<PAGE>

                                 United States
                      Securities and Exchange Commission
                            Washington, D.C. 20549
                                   Form 10-K

[X]  Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934


For the fiscal year ended December 31, 2000,

OR
[_]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
     For the transition period from          to
Commission File Number 0-24720

                             BUSINESS OBJECTS S.A.
         -------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

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<S>                                                                     <C>
          The Republic of France                                                    None
------------------------------------------------------                  -------------------------------------------
   (Jurisdiction of incorporation or organization)                          (I.R.S. Employer Identification No.)
</TABLE>

          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:

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<S>                                                  <C>
Title of each class:                                  Name of each exchange on which registered:
-------------------                                   -----------------------------------------
American depositary shares, each representing                 Nasdaq -National Market
   one Ordinary Share
Ordinary Shares                                          Nasdaq -National Market*
Ordinary Shares                                          Premier Marche of the Euronext Paris, France
</TABLE>

* Ordinary Shares are not traded in the United States, rather, they are
deposited with The Bank of New York, as Depositary, and one American depositary
share is issuable for every one Ordinary Share deposited with the Depositary.

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   [X] Yes    [ ]No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     The aggregate market value of our common equity held by non-affiliates,
based upon the closing sale price of our American depositary shares on February
28, 2001 as reported on the Nasdaq -National Market, was approximately
$3,463,777,000 Ordinary Shares held by each of our officers and directors and by
each person owning 5% or more of our outstanding Ordinary Shares are excluded
because such persons may be deemed to be affiliates of Business Objects. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
<PAGE>

     As of February 28, 2001, the number of outstanding shares of each class of
our common equity was 60,961,140 Ordinary Shares of Euro 0.10 nominal value,
including 19,152,105 American depositary shares (as evidenced by American
depositary receipts), each corresponding to one Ordinary Share.

     All ordinary and American depositary share and per share data have been
adjusted for the three for two stock split effected in the form of a dividend on
March 12, 2001.

                      Documents Incorporated by Reference

     We have incorporated by reference into Part III of this Form 10-K portions
of our Proxy Statement for our Annual Meeting of Shareholders. References in
this Form 10-K to the "Company," "Business Objects," "we," "our," and "us" refer
to Business Objects S.A. and our consolidated subsidiaries.

                                  Trademarks

     BusinessObjects, the Business Objects logo, BusinessQuery, BusinessMiner,
BusinessObjects Ithena CVM, Set Analyzer, BusinessObjects Infoview,
BusinessObjects Broadcast Agent, BusinessObjects personal Trainer, Rapid
Deployment Templates, ReportScript, Semantically Dynamic, SmartSpace, Universe
Repository, and WebIntelligence are trademarks or registered trademarks of
Business Objects S.A. All other trademarks or trade names referenced in this
Form 10-K are the property of their respective owners.

                              Reporting Currency

     All financial information contained in this document is expressed in United
States dollars, unless otherwise stated.

                          American Depositary Shares

     We have sponsored a program that provides for the trading of our Ordinary
Shares in the United States in the form of American depositary shares ("ADSs").
Each ADS represents one Ordinary Share placed on deposit with The Bank of New
York, as depositary (the "Depositary"), and is issued and delivered by the
Depositary through its principal office in New York City at 101 Barclay Street,
New York, New York, 10286. Under the terms of the Deposit Agreement (the
"Deposit Agreement") dated September 22, 1994, as amended on May 8, 1996 and
December 30, 1998, Ordinary Shares may be deposited with the Paris office of BNP
Paribas, as custodian (the "Custodian"), or any successor or successors to such
Custodian. The Depositary provides a variety of services to our investors. The
form of the Deposit Agreement as amended and restated on December 30, 1998 is
incorporated by reference as an exhibit to this Form 10-K.

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                                TABLE OF CONTENTS

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Item 1.  Description Of  Business ...............................................................     4

Item 2.  Description Of Property.................................................................    16

Item 3.  Legal Proceedings.......................................................................    16

Item 4.  Submission of Matters to a Vote of Security Holders.....................................    17

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters...................    17

Item 6.  Selected Financial Data.................................................................    19

Item 7.  Management's Discussion and Analysis of Financial Condition and Results Of Operations...    19

Item 7A. Quantitative and Qualitative Disclosures About Market Risk .............................    31

Item 8.  Financial Statements and Supplementary Data ............................................    32

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...    49

Item 10. Directors and Executive Officers Of Registrant .........................................    49

Item 11. Executive Compensation .................................................................    49

Item 12. Security Ownership of Certain Beneficial Owners and Management .........................    49

Item 13. Certain Relationships and Related Transactions .........................................    49

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K........................    49

Item 14A Index to Exhibits.......................................................................    51
</TABLE>

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Item 1. Description of Business

Our Company

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

There are three main market areas for e-business intelligence: enterprise,
extranets, and analytic applications. In the enterprise, Business Objects
products provide employees with information to make better business decisions,
and are used in environments ranging from workgroups of 10 users to enterprise
deployments exceeding 20,000 within an intranet environment. In the extranet
environment, we are pioneering the use of e-BI in applications that allow
organizations to build stronger relationships by linking customers, partners,
and suppliers via the internet. In addition, our analytic applications allow
companies to model, segment, and measure customer data and other key variables.

Our core software tool, BusinessObjects(TM), and its platform for internet-based
installations, WebIntelligence(R), enable end users to access and interact with
information available to enterprises from a wide range of sources, including
database systems, such as those developed by Oracle, IBM, Sybase, Informix and
Microsoft, business applications, such as those developed by SAP, Siebel,
PeopleSoft, Oracle and I2, and data warehouses. Users can create new queries or
reports, access catalogs of reports and do simple or complex analysis of the
data. Instead of struggling with complex and technical database terminology,
users interact with data using business representations of information, or
"business objects," with which they are familiar. The reports they create or
access can be shared with other users through sophisticated distribution and
security systems. Our software tools also enable our customers to share their
information with their own customers, suppliers and other business partners
through the internet and extranets.

From our inception in 1990 through December 31, 2000, we have sold to more than
12,400 customers around the world.

Industry Background

History

In the past, organizations around the world have invested in an array of
business software applications in order to better run their operations and
better manage their businesses. These applications are commonly referred to as
online transaction processing (OLTP) systems, because their primary requirement
was the ability to process and record the large number of transactions handled
by an organization in the course of its operations.

During the 1980s, these applications were typically built in-house using
application development tools and relational database management systems. The
early 1990s brought a revolution in packaged enterprise business applications as
customers began to purchase their software solutions from third parties rather
than develop such software internally. As a result, organizations invested
heavily in enterprise resource planning systems, customer relationship
management applications, supply chain systems and other packaged business
applications from vendors such as SAP, PeopleSoft, Oracle, Baan, Siebel and I2.

While the ultimate goal of deploying these business applications was to both
automate the execution of business processes and make information more readily
available to business users, the software industry historically succeeded in
delivering the former goal and failed in the latter. In other words, while the
increased use of packaged business applications have resulted in organizations
possessing unprecedented amounts of data about their customers, products,
revenues and operations, that data largely remained inaccessible to the business
users who needed it. Realizing that the strategic business value of information
technology lies not in process automation itself, but in exploiting the
information captured by process automation, these enterprises began looking for
ways in which to access and utilize that information.

The Emergence of Business Intelligence

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As a result, the 1990s brought a strong focus on the delivery of business
intelligence software tools designed to work in conjunction with an enterprise's
operational packaged business applications, but built with the specific goal of
providing information access to users throughout an organization. Business
intelligence software tools were typically built in conjunction with data
warehouses and data marts, which are dedicated databases set up and designed to
provide end users with access to business information.

Business intelligence tools were developed to allow non-technical users to
generate queries, structure reports, conduct analysis and share the answers to
common business questions such as the following:

     Sales.  What were sales by region for the past four quarters? Which regions
     are over-performing their plan?

     Finance.  Which departments are more than 10% over budget? What are the
     three departments that have spent closest to their plan?

     Human resources.  What is the hiring deficit by department for all
     departments that are not fully staffed? What is the turnover by department
     for the ten departments with the highest turnover?

     Marketing.  What is the repeat purchase rate for customers who have
     purchased in the last five years? What were the top three sales lead
     generating programs during the year?

The Impact of the Internet

The emergence and growth of the internet has brought many changes to the
business intelligence software market, including the following:

Larger enterprise deployments. New internet technologies, such as Java and the
hypertext markup language (HTML), have made it possible to create business
intelligence software tools that eliminate the need to install and maintain
personal computer application database connectivity software on a user's desktop
personal computer. As a result, organizations can now deploy business
intelligence tools in an environment that requires minimal administration by
information technology departments at a greatly reduced cost. Accordingly, it
has become cost effective for organizations to deploy business intelligence
software tools more widely within an organization to the increasing number of
individuals empowered to make business decisions.

More data collected from new sources. Organizations are now collecting and
storing an increasing amount of data through the internet, including customer
profiles, data regarding users' navigation through the internet (known as
clickstream data), customer purchasing patterns and other e-commerce
information. Organizations need to analyze this data in order to implement
applications such as:

     .    Fine-grained customer segmentation, or dividing their customer base
          into segments and delivering tailored market messages to these
          segments.

     .    One-to-one marketing, which is advanced fine-grained market
          segmentation where each customer is given personalized marketing
          messages based on a detailed profile of his or her preferences and
          past behaviors.

     .    Customer loyalty, profitability, retention and lifetime value
          analysis.

Extranets. The internet also enables organizations to differentiate their
products and services from competitive offerings by supplementing the products
and services with online, value-added, internet-based information services.
Organizations are realizing that value-added information can also improve
customer service and drive both revenue and profit growth. Examples of ways in
which these business to business extranet applications have been used
successfully include:

     .    A telecommunications company providing online billing information to
          its customers as a way to differentiate its commodity local voice
          telephone service.

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     .    An insurance firm providing its commercial clients with real-time
          claims information so its clients can spot accident patterns quickly,
          and take steps to prevent future accidents before they happen.

     .    A medical products distributor positioning itself as an information
          middleman between the hospitals it serves and the suppliers it
          represents, allowing the hospitals to better analyze their purchasing
          patterns and supplier fill rates, and suppliers to analyze purchasing
          patterns across hospitals.

As a summary, the internet is having a positive impact on the business
intelligence software market because it increases the business potential in
three principal ways, among others:

     .    It lowers the cost of deployment and therefore increases the number of
          users within an organization;

     .    It enables companies to get more data about their customers, which in
          turn results in a more significant need for business intelligence; and

     .    It enables extranet applications, which significantly increases the
          number of users of business intelligence software tools, from just
          users within an organization to users outside the organization,
          including customers, suppliers and partners.

However, in order to take advantage of this increased business opportunity,
business intelligence software has to meet new requirements, including:

     .    a pure internet-based architecture with robust engines resident on the
          servers and Java-based query applets--which are small software
          applications capable of executing queries--on the desktops;

     .    scaleability to the large numbers of users required by larger internal
          deployments and extranet usage as well as a larger volume of data;

     .    robust security features; and

     .    an easy migration path between client/server-based applications--
          today's prevalent environment--and internet-based applications.

The Business Objects Solution

We provide our customers with an easy-to-use, secure, scaleable, and extensible
business intelligence solution designed to meet the demanding requirements of
today's competitive world. Our principal software tool, BusinessObjects, and its
platform for internet-based installations, WebIntelligence, act as an
information access front end for end users on top of corporate databases,
business applications and data warehouses. The key advantages of our solution
include:

     .   Ease of use and learning. Our software tools are designed to ensure
         maximum ease of use and learning. They allow users to develop queries
         consisting of commonly used business terms and phrases. For example,
         users can combine objects or terms such as "sales revenue," "products"
         or "customers" to develop their queries. Further, users do not need to
         understand the technical details of database structures, such as the
         location of the data, or the relationship between different database
         tables. In addition, we provide sophisticated online documentation and
         an intranet-based training tool for highly cost-effective training.

     .   Access to all enterprise data sources. Our software tools can access
         over 100 different relational and non-relational data sources. Due to
         our powerful query generation technology, our software tools can access
         data stored not only in relational data warehouses and data marts built
         for analytical purposes, but also any existing relational database. We
         also offer specific interfaces for popular packaged business
         applications such as those provided by SAP, Oracle, Siebel, PeopleSoft
         and Baan.

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     .   Shared infrastructure for client/server and internet environments.
         Because we built our internet platform, WebIntelligence, on the
         architecture of our client/server software, BusinessObjects, our
         software platforms share a common infrastructure. This enables our
         customers to expand easily their existing client/server installations
         to include internet-based users and to migrate their systems from
         client/server-based systems to internet applications.

     .   Optimized for e-business. We believe that extranet applications are key
         business opportunities for the future. Accordingly, our internet
         software tools have been developed based on an HTML/Java architecture
         that works in extranet environments. Extranets are shared networks that
         use the internet to link businesses with their suppliers, customers and
         partners. Our internet software tools offer a business intelligence
         solution that allows our customers to share selected information with
         their suppliers, customers and partners with the protection of security
         protocols that have been designed to provide effective security across
         internet firewalls.

     .   Information technology control and security. Our software tools are
         designed to provide non-technical business users with the ability to
         access, analyze and share information stored in their company
         databases, while at the same time allowing information technology
         departments to control and manage that access throughout the
         enterprise. Business representations of such information are contained
         in a central repository where the information technology staff can
         maintain control over data access and security throughout the
         enterprise, as well as for remote users accessing the database through
         an extranet or the internet.

     .   Scalability. Because of our powerful administration and security tools,
         as well as a centralized business intelligence repository, our software
         tools are capable of scaling from deployments as small as ten users to
         deployments of thousands of users.

Business Strategy

Our objective is to become the leading supplier of e-business intelligence
software solutions worldwide. Our business strategy to achieve our objective is
focused on four key areas:

Continue to develop and deploy products and services for extranet and e-business
applications. We believe that the internet represents a tremendous opportunity
for e-business intelligence technology. We developed WebIntelligence to extend
the business intelligence capabilities of BusinessObjects from its original
client/server environment into intranet, extranet and e-business environments.
We intend to continue developing and optimizing our products for use on the
internet, extranets and e-business environments, both for traditional brick and
mortar companies and pure dot.com companies.

Maintain enterprise-wide focus. We believe that enterprise-wide deployments will
continue to represent a significant business opportunity for us. To capitalize
on this opportunity, we intend to ensure that our software can be used
throughout the enterprise by the maximum number of users. To this end, we intend
to continue to enhance the administration and security features of our software.
We also intend to increase our focus on delivering products that complement
packaged business applications, including enterprise resource planning and
customer relationship management systems, such as those offered by SAP, Oracle,
Siebel, I2, and PeopleSoft. Finally, we intend to continue to optimize our
products for use on intranets, which we believe will be the primary platform for
corporate software deployment.

Expand the analytic applications strategy. We believe that corporations today
are focusing more and more on the relationships with their customers, and that
e-business intelligence has an important role to play in the customer
relationship management market. In 1999, we incorporated Ithena, Inc., focused
on delivering front-end customer intelligence, or analysis applications. In
2000, Business Objects combined the company's existing Set Analyzer strategic
business unit and the Ithena subsidiary to form the Analytic Applications
Division. This division will work to create integrated, applications that will
provide business managers with a complete view of their organization's
operations.

Expand our strategic relationships. We believe that our relationships with key
enterprise software vendors, systems integrators and value-added resellers are
important to our success. We currently have marketing relationships with several
large relational data base management, enterprise resource planning, customer
relationship management, wireless, portal, and e-business vendors to promote our
solution in their respective markets, which we believe will improve our
competitive position. In the ERP market,

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we have continued to work very closely with SAP and PeopleSoft and have received
certifications on their most recent offerings. In 2000, we significantly
extended our relationship with Siebel where Business Objects is embedded in the
Siebel eBusiness Analytics suite. We have a strategic relationship with IBM, who
is currently the largest reseller of Business Objects products worldwide. We
created formal partnership programs to work with many of the leading enterprise
information portal vendors and wireless device, service, and platform companies.
We also have reseller agreements with indirect sales channel partners to expand
our market coverage, as well as provide a source of revenue at attractive
margins. Finally, we have relationships with system integrators who not only
market our products with larger systems solutions, but have also generated
revenues for us by recommending our products to their customer base. We intend
to continue to pursue and develop these relationships to expand our market
opportunity.


Marketing Focus

We design our software for medium to large business organizations and
governmental institutions, and focus our marketing efforts on the following:

     .   Users of Data Warehousing/Data Marts. Data warehousing has emerged
     recently as a popular architecture for business intelligence functions. To
     implement data warehousing, an organization installs one or more servers to
     supplement existing mainframes or other systems on which mission-critical
     transactional applications run. The organization then regularly downloads
     data from its transactional applications to the "data warehouses" that are
     used as information servers for end users. Data marts are smaller scale
     data warehouses that are focused on a particular business unit or specific
     function. Both data warehousing and data marts enable end users to access
     data without incurring the risk of "corrupting" production databases or
     slowing down mission-critical transactional applications. In addition,
     transactional applications usually only contain six to twelve months of
     data, in contrast to data warehouses and data marts which, over time, may
     contain years of information. Because business intelligence is the main
     objective of data warehousing, we consider our software to be a key
     component of the data warehousing architecture, as it provides the end user
     with the e-business intelligence tools to access warehoused data.

