10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2005

or

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

For the transition period from: ___to ___

Commission File Number 0-24720

Business Objects S.A.

(Exact name of registrant as specified in its charter)

Republic of France	98-0355777
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

157-159 rue Anatole France, 92300 Levallois-Perret, France
(Address of principal executive offices)

(408) 953-6000
(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

As of July 31, 2005, the number of issued ordinary shares was 96,569,305, €0.10 nominal value, (including 29,769,012 American depositary shares, each corresponding to one ordinary share, 3,067,675 treasury shares and 3,173,621 shares held by Business Objects Option LLC). As of July 31, 2005, we had issued and outstanding 93,395,684 ordinary shares of €0.10 nominal value.

Business Objects S.A.

Index

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004		3
Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2005 and 2004		4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3. Quantitative and Qualitative Disclosures about Market Risk		61
Item 4. Controls and Procedures		62
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		63
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		63
Item 4. Submission of Matters to a Vote of Security Holders		63
Item 6. Exhibits		64
SIGNATURES		65
EXHIBIT 10.24
EXHIBIT 10.52
EXHIBIT 10.63
EXHIBIT 10.64
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 100.INS
EXHIBIT 100.SCH
EXHIBIT 100.PRE
EXHIBIT 100.LAB
EXHIBIT 100.CAL

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

BUSINESS OBJECTS S.A.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except nominal value per ordinary share)

	June 30,			December 31,
	2005			2004 (1)
	(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
Commitments and contingencies
Shareholders’ equity:
Ordinary shares, €0.10 nominal value ($0.12 at June 30, 2005 and $0.14 at December 31, 2004): authorized 122,382 and 122,334; issued 96,505 and 95,922; issued and outstanding 93,229 and 92,220; respectively at June 30, 2005 and December 31, 2004		10,442			10,312
Additional paid-in capital		1,182,728			1,167,336
Treasury and Business Objects Option LLC shares: 6,344 shares at June 30, 2005 and 6,769 shares at December 31, 2004		(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

See accompanying notes to Condensed Consolidated Financial Statements

(1) The balance sheet at December 31, 2004 has been derived from the audited consolidated financial statements at that date.

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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

See accompanying notes to Condensed Consolidated Financial Statements

4

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 (used in) 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 benefits 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 (to) from restricted cash		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

See accompanying notes to Condensed Consolidated Financial Statements

5

Business Objects S.A.

Notes to Condensed Consolidated Financial Statements

June 30, 2005

1. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements of Business Objects S.A. (the “Company” or “Business Objects”) have been prepared by the Company in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These interim unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes of the Company in its Annual Report on Form 10-K for the year ended December 31, 2004 as filed with the SEC on March 16, 2005.

     The condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation of the consolidated financial position, results of operations and cash flows. All significant intercompany accounts and transactions have been eliminated. Results of operations for the three and six months ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005 or future operating periods. All information is stated in U.S. dollars unless otherwise noted. Certain comparative period figures have been reclassified to conform to the current basis of presentation. Such reclassifications had no effect on revenues, operating income or net income as previously reported.

     On December 11, 2003, the Company acquired Crystal Decisions, Inc. (“Crystal Decisions”), and its majority stockholder, Seagate Software (Cayman) Holdings, for aggregate consideration of $1.2 billion consisting of $307.6 million of cash, approximately 23.3 million newly issued ordinary shares or American depositary shares (“ADSs”), and the fair value of approximately 6.3 million stock options assumed entitling holders to purchase approximately 6.3 million of Business Objects’ ADSs. This transaction is referred to herein as the “Crystal Decisions Acquisition.”

Use of Estimates

     The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates are used for, but are not limited to, revenue recognition, valuation assumptions utilized in business combinations, restructuring accruals, impairment of goodwill and other intangible assets, contingencies and litigation, allowances for doubtful accounts, stock-based compensation and income and other taxes. Actual results could differ from those estimates.

Other Current Liabilities

     Other current liabilities include balances related to: accruals for sales, use and value added taxes, current portion of accrued rent, accrued professional fees, deferred compensation under the Company’s deferred compensation plan, payroll deductions from international employee stock purchase plan participants, current deferred tax liabilities, forward and option contract liabilities, and both acquisition and non-acquisition related restructuring liabilities, none of which individually account for more than five percent of total current liabilities.

6

Ordinary Shares, Treasury Shares and Business Objects Option LLC Shares

     At June 30, 2005, the difference between the 96.505 million issued ordinary shares and the 93.229 million issued and outstanding ordinary shares presented on the face of the condensed consolidated balance sheet represents the 3.276 million shares held by Business Objects Option LLC. Shares held by Business Objects Option LLC, which were issued by the Company in connection with the Crystal Decisions Acquisition, are not deemed to be outstanding, will not be entitled to voting rights, and will not be included in the calculation of basic net income per ordinary share and ADS until such time as the option holders exercise their options.

     The Company issues ordinary shares or ADSs upon the exercise of stock options or share warrants and under employee stock purchase plans. A holder of the Company’s ordinary shares may exchange them for ADSs on a one for one basis at any time. The ADSs may also be surrendered for ordinary shares on a one for one basis. The ordinary shares are traded on the Eurolist of Euronext ^TM (Compartment A) of Euronext Paris and the ADSs are traded on the Nasdaq National Market. For the convenience of the reader in this document, net income (loss) per ordinary share and ADS will be referenced as net income (loss) per share, as applicable, in the remainder of this document.

Significant Accounting Policies

Revenue Recognition

     The Company enters into arrangements for the sale of: (i) licenses of software products and related maintenance contracts; (ii) bundled license, maintenance and services; and (iii) 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. In software arrangements that include rights to multiple software products and/or services, the Company uses the residual method, under which revenues are allocated to the undelivered elements based on vendor-specific objective evidence of fair value of the undelivered elements and the residual amount of revenues are allocated to the delivered elements. In the absence of vendor-specific objective evidence for an undelivered element, license revenues are amortized over the related maintenance term or the license term for a non-perpetual license.

     For those contracts that consist solely of licenses and maintenance, the Company recognizes net license revenues based upon the residual method after all licensed software product has been delivered as prescribed by 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. The maintenance rates for both license agreements with and without stated renewal rates are based upon the Company’s price list. Vendor-specific objective evidence of the fair value of maintenance for license agreements that do not include stated renewal rates is determined by reference to the price paid by the Company’s customers when maintenance is sold separately (i.e. the prices paid by customers in connection with renewals). Past history has shown that the rate the Company charges for maintenance on license agreements with a stated renewal rate is similar to the rate the Company charges for maintenance on license agreements without a stated renewal rate.

     Services consist of maintenance, consulting and training. 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 or the arrangement involves customization or modification of the software, both the net license and services revenues under the arrangement are recognized under the percentage of completion method of contract accounting, based on input measures of hours. For those arrangements for which the Company has concluded that the service element is not essential to the other

7

elements of the arrangement, the Company determines whether: (i) the services are available from other vendors; (ii) the services involve a significant degree of risk or unique acceptance criteria; and (iii) 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. Revenues allocable to services are recognized as the services are performed. Vendor-specific objective evidence of fair value of consulting and training services is based upon average daily rates. When the Company provides services only, typically the contracts are structured on a time and materials basis.

     For sales to resellers, value added resellers and system integrators (“partners”), the Company does not provide rights of return or price protection. The Company does not accept orders from these partners when the Company is aware that the partner does not have a purchase order from an end user. For sales to distributors that have a right of return, revenues are recognized as the products are sold to the distributor, net of reserves to approximate net sell-through. Some of the factors that are considered in determining the reserves include historical experience of returns received and the level of inventory in the distribution channels. The reserve reduces the revenues and the related accounts receivable. For sales to original equipment manufacturers (“OEMs”), revenues are recognized when the OEM reports sales that have occurred to an end user customer, provided that collection from the OEM is probable. Some OEM arrangements include the payment of an upfront arrangement fee, which is deferred and recognized ratably over the contractual period of distribution of the OEM or when the OEM reports sales that have occurred to an end user customer.

     Deferred revenues represent amounts under license and services arrangements for which the earnings process has not been completed. Deferred revenues relate primarily to maintenance contracts, which are amortized ratably to revenues over the term of the maintenance contracts. In addition, deferred revenues also include amounts under arrangements where there are unspecified future deliverables or where specified customer acceptance has not yet occurred.

Accounting for Stock-based Compensation

     The Company grants stock options to its employees pursuant to shareholder approved stock option plans and provides employees the right to purchase its shares pursuant to shareholder approved employee stock purchase plans. The Company also grants warrants to purchase shares to its nonemployee directors. The Company accounts for its stock-based compensation plans under the intrinsic value method of accounting as defined by Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations.

     The Company is required to provide pro forma disclosures of the effect on net income (loss) and net income (loss) per share if the fair-value based method had been applied in measuring stock-based compensation expense. The fair-value based method is in accordance with Statement of Financial Accounting Standards (“FAS”) No. 123, “Accounting for Stock-Based Compensation” (“FAS 123”), which was amended by FAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” (“FAS 148”). FAS 148 sets forth the requirement to provide prominent disclosure of pro forma information regarding net income (loss) and net income (loss) per share as calculated under the provisions of FAS 123. For purposes of the pro forma disclosure, management historically estimated the fair value of stock options using the Black-Scholes option-pricing valuation model by applying various weighted average assumptions.

8

Change in Option-Pricing Model for Fair Value Estimate

     As the Company is incorporated in France and trades its stock on the Euronext, it is required to adopt regulations as set forth by the International Financial Reporting Standards Board and specifically IFRS 2, “Share-Based Payment”, in connection with its French statutory financial reporting requirements. IFRS 2 requires the Company to expense stock-based compensation in its statements of income commencing on January 1, 2005 for French statutory purposes. With the required adoption of IFRS 2 and the adoption of a new FAS 123 standard under U.S. GAAP on January 1, 2006, the Company evaluated allowable option-pricing models, which estimate the fair value of stock awards granted under the Company’s stock plans. In the assessment of the application of IFRS 2, the Company decided to use a binomial-lattice option-pricing model for both standards, choosing to select one option-pricing model between the allowable methods under U.S. GAAP and IFRS 2. The Company believes that the use of the binomial-lattice option-pricing model for the valuation of stock options and warrants provides a more accurate estimate of the fair value of its stock awards than the Black-Scholes model.

     The following table provides pro forma disclosures of the effect on net income (loss) and net income (loss) per share if the fair-value based method had been applied in measuring stock-based compensation expense. The table includes the estimate of stock-based compensation expense using a fair value determined using a binomial-lattice option-pricing model for the three and six months ended June 30, 2005 and a Black-Scholes option-pricing model for the three and six months ended June 30, 2004.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
	(in thousands, except per share amounts)
Net income — as reported	$	23,139		$	11,488		$	38,145		$	14,748
Add: Amortization of stock-based compensation expense included in reported net income, net of estimated tax related benefits of $449 and $914 for the three and six months ended June 30, 2005 and $650 and $1,439 for the three and six months ended June 30, 2004		694			1,060			1,446			2,348
Deduct: Stock-based compensation expense determined under the fair-value based method for all awards, net of estimated tax related benefits of $4,093 and $8,382 for the three and six months ended June 30, 2005 and $3,342 and $6,681 for the three and six months ended June 30, 2004		(6,322	)		(5,453	)		(12,245	)		(10,900	)
Net income — pro forma	$	17,511		$	7,095		$	27,346		$	6,196
Net income per share — as reported
Basic	$	0.26		$	0.13		$	0.43		$	0.17
Diluted	$	0.25		$	0.13		$	0.42		$	0.16
Net income per share — pro forma
Basic	$	0.19		$	0.08		$	0.30		$	0.07
Diluted	$	0.19		$	0.08		$	0.30		$	0.07
Net income (loss) per share — pro forma, excluding tax benefits
Basic	$	0.15		$	0.04		$	0.21		$	(0.01	)
Diluted	$	0.15		$	0.04		$	0.21		$	(0.01	)

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     The amortization of stock-based compensation expense included in reported net income for the three and six months ended June 30, 2005 and 2004 represented amortization of unearned compensation related to stock options assumed in the Crystal Decisions Acquisition which were unvested at the time of the acquisition. Amortization of stock-based compensation expense was tax-effected at the actual rates included in the computation of net income, which does not necessarily equate to the actual tax benefit which will be received.

     Pro forma net income includes the tax-effected stock-based compensation expense determined under the fair value based method. As the calculated tax benefit, which assumes the Company will benefit on all stock options at the effective rate for the applicable three and six-month periods, may not be equal to, and could vary materially from, the actual tax deduction that the Company will be entitled to receive for these non-cash compensation charges, the Company has also presented in the table above pro forma net income (loss) per share under the presumption that no additional tax benefit will be available to offset the impact of stock-based compensation charges. The Company currently does not believe that, given its current tax structure, any tax deduction for estimated stock-based compensation will be available.

     The weighted average assumptions used in the calculation of the fair value of options granted during the three months ended June 30, 2005 using the binomial-lattice option-pricing model, and the weighted average assumptions used in the calculation of the fair value of stock options and warrants granted during the three months ended June 30, 2004 using the Black-Scholes option-pricing model, were as follows:

	Grants During the Three
	Months ended June 30,
	2005			2004
Expected life of employee stock options and warrants (in years)(1)		4.73			3.00
Volatility		55	%		61	%
Risk-free interest rate		2.9	%		3.2	%
Dividend yields		0	%		0	%
Weighted average fair value of stock options under employee stock option plans and warrants granted during the period	$	11.18		$	8.76

(1) The expected life of stock awards is an output of the binomial-lattice model versus an input for the Black-Scholes model.

     There were no stock options or warrants granted by the Company during the three months ended March 31, 2005. For stock options and warrants granted during the three months ended March 31, 2004, a weighted average fair value of $13.69 was calculated using the Black-Scholes model based on weighted average assumptions which included: an expected life of 3 years, volatility of 61%, risk-free interest rate of 2.3% and zero dividend yields.

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     For purposes of the pro forma disclosures, the expected volatility assumptions used by the Company through December 31, 2004 were based solely on the historical volatility of the Company’s shares over the most recent period commensurate with the estimated expected life of the Company’s stock options. Beginning in fiscal year 2005, the Company modified its approach in calculating volatility as part of its efforts to make a thorough and accurate estimate and to consider other relevant factors, including implied volatility of market traded options on the Company’s shares. The Company, which had historically used the zero coupon treasury bond rate as the risk-free interest rate, used the Sovereign IBoxx Eurozone in the calculation of the June 30, 2005 option fair value, which is more appropriate for options which are denominated in euros. The Company has analyzed the historical exercise behavior of its employees in order to determine the appropriate related inputs to the binomial-lattice model. In doing so, the Company has segregated its stock option grants into distinct pools for purposes of determining expected life and has also applied anticipated turnover for each pool. The Company will continue to monitor these and other relevant factors in developing these assumptions to value future awards.

     For the six months ended June 30, 2005, the change in the valuation model had no impact on total expenses, net income or net income per share as stock-based compensation expense is currently only reported in the financial statement notes in accordance with FAS 148. Commencing on January 1, 2006, the unvested portion of the options will be amortized into the statements of income over the remaining requisite service period. As the revaluation of prior period fair values is specifically precluded under the new FAS 123 accounting standard, reported stock-based compensation costs will be calculated using fair values calculated under both the Black-Scholes and binomial-lattice option-pricing models. If the Company had continued to use the Black-Scholes model and the previous historical weighted average input assumptions, the total expense used in the calculation of pro forma net income (loss) related to stock options granted during the three months ended June 30, 2005 would have been approximately $0.2 million lower, before the impact of tax, than that calculated using the binomial-lattice option-pricing model.

     No shares were purchased under either the current International Employee Savings Purchase Plan or the French Employee Savings Purchase Plan during the three months ended June 30, 2005 or the three months ended June 30, 2004. For pro forma presentation purposes, the stock-based compensation expense calculated for employee savings purchase plans is amortized over the purchase period for each of these plans and included in the FAS 148 pro forma table presented above. The Company currently intends to retain the Black-Scholes option-pricing model in the calculation of the fair value of options to purchase shares under employee stock purchase plans.

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Recent Pronouncements

     Share Based Payment. In December 2004, the Financial Accounting Standards Board (“FASB”) issued FAS No. 123R, “Share-Based Payment, an Amendment of FASB Statements No. 123 and 95” (“FAS 123R”). This standard replaces the existing requirements under FAS 123 and APB 25 and requires that all forms of share-based payments to employees, including employee stock options and employee stock purchase plans, be treated the same as other forms of compensation by recognizing the related cost in the statements of income. FAS 123R eliminates the ability to account for stock-based compensation transactions using APB 25 and requires instead that such transactions be accounted for using a fair-value based method. FAS 123R is effective for annual periods beginning after June 15, 2005 and for the interim periods thereafter. The transitional provisions of FAS 123R allow companies to select either a modified-prospective or a modified-retrospective transition method, either of which effectively dictates in which period the actual expense will be reported in the statements of income. The Company currently expects to apply the modified-prospective transition method when it adopts FAS 123R on January 1, 2006, which will result in the recognition of an expense in the statement of income in periods commencing after January 1, 2006.

     Commencing with the three months ending March 31, 2006, a pro rata portion of the actual expense determined at January 1, 2006 will be expensed to the statements of income over the remaining requisite service period of the applicable stock-based awards, which is on average three years for stock awards outstanding currently. The actual expense reported in the statements of income will be impacted by factors which may include, but are not limited to: (i) individuals leaving the Company who forfeit unvested stock options for which no charge will be taken; (ii) changes to the exchange rate between the U.S. dollar and the euro as the Company’s options were issued in euros (other than those assumed in the Crystal Decisions Acquisition) but the expense will be reflected in U.S. dollars; and (iii) additional stock-based awards granted or issued after June 30, 2005, including the potential issue of restricted stock awards or units.

     At December 31, 2004, the Company estimated the anticipated cost associated with past grants on the adoption of FAS 123R to be approximately $72 million. The Company decreased this cost estimate to approximately $50 million at March 31, 2005. The decrease in estimate was the result of: (i) the six-month delay in implementation of FAS 123R, which effectively reduced the number of unvested options outstanding on which the expense will be calculated; (ii) stock option and share warrant cancellations during the period, which resulted in fewer outstanding stock options and share warrants; and (iii) the impact of currency changes. The Company is in the process of determining a revised estimate of stock-based compensation cost under FAS 123R.

     The Company is in the process of determining the impact FAS 123R will have on its effective tax rate and cash flow from operations. The Company cannot currently estimate the amount of stock-based compensation expense or the amount of associated tax benefit, if any, which will relate to stock-based awards granted or issued subsequent to June 30, 2005.

     In March 2005, the SEC released Staff Accounting Bulletin No. 107, “Share-Based Payment” (“SAB 107”), which provides the SEC staff’s position regarding the application of FAS 123R. SAB 107 contains interpretive guidance related to the interaction between FAS 123R and certain SEC rules and regulations, as well as provides the staff’s views regarding the valuation and disclosure of share-based payment arrangements for public companies. The Company continues to evaluate SAB 107.

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     Accounting Changes and Error Corrections. In May 2005, the FASB issued FAS No. 154, “Accounting Changes and Error Corrections” (“FAS 154”). FAS 154 replaces APB Opinion No. 20, “Accounting Changes” and FAS No. 3, “Reporting Accounting Changes in Interim Financial Statements.” FAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented based on the application of the new accounting principle. The statement will require the retrospective application of the impact of the direct effect of changes in accounting principles unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. FAS 154 carries forward without change the guidance contained in APB 20 for reporting the correction of an error in previously issued financial statements and changes in accounting estimates. FAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 and requires prospective application. The Company will adopt this standard on January 1, 2006 and currently does not anticipate that it will have a material impact on its financial statements or disclosures.

2. Derivative Financial Instruments

     The Company accounts for derivatives in accordance with FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”), as amended, and related interpretations. To receive hedge accounting treatment, cash flow hedges must be highly effective in achieving offsetting changes to expected future cash flows on hedged transactions. A hedge is considered effective if the expected amount, currency and timing of the cash flow hedge match anticipated cash outflows for which the cash flow hedge relates. Upon maturity or settlement of a forward or option contract, hedge effectiveness is measured and the realized gain or loss attributable to the portion of the hedge which is determined to be effective is recorded in interest and other income (expense), net. In addition, the amount previously set up in accumulated other comprehensive income and the forward or option contract asset or liability related to the previously unrealized portion of the exchange gain or loss is reversed. Should some portion of the hedge be determined to be ineffective, the portion of the unrealized gain or loss is realized in the statement of income in the period of determination.

     The Company’s derivative financial instruments are summarized in the table below.

