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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the Year Ended
    December 31, 2005o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For 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

98-0355777(State or other jurisdiction of
    incorporation)

(I.R.S. Employer Identification
    Number)   157-159 rue Anatole France, 92300 Levallois-Perret, France
 (Address of principal executive
    offices)
  (408) 953-6000
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
 None
  Securities registered pursuant to Section 12(g) of the
    Act:
   Title of Each Class:

Name of Each Exchange on Which
    Registered:American depositary shares, each
    representing
    one ordinary share*

Nasdaq National Market 
    Eurolist by
    Euronexttm,
    France   *
    
    Ordinary shares are not traded in
    the United States, but rather they are deposited with The Bank
    of New York, as Depositary. Each American depositary share
    represents one ordinary share.  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 Large accelerated
    filer þ          
    Accelerated
    filer o     Non-accelerated
    filer o
  Rule 12b-2 o þ
    Sub-Plan




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Trademarks
  Form 10-K Form 10-K
  Reporting
    Currency
    American
    Depositary Shares
  Form 10-K.




---



##### 



BUSINESS
    OBJECTS S.A.
  TABLE OF
    CONTENTS
  PagePART IItem 1.

Business


1Item 1A.

Risk Factors


11Item 1B.

Unresolved Staff
    Comments


29Item 2.

Properties


29Item 3.

Legal
    Proceedings


29Item 4.

Submission of
    Matters to a Vote of Security Holders


32PART IIItem 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


33Item 6.

Selected Financial
    Data


35Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


37Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


55Item 8.

Financial
    Statements and Supplementary Data


58Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


109Item 9A.

Controls and
    Procedures


109Item 9B.

Other
    Information


109PART IIIItem 10.

Directors and
    Executive Officers of the Registrant


110Item 11.

Executive
    Compensation


116Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


118Item 13.

Certain
    Relationships and Related Transactions


120Item 14.

Principal
    Accountant Fees and Services


121PART IVItem 15.

Exhibits and
    Financial Statement Schedules


122EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




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PART I  This Annual Report on
    Form 10-K
    contains forward-looking statements based on our expectations,
    assumptions, estimates and projections about Business Objects
    and our industry as of the filing date of this
    Form 10-K.
    These statements include, but are not limited to, statements
    concerning: our strategy, including our expected financial
    performance, continued sales of our existing products and
    services as well as sales of our Business Objects XI product
    offering, the impact of exchange rates on our operations, the
    integration by us and acceptance by the market of companies we
    acquire and their products, the impact of stock compensation
    expense on our financial results and our ability to continue to
    maintain effective internal controls over financial reporting .
    Actual events or results may differ materially from those
    described in this document due to a number of risks and
    uncertainties. The potential risks and uncertainties include,
    among others, our ability to attract and retain customer support
    for Business Objects XI; our ability to recognize revenues from
    new OEM and reseller agreements; the introduction of new
    products by competitors or the entry of new competitors into the
    markets for Business Objects products; the impact of the
    pricing of competing technologies; and economic and political
    conditions in the U.S. and abroad. These forward-looking
    statements involve risks and uncertainties. Our actual results
    could differ materially from those indicated in these
    forward-looking statements as a result of certain factors, as
    more fully described in Part I, Item 1A in Risk
    Factors and elsewhere in this
    Form 10-K.
    We undertake 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.
  Item 1.
    Business  Our
    Company
        www.businessobjects.com
  Industry
    Background
  Business
    Strategy
   1




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Extending
    our lead in the Enterprise market
        Expanding
    into the Analytic Solutions market
  line-of-business.
    Expanding
    into the Enterprise Information Management market
     2




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Expanding
    our position in the Mid-market
      
    Channel development:  increase number of
    partners, new vertical areas of expertise, and channel-focused
    marketing initiatives
    Pricing and packaging:  to fit the requirements
    of our customers and partners while responding to market needs
    Product innovation:  additional products under
    the Crystal brand to meet the needs of mid-market organizations  Growing
    our Services Business
    Products
    Enterprise
    customers
      Mid-market
    customers
   3




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Core
    Business Intelligence
    
    Our business intelligence platform which provides customers with
    the technology to enable them to support users inside and
    outside of the organization. This includes the ability to
    deploy, control, and manage their deployments from departmental
    to enterprise-level communities of customers.
    Reporting tools facilitate accessing data, formatting it, and
    delivering it as information to users inside and outside the
    organization.
    Our query and analysis products allow end users to interact with
    business information and answer ad-hoc questions themselves
    without advanced knowledge of the underlying data sources and
    structures. A range of users  from experienced
    data analysts to mainstream business users  can
    create queries and perform calculations without having to
    understand complex database languages or structures. Users can
    then share the information they create with others across the
    organization and beyond.  Enterprise
    Information Management
    Enterprise
    Performance Management
    Services
  Post-Sales
    Customer Support and Software Maintenance
     4




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Global
    Services
      
    Consulting Services.  Committed to delivering
    business performance improvement to our customers, we
    collaborate with our clients to enable their success through the
    innovative use of business, technology, and information assets.
    With consulting resources versed in the latest BI technologies
    and in-depth industry knowledge, our focus is on providing
    complete business intelligence solutions that are critical to
    our clients success.    
    Customer Education.  Business Objects Education
    Services offers training from certified experts, with authorized
    curriculums and course materials. Our team and network of
    authorized education partners focus on helping customers achieve
    better business value via training plan development services,
    comprehensive offerings, and flexible delivery.    Sales &
    Marketing
    face-to-face
    Strategic
    Relationships
   5




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and/or
    and/or
    Industry
    Focus
    
    Retail:  We provide the worlds top
    retailers with software to improve purchasing, profitability,
    marketing efforts, inventory and store management, customer
    service, and financial reporting.
    Consumer Packaged Goods:  We provide a
    comprehensive set of BI solutions to improve performance in the
    consumer product goods (CPG) industry. Our CPG customers include
    makers of fine apparel, personal and household care products,
    food and beverages, paper and business forms, and pet products.
    Financial Services:  We provide a comprehensive
    set of business intelligence solutions to improve performance in
    the banking, brokerage, consumer credit, investment banking, and
    insurance industries.
    Government:  We are a leading provider of
    business intelligence solutions to governments, educational
    organizations, and defense agencies.
    Healthcare:  Our BI solutions help healthcare
    professionals provide higher quality customer care while keeping
    costs down.
    Communications:  We provide solutions to the
    leading wire line, wireless, broadband, internet service
    provider, and satellite carriers around the world, which help
    them increase revenue and customer retention while reducing
    operational costs.    Product
    Development
   6




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Competition
  and/or
  
    Large, pure-play business intelligence vendors. Our direct
    competitors here are Cognos Inc. and Hyperion Solutions Corp.
    Larger companies whose core business is primarily applications
    (ERP, CRM, and SCM) or databases. Our competitors here include
    IBM, Microsoft Corporation, Oracle Corporation, and SAP AG.
    Small and/or
    niche business intelligence vendors. These companies include
    Actuate Corporation, Informatica Corporation, Information
    Builders, MicroStrategy, Inc., and the SAS Institute.      Patents
    and Intellectual Property Protection
    ,
   7




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8




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Employees
    
    915 in research and development;
    1,740 in sales and marketing;
    1,209 in customer service and support, including 658 in
    professional services; and
    554 in finance and administration. 9




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Confédération Francaise
    Démocratique du Travail  since October 2002
    and by the CGT Union  Confédération
    Générale du Travail
  comité dentreprise
      Philanthropy
    Executive
    Officers of the Registrant
  Form 10-K.
  Where You
    Can Find Additional Information
    Form 10-K, Form 10-Q, Form 8-K Form 10-K.
   10




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Bulletin des Announces Légales Obligatoires French Journal Official http://balo.journal-officiel.gouv.fr/ Autorité des Marches Financiers Document de Référence www.amf-france.org
  www.france.businessobjects.com
 Item 1A.  Risk
    Factors  We operate in a rapidly changing environment that involves
    numerous risks and uncertainties. Before you invest in any of
    our securities, you should be aware of various risks to which we
    may be subject, including those described below. The following
    risks and uncertainties may have a material and adverse effect
    on our business, financial condition or results of operations.
    You should carefully consider these risks and uncertainties,
    together with all of the other information included or
    incorporated by reference in this Annual Report on
    Form 10-K,
    before you decide whether to purchase any of our securities. If
    any of the risks or uncertainties we face were to occur, the
    trading price of our securities could decline, and you may lose
    all or part of your investment.
  Risks
    Related to Our Business
  Our
    quarterly operating results have been and will continue to be
    subject to fluctuations.
    
    we typically record a substantial amount of our revenues in the
    last weeks of the last month of a quarter, rather than evenly
    throughout the quarter;
    our customers typically wait until their fourth quarter, the end
    of their annual budget cycle, before deciding whether to
    purchase new software;
    economic activity in Europe generally slows during the summer
    months;
    customers may delay purchase decisions in anticipation of
    (i) changes to our product line, (ii) new products or
    platforms, (iii) product enhancements or (iv) in
    response to announced pricing changes by us or our competitors;
    our revenues typically vary based on the mix of products and
    services and the amount of consulting services that our
    customers order, and we expect this trend to continue for the
    foreseeable future;
    we depend, in part, on large orders and any delay in closing a
    large order may result in the realization of potentially
    significant net license fees being postponed from one quarter to
    the next; and
    our revenues are typically sensitive to the timing of offers of
    new products that successfully compete with our products on the
    basis of functionality, price or otherwise, and we expect this
    trend to continue for the foreseeable future.   11




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We may
    be unable to sustain or increase our
    profitability.
    Our
    revenues may be unpredictable due to the recent release of our
    Business Objects XI product, which integrates our existing
    Business Objects and Crystal Decisions product lines, and the
    expected end of life of our separate, existing Business Objects
    and Crystal Decisions products.
        If we
    overestimate revenues, and are unable to sufficiently reduce our
    expenses in any quarter, this could have a negative impact on
    our quarterly results of operations.
     12




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Changes
    to current accounting policies could have a significant effect
    on our reported financial results or the way in which we conduct
    our business.
  Document de Référence No. R.05-049.
    
    accounting for stock-based compensation;
    accounting for business combinations;
    accounting for goodwill and other intangible assets
    accounting for uncertain tax positions;
    earnings per share; and
    software revenue recognition    The
    requirement to expense stock options in our income statement
    could have a significant adverse effect on our reported results,
    and we do not know how the market will react to reduced
    earnings
       13




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Our
    market is highly competitive, which could harm our ability to
    sell products and services and reduce our market
    share.
      Some
    of our competitors may have greater financial, technical, sales,
    marketing and other resources than we do. In addition,
    acquisitions of or other strategic transactions by our
    competitors could weaken our competitive position or reduce our
    revenues.
      We may
    pursue strategic acquisitions and investments that could have an
    adverse effect on our business if they are
    unsuccessful.
   14




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We
    have strategic relationships with Microsoft, SAP and Oracle
    which, if terminated, could reduce our revenues and harm our
    operating results.
    We
    sell products only in the business intelligence software market;
    if sales of our products in this market decline, our operating
    results will be harmed.
    If the
    market in which we sell business intelligence software does not
    grow as anticipated, our future profitability could be
    negatively affected.
    
    not fully value the benefits of using business intelligence
    products;
    not achieve favorable results using business intelligence
    products;
    experience technical difficulty in implementing business
    intelligence products;
    decide to use other technologies, such as search engines, to
    obtain the required business intelligence for their users.    Our
    software may have defects and errors that could lead to a loss
    of revenues or product liability claims.
    
    potential customers may delay purchases;
    customers may react negatively, which could reduce future sales; 15




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
    our reputation in the marketplace may be damaged;
    we may have to defend product liability claims;
    we may be required to indemnify our customers, distributors,
    original equipment manufacturers or other resellers;
    we may incur additional service and warranty costs; and
    we may have to divert additional development resources to
    correct the defects and errors, which may result in the delay of
    new product releases or upgrades.    We may
    have difficulties providing and managing large scale
    deployments, which could cause a decline or delay in recognition
    of our revenues and an increase in our expenses.
      Business
    disruptions could seriously harm our operations and financial
    condition and increase our costs and expenses.
           16




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While
    we believe that we currently have adequate internal control over
    financial reporting, we are exposed to risks from recent
    legislation requiring companies to evaluate internal control
    over financial reporting.
      We
    cannot be certain that our internal control over financial
    reporting will be effective or sufficient in the
    future.
      The
    software market in which we operate is subject to rapid
    technological change and new product introductions, which could
    negatively affect our product sales.
    
    adapting third party technology, including open source software;
    successful education and training of sales, marketing and
    consulting personnel;
    effective marketing and market acceptance; 17




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
    proper positioning and pricing; and
    product quality, including possible defects.    We are
    currently a party to several lawsuits with MicroStrategy. The
    prosecution of these lawsuits could have a negative impact on
    our business. Should MicroStrategy prevail, we may be required
    to pay substantial monetary damages or be prevented from selling
    some of our products.
       18




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We are
    a party to litigation with Vedatech Corporation and, in the
    event of an adverse judgment against us, we may have to pay
    damages, which could adversely affect our financial position and
    results of operations.
   19




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We are
    a party to litigation with Informatica and, in the event of an
    adverse judgment against us, we may have to pay damages or be
    prevented from selling some of our products, either of which
    could adversely affect our financial position and results of
    operations.
      We are
    a party to litigation with Decision Warehouse. The prosecution
    of this lawsuit could have a substantial negative impact on our
    business. Should Decision Warehouse prevail, we may be required
    to pay substantial monetary damages.
  Decision Warehouse Consultoria E
    Importacao Ltda. Business Objects Do Brasil,
    Ltda.
 20




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Business Objects Do Brasil, Ltda. Decision Warehouse Consultoria E
    Importacao Ltda.
  We
    have committed to undertake certain internal practices in
    connection with handling of employee information.
    The
    protection of our intellectual property rights is crucial to our
    business and, if third parties use our intellectual property
    without our consent, our business could be
    damaged.
    
    policing unauthorized copying or use of our products is
    difficult and expensive;
    software piracy is a persistent problem in the software industry;
    our patents may be challenged, invalidated or
    circumvented; and
    our shrink-wrap licenses may be unenforceable under the laws of
    certain jurisdictions.       21




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Third
    parties have asserted that our technology infringes upon their
    proprietary rights, and others may do so in the future, which
    has resulted, and may in the future result, in costly litigation
    and could adversely affect our ability to distribute our
    products.
      
    we would need to commit management resources in defense of the
    claim;
    we may incur substantial litigation costs in defense of the
    claim;
    we may have to expend significant development resources to
    redesign our products;
    we may be required to enter into royalty and licensing
    agreements with such third party under unfavorable
    terms; and
    we could be forced to cease selling or delay shipping our
    products should an adverse judgment be rendered against us.         22




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Our
    loss of rights to use software licensed from third parties could
    harm our business.
    We
    depend on strategic relationships and business alliances for
    continued growth of our business.
        Our
    executive officers and key employees are crucial to our
    business, and we may not be able to recruit, integrate and
    retain the personnel we need to succeed.
   23




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We
    have multinational operations that are subject to risks inherent
    in international operations.
    
    technical difficulties and costs associated with product
    localization;
    challenges associated with coordinating product development
    efforts among geographically dispersed development centers;
    potential loss of proprietary information due to piracy,
    misappropriation, or laws that may be less protective of our
    intellectual property rights;
    lack of experience in certain geographic markets;
    longer payment cycles for sales in certain foreign countries;
    seasonal reductions in business activity in the summer months in
    Europe and certain other countries;
    the significant presence of some of our competitors in some
    international markets;
    potentially adverse tax consequences;
    import and export restrictions and tariffs;
    foreign laws and other government controls, such as trade and
    employment restrictions;
    management, staffing, legal and other costs of operating an
    enterprise spread over various countries;
    political instability in the countries where we are doing
    business; and
    fears concerning travel or health risks that may adversely
    affect our ability to sell our products and services in any
    country in which the business sales culture encourages
    face-to-face
    interactions.
    Less well developed business practices and regulations, leading
    to potential need to defer the recognition of revenue earned in
    these areas    Fluctuations
    in exchange rates between the euro, the U.S. dollar and the
    Canadian dollar, as well as other currencies in which we do
    business, may adversely affect our operating
    results.
    and/or
   24