     .   Users of Enterprise Resource Planning and Customer Relationship
     Management Software. Organizations implementing complex client/server
     packaged business applications from Enterprise Resource Planning vendors
     such as SAP, Oracle, PeopleSoft, and Baan and Customer Relationship
     Management vendors such as Siebel, Vantive, Remedy, and Clarify frequently
     require comprehensive end user data access and reporting functionality. Our
     software provides significant value to these organizations by virtue of its
     ability to handle the complexities of the underlying databases that support
     these applications. In addition, our Rapid Deployment Templates (RDTs) can
     be used with certain of these client/server packaged business applications.
     RDTs provide a set of predefined objects to organizations using such
     applications to facilitate the implementation of our e-business
     intelligence solution. We intend to continue to develop, independently or
     in conjunction with others, RDTs for use with specific applications.

     .   Users of Custom Developed Business Applications Software. Many
     organizations have a number of end users using information systems or
     applications developed by third parties in a relational database
     environment and have accumulated a large volume of data in their databases.
     We believe that the exposure of end users to the benefits of the relational
     database environment has stimulated demand for more efficient and effective
     access to the data. By allowing end users to independently access data,
     generate reports, and perform analyses, our software enables these
     organizations to take better advantage of their substantial investments in
     relational database and client/server technology.

     .   Organizations Sharing Data and Doing Business Over the Internet. Many
     organizations are providing their customers, partners, and suppliers with
     access to information about their relationship over the internet. For
     example, a medical supplies distributor plans to open its data warehouse to
     its 5,000 suppliers and 1,500 hospitals, thus providing its entire supply
     chain with self-service access to inventory and sales information. Our
     software products enable these organizations to provide controlled access
     to information to end users outside the organization through internet
     connectivity. While this currently represents a relatively small portion of
     our existing business, we believe that this is a growing new market.
     However, we cannot assure you that this market will develop or that we will
     be successful in this market if it does develop.

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Products

Business Objects offers a complete suite of e-business intelligence software
solutions, which include query, reporting, online analytical processing,
set-based analysis, time series analysis, and data mining features for the end
user and administration tools that enable information technology professionals
to set up and deploy our products across the enterprise.

User Products

To provide greater flexibility to our customers, our core software can be
deployed in web, Windows(TM) or wireless environments.

BusinessObjects InfoView is our business intelligence portal that collects and
consolidates a company's business intelligence information and presents it in a
secure, focused, and personalized view to users inside and outside the
organization. InfoView allows users to view, search, open, print, refresh, and
read reports, as well as store and view other documents. InfoView is
particularly useful for users who only need a basic level of business
intelligence functionality, as well as for large companies who want to deploy
reports to a large number of users across the enterprise. InfoView is available
in web, Windows, and wireless (e.g., from a cell phone) environments.

Our client/server business intelligence software tool, BusinessObjects, provides
integrated query, reporting, and online analytical processing capabilities, in
order to enable non-technical end users to easily access, analyze, and share
corporate data. The latest release of this product, BusinessObjects 5.i, began
shipping in July 2000. BusinessObjects 5.i combines access to enterprise
reporting functions such as report distribution and management with traditional
decision support functions such as ad hoc access to corporate data, report
creation, and online analytical processing functions such as "drill" and "slice
and dice." Drilling refers to looking at data in increasing levels of detail,
for example by starting at sales by region and then drilling or conducting
further queries to see sales by district for a given region. Slice and dice
refers to the complex data analysis function where a user views or analyzes data
based on variables in different ways, for example by analyzing sales by region
and then changing the variables to analyze regions by sales.

WebIntelligence, our platform for internet-based installations, allows end users
to perform ad hoc query, reporting, and analysis over the internet.
WebIntelligence has a distributed architecture with core functionality resident
on the server and Java-based applets running on the desktop. WebIntelligence
eliminates the need for installation and maintenance of both application
software and database middleware on each user's desktop personal computer, which
provides organizations with a cost-effective way to broadly deploy business
intelligence software capabilities, and extend it beyond the organization to
reach suppliers, partners, and customers through extranets. Customers are
currently pursuing extranet deployments for applications in industries including
finance, manufacturing, telecommunications, insurance, healthcare, publishing,
logistics, and government. At the end of 2000 we had several hundred customers
using WebIntelligence in extranet applications.

The latest release of this platform, WebIntelligence 2.6, began shipping in July
2000 on Windows NT and UNIX (Sun Solaris). WebIntelligence 2.6 also has
programmability features including a WebIntelligence application programming
interface allowing customers to change its look and feel to be consistent with
their own internet site.

Both BusinessObjects and WebIntelligence are packaged as two core integrated
modules that allow users to access data, build reports, and do multidimensional
analysis. Customers can start with the business intelligence portal
BusinessObjects InfoView and add functionality over time by adding modules of
BusinessObjects and WebIntelligence for maximum functionality.

Core Modules. The core integrated modules of BusinessObjects and WebIntelligence
are:

     .   Reporter. Reporter is the module for ad hoc query and reporting that
         can be added to BusinessObjects InfoView to enable end users to
         retrieve information and build their own reports, which can include a
         variety of multidimensional charts and graphs.

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     .    Explorer. Explorer is our online analytical processing module that can
          be added to BusinessObjects InfoView to enable end users to conduct
          integrated multidimensional analysis of data, such as slice, dice and
          drill, directly in reports.

Add-On Products. In addition, we provide the following add-on products to
enhance the functionality of BusinessObjects InfoView, BusinessObjects, and
WebIntelligence:

     .    Broadcast Agent(TM). Broadcast Agent is our integrated enterprise
          report and broadcast server that allows users to publish, push, and
          broadcast pre-built or ad hoc reports on corporate data via the
          internet, the BusinessObjects repository, and a wide range of output
          devices. Its robust, flexible architecture provides a scaleable
          enterprise reporting solution for thousands of users.

     .    BusinessQuery(R) for Excel. BusinessQuery is an add-on for Microsoft
          Excel that provides end users with the ability to extract information
          from corporate databases and load it into Microsoft Excel for charting
          and analysis.

     .    BusinessMiner(R). BusinessMiner is a desktop data mining tool used for
          uncovering trends hidden in data. BusinessMiner displays this
          information in the form of a decision tree to facilitate user
          analysis.

     .    BusinessObjects Personal Trainer(TM). Business Objects Personal
          Trainer is an intranet-based training package for users of our
          software products.

Analytic applications.  Analytic applications allow companies to model, segment,
and measure customer data and other key variables:

     .    BusinessObjects Ithena CVM(TM). Business Objects Ithena CVM is a
          customer value management analytic applications solution that tracks
          and analyzes individual behavior over time and customer-interaction
          touchpoints using fine-grained segmentation. Using Business Objects
          Ithena CVM, companies can realize one-to-one marketing because it has
          the ability to determine how changes in an individual customer's
          behavior affect both individual relationships and entire segments. For
          example, Ithena CVM can identify key business and lifetime events that
          happen to individual customers within a segment and events that could
          cause a customer to leave or join a segment.

     .    Set Analyzer(TM). Set Analyzer is a high performance, set-based
          analysis tool for very large databases. Set Analyzer extends the
          functionality of BusinessObjects and WebIntelligence, by adding more
          powerful analysis functions and increasing the speed of complex data
          queries within very large databases.

Administration Tools

To assist information technology professionals in setting up and maintaining our
business intelligence software, we provide the following administration tools:

     .    Designer. Designer enables information technology staff to design and
          maintain universes of objects in just a few steps. Designer is a
          graphical tool that also includes powerful routines for automatic
          design checking, including loop detection and resolution.

     .    Supervisor. Supervisor is our object-based security tool that allows
          an enterprise's information technology staff to assign and modify the
          access rights granted to end users, individually and in groups. Using
          Supervisor, information technology professionals can easily manage
          access to the resources available through BusinessObjects and
          WebIntelligence, including documents, universes, objects, and even
          specific functions.

     .    Developer Suite. Developer Suite opens up our business intelligence
          platform to enable value-added resellers or end users to develop
          packaged, analytical, or custom business intelligence applications, as
          well as to

                                       10
<PAGE>

          customize the look and feel of our products. Developer Suite utilizes
          Microsoft Visual Basic for Applications, Active Server Pages, and
          JavaServer Pages, and also includes development licenses of
          BusinessObjects InfoView, BusinessObjects, WebIntelligence, Designer,
          and Supervisor, plus advanced documentation, and sample programs.

     .    Rapid Deployment Templates(TM). We have also developed a series of
          Rapid Deployment Templates for organizations that wish to directly
          access data stored in packaged applications from vendors such as SAP,
          Oracle, Baan, and PeopleSoft. A rapid deployment template is a
          deployment starter kit that consists of predefined objects of
          information which map directly to the application packages.

Services

We provide the following services in connection with our product offerings:

Post-Sales Customer Support and Software Maintenance. Our five regional customer
support centers (Americas--San Jose and Atlanta, USA; Europe--Maidenhead, United
Kingdom; and Asia/Pacific--Tokyo, Japan and Sydney, Australia) are staffed by
highly-trained support engineers who answer customer inquiries by telephone. All
customer support centers use a common global case tracing, knowledge base and
problem reporting system designed to enable engineers to share their knowledge
and experience, improve the quality of our responses to customers and reduce our
response time for customer inquiries. Technical support is also provided by our
value-added resellers, systems integrators, consulting partners and
distributors, whom we support with our regional Business Objects support
centers.

We deliver, tiered customer support services to better meet customers' needs.
Customers can purchase premium level services for extended service hours and
designated engineering support. In addition, we offer an online customer support
internet site, designed to help customers become more self-sufficient. The
website is available 24 hours a day, 7 days a week to customers on our
maintenance plan. The website allows customers to use a high-powered search
engine to query the multiple technical repositories we have available to find a
solution to their inquiries, or the customer may log a case directly from our
internet site to their local support center. Our online customer support
internet site provides our customers with access to up-to-date technical
information, the ability to download service packs and patches for our software
tools, tips on using our software tools, product documentation, technical papers
and our support newsletter. This internet site provides customers with access to
up-to-date technical information and helps customers independently resolve
inquiries.

Software maintenance releases and post-sales technical support are provided to
customers for an annual maintenance fee. As is customary in the software
industry, maintenance fees are charged in addition to the initial product
license.

Customer Education and Training. We offer a comprehensive education and training
program to our customers, and to third-party consultants who support our
products. Courses range from entry-level sessions for users, to more advanced
courses for information technology professionals. Every student is provided a
complete hands-on experience to help reinforce learning with practical
exercises.

We offer training classes through in-house facilities at our offices in the
United States, the United Kingdom, France, and other locations in Europe. These
facilities are complemented by a network of independent certified training
centers in our principal markets throughout the world. In addition, we also
provide onsite training services upon customer request. Training service fees
are charged to a customer on a per participant per day basis. Business Objects
PERSONAL TRAINER is available for customers who want intranet-based training in
their own environments (see "Item 1. Description of Business -Products").

Consulting Services. We provide consulting services to our customers through our
own staff and through certified consulting partners. We believe that providing
consulting services directly through our own staff and our certified partners
generates more demand for our products. Our consulting services allow us to
assist our customers in all stages of their development life cycle, from initial
analysis through deployment of products. Our involvement can range from an
advisory status to managing the entire implementation process.

                                       11
<PAGE>

Our consultants have wide-ranging industry, operational and technical knowledge
of numerous database systems, and all have in-depth knowledge of our product
line. Our consulting services are charged to a customer on a per consultant per
day basis, or in specific package bundles.

Sales and Marketing

We market and sell our products and services through a direct sales organization
in the United States, France, the United Kingdom, Germany, Belgium, Luxembourg,
Italy, Spain, Canada, Sweden, the Netherlands, Switzerland, Australia, and
Japan. In addition, we utilize indirect sales channels, such as value-added
resellers, system integrators, consulting partners and distributors to cover
North America, Europe, Asia, Latin America, and the rest of the world where we
have no direct sales presence.

Our sales and marketing organization is comprised of sales teams, each
consisting of employees engaged in field sales, field technical support,
telemarketing and telesales activities. Each sales and marketing organization is
responsible for the coordination of both direct and indirect sales in its
assigned country. We believe that focusing our direct sales efforts on
identified customers while supporting our indirect sales channels to service our
channel partners' customers maximizes the utilization of our direct sales
personnel.

We focus our initial sales efforts on the information technology staff of a
particular organization while also seeking to involve end users through
demonstrations and product trials. Typically, we perform one demonstration for
an organization's information technology staff, which is then followed by a
trial period during which the information technology staff develops a prototype
with our assistance. The information technology staff then use the prototype to
conduct demonstrations for their end users. Our sales cycle varies from customer
to customer, typically requiring several months from initial contact to closing
a sale. For large customers, the sales cycle can be over a year.

To support our sales efforts, we conduct marketing programs, including
advertising, direct mail, public relations, web-based and face-to-face seminars
and demonstrations at customer sites and at our offices, appearances at trade
shows, and ongoing customer communications programs.

Product Development

We believe that innovation, timeliness of product releases, and high product
quality is essential to maintain our competitive position. Consequently, we
dedicate considerable resources to development efforts to enhance our existing
products and to develop new products. To date, we have relied primarily on
internal development of our products, but have in the past and may in the future
continue to license or acquire technology or products from third parties. The
development group is responsible for the design, development and release of
product enhancements, upgrades, and new products, and is based primarily in
Levallois-Perret, France. We also occasionally use third-party resources to
expand the capacity and technical expertise of our internal research and
development group.

The product development cycle consists of five stages:

     .    The planning stage, in which a vision statement of the product is
          developed, the initial design and prototype of the product is
          completed, specifications of the product are written, a testing
          strategy is developed and the basic documentation of the product is
          started.

     .    The development stage, in which the product code is written and
          tested, bugs are identified and fixed, the product is tested and
          documentation continues.

     .    The stabilization stage, in which the product undergoes further
          testing, including beta testing, final release testing and bug fixing,
          the visual interface and results of the testing and bug fixes are
          reviewed, and final sign-off prior to commercial shipments are
          commenced. In addition, during this phase, the product group runs a
          field readiness program to ensure that all departments in our
          organization are ready to sell and support the new release or product.

                                       12
<PAGE>

     .    The release stage culminates in the general availability of a given
          product. A product is deemed to be ready to manufacture (RTM) when all
          involved groups indicate they are satisfied with the stabilization
          stage and are ready to start shipping the product.

     .    The maintenance stage begins once a product is released RTM and
          involves the planning, development and release of service packs.

Customers

Our customers represent a wide, cross-industry spectrum of large global
corporations, major governmental institutions and educational institutions. A
partial list of customers who have purchased at least $100,000 of software
licenses from us include:

Financial/Insurance

Chase Global Bank
Citibank
Fidelity Investment
First National Bank of Omaha
Goldman Sachs
Mastercard International
Merrill Lynch
The Principal Financial Group
Prudential Insurance Company
Smith Barney
Zurich - U.S. Insurance

Health/Medical

Allegiance
Blue Cross Blue Shield
Healthnet
Kaiser Permanente
Medtronic
Owens & Minor

Chemical/Energy

Baltimore Gas & Electric
BP Amoco
Chevron
CITGO Petroleum Corp.
Dow Chemical
Duke Energy
Electricite de France
Mitsubishi Chemicals
Mobil
Shell International

Government/Federal

Ministere de la Defense
NASA

                                       13
<PAGE>

U.S. Army
U.S. Department of Defense Health Affairs
U.S. DOE/Lawrence Livermore
U.S. Federal Government
U.S. Navy/NavAir

Telecommunications

AT&T
Belgacom
British Telecom
China Telecom
Deutsche Telekom
Ericsson
France Telecom
Global One
Lucent Technologies
Nortel Networks
Southwestern Bell
Telecom Italia
Telstra
Vodafone

Pharmaceuticals

Ciba Geigy
Eli Lilly
Glaxo
Novartis Pharmaceutical
SmithKline Beecham

Consumer/Retail

Nestle Corporation
PepsiCo
Kraft Foods

Transportation/Automotive

Harley Davidson
Ford Motor Company
Peugeot
Penske Logistics

Competition

The market for our software is highly competitive, rapidly evolving, and subject
to rapidly changing technology. We compete principally with providers of
business intelligence software, data warehousing, and data mining software, and
query and reporting software. Our direct competitors for our core business
include Brio Technology, Inc., Cognos Incorporated, Hummingbird Communications,
Ltd., MicroStrategy, Inc., Oracle Corporation, Actuate Corporation, and Seagate
Software. We also indirectly compete with suppliers of enterprise application
software, including Microsoft Corporation. Competitors for the Analytic
Applications Division include: Cognos Incorporated, Informatica Corporation,
E.piphany, Inc., Hyperion, Microstrategy, Inc., and SAP AG. A number of our
competitors and potential competitors have significantly greater financial and
other resources than us, which may enable them to address more effectively new
competitive opportunities. In addition, some of our competitors,

                                       14
<PAGE>

particularly companies that offer relational database management software
systems and enterprise resource planning software systems, have well-established
relations with some of our existing and targeted customers.

