Exhibit 99.1

SAP INTERIM REPORT
JANUARY — JUNE 2004

SAP INTERIM REPORT
JANUARY — JUNE 2004

FORWARD-LOOKING STATEMENTS Any statements contained in the review of operations that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate”, “assume”, “believe”, “counting on”, “continue”, “estimate”, “expect”, “forecast”, “intend”, “is confident”, “may”, “plan”, “predict”, “project”, “should”, “target”, “wants”, “will” and “would” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the Company’s future financial results are discussed more fully in SAP’s filings with the U.S. Securities and Exchange Commission (SEC), including SAP’s most recent annual report on Form 20-F for 2003 filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

NON-GAAP MEASURES The quarterly report discloses certain financial measures, such as pro-forma EBITDA, pro-forma operating income and pro-forma expenses, pro-forma net income and pro-forma earnings per share (EPS). These measures are not prepared in accordance with generally accepted accounting principles and are therefore considered non-GAAP financial measures. The non-GAAP measures included in this annual report are reconciled to the nearest U.S. GAAP measure, as is required under SEC rules regarding the use of non-GAAP financial measures. However the non-GAAP measures should be considered in addition to, and not as a substitute for, or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with generally accepted accounting principles. The pro-forma measures used by SAP may be different from pro-forma measures used by other companies.

     Management believes that pro-forma EBITDA is a widely accepted supplemental measure of evaluating operating performance and liquidity among companies. Further management believes that pro-forma operating income, pro-forma expenses, pro-forma net income and pro-forma EPS provide supplemental meaningful information to the investor to fully assess the financial performance of our core operations. The pro-forma operating measures disclosed are the same SAP uses in its internal management reporting and as criteria for variable elements of management compensation.

     Eliminated expenses in pro-forma expenses, pro-forma operating income, pro-forma net income, and pro-forma EPS are defined as follows:

• Stock-based compensation includes expenses for stock-based compensation as defined under U.S. GAAP (STAR and LTI) as well as expenses related to the settlement of stock-based compensation plans in the context of mergers and acquisitions. Management excludes stock-based compensation expenses because SAP has no direct influence over the actual expense of these awards once the Company enters into stock-based compensation plans.

• Acquisition-related charges include amortization of intangible assets acquired in acquisitions.

• Impairment-related charges include other-than-temporary impairment charges on minority equity investments.

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SAP INTERIM REPORT
JANUARY — JUNE 2004

     Pro-forma expenses and pro-forma operating income reconcile to the nearest U.S. GAAP measure as follows:

RECONCILIATION 2ND QUARTER

			Stock-based		Acquisition-
in € million (unaudited)	U.S. GAAP		compensation		related charges		Pro-forma
2004
Cost of product		200		0		6		194
Cost of service		439		7		1		431
Research and development		261		9		0		252
Sales and marketing		400		6		0		394
General and administration		93		8		0		85
Operating income		391		30		7		428
2003
Cost of product		189		3		5		181
Cost of service		411		8		0		403
Research and development		241		11		1		229
Sales and marketing		358		9		0		349
General and administration		99		11		0		88
Operating income		340		42		6		388

RECONCILIATION SIX MONTHS ENDED JUNE 30

			Stock-based		Acquisition-
in € million (unaudited)	U.S. GAAP		compensation		related charges		Pro-forma
2004
Cost of product		382		0		11		371
Cost of service		840		10		1		829
Research and development		492		4		1		487
Sales and marketing		725		4		0		721
General and administration		174		5		0		169
Operating income		724		23		13		760
2003
Cost of product		373		3		11		359
Cost of service		844		8		0		836
Research and development		459		11		1		447
Sales and marketing		665		9		0		656
General and administration		173		11		0		162
Operating income		638		42		12		692

     A reconciliation of pro-forma net income, pro-forma EPS and pro-forma EBITDA figures is provided in the additional information to the consolidated income statements.

     In addition, management gives guidance based on non-GAAP financial measures as defined above. Management does not provide its guidance on operating margin and earnings per share based on GAAP measures because these measures include expenses like stock-based compensation, impairment-related charges, and acquisition-related charges. Management views these expenses as less meaningful in assessing the financial performance of SAP’s core operations, or they are factors outside management’s control, dependent on SAP’s share price or the share price of companies we acquire or in which we invest.

LISTINGS SAP AG ordinary shares are listed on the Frankfurt Stock Exchange as well as a number of other exchanges. In the United States, SAP’s American Depositary Receipts (ADRs), each worth one-fourth of an ordinary share, trade on the New York Stock Exchange under the symbol ‘SAP’. SAP is a component of the DAX, the index of 30 German blue chip companies.