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Our
    effective tax rate may increase or fluctuate, which could
    increase our income tax expense and reduce our net
    income.
    
    changes in forecasted annual operating income;
    changes in relative proportions of revenues and income before
    taxes in the various jurisdictions in which we operate;
    changes to the valuation allowance on net deferred tax assets;
    changes to actual or forecasted permanent differences between
    book and tax reporting, including the tax effects of purchase
    accounting for acquisitions and non-recurring charges which may
    cause fluctuations between reporting periods;
    impacts from any future tax settlements with state, federal or
    foreign tax authorities;
    impacts from changes in tax laws, regulations and
    interpretations in the jurisdictions in which we operate, as
    well as the requirements of certain tax rulings; or
    impacts from new FASB or IFRS requirements.    We are
    subject to frequent tax audits, where the ultimate resolution
    may result in additional taxes.
     25




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Risks
    Related to Ownership of Our Ordinary Shares or ADSs
  Additional
    sales of our shares by New SACs shareholders, our employees or
    issuances by us in connection with future acquisitions could
    adversely affect the market price of our shares.
    Provisions
    of our articles of association and French law could have
    anti-takeover effects and could deprive shareholders who do not
    comply with such provisions of some or all of their voting
    rights.
  1 3 2 3 12-month
    and/or and/or and/or
   26




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Holders
    of our shares have limited rights to call shareholders
    meetings or submit shareholder proposals, which could adversely
    affect their ability to participate in governance of our
    company.
    Interests
    of our shareholders will be diluted if they are not able to
    exercise preferential subscription rights for our
    shares.
  droits préférentiels de souscription
    It may
    be difficult for holders of our ADSs rather than our ordinary
    shares to exercise some of their rights as
    shareholders.
   27




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Fluctuation
    in the value of the U.S. dollar relative to the euro may
    cause the price of our ordinary shares to deviate from the price
    of our ADSs.
    We
    have not distributed dividends to our shareholders and do not
    anticipate doing so in the near future.
    The
    market price of our shares is susceptible to changes in our
    operating results and to stock market
    fluctuations.
    
    quarterly variations in our results of operations;
    announcements of technological innovations or new products by
    us, our customers or competitors;
    announcements of our quarterly operating results and expected
    results of the future periods;
    our failure to achieve the operating results anticipated by
    analysts or investors;
    sales or the perception in the market of possible sales of a
    large number of our shares by our directors, officers, employees
    or principal stockholders;
    announcements of our competitors or customers quarterly
    operating results, and expected results of future periods;
    addition of significant new customers or loss of current
    customers;
    international political, socioeconomic and financial
    instability, including instability associated with military
    action in Afghanistan and Iraq or other conflicts;
    releases or reports by or changes in security and industry
    analysts recommendations; and
    developments or disputes concerning patents or proprietary
    rights or other events.   28




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Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties            Item 3.
    Legal
    Proceedings       29




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30




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31




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Item 4.
    Submission
    of Matters to a Vote of Security Holders    Exemptions
    from Certain Nasdaq Corporate Governance Rules
  1 3
   32




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  U.S. Market
    Information
    French
    Market Information
  Continu Continu Continu
  Service à
    Règlement Différé (date de liquidation)
    tm tm
 33




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High and
    Low Price Ranges
    Price per OrdinaryPrice per ADS


ShareHigh


Low


High


Low2005:Fourth Quarter

$
41.50


$
32.82



34.78



27.60Third Quarter

$
36.09


$
26.30



29.03



22.08Second Quarter

$
28.79


$
25.23



23.45



19.57First Quarter

$
28.07


$
22.49



21.42



17.052004:Fourth Quarter

$
25.78


$
21.07



20.69



16.25Third Quarter

$
23.79


$
17.43



19.00



14.19Second Quarter

$
31.00


$
18.89



25.40



15.97First Quarter

$
38.34


$
27.40



30.68



22.16   Sub-Plan
  Dividends.
  Issuer
    Purchases of Equity Securities
  Sub-Plan
 34




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Item 6.
    Selected
    Financial Data  Form 10-K. Form 10-K. Form 10-K.
  Year Ended
    December 31,2005


2004


2003(1)


2002


2001(In thousands, except per
    ordinary share and ADS data)Statement of Income
    DataRevenues:Net license fees

$
515,637


$
473,373


$
275,261


$
243,955


$
249,594Services


561,514



452,258



285,564



210,844



166,200Total revenues


1,077,151



925,631



560,825



454,799



415,794Cost of revenues:Net license fees


29,715



28,272



5,951



3,102



2,155Services


216,626



172,133



89,005



71,489



63,497Total cost of revenues


246,341



200,405



94,956



74,591



65,652Gross profit


830,810



725,226



465,869



380,208



350,142Operating expenses:Sales and marketing


434,432



406,796



250,870



222,243



203,655Research and development


162,540



150,562



95,399



74,991



55,246General and administrative


97,910



83,947



44,655



29,387



24,256Acquired in-process research and
    development


3,584







27,966



2,000



Restructuring costs


150



2,169



7,782



3,871



Amortization of goodwill(2)


















4,492Total operating expenses


698,616



643,474



426,672



332,492



287,649Income from operations


132,194



81,752



39,197



47,716



62,493Interest and other income
    (expense), net


14,304



(4,220
)


14,334



18,959



10,460Income before provision for income
    taxes


146,498



77,532



53,531



66,675



72,953Provision for income taxes


(53,873
)


(30,409
)


(30,969
)


(26,095
)


(28,075
)Net income

$
92,625


$
47,123


$
22,562


$
40,580


$
44,878Basic net income per ordinary
    share and ADS

$
1.02


$
0.53


$
0.35


$
0.66


$
0.74Diluted net income per ordinary
    share and ADS

$
1.00


$
0.52


$
0.34


$
0.63


$
0.70Ordinary shares and ADSs used in
    computing basic net income per ordinary share and ADS


90,405



88,748



64,584



61,888



60,879Ordinary shares and ADSs and
    equivalents used in computing diluted net income per ordinary
    share and ADS


93,036



91,077



66,168



63,933



64,361  35




---



##### Table of Contents



At December 31,2005


2004


2003(1)


2002


2001(In thousands)Balance Sheet Data:Cash, cash equivalents, short-term
    investments and restricted cash

$
380,443


$
311,359


$
257,955


$
301,509


$
251,509Total Assets


2,123,358



1,922,928



1,775,062



551,808



421,469Working capital


195,199



112,844



49,513



225,513



193,150Long-term liabilities


29,360



20,363



4,950



17,441



3,174     (1)
    
    We acquired Crystal Decisions on December 11, 2003 for a
    total purchase price of approximately $1.2 billion. The
    purchase price consisted of the payment of $307.6 million
    in cash to former shareholders of Crystal Decisions, which was
    paid out of general cash reserves, and the issue of
    23.3 million ADSs. We acquired the fair value of the net
    tangible and intangible assets on purchase, including
    $978.0 million of goodwill and $142.7 million of
    amortizable intangible assets. The statement of income for 2003
    includes the revenues and expenses of Crystal Decisions for the
    20 days ended December 31, 2003. Our acquisition of
    Crystal Decisions had a $38.0 million negative impact on
    operating income for 2003 due to the $28.0 million
    write-off of acquired in-process research and development,
    $2.2 million in amortization of acquired intangible assets
    and deferred stock-based compensation expense, $7.5 million
    in integration related costs and $7.8 million in
    restructuring costs. These costs were partially offset by the
    $7.4 million of operating income earned by Crystal
    Decisions during the 20 days in 2003 that we operated as a
    combined company.(2)
    
    We no longer amortize goodwill effective January 1, 2002
    with our adoption of Statement of Financial Accounting Standard
    (FAS) No. 142, Goodwill and Other
    Intangible Assets. 36




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion and analysis should be read together
    with our Consolidated Financial Statements and the Notes to
    those statements included elsewhere in this
    Form 10-K.
    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 Factors
    Affecting Future Operating Results section of this
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations and elsewhere in this
    Form 10-K.
    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
  Our
    Business
      Sources
    of Revenues and Expenses
  Net
    License Fees
    Services
    Revenues
      Costs
    of Revenues
   37




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##### Table of Contents



Operating
    Expenses
    Share-based Payments Recent Accounting
    Pronouncements
  Key
    Performance Indicators
  Year Ended
    December 31,2005


2004


2003(In millions, except for % and
    EPS)Revenues

$
1,077.2


$
925.6


$
560.8Revenues growth


16
%


65
%


23
%Operating income

$
132.2


$
81.8


$
39.2Income from operations as
    percentage of total revenues


12
%


9
%


7
%Diluted earnings per share

$
1.00


$
0.52


$
0.34       New
    Products
   38




---



##### Table of Contents



Seasonality
    Impact
    of Foreign Currency Exchange Rate Fluctuations on Results of
    Operations
        Year Ended
    December 31,2005


2004


2003Total revenues

$
4.5


$
49.1


$
43.3Total cost of revenues


3.4



10.5



6.6Sales and marketing expenses


7.0



22.3



17.6Research and development expenses


4.1



11.8



12.1General and administrative expenses


0.9



3.9



3.2  39




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##### Table of Contents



Results
    of Operations
  Revenues
    2005


% Change


2004


% Change


2003Net license fees:Business intelligence platform

$
447.6



5


$
427.2



81


$
235.5Enterprise performance management
    applications


40.7



45



28.0



9



25.7Data Integration


27.4



51



18.2



30



14.0Total net license fees

$
515.7



9


$
473.4



72


$
275.2Services revenues:Software license updates and
    support


411.7



24



330.7



57



210.8Professional services and other


149.8



23



121.5



62



74.8Total services revenues

$
561.5



24


$
452.2



58


$
285.6Total revenues

$
1,077.2



16


$
925.6



65


$
560.8   Net
    License Fees
         40




---



##### Table of Contents



Services
    Revenues
        Geographic
    Revenues Mix
    2005


% Change


2004


% Change


2003Europe, Middle East and Africa
    (EMEA)(1)

$
450.3



13


$
397.7



45


$
273.7Percent of total revenues


42
%






43
%






49
%Americas(2)


546.0



20



453.3



87



241.9Percent of total revenues


51
%






49
%






43
%Asia Pacific


80.9



8



74.6



65



45.2Percent of total revenues


7
%






8
%






8
%Total revenues

$
1,077.2






$
925.6






$
560.8     (1)
    
    Includes the following total revenues in France:
    $95.2 million in 2005, $85.9 million in 2004 and
    $72.1 million in 2003.(2)
    
    Includes the following total revenues in the United States:
    $503.8 million in 2005, $408.7 million in 2004 and
    $227.0 million in 2003.   41




---



##### Table of Contents



Cost
    of Revenues
  2005


% Change


2004


% Change


2003(In millions, except percent
    change)Net license fees

$
29.7



5


$
28.3



372


$
6.0Services


216.6



26



172.1



93



89.0Total cost of revenues

$
246.3



23


$
200.4



111


$
95.0     Cost of net license fees.
    Cost of services revenues.
 42




---



##### Table of Contents



Operating
    Income Margin
  Summary
      For the Year EndedDecember 31,2005


2004


2003Operating expenses:Sales and marketing


40
%


44
%


45
%Research and development


15
%


16
%


17
%General and administrative


9
%


9
%


8
%Acquired in-process research and
    development


0
%


0
%


5
%Restructuring costs


0
%


0
%


1
%Total operating expenses


65
%


69
%


76
%   Sales
    and Marketing Expenses
     43




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##### Table of Contents



Research
    and Development Expenses
    General
    and Administrative Expenses
      Acquired
    In-Process Research and Development
      Applicability of FASB Statement
    No. 2 to Business Combinations Accounted for by the
    Purchase Method,
 44




---



##### Table of Contents



Restructuring
    Expenses
  Cost Associated with Exit or Disposal Activities No. 95-3 Recognition of Liabilities in Connection with Purchase
    Business Combinations Form 10-K.
    Crystal Decisions.
  Restructuring
    Costs Expensed Related to Pre-acquisition Business
    Objects
      Restructuring
    Costs Included as a Cost of the Crystal Decisions
    Acquisition
  No. 95-3.
     45




---



##### Table of Contents



Acta
    Technology, Inc.
  No. 95-3.
      Interest
    and Other Income (Expense), Net
    Year Ended
    December 31,2005


2004


2003(In millions)Interest income

$
8.6


$
3.7


$
7.1Patent infringement settlement
    income, net of litigation expenses


0.0



3.5



7.0Foreign currency exchange gains
    (losses)


5.9



(11.6
)


(0.4
)Other income, net


(0.2
)


0.2



0.6Interest and other income
    (expense), net

$
14.3


$
(4.2
)

$
14.3   Interest and other income (expense), net
  Patent infringement settlement income.
  Foreign
    currency exchange gains (losses).
     46




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##### Table of Contents



mark-to-market
  Income
    Taxes
            Liquidity
    and Capital Resources
  Liquidity
    For the Year Ended
    December 31,2005


2004


2003(In millions)Cash flow provided by operations

$
162.7


$
88.1


$
98.5Cash flow used in investing
    activities


(172.9
)


(28.4
)


(134.9
)Cash flow provided by financing
    activities


53.1



0.4



29.6Effects of changes in exchange
    rates on cash and cash equivalents


(3.6
)


(2.0
)


8.2Net increase in cash and cash
    equivalents

$
39.3


$
58.1


$
1.4Cash, cash equivalents, restricted
    cash and short-term investments

$
380.4


$
311.4


$
258.0    47




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##### Table of Contents



Operating Activities.
      Investing Activities.
  Financing Activities.
      Dividends
   48




---



##### Table of Contents



Future
    Liquidity Requirements
  and/or
    Contractual
    Obligations
      Payments Due by PeriodWithin








More ThanTotal


1 Year


2-3 Years


4-5 Years


5 Years(In millions)Operating leases

$
272.7


$
43.6


$
78.8


$
71.5


$
78.8Escrows Payable


32.6



21.7



10.9







Statutory French Profit Sharing
    Plan


5.2



5.2











Total contractual cash obligations

$
310.5


$
70.5


$
89.7


$
71.5


$
78.8     Operating
    Leases
   49




---



##### Table of Contents



Escrows
    Payable
    Statutory
    French Profit Sharing Plan
    Guarantees
  Guarantors Accounting for
    Guarantees.
    Product Warranties.
  Environmental Liabilities. Accounting for
    Asset Retirement Obligations
  Other Liabilities and Other Claims.
 50




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
  Employers Accounting for
    Pensions Consolidation of Variable Interest Entities, an
    Interpretation of Accounting Research
    Bulletin No. 51
  Critical
    Accounting Policies
  Form 10-K
  
    Recognition of revenues
    Business combinations
    Impairment of goodwill, intangible assets and long-lived assets
    Contingencies and litigation
    Accounting for income taxes
    Stock-based compensation    Recognition
    of Revenues
    and/or
  Modification of
    SOP No. 97-2
    with Respect to Certain Transactions.
 51




---



##### Table of Contents



Business
    Combinations
  Business Combinations No. 95-3, Recognition of Liabilities in Connection with a
    Purchase Business Combination
   52




---



##### Table of Contents



Impairment
    of Goodwill, Intangible Assets and Other Long-Lived
    Assets
    Goodwill and Other Intangible Assets
  Impairment of Long-Lived
    Assets
    Contingencies
    and Litigation
  Accounting for Contingencies.
  Accounting
    for Income Taxes
  Accounting for Income
    Taxes
 53




---



##### Table of Contents



Stock-Based
    Compensation
  Accounting for Stock Issued to
    Employees Accounting for Stock-Based
    Compensation
 54




---



##### Table of Contents



Recent
    Accounting Pronouncements
  Share-Based Payment. Share-Based Payment, an
    Amendment of FASB Statements No. 123 and 95
    Share-Based
    Payment
  Accounting Changes and Error Corrections. Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in
    Interim Financial Statements.
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk    Interest
    Rate Risk
   55




---



##### Table of Contents



Form 10-K.
  Trading
    Securities
  over-and-above
  Foreign
    Exchange Risk
    Foreign Currency
    Translation
      Derivatives
    Risk
   56




---



##### Table of Contents



mark-to-market
  Accounting for Derivative
    Instruments and Hedging Activities mark-to-market
      2005


2004Weighted





WeightedAverage





AverageNotional


Contract


Notional


ContractAmount


Rate (%)


