8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

July 28, 2005

Date of Report (Date of Earliest Event Reported)

BUSINESS OBJECTS S.A.

(Exact name of Registrant as specified in its charter)

Republic of France	0-24720	98-0355777
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

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

(Address of principal executive offices)

(408) 953-6000

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[   ]   Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[   ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[   ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[   ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02 Results of Operations and Financial Condition.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURE
EXHIBIT INDEX
EXHIBIT 99.1

Item 2.02 Results of Operations and Financial Condition.

     The information provided under Item 2.02 in this Current Report on Form 8-K and the Exhibit attached hereto is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

     On July 28, 2005, Business Objects S.A. (the “Company”) issued a press release and is holding a conference call announcing its financial results for the three and six months ended June 30, 2005. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

     The Company is making reference to non-GAAP financial information in both the press release and on the conference call. A reconciliation of non-GAAP financial measures contained in the press release to the comparable US GAAP financial measures is contained in the attached press release and a reconciliation of this and other non-GAAP financial information provided on the conference call is contained on the Company’s Investor Relations web page at www.businessobjects.com.

Item 9.01 Financial Statements and Exhibits.

Exhibit Number	Description
99.1	Press release dated July 28, 2005.

2

SIGNATURE

     Pursuant to the requirements 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 hereunto duly authorized.

Date: July 28, 2005

BUSINESS OBJECTS S.A.
By:	/s/ James R. Tolonen
	James R. Tolonen
	Chief Financial Officer and Senior Group Vice President

3

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release dated July 28, 2005.

4

EX-99.1

Exhibit 99.1

BUSINESS OBJECTS REPORTS SECOND QUARTER 2005
RESULTS

Total Revenues Up 18 Percent Year over Year
BusinessObjects XI^TM Revenues More Than Triple from prior Quarter
Full Year Guidance Raised

San Jose, California; Paris, France – July 28, 2005 – Business Objects (Nasdaq: BOBJ; Euronext Paris ISIN code FR0004026250 — BOB), the world’s leading provider of business intelligence (BI) solutions, today announced results for the second quarter ended June 30, 2005.

For the second quarter of 2005, the company reported total revenues of $262.4 million, an increase of 18 percent year over year. US GAAP diluted earnings per share were $0.25 and non-GAAP diluted earnings per share were $0.32 in the second quarter of 2005. The US GAAP and non-GAAP diluted earnings per share exceeded the high end of the company’s guidance for the quarter of US GAAP $0.20 to $0.22 per share and non-GAAP $0.26 to $0.28 per share.

Operating income improved significantly on both a US GAAP and non–GAAP basis during the second quarter of 2005. On a US GAAP basis, income from operations was $34.9 million or 13 percent of total revenues, up 91 percent year over year. On a non-GAAP basis, income from operations was $43.9 million or 17 percent of total revenues, up 51 percent from the second quarter of 2004.

All figures referred to herein are stated in US Dollars unless otherwise indicated. Second quarter 2005 non-GAAP results as defined in the section “Use of Non-GAAP Financial Measures” below differ from results measured under US GAAP as they exclude $7.9 million of amortization of intangible assets and $1.1 million of deferred stock-based compensation expense, all primarily associated with the acquisition of Crystal Decisions. Reconciliations of US GAAP to non- GAAP results are included at the end of this press release.

“Second quarter results highlight our momentum since the launch of BusinessObjects XI,” said Bernard Liautaud, chairman and chief executive officer. “The newest release of our flagship product suite has allowed us to develop strategic relationships with more customers, increasing license deals over $1 million to 13 in the quarter. We accelerated revenue growth across all major geographies, with particularly strong success in the Americas, up 19 percent year over year. At the same time, we have been focusing on operating income which increased 91 percent in the quarter versus the second quarter of last year.”

“Going forward,” Liautaud continued, “we remain focused on our core strategy of expanding our footprint in the enterprise, leveraging our strength in the mid market and growing performance management across new markets. We believe that our planned acquisition of SRC Software, Inc. fits well with these three objectives and with our ultimate goal of driving increased standardization of Business Objects.”