     Information on the SAP ordinary shares is available on Bloomberg under the symbol SAP GR, on Reuters under SAPG.F and on Quotron under SAGR.EU. Additional information is available on SAP AG’s home page: www.sap.com.

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SAP INTERIM REPORT
JANUARY — JUNE 2004

ECONOMIC SITUATION 2ND QUARTER 2004

REVENUES Software revenues were €497 million (2003: €431 million), representing an increase of 15% compared to 2003. At constant currencies¹⁾, software revenues increased 17% year-over-year.

     Software revenues in the U.S. increased 63% to €140 million (2003: €86 million). At constant currencies¹⁾, software revenues in the U.S. increased 70% year-over-year.

     Total revenues were €1.8 billion (2003: €1.6 billion), which was an increase of 9% compared to 2003. At constant currencies¹⁾, total revenues increased 11% year-over-year.

INCOME Operating income was €391 million (2003: €340 million), which was an increase of 15% compared to last year. Pro forma operating income was €428 million (2003: €388 million), representing an increase of 10% compared to 2003.

     The operating margin was 22%, which was up one percentage point year-over-year. The pro forma operating margin was 24%, which represented the same level as 2003.

     Net income was €249 million (2003: €219 million), or €0.80 per share (2003: €0.71 per share), representing an increase of 14% compared to 2003. Pro forma net income was €273 million (2003: €253 million), or pro forma €0.87 per share (2003: €0.81 per share), representing an increase of 8% compared to 2003.

PEER GROUP SHARE With approximately $600 million in software revenues on a quarter-end U.S. dollar exchange rate basis, SAP continued to gain worldwide share against its peer group. On a rolling four quarter basis, the Company’s worldwide share against its peer group (defined as SAP and the four companies mentioned in footnote²⁾ based on software revenues was 55% at the end of the second quarter of 2004 compared to 51% at the end of the second quarter of 2003.

     On a rolling four quarter basis, the Company’s U.S. share against its peer group (defined as SAP and the four companies mentioned in footnote³⁾ based on software revenues was 37% at the end of the second quarter of 2004 compared to 29% at the end of the second quarter of 2003.

REGIONAL PERFORMANCE The Americas region, specifically the U.S., continued to be the growth driver for SAP in the second quarter. Software revenues in the U.S. increased 63% year-over-year, but at constant currencies¹⁾ U.S. software revenues were 70% higher. The Company believes that it continued to significantly outperform its U.S. based peer group in the U.S. In the EMEA region, the Company is experiencing a slow, but stable recovery as demonstrated by the 2% increase (1% at constant currencies¹⁾) in software revenues for the second quarter. Germany trended upward from the first quarter to the second quarter with a strong 10% year-over-year growth in software revenues. The APA region reported a 19% increase (17% at constant currencies¹⁾) in software revenues for the second quarter with another quarter of solid growth coming from the emerging market countries of China and India. Japan, like EMEA, saw a better performance in the second quarter indicating some stabilization in that country. Software revenues in Japan grew 8% (5% at constant currencies¹⁾) compared to the second quarter of 2003.

ECONOMIC SITUATION FOR THE SIX MONTHS ENDED JUNE 30

REVENUES Six month software revenues were €867 million (2003: €783 million), representing an increase of 11% compared to the same period in 2003. At constant currencies¹⁾, software revenues increased 14% for the six month period.

     Total revenues for the first half of 2004 were €3.3 billion (2003: €3.2 billion), which was an increase of 6% compared to 2003. At constant currencies¹⁾, total revenues increased 9% for the first half.

INCOME Operating income for the six month period was €724 million (2003: €638 million), which was an increase of 13% compared to the same period last year. Pro forma operating income was €760 million (2003: € 692 million), representing an increase of 10% compared to 2003.

     The operating margin for the first half of 2004 was 22%, which was up 2 percentage points compared to the first half of 2003. The pro forma operating margin for the six month period was 23%, which represented an increase of 1 percentage point compared to the same period in 2003.

     Net income for the 2004 six month period was €478 million (2003: €405 million), or €1.54 per share (2003: €1.31 per share), representing an increase of 18% compared to the 2003 six month period. Pro forma net income was €502 million (2003: €453 million), or pro forma €1.61 earnings per share (2003: €1.45 per share), representing an increase of 11% compared to 2003.

CASH FLOW Operating cash flow was €1.2 billion (2003: €804 million), which was an increase of 45% compared to last year. At June 30, 2004, the Company had €2.8 billion in liquid assets (June 30, 2003: €1.8 billion), representing a 55% increase compared to last year.

