |          |   |            |  |         |        |     |  |         |   |  |            |         |   |        | 
|                                                                                           | Net unrealized gains/losses on STAR hedge                                |         |  | (73,572  | )          |  |  | 25,606  |   |  |          | (47,966  | ) |            |  | 65,849  |        |     |  | (23,035 | ) |  |            | 42,814  |   |        |  | (23,527 | ) |  |  | 8,129  |   |  |          | (15,398 | )
|Accumulated unrealized gains/losses on STAR hedge as of
    December 31                    |                                                                          |         |  |          |            |  |  |         |   |  | 3,446    |          |   |            |  |         |        |     |  |         |   |  | 51,412     |         |   |        |  |         |   |  |  |        |   |  | 8,598    |        
|Accumulated currency effects from intercompany long-term
    investments as of January 1   |                                                                          |         |  |          |            |  |  |         |   |  | 40,763   |          |   |            |  |         |        |     |  |         |   |  | (2,473     | )       |   |        |  |         |   |  |  |        |   |  | 0        |        
|                                                                                           | Currency effects from intercompany long-term investment
    transactions |         |  | (26,022  | )          |  |  | 0       |   |  |          | (26,022  | ) |            |  | 43,236  |        |     |  | 0       |   |  |            | 43,236  |   |        |  | (2,473  | ) |  |  | 0      |   |  |          | (2,473  | )
|Accumulated currency effects from intercompany long-term
    investments as of December 31 |                                                                          |         |  |          |            |  |  |         |   |  | 14,741   |          |   |            |  |         |        |     |  |         |   |  | 40,763     |         |   |        |  |         |   |  |  |        |   |  | (2,473   | )      
|                                                                                           |                                                                          |         |  |          |            |  |  |         |   |  |          |          |   |            |  |         |        |     |  |         |   |  |            |         |   |        | 

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|                                                                        |                                             |         |          |         |            |  |        |        |   |  |          |         |   |            |         |  |        |     |        |         |  |  |            |   |  |        |          |   |  |  |        |  |  |  |          |   | 
|----------------------------------------------------------------------- | ------------------------------------------- | ------- | -------- | ------- | ---------- |  | ------ | ------ | - |  | -------- | ------- | - | ---------- | ------- |  | ------ | --- | ------ | ------- |  |  | ---------- | - |  | ------ | -------- | - |  |  | ------ |  |  |  | -------- | - | 
|                                                                        |                                             | 2006    |          |         | 2005       |  |        | 2004   |  
|                                                                        |                                             |         |          |         |            |  |        |        |  
|                                                                        |                                             |         |          | Tax     |            |  |        |        |   |  | Tax      |         |   |            |         |  |        | Tax |        |         | 
|                                                                        |                                             | Pre-tax |          |         | (expense)  |  |        | Net    |   |  | Pre-tax  |         |   | (expense)  |         |  | Net    |     |        | Pre-tax |  |  | (expense)  |   |  | Net    |         
|                                                                        |                                             | amount  |          |         | or benefit |  |        | amount |   |  | amount   |         |   | or benefit |         |  | amount |     |        | amount  |  |  | or benefit |   |  | amount |         
|                                                                        |                                             |         |          |         |            |  |        |        |   |  |          |         |   |            |         |  |        |     |        |         |  |  |            |   |  |        |         
|                                                                        |                                             | (000)  |          |         | (000)     |  |        | (000) |   |  | (000)   |         |   | (000)     |         |  | (000) |     |        | (000)  |  |  | (000)     |   |  | (000) |         
|Total other comprehensive income/loss                                   |                                             |         | (223,704 | )       |            |  | 14,002 |        |   |  | (209,702 | )       |   |            | 195,338 |  |        |     | (7,792 | )       |  |  | 187,546    |   |  |        | (114,684 | ) |  |  | 11,262 |  |  |  | (103,422 | )
|                                                                        |                                             |         |          |         |            |  |        |        |   |  |          |         |   |            |         |  |        |     |        |         |  |  |            |   |  |        |         
|Total accumulated other comprehensive income/loss as of
    January 1   |                                             |         |          |         |            |  |        |        |   |  | (117,855 | )       |   |            |         |  |        |     |        |         |  |  | (305,401   | ) |  |        |          |   |  |  |        |  |  |  | (201,979 | )
|Impact due to first-time adoption SFAS 158                              |                                             |         |          |         |            |  |        |        |   |  |          |         |   |            |         |  |        |     |        |         |  |  |            |   |  |        |          |   |  |  |        |  |  |  |          |  
|                                                                        | Additional minimum pension liability effect |         |          | 15,660  |            |  |        | (5,685 | ) |  |          | 9,975*  |   |            |         |  |        |     |        |         |  |  |            |   |  |        |          |   |  |  |        |  |  |  |          |   | 
|                                                                        |  Unrealized transition obligation          |         |          | (1,698  | )          |  |        |        |   |  |          |         |   |            |         |  |        |     |        |         |  |  |            |   |  |        |          |   |  |  |        |  |  |  |          |   | 
|                                                                        |  Unrealized prior service cost             |         |          | 346     |            |  |        |        |   |  |          |         |   |            |         |  |        |     |        |         |  |  |            |   |  |        |          |   |  |  |        |  |  |  |          |   | 
|                                                                        |  Unrealized actuarial gains/losses         |         |          | (26,349 | )          |  |        |        |   |  |          |         |   |            |         |  |        |     |        |         |  |  |            |   |  |        |          |   |  |  |        |  |  |  |          |   | 
|                                                                        | Net unrealized pension cost                 |         |          | (27,701 | )          |  |        | 7,960  |   |  |          | (19,741 | ) |            |         |  |        |     |        |         |  |  |            |   |  |        |          |   |  |  |        |  |  |  |          |   | 
|                                                                        |                                             |         |          |         |            |  |        |        |   |  |          |         |   |            |         |  |        |     |        |         |  |  |            |   |  |        |         
|Total accumulated other comprehensive income/loss as of
    December 31 |                                             |         |          |         |            |  |        |        |   |  | (337,323 | )       |   |            |         |  |        |     |        |         |  |  | (117,855   | ) |  |        |          |   |  |  |        |  |  |  | (305,401 | )



(Aktiengesetz) (Handelsgesetzbuch) 




|                          |  |      |      |  |      |  |      | 
|------------------------- |  | ---- | ---- |  | ---- |  | ---- | 
|                          |  | 2005 |      |  | 2004 | 
|                          |  |      |      |  |      | 
|                          |  |     |      |  |     | 
|Dividend per common share |  |      | 0.36 |  |      |  | 0.28 | 



D. ADDITIONAL INFORMATION




     






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     




|               |  |        |         | 
|-------------- |  | ------ | ------- | 
|               |  | (000) |        
|               |  |        |        
|Due 2007       |  |        | 148,958 | 
|Due 2008       |  |        | 114,127 | 
|Due 2009       |  |        | 90,763  | 
|Due 2010       |  |        | 72,375  | 
|Due 2011       |  |        | 61,935  | 
|Due thereafter |  |        | 168,657 | 

  