Business Objects Reports Second Quarter 2005 Results
Page 2

Large Deals Increase Versus the Previous Year

• There were 13 transactions over $1 million in license revenues in the second quarter, up from 8 transactions over $1 million in the year ago quarter.

• Notable customer wins included Australia Post, FedEx Corp., ING Nederland N.V., Ministère de l’Economie, des Finances et de l’Industrie (French Ministry of Economy, Finance and Industry) and U.S. General Services Administration (GSA), many of which were driven by BusinessObjects XI.

All Major Geographies Reported Double Digit Growth

• Revenues in the Americas reached $123.6 million in the second quarter of 2005, up 19 percent year over year with 7 transactions over $1 million in license revenue.

• Revenues in EMEA (Europe, Middle East, and Africa) totaled $116.5 million, up 17 percent year over year (up 11 percent at 92.2 million in Euros), with 6 transactions over $1 million in license revenues.

• Revenues in Asia Pacific, including Japan, rose to $22.3 million, up 21 percent year over year.

Software License and Services Revenues up Year Over Year

• Software license revenues totaled $124.9 million in the second quarter of 2005, up 7 percent year over year.

• The company reported growth in each major product area, with 36 percent growth year over year in Enterprise Performance Management Applications.

• Sales of core business intelligence products including query, reporting and analysis resulted in $109.3 million in license revenues, representing 88 percent of total license revenues.

• Enterprise Performance Management Applications reached $8.9 million in license revenues, representing 7 percent of total license revenues.

• Data Integration products reached $6.7 million in license revenues, representing 5 percent of total license revenues.

• Services revenues totaled $137.5 million in the second quarter, up 31 percent year over year.

Earnings per Share Up Year over Year

• On a US GAAP basis, operating income was $34.9 million in the second quarter of 2005, up 91 percent year over year, representing a US GAAP operating margin of 13 percent. In the second quarter, US GAAP net income was $23.1 million and US GAAP diluted earnings per share were $0.25 per share.

• On a non-GAAP basis, operating income was $43.9 million in the second quarter of 2005, up 51 percent year over year, representing a non-GAAP operating margin of 17 percent. In the second quarter, non-GAAP net income was $29.7 million and non-GAAP diluted earnings per share were $0.32 per share.

Balance Sheet Remains Strong

• Total cash and investments (cash, cash equivalents, restricted cash and short-term investments) were $383.9 million at June 30, 2005.

• Deferred and long-term deferred revenues totaled $207.2 million at June 30, 2005.

• Days Sales Outstanding (DSOs) increased slightly to 72 days as of June 30, 2005, which is within the Company’s target range of 60 to 75 days.

Business Objects Reports Second Quarter 2005 Results
Page 3

BusinessObjects XI Momentum Accelerates

• Customer acceptance of BusinessObjects XI continued to accelerate throughout the second quarter of 2005.

• BusinessObjects XI license revenues totaled more than $50 million in the second quarter of 2005, more than tripling sequentially.

• BusinessObjects XI performed well in the Americas and with new customers overall in the second quarter.

Business Objects to Acquire SRC Software, Inc.

• On July 20, 2005 Business Objects announced that it entered into a definitive agreement to acquire privately held SRC Software, Inc., a leading vendor of financial planning and performance management software.

• The acquisition will be an all cash transaction of approximately $100 million US and will be accounted for under the purchase method of accounting.

• The transaction is subject to regulatory approvals and other customary closing conditions, and is expected to close in September 2005.

Business Outlook
Since the guidance issued in April 2005, the US Dollar to euro exchange rate declined significantly, moving the company’s exchange rate assumption for guidance from $1.30 to $1.22 per €1.00. This exchange rate decline resulted in a negative impact of approximately $12 million in total revenues for the second half of fiscal 2005. Despite the negative currency impact, the company is raising its guidance for the full year, indicating that the strength in the overall business substantially offsets the currency change.