Amount


Rate (%)(Notional amounts in
    millions)Currency forward contracts
    (non-designated derivatives) U.S. dollars against euros


47.0



1.19



178.4



1.19Canadian dollars against euros


0.0



0.00



9.9



1.62British pounds against euros


9.8



0.69



25.3



0.68Hong Kong dollars against euros


15.2



9.29



0.0



0.00South African rand against euros


3.0



7.81



0.0



0.00Mexican pesos against euros


15.6



13.07



0.0



0.00Currency option and forward
    contracts (designated derivatives)Canadian dollars against
    U.S. dollars  options


17.0



1.18



0.0



0.00Canadian dollars against
    euros  forwards


6.0



1.37



0.0



0.00    57




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  BUSINESS
    OBJECTS S.A.
   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  PageReports of
    Ernst & Young LLP. Independent Registered Public
    Accounting Firm


59Consolidated
    Balance Sheets as of December 31, 2005 and 2004


62Consolidated
    Statements of Income for the Years Ended December 31, 2005,
    2004 and 2003


63Consolidated
    Statements of Shareholders Equity for the Years Ended
    December 31, 2005, 2004 and 2003


64Consolidated
    Statements of Cash Flows for the Years Ended December 31,
    2005, 2004 and 2003


65Notes to
    Consolidated Financial Statements


66  58




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm  The Board
    of Directors and Shareholders of Business Objects S.A.
              59




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
   The Board
    of Directors and Shareholders of Business Objects S.A.
  .
         60




---



##### Table of Contents



.
         61




---



##### Table of Contents



BUSINESS
    OBJECTS S.A.
  CONSOLIDATED BALANCE SHEETS
  December 31,2005


2004(In thousands, except nominal
    value per ordinary shares)ASSETSCurrent assets:Cash and cash equivalents

$
332,777


$
293,485Restricted cash


22,157



7,089Short-term investments


4,651



3,831Accounts receivable, net of
    allowances of $12,211 and $12,535 as of December 31, 2005
    and 2004


265,672



248,957Deferred tax assets


13,605



8,328Prepaid and other current assets


60,880



46,575Total current assets


699,742



608,265Goodwill


1,166,043



1,067,694Other intangible assets, net


110,512



124,599Property and equipment, net


74,116



64,053Deposits and other assets


34,945



49,296Long-term restricted cash


20,858



6,954Long-term deferred tax assets


17,142



2,067Total assets

$
2,123,358


$
1,922,928LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
45,777


$
40,939Accrued payroll and related
    expenses


83,332



84,918Income taxes payable


79,820



85,000Deferred revenues


201,788



194,366Other current liabilities


72,098



83,544Escrows payable


21,728



6,654Total current liabilities


504,543



495,421Long-term escrows payable


10,902



Other long-term liabilities


8,871



6,448Long-term deferred tax liabilities


2,853



7,599Long-term deferred revenues


6,734



6,316Total liabilities


533,903



515,784Commitments and contingenciesShareholders
    equityOrdinary
    shares  0.10 nominal value ($0.12 U.S. and
    $0.14, respectively as of 2005 and 2004): authorized 120,842 and
    122,334; issued  95,304 and 95,922; issued and
    outstanding  92,262 and 89,152; for 2005 and
    2004, respectively


10,359



10,312Additional paid in capital


1,217,473



1,167,336Treasury, Business Objects Option
    LLC, and Employee Benefit
    Sub-Plan
    shares, 3,041 and 6,769 for 2005 and 2004, respectively


(3,223
)


(53,335
)Retained earnings


342,345



249,720Unearned compensation


(12,243
)


(8,079
)Accumulated other comprehensive
    income


34,744



41,190Total shareholders equity


1,589,455



1,407,144Total liabilities and
    shareholders equity

$
2,123,358


$
1,922,928    62




---



##### Table of Contents



BUSINESS
    OBJECTS S.A.
  CONSOLIDATED STATEMENTS OF INCOME
  Year Ended
    December 31,2005


2004


2003(In thousands, except per
    ordinary share and ADS data)Revenues:Net license fees

$
515,637


$
473,373


$
275,261Services


561,514



452,258



285,564Total revenues


1,077,151



925,631



560,825Cost of revenues:Net license fees


29,715



28,272



5,951Services


216,626



172,133



89,005Total cost of revenues


246,341



200,405



94,956Gross profit


830,810



725,226



465,869Operating expenses:Sales and marketing


434,432



406,796



250,870Research and development


162,540



150,562



95,399General and administrative


97,910



83,947



44,655Acquired in-process research and
    development


3,584







27,966Restructuring costs


150



2,169



7,782Total operating expenses


698,616



643,474



426,672Income from operations


132,194



81,752



39,197Interest and other income
    (expense), net


14,304



(4,220
)


14,334Income before provision for income
    taxes


146,498



77,532



53,531Provision for income taxes


(53,873
)


(30,409
)


(30,969
)Net income

$
92,625


$
47,123


$
22,562Basic net income per ordinary
    share and ADS

$
1.02


$
0.53


$
0.35Diluted net income per ordinary
    share and ADS

$
1.00


$
0.52


$
0.34Ordinary shares and ADSs used in
    computing basic net income per ordinary share and ADS


90,405



88,748



64,584Ordinary shares and ADSs and
    equivalents used in computing diluted net income per ordinary
    share and ADS


93,036



91,077



66,168    63




---



##### Table of Contents



BUSINESS
    OBJECTS S.A.
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS
    EQUITY
  Business Objects








AccumulatedAdditional








LLC and








Other


TotalOrdinary Shares


Paid-In


Treasury


Employee


Retained


Unearned


Comprehensive


ShareholdersShares


Amount


Capital


Shares


Amount


Benefit
    Sub-Plan


Earnings


Compensation


Income


Equity(In thousands)Balance at December 31,
    2002


62,395


$
6,731


$
168,939



1,068


$
(13,104
)





$
180,035


$



$
2,332


$
344,933Issuance of ordinary shares in
    connection with purchase business combination, net of exchange
    costs of $201


23,301



2,912



904,613



























907,525Shares issued to Business Objects
    Option LLC






















6,310















Stock based compensation










992



























992Deferred stock based compensation






























(19,788
)






(19,788
)Amortization of stock based
    compensation






























646







646Forfeiture of unvested stock options






























789







789Tax benefit of nonqualified stock
    options










17,974



























17,974Issuance of ordinary shares
    pursuant to employee stock option plans


1,893



227



23,797











(573
)














24,024Issuance of ordinary shares under
    employee stock purchase plans


389



43



4,928



























4,971Directors warrants exercise


120



14



667



























681Components of comprehensive incomeTranslation adjustment


































37,750



37,750Net income


























22,562











22,562Total comprehensive income






































60,312Balance at December 31,
    2003


88,098


$
9,927


$
1,121,910



1,068


$
(13,104
)


5,737


$
202,597


$
(18,353
)

$
40,082


$
1,343,059Issuance of ordinary shares
    pursuant to employee stock option plans


2,678



339



32,480











(2,036
)














32,819Issuance of ordinary shares under
    employee stock purchase plans


376



46



7,721



























7,767Purchase of treasury shares


(2,000
)










2,000



(40,231
)


















(40,231
)Tax benefit of nonqualified stock
    options










8,812



























8,812Amortization of stock based
    compensation






























6,656







6,656Forfeiture of unvested stock options










(3,618
)


















3,618







Stock based compensation










31



























31Components of comprehensive incomeTranslation adjustment


































1,108



1,108Net income


























47,123











47,123



































Total comprehensive income






































48,231Balance at December 31,
    2004


89,152


$
10,312


$
1,167,336



3,068


$
(53,335
)


3,701


$
249,720


$
(8,079
)

$
41,190


$
1,407,144Issuance of ordinary shares
    pursuant to employee stock option plans


2,483



302



40,579











(1,180
)














40,881Issuance of ordinary shares under
    employee stock purchase plans


597



74



12,158



























12,232Shares issued to Business Objects
    Employee benefit trust






















425















Issuance of
    shares  vesting of restricted stock units, net
    of tax


50



6



(6
)










(50
)














Shares withheld and applied to tax
    liability upon vesting of RSUs


(20
)










20



(824
)


















(824
)Fair value of assumed options in
    acquisitions










7,245



























7,245Cancellation of treasury shares






(335
)


(50,601
)


(2,943
)


50,936



















Tax benefit of nonqualified stock
    options










8,510



























8,510Release of valuation allowance on
    deferred tax assets










22,610



























22,610Amortization of stock based
    compensation






























6,943







6,943Forfeiture of unvested stock options










(880
)


















880







Stock based compensation










10,522



















(11,987
)






(1,465
)Components of comprehensive income






































Translation adjustment


































(6,446
)


(6,446
)Net income


























92,625











92,625Total comprehensive income






































86,179Balance at December 31,
    2005


92,262


$
10,359


$
1,217,473



145


$
(3,223
)


2,896


$
342,345


$
(12,243
)

$
34,744


$
1,589,455    64




---



##### Table of Contents



BUSINESS
    OBJECTS S.A.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended
    December 31,2005


2004


2003Operating activities:Net Income

$
92,625


$
47,123


$
22,562Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation and amortization of
    property and equipment


31,691



32,493



18,269Amortization of other intangible
    assets


32,851



30,780



4,344Stock-based compensation expense


6,942



6,687



1,638Acquired in-process research and
    development


3,584







27,966Loss on retirements of property
    and equipment


972







Deferred income taxes


(5,786
)


14,708



(1,664
)Tax benefit from employee stock
    plans


8,510



8,812



17,974Changes in operating assets and
    liabilities:Accounts receivable, net


(26,296
)


(51,809
)


(36,973
)Prepaid and other current assets


(15,684
)


(15,042
)


(1,768
)Deposits and other assets


14,181



(30,777
)


(13,371
)Accounts payable


6,596



(8,660
)


8,118Accrued payroll and related
    expenses


319



(7,090
)


13,383Income taxes payable


4,335



(9,948
)


14,539Deferred revenue


17,288



58,186



35,657Other current liabilities


(8,655
)


13,177



(10,825
)Short-term investments classified
    as trading


(820
)


(499
)


(1,350
)Net cash provided by operating
    activities


162,653



88,141



98,499Investing activities:Purchases of property and equipment


(41,079
)


(30,273
)


(12,453
)Change in estimate in
    restructuring accrual for Acta acquisition










2,741Business acquisitions and other
    investments, net of acquired cash


(128,814
)


(279
)


(178,327
)Increase in escrow payable


25,976







Transfer of cash (to) from
    restricted cash accounts


(28,972
)


5,200



1,150Payments on escrows payable






(3,074
)


(1,717
)Sales of short-term investments










53,662Net cash used in investing
    activities


(172,889
)


(28,426
)


(134,944
)Financing activities:Issuance of shares


53,113



40,586



29,677Purchase of treasury shares






(40,231
)


Net cash provided by financing
    activities


53,113



355



29,677Effect of foreign exchange rate
    changes on cash and cash equivalents


(3,585
)


(1,965
)


8,207Net increase in cash and cash
    equivalents


39,292



58,105



1,439Cash and cash equivalents,
    beginning of the year


293,485



235,380



233,941Cash and cash equivalents, end of
    the year

$
332,777


$
293,485


$
235,380Supplemental cash flow
    information:Cash paid for interest

$
415


$
93


$
14Cash paid for income taxes, net of
    refunds

$
44,915


$
54,181


$
33,218Supplemental schedule of
    non-cash investing and financing activities:Value of shares issued
    and/or
    options assumed in connection with acquisitions

$
7,245


$



$
768,609    65




---



##### Table of Contents



Business
    Objects S.A.



Notes to
    Consolidated Financial Statements  1.
    Organization
    and Summary of Significant Accounting Policies  Organization
    and Basis of Presentation
  société
    anonyme Form 10-K.
        Use of
    Estimates
    Translation
    of Financial Statements of Foreign Entities
  Foreign Currency Translation,
  Revenue
    Recognition
   66




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
    and/or
  Modification of
    SOP No. 97-2
    with Respect to Certain Transactions.
       67




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
     December 31,2005


2004Maintenance

$
187,049


$
169,325License


4,679



17,367Consulting


3,422



3,690Training


6,638



3,984Total
    balances  short term

$
201,788


$
194,366Maintenance

$
6,734


$
6,316Total
    balances  long term

$
6,734


$
6,316   Accounts
    Receivable
      Net
    Income per Ordinary Share and ADS
  Earnings per
    Share,
  Cash
    and Cash Equivalents, Restricted Cash and Short-Term
    Investments
    Accounting for Certain
    Investments in Debt and Equity Securities No. 97-14, Accounting for Deferred Compensation Arrangements Where
    Amounts Earned are Held in a Rabbi Trust and Invested,
 68




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
    Derivative
    Financial Instruments
  Accounting for Derivative
    Instruments and Hedging Activities
  Business
    Combinations
  Business
    Combinations No. 95-3, Recognition of Liabilities in Connection with a
    Purchase Business Combination
    Restructuring
    Costs
  Cost Associated with Exit or Disposal
    Activities No. 94-3, Liability Recognition for Certain Employee Termination
    Benefits and Other Costs to Exit an Activity.
 69




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
   Goodwill
    and Other Intangible Assets
    Goodwill and Other Intangible Assets
  Property
    and Equipment
    Accounting for the Costs of Computer Software Developed
    or Obtained for Internal Use,
  Impairment
    of Long-Lived Assets
       70




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
   Software
    Development Costs
  Accounting
    for the Costs of Computer Software to Be Sold, Leased, or
    Otherwise Marketed
  Concentration
    of Credit Risk
      Income
    Taxes
  Accounting for Income
    Taxes
       71




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
      Other
    Current Liabilities
    Contingencies
    and Litigation
  Accounting for
    Contingencies.
  Comprehensive
    Income
    Accounting
    for Stock-based Compensation
  Accounting for Stock Issued to
    Employees
 72




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
   Accounting for Stock-Based
    Compensation  Transition and
    Disclosure  an Amendment of FASB Statement
    No. 123 Accounting for Stock-Based Compensation Interim Financial
    Reporting
    Sub-Plan (Sub-Plan)
  Share-Based Payment
    Bulletin No. 97-1,
     73




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
     Year Ended
    December 31,2005


2004 (Revised)


2003 (Revised)(In thousands, except per
    ordinary share and ADS amounts)Net income  as
    reported

$
92,625


$
47,123


$
22,562Add:Amortization of stock-based compensation expense included in
    reported net income, net of estimated tax related benefits of
    $1,535, $2,541 and $622 for 2005, 2004 and 2003 respectively


5,407



4,147



1,015Deduct:Stock-based compensation expense determined under the fair-value
    based method for all awards, net of estimated tax related
    benefits of $4,370, $8,077 and $4,689 for 2005, 2004 and 2003,
    respectively:


(43,169
)


(60,850
)


(52,234
)Net income
    (loss)  pro forma

$
54,863


$
(9,580
)

$
(28,657
)Net income per ordinary share and
    ADS  as reported Basic

$
1.02


$
0.53


$
0.35Net income per ordinary share and
    ADS  as reported Diluted

$
1.00


$
0.52


$
0.34Net income (loss) per ordinary
    share and ADS  pro forma Basic

$
0.61


$
(0.11
)

$
(0.44
)Net income (loss) per ordinary
    share and ADS  pro forma  Diluted

$
0.59


$
(0.11
)

$
(0.44
)        74




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
   Advertising
    Costs
    Recent
    Pronouncements
  Share-Based Payment. Share-Based Payment, an
    Amendment of FASB Statements No. 123 and 95
    Share-Based
    Payment
  Accounting Changes and Error Corrections. Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in
    Interim Financial Statements.
 75




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
   2.
    Cash,
    Cash Equivalents and Short-term Investments    December 31,2005


2004(In thousands)Cash

$
203,574


$
157,354Cash equivalents:Bank certificates of deposit


2,986



2,015Guaranteed investment certificates


31,814



18,317US Government agency securities
    (FHLB)


13,791



Bankers Acceptances


7,705



Money market funds


72,907



115,799Total cash equivalents


129,203



136,131Total cash and cash equivalents


332,777



293,485Short-term investments:Insurance dedicated mutual funds


4,651



3,831Total short-term investments


4,651



3,831Total cash, cash equivalents and
    short-term investments

$
337,428


$
297,316     3.
    Derivative
    Financial Instruments    mark-to-market
  Accounting for Derivative
    Instruments and Hedging Activities
 76