U.S.-based


U.S.-based


German-based CSB-Systems


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




U.S.-based


U.S.-based


U.S.-based court-mediated


African-based 




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|                                |  |          |           |   |        |  |           |          |  |  |         |   |  |  |         |  
|------------------------------- |  | -------- | --------- | - | ------ |  | --------- | -------- |  |  | ------- | - |  |  | ------- | -
|                                |  | 2006     |           |   | 2005   | 
|                                |  |          |           |   |        | 
|                                |  | Carrying |           |   | Fair   |  |           | Carrying |  |  | Fair    |  
|                                |  | value    |           |   | value  |  |           | value    |  |  | value   |  
|                                |  |          |           |   |        |  |           |          |  |  |         |  
|                                |  | (000)   |           |   | (000) |  |           | (000)   |  |  | (000)  |  
|Assets                          |  |          |           |   |        |  |           |          |  |  |         |   |  |  |         |  
|Financial assets and securities |  |          | 1,006,903 |   |        |  | 1,006,903 |          |  |  | 934,081 |   |  |  | 934,081 |  
|Other loans                     |  |          | 51,385    |   |        |  | 51,385    |          |  |  | 48,915  |   |  |  | 48,915  |  
|Forward exchange contracts      |  |          | 33,549    |   |        |  | 33,549    |          |  |  | 6,143   |   |  |  | 6,143   |  
|Call options (STAR hedge)       |  |          | 170,885   |   |        |  | 170,885   |          |  |  | 169,113 |   |  |  | 169,113 |  
|Liabilities                     |  |          |           |   |        |  |           |          |  |  |         |   |  |  |         |  
|Bank loans and overdrafts       |  |          | (26,170   | ) |        |  | (26,170   | )        |  |  | (24,300 | ) |  |  | (24,300 | )
|Forward exchange contracts      |  |          | (11,708   | ) |        |  | (11,708   | )        |  |  | (43,919 | ) |  |  | (43,919 | )





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















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








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|                                 |      |  |         |  |            |              |  |  |       | 
|-------------------------------- | ---- |  | ------- |  | ---------- | ------------ |  |  | ----- | 
|2006                             |     
|                                 |     
|Hedge of 12.0 million 2006 STARs |     
|                                 |     
|Buy/sell                         |      |  | Options |  |            | Strike price | 
|                                 |      |  |         |  |            |              | 
|                                 | Buy  |  |         |  | 12,000,000 |              |  |  | 42.12 | 
|                                 | Sell |  |         |  | 6,000,000  |              |  |  | 54.62 | 
|                                 | Sell |  |         |  | 3,000,000  |              |  |  | 67.12 | 

Fair value as of Dec. 31, 2006: in
(000): 20,479


|                                 |      |  |         |  |            |              |  |  |       | 
|-------------------------------- | ---- |  | ------- |  | ---------- | ------------ |  |  | ----- | 
|2006                             |     
|                                 |     
|Hedge of 15.2 million 2005 STARs |     
|                                 |     
|Buy/sell                         |      |  | Options |  |            | Strike price | 
|                                 |      |  |         |  |            |              | 
|                                 | Buy  |  |         |  | 15,200,000 |              |  |  | 30.47 | 
|                                 | Sell |  |         |  | 7,600,000  |              |  |  | 42.97 | 
|                                 | Sell |  |         |  | 3,800,000  |              |  |  | 55.47 | 

Fair value as of Dec. 31, 2006: in
(000):
132,334


|                                 |      |  |         |  |            |              |  |  |       | 
|-------------------------------- | ---- |  | ------- |  | ---------- | ------------ |  |  | ----- | 
|2006                             |     
|                                 |     
|Hedge of 12.0 million 2004 STARs |     
|                                 |     
|Buy/sell                         |      |  | Options |  |            | Strike price | 
|                                 |      |  |         |  |            |              | 
|                                 | Buy  |  |         |  | 12,000,000 |              |  |  | 33.59 | 
|                                 | Sell |  |         |  | 6,000,000  |              |  |  | 46.09 | 
|                                 | Sell |  |         |  | 3,000,000  |              |  |  | 58.59 | 

Fair value as of Dec. 31, 2006: in
(000): 18,073


|                                 |      |  |         |  |            |              |  |  |       | 
|-------------------------------- | ---- |  | ------- |  | ---------- | ------------ |  |  | ----- | 
|2005                             |     
|                                 |     
|Hedge of 15.2 million 2005 STARs |     
|                                 |     
|Buy/sell                         |      |  | Options |  |            | Strike price | 
|                                 |      |  |         |  |            |              | 
|                                 | Buy  |  |         |  | 15,200,000 |              |  |  | 30.47 | 
|                                 | Sell |  |         |  | 7,600,000  |              |  |  | 42.97 | 
|                                 | Sell |  |         |  | 3,800,000  |              |  |  | 55.47 | 

Fair value as of Dec. 31, 2005: in
(000):
107,358


|                                 |      |  |         |  |            |              |  |  |       | 
|-------------------------------- | ---- |  | ------- |  | ---------- | ------------ |  |  | ----- | 
|2005                             |     
|                                 |     
|Hedge of 12.0 million 2004 STARs |     
|                                 |     
|Buy/sell                         |      |  | Options |  |            | Strike price | 
|                                 |      |  |         |  |            |              | 
|                                 | Buy  |  |         |  | 12,000,000 |              |  |  | 33.59 | 
|                                 | Sell |  |         |  | 6,000,000  |              |  |  | 46.09 | 
|                                 | Sell |  |         |  | 3,000,000  |              |  |  | 58.59 | 

Fair value as of Dec. 31, 2005: in
(000): 22,453


|                                |      |  |         |  |           |              |  |  |       | 
|------------------------------- | ---- |  | ------- |  | --------- | ------------ |  |  | ----- | 
|2005                            |     
|                                |     
|Hedge of 8.0 million 2003 STARs |     
|                                |     
|Buy/sell                        |      |  | Options |  |           | Strike price | 
|                                |      |  |         |  |           |              | 
|                                | Buy  |  |         |  | 8,000,000 |              |  |  | 21.23 | 
|                                | Sell |  |         |  | 4,000,000 |              |  |  | 33.73 | 
|                                | Sell |  |         |  | 2,000,000 |              |  |  | 46.23 | 

Fair value as of Dec. 31, 2005: in
(000): 39,302


 




        


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


STOCK-BASED


      stock-based stock-based modified-prospective








   1-to-3


|                                |  |         |    |  |         |  |     |         |  |  |          |  |  |         |     |  |         |  |     |         |  |  |     |  |  |  |     | 
|------------------------------- |  | ------- | -- |  | ------- |  | --- | ------- |  |  | -------- |  |  | ------- | --- |  | ------- |  | --- | ------- |  |  | --- |  |  |  | --- | 
|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% | 



 


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    


 






  