Business Objects offers the following guidance for the quarter ending September 30, 2005:

• Total revenues are expected to range from $248 million to $253 million.

• US GAAP diluted earnings per share are expected to range from $0.19 to $0.22.

• Non-GAAP diluted earnings per share are expected to range from $0.25 to $0.28.

• This guidance does not include the impact of the proposed SRC Software, Inc. acquisition which is expected to close in September 2005.

The non-GAAP diluted earnings per share guidance for the quarter ending September 30, 2005 excludes amortization of intangible assets and deferred stock-based compensation expense of approximately $9 million, which is an increase of approximately $0.06 per share. Assumptions for the third quarter guidance assume a US GAAP tax rate of 37% and a US Dollar to Euro exchange rate of $1.22 per €1.00.

Business Objects offers the following updated guidance for the year ending December 31, 2005:

• Total revenues are expected to range from $1.025 billion to $1.040 billion.

• US GAAP diluted earnings per share are expected to range from $0.89 to $0.97.

• Non-GAAP diluted earnings per share are expected to range from $1.16 to $1.24.

• This guidance does not include the impact of the proposed SRC Software, Inc. acquisition which is expected to close in September 2005.

Business Objects Reports Second Quarter 2005 Results
Page 4

The non-GAAP diluted earnings per share guidance for the year ending December 31, 2005 excludes amortization of intangible assets and deferred stock-based compensation expense of approximately $37.0 million, which represents an increase of approximately $0.27 per share. The outlook for the full year 2005 assumes a US Dollar to euro exchange rate of $1.22 per €1.00 and an effective US GAAP tax rate of 38 percent for the full year 2005.

The above information concerning our forecast for the third quarter and full year 2005 represents our outlook only as of the date hereof, and we undertake no obligation to update or revise any financial forecast or other forward looking statements, as a result of new developments or otherwise.

Conference Call
Business Objects will hold a conference call to discuss its financial results for the second quarter of 2005. The call will begin at 2:00 p.m. PT (5:00 p.m. New York, 11:00 p.m. Paris, 10:00 p.m., London). The call-in numbers are 800-399-7988 for North America and 706-634-5428 for Europe and Asia with ID #7636234. The conference call also will be webcast live, and can be accessed on the company’s website – www.businessobjects.com. A replay of the webcast will be available on the site approximately two hours after the end of the live call.

Accounting Principles
Business Objects prepares its financial statements in accordance with US GAAP. Because the company is listed on both the Eurolist by Euronext^TM in France and the Nasdaq National Market in the United States, it is required to separately report consolidated financial statements prepared in accordance with US GAAP and International Financial Reporting Standards (“IFRS”). The most significant identified differences between the two reporting standards for Business Objects relate to the treatment of stock-based compensation expense and the accounting for treasury shares related to a prior acquisition.

In accordance with French regulations and IFRS, Business Objects will report its consolidated financial statements for the first half of 2005 on or before October 31, 2005. In addition, Business Objects expects to report its consolidated financial statements for the full year 2005 in April 2006. Business Objects filed with the Autorité des Marchés Financiers in France its 2004 Document de Référence which included the opening balance sheet of the Company as of January 1, 2004 prepared in accordance with IFRS. In addition, the Company will publish net sales for its second quarter in accordance with IFRS in the Bulletin des Annonces Légales Obligatoires in France by August 15, 2005.

