<PAGE>

================================================================================

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
                                   Act of 1934

                  For the quarterly period ended June 30, 2001

                                       or

[_]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

              For the transition period from _________ to ________




                         Commission File Number 0-24720

                              Business Objects S.A.

             (Exact name of registrant as specified in its charter)

           Republic of France                                       None
     (State or other jurisdiction of                          (I.R.S. Employer
     incorporation or organization)                          Identification No.)

           157-159 Rue Anatole France, 92300 Levallois-Perret, France

                    (Address of principal executive offices)

                                 (408) 953-6000

              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                           Yes    X           No_________
                              --------


The number of outstanding shares of each of the issuer's classes of capital or
common stock as of July 31, 2001 was 61,392,898 Ordinary Shares of Euro 0.10
nominal value, including 13,217,842 American Depositary Shares (as evidenced by
American Depositary Receipts), each corresponding to one Ordinary Share.


================================================================================

                                      -1-

<PAGE>

                              Business Objects S.A.

                                      Index





<TABLE>
<CAPTION>
PART I.  FINANCIAL INFORMATION                                                       Page

<S>                                                                                  <C>
Item 1        Unaudited Consolidated Financial Statements:

              Condensed Consolidated Balance Sheets at
              June 30, 2001 and December 31, 2000                                       3

              Condensed Consolidated Statements of Income for the
              three and six months ended June 30, 2001 and 2000                         4

              Condensed Consolidated Statements of Cash Flows for the
              six months ended June 30, 2001 and 2000                                   5

              Notes to Condensed Consolidated Financial Statements                      6

Item 2        Management's Discussion and Analysis of Financial
              Condition and Results of Operations                                      10

Item 3        Quantitative and Qualitative Disclosures about Market Risk               23

PART II       OTHER INFORMATION                                                        24

SIGNATURES                                                                             27
</TABLE>

                                      -2-

<PAGE>


                              BUSINESS OBJECTS S.A.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
             (In thousands of US dollars, except for share amounts)


<TABLE>
<CAPTION>
                                                                                           June 30, 2001        December 31, 2000
                                                                                           -------------        -----------------
                                                                                            (unaudited)               (note)
<S>                                                                                        <C>                  <C>
ASSETS
Current assets:
     Cash and cash equivalents                                                               $ 202,255              $ 199,581
     Restricted cash                                                                             8,625                  9,020
     Accounts receivable, net                                                                   74,431                 88,737
     Other current assets                                                                       20,149                 20,892
                                                                                             ---------              ---------
          Total current assets                                                                 305,460                318,230

Goodwill and other intangible assets, net                                                       17,584                 21,582
Property and equipment, net                                                                     36,083                 21,641
Restricted cash- long term                                                                       1,666                  3,333
Deposits and other assets                                                                        5,179                  4,228
                                                                                             ---------              ---------
          Total assets                                                                       $ 365,972              $ 369,014
                                                                                             =========              =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                                        $  15,627              $  22,503
     Accrued payroll and related expenses                                                       26,203                 30,680
     Deferred revenue                                                                           52,773                 49,490
     Other current liabilities                                                                  44,088                 51,118
                                                                                             ---------              ---------
          Total current liabilities                                                            138,691                153,791

Notes payable- long term                                                                         3,132                  4,288


Shareholders' equity

     Ordinary shares, Euro 0.10 nominal value ($0.08 U.S. as of June 30, 2001):
     Authorized 86,054 at June 30, 2001 and  83,086 at December 31, 2000;
     Issued and outstanding- 61,353 at June 30, 2001 and 60,584 at
     December 31, 2000                                                                           6,538                  6,471
     Additional paid-in capital                                                                144,667                138,390
     Treasury stock, 575 shares at June 30, 2001 and December 31, 2000                          (4,611)                (4,611)
     Retained earnings                                                                         116,073                 94,577
     Accumulated other comprehensive income                                                    (38,518)               (23,892)
                                                                                             ---------              ---------
Total shareholders' equity                                                                     224,149                210,935
                                                                                             ---------              ---------
          Total liabilities and shareholders' equity                                         $ 365,972              $ 369,014
                                                                                             =========              =========
</TABLE>

Note: The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date.

See accompanying notes to Condensed Consolidated Financial Statements.

                                      -3-


<PAGE>

                              BUSINESS OBJECTS S.A.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited, in thousands of US dollars, except per ADS and per share data)

<TABLE>
<CAPTION>
                                                                                   Three Months Ended        Six Months Ended
                                                                                         June 30                   June 30
                                                                                    2001         2000         2001         2000
                                                                                  ---------    ---------    ---------    ---------
<S>                                                                               <C>          <C>          <C>          <C>
Revenues:
     License fees                                                                 $  61,012    $  53,162    $ 121,613    $  98,208
     Services                                                                        40,493       31,391       78,170       58,927
                                                                                  ---------    ---------    ---------    ---------
          Total revenues                                                            101,505       84,553      199,783      157,135

Cost of revenues:
     License fees                                                                       464        1,013        1,066        1,462
     Services                                                                        15,728       13,643       31,156       25,441
                                                                                  ---------    ---------    ---------    ---------
          Total cost of revenues                                                     16,192       14,656       32,222       26,903
                                                                                  ---------    ---------    ---------    ---------

Gross margin                                                                         85,313       69,897      167,561      130,232
Operating expenses:
     Sales and marketing                                                             48,490       41,312       96,477       78,696
     Research and development                                                        13,574       10,115       26,567       18,294
     General and administrative                                                       7,053        4,676       12,826        9,278
     Goodwill                                                                         1,115        1,117        2,247        2,106
                                                                                  ---------    ---------    ---------    ---------
           Total operating expenses                                                  70,232       57,220      138,117      108,374
                                                                                  ---------    ---------    ---------    ---------

Income from operations                                                               15,081       12,677       29,444       21,858
Interest and other income, net                                                        2,950        2,680        5,793        5,141
                                                                                  ---------    ---------    ---------    ---------

Income before provision for income taxes                                             18,031       15,357       35,237       26,999
Provision for income taxes                                                           (7,032)      (6,143)     (13,742)     (10,800)
                                                                                  ---------    ---------    ---------    ---------
Net income                                                                        $  10,999    $   9,214    $  21,495    $  16,199
                                                                                  =========    =========    =========    =========
Net income per ADS and share - basic                                              $    0.18    $    0.15    $    0.35    $    0.27
                                                                                  =========    =========    =========    =========
ADS and shares used in computing net income per ADS & per share- basic               61,216       59,769       60,984       59,296
                                                                                  =========    =========    =========    =========
Net income per ADS and share - diluted                                            $    0.17    $    0.14    $    0.33    $    0.25
                                                                                  =========    =========    =========    =========
ADS, shares and common share equivalents used in computing net income
per ADS & per share- diluted                                                         64,686       65,503       64,802       65,619
                                                                                  =========    =========    =========    =========
</TABLE>

                                      -4-

<PAGE>

                              BUSINESS OBJECTS S.A.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     (Unaudited, in thousands of US dollars)

<TABLE>
<CAPTION>
                                                                                              Six Months Ended
                                                                                                   June 30,
                                                                                          2001                 2000
                                                                                        ---------            ---------
<S>                                                                                     <C>                  <C>
Cash flows from operating activities:
 Net income                                                                             $  21,494            $  16,199
 Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization                                                        9,122                7,989
       Deferred income taxes                                                                   --                    7
       Changes in operating assets and liabilities:
         Accounts receivable, net                                                           8,777              (13,085)
         Current and other assets                                                              46               (1,532)
         Accounts payable                                                                  (5,420)               5,307
         Accrued payroll and related expenses                                              (2,580)               2,503
         Deferred revenue                                                                   5,836                7,341
         Other current  liabilities                                                        (2,439)               5,044
                                                                                        ---------            ---------
 Net cash provided by operating activities                                                 34,836               29,773

 Cash flows from investing activities:
 Purchases of property and equipment                                                      (21,218)              (6,951)
 Business and minority interest acquisitions, net of cash acquired                         (1,316)             (15,423)
                                                                                        ---------            ---------
 Net cash used for investing activities                                                   (22,534)             (22,374)

 Cash flows from financing activities:
 Issuance of shares                                                                         6,344                8,356
 Issuance of notes payable                                                                     --                5,000
 Restricted cash                                                                            2,013               (5,000)
 Payments on notes payable                                                                 (2,907)              (6,600)
                                                                                        ---------            ---------
 Net cash provided by financing activities                                                  5,450                1,756

 Effect of foreign exchange rate changes on cash
     and cash equivalents                                                                 (15,078)              (8,596)
                                                                                        ---------            ---------
 Net increase  in cash and cash equivalents                                                 2,674                  559
 Cash and cash equivalents at the beginning of the period                                 199,581              176,233
                                                                                        ---------            ---------
 Cash and cash equivalents at the end of the period                                     $ 202,255            $ 176,792
                                                                                        =========            =========
</TABLE>

    See accompanying notes to Condensed Consolidated Financial Statements.

                                      -5-



<PAGE>

                              Business Objects S.A.

              Notes to Condensed Consolidated Financial Statements

                                  June 30, 2001

1.   Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements have
     been prepared in accordance with accounting principles generally accepted
     in the United States, applied on a consistent basis. As permitted by Form
     10-Q, certain information and footnote disclosures normally included in
     financial statements prepared in accordance with generally accepted
     accounting principles have been condensed or omitted. In the opinion of
     management, all adjustments, consisting only of normal recurring
     adjustments necessary for a fair presentation of our financial position,
     results of operations, and cash flows for the interim periods presented
     have been made. Operating results for the three month and six month periods
     ended June 30, 2001 are not necessarily indicative of the results that may
     be expected for the year ending December 31, 2001. These financial
     statements should be read in conjunction with our audited consolidated
     financial statements and footnotes as included in our Annual Report on Form
     10-K for the year ended December 31, 2000.

2.   Use of Estimates

     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States requires management to
     make estimates and assumptions that affect the amounts reported in the
     financial statements and accompanying footnotes. Actual results could
     differ from those estimates.

3.   Accounts Receivable

     Accounts receivable are stated net of allowances for sales returns and
     doubtful accounts of $4,728,000 at June 30, 2001 and $3,987,000 at December
     31, 2000.