F-54



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




|                                  |  |                |      |   |                |   |     |                  |  |  |        | 
|--------------------------------- |  | -------------- | ---- | - | -------------- | - | --- | ---------------- |  |  | ------ | 
|                                  |  | Calculation of |      |   | Maximum        |   |     |                 
|                                  |  | payout per %   |      |   | payout as % of |   |     | Maximum          | 
|Increase in market capitalization |  | point increase |      |   | grant value    |   |     | payout per right | 
|                                  |  |                |      |   |                |   |     |                  | 
|                                  |  |                |      |   |                |  |    
|%                                 |  |                |      | % |                |   |    
|0 to 50                           |  |                | 0.00 |   |                |   | 0   |                  |  |  | 0.00   | 
|>50 to 80                         |  |                | 0.67 |   |                |   | 20  |                  |  |  | 28.92  | 
|>80 to 90                         |  |                | 3.00 |   |                |   | 30  |                  |  |  | 43.38  | 
|>90 to 99.99                      |  |                | 5.00 |   |                |   | 50  |                  |  |  | 72.30  | 
|                                  |  |                |      |   |                |   |     |                  | 
|Total                             |  |                |      |   |                |   | 100 |                  |  |  | 144.60 | 
|                                  |  |                |      |   |                |   |     |                  | 







|                                                             |  |     
|------------------------------------------------------------ |  | ----
|                                                             |  | %   
|                                                             |  |     
|Risk-free interest rate 3.85 to 3.91 (depending on maturity)
|Expected volatility                                          |  | 23.4
|Expected dividend ratio                                      |  | 1.15












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|                        |  |      |           |  |      |  |           |      |  |  |           | 
|----------------------- |  | ---- | --------- |  | ---- |  | --------- | ---- |  |  | --------- | 
|                        |  | 2006 |           |  | 2005 |  |           | 2004 | 
|                        |  |      |           |  |      |  |           |      | 
|Expected life           |  |      | 3.5 years |  |      |  | 3.5 years |      |  |  | 2.5 years | 
|Risk-free interest rate |  |      | 3.10%     |  |      |  | 2.82%     |      |  |  | 2.65%     | 
|Expected volatility     |  |      | 24%       |  |      |  | 24%       |      |  |  | 57%       | 
|Expected dividend ratio |  |      | 0.87%     |  |      |  | 0.65%     |      |  |  | 0.45%     | 



|                                             |  |             |       |   |                  |          |        |                  |  |        |                 |  |  |  |         | 
|-------------------------------------------- |  | ----------- | ----- | - | ---------------- | -------- | ------ | ---------------- |  | ------ | --------------- |  |  |  | ------- | 
|                                             |  |             |       |   |                  | Weighted |        |                  | 
|                                             |  | Number      |       |   | Weighted average |          |        | average          |  |        |                
|                                             |  | of options  |       |   | exercise price   |          |        | remaining        |  |        | Aggregate       | 
|                                             |  | outstanding |       |   | per option       |          |        | contractual term |  |        | intrinsic value | 
|                                             |  |             |       |   |                  |          |        |                  |  |        |                 | 
|                                             |  |             |       |  |                  |          |        |                  | 
|                                             |  | (000)       |       |   |                  |          | years  |                  |  | (000) |                
|12/31/2005                                   |  |             | 6,669 |   |                  |          | 127.02 |                  |  |        |                 |  |  |  |         | 
|Granted                                      |  |             | 1,841 |   |                  |          | 185.93 |                  |  |        |                |  |  |  |        | 
|Exercised                                    |  |             | (900  | ) |                  |          | 114.23 |                  |  |        |                |  |  |  |        | 
|Forfeited or expired                         |  |             | (164  | ) |                  |          | 152.77 |                  |  |        |                |  |  |  |        | 
|                                             |  |             |       |   |                  |          |        |                  |  |        |                 | 
|12/31/2006                                   |  |             | 7,446 |   |                  |          | 142.57 |                  |  |        | 2.8             |  |  |  | 181,846 | 
|                                             |  |             |       |   |                  |          |        |                  |  |        |                 | 
|Fully vested options as of December 31, 2006 |  |             | 2,905 |   |                  |          | 123.95 |                  |  |        | 1.7             |  |  |  | 107,763 | 

weighted-average grant-date      


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|                               |  |           |        |                  |            |  |       | 
|------------------------------ |  | --------- | ------ | ---------------- | ---------- |  | ----- | 
|                               |  |           |        | Weighted average |           
|                               |  | Number of |        |                  | grant-date | 
|                               |  | options   |        |                  | fair value | 
|                               |  |           |        |                  |            | 
|                               |  |           |        |                 |           
|                               |  | (000)    |        |                  |           
|Nonvested at January 1, 2006   |  |           | 4,846  |                  |            |  | 29.81 | 
|Granted                        |  |           | 1,842  |                  |            |  | 26.47 | 
|Vested                         |  |           | (2,000 | )                |            |  | 43.61 | 
|Forfeited                      |  |           | (147   | )                |            |  | 23.21 | 
|                               |  |           |        |                  |            | 
|Nonvested at December 31, 2006 |  |           | 4,541  |                  |            |  | 22.59 | 
|                               |  |           |        |                  |            | 






stock-based 




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|                  |  |             |       |   |                  |          |        |                  |  |        |                 |  |  |  |           | 
|----------------- |  | ----------- | ----- | - | ---------------- | -------- | ------ | ---------------- |  | ------ | --------------- |  |  |  | --------- | 
|                  |  |             |       |   |                  | Weighted |        |                  | 
|                  |  | Number      |       |   | Weighted average |          |        | average          |  |        |                
|                  |  | of options  |       |   | exercise price   |          |        | remaining        |  |        | Aggregate       | 
|                  |  | outstanding |       |   | per option       |          |        | contractual term |  |        | intrinsic value | 
|                  |  |             |       |   |                  |          |        |                  |  |        |                 | 
|                  |  |             |       |  |                  |          |        |                  | 
|                  |  | (000)       |       |   |                  |          | years  |                  |  | (000) |                
|Stock options     |  |             |       |   |                  |          |        |                  |  |        |                 |  |  |  |           | 
|12/31/2005        |  |             | 1,467 |   |                  |          | 107.44 |                  |  |        |                 |  |  |  |           | 
|Granted           |  |             |      |   |                  |          |       |                  |  |        |                 |  |  |  |           | 
|Exercised         |  |             | (435  | ) |                  |          | 108.00 |                  |  |        |                 |  |  |  |           | 
|Forfeited         |  |             | (22   | ) |                  |          | 105.04 |                  |  |        |                 |  |  |  |           | 
|                  |  |             |       |   |                  |          |        |                  |  |        |                 | 
|12/31/2006        |  |             | 1,010 |   |                  |          | 106.15 |                  |  |        | 4.7             |  |  |  | 55,465.24 | 
|                  |  |             |       |   |                  |          |        |                  |  |        |                 | 
|Convertible bonds |  |             |       |   |                  |          |        |                  |  |        |                 |  |  |  |           | 
|12/31/2005        |  |             | 6,925 |   |                  |          | 200.31 |                  |  |        |                 |  |  |  |           | 
|Granted           |  |             |      |   |                  |          |       |                  |  |        |                 |  |  |  |           | 
|Exercised         |  |             | (334  | ) |                  |          | 151.54 |                  |  |        |                 |  |  |  |           | 
|Forfeited         |  |             | (180  | ) |                  |          | 149.93 |                  |  |        |                 |  |  |  |           | 
|                  |  |             |       |   |                  |          |        |                  |  |        |                 | 
|12/31/2006        |  |             | 6,411 |   |                  |          | 202.20 |                  |  |        | 4.2             |  |  |  | 21,569.64 | 
|                  |  |             |       |   |                  |          |        |                  |  |        |                 | 