	June 30, 2005				December 31, 2004
			Weighted					Weighted
			Average					Average
	Notional		Contract		Notional			Contract
	Amount		Rate (%)		Amount			Rate (%)
	(notional and fair value amounts in millions
	of noted currencies)
Derivative instruments not designated as hedges (1):
Forward Contracts
U.S. dollars against euros	US$	92.7		1.2699	US$	178.4			1.1944
Canadian dollars against euros	CAD$	9.9		1.6199	CAD$	9.9			1.6235
British pounds against euros	£	25.3		0.6759	£	25.3			0.6843
South African rand against euros	ZAR	2.0		7.9200		—			—
Mexican peso against euros	MXP	15.6		13.9435		—			—
Hong Kong dollar against euros	HKD	15.2		9.5650		—			—
Derivative instruments designated as cash flow hedges (2):
Option contracts
Canadian dollars against euros	CAD$	9.8		1.5870		—			—
Canadian dollars against U.S. dollars	CAD$	26.3		1.2086		—			—
Forward contracts
Canadian dollars against euros	CAD$	6.5		1.5870		—			—
U.S. dollar equivalent of fair value of derivatives not designated as hedges — net asset (liability) (3)	US$	4.8			US$	(25.8	)
U.S. dollar equivalent of fair value of derivatives designated as cash flow hedges — net asset (3)	US$	0.9			US$	—

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(1)	In April 2004, the Company began to enter into various euro-denominated forward contracts to purchase U.S. dollars, Canadian dollars and British pounds at a future date to enable its Irish subsidiary to settle intercompany loan obligations in those currencies. The Company has since entered into forward contracts to hedge additional intercompany obligations. The forward contracts held at June 30, 2005 had maturity dates ranging from July 2005 to October 2005. These forward contracts did not qualify for hedge accounting; therefore, the change in the fair value of each forward contract at each period-end was recorded in interest and other income (expense), net. The changes in the fair value of the forward contracts were materially offset by the revaluation of the intercompany loan obligations for the three and six months ended June 30, 2005. During the three months ended June 30, 2005, a number of contracts were settled. These settlements resulted in the net outflow of $11.6 million of cash, resulting in the reduction of the cumulative mark-to-market balance of the forward contracts. Certain of these contracts were swapped forward.
(2)	Commencing in January 2005, certain of the Company’s subsidiaries entered into forward and option contracts to purchase Canadian dollars against the euro and the U.S. dollar in order to hedge certain anticipated future intercompany cash flows. In accordance with FAS 133, these forward and option contracts have been designated as cash flow hedges and qualify for hedge accounting. At June 30, 2005, the forward and option contracts outstanding had maturity dates ranging from July 2005 to January 2006. The goal of entering into a cash flow hedge is to minimize the impact of exchange rate fluctuations on expenses over the contract period. At June 30, 2005, in accordance with hedge accounting, mark-to-market net gains of approximately $0.7 million on the revaluation of these forward and option contracts were recorded in accumulated other comprehensive income with a corresponding entry to the forward or option contract asset (liability). Realized net gains of $0.4 million on the settlement of option contracts were recorded in the statement of income during the three months ended June 30, 2005. There were no realized gains or losses for the three months ended March 31, 2005.
	At June 30, 2005, the Company had assessed that all forward and option contracts for which hedge accounting was applicable still matched estimated future Canadian dollar intercompany cash flows, and therefore, still met the criteria to be classified as cash flow hedges. On July 15, 2005, certain of the option contracts matured and the hedges were assessed to be effective.
(3)	Forward and option contract assets are included in prepaids and other current assets and forward and option contract liabilities are included in other current liabilities.

3. Accounts Receivable

     Accounts receivable are stated net of allowance for doubtful accounts, distribution channel and other reserves of $11.3 million at June 30, 2005 and $12.5 million at December 31, 2004. The allowance for doubtful accounts balance represented $6.9 million and $8.0 million of the $11.3 million and $12.5 million balances at June 30, 2005 and December 31, 2004, respectively.

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4. Goodwill and Other Intangible Assets

     In accordance with FAS No. 142, “Goodwill and Other Intangible Assets” (“FAS 142”), the Company tests for impairment at least annually at June 30 of each year or whenever events or changes in circumstances indicate that the carrying amount of goodwill or other intangible assets may not be recoverable. These tests are performed at the reporting unit level using a two-step, fair-value based approach. Business Objects has determined that it has only one reporting unit. The first step compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is less than its carrying amount, a second step is performed to measure the amount of impairment loss. The second step allocates the fair value of the reporting unit to the Company’s tangible and intangible assets and liabilities. This derives an implied fair value for the reporting unit’s goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized equal to that excess. The Company completed the annual impairment tests and concluded that no impairment existed at June 30, 2005.

     The change in the carrying amount of goodwill was as follows (in thousands):

	June 30,			December 31,
	2005			2004
Balance, beginning of the year	$	1,067,694		$	1,051,111
Add: Goodwill acquired or adjusted during the period		(2,353	)		16,567
Impact of foreign currency fluctuations on goodwill.		(6	)		16
Balance, end of the period	$	1,065,335		$	1,067,694

     During the three months ended June 30, 2005, the Company determined that $2.4 million of tax accruals, which comprised a component of the Crystal Decisions’ purchase price, were no longer required since they no longer represented specific identifiable liabilities. Therefore, these amounts were adjusted to goodwill in the period. This determination was made based as a result of the passage of time, and other events, such as the completion of tax audits.

     Other intangible assets consisted of the following (in thousands):

	June 30,			December 31,
	2005			2004
Developed technology	$	99,255		$	109,882
Maintenance and support contracts		46,440			46,440
Trade names		6,176			6,909
Total other intangible assets, at cost	$	151,871		$	163,231
Accumulated amortization on other intangible assets		(51,349	)		(38,632	)
Other intangible assets, net	$	100,522		$	124,599

     Certain intangible assets and the related accumulated amortization balances are held by the Company’s foreign subsidiaries in local currencies and are revalued at the end of each reporting period, which may result in a higher or lower cost base for these assets than originally recorded. During the six months ended June 30, 2005, there were no additions or disposals of other intangible assets, with the entire change in cost attributable to currency revaluations.

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     Other intangible assets are amortized on a straight-line basis over their respective estimated useful lives, which are generally five years. Amortization expense for the periods below was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005		2004
	(in thousands)
Amortization of:
Developed technology (included in cost of net license fees)	$	5,261	$	5,009	$	10,733	$	10,161
Maintenance and support contracts (included in cost of services revenues)		2,315		2,326		4,631		4,652
Trade names (included in general and administrative expenses)		331		311		676		622
Total intangible amortization expense	$	7,907	$	7,646	$	16,040	$	15,435

     The estimated future amortization expense of other intangible assets existing at June 30, 2005 is presented in U.S. dollars based on the June 30, 2005 period-end exchange rates and is not necessarily indicative of the exchange rates at which amortization expense for other intangible assets denominated in foreign currencies will be expensed (in thousands):

Remainder of 2005	$	15,142
2006		30,264
2007		28,790
2008		26,326
Total	$	100,522

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5. Net Income per Share

     The components of basic and diluted net income per share were as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005		2004
	(in thousands, except per share data)
Basic net income per share:
Numerator:
Net income	$	23,139	$	11,488	$	38,145	$	14,748
Denominator:
Weighted average shares outstanding		90,030		89,095		89,727		88,864
Net income per share — basic	$	0.26	$	0.13	$	0.43	$	0.17
Diluted net income per share:
Numerator:
Net income	$	23,139	$	11,488	$	38,145	$	14,748
Denominator:
Weighted average shares outstanding		90,030		89,095		89,727		88,864
Incremental shares attributable to shares under employee stock option plans and share warrants (treasury stock method)		2,059		1,966		1,923		2,866
Weighted average shares outstanding		92,089		91,061		91,650		91,730
Net income per share — diluted	$	0.25	$	0.13	$	0.42	$	0.16

     For the three and six months ended June 30, 2005, approximately 0.3 million and 0.7 million stock options were exercised, respectively, of which approximately 0.1 million and 0.4 million represented exercises of options held by Business Objects Option LLC. On March 31, 2005, approximately 0.3 million shares were issued to employees under employee stock purchase plans. At June 30, 2005 and 2004, respectively, 13.4 million and 15.9 million stock options and share warrants were outstanding in aggregate.

     For the three months ended June 30, 2005 and 2004, respectively, 6.1 million and 8.8 million outstanding options and warrants to purchase ordinary shares or ADSs were excluded from the calculation of diluted net income per share because the option or warrant exercise prices during the respective periods was greater than the average market price of the ordinary shares or ADSs and; therefore, the effect would have been anti-dilutive. For the six months ended June 30, 2005 and 2004, respectively, 6.3 million and 8.0 million outstanding options and warrants were anti-dilutive and excluded from the calculation.

6. Comprehensive Income

     Comprehensive income shows the impact on net income of revenues, expenses, gains and losses that under U.S. GAAP are recorded as an element of shareholders’ equity and are excluded from net income. For the three and six months ended June 30, 2005, comprehensive income included foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, unrealized gains (losses) on cash flow hedges, and the reversal from other comprehensive income of realized gains (losses) on cash flow hedges settled in the period. For the three and six months ended June 30, 2004, other comprehensive income included only foreign currency translation adjustments.

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	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
	(in thousands)
Net income	$	23,139		$	11,488		$	38,145		$	14,748
Other comprehensive income:
Foreign currency translation adjustments		(4,755	)		(2,394	)		(4,891	)		1,811
Unrealized net gains on cash flow hedges, net of tax		505			—			862			—
Realized net gains on cash flow hedges, net of tax, reclassified into earnings		(168	)		—			(168	)		—
Total comprehensive income	$	18,721		$	9,094		$	33,948		$	16,559

7. Business Segment Information

     The Company has one reportable segment — business intelligence software products and services. The Company recognizes its net license fees from three product families: Business Intelligence Platform, Enterprise Performance Management Applications and Data Integration. The Company does not provide services revenues by product family as it does not manage its operations on this basis. The following table summarizes net license fees recognized from each product family and total services revenues (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005		2004
Net license fees:
Business Intelligence Platform	$	109,278	$	107,111	$	210,188	$	209,201
Enterprise Performance Management Applications		8,929		6,584		17,169		14,693
Data Integration		6,651		3,487		12,652		7,781
Total net license fees	$	124,858	$	117,182	$	240,009	$	231,675
Total services revenues		137,551		105,056		271,175		207,798
Total revenues	$	262,409	$	222,238	$	511,184	$	439,473

     The following table summarizes the Company’s total revenues by geographic region (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005		2004
Americas, including Canada and Latin America	$	123,700	$	104,259	$	241,725	$	208,442
Europe, Middle East and Africa		116,443		99,632		227,661		196,033
Asia Pacific, including Japan		22,266		18,347		41,798		34,998
Total revenues	$	262,409	$	222,238	$	511,184	$	439,473

8. Business Restructuring Charges

Crystal Decisions, Inc.

     In December 2003, prior to the Crystal Decisions Acquisition, management began to assess and formulate a plan to restructure the combined operations to eliminate duplicative activities, focus on strategic products and reduce the Company’s cost structure. The Board of Directors and management approved and committed the Company to the plan shortly after the completion of the Crystal Decisions Acquisition.

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The plan outlined the anticipated costs associated with the involuntary termination of certain employees and the exit of certain facilities.

Restructuring Costs Expensed Related to Pre-acquisition Business Objects

     In accordance with FAS No. 146, “Cost Associated with Exit or Disposal Activities” (“FAS 146”), during the three months ended December 31, 2003, the Company accrued $7.8 million of costs related to employee severance and other related benefits. At December 31, 2004, the remaining liability balance of $0.9 million related to employee severance and other payments due to 20 previously terminated employees. The decrease in the liability of $6.9 million resulted from: (i) the payment of severance and benefits of approximately $7.0 million to 134 of the 159 employees who were part of the plan; (ii) a reduction in the liability of less than $0.1 million associated with a change in estimate of anticipated severance costs (which was charged to restructuring costs in the three months ended December 31, 2004); and (iii) an increase of approximately $0.2 million as a result of the impact of foreign currency exchange rates on translation of the accrual. At June 30, 2005, the remaining liability balance of less than $0.1 million related to payments due to four former employees that are expected to be settled in conjunction with the terms of the employees’ respective agreements. The decrease in the liability of $0.8 million in the six months ended June 30, 2005 from December 31, 2004 resulted from: (i) the payment of approximately $0.7 million of severance and benefits; and (ii) a reduction in the liability of less than $0.1 million associated with a change in estimate (which was charged to restructuring costs in the three months ended March 31, 2005 and included in the general and administrative income statement caption line).

     Commencing in the second quarter of 2004, the Company recorded approximately $2.2 million of charges for 2004 related to costs incurred in connection with exiting eight facilities, of which approximately $0.8 million were paid in 2004, resulting in a liability balance of $1.4 million at December 31, 2004. At June 30, 2005, the remaining liability balance of $0.4 million related to costs associated with exiting one facility. The decrease in the liability of $1.0 million in the six months ended June 30, 2005 from December 31, 2004 primarily resulted from the payment of $0.9 million of exit costs. The remaining liability is expected to be paid over the course of the sub-lease period.

     During the six months ended June 30, 2004, restructuring costs related to pre-acquisition Business Objects were $1.5 million, comprised of a $1.6 million accrual for charges incurred in exiting facilities and a $0.1 million reduction in the estimated liability for employee severance and other related benefits.

Restructuring Costs Included as a Cost of the Crystal Decisions Acquisition

     Restructuring costs of $13.5 million related to the Crystal Decisions Acquisition ($10.8 million related to employee severance and $2.7 million related to the cost to abandon facilities) were accounted for under Emerging Issues Task Force Issue No. 95-3 “Recognition of Liabilities in Connection with Purchase Business Combinations.” These costs were recognized as an assumed liability in the acquisition and were included in the purchase price allocation at December 11, 2003.

     The charge of $10.8 million related to employee severance and other related benefits for 194 employees across all functions worldwide. There were no significant additional terminations associated with the restructuring plan. The Company paid severance and benefits of approximately $1.1 million to five employees during 2003. At June 30, 2005 and December 31, 2004, the remaining liability balance of less than $0.1 million related to employee severance due to one previously terminated employee. The decrease in the liability of $9.6 million from December 31, 2004 resulted from: (i) the payment of severance and benefits of approximately $9.0 million to 154 of the 194 employees who were part of the plan; and (ii) a reduction in the liability of $0.6 million associated with the costs not incurred for 34 previously-planned terminations (which was charged to goodwill in the three months ended June 30, 2004). The remaining liability is expected to be paid before September 30, 2005.

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     The restructuring charge to abandon facilities of $2.7 million at December 31, 2003 related to estimated costs for future minimum lease payments associated with the planned closure of 11 facilities, net of estimated sublease income to be earned on these premises. At June 30, 2005 and December 31, 2004, the remaining liability balance of $0.8 million related to two facilities the Company is subletting with lease terms extending through 2008. The remainder of the facilities identified as part of the plan had been vacated at December 31, 2004, and the remaining liability balance will be drawn down by net cash payments over the lease terms, adjusted by changes to the present value of rent payments. The decrease in the liability of $1.9 million from December 31, 2003 to December 31, 2004 resulted from: (i) the payment of $1.6 million of minimum lease payments and settlement costs, net of sublease income of less than $0.1 million; (ii) a reduction in the liability of $0.4 million due to changes in the estimates of costs (which was charged to goodwill in the three months ended December 31, 2004); and (iii) an increase of approximately $0.1 million as a result of the impact of foreign currency exchange rates on translation of the accrual. While the June 30, 2005 restructuring liability remained unchanged from December 31, 2004, the Company paid $0.1 million of minimum lease payments which were offset by an increase resulting from the adjustment of various rents, the result of which was included in the general and administrative income statement caption line.

Other Acquisitions

     In 2002, the Company was also involved in other acquisition and non-acquisition related restructurings. There has not been any material activity related to these restructurings since December 31, 2004. The balances at and activity to December 31, 2004 are presented in Note 14 to the Consolidated Financial Statements included in the Company’s Form 10-K report filed on March 16, 2005 with the SEC.

9. Commitments and Contingencies

Legal matters

     On October 17, 2001, the Company filed a lawsuit in the United States District Court for the Northern District of California against MicroStrategy Incorporated (“MicroStrategy”) for alleged patent infringement. The lawsuit alleged that MicroStrategy infringed the Company’s U.S. Patent No. 5,555,403 by making, using, offering to sell and selling MicroStrategy Versions 6.0, 7.0 and 7.0i. The Company’s complaint requested that MicroStrategy be enjoined from further infringing the patent and sought an as-yet undetermined amount of damages. On June 27, 2003, MicroStrategy filed a motion for summary judgment that its products do not infringe the Company’s patent. On August 29, 2003, the District Court ruled that the Company’s patent was not literally infringed and that the Company was estopped from asserting the doctrine of equivalents and dismissed the case. The Company appealed the District Court’s judgment to the Court of Appeals for the Federal Circuit. On January 6, 2005, the Court of Appeals for the Federal Circuit decided that the District Court incorrectly concluded that MicroStrategy’s products did not violate the Company’s patent and determined that the Company was not precluded from arguing that MicroStrategy’s products were equivalent to a claim in U.S. Patent No. 5,555,403. The District Court heard summary judgment motions on June 10, 2005. On July 26, 2005, the District Court granted MicroStrategy’s motion for summary judgment of non-infringement. The Company intends to appeal this ruling.

     On October 30, 2001, MicroStrategy filed an action for alleged patent infringement in the United States District Court for the Eastern District of Virginia against the Company and its subsidiary, Business Objects Americas. The complaint alleged that the Company’s software products, BusinessObjects Broadcast Agent Publisher, BusinessObjects Broadcast Agent Scheduler and BusinessObjects Infoview, infringe MicroStrategy’s U.S. Patent Nos. 6,279,033 and 6,260,050. In December 2003, the Court dismissed MicroStrategy’s claim of infringement on U.S. Patent No. 6,279,033 without prejudice. On June 7, 2004, the Court informed the parties that the Court was of the opinion that summary judgment should be granted in the Company’s favor as to non-infringement of MicroStrategy’s U.S. Patent No. 6,260,050 and canceled the trial. On August 6, 2004, the Court entered a formal opinion and order formalizing this decision. On September 3, 2004, MicroStrategy filed a Notice of Appeal with the Court of Appeals for the Federal Circuit.

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The Court of Appeals heard oral arguments on August 3, 2005 and took the matter under submission. The Company expects a ruling in late 2005 or early 2006.

     In April 2002, MicroStrategy obtained leave to amend its patent claims against the Company to include claims for misappropriation of trade secrets, violation of the Computer Fraud and Abuse Act, tortious interference with contractual relations and conspiracy in violation of the Virginia Code, seeking injunctive relief and damages. On December 30, 2002, the Court granted the Company’s motion for summary judgment and rejected MicroStrategy’s claims for damages as to the causes of action for misappropriation of trade secrets, Computer Fraud and Abuse Act and conspiracy in violation of the Virginia Code. On October 28, 2003, the Court granted judgment as a matter of law in favor of the Company and dismissed the jury trial on MicroStrategy’s allegations that the Company tortiously interfered with certain employment agreements between MicroStrategy and its former employees. The Court took MicroStrategy’s claim for misappropriation of trade secrets under submission. On August 6, 2004, the Court issued an order rejecting all of MicroStrategy’s claims for misappropriation of trade secrets except for a finding that a former employee of the Company had misappropriated two documents. The Court issued a limited injunction requiring the Company not to possess, use or disclose the two documents as to which it found misappropriation. The Court also denied MicroStrategy’s request for attorneys’ fees. On September 3, 2004, MicroStrategy filed a Notice of Appeal with the Court of Appeals for the Federal Circuit appealing each of the rulings. The Court of Appeals heard oral arguments on August 3, 2005 and took the matter under submission. The Company expects a ruling by the Court of Appeals in late 2005 or early 2006.

     On December 10, 2003, MicroStrategy filed an action for patent infringement against Crystal Decisions in the United States District Court for the District of Delaware. The Company became a party to this action when it acquired Crystal Decisions. The complaint alleged that the Crystal Decisions’ software products: Crystal Enterprise, Crystal Reports, Crystal Analysis and Crystal Applications, infringe MicroStrategy’s U.S. Patent Nos. 6,279,033, 6,567,796 and 6,658,432. MicroStrategy has since alleged that BusinessObjects Enterprise XI, Crystal Reports XI and OLAP Intelligence XI, successors of the products initially accused, also infringe the patents named in the suit. The complaint seeks relief in the form of an injunction, unspecified damages, an award of treble damages and attorneys’ fees. The parties are currently engaged in extensive discovery and the trial, which was scheduled to start on November 7, 2005, has been postponed to May 30, 2006. The Company is defending the action vigorously.

     In November 1997, Vedatech Corporation (“Vedatech”) commenced an action in the Chancery Division of the High Court of Justice in the United Kingdom against Crystal Decisions (UK) Limited, now a wholly owned subsidiary of Business Objects Americas. The liability phase of the trial was completed in March 2002, and Crystal Decisions prevailed on all claims except for the quantum meruit claim. The High Court ordered the parties to mediate the amount of that claim and, in August 2002, the parties came to a mediated settlement. The mediated settlement was not material to Crystal Decisions’ operations and contained no continuing obligations. In September 2002, however, Crystal Decisions received notice that Vedatech was seeking to set aside the settlement. The mediated settlement and related costs were accrued in Crystal Decisions’ consolidated financial statements. In April 2003, Crystal Decisions filed an action in the High Court of Justice seeking a declaration that the mediated settlement agreement is valid and binding. In connection with this request for declaratory relief Crystal Decisions paid the agreed settlement amount into the High Court.