4.   Revenue Recognition

     The Company enters into arrangements for the sale of 1) licenses of
     software products and related maintenance contract; 2) bundled license,
     maintenance, and services; and 3) services on a time and material basis. In
     instances where maintenance is bundled with a license of software products,
     such maintenance terms are typically one year.

     For each arrangement, the Company determines whether evidence of an
     arrangement exists, delivery has occurred, the fee is fixed or
     determinable, and collection is probable. If any of these criteria are not
     met, revenue recognition is deferred until such time as all of the criteria
     are met.

     For those contracts that consist solely of license and maintenance, the
     Company recognizes license revenues based upon the residual method after
     all elements other than maintenance have been delivered as prescribed by
     the Statement of Position 98-9 "Modification of SOP No. 97-2 with Respect
     to Certain Transactions." The Company recognizes maintenance revenues over
     the term of the maintenance contract as vendor specific objective evidence
     that fair value for maintenance exists. There is no right of return or
     price protection for sales to domestic and international distributors or
     value-added resellers (collectively, "resellers"). In situations where the
     reseller has a

                                      -6-

<PAGE>

     purchase order from the end-user that is immediately deliverable, the
     Company recognizes revenue on shipment to the reseller, if other criteria
     in SOP 97-2 are met, since the Company has no risk of concessions.

     Services can consist of maintenance, training and/or consulting services.
     In all cases, the Company assesses whether the service element of the
     arrangement is essential to the functionality of the other elements of the
     arrangement. When software services are considered essential, revenue under
     the arrangement is recognized using contract accounting. When software
     services are not considered essential, the revenue allocable to the
     software services is recognized as the services are performed. Revenue is
     recognized using contract accounting for arrangements involving
     customization or modification of the software or where software services
     are considered essential to the functionality of the software. Revenue from
     these software arrangements is recognized using the
     percentage-of-completion method with progress-to-completion measured using
     labor cost inputs.

     For those arrangements for which the Company has concluded that the service
     element is not essential to the other elements of the arrangement, the
     Company determines whether the services are available from other vendors,
     do not involve a significant degree of risk or unique acceptance criteria,
     and whether the Company has sufficient experience in providing the service
     to be able to separately account for the service. When the service
     qualifies for separate accounting, the Company uses vendor specific
     objective evidence of fair value for the services and the maintenance to
     account for the arrangement using the residual method, regardless of any
     separate prices stated within the contract for each element.

     Vendor-specific objective evidence of fair value of services is based upon
     hourly rates. As previously noted, the Company enters into contracts for
     services alone and such contracts are based upon time and material basis.
     Such hourly rates are used to assess the vendor specific objective evidence
     of fair value in multiple element arrangements.

                                      -7-

<PAGE>

5.   Net Income per ADS and per Share

     The following table sets forth the computation of basic and diluted net
     income per American Depositary Share (ADS) and per share (in thousands,
     except per ADS and per share amounts):

<TABLE>
<CAPTION>
                                                                   Three Months Ended       Six Months Ended
                                                                        June 30,                 June 30,
                                                                    2001         2000        2001       2000
                                                                  --------------------     -------------------
     <S>                                                          <C>          <C>         <C>         <C>
    Numerator:
         Net Income                                               $10,999      $ 9,214     $21,495     $16,199
                                                                  ====================     ===================

     Denominator:
         Basic weighted average ADSs and shares
         outstanding                                               61,216       59,769      60,984      59,296

         Incremental ordinary shares attributable
         to shares issuable under employee stock
         plans and warrants                                         3,470        5,734       3,818       6,323
                                                                  --------------------     -------------------

         Diluted weighted average ADS and
         shares outstanding                                        64,686       65,503      64,802      65,619
                                                                  ====================     ===================

     Net income per ADS and per share - basic                     $  0.18      $  0.15     $  0.35     $  0.27
                                                                  ====================     ===================

     Net income per ADS and per share - diluted                   $  0.17      $  0.14     $  0.33     $  0.25
                                                                  ====================     ===================
</TABLE>

6.   Comprehensive Income

     Comprehensive income includes foreign currency translation gains and losses
     that have been previously excluded from net income and reflected instead in
     stockholders' equity. The following table sets forth the calculation of
     comprehensive income (in thousands):


<TABLE>
<CAPTION>
                                                                   Three Months Ended       Six Months Ended
                                                                        June 30,                 June 30,
                                                                   2001          2000        2001       2000
                                                                  --------------------     -------------------
     <S>                                                          <C>          <C>         <C>         <C>
     Net income                                                   $10,999      $ 9,214     $21,495     $16,199

     Change in cumulative translation adjustment                   (5,557)      (1,222)    (14,626)     (7,935)
                                                                  --------------------     -------------------

     Total comprehensive income                                   $ 5,442      $ 7,992     $ 6,869     $ 8,264
                                                                  ====================     ===================
</TABLE>

7.   Segmented Information

     The Company has one reportable segment - e-business intelligence software
     products.

8.   Three for Two Stock Split

     During February 2001, the Company's Shareholders and Board of Directors
     approved a three for two stock split to be effected in the form of a
     dividend of the Company's

                                      -8-

<PAGE>

     ordinary shares and American depositary shares. The split was effective on
     March 12, 2001. All share, ADS, per share and per ADS data has been
     adjusted for the split.

                                      -9-

<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

The following discussion and analysis should be read together with our Condensed
Consolidated Financial Statements and the Notes to those statements included
elsewhere in this Form 10-Q. This discussion contains forward-looking statements
based on our current expectations, assumptions, estimates, and projections about
Business Objects and our industry. These forward-looking statements involve
risks and uncertainties. Business Objects' actual results could differ
materially from those indicated in these forward-looking statements as a result
of certain factors, as more fully described in the "Risk Factors" section and
elsewhere in this Form 10-Q. Business Objects undertakes no obligation to update
publicly any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.

Overview

Business Objects develops, markets, and supports e-business intelligence
software for client/server environments, intranets, extranets, and the internet.
Using e-business intelligence, organizations can access, analyze, and share
corporate data for better decision making. Business intelligence software tools
are designed to help companies turn data into useful business information,
thereby leading to increased competitive advantage, new business opportunities,
improved customer service and corporate agility.

In view of our significant growth in recent years, we believe that
period-to-period comparisons of our financial results are not necessarily
meaningful and you should not rely upon them as an indication of future
performance.


                                      -10-

<PAGE>

Results of Operations

The following table sets forth certain items from our condensed consolidated
statements of income as a percentage of total revenues for the periods
indicated:

<TABLE>
<CAPTION>
                                                  Three Months Ended    Six Months Ended
                                                       June 30               June 30
                                                    2001     2000         2001      2000
                                                  -------  -------      -------   -------
<S>                                               <C>      <C>          <C>       <C>
Revenues:
     License fees                                    60.1%    62.9%        60.9%     62.5%
     Services                                        39.9%    37.1%        39.1%     37.5%
                                                  -------  -------      -------   -------
          Total revenues                            100.0%   100.0%       100.0%    100.0%
Cost of revenues:
     License fees                                     0.5%     1.2%         0.5%      0.9%
     Services                                        15.5%    16.1%        15.6%     16.2%
                                                  -------  -------      -------   -------
          Total cost of revenues                     16.0%    17.3%        16.1%     17.1%
                                                  -------  -------      -------   -------
Gross margin                                         84.0%    82.7%        83.9%     82.9%
Operating expenses:
     Sales and marketing                             47.8%    48.9%        48.3%     50.1%
     Research and development                        13.4%    12.0%        13.3%     11.6%
     General and administrative                       6.9%     5.5%         6.4%      5.9%
     Goodwill                                         1.1%     1.3%         1.1%      1.3%
                                                  -------  -------      -------   -------
          Total operating expenses                   69.2%    67.7%        69.1%     69.0%
                                                  -------  -------      -------   -------
Income from operations                               14.9%    15.0%        14.7%     13.9%
Interest and other income, net                        2.9%     3.2%         2.9%      3.3%
Income before provision for income taxes             17.8%    18.2%        17.6%     17.2%
Provision for income taxes                           -6.9%    -7.3%        -6.9%     -6.9%
                                                  -------  -------      -------   -------
Net income                                           10.8%    10.9%        10.8%     10.3%
                                                  =======  =======      =======   =======

Gross margin license                                 99.2%    98.1%        99.1%     98.5%
Gross margin services                                61.2%    56.5%        60.1%     56.8%
</TABLE>

The following table shows the geographic distribution of our revenues:

<TABLE>
<CAPTION>
                                         Three Months Ended                 Six Months Ended
                                               June 30,                         June 30,
                                        2001            2000               2001          2000
                                      -----------------------            ----------------------
<S>                              <C>                               <C>
Europe                                    53%              60%                54%            61%
North America                             40               33                 38             32
Rest of World                              7                7                  8              7
                                      -----------------------            ----------------------
     Total                               100%             100%               100%           100%
                                      =======================            ======================
</TABLE>

Prior year amounts have been reclassified to conform to current year
presentation.

Total Revenue. Total revenues were $101.5 million for the three months ended
June 30, 2001, an increase of $17.0 million or 20% over the corresponding prior
year period. Total


                                      -11-

<PAGE>

revenues for the six months ended June 30, 2001 were $199.8 million, an increase
of $42.6 million or 27% over the corresponding prior year period.

The Company operates internationally, with a substantial portion of its business
conducted in foreign currencies. As such, the Company's results are affected by
year-over-year exchange rate fluctuations in the United States dollar relative
to various European currencies and to a lesser extent the Japanese yen and other
foreign currencies.

License Fees. License fees were $61.0 million for the three months ended June
30, 2001, an increase of $7.9 million or 15% over the corresponding prior year
period. License fees for the six months ended June 30, 2001 were $121.6 million,
an increase of $23.4 million or 24% over the corresponding prior year period.
The increase in license fees was due to increased unit sales of our licensed
products in all geographic regions.

We anticipate that license fees, which represented approximately 60% of our
total revenues for the three and six month periods ended June 30, 2001 and 2000,
will continue to represent a majority of our revenue for the foreseeable future.
It is expected that the percentage of total revenues derived from license fees
may decrease in the future as the growth in service revenues exceeds the growth
in license revenues. In addition, we expect that the market penetration by, and
number of, our competitors will increase, and as a result, the growth rate in
our license fees in the future may not be as high as the growth rate of license
fees achieved in the past.