  


     




Disclosures About Segments of an Enterprise
and Related Disclosures






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|                              |  |         |            |   |            |  |            |          |  |  |          |   |  |  |            |  
|----------------------------- |  | ------- | ---------- | - | ---------- |  | ---------- | -------- |  |  | -------- | - |  |  | ---------- | -
|                              |  | 2006    |           
|                              |  |         |           
|                              |  | Product |            |   | Consulting |  |            | Training |  |  | Total    |  
|                              |  |         |            |   |            |  |            |          |  |  |          |  
|                              |  | (000)  |            |   | (000)     |  |            | (000)   |  |  | (000)   |  
|External revenue              |  |         | 6,652,370  |   |            |  | 2,300,056  |          |  |  | 440,257  |   |  |  | 9,392,683  |  
|Depreciation and amortization |  |         | (83,542    | ) |            |  | (23,078    | )        |  |  | (6,558   | ) |  |  | (113,178   | )
|Other segment expenses        |  |         | (2,544,717 | ) |            |  | (1,679,488 | )        |  |  | (266,164 | ) |  |  | (4,490,369 | )
|                              |  |         |            |   |            |  |            |          |  |  |          |  
|Segment contribution          |  |         | 4,024,111  |   |            |  | 597,490    |          |  |  | 167,535  |   |  |  | 4,789,136  |  
|                              |  |         |            |   |            |  |            |          |  |  |          |  
|Segment profitability         |  |         | 60.5%      |   |            |  | 26.0%      |          |  |  | 38.1%    |   |  |  |            |  

|                              |  |         |            |   |            |  |            |          |  |  |          |   |  |  |            |  
|----------------------------- |  | ------- | ---------- | - | ---------- |  | ---------- | -------- |  |  | -------- | - |  |  | ---------- | -
|                              |  | 2005    |           
|                              |  |         |           
|                              |  | Product |            |   | Consulting |  |            | Training |  |  | Total    |  
|                              |  |         |            |   |            |  |            |          |  |  |          |  
|                              |  | (000)  |            |   | (000)     |  |            | (000)   |  |  | (000)   |  
|External revenue              |  |         | 6,044,338  |   |            |  | 2,078,091  |          |  |  | 380,209  |   |  |  | 8,502,638  |  
|Depreciation and amortization |  |         | (81,723    | ) |            |  | (24,055    | )        |  |  | (7,054   | ) |  |  | (112,832   | )
|Other segment expenses        |  |         | (2,370,747 | ) |            |  | (1,594,979 | )        |  |  | (240,914 | ) |  |  | (4,206,640 | )
|                              |  |         |            |   |            |  |            |          |  |  |          |  
|Segment contribution          |  |         | 3,591,868  |   |            |  | 459,057    |          |  |  | 132,241  |   |  |  | 4,183,166  |  
|                              |  |         |            |   |            |  |            |          |  |  |          |  
|Segment profitability         |  |         | 59.4%      |   |            |  | 22.1%      |          |  |  | 34.8%    |   |  |  |            |  

|                              |  |         |            |   |            |  |            |          |  |  |          |   |  |  |            |  
|----------------------------- |  | ------- | ---------- | - | ---------- |  | ---------- | -------- |  |  | -------- | - |  |  | ---------- | -
|                              |  | 2004    |           
|                              |  |         |           
|                              |  | Product |            |   | Consulting |  |            | Training |  |  | Total    |  
|                              |  |         |            |   |            |  |            |          |  |  |          |  
|                              |  | (000)  |            |   | (000)     |  |            | (000)   |  |  | (000)   |  
|External revenue              |  |         | 5,292,941  |   |            |  | 1,910,292  |          |  |  | 306,591  |   |  |  | 7,509,824  |  
|Depreciation and amortization |  |         | (84,166    | ) |            |  | (24,885    | )        |  |  | (8,047   | ) |  |  | (117,098   | )
|Other segment expenses        |  |         | (1,973,933 | ) |            |  | (1,459,108 | )        |  |  | (200,954 | ) |  |  | (3,633,995 | )
|                              |  |         |            |   |            |  |            |          |  |  |          |  
|Segment contribution          |  |         | 3,234,842  |   |            |  | 426,299    |          |  |  | 97,590   |   |  |  | 3,758,731  |  
|                              |  |         |            |   |            |  |            |          |  |  |          |  
|Segment profitability         |  |         | 61.1%      |   |            |  | 22.3%      |          |  |  | 31.8%    |   |  |  |            |  





F-59



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##### Table of Contents







|                                      |  |        |           |  |        |  |           |        |  |  |           | 
|------------------------------------- |  | ------ | --------- |  | ------ |  | --------- | ------ |  |  | --------- | 
|                                      |  | 2006   |           |  | 2005   |  |           | 2004   | 
|                                      |  |        |           |  |        |  |           |        | 
|                                      |  | (000) |           |  | (000) |  |           | (000) | 
|Total revenue for reportable segments |  |        | 9,392,683 |  |        |  | 8,502,638 |        |  |  | 7,509,824 | 
|Other external revenues               |  |        | 9,033     |  |        |  | 10,349    |        |  |  | 4,474     | 
|Other differences                     |  |        | 407       |  |        |  | (558      | )      |  |  | 195       | 
|                                      |  |        |           |  |        |  |           |        | 
|Total consolidated revenue            |  |        | 9,402,123 |  |        |  | 8,512,429 |        |  |  | 7,514,493 | 
|                                      |  |        |           |  |        |  |           |        | 





  




|                                                             |  |        |            |   |        |  |            |        |  |  |            |  
|------------------------------------------------------------ |  | ------ | ---------- | - | ------ |  | ---------- | ------ |  |  | ---------- | -
|                                                             |  | 2006   |            |   | 2005   |  |            | 2004   | 
|                                                             |  |        |            |   |        |  |            |        | 
|                                                             |  | (000) |            |   | (000) |  |            | (000) | 
|Total contribution for reportable segments                   |  |        | 4,789,136  |   |        |  | 4,183,166  |        |  |  | 3,758,731  |  
|Contribution from activities outside the reportable segments |  |        | (2,082,073 | ) |        |  | (1,773,325 | )      |  |  | (1,672,252 | )
|Acquisition-related charges                                  |  |        | (43,090    | ) |        |  | (33,664    | )      |  |  | (30,221    | )
|Stock-based compensation expenses                            |  |        | (99,449    | ) |        |  | (45,042    | )      |  |  | (38,126    | )
|Other differences                                            |  |        | 870        |   |        |  | (403       | )      |  |  | 249        |  
|                                                             |  |        |            |   |        |  |            |        | 
|Operating income                                             |  |        | 2,565,394  |   |        |  | 2,330,732  |        |  |  | 2,018,381  |  
|                                                             |  |        |            |   |        |  |            |        | 
|Other non-operating income/expenses, net                     |  |        | (12,303    | ) |        |  | (25,161    | )      |  |  | 13,274     |  
|Finance income/expense, net                                  |  |        | 121,708    |   |        |  | 10,785     |        |  |  | 40,987     |  
|                                                             |  |        |            |   |        |  |            |        | 
|Income before income taxes and minority interest             |  |        | 2,674,799  |   |        |  | 2,316,356  |        |  |  | 2,072,642  |  
|                                                             |  |        |            |   |        |  |            |        | 