Use of Non-GAAP Financial Measures
The non-GAAP financial measures such as operating income, net income and earnings per share information for the second quarters of 2005 and 2004 included in this press release are different from those otherwise presented under US GAAP as these non-GAAP measures excluded certain charges. These charges include amortization of intangible assets, deferred stock-based compensation expense and restructuring charges, all of which are primarily associated with the acquisition of Crystal Decisions. Business Objects has provided these measures in addition to US GAAP financial results because management believes these non-GAAP measures provide a consistent basis for comparison between quarters and of growth rates year-over-year that are not influenced by certain non-cash charges or impacts of prior period acquisitions, and therefore are helpful in understanding Business Objects’ underlying operating results. In addition, this press release also includes non-GAAP measures that use a

Business Objects Reports Second Quarter 2005 Results
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constant currency to separate the impact of conversion from other foreign currencies to US dollars from other changes in our business. These non-GAAP measures are some of the primary measures Business Objects’ management uses for planning and forecasting. These measures are not in accordance with, or an alternative to US GAAP and these non-GAAP measures may not be comparable to information provided by other companies. Reconciliations of US GAAP to non-GAAP results are presented at the end of this press release.

About Business Objects
Business Objects is the world’s leading business intelligence (BI) software company. With over 30,000 customers worldwide, including over 80 percent of the Fortune 500, Business Objects helps organizations gain better insight into their business, improve decision making, and optimize enterprise performance. The company’s business intelligence platform, BusinessObjects XI, offers the BI industry’s most complete and trusted platform for query, reporting and analysis, performance management, and data integration. BusinessObjects XI includes Crystal Reports(R), the industry standard for enterprise reporting. Business Objects has built the industry’s strongest and most diverse partner community, and also offers consulting and education services to help customers effectively deploy their business intelligence projects.

Business Objects has headquarters in San Jose, Calif., and Paris, France. The company’s stock is traded on both the Nasdaq (BOBJ) and Euronext Paris (ISIN: FR0004026250 — BOB) stock exchanges. More information about Business Objects can be found at www.businessobjects.com.

Forward-Looking Statements
This document contains forward-looking statements that involve risks and uncertainties concerning the company, including the company’s expected financial performance for the third quarter and full year 2005, the company’s core strategy and the company’s expectations regarding its planned acquisition of SRC Software, Inc. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties. These potential risks and uncertainties include, among others, fluctuations in the company’s quarterly operating results; the company’s ability to sustain or increase its profitability; the company’s ability to attract and retain customers for BusinessObjects XI; the company’s ability to issue new releases of BusinessObjects XI on other platforms; changes to current accounting policies which may have a significant, adverse impact upon the company’s financial results; risks related to the company’s purchase and integration of SRC Software, Inc.; the introduction of new products by competitors or the entry of new competitors into the markets for Business Objects’ products; the impact of the pricing of competing technologies; the company’s ability to preserve its key strategic relationships; the company’s reliance upon selling products only in the Business Intelligence software market; and economic and political conditions in the US and abroad. More information about potential factors that could affect Business Objects’ business and financial results is included in Business Objects’ Form 10-K for the year ended December 31, 2004 and Business Objects’ Amendment No. 3 to its Registration Statement on Form S-3 filed with the Securities and Exchange Commission, or the “SEC”, on July 20, 2005 (File No. 333-119662), each of which are on file with the SEC and available at the SEC’s website at www.sec.gov. Business Objects is not obligated to undertake any obligation to update these forward-looking statements to reflect events or circumstances after the date of this document.

Business Objects Reports Second Quarter 2005 Results
Page 6

Business Objects and the Business Objects logo, BusinessObjects, WebIntelligence, Crystal Reports, Crystal Enterprise, Crystal Analysis, RapidMarts, and BusinessQuery are trademarks or registered trademarks of Business Objects S.A. or its affiliated companies in the United States and/or other countries. All other names mentioned herein may be trademarks of their respective owners.