1)	Constant currency data excludes the impact of currency exchange rates.
2)	Beginning in the first quarter of 2004, the Company’s peer group changed, better reflecting what SAP believes it to be its peer group of major global business applications providers. Worldwide share of what SAP considers to be its peer group of Microsoft Corp. (Business Solutions segment only), Oracle Corp. (business applications only), PeopleSoft, Inc. and Siebel Systems, Inc. is based on comparable software revenues in U.S. dollars (for vendors that did not yet announce or pre-announce software revenues, analyst estimates were used). SAP’s results have been converted into U.S. dollars. Until the end of 2003, SAP considered its peer group to be i2 Technologies, Inc., Oracle Corp. (business applications only), PeopleSoft, Inc. and Siebel Systems, Inc. Based on the peer group used in 2003, SAP’s share would have been 61% in the second quarter of 2004.
3)	Beginning in the first quarter of 2004, the Company’s peer group changed, better reflecting what SAP believes it to be its peer group of major global business applications providers. U.S. share of what SAP considers to be its peer group of Microsoft Corp. (business solutions segment only), Oracle Corp. (business applications only), PeopleSoft, Inc. and Siebel Systems, Inc. is based on comparable U.S. software revenues in U.S. dollars (for vendors that did not yet announce or pre-announce software revenues, analyst estimates were used, and for some vendors U.S. software revenues are estimated). SAP’s results have been converted into U.S. dollars. Until the end of 2003, SAP considered its peer group to be i2 Technologies, Inc., Oracle Corp. (business applications only), PeopleSoft, Inc. and Siebel Systems, Inc. Based on the peer group used in 2003, SAP’s share would have been 42% in the second quarter of 2004.

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SAP INTERIM REPORT
JANUARY — JUNE 2004

KEY FIGURES AT A GLANCE SAP GROUP

					Change		Change
in € millions (unaudited)	Q2 2004		Q2 2003		total		in %
Revenues		1,781		1,638		143		9
Software revenues		497		431		66		15
Income before taxes		391		347		44		13
Net income		249		219		30		14
Headcount, in FTE (June 30)		30,945		28,961		1,984		7

REVENUE BY REGION SAP GROUP

					Change		Change
in € millions (unaudited)	Q2 2004		Q2 2003		total		in %
Total		1,781		1,638		143		9
— at constant currency rates								11
EMEA		994		942		52		6
— at constant currency rates								5
Americas		578		506		72		14
— at constant currency rates								21
Asia Pacific		209		190		19		10
— at constant currency rates								9

RESEARCH AND DEVELOPMENT

     SAP’s success depends on delivering innovative solutions that truly improve customers’ business processes. That is why continued development of its solution offerings was again the Company’s trump card in 2004. SAP has resolved not to allow any cost-containment measures to jeopardize its strength as an innovator. R&D expenses (excluding expenses for stock-based compensation and acquisition-related charges) increased 9% to €487 million in the first halfyear 2004 (Q2 2004: €252 million) compared to €447 million of the first halfyear 2003 (Q2 2003: €229 million) despite the Company’s pursuit of operating margin improvement.

     Underscoring SAP’s commitment to development, the portion of its total revenue that the Company spent on R&D (excluding expenses for stock-based compensation and acquisition-related charges) rose to 14.6% (H1 2003: 14.2%) and, measured in full time equivalents, the number of employees working in development teams rose in H1 2004 to 9,269 (H1 2003: 8,391).

BUSINESS OUTLOOK

     SAP has not changed its outlook for 2004, which is as follows:

     Software revenues are expected to increase by around 10% compared to 2003.

     The pro forma operating margin, which excludes stock-based compensation and acquisition-related charges, is expected to increase by around one percentage point compared to 2003.

     Pro forma earnings per share, which excludes stock-based compensation, acquisition-related charges and impairment-related charges, are expected to be in the range of €4.20 to €4.30 per share.

     The outlook is based on an assumed U.S. Dollar to Euro exchange rate of $1.25 per €1.00.

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SAP INTERIM REPORT
JANUARY — JUNE 2004

SECOND QUARTER HIGHLIGHTS

IN THE SECOND QUARTER, SAP DEMONSTRATED STRONG MOMENTUM, ANNOUNCING MAJOR DEALS IN ALL KEY REGIONS These included in the Americas: Adobe System, Citrix, Massachusetts Mutual Life Insurance, and Pepsi Co (all in the US), Petroflex Industria e Comercia (Brazil); in EMEA: Akzo Nobel (Netherlands), Swarovski (Austria), Thyssen Krupp, and Vodafone (Germany), Yves Rocher (France), Mediaset (Italy), and South African Post Office (South Africa); and in Asia Pacific: NEC Micro Systems, Cosmo Oil, Yokohama Rubber (all Japan), National Australian Bank (Australia), Hyundai Heavy Industries (Korea), Shanghai Municipal Electric Power (China), and Jet Airways and Tata Motors (both India).