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
        December 31,2005


2004Notional





NotionalAmount


Fair Value


Amount


Fair Value(In millions)U.S. dollar equivalent of
    derivatives not designated as hedges

$
67.8


$
0.1


$
235.2


$
25.8U.S. dollar equivalent of
    derivatives designated as cash flow hedges

$
19.8


$
0.2







     4.
    Property
    and Equipment    December 31,2005


2004Office and computer equipment

$
98,431


$
89,528Software


36,329



26,565Leasehold improvements


43,262



33,699Total property and equipment


178,022



149,792Accumulated depreciation and
    amortization


(103,906
)


(85,739
)Property and equipment, net

$
74,116


$
64,053     5.
    Acquisitions    
    Acquisition of SRC Software, Inc., a privately-held vendor
    specializing in financial planning, budgeting and performance
    management software, on August 24, 2005. The results of
    operations were included in the consolidated financial
    statements after the date of the acquisition. The Companys
    wholly owned subsidiary Business Objects Americas, acquired all
    the outstanding capital stock and Business Objects Option Sub
    LLC 77




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
  assumed outstanding stock options through a statutory merger of
    an indirect, wholly owned subsidiary with and into SRC.  
    Acquisition of Medience S.A., an enterprise information
    integration company, on September 16, 2005. The results of
    operations were included in the consolidated financial
    statements after the date of the acquisition. The Company
    acquired all the outstanding capital stock.
    Acquisition of Infommersion, Inc., a leading vendor of
    interactive visual analytics, on October 31, 2005. The
    results of operations were included in the consolidated
    financial statements after the date of the acquisition. The
    Companys wholly owned subsidiary Business Objects
    Americas, acquired all the outstanding capital stock and
    Business Objects Option Sub LLC assumed outstanding stock
    options through a statutory merger of an indirect, wholly owned
    subsidiary with and into Infommersion.    DeferredNet Tangible Assets








Compensation onPurchase


(Liabilities)


Fair Value of





UnvestedAcquisition

Consideration


Acquired


Intangibles


In-Process R&D


Options Assumed


GoodwillSRC

$
100.1


$
0.8


$
20.6


$
1.4


$
0.9


$
76.4Medience


10.9



(1.1
)


1.7



1.0







9.3Infommersion


37.4



1.4



5.8



1.2



0.6



28.4Total

$
148.4


$
1.1


$
28.1


$
3.6


$
1.5


$
114.1          78




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
     Developed Technology


Maintenance Contracts


Consulting
    RelationshipsEstimated





Estimated





EstimatedUseful Life





Useful Life





Useful LifeFair Value


(in Years)


Fair Value


(in Years)


Fair Value


(in Years)


TotalSRC

$
17.2



5-8


$
3.2



6-9


$
0.2



2-3


$
20.6Medience


1.5



3-5



0.2



3-5











1.7Infommersion


5.0



4-5



0.1



4-5



0.7



2-3



5.8Total amortizable intangible
    assets acquired

$
23.7






$
3.5






$
0.9






$
28.1     Significant
    Prior Year Acquisition:
  Crystal
    Decisions
       79




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
     EstimatedFair Value


Useful LifeDeveloped technology

$
92.6



5 yearsMaintenance and support contracts


43.7



5 yearsTrade names


6.4



5 yearsTotal amortizable intangible
    assets acquired

$
142.7     6.
    Goodwill
    and Other Intangible Assets  Goodwill and
    Other Intangible Assets
    December 31,2005


2004Balance, beginning of the year

$
1,067,694


$
1,051,111Goodwill acquired during the year
    (note 5)


114,119



Goodwill adjustments relating to
    prior year acquisitions


(15,617
)


16,567Impact of currency fluctuations on
    goodwill


(153
)


16Balance, end of the year

$
1,166,043


$
1,067,694    80




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
      December 31,2005


2004Developed technology

$
120,972


$
109,882Maintenance and support contracts


50,837



46,440Trade names


6,043



6,909Total other intangible assets, at
    cost

$
177,852


$
163,231Accumulated amortization on other
    intangible assets


(67,340
)


(38,632
)Other intangible assets, net

$
110,512


$
124,599       December 31,2005


2004Amortization of:Developed technology (included in
    cost of net license fees)

$
22,035


$
20,269Maintenance and support contracts
    (included in cost of services revenues)


9,486



9,261Trade names (included in operating
    expenses)


1,330



1,250Total other intangibles
    amortization expense

$
32,851


$
30,780     2006

$
35,4842007


34,0002008


31,4972009


5,3232010


3,862Thereafter


346Total

$
110,512   7.
    Commitments
    and Contingencies  Commitments
   81




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
    2006

$
43,5582007


40,4092008


38,4672009


36,5802010


34,897Thereafter


78,757Total

$
272,668       Legal
    matters
     82




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
         83




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
                84




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
              8.
    Shareholders
    Equity  Ordinary
    Shares, Treasury Shares, Business Objects Option LLC Shares and
    Employee Benefit
    Sub-Plan
    shares
   85




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
  Business Objects
    Option LLC and Employee Benefit
    Sub-Plan
    shares.
  Stock
    Repurchase Programs
    Autorité des Marches Financier
    Stock
    Option Exchange Programs
  2002
    Stock Option Exchange Program
     86




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
        Dividend
    Rights
    status
    Liquidation
    Rights
    Preemptive
    Subscription Rights
    Unearned
    Compensation
   87




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
          Stock
    Based Compensation Plans
     88




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
   Stock
    Option Plans
    Options and Restricted Stock
    Units OutstandingWeighted


WeightedOptions





Average


AverageAvailable for


Number of


Exercise


ExerciseGrant


Shares


Price (in Euros)


Price (in Dollars)Balance at December 31, 2002


4,155,614



8,025,196



27.83



29.18Shares reserved


3,212,729











Granted


(4,968,271
)


4,968,271



22.16



25.14Options assumed in Crystal
    Decisions acquisition






6,306,939



13.12



14.88Canceled


1,077,901



(1,214,343
)


34.31



38.92Exercised






(1,893,522
)


10.78



12.23Balance at December 31, 2003


3,477,973



16,192,541



21.87



24.80Granted


(3,178,057
)


3,178,057



20.95



26.46Canceled


1,711,794



(3,167,735
)


26.67



33.72Options expired under the 1999 Plan


(54,992
)










Exercised






(2,678,298
)


9.70



12,26Balance at December 31, 2004


1,956,718



13,524,565



22.36



28.27Shares reserved


1,425,000











Granted


(3,008,550
)


3,008,550



26.08



31.58RSUs granted


(439,115
)


439,115







RSUs vested






(50,000
)






Options assumed in SRC acquisition






163,872



6.50



7.95Options assumed in Infommersion
    acquisition






110,752



4.07



4.88Canceled


513,090



(1,224,354
)


26.99



33.45Exercised






(2,482,957
)


13.53



16.48Balance at December 31, 2005


447,143



13,489,543



23.55



27.89  89




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
     Stock Options
    Outstanding


Stock Options
    ExercisableWeighted


Weighted





WeightedAverage Remaining


Average





AverageRange of Exercise


Number of Shares


Contractual Life


Exercise


Number of


ExercisePrice in Euros


as of 12-31-05


(in Years)


Price in Euros


Shares


Price in Euros0.0000 - 6.76



402,260



3.2



4.43



350,845



4.196.76 - 13.52



592,069



3.8



10.42



553,064



10.3413.52 - 20.27



2,328,221



7.9



16.75



1,055,310



16.6620.27 - 27.03



3,271,681



8.2



23.60



1,002,995



23.9427.03 - 33.79



2,666,065



8.6



29.61



695,864



29.8133.79 - 40.55



838,793



5.0



36.56



832,483



36.5740.55 - 47.31



564,070



5.6



42.46



554,367



42.4647.31 - 60.82



266,078



4.2



54.92



266,078



54.9260.82 - 67.58



264,427



4.5



66.36



264,427



66.3611,193,664



7.3



25.90



5,575,433



27.92   Stock Options and RSUs
    Outstanding


Stock Options
    ExercisableWeighted








WeightedAverage


Weighted





AverageRemaining


Average





ExerciseNumber of Shares


Contractual Life


Exercise


Number of


Price inRange of Exercise Price in
    Dollars


as of 12-31-05


(in Years)


Price in Dollars


Shares


Dollars0.00 - 2.94



407,487



9.7



0.05



8,184



1.142.94 - 8.82



2,286



7.0



7.68



854



7.688.82 - 11.76



736,869



5.0



10.17



716,979



10.1511.76 - 14.70



410,988



6.6



13.59



316,149



13.5714.70 - 17.64



72,722



6.7



14.93



55,050



14.9317.64 - 20.58



71,854



7.4



19.90



43,643



19.9020.58 - 29.40



593,673



7.7



29.19



310,726



29.152,295,879



7.0



14.36



1,451,585



15.39   General Stock Option Terms. tm
   90




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
      2001 Stock Incentive Plan.
    Sub-Plan Sub-Plan). Sub-Plan Sub-Plan Sub-Plan Sub-Plan
  1999 Stock Option Plan.
    Business Objects Americas 1999 Stock Option
    Plan.
 91




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
          Warrants.
       92




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
         Employee Stock Purchase Plans.
      Restricted Stock Units (RSUs).
 93




---



##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
    Pro
    forma Effect of Stock-based Compensation
  Accounting for Stock-based Compensation.
    Year Ended
    December 31Employee Stock OptionPlans and Warrants


International Employee Stock
    Purchase Plans2005

2004


2003


2005


2004


2003Weighted average expected life (in
    years) (1)

4.7


3.0



3.0



0.5



0.5



0.5Volatility

53%


59
%


71
%


37
%


51
%


67
%Risk-free interest rate

3.1%


2.7
%


2.2
%


2.3
%


1.0
%


1.5
%Dividend yields

0%


0
%


0
%


0
%


0
%


0
%Forfeiture rate (turnover
    %) (2)

0%-20%(3)


15
%


15
%


13
%


N/A



N/AWeighted average fair value of
    stock options, warrants and awards under IESPP granted or
    purchased during the period

$15.11

$
11.16


$
12.34


$
6.76


$
7.09


$
4.59     (1)
    
    The expected life of stock awards is an output of the
    binomial-lattice model used in 2005 versus an input for the
    Black-Scholes model used previously.(2)
    
    The turnover assumption used in Black-Scholes model has no
    impact on the fair value but only on the number of options
    expected to vest during the vesting period. The post-vesting
    turnover impact in the Black-Scholes model was included in the
    weighted average expected term of three years.(3)
    
    The turnover assumptions used for the 2005 grants was determined
    by pool of employees, using 0% for the Directors, 12% for
    France, 14% for the executives and 20% for the rest of the world.  Options and warrants.
 94




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
    9.
    Employer
    Sponsored Employee Savings Plans          Pension
    Plans and Termination Indemnities
  Employers Accounting for
    Pensions
 95




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
  Employers
    Disclosures about Pensions and Other Postretirement
    Benefit  an amendment of FASB Statements
    No. 87, 88 and 106
  French
    Pension Plan
    Compensation


TurnoverAge Range

Growth Rate


Rate15    20


9
%


20.0
%21    25


9
%


15.0
%26    30


8
%


10.0
%31    35


5
%


6.0
%36    40


4
%


4.0
%41    45


3
%


3.0
%46    50


3
%


2.0
%51    55


2
%


1.0
%56    60


1
%


0.5
%61    75


0
%


0.0
%       Italian
    Indemnity
   96




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
   10.
    Net
    Income Per Ordinary Share and ADS    Year Ended
    December 31,2005


2004


2003Basic net income per
    share:Numerator:Net income

$
92,625


$
47,123


$
22,562Denominator:Weighed average ordinary shares
    and ADSs outstanding  basic


90,405



88,748



64,584Net income per ordinary share and
    ADS  basic

$
1.02


$
0.53


$
0.35Diluted net income per
    share:Numerator:Net income

$
92,625


$
47,123


$
22,562Denominator:Weighed average ordinary shares
    and ADSs outstanding  basic


90,405



88,748



64,584Incremental ordinary shares and
    ADSs attributable to shares exercisable under employee stock
    option and purchase plans and warrants (treasury stock method)


2,631



2,329



1,584Weighted average ordinary shares
    and ADSs outstanding  diluted


93,036



91,077



66,168Net income per ordinary share and
    ADS  diluted

$
1.00


$
0.52


$
0.34        97




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
   11.
    Interest
    and Other Income (Expense), Net    Year Ended
    December 31,2005


2004


2003Net interest income

$
8,554


$
3,696


$
7,142Patent infringement settlement
    income, net of litigation expenses






3,500



7,000Net exchange gains (losses)


5,952



(11,587
)


(406
)Other income (loss), net


(202
)


171



598Total interest and other income
    (expense), net

$
14,304


$
(4,220
)

$
14,334       12.
    Income
    Taxes    Year Ended
    December 31,2005


2004


2003France

$
17,514


$
21,418


$
21,612Rest of world


128,984



56,114



31,919Total

$
146,498


$
77,532


$
53,531  98




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
     Year Ended
    December 31,2005


2004


2003Current:France

$
(2,770
)

$
5,867


$
21,202Rest of world


50,524



26,717



69,347Total current

$
47,754


$
32,584


$
90,549Deferred:France

$
2,373


$
2,702


$
(15,867
)Rest of world


3,746



(4,877
)


(43,713
)Total deferred

$
6,119


$
(2,175
)

$
(59,580
)Total

$
53,873


$
30,409


$
30,969       Year Ended
    December 31,2005


2004


2003Income tax provision computed at
    the French statutory rate

$
51,172


$
27,470


$
18,966Non-deductible acquired in-process
    research and development


1,040







9,963Operating losses not utilized










667Income at higher (lower) tax rates


(10,162
)


(6,808
)


255Research and development tax
    credits


(7,675
)


(3,911
)


(3,595
)Net expense on intercompany
    transfers of intellectual property


12,515



11,761



Other individually immaterial items


6,983



1,897



4,713Total

$
53,873


$
30,409


$
30,969  99




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
     December 31,2005


2004 (Revised)Deferred tax assets:Net operating loss carryforwards

$
31,164


$
34,509Accrued bonuses and compensation


5,926



11,051Amortization of intangible assets


2,905



7,547Accrued rent


2,657



552Depreciation


9,303



5,353Other, including reserves and
    accruals not currently deductible


9,885



12,909Total deferred tax assets


61,840



71,921Valuation allowance


(13,342
)


(48,827
)Total deferred tax assets

$
48,498


$
23,094Deferred tax liabilities:Intangible assets

$
(20,751
)

$
(13,221
)Other, individually immaterial
    items


(62
)


(7,103
)Total deferred tax liabilities


(20,813
)


(20,324
)Net deferred tax assets(1)

$
27,685


$
2,770     (1)
    
    At December 31, 2005, balance sheet classification
    included: $13.6 million in current deferred tax assets,
    $17.1 million in long-term deferred tax assets, offset by
    $2.9 million of long-term deferred tax liabilities. At
    December 31, 2004, balance sheet classification included:
    $8.3 million in current deferred tax assets,
    $2.1 million in long-term deferred tax assets and offset by
    $7.6 million of long-term deferred tax liabilities.       100




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
        13.
    Financial,
    Segment and Geographic Information  Financial. 20-day
  Segment.
  Year Ended
    December 31,2005


2004


2003Business Intelligence Platform(1)

$
447,557


$
427,181


$
235,539Enterprise Performance Management
    Applications


40,690



28,026



25,754Data Integration


27,390



18,166



13,968Total net license fees

$
515,637


$
473,373


$
275,261     (1)
    
    Includes Crystal Decisions products for 2005, 2004 and
    20 days in 2003. The Company does not have vendor specific
    objective evidence for its licensed products. Accordingly, these
    amounts represent the residual values of contracts and, to the
    extent that more than one product was sold in a transaction, the
    allocation of value between products is based purely upon the
    proportionate value ascribed to each product in the arrangement. 101




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
   Geography.
  Year Ended
    December 31,2005