F-60



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##### Table of Contents



  
















|                           |  |                              |           |  |                       |  |           |        |  |  |           |  |  |        |           |  |        |  |           |  |  |  |           | 
|-------------------------- |  | ---------------------------- | --------- |  | --------------------- |  | --------- | ------ |  |  | --------- |  |  | ------ | --------- |  | ------ |  | --------- |  |  |  | --------- | 
|                           |  | Revenue by sales destination |           |  | Revenue by operations | 
|                           |  |                              |           |  |                       | 
|                           |  | 2006                         |           |  | 2005                  |  |           | 2004   |  |  | 2006      |  |  | 2005   |           |  | 2004   | 
|                           |  |                              |           |  |                       |  |           |        |  |  |           |  |  |        |           |  |        | 
|                           |  | (000)                       |           |  | (000)                |  |           | (000) |  |  | (000)    |  |  | (000) |           |  | (000) | 
|Germany                    |  |                              | 1,907,428 |  |                       |  | 1,810,342 |        |  |  | 1,780,128 |  |  |        | 2,030,432 |  |        |  | 1,906,018 |  |  |  | 1,875,081 | 
|Rest of
    EMEA(1)        |  |                              | 2,994,281 |  |                       |  | 2,702,429 |        |  |  | 2,443,383 |  |  |        | 2,959,511 |  |        |  | 2,670,304 |  |  |  | 2,411,294 | 
|                           |  |                              |           |  |                       |  |           |        |  |  |           |  |  |        |           |  |        | 
|Total EMEA                 |  |                              | 4,901,709 |  |                       |  | 4,512,771 |        |  |  | 4,223,511 |  |  |        | 4,989,943 |  |        |  | 4,576,322 |  |  |  | 4,286,375 | 
|                           |  |                              |           |  |                       |  |           |        |  |  |           |  |  |        |           |  |        | 
|United States              |  |                              | 2,616,923 |  |                       |  | 2,342,808 |        |  |  | 1,893,746 |  |  |        | 2,596,586 |  |        |  | 2,343,466 |  |  |  | 1,880,247 | 
|Rest of Americas           |  |                              | 776,336   |  |                       |  | 656,789   |        |  |  | 530,043   |  |  |        | 753,108   |  |        |  | 653,938   |  |  |  | 513,586   | 
|                           |  |                              |           |  |                       |  |           |        |  |  |           |  |  |        |           |  |        | 
|Total Americas             |  |                              | 3,393,259 |  |                       |  | 2,999,597 |        |  |  | 2,423,789 |  |  |        | 3,349,694 |  |        |  | 2,997,404 |  |  |  | 2,393,833 | 
|                           |  |                              |           |  |                       |  |           |        |  |  |           |  |  |        |           |  |        | 
|Japan                      |  |                              | 431,253   |  |                       |  | 406,173   |        |  |  | 387,443   |  |  |        | 429,118   |  |        |  | 402,226   |  |  |  | 385,013   | 
|Rest of Asia Pacific Japan |  |                              | 675,902   |  |                       |  | 593,888   |        |  |  | 479,750   |  |  |        | 633,368   |  |        |  | 536,477   |  |  |  | 449,272   | 
|                           |  |                              |           |  |                       |  |           |        |  |  |           |  |  |        |           |  |        | 
|Total Asia Pacific Japan   |  |                              | 1,107,155 |  |                       |  | 1,000,061 |        |  |  | 867,193   |  |  |        | 1,062,486 |  |        |  | 938,703   |  |  |  | 834,285   | 
|                           |  |                              |           |  |                       |  |           |        |  |  |           |  |  |        |           |  |        | 
|                           |  |                              | 9,402,123 |  |                       |  | 8,512,429 |        |  |  | 7,514,493 |  |  |        | 9,402,123 |  |        |  | 8,512,429 |  |  |  | 7,514,493 | 
|                           |  |                              |           |  |                       |  |           |        |  |  |           |  |  |        |           |  |        | 

F-61



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##### Table of Contents



|                           |  |                             |           |  |              |  |           |        |  |  |           |  |  |        |           |  |        |  |           |  |  |  |           | 
|-------------------------- |  | --------------------------- | --------- |  | ------------ |  | --------- | ------ |  |  | --------- |  |  | ------ | --------- |  | ------ |  | --------- |  |  |  | --------- | 
|                           |  | Income before income tax(2) |           |  | Total assets | 
|                           |  |                             |           |  |              | 
|                           |  | 2006                        |           |  | 2005         |  |           | 2004   |  |  | 2006      |  |  | 2005   |           |  | 2004   | 
|                           |  |                             |           |  |              |  |           |        |  |  |           |  |  |        |           |  |        | 
|                           |  | (000)                      |           |  | (000)       |  |           | (000) |  |  | (000)    |  |  | (000) |           |  | (000) | 
|Germany                    |  |                             | 2,041,868 |  |              |  | 2,001,816 |        |  |  | 1,528,052 |  |  |        | 3,866,193 |  |        |  | 4,202,554 |  |  |  | 3,567,090 | 
|Rest of
    EMEA(1)        |  |                             | 505,915   |  |              |  | 345,573   |        |  |  | 335,768   |  |  |        | 1,556,075 |  |        |  | 1,368,949 |  |  |  | 1,376,879 | 
|                           |  |                             |           |  |              |  |           |        |  |  |           |  |  |        |           |  |        | 
|Total EMEA                 |  |                             | 2,547,783 |  |              |  | 2,347,389 |        |  |  | 1,863,820 |  |  |        | 5,422,268 |  |        |  | 5,571,503 |  |  |  | 4,943,969 | 
|                           |  |                             |           |  |              |  |           |        |  |  |           |  |  |        |           |  |        | 
|United States              |  |                             | 470,261   |  |              |  | 417,124   |        |  |  | 265,344   |  |  |        | 2,919,074 |  |        |  | 2,361,033 |  |  |  | 1,866,987 | 
|Rest of Americas           |  |                             | 80,808    |  |              |  | 68,821    |        |  |  | 21,593    |  |  |        | 517,900   |  |        |  | 528,741   |  |  |  | 288,370   | 
|                           |  |                             |           |  |              |  |           |        |  |  |           |  |  |        |           |  |        | 
|Total Americas             |  |                             | 551,069   |  |              |  | 485,945   |        |  |  | 286,937   |  |  |        | 3,436,974 |  |        |  | 2,889,774 |  |  |  | 2,155,357 | 
|                           |  |                             |           |  |              |  |           |        |  |  |           |  |  |        |           |  |        | 
|Japan                      |  |                             | 56,364    |  |              |  | 39,176    |        |  |  | 38,752    |  |  |        | 147,735   |  |        |  | 153,137   |  |  |  | 151,712   | 
|Rest of Asia Pacific Japan |  |                             | 140,664   |  |              |  | 93,717    |        |  |  | 62,027    |  |  |        | 497,867   |  |        |  | 448,328   |  |  |  | 334,434   | 
|                           |  |                             |           |  |              |  |           |        |  |  |           |  |  |        |           |  |        | 
|Total Asia Pacific Japan   |  |                             | 197,028   |  |              |  | 132,893   |        |  |  | 100,779   |  |  |        | 645,602   |  |        |  | 601,465   |  |  |  | 486,146   | 
|                           |  |                             |           |  |              |  |           |        |  |  |           |  |  |        |           |  |        | 
|                           |  |                             | 3,295,880 |  |              |  | 2,966,227 |        |  |  | 2,251,536 |  |  |        | 9,504,844 |  |        |  | 9,062,742 |  |  |  | 7,585,472 | 
|                           |  |                             |           |  |              |  |           |        |  |  |           |  |  |        |           |  |        | 