We believe that the principal competitive factors that impact the market we
serve include: price, performance, and scalability, ease of use, functionality,
product architecture, product quality and reliability, scope of distribution,
customer support and name recognition. We believe that we are successfully
addressing each of these competitive factors. Nonetheless, we expect to face
increasing competitive pressures from both current and future competitors in the
markets we serve.

Manufacturing

We rely upon third-party suppliers to perform our CD duplication, print our user
manuals, package our products, and manufacture related materials incorporated
into our products and to deliver our product electronically. To date, we have
not experienced any material difficulties or delays in manufacturing by our
third-party suppliers.

Patents and Intellectual Property Protection

We believe that we own or have licensed all proprietary rights relating to our
software products. Our success depends in part on our ability to protect our
property rights in our intellectual property. To protect our proprietary
information, we use a combination of protections provided by:

     .    patent, copyright, and trademark laws;

     .    trade secret laws;

     .    confidentiality agreements; and

     .    licensing arrangements, including confidentiality provisions.

We currently have one patent issued in the United States, number 5,555,403,
relating to a "Relational Database Access System Using Semantically Dynamic
Objects." We also have obtained a registered trademark in the United States,
France and other countries for our name, together with our logo as well as for
the names WebIntelligence, Businessminer and BusinessQuery. Despite our efforts,
we may not successfully protect our proprietary property from misappropriation.
While our competitive position may be affected by our ability to protect our
proprietary information, we believe that factors such as the technical expertise
and innovation skills of our personnel, our name recognition, and ongoing
product support and enhancement may be more significant in maintaining our
competitive position.

Litigation may be necessary to protect our proprietary property. For example, we
successfully engaged in litigation asserting that one of our competitors, Brio
Technology, Inc., was infringing upon our rights under our patent. During May,
2000, we filed a lawsuit against another competitor, Cognos, Inc. and Cognos
Corporation, alleging patent infringement under the same patent (see Item 3.
Legal Proceedings). Litigating claims relating to our intellectual property can
be very expensive in terms of management time and resources.

Occasionally, we license a portion of our technology to third parties. SPSS
Inc., GeoConcept, formerly known as Alsoft, StatSoft, and ESRI have licensed our
query technology and incorporated it into their products, as follows:

     .    BusinessQuery for SPSS from SPSS Inc.;

     .    BusinessQuery for GeoConcept from Alsoft;

     .    BusinessQuery for Statistica from StatSoft; and

     .    BusinessQuery for ArcView GIS from ESRI.

                                       15
<PAGE>

In addition, we license software programs from third parties and incorporate
these programs into our software products or sub-license them directly to our
customers. For example, we license our object request broker, which allows
messaging between software components, from Inprise (formerly Visigenic) and our
Visual Basic Application functionality from Microsoft Corporation. This licensed
software is embedded in our products. In addition, we license our
BusinessMiner(R) and Personal Trainer products from third parties, which are
sold directly to end users as stand-alone add-on products.

Employees

     As of December 31, 2000 we had 1,888 full-time employees, including:

     .    395 in research and development;
     .    1,121 in sales and marketing;
     .    179 in customer service and support; and
     .    193 in finance and administration.

Our employees are not represented by any collective bargaining organization, and
we have never experienced a work stoppage.

Under French law, management is required to hold monthly meetings with a
delegation of elected employee representatives, called the comite d'entreprise,
to discuss, in particular, employment matters and our economic condition and to
provide appropriate information and documents relating to these matters. As
required under French law, one employee representative is entitled to be present
at meetings of our Board of Directors, but does not have any voting rights.

Our newly hired employees may complete an orientation course, ranging from one
to three weeks in length, presented by Business Objects University, our in-house
education program. Generally, most employees complete at least a one week
orientation course at our facilities. Our engineers and other technical staff
generally complete a two week training course, in addition to the one week
orientation, at our Paris facilities. Our extended training program consists of
lectures, problem sets and independent and group projects relating to
programmability, deployment, and our products. We believe this emphasis on
training yields highly qualified employees and promotes camaraderie among all of
the Business Objects staff.

Item 2. Description of Property

Our corporate headquarters are located in Levallois-Perret, France, a suburb of
Paris, in a leased facility consisting of approximately 140,000 square feet
under a lease term expiring in 2009; however, we have the option to cancel the
lease in 2006 without penalty.

We currently maintain our U.S. headquarters in a 58,000 square feet facility
under a lease that expires in 2001. We plan to relocate this facility to a new
location in San Jose, California in April 2001 under a 10 year lease agreement
signed in August 2000. The new lease commences 90 days after delivery, and
includes the right to extend the term for one additional six-year period. The
new facility measures approximately 126,000 square feet, of which we plan to
sublease approximately 51,000 square feet. We lease other facilities and offices
in Puteaux, Aix-en-Provence, Lyon and Toulouse in France; Maidenhead, England;
Koln and Bad Homburg, Germany; Bilthoven, the Netherlands; Madrid, Spain;
Stockholm, Sweden; Zaventem, Belgium; Rome and Milan, Italy; Geneva and
Baden-Dattwil, Switzerland; Luxembourg; Singapore; Sydney, Australia; Tokyo,
Japan; Toronto, Canada; and in the United States in California, Colorado,
Georgia, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New York and
Texas.

Item 3. Legal Proceedings

On May 5, 2000, we filed a lawsuit in United States District Court for the
Northern District of California against Cognos, Inc. and Cognos Corporation for
alleged patent infringement. The lawsuit alleges that Cognos, Inc. and Cognos
Corporation infringe our United States Patent No. 5,555,403 by making, using,
offering to sell and selling its product known as

                                       16
<PAGE>

Impromptu. Our complaint requests that the defendants be enjoined from further
infringing the patent and seeks an as yet undetermined amount of damages. In
addition, we filed a notice of related case referring to a case previously
pending before the district court, namely Business Objects S.A. v. Brio
Technology, Inc. Case No. C97-0354.

We are also involved in various legal proceedings arising in the ordinary course
of business.

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

None.

Item 5. Market For Registrant's Common Equity and Related Stockholder Matters

U.S. Market Information

We have sponsored a program that provides for the trading of our ordinary shares
in the United States in the form of American depositary shares (ADSs). Each
American depositary share represents one ordinary share placed on deposit with
the Bank of New York, as depositary, and is issued and delivered by the
depositary through its principal office in New York City at 101 Barclay Street,
New York, New York, 10286. Under the terms of our deposit agreement with the
depositary, ordinary shares may also be deposited with the Paris office of
Paribas, as custodian. Our American depositary shares have been quoted on the
Nasdaq National Market since September 1994.

French Market Information

Our ordinary shares are quoted on the Premier Marche of the Euronext Paris S.A.
("Euronext Paris") since November 1999.

On September 22, 2000, upon successful completion of an exchange offer, the
ParisBourseSBF S.A., or the "SBF", the Amsterdam Stock Exchange and the Brussels
Stock Exchanges merged to create Euronext, the first pan-European exchange.
Through the exchange offer, all the shareholders of the SBF, the Amsterdam Stock
Exchange and the Brussels Stock Exchanges contributed their shares to Euronext
N.V., a Dutch holding company. Following the creation of Euronext, the SBF
changed its name to Euronext Paris. Securities quoted on exchanges participating
in Euronext will be traded over a common Euronext platform, with central
clearinghouse, settlement and custody structures. However, these securities will
remain listed on their local exchanges. As part of Euronext, Euronext Paris
retains responsibility for the admission of shares to Euronext Paris' trading
markets as well as the regulation of those markets.

Securities listed on the Euronext Paris are traded on one of three markets:
Premier Marche, Second Marche and Nouveau Marche. The securities of most large
public companies are listed on the Premier Marche, and the Second Marche is
available for small-and medium-sized companies. Securities may also be traded on
the Nouveau Marche, a regulated electronic market introduced in March 1996,
managed and operated by the Societe du Nouveau Marche, and established to allow
companies seeking development capital to access the stock market.

Official trading of listed securities on the Euronext Paris is transacted
through authorized financial institutions that are members of the Euronext
Paris. Trading on the Premier Marche and the Second Marche takes place
continuously on each business day from 9:00 a.m. through 5:30 p.m. (Paris,
France time), with a pre-opening session from 7:15 a.m. through 9:00 a.m.
(Paris, France time), with a pre-closing session from 5:30 a.m. to 5:35 p.m.
during which transactions are recorded but not executed and a closing auction at
5:35 p.m. Any trade effected after the close of a stock exchange session is
recorded on the next Euronext Paris trading day at the previous session's
closing price.

Euronext Paris has introduced continuous electronic trading during trading hours
for most listed securities. Euronext Paris, is managed and operated by Euronext
Paris market enterprise. Euronext Paris publishes a daily official price list
that includes price information on listed securities.

Euronext Paris places securities listed on the Premier Marche or the Second
Marche in one of three categories, depending on their trading volume. Our shares
are placed in the category known as Continu A, which includes the most actively
traded securities.

                                       17
<PAGE>

Since September 25, 2000, all trading on the Premier Marche is performed on a
cash settlement basis. However, a Deferred Settlement Service (Service a
Reglement Differe or SRD) allows investors who elect this service to benefit
from leverage and other special features of the monthly settlement market. The
service is reserved for stocks which are either SF 120 components or have both a
total market capitalization of at least Euro 1 billion and represent a minumum
daily trading value of Euro 1 million. Our shares are eligible to the deferred
settlement service. Investors who opt for SRD get billed by the financial
intermediary holding these shares. Only bearer shares can be traded using SRD.
Investors can elect on the determination date (date de liquidation), which is
the fifth trading day before the end of the month, either to settle the trade by
the last trading day of the month or to pay an additional fee and postpone the
settlement decision to the determination date of the following month.

Equity securities traded on a deferred settlement basis are considered to have
been transferred only after they have been registered in the purchaser's
account. In accordance with French securities regulation, any sale of securities
executed on a deferred settlement basis during the month of a dividend is deemed
to occur after payment of the dividend to the seller. The account of the
purchaser having purchased the securities prior to the date of the dividend
payment is credited with an amount equal to the dividend paid, and the seller's
account is debited by the same amount.

Trading in securities listed on the Premier Marche may be suspended by the
Euronext Paris if quoted prices exceed certain price limits defined by the
regulations of the Euronext Paris S.A. In particular, if the quoted price of a
Continu A security varies by more than 10% from the previous day's closing
price, trading may be suspended for up to 15 minutes. Further suspensions for up
to 15 minutes are also possible if the price again varies by more than 5%, it
being specified that the total daily variation may never exceed + 21.25% or
-18.75%. Euronext Paris may also suspend trading of a security listed on the
Premier Marche in certain other limited circumstances, including for example,
the occurrence of unusual trading activity in the security. In addition, in
exceptional cases, the Conseil des Marches financier may also suspend trading.

High and Low Price Range

The following table sets forth the range of quarterly high and low closing
prices in U.S. dollars for our ADSs on the Nasdaq National Market exchange for
each full quarterly period within the two most recent fiscal years and the range
of high and low closing prices in euro for our ordinary shares on the Premier
Marche for the period November 5, 1999 through December 31, 2000, the period in
which our ordinary shares began trading on the Premier Marche. All prices have
been adjusted retroactively to reflect the three for two stock split effected on
March 12, 2001 and the two for one stock split effected on January 20, 2000.

<TABLE>
<CAPTION>
                                                             Price per ADS                 Price per
                                                                                          Ordinary Share
                                                          ----------------------      -----------------------
                                                           High         Low               High      Low
<S>                                                       <C>           <C>           <C>          <C>
2000:
Fourth Quarter...........................................   $ 75.83     $  37.21      Euro 87.33   Euro 41.87
Third Quarter............................................   $ 76.33    $  52.92      Euro 85.00   Euro 56.67
Second Quarter...........................................   $ 68.00    $  45.33      Euro 74.47   Euro 50.67
First Quarter............................................   $ 98.67    $  37.58      Euro 103.3   Euro 40.00
1999:
Fourth Quarter (period of November 5 to December 31
for Ordinary Shares)....................................    $ 47.42    $  18.13      Euro 49.33   Euro 23.83
Third Quarter...........................................    $ 20.56    $  12.13               -            -
Second Quarter..........................................    $ 13.00    $   5.85               -            -
First Quarter..........................................     $ 13.83    $   8.25               -            -
</TABLE>

As of December 31, 2000, there were 50 record holders of our American depositary
receipts evidencing 23,879,263 American depositary shares. As of December 31,
2000, there were 60,583,881 ordinary shares outstanding (including 23,879,263
ordinary shares underlying the outstanding American depositary shares and
574,500 treasury shares). All ADS and ordinary share data has been adjusted
retroactively to reflect the three for two stock split effected in the form of a
dividend on March 12, 2001 and the two for one stock split effected on January
20, 2000. The Company has never declared or paid any cash dividends on its
ordinary shares. We currently intend to retain our earnings to finance future
growth and, therefore, do not anticipate paying any cash dividends on our
ordinary shares in the foreseeable future.

                                       18
<PAGE>

Item 6. Selected Financial Data

The following selected financial data should be read in conjunction with the
Consolidated Financial Statements and related Notes thereto appearing elsewhere
in this Form 10-K. The selected statement of operations data for each of the
five years in the period ended December 31, 2000 and the balance sheet data at
December 31, 2000, 1999, 1998, 1997, and 1996 respectively have been derived
from the Consolidated Financial Statements of the Company, which have been
prepared in accordance with accounting principles generally accepted in the
United States, and adjusted to reflect the three for two stock split effective
March 12, 2001, and the two for one stock split effective January 20, 2000.

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                              -----------------------
                                                                  2000       1999       1998       1997      1996
                                                                  ----       ----       ----       ----      ----
                                                                  (in thousands, except  per ADS and per  share data)
<S>.........................................................    <C>        <C>        <C>        <C>      <C>
Total revenues..............................................    $348,934   $241,643   $ 166,894  $114,253 $ 85,137
Income from operations......................................    $ 59,025   $ 37,492   $  15,777  $  4,132 $  7,048
Net income..................................................    $ 42,403   $ 23,780   $  10,287  $  2,877 $  5,160
Basic net income per ADS and per share......................    $   0.71   $   0.44   $    0.20      0.06 $   0.11
Diluted net income per ADS and per share....................    $   0.65   $   0.40   $    0.19  $   0.06 $   0.10
Weighted average shares--basic..............................      59,741     54,159      50,897    49.872   48,795
Weighted average shares--diluted............................      65,292     59,303      53,223    50,627   50,772
Cash, cash equivalents, short-term
    investments and restricted cash.........................    $211,934   $176,233   $  71,713  $ 39,013 $ 42,171
Total assets................................................    $369,014   $272,546   $ 138,085  $ 94,340 $ 80,770
Working Capital.............................................    $164,439   $138,604   $  51,104  $ 36,479 $ 41,142
Long term obligations.......................................    $  4,288   $  2,924   $      --        -- $     19
</TABLE>

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 "Risk Factors" section 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

General

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

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

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

For those contracts that consist solely of license and maintenance we recognize
license revenues based upon the residual method after all elements other than
maintenance have been delivered as prescribed by the Statement of Position 98-9

                                       19
<PAGE>

"Modification of SOP No. 97-2 with Respect to Certain Transactions." We
recognize maintenance revenues over the term of the maintenance contract as
vendor specific objective evidence of fair value for maintenance exists. There
is no right or return or price protection for sales to domestic and
international distributors or value-added resellers (collectively, "resellers").
In situations where the reseller has a purchase order from the end-user that is
immediately deliverable, we recognize revenue on shipment to the reseller, if
other criteria in SOP 97-2 are met, since we have no risk of concessions.

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

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

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

The Company generates a significant portion of its revenue and incurs a
significant portion of its expenses in foreign currencies, primarily French
francs, British pounds sterling, Japanese yen, Italian lira, and other European
currencies. Accordingly, the Company's results of operations are affected by
year-over-year exchange rate fluctuations of the United States dollar relative
to these currencies. However, the net impact of foreign exchange rate
fluctuations on operating income has been low as the variance in translated
revenue is primarily counterbalanced by an offsetting variance in foreign
operating expenses.

As with many software companies, we experience seasonality in our business, with
revenues generally higher in the fourth quarter of each year and lower in the
first quarter of the following year. We believe that this trend is primarily the
result of a tendency of customers to delay software purchases until the fourth
quarter due to their annual budget. In addition, our third quarter is a
relatively slow quarter due to the lower economic activity throughout Europe
during the summer months.

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

Recent Acquisitions

During August 2000, the Company acquired a division of Executive Computing
Group, the Company's Australian distributor, for approximately $2.5 million in
cash and $500,000 in notes payable fully secured by a restricted cash escrow
account. The acquisition has been accounted for under the purchase method of
accounting. The purchase price has been allocated to goodwill and other
intangible assets and is being amortized over 5 years from the date of
acquisition.