     In October 2003, Vedatech and Mani Subramanian filed an action against Crystal Decisions, Crystal Decisions (UK) Limited and Susan J. Wolfe, then Vice President, General Counsel and Secretary of Crystal Decisions, in the United States District Court, Northern District of California, San Jose Division, alleging that the August 2002 mediated settlement was induced by fraud and that the defendants engaged in negligent misrepresentation and unfair competition. The Company became a party to this action when it acquired Crystal Decisions. In July 2004, the United States District Court, Northern District of California, San Jose Division granted the defendants’ motion to stay any proceedings before such court pending resolution of the matters currently submitted to the English High Court. In October 2003, Crystal Decisions (UK) Limited, Crystal Decisions (Japan) K.K. and Crystal Decisions filed an application with the High Court claiming the

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proceedings in the United States District Court, Northern District of California, San Jose Division were commenced in breach of an exclusive jurisdiction clause in the settlement agreement and requesting injunctive relief to restrain Vedatech from pursuing the United States District Court proceedings. On August 3, 2004, the High Court granted the anti-suit injunction but provided that the United States District Court, Northern District of California, San Jose Division could complete its determination of any matter that may be pending. Vedatech and Mr. Subramanian made an application to the High Court for permission to appeal the orders of August 3, 2004, along with orders which were issued on May 19, 2004. On July 7, 2005, the Court of Appeals refused this application.

     On July 15, 2002, Informatica Corporation (“Informatica”) filed an action for alleged patent infringement in the United States District Court for the Northern District of California against Acta Technology, Inc (“Acta”). The Company became a party to this action when it acquired Acta in August 2002. The complaint alleged that the Acta software products infringed Informatica’s U.S. Patent Nos. 6,014,670, 6,339,775 and 6,208,990. On July 17, 2002, Informatica filed an amended complaint alleging that the Acta software products also infringed U.S. Patent No. 6,044,374. The complaint seeks relief in the form of an injunction, unspecified damages, an award of treble damages and attorneys’ fees. The Company has answered the suit, denying infringement and asserting that the patents are invalid and other defenses. The parties are engaged in discovery. On August 2, 2005, the Court issued its claim construction order. The Court had previously vacated the August 16, 2004 trial date and no new trial date has been set. The Company is defending the action vigorously.

     Between June 2 and July 1, 2004, four purported class action complaints were filed in the United States District Courts for the Northern District of California, the Southern District of California, and the Southern District of New York against the Company and certain of its current and former officers and directors. The actions commenced in the courts for the Southern District of California and the Southern District of New York were transferred to the Northern District of California. All four actions were consolidated into one action in the Northern District of California and a consolidated amended compliant (“CAC”) was filed in January 2005 seeking unspecified damages. The CAC alleged violations of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder. The plaintiffs seek to represent a putative class of investors in the Company’s American depositary receipts (“ADRs”) who purchased the ADRs between April 23, 2003 and May 5, 2004 (the “Class Period”). The complaint alleged that during that Class Period, the Company and the individual defendants made false or misleading statements in press releases and SEC filings regarding, among other things, the Company’s acquisition of Crystal Decisions, its Enterprise 6 product and the Company’s forecasts and financial results for the three months ended March 31, 2004. In February 2005, the Company and other defendants moved to dismiss the CAC. On July 27, 2005, the Court granted defendants’ motion to dismiss and granted plaintiffs 30 days to file an amended complaint.

     On July 23, 2004, two purported shareholder derivative actions were filed in Santa Clara County Superior Court against certain of the Company’s current and former officers and directors, styled Bryan Aronoff, et al. v. Bernard Liautaud, et al. and Ken Dahms v. Bernard Liautaud, et al. The Company is named as a nominal defendant. The actions were consolidated into an action on August 16, 2004 and in September 2004, derivative plaintiffs filed a consolidated complaint. The complaint is based on the same facts and events alleged in the class action complaints and alleged violations of California Corporations Code Sections 25402 and 25502.5, breaches of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment by certain of the Company’s current and former officers and directors. The derivative plaintiffs seek damages, disgorgement of profits, equitable, injunctive, restitutionary and other relief. In December 2004, defendants filed a motion to dismiss the compliant. On April 28, 2005, plaintiffs voluntarily dismissed the case without prejudice and this matter was concluded.

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     On September 29, 2004, Decision Warehouse Consultoria E Importacao Ltda. filed an action in the Superior Court for the State of California, County of Santa Clara against Business Objects Americas and Business Objects Do Brasil, Ltda. for unspecified damages alleging breach of contract, intentional interference with prospective economic advantage and contract relationships, misappropriation of trade secrets, promissory fraud and unlawful business practices. The parties are currently engaged in discovery. No trial date has been set. The Company intends vigorously to defend this action.

     On December 22, 2004, Business Objects Americas and Business Objects Do Brasil, Ltda. filed a lawsuit in the Superior Court for the State of California, County of Santa Clara against Decision Warehouse Consultoria E Importacao Ltda. The lawsuit alleges violations of Brazilian copyright law, breach of contract, unfair business practices, account stated, open book account and for an accounting. The Company’s complaint requested damages according to proof, “moral” damages under Brazilian law and award of sums found due after accounting. No trial date has been set.

     On July 7, 2005, the Company announced that it had been informed by the staff of the SEC that it had terminated its informal inquiry without recommendation for any enforcement action. The SEC’s notice concludes that matter referenced in a Company press release issued in August 2004. That release announced that the SEC staff had notified the Company by means of a Wells notice that it intended to recommend to the SEC that a civil action be initiated against Business Objects, alleging that the Company violated provisions of the Exchange Act relating to periodic reporting requirements.

     The Company is also involved in various other legal proceedings in the ordinary course of business in addition to the items discussed above, none of which is believed to be material to its results of operations, liquidity or financial condition at this time. In accordance with FAS No. 5, “Accounting for Contingencies”, when the Company believes a loss is probable and can be reasonably estimated, the estimated loss is accrued in the consolidated financial statements. No provision is made in the consolidated financial statements until the loss, if any, is probable and can be reasonably estimated or the outcome becomes known. Unless otherwise noted, the Company cannot reasonably estimate at this time whether a monetary settlement will be reached or predict the outcome of these legal matters. Should an unfavorable outcome arise in any of these legal matters, there can be no assurance that such outcome would not have a material adverse affect on the Company’s results of operations, liquidity or financial position.

Commitments

     The Company leases its facilities and certain equipment under operating leases that expire at various dates through 2020. At December 31, 2004, the Company estimated the total future minimum lease payments under non-cancelable operating leases at $245.3 million in aggregate. During the three months ended March 31, 2005, the Company amended its lease agreement for its premises in Paris, France which resulted in an increase in the total commitment of approximately $13.8 million. The increase resulted from the three year term extension from the original termination date in July 2009 to July 2012, partially offset by a decrease in annual rent effective April 2005.

10. Escrows Payable, Restricted Cash and Credit Agreement

     There were no material changes in escrows payable, restricted cash or the terms or balances of our credit agreement from December 31, 2004.

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11. Accounting for and Disclosure of Guarantees

     Guarantor’s Accounting for Guarantees. The Company enters into certain types of contracts from time to time that require the Company to indemnify parties against third party claims. These contracts primarily relate to: (i) certain real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities, and other claims arising from the Company’s use of the applicable premises; (ii) certain agreements with the Company’s officers, directors, employees and third parties, under which the Company may be required to indemnify such persons for liabilities arising out of their efforts on behalf of the Company; and (iii) agreements under which the Company has agreed to indemnify customers and partners for claims arising from intellectual property infringement. The conditions of these obligations vary and generally a maximum obligation is not explicitly stated. Because the obligated amounts under these types of agreements often are not explicitly stated, the overall maximum amount of the obligations cannot be reasonably estimated. Except as detailed below, the Company has not recorded any associated obligations at June 30, 2005 or December 31, 2004. The Company carries coverage under certain insurance policies to protect itself in the case of any unexpected liability; however, this coverage may not be sufficient.

     The Company entered into a guarantee agreement to guarantee the obligations of two subsidiaries to a maximum of $120.0 million to fulfill their performance and payment of all indebtedness related to all foreign exchange contracts with a bank. At June 30, 2005, there were five option contracts with the bank under this guarantee in the aggregate notional amount of Canadian $26.3 million. In addition, there were three forward contracts with the bank under this guarantee denominated in various currencies in the aggregate notional amount of $8.7 million as converted at the period end exchange rate. There was no liability under this guarantee as the subsidiaries were not in default of any contract.

     Product Warranties. The Company warrants to its customers that its software products will operate substantially in conformity with product documentation and that the physical media will be free from defect. The specific terms and conditions of the warranties are generally 30 days. The Company accrues for known warranty issues if a loss is probable and can be reasonably estimated, and accrues for estimated incurred but unidentified warranty claims based on historical activity. The Company has not recorded a warranty accrual to date as there is no history of material warranty claims and no significant warranty issues have been identified.

     Environmental Liabilities. The Company engages in the development, marketing and distribution of software, and has never had any environmental related claims. The Company believes the likelihood of incurring a material loss related to environmental indemnification is remote due to the nature of its operations. The Company is unable to reasonably estimate the amount of any unknown or future claim and as such has not recorded any liability in accordance with the recognition and measurement provisions of FAS No. 143, “Accounting for Asset Retirement Obligations” (“FAS 143”).

     Other Liabilities and Other Claims. The Company is liable for certain costs of restoring leased premises to their original condition. In accordance with FAS 143, the Company measured and recorded the fair value of these obligations at June 30, 2005 and December 31, 2004 and such amounts were included in other current liabilities in the condensed consolidated balance sheets. These liabilities were not associated with the Crystal Decisions restructuring plan.

12. Income Taxes

     The Company is subject to income taxes in numerous jurisdictions and the use of estimates is required in determining the Company’s provision for income taxes. Although the Company believes its tax estimates are reasonable, the ultimate tax determination involves significant judgment that could become subject to audit by tax authorities in the ordinary course of business. Due to the Company’s size, it contemplates it will regularly be audited by tax authorities in many jurisdictions.

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     The Company provides for income taxes for each interim period based on the estimated annual effective tax rate for the year, adjusted for changes in estimates which occur during the period. During the three and six months ended June 30, 2005, the Company recorded discrete charges related to changes in estimates, partially offset by the provision to return true up recognized in association with filing certain of the Company’s income tax returns. As a result of these discrete charges, the Company’s effective tax rate increased to 39% for the three months ended June 30, 2005 from 38% for the three months ended June 30, 2004, and to 40% for the six months ended June 30, 2005 from 38% for the six months ended June 30, 2004.

13. Subsequent Events

(a) Acquisition of SRC Software, Inc.

     Under the terms of a definitive purchase agreement dated July 20, 2005, between the Company, Sodium Acquisition Corporation, a Delaware corporation and an indirect, wholly owned subsidiary of the Company, SRC Software, Inc. (“SRC”), a Delaware corporation, Vista Equity Fund II LP, a Cayman Islands exempted limited partnership, and Andrew Ferguson, Stephen Reiff and Philip Sandstrom, the Company agreed to acquire all of the outstanding capital stock of SRC and to assume all of the SRC options outstanding immediately prior to closing by means of a merger of Sodium Acquisition Corporation with and into SRC for $90.0 million in cash, subject to certain adjustments as set forth in the purchase agreement. Of the cash to be paid, $15.0 million will be held in escrow. Upon completion of the merger, SRC will become an indirect, wholly owned subsidiary of the Company.

     Upon consummation of the merger of Sodium Acquisition Corporation with and into SRC, options held to acquire shares of SRC common stock outstanding immediately prior to consummation of the merger, whether vested or unvested, will be converted into options to acquire currently outstanding, validly issued and fully paid ordinary shares of Business Objects. An option exchange ratio will be used to determine the number of options in the Company’s ordinary shares that may be received for each SRC stock option.

     SRC has made customary representations, warranties and covenants, including, among others, covenants (i) to conduct its business in the ordinary course consistent with past practice during the interim period between execution of the purchase agreement and consummation of the merger; (ii) not to engage in certain kinds of transactions during such period; and (iii) not to solicit proposals relating to alternative business combination transactions during such period.

     The completion of the merger is subject to various closing conditions, including, among others, (i) obtaining the approval of the stockholders of SRC; (ii) the absence of any legal or regulatory restraint or prohibition preventing the consummation of the merger; (iii) expiration or termination of the applicable Hart-Scott-Rodino waiting period; (iv) certain exceptions, including the accuracy of the representations and warranties; and (v) the absence of any material adverse effect on SRC.

(b) Registration of New SAC Shares

     On October 8, 2004, the Company filed a registration statement with the SEC on behalf of its largest shareholder, New SAC, for the resale from time to time of 14,365,339 ordinary shares or ADSs held by New SAC. The Company has filed various amendments to this registration statement, with an amendment filed on June 23, 2005, which filing included an increase in the number of shares eligible for resale from 14,365,339 to 15,887,329, (the “Shares”). The Shares represented approximately 17.6% of the Company’s voting rights at June 30, 2005. The Company will not receive any proceeds on resale of the Shares by New SAC and the Company is not seeking to sell any of the Shares for its own account under the registration statement. In connection with the Crystal Decisions Acquisition, the Company committed to paying the costs, other than underwriting commissions and discounts or sales commissions, if any, associated with this registration statement. As of the date of this filing, the registration statement had not been declared effective by the SEC.

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

The following discussion and analysis should be read together with our Condensed Consolidated Financial Statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based on our current expectations, assumptions, estimates and projections about Business Objects and our industry. These forward-looking statements include, but are not limited to, statements concerning risks and uncertainties. Our actual results could differ materially from those indicated in these forward-looking statements as a result of certain factors, as more fully described in the “Factors Affecting Future Operating Results” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Quarterly Report on Form 10-Q. We undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur.

Overview

     We are the world’s leading independent provider of Business Intelligence (“BI”) solutions. We develop, market and distribute software and provide services that enable organizations to track, understand and manage enterprise performance within and beyond the enterprise. Our business intelligence platform, Business Objects XI, offers a single platform for enterprise reporting, query and analysis, enterprise performance management and data integration. We believe that data provided by the use of a BI solution allows organizations to make better and more informed business decisions. We have also built one of the industry’s strongest and most diverse partner communities and we also offer consulting and education services to help customers effectively deploy their business intelligence projects. We have one reportable segment – BI software products and services.

Key Performance Indicators

(In millions, except for percentages and diluted net income per	Three Months Ended						Six Months Ended
share)	June 30,						June 30,
	2005			2004			2005			2004
Revenues	$	262.4		$	222.2		$	511.2		$	439.5
Growth in revenues (compared to prior year comparative period)		18	%		72	%		16	%		78	%
Income from operations	$	34.9		$	18.3		$	56.4		$	27.6
Income from operations as percentage of total revenues		13	%		8	%		11	%		6	%
Diluted net income per share	$	0.25		$	0.13		$	0.42		$	0.16

The key performance indicator for growth in revenues for 2004 periods reflects the increase from our acquisition of Crystal Decisions on December 11, 2003.

Results of Operations

     The following table shows each line item on our condensed consolidated statements of income as a percentage of total revenues (as calculated based on amounts in thousands rounded to the nearest percentage):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Net license fees:
Business Intelligence Platform		42	%		48	%		41	%		48	%
Enterprise Performance Management Applications		3			3			3			3
Data Integration		3			2			3			2
Total net license fees		48			53			47			53

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	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Services revenues:
Maintenance and technical support		38	%		34	%		39	%		34	%
Professional services		14			13			14			13
Total services fees		52			47			53			47
Total revenues		100			100			100			100
Cost of net license fees		3			3			3			3
Cost of services		20			19			20			19
Total cost of revenues		23			21			23			22
Gross margin		77			79			77			78
Operating expenses:
Sales and marketing		40			45			41			45
Research and development		15			16			16			17
General and administrative		9			9			9			9
Restructuring costs		—			1			—			1
Total operating expenses		64			71			66			72
Income from operations (operating margin)		14			8			11			6
Interest and other income (expense), net		1			0			1			(1	)
Income before provision for income taxes		15			8			12			5
Provision for income taxes		(6	)		(3	)		(5	)		(2	)
Net income		9	%		5	%		7	%		3	%

Impact of Foreign Currency Exchange Rate Fluctuations on Results of Operations

     As we conduct a significant number of transactions in currencies other than the U.S. dollar, we have presented constant currency information, where meaningful, to provide information for assessing our underlying business performance excluding the effect of currency exchange rate fluctuations. As currency rates change from quarter to quarter and year over year, our results of operations may be impacted. For example, our results may show an increase or decrease in costs for a period; however, when the portion of those costs denominated in other currencies is translated into U.S. dollars at the same rate as the comparative quarter or year, the results may indicate a different change in balance, with the change being principally the result of fluctuations in the currency exchange rates. In order to present changes to our operating results in constant currency, our operating results were calculated by translating the results for the three and six months ended June 30, 2005 using the average currency exchange rates in effect for the three and six months ended June 30, 2004. As can be seen from these numbers, historically our revenues and our expenses have moved in the same direction, either both increasing or both decreasing, resulting in only a small net currency impact on income from operations.

     On a constant currency basis, our reported results for total revenues would have been $7.6 million lower for the three months ended June 30, 2005, and $15.0 million lower for the six months ended June 30, 2005, if we translated revenues at prior period exchange rates. On a constant currency basis for the three and six months ended June 30, 2005, respectively, our reported results for total cost of revenues and operating expenses in aggregate would have been $8.5 million and $17.7 million lower if translated at prior period exchange rates. At exchange rates consistent with those for the three and six months ended June 30, 2004, we would have recognized greater income from operations of $0.9 million and $2.7 million for the three and six months ended June 30, 2005, respectively.

     From time to time, we and our subsidiaries transact in currencies other than the local currency of that entity. As a result, the asset and liability balances may be denominated in a currency other than that of the local countries’ and on settlement of these asset or liability balances, or at quarter end for reporting purposes, we may experience mark-to-market exchange gains or losses, which are recorded in interest and other income (expense), net.

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Revenues

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2005		2004		2005		2004
Net license fees:
Business Intelligence Platform	$	109.3	$	107.2	$	210.2	$	209.2
Enterprise Performance Management Applications		8.9		6.6		17.2		14.7
Data Integration		6.7		3.5		12.6		7.9
Total net license fees	$	124.9	$	117.2	$	240.0	$	231.7
Services revenues:
Maintenance and technical support.		100.7		75.6		200.8		149.4
Professional services		36.8		29.4		70.4		58.4
Total services revenues		137.5		105.0		271.2		207.8
Total revenues	$	262.4	$	222.2	$	511.2	$	439.5

     Net License Fees. Net license fees increased by $7.7 million, or 7%, in the three months ended June 30, 2005 from the three months ended June 30, 2004 (an increase of $4.0 million in constant currency). Net license fees increased by $8.3 million, or 4%, in the six months ended June 30, 2005 from the six months ended June 30, 2004 (an increase of $0.8 million in constant currency).

     The increases in the three and six months ended June 30, 2005 were the result of increased revenues in all product families — business intelligence platform, performance management and data integration products. During the quarter ended June 30, 2005, we closed 13 license transactions with revenues of more than of $1.0 million, up from 8 license transactions in the quarter ended June 30, 2004. During the six months ended June 30, 2005, we closed 22 license transactions with revenues of more than $1.0 million, up from 15 license transactions in the six months ended June 30, 2004. We believe the increased number of greater than $1.0 million transactions closed over the comparative periods reflects that an increasing number of customers are electing to expand their commitments across the BusinessObjects product families. In addition, we have generally continued to see growth in the number of less than $1.0 million transactions.

     In December 2004, we launched a new platform called BusinessObjects XI, on which all new products including enterprise reporting, query and analysis, enterprise performance management and data integration operate. The launch of BusinessObjects XI completed the integration on a single platform of the Crystal Decisions’ and Business Objects’ product lines. We did not recognize any revenues from products on the BusinessObjects XI platform in 2004. During the six months ended June 30, 2005, we released all of our products on this platform in all supported languages. Our most significant core business intelligence product is known as BusinessObjects Enterprise XI. During the three and six months ended June 30, 2005, respectively, we recorded approximately $54 million and $71 million in net license fees from products on this platform. We believe this level of license fees within the second quarter after release demonstrates increasing customer acceptance of this new platform and the migration to products on this platform.

     We expect the adoption of the newest releases of our core products on our new platform will be gradual and increase over several quarters. While the revenues recognized to date from BusinessObjects XI platform products clearly indicate demand, we believe that some customers may wait to purchase products on the BusinessObjects XI platform until further versions of products on this platform or an updated platform have been released. Given the nature of software product transitions and considering the fact that certain current Business Objects’ and Crystal Decisions’ products will transition to end of life over the next 18 months, we experienced during the six months ended June 30, 2005 and expect to continue to experience a decrease in revenues from older product offerings. We cannot predict whether revenues from our products other than those released on the BusinessObjects XI platform will be consistent with patterns we have previously experienced or whether customer acceptance of our current products will be similar to our prior product

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releases. While we believe that our success in bringing to market an integrated product has built customer confidence in our business, we anticipate that our net license fees and associated services revenues for 2005 will depend on the market’s adoption rate of our new products.