CONTACTS:

Krista Bessinger
Business Objects
Director, Investor Relations
+1 408 953 6349
krista.bessinger@businessobjects.com

Anne Guimard
Business Objects
European Investor Relations
+33 1 41 25 39 19
anne.guimard@businessobjects.com

Catherine Peterson
Business Objects
Vice President, Investor Relations
+1 408 953 6064
catherine.peterson@businessobjects.com

Business Objects Reports Second Quarter 2005 Results
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BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per ordinary share and ADS data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
	(unaudited)						(unaudited)
Revenues:
Net license fees	$	124,858		$	117,182		$	240,009		$	231,675
Services		137,551			105,056			271,175			207,798
Total revenues		262,409			222,238			511,184			439,473
Cost of revenues:
Net license fees		7,249			5,971			14,417			13,653
Services		52,781			41,444			104,162			83,074
Total cost of revenues		60,030			47,415			118,579			96,727
Gross margin		202,379			174,823			392,605			342,746
Operating expenses:
Sales and marketing		104,787			99,271			208,509			196,452
Research and development		40,427			36,541			80,701			76,244
General and administrative		22,218			19,234			47,031			40,946
Restructuring costs		—			1,492			—			1,492
Total operating expenses		167,432			156,538			336,241			315,134
Income from operations		34,947			18,285			56,364			27,612
Interest and other income (expense), net		3,178			261			7,578			(3,807	)
Income before provision for income taxes		38,125			18,546			63,942			23,805
Provision for income taxes		(14,986	)		(7,058	)		(25,797	)		(9,057	)
Net income	$	23,139		$	11,488		$	38,145		$	14,748
Basic net income per ordinary share and ADS	$	0.26		$	0.13		$	0.43		$	0.17
Diluted net income per ordinary share and ADS	$	0.25		$	0.13		$	0.42		$	0.16
Ordinary shares and ADSs used in computing basic net income per ordinary share and ADS		90,030			89,095			89,727			88,864
Ordinary shares and ADSs and equivalents used in computing diluted net income per ordinary share and ADS		92,089			91,061			91,650			91,730

Business Objects Reports Second Quarter 2005 Results
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BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except nominal value per ordinary share)

	June 30, 2005			December 31, 2004
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	365,994		$	293,485
Restricted cash		14,052			14,043
Short-term investments		3,846			3,831
Accounts receivable, net		208,637			248,957
Deferred tax assets		3,992			8,328
Prepaid and other current assets		52,902			46,575
Total current assets		649,423			615,219
Goodwill		1,065,335			1,067,694
Other intangible assets, net		100,522			124,599
Property and equipment, net		59,811			64,053
Deposits and other assets		41,473			49,296
Long-term deferred tax assets		2,476			2,067
Total assets	$	1,919,040		$	1,922,928
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	42,944		$	40,939
Accrued payroll and related expenses		66,174			84,918
Income taxes payable		67,896			85,000
Deferred revenues		201,238			194,366
Other current liabilities		55,973			83,544
Escrows payable		6,700			6,654
Total current liabilities		440,925			495,421
Other long-term liabilities		7,021			6,448
Long-term deferred revenues		5,994			6,316
Long-term deferred tax liabilities		5,628			7,599
Total liabilities		459,568			515,784
Shareholders’ equity
Ordinary shares, Euro 0.10 nominal value		10,442			10,312
Additional paid-in capital		1,182,728			1,167,336
Treasury and Business Objects Option LLC shares		(53,335	)		(53,335	)
Retained earnings		287,865			249,720
Unearned compensation		(5,221	)		(8,079	)
Accumulated other comprehensive income		36,993			41,190
Total shareholders’ equity		1,459,472			1,407,144
Total liabilities and shareholders’ equity	$	1,919,040		$	1,922,928