SAP HOSTED ITS ANNUAL SAPPHIRE CONFERENCES IN NORTH AMERICA (NEW ORLEANS), AUSTRALIA (BRISBANE) AND JAPAN (TOKYO) The conferences attracted in total more than ten thousand customers, prospects, and partners, and served as forums in which SAP presented new products and developments. SAP’s NetWeaver integration and applications platform was a focal point at the SAPPHIRE conferences this year. During SAPPHIRE in New Orleans, SAP introduced new adaptive computing capabilities for NetWeaver. The new functionalities are designed to help customers leverage existing investments, drive enhanced customer efficiencies and improve flexibility.

SAP AND IBM ANNOUNCED A MAJOR RETAIL PARTNERSHIP IN MAY DURING THE SAPPHIRE CONFERENCE IN NEW ORLEANS The deal is an expansion of a global strategic alliance aimed at enabling leading retailers to strategically transform their businesses to meet rapidly changing consumer demands and global competition. SAP and IBM jointly agreed to promote the end-to-end retail offering comprised of SAP and IBM retail solutions and technologies, leveraging in particular IBM store capabilities and SAP retail business solutions.

SAP AND MICROSOFT ALSO ANNOUNCED A SIGNIFICANT EXPANSION OF THEIR LONG-STANDING RELATIONSHIP DURING SAPPHIRE IN NEW ORLEANS The partnership is based on a shared commitment to Web services as the foundation for the next generation of enterprise software. The two companies detailed a road map for deeper integration between Microsoft .NET and SAP NetWeaver, the companies’ respective strategic platform initiatives, allowing customers to get more out of business-critical SAP applications and technologies running in collaboration with Microsoft .NET. The jointly developed solutions will greatly enhance access to SAP NetWeaver functionality for developers using Microsoft Visual Studio .NET and will increase the interoperability between SAP solutions and the Microsoft Office System.

SAP ACQUIRED A2I, INC., a privately held software company, to broaden master data management capabilities of the SAP NetWeaver open integration and applications platform. The acquisition was part of SAP’s continuing strategy to identify and acquire businesses that can enhance SAP’s ability to deliver the most innovative suite of products available, helping customers address specific business challenges for competitive advantage.

6

CONSOLIDATED INCOME STATEMENTS SAP GROUP 2ND QUARTER

					Change
in € millions | (unaudited)	2004		2003		in %
Software revenue		497		431		15
Maintenance revenue		698		633		10
Product revenue		1,195		1,064		12
Consulting revenue		487		479		2
Training revenue		78		75		4
Service revenue		565		554		2
Other revenue		21		20		5
Total revenue		1,781		1,638		9
Cost of product		-200		-189		6
Cost of service		-439		-411		7
Research and development		-261		-241		8
Sales and marketing		400		-358		12
General and administration		-93		-99		-6
Other income/expenses, net		3		0		n. a.
Total operating expense		-1,390		-1,298		7
Operating income		391		340		15
Other non-operating income/expenses, net		-11		2		-650
Financial income, net		11		5		120
Income before income taxes		391		347		13
Income taxes		-141		-127		11
Minority interest		-1		-1		0
Net income		249		219		14
Basic earnings per share (in €)		0.80		0.71		14

CONSOLIDATED INCOME STATEMENTS SAP GROUP SIX MONTHS ENDED JUNE 30

					Change
in € millions | (unaudited)	2004		2003		in %
Software revenue		867		783		11
Maintenance revenue		1,364		1,241		10
Product revenue		2,231		2,024		10
Consulting revenue		929		955		-3
Training revenue		148		152		-3
Service revenue		1,077		1,107		-3
Other revenue		29		27		7
Total revenue		3,337		3,158		6
Cost of product		-382		-373		2
Cost of service		-840		-844		0
Research and development		-492		-459		7
Sales and marketing		-725		-665		9
General and administration		-174		-173		1
Other income/expenses, net		0		-6		-100
Total operating expense		-2,613		-2,520		4
Operating income		724		638		13
Other non-operating income/expenses, net		-6		12		-150
Financial income, net		37		8		363
Income before income taxes		755		658		15
Income taxes		-274		-250		10
Minority interest		-3		-3		0
Net income		478		405		18
Basic earnings per share (in €)		1.54		1.31		18

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SAP INTERIM REPORT
JANUARY — JUNE 2004