Services. Revenues from services consist of maintenance, consulting, and
training revenues. Revenues from services were $40.5 million for the three
months ended June 30, 2001, an increase of $9.1 million or 29% over the
corresponding prior year period. For the six months ended June 30, 2001,
revenues from services were $78.2 million, an increase of $19.2 million or 33%
over the corresponding prior year period. The increase in revenues from services
was primarily due to increases in maintenance revenues related to increases in
our installed customer base, the renewal of existing support contracts,
increases in consulting revenues, and increases in training revenues. As market
penetration by, and the number of, the Company's competitors increase, the
growth rate of our installed base and, consequently, the growth rate of our
services revenues in the future may not be as high as growth rates achieved in
the past.

Cost of License Fees. Cost of license fees consists primarily of materials,
packaging, freight and third-party royalties. Cost of license fees as a
percentage of license fees decreased to 1% for the three and six months ended
June 30, 2001, down from 2% for the corresponding periods in 2000. The decrease
as a percentage of related revenues was primarily due to improved management of
inventory levels, a reduction of freight and production costs of documentation,
and reduced royalty costs due to lower sales of third-party products.

Cost of Services. Cost of services consists of the cost of providing consulting,
maintenance and training services. Cost of services was $15.7 million for the
three months ended June 30, 2001, an increase of $2.1 million, or 15% over the
corresponding prior year period. Cost of services was $31.2 million for the six
months ended June 30, 2001, an increase of $5.7 million or 22% over the
corresponding prior year period. The cost of services as a percentage of service
revenue was 39% and 43% for the three months ended June 30, 2001 and 2000
respectively and 40% and 43% for the six months ended June 30, 2001 and 2000.
The decrease as a percentage of related revenues was primarily due to improved
productivity in providing maintenance support, offset by a higher cost of


                                      -12-

<PAGE>

providing consulting services. The increase in expenses in absolute dollars
     resulted from increased headcount necessary to support our service
activities, and to a lesser extent increased facilities expenses related to new
facilities in the U.S. and the U.K. The Company's U.S. and U.K. facilities were
relocated in April, 2001.

Operating Expenses

Sales and Marketing. Sales and marketing expenses consist primarily of salaries
and commissions, advertising and promotional activities, and related facilities
expenses. Sales and marketing expenses were $48.5 million for the three months
ended June 30, 2001, an increase of $7.2 million or 17% over the corresponding
prior year period. Sales and marketing expenses were $96.5 million for the six
months ended June 30, 2001, an increase of $17.8 million or 23% over the
corresponding prior year period. Sales and marketing expenses, as a percentage
of total revenues, were 48% and 49% for the three months ended June 30, 2001 and
2000 respectively. These expenses were 48% and 50% of total revenues for the six
months ended June 30, 2001 and 2000 respectively. The decrease as a percentage
of total revenues was primarily due to improved productivity in the sales and
marketing group. The increase in sales and marketing expenses in absolute
dollars was attributable to the expansion of our sales and marketing
organization and, to a lesser extent, increased facilities expenses related to
new facilities in France, the U.S. and the U.K. Sales and marketing expenses are
expected to continue to increase in absolute dollars but may vary as a
percentage of revenues in the future.

Research and Development. Research and development expenses consist primarily of
salaries and related benefits, third party consultant fees, related facilities
expenses and the amortization of intangible assets allocated to employment
contingencies resulting from the acquisitions of Olap@Work, Inc. in April 2000
and Next Action Technology, Ltd. in October 1999. Research and development
expenses were $13.6 million for the three months ended June 30, 2001, an
increase of $3.5 million, or 34% over the corresponding prior year period.
Research and Development expenses were $26.6 million for the six months ended
June 30, 2001, an increase of $8.3 million or 45% over the corresponding prior
year period. Research and development expenses as a percentage of total revenues
were 13% for the three and six months ended June 30, 2001 up from 12% for the
three and six months ended June 30, 2000. The increase in research and
development expenses both as a percentage of total revenues and in absolute
dollars was due to increased staffing and associated support for software
engineers as part of our ongoing operations, expansion into the analytical
applications market and increased facilities expenses related to new facilities
in France, the U.S. and the U.K. , partially offset by decreased expenses for
professional services and third party consulting fees. As of June 30, 2001 all
research and development costs have been expensed as incurred. Research and
development expenses are expected to continue to increase in absolute dollars
but may vary as a percentage of revenues in the future.

General and Administrative. General and administrative expenses consist
primarily of salaries, related benefits, fees for professional services
including legal and accounting services, and allowances for doubtful accounts.
General and administrative expenses were $7.1 million for the three months ended
June 30, 2001, an increase of $2.4 million, or 51% over the corresponding prior
year period. For the six months ended June 30, 2001, general and administrative
expenses were $12.8 million, an increase of $3.5 million or 38% over the
corresponding prior year period. General and administrative expenses as a
percentage of total revenues were 7% and 6% for the three months ended June 30,
2001 and 2000 respectively and 6% of total revenues for the six months ended
June 30, 2001 and 2000. The increase in


                                      -13-

<PAGE>

absolute dollars for the three and six months ended June 30, 2001 was due to
increased staffing to support our growth, increased allowances for doubtful
accounts associated with higher revenue levels and increased facilities expenses
related to new facilities in France and the U.S. General and administrative
expenses are expected to continue to increase in absolute dollars but may vary
as a percentage of revenues in the future.

Amortization of Goodwill. Goodwill amortization expense was $1.1 million for the
three months ended June 30, 2001 and 2000. Goodwill amortization was $2.2
million and $2.1 million for the six months ended June 30, 2001 and 2000.
Goodwill amortization expense was approximately 1% of total revenues for all
periods presented. In general, goodwill is currently being amortized over a
five-year period. With the implementation of the Financial Accounting Standards
Board's Statement of Financial Accounting Standard No. 142, "Goodwill and Other
Intangible Assets" on January 1, 2002, goodwill will no longer be amortized to
expense.

Interest and Other Income, Net

Interest and other income, net included the following (in thousands):

<TABLE>
<CAPTION>
                                                Three months ended               Six months ended
                                                     June 30,                        June 30,
                                                2001          2000              2001           2000
                                            --------------------------     ----------------------------
<S>                                         <C>                            <C>
Net interest income                               $2,112        $1,638             $4,343        $3,010
Other income                                         838         1,042              1,450         2,131
                                            --------------------------     ----------------------------
Total interest and other income, net              $2,950        $2,680             $5,793        $5,141
                                            ==========================     ============================
</TABLE>

Net interest income increased by $0.5 million or 29% and $1.3 million or 44% for
the three and six month periods ended June 30, 2001 and 2000 respectively. The
increase was primarily due to an increase in average invested cash and cash
equivalents and to a lesser extent, an increase in the average effective
interest rate, as a substantial portion of the Company's cash and cash
equivalents are invested in France. Cash and cash equivalents totaled $202.3
million at June 30, 2001.

Other income was comprised of net foreign exchange gains and losses and
payments, net of attorney fees, that we received from Brio Technology, Inc. in
settlement of patent litigation. The settlement was for $10.0 million payable
quarterly in $1.0 million payments beginning September 30, 1999 and ending
December 31, 2001. Due to inherent uncertainties with respect to Brio making the
remaining quarterly payments under the settlement, the Company is recognizing
the settlement under the cost-recovery method.

Income Taxes

The Company's effective tax rate was 39% for the three and six month periods
ended June 30, 2001 compared to 40% for the same periods in 2000. The 2001
decrease in the effective rate is primarily dueto the reduction in the French
statutory rate. The Company provides for income taxes for each interim period
based on the estimated annual effective tax rate for the year.


                                      -14-

<PAGE>

Liquidity and Capital Resources

Cash and cash equivalents totaled $202.3 million as of June 30, 2001, an
increase of $2.7 million from December 31, 2000. Net cash provided by operating
activities for the six months ended June 30, 2001 was $34.8 million as compared
to $29.8 million for the same period in 2000. The increase in net cash provided
by operating activities for the six months ended June 30, 2001 primarily
resulted from higher net income, non-cash charges for depreciation and
amortization expense, increases in deferred revenue and decreases in accounts
receivable and current and other assets partially offset by decreases in
accounts payable, accrued payroll and related expenses and other current
liabilities.

Cash used by investing activities totaled $22.5 million and $22.4 million for
the first six months of 2001 and 2000 respectively. Investing activities during
the six months ended June 30, 2001 consisted of the purchase of $21.2 million of
leasehold improvements and property and equipment primarily related to the
relocation of facilities in the U.S. and the U.K. and a minority interest
investment of $1.3 million. Investing activities during the six months ended
June 30, 2000 included $15.4 million in business acquisitions and $7.0 million
of property and equipment purchases.

Cash provided by financing activities totaled $5.5 million and $1.8 million for
the first six months of 2001 and 2000 respectively. Financing activities for the
six months ended June 30, 2001 generated cash of $6.3 million from the issuance
of shares under employee stock option and purchase plans and $2.0 million in the
release of restricted cash, offset partially by the payment of $2.9 million on
notes payable. Financing activities for the six months ended June 30, 2000
generated cash of $8.4 million from the issuance of shares under employee stock
option and purchase plans and $5.0 million from the issuance of notes payable,
offset by the payment of $6.6 million on notes payable and the transfer of $5.0
million into a restricted cash account.

The impact of the weakening of the Euro and the British Pound versus the U.S.
Dollar caused a decrease in cash and cash equivalents of $15.1 million and $8.6
million for the six months ended June 30, 2001 and 2000, respectively.

Management believes that cash from operations together with existing cash and
cash equivalents will be sufficient to meet the company's cash requirements
through at least the next 12 months.

Recent Accounting Pronouncements

On June 29, 2001, the Financial Accounting Standards Board approved the issuance
of Statements of Financial Accounting Standards No. 141, "Business Combinations"
and No. 142, "Goodwill and Other Intangible Assets." Statement 141, which is
effective for all business combinations subsequent to July 1, 2001, eliminates
the pooling-of-interests method of accounting for business combinations and
includes new criteria to recognize intangible assets separately from goodwill.
Under Statement 142, goodwill and other intangible assets with indefinite lives
are no longer amortized but are reviewed at least annually for impairment.
Separable intangible assets that are deemed to have a definite life will
continue to be amortized over the estimated useful life. Statement 142 is
effective with respect to the nonamortization of goodwill and certain
intangibles on January 1, 2002 for amounts currently recorded on the Company's
balance sheet and will apply to any goodwill and certain intangible assets
acquired after June 30, 2001. The Company is


                                      -15-

<PAGE>

currently recording amortization expense of $1.1 million for goodwill and other
intangibles each quarter for which no amortization expense will be required
effective January 1, 2002.