During April 2000, the Company acquired all the outstanding shares of Olap@Work,
Inc., a privately held software company based in Ottawa, Canada, that develops
and markets high-end online analytical processing (OLAP) reporting tools. The
total purchase price including direct acquisition costs was $15.2 million,
including notes payable of $5.0 million. The notes are due in three annual
installments subject to employment related contingencies, and are secured by
$5.0 million of restricted cash that the Company has placed into an escrow
account. Of the purchase price, approximately $8.7 million has been allocated to
goodwill, $5.0 million has been allocated to deferred employee retention costs,
and $1.5 million has been

                                       20
<PAGE>

allocated to the net book value of the acquired assets and liabilities, which
approximate fair value. Goodwill is being amortized over a five year life
beginning April 2000, and employee retention costs are being amortized to
research and development expense over the term of the related notes payable.

                                       21
<PAGE>

Results of Operations

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

<TABLE>
<CAPTION>
                                                                                     Year Ended
                                                                                    December 31,
                                                                                    ------------
                                                                             2000       1999          1998
                                                                             ----       ----          ----
<S>                                                                       <C>         <C>          <C>

   License fees.....................................................         63%         64%          65%
   Services.........................................................         37          36           35
                                                                          -----       -----        -----
      Total revenues................................................        100         100          100
Cost of revenues:
   License fees.....................................................          1           2            2
   Services.........................................................         15          14           14
                                                                          -----       -----        -----
      Total cost of revenues........................................         16          16           16
                                                                          -----       -----        -----
Gross margin........................................................         84          84           84
Operating expenses:
   Sales and marketing..............................................         48          49           53
   Research and development.........................................         12          11           12
   General and administrative.......................................          6           7            8
   Goodwill amortization............................................          1           1            1
                                                                          -----       -----        -----
      Total operating expenses......................................         67          68           74
                                                                          -----       -----        -----
Income from operations..............................................         17          16           10
Interest and other income, net......................................          3           1            1
                                                                          -----       -----        -----
Income before provision for income
   taxes and minority interest.......................................        20          17           11
Provision for income taxes...........................................        (8)         (7)          (4)
                                                                          -----       -----        -----
Net income...........................................................        12%         10%           6%
                                                                          =====       =====        =====
Gross margin:
   License fees......................................................        99%         97%          97%
   Services..........................................................        59%         60%          59%
</TABLE>

Fiscal Years Ended December 31, 2000, 1999, and 1998.

Revenues

The following table sets forth information regarding the composition of our
revenues and period-to-period changes:

<TABLE>
<CAPTION>
                                                    2000           Percent          1999        Percent           1998
                                                    ----           --------         ----       --------           ----
                                                                    Change                      Change
                                                                    ------                      ------
                                                                            (Dollars in thousands)
<S>                                               <C>               <C>          <C>            <C>             <C>
License fees.............................        $   220,845         44%         $  153,747      41%            $  108,761
    Percentage of total revenues.........                 63%                            64%                            65%
Services.................................        $   128,089         46%         $   87,896      51%            $   58,133
    Percentage of total revenues.........                 37%                            36%                            35%
                                                 -----------                     ----------                     ----------
Total revenues...........................        $   348,934         44%         $  241,643      45%            $  166,894
                                                 ===========                     ==========                     ==========
</TABLE>

Total revenues increased to $348.9 million in 2000, up from $241.6 million in
1999, and $166.9 million in 1998, representing increases of 44% from 1999 to
2000 and 45% from 1998 to 1999. In each year presented, a majority of our total
revenues was derived from license fees for BusinessObjects and WebIntelligence,
and related products. Our services revenues were comprised of revenues from
maintenance, consulting and training activities.

                                       22
<PAGE>

 .    License Fees. Revenues from license fees increased approximately $67.1
million or 44% in 2000 over the level achieved in 1999. This compares to an
increase of $45.0 million or 41% during 1999 over the level achieved in 1998.
The increase in license fees in 2000 and 1999 was primarily due to increased
sales of WebIntelligence, the Company's platform for internet-based
installations, and to a lesser extent, increases in BusinessObjects and related
software products in all geographic areas into which we sell.

 .    Services. Revenues from services increased approximately $40.2 million or
46% from 1999 to 2000. This compares to an increase of $29.8 million or 51% from
1998 to 1999. The increase in revenues from services for each period was
primarily due to increases in maintenance resulting from the expansion of our
installed customer base and concentration on the renewal of existing support
contracts, increases in consulting revenues, and to a lesser extent increases in
training revenues.

Cost of Revenues

The following table sets forth information regarding our cost of revenues and
period-to-period changes:

<TABLE>
<CAPTION>
                                                                        Percent                Percent
                                                            2000        Change     1999        Change      1998
                                                            ----        ------     ----        ------      ----
                                                                            (Dollars in thousands)
<S>                                                        <C>          <C>       <C>       <C>       <C>
Cost of license fees................................       $ 2,569       (40)%    $ 4,297          31%    $ 3,272
   Percentage of license fees
       revenues.....................................             1%                     3%                      3%
Cost of services....................................       $53,101         50%    $35,467          48%    $23,899
   Percentage of services revenues..................            41%                    40%                     41%
                                                          --------                -------                 -------
       Total cost of revenues.......................       $55,670         40%    $39,764          46%    $27,171
                                                          --------                -------                 -------
   Percentage of total revenues.....................            16%        16%         16%
</TABLE>

 . Cost of License Fees. Cost of license fees consist primarily of materials,
packaging, freight, and third-party royalties. Cost of license fees as a
percentage of license fees decreased to 1% for 2000, down from 3% in 1999 and
1998. The decrease in 2000 from 1999 as a percent of related revenues was
primarily due to improved management of inventory levels, and reduction of
freight and production costs of documentation and reduced royalty costs due to
lower sales of third-party products.

 . Cost of Services. Cost of services, which consist of the cost of providing
consulting, training, and maintenance, increased approximately $17.6 million or
50% in 2000 over the level experienced in 1999. This compares to an increase of
$11.6 million or 48% in 1999 over the level experienced in 1998. The increase in
costs in absolute dollars for both years was primarily due to the increase in
the number of personnel involved in our consulting, maintenance, and training
activities, and to a lesser extent, the cost of subcontracting some consulting
and training activities. As a percentage of service revenues, cost of services
remained fairly constant during all periods presented, ranging from 40% to 41%
during the three years ended December 31, 2000.

Operating Expenses

The following table sets forth information regarding the composition of our
operating expenses and period-to-period changes:

<TABLE>
<CAPTION>
                                                        Percent                     Percent
                                               2000     Change           1999       Change       1998
                                               ----     ------           ----       ------       ----
                                                                (Dollars in thousands)
<S>                                         <C>          <C>        <C>             <C>      <C>
Sales and marketing....................     $  167,519       42%    $   117,960     32%      $    89,118
   Percentage of total revenues........             48%                      49%                      53%
Research and development...............     $   40,725       52%    $    26,746     38%      $    19,434
   Percentage of total revenues........             12%                      11%                      12%
General and administrative.............     $   21,741       31%    $    16,538     17%      $    14,140
   Percentage of total revenues........              6%                       7%                       8%
Goodwill Amortization..................     $    4,254       35%    $     3,143    151%      $     1,254
   Percentage of total revenues........              1%                       1%                       1%
                                            ----------              -----------              -----------
       Total operating expenses........     $  234,239       42%    $   164,387     33%      $   123,946
                                            ----------              -----------              -----------
</TABLE>

                                       23
<PAGE>

<TABLE>
<S>                                                 <C>                      <C>                   <C>
   Percentage of total revenues........             67%                      68%                   74%
</TABLE>

 . Sales and Marketing. Sales and marketing expenses were $167.5 million, or 48%
of total revenues in 2000 as compared to $118.0 million, or 49% of total
revenues in 1999 and $89.1 million, or 53% of total revenues in 1998. Sales and
marketing expenses consist primarily of salaries and commissions for our sales
and marketing personnel, together with amounts paid for advertising and product
promotion activities, and related facilities expenses. Sales and marketing
expenses increased in absolute dollars in each period as we expanded our sales
and marketing organization. This organization grew to 1,121 people at December
31, 2000 from 812 people at December 31, 1999 and 607 people at December 31,
1998. Sales and marketing expenses as a percentage of total revenues decreased
each year over the prior period, as we experienced better productivity in our
sales and marketing organization.

 . Research and Development. Research and development expenses were $40.7 million
in 2000, $26.7 million in 1999, and $19.4 million in 1998. Research and
development expenses represented 12% of total revenues in 2000, 11% of total
revenues in 1999 and 12% of total revenues in 1998. Research and development
expenses consist primarily of salaries, related benefits, third party consultant
fees, related facilities costs and amortization of intangible assets allocated
to employment contingencies resulting from the acquisitions of Olap@Work, Inc.
in April, 2000 and Next Action Technology, Ltd. in October, 1999. The increase
in research and development expenses in absolute dollars is due to increased
staffing and associated support for software engineers as part of our expansion
into the analytical applications market and, to a lesser extent, the
amortization of intangible assets and other related costs associated with the
continued operations of Olap@Work, Inc. and Next Action Technology, Ltd.,
including staffing and facilities. Our research and development organization
grew to 395 people at December 31, 2000 from 243 people at December 31, 1999 and
155 people at December 31, 1998.

 . General and Administrative. General and administrative expenses were $21.7
million, or 6% of total revenues in 2000 as compared to $16.5 million, or 7% of
total revenues in 1999 and $14.1 million, or 8% of total revenues in 1998.
General and administrative expenses consist primarily of salaries, related
benefits, fees for professional services including legal and accounting
services, and allowances for doubtful accounts. General and administrative
expenses increased in absolute dollars in 2000 due to increased allowances for
doubtful accounts due to the growth in accounts receivable associated with
higher revenue levels and for all periods presented due to increased staffing to
support our growth, and higher expenditures for legal and accounting services
associated with operating a larger company. General and administrative expenses
as a percentage of total revenues decreased each year over the prior period, as
we experienced better productivity in our general and administrative
organization.

 . Amortization of Goodwill. Goodwill amortization expense was $4.3 million in
2000 as compared to $3.1 million in 1999 and $1.3 million in 1998. Goodwill
amortization expense was approximately 1% of total revenues for all years
presented. Goodwill amortization expense increased in 2000 over 1999 and 1998
due to the purchase of Olap@Work, Inc. in April 2000 and the purchase of a
division of Executive Computing Group, the Company's Australian distributor, in
August 2000. Goodwill amortization expense increased in 1999 over 1998 as a
result of the purchase of Next Action Technology in October 1999, and the
purchase of Prophecy Holding B.V. in April 1999. In general, goodwill is
amortized over a five year period.

Interest and Other Income, Net

The following table sets forth information  regarding the composition of our net
interest and other income and period-to-period changes:

<TABLE>
<CAPTION>
                                                       Percent                  Percent
                                              2000     Change       1999        Change         1998
                                              ----     ------       ----        ------         ----
                                                            (Dollars in thousands)
<S>                                        <C>         <C>        <C>           <C>          <C>
Net interest income....................    $   7,281      160%    $    2,798         45%     $   1,931
Other income...........................        3,908     1375%           265         --             --
Net exchange gain......................          458     1105%            38        (74)%          147
                                           ---------              ----------                 ---------
Total interest income and other, net...    $  11,647      276%    $    3,101         49%     $   2,078
                                           ---------              ----------                 ---------
</TABLE>

Interest and other income, net primarily represents net interest income, net
gains resulting from foreign currency exchange rate changes, and other income
net of related legal expenses from the settlement of a patent infringement
action against Brio Technology, Inc.

                                       24
<PAGE>

Net interest income totaled $7.3 million in 2000, $2.8 million in 1999 and $1.9
million in 1998. The increase in net interest income for all periods presented
resulted from higher levels of invested cash due to increased cash provided by
operations, as well as from the $71.8 million we received in November 1999 the
from the sale of 3,105,000 ordinary shares in France and the rest of Europe in
connection with a listing on the Premier Marche of the Euronext Paris in France.

During September 1999, the Company executed a Memorandum of Understanding with
Brio Technology Inc. (Brio) in settlement of pending patent litigation. As part
of the settlement, the Company dismissed its pending lawsuit against Brio
involving patent number 5,555,403 and Brio dismissed its pending lawsuit against
the Company involving patent number 5,915,257 and agreed to pay the Company
$10.0 million payable quarterly in $1.0 million payments beginning September 30,
1999. Due to the inherent uncertainties with respect to Brio making the
remaining quarterly payments on the settlement, the Company deferred the gain on
the settlement and is recognizing it under the cost-recovery method. Under the
cost-recovery method, no gain is recognized until cash payments by Brio exceed
the legal expenses incurred by the Company. Payments under the settlement are
included in interest and other income, net of related legal expenses.


Income Taxes

The following table sets forth information regarding our income taxes:


<TABLE>
<CAPTION>
                                                         Percent                    Percent
                                             2000        Change         1999        Change        1998
                                             ----        ------         ----        ------        ----
                                                                (Dollars in thousands)
<S>                                        <C>           <C>          <C>           <C>         <C>
Provision for income taxes.............    $ 28,269          68%      $ 16,813         130%     $  7,316
Effective tax rate.....................          40%                        41%                       41%
</TABLE>

Income taxes totaled $28.3 million in 2000, $16.8 million in 1999 and $7.3
million in 1998. This represented an effective income tax rate of 40% in 2000,
and 41% in 1999 and 1998. The 2000 rate was lower due primarily to a decrease in
the French statutory income tax rate.

Liquidity and Capital Resources

<TABLE>
<CAPTION>
                                                                                Percent
                                                                2000            Change           1999
                                                                ----            ------           ----
                                                                         (Dollars in thousands)
<S>                                                           <C>               <C>            <C>
Working capital.............................................  $164,439              19%        $138,604
Cash and cash equivalents...................................   199,581              13%         176,233
Net cash provided by operating activities...................    69,002              49%          46,277
Net cash used for investing activities......................   (32,485)             50%         (21,672)
Net cash provided by (used in) financing activities.........    (1,186)           (101)%         90,137
</TABLE>

As of December 31, 2000, we had cash and cash equivalents of $199.6 million, an
increase of $23.3 million from December 31, 1999. Net cash provided by operating
activities for the twelve months ended December 31, 2000 was $69.0 million, as
compared to $46.3 million for the same period in 1999. The increase in net cash
provided by operating activities for the year ended December 31, 2000 primarily
resulted from higher net income, non-cash charges for depreciation and
amortization expense and increases in deferred revenue, accounts payable, income
taxes payable, other current liabilities and accrued payroll and related
expenses, partially offset by increases in accounts receivable and current and
other assets.

Accounts receivable net of allowances increased to $88.7 million at December 31,
2000 from $54.0 million at December 31, 1999 resulting primarily from an
increase in revenue. Accounts receivable days sales outstanding was 75 days as
of December 31, 2000 and 65 days at December 31, 1999. The increase in days
sales outstanding in 2000 was due in part to the strengthening of the Euro vs.
the U.S. dollar at December 31, 2000, whereby accounts receivable were
translated into U.S. dollars at a higher value than the translation of the
related revenues, which are translated at average rates during the period.
Although days sales outstanding increased from 1999, the percent of receivables
past due has decreased from 1999 due to increased focus on

                                       25
<PAGE>

collection activities. In general, due to the level of European sales which tend
to have longer collection cycles than North American sales and the fluctuation
of the Euro, and the historical pattern of revenue generation towards the end of
each quarter, we anticipate that accounts receivable will continue to be
substantial in the future, and that days sales outstanding will remain fairly
consistent with the 2000 results.

Our investing activities in each year presented consisted primarily of business
acquisitions totaling $18.2 million in 2000 and $12.9 million in 1999, and
expenditures for fixed assets totaling $14.2 million in 2000 and $8.8 million in
1999. We had no significant capital commitments as of December 31, 2000 and we
currently anticipate that additions to property and equipment for the next year
will be comparable to recent past years.

Our net financing activities used $1.2 million of cash in 2000 and provided
$90.1 million of cash in 1999. Financing activities in 2000 included $13.4
million from the issuance of shares under employee stock option, purchase plans
and directors warrants and $5.5 million from the issuance of notes payable for
business acquisitions, which was partially offset by the transfer of $12.3
million into restricted cash accounts as security for the notes issued in 2000
and as collateral for a $7.0 million standby letter of credit issued in August,
2000 to secure our new San Jose facilities lease, and by the repayment of $7.8
million of notes payable. Financing activities in 1999 included $71.8 million
from the sale of 3,105,000 ordinary shares in France and the rest of Europe in
November 1999, $12.4 million from the issuance of shares under employee stock
option and purchase plans, $10.6 million from the issuance of notes payable in
relation to business acquisitions, partially offset by $4.6 million for the
repurchase of 575,000 treasury shares.

We believe that cash from operations together with existing cash and cash
equivalents will be sufficient to meet our cash requirements for at least the
foreseeable future.

                                       26
<PAGE>

                                 RISK FACTORS

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

Risks related to our business

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

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

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

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

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

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

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

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

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

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

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

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

In future quarters, our operating results may be below the expectations of
public market analysts and investors, and the price of our shares may fall. In
addition, the stock markets in the United States and France have experienced
significant price and volume

                                       27
<PAGE>

fluctuations, which have particularly affected the market prices of many
software companies and which have often been unrelated to the operating
performance of these companies. These market fluctuations could affect our stock
price.