CONSOLIDATED BALANCE SHEETS SAP GROUP

					Change
in € millions (unaudited)	06/30/2004		12/31/2003		in %
Assets
Intangible assets		538		421		28
Property, plant and equipment		1,016		1,020		0
Financial assets		167		168		- 1
Fixed assets		1,721		1,609		7
Accounts receivables		1,534		1,771		- 13
Inventories and other assets		491		516		- 5
Liquid assets/marketable securities		2,766		2,097		32
Current assets		4,791		4,384		9
Deferred taxes		226		265		- 15
Prepaid expenses		163		68		140
Total assets		6,901		6,326		9
Shareholders’ equity and liabilities
Shareholders’ equity		3,955		3,709		7
Minority interest		21		59		64
Reserves and accrued liabilities		1,444		1,567		- 8
Other liabilities		624		686		- 9
Deferred income		857		305		181
Total shareholders’ equity and liabilities		6,901		6,326		9
Days sales outstanding		74		16

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

									Other
	Subscribed		Treasury		Additional		Retained		comprehensive		Total
in € millions (unaudited)	capital		stock		paid-in capital		earnings		income/loss		equity
01/01/2003		315		- 373		185		2,871		- 126		2,872
Net income								405				405
Dividends paid								- 186				- 186
Change in treasury stock				- 71								- 71
Currency translation adjustment								- 68		- 68
Unrealized gains on marketable securities										13		13
Unrealized gains on cash flow hedges										11		11
Stock-based compensation						35						35
Convertible bonds & stock options exercised						3						3
Other changes						- 1				1		0
06/30/2003		315		- 444		222		3,090		- 169		3,014
01/01/2004		315		- 462		297		3.761		- 202		3,709
Net income								478				478
Dividends paid								- 249				- 249
Change in treasury stock				- 20								- 20
Currency translation adjustment										34		34
Unrealized losses on marketable securities										- 5		- 5
Unrealized losses on cash flow hedges										- 13		- 13
Unrealized losses on STAR hedges										- 4		- 4
Stock-based compensation						- 2						- 2
Convertible bonds & stock options exercised		1				18						19
Other changes						5		3				8
06/30/2004		316		- 482		318		3,993		- 190		3,955

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CONSOLIDATED STATEMENTS OF CASH FLOWS SAP GROUP SIX MONTHS ENDED JUNE 30

in € millions (unaudited)	2004		2003
Net income		478		405
Minority interest		3		3
Net income before minority interest		481		408
Depreciation and amortization		100		102
Gains on disposal of property, plant and equipment and marketable equity securities, net		- 12		0
Write-downs of financial assets, net		4		11
Impacts of hedging		- 11		3
Change in accounts receivable and other assets		301		344
Change in deferred stock compensation		- 2		35
Change in reserves and liabilities		- 115		- 554
Change in deferred taxes		- 34		36
Change in other current assets		- 100		- 52
Change in deferred income		552		471
Net cash provided by operating activities		1,164		804
Acquisition of minorities in subsidiaries		- 156		- 9
Purchase of intangible assets and property, plant and equipment		- 89		- 96
Purchase of financial assets		- 27		- 8
Proceeds from disposal of fixed assets		42		16
Change in liquid assets (maturities greater than 90 days) and marketable securities		149		- 226
Net cash used in investing activities		- 81		- 323
Dividends paid		- 249		- 186
Change in treasury stock		- 20		- 71
Change in bonds, net		18		2
Other changes to additional paid-in-capital		5		- 1
Proceeds from line of credit and long-term debt		6		122
Effect of STAR-hedge		- 43		- 9
Net cash used in financing activities		- 283		- 143
Effect of foreign exchange rates on cash		18		- 21
Net change in cash and cash equivalents		818		317
Cash and cash equivalents at the beginning of the period		1,340		1,122
Cash and cash equivalents at the end of the period		2,158		1,439

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SAPINTERIM REPORT
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CONSOLIDATED INCOME STATEMENTS SAP GROUP 2ND QUARTER