Stock Option Exchange Program

On May 16, 2001, the Company announced a voluntary stock option exchange program
for its eligible employees. This program included two separate offers: one to
France based employees (the "French program") and the other to international
employees including employees in the United States (the "International
program"). Pursuant to the terms and conditions of each program, eligible
employees were given the opportunity to renounce the right to the benefit of all
outstanding stock options granted on or after January 1, 2000 under the Business
Objects S.A. 1999 Stock Option Plan, as amended, in exchange for an equal number
of new options to be granted on or after December 18, 2001. If an employee
renounced the right to the benefit of any one option, the employee was required
to renounce the right to the benefit of all options granted to the employee
during the six month period prior to the cancellation of any options. The offer
expired June 14, 2001. A total of 140 eligible employees elected to participate
in the French program and these employees tendered a total of 328,537 options. A
total of 301 eligible employees elected to participate in the International
program and these employees tendered a total of 1,083,554 options. As a result
of the two separate offers, an aggregate of 441 eligible employees tendered an
aggregate of 1,412,091 options in return for the promise to grant new options on
or after December 18, 2001.

The exercise price of the new options may not be less than the higher of (i)100%
of the closing price of our ordinary shares as reported on the Premier Marche of
Euronext Paris S.A. (the "Premier Marche") on the last trading day before the
date of grant, or (ii) 80% of the average of the closing prices of our ordinary
shares on the Premier Marche over the twenty trading days preceding the grant
date. In addition, for eligible employees who are Italy-based employees, the
exercise price per share may not be less than 100% of the average of the closing
prices of our ordinary shares on the Premier Marche over the thirty trading days
preceding the grant date.

For the new options granted pursuant to the terms and conditions of the
International program (approximately 80% of the aggregate number of new options
to be granted under the French and International programs), each new option will
retain the vesting schedule of the old option it replaces. For the new options
granted pursuant to the terms and conditions of the French program
(approximately 20% of the aggregate number of the new options to be granted
under the French and International programs), each new option will substantially
retain the vesting schedule of the old option it replaces, except that the new
options will not become excercisable until one year following the date of grant
of the new option.

The programs were not available to (i) members of our extended executive
committee, (ii) employees with general management and/or management
responsibility for multiple countries, (iii) employees with general sales
management responsibility for named "strategically important" countries,
including Japan, USA and Germany, (iv) employees responsible for sales
representing 10% or more of our consolidated budget revenues for fiscal 2001,
(v) former employees and (vi) any of our employees who are resident in Belgium
or Switzerland. In addition, new options will not be granted to individuals who
are not employees of Business Objects S.A. or one of our affiliates as of the
grant date of the new options.


                                      -16-

<PAGE>

RISK FACTORS

You should carefully consider the risks and uncertainties described below before
making an investment decision. Additional risks and uncertainties that we are
unaware of or that we currently deem immaterial also may become important
factors that may adversely affect our company.

Risks related to our business

We target our products to one market and if sales of our products in this market
decline, our operating results will be seriously harmed.

We generate substantially all of our revenues from licensing and service fees
generated from the sale of our products in the e-business intelligence software
market, and we expect to continue to do so in the future. Accordingly, our
future revenues and profits will depend significantly on our ability to further
penetrate the e-business intelligence software market. If we are not successful
in selling our products in our targeted market due to competitive pressures,
technological advances by others or otherwise, our operating results would
suffer. The United States and Europe are two of the largest geographic markets
for our products and services. If there is an economic slowdown to any degree in
either of these geographic markets or in the e-business intelligence software
market in general, this could affect the IT spending level by both current and
potential customers and have an adverse effect on our revenue and profitability
results.

Our quarterly operating results are subject to fluctuations, which may affect
our stock price.

Historically, our quarterly operating results have varied substantially from
quarter to quarter, and we anticipate this pattern to continue. This is
principally because our license fees are variable from quarter to quarter, while
a high percentage of our operating expenses are relatively fixed, and are based
on anticipated levels of revenues. In addition, we expect our expenses to
increase as our business grows. If revenues earned in any particular quarter
fall short of anticipated revenue levels, our quarterly operating results would
be significantly harmed.

While the variability of our license fees is partially due to factors that would
influence the quarterly results of any company, our business is particularly
susceptible to quarterly variations because:

     .    We typically receive a substantial amount of our revenues in the last
          weeks of the last month of a quarter, rather then evenly throughout
          the quarter.

     .    Our strongest quarter each year is typically our fourth quarter, as
          our customers often wait for the end of their annual budget cycle
          before deciding whether to purchase new software. Consequently, our
          revenues are generally lower in our first quarter. In addition, our
          third quarter is a relatively slow quarter due to lower economic
          activity throughout Europe during the summer months.

     .    Customers may delay purchasing decisions in anticipation of our new
          products or product enhancements or platforms or announced pricing
          changes by us or our competitors.


                                      -17-

<PAGE>

     .    We partly depend on large orders which may take several months to
          finalize. A delay in finalizing a large order may result in the
          realization of license fees being postponed from one quarter to the
          next.

     .    Our revenues are also sensitive to the timing of our competitors'
          offers of new products that successfully compete with ours on the
          basis of functionality, price or otherwise.

As a result of the above, quarter to quarter comparisons of our revenues and
operating results may not be meaningful and you should not rely on them as
indicative of our future performance.

Our stock price is susceptible to our operating results and to stock market
fluctuations.

In future quarters, our operating results may be below the expectations of
public market analysts and investors, and the price of our shares may fall. In
addition, the stock markets in the United States and France have experienced
significant price and volume fluctuations, which have particularly affected the
market prices of many software companies and which have often been unrelated to
the operating performance of these companies. These market fluctuations could
affect our stock price.

Our software may have defects and errors, which may lead to a loss of revenue or
product liability claims.

BusinessObjects and its platform for internet-based installations,
WebIntelligence, are internally complex and occasionally contain defects or
errors, especially when first introduced or when new versions or enhancements
are released. Despite extensive testing, we may not detect errors in our new
products, platforms or product enhancements, until after we have commenced
commercial shipments. If defects and errors are discovered in our products,
platforms or product enhancements after commercial release:

     .    potential customers may delay or forego purchases;

     .    our reputation in the marketplace may be damaged;

     .    we may incur additional service and warranty costs; and

     .    we may have to divert additional development resources to correct the
          defects and errors.

If any or all of the foregoing occur, we may lose revenues or incur higher
operating expenses and lose market share, any of which could severely harm our
financial condition and operating results.

We may have difficulties providing and managing the increased technical
stability, performance and support requirements of an evolving market, which
could cause a decline in our revenues and an increase in our expenses.

We are increasingly focusing our selling efforts on larger, enterprise-wide
deployments of our products. Many of these deployments are on a Unix platform,
and require greater technical


                                      -18-

<PAGE>

stability, performance and support than we have typically had to
provide in the past. We may have difficulty providing and managing these
increased technical requirements. Any such difficulty could cause us to lose
existing customers, limit us to smaller deployments and cause us to expand our
research and development and technical support costs which could cause a decline
in our revenues and an increase in our expenses.

The protection of our intellectual property is crucial to our business, and if
third parties use our intellectual property without our consent, it could damage
our business.

Our success depends in part on our ability to protect our proprietary rights in
our intellectual property. Despite precautions we take to protect these rights,
unauthorized third parties could copy aspects of our current or future software
and platforms or obtain and use information that we regard as proprietary.
Policing unauthorized use of software is difficult and some foreign laws do not
protect our proprietary rights to the same extent as in the United States or
France.

In addition, although our name, together with our logo, is registered as a
trademark in France, the United States, and a number of other countries, we may
have difficulty asserting our ownership rights in the name "Business Objects" as
some jurisdictions consider the name "Business Objects" to be generic or
descriptive in nature. As a result, we may be unable to effectively police
unauthorized use of our name or otherwise prevent the name of our software
products from becoming a part of the public domain.

To protect our proprietary rights, we may become involved in litigation, which
could be costly and negatively impact our operating results. For example, we
settled a patent infringement claim in our favor against Brio Technology, Inc.
in 1999, and are currently involved with another patent infringement claim
against Cognos, Inc. Litigating claims related to our proprietary rights can be
very expensive in terms of management time and resources, which could cause our
financial condition and operating results to suffer.

Third parties could assert that our technology infringes their proprietary
rights, which could adversely affect our ability to distribute our products and
result in costly litigation.

We do not believe that our products infringe the proprietary rights of any third
parties. However, in July 1999, Brio Technology, Inc. filed an action alleging
that we infringe one of its patents by selling our reporting functionality.
Although Brio Technology dismissed this lawsuit as part of a settlement
announced in September 1999, other third parties may in the future make claims
that our product infringes their technology. We cannot assure you that third
parties will never make these types of claims. We believe that software products
offered in our target markets increasingly will be subject to infringement
claims as the number of products and competitors in our industry segment grows
and product functionalities begin to overlap.

The potential effects on our business operations resulting from any third party
infringement claim that may be filed against us in the future include the
following:

         .       we could be forced to cease selling our products;

         .       we would be forced to commit management resources to resolve
                 the claim;

         .       we may incur substantial litigation costs in defense of the
                 claim;


                                      -19-

<PAGE>

         .       we may be required to indemnify our customers;

         .       we may have to expand significant development resources to
                 redesign our products as a result of these claims; and

         .       we may be required to enter into royalty and licensing
                 agreements with a third party bringing an infringement claim
                 against us, and these agreements may contain terms that are
                 unfavorable to us.

We depend on strategic relationships and business alliances for continued growth
of our business

Our development, marketing, and distribution strategies rely increasingly on our
ability to form long-term strategic relationships with major vendors, many of
who are substantially larger than Business Objects. These business relationships
often consist of joint marketing programs or partnerships with original end
manufacturer or value added resellers. Although certain aspects of some of these
relationships are contractual in nature, many important aspects of these
relationships depend on the continued cooperation of each party with us.
Divergence in strategy, change in focus, competitive product offerings or
contract defaults by any of these companies may interfere with our ability to
develop, market, sell, or support our products, which in turn could harm our
business. In addition, one or more of these companies may use the information
they gain from their relationship with us to develop or market competing
products.