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

BUSINESSOBJECTS and its platform for internet-based installations,
WEBINTELLIGENCE, are internally complex and occasionally contain defects or
errors, especially when first introduced or when new versions or enhancements
are released. Despite extensive testing, we may not detect errors in our new
products, platforms or product enhancements, including BUSINESSOBJECTS 5.i and
WEBINTELLIGENCE 2.6, which were recently launched, until after we have commenced
commercial shipments. If defects and errors are discovered in our products,
platforms or product enhancements after commercial release:

     .    potential customers may delay or forego purchases;

     .    our reputation in the marketplace may be damaged;

     .    we may incur additional service and warranty costs; and

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

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

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

We are increasingly focusing our selling efforts on larger, enterprise-wide
deployments of our products.  Many of these deployments are on a Unix platform
and require greater technical stability, performance and support than we have
typically had to provide in the past.  We may have difficulty providing and
managing these increased technical requirements.  Any such difficulty could
cause us to lose existing customers, limit us to smaller deployments and cause
us to expand our research and development and technical support costs which
could cause a decline in our revenues and an increase in our expenses.

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

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

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

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

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

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

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

                                       28
<PAGE>

     .    we could be forced to cease selling our products;

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

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

     .    we may be required to indemnify our customers;

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

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

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

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

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

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

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

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

We may have difficulty managing our growth.

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

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

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

In addition, we conduct a significant portion of our business in currencies
other than the U.S. dollar, the currency in which we report our financial
statements. We expect to generate a significant portion of our revenues and
expenses in the Euro in the future. As a result, our operating results expressed
in U.S. dollars have been in the past, and may be in the future, adversely
impacted by currency exchange rate fluctuations on the U.S. dollar value of
foreign currency-denominated revenues and expenses. As of December 31, 2000, we
were not engaged in a foreign currency hedging program to cover our currency
transaction or translation exposure.

                                       29
<PAGE>

Risks related to our industry

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

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

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

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

The market for business intelligence software tools is characterized by:

     .    rapid technological advances;

     .    changes in customer requirements; and

     .    frequent new product introductions and enhancements.

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

                                       30
<PAGE>

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

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

     As of December 31, 2000, all of our cash and cash equivalents were
classified as available-for-sale. The principal portion of our investments are
not subject to interest rate risk; however, declines in interest rates over time
will reduce our interest income. We do not have any investments in equity or
debt securities traded in the public markets. Therefore, we do not currently
have any direct equity price risk.

     We conduct a significant portion of our business in currencies other than
the U.S. dollar, the currency in which we report our financial statements.
Assets and liabilities of our subsidiaries are translated into U.S. dollars at
exchange rates in effect as of the applicable balance sheet date, and any
resulting translation adjustments are included as an adjustment to shareholders'
equity. Revenues and expenses generated from these subsidiaries are translated
at average exchange rates during the quarter the transactions occur. Gains and
losses from these currency transactions are included in net earnings.
Historically, we have generated a significant portion of our revenues and
incurred a significant portion of our expenses in French francs, British pounds
sterling, Japanese yen and Italian lira and we expect to generate a significant
portion of our revenues and expenses in the Euro in the future. As a result, our
operating results have been in the past, and may be in the future, adversely
impacted by currency exchange rate fluctuations on the U.S. dollar value of
foreign currency-denominated revenues and expenses.  We cannot predict the
effect of exchange rate fluctuations upon our future operating results. As of
December 31, 2000, we were not engaged in a foreign currency hedging program to
cover our currency transaction or translation exposure. For the year ended
December 31, 2000, a combined variation of 10% of the exchange rates of the main
currencies in which we conduct business--the Euro, the British pound sterling
and the Japanese yen--against the U.S. dollar would have generated a combined 7%
variation of our revenues, partially offset by a combined 6 percent variation of
expenses.

                                       31
<PAGE>

Item 8. Financial Statements and Supplementary Data

               Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Shareholders
Business Objects S.A.

We have audited the accompanying consolidated balance sheets of Business Objects
S.A. as of December 31, 2000 and 1999, and the related consolidated statements
of income, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 2000. Our audits also included the financial
schedule listed in Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Business Objects S.A. at December 31, 2000 and 1999, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.



                                                /s/ Ernst & Young LLP


San Jose, California
January 31, 2001,
except for note 11, as to which the date is
March 12, 2001


                                       32
<PAGE>

                             Business Objects S.A.

                          Consolidated Balance Sheets
             (In thousands, except for per ordinary share amounts)

<TABLE>
<CAPTION>
                                                                              December 31,
                                                                          2000            1999
                                                                          ----            ----
<S>                                                                   <C>           <C>
Assets
Current assets:
  Cash and cash equivalents.................................          $   199,581   $     176,233
  Restricted cash- current..................................                9,020              --
  Accounts receivable, net of allowances of $3,987 and
     $1,650 at December 31, 2000 and 1999, respectively.....               88,737          53,993
  Deferred tax assets, net..................................                7,458           5,997
  Prepaid and other current assets..........................               13,434           7,950
                                                                      -----------   -------------
       Total current assets.................................              318,230         244,173
Goodwill and other intangible assets, net....................              21,582          12,556
Property and equipment, net..................................              21,641          13,831
Deposits and other assets....................................               4,228           1,986
Restricted cash- long term...................................               3,333              --
                                                                      -----------   -------------
           Total assets......................................         $   369,014   $     272,546
                                                                      ===========   =============
Liabilities and Shareholders' Equity
Current liabilities:
   Accounts payable..........................................         $    22,503   $      11,780
   Accrued payroll and related expenses......................              30,680          23,994
   Income taxes payable......................................              18,570          10,863
   Deferred revenue..........................................              49,490          31,849
   Other current liabilities.................................              28,524          19,448
   Notes payable- current portion............................               4,024           7,635
                                                                      -----------   -------------
      Total current liabilities..............................             153,791         105,569
Notes payable................................................               4,288           2,924
Commitments and contingencies
Shareholders' equity:
   Ordinary shares, Euro 0.10 nominal value ($0.09 U.S. as of
   December 31, 2000): authorized 83,086 at December 31, 2000
   and 97,077 at December 31, 1999; issued and outstanding
   60,584 and 58,437 at December 31, 2000
   and 1999, respectively....................................               6,471           3,522
   Additional paid-in capital................................             138,390         126,026
   Treasury shares, 575 shares at December 31, 2000 and 1999.              (4,611)         (4,611)
   Retained earnings.........................................              94,577          52,174
   Accumulated other comprehensive loss......................             (23,892)        (13,058)
                                                                      -----------   -------------
Total shareholders' equity...................................             210,935         164,053
                                                                      -----------   -------------
Total liabilities and shareholders' equity...................         $   369,014   $     272,546
                                                                      ===========   =============
</TABLE>

See accompanying notes.

                                      33
<PAGE>

                             Business Objects S.A.

                       Consolidated Statements of Income
          (In thousands, except per ADS and per ordinary share data)

<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                                    -----------------------
                                               2000          1999           1998
                                               ----          ----           ----
<S>                                        <C>          <C>           <C>
Revenues:
  License fees........................     $   220,845  $    153,747  $    108,761
  Services............................         128,089        87,896        58,133
                                           -----------  ------------  ------------
    Total revenues...................          348,934       241,643       166,894
Cost of revenues:
  License fees........................           2,569         4,297         3,272
  Services............................          53,101        35,467        23,899
                                           -----------  ------------  ------------
     Total cost of revenues...........          55,670        39,764        27,171
                                           -----------  ------------  ------------
Gross margin...........................        293,264       201,879       139,723
Operating expenses:
  Sales and marketing.................         167,519       117,960        89,118
  Research and development............          40,725        26,746        19,434
  General and administrative..........          21,741        16,538        14,140
  Goodwill amortization...............           4,254         3,143         1,254
                                           -----------  ------------  ------------
    Total operating expenses.........          234,239       164,387       123,946
                                           -----------  ------------  ------------
Income from operations.................         59,025        37,492        15,777
Interest and other income, net.........         11,647         3,101         2,078
                                           -----------  ------------  ------------
Income before provision for
  income taxes and minority interest....        70,672        40,593        17,855
Provision for income taxes.............        (28,269)      (16,813)       (7,316)
Minority interest......................             --            --          (252)
                                           -----------  ------------  ------------
Net income.............................    $    42,403  $     23,780  $     10,287
                                           ===========  ============  ============
Net income per ADS and
  per share--basic....................     $      0.71  $       0.44  $       0.20
                                           ===========  ============  ============
  ADS and shares used in
   computing net income
   per ADS and per share--basic.......          59,741        54,159        50,897
                                           ===========  ============  ============
Net income per ADS and
  per share--diluted..................     $      0.65  $       0.40  $       0.19
                                           ===========  ============  ============
  ADS and shares and common
   share equivalents used in
   computing net income per ADS
   and per share--diluted.............          65,292        59,303        53,223
                                           ===========  ============  ============
</TABLE>

See accompanying notes.

                                      34
<PAGE>

                             Business Objects S.A.

                Consolidated Statements of Shareholders' Equity
                                (In thousands)

<TABLE>
<CAPTION>
                                                                                                            Accumulated     Total
                                                   Ordinary Shares  Additional Treasury Shares                 Other        Share-
                                                   ---------------    Paid-in  ---------------   Retained   Comprehensive   holders'
                                                   Shares    Amount   Capital  Shares    Amount  Earnings    Income(Loss)   Equity
                                                   ------    ------   -------  ------    ------  --------     -----------   ------
<S>                                              <C>         <C>      <C>      <C>       <C>     <C>        <C>            <C>
Balance at December 31, 1997..................    50,333     3,084     34,270      --       --    18,107         (4,662)     50,799
  Issuance of stock pursuant to
    employee stock option plans...............       957        56      2,719      --       --        --             --       2,775
  Issuance of ordinary shares under
    Employee Stock Purchase Plans.............       477        26      1,316      --       --        --             --       1,342
  Tax benefit of Nonqualified Stock Options..         --        --        400      --       --        --             --         400
Components of comprehensive income............
  Translation adjustment......................        --        --         --      --       --        --          1,644       1,644
  Net income..................................        --        --         --      --             10,287             --      10,287
                                                                                                                           --------
Total comprehensive income....................        --        --         --      --       --        --             --      11,931
                                                  ------    ------    -------  ------    -----   -------      ---------    --------
Balance at December 31, 1998..................    51,767     3,166     38,705      --       --    28,394         (3,018)     67,247
  Issuance of ordinary shares,
   net of expenses of $5,813                       3,105       166     71,678      --       --        --             --      71,844
  Issuance of stock pursuant to
    employee stock option plans ..............     2,883       154      9,008      --       --        --             --       9,162
  Issuance of ordinary shares under
    Employee Stock Purchase Plans.............       682        36      3,195      --       --        --             --       3,231
  Purchase of treasury shares.................        --        --         --     575    (4611)       --             --      (4,611)
  Tax benefit of issuance of ordinary shares..        --        --      1,036      --       --        --             --       1,036
  Tax benefit of Nonqualified Stock Options           --        --      2,404      --       --        --             --       2,404
Components of comprehensive
  income......................................
  Translation adjustment......................        --        --         --      --       --        --        (10,040)    (10,040)
  Net income..................................        --        --         --      --       --    23,780             --      23,780
                                                                                                                           --------
Total comprehensive income....................        --        --         --      --       --        --             --      13,740
                                                  ------    ------    -------  ------    -----   -------      ---------    --------
Balance at December 31, 1999..................    58,437     3,522   $126,026     575   (4,611)  52,174         (13,058)    164,053
  Issuance of stock pursuant to
    employee stock option plans ..............     1,768       116      8,069      --       --        --             --       8,185
  Issuance of ordinary shares under
    Employee Stock Purchase Plans ............       197        12      4,630      --       --        --             --       4,642
  Directors' warrants exerercise..............       182        12        574      --       --        --             --         586
  Nominal Value increased to 0.10 Euro                --       930       (930)     --       --       --              --          --
  Capitalization of share premium to effect
    3 for 2 stock split in the form of a
      dividend................................        --     1,879     (1,879)     --       --        --             --          --
  Tax benefit of Nonqualified Stock Options...        --        --      1,900      --       --        --             --       1,900
Components of comprehensive
  income......................................
  Translation adjustment......................        --        --         --      --       --        --        (10,834)    (10,834)
  Net income..................................        --        --         --      --       --    42,403             --      42,403
                                                                                                                           --------
Total comprehensive income....................        --        --         --      --       --        --             --      31,569
                                                  ------    ------    -------  ------    -----   -------       --------    --------
Balance at December 31, 2000..................    60,584    $6,471   $138,390     575  $(4,611) $ 94,577       $(23,892)   $210,935
                                                  ======    ======    =======  ======    ======  =======       =========   ========
</TABLE>

See accompanying notes.

                                       35
<PAGE>

                              Business Objects S.A.

                      Consolidated Statements of Cash Flows
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                         Year Ended December 31,
                                                                         ------------------------
                                                                      2000        1999        1998
                                                                      ----        ----        ----
<S>                                                              <C>         <C>         <C>
Cash Flows from Operating Activities:
   Net income................................................    $  42,403   $  23,780   $   10,287
   Adjustments to reconcile net income to
     net cash provided by operating
     activities:
     Depreciation and amortization...........................        6,923       6,896        5,385
     Amortization of goodwill and other intangible assets....        8,097       3,546        1,254
     Recognition of investment grant.........................           --          --         (712)
     Deferred income taxes...................................       (1,461)     (1,861)      (2,768)
     Tax benefits from issuance of stock.....................        1,900       3,440          400
     Changes in operating assets and
       liabilities:
       Accounts receivable, net..............................      (38,522)    (14,130)      (6,056)
       Current and other assets..............................       (6,416)     (4,429)        (665)
       Accounts payable......................................       11,140       2,307        2,043
       Accrued payroll and related expenses..................        7,999       8,934        9,673
       Income taxes payable..................................        8,469       3,396        6,160
       Deferred revenue......................................       19,424      11,141        4,323
       Other current liabilities.............................        9,046       3,257        5,390
                                                                 ---------   ---------   ----------
Net cash provided by operating activities....................       69,002      46,277       34,714

Cash Flows from Investing Activities:
   Purchases of property and equipment.......................      (14,240)     (8,807)      (6,803)
   Business acquisitions, net of cash acquired...............      (18,245)    (12,865)        (972)
   Proceeds from sales of short-term investments.............           --          --        2,505
                                                                 ---------   ---------   ----------
   Net cash used for investing activities....................      (32,485)    (21,672)      (5,270)

Cash Flows from Financing Activities:
   Issuance of shares........................................       13,413      84,189        4,117
   Purchase of treasury shares...............................           --      (4,611)          --
   Issuance of notes payable.................................        5,542      10,559           --
   Transfer of cash to escrow and other restricted accounts..      (12,340)         --           --
   Principal payments on notes payable.......................       (7,801)         --           --
                                                                 ---------   ---------   ----------
Net cash provided by (used in) financing activities                 (1,186)     90,137        4,117
   Effect of foreign exchange rate changes
     on cash and cash equivalents............................      (11,983)    (10,222)       1,644
                                                                 ---------   ---------   ----------
   Net increase in cash and cash equivalents.................       23,348     104,520       35,205
   Cash and cash equivalents at the
     beginning of the year...................................      176,233      71,713       36,508
                                                                 ---------   ---------   ----------
   Cash and cash equivalents at the end of
     the year................................................    $ 199,581   $ 176,233   $   71,713
                                                                 =========   =========   ==========
   Supplemental disclosures of non-cash
     activities:
   Cash paid for interest expense............................    $     182          --           --
   Cash paid for income taxes................................    $  19,586   $  12,047   $    6,903
</TABLE>

See accompanying notes.


                                       36
<PAGE>

                            Business Objects, S.A.

                 Notes to Consolidated Financial Statements--
                             Business Objects S.A.


1.  Organization and Summary of Significant Accounting Policies

*   Organization and Basis of Presentation. Business Objects S.A. (the Company)
was organized in 1990 as a societe anonyme, or limited liability company, under
the laws of the Republic of France. The Company develops, markets, and supports
e-business intelligence software for client/server environments, intranets,
extranets and the internet. The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned and majority controlled
subsidiaries, after elimination of intercompany transactions and balances.

The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States, applied on a
consistent basis. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying footnotes. Actual results could differ
from those estimates.

*   Translation of Financial Statements of Foreign Entities. The functional
currency of the Company and its subsidiaries is the applicable local currency in
accordance with Statement of Financial Accounting Standards No. 52, "Foreign
Currency Translation," while the Company's reporting currency is the U.S.
dollar. Assets and liabilities of the Company and its subsidiaries with
functional currencies other than the U.S. dollar are translated into U.S. dollar
equivalents at the rate of exchange in effect on the balance sheet date.
Revenues and expenses are translated at the weighted average exchange rates for
the year. Translation gains or losses are recorded as a separate component of
shareholders' equity, and transaction gains and losses are reflected in net
income.

Due to the number of currencies involved, the constant change in currency
exposures, and the substantial volatility of currency exchange rates, the effect
of exchange rate fluctuations upon future operating results could be
significant. To date, the Company has not undertaken hedging transactions to
cover any currency exposure.