2004


2003Revenues:United States

$
503,798


$
408,727


$
226,969Europe, Middle East and Africa
    (EMEA), excluding France


355,104



311,746



201,627France


95,174



85,942



72,088Americas, excluding the United
    States


42,179



44,565



14,942Asia Pacific


80,896



74,651



45,199Total revenues

$
1,077,151


$
925,631


$
560,825     December 31,2005


2004Long-lived assets:United States

$
1,255,168


$
1,124,682Europe, Middle East and Africa
    (EMEA), excluding France


61,976



99,433France


50,587



53,394Americas, excluding the United
    States


47,967



30,682Asia Pacific


7,918



6,472Total long-lived assets

$
1,423,616


$
1,314,663   Confédération Francaise
    Démocratique du Travail Confédération
    Générale du Travail
  comité dentreprise
  14.
    Business
    Restructuring Charges  Crystal
    Decisions, Inc.
   102




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
   Restructuring
    Costs Expensed Related to Pre-acquisition Business
    Objects
        EmployeeSeverance and


Cost toOther Related


AbandonBenefits


Facilities


TotalRestructuring charges accrued at
    December 2003

$
7,782


$



$
7,782Non-cash charges


(332
)






(332
)Impact of foreign currency
    exchange rates on translation of accrual


302







302Balance at December 31, 2003

$
7,752


$



$
7,752Adjustments to restructuring
    charges accrued during 2004 included as restructuring costs


(85
)


2,254



2,169Cash payments during 2004


(6,970
)


(849
)


(7,819
)Impact of foreign currency
    exchange rates on translation of accrual


166



(44
)


122Balance at December 31, 2004

$
863


$
1,361


$
2,224Cash payments during 2005


(717
)


(1,029
)


(1,746
)Adjustments to restructuring
    charges accrued during 2005 included as restructuring costs


(66
)


228



162Impact of foreign currency
    exchange rates on translation of accrual


(33
)


(93
)


(126
)Balance at December 31, 2005

$
47


$
467


$
514   Restructuring
    Costs Included as a Cost of the Crystal Decisions
    Acquisition
  No. 95-3 Recognition of Liabilities in Connection with Purchase
    Business Combinations.
   103




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
        EmployeeSeverance and


Cost toOther Related


AbandonBenefits


Facilities


TotalRestructuring charges accrued at
    December 2003

$
10,780


$
2,745


$
13,525Cash payments during 2003


(1,136
)






(1,136
)Balance at December 31, 2003

$
9,644


$
2,745


$
12,389Cash payments during 2004


(8,960
)


(1,646
)


(10,606
)Adjustments to original plan


(598
)


(454
)


(1,052
)Impact of foreign currency
    exchange rates on translation of accrual


48



115



163Balance at December 31, 2004

$
134


$
760


$
894Cash payments during 2005






(321
)


(321
)Adjustments to restructuring
    charges during 2005


(51
)


185



134Balance at December 31, 2005

$
83


$
624


$
707   Acta
    Technology, Inc.
  No. 95-3 Recognition of Liabilities in Connection with Purchase
    Business Combinations.
     104




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
     LeaseAbandonmentand Write-offof Property andEquipment


TotalBalance at December 31, 2002

$
6,818


$
6,818Net cash payments during 2003


(3,400
)


(3,400
)Reversal of excess
    U.S. facilities shutdown accrual adjusted through goodwill


(2,741
)


(2,741
)Balance at December 31, 2003

$
677


$
677Cash payments during 2004


(391
)


(391
)Impact of foreign currency
    exchange rates on translation of accrual


38



38Balance at December 31, 2004

$
324


$
324Cash payments during 2005


(312
)


(312
)Impact of foreign currency
    exchange rates on translation of accrual


(12
)


(12
)Balance at December 31, 2005

$



$
   15.
    Escrows
    Payable and Restricted Cash    December 31,Escrows Payable


Restricted Cash2005


2004


2005


2004Funds held in escrow in connection
    with the acquisition of Acta

$
6,423


$
6,379


$
6,423


$
6,379Bonuses to former Acta employees,
    subject to indemnification obligations


300



275



276



276Cash subject to withdrawal
    restrictions on deposit of security for bonuses to be paid to
    Acta employees, subject to employment related contingencies










353



353Funds held in escrow in connection
    with the acquisition of SRC


15,005







15,005



Other










100



81Total
    balances  short-term

$
21,728


$
6,654


$
22,157


$
7,089Cash held to support letter of
    credit for San Jose premises

$



$



$
6,954


$
6,954Funds held in Escrow in connection
    with the acquisition of Infommersion


8,000







11,002



Funds held in Escrow in connection
    with the acquisition of Medience


2,902







2,902



Total
    balances  long-term

$
10,902


$



$
20,858


$
6,954    105




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
          16.
    Credit
    Agreement  and/or
    17.
    Accounting
    for and Disclosure of Guarantees  Guarantors Accounting for
    Guarantees.
 106




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
        Product Warranties.
  Environmental Liabilities. Accounting for Asset Retirement
    Obligations
  Other Liabilities and Other Claims.
 107




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##### Table of Contents



Business Objects S.A.
  Notes to Consolidated Financial
    Statements  (Continued)
   18.
    Supplemental
    Financial Information (Unaudited)  Selected
    Quarterly Data    Three Months EndedDec. 31,


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,2005


2005


2005


2005


2004


2004


2004


2004(In thousands, except per share
    data)Total revenues

$
304,586


$
261,381


$
262,409


$
248,775


$
266,688


$
219,470


$
222,238


$
217,235Gross profit


238,847



199,358



202,379



190,226



212,597



169,883



174,823



167,923Acquired in-process research and
    development


1,200



2,384























Restructuring costs


150















677







1,492



Income from operations


45,742



30,088



34,947



21,417



37,505



16,635



18,285



9,327Net income

$
34,913


$
19,567


$
23,139


$
15,006


$
21,346


$
11,029


$
11,488


$
3,260Net income per share and
    ADS  basic

$
0.38


$
0.22


$
0.26


$
0.17


$
0.24


$
0.12


$
0.13


$
0.04Net income per share and
    ADS  diluted

$
0.37


$
0.21


$
0.25


$
0.16


$
0.24


$
0.12


$
0.13


$
0.04   19.
    Subsequent
    Event   108




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15(e))
  Managements
    Report on Internal Control Over Financial Reporting
      Internal Control  Integrated
    Framework.
        Changes
    in Internal Control over Financial Reporting
    Item 9B.
    Other
    Information   109




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##### Table of Contents



PART III  Item 10.
    Directors
    and Executive Officers of the Registrant    Name

Age

Principal Occupation and
    Business ExperienceBernard Liautaud


43


Chairman of the Board and Chief
    Strategy
    Officer.Mr.
    Liautaud is a founder of the Company and has served as Chairman
    of the Board of Directors since our incorporation in August
    1990. He served as Chief Executive Officer from August 1990
    through September 2005. Mr. Liautaud was appointed as our
    Chief Strategy Officer in September 2005. Prior to the founding
    of Business Objects, Mr. Liautaud was the Sales Marketing
    Manager with Oracle Corporations French subsidiary. Mr.
    Liautaud is the
    son-in-law
    of Mr. Silverman, one of the Companys Directors.
    Mr. Liautaud is a member of the Board of Directors of My
    SQL. Mr. Liautauds term of office on our Board of
    Directors will expire at the close of the Companys 2006
    Annual Shareholders meeting.Bernard Charlès


48


President of Dassault
    Systémes
    S.A.Mr.
    Charlès has been Chief Executive Officer of Dassault
    Systèmes, a worldwide leader in product lifecycle
    management, since 2002 and President of Dassault Systèmes
    since 1995. Prior to becoming President, Mr. Charlès
    served as Dassault Systèmes President of Research and
    Development from 1988 to 1995 and as President of Research and
    Strategy from 1985 to 1988. Mr. Charlès is also a
    director of Dassault Systèmes, Dassault Systèmes
    Corp., Dassault Systèmes K.K., DELMIA Corp., Solidworks
    Corporation, SmarTeam Corporation Ltd., Abaqus Inc. and Dassault
    Systèmes Canada, Inc. Mr. Charlès serves as a
    member of our Compensation Committee.
    Mr. Charlès term of office on our Board of
    Directors will expire at the close of the Companys 2007
    Annual Shareholders meeting.Jean-François Heitz


56


Consultant and Private
    Investor.Mr. Heitz was Deputy Chief Financial Officer at Microsoft
    Corporation from April 2000 to June 2003. Mr. Heitz joined
    Microsoft France in 1989 as Deputy General Manager, and served
    in a number of different roles during his tenure, including
    Corporate Treasurer. Prior to Microsoft, he spent nine years at
    Matra SA (Group Lagardere), a French multinational
    high-tech conglomerate, in various business and finance
    positions and four years with lAir Liquide as an
    Operations Research engineer. Mr. Heitz is a member of the
    Board of Directors and Chairman of the Audit Committee of
    Wavecom S.A., ARC International Corporation and Bull; he is a
    member of the Board of Directors of Total Immersion and TIR
    Systems Ltd. Mr. Heitz joined our Board of Directors in May
    2003, and he also serves on our Audit Committee as Chairman and
    financial expert. Mr. Heitzs term of office on our
    Board of Directors will expire at the close of our 2006 Annual
    Shareholders meeting. 110




---



##### Table of Contents



Name

Age

Principal Occupation and
    Business ExperienceGerald Held


58


Consultant.Since
    1999, as a Principal of The Held Group, Dr. Held has been a
    strategic consultant primarily to Chief Executive Officers of
    technology firms ranging from startups to very large
    organizations. In 1998, Dr. Held was
    CEO-in-residence
    at the venture capital firm Kleiner Perkins Caulfield &
    Byers. Through 1997, Dr. Held was Senior Vice President of
    Oracles server product division. Prior to Oracle,
    Dr. Held spent 18 years at Tandem Computers
    Incorporated. Dr. Held is the Chairman of the Board of Directors
    of Software Development Technologies, Inc. He currently serves
    as a member of the Boards of Directors of Openwave Systems Inc.,
    Mirapoint Inc. and MetaMatrix Inc. Dr. Held joined our
    Board of Directors in October 2002. Dr. Held is also the
    Chairman of our Compensation Committee, a member of our
    Corporate Governance Committee and a member of the
    Companys Nominating Committee. Mr. Helds term
    of office on our Board of Directors will expire at the close of
    our 2008 Annual Shareholders meeting.David Peterschmidt


58


President and Chief Executive
    Officer of Openwave Systems,
    Inc.Since November
    2004, Mr. Peterschmidt has served as President and Chief
    Executive Officer of Openwave Systems Inc., telecommunications
    software and services company. From October 2003 to November
    2004, Mr. Peterschmidt served as the Chief Executive
    Officer and Co-Chairman of the Board of Directors of Security,
    Inc. Mr. Peterschmidt served as President, Chief Executive
    Officer and Director of Inktomi, Inc., an internet
    infrastructure company, from July 1996 to March 2003, and served
    as Chairman of the Inktomi board from December 1997 to March
    2003. He currently serves as a member of the Boards of Directors
    of Openwave Systems, Inc., Netblue and UGS, a private software
    company. Mr. Peterschmidt joined our Board of Directors in
    May 2003. He is also Chairman of our Nominating Committee and a
    member of the Companys Audit Committee. Mr.
    Peterschmidts term of office on our Board of Directors
    will expire at the close of our 2006 Annual Shareholders
    meeting.Arnold Silverman


67


Consultant and Private
    Investor.Since 1991,
    Mr. Silverman has been a venture capital investor.
    Mr. Silverman was a Director of Oracle from 1984 to 1991.
    Mr. Silverman currently serves as a member of the Boards of
    Directors in Exemplary Software Inc. MAE Software Inc. and
    Remend Inc. Mr. Silverman is Mr. Liautauds
    father-in-law.
    Mr. Silverman joined our Board of Directors in February
    1991, and he is also a Chairman of our Corporate Governance
    Committee. Mr. Silvermans term of office on our Board
    of Directors will expire at the close of our 2007 Annual
    Shareholders Meeting. 111




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##### Table of Contents



Name

Age

Principal Occupation and
    Business ExperienceKurt Lauk


59


President of Globe CP
    GmbH.Dr. Lauk is
    President of Globe CP GmbH, an investment & advisory
    firm he co-founded in July 2000. Dr. Lauk was elected President
    of the Economic Council of the Christian Democratic Party of
    Berlin (Germany) in November 2000. From February to July 2000,
    he was a professor of the Stanford University Business School.
    From 1996 to 1999, Dr. Lauk served in various capacities at
    Daimler-Benz and the Mercedes-Benz Group, including Member of
    the Board of Management  Commercial Vehicle
    Division and was a member of the Chairmans Integration
    Council of Daimler-Chrysler A.G. [From 1992 to 1996,
    Dr. Lauk was Executive Senior Vice President (Member of the
    Board of Management) of Finance Controlling of VEBA A.G. (today
    Eon AG). From 1989 to 1992, he served as Vice Chairman, Chief
    Financial Officer and Chief Marketing Officer of Audi AG. From
    1984 to 1989, Dr. Lauk served as Chief Executive Officer of
    Zinser Textilmaschinen GMbH. From 1978 to 1984, Dr. Lauk served
    in various capacities at the Boston Consulting Group, including
    Director of the Munich office, and Vice President and Director
    of BCG, Inc. (Boxson USA).] Dr. Lauk is a member of the
    Board of Directors of Corus Group plc, Gehring GmbH &
    Co KG, Scheuffelen Papierfabrik and ForteMedia. Dr. Lauk
    joined our Board of Directors in June 2004. Dr. Lauks
    term of office on our Board of Directors will expire at the
    close of our 2007 Annual Shareholders meeting.Carl Pascarella


63


Executive Advisor, Texas
    Pacific
    Group.Mr.
    Pascarella is currently affiliated with Texas Pacific Group as
    an Executive Advisor. He recently retired as President and
    Chief Executive Officer from Visa U.S.A. Inc., after twelve
    years of service. Before assuming that position, he was
    President and Chief Executive Officer of Visa Asia Pacific
    Limited Region and Director of the Asia-Pacific Regional Board.
    Before joining Visa, Mr. Pascarella was Vice President,
    International Division at Crocker National Bank and Vice
    President, Metropolitan Banking at Bankers Trust Company. His
    experience also includes commercial banking, corporate banking,
    credit review and policy, and DeNovo banking. Mr. Pascarella was
    also head of the California International Banking and Trade
    Finance organization for Crocker National Bank. Mr. Pascarella
    joined our Board of Directors in March 2005. His term of office
    on our Board of Directors will expire at the close of our 2007
    Annual Shareholders meeting. 112




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##### Table of Contents



Name

Age

Principal Occupation and
    Business ExperienceJohn G. Schwarz


55


Chief Executive Officer and
    director.Mr. Schwarz was elected as Chief Executive Officer of the
    Company in September 2005 and was appointed to our Board of
    directors in  January  2006. Before joining Business
    Objects, Mr. Schwarz served as President and Chief
    Operating Officer of Symantec Corporation from December 2001 to
    September 2005. As President and Chief Operating Officer.
    Mr. Schwarz was responsible for Symantecs product
    development, incident response, sales, marketing, support,
    professional services and partner relationships. Prior to
    joining Symantec, from January 2000 to November 2001,
    Mr. Schwarz served as President and Chief Executive Officer
    of Reciprocal Inc., which provided
    business-to-business
    secure
    e-commerce
    services for digital content distribution over the internet.
    Before joining Reciprocal, Mr. Schwarz spent 25 years
    at IBM Corporation where most recently he was General Manager of
    IBMs Industry Solutions unit, a worldwide organization
    focused on building business applications and related services
    for IBMs large industry customers. Mr. Schwarz serves
    as a member of the Board of Directors of the Information
    Technology Association of Americas Software Board.Executive OfficersJames R. Tolonen


56


Chief Financial
    Officer.Mr.
    Tolonen joined Business Objects as Senior Group Vice President
    and Chief Financial Officer in January 2003. Before joining our
    Company, he served as Chief Operating Officer and Chief
    Financial Officer of IGN Entertainment, Inc. from October 1999
    to December 2002. Mr. Tolonen was a Director of IGN
    Entertainment and a Director and member of the Compensation
    Committee of Closedloop Solutions, Inc. until 2003. From April
    of 1998 to September of 1998, Mr. Tolonen was the President
    and Chief Financial Officer of Cybermedia, Inc. Prior to that,
    Mr. Tolonen was Chief Financial Officer and a member of the
    Office of the President at Novell, Inc. from 1989 to 1998.Susan J. Wolfe