The loss of our rights to use software licensed to us by third parties could
harm our business.

In order to provide a complete product suite, we occasionally license software
from third parties, and sub-license this software to our customers. In addition,
we license software programs from third parties and incorporate these programs
into our own software products. By utilizing third party software in our
business, we incur risks that are not associated with developing software
in-house. For example, these third party providers may discontinue or alter
their operations, terminate their relationship with us, or generally become
unable to fulfill their obligations to us. If any of these circumstances were to
occur, we may be forced to seek alternative technology which may not be
available on commercially reasonable terms. In the future, we may be forced to
obtain additional third party software licenses to enhance our product offerings
and compete more effectively. We may not be able to obtain and maintain
licensing rights to needed technology on commercially reasonable terms, which
would harm our business and operating results.

Our executive officers and key personnel are critical to our business; we may
not be able to recruit and retain the personnel we need to succeed.

Our success depends to a significant extent upon a number of key management and
technical personnel, including Bernard Liautaud, our chief executive officer and
co-founder, the loss of whom could adversely affect our business. The loss of
the services of other key personnel or our inability to attract and retain
highly skilled technical, management, sales and marketing personnel could also
harm our business. Competition for such personnel in the computer software
industry is intense, and we may be unable to successfully attract and retain
such personnel.


                                      -20-

<PAGE>

We may have difficulty managing our growth.

Our business has grown rapidly in recent years. If we continue to grow at the
same pace, this growth may place a significant strain on our management and
operations. Our future operating results depend in part on the ability of our
officers and key employees to continue to implement and improve our operational
and financial control systems and to hire, expand, train and manage our
employees. If we are unable to manage our growth effectively, our financial
condition and operating results could suffer.

We have multinational operations that are subject to risks inherent in
international operations, including currency exchange rate fluctuations.

Because we conduct our business throughout the world, we are subject to a number
of risks inherent in international operations, including compliance with various
foreign laws, regulations and tax structures, and longer accounts receivable
payment cycles outside of the United States.

In addition, we conduct a significant portion of our business in currencies
other than the U.S. dollar, the currency in which we report our financial
statements. Historically, we have generated a significant portion of our
revenues and incurred a significant portion of our expenses in French francs,
British pounds sterling, Japanese yen and Italian lira, and we expect to
generate a significant portion of our revenues and expenses in the Euro in the
future. As a result, our operating results expressed in U.S. dollars have been
in the past, and may be in the future, adversely impacted by currency exchange
rate fluctuations on the U.S. dollar value of foreign currency-denominated
revenues and expenses. As of June 30, 2001, we were not engaged in a foreign
currency hedging program to cover our currency transaction or translation
exposure.

Risks related to our industry

Our markets are highly competitive and competition could harm our ability to
sell products and services and reduce our market share.

Competition could seriously harm our ability to sell software and services at
prices and terms favorable to us. If we cannot compete effectively, we may lose
market share. Some of our competitors have been in business longer than us and
have significantly greater financial, technical, sales, marketing and other
resources than we do. In addition, some of our competitors enjoy greater name
recognition and a larger installed customer base than we do. Moreover, some of
our competitors, particularly companies that offer relational database
management software systems and enterprise resource planning software systems,
have well-established relationships with some of our existing and targeted
customers.

In the future, any of our competitors could introduce products with more
features at lower prices. Some of these companies could also bundle existing or
new products, with other more established products that they offer, and compete
more effectively against our products. Some of these competitors have already,
or may in the future, provide their products or components of their products to
customers at no cost to the customer to gain market share. Because our products
are specifically designed and targeted to the business intelligence software
market, we may lose sales to competitors offering a broader range of products.
Furthermore, other companies larger than us could enter the market through
internal expansion or by strategically aligning themselves with one of our
current competitors and provide products that cost less than our products. We
believe that the business intelligence software tools market will continue to
grow and develop, and that more and more large companies may find it a desirable
market in which to compete. To the


                                      -21-

<PAGE>

extent that we are unable to effectively compete against our current and future
competitors, as a result of some or all of the factors stated above, our
financial condition and operating results would suffer.

The software markets that we target are subject to rapid technological change
and new product introductions.

The market for business intelligence software tools is characterized by:

         .       rapid technological advances;

         .       changes in customer requirements; and

         .       frequent new product introductions and enhancements.

To be successful, we must develop new products, platforms and enhancements to
our existing products that keep pace with technological developments, changing
industry standards and the increasingly sophisticated requirements of our
customers. If we are unable to respond quickly and successfully to these
developments and changes, we may lose our competitive position. In addition,
even if we are able to develop new products, platforms or enhancements to our
existing products, these products, platforms and product enhancements may not be
accepted in the marketplace. Our customers may defer or forego purchases of our
existing products if we do not adequately time the introduction or the
announcement of new products or enhancement to our existing products, or if our
competitors introduce or announce new products, platforms and product
enhancements. Any of these factors could severely harm our business, financial
condition and operating results.


                                      -22-

<PAGE>

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The following discusses our exposure to market risk related to changes in
interest rates, equity prices and foreign currency exchange rates. This
discussion contains forward-looking statements that are subject to risks and
uncertainties. Actual results could vary materially as a result of a number of
factors including those set forth in the Risk Factors section.

As of June 30, 2001, all of our cash and cash equivalents were classified as
available-for-sale. The principal portion of our investments are not subject to
interest rate risk; however, declines in interest rates over time will reduce
our interest income. We do not have any investments in equity or debt securities
traded in the public markets. Therefore, we do not currently have any direct
equity price risk.

We conduct a significant portion of our business in currencies other than the
U.S. dollar, the currency in which we report our financial statements. Assets
and liabilities of our subsidiaries are translated into U.S. dollars at exchange
rates in effect as of the applicable balance sheet date, and any resulting
translation adjustments are included as an adjustment to shareholders' equity.
Revenues and expenses generated from these subsidiaries are translated at
average exchange rates during the quarter the transactions occur. Gains and
losses from these currency transactions are included in net earnings.
Historically, we have generated a significant portion of our revenues and
incurred a significant portion of our expenses in French francs, British pounds
sterling, Japanese yen and Italian lira and we expect to generate a significant
portion of our revenues and expenses in the Euro in the future. As a result, our
operating results have been in the past, and may be in the future, adversely
impacted by currency exchange rate fluctuations on the U.S. dollar value of
foreign currency-denominated revenues and expenses. We cannot predict the effect
of exchange rate fluctuations upon our future operating results. As of June 30,
2001, we were not engaged in a foreign currency hedging program to cover our
currency transaction or translation exposure.


                                      -23-

<PAGE>

Part II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

a) The Annual Meeting of Shareholders was held on June 12, 2001.

b) The term of office was renewed for the following Directors:

         Bernard Charles
         Albert Eisenstat
         Arnold Silverman

     Other Directors whose term of office continued after the meeting were:

         Bernard Liautaud
         Vincent Worms (See item 5 - Other Information)
         John Olsen

c) The following proposals were adopted at the Annual Meeting of Shareholders by
   the margins indicated:

     1.   To approve the financial statements of Business Objects S.A for the
          year ended December 31, 2000.

                 For                               18,521,971
                 Against                              390,535

     2.   To allocate the profits of the year ended December 31, 2000.

                 For                              18,521,626
                 Against                             390,880


     3.   To renew the term of office of Mr. Bernard Charles as Director.

                 For                              18,221,085
                 Against                             691,421


                                      -24-

<PAGE>

     4.   To renew the term of office of Mr. Albert Eisenstat as Director.

                 For                              18,517,859
                 Against                             394,647

     5.   To renew the term of office of Mr. Arnold Silverman as Director.

                 For                              17,542,923
                 Against                           1,369,583

     6.   To authorize the Board of Directors to repurchase shares of the
          Company.

                 For                              18,521,637
                 Against                             390,869

     7.   To issue 15,000 warrants to Bernard Charles, subject to the condition
          precedent that the shareholders approve the Third Resolution.

                 For                              17,520,733
                 Against                           1,391,773

     8.   To issue 15,000 warrants to Albert Eisenstat, subject to the condition
          precedent that the shareholders approve the Fourth Resolution.

                 For                              17,520,718
                 Against                           1,391,788

     9.   To issue 15,000 warrants to Mr. Silverman, subject to the condition
          precedent that the shareholders approve the Fifth Resolution.

                 For                              17,521,063
                 Against                           1,391,443

     10.  To re-affirm the price setting conditions of shares reserved for
          issuance under the French Employee Savings Plan.

                 For                              16,894,401
                 Against                           2,018,105

     11.  To reserve 50,000 shares for issuance under the French Employee
          Savings Plan.

                 For                              16,995,229
                 Against                           1,917,277

     12.  To re-affirm the price setting conditions of shares reserved for
          issuance under the 1995 International Employee Stock Purchase Plan.

                 For                              16,894,089
                 Against                           2,018,417


                                      -25-

<PAGE>

     13.  To reserve 200,000 shares for issuance under the 1995 International
          Employee Stock Purchase Plan.

                 For                              16,866,758
                 Against                           2,025,748

     14.  To provide in the articles of association that, subject to the
          decision of the Board of directors duly published, holders of Ordinary
          Shares may send their proxy or voting instructions via the Internet,
          in addition to voting by mail or in person.

                 For                              18,521,490
                 Against                             391,016

     15.  To provide in the articles of association that a quorum of Directors
          shall exist if a majority of Directors are present at the meeting or
          participate in the meeting via video-conference.

                 For                              18,516,235
                 Against                             396,271

     16.  To authorize capital reductions by cancellation of treasury shares.

                 For                              18,520,420
                 Against                             392,086


For each of the above, abstentions are included as votes against, consistent
with French law.

d) Not applicable.


Item 5. Other Information

On July 17, 2001, the Company's Board of Directors appointed Bernard Bourigeaud
as Director of the Company subject to ratification at the next general meeting
of shareholders. This nomination was made to fill the vacancy created by the
resignation of Vincent Worms effective June 29, 2001.