     For the six months ended June 30, 2005, 49% of our net license fees were generated through our direct sales force and 51% were generated from channel partners, including original equipment manufacturers, value added resellers and system integrators. For the six months ended June 30, 2004, 54% of our net license fees were generated through our direct sales force and 46% were generated from channel partners. Historically, net license fees from direct sales comprised a greater percentage of total net license revenues. During 2004, as a result of the strengthening of our independent distributors and channel partners, our direct sales revenues were approximately the same as our indirect sales revenues. For the three months ended March 31, 2005, net license transactions with revenues of more than $1.0 million were primarily from indirect sources. For the three months ended June 30, 2005, the majority of net license transactions with revenues of more than $1.0 million were from direct sales. This demonstrates that large transactions, which are neither predictable nor consistent in size or timing, can disproportionately affect the percentage of our total revenues derived from direct or indirect sales from one period to another. No single customer or single channel partner represented more than 10% of total revenues during the periods presented.

     Services Revenues. Services revenues increased by $32.5 million, or 31%, in the three months ended June 30, 2005 from the three months ended June 30, 2004 (an increase of $28.6 million in constant currency). Services revenues increased by $63.4 million, or 30%, in the six months ended June 30, 2005 from the six months ended June 30, 2004 (an increase of $55.9 million in constant currency).

     Maintenance and technical support. For the three month period ended June 30, 2005, $25.0 million, or 77%, of the increase in total services revenues, related to maintenance and technical support revenues (an increase of $22.1 million in constant currency). For the six months ended June 30, 2005, $51.4 million, or 81%, of the increase in total services revenues, related to maintenance and technical support revenues (an increase of $45.7 million in constant currency). During the three and six months ended June 30, 2004, and directly associated with accounting for the acquisition of Crystal Decisions, we were required to exclude $8.7 million and $21.3 million, respectively, of certain maintenance revenues which would have otherwise been recognized from Crystal Decisions’ deferred maintenance revenues existing at the time of the acquisition. The remainder of the increase in our maintenance and technical support services revenues for both the three and six-month periods resulted primarily from an increase in our installed base relating to new and existing customers.

     Professional Services. Of the $32.5 million increase in total services revenues for the three months ended June 30, 2005, $7.5 million, or 23%, of the increase in total services revenues, related to professional services revenues including consulting and training (an increase of $6.5 million in constant currency). Of the $63.4 million increase in total services revenues for the six months ended June 30, 2005, $12.0 million, or 19%, of the increase in total services revenues, related to professional services revenues including consulting and training (an increase of $10.2 million in constant currency).

     We have committed and will continue to commit management time and financial resources to develop our professional services teams. We believe that enabling companies to deploy business intelligence solutions company-wide in an efficient and cost effective manner, as assisted by our professional services team, will promote customer satisfaction and ultimately drive license revenues in the future. The success of this strategy is in part reflected in professional services comprising a greater proportion of the increase in total services revenues during the three months ended June 30, 2005 compared to the six months ended June 30, 2005. In addition, during the three months ended June 30, 2005, new training programs and increased demand for our training services contributed to increased levels of training revenues over the comparative period for 2004.

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Geographic Revenues Mix

     The following shows the geographic mix of our total revenues. For the three and six months ended June 30, revenues in all major geographies remained consistent as a percentage of total revenues.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2005		2004		2005		2004
Americas	$	123.6	$	104.3	$	241.7	$	208.4
Europe, Middle East and Africa (EMEA)		116.5		99.6		227.7		196.1
Asia Pacific, including Japan		22.3		18.3		41.8		35.0
Total revenues	$	262.4	$	222.2	$	511.2	$	439.5

     Total revenues from the Americas increased $19.5 million and $33.3 million in the three and six months ended June 30, 2005, respectively, from the three and six months ended June 30, 2004. The $19.5 million increase in Americas’ revenues was primarily attributable to increased license revenues driven by a greater number of large revenue transactions realized in the quarter. We also continued to strengthen our sales force in the Americas and saw increases in productivity measures. In addition, our new product releases contributed to the increased revenues. The $33.3 million increase in Americas’ revenues was attributable to increased license and services revenues, the majority of which was from increased maintenance and technical support revenues.

     Total revenues from EMEA increased $16.8 million (an increase of $11.6 million in constant currency) in the three months ended June 30, 2005 from the three months ended June 30, 2004, and increased $31.6 million (an increase of $20.6 million in constant currency) in the six months ended June 30, 2005 from the six months ended June 30, 2004. The increases in EMEA revenues in the three and six months ended June 30, 2005 were attributable to an increase in all revenues categories, led by an increase in maintenance and technical support revenues. In addition, we generally continued to see strong performance in our EMEA consulting business associated with large transactions and increases in training revenues associated with increased license fees.

     Total revenues from Asia Pacific, including Japan, increased $3.9 million and $6.8 million in the three and six months ended June 30, 2005, respectively, from the three and six months ended June 30, 2004. The increases in revenues were the result of increases in license, maintenance and consulting revenues, partially offset by a decrease in training revenues. Our existing and new operations in this region continue to contribute to our increased revenues.

Cost of Revenues

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2005		2004		2005		2004
Cost of revenues:
Net license fees	$	7.2	$	6.0	$	14.4	$	13.7
Services		52.8		41.4		104.2		83.0
Total cost of revenues	$	60.0	$	47.4	$	118.6	$	96.7

     Cost of net license fees. Cost of net license fees increased by $1.3 million, or 21%, in the three months ended June 30, 2005 from the three months ended June 30, 2004 (an increase of $0.9 million in constant currency). Cost of net license fees increased by $0.7 million, or 5%, in the six months ended June 30, 2005 from the six months ended June 30, 2004 (no increase in constant currency).

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     The majority of the cost of net license fees represented the amortization of developed technology of $5.3 million and $5.0 million for the three months ended June 30, 2005 and 2004, respectively, and $10.7 million and $10.2 million for the six months ended June 30, 2005 and 2004, respectively. A large portion of the remaining costs in both the three and six months periods related to costs associated with shipping our products, including major product releases in January 2005 (BusinessObjects XI platform products) and January 2004 (Crystal Version 10 products), as well as third party royalties. We continued to ship a large volume of orders of BusinessObjects XI products in the three months ended June 30, 2005. Gross margins on net license fees were 94% for the three months ended June 30, 2005 compared to 95% for the three months ended June 30, 2004. Gross margins on net license fees were consistent at 94% for the six months ended June 30, 2005 and 2004.

     Cost of services revenues. Cost of services revenues increased $11.3 million, or 27%, in the three months ended June 30, 2005 from the three months ended June 30, 2004 (an increase of $9.7 million in constant currency). Cost of services revenues increased $21.1 million, or 25%, in the six months ended June 30, 2005 from the six months ended June 30, 2004 (an increase of $17.9 million in constant currency). During the three months ended June 30, 2005, we continued our investment in supporting our customers in the deployment of our products, including the addition of headcount to increase our overall professional services capacity. During the three months ended June 30, 2005, the cost increase was primarily attributable to three items: $4.5 million for headcount, associated benefits and travel costs, $3.9 million for professional fees primarily related to third-party consultants to support our consulting business and approximately $2.0 million in facilities and information technology costs. During the six months ended June 30, 2005, the cost increase was primarily attributable to three items: $8.1 million for headcount, associated benefits and travel costs, $8.7 million for professional fees, the majority of which related to third-party consultant fees and approximately $3.0 million in facilities and information technology costs.

     Gross margins on services revenues were 62% for the three months ended June 30, 2005 compared to 61% for the three months ended June 30, 2004. Gross margins on services revenues were 62% for the six months ended June 30, 2005 compared to 60% for the six months ended June 30, 2004. Taking into consideration the adjustment for deferred revenues previously discussed, gross margins decreased in relative terms from the comparative year periods by 2% for each of the three and six months ended June 30, 2005. These decreases were attributable to: (i) a slight shift to professional services revenues in the three months ended June 30, 2005, which yield lower margins; and (ii) the mix of outsourcing used for specific consulting engagements. Our consulting and training margins increased in the three months ended June 30, 2005 from the three months ended March 31, 2005, which we believe is a reflection of our investment in this area; however, these margins have not returned to levels of the previous year. We expect that services revenues will generally increase in the future and our margins will increase as a result.

Operating Expenses

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2005		2004		2005		2004
Sales and marketing	$	104.8	$	99.3	$	208.5	$	196.5
Research and development		40.4		36.5		80.7		76.2
General and administrative		22.2		19.2		47.0		40.9
Restructuring costs		—		1.5		—		1.5
Total operating expenses	$	167.4	$	156.5	$	336.2	$	315.1

     Total operating expenses increased by $10.9 million, or 7%, (an increase of $5.9 million in constant currency), in the three months ended June 30, 2005 compared to the three months ended June 30, 2004. Total operating expenses increased by $21.1 million, or 7%, (an increase of $9.0 million in constant currency) in the six months ended June 30, 2005 compared to the six months ended June 30, 2004. The absolute dollar increases in each period are described by line item below.

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In the three and six months ended June 30, 2005, total operating expenses as a percentage of total revenues decreased by 7% and 6%, respectively, from the three and six months ended June 30, 2004. The decrease as a percentage of total revenues was the result of: (i) cost synergies realized in the three and six months ended June 30, 2005; (ii) the absence of material integration costs associated with our acquisition of Crystal Decisions; (iii) lower stock-based compensation expense related to assumed options from Crystal Decisions; and (iv) a reduction in bad debt expenses. These cost decreases were partially offset by increases in overall facilities and information technology costs as we continue to expand worldwide.

     Sales and Marketing Expenses. Sales and marketing expenses increased by $5.5 million, or 6%, in the three months ended June 30, 2005 from the three months ended June 30, 2004 (an increase of $1.9 million in constant currency). Sales and marketing expenses increased by $12.1 million, or 6%, in the six months ended June 30, 2005 from the six months ended June 30, 2004 (an increase of $4.1 million in constant currency). Sales and marketing expenses decreased as a percentage of total revenues in both the three and six months ended June 30, 2005 compared to the comparable period due to revenue growing at a faster rate than spending on sales activities, and increased operational efficiencies resulting in part from reduced turnover, especially in the Americas. The increase in sales and marketing expenses were associated with increases in headcount and related benefits costs, costs associated with the January 2005 launch and advertising campaign for BusinessObjects XI, new marketing campaigns during the three months ended June 30, 2005 and increased facilities and information technology costs.

     Research and Development Expenses. Research and development expenses increased by $3.9 million, or 11%, in the three months ended June 30, 2005 from the three months ended June 30, 2004 (an increase of $1.6 million in constant currency). Research and development expenses increased by $4.5 million, or 6%, in the six months ended June 30, 2005 from the six months ended June 30, 2004 (an increase of $0.1 million in constant currency). Research and development expenses decreased by 1% of total revenues in each of the three and six months ended June 30, 2005 compared to 2004, mainly due to the result of the consolidation of locations since the acquisition of Crystal Decisions. In the three and six months ended June 30, 2005, cost increases were primarily associated with increased headcount costs, including an increase in our off-shore operations in India, and increased facilities and information technology costs.

     General and Administrative Expenses. General and administrative expenses increased by $3.0 million, or 16%, in the three months ended June 30, 2005 from the three months ended June 30, 2004 (an increase of $2.4 million in constant currency). General and administrative expenses increased by $6.1 million, or 15%, in the six months ended June 30, 2005 from the six months ended June 30, 2004 (an increase of $4.8 million in constant currency). The increase in the three months ended June 30, 2005 was primarily the result of $2.9 million in additional headcount costs, including temporary personnel and travel costs, $3.0 million of additional legal and accounting related professional fees, which were partially offset by a net decrease in bad debt expense of $1.6 million. The increase in the six months ended June 30, 2005 was attributable to all of these factors, including a $5.0 million increase in headcount, partially offset by a net decrease in bad debt expense of $3.6 million. The large decreases in bad debt expense were primarily attributable to collections of older accounts receivable balances which were reserved against in prior periods, but which we collected during the six months ended June 30, 2005.

     Restructuring Costs. Restructuring costs decreased by $1.5 million, or 100%, in each of the three and six months ended June 30, 2005 from the three and six months ended June 30, 2004. Restructuring costs in the three and six months ended June 30, 2004 were associated with the planned facility abandonment or closure of specific office locations occupied by us prior to the acquisition of Crystal Decisions.

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Interest and Other Income (Expense), Net

     Interest and other income (expense), net were comprised of the following:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions)	2005			2004			2005			2004
Net interest income	$	1.9		$	0.8		$	3.7		$	1.7
Patent infringement settlement income		—			1.8			—			3.6
Net foreign exchange gains (losses)		1.8			(2.3	)		4.4			(9.1	)
Other income (expense)		(0.5	)		—			(0.5	)		—
Interest and other income (expense), net	$	3.2		$	0.3		$	7.6		$	(3.8	)

     Net interest income. Net interest income for both the three and six months ended June 30, 2005 increased as the average interest earning balances of invested cash and cash equivalents were higher for the three and six months ended June 30, 2005 compared to the three and six months ended June 30, 2004. Excess cash is invested in short-term vehicles such as bank mutual funds, daily sweep accounts and interest bearing bank accounts in accordance with our banking policies. As our worldwide cash position allows, we intend to invest in short-term investments that typically yield greater rates of return.

     Patent infringement settlement income. During the six months ended June 30, 2004, patent infringement settlement income consisted of quarterly payments from Cognos related to our U.S. Patent No. 5,555,403. Quarterly payments of $1.8 million commenced in September 2002 and concluded with a final quarterly payment in the three months ended June 30, 2004. We received no similar payments in the three or six months ended June 30, 2005.

     Net foreign exchange gains (losses). During the three months ended June 30, 2005, the majority of the $1.8 million net foreign exchange gains resulted from transactions by our Irish subsidiary, which was impacted by the continued strength of the U.S. dollar against the euro. The gains resulted primarily from cash transactions and the revaluation of certain receivables and unhedged intercompany loans. These gains were unrelated to the $2.6 million of net foreign exchange gains recorded during the three months ended March 31, 2005, the majority of which represented gains on the settlement of certain fourth quarter intercompany balances, which were settled in January 2005 and not hedged. The gains related to the settlement of intercompany balances at favorable terms as a result of currency fluctuation.

     During the six months ended June 30, 2004, we recognized $9.1 million of net foreign exchanges losses, $6.8 million of which were recognized in the three months ended March 31, 2004. The majority of the net foreign exchange loss for the three months ended March 31, 2004 represented non-operating net currency exchange losses which were primarily caused by the effect of a stronger U.S. dollar on our euro-denominated intercompany U.S. dollar loans, which arose as part of the Crystal Decisions Acquisition and integration process. These intercompany loans and the interest thereon were eliminated on consolidation; however, we incurred mark-to-market non-cash foreign exchange losses on the revaluation of these loans from U.S. dollars to euros on the euro-denominated statutory books. The majority of the $2.3 million net foreign exchange loss for the three months ended June 30, 2004 was attributable to the reversal of the March 31, 2004 unrealized gain of $3.4 million, partially offset by a gain on settlement of forward contracts.

     Since April 2004, we have mitigated the majority of the impact on our statements of income by entering into forward contracts whereby the mark-to-market adjustments on the forward contracts generally offset the gains or losses on the revaluation of the intercompany loans. In January 2005, we expanded our hedging strategy to include quarterly forecasted foreign-currency denominated intercompany transactions. While we believe we have covered the majority of our foreign exchange exposure by either being naturally hedged or with the use of forward or option contracts, the large variation in world currencies may result in unexpected gains or losses in future periods. We continue to assess our exposures on an ongoing basis.

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Income Taxes

     We provide for income taxes for each interim period based on our estimated annual effective tax rate for the year, adjusted for changes in estimates which occur during the period. During the three and six months ended June 30, 2005, we recorded discrete charges related to changes in estimates, partially offset by the provision to return true up recognized in association with filing certain of our income tax returns. As a result of these discrete charges, our effective tax rate increased to 39% for the three months ended June 30, 2005 from 38% for the three months ended June 30, 2004, and to 40% for the six months ended June 30, 2005 from 38% for the six months ended June 30, 2004.

Liquidity and Capital Resources

     The following table summarizes our statements of cash flows and changes in cash and cash equivalents:

	Six Months Ended
(in millions)	June 30,
	2005			2004
Cash flow provided by operating activities	$	71.3		$	12.5
Cash flow used in investing activities		(13.9	)		(16.3	)
Cash flow provided by (used in) financing activities		16.0			(33.3	)
Effect of changes in foreign currency exchange rates on cash and cash equivalents		(0.9	)		4.3
Net increase (decrease) in cash and cash equivalents	$	72.5		$	(32.8	)

     Cash and cash equivalents totaled $366.0 million at June 30, 2005, an increase of $72.5 million from December 31, 2004. In addition to the cash and cash equivalents balance at June 30, 2005, we held $17.9 million in restricted cash and short-term investments. Our principal source of liquidity has been our operating cash flow, including the collection of accounts receivable, funds provided by stock option exercises and the issuance of shares under our employee stock purchase plans.

     While our cash and cash equivalents increased in the six months ended June 30, 2005, the overall balance decreased by $8.5 million from March 31, 2005. This decrease was primarily the result of: (i) less cash collected from accounts receivable in the three months ended June 30, 2005 in comparison to the large inflow of accounts receivable payments in the three months ended March 31, 2005 attributable to the strong revenues recognized in the three months ended December 31, 2004; (ii) additional payments of taxes due when we filed our tax returns in the three months ended June 30, 2005; (iii) fewer proceeds from stock option exercises; and (iv) the net payment of U.S. dollar equivalent $11.6 million on the settlement of forward contracts to purchase U.S. dollars, Canadian dollars and British pounds against the euro in the three months ended June 30, 2005. These forward contracts related to the hedging of intercompany loan liabilities in the records of our Irish subsidiary, and the net outflow of cash resulted in the reduction in the cumulative mark-to-market balance of the forward contract liabilities.

     Operating Activities. During the six months ended June 30, 2005, we generated more cash than we used from operations. These cash resources resulted primarily from net income excluding non-cash items of $76.9 million and net receipts of $29.0 million from accounts receivables, partially offset by cash payments of approximately $32.6 million for normal course tax liabilities, net payments of $14.4 million in accrued payroll and related expense accruals, and $11.6 million paid on the settlement of various forward contracts.

     The net decrease in accounts receivables from December 31, 2004 was due to the high level of collections during the six months ended June 30, 2005 and especially during the three months ended March 31, 2005. Given our strong fourth quarter of 2004, the significant amount of billings for maintenance renewals which generally are billed in the fourth quarter of the year, and efforts by our accounts receivable teams to collect receivables, our days sales outstanding decreased to 72 days at June 30, 2005 from 84 days at December 31, 2004, and decreased from 81 days at June 30, 2004.

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Cash collected from accounts receivable was $43.9 million greater for the six months ended June 30, 2005 over the six months ended June 30, 2004, resulting in a reduction in days sales outstanding. Given the seasonality of our revenues and related collection of receivables, we expect the number of days sales outstanding will vary in future quarters but will generally remain within our target range of 60 to 75 days.

     During the six months ended June 30, 2004, we generated greater cash resources than we used from operations. The major uses of cash in the six months ended June 30, 2004 include: cash payments of approximately $13.0 million for restructuring charges; a net cash payment of $21.5 million in accrued payroll and related expense accruals which included severance payments to former employees, and cash payments of approximately $11.9 million for normal course tax liabilities. As a result of the integration of the two companies and the consolidation of certain portions of our collections teams in the three months ended June 30, 2004, our days sales outstanding increased to 81 days at June 30, 2004 from 66 days at December 31, 2003.

     Investing Activities. Net cash used in investing activities of $13.9 million in the six months ended June 30, 2005 primarily related to the purchase of computer hardware and software and related infrastructure costs to support our growth, and to a lesser extent, costs associated with facilities improvements. Net cash used in investing activities of $16.3 million in the six months ended June 30, 2004 related to capital expenditures and other equipment costs, including costs related to the continued implementation of financial systems and information technology infrastructure and the continued expansion of our facilities.

     Financing Activities. Net cash provided by financing activities of $16.0 million in the six months ended June 30, 2005 was attributable to the issuance of ordinary shares or ADSs under our stock option and employee stock purchase plans. During the six months ended June 30, 2004, the net use in cash of $33.3 million for financing activities included: (i) the transfer of $33.3 million of cash to a restricted account in accordance with a pledge and security agreement to collateralize forward contracts, (ii) the payment of $3.1 million against the escrow payable balance and resulting offsetting reduction of $3.3 million in restricted cash; (iii) the repurchase of 1 million of our shares for $21.0 million in the open market at a weighted average price per share of $20.95, partially offset by (iv) cash received of $20.7 million from the exercise of options under our stock option plans and the issuance of shares under our employee stock purchase plans. We did not repurchase any shares on the open market during the six months ended June 30, 2005 or enter into any banking or credit agreements. We expect the monies received on the exercise of options and purchase of shares to vary as we cannot predict when our employees will exercise their stock options or to what extent they will participate in our employee stock purchase plans and/or the impact the change in our stock price will make on their decisions.