Business Objects Reports Second Quarter 2005 Results
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BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Six Months Ended
	June 30,
	2005			2004
	(unaudited)
Operating activities:
Net income	$	38,145		$	14,748
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		16,516			16,113
Amortization of other intangible assets		16,040			15,435
Stock-based compensation expense		2,360			3,787
Deferred income taxes		3,850			(14,795	)
Tax benefit from employee stock plans		—			2,517
Changes in operating assets and liabilities:
Accounts receivable, net		29,019			(14,849	)
Prepaid and other current assets		(8,865	)		(9,226	)
Deposits and other assets		7,563			(13,717	)
Accounts payable		4,523			(8,808	)
Accrued payroll and related expenses		(14,389	)		(21,503	)
Income taxes payable		(14,067	)		6,501
Deferred revenues		15,517			41,576
Other liabilities		(24,943	)		(4,991	)
Short-term investments classified as trading		(15	)		(290	)
Net cash provided by operating activities		71,254			12,498
Investing activities:
Purchases of property and equipment		(13,891	)		(16,272	)
Net cash used in investing activities		(13,891	)		(16,272	)
Financing activities:
Issuance of shares		16,020			20,746
Purchase of treasury shares		—			(20,961	)
Transfer of cash from (to) restricted cash accounts		37			(30,037	)
Payments on escrows payable		—			(3,092	)
Net cash provided by (used in) financing activities		16,057			(33,344	)
Effect of foreign exchange rate changes on cash and cash equivalents		(911	)		4,355
Net increase (decrease) in cash and cash equivalents		72,509			(32,763	)
Cash and cash equivalents, beginning of the period		293,485			235,380
Cash and cash equivalents, end of the period	$	365,994		$	202,617

Business Objects Reports Second Quarter 2005 Results
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BUSINESS OBJECTS S.A.
STATEMENT OF INCOME — Reconciliation of US GAAP to Non-GAAP Results
Three Months Ended June 30, 2005
(in millions, except per ordinary share and ADS data)
(Unaudited)

							Add back:
				Add back:			Amortization
				Amortization			of stock-
				of intangible			based			Non-GAAP
	US GAAP			assets			compensation			Results
Revenues:
Net license fees	$	124.9								$	124.9
Services		137.5									137.5
Total revenues		262.4			—			—			262.4
Cost of revenues:
Net license fees		7.2			(5.3	)					1.9
Services		52.8			(2.3	)		(0.2	)		50.3
Total cost of revenues		60.0			(7.6	)		(0.2	)		52.2
Gross margin		202.4			7.6			0.2			210.2
Gross margin %		77	%								80	%
Operating expenses:
Sales and marketing		104.8						(0.5	)		104.3
Research and development		40.4						(0.3	)		40.1
General and administrative		22.3			(0.3	)		(0.1	)		21.9
Total operating expenses		167.5			(0.3	)		(0.9	)		166.3
Income from operations		34.9			7.9			1.1			43.9
Interest and other income (expense), net		3.2									3.2
Income before provision for income taxes		38.1			7.9			1.1			47.1
Provision for income taxes		(15.0	)								(17.4	)
Net income	$	23.1								$	29.7
Basic net income per ordinary share and ADS	$	0.26								$	0.33
Diluted net income per ordinary share and ADS	$	0.25								$	0.32

Business Objects Reports Second Quarter 2005 Results
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BUSINESS OBJECTS S.A.
STATEMENT OF INCOME — Reconciliation of US GAAP to Non-GAAP Results
Six Months Ended June 30, 2005
(in millions, except per ordinary share and ADS data)
(Unaudited)

				Add back:
				Amortization			Add back:
				of intangible			Amortization
				assets and			of stock-
				restructuring			based			Non-GAAP
	US GAAP			costs			compensation			Results
Revenues:
Net license fees	$	240.0								$	240.0
Services		271.2									271.2
Total revenues		511.2			—			—			511.2
Cost of revenues:
Net license fees		14.4			(10.7	)		—			3.7
Services		104.2			(4.6	)		(0.4	)		99.2
Total cost of revenues		118.6			(15.3	)		(0.4	)		102.9
Gross margin		392.6			15.3			0.4			408.3
Gross margin %		77	%								80	%
Operating expenses:
Sales and marketing		208.5						(1.0	)		207.5
Research and development		80.7						(0.7	)		80.0
General and administrative		47.1			(0.7	)		(0.3	)		46.1
Restructuring costs		(0.1	)		0.1			—			—
Total operating expenses		336.2			(0.6	)		(2.0	)		333.6
Income from operations		56.4			15.9			2.4			74.7
Interest and other income (expense), net		7.5									7.5
Income before provision for income taxes		63.9			15.9			2.4			82.2
Provision for income taxes		(25.8	)								(30.3	)
Net income	$	38.1								$	51.9
Basic net income per ordinary share and ADS	$	0.43								$	0.58
Diluted net income per ordinary share and ADS	$	0.42								$	0.57