Item 6.  Exhibits and Reports on Form 8-K

a) (3) (ii) Bylaws
b) Reports on Form 8-K:  None


                                      -26-

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                              Business Objects S.A.

Date:  August 6, 2001           By:           /s/ Bernard Liautaud
                                   ---------------------------------------------
                                                   Bernard Liautaud
                                                 Chairman of the Board
                                              and Chief Executive Officer

Date:  August 6, 2001           By:           /s/ Clifton T. Weatherford
                                   ---------------------------------------------
                                                Clifton T. Weatherford
                                              Chief Financial Officer and
                                              Senior Group Vice President


                                      -27-

<PAGE>

                              BUSINESS OBJECTS S.A.

                            A French societe anonyme
                    with a share capital of 6,102,682.9 euros

Registered office : 157-159rue Anatole France

92300 Levallois-Perret

            Register of Commerce and Companies Nanterre B 379 821 994

                                ----------------







                                UP-DATED BY LAWS

                                  June 12, 2001

<PAGE>

                                      ~ I ~

                     MEMORANDUM AND ARTICLES OF ASSOCIATION
                     --------------------------------------

                                     TITLE I
                                     -------

              FORM - NAME - OBJECTS - REGISTERED OFFICE - DURATION
              ----------------------------------------------------

Article 1 - FORM
----------------

                  There is, between the owners of the shares hereinafter issued
and of those which could be subsequently issued, a corporation (societe
anonyme), governed by the law of July 24, 1966 on commercial companies and by
the present Memorandum and Articles of Association.

Article 2 - NAME
----------------

                  The name of the company is :

                                BUSINESS OBJECTS

                  In all deeds and documents emanating from the company and
addressed to third parties, this name must always be immediately preceded or
followed by the words "Societe anonyme" or the initials "S.A." and by the
mention of the amount of the capital.

Article 3 - OBJECTS
-------------------

                  The objects of the company are, directly and indirectly, in
France and abroad :

                  - all operations relating to the design and the sale of
products and the rendering of services in the computer industries and in
connected industries ;

                  - and generally, any financial, commercial, industrial, civil,
real estate or chattels operations related directly or indirectly to the above
activities and to any similar or connected activities as well as to any social
properties.

                  Directly and indirectly on its behalf or on behalf of third
parties, either alone, or with third parties, by way of creation of new
companies, contributions, partnership, subscription, purchase of securities or
of social rights, merger, association, or by way of subleasing of any properties
or rights.

<PAGE>

Article 4 - REGISTERED OFFICE
-----------------------------

                   The registered office of the company is at:

                           157-159 Rue Anatole France
                             92300 Levallois-Perret

                  It may be transferred to any other place within the same
district (departement) or any adjacent district by decision of the board of
directors subject to the ratification of this decision by the next ordinary
general meeting of the shareholders.

                  It may be transferred to any other place pursuant to a
resolution of the extraordinary general meeting of the shareholders.

Article 5 - DURATION
--------------------

                  The duration of the company shall be of ninety nine (99) years
from the date of registration with the Register of Commerce and Companies,
except in the event of early dissolution or extension decided by the
extraordinary meeting of the shareholders.


                                   *** *** ***




                                       ***


                                      -2-

<PAGE>

                                    TITLE II
                                    --------

                               CAPITAL AND SHARES
                               ------------------

Article 6 - CAPITAL
-------------------

                  The capital of the company is of 6,102,682.9 euros.

                  It is divided into 61,026,829 shares of 10 cents of euro
                  (0.10) each.

         Mr. Albert Eisenstat is a recipient of special advantages resulting
         from the grant of 36,000 warrants each entitling to the subscription of
         one share, by the shareholder meeting held on June 19, 1997. The
         special advantages consist in (i) the granting of such warrants without
         payment as consideration and (ii) the implementing of a fixed exercise
         price of 2,81 euros per share corresponding to the estimated value of a
         share as of April 25, 1997.

                  Mr. Albert Eisenstat is a recipient of special advantages
resulting from the grant of one warrant entitling to the subscription of 36,000
shares, by the shareholder meeting held on June 21, 1995. The special advantages
consist in (i) the granting of such warrants without payment as consideration
and (ii) the implementing of a fixed exercise price of 3.70 euros per share
corresponding to the estimated value of a share as of April 25, 1995.

                  Mr. Vincent Worms is a recipient of special advantages
resulting from the grant of 36,000 warrants each entitling to the subscription
of one share, by the shareholder meeting held on June 19, 1997. The special
advantages consist in (i) the granting of such warrants without payment as
consideration and (ii) the implementing of a fixed exercise price of 2.81 euros
per share corresponding to the estimated value of a share as of April 25, 1997.

                  Mr. Philippe Claude is a recipient of special advantages
resulting from the grant of 36,000 warrants each entitling to the subscription
of one share, by the shareholder meeting held on June 19, 1997. The special
advantages consist in (i) the granting of such warrants without payment as
consideration and (ii) the implementing of a fixed exercise price of 2.81 euros
per share corresponding to the estimated value of a share as of April 25, 1997.

                  Mr. Arnold Silverman is a recipient of special advantages
resulting from the grant of 36,000 warrants each entitling to the subscription
of one share, by the shareholder meeting held on June 19, 1997. The special
advantages consist in (i) the granting of such warrants without payment as
consideration and (ii) the implementing of a fixed exercise price of 2.81 euros
per share corresponding to the estimated value of a share as of April 25, 1997.

                  Mr. Arnold Silverman is a recipient of special advantages
resulting from the grant of 90,000 warrants each entitling to the subscription
of one share, by the shareholder meeting held on April 6, 1994. The special
advantages consist in (i) the granting of such warrants without


                                      -3-

<PAGE>

payment as consideration and (ii) the implementing of a fixed exercise price of
3.7 euros per share corresponding to the estimated value of a share as of
January 31, 1993.

                  Mr. Bernard Charles is a recipient of special advantages
resulting from the grant of 75,000 warrants each entitling to the subscription
of one share, by the shareholder meeting held on June 18, 1998. The special
advantages consist in (i) the granting of such warrants without payment as
consideration and (ii) the implementing of a fixed exercise price of 4.91 euros
per share corresponding to the estimated value of a share as of June 18, 1998.

                  Mr. Albert Einsenstat is a recipient of special advantages
resulting from the grant of 45,000 warrants each entitling to the subscription
of one share, by the shareholder meeting held on June 18, 1998. The special
advantages consist in (i) the granting of such warrants without payment as
consideration and (ii) the implementing of a fixed exercise price of 4.91 euros
per share corresponding to the estimated value of a share as of June 18, 1998.

                  Mr. Arnold Silverman is a recipient of special advantages
resulting from the grant of 45,000 warrants each entitling to the subscription
of one share, by the shareholder meeting held on June 18, 1998. The special
advantages consist in (i) the granting of such warrants without payment as
consideration and (ii) the implementing of a fixed exercise price of 4.91 euros
per share corresponding to the estimated value of a share as of June 18, 1998.

                  Mr. Philippe Claude is a recipient of special advantages
resulting from the grant of 30,000 warrants each entitling to the subscription
of one share, by the shareholder meeting held on June 18, 1998. The special
advantages consist in (i) the granting of such warrants without payment as
consideration and (ii) the implementing of a fixed exercise price of 4.91 euros
per share corresponding to the estimated value of a share as of June 18, 1998.

                  Mr. Vincent Worms is a recipient of special advantages
resulting from the grant of 15,000 warrants each entitling to the subscription
of one share, by the shareholder meeting held on June 18, 1998. The special
advantages consist in (i) the granting of such warrants without payment as
consideration and (ii) the implementing of a fixed exercise price of 4.91 euros
per share corresponding to the estimated value of a share as of June 18, 1998.

                  Mr. Vincent Worms is a recipient of special advantages
resulting from the grant of 45,000 warrants giving the right to subscribe to
45,000 shares by the shareholder meeting held on May 4, 1999. The special
advantages consist in (i) the granting of such warrants without payment as
consideration and (ii) the implementing of a fixed exercise price of 7,58 euros
per share corresponding to the estimated value of a share as of May 3, 1999.

                  Mr. John Olsen is a recipient of special advantages resulting
from the grant of 22,500 warrants giving the right to subscribe to 22,500 shares
by the shareholder meeting held on February 6, 2001. The special advantages
consist in (i) the granting of such warrants without payment as consideration
and (ii) the implementing of a fixed exercise price of 57.96 euros per share
corresponding to the estimated value of a share as of February 5, 2001.

     Mr. Bernard Charles is a recipient of special advantages resulting from the
     grant of warrants giving the right to subscribe to 15,000 shares approved
     by the shareholders meeting held on


                                      -4-

<PAGE>

     June 12, 2001. The special advantages consist of (i) the grant of such
     warrants without payment as consideration and (ii) the implementing of a
     fixed exercise price of 36.13 euros per share corresponding to the
     estimated market value of one share on June 11, 2001.

     Mr. Albert Eisenstat is a recipient of special advantages resulting from
     the grant of warrants giving the right to subscribe to 15,000 shares
     approved by the shareholders meeting held on June 12, 2001. The special
     advantages consist of (i) the grant of such warrants without payment as
     consideration and (ii) the implementing of a fixed exercise price of 36.13
     euros per share corresponding to the estimated market value of one share on
     June 11, 2001.

     Mr. Arnold Silverman is a recipient of special advantages resulting from
     the grant of warrants giving the right to subscribe to 15,000 shares
     approved by the shareholders meeting held on June 12, 2001. The special
     advantages consist of (i) the grant of such warrants without payment as
     consideration and (ii) the implementing of a fixed exercise price of 36.13
     euros per share corresponding to the estimated market value of one share on
     June 11, 2001.

Article 7 - FORM OF THE SHARES - TRANSFER OF SHARES
---------------------------------------------------

                  The shares may be held in registered or bearer form, at the
shareholder's discretion, in accordance with regulations applicable to companies
listed on a regulated market.

                  The shares are entered into accounts according to the
provisions provided by law and regulations.

                  The ownership of the registered shares is evidenced by their
registration in registered accounts.

                  The shares entered into accounts are freely transferred by
transfer from one account to another.

                  Prior approval of the transferee is required only for partly
paid-up shares.

                  All costs resulting from the transfer shall be borne by the
transferee.

                  Shares with payments in arrears are not admitted to transfer.