Future Liquidity Requirements

     Changes in the demand for our products and services could impact our operating cash flow. We believe that our existing cash and cash equivalents will be sufficient to meet our consolidated cash requirements including, but not limited to, working capital, capital expenditures and operating lease commitments for at least the next 12 months. Although we expect to continue to generate cash from operations, we may seek additional financing from debt or equity issuances. In order to provide flexibility to obtain cash on a short-term basis, we entered into a €100.0 million credit agreement in the three months ended December 31, 2004, which can be drawn in euros, U.S. dollars or Canadian dollars, with €60.0 million to satisfy general corporate financing requirements and a €40.0 million bridge loan for the purpose of acquiring companies and/or for medium- and long-term financing. The credit agreement restricts certain of our activities including the extension of a mortgage, lien, pledge, security interest or other rights related to all or part of our existing or future assets or revenues, as security for any existing or future debt for money borrowed. At June 30, 2005 there were no drawings against or balances due related to this credit agreement.

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     Under the terms of an agreement and plan of merger dated July 20, 2005, by and among us, Sodium Acquisition Corporation, a Delaware corporation and an indirect, wholly owned subsidiary of the Company, SRC Software, Inc. (“SRC”), Vista Equity Fund II LP, and Andrew Ferguson, Stephen Reiff and Philip Sandstrom, an indirect, wholly owned subsidiary of the Company will merge with and into SRC and SRC will become an indirect, wholly owned subsidiary of ours. As a result of the merger, former stockholders of SRC will be entitled to receive the merger consideration and SRC options outstanding immediately prior to consummation of the merger will be assumed. The merger consideration will consist of $90.0 million in cash, subject to certain adjustments as set forth in the purchase agreement. Of the cash to be paid, $15.0 million will be held in escrow. The parties currently expect the transaction to close in September 2005; although, there can be no assurances that the transaction will close in that time period. We expect to finance this proposed transaction from our existing cash balances.

     The completion of the merger is subject to various closing conditions, including, among others, (i) obtaining the approval of the stockholders of SRC; (ii) the absence of any legal or regulatory restraint or prohibition preventing the consummation of the merger; (iii) expiration or termination of the applicable Hart-Scott-Rodino waiting period; (iv) certain exceptions, including the accuracy of the representations and warranties; and (v) the absence of any material adverse effect on SRC.

Contractual Obligations

     Our contractual obligations have not changed materially from those presented as of December 31, 2004 in our Annual Report on Form 10-K, except for an amendment to a lease agreement which we entered into on March 29, 2005 for our Paris, France facility. The lease amendment will result in an increase of approximately $13.8 million of operating lease commitments over the duration of the lease. The increase in operating lease commitments resulted from the three-year term extension to July 2012, partially offset by a decrease in annual rent effective April 2005. At December 31, 2004, our estimated commitment related to operating leases was $245.3 million, which included rent commitments related to our Paris, France facility through the original lease termination date of July 2009.

Guarantees

     Guarantor’s Accounting for Guarantees. From time to time, we enter into certain types of contracts that require us to indemnify parties against third party claims. These contracts primarily relate to: (i) certain real estate leases, under which we may be required to indemnify property owners for environmental and other liabilities, and other claims arising from our use of the applicable premises; (ii) certain agreements with our officers, directors, employees and third parties, under which we may be required to indemnify such persons for liabilities arising out of their efforts on our behalf; and (iii) agreements under which we have agreed to indemnify customers and partners for claims arising from intellectual property infringement. The conditions of these obligations vary and generally a maximum obligation is not explicitly stated. Because the obligated amounts under these types of agreements often are not explicitly stated, the overall maximum amount of the obligations cannot be reasonably estimated. Except as detailed below, we had not recorded any associated obligations on our balance sheets as of June 30, 2005 or December 31, 2004. We carry coverage under certain insurance policies to protect us in the case of any unexpected liability; however, this coverage may not be sufficient.

     We entered into a guarantee agreement to guarantee the obligations of two of our subsidiaries to a maximum of $120.0 million to fulfill their performance and payment of all indebtedness related to all foreign exchange contracts with a bank. At June 30, 2005, there were five option contracts with the bank under this guarantee in the aggregate notional amount of Canadian $26.3 million. In addition, there were three forward contracts with the bank under this guarantee denominated in various currencies in the aggregate notional amount of $8.7 million as converted at the period end exchange rate. There was no liability under this guarantee as our subsidiaries were not in default of any contract.

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     Product Warranties. We warrant that our software products will operate substantially in conformity with product documentation and that the physical media will be free from defect. The specific terms and conditions of the warranties are generally 30 days. We accrue for known warranty issues if a loss is probable and can be reasonably estimated, and accrue for estimated incurred but unidentified warranty issues based on historical activity. We have not recorded a warranty accrual to date as there is no history of material warranty claims and no significant warranty issues have been identified.

     Environmental Liabilities. We engage in the development, marketing and distribution of software, and have never had an environmental related claim. We believe the likelihood of incurring a material loss related to environmental indemnification is remote due to the nature of our business. We are unable to reasonably estimate the amount of any unknown or future claim and as such we have not recorded a related liability in accordance with the recognition and measurement provisions of FAS No. 143, “Accounting for Asset Retirement Obligations” (“FAS 143”).

     Other Liabilities and Other Claims. We are liable for certain costs of restoring leased premises to their original condition. In accordance with FAS 143, we measured and recorded the fair value of these obligations at June 30, 2005 and December 31, 2004 and such amounts were included in other current liabilities in the condensed consolidated balance sheets. These liabilities are not associated with the Crystal Decisions restructuring plan.

Off-Balance Sheet Arrangements

     We did not have any off-balance sheet arrangements as of June 30, 2005 or December 31, 2004. In accordance with FAS No. 87, “Employers’ Accounting for Pensions” (“FAS 87”), our French pension plan which is managed by a third party is not consolidated into our condensed consolidated balance sheets, except for the net liability due to the plan which was less than $0.1 million at June 30, 2005 and approximately $0.1 million at December 31, 2004. In accordance with FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51”, employers are not required to apply the interpretation provisions of FIN 46 to their employee benefit plans that are accounted for under FAS 87. We have not provided the full disclosure under FAS No. 132R, “Employers’ Disclosures about Pensions and Other Postretirement benefit – an amendment of FASB Statements No. 87, 88, and 106” as this plan is not material to our operations.

     Our audited consolidated financial statements and accompanying notes included in our 2004 Annual Report on Form 10-K and our unaudited condensed consolidated financial statements and accompanying notes included in our Quarterly Report on Form 10-Q are prepared in accordance with U.S. GAAP. These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates, judgments and assumptions are based upon information available to us at the time that they are made. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our consolidated financial statements will be affected. We believe the following critical accounting policies reflect our most significant estimates, judgments and assumptions used in the preparation of our consolidated financial statements. We have reviewed these critical accounting policies and related disclosures, which appear in our 2004 Form 10-K, with our Audit Committee.

• Recognition of revenues

• Business combinations

• Restructuring accruals

• Impairment of goodwill, intangible assets and long-lived assets

• Derivative financial instruments

• Contingencies and litigation

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• Accounts receivable, including allowances for doubtful accounts

• Consolidated tax provision, including accruals, and deferred income tax assets and liabilities

• Accounting for stock-based compensation

     There have been no significant changes in our critical accounting policies during the six months ended June 30, 2005 compared to what was previously disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2004.

Recent Pronouncements

     Share Based Payment. In December 2004, the Financial Accounting Standards Board (“FASB”) issued the FAS No. 123R, “Share-Based Payment, an Amendment of FASB Statements No. 123 and 95” (“FAS 123R”). This standard replaces the existing requirements under FAS 123 and APB 25 and requires that all forms of share-based payments to employees, including employee stock options and employee stock purchase plans, be treated the same as other forms of compensation by recognizing the related cost in the statements of income. FAS 123R eliminates the ability to account for stock-based compensation transactions using APB 25 and requires instead that such transactions be accounted for using a fair-value based method. FAS 123R is effective for annual periods beginning after June 15, 2005 and for the interim periods thereafter. The transitional provisions of FAS 123R allow companies to select either a modified-prospective or a modified-retrospective transition method, either of which effectively dictates in which period the actual expense will be reported in the statements of income. We currently intend to apply the modified-prospective transition method when we adopt FAS 123R on January 1, 2006, which will result in the recognition of an expense in the statement of income in periods after January 1, 2006.

     Commencing with the three months ending March 31, 2006, a pro rata portion of the actual expense determined at January 1, 2006 will be expensed to the statements of income over the remaining requisite service period of the applicable stock-based awards, which is on average three years for stock awards currently outstanding. The actual expense reported in the statements of income will be impacted by factors which may include, but are not limited to: (i) individuals leaving us who forfeited unvested stock options for which no charge will be taken; (ii) changes to the exchange rate between the U.S. dollar and the euro as our options were issued in euros (other than those assumed in the Crystal Decisions Acquisition) but the expense will be reflected in U.S. dollars; and (iii) additional stock-based awards granted or issued after June 30, 2005, including the potential issue of restricted stock awards or units.

     At December 31, 2004, we estimated the anticipated cost associated with past grants on the adoption of FAS 123R to be approximately $72 million. We decreased this cost estimate to approximately $50 million at March 31, 2005. The decrease in the estimate was the result of: (i) the six-month delay in implementation of FAS 123R, which effectively reduced the number of unvested options outstanding on which the expense will be calculated; (ii) stock option and share warrant cancellations during the period, which resulted in fewer outstanding stock options and share warrants and (iii) the impact of currency changes. We are in the process of determining a revised estimate of stock-based compensation cost under FAS 123R.

     We are in the process of determining the impact FAS 123R will have on our effective tax rate and cash flow from operations. We cannot currently estimate the amount of stock-based compensation expense or the amount of associated tax benefit, if any, which will relate to stock-based awards granted or issued subsequent to June 30, 2005.

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     In March 2005, the SEC released Staff Accounting Bulletin No. 107, “Share-Based Payment” (“SAB 107”), which provides the SEC staff position regarding the application of FAS 123R. SAB 107 contains interpretive guidance related to the interaction between FAS 123R and certain SEC rules and regulations, as well as provides the staff’s views regarding the valuation and disclosure of share-based payment arrangements for public companies. We continue to evaluate SAB 107.

     Accounting Changes and Error Corrections. In May 2005, the FASB Issued FAS No. 154, "Accounting Changes and Error Corrections” (“FAS 154”). FAS 154 replaces APB Opinion No. 20, "Accounting Changes” and FASB Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements.” FAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented based on the application of the new accounting principle. The statement will require the retrospective application of the impact of the direct effect of changes in accounting principles unless it is impracticable to determine either the period-specific effects of the cumulative effect of the change. FAS 154 carries forward without change the guidance contained in APB 20 for reporting the correction of an error in previously issued financial statements and changes in accounting estimates. FAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 and requires prospective application of the standard. We will adopt this standard on January 1, 2006 and currently do not anticipate that it will have a material impact on our financial statements or disclosures.

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Factors Affecting Future Operating Results

We operate in a rapidly changing environment that involves numerous uncertainties and risks. The following section describes some, but not all, of these risks and uncertainties that may adversely affect our business, financial condition or results of operations. This section should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying condensed notes thereto, and the other parts of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10-Q. Additional factors and uncertainties not currently known to us or that we currently consider immaterial could also harm our business, operating results and financial condition. We may make forward-looking statements from time to time, both written and oral. We undertake no obligation to revise or publicly release the results of any revisions to these forward looking statements based on circumstances or events which occur in the future. Our actual results may materially differ from those projected in any such forward looking statements due to a number of factors, including those set forth below and elsewhere in this Form 10-Q.

Risks Related to Our Business

Our quarterly operating results have been and will continue to be subject to fluctuations.

     Historically, our quarterly operating results varied substantially from quarter to quarter, and we anticipate that this will continue. This fluctuation occurs principally because our net license fees vary from quarter to quarter, while a high percentage of our operating expenses are relatively fixed and are based on anticipated levels of revenues. While the variability of our net 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 than evenly throughout the quarter;

• our customers typically wait until their fourth quarter, the end of their annual budget cycle, before deciding whether to purchase new software;

• economic activity in Europe generally slows during the summer months;

• customers may delay purchasing decisions in anticipation of changes to our product line, other new products, product enhancements or platforms or in response to announced pricing changes by us or our competitors;

• we expect our revenues to continue to vary based on the mix of products and services and the amount of consulting services that our customers order;

• we depend, in part, on large orders and any delay in closing a large order may result in the realization of potentially significant net license fees being postponed from one quarter to the next; and

• we expect our revenues to continue to be sensitive to the timing of offers of new products that successfully compete with our products on the basis of functionality, price or otherwise.

     General market conditions and other domestic or international macroeconomic and geopolitical factors unrelated to our performance also affect our quarterly revenues and operating results. For these reasons, quarter to quarter comparisons of our revenues and operating results may not be meaningful and you should not rely on them as an indication of our future performance.

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We may be unable to sustain or increase our profitability.

     While we were profitable in our most recent quarter and fiscal year, our ability to sustain or increase profitability on a quarterly or annual basis will be affected by changes in our business and the demand for our products. We expect our operating expenses to increase as our business grows, and we anticipate that we will make investments in our business. Therefore, our results of operations will be harmed if our revenues do not increase at a rate equal to or greater than increases in our expenses or are insufficient for us to sustain profitability.

Our revenues may be unpredictable due to the recent release of our BusinessObjects XI product, which integrates our existing Business Objects and Crystal Decisions product lines, and the expected end of life of our existing Business Objects and Crystal Decisions products.

     In the past, customers have deferred purchase decisions as the expected release date of our new products have approached, and have delayed making purchases of the new product to permit them to undertake a more complete evaluation or until industry analysts have commented upon the products. We released the Microsoft Windows version of BusinessObjects XI in December 2004, and by the end of June 2005, had released all related products on this platform in all supported languages. BusinessObjects XI could be particularly susceptible to deferred or delayed orders, since it represents the integration of our former stand-alone Business Objects and Crystal Decisions product lines. Some customers may delay purchasing BusinessObjects XI until this product is available in their desired configuration, until later releases or until third party opinion is widely available.

     Any customer hesitation could result in purchase delays from one quarter to the next, causing quarterly orders and associated shipments and revenues to vary more significantly during this transition than we have previously experienced. The impact on revenues of the introduction of BusinessObjects XI may be exacerbated or reduced by normal seasonal spending patterns. Our customers can elect to continue to use stand-alone products for some time and we may not be able to convince them to adopt our combined product. As a result, we may have to continue to support multiple products for a period of time.

     In addition, we anticipate that the pattern of adoption of BusinessObjects XI by existing customers, and the related impact on our revenues, may not be consistent with the patterns we have previously experienced because we have announced that the old Business Objects and Crystal Decisions’ products will transition to end of life over the next 18 months. Existing customers will be deciding whether and when to transition to the integrated BusinessObjects XI product, which may be viewed by them as a more significant decision about how to manage their BI platform. We cannot anticipate whether the product transition will result in a prolonged adoption cycle for BusinessObjects XI or what the impact will be on maintenance revenues for the existing Business Objects and Crystal Decisions’ products prior to their end of life.

     Charges to earnings resulting from our acquisition of Crystal Decisions and additional restructuring and operating expenses may adversely affect the market value of our shares.

     We have accounted for our acquisition of Crystal Decisions using the purchase method of accounting in accordance with U.S. GAAP. The portion of the estimated purchase price allocated to acquired in-process research and development was expensed in the three months ended December 31, 2003.

     We expect to incur additional amortization expense over the useful lives of certain other intangible assets acquired in connection with the acquisition, which will reduce our operating results through 2008. In addition, we recorded goodwill of $978.0 million in connection with the acquisition. If this goodwill, other intangible assets with indefinite lives or other assets acquired in the acquisition become impaired, we may be required to incur material charges. Any significant impairment charges will have a negative effect on our operating results and could reduce the market price of our shares.

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     We incurred $2.2 million in restructuring expenses during 2004, and do not expect to incur any significant additional restructuring expenses in 2005. These and any additional restructuring or operating expenses and charges could adversely affect our results of operations.

If we overestimate revenues, we may be unable to reduce our expenses to avoid or minimize a negative impact on our quarterly results of operations.

     Our revenues are difficult to forecast and are likely to fluctuate significantly from quarter to quarter. Our estimates of sales trends may not correlate with actual revenues in a particular quarter or over a longer period of time. Variations in the rate and timing of conversion of our sales prospects into actual licensing revenues could cause us to plan or budget inaccurately and those variations could adversely affect our financial results. In particular, delays, reductions in amount or cancellation of customers’ purchases would adversely affect the overall level and timing of our revenues, which could then harm our business, results of operations and financial condition.

     In addition, because our costs will be relatively fixed in the short term, we may be unable to reduce our expenses to avoid or minimize the negative impact on our quarterly results of operations if anticipated revenues are not realized. As a result, our quarterly results of operations could be worse than anticipated.

Changes to current accounting policies could have a significant effect on our reported financial results or the way in which we conduct our business.

     We prepare our financial statements in conformity with U.S. GAAP, which is a body of guidance that is subject to interpretation or influence by the American Institute of Certified Public Accountants, the Public Company Accounting Oversight Board, the SEC and various bodies formed to interpret and create appropriate accounting policies. Until and including 2004, we also prepared financial statements in accordance with French GAAP according to French law. Effective January 1, 2005, our statutory and consolidated French financial statements will be prepared in conformity with International Financial Reporting Standards (“IFRS”). The International Accounting Standards Board, which is the body formed to create the international standards, has undertaken a convergence program to eliminate a variety of differences between IFRS and U.S. GAAP. The most significant differences between U.S. GAAP and IFRS applicable to us relate to the treatment of stock-based compensation expense and the accounting for treasury shares related to a prior acquisition. For our consolidated financial statements prepared in accordance with IFRS, our previously reported results were required to be restated in accordance with IFRS. The opening balance sheet as of January 1, 2004 in accordance with IFRS was filed on April 26, 2005 with the Autorité des Marchés Financiers in France in our 2004 Document de Référence. Our accounting policies that recently have been or may in the future be affected by the changes in the accounting rules are as follows:

• software revenue recognition;

• accounting for stock-based compensation;

• accounting for variable interest entities; and

• accounting for goodwill and other intangible assets.

     Changes in these or other rules, or the scrutiny of current practices, may have a significant adverse effect on our reported operating results or the way in which we conduct our business.

Our market is highly competitive, which could harm our ability to sell products and services and reduce our market share.

     The market in which we compete is intensely competitive, highly fragmented and characterized by changing technology and evolving standards. Our competitors may announce new products, services or

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enhancements that better meet the needs of customers. Increased competition may cause price reductions or a loss of market share, either of which could have a material adverse effect on our business, results of operations and financial condition.

     Additionally, we may face competition from many companies with whom we have strategic relationships, including Hyperion Solutions Corporation, International Business Machines Corporation, Microsoft Corporation, Oracle Corporation and SAP AG, all of whom offer business intelligence products that compete with our products. For example, Microsoft has extended its SQL server business intelligence platform to include reporting capabilities which compete with our enterprise reporting solutions. These companies could bundle their business intelligence software with their other products at little or no cost, giving them a potential competitive advantage over us. Because our products will be specifically designed and targeted to the business intelligence software market, we may lose sales to competitors offering a broader range of products.

Some of our competitors may have greater financial, technical, sales, marketing and other resources than we do. In addition, acquisitions of or other strategic transactions by our competitors could weaken our competitive position or reduce our revenues.

     Some of our competitors may have greater financial, technical, sales, marketing and other resources than we do. In addition, some of these competitors may enjoy greater name recognition and a larger installed customer base than we do. These competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements or devote greater resources to the development, promotion, sale and support of their products. In addition, some of our competitors may be more successful than we are in attracting and retaining customers. Moreover, some of our competitors, particularly companies that offer relational database management software systems, enterprise resource planning software systems and customer relationship management systems may have well established relationships with some of our existing and targeted customers. This competition could harm our ability to sell products and services effectively, which may lead to lower prices for our products, reduced revenues and market share, and ultimately, reduced earnings.

     If one or more of our competitors were to merge or partner with another of our competitors, the change in the competitive landscape could adversely affect our ability to compete effectively. Furthermore, companies larger than ours could enter the market through internal expansion or by strategically aligning themselves with one of our competitors and providing products that cost less than our products. Our competitors may also establish or strengthen cooperative relationships with our current or future distributors, resellers, original equipment manufacturers or other parties with whom we have relationships, thereby limiting our ability to sell through these channels and reducing promotion of our products.

We may pursue strategic acquisitions and investments that could have an adverse effect on our business if they are unsuccessful.