Business Objects Reports Second Quarter 2005 Results
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BUSINESS OBJECTS S.A.
Q2 FISCAL 2005 SUPPLEMENTAL INFORMATION
(in millions, except per ordinary share and ADS data)
(Unaudited)

	Fiscal 2004															Fiscal 2005
	Q1			Q2			Q3			Q4			Total			Q1			Q2
SUPPLEMENTAL INCOME STATEMENT INFORMATION
Revenues
Net license fees	$	114.5		$	117.2		$	105.7		$	136.0		$	473.4		$	115.2		$	124.9
Maintenance		73.8			75.6			84.4			97.0			330.8			100.1			100.7
Consulting and training		28.9			29.4			29.4			33.7			121.4			33.5			36.8
Total revenues		217.2			222.2			219.5			266.7			925.6			248.8			262.4
Total expenses
Cost of net license fees		2.5			1.0			2.1			2.4			8.0			1.7			1.9
Cost of services revenues		39.0			38.8			39.9			44.1			161.8			48.9			50.3
Sales and marketing		96.5			98.6			95.9			113.2			404.2			103.2			104.3
Research and development		39.1			36.1			34.9			38.7			148.8			40.0			40.1
General and administrative		20.9			18.6			20.9			21.1			81.5			24.4			21.9
Amortization of intangible assets		7.8			7.6			7.6			7.7			30.7			8.1			7.9
Stock-based compensation (1)		2.1			1.7			1.5			1.4			6.7			1.2			1.1
Restructuring costs		—			1.5			—			0.7			2.2			(0.1	)		—
Total expenses		207.9			203.9			202.8			229.3			843.9			227.4			227.5
Income from operations		9.3			18.3			16.7			37.4			81.7			21.4			34.9
Interest and other income (expense), net		(4.0	)		0.3			1.1			(1.6	)		(4.2	)		4.4			3.2
Income before provision for income taxes		5.3			18.6			17.8			35.8			77.5			25.8			38.1
Provision for income taxes		(2.0	)		(7.1	)		(6.8	)		(14.5	)		(30.4	)		(10.8	)		(15.0	)
Effective tax rate		38	%		38	%		38	%		41	%		39	%		42	%		39	%
Net income		3.3			11.5			11.0			21.3			47.1			15.0			23.1
Net income per ordinary share and ADS
Basic		0.04			0.13			0.12			0.24			0.53			0.17			0.26
Diluted		0.04			0.13			0.12			0.24			0.52			0.16			0.25
Ordinary shares and ADSs used in computing net income per share (000’s)
Basic		88,632			89,095			88,495			88,769			88,748			89,424			90,030
Diluted		92,305			91,061			89,792			90,390			91,077			91,184			92,089
Amortization of intangible assets
Cost of net license fees		5.2			5.0			5.0			5.1			20.3			5.5			5.3
Cost of services revenues		2.3			2.3			2.3			2.3			9.2			2.3			2.3
General and administrative		0.3			0.3			0.3			0.3			1.2			0.3			0.3
Total		7.8			7.6			7.6			7.7			30.7			8.1			7.9
Stock-based compensation (1)
Cost of services revenues		0.3			0.3			0.3			0.2			1.1			0.2			0.2
Sales and marketing		0.7			0.7			0.6			0.6			2.6			0.5			0.5
Research and development		0.6			0.4			0.4			0.4			1.8			0.3			0.3
General and administrative		0.5			0.3			0.2			0.2			1.2			0.2			0.1
Total		2.1			1.7			1.5			1.4			6.7			1.2			1.1
Non-GAAP income from operations (2)		19.2			29.1			25.8			47.2			121.3			30.6			43.9
% of total revenues		9	%		13	%		12	%		18	%		13	%		12	%		17	%
Interest and other income (expense), net		(4.0	)		0.3			1.1			(1.6	)		(4.2	)		4.4			3.2
Income before provision for income taxes		15.2			29.4			26.9			45.6			117.1			35.0			47.1
Provision for income taxes		(5.8	)		(11.2	)		(10.2	)		(18.3	)		(45.5	)		(12.9	)		(17.4	)
Effective tax rate		38	%		38	%		38	%		40	%		39	%		37	%		37	%
Non-GAAP net income		9.4			18.2			16.7			27.3			71.6			22.1			29.7
% of total revenues		4	%		8	%		8	%		10	%		8	%		9	%		11	%
Non-GAAP net income per ordinary share and ADS
Basic		0.11			0.20			0.19			0.31			0.81			0.25			0.33
Diluted		0.10			0.20			0.19			0.30			0.79			0.24			0.32