Additional information

							Change
in € millions (unaudited)	2004			2003			in %
Pro-forma EBITDA reconciliation
Net income		249			219			14
Minority interest		1			1			0
Income taxes		141			127			11
Net income before income taxes		391			347			13
Financial income, net		-11			-5			120
Other non-operating income/expenses, net		11			-2			-650
Operating income		391			340			15
Depreciation & amortization		51			52			-2
Pro-forma EBITDA		442			392			13
as a % of sales		25	%		24	%
Pro-forma operating income reconciliation
Operating income		391			340			15
LTI/STAR		29			41			-29
Settlement of stock-based compensation programs		1			1			0
Total stock-based compensation		30			42			-29
Acquisition-related charges		7			6			17
Pro-forma operating income excluding stock-based compensation & acquisition-related charges		428			388			10
Finance income		11			5			120
thereof impairment-related charges		0			-2			-100
Income before income taxes		391			347			13
Income taxes		141			127			11
Effective tax rate		36	%		37	%
Pro-forma net income reconciliation
Net income		249			219			14
Stock-based compensation, net of tax		20			29			-31
Acquisition-related charges, net of tax		4			3			33
Impairment-related charges, net of tax		0			2			-100
Pro-forma net income excluding stock-based compensation, acquisition-related charges, and impairment-related charges		273			253			8
Pro-forma EPS reconciliation
Earnings per share (in €)		0.80			0.71			14
Stock-based compensation		0.06			0.09			-31
Acquisition-related charges		0.01			0.01			33
Impairment-related charges		0.00			0.00			-100
Pro-forma EPS excluding stock-based compensation, acquisition-related charges and impairment-related charges (in €)		0.87			0.81			8
Weighted average number of shares (in thousands)		310,888			310,580

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SAP INTERIM REPORT
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CONSOLIDATED INCOME STATEMENTS SAP GROUP SIX MONTHS ENDED JUNE 30

Additional information

							Change
in € millions (unaudited)	2004			2003			in %
Pro-forma EBITDA reconciliation
Net income		478			405			18
Minority interest		3			3			0
Income taxes		274			250			10
Net income before income taxes		755			658			15
Financial income, net		-37			-8			363
Other non-operating income/expenses, net		6			-12			-150
Operating income		724			638			13
Depreciation & amortization		100			102			-2
Pro-forma EBITDA		824			740			11
as a % of sales		25	%		23	%
Pro-forma operating income reconciliation
Operating income		724			638			13
LTI/STAR		22			40			-45
Settlement of stock-based compensation programs		1			2			-50
Total stock-based compensation		23			42			-45
Acquisition-related charges		13			12			8
Pro-forma operating income excluding stock-based compensation & acquisition-related charges		760			692			10
Finance income		37			8			363
thereof impairment-related charges		-1			-12			-92
Income before income taxes		755			658			15
Income taxes		274			250			10
Effective tax rate		36	%		38	%
Pro-forma net income reconciliation
Net income		478			405			18
Stock-based compensation, net of tax		15			29			-48
Acquisition-related charges, net of tax		8			7			14
Impairment-related charges, net of tax		1			12			-92
Pro-forma net income excluding stock-based compensation, acquisition-related charges, and impairment-related charges		502			453			11
Pro-forma EPS reconciliation
Earnings per share (in €)		1.54			1.31			18
Stock-based compensation (in €)		0.05			0.09			-48
Acquisition-related charges (in €)		0.02			0.02			14
Impairment-related charges (in €)		0.00			0.03			-92
Pro-forma EPS excluding stock-based compensation, acquisition-related charges and impairment-related charges (in €)		1.61			1.45			11
Weighted average number of shares (in thousands)		310,895			310,848

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GENERAL The consolidated financial statements of the SAP Aktiengesellschaft Systeme, Anwendungen, Produkte in der Datenverarbeitung (“SAP AG”), together with its subsidiaries (collectively, “SAP,” the “Group”, or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The quarterly financial statements comprise an abbreviated profit and loss statement, balance sheet, cash flow statement and development of equity statement. The interim financial statements as per June 30, 2004 were prepared in accordance with the same accounting and measurement principles as those applied in the consolidated financial statements as per December 31, 2003, outlined in detail in the notes to those financial statements. For further information, refer to the Company’s Annual Report on Form 20-F for 2003 filed with the SEC.

CONDENSED NOTES TO CONSOLIDATED INCOME STATEMENTS AND BALANCE SHEETS — UNAUDITED

Scope of Consolidation The following table summarizes the change in the number of companies included in the consolidated financial statements:

Number of companies consolidated in the financial statements

	German		Foreign		Total
12/31/2003		21		75		96
Additions		—		—		—
Disposals		2		—		2
03/31/2004		19		75		94
Additions		—		—		—
Disposals		1		—		1
06/30/2004		18		75		93

     As of June 30, five companies, in which SAP directly holds between 20% and 50% of the voting rights or has the ability to exercise significant influence over the operating and financial policies (“associated companies”), are accounted for using the equity method.

     The impact of changes in the scope of companies included in the consolidated financial statements has an immaterial effect on the comparability of the consolidated financial statements presented.

Stock-based Compensation SFAS 123 requires disclosure of pro-forma information regarding net income and earnings per share as if the Company had accounted for its stock-based awards granted to employees using the fair value method. The fair value of the Company’s stock-based awards was estimated as of the date of grant using the Black-Scholes option-pricing model.