|                           |  |                                |           |  |                      |  |           |        |  |  |         |  |  |        |         |  |        |  |         |  |  |  |         | 
|-------------------------- |  | ------------------------------ | --------- |  | -------------------- |  | --------- | ------ |  |  | ------- |  |  | ------ | ------- |  | ------ |  | ------- |  |  |  | ------- | 
|                           |  | Property, plant, and equipment |           |  | Capital expenditures | 
|                           |  |                                |           |  |                      | 
|                           |  | 2006                           |           |  | 2005                 |  |           | 2004   |  |  | 2006    |  |  | 2005   |         |  | 2004   | 
|                           |  |                                |           |  |                      |  |           |        |  |  |         |  |  |        |         |  |        | 
|                           |  | (000)                         |           |  | (000)               |  |           | (000) |  |  | (000)  |  |  | (000) |         |  | (000) | 
|Germany                    |  |                                | 858,354   |  |                      |  | 764,175   |        |  |  | 702,500 |  |  |        | 205,657 |  |        |  | 170,358 |  |  |  | 117,187 | 
|Rest of
    EMEA(1)        |  |                                | 132,804   |  |                      |  | 129,427   |        |  |  | 128,347 |  |  |        | 34,248  |  |        |  | 27,586  |  |  |  | 27,003  | 
|                           |  |                                |           |  |                      |  |           |        |  |  |         |  |  |        |         |  |        | 
|Total EMEA                 |  |                                | 991,158   |  |                      |  | 893,602   |        |  |  | 830,847 |  |  |        | 239,905 |  |        |  | 197,944 |  |  |  | 144,190 | 
|                           |  |                                |           |  |                      |  |           |        |  |  |         |  |  |        |         |  |        | 
|United States              |  |                                | 152,356   |  |                      |  | 154,650   |        |  |  | 132,590 |  |  |        | 33,653  |  |        |  | 22,030  |  |  |  | 11,689  | 
|Rest of Americas           |  |                                | 9,640     |  |                      |  | 8,531     |        |  |  | 5,371   |  |  |        | 6,741   |  |        |  | 4,568   |  |  |  | 3,226   | 
|                           |  |                                |           |  |                      |  |           |        |  |  |         |  |  |        |         |  |        | 
|Total Americas             |  |                                | 161,996   |  |                      |  | 163,181   |        |  |  | 137,961 |  |  |        | 40,394  |  |        |  | 26,598  |  |  |  | 14,915  | 
|                           |  |                                |           |  |                      |  |           |        |  |  |         |  |  |        |         |  |        | 
|Japan                      |  |                                | 4,147     |  |                      |  | 4,383     |        |  |  | 5,377   |  |  |        | 2,240   |  |        |  | 1,981   |  |  |  | 1,959   | 
|Rest of Asia Pacific Japan |  |                                | 48,894    |  |                      |  | 33,799    |        |  |  | 24,898  |  |  |        | 29,266  |  |        |  | 14,157  |  |  |  | 10,924  | 
|                           |  |                                |           |  |                      |  |           |        |  |  |         |  |  |        |         |  |        | 
|Total Asia Pacific Japan   |  |                                | 53,041    |  |                      |  | 38,182    |        |  |  | 30,275  |  |  |        | 31,506  |  |        |  | 16,138  |  |  |  | 12,883  | 
|                           |  |                                |           |  |                      |  |           |        |  |  |         |  |  |        |         |  |        | 
|                           |  |                                | 1,206,195 |  |                      |  | 1,094,965 |        |  |  | 999,083 |  |  |        | 311,805 |  |        |  | 240,680 |  |  |  | 171,988 | 
|                           |  |                                |           |  |                      |  |           |        |  |  |         |  |  |        |         |  |        | 






|    |                                                                
|--- | ---------------------------------------------------------------
|(1) | Europe/ Middle East/ Africa.                                   
|   
|(2) | Figures of the unconsolidated Stand-alone Financial Statements.

|                           |  |              |         |                              |                          |  |         |        |  |  |         |  |  |        |        |  |        |  |        |  |  |  |        | 
|-------------------------- |  | ------------ | ------- | ---------------------------- | ------------------------ |  | ------- | ------ |  |  | ------- |  |  | ------ | ------ |  | ------ |  | ------ |  |  |  | ------ | 
|                           |  |              |         | Employees as of December 31, |                         
|                           |  | Depreciation |         |                              | in full-time equivalents | 
|                           |  |              |         |                              |                          | 
|                           |  | 2006         |         |                              | 2005                     |  |         | 2004   |  |  | 2006    |  |  | 2005   |        |  | 2004   | 
|                           |  |              |         |                              |                          |  |         |        |  |  |         |  |  |        |        |  |        | 
|                           |  | (000)       |         |                              | (000)                   |  |         | (000) |  |  | (000)  |  |  | (000) |        |  | (000) | 
|Germany                    |  |              | 93,866  |                              |                          |  | 101,097 |        |  |  | 109,714 |  |  |        | 14,214 |  |        |  | 13,916 |  |  |  | 13,525 | 
|Rest of
    EMEA(1)        |  |              | 24,790  |                              |                          |  | 24,916  |        |  |  | 24,862  |  |  |        | 8,146  |  |        |  | 7,813  |  |  |  | 7,133  | 
|                           |  |              |         |                              |                          |  |         |        |  |  |         |  |  |        |        |  |        | 
|Total EMEA                 |  |              | 118,656 |                              |                          |  | 126,013 |        |  |  | 134,576 |  |  |        | 22,360 |  |        |  | 21,729 |  |  |  | 20,658 | 
|                           |  |              |         |                              |                          |  |         |        |  |  |         |  |  |        |        |  |        | 
|United States              |  |              | 20,457  |                              |                          |  | 18,001  |        |  |  | 18,211  |  |  |        | 6,958  |  |        |  | 6,019  |  |  |  | 5,143  | 
|Rest of Americas           |  |              | 3,785   |                              |                          |  | 2,798   |        |  |  | 1,985   |  |  |        | 2,267  |  |        |  | 1,934  |  |  |  | 1,541  | 
|                           |  |              |         |                              |                          |  |         |        |  |  |         |  |  |        |        |  |        | 
|Total Americas             |  |              | 24,242  |                              |                          |  | 20,799  |        |  |  | 20,196  |  |  |        | 9,225  |  |        |  | 7,953  |  |  |  | 6,684  | 
|                           |  |              |         |                              |                          |  |         |        |  |  |         |  |  |        |        |  |        | 
|Japan                      |  |              | 1,925   |                              |                          |  | 2,958   |        |  |  | 3,778   |  |  |        | 1,236  |  |        |  | 1,264  |  |  |  | 1,340  | 
|Rest of Asia Pacific Japan |  |              | 10,712  |                              |                          |  | 7,936   |        |  |  | 5,916   |  |  |        | 6,534  |  |        |  | 4,927  |  |  |  | 3,523  | 
|                           |  |              |         |                              |                          |  |         |        |  |  |         |  |  |        |        |  |        | 
|Total Asia Pacific Japan   |  |              | 12,637  |                              |                          |  | 10,894  |        |  |  | 9,694   |  |  |        | 7,770  |  |        |  | 6,191  |  |  |  | 4,863  | 
|                           |  |              |         |                              |                          |  |         |        |  |  |         |  |  |        |        |  |        | 
|                           |  |              | 155,535 |                              |                          |  | 157,706 |        |  |  | 164,466 |  |  |        | 39,355 |  |        |  | 35,873 |  |  |  | 32,205 | 
|                           |  |              |         |                              |                          |  |         |        |  |  |         |  |  |        |        |  |        | 