     As part of our business strategy, we have acquired companies, technologies and product lines to complement our internally developed products. We expect that we will have a similar business strategy going forward. For example, in July 2005, we agreed to acquire SRC Software, Inc., a privately held maker of financial planning and analysis software. It is possible that the contemplated benefits of an acquisition may not materialize within the time periods or to the extent anticipated. Critical to the success of this strategy in the future and, ultimately, our business as a whole, is the orderly, effective integration of acquired businesses, technologies, product lines and employees into our organization. If our integration of future acquisitions is unsuccessful, our business will suffer. There is also the risk that our valuation assumptions and models for an acquired product or business may be overly optimistic or incorrect if customers do not demand the acquired company’s products to the extent we expect, the technology does not function as we expect or the technology we acquire is the subject of infringement or trade secret claims by third parties.

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We have strategic relationships with Microsoft and SAP which, if terminated, could reduce our revenues and harm our operating results.

     We have strategic relationships with Microsoft, SAP and Oracle that enable us to bundle our products with those of Microsoft, SAP and Oracle, and we are also developing certain utilities and products to be a part of their products. We have limited control, if any, as to whether Microsoft, SAP or Oracle will devote adequate resources to promoting and selling our products. In addition, Microsoft, SAP or Oracle have designed their own BI software. For example, to date none of these partnerships has contributed significantly to our annual license revenues through these reseller activities. If Microsoft, SAP or Oracle reduces its efforts on our behalf or discontinues its relationship with us and instead develops a relationship with one of our competitors or increases its selling efforts of its own business intelligence software, our reputation as a technology partner with them could be damaged and revenues and operating results may be reduced. For example, Microsoft is actively marketing its reporting product for its SQL server BI platform.

We sell products only in the Business Intelligence software market; if sales of our products in this market decline, our operating results will be harmed.

     We generate substantially all of our revenues from licensing, support and services in conjunction with the sale of our products in the business intelligence software market. Accordingly, our future revenues and profits will depend significantly on our ability to further penetrate the 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 other reasons, our operating results would suffer.

If the market in which we sell Business Intelligence software does not grow as anticipated, our future profitability could be negatively affected.

     The BI software market is still emerging, and our success depends upon the growth of this market. Our potential customers may:

• not fully value the benefits of using Business Intelligence products;

• not achieve favorable results using Business Intelligence products;

• experience technical difficulty in implementing Business Intelligence products; or

• use alternative methods to solve the problems addressed by Business Intelligence software.

     These factors may cause the market for Business Intelligence software not to grow as quickly or become as large as we anticipate, which may adversely affect our revenues.

Our software may have defects and errors that may lead to a loss of revenues or product liability claims.

     Our products and platforms are internally complex and may contain defects or errors, especially when first introduced or when new versions or enhancements are released. Despite extensive testing, we may not detect errors in our new products, platforms or product enhancements until after we have commenced commercial shipments. If defects and errors are discovered after commercial release of either new versions or enhancements of our products and platforms:

• potential customers may delay purchases;

• customers may react negatively, which could reduce future sales;

• our reputation in the marketplace may be damaged;

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• we may have to defend product liability claims;

• we may be required to indemnify our customers, distributors, original equipment manufacturers or other resellers;

• we may incur additional service and warranty costs; and

• we may have to divert additional development resources to correct the defects and errors, which may result in the delay of new product releases or upgrades.

     If any or all of the foregoing occur, we may lose revenues, 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 large scale deployments, which could cause a decline or delay in recognition of our revenues and an increase in our expenses.

     We may have difficulty managing the timeliness of our large scale deployments and our internal allocation of personnel and resources. Any such difficulty could cause us to lose existing customers, face potential customer disputes or limit the number of new customers who purchase our products or services, which could cause a decline in or delay in recognition of revenues, and could cause us to increase our research and development and technical support costs, either of which could adversely affect our operating results.

     In addition, we generally have long sales cycles for our large scale deployments. During a long sales cycle, events may occur that could affect the size, timing or completion of the order. For example, the potential customer’s budget and purchasing priorities may change, the economy may experience a downturn or new competing technology may enter the marketplace, any of which could reduce our revenues.

Business disruptions could seriously harm our operations and financial condition and increase our costs and expenses.

     A number of factors, including natural disasters, computer viruses or failure to successfully upgrade and improve operational systems to meet evolving business conditions, could disrupt our business, which could seriously harm our revenues or financial condition and increase our costs and expenses. For example, some of our offices are located in potential earthquake or flood zones that could subject these offices, product development facilities and associated computer systems to disruption.

     We currently have proprietary applications running key pieces of our manufacturing systems. These technologies were developed internally and we have only a small number of people that know and understand them. Should we lose those individuals before these systems can be replaced with non-proprietary solutions, we may experience business disruption resulting from an inability to manufacture and ship product.

     In addition, experienced computer programmers and hackers may be able to penetrate our network security and misappropriate our confidential information or temporarily disrupt our operations. As a result, we could incur significant expenses in addressing problems created by security breaches of our own network. The costs to eliminate computer viruses and alleviate other security problems could be significant. The efforts to address these problems could result in interruptions, delays or cessation of our operations.

     We work continually to upgrade and enhance our computer systems and anticipate implementing several system upgrades during the coming years. For example, we expect to implement new worldwide case and order management systems. Delay of the projects or the launch of a faulty application could have a material impact on our customer service levels. Failure to smoothly migrate existing systems to newer systems could cause business disruptions.

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     Even short-term disruptions from any of the above mentioned causes or other causes could result in revenue disruptions, delayed product deliveries or customer service disruptions, which could result in decreases in revenues or increases in costs of operations.

While we believe that we currently have adequate internal control over financial reporting, we are exposed to risks from recent legislation requiring companies to evaluate internal control over financial reporting.

     Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to report on and our independent registered public accounting firm to attest to the effectiveness of our internal control over financial reporting. We have an ongoing program to perform the system and process evaluation and testing necessary to comply with these requirements. This requirement has only recently become effective and neither we nor our independent registered public accounting firm has significant experience in complying or assessing compliance.

     We expect to continue to incur significant expenses and to devote additional resources to Section 404 compliance on an ongoing basis. In addition, it is difficult for us to predict how long it will take to complete the assessment of the effectiveness of our internal control over financial reporting each year and we may not be able to complete the process on a timely basis. In the event that our chief executive officer, chief financial officer or independent registered public accounting firm determine that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how regulators will react or how the market prices of our shares will be affected.

We cannot be certain that our internal control over financial reporting will be effective or sufficient in the future.

     It may be difficult to design and implement effective internal control over financial reporting for combined operations. In addition, differences in existing controls of acquired businesses may result in weaknesses that require remediation when internal controls over financial reporting are combined. For example, we were required to integrate the financial reporting systems of Crystal Decisions with our existing systems in 2004 and, if our acquisition of SRC is completed, we will be required to integrate SRC’s systems with ours. The integration of two compliant systems could result in a noncompliant system or an acquired company may not have compliant systems at all. In either case, the effectiveness of our internal control may be impaired. Our ability to manage our operations and growth will require us to improve our operations, financial and management controls, as well as our internal control over financial reporting. We may not be able to implement improvements to our internal control over financial reporting in an efficient and timely manner and may discover deficiencies and weaknesses in existing systems and controls; especially when such systems and controls are tested by increased scale of growth or the impact of acquisitions.

     If we fail to maintain an effective system of internal control or if management or our independent registered public accounting firm were to discover material weaknesses in our internal control systems we may be unable to produce reliable financial reports or prevent fraud and it could harm our results of operations and financial condition. This could result in a negative perception of our ability to operate in compliance with existing internal control rules and regulations and subsequently a decline in our stock price.

The software market in which we operate is subject to rapid technological change and new product introductions, which could negatively affect our product sales.

     The market for business intelligence software is characterized by rapid technological advances, evolving industry standards, changes in customer requirements and frequent new product introductions and enhancements. The emergence of new industry standards in related fields may adversely affect the demand for our products. 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. Introducing new products into our market has inherent risks including those associated with:

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• adapting third-party technology, including open source software;

• successful education and training of sales, marketing and consulting personnel;

• effective marketing and market acceptance;

• proper positioning and pricing; and

• product quality, including possible defects.

     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. Further, if we do not appropriately time the introduction or the announcement of new products or enhancements to our existing products, or if our competitors introduce or announce new products, platforms and product enhancements, our customers may defer or forego purchases of our existing products. In addition, we will have expended substantial resources without realizing the anticipated revenues, which would have an adverse effect on our results of operations and financial condition.

We are currently a party to several lawsuits with MicroStrategy. The prosecution of these lawsuits could have a substantial negative impact on our business. Should MicroStrategy prevail, we may be required to pay substantial monetary damages or be prevented from selling some of our products.

     On October 17, 2001, we filed a lawsuit in the United States District Court for the Northern District of California against MicroStrategy for alleged patent infringement. The lawsuit alleged that MicroStrategy infringed our U.S. Patent No. 5,555,403 by making, using, offering to sell and selling MicroStrategy Versions 6.0, 7.0 and 7.0i. Our complaint requested that MicroStrategy be enjoined from further infringing the patent and sought an as-yet undetermined amount of damages. On June 27, 2003, MicroStrategy filed a motion for summary judgment that its products do not infringe our patent. On August 29, 2003, the District Court ruled that our patent was not literally infringed and that we were estopped from asserting the doctrine of equivalents and dismissed the case. We appealed the District Court’s judgment to the Court of Appeals for the Federal Circuit. On January 6, 2005, the Court of Appeals for the Federal Circuit decided that the District Court incorrectly concluded that MicroStrategy’s products did not violate our patent and determined that we were not precluded from arguing that MicroStrategy’s products were equivalent to claim in U.S. Patent No. 5,555,403. The District Court heard summary judgment motions on June 10, 2005. On July 26, 2005, the District Court granted MicroStrategy’s motion for summary judgment of non-infringement. We intend to appeal this ruling. We cannot reasonably estimate at this time whether a monetary settlement will be reached.

     On October 30, 2001, MicroStrategy filed an action for alleged patent infringement in the United States District Court for the Eastern District of Virginia against us and our subsidiary, Business Objects Americas. The complaint alleged that our software products, BusinessObjects Broadcast Agent Publisher, BusinessObjects Broadcast Agent Scheduler and BusinessObjects Infoview, infringed MicroStrategy’s U.S. Patent Nos. 6,279,033 and 6,260,050. In December 2003, the Court dismissed MicroStrategy’s claim of infringement on U.S. Patent No. 6,279,033 without prejudice. Trial on U.S. Patent No. 6,260,050 was scheduled to begin June 14, 2004. On June 7, 2004, the Court informed the parties that the Court was of the opinion that summary judgment should be granted in our favor as to non-infringement of MicroStrategy’s Patent No. 6,260,050 and canceled the trial. On August 6, 2004, the Court entered a formal opinion and order formalizing this decision. On September 3, 2004, MicroStrategy filed a Notice of Appeal with the Court of Appeals for the Federal Circuit. The Court of Appeals heard oral arguments on August 3, 2005 and took the matter under submission. We expect a ruling in late 2005 or in 2006.

     In April 2002, MicroStrategy obtained leave to amend its patent claims against us to include claims for misappropriation of trade secrets, violation of the Computer Fraud and Abuse Act, tortious interference with contractual relations and conspiracy in violation of the Virginia Code seeking injunctive relief and

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damages. On December 30, 2002 the Court granted our motion for summary judgment and rejected MicroStrategy’s claims for damages as to the causes of action for misappropriation of trade secrets, Computer Fraud and Abuse Act and conspiracy in violation of the Virginia Code. On October 28, 2003, the Court granted judgment as a matter of law in our favor and dismissed the jury trial on MicroStrategy’s allegations that we tortiously interfered with certain employment agreements between MicroStrategy and its former employees. The Court took MicroStrategy’s claim for misappropriation of trade secrets under submission. On August 6, 2004, the Court issued an order rejecting all of MicroStrategy’s claims for misappropriation of trade secrets except for a finding a former employee of ours had misappropriated two documents. The Court issued a limited injunction requiring us not to possess, use or disclose the two documents as to which it found misappropriation. The Court also denied MicroStrategy’s request for attorneys’ fees. On September 3, 2004 MicroStrategy filed a Notice of Appeal with the Court of Appeals for the Federal Circuit appealing each of the rulings. The Court of Appeals heard oral arguments on August 3, 2005 and took the matter under submission. We expect a ruling by the Court of Appeals in late 2005 or early 2006.

     On December 10, 2003, MicroStrategy filed an action for patent infringement against Crystal Decisions in the United States District Court for the District of Delaware. We became a party to this action when we acquired Crystal Decisions. The complaint alleged that the Crystal Decisions’ software products: Crystal Enterprise, Crystal Reports, Crystal Analysis and Crystal Applications, infringed MicroStrategy’s U.S. Patent Nos. 6,279,033, 6,567,796 and 6,658,432. MicroStrategy has since alleged that BusinessObjects XI, Crystal Reports XI and OLAP Intelligence XI, successors of the products initially accused, also infringe the patents named in the suit. The complaint seeks relief in the form of an injunction, unspecified damages, an award of treble damages and attorneys’ fees. The parties are currently engaged in extensive discovery and trial which was scheduled to begin on November 7, 2005 has been postponed to May 30, 2006. We are defending this action vigorously. Should an unfavorable outcome arise, there can be no assurance that such outcome would not have a material adverse affect on our results of operations, liquidity or financial position.

     We believe that we have meritorious defenses to MicroStrategy’s various allegations and claims in each of the suits and we intend to continue vigorously to defend the actions. However, because of the inherent uncertainty of litigation in general, and the fact that the discovery related to certain of these suits is ongoing, we cannot assure you that we will ultimately prevail. Should MicroStrategy ultimately succeed in the prosecution of its claims, we could be permanently enjoined from selling some of our products and deriving related maintenance revenues. In addition, we could be required to pay substantial monetary damages to MicroStrategy.

     Litigation such as the suits MicroStrategy has brought against us can take years to resolve and can be expensive to defend. An adverse judgment, if entered in favor of any MicroStrategy claim, could seriously harm our business, results of operations and financial position and cause our stock price to decline substantially. In addition, the MicroStrategy litigation, even if ultimately determined to be without merit, will be time consuming to defend, divert our management’s attention and resources and could cause product shipment delays or require us to enter into royalty or license agreements. These royalty or license agreements may not be available on terms acceptable to us, if at all, and the prosecution of the MicroStrategy allegations and claims could significantly harm our business, financial position and results of operations and cause our stock price to decline substantially.

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

     In November 1997, Vedatech commenced an action in the Chancery Division of the High Court of Justice in the United Kingdom against Crystal Decisions (UK) Limited, now a wholly owned subsidiary of Business Objects Americas. The liability phase of the trial was completed in March 2002, and Crystal Decisions prevailed on all claims except for the quantum meruit claim. The High Court ordered the parties to mediate the amount of that claim and, in August 2002, the parties came to a mediated settlement. The mediated settlement was not material to Crystal Decisions’ operations and contained no continuing

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obligations. In September 2002, however, Crystal Decisions received notice that Vedatech was seeking to set aside the settlement. The mediated settlement and related costs were accrued in Crystal Decisions’ consolidated financial statements. In April 2003, Crystal Decisions filed an action in the High Court of Justice seeking a declaration that the mediated settlement agreement is valid and binding. In connection with this request for declaratory relief Crystal Decisions paid the agreed settlement amount into the High Court.

     In October 2003, Vedatech and Mani Subramanian filed an action against Crystal Decisions, Crystal Decisions (UK) Limited and Susan J. Wolfe, then Vice President, General Counsel and Secretary of Crystal Decisions, in the United States District Court, Northern District of California, San Jose Division, that alleged that the August 2002 mediated settlement was induced by fraud and that the defendants engaged in negligent misrepresentation and unfair competition. We became a party to this action when we acquired Crystal Decisions. In July 2004, the United States District Court, Northern District of California, San Jose Division granted the defendants’ motion to stay any proceedings before such court pending resolution of the matters currently submitted to the English High Court. In October 2003, Crystal Decisions (UK) Limited, Crystal Decisions (Japan) K.K. and Crystal Decisions filed an application with the High Court claiming the proceedings in United States District Court, Northern District of California, San Jose Division were commenced in breach of an exclusive jurisdiction clause in the settlement agreement and requesting injunctive relief to restrain Vedatech from pursuing the United States District Court proceedings. On August 3, 2004, the High Court granted the anti-suit injunction but provided that the United States District Court, Northern District of California, San Jose Division could complete its determination of any matter that may be pending. Vedatech and Mr. Subramanian made an application to the High Court for permission to appeal the orders of August 3, 2004, along with orders which were issued on May 19, 2004. On July 7, 2005, the Court of Appeal refused this application for permission to appeal.

     Although we believe that Vedatech’s basis for seeking to set aside the mediated settlement and its claims in the October 2003 complaint is meritless, the outcome cannot be determined at this time. If the mediated settlement were to be set aside, an ultimate damage award could adversely affect our results of operations, liquidity or financial position.

We are a party to litigation with Informatica and, in the event of an adverse judgment against us, we may have to pay damages or be prevented from selling some of our products, which could adversely affect our financial position and results of operations.

     On July 15, 2002, Informatica filed an action for alleged patent infringement in the United States District Court for the Northern District of California against Acta Technology, Inc. We became a party to this action when we acquired Acta in August 2002. The complaint alleged that the Acta software products infringed Informatica’s U.S. Patent Nos. 6,014,670, 6,339,775 and 6,208,990. On July 17, 2002, Informatica filed an amended complaint that alleged that the Acta software products also infringe U.S. Patent No. 6,044,374. The complaint seeks relief in the form of an injunction, unspecified damages, an award of treble damages and attorneys’ fees. We have answered the suit, denying infringement and asserting that the patents are invalid and other defenses. The parties are engaged in discovery. On August 2, 2005, the Court issued its claim construction order. The Court had previously vacated the August 16, 2004 trial date and no new trial date has been set. We are defending the action vigorously. Were an unfavorable outcome to arise, there can be no assurance that such outcome would not have a material adverse affect on our results of operations, liquidity or financial position.

     Although we believe that Informatica’s basis for its suit is meritless, the outcome cannot be determined at this time. Because of the inherent uncertainty of litigation in general and that fact that this litigation is ongoing, we cannot assure you that we will prevail. Should Informatica ultimately succeed in the prosecution of its claims, we could be permanently enjoined from selling some of our products and be required to pay damages.

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We are a party to litigation with Decision Warehouse. The prosecution of this lawsuit could have a substantial negative impact on our business. Should Decisions Warehouse prevail, we may be required to pay substantial monetary damages.

     On September 29, 2004, Decision Warehouse Consultoria E Importacao Ltda. filed an action in the Superior Court for the State of California, County of Santa Clara against Business Objects Americas and Business Objects Do Brasil, Ltda. for unspecified damages alleging breach of contract, intentional interference with prospective economic advantage and contract relationships, misappropriation of trade secrets, promissory fraud and unlawful business practices. The parties are currently engaged in discovery. No trial date has been set. We intend vigorously to defend this action. Should an unfavorable outcome arise, there can be no assurance such outcome would not have a material adverse affect on our results of operations, liquidity or financial position.

     On December 22, 2004, Business Objects Americas and Business Objects Do Brasil, Ltda. filed a lawsuit in the Superior Court for the State of California, County of Santa Clara against Decision Warehouse Consultoria E Importacao Ltda. The lawsuit alleges violations of Brazilian copyright law, breach of contract, unfair business practices, account stated, open book account and for an accounting. Our complaint requested damages according to proof, “moral” damages under Brazilian law and award of sums found due after accounting. No trial date has been set.

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

     Our success is heavily dependent on protecting intellectual property rights in our proprietary technology, which is primarily our software. It is difficult for us to protect and enforce our intellectual property rights for a number of reasons, including:

• policing unauthorized copying or use of our products is difficult and expensive;

• software piracy is a persistent problem in the software industry;

• our patents may be challenged, invalidated or circumvented; and

• our shrink-wrap licenses may be unenforceable under the laws of certain jurisdictions.

     In addition, the laws of many countries do not protect intellectual property rights to as great an extent as those of the United States and France. We believe that effective protection of intellectual property rights is unavailable or limited in certain foreign countries, creating an increased risk of potential loss of proprietary technology due to piracy and misappropriation. For example, we are currently doing business in the People’s Republic of China where the status of intellectual property law is unclear and we may expand our presence there in the future.

     Although our name, when used in combination with our previous logo, is registered as a trademark in France, the United States and a number of other countries, we may have difficulty asserting our trademark rights in the name “Business Objects” because some jurisdictions consider the name “Business Objects” to be generic or descriptive in nature. As a result, we may be unable to effectively police the unauthorized use of our name or otherwise prevent our name from becoming a part of the public domain. We are registering a new trademark associated with our name “Business Objects” in numerous jurisdictions. We may have difficulty registering the new trademark because it may be considered generic or descriptive, or may conflict with pre-existing marks in some jurisdictions. We also have other trademarks or service marks in use around the world, and we may have difficulty registering or maintaining these marks in some countries, which may require us to change our marks or obtain new marks.