55


Senior Vice President, General
    Counsel and
    Secretary.Ms.
    Wolfe joined Business Objects in December 2003 as Senior Vice
    President, General Counsel and Secretary. Before joining
    Business Objects, she was the Vice President, General Counsel
    and Secretary of Crystal Decisions Inc. and its predecessors
    from 1996 to December 2003. Ms. Wolfe was an attorney at
    Conner Peripherals, Inc. from 1994 to 1996. Prior to that she
    was an attorney at the firms of Nolan & Armstrong and
    Wilson Sonsini Goodrich & Rosati, Professional
    Corporation.   SECTION 16(a)
    BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
    Rule 16a-3 Regulation S-K
 113




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##### Table of Contents



THE AUDIT
    COMMITTEE
  www.businessobjects.com.
  
    retaining, evaluating and terminating our independent and
    statutory auditors subject to the powers that are expressly
    reserved under French corporate law to the board of directors
    and to the shareholders at annual general meetings;
    reviewing the annual report of the independent and statutory
    auditors;
    reviewing the audit plan and scope with the independent and
    statutory auditors and internal auditors;
    reviewing with management, the independent, statutory and
    internal auditors our quarterly financial statements,
    semi-annual financial statements, annual financial statements
    and disclosures, including disclosure controls and procedures
    and Managements Discussion and Analysis of Financial
    Condition and Results of Operations prior to the public release
    or filing of these statements;
    consulting with independent, statutory and internal auditors and
    reviewing with them the results of their quarterly review,
    annual audit and other examinations;
    reviewing and approving in advance the annual budget for audit
    services;
    reviewing and approving any material accounting policy changes
    affecting our operating results;
    reviewing effectiveness and operation of our system of internal
    controls and internal control over financial reporting;
    reviewing and approving, subject to board of directors and
    shareholders ratification if applicable, all related party
    transactions; and
    establishing procedures for the receipt and treatment of
    complaints regarding accounting, controls or auditing matters
    and/or
    corporate attorneys reports of evidence of a material
    violation of securities laws;
    reviewing and evaluating its performance and report such
    evaluation to the board of directors at least once a year;
    reviewing and evaluating whether it complies with its membership
    requirements and take corrective action, as necessary, at least
    once a year.  Rule 10A-3(b)(2), Article L225-228 Rule 10A-3(b)(2)
 114




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##### Table of Contents



www.businessobjects.com 157/159 www.businessobjects.com Form 8-K Form 10-K
  Procedure
    for Submitting Shareholder Proposals
        Procedure
    for Submitting Shareholder Proposals Relating to Nominee as
    Director
   115




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##### Table of Contents



Item 11.
    Executive
    Compensation  Summary Compensation Table.
  Long-termCompensation AwardsAnnual Compensation


Restricted


SharesFiscal








Other Annual


Stock


Underlying


All Other


TotalName and Principal
    Position

Year


Salary(1)


Bonus(1)


Compensation (1)


Awards(2)


Options


Compensation (1)


Compensation(3)John Schwarz(4)


2005


$
230,288


$
228,082


$



$
14,735,785



675,000


$



$
458,370Chief Executive Officer


2004



























2003



























Bernard Liautaud(5)


2005



627,701



679,023



52,863



1,893,500



130,000



64,011



1,423,598Chairman of the Board


2004



539,893



318,243



57,270







450,000



51,085



966,491and Chief Strategy Officer


2003



465,378



501,598



57,500







400,000



568



1,025,044James Tolonen


2005



339,000



132,422



















471,422Senior Group VP


2004



315,000



99,001



















414,001Chief Financial Officer


2003



315,000



132,113











275,000







447,113Susan Wolfe(6)


2005



300,000



122,367















2,000



424,367Senior VP  General


2004



263,865



83,182











145,000



2,000



349,047Counsel and Secretary


2003



























     (1)
    
    All amounts are stated in U.S. dollars. For payment in
    total or in part in currencies other than the U.S. dollar,
    translation of compensation into U.S. dollars is made using
    the average exchange rate for the relevant year. Bernard
    Liautaud is the only executive officer paid in total or in part
    in currencies other than the U.S. dollar (euros and British
    pounds). Due to the variation of the exchange rate of the
    U.S. dollar against the British pound and the euro, the
    U.S. dollar values in this Summary Compensation Table do
    not reflect actual compensation raises.(2)
    
    These values represent the dollars value of the restricted
    stocks awards, net any consideration paid by the executive
    officer, which for the purposes of this calculation was none,
    calculated by multiplying the closing price of our ADSs on the
    NASDAQ National Market on the date of the grant on
    November 22, 2005, which was $37.87.(3)
    
    Excludes Restricted Stock Awards.(4)
    
    Mr. Schwarz was appointed as Chief Executive Officer on
    September 11, 2005 and 50,000 restricted stock awards
    vested on December 30, 2005.(5)
    
    Mr. Liautaud was Chief Executive Officer until
    September 11, 2005 and he has been Chairman of the Board of
    Directors since August 1990 and Chief Strategy Officer since
    September 11, 2005. Other annual compensation for
    Mr. Liautaud included (i) tax return preparation fees
    of $15,000 in 2005, $15,000 in 2004 and $15,000 in 2003,
    (ii) moving expenses of $13,803 in 2003, (iii) car
    allowance expenses of $6,945 in 2005, $6,828 in 2004 and $2,315
    in 2003, (iv) life insurance premiums of $5,942 in 2005,
    $5,809 in 2004 and $3,470 in 2003, (v) family airfare costs
    of $24,976 in 2005, $29,633 in 2004 and $22,912 in 2003. All
    other compensation for Mr. Liautaud are payments of $64,011
    to the French pension retirement plan which are contributions by
    us on his behalf.(6)
    
    Ms. Wolfe joined the Company as Senior Vice President
    General Counsel and Secretary on December 11, 2003. Other
    annual compensation for Ms. Wolfe includes a payment of
    $2,000 each year in lieu of her enrollment in our health
    insurance plan. 116




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##### Table of Contents



Option Grants in 2005.
  Price Appreciation forIndividual Grants








Option Term(2)% of Total








Potential RealizedNumber of


Options


Exercise





Value at AssumedSecurities


Granted to


Price





Annual Rates of StockUnderlying


employees in


$/Share


Expiration


5%


10%Name

Granted Options


Fiscal Year


(1)


Date


($)


($)John Schwarz


225,000
(3)


7.48


$
36.92



11/11/2015


$
5,223,798


$
13,238,131450,000



14.96



36.92



11/11/2015


$
10,447,597


$
26,476,262Bernard Liautaud


130,000



4.32



36.92



11/11/2015



3,018,195



7,648,698James Tolonen






















Susan Wolfe






















     (1)
    
    All stock options have been granted at no less than the fair
    market value on the date of grant, in accordance with the terms
    of our 2001 Stock Incentive Plan.(2)
    
    In accordance with SEC rules, the table sets forth the
    hypothetical gains or options spread that would exist for the
    options at the end of their respective 10 year terms based
    on assumed annualized rates of compound stock price appreciation
    of 5% and 10% from the dates the options were granted until the
    expiration of the option term. The disclosure of 5% and 10%
    assumed rates is required by the rules of the SEC and does not
    represent our estimate or projection of future stock price or
    stock price growth. If the stock price does not increase over
    the exercise price, compensation to the Named Executive Officer
    would be zero.(3)
    
    Performance options  Aggregated Option Exercises in 2005 and December 31,
    2005 Option Values.
  Number of Securities


Value of UnexercisedUnderlying Unexercised


In-the-MoneyShares





Options at


Options atAcquired


Value


December 31, 2005


December 31, 2005
    ($)(1)Name

on Exercise


Realized ($)


Exercisable


Unexercisable


Exercisable


UnexercisableJohn Schwarz














675,000






$
2,361,628Bernard Liautaud










1,298,957



556,043


$
14,245,035


$
4,881,191James Tolonen


75,000


$
1,489,327



125,520



74,480


$
2,759,973


$
1,637,690Susan Wolfe


66,613


$
1,559,595



59,304



98,259


$
712,555


$
1,444,618     (1)
    
    These values represent the spread between the respective
    exercise prices of outstanding options and the closing price of
    our ADSs on the Nasdaq National Market on December 31,
    2005, which was $40.41. Option prices are set in euros, in
    accordance with French law, and are converted, for purposes of
    this table, at the weighted average exchange rate of the euro
    versus U.S. dollar of 1.2450916. 117




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##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  BENEFICIAL
    SHARE OWNERSHIP BY
    PRINCIPAL SHAREHOLDERS AND MANAGEMENT
  and/or AMF c/o Business
  Shares


Percentage5% Shareholders, Directors and
    Executive Officers

Beneficially Owned


Beneficially Owned5% ShareholdersDeutsche Bank AG(1)


6,687,987



7.22
%Taunusanlage 12, D-60325
    Frankfurt am Main Federal
    Republic of GermanyDirectors and Nominees for
    DirectorArnold Silverman(2)


229,879



*Bernard Charlès(3)


85,003



*Gerald Held(4)


47,000



*Jean-François Heitz(5)


32,000



*David Peterschmidt(6)


32,000



*Kurt Lauk(7)


15,001



*Carl Pascarella


1,001



*Executive OfficersBernard Liautaud(8)


1,977,958



2.13
%John Schwarz(9)


79,600



*James Tolonen(10)


148,436



*Susan Wolfe(11)


72,782



*All directors and executive
    officers as a group (11 persons)(12)


2,720,660



2.94
%     *
    
    Less than 1%.(1)
    
    Based on the information on Schedule 13G form, as amended,
    filed by Deutsche Bank AG on February 14, 2006.(2)
    
    Includes 30,000 shares issuable upon the exercise of share
    warrants exercisable as of February 28, 2006 or within
    60 days of such date.(3)
    
    Includes 30,000 shares issuable upon the exercise of share
    warrants exercisable as of February 28, 2006 or within
    60 days of such date.(4)
    
    Includes 45,000 shares issuable upon the exercise of share
    warrants exercisable as of February 28, 2006 or within
    60 days of such date. 118




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##### Table of Contents



(5)
    
    Includes 30,000 shares issuable upon the exercise of share
    warrants exercisable as of February 28, 2006 or within
    60 days of such date.(6)
    
    Includes 30,000 shares issuable upon the exercise of share
    warrants exercisable as of February 28, 2006 or within
    60 days of such date.(7)
    
    Includes 15,000 shares issuable upon the exercise of share
    warrants exercisable as of February 28, 2006 or within
    60 days of such date.(8)
    
    Mr. Liautaud is also Chairman of the Board. Includes
    1,337,499 shares issuable upon the exercise of stock
    options exercisable as of February 28, 2006 or within
    60 days of such date and 42,500 shares issuable upon
    vesting of restricted stock units as of February 28, 2006
    or within 60 days of such date.(9)
    
    Mr. Schwarz is also a member of the Board of
    Directors. Includes 50,000 shares issuable upon vesting of
    restricted stock units as of February 28, 2006 or within
    60 days of such date.(10)
    
    Includes 148,436 shares issuable upon the exercise of stock
    options exercisable as of February 28, 2006 or within
    60 days of such date.(11)
    
    Includes 72,434 shares issuable upon the exercise of stock
    options exercisable as of February 28, 2006 or within
    60 days of such date.(12)
    
    See notes 2 through 11.  Sub-Plan
  Equity
    Compensation Plan Information
    Number of SecuritiesNumber of Securities to be


Weighted-Average


Weighted-Average


Remaining Available forIssued upon Exercise of


Exercise Price of


Exercise Price of


Future Issuance UnderOutstanding Options,


Outstanding Options,


Outstanding Options,


Equity CompensationPlan Category

Warrants and Rights(1)


Warrants and Rights


Warrants and Rights


PlansEquity compensation plans approved
    by security holders


11,536,454



25.84


$
30.59



1,524,839
(2)(3)Equity compensation plans not
    approved by security holders














Total


11,536,454



25.84


$
30.59



1,524,839     (1)
    
    During December 2003, we assumed the as-converted outstanding
    stock options of former Crystal Decisions optionees. The
    former Crystal Decisions 1999 Plan now exists as part of
    Business Objects, as the BOSA 1999 119




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##### Table of Contents



Plan. We did not assume any authorized but ungranted stock
    options under the Crystal Decisions 1999 Stock Option Plan and
    may not regrant any stock options from forfeited stock options.As a result of our acquisition of Crystal Decisions, an
    aggregate of 6,310,234 ordinary shares were issued to Business
    Objects Option LLC. These shares are issued and are not included
    in this calculation.(2)
    
    Includes 956,000 shares available under the 2004 IESPP and
    121,696 shares available for issuance under the French ESPP.(3)
    
    Includes 447,143 shares available for issuance under the
    2001 Plan. No further stock options can be granted under the
    1993 Plan, which expired in 1998, the 1994 Plan, which expired
    in 1999, or under the 1999 Plan, which expired in May 2004. The
    2001 Plan is subject annually to increases on June 30 of
    each year by the lesser of: (i) 6.5 million shares,
    with 0.10 nominal value per share, (ii) the number of
    shares corresponding to 5% of the total number of Business
    Objects shares outstanding as of June 30, or (iii) any
    lesser amount as determined by the Board of Directors.  Item 13.
    Certain
    Relationships and Related Transactions  Regulated
    Agreements
    Form S-3
    (conventions règlementées). article L.233-3 articles L.225-38 article L225-42-1
  Agreements
    in the Ordinary Course of the Business
    
    Business Objects S.A.  Dassault
    Systèmes S.A. (Mr. Charlès): purchase of license
    and related services under its master software license agreement
    no. 97.1059 dated December 23, 1997 and its amendment
    dated March 25, 2005; 120




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##### Table of Contents




    Business Objects S.A.  Software
    Development Technologies (Mr. Held): Consulting agreement;
    Business Objects Corp/Business Objects
    Americas  Creo (Mr. Heitz): Software
    License Agreement;
    Business Objects Software
    Ltd  Electronics for Imaging
    (Mr. Peterschmidt): Authorized Application Provider
    Agreement;
    Business Object S.A.  My SQL
    (Mr. Liautaud): Technology Partnership Agreement;
    Business Objects Software Ltd  Open Wave
    (Mr. Peterschmidt and Mr. Held): OEM agreement;
    Business Objects Americas  Symantec
    (Mr. Roux): Software License Agreement;
    Business Objects Greater China Smarteam
    Corporation (Mr. Charles): Settlement Agreement relating to
    software localization services;
    Business Objects Americas  Arc
    (Mr. Heitz):  Global Technology Partner
    Agreement  and/or and/or
  Item 14.
    Principal
    Accountant Fees and Services     Regulation S-K
  Fees Paid
    to Auditors for Service Rendered
  Audit
    Fees
  Form 10-Q
  Audit-Related
    Fees
    Tax
    Fees
   121




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##### Table of Contents



All
    Other Fees
    Pre-Approval
    Policies and Procedures
     PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Consolidated Financial Statements
  Form 10-K Form 10-K
  PageReports of
    Independent Registered Public Accounting Firm


59Consolidated
    Balance Sheets as of December 31, 2005 and 2004


62Consolidated
    Statements of Income for the Years Ended December 31, 2005,
    2004 and 2003


63Consolidated
    Statements of Shareholders Equity for the Years Ended
    December 31, 2005, 2004 and 2003


64Consolidated
    Statements of Cash Flow for the Years Ended December 31,
    2005, 2004 and 2003


65Notes to
    Consolidated Financial Statements


66   Financial Statement Schedules
  Schedule II:  Valuation
    and Qualifying Accounts  Business Objects S.A
    (in thousands).
  Year Ended
    December 31,2005


2004


2003Allowance for doubtful accounts
    and distribution reserves:Balance at beginning of year

$
12,535


$
9,847


$
2,891Acquired through acquisition


207



0



6,628Charged to costs and expenses


3,691



5,352



1,102Deductions and write-offs


(3,728
)


(3,051
)


(638
)Translation adjustments


(494
)


387



(136
)Balance at end of year

$
12,211


$
12,535


$
9,847   122




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##### Table of Contents



Year Ended
    December 31,2005


2004


2003Deferred Tax Asset, Valuation
    AllowanceBalance at beginning of year

$
48,827


$
49,265


$
54,615Additions charged to valuation
    allowance


6,483



17,576



7,573Reductions from valuation allowance


(41,968
)


(18,014
)


(12,923
)Balance at end of year

$
13,342


$
48,827


$
49,265     Exhibits.
  Form 10-K.
  Exhibit No.