|    |                             
|--- | ----------------------------
|(1) | Europe/ Middle East/ Africa.

F-62



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##### Table of Contents







|                    |  |                                   |           |  |                                          |  |           |        |  |  |           |  |  |        |           |  |        |  |           |  |  |  |           | 
|------------------- |  | --------------------------------- | --------- |  | ---------------------------------------- |  | --------- | ------ |  |  | --------- |  |  | ------ | --------- |  | ------ |  | --------- |  |  |  | --------- | 
|                    |  | Total revenue by industry sectors |           |  | Software revenues by industry sectors(1) | 
|                    |  |                                   |           |  |                                          | 
|                    |  | 2006                              |           |  | 2005                                     |  |           | 2004   |  |  | 2006      |  |  | 2005   |           |  | 2004   | 
|                    |  |                                   |           |  |                                          |  |           |        |  |  |           |  |  |        |           |  |        | 
|                    |  | (000)                            |           |  | (000)                                   |  |           | (000) |  |  | (000)    |  |  | (000) |           |  | (000) | 
|Process industries  |  |                                   | 1,996,408 |  |                                          |  | 1,765,909 |        |  |  | 1,469,136 |  |  |        | 731,300   |  |        |  | 659,346   |  |  |  | 489,024   | 
|Discrete industries |  |                                   | 2,180,924 |  |                                          |  | 1,986,113 |        |  |  | 1,807,871 |  |  |        | 718,171   |  |        |  | 638,441   |  |  |  | 550,444   | 
|Consumer industries |  |                                   | 1,666,666 |  |                                          |  | 1,457,006 |        |  |  | 1,349,825 |  |  |        | 538,949   |  |        |  | 463,504   |  |  |  | 426,547   | 
|Service industries  |  |                                   | 2,134,471 |  |                                          |  | 1,946,026 |        |  |  | 1,673,901 |  |  |        | 628,289   |  |        |  | 552,120   |  |  |  | 455,054   | 
|Financial services  |  |                                   | 590,861   |  |                                          |  | 543,360   |        |  |  | 519,115   |  |  |        | 183,516   |  |        |  | 179,046   |  |  |  | 197,511   | 
|Public services     |  |                                   | 832,793   |  |                                          |  | 814,015   |        |  |  | 694,645   |  |  |        | 271,066   |  |        |  | 290,294   |  |  |  | 242,432   | 
|                    |  |                                   |           |  |                                          |  |           |        |  |  |           |  |  |        |           |  |        | 
|                    |  |                                   | 9,402,123 |  |                                          |  | 8,512,429 |        |  |  | 7,514,493 |  |  |        | 3,071,291 |  |        |  | 2,782,751 |  |  |  | 2,361,012 | 
|                    |  |                                   |           |  |                                          |  |           |        |  |  |           |  |  |        |           |  |        | 






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

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|                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                   |  | Membership on other supervisory boards and comparable governing                                                                                                                                                                                                     
|                                                                                                                                                                                                   |  | bodies of enterprises, other than subsidiaries of the Company, in                                                                                                                                                                                                   
|                                                                                                                                                                                                   |  | Germany and other countries, on                                                                                                                                                                                                                                     
|                                                                                                                                                                                                   |  | December 31, 2006(1)                                                                                                                                                                                                                                                
|                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                     
|Prof. Dr. Henning Kagermann                                                                                                                                                                        |  |                                                                                                                                                                                                                                                                     
|Chief Executive Officer
    Overall responsibility for SAPs strategy and business
    development, Global Communications, Global Intellectual
    Property, Internal Audit, Top Talent Management |  | Supervisory Board, Deutsche Bank AG, Frankfurt am Main,
    Germany
    Supervisory Board, Münchener Rückversicherungs-
    Gesellschaft AG, Munich, Germany
    Supervisory Board, DaimlerChrysler Financial Services AG,
    Berlin, Germany (until July 31, 2006)
|Shai AgassiProduct development and technology, Industry solutions,
    Product and industry marketing                                                                                              |  |                                                                                                                                                                                                                                                                     
|Léo Apotheker                                                                                                                                                                                      |  |                                                                                                                                                                                                                                                                     
|Sales, Consulting, Education, Marketing                                                                                                                                                            |  | Supervisory Board, AXA, Paris, France
    Supervisory Board, Ginger Group, Paris, France (until
    January 12, 2007)                                                                                                                                               
|Dr. Werner Brandt                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                     
|Chief Financial Officer
    Finance and Administration, Shared Services, SAP Ventures                                                                                                              |  | Supervisory Board, LSG Lufthansa Service Holding AG,
    Neu-Isenburg, Germany                                                                                                                                                                                      
|Prof. Dr. Claus E. HeinrichLabor Relations Director
    Global Human Resources, Quality Management, Internal IT, SAP Labs                                                                          |  |                                                                                                                                                                                                                                                                     
|Gerhard OswaldGlobal Service and Support, Custom Development, new
    dedicated midmarket solution                                                                                                 |  |                                                                                                                                                                                                                                                                     
|Dr. Peter ZenckeResearch, Application Platform, new dedicated midmarket
    solution                                                                                                               |  | Supervisory Board, SupplyOn AG, Hallbergmoos, Germany                                                                                                                                                                                                               