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

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

Arrangements consisting of license and maintenance only. For those contracts
that consist solely of license and maintenance the Company recognizes license
revenues based upon the residual method after all elements other than
maintenance have been delivered as prescribed by the Statement of Position 98-9
"Modification of SOP No. 97-2 with Respect to Certain Transactions." The Company
recognizes maintenance revenues over the term of the maintenance contract as
vendor specific objective evidence of fair value for maintenance exists. There
is no right of return or price protection for sales to domestic and
international distributors or value-added resellers (collectively, "resellers").
In situations where the reseller has a purchase order from the end-user that is
immediately deliverable, the Company recognizes revenue on shipment to the
reseller, if other criteria in SOP 97-2 are met, since the Company has no risk
of concessions.

Arrangements consisting of license, maintenance and other services. Services can
consist of maintenance, training and/or consulting services. In all cases, the
Company assesses whether the service element of the arrangement is essential to
the functionality of the other elements of the arrangement. When software
services are considered essential, revenue under the arrangement is recognized
using contract accounting. When software services are not considered essential,
the revenue

                                       37
<PAGE>

allocable to the software services is recognized as the services are performed.
Revenue is recognized using contract accounting for arrangements involving
customization or modification of the software or where software services are
considered essential to the functionality of the software. Revenue from these
software arrangements is recognized using the percentage-of-completion method
with progress-to-completion measured using labor cost inputs.

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

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

*   Sales Returns and Warranties. The Company's distributors do not have the
right to return merchandise for credit or refund. Any other potential sales
returns are covered by the Company's allowance for sales returns and doubtful
accounts. The Company provides for the costs of warranty when specific problems
are identified. The Company has not experienced any significant warranty claims
to date.

*   Net Income Per ADS and Per Share. Basic net income per ADS and per share is
computed using the weighted average number of common shares outstanding during
the period. Diluted net income per ADS and per share is computed using the
weighted average number of common and dilutive common equivalent shares
outstanding during the period using the treasury stock method. Dilutive common
equivalent shares consist of stock options and warrants. Net income per share
and per ADS has been adjusted for all periods presented to reflect the three for
two stock split in the form of a dividend effective March 2001 and the two for
one stock split effective January 2000.

*   Cash and Cash Equivalents. The Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents. Investments with maturity dates of greater than three months
and less than one year are considered to be short-term investments. Cash
equivalents include marketable securities that are principally money market
funds, certificates of deposit and term deposits.

All of the Company's cash and cash equivalents are classified as available-for-
sale and are recorded at amounts that approximate fair value based on quoted
market prices at December 31, 2000 and 1999. Unrecognized gains or losses on
available-for-sale securities are included net of tax in equity until their
disposition. Realized gains and losses and declines in value judged to be other
than temporary on available-for-sale securities are included in net interest
income. The cost of securities sold is based on the specific identification
method.

*   Software Development Costs. The Company capitalizes eligible software
development costs upon achievement of technological feasibility subject to net
realizable value considerations. Based on the Company's development process,
technological feasibility is generally established upon completion of a working
model. Research and development costs prior to the establishment of
technological feasibility are expensed as incurred. Because the period between
achievement of technological feasibility and the general release of the
Company's products has been of relatively short duration, costs qualifying for
capitalization were insignificant during the years ended December 31, 2000, 1999
and 1998. Accordingly, there were no capitalized software development costs at
December 31, 2000 and 1999.

*   Property and Equipment. Property and equipment are stated at cost. Office
and computer equipment is depreciated using the straight-line method over
estimated useful lives ranging from three to five years. Leasehold improvements
are depreciated over the shorter of the asset life or the remaining lease term.

*   Concentration of Credit Risk. The Company sells its products to various
companies across several industries throughout the world. The Company performs
ongoing credit evaluations of its customers and maintains reserves for potential
credit losses. Such losses have been within management's expectations. The
Company generally requires no collateral from its customers.

                                       38
<PAGE>

Substantially all revenues of the Company have been derived from the successive
releases of one product and, as a consequence, any factor adversely affecting
any release of this product would have a material adverse effect on the Company.

*   Employee Stock Option Plans. The Company has elected to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25), and related interpretations in accounting for its employee stock options
because the Company believes the alternative fair value accounting provided for
under Statement of Financial Accounting Standards Statement No. 123, "Accounting
for Stock-Based Compensation" (FAS 123), requires the use of option valuation
models that were not developed for use in valuing employee stock options. The
Company generally grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair market value of the shares at the date
of grant, and no compensation expense is recorded. When the exercise price of
the Company's employee stock options is less than the market price of the
underlying shares of the date of the grant, compensation expense is recognized.

*   Goodwill and Other Intangible Assets. Amortization of goodwill and purchased
intangibles is provided on a straight-line basis over the respectful useful
lives of the assets, which range from one to five years. As circumstances
dictate, the Company assesses the recoverability of its other intangible assets
by comparing the undiscounted net cash flows associated with such assets against
their respective carrying values. Impairment, if any, is based on the excess of
the carrying value over the fair value.

*   Advertising Costs. The Company expenses advertising expenses as incurred.
Advertising expenses totaled $4,081,000, $2,750,000 and $1,189,000 for the years
ended December 31, 2000, 1999, and 1998, respectively.

*   Reclassifications. Certain prior year amounts have been reclassified to
conform to current year presentation.

*   Recent Pronouncements. In June 1998, the Financial Accounting Standards
Board issued Statement No. 133, "Accounting for Derivative Instruments and
Hedging Activity" (FAS 133). FAS 133, as amended, is effective for fiscal years
beginning after June 15, 2000. FAS 133 requires the recognition of all
derivatives on the balance sheet at fair value. Derivatives that are not hedges
of underlying transactions must be adjusted to fair value through income. If the
derivative is a hedge, depending on the nature of the hedge, changes in the fair
value of derivatives will either be offset against the change in fair value of
the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. FAS 133 will not have a significant impact
on the Company's consolidated financial position, results of operations, or cash
flows at this time.

 .   Introduction of the European Economic and Monetary Union (EMU). On January
1, 1999, 11 of the 15 member countries of the European Union established a fixed
conversion rate between their sovereign currencies and adopted the Euro as their
common legal currency. As a result, the Euro now trades on currency exchanges
and is available for non-cash transactions. The Company expended resources,
reviewed and modified pricing policies in the new economic environment, analyzed
the legal and contractual implications for contracts, evaluated system
capabilities, and ensured that banking vendors support its operations in Euro-
related transactions. The Company has modified its business operations and
systems to accommodate the Euro conversion, and as of December 31, 2000, the
cost of these modifications has not significantly affected its operating
results.

2.  Cash and Cash Equivalents

         The Company's cash and cash equivalents are as follows (in thousands):

<TABLE>
<CAPTION>
                                                              December 31,
                                                              -----------
                                                          2000            1999
                                                          ----            ----
<S>                                                    <C>             <C>
Cash and cash equivalents:
   Cash.............................................   $  14,643       $  26,529
   Certificates of deposit..........................      43,618          61,395
   Money market funds...............................     141,320          88,309
                                                       ---------       ---------
      Total cash and cash equivalents...............   $ 199,581       $ 176,233
                                                       =========       =========
</TABLE>

         Unrealized holding gains and losses on available-for-sale securities at
December 31, 2000 and 1999 and gross realized gains and losses on sales of
available-for-sale securities during 2000, 1999 and 1998 were insignificant.

                                       39
<PAGE>

3.  Property and Equipment

         Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                              December 31,
                                                              ------------
                                                           2000          1999
                                                           ----          ----
<S>                                                      <C>           <C>
Office and computer equipment..........................  $ 39,738      $ 28,150
Leasehold improvements.................................     6,370         5,237
                                                         --------      --------
   Total property and equipment........................    46,108        33,387
Accumulated depreciation and amortization..............   (24,467)      (19,556)
                                                         --------      --------
   Property and equipment, net.........................  $ 21,641      $ 13,831
                                                         ========      ========
</TABLE>

Depreciation and amortization expense related to property and equipment totaled
$6,923,000, $6,896,000, and $5,385,000 for the years ended December 31, 2000,
1999 and 1998, respectively.

4.  Acquisitions

During August 2000, the Company acquired a division of Executive Computing
Group, the Company's Australian distributor, for approximately $2,500,000 in
cash and $500,000 in notes payable fully secured by a restricted cash escrow
account. The acquisition has been accounted for under the purchase method of
accounting. The purchase price has been allocated to goodwill and other
intangible assets and is being amortized over 5 years from the date of
acquisition.

During April 2000, the Company acquired all the outstanding shares of Olap@Work,
Inc., a privately held software company based in Ottawa, Canada, that develops
and markets high-end online analytical processing (OLAP) reporting tools. The
total purchase price including direct acquisition costs was $15,154,000,
including notes payable of $5,000,000. The notes are due in three annual
installments subject to employment related contingencies, and are secured by
$5,000,000 of restricted cash that the Company has placed into an escrow
account. Of the purchase price, approximately $8,664,000 has been allocated to
goodwill, $5,000,000 has been allocated to deferred employee retention costs,
and $1,490,000 has been allocated to the net book value of the acquired assets
and liabilities, which approximate fair value. Goodwill is being amortized over
a five year life beginning April 2000, and employee retention costs are being
amortized to research and development expense over the term of the related notes
payable.

During October 1999, the Company acquired all the outstanding shares of Next
Action Technology, Ltd. ("NAT"), a UK-based developer of set-based analysis
technology for customer selection and segmentation applications. The total
purchase price including direct acquisition costs was $8,396,000, including
notes payable of $7,559,000. The notes bear interest at 5% and are due in four
installments, with $4,600,000 due and paid in full in April 2000, $1,035,000 due
and paid in full in December 2000, $985,000 due December 2001 and $938,000 due
December 2002. The two final installments due December 2001 and 2002 are subject
to certain contingencies relating to continuing employment of the NAT
principals. Of the purchase price, approximately $5,437,000 has been allocated
to goodwill and is being amortized over a five year life beginning October 1999,
and $2,959,000 has been allocated to deferred employee retention costs and is
being amortized to research and development, sales and marketing and general and
administrative expenses over the term of the related notes payable.

During April 1999, the Company acquired all the outstanding shares of Prophecy
Holding B.V., the sole shareholder of Prophecy Automatisering B.V. ("Prophecy"),
a Dutch consulting firm predominately focused on decision support solutions as
they relate to packaged applications. The aggregate purchase price, including
direct acquisition costs, was $3,075,000 in cash plus notes payable totaling
$3,000,000. The notes are payable in two installments, with $2,000,000 due and
paid in full in April 2000 and the remaining $1,000,000 payable in April 2001,
subject to certain contingencies relating to continuing employment of the
principals of Prophecy. $5,278,000 of the purchase price has been allocated to
goodwill and is being amortized over a five year period that began in April
1999.

The Company has accounted for all the acquisitions listed above using the
purchase method, and accordingly, the operating results of the acquired
companies have been included in the accompanying consolidated financial
statements from their dates of acquisition. Accumulated amortization of goodwill
and other intangible assets totaled $13,483,000 at December 31, 2000 and
$5,384,000 at December 31, 1999.

                                       40
<PAGE>

The unaudited pro-forma consolidated results for the Company had the
acquisitions been consummated January 1, 1999 are as follows (in thousands
except per share amounts):

<TABLE>
<CAPTION>
                                                               December 31,
                                                               ------------
                                                            2000         1999
                                                            ----         ----
    <S>                                                  <C>           <C>
    Revenues...........................................  $ 350,568     $ 243,144
    Net income.........................................  $  41,807     $  19,391
    Net income per ADS and per share--diluted..........  $    0.64     $    0.33
</TABLE>

5.  Commitments and Contingencies

*   Commitments.  The Company leases its facilities and certain equipment under
operating leases that expire through 2006. Future minimum lease payments under
operating leases due for the fiscal years ending December 31 are as follows (in
thousands):


            2001...................................  $   18,695
            2002...................................      17,275
            2003...................................      15,760
            2004...................................      15,306
            2005 ..................................      15,143
            Thereafter.............................      68,009
                                                     ----------
            Total..................................  $  150,188

Rent expense under all operating leases was approximately $10,600,000,
$9,200,000 and $7,000,000 for the years ended December 31, 2000, 1999 and 1998,
respectively.

The Company leases certain facilities under operating leases that contain free
rent periods. Rent expense under these leases has been recorded on a
straight-line basis over the lease term. The difference between amounts paid and
rent expense is recorded as deferred rent and is included in other current
liabilities. The total liability for deferred rent was $1,667,000 and $464,000
at December 31, 2000 and 1999, respectively.

  *   Legal matters. On May 5, 2000, the Company filed a lawsuit in United
States District Court for the Northern District of California against Cognos,
Inc. and Cognos Corporation for alleged patent infringement. The lawsuit alleges
that Cognos, Inc. and Cognos Corporation infringe the Company's United States
Patent No. 5,555,403 by making, using, offering to sell and selling its product
known as Impromptu. The Company's complaint requests that the defendants be
enjoined from further infringing the patent and seeks an as yet undetermined
amount of damages. In addition, the Company filed a notice of related case
referring to a case previously pending before the district court, namely
Business Objects S.A. v. Brio Technology, Inc. Case No. C97-0354.

On September 9, 1999, the Company executed a Memorandum of Understanding with
Brio Technology Inc. (Brio) in settlement of pending patent litigation. As part
of this settlement, the Company dismissed its pending lawsuit against Brio
involving patent number 5,555,403 and Brio dismissed its pending lawsuit against
the Company involving patent number 5,915,257 and agreed to pay the Company
$10.0 million payable quarterly in $1.0 million payments beginning September 30,
1999. Due to the inherent uncertainties with respect to Brio making the
remaining quarterly payments on the settlement, the Company deferred the gain on
the settlement and is recognizing it under the cost-recovery method. Under the
cost-recovery method, no gain is recognized until cash payments by Brio exceed
the legal expenses incurred by the Company. Payments under the settlement are
included in interest and other income, net of related legal expenses.

The Company is involved in various legal proceedings arising in the ordinary
course of business. The Company believes that the ultimate resolution of these
matters will not have a material effect on the Company's financial position,
results of operations, or cash flows.

                                       41
<PAGE>

6.  Shareholders' Equity

*   Stock Splits. During February 2001, the Company's shareholders and Board of
Directors voted approval for a three for two stock split in the form of a
dividend of its ordinary shares and American depositary shares, which was
effective on March 12, 2001. Because the three for two split was in the form of
a dividend, the nominal value per ADS and per share was not adjusted. Instead,
the Company recorded a transfer effective December 31, 2000 of approximately
$1,879,000 from additional paid-in capital to ordinary share capital
corresponding to $0.10 Euro per ADS and per share nominal value for the shares
and ADS outstanding as of that date to reflect the result of the three for two
split. During January 2000, the Company's shareholders and Board of Directors
voted approval for a two for one stock split, for which the nominal value per
share and ADS was adjusted. The split was effective January 20, 2000. All share
and per share information have been adjusted to give effect to both splits.

*   Ordinary shares.  During November 1999, the Company sold 3,105,000 ordinary
shares in a public offering in France and the rest of Europe made in connection
with a listing on the Premier Marche of the Euronext Paris in France. Net
proceeds from the offering were $71,844,000 after deducting underwriting
discounts, commissions and other related expenses.

*   Conversion of share capital into Euro and Increase in Nominal Value per
Share. During May 1999 at the annual shareholders' meeting, the shareholders
authorized the Board to convert the nominal value of the Company's ordinary
shares from French Francs to the Euro. During November 1999, the Company's Board
of Directors approved the conversion of the nominal value into Euro. In January
2000, the shareholders authorized an increase in the nominal value from 0.075
euro per share to 0.10 euro per share, resulting in a transfer of $930,000 from
additional paid-in capital to ordinary share capital. All nominal value and
option and warrant exercise price data have been adjusted to reflect this
change.

*   Dividend Rights.  Net income in each fiscal year after deduction for legal
reserves is available for distribution to shareholders of the Company as
dividends, subject to the requirements of French law and the Company's
"statuts," or articles of association. Dividends may also be distributed from
reserves of the Company, subject to approval by the shareholders and certain
limitations. Payment of dividends is fixed by the ordinary general meeting of
shareholders at which the annual accounts are approved following recommendations
of the Board of Directors. If net income is sufficient, the Board of Directors
has the authority, subject to French law and regulation and without the approval
of shareholders, to distribute interim dividends. The Company has not
distributed any dividends since its inception.

The Company is required to maintain a legal reserve equal to 10% of the
aggregate nominal value of its share capital, funded by a transfer of at least
5% of the Company's net income per year to such legal reserve. The legal reserve
balance requirement was $376,000 and $352,000 as of December 31, 2000 and 1999,
respectively. The legal reserve is distributable only upon the liquidation of
the Company. The Company's statuts also provide that distributable profits,
after deduction of any amounts required to be allocated to the legal reserve,
can be allocated to one or more special purpose reserves or distributed as
dividends as may be determined by the general meeting of shareholders.