     The fair value of the Company’s stock-based awards granted in the first quarter of 2004 under SAP SOP 2002 amounts to €43.61 per option and was calculated using the following assumptions:

Expected life (in years)	2.5
Risk free interest rate	2.65	%
Expected volatility	56.7	%
Expected dividends	0.45	%

The following table illustrates the effect on net income if the fair-value-based method had been applied to all granted awards in each period.

Net income

	Q2		H1		Q2		H1
in € millions	2004		2004		2003		2003
As reported		249		478		219		405
Add/Minus: Expense for stock-based compensation, net of tax according to APB 254)		20		15		28		27
Minus: Expense for stock-based compensation, net of tax according to FAS 123		51		98		51		93
Pro forma		216		395		196		339

Earnings per share

	Q2		H1		Q2		H1
in €	2004		2004		2003		2003
Basic — as reported		0.80		1.54		0.71		1.31
Diluted — as reported		0.80		1.53		0.70		1.31
Basic — pro-forma		0.69		1.27		0.63		1.09
Diluted — pro-forma		0.69		1.27		0.63		1.09

     Convertible bonds and stock options granted to employees under SAP’s stock-based compensation programs are included in the diluted earnings per share calculations to the extent they have a dilutive effect. The dilutive impact is calculated using the treasury stock method. The number of outstanding awards as of June 30, 2004 amounts to approximately 15 million. For further information to our stock-based compensation plans we refer to our annual report 2003 on Form 20-F filed with the SEC.

Subscribed Capital At June 30, 2004, SAP AG had 315,958,537 no-par ordinary shares issued with a calculated nominal value of €1 per share.

     In the first half of the year the number of ordinary shares increased by 544,984 (Q2: 473,120), representing €544,984 (Q2: €473,120) resulting from the exercise of awards granted under certain stock-based compensation programs.

4) Expenses related to the settlement of stock-based compensation plans in the context of mergers and acquisitions are not included.

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SAP INTERIM REPORT
JANUARY — JUNE 2004

Treasury Stock As of June 30, 2004, SAP had acquired 4,679 thousand of its own shares, representing €4,679 thousand or 1.5% of capital stock. In the first half of the year 2004 453 thousand (Q2: 406 thousand) shares were acquired under the buyback program at an average price of approximately €128.18 (Q2: 127.74) per share, representing €453 thousand (Q2: €406 thousand) or 0.14% (Q2: 0,12%) of capital stock. Although treasury stock is legally considered to be outstanding, SAP has no dividend or voting rights associated with treasury stock.

     Included in the above acquisitions are 115 thousand (Q2: 68 thousand) of its own ordinary shares, representing €115 thousand (Q2: 38 thousand) or 0.04% (Q2: 0,02%) of capital stock at an average market price of €130.40 (Q2: €129.32) per share in conjunction with employee discounted stock purchase programs. Such shares were transferred to employees during the year at an average price of €87.16 (Q2: €84.04) per share.

     In the first six months of the year certain of SAP AG’s North American subsidiaries purchased an additional 161 thousand (Q2: 58 thousand) ADRs at an average price of US$40.69 per ADR (Q2: US$39.58). Each ADR represents one-fourth of an ordinary share. Such ADRs were distributed to employees at an average price of US$34.62 (Q2: US$33.98) per ADR by an administrator. The Company held no ADRs at June 30, 2004.

SEGMENT INFORMATION Effective January 1, 2004 all cross-charging within SAP (intra-company and inter-company) was changed from an average market rate to a fully loaded cost rate. The objective of this new methodology is to enhance the utilization of SAP’s internal resources. The adoption of this new methodology resulted in lower internal revenues and costs. Simultaneously, the reporting of internal revenues was adjusted. Revenues related to transactions with other parts of the Company are no longer reported as internal revenues, but rather as a reduction of costs. In addition, the calculation of the segment contribution was changed. Acquisition related charges are not part of segment costs but are shown separately. The Company’s segment disclosure for 2003 was revised to conform to the current period presentation.