Description21.1

List of Subsidiaries of the
    Company.23.1

Consent of Independent Registered
    Public Accounting Firm.24.1

Power of Attorney is herein
    referenced to the signature page of this Annual Report on
    Form 10-K.31.1

Certification of Chief Executive
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.31.2

Certification of Chief Financial
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.32.1

Certification of Chief Executive
    Officer and of Chief Financial Officer furnished pursuant to
    Rule 13a-14(b)
    of the Exchange Act and Section 1350 of Chapter 63 of
    Title 18 of the United States Code (18 U.S.C. 1350).   Exhibits Incorporated by Reference
  Exhibit No.

Description3.1*

Amended and Restated Bylaws of
    Business Objects S.A., as amended November 18, 2005
    (English translation) is incorporated herein by reference to
    Exhibit 3.1 filed with our Current Report on
    Form 8-K
    filed with the SEC on November 23, 2005 (File
    No. 000-24720).4.1*

Form of Deposit Agreement, as
    amended and restated on October 15, 2003, by and among
    Business Objects S.A. and The Bank of New York, as Depositary
    and holder from time to time of ADSs issued thereunder and
    Exhibit A to the Deposit Agreement, is incorporated herein
    by reference to Exhibit 1 of our Registration Statement on
    Form F-6
    filed with the SEC on October 15, 2003 (File
    No. 333-109712).4.2*

Amended and Restated Stockholders
    Agreement, dated as of October 15, 2003, by and among
    Business Objects S.A., New SAC, CB Cayman and certain
    shareholders of New SAC, is incorporated herein by reference to
    Exhibit 2.1 of our Current Report on
    Form 8-K
    filed with the SEC on October 17, 2003 (File
    No. 000-24720).4.3*

Employee Benefit
    Sub-Plan
    Trust Agreement is incorporated herein by reference to
    Exhibit 4.3 filed with our Registration Statement on
    Form S-3
    filed with the SEC on June 23, 2005 (File
    No. 333-126082).10.3*+

1991 Stock Option Plan is
    incorporated herein by reference to Exhibit 10.2 filed with
    our Registration Statement on
    Form F-1
    filed with the SEC on September 20, 1994 (File
    No. 33-83052).10.4*+

1993 Stock Option Plan is
    incorporated herein by reference to Exhibit 10.3 filed with
    our Registration Statement on
    Form F-1
    filed with the SEC on September 20, 1994 (File
    No. 33-83052).10.5*+

1994 Stock Option Plan is
    incorporated herein by reference to Exhibit 4.2 filed with
    our Registration Statement on
    Form F-1
    filed with the SEC on September 20, 1994 (File
    No. 33-83052).10.6*

Summary, in English, of 1992 Grant
    by the French Ministry of the Economy, Finance and the Budget is
    incorporated herein by reference to Exhibit 10.4 filed with
    our Registration Statement on
    Form F-1
    filed with the SEC on September 20, 1994 (File No.
    33-83052).10.21*

Commercial Lease by and between
    SCI De LIlot 4.3 and SCI Du Pont De Levallois (lessors)
    and the Company (lessee) dated December 22, 1999 (English
    translation) is incorporated herein by reference to
    Exhibit 10.24 filed with our Annual Report on
    Form 10-K
    filed with the SEC on March 30, 2000. 123




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##### Table of Contents



Exhibit No.

Description10.21.1*

Amendment to Commercial Lease by
    and between SCI De Lllot 4.3 and SCI Du Pont de Levallois
    (lessors) and the Company (lessee) date March 29, 2005
    (English Translation) is incorporated herein by reference to
    Exhibit 10.21.1 filed with our Quarterly Report on
    Form 10-Q
    filed with the SEC on May 9, 2005.10.22*

Lease agreement by and between 475
    Java Drive Associates, L.P. and Business Objects Americas dated
    August 3, 2000 is incorporated herein by reference to
    Exhibit 10 filed with our Quarterly Report on
    Form 10-Q
    filed with the SEC on August 9, 2000.10.23*+

1999 Stock Option Plan, as
    amended, is incorporated herein by reference to
    Exhibit (d) (1) of our
    Schedule TO-I
    filed with the SEC on October 11, 2002 (File
    No. 005-47622).10.24*+

French Employee Savings Plan, as
    amended, June 14, 2005, is incorporated herein by reference
    to Exhibit 10.24 filed with our Quarterly Report on
    Form 10-Q
    filed with the SEC on August 9, 2005.10.24.1*+

1995 International Employee Stock
    Purchase Plan, as amended, is incorporated herein by reference
    to Exhibit 10.24.2 filed with our Current Report on
    Form 8-K
    filed with the SEC on October 26, 2004.10.25*+

2001 Stock Incentive Plan, as
    amended October 20, 2005 (English Translation) is
    incorporated by reference to Exhibit 10.1 to
    Registrants Current Report on
    Form 8-K
    filed with the SEC on October  26, 2005.10.25.1+

2001 Stock Incentive
    Plan  Subsidiary Stock Incentive
    Sub-Plan, as
    amended October 19, 2005 is incorporated herein by
    reference to Exhibit 10.25.3 filed with our Registration
    Statement on
    Form S-3/A
    filed with the SEC on October 24, 2005 (File No.
    333-126082).10.26.*+

Stock subscription warrant for
    John Olsen dated February 7, 2001, is incorporated herein
    by reference to Exhibit 4.2 filed with our Registration
    Statement on
    Form S-8
    filed with the SEC on September 14, 2001.10.27*+

Stock subscription warrant for
    Bernard Charlès dated October 30, 2001, is
    incorporated herein by reference to Exhibit 4.2 filed with
    our Registration Statement on
    Form S-8
    filed with the SEC on November 8, 2002 (File
    No. 333-101104).10.28*+

Stock subscription warrant for
    Albert Eisenstat dated October 30, 2001, is incorporated
    herein by reference to Exhibit 4.3 filed with our
    Registration Statement on
    Form S-8
    filed with the SEC on November 8, 2002 (File
    No. 333-101104).10.29*+

Stock subscription warrant for
    Arnold Silverman dated October 30, 2001, is incorporated
    herein by reference to Exhibit 4.4 filed with our
    Registration Statement on
    Form S-8
    filed with the SEC on November 8, 2002 (File
    No. 333-101104).10.30*+

Agreement with each of the
    Companys directors and senior management pursuant to which
    the Company agreed to contract for and maintain liability
    insurance against liabilities which may be incurred by such
    persons in their respective capacities is incorporated herein by
    reference to Exhibit 10.5 filed with our Registration
    Statement on
    Form F-1
    filed with the SEC on September 20, 1994 (File
    No.333-83052).10.31*

Lease agreement by and between
    Commercial Union Life Assurance Company Limited, Business
    Objects UK Limited and Business Objects SA dated April 3,
    2001 is incorporated herein by reference to Exhibit 993(ii)
    filed with our Quarterly Report on
    Form 10-Q
    filed with the SEC on November 14, 2001.10.32*+

Stock subscription warrant for
    Gerald Held dated September 16, 2003, is incorporated
    herein by reference to Exhibit 4.2 filed with our
    Registration Statement on
    Form S-8
    filed with the SEC on September 30, 2003 (File
    No. 333-109278).10.33*+

Stock subscription warrant for
    Jean-François Heitz dated September 16, 2003, is
    incorporated herein by reference to Exhibit 4.3 filed with
    our Registration Statement on
    Form S-8
    filed with the SEC on September 30, 2003 (File
    No. 333-109278).10.34*+

Stock subscription warrant for
    David Peterschmidt dated September 16, 2003, is
    incorporated herein by reference to Exhibit 4.4 filed with
    our Registration Statement on
    Form S-8
    filed with the SEC on September 30, 2003 (File
    No. 333-109278).10.35.3*

Agreement between
    Société Générale and Business Objects S.A.
    effective March 1, 2006 is incorporated herein by reference
    to Exhibit 10.35 filed with our Current Report on
    Form 8-K
    filed with the SEC on March 7, 2006. 124




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##### Table of Contents



Exhibit No.

Description10.36*+

Crystal Decisions, Inc. 1999 Stock
    Option Plan, as amended August 13, 2003, is incorporated
    herein by reference to Exhibit 4.2 filed with our
    Registration Statement on
    Form S-8
    filed with the SEC on December 11, 2003 (File
    No. 333-111090).10.36.1*+

Crystal Decisions 1999 Stock
    Option Plan  Canadian Stock Option Agreement is
    incorporated herein by reference to Exhibit 10.1.1 filed
    with the Crystal Decisions Registration Statement on
    Form 10 filed with the SEC on October 27, 2000 (File
    No. 000-31859).10.36.2*+

Crystal Decisions 1999 Stock
    Option Plan  as amended August 13, 2001
    (French Employees Only) is incorporated herein by reference to
    Exhibit 10.1.4 filed with the Crystal Decisions Annual
    Report on
    Form 10-K
    filed with the SEC on September 26, 2002.10.37*

Shareholders Agreement, dated as
    of November 22, 2000, by and among New SAC, Silver Lake
    Technology Investors Cayman, L.P., Silver Lake Investors Cayman,
    L.P., Silver Lake Partners Cayman, L.P., SAC Investments, L.P.,
    August Capital III, L.P., Chase Equity Associates, L.P., GS
    Capital Partners III, L.P., GS Capital Partners III
    Offshore, L.P., Goldman, Sachs & Co. Verwaltungs GmbH,
    Stone Street Fund 2000 L.P., Bridge Street Special
    Opportunities Fund 2000, L.P. Staenberg Venture
    Partners II, L.P., Staenberg Seagate Partners, LLC,
    Integral Capital Partners V, L.P., Integral Capital
    Partners V Side Fund, L.P. and the individuals listed therein,
    is incorporated by reference to Exhibit 10.16 filed with
    Seagate Technology International LLCs Registration
    Statement on
    Form S-4
    filed with the SEC on April 20, 2001 (File
    No. 333-59328).10.38*

Management Shareholders Agreement,
    dated as of November 22, 2000, by and among New SAC and the
    Management Shareholders listed therein is incorporated by
    reference to Exhibit 10.17 filed with the Seagate
    Technology International LLC Registration Statement on
    Form S-4
    filed with the SEC on April 20, 2001 (File
    No. 333-59328).10.40*

Lease Agreement, dated
    September 27, 1999, between Laurelton Investments Ltd.,
    Seagate Software Information Management Group (Canada) Ltd. And
    Seagate Software, Inc. incorporated herein by reference to
    Exhibit 10.10 filed with the Crystal Decisions Registration
    Statement on Form 10 filed with the SEC on October 27,
    2000 (File No.
    000-31859).10.0.1*

Amendment to Lease agreement,
    dated June 22, 2000, between Laurelton Investments Ltd.,
    Seagate Software Information Management Group (Canada) Ltd. And
    Seagate Software, Inc. is incorporated herein by reference to
    Exhibit 10.10.1 filed with the Crystal Decisions Annual
    Report on
    Form 10-K
    filed with the SEC on September 27, 2001.10.40.2*

Amended and Restated Lease
    Agreement, dated February 28, 2002, between Laurelton
    Investments Ltd., Crystal Decision, Corp. and Crystal Decisions,
    Inc. is incorporated herein by reference to Exhibit 10.10.2
    filed with the Crystal Decisions Annual Report on
    Form 10-K
    filed with the SEC on September 26, 2002.10.44*

Employment Agreement, dated as of
    September 25, 2002, by and between Crystal Decisions Inc.
    and Jonathan Judge is incorporated herein by reference to
    Exhibit 10.17 filed with the Crystal Decisions Quarterly
    Report on
    Form 10-Q
    filed with the SEC on November 12, 2002 (File
    No. 000-31859).10.51*

Pledge and Security Agreement
    dated April 28, 2004 between Business Objects Americas and
    Comerica Bank is incorporated by reference to Exhibit 10.51
    of the Companys
    Form 10-Q
    filed with the SEC on August 9, 2004.10.51.1*

First Amendment to Pledge and
    Security Agreement dated July 28, 2004 between Business
    Objects Americas and Comerica Bank is incorporated by reference
    to Exhibit 10.51.1 of the Companys
    Form 10-Q
    filed with the SEC on August 9, 2004.10.52*+

2004 International Employee Stock
    Purchase Plan, as amended on June 14, 2005, is incorporated
    herein by reference to Exhibit 10.52 filed with our
    Quarterly Report on
    Form 10-Q
    filed with the SEC on August 9, 2005.10.53*+

Stock Subscription Warrant for
    David J. Roux is incorporated herein by reference to
    Exhibit 4.2 filed with our Registration Statement on
    Form S-8
    filed with the SEC on May 13, 2004 (File No.
    333-115768).10.54*+

Stock Subscription Warrant for
    Arnold Silverman is incorporated herein by reference to
    Exhibit 4.2 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869). 125




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##### Table of Contents



Exhibit No.

Description10.55*+

Stock Subscription Warrant for
    Albert Eisenstat is incorporated herein by reference to
    Exhibit 4.3 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.56*+

Stock Subscription Warrant for
    Bernard Charlès is incorporated herein by reference to
    Exhibit 4.4 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.57*+

Stock Subscription Warrant for
    Kurt Lauk is incorporated herein by reference to
    Exhibit 4.5 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.58*+

Stock Subscription Warrant for
    Gerald Held is incorporated herein by reference to
    Exhibit 4.6 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.59*+

Stock Subscription Warrant for
    Jean-François Heitz is incorporated herein by reference to
    Exhibit 4.7 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.60*+

Stock Subscription Warrant for
    David Peterschmidt is incorporated herein by reference to
    Exhibit 4.8 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.62*+

2005 Executive Compensation Plan
    Stock Subscription Warrant Agreement for Gerald Held is
    incorporated herein by reference to Exhibit 10.62 filed
    with our Annual Report on
    Form 10-K
    filed with the SEC on March 16, 2005.10.63*+

Stock Subscription Warrant
    Agreement for Carl S. Pascarella is incorporated herein by
    reference to Exhibit 10.52 filed with our Annual Report on
    Form 10-K
    filed with the SEC on March 16, 2005.10.64*+

Stock Subscription Warrant
    Agreement for Gerald Held is incorporated herein by reference to
    Exhibit 10.52 filed with our Quarterly Report on
    Form 10-Q
    filed with the SEC on August 9, 2005.10.65*+

SRC Software, Inc. 2003 Stock
    Incentive Plan is incorporated herein by reference to
    Exhibit 4.1 filed with our Registration Statement on
    Form S-8
    filed with the SEC on October 24, 2005 (File No.
    333-129200).10.66*+

Form of Restricted Stock Purchase
    Agreement is incorporated herein by reference to
    Exhibit 10.66 filed with our Registration Statement on
    Form S-3/A
    filed with the SEC on October 24, 2005 (File No.
    333-126082).10.67*+

Infommersion, Inc. 2002 Stock
    Incentive Plan, as amended on December 3, 2004 is
    incorporated herein by reference to Exhibit 10.67 filed
    with our Registration Statement on
    Form S-8
    filed with the SEC on November 3, 2005 (File
    No. 333-129433).10.68*+

Employment Agreement of John G.
    Schwarz dated September 9, 2005 is incorporated herein by
    reference to Exhibit 10.65 filed with our Quarterly Report
    on
    Form 10-Q
    filed with the SEC on November $9, 2005.10.69*+

Business Objects Americas Deferred
    Compensation Plan, as amended is incorporated herein by
    reference to Exhibit 4.1 filed with our Registration
    Statement on
    Form S-8
    filed with the SEC on May 8, 2005 (File
    No. 333-124726).     *
    
    Previously filed.+
    
    Management contracts or compensatory plans.$
    
    Confidential treatment has been requested with respect to
    certain portions of this exhibit. Omitted portions have been
    filed separately with the Securities and Exchange Commission.  126




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##### Table of Contents



SIGNATURES
      By:
    /s/  John G. Schwarz      POWER OF
    ATTORNEY
  KNOW ALL PERSONS BY THESE PRESENTS attorney-in-fact, Form 10-K attorneys-in-fact,
    Signature

Title

Date/s/  John
    G. SchwarzJohn
    G. Schwarz

Chief Executive Officer (Principal
    Executive Officer)

March 16, 2006/s/  James
    R. TolonenJames
    R. Tolonen

Chief Financial Officer (Principal
    Financial and Accounting Officer)

March 16, 2006/s/  Bernard
    LiautaudBernard
    Liautaud

Chairman of the Board

March 16, 2006/s/  Bernard
    CharlèsBernard
    Charlès

Director

March 16, 2006/s/  Jean-François
    HeitzJean-François
    Heitz

Director

March 16, 2006/s/  Gerald
    HeldGerald
    Held

Director

March 16, 2006/s/  Kurt
    LaukKurt
    Lauk

Director

March 16, 2006/s/  Carl
    F. PascarellaCarl
    F. Pascarella

Director

March 16, 2006/s/  David
    PeterschmidtDavid
    Peterschmidt

Director

March 16, 2006/s/  Arnold
    N. SilvermanArnold
    N. Silverman

Director

March 16, 2006  127




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EXHIBIT INDEX
  Exhibit No.