*   Liquidation Rights. In the event that the Company is liquidated, the assets
of the Company remaining after payment of debts, liquidation expenses, and all
remaining obligations will be distributed first to repay in full the capital of
any outstanding shares. The surplus, if any, will then be distributed pro rata
among the shareholders in proportion to the nominal value of their share
holdings and subject to special rights granted to holders of priority shares, if
any.

*   Preemptive Subscription Rights. Shareholders have preemptive rights to
subscribe for additional shares issued by the Company for cash on a pro rata
basis. Shareholders may waive such preemptive subscription rights at an
extraordinary general meeting of shareholders under certain circumstances.
Preemptive subscription rights, if not previously waived, are transferable
during the subscription period relating to a particular offer of shares.

*   Stock Repurchase Program. In October 1998, the Board of Directors approved
the implementation of a share repurchase program whereby the Company could
repurchase its ordinary shares or ADSs. In May 1999, the Company repurchased on
the Nasdaq National Market a total of 574,500 shares for an aggregate cost of
$4,611,000. As of December 31, 2000 the Company was authorized to repurchase an
additional 1,000,000 shares or ADSs at a maximum price of 100 Euros per share or
ADS.

*   Stock Option Plans.  The Company's 1993 Stock Option Plan expired in 1998,
and the 1994 Stock Option Plan expired in 1999.

                                       42
<PAGE>

On May 4, 1999, the shareholders of the Company approved a new stock option plan
(the 1999 Plan) pursuant to which the Board of Directors was authorized to issue
options corresponding to 2,625,000 shares. During June 2000, the shareholders
approved an additional 4,500,000 shares reserved for issuance under the 1999
Plan. The 1999 Plan provides, in accordance with French regulations applicable
to companies listed on a French stock exchange, that the option price may not be
less than the higher of (i) 100% of the closing price as reported on the French
stock exchange on the last trading day prior to the date of grant, or (ii) 80%
of the average of the closing prices on such market over the twenty trading days
preceding the grant date.

The 1999 Plan is intended to qualify as incentive stock option plans within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended. The
Board of Directors determines the vesting schedule of option grants, which
generally vest at a rate of 25% per year subject to a minimum of one year of
continued service with the Company. The options granted under the both Plans are
exercisable up to ten years from the date of grant (other than options granted
to employees in the United Kingdom, which have a term of seven years less one
day).

In December 1996, the French parliament adopted a law that requires French
companies to pay French social contributions and certain salary-based taxes of
up to 45% for France-based employees on the difference between the exercise
price of a stock option and the fair market value of the underlying shares on
the exercise date, if the beneficiary disposes of the shares before a five-year
period following the grant of the option. Currently, for options issued to
France-based employees after January 1, 1997, holders of such options are not
permitted to sell or dispose their shares within five years of the date of grant
and, therefore, no social charges will be due on these options.

A summary of the Company's stock option activity under all Plans is summarized
as follows:

<TABLE>
<CAPTION>
                                                                                             Options Outstanding
                                                                                             -------------------
                                                                                                           Weighted
                                                                                                         Average Price
                                                                       Options            Number           Per Share
                                                                      Available          of Shares         (inEuro)
                                                                      ---------          ---------         --------
<S>                                                              <C>                <C>               <C>
Balance at December 31, 1997...........................               4,239,429          6,567,786             2.76
   Shares reserved.....................................               2,250,000                 --               --
   Granted.............................................              (4,463,175)         4,463,175             4.31
   Canceled............................................               1,905,612         (1,905,612)            3.45
   Exercised...........................................                      --           (957,042)            2.51
   Expired (1991 and 1993 Option Plans)................              (1,581,522)                --               --
                                                                 --------------     --------------    -------------
Balance at December 31, 1998...........................               2,350,344          8,168,307             3.48
   Shares reserved ....................................               2,625,000                 --               --
   Granted ............................................              (3,723,750)         3,723,750            12.99
   Canceled ...........................................                 966,774           (966,774)            4.49
   Exercised ..........................................                      --         (2,883,156)            3.03
   Expired (1994 Option Plans) ........................                (872,949)                --               --
                                                                 --------------     --------------    -------------
Balance at December 31, 1999 ..........................               1,345,419          8,042,127             7.88
     Shares reserved ..................................               4,500,000                 --               --
     Granted ........................................                (3,276,338)         3,276,338            61.44
     Canceled (1994 and 1999 Stock Plans)..............                 464,807         (1,282,652)           18.11
     Exercised ........................................                      --         (1,768,459)            4.96
                                                                 --------------     --------------    -------------
Balance at December 31, 2000..........................                3,033,888          8,267,354            28.09
                                                                 ==============     ==============    =============
</TABLE>

The following table summarizes the status of the Company stock options
outstanding and exercisable at December 31, 2000:

<TABLE>
<CAPTION>
                                                                                                            Stock Options
                                                           Stock Options Outstanding                         Exercisable
                                                           -------------------------                         -----------
                                                                 Weighted
                                                                  Average
                                                                 Remaining             Weighted                         Weighted
                                                                Contractual             Average                          Average
                                             Number                Life                Exercise          Number         Exercise
Range of Exercise Prices in Euro            of Shares            in Years            Price in Euro      of Shares     Price in Euro
--------------------------------            ---------            --------            -------------      -----------   -------------
<S>                                         <C>            <C>                       <C>                <C>           <C>
</TABLE>

                                       43
<PAGE>

<TABLE>
<S>                                    <C>                <C>          <C>             <C>            <C>
        0.19 -  6.76                          2,540,265        6.3             3.75      1,622,898            3.61
        6.77 - 13.52                          1,729,803        7.7             9.65        403,122            9.26
       13.53 - 20.27                            270,000        8.8            18.48         78,750           18.48
       20.28 - 27.03                            703,578        7.5            20.60        140,999           20.60
       54.06 - 60.82                          1,063,620        8.8            55.00         63,474           55.00
       60.83 - 67.58                          1,960,088        9.5            65.30          1,093           66.27
                                       ----------------   --------     ------------    -----------    ------------
All options                                   8,267,354        7.8            28.09      2,310,336            7.58
                                       ================   ========     ============    ===========    ============
</TABLE>

 .  Warrants. On April 25, 1995, the Board of Directors approved the issuance of
warrants to purchase 36,000 shares to a Director with an exercise price of Euro
3.70 per share, vesting at a rate of 33.33% per year from June 22, 1995. The
warrants were issued in June 1995 after formal shareholder approval. The
difference between the exercise price and the estimated fair value of such
warrants was immaterial. These warrants were fully exercised during the year
ended December 31, 2000.

On April 28, 1997, the Board of Directors approved the issuance of warrants to
purchase a total of 144,000 shares to four Directors with an exercise price of
Euro 2.81 per share. These warrants vest monthly over three years commencing
January 1, 1997. The warrants were issued in June 1997 after formal shareholder
approval. The difference between the exercise price and the estimated fair value
of such warrants was immaterial. 108,000 of these warrants were exercised during
the year ended December 31, 2000.

On April 28, 1998, the Board of Directors approved the issuance of warrants to
purchase a total of 210,000 shares to five directors. The warrants were issued
on June 18, 1998 after formal shareholder approval and have an exercise price of
Euro 4.91, vesting at a rate of 33.33% per year from June 18, 1998. 37,500 of
these warrants were exercised during the year ended December 31, 2000.

In May 1999, the Company's shareholders approved the issuance of warrants to
purchase an aggregate of 45,000 shares at an exercise price of Euro 7.59 per
share to a director. These warrants were fully vested as of May 4, 1999, and
were all outstanding as of December 31, 2000.

 .  Employee Stock Purchase Plans. The Company has an Employee Stock Purchase
Plan intended to qualify under the provisions of sections 421 and 423 of the
1986 Internal Revenue Code of the United States. Under the terms of this plan,
employees may contribute via payroll deductions up to 10% of their compensation
to purchase shares at a price equal to 85% of the lower of the fair market value
as of the beginning or end of the six-month offering period. The Company issued
approximately 125,000 shares under the plan in 2000 and 354,000 shares in 1999.
There are approximately 698,000 shares remaining available for issuance under
the plan as of December 31, 2000.

In addition, the Company also has an Employee Stock Purchase Plan available to
the Company's French employees as part of the Employee Savings Plan, which is
qualified under the provisions of French tax regulations. Stock purchases are
limited under this plan to 10% of an employee's compensation received during the
offering period. The Company issued approximately 71,000 shares under the plan
in 2000 and 329,000 shares in 1999. There are approximately 250,000 shares
remaining available for issuance under the plan as of December 31, 2000.

 .  Stock Based Compensation. Pro forma information regarding net income and net
income per share is required by FAS 123, and has been determined as if the
Company had accounted for its employee stock options under the fair value method
of FAS 123. The fair value for these options for 2000, 1999, and 1998 was
estimated at the date of grant using a Black-Scholes option pricing model
assuming no dividends, risk-free weighted average interest rates of 6% for 2000
and 5% for 1999 and 1998 and a weighted average expected option life of six
months and three years for options granted under Employee Stock Purchase Plans
and Stock Options Plans, respectively. The volatility factor of the expected
market price of the Company's ordinary shares was assumed to be 101%, 79% and
77% for 2000, 1999 and 1998, respectively.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. The Black-Scholes model requires the input of highly subjective
assumptions including the expected stock price volatility. Because the Company's
employee stock options have characteristics significantly different from those
of traded options, and because the changes in the subjective input assumptions
can materially affect the fair

                                       44
<PAGE>

value estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information is as follows (in thousands, except for net income and pro
forma net income per ADS and per share information):

<TABLE>
<CAPTION>
                                                                            2000            1999            1998
                                                                            ----            ----            ----
<S>                                                                   <C>              <C>              <C>
Net income as reported.......................................         $      42,403    $      23,780    $    10,287
Pro forma net income.........................................                26,933    $      21,602    $     3,689
Net income per ADS and per share as reported--basic..........         $        0.71    $        0.44    $      0.20
Pro forma net income per ADS and per share --basic...........                  0.45    $        0.40    $      0.07
Net income per ADS and per share as reported--diluted........         $        0.65    $        0.40    $      0.19
Pro forma net income per ADS and per share --diluted.........                  0.41    $        0.36    $      0.07
</TABLE>

The weighted average fair value calculated under FAS 123 for stock options
granted during 2000, 1999 and 1998 was $27.54 $7.17 and $2.63 per share,
respectively. The weighted-average fair value of shares purchased under employee
stock purchase plans during 1999, 1998 and 1997 was $9.31, $2.28 and $1.59,
respectively.


7.  Employee Savings Plans

During 1991, the Company established an Employee Savings Plan that allows
voluntary tax contributions by all full-time employees who are employed by the
French entity and have completed at least six months of service with us. In
1995, the Employee Savings Plan was amended to allow these employees to purchase
ordinary shares of the Company. Eligible employees may contribute up to 25% of
pretax earnings to the Employee Savings Plan, of which a maximum of 10% of
pre-tax earnings may be used to purchase shares of the Company. See Note 6.
Shareholders' Equity--Employee Stock Purchase Plans. The Company does not match
employee contributions.

The Company is subject to a Statutory Profit Sharing Plan (Statutory Plan) for
substantially all of the employees of its French entity. Contributions under the
Statutory Plan are based on a formula prescribed by French law. In addition,
employees of the Company's French entity may receive contributions from a
separate profit sharing plan sponsored by the Company (Company Plan).
Contributions under the Company Plan are based on the achievement of certain
goals established by the Board of Directors. Contributions under the Company
Plan are reduced by contributions required to be made under the Statutory Plan.
The Company has accrued for all contributions required by the Plans as of
December 31, 2000.

The Company's subsidiary in the United States has a defined contribution 401(k)
plan covering substantially all of its employees. Participants may contribute up
to 20% of their annual compensation to the plan, limited to a maximum annual
amount as set periodically by the Internal Revenue Service. During 1999, the
Company implemented a matching policy whereby the Company matches employee
contributions at a rate of $0.50 for each U.S. dollar contributed up to a
maximum of $1,500 per year per person, subject to a three year vesting schedule.
Company matching contributions to the plan totaled approximately $535,000 in
2000 and $349,000 in 1999. No contributions were made to the Plan prior to 1999.

During 1999, the Company implemented a nonqualified deferred compensation plan
in its United States subsidiary which permits eligible officers and salaried
employees to defer up to a maximum of 85% of their base salary and up to 100% of
their bonuses per year. The Company does not contribute to the plan.
Participants may elect to receive distributions from the plan at a pre-
determined date or upon termination of employment or retirement, based upon
years of service. The plan is funded through a Company owned life insurance
policy. The liability for deferred compensation was approximately $1,027,000 and
$614,000 at December 31, 2000 and 1999 and is included in other current
liabilities.

8.  Earnings Per Share

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

                                       45
<PAGE>

<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                                        -----------------------
                                                                         2000              1999            1998
                                                                         ----              ----            ----
<S>                                                                   <C>               <C>           <C>
Numerator:
  Net income ........................................                 $   42,403        $    23,780     $   10,287
                                                                      ----------        -----------    -----------
Denominator:
  Weighted average ADSs and shares
      outstanding....................................                     59,741             54,159         50,897
                                                                      ----------        -----------    -----------
  Incremental common shares attributable
      to shares exercisable under employee
      stock plans and warrants.......................                       5,551             5,144          2,325
                                                                      ===========       ===========    ===========
  Denominator for diluted earnings per...............
      ADS and per share..............................                      65,292            59,303         53,223
                                                                      ===========       ===========    ===========
  Net income per ADS and per
      share--basic...................................                 $      0.71       $      0.44    $      0.20
                                                                      ===========       ===========    ===========
  Net income per ADS and per
      share--diluted.................................                 $      0.65       $      0.40    $      0.19
                                                                      ===========       ===========    ===========
</TABLE>


9.  Income Taxes

Income before provision for income taxes consists of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                                  -----------------------
                                                                                2000        1999        1998
                                                                                ----        ----        ----
<S>                                                                           <C>        <C>          <C>
France................................................................        $  35,448  $  11,687    $   5,039
Rest of world.........................................................           35,224     28,906       12,816
                                                                              ---------  ---------    ---------
Total.................................................................           70,672  $  40,593    $  17,855
                                                                              =========  =========    =========
</TABLE>

The provision for income taxes consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                                   -----------------------
                                                                                2000         1999          1998
                                                                                ----         ----          ----
<S>                                                                           <C>          <C>          <C>
Current:
   France.............................................................        $  12,324    $   4,766    $   1,913
   Rest of world......................................................           17,409       14,121        8,172
                                                                              ---------    ---------    ---------
   Total current......................................................           29,733       18,887       10,085
Deferred:
   France.............................................................              (28)          74          204
   Rest of world......................................................           (1,436)      (2,148)      (2,973)
                                                                              ---------    ---------    ---------
   Total deferred.....................................................           (1,464)      (2,074)      (2,769)
                                                                              ---------    ---------    ---------
                                                                              $  28,269    $  16,813    $   7,316
                                                                              =========    =========    =========
</TABLE>

Tax benefits resulting from the exercise of nonqualified stock options and the
disqualifying disposition of shares acquired under the Company's incentive stock
option plan reduced taxes currently payable as shown above by approximately $1.9
million in 2000. Such benefits were credited to capital in excess of par value
when realized.

A reconciliation of income taxes computed at the French statutory rate (37.7% in
2000, 40% in 1999 and 41.66% in 1998) to the provision for income taxes is as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                                  -----------------------
                                                                                2000         1999          1998
                                                                                ----         ----          ----
<S>                                                                           <C>          <C>          <C>
Income tax provision computed at the French
   statutory rate.....................................................        $   26,693   $  16,237    $   7,439
Operating losses (utilized) / not utilized............................              (114)       (800)           9
</TABLE>

                                       46
<PAGE>

<TABLE>
<S>                                                                             <C>         <C>       <C>
Non-deductible goodwill...............................................              399          809          311
Income at lower tax rates.............................................             (451)        (885)        (598)
Research credits......................................................             (992)          --           --
Other individually immaterial items...................................            2,734        1,452          155
                                                                              ---------    ---------    ---------
                                                                              $  28,269    $  16,813    $   7,316
                                                                              =========    =========    =========
</TABLE>

Deferred taxes reflect the net tax effects of loss carryforwards and temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred taxes consist of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                                              December 31,
                                                                                              ------------
                                                                                           2000         1999
                                                                                           ----         ----
<S>                                                                                  <C>            <C>
Deferred tax assets:
   Net operating loss carryforwards............................................        $   16,600    $    6,061
   Deferred revenue............................................................             2,516         2,620
   Accrued bonuses and compensation............................................               658           427
   Allowance for doubtful accounts.............................................               492           415
   Deferred rent...............................................................                 3           179
   Other reserves and accruals not currently deductible........................             6,751         4,095
   Other ......................................................................             2,674           538
                                                                                       ----------    ----------
         Total deferred tax assets.............................................            29,694        14,335
         Valuation allowance...................................................           (22,022)       (8,118)
                                                                                       -----------   ----------
                                                                                            7,672         6,217
Deferred tax liabilities:
   Individually immaterial items...............................................              (214)         (220)
                                                                                       -----------   ----------
         Net deferred tax assets...............................................        $    7,458    $    5,997
                                                                                       ===========   ==========
</TABLE>

Substantially all of the valuation allowance is attributed to stock options, the
benefit of which will be credited to additional paid-in capital when realized.