                  Shareholders who, through one or several entities, hold shares
or voting rights representing more than 5% of the share capital or voting
rights, or any multiple thereof, must notify the Company of the total number of
Ordinary Shares or voting rights owned, within 15 days from the date these
thresholds have been reached.

                           The notification obligations would also apply each
time the percentage of capital or voting rights falls under 5% or a multiple
thereof.

                  In the event a shareholder fails to notify the Company, one or
several shareholders holding together at least 5% of the share capital or voting
rights may request that the shares or


                                      -5-

<PAGE>

voting right certificates be deprived from voting rights for as long as
notification is completed and for a two-year period thereafter.

                  The Company may request, at its expense, from the entity
tracking bearer shares transfer (SICOVAM) communication of the identity and
number of shares held by holders of bearer shares.

Article 8 - RIGHTS AND OBLIGATIONS ATTACHED TO THE SHARES
---------------------------------------------------------

                  The rights and obligations attached to a share follow the
share to any transferee to whom it may be transferred and the transfer includes
all the payable and unpaid dividends and dividends to be payable, as well as, as
the case may be, the corresponding share in the reserve funds and provisions.

                  The ownership of the a share shall imply ipso facto the
acceptance of the present Memorandum and Articles of Association and of the
decision of the general meetings.

                  In addition to the right to vote which is attached by law to
the shares, each share carries a right to a share of corporate assets, of
profits, and of liquidation surplus, proportional to the number and nominal
value of the existing shares.

                  Each time it shall be necessary to hold a certain number of
shares in order to exercise a right, it will up be to the shareholder(s) missing
such number to take the necessary actions to group a sufficient number of
shares.

                  The heirs, creditors, eligible parties or other
representatives of a shareholder cannot, for any reason whatsoever, request the
affixing of the assets of the company, or ask for their sharing or auction sale,
or to interfere in any manner in the management of the company ; they have, in
order to exercise their rights, to refer themselves to the inventories and to
the resolutions of the shareholders meetings.

                  The company may require the repurchase, subject to the
conditions set forth in article 269-8 of the law of 24th July 1966, either of
all of its shares with a preferential dividend and no voting right, or of a
category of such shares, each category being determined by the date at which it
has been issued.

Article 9 - PAYING UP OF THE SHARES
-----------------------------------

                  The amount to be paid in cash for the subscription of the
shares issued with respect to an increase of capital shall be payable according
to the terms stipulated by the extraordinary general meeting of the
shareholders.

                  The initial payment shall not be less than one half of the
nominal value of the shares at the time of the subscription; it shall include
the whole issuing premium, if any.


                                      -6-

<PAGE>

                  The remainder, which shall be paid-up in one or several times
within a period of five years as from the date of completion of such increase of
capital, shall be called upon by the board of directors.

                  Each shareholder shall be notified of the amount to be paid
and of the date at which this amount shall fall due fifteen days at least before
that date.

                  The shareholder who will not have paid at due date the amounts
due on his share(s) shall, automatically and without formal notice, owe to the
company an interest calculated day per day commencing on due date at the legal
rate in commercial matters increased by three points, without prejudice to the
personal proceedings that the company may institute against the defaulting
shareholder and to the acts of enforcement provided by law.

                                   *** *** ***



                                       ***


                                      -7-

<PAGE>

                                    TITLE III
                                    ---------

                            MANAGEMENT OF THE COMPANY
                            -------------------------

Article 10 - BOARD OF DIRECTORS
-------------------------------

                  The company is managed by a board of directors composed of
individuals or legal entities, the number of which is determined by the ordinary
general meeting of the shareholders within the limits of the law.

                  A legal entity must, at the time of its appointment, designate
an individual who will be its permanent representative on the board of
directors. The term of office of a permanent representative is the same as that
of the director he represents. When a legal entity dismisses its permanent
representative, it must at the same time provide for its replacement. The same
applies in case of death or resignation of the permanent representative.

                  Each director must own at least one share during his term of
office.

                  If, at the time of his appointment, a director does not own
the required number of shares or if, during his term of office, he ceases to be
the owner thereof, he shall have a period of three months to purchase such
number of shares, in default of which he shall be automatically deemed to have
resigned.

                  The directors are appointed for a term of three years. A year
corresponds to the period of time between two successive annual ordinary general
meetings of shareholders. The duties of a director shall terminate at the close
of the ordinary general meeting of shareholders which acts on the accounts of
the preceding financial year and is held in the year during which the term of
office of said director comes to an end.

                  The members of the board are renewed in rotation so that the
renewal be as equal as possible and in any case complete for each period of
three years. Renewal takes place according to seniority. However, when required,
the ordinary general meeting may resolve that the order of renewal will be set
by a toss drawn in a board meeting.

                  The directors may always be re-elected; they may be revoked
at any time by decision of the general meeting of the shareholders.

                  In case of death or resignation of one or several directors,
the board of directors may make provisional appointments between two meetings of
shareholders.

                  The appointment(s) so made have to be ratified by the next
general meeting of shareholders.

                  Should the meeting of the shareholders not ratify these
provisional appointments, this shall not affect the validity of the prior
resolutions and acts of the board of directors.

                                      -8-

<PAGE>

                  When the number of directors falls below the minimum required
by law, the remaining director(s) must immediately convene the ordinary general
meeting of the shareholders, in order to complete the membership of the board of
directors.

                  The director appointed in replacement of another director,
whose term of office has not come to its end shall remain in office only for the
remaining term of office of his predecessor.

                  A salaried employee of the company may be appointed as a
director. His employment contract shall correspond to a position actually held.
In such case, he shall not lose the benefit of his employment contract.

                  The number of directors  bound to the company by an employment
contract may not exceed one third of the directors in office.

                  The number of directors who are more than seventy (70) years
old may not exceed one third of the directors in office. Should such quota be
reached during the director's term of office, the appointment of the oldest
director would be automatically terminated at the close of the nearest general
meeting of the shareholders.

Article 11 - MEETING OF THE BOARD
---------------------------------

                  11.1. The board of directors shall meet as often as required
for the interest of the company.

                  11.2. The meetings of the board of directors are convened by
the president. The convening may be made by any means, in oral or written form.

                  Moreover directors, representing one third at least of the
         members of the board, may convene the board. In such case, they shall
         indicate the agenda of the meeting.

                  When a work-committee (comite d'entreprise) has been formed,
the representatives of such committee, appointed in accordance with the
provisions of the Labor Code, shall be convened to all the meetings of the board
of directors.

                  The meetings of the board are held at the registered office or
at any other place, in France or abroad.

                  11.3. The board of directors may not transact business validly
unless at least half of its members attend the meeting. A quorum shall be deemed
to exist when at least half of the directors are present at the meeting or
participate in the meeting via video-conference, subject to the conditions
determined by applicable laws and regulations then in effect.

                  The resolutions of the board of directors shall be carried out
at the majority of the directors, present or represented.

                                      -9-

<PAGE>

                  It is specified that any and all decisions to grant options to
subscribe or to buy stock to a director holding an employment contract, to the
president or to the general manager of the Company, if this latter is a
director, pursuant to authority granted by the extraordinary general meeting,
pursuant to the provisions set forth in articles 208-1 and the following of the
Law of July 24, 1966 on commercial companies shall be adopted by the affirmative
vote of the majority of the directors present or represented at the Board
meeting, the interested director, and any other director to whom options to
subscribe or to buy stock may be granted, being conclusively refrained from
voting.

                  11.4. Any director may give to another director, by letter,
cable or telex, a proxy to be represented at a meeting of the board. However,
each director may only dispose of one proxy during each meeting.

                  11.5. The copies or extracts of the minutes of the board of
directors are validly certified by the president of the board of directors, a
general manager, the director temporarily delegated in the duties of president
or by a representative duly authorized for that purpose.

Article 12 - POWERS OF THE BOARD
--------------------------------

                  The board of directors is vested with the most extensive
powers to act under all circumstances on behalf of the company, and to make any
decisions relating to all acts of administration and disposition. The board
shall exercise these powers within the limits of the purposes of the company,
and of the powers expressly granted by law to the general meetings of the
shareholders.

Article 13 - GENERAL MANAGEMENT OF THE COMPANY
----------------------------------------------

                  The board of directors shall elect a president, who must be an
individual, from among its members. It shall determine his term of office, which
cannot exceed that of his office as director and may dismiss him at any time.
The board sets his remuneration.

                  The president of the board is responsible for the general
management of the company.

                  The president is vested with the most extensive powers to act
under all circumstances on behalf of the company within the limits of the goals
of the company, except for those powers expressly granted by law to the meetings
of shareholders and those specially reserved to the board of directors.

                  The president of the board cannot be more than sixty five (65)
years old. Should the president reach this age limit during his term of office
as president, his office would automatically terminate. Subject to this
provision, the president of the board may always be reelected.

                                      -10-

<PAGE>

Article 14 - GENERAL MANAGER (Directeur General)
----------------------------

                  Upon proposal of the president, the board of directors may
appoint one or several individuals to assist the president as general manager.
The general manager(s) may be revoked at any time by the board of directors upon
proposal of the president.

                  In agreement with the president, the board of directors shall
determine the scope and the duration of the powers delegated to the general
manager. The board sets his remuneration. When a general manager is a director,
his term of office may not exceed that of his directorship.

                  As regards third parties, general managers have the same
powers as the president. The general managers are, among others, vested with the
powers to bring a matter to court.

                  Any general manager cannot be more than sixty-five (65) years
old. Should a general manager reach this age limit during his term of office as
general manager, his duties would automatically terminate. This term may be
prolonged however until the next meeting of the board during which the new
general manager will be appointed.

                  The board may appoint two general managers should the share
capital be of at least five hundred thousand (500,000) francs. Five general
managers may be appointed should the share capital be of at least ten million
(10,000,000) francs, provided that at least three of them are directors.

Article 15 - AGREEMENTS SUBJECT TO AUTHORIZATION
------------------------------------------------

                  15.1. Any sureties, endorsements and guarantees granted by the
company must be authorized by the board of directors as provided by law.

                  15.2. Any agreement to be entered into between the company and
one of its directors or general manager(s), whether directly or indirectly or
through an intermediary, must be submitted for the prior authorization of the
board of directors.