Description3.1*

Amended and Restated Bylaws of
    Business Objects S.A., as amended November 18, 2005
    (English translation) is incorporated herein by reference to
    Exhibit 3.1 filed with our Current Report on
    Form 8-K
    filed with the SEC on November 23, 2005 (File
    No. 000-24720).4.1*

Form of Deposit Agreement, as
    amended and restated on October 15, 2003, by and among
    Business Objects S.A. and The Bank of New York, as Depositary
    and holder from time to time of ADSs issued thereunder and
    Exhibit A to the Deposit Agreement, is incorporated herein
    by reference to Exhibit 1 of our Registration Statement on
    Form F-6
    filed with the SEC on October 15, 2003 (File
    No. 333-109712).4.2*

Amended and Restated Stockholders
    Agreement, dated as of October 15, 2003, by and among
    Business Objects S.A., New SAC, CB Cayman and certain
    shareholders of New SAC, is incorporated herein by reference to
    Exhibit 2.1 of our Current Report on
    Form 8-K
    filed with the SEC on October 17, 2003 (File
    No. 000-24720).4.3*

Employee Benefit
    Sub-Plan
    Trust Agreement is incorporated herein by reference to
    Exhibit 4.3 filed with our Registration Statement on
    Form S-3
    filed with the SEC on June 23, 2005 (File No.
    333-126082).10.3*+

1991 Stock Option Plan is
    incorporated herein by reference to Exhibit 10.2 filed with
    our Registration Statement on
    Form F-1
    filed with the SEC on September 20, 1994 (File
    No. 33-83052).10.4*+

1993 Stock Option Plan is
    incorporated herein by reference to Exhibit 10.3 filed with
    our Registration Statement on
    Form F-1
    filed with the SEC on September 20, 1994 (File
    No. 33-83052).10.5*+

1994 Stock Option Plan is
    incorporated herein by reference to Exhibit 4.2 filed with
    our Registration Statement on
    Form F-1
    filed with the SEC on September 20, 1994 (File
    No. 33-83052).10.6*

Summary, in English, of 1992 Grant
    by the French Ministry of the Economy, Finance and the Budget is
    incorporated herein by reference to Exhibit 10.4 filed with
    our Registration Statement on
    Form F-1
    filed with the SEC on September 20, 1994 (File No.
    33-83052).10.21*

Commercial Lease by and between
    SCI De LIlot 4.3 and SCI Du Pont De Levallois (lessors)
    and the Company (lessee) dated December 22, 1999 (English
    translation) is incorporated herein by reference to
    Exhibit 10.24 filed with our Annual Report on
    Form 10-K
    filed with the SEC on March 30, 2000.10.21.1*

Amendment to Commercial Lease by
    and between SCI De Lllot 4.3 and SCI Du Pont de Levallois
    (lessors) and the Company (lessee) date March 29, 2005
    (English Translation) is incorporated herein by reference to
    Exhibit 10.21.1 filed with our Quarterly Report on
    Form 10-Q
    filed with the SEC on May 9, 2005.10.22*

Lease agreement by and between 475
    Java Drive Associates, L.P. and Business Objects Americas dated
    August 3, 2000 is incorporated herein by reference to
    Exhibit 10 filed with our Quarterly Report on
    Form 10-Q
    filed with the SEC on August 9, 2000.10.23*+

1999 Stock Option Plan, as
    amended, is incorporated herein by reference to
    Exhibit (d) (1) of our
    Schedule TO-I
    filed with the SEC on October 11, 2002 (File
    No. 005-47622).10.24*+

French Employee Savings Plan, as
    amended, June 14, 2005, is incorporated herein by reference
    to Exhibit 10.24 filed with our Quarterly Report on
    Form 10-Q
    filed with the SEC on August 9, 2005.10.24.1*+

1995 International Employee Stock
    Purchase Plan, as amended, is incorporated herein by reference
    to Exhibit 10.24.2 filed with our Current Report on
    Form 8-K
    filed with the SEC on October 26, 2004.10.25*+

2001 Stock Incentive Plan, as
    amended October 20, 2005 (English Translation) is
    incorporated by reference to Exhibit 10.1 to
    Registrants Current Report on
    Form 8-K
    filed with the SEC on October  26, 2005.10.25.1+

2001 Stock Incentive
    Plan  Subsidiary Stock Incentive
    Sub-Plan, as
    amended October 19, 2005 is incorporated herein by
    reference to Exhibit 10.25.3 filed with our Registration
    Statement on
    Form S-3/A
    filed with the SEC on October 24, 2005 (File No.
    333-126082).10.26.*+

Stock subscription warrant for
    John Olsen dated February 7, 2001, is incorporated herein
    by reference to Exhibit 4.2 filed with our Registration
    Statement on
    Form S-8
    filed with the SEC on September 14, 2001. 128




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##### Table of Contents



Exhibit No.

Description10.27*+

Stock subscription warrant for
    Bernard Charlès dated October 30, 2001, is
    incorporated herein by reference to Exhibit 4.2 filed with
    our Registration Statement on
    Form S-8
    filed with the SEC on November 8, 2002 (File
    No. 333-101104).10.28*+

Stock subscription warrant for
    Albert Eisenstat dated October 30, 2001, is incorporated
    herein by reference to Exhibit 4.3 filed with our
    Registration Statement on
    Form S-8
    filed with the SEC on November 8, 2002 (File
    No. 333-101104).10.29*+

Stock subscription warrant for
    Arnold Silverman dated October 30, 2001, is incorporated
    herein by reference to Exhibit 4.4 filed with our
    Registration Statement on
    Form S-8
    filed with the SEC on November 8, 2002 (File
    No. 333-101104).10.30*+

Agreement with each of the
    Companys directors and senior management pursuant to which
    the Company agreed to contract for and maintain liability
    insurance against liabilities which may be incurred by such
    persons in their respective capacities is incorporated herein by
    reference to Exhibit 10.5 filed with our Registration
    Statement on
    Form F-1
    filed with the SEC on September 20, 1994 (File No.
    333-83052).10.31*

Lease agreement by and between
    Commercial Union Life Assurance Company Limited, Business
    Objects UK Limited and Business Objects SA dated April 3,
    2001 is incorporated herein by reference to Exhibit 993(ii)
    filed with our Quarterly Report on
    Form 10-Q
    filed with the SEC on November 14, 2001.10.32*+

Stock subscription warrant for
    Gerald Held dated September 16, 2003, is incorporated
    herein by reference to Exhibit 4.2 filed with our
    Registration Statement on
    Form S-8
    filed with the SEC on September 30, 2003 (File
    No. 333-109278).10.33*+

Stock subscription warrant for
    Jean-François Heitz dated September 16, 2003, is
    incorporated herein by reference to Exhibit 4.3 filed with
    our Registration Statement on
    Form S-8
    filed with the SEC on September 30, 2003 (File
    No. 333-109278).10.34*+

Stock subscription warrant for
    David Peterschmidt dated September 16, 2003, is
    incorporated herein by reference to Exhibit 4.4 filed with
    our Registration Statement on
    Form S-8
    filed with the SEC on September 30, 2003 (File
    No. 333-109278).10.35.3*

Agreement between
    Société Générale and Business Objects S.A.
    effective March 1, 2006 is incorporated herein by reference
    to Exhibit 10.35.3 filed with our Current Report on
    Form 8-K
    filed with the SEC on March 7, 2006.10.36*+

Crystal Decisions, Inc. 1999 Stock
    Option Plan, as amended August 13, 2003, is incorporated
    herein by reference to Exhibit 4.2 filed with our
    Registration Statement on
    Form S-8
    filed with the SEC on December 11, 2003 (File
    No. 333-111090).10.36.1*+

Crystal Decisions 1999 Stock
    Option Plan  Canadian Stock Option Agreement is
    incorporated herein by reference to Exhibit 10.1.1 filed
    with the Crystal Decisions Registration Statement on
    Form 10 filed with the SEC on October 27, 2000 (File
    No. 000-31859).10.36.2*+

Crystal Decisions 1999 Stock
    Option Plan  as amended August 13, 2001
    (French Employees Only) is incorporated herein by reference to
    Exhibit 10.1.4 filed with the Crystal Decisions Annual
    Report on
    Form 10-K
    filed with the SEC on September 26, 2002.10.37*

Shareholders Agreement, dated as
    of November 22, 2000, by and among New SAC, Silver Lake
    Technology Investors Cayman, L.P., Silver Lake Investors Cayman,
    L.P., Silver Lake Partners Cayman, L.P., SAC Investments, L.P.,
    August Capital III, L.P., Chase Equity Associates, L.P., GS
    Capital Partners III, L.P., GS Capital Partners III
    Offshore, L.P., Goldman, Sachs & Co. Verwaltungs GmbH,
    Stone Street Fund 2000 L.P., Bridge Street Special
    Opportunities Fund 2000, L.P. Staenberg Venture
    Partners II, L.P., Staenberg Seagate Partners, LLC,
    Integral Capital Partners V, L.P., Integral Capital
    Partners V Side Fund, L.P. and the individuals listed therein,
    is incorporated by reference to Exhibit 10.16 filed with
    Seagate Technology International LLCs Registration
    Statement on
    Form S-4
    filed with the SEC on April 20, 2001 (File
    No. 333-59328).10.38*

Management Shareholders Agreement,
    dated as of November 22, 2000, by and among New SAC and the
    Management Shareholders listed therein is incorporated by
    reference to Exhibit 10.17 filed with the Seagate
    Technology International LLC Registration Statement on
    Form S-4
    filed with the SEC on April 20, 2001 (File
    No. 333-59328). 129




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##### Table of Contents



Exhibit No.

Description10.40*

Lease Agreement, dated
    September 27, 1999, between Laurelton Investments Ltd.,
    Seagate Software Information Management Group (Canada) Ltd. And
    Seagate Software, Inc. incorporated herein by reference to
    Exhibit 10.10 filed with the Crystal Decisions Registration
    Statement on Form 10 filed with the SEC on October 27,
    2000 (File No.
    000-31859).10.0.1*

Amendment to Lease agreement,
    dated June 22, 2000, between Laurelton Investments Ltd.,
    Seagate Software Information Management Group (Canada) Ltd. And
    Seagate Software, Inc. is incorporated herein by reference to
    Exhibit 10.10.1 filed with the Crystal Decisions Annual
    Report on
    Form 10-K
    filed with the SEC on September 27, 2001.10.40.2*

Amended and Restated Lease
    Agreement, dated February 28, 2002, between Laurelton
    Investments Ltd., Crystal Decision, Corp. and Crystal Decisions,
    Inc. is incorporated herein by reference to Exhibit 10.10.2
    filed with the Crystal Decisions Annual Report on
    Form 10-K
    filed with the SEC on September 26, 2002.10.44*

Employment Agreement, dated as of
    September 25, 2002, by and between Crystal Decisions Inc.
    and Jonathan Judge is incorporated herein by reference to
    Exhibit 10.17 filed with the Crystal Decisions Quarterly
    Report on
    Form 10-Q
    filed with the SEC on November 12, 2002 (File
    No. 000-31859)10.51.1*

First Amendment to Pledge and
    Security Agreement dated July 28, 2004 between Business
    Objects Americas and Comerica Bank is incorporated by reference
    to Exhibit 10.51.1 of the Companys
    Form 10-Q
    filed with the SEC on August 9, 2004.10.52*+

2004 International Employee Stock
    Purchase Plan, as amended on June 14, 2005, is incorporated
    herein by reference to Exhibit 10.52 filed with our
    Quarterly Report on
    Form 10-Q
    filed with the SEC on August 9, 2005.10.53*+

Stock Subscription Warrant for
    David J. Roux is incorporated herein by reference to
    Exhibit 4.2 filed with our Registration Statement on
    Form S-8
    filed with the SEC on May 13, 2004 (File No.
    333-115768).10.54*+

Stock Subscription Warrant for
    Arnold Silverman is incorporated herein by reference to
    Exhibit 4.2 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.55*+

Stock Subscription Warrant for
    Albert Eisenstat is incorporated herein by reference to
    Exhibit 4.3 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.56*+

Stock Subscription Warrant for
    Bernard Charlès is incorporated herein by reference to
    Exhibit 4.4 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.57*+

Stock Subscription Warrant for
    Kurt Lauk is incorporated herein by reference to
    Exhibit 4.5 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.58*+

Stock Subscription Warrant for
    Gerald Held is incorporated herein by reference to
    Exhibit 4.6 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.59*+

Stock Subscription Warrant for
    Jean-François Heitz is incorporated herein by reference to
    Exhibit 4.7 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.60*+

Stock Subscription Warrant for
    David Peterschmidt is incorporated herein by reference to
    Exhibit 4.8 filed with our Registration Statement on
    Form S-8
    filed with the SEC on June 25, 2004 (File No.
    333-116869).10.62*+

2005 Executive Compensation Plan
    Stock Subscription Warrant Agreement for Gerald Held is
    incorporated herein by reference to Exhibit 10.62 filed
    with our Annual Report on
    Form 10-K
    filed with the SEC on March 16, 2005.10.63*+

Stock Subscription Warrant
    Agreement for Carl S. Pascarella is incorporated herein by
    reference to Exhibit 10.52 filed with our Annual Report on
    Form 10-K
    filed with the SEC on March 16, 2005.10.64*+

Stock Subscription Warrant
    Agreement for Gerald Held is incorporated herein by reference to
    Exhibit 10.52 filed with our Quarterly Report on
    Form 10-Q
    filed with the SEC on August 9, 2005. 130




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##### Table of Contents



Exhibit No.

Description10.65*+

SRC Software, Inc. 2003 Stock
    Incentive Plan is incorporated herein by reference to
    Exhibit 4.1 filed with our Registration Statement on
    Form S-8
    filed with the SEC on October 24, 2005 (File No.
    333-129200).10.66*+

Form of Restricted Stock Purchase
    Agreement is incorporated herein by reference to
    Exhibit 10.66 filed with our Registration Statement on
    Form S-3/A
    filed with the SEC on October 24, 2005 (File No.
    333-126082).10.67*+

Infommersion, Inc. 2002 Stock
    Incentive Plan, as amended on December 3, 2004 is
    incorporated herein by reference to Exhibit 10.67 filed
    with our Registration Statement on
    Form S-8
    filed with the SEC on November 3, 2005 (File
    No. 333-129433).10.68*+

Employment Agreement of John G.
    Schwarz dated September 9, 2005 is incorporated herein by
    reference to Exhibit 10.65 filed with our Quarterly Report
    on
    Form 10-Q
    filed with the SEC on November $9, 2005.10.69*+

Business Objects Americas Deferred
    Compensation Plan, as amended is incorporated herein by
    reference to Exhibit 4.1 filed with our Registration
    Statement on
    Form S-8
    filed with the SEC on May 8, 2005 (File
    No. 333-124726).21.1

List of Subsidiaries of the
    Company.23.1

Consent of Independent Registered
    Public Accounting Firm.24.1

Power of Attorney is herein
    referenced to the signature page of this Annual Report on
    Form 10-K.31.1

Certification of Chief Executive
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.31.2

Certification of Chief Financial
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.32.1

Certification of Chief Executive
    Officer and of Chief Financial Officer furnished pursuant to
    Rule 13a-14(b)
    of the Exchange Act and Section 1350 of Chapter 63 of
    Title 18 of the United States Code (18 U.S.C. 1350).     *
    
    Previously filed.+
    
    Management contracts or compensatory plans.$
    
    Confidential treatment has been requested with respect to
    certain portions of this exhibit. Omitted portions have been
    filed separately with the Securities and Exchange Commission. 131