(1)	Represents stock-based compensation expense charged to expense as a result of assumption of unvested options in Crystal Decisions acquisition.
(2)	Non-GAAP measures are reconciled from US GAAP figures. Non-GAAP measures exclude amortization of intangible assets, non-cash stock-based compensation expense, and restructuring costs.

Business Objects Reports Second Quarter 2005 Results
Page 13

BUSINESS OBJECTS S.A.
Q2 FISCAL 2005 SUPPLEMENTAL INFORMATION
(in millions, except for number of transactions, DSO and headcount information)
(Unaudited)

	Fiscal 2004															Fiscal 2005
	Q1			Q2			Q3			Q4			Total			Q1			Q2
REVENUE ANALYSIS
Total revenues by geography
Americas	$	104.1		$	104.3		$	113.8		$	131.0		$	453.3		$	118.1		$	123.6
EMEA		96.4			99.6			87.6			114.2			397.7			111.2			116.5
Asia Pacific, including Japan		16.7			18.3			18.1			21.5			74.6			19.5			22.3
Total	$	217.2		$	222.2		$	219.5		$	266.7		$	925.6		$	248.8		$	262.4
Analysis of currency impact (year-over-year) (3)
Reported revenue growth rate		13	%		7	%		4	%		13	%		9	%		15	%		18	%
Constant currency growth rate		5	%		3	%		-1	%		7	%		4	%		11	%		15	%
Impact of foreign currency on growth rate		9	%		4	%		4	%		6	%		6	%		3	%		3	%

	Fiscal 2004															Fiscal 2005
	Q1			Q2			Q3			Q4			Total			Q1			Q2
LICENSE REVENUE ANALYSIS
License revenues by channel
Direct		53	%		55	%		49	%		50	%		52	%		47	%		51	%
Indirect		47	%		45	%		51	%		50	%		48	%		53	%		49	%
Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%
Number of transactions by size
Over $1 million		7			8			4			14			33			9			13
Over $200 thousand		104			91			78			103			376			101			96

	Fiscal 2004								Fiscal 2005
	Q1		Q2		Q3		Q4		Q1		Q2
SELECTED BALANCE SHEET ITEMS
Cash and cash equivalents, restricted cash, and short-term investments	$	269	$	256	$	263	$	311	$	392	$	384
DSO (Days sales outstanding)		75		81		75		84		66		72
HEADCOUNT
Total headcount		3,756		3,707		3,815		3,834		3,944		4,039

(3) For 2004, reported revenue growth rates are calculated on a Non-GAAP basis including the impact of inclusion of Crystal Decisions’ operations for fiscal 2003. Certain information on constant currency to separate out the impact of conversion from other foreign currencies to US dollars from other changes in our business is also presented. The impact of foreign currency on growth rate is calculated from absolute amounts and thus this presentation in full percentages does not always add.