     The segment information for the periods presented are as follows:

Q2 2004

in € millions	Product			Consulting			Training			Total
External revenue		1,231			470			80			1,781
Segment expenses		-544			-364			-51			-959
Segment contribution		687			106			29			822
Segment profitability		55.8	%		22.6	%		36.3	%

Q2 2003

in € millions	Product			Consulting			Training			Total
External revenue		1,091			463			78			1,632
Segment expenses		-448			-353			-57			-858
Segment contribution		643			110			21			774
Segment profitability		58.9	%		23.8	%		26.9	%

H1 2004

in € millions	Product			Consulting			Training			Total
External revenue		2,285			899			151			3,335
Segment expenses		-996			-698			-99			-1.793
Segment contribution		1,289			201			52			1,542
Segment profitability		56.4	%		22.4	%		34.4	%

H1 2003

in € millions	Product			Consulting			Training			Total
External revenue		2,058			923			160			3,141
Segment expenses		-864			-728			-117			-1.709
Segment contribution		1,194			195			43			1,432
Segment profitability		58.0	%		21.1	%		27.5	%

     The following table presents a reconciliation of total segment revenues to total consolidated revenues as reported in the consolidated statements of income:

	Q2		H1		Q2		H1
in € millions	2004		2004		2003		2003
Total revenue for reportable segments		1,781		3,335		1,632		3,141
Other external revenues		0		2		6		17
		1,781		3,337		1,638		3,158

     The following table presents a reconciliation of total segment contribution to income before income taxes as reported in the consolidated statements of income:

	Q2		H1		Q2		H1
in € millions	2004		2004		2003		2003
Total contribution for reportable segments		822		1.542		774		1.432
Contribution from activities outside the reportable segments		-394		-782		-386		-740
Stock-based compensation expenses		-30		-23		-42		-42
Acquisitions related charges		-7		-13		-6		-12
Other differences		0		0		0		0
Operating income		391		724		340		638
Other non-operating income/expenses, net		-11		-6		2		12
Finance income, net		11		37		5		8
Income before income taxes		391		755		347		658

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Geographic Information The following tables present a summary of operations by geographic region. The amounts for sales by destination are based on consolidated data which reconciles to the Consolidated Statements of Income. Income before income tax is based on unconsolidated data.

Income before income taxes

	Q2		H1		Q2		H1
in € millions	2004		2004		2003		2003
Germany		236		760		322		778
Rest of EMEA5)		55		121		67		117
Total EMEA		291		881		389		895
United States		31		94		17		47
Rest of America		-7		-4		4		10
Total America		24		90		21		57
Japan		-1		9		7		19
Rest of Asia-Pacific		19		33		10		10
Total Asia-Pacific		18		42		17		29
		333		1,013		427		981

Sales by destination

	Q2		H1		Q2		H1
in € millions	2004		2004		2003		2003
Germany		419		773		414		755
Rest of EMEA5)		575		1.092		545		1,041
Total EMEA		994		1,865		959		1,796
United States		468		865		385		772
Rest of America		110		213		108		202
Total America		578		1,078		493		974
Japan		93		183		89		202
Rest of Asia-Pacific		116		211		97		186
Total Asia-Pacific		209		394		186		388
		1,781		3,337		1,638		3,158

Employees by region

in full time equivalents	06/30/2004		06/30/2003
Germany		13,304		12,633
Rest of EMEA5)		6,904		6,746
Total EMEA		20,208		19,379
United States		4,919		4,659
Rest of America		1,483		1,438
Total America		6,402		6,097
Japan		1,378		1,324
Rest of Asia-Pacific		2,957		2,161
Total Asia-Pacific		4,335		3.485
		30,945		28,961

Other Segment Information

Six months software revenue by solution SAP group⁶⁾

	Q2		Q1
in € millions (unaudited)	2004		2004
ERP		205		156
SCM		107		81
CRM		110		71
SRM		27		24
PLM		29		31
Other		19		7
Total software revenue		497		370

Employees

					Absolute
in full time equivalents	06/30/2004		03/31/2004		change
Research & Development		9,269		9,060		209
Service & Support		13,139		12,759		380
Sales & Marketing		5,374		5,246		128
General & Administration		3,163		3,101		62
SAP Group		30,945		30,166		779

5)

Europe/Middle East/Africa

6)

These figures include revenues from designated solution contracts, as well as figures from integrated solution contracts, which are allocated based on usage surveys provided by SAP’s customers. Beginning in 2004, the Company changed its usage surveys for determining software revenues by solution. The usage surveys no longer include certain technology components, including BI and Portals since all technology components are now integrated with SAP NetWeaver. No prior comparable figures are available using the new method. For prior years’ information under the old method, please refer to SAP’s annual report on Form 20F.

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FINANCIAL CALENDAR

2004
OCTOBER 21
Preliminary figures for Q3 2004
telephone conference

2005
JANUARY 26
Figures for fiscal year 2004
press, analyst, and telephone conference

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Telephone	+49 / 6227 / 7-47474
Telefax	+49 / 6227 / 7-57575
Internet	www.sap.com
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INFORMATION ABOUT CONTENT:

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OVERALL RESPONSIBILITY:
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Investor Relations
 

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