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     We also seek to protect our confidential information and trade secrets through the use of non-disclosure agreements with our contractors, vendors, and partners. However, there is a risk that our trade secrets may be disclosed or published without our authorization, and in these situations it may be difficult or costly for us to enforce our rights and retrieve published trade secrets.

     We sometimes contract with third parties to provide development services to us, and we routinely ask them to sign agreements which require them to assign intellectual property to us which is developed on our behalf. However, there is a risk that they will fail to disclose to us such intellectual property, or that they may have inadequate rights to such intellectual property. This could happen, for example, if they failed to obtain the necessary invention assignment agreements with their own employees.

     We are involved in litigation to protect our intellectual property rights, and we may become involved in further litigation in the future. This type of litigation is costly and could negatively impact our operating results.

Third parties have asserted that our technology infringes upon their proprietary rights, and others may do so in the future, which has resulted, and may in the future result, in costly litigation and could adversely affect our ability to distribute our products.

     From time to time, companies in the industry in which we compete receive claims that they are infringing upon the intellectual property rights of third parties. We believe that software products that are offered in our target markets will increasingly be subject to infringement claims as the number of products and competitors in the industry segment grows and product functionalities begin to overlap. For example, we are defending one patent infringement suit brought by Informatica, one brought by MicroStrategy against us and one brought by MicroStrategy against Crystal Decisions.

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

• we would need to commit management resources in defense of the claim;

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

• we may have to expend significant development resources to redesign our products;

• we may be required to enter into royalty and licensing agreements with such third party under unfavorable terms; and

• we could be forced to cease selling or delay shipping our products should an adverse judgment be rendered against us.

     We may also be required to indemnify customers, distributors, original equipment manufacturers and other resellers for third-party products incorporated in our products if such third party’s products infringe upon the intellectual property rights of others. Although many of these third parties who are commercial vendors will be obligated to indemnify us if their products infringe the intellectual property rights of others, any such indemnification may not be adequate.

     In addition, from time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their products. We use selected open source software in our products and may use more open source software in the future. As a result, we could be subject to suits by parties challenging ownership of what we believe to be our proprietary software. We may also be subject to claims that we have failed to comply with all the requirements of the open source licenses. Open source licenses are more likely than commercial licenses to contain vague, ambiguous, or legally untested provisions, which increase the risks of such litigation. In addition, third parties may assert

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that the open source software itself infringes upon the intellectual property of others. Because open source providers seldom provide warranties or indemnification to us, in such event we may not have an adequate remedy against the open source provider.

     Any of this litigation could be costly for us to defend, have a negative effect on our results of operations and financial condition or require us to devote additional research and development resources to redesign our products or obtain licenses from third parties.

Our loss of rights to use software licensed from third parties could harm our business.

     We license software from third parties and sublicense this software to our customers. In addition, we license software from third parties and incorporate it into our products. In the future, we may be forced to obtain additional third party software licenses to enhance our product offerings and compete more effectively. By utilizing third party software in our business, we incur risks that are not associated with developing software internally. For example, third party licensors may discontinue or modify their operations, terminate their relationships with us, or generally become unable to fulfill their obligations to us. If any of these circumstances were to occur, we might be forced to seek alternative technology of inferior quality, which has lower performance standards or which might not be available on commercially reasonable terms. If we are unable to maintain our existing licenses or obtain alternate third party software licenses on commercially reasonably terms, our revenues could be reduced, our costs could increase and our business could suffer.

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

     Our development, marketing and distribution strategies depend on our success to create and maintain long-term strategic relationships with major vendors, many of whom are substantially larger than us. These business relationships often consist of joint marketing programs or partnerships with original equipment manufacturers or value added resellers. Although certain aspects of these relationships are contractual in nature, many important aspects of these relationships depend on the continued cooperation of each party. Divergence in strategy, change in focus, competitive product offerings or contract defaults by any of these companies might interfere with our ability to develop, market, sell or support our products, which in turn could harm our business.

     No customer accounted for 10% or more of our total revenues in the three or six months ended June 30, 2005 or in any quarter in 2004. Although no single reseller currently accounts for more than 10% of our total revenues, if one or more of our large resellers were to terminate their co-marketing agreements with us it could have an adverse effect on our business, financial condition and results of operations. In addition, our business, financial condition and results of operations could be adversely affected if major distributors were to materially reduce their purchases from us.

     Our distributors and other resellers generally carry and sell product lines that are competitive with ours. Because distributors and other resellers generally are not required to make a specified level of purchases from us, we cannot be sure that they will prioritize selling our products. We rely on our distributors and other resellers to sell our products, report the results of these sales to us and to provide services to certain of the end user customers of our products. If the distributors and other resellers do not sell our products, report sales accurately and in a timely manner and adequately service those end user customers, our revenues and the adoption rates of our products could be harmed.

Our executive officers and key employees are crucial to our business, and we may not be able to recruit, integrate and retain the personnel we need to succeed.

     Our success depends upon a number of key management, sales, technical and other critical personnel, including our co-founder, Bernard Liautaud, who is our chairman of the board of directors and chief executive officer, the loss of whom could adversely affect our business. The loss of the services of any key personnel or our inability to attract, integrate and retain highly skilled technical, management, sales and marketing personnel could result in significant disruption to our operations, including affecting the timeliness of new

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product introductions, hindrance of product development and sales efforts, degradation of customer service, as well as the successful completion of company initiatives and the results of our operations. Competition for such personnel in the computer software industry is intense, and we may be unable to attract, integrate and retain such personnel successfully.

We have multinational operations that are subject to risks inherent in international operations.

     We have significant operations outside of France and the United States including development facilities, sales personnel and customer support operations. For example, as of June 30, 2005 we relied on approximately 390 software developers in India through a contract development agreement. Our international operations are subject to certain inherent risks including:

• technical difficulties and costs associated with product localization;

• challenges associated with coordinating product development efforts among geographically dispersed development centers;

• potential loss of proprietary information due to piracy, misappropriation, or laws that may be less protective of our intellectual property rights;

• lack of experience in certain geographic markets;

• longer payment cycles for sales in certain foreign countries;

• seasonal reductions in business activity in the summer months in Europe and certain other countries;

• the significant presence of some of our competitors in some international markets;

• potentially adverse tax consequences;

• import and export restrictions and tariffs;

• foreign laws and other government controls, such as trade and employment restrictions;

• management, staffing, legal and other costs of operating an enterprise spread over various countries;

• political instability in the countries where we are doing business; and

• fears concerning travel or health risks that may adversely affect our ability to sell our products and services in any country in which the business sales culture encourages face-to-face interactions.

     These factors could have an adverse effect on our business, results of operations and financial condition.

The requirement to expense stock options in our income statement could have a significant adverse effect on our reported results, and we do not know how the market will react to reduced earnings.

     In December 2004, the final statement FAS 123R, Share-Based Payment, was issued. This final standard replaces the existing requirements and requires that all forms of share-based payments to employees, including employee stock options and employee stock purchase plans, be treated the same as other forms of compensation by recognizing the related cost in the statements of income.

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FAS 123R requires that such transactions be accounted for using a fair-value based method. FAS 123R is effective for annual periods beginning after June 15, 2005 and for interim periods thereafter. In accordance with International Financial Reporting Standard, IFRS 2, “Share-Based Payment”, we are required for our French consolidated and statutory financial reporting requirements to report the expense associated with stock-based compensation in our statements of income commencing on January 1, 2005.

     We continue to assess the impact that the adoption of FAS 123R will have on our results of operations and financial position. In addition, our effective tax rate will be adversely affected by the adoption of the final standard to the extent to which we are unable to record a tax benefit on the stock-based compensation expense. While most forms of stock-based compensation are non-cash charges and the expensing of stock-based awards will impact all companies who have stock-based compensation plans, we cannot predict how investors will view this additional expense or our management of this expense via our compensation policy related to stock-based awards and, as such, our stock price may decline.

Fluctuations in exchange rates between the euro, the U.S. dollar and the Canadian dollar, as well as other currencies in which we do business, may adversely affect our operating results.

     We transact business in an international environment. As a result, we may experience substantial foreign exchange gains or losses due to the volatility of other currencies compared to the U.S. dollar. We incur Canadian dollar expenses that are substantially larger than our Canadian dollar revenues, and we generate a substantial portion of our revenues and expenses in currencies other than the U.S. dollar, including the euro and the British pound. We may experience foreign exchange gains and losses on a combination of events, including revaluation of foreign denominated amounts to the local currencies, gains or losses on forward or option contracts settled during and outstanding at period end and other transactions involving the purchase of currencies.

     As we report our results in U.S. dollars, the difference in exchange rates in one period compared to another directly impacts period to period comparisons of our operating results. For example, for the six months ended June 30, 2005, if income from operations were translated based at the currency exchange rates that were in effect for the six months ended June 30, 2004, we would have had $2.7 million greater income from operations than reported. Furthermore, currency exchange rates have been especially volatile in the recent past and these currency fluctuations may make it difficult for us to predict and/or provide guidance on our results.

     While we believe we have put strategies in place to mitigate risks related to the impact of fluctuations in currency exchange rates, we cannot ensure that we will not recognize gains or losses from international transactions, as this is part of transacting business in an international environment. Not every exposure is or can be hedged, and, where hedges are put in place based on expected foreign exchange exposure, they are based on forecasts which may vary or which may later prove to have been inaccurate. Failure to hedge successfully or anticipate currency risks properly could adversely affect our operating results. We cannot predict the change in currency exchange rates in the future.

Our effective tax rate may increase or fluctuate, which could increase our income tax expense and reduce our net income.

     Our effective tax rate could be adversely affected by several factors, many of which are outside of our control. Our effective tax rate may be affected by the proportion of our revenues and income before taxes in the various domestic and international jurisdictions in which we operate. Our revenues and operating results are difficult to predict and may fluctuate substantially from quarter to quarter. We are also subject to changing tax laws, regulations and interpretations in multiple jurisdictions in which we operate, as well as the requirements of certain tax and other accounting body rulings. Since we must estimate our annual effective

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tax rate each quarter based on a combination of actual results and forecasted results of subsequent quarters, any significant change in our actual quarterly or forecasted annual results may adversely impact the computation of the estimated effective tax rate for the year. Our estimated annual effective tax rate may increase or fluctuate for a variety of reasons, including:

• changes in forecasted annual operating income;

• changes in relative proportions of revenues and income before taxes in the various jurisdictions in which we operate;

• changes to the valuation allowance on net deferred tax assets;

• changes to actual or forecasted permanent differences between book and tax reporting, including the tax effects of purchase accounting for acquisitions and non-recurring charges which may cause fluctuations between reporting periods;

• impacts from any future tax settlements with state, federal or foreign tax authorities;

• impacts from changes in tax laws, regulations and interpretations in the jurisdictions in which we operate, as well as the requirements of certain tax rulings; or

• impacts from new FASB or IFRS requirements.

     Although we believe our estimates are reasonable, the ultimate outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period.

We are subject to frequent tax audits where the ultimate resolution may result in additional taxes.

     As a matter of course, we are regularly audited by various taxing authorities, and sometimes these audits result in proposed assessments where the ultimate resolution may result in our owing additional taxes. The determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment. Despite our belief that our tax return positions are appropriate and supportable under local tax law, we believe certain positions may be challenged and that we may not succeed in realizing the anticipated tax benefit. We establish specific reserves when it is our belief that may not be likely to succeed in realizing a tax benefit. We also evaluate these reserves each quarter and adjust the reserves and the related interest in light of changing facts and circumstances regarding the probability of realizing tax benefits, such as the progress of a tax audit or the expiration of a statute of limitations. Although we believe our estimates are reasonable, that our tax positions comply with applicable tax law, and that we have adequately provided for any known tax contingencies, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results for either the period of our original estimate or for the period in which the determination of an unfavorable outcome is made.

     In addition, as a result of tax audits, we may become aware of required adjustments to previous tax provisions set up in connection with the acquisition of businesses. These balances are generally recorded as part of goodwill as part of the price purchase allocation and are adjusted in future periods to goodwill instead of charges against the current statements of income. This treatment does not preclude the payment of additional taxes due, if assessed. For example, during April 2005, we received a notice of proposed adjustment from the Internal Revenue Service for the 2001 and 2002 fiscal year tax returns of Crystal Decisions and have submitted a Protest Letter. Income taxes related to the issues under audit were fully reserved as part of the original purchase price allocation, and are included in the income taxes payable balance on the condensed consolidated balance sheets at June 30, 2005 and December 31, 2004. We intend to defend our position vigorously. If we prevail, we will reverse the tax reserves and record a credit to goodwill.

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If we are not successful in defending our position, we expect this to have a negative impact on our cash and cash equivalents balance as the result of the payment of income taxes, but no material impact on our net income.

We have been named as a party to several class action lawsuits and shareholder derivative actions which could result in significant management time and attention, result in significant legal expenses and have a material adverse effect on our business, financial condition, results of operations and cash flows.

     Between June 2 and July 1, 2004, four purported class action complaints were filed in the United States District Courts for the Northern District of California, the Southern District of California, and the Southern District of New York against us and certain of our current and former officers and directors. The actions commenced in the courts for the Southern District of California and the Southern District of New York were transferred to the Northern District of California. All four actions were consolidated into one action in the Northern District of California and a consolidated amended complaint (“CAC”) was filed in January 2005 seeking unspecified damages. The CAC alleged violations of the Exchange Act and Rule 10b-5 promulgated thereunder. The plaintiffs seek to represent a putative class of investors in our American depositary receipts (“ADRs”) who purchased the ADRs between April 23, 2003 and May 5, 2004 (the “Class Period”). The complaint alleged that during that Class Period, we and the individual defendants made false or misleading statements in press releases and SEC filings regarding, among other things, our acquisition of Crystal Decisions, our Enterprise 6 product and our forecasts and financial results for the three months ended March 31, 2004. In February 2005, we and other defendants moved to dismiss the CAC. On July 27, 2005, the Court granted defendants’ motion to dismiss and granted plaintiffs 30 days to file an amended complaint. We are unable to predict the outcome of these actions; however, were an unfavorable outcome to arise, such outcome could have a material adverse effect on our results of operations, liquidity or financial position.

     On July 23, 2004, two purported shareholder derivative actions were filed in Santa Clara County Superior Court against certain of our current and former officers and directors, styled Bryan Aronoff, et al. v. Bernard Liautaud, et al. and Ken Dahms v. Bernard Liautaud, et al. We are named as a nominal defendant. These actions were consolidated into one action August 16, 2004 and in September 2004, derivative plaintiffs filed the consolidated complaint. The complaint is based on the same facts and events alleged in the class action complaints and alleged violations of California Corporations Code Sections 25402 and 25502.5, breaches of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment by certain of our current and former officers and directors. The derivative plaintiffs seek damages, disgorgement of profits, equitable, injunctive, restitutionary and other relief. In December 2004, defendants filed a motion to dismiss the complaint. On April 28, 2005, plaintiffs voluntarily dismissed the case without prejudice and this matter was concluded.

     We believe that the allegations of the CAC are without merit. Defending any such litigation is costly and may divert management’s attention from the day to day operations of our business, which could adversely affect our business, results of operations and cash flows. An adverse resolution of these actions could have a material adverse effect on our liquidity, financial position or results of operations in the quarter in which any such adverse resolution were to occur and may result in damage to our reputation among our customers and investors.

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Risks Related to Ownership of Our Ordinary Shares or ADSs

New SAC and certain of its affiliates own a substantial percentage of our shares and their interests could conflict with those of our other shareholders.

     New SAC and certain of its affiliates own a significant percentage of our company as a result of our acquisition of Crystal Decisions. As of July 31, 2005, New SAC and certain of its affiliates owned approximately 17.6% of our voting rights. The interests of these shareholders could conflict with those of our other shareholders. As a result of their ownership position, New SAC and these other parties collectively are able to significantly influence all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. Such concentration of ownership may also have the effect of delaying or preventing a change in control of our company.

Additional sales of our shares by New SAC and certain of its affiliates, our employees or issuances by us in connection with future acquisitions could adversely affect the market price of our shares.

     New SAC and certain of its affiliates have rights, subject to specified conditions, to require us to file a registration statement on its behalf to register for resale shares in us that they currently hold or to include such shares in registration statements we may file independently. In addition, New SAC can unilaterally distribute its shares in us to its shareholders. In October 2004, we filed a registration statement on Form S-3 with the SEC on behalf of New SAC, registering for resale up to 14,365,339 of our shares held by New SAC. In June 2005, we amended this registration statement and increased the number of shares eligible for resale thereunder from 14,365,339 to 15,887,329. If New SAC or, after any distribution by New SAC to its shareholders of the shares it holds in us, certain of its affiliates, resell a substantial number of these shares in a short period of time, this could cause the market price of our shares to decline. The perception among investors that these sales may occur could produce the same effect. In addition, if we were to include New SAC’s shares in a registration statement initiated by us, those additional shares could impair our ability to raise needed capital by depressing the price at which we could sell our shares. Furthermore, any resale by New SAC or its affiliates of a large number of its shares in us pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (“Securities Act”), such as through Rule 144, may cause the price of our common shares to decline.

Provisions of our articles of association and French law could have anti-takeover effects and could deprive shareholders who do not comply with such provisions of some or all of their voting rights.

     Provisions of our articles of association and French law may impede the accumulation of our shares by third parties seeking to gain a measure of control over our company. For example, French law provides that any individual or entity (“person”), acting alone or in concert with others, that becomes the owner or ceases to be the owner, holding more than 5%, 10%, 20%, 33 1/3%, 50% or 66 2/3% of the share capital or voting rights of our company is required to notify us and the AMF within five trading days of crossing any of the applicable percentage thresholds, of the number of shares and voting rights held by it. The AMF makes any such notice public. Additionally, any person acquiring more than 10% or 20% of the share capital or voting rights of our company must notify us and the AMF within 10 trading days of crossing any of these thresholds, and file a statement of their intentions relating to future acquisitions or participation in the management of our company for the following 12 month period, including whether or not this person is acting alone or in concert and whether or not they intend to continue their purchases to acquire control of our company or to seek nominations to our board of directors. This person may amend their stated intentions, provided that they do so on the basis of significant changes in their own situation or stockholding. Upon any change of intentions, they must file a new statement. The AMF makes these statements public. Any shareholder who fails to comply with these requirements shall have voting rights for all shares in excess of the relevant threshold suspended for two years following the completion of the required notification. Moreover this shareholder may have all or part of its voting rights within our company suspended for up to five years by the relevant commercial court at the request of our chairman, any of our shareholders or the AMF. In addition, such shareholders may be subject to a fine of €18,000 for violation of the share ownership notification

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requirement and up to €1,500,000 for violation of the notification requirement regarding the statement of intentions.

     Under the terms of the deposit agreement relating to our ADSs, if a holder of ADSs fails to instruct the depositary in a timely and valid manner how to vote such holder’s ADSs with respect to a particular matter, the depositary will deem that such holder has given a proxy to the chairman of the meeting to vote in favor of each proposal recommended by our board of directors and against each proposal opposed by our board of directors and will vote the ordinary shares underlying the ADSs accordingly.

     This provision of the depositary agreement could deter or delay hostile takeovers, proxy contests and changes in control or management of our company.

Holders of our shares have limited rights to call shareholders’ meetings or submit shareholder proposals, which could adversely affect their ability to participate in governance of our company.

     In general, our board of directors may call a meeting of our shareholders. A shareholders’ meeting may also be called by a liquidator or a court appointed agent, in limited circumstances, such as at the request of the holders of 5% or more of our outstanding shares held in the form of ordinary shares. In addition, only shareholders holding a defined number of shares held in the form of ordinary shares or groups of shareholders holding a defined number of voting rights underlying their ordinary shares may submit proposed resolutions for meetings of shareholders. The minimum number of shares required depends on the amount of the share capital of our company and is equal to 2,203,194 ordinary shares based on our share capital as of July 31, 2005. Similarly, a duly qualified association, registered with the AMF and us, of shareholders who have held their ordinary shares in registered form for at least two years and together hold at least a defined percentage of our voting rights, equivalent to 1,806,561 ordinary shares based on our company’s voting rights as of July 31, 2005, may submit proposed resolutions for meetings of shareholders. As a result, the ability of our shareholders to participate in and influence the governance of our company will be limited.

Interests of our shareholders will be diluted if they are not able to exercise preferential subscription rights for our shares.

     Under French law, shareholders have preferential subscription rights (droits préférentiels de souscription) to subscribe for cash for issuances of new shares or other securities with preferential subscription rights, directly or indirectly, to acquire additional shares on a pro rata basis. Shareholders may waive their rights specifically in respect of any offering, either individually or collectively, at an extraordinary general meeting. Preferential subscription rights, if not previously waived, are transferable during the subscription period relating to a particular offering of shares and may be quoted on the exchange for such securities on Euronext Paris S.A. Holders of our ADSs may not be able to exercise preferential subscription rights for these shares unless a registration statement under the Securities Act is effective with respect to such rights or an exemption from the registration requirements is available.