                  Such prior authorization is also required for agreements
between the company and another enterprise, should one of the directors or
general managers of the company be owner, partner with unlimited liability,
manager, director, general manager, member of the management committee
(directoire) or supervisory council (conseil de surveillance) of said
enterprise.

                  Such prior authorization shall be sought as provided by law.

Article 16 - PROHIBITED AGREEMENTS
----------------------------------

                  Directors, other than legal entities, are forbidden to
contract, in any form whatsoever, loans from the company, to secure an overdraft
from it, as a current account or otherwise, and to have the company guarantee or
secure their commitments toward third parties.

                                      -11-

<PAGE>

                  The same prohibition applies to general managers and to the
permanent representatives of legal entities which are directors. It also applies
to spouses, ascendants and descendants of the persons referred to in this
article, as well as to all interposed persons.

Article 17 - STATUTORY AUDITORS (Commissaires aux comptes)
-------------------------------

                  Audits of the company shall be carried out, as provided by
law, by one or more statutory auditors legally entitled to be elected as such.
When the conditions provided by law are met, the company must appoint at least
two supervisory auditors.

                  Each statutory auditor shall be appointed by the ordinary
general meeting.

                  One or more deputy statutory auditors, who may be called to
replace the regular statutory auditors in the case of death, disability,
resignation or refusal to act of the latter, shall be appointed by an ordinary
general meeting.

                  Should the general ordinary meeting of the shareholders fail
to elect a statutory auditor, any shareholder can claim in court that one be
appointed, provided that the President of the board of directors be duly
informed. The term of office of the statutory auditor appointed in court will
end upon the appointment of the statutory auditor(s) by the general ordinary
meeting of the shareholders.

                                   *** *** ***




                                       ***

                                      -12-


<PAGE>

                                    TITLE IV
                                    --------

                            MEETINGS OF SHAREHOLDERS
                            ------------------------

Article 18
----------

                  The general meetings of shareholders shall be convened and
held as provided by law.

                  The meetings of shareholders are held at the registered office
         or at any other place mentioned in the convening notices.

                  The right to take part in a general meeting of shareholders:

                  For holders of registered shares is subject to the
registration of the shareholder in the books of the company, at least one
business day prior to the date of the meeting.

                  For holders of bearer Ordinary Shares is subject to the
         filing, at least one business day prior to such shareholders' meeting,
         of a certificate stating that shares are not transferable until the
         date of such shareholders' meeting.

                  A shareholder who cannot attend the meeting in person may
choose either :

                  - to give a proxy to another shareholder or to his/her spouse,
                  or

                  - to vote by mail, or

                  - to send to the company a proxy without any indication of the
                  name of the representative;

within the terms and conditions provided by law and these by-laws.

     Upon the decision of the board of directors published in the notice of any
     shareholders meeting, shareholders may, subject to the provisions of and
     procedures under applicable laws, send their proxy or voting instructions
     either on paper or using a teletransmission mean.

                  To be taken into account, the proxies and the forms of vote by
mail must be deposited with the company at least one business day prior to the
date of the meeting.

                  Meetings of shareholders are presided over by the president of
the board of directors or in his absence, by a director specially authorized for
that purpose by the board. If no president has been appointed, the meeting
elects its president.

                  The two members of the meeting having the greatest number of
votes and who accept that role, are appointed as scrutineers. The officers of
the meeting appoint a secretary, who may be a non-shareholder.

                                      -13-

<PAGE>

                  An attendance sheet is drawn up, in accordance with the law.

                  The ordinary general meeting of the shareholders, upon first
convening notice, may transact business validly only if the shareholders
present, or represented, hold at least one fourth of the voting shares. Upon
second convening notice, the general meeting may transact business validly
whatever the number of shareholders present or represented.

                  The resolutions of the ordinary general meeting shall be
carried out at the majority vote of the shareholders, present or represented.

                  The extraordinary general meetings of the shareholders, upon
first convening notice, may transact business validly only if the shareholders
present, or represented by proxy, hold at least one third of the voting shares.
Upon second convening notice, the extraordinary general meeting may transact
business validly only if the shareholders present or represented by proxy hold
at least one fourth of the voting shares.

                  The resolutions of the extraordinary general meeting shall be
carried out at a two third majority vote of the shareholders, present or
represented.

                  The copies or extracts of the minutes of the meeting are
certified by the president of the board of directors, by a director acting as
general manager, or by the secretary of the meeting.

                  The ordinary and extraordinary meetings of shareholders
exercise their respective powers as provided by law.

                                   *** *** ***




                                       ***

                                      -14-


<PAGE>

                                     TITLE V
                                     -------

                             RESULTS OF THE COMPANY
                             ----------------------

Article 19 - FINANCIAL YEAR
---------------------------

                  Each fiscal year is of one year beginning on January 1 and
ending on December 31.

Article 20 - PROFITS - LEGAL RESERVE FUNDS
------------------------------------------

                  Out of the profit of a fiscal year, reduced by prior losses if
any, an amount equal to at least 5 % thereof is first deducted in order to form
the legal reserve fund provided by law. This deduction is no longer required
when the legal reserve fund amounts to one tenth of the capital of the company.

                  Distributable profit is the profit of a fiscal year, reduced
by prior losses and by the deduction provided for in the preceding paragraph and
increased by the profits carried forward.

Article 21 - DIVIDENDS
----------------------

                  If there results a distributable profit from the accounts of
the fiscal year, as approved by the general meeting, the general meeting may
decide to allocate it to one or several reserve funds, the appropriation or use
of which it shall determine, or to carry it forward or to distribute it as
dividends.

                  Furthermore, after having established the existence of
reserves which it may dispose of, the general meeting may decide the
distribution of amounts paid out of such reserves. In such case, the payments
shall be made. However, the dividends shall be set off by priority on the
distributable profit of the financial year.

                  The general meeting shall determine the terms of payment of
dividends ; failing such determination, these terms shall be determined by the
board of directors.

                  However, the dividends must be declared payable no more than
nine months following the close of the financial year.

                  The general meeting deciding upon the accounts of a fiscal
year will be entitled to grant to each shareholder, for all or part of the
distributed dividends, an option between payment in cash or in shares.

                  Similarly, should the ordinary general meeting resolve the
distribution of interim dividends pursuant to article 347 of the law of 24th
July 1966, it will be entitled to grant to each

                                      -15-

<PAGE>

shareholder an interim dividend and, for all or part of the said interim
dividend, an option between payment in cash or in shares.

                  The offer of payment in shares, the price and the conditions
as to the issuing of such shares, together with the request for payment in
shares and the conditions of the completion of the capital increase will be
governed by the law and regulations.

                  When a balance sheet, drawn up during, or at the end of the
fiscal year, and certified by the statutory auditor(s), shows that the company,
since the close of the preceding fiscal year, after having made the necessary
depreciations and provisions and after deduction of the prior losses, if any, as
well as of the amounts which are to be allocated to the reserve fund provided by
law or by the by-laws, has made profits, the board of directors may resolve the
distribution of interim dividends prior to the approval of the accounts of the
fiscal year, and may determine the amount thereof and the date of such
distribution. The amount of such interim dividends cannot exceed the amount of
the profits as defined in this paragraph. In this case, the option described in
the preceding paragraph shall not be available.

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                                      -16-


<PAGE>

                                    TITLE VI
                                    --------

                            DISSOLUTION - LIQUIDATION
                            -------------------------

Article 22 - PREMATURE DISSOLUTION
----------------------------------

                  The extraordinary general meeting may at any time declare the
dissolution of the company before the expiration of its stated duration under
the present Memorandum and Articles of Association.

Article 23 - LOSS OF ONE HALF OF THE CAPITAL OF THE COMPANY
-----------------------------------------------------------

                  If, as a consequence of losses showed by the company's
accounts, the net assets (capitaux propres) of the company are reduced below one
half of the capital of the company, the board of directors must, within four
months from the approval of the accounts showing this loss, convene an
extraordinary general meeting of shareholders in order to decide whether the
company ought to be dissolved before its statutory term.

                  If the dissolution is not declared, the capital must, at the
latest at the end of the second fiscal year following the fiscal year during
which the losses were established and subject to the legal provisions concerning
the minimum capital of societes anonymes, be reduced by an amount at least equal
to the losses which could not be charged on reserves, if during that period the
net assets have not been restored up to an amount at least equal to one half of
the capital.

                  In the absence of the meeting of shareholders, or in the case
where this meeting has not been able to validly act, any interested party may
institute legal proceedings to dissolve the company.

Article 24 - EFFECT OF THE DISSOLUTION OF THE COMPANY
-----------------------------------------------------

                  The company is in liquidation as soon as it is dissolved for
any reason whatsover. It continues to exist as a legal entity for the needs of
this liquidation until the liquidation is completed.

                  During the period of the liquidation, the general meeting
shall retain the same powers it exercised during the life of the company.

                  The shares shall remain transferable until the completion of
the liquidation proceedings.

                  The dissolution of the company is only valid vis a vis third
parties as from the date at which it is published at the register of commerce.

                                      -17-

<PAGE>

Article 25 - APPOINTMENT OF LIQUIDATORS - POWERS
------------------------------------------------

                  Upon the expiration of the term of existence of the company or
in the case of its premature dissolution, the meeting of the shareholders shall
decide the method of liquidation and appoint one or several liquidators whose
powers it will determine. The liquidators will exercise their duties according
to the law. The appointment of the liquidator(s) terminates the offices of the
directors.

Article 26 - LIQUIDATION - CLOSING
----------------------------------

                  After payment of the liabilities, the remaining assets shall
be used first for the payment to the shareholders of the amount paid for their
shares and not amortized.

                  The balance, if any, shall be divided among all the
shareholders.

                  The shareholders shall be convened at the end of the
liquidation in order to decide on the final accounts, to discharge the
liquidator from liability for his acts of management and the performance of his
office, and to take notice of the closing of the liquidation.

                  The closing of the liquidation is published as provided by
law.

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                                      -18-


<PAGE>

                                    TITLE VII
                                    ---------

                                  NOTIFICATIONS
                                  -------------

Article 27 - NOTIFICATIONS
--------------------------

                  All notifications provided for in the present Memorandum and
Articles of Associations shall be made either by registered mail with
acknowledgment of receipt or by process server. Simultaneously a copy of the
notification shall be sent to the recipient by ordinary mail.

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                                      -19-