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

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|                                                                                                                                                                                                                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                             |  | Membership on other supervisory boards and comparable                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                             |  | governing bodies of enterprises other than the Company, in                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                             |  | Germany and other countries on December 31, 2006                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Prof. Dr. h.c. mult. Hasso Plattner
    (2), (4),
    (5), (7)Chairman of the Supervisory Board                                                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Helga
    Classen(1),
    (4), (7)Deputy Chairperson
    Chairperson of the Works Council of
    SAP AG and SAP Hosting AG & Co. KG                                                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Pekka
    Ala-Pietilä(5)Executive Advisor to the CEO of Nokia Corporation,
    Espoo, Finland (until January 31, 2006)
    Co-founder and CEO Blyk Ltd., London, Great Britain (from
    April 12, 2006)                                     |  | Board of Directors, Pöyry Plc, Vantaa, Finland (from
    March 7, 2006)
    Board of Directors, CVON Group Limited (UK), London, Great
    Britain (from March 28, 2006)
    Board of Directors, CVON Group
    (UK), London, Great Britain (from March 28, 2006)
    Board of Directors, CVON Innovations Limited (UK), London, Great
    Britain (from July 10, 2006)
    Board of Directors, Blyk Services Oy (Finland), Helsinki,
    Finland (from May 12, 2006)
|Willi
    Burbach(1),
    (4), (5)Developer                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Prof. Dr. Wilhelm
    Haarmann(2),
    (6), (7)Attorney-at-law, certified public auditor, certified
    tax advisor HAARMANN Partnerschaftsgesellschaft,
    Rechtsanwälte, Steuerberater, Wirtschaftsprüfer,
    Frankfurt am Main, Germany |  | Supervisory Board, Aareon AG (formerly Depfa IT Services),
    Mainz, Germany
    Supervisory Board, Vodafone Deutschland GmbH, Düsseldorf,
    Germany                                                                                                                                                                                                                                                                                                              
|Bernhard
    Koller(1),
    (3)Manager of idea management                                                                                                                                                                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Christiane
    Kuntz-Mayr(1),
    (5), (7)Development architect                                                                                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Lars
    Lamadé(1),
    (6)Project Manager Service & Support                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Dr. Gerhard
    Maier(1),
    (2), (6)Development project manager                                                                                                                                                                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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|                                                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                         |  | Membership on other supervisory boards and comparable                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                         |  | governing bodies of enterprises other than the Company, in                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                         |  | Germany and other countries on December 31, 2006                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Dr. h.c. Hartmut
    Mehdorn(4)Chairman of the Executive Board, Deutsche
    Bahn AG, Berlin, Germany                    |  | Supervisory Board, DB Netz AG, Frankfurt am Main, Germany
    Supervisory Board, DEVK Deutsche Eisenbahn Versicherung
    Lebensversicherungsverein a.G., 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, DB Magnetbahn GmbH, Munich, Germany (from
    March 27, 2006)       
|Prof. Dr. Dr. h.c. mult. August-Wilhelm
    Scheer(5),
    (6)Professor at Saarland University, Saarbrücken,
    Germany |  | Supervisory Board, IDS Scheer AG, Saarbrücken, Germany
    Supervisory Board, imc information multimedia communication AG,
    Saarbrücken, Germany
    Board of Trustees, Hasso-Plattner-Stiftung für
    Software-systemtechnik, Potsdam, Germany
    Supervisory Board, Saarbrücker Zeitung Verlag und Druckerei
    GmbH, Saarbrücken, Germany
    Member of the Senate, Fraunhofer-Gesellschaft zur
    För-derung der angewandten Forschung e.V., Munich, Germany
|Dr. Barbara
    Schennerlein(1),
    (7)Principal consultant                                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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|                                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                              |  | Membership on other supervisory boards and comparable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                              |  | governing bodies of enterprises other than the Company, in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                              |  | Germany and other countries on December 31, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Dr. Erhard
    Schipporeit(3)Former member of the Executive
    Board, E.ON AG, Düsseldorf, Germany
    Management Consultant |  | Supervisory Board, Commerzbank AG, Frankfurt am Main, Germany
    Supervisory Board, Talanx AG, Hanover, Germany
    Supervisory Board, Deutsche Börse AG, Frankfurt am Main,
    Germany
    Supervisory Board, HDI V.a.G., Hanover, Germany
    Supervisory Board, Degussa AG, Düsseldorf, Germany (until
    December 31, 2006)
    Supervisory Board, E.ON Ruhrgas AG, Essen, Germany (until
    December 31, 2006)
    Supervisory Board, E.ON IS GmbH, Hanover, Germany (until
    December 31, 2006)
    Supervisory Board, E.ON Risk Consulting GmbH, Düsseldorf,
    Germany (until December 31, 2006)
    Supervisory Board, E.ON Audit Services, Düsseldorf, Germany
    (until December 31, 2006)
    Supervisory Board, E.ON UK plc, Coventry, UK (until
    December 31, 2006)
    Supervisory Board, E.ON US Investment Corp., Delaware, USA
    (until December 31, 2006)
|Stefan
    Schulz(1),
    (3), (5)Development Project Manager                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Dr. Dieter
    Spöri(7)Head of Corporate Representation Federal Affairs,
    DaimlerChrysler AG, Berlin, Germany              |  | Advisory Council, Contraf Nicotex Tobacco GmbH, Heilbronn,
    Germany                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Dr. h.c. Klaus
    Tschira(3)Managing Director, Klaus Tschira Foundation gGmbH,
    Heidelberg, Germany                       |  | Supervisory Board, SRH Learnlife AG, Heidelberg, Germany
    Member of the Senate, Max-Planck-Gesellschaft zur Förderung
    der Wissenschaften e.V., Munich, Germany                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    






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

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       


   






20-F










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    




   interest-free below-market-rate




Treuhand-Gesellschaft


|                   |  |        |       |  |        |  |       |        |  |  |       | 
|------------------ |  | ------ | ----- |  | ------ |  | ----- | ------ |  |  | ----- | 
|                   |  | 2006   |       |  | 2005   |  |       | 2004   | 
|                   |  |        |       |  |        |  |       |        | 
|                   |  | (000) |       |  | (000) |  |       | (000) | 
|Audit fees         |  |        | 7,435 |  |        |  | 5,234 |        |  |  | 4,328 | 
|Audit-related fees |  |        | 641   |  |        |  | 1,090 |        |  |  | 888   | 
|Tax fees           |  |        | 57    |  |        |  | 154   |        |  |  | 1,198 | 
|All other fees     |  |        | 375   |  |        |  | 196   |        |  |  | 38    | 
|                   |  |        |       |  |        |  |       |        | 
|                   |  |        | 8,508 |  |        |  | 6,674 |        |  |  | 6,452 | 
|                   |  |        |       |  |        |  |       |        | 

Audit-related agreed-upon


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employee-related


       






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SCHEDULE II


Valuation and Qualifying Accounts and Reserves


Years ended December 31, 2006, 2005, and 2004


|                                            |  |                         |         |   |        |  |        |        |  |  |        |  
|------------------------------------------- |  | ----------------------- | ------- | - | ------ |  | ------ | ------ |  |  | ------ | -
|                                            |  | Year ended December 31, |        
|                                            |  |                         |        
|                                            |  | 2006                    |         |   | 2005   |  |        | 2004   | 
|                                            |  |                         |         |   |        |  |        |        | 
|                                            |  | (000)                  |         |   | (000) |  |        | (000) | 
|Balance at beginning of year                |  |                         | 72,889  |   |        |  | 63,362 |        |  |  | 71,011 |  
|Charged (credited) to costs and expenses(*) |  |                         | (40,453 | ) |        |  | 12,383 |        |  |  | 1,742  |  
|Amounts written off                         |  |                         | (5,399  | ) |        |  | (8,053 | )      |  |  | (7,700 | )
|Currency translation and other changes      |  |                         | (2,140  | ) |        |  | 5,197  |        |  |  | (1,691 | )
|                                            |  |                         |         |   |        |  |        |        | 
|Balance at end of year                      |  |                         | 24,897  |   |        |  | 72,889 |        |  |  | 63,362 |  
|                                            |  |                         |         |   |        |  |        |        | 




  


S-1