     If these preferential subscription rights cannot be exercised by holders of ADSs, we will make arrangements to have the preferential subscription rights sold and the net proceeds of the sale paid to such holders. If such rights cannot be sold for any reason, we may allow such rights to lapse. In either case, the interest of holders of ADSs in our company will be diluted, and, if the rights lapse, such holders will not realize any value from the granting of preferential subscription rights.

It may be difficult for holders of our ADSs rather than our ordinary shares to exercise some of their rights as shareholders.

     It may be more difficult for holders of our ADSs to exercise their rights as shareholders than it would be if they directly held our ordinary shares. For example, if we offer new ordinary shares and a holder of our ADSs has the right to subscribe for a portion of them, the Bank of New York, as the depositary, is allowed, in its own discretion, to sell for such ADS holder’s benefit that right to subscribe for new ordinary shares of our company instead of making it available to such holder. Also, to exercise their voting rights,

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holders of our ADSs must instruct the depositary how to vote their shares. Because of this extra procedural step involving the depositary, the process for exercising voting rights will take longer for a holder of our ADSs than it would for holders of our ordinary shares.

Fluctuation in the value of the U.S. dollar relative to the euro may cause the price of our ordinary shares to deviate from the price of our ADSs.

     Our ADSs trade in U.S. dollars and our ordinary shares trade in euros. Fluctuations in the exchange rates between the U.S. dollar and the euro may result in temporary differences between the value of our ADSs and the value of our ordinary shares, which may result in heavy trading by investors seeking to exploit such differences.

We have not distributed dividends to our shareholders and do not anticipate doing so in the near future.

     We currently intend to use all of our operating cash flow to finance our business for the foreseeable future. We have never distributed cash dividends to our shareholders, and we do not anticipate that we will distribute cash dividends in the near term. Although we may in the future distribute a portion of our earnings as dividends to shareholders, the determination of whether to declare dividends and, if so, the amount of such dividends will be based on facts and circumstances existing at the time of determination. We may not distribute dividends in the near future, or at all.

The market price of our shares will be susceptible to changes in our operating results and to stock market fluctuations.

     Our operating results may be below the expectations of public market analysts and investors’ and therefore, the market price of our shares may fall. In addition, the stock markets in the United States and France have experienced significant price and volume fluctuations in recent periods, which have particularly affected the market prices of many technology companies and often are unrelated and disproportionate to the operating performance of these particular companies. These broad market fluctuations, as well as general economic, political and market conditions, may negatively affect the market price of our shares. The market fluctuations have affected our stock price in the past and could continue to affect our stock price in the future. The market price of our shares may be affected by the following factors:

• quarterly variations in our results of operations;

• announcements of technological innovations or new products by us, our customers or competitors;

• announcements of our quarterly operating results and expected results of the future periods;

• our failure to achieve the operating results anticipated by analysts or investors;

• sales or the perception in the market of possible sales of a large number of our shares by our directors, officers, employees or principal stockholders;

• announcements of our competitors or customers’ quarterly operating results, and expected results of future periods;

• addition of significant new customers or loss of current customers;

• international political, socioeconomic and financial instability, including instability associated with military action in Afghanistan and Iraq or other conflicts;

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• releases or reports by or changes in security analysts’ recommendations; and

• developments or disputes concerning patents or proprietary rights or other events.

     The closing price of our ADSs on the Nasdaq National Market for the period of January 1, 2004 to July 31, 2005 ranged from a low of $17.43 to a high of $38.34.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in interest rates, changes to certain short-term investments, fluctuations in foreign currency exchange rates and changes in the fair market value of forward or option contracts. We believe there have been no significant changes in our market risk during the six months ended June 30, 2005 compared to what was previously disclosed in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report for the year ended December 31, 2004. Further information on the impact of foreign currency exchange rate fluctuations is further described in Item 2, “Management Discussion and Analysis of Financial Condition and Results of Operations” to this Form 10-Q.

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Item 4. Controls and Procedures

     Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded these disclosure controls and procedures are effective.

     There were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended June 30, 2005 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

     Information regarding this Item may be found in Note 9 to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. This information is incorporated by reference to this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     During the six months ended June 30, 2005, we did not repurchase any of our ordinary shares or American depositary shares. At June 30, 2005, a maximum of 3,306,754 ordinary shares or ADSs were eligible for repurchase under our approved stock repurchase program. On June 14, 2005, our shareholders approved the proposal to authorize our Board of Directors to renew the existing repurchase program for the repurchase of up to 8.4 million ordinary shares at a price not to exceed €30.00 per share (excluding costs) or its U.S. dollar equivalent. This authorization, which is valid for 18 months following June 14, 2005, also requires that the total number of treasury shares may not exceed 10% of our share capital.

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

     On June 20, 2005, the Company filed a Current Report on Form 8-K, which included the information required by Item 4. Submission of Matters to a Vote of Security Holders. The information provided under Item 8.01 of the Company’s Current Report on Form 8-K filed with the SEC on June 20, 2005 is incorporated herein by reference.

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Item 6. Exhibits

Exhibit No.	Description
10.24	French Employee Savings Plan, as amended June 14, 2005.
10.52	2004 International Employee Savings Plan, as amended June 14, 2005.
10.63	Stock Subscription Warrant Agreement for Carl S. Pascarella.
10.64	Stock Subscription Warrant Agreement for Gerald Held.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act.
32.1	Certification of Chief Executive Officer and of Chief Financial Officer furnished pursuant to Rule 13a-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
100.INS*	XBRL Instance Document
100.SCH*	XBRL Taxonomy Extension Schema Document
100.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
100.LAB*	XBRL Taxonomy Extension Label Linkbase Document
100.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document

* Attached as Exhibit 100 to this Form 10-Q for the three months ended June 30, 2005, are the: (i) condensed consolidated balance sheets at June 30, 2005 and December 31, 2004, (ii) condensed consolidated statements of income for the three and six months ended June 30, 2005 and 2004, and (iii) condensed consolidated statements of cash flows for the six months ended June 30, 2005 and 2004, formatted in XBRL (Extensible Business Reporting Language). Users of this data are advised pursuant to Rule 401 of Regulation S-T that the financial information contained in the XBRL documents is unaudited and these are not official publicly filed financial statements of the Company. In accordance with Rule 402 of Regulation S-T, Exhibit 100 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

     The purpose of submitting these XBRL formatted documents is to test the related format and technology and, as a result, investors should continue to rely on the official filed version of our condensed consolidated financial statements included in Part I, Financial Information to this Form 10-Q and not rely on the XBRL format documents in making investment decisions.

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SIGNATURES

     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, thereunto duly authorized.

	Business Objects S.A.
	(Registrant)
Date: August 9, 2005	By:	/s/ Bernard Liautaud
		Bernard Liautaud
		Chairman of the Board and
		Chief Executive Officer
Date: August 9, 2005	By:	/s/ James R. Tolonen
		James R. Tolonen
		Chief Financial Officer and
		Senior Group Vice President

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EXHIBIT INDEX

Exhibit No.	Description
10.24	French Employee Savings Plan, as amended June 14, 2005.
10.52	2004 International Employee Savings Plan, as amended June 14, 2005.
10.63	Stock Subscription Warrant Agreement for Carl S. Pascarella.
10.64	Stock Subscription Warrant Agreement for Gerald Held.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act.
32.1	Certification of Chief Executive Officer and of Chief Financial Officer furnished pursuant to Rule 13a-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
100.INS*	XBRL Instance Document
100.SCH*	XBRL Taxonomy Extension Schema Document
100.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
100.LAB*	XBRL Taxonomy Extension Label Linkbase Document
100.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document

* Attached as Exhibit 100 to this Form 10-Q for the three months ended June 30, 2005, are the: (i) condensed consolidated balance sheets at June 30, 2005 and December 31, 2004, (ii) condensed consolidated statements of income for the three and six months ended June 30, 2005 and 2004, and (iii) condensed consolidated statements of cash flows for the six months ended June 30, 2005 and 2004, formatted in XBRL (Extensible Business Reporting Language). Users of this data are advised pursuant to Rule 401 of Regulation S-T that the financial information contained in the XBRL documents is unaudited and these are not official publicly filed financial statements of the Company. In accordance with Rule 402 of Regulation S-T, Exhibit 100 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

     The purpose of submitting these XBRL formatted documents is to test the related format and technology and, as a result, investors should continue to rely on the official filed version of our condensed consolidated financial statements included in Part I, Financial Information to this Form 10-Q and not rely on the XBRL format documents in making investment decisions.

EX-10.24

Exhibit 10.24

COMPANY SAVINGS PLAN DOCUMENT

English translation of foreign language document

Business Objects S.A. (“the Company”), a joint-stock company governed by a board of directors, headquartered at 157- 159 Rue Anatole France, 92300 Levallois-Perret, registered with the Company and Trade Registry of Nanterre under number B 379 821 994 and represented by Mr. Stéphane Massas, acting in his capacity as Vice President of European Human Resources,

Has established, under the provisions of Title IV of Volume IV of the Labor Code,

A company savings plan (“the Plan”), intended to permit both current employees and those who have retired or taken early retirement from the Company to build a securities portfolio with Company assistance, subject to the provisions of this Plan Document.

RECITALS

The Plan is intended to give Company employees a stake in its development and growth by purchasing Company shares under preferential conditions and holding them through the Business Objects Actionnariat company investment fund.

Other investment vehicles, including Capi-Equilibre, a diversified company investment fund and Capi-Sécurité, a secure company investment fund, are also available to participants wishing to diversify their investments.

This Plan Document sets forth in particular the terms applicable to the capital increase reserved to Plan participants decided by the Chairman of the Board on June 15, 2005, hereafter “the Capital Increase” in compliance with the delegation of the Board meeting of May 13, 2005. The Company shares purchased in the scope of this offer will be subscribed to via the Business Objects September 2005 company investment fund, then promptly transferred to the Business Objects Actionnariat company investment fund.

This Plan Document supersedes and replaces the Plan Document dated December 16, 2004. This replacement in no way affects the unavailability periods of blocked funds or the tax treatment of sums previously invested by Company employees under the applicable Plan Document.

TITLE I — ENROLLMENT IN THE PLAN

Article 1 —who is eligible

1.1 All Company employees are eligible to join the Plan after having been “legally employed” by the Company for at least three months. “Legally employed” means being an employee of the company, without subtracting for periods of suspension of the employment contract for whatever reason.

1.2 Retired Company employees, including those having taken early retirement, who joined the Plan before their departure and remained in the Plan from that date by maintaining their investment, whether partially or totally, in the Plan, may continue to make contributions to the Capi-Sécurité and Capi-Equilibre multi-company funds.

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1.3 No voluntary contribution, except for that of an elective profit-sharing distribution payment, may be made as of the date of departure from the Company for any reason other than retirement or early retirement.

Article 2 — Enrollment formalities

Monetary contributions as well as the transfer of Company shares to the Plan entitle an employee to all rights attached to full Plan participation.

2.1 — Optional enrollment

Every Plan beneficiary making a voluntary contribution to the Plan fills in a participation form provided by the Company. Participation is effective from date of deposit of the form with the Human Resources Department of the Company.

2.2 — Automatic enrollment

As the amounts distributed within the scope of the statutory profit-sharing scheme are required to be paid into the Plan under the Company statutory profit-sharing agreement, no formalities for individual participation are therein required.

TITLE II — PLAN CONTRIBUTIONS

Article 3 — Origin of Plan contributions

Contributions can be made to the Plan by:

- The employee’s share of the special reserve of the statutory profit-sharing scheme under the terms of the profit-sharing agreement;

- - The voluntary contribution of the elective profit-sharing distribution payment under the terms of the elective profit-sharing agreement;

- - Other individual voluntary contributions;

- - Company matching contributions, if so granted;

- - Company shares resulting from an exercise of options granted under the provisions of Article L. 225-177 or Article L. 225-179 of the Commercial Code;

- - The income and investment earnings on Plan assets, as well as the dividend and other tax credits applicable thereto, except certain income and products of the shares resulting from the exercise of the foregoing mentioned options, i.e the dividends, the avoir fiscal and the related tax credit and the cash resulting from the sale of the fractional rights under share capital increases by incorporation of profits, reserves and premiums.

Article 4 — Contribution Methods

4.1 — Statutory profit-sharing

Under the provisions of Article R. 442-10 of the Labor Code, the distribution of the statutory profit sharing special reserve must be made to its beneficiaries before the first day of the fourth month following the closing of the fiscal year to which the distribution applies. After that date, the Company must calculate and add interest at a rate fixed by law to the profit-sharing payment. The interest must be paid at the same time as the principal and under the same conditions.

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.
4.2 — Voluntary contributions

All Plan beneficiaries as defined under the clause 1.1 herein may make voluntary contributions to the Plan.

The total annual amount of the sums contributed by the Plan participant may not exceed the legal ceiling which, as of the date of this Plan Document, is one-quarter of the participant’s annual gross salary if an employee and one-quarter of the pension amount received per year if the participant is retired or has taken early retirement. Only voluntary contributions, defined as elective profit-sharing distribution amounts, regular and special contributions are taken into consideration for purposes of calculating the maximum annual contribution, not the other means of contribution.

4.2.1 — Elective profit-sharing distribution payment

Under the applicable Company elective profit-sharing agreement, the beneficiary of an elective profit-sharing plan may elect to contribute all or a part of his/her elective profit-sharing distribution payment.

4.2.2 — Regular contributions in the scope of annual savings plan

The employee participant may make voluntary contributions in the scope of an annual savings plan, wherein the participant fixes an annual contribution amount at the time of joining the Plan. The annual contribution amount may be increased or decreased at the beginning of each calendar year, and shall be equal to a minimum of 160.00 euros per year.

Contributions, divided into four parts, are automatically deducted from the employee’s salary the last month of each quarter. Contributions can nonetheless be suspended, increased or decreased in the course of the year, as long as the Human Resources department is notified before the 5^th of the month of the relevant suspension, increase or decrease.

4.2.3 — Special contributions

4.2.3.1 — Independent of any regular contributions, a participant may make special contributions to the Plan.

Special contributions are possible at any time, either by check or by payroll deduction.

4.2.3.2 —If the participant makes a special contribution to the Plan within the scope of the Capital Increase, the amount of this contribution may not exceed:

(i) Either 10% of the gross salary paid to the participant between March 1, 2005 and August 31, 2005, with the additional limitation that the authorized subscription amount is capped under section 423(b)(8) of the United States Internal Revenue Code of 1986, as amended;

(ii) Or the exchange value of 500 “parts” of the Business Objects September 2005 fund.

The maximum number of “parts” of the Business Objects September 2005 fund to be purchased by the participant, within the limits set forth in (i) and (ii), is then multiplied by the total number of available shares in the scope of the offer and divided by the maximum number of Business Objects September 2005 fund “parts” to be purchased by all employees, within the limits set forth in (i) and (ii), and finally rounded down to a whole number.

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4.2.4 — Contribution of Company shares resulting from the exercise of options

When the stock option beneficiary consents, subject to the conditions described under Article L. 225-177 or Article L. 225-179 of the Commercial Code, to use the holdings that s/he has under the Plan to exercise options, the resulting shares assigned to the participant are placed in the Plan.

Article 5 — income, dividend and other tax credits

The income and return on amounts placed in the Plan are automatically reinvested therein. The same applies to relevant dividend and other tax credits, for which a refund will be requested from the administration.

Notwithstanding the foregoing provisions, certain incomes or products of shares resulting from the exercise of options in accordance with the Article L 225-177 or Article L225-179 of the Commercial Code will not be reinvested in the Plan and will be paid to their owners. These incomes and products are dividends, the avoir fiscal and any other tax credit, as well as the cash resulting from the sale of the fractional rights under share capital increases by incorporation of profits, reserves and premiums.

TITLE III — ADMINISTRATION OF SUMS AND SHARES TO BE PAID INTO THE PLAN AND PARTICIPANT ASSETS

Article 6 — Investment Vehicles

6.1 — Investment of sums paid into the Plan

Sums paid into the Plan are used to purchase “parts”:

• Of the Business Objects Actionnariat company investment fund, registered with the French securities and exchange commission (“AMF”) under number 07127, governed by Article L. 214-40 of the Monetary and Financial Code;

• Of the Capi-Equilibre multi-company fund, registered with the French securities and exchange commission (“AMF”) under number 01538, governed by Article L. 214-39 of the Monetary and Financial Code;

• Of the Capi-Sécurité multi-company fund, registered with the French securities and exchange commission (“AMF”) under number 03935, governed by Article L. 214-39 of the Monetary and Financial Code;

• Of the Business Objects September 2005 multi-company fund currently in approval stages with the French securities and exchange commission (“AMF”) governed by Article L. 214-40 of the Monetary and Financial Code.

These funds together are referred to as the “Funds” herein.

The official Fund Document is available to all participants. All participants receive the relevant summary information.

The administration of the funds is provided by:

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- Fongépar Gestion Financière, a joint-stock company, headquartered in Paris at 10 Place de Catalogne registered with the Paris Trade Registry under number B451 419 774, as the portfolio management company;

- CDC Finance-CDC Ixis a limited company governed by a board of directors and a monitoring committee, headquartered in Paris26/28 rue Neuve Tolbiac, registered with the Paris Trade Registry under number B 335 128 898, as trustee.

- Fongépar a limited company headquartered in Paris, 10 Place de Catalogne registered with the Paris Trade Registry under number B 692 042 310 as the Plan administrator.

6.2 — Investment of Company shares placed into the Plan

The Company shares deposited into the Plan, as per the paragraph “ Contribution of Company shares resulting from the exercise of options” from the “Methods of payment” article herein, are held in the individual securities accounts opened in the name of the participants, hereinafter “individual securities accounts”.

The share custodian is the Bank BNP PARIBAS Securities Services, , a joint-stock company with a capital of 165,279,835 euros, headquartered in Paris at 3 rue d’Antin, 75002 Paris, registered with the Paris Trade Registry under number 552 108 011.

Article 7 — Use of sums paid in and management of participant holdings

7.1 — Statutory profit-sharing plan special reserve

The participant chooses the fund(s) into which his or her statutory profit-sharing distribution is paid from among the Business Objects September 2005 fund, Capi-Equilibre and Capi-Sécurité. S/he in particular decides, where applicable, the allocation of the amounts between the various funds. If the administrator is not notified of the participant’s choice, the statutory profit-sharing distribution amount is automatically deposited into Capi-Sécurité.

7.2 — Elective profit-sharing distribution

When a beneficiary decides to invest all or a part of his elective profit-sharing distribution payment into the Plan, s/he chooses the fund(s) among Business Objects September 2005, Capi-Equilibre and Capi-Sécurité into which the amounts will be deposited. S/he specifically decides, where applicable, the allocation of the amounts between the various funds. If the administrator is not notified of the participant’s choice, the statutory profit-sharing distribution amount is automatically deposited into Capi-Sécurité.

7.3 — Regular contributions

When a beneficiary decides to regularly contribute to the Plan, s/he may choose the fund(s) from the Capi-Equilibre and Capi-Sécurité funds. S/he specifically decides, where applicable, the allocation of the amounts between the various funds. If the administrator is not notified of the participant’s choice, the statutory profit-sharing distribution amount is automatically deposited into Capi-Sécurité. This assignment remains valid for the duration of the fiscal year.

7.4 — Special contributions

When a beneficiary decides to make a special contribution to the Plan, s/he chooses the fund(s) from among the Capi-Equilibre and Capi-Sécurité funds into which the amounts will be deposited. S/he specifically decides, where applicable, the allocation of the amounts between the various funds. If the administrator is

5

not notified of his/her choice, the statutory profit-sharing distribution amount is automatically deposited into Capi-Sécurité.

Nonetheless, if the participant makes a special contribution to the Plan in the scope of the Capital Increase, s/he may choose the fund(s) from among Business Objects September 2005, Capi-Equilibre and Capi-Sécurité into which the amounts will be deposited. S/he specifically decides, where applicable, the allocation of the amounts between the various funds.

7.5 — Arbitrage from one fund to another

Any bearer of “parts” of any one of the following three funds: Business Objects Actionnariat, Capi-Equilibre and Capi-Sécurité, may request the transfer of all or a part of his/her holdings in a fund to one of the other two funds, or to both, within the following guidelines:

- Arbitrage may be requested at any time. To be processed on the basis of a valuation price, the arbitrage request must be made via the Sesalis website by 4:00 pm at the latest the day before the valuation price is set;

- An arbitration may apply to holdings which are either available or blocked;

- No arbitrage of Business Objects Actionnariat “parts” can be processed if they have not been fully paid;

- No arbitrage of Business Objects Actionnariat “parts” can be processed if the sums paid to purchase these same “parts” were subject to an employer contribution as set forth in Article L. 443-7 of the Labor Code.

7.6 — Income, dividend and other tax credits

For each fund, the income and investment earnings on amounts placed in the funds, in addition to the dividend and other tax credits applicable thereto, are reinvested in the fund

The Company shares held in individual securities accounts, the income, dividends and applicable dividend tax credits are paid to the owners of the shares. Payments in kind (bonus shares or other amounts) are reinvested in