As of December 31, 2000, the Company has U.S. federal and state net operating
loss carryforwards of approximately $48,500,000 and $1,600,000, respectively.
These net operating loss carryforwards will expire in the years 2001 through
2021, if not utilized.

10.  Segment and Geographic Information

 .  Segment. The Company and its subsidiaries operate in one reportable industry
segment, the development, marketing, and support of enterprisewide business
intelligence software tools. The Company makes key decisions and evaluates
performance of the Company based on this single industry segment.

 .  Geography. Operations outside of France consist principally of sales,
marketing, finance, customer support, and to a lesser extent, research and
development activities. Transfers between geographic areas are accounted for at
amounts that are generally above cost and consistent with the rules and
regulations of governing tax authorities. Such transfers are eliminated in the
consolidated financial statements. Identifiable assets are those assets that can
be directly associated with a particular geographic area. The following is a
summary of operations within geographic area:

<TABLE>
<CAPTION>
                                                  Revenues         Transfers
                                                    from            Between
                                                Unaffiliated      Geographic           Total       Identifiable
                                                  Customers          Areas           Revenues         Assets
                                                  ---------          -----           --------         ------
<S>                                             <C>              <C>               <C>            <C>
2000:
   France...................................    $     51,292     $    75,920       $   127,212    $     228,417
   United Kingdom...........................          65,745              --            65,745           70,630
   Rest of Europe...........................          84,928              --            84,928           67,830
   North America............................         117,795              --           117,795          104,775
</TABLE>

                                       47
<PAGE>

<TABLE>
<S>                                             <C>              <C>               <C>            <C>
   Rest of World............................          29,174              --            29,174           20,499
   Eliminations.............................              --         (75,920)          (75,920)        (123,137)
                                                ------------     ------------      -----------    -------------
                                                $    348,934     $        --       $   348,934    $     369,014
                                                ============     ===========       ===========    =============
1999:
   France...................................    $     43,131     $    43,964       $    87,095    $     175,632
   United Kingdom...........................          45,568              --            45,568           40,672
   Rest of Europe...........................          64,116              --            64,116           46,634
   North America............................          72,904              --            72,904           59,253
   Rest of World............................          15,924              --            15,924            8,921
   Eliminations.............................              --         (43,964)          (43,964)         (58,566)
                                                ------------     ------------      -----------    -------------
                                                $    241,643     $        --       $   241,643    $     272,546
                                                ============     ===========       ===========    =============
1998:
   France...................................    $     30,472     $    28,967       $    59,439    $      79,360
   United Kingdom...........................          37,858              --            37,858           30,171
   Rest of Europe...........................          39,109              --            39,109           33,447
   North America............................          47,493              --            47,493           28,048
   Rest of World............................          11,962              --            11,962            6,080
   Eliminations.............................              --         (28,967)          (28,967)         (39,021)
                                                ------------     -----------       -----------    -------------
                                                $    166,894     $        --       $   166,894    $     138,085
                                                ============     ===========       ===========    =============
</TABLE>

11.  Subsequent event

On February 6, 2001, the Company held a general meeting of shareholders during
which the shareholders voted, among other things, to approve a resolution
authorizing a capital increase through capitalization of reserves or issue
premium in order to effect a three for two stock split of the Company's ordinary
shares and American Depositary Shares. On February 15, 2001, the Company's Board
of Directors approved the stock split, and on March 12, 2001 the split was
effected in the form of a stock dividend, with cash paid in lieu of fractional
shares.

Supplemental Financial Information (Unaudited)- Selected Quarterly Data

The following tables presents unaudited quarterly operating results for each of
the eight quarters in the two-year period ended December 31, 2000 (in thousands,
except per share amounts). This information has been prepared on the same basis
as the annual information presented elsewhere herein and adjusted to reflect the
three for two stock split in the form of a dividend effective March 12, 2001,
and the two for one stock split effective January 20, 2000 and, in management's
opinion, includes all adjustments, consisting only of normal recurring accruals,
necessary for a fair presentation of the information for the quarters presented.
The operating results for any quarter are not necessarily indicative of results
for any future period.


<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                      ------------------
                                Dec. 31,     Sept. 30,    June 30,    Mar. 31,    Dec. 31,  Sept. 30,  June 30,  Mar. 31,
                                  2000         2000         2000        2000        1999       1999      1999      1999
                                  ----         ----         ----        ----        ----       ----      ----      ----
                                                           (In thousands, except per share data)
<S>                            <C>          <C>          <C>         <C>         <C>        <C>      <C>         <C>
Total Revenues                 $ 105,794    $  86,005    $ 84,553    $  72,582   $  74,826  $ 59,766  $  57,543  $  49,508
Gross margin                   $  90,648    $  72,384    $ 69,897    $  60,335   $  64,372  $ 49,539  $  47,551  $  40,417
Income from operations         $  23,702    $  13,465    $ 12,677    $   9,181   $  15,096  $  9,456  $   8,065  $   4,875
Net income                     $  16,053    $  10,151    $  9,214    $   6,985   $   9,535  $  5,893  $   5,139  $   3,213
Net income per ADS and per     $    0.27    $    0.17    $   0.15    $    0.12   $    0.17  $   0.11  $    0.10  $    0.06
share--basic
Net income per ADS and per     $    0.25    $    0.15    $   0.14    $    0.11   $    0.15  $   0.10  $    0.09  $    0.06
share--diluted
</TABLE>

                                       48
<PAGE>

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

Item 10. Directors and Executive Officers of Registrant

Incorporated by reference to the Company's Proxy Statement for Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission within 120
days after the close of the fiscal year ended December 31, 2000.

Information regarding compliance with Section 16(a) of the Securities Exchange
Act of 1934, as amended, is hereby incorporated herein by reference from the
section entitled "Compliance with Section 16(a) of the Exchange Act" in the
Proxy Statement.

Item 11. Executive Compensation

Incorporated by reference to the Company's Proxy Statement for Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission within 120
days after the close of the fiscal year ended December 31, 2000.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Incorporated by reference to the Company's Proxy Statement for Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission within 120
days after the close of the fiscal year ended December 31, 2000.

Item 13. Certain Relationships and Related Transactions

Incorporated by reference to the Company's Proxy Statement for Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission within 120
days after the close of the fiscal year ended December 31, 2000.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

     (a)  1.   Financial statements.  See Item 8 of this Form 10-K.

          2.   Financial Statement Schedules. The following financial statement
               schedule of the Company for each of the years ended December 31,
               2000, 1999 and 1998 is filed as part of this Form 10-K and should
               be read in conjunction with the Consolidated Financial
               Statements, and related notes thereto, of the Company.

                                                                 Page Number
                                                                 -----------
               Schedule II- Valuation and Qualifying Accounts         53

               Schedules other than that listed above have been omitted since
               they are either not required, not applicable, or the information
               is otherwise included.

          3.   Exhibits. The exhibits listed in the accompanying index to
               exhibits are filed as part of this report.

     (b)  Reports on Form 8-K. No reports on Form 8-K were filed during the
          quarter ended December 31, 2000.

                                       49
<PAGE>

Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.

Date:                                BUSINESS OBJECTS S.A.


                                     By:       /s/ Bernard Liautaud
                                          -----------------------------------
                                          Bernard Liautaud
                                          Chairman of the Board, President,
                                          and Chief Executive Officer

Know all Person by These Presents, that each person whose signature appears
below constitutes and appoints Bernard Liautaud and Clifton T. Weatherford,
jointly and severally, his attorneys-in fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Form 10-K, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this Report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
          Signature                                         Title                                  Date
-------------------------------         ----------------------------------------------         --------------
<S>                                     <C>                                                    <C>
/s/  Bernard Liautaud                   Chairman of the Board, President and Chief             March 30, 2001
----------------------------------      Executive Officer (Principal Executive Officer)
     Bernard Liautaud

/s/  Clifton T. Weatherford             Chief Financial Officer and Senior Group Vice          March 30, 2001
----------------------------------      President (Principal Financial and Accounting
     Clifton T. Weatherford             Officer)

/s/  Bernard Charles                    Director                                               March 30, 2001
----------------------------------
     Bernard Charles

/s/  Albert Eisenstat                   Director                                               March 30, 2001
----------------------------------
     Albert Eisenstat

/s/  John Olsen                         Director                                               March 30, 2001
----------------------------------
     John Olsen

/s/  Arnold Silverman                   Director                                               March 30, 2001
----------------------------------
     Arnold Silverman

/s/  Vincent Worms                      Director                                               March 30, 2001
----------------------------------
     Vincent Worms
</TABLE>

                                       50
<PAGE>

                                Index to Exhibits

Item 14(a).  Index to Exhibits

     Exhibit
     Number     Description
    --------    ------------
    3.0*        Status or Charter of the Company, as amended on May 4, 1999
                (English translation), is incorporated herein by reference to
                Exhibit 3.1 filed with the Company's Registration Statement on
                Form S-8 filed with the SEC on August 3, 1999 (File No.
                333-84341).
    3.1*        Bylaws of the Company, as amended, dated February 10, 1998, is
                incorporated herein by reference to Exhibit 3.1 filed with the
                Company's 1997 Form 10-K filed with the SEC.
    4.0*        Form of Deposit  Agreement,  as amended and restated on December
                30, 1998, among Business Objects S.A., the Bank of New York as
                Depositary, and holder from time to time of American Depositary
                Shares issued thereunder, and Exhibit A to Deposit Agreement, is
                incorporated herein by reference to Exhibit 4.0 filed with the
                Company's 1998 Form 10-K filed with the SEC.
   10.0*        Lincoln Park Lease Agreement by and between Metropolitan Life
                Insurance Company and the Company dated January 18, 1996, as
                amended, and assignment of interest to Speiker Properties, L.P.,
                is incorporated herein by reference to Exhibit 10.0 filed with
                the Company's 1997 Form 10-K filed with the SEC.
   10.1*        Office Building Lease by and between Nabarro Nathanson, D.J.
                Downing, J.M. Jones Properties Limited and the Company dated
                March 6, 1996 is incorporated herein by reference to Exhibit
                10.1 filed with the Company's 1997 Form 10-K filed with the SEC.
   10.2*        Commercial Lease by and between Foncierne Chaptal and the
                Company dated June 4, 1996 is incorporated herein by reference
                to Exhibit 10.2 filed with the Company's 1997 Form 10-K filed
                with the SEC.
   10.3*        1991 Stock Option Plan is incorporated herein by reference to
                Exhibit 10.2 filed with the Company's 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 the Company's 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 the Company's Registration Statement on
                Form F-1 filed with the SEC on September 20, 1994 (File No.
                33-83052).
   10.6*        1995 International Employee Stock Purchase Plan, amended, is
                incorporated herein by reference to Exhibit 4.2 filed with the
                Company's Registration Statement on Form S-8 filed with the SEC
                on August 3, 1999 (File No. 333-84341).
   10.7*        French Employee Savings Plan, as amended (English translation),
                is incorporated herein by reference to Exhibit 4.3 filed with
                the Company's Registration Statement on Form S-8 filed with the
                SEC on August 3, 1999 (File No. 333-84341).
   10.8*        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 the Company's Registration
                Statement on Form F-1 filed with the SEC on September 20, 1994
                (File No. 33-83052).
   10.9*        Stock subscription warrant for Albert Eisenstat is incorporated
                herein by reference to Exhibit 4.2 filed with the Company's
                Registration Statement on Form S-8 filed with the SEC on
                September 5, 1995 (File No. 333-96598).
   10.10*       Stock subscription warrant for Arnold Silverman is incorporated
                herein by reference to Exhibit 4.3 filed with the Company's
                Registration Statement on Form S-8 filed with the SEC on
                September 5, 1995 (File No. 333-96598).
   10.11*       Stock subscription warrant for Philippe Claude dated June 19,
                1997, is incorporated herein by reference to Exhibit 4.2 filed
                with the Company's Registration Statement on Form S-8 filed with
                the SEC on December 11, 1997 (File No. 333-42059).
   10.12*       Stock subscription warrant for Albert Eisenstat dated June 19,
                1997, is incorporated herein by reference to Exhibit 4.3 filed
                with the Company's Registration Statement on Form S-8 filed with
                the SEC on December 11, 1995 (File No. 333-42059).


                                       51
<PAGE>

  Exhibit
  Number        Description
  -----         -----------
  10.13*        Stock subscription warrant for Arnold Silverman dated June 19,
                1997, is incorporated herein by reference to Exhibit 4.4 filed
                with the Company's Registration Statement on Form S-8 filed with
                the SEC on December 11, 1995 (File No. 333-42059).
   10.14*       Stock subscription warrant for Vincent Worms dated June 19,
                1997, is incorporated herein by reference to Exhibit 4.5 filed
                with the Company's Registration Statement on Form S-8 filed with
                the SEC on December 11, 1995 (File No. 333-42059).
   10.15*       Value Added Reseller Agreement for Visigenics Products with
                Reseller Rights dated March 27, 1997, by and between the Company
                is incorporated herein by reference to Exhibit 10.16 with the
                Company's 1997 Form 10-K filed with the SEC.
   10.16*       Stock subscription warrant for Bernard Charles dated June 18,
                1998, is incorporated herein by reference to Exhibit 4.2 filed
                with the Company's Registration Statement on Form S-8 filed with
                the SEC on October 9, 1998 (File No. 333-65549).
   10.17*       Stock subscription warrant for Philippe Claude dated June 18,
                1998, is incorporated herein by reference to Exhibit 4.3 filed
                with the Company's Registration Statement on Form S-8 filed with
                the SEC on October 9, 1998 (File No. 333-65549).
   10.18*       Stock subscription warrant for Albert Eisenstat dated June 18,
                1998, is incorporated herein by reference to Exhibit 4.4 filed
                with the Company's Registration Statement on Form S-8 filed with
                the SEC on October 9, 1998 (File No. 333-65549).
   10.19*       Stock subscription warrant for Arnold Silverman dated June 18,
                1998, is incorporated herein by reference to Exhibit 4.4 filed
                with the Company's Registration Statement on Form S-8 filed with
                the SEC on October 9, 1998 (File No. 333-65549).
   10.20*       Stock subscription warrant for Vincent Worms dated June 18,
                1998, is incorporated herein by reference to Exhibit 4.5 filed
                with the Company's Registration Statement on Form S-8 filed with
                the SEC on October 9, 1998 (File No. 333-65549).
   10.21*       License, Distribution, and Marketing Agreement by and between
                the Company and Microsoft Corporation, dated June 23, 1998, is
                incorporated herein by reference to Exhibit 10.21 filed with the
                Company's 1998 Form 10-K filed with the SEC.
   10.22*       Stock subscription warrant for Vincent Worms dated May 4, 1999,
                is incorporated herein by reference to Exhibit 4.2 filed with
                the Company's Registration Statement on Form S-8 filed with the
                SEC on August 3, 1999 (File No. 333-84331).
   10.23*       1999 Stock Option Plan is incorporated herein by reference to
                Exhibit 4.4 filed with the Company's Registration Statement on
                Form S-8 filed with the SEC on August 3, 1999 (File No.
                333-84341).
   10.24*       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)
   10.25*       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 the
                Company's June 30, 2000 10-Q filed with the SEC.
   10.26*       1999 Stock Option Plan, as amended, is incorporated herein by
                reference to Exhibit 4.4 filed with the Company's Registration
                Statement on Form S-8 filed with the SEC on July 31, 2000 (File
                No. 333-42670).
   10.27*       1995 International Employee Stock Purchase Plan, as amended, is
                incorporated herein by reference to Exhibit 4.2 filed with the
                Company's Registration Statement on Form S-8 filed with the SEC
                on July 31, 2000 (File No. 333-42670).
   10.28*       French Employee Savings Plan, as amended, is incorporated herein
                by reference to Exhibit 4.3 filed with the Company's
                Registration Statement on Form S-8 filed with the SEC on July
                31, 2000 (File No. 333-42670).
   21.0         List of Subsidiaries of the Company.
   23.0         Consent of Ernst & Young, LLP, Independent Auditors.
   24.0         Power of Attorney is herein referenced to the signature page of
                this Annual Report on Form 10K.

                    ______________
* Previously filed.
+ Confidential treatment for portions of this exhibit has been requested.

                                       52
<PAGE>

                Schedule II: Valuation and Qualifying Accounts

     Schedule II: Valuation and Qualifying Accounts--Business Objects S.A.

<TABLE>
<CAPTION>
                                          Balance          Charged                            Balance
                                       at Beginning        to Costs                           at End
                                         of Period       and Expenses      Write-Offs        of Period
                                       ------------      ------------      ----------        ---------
Allowance for doubtful accounts:                                 (In thousands)
<S>                                     <C>              <C>                <C>              <C>
Year ending December 31, 1998           $  1,568         $     585          $   481           $  1,672
Year ending December 31, 1999           $  1,672         $     180          $   202           $  1,650
Year ending December 31, 2000           $  1,650         $   2,514          $   177           $  3,987
</TABLE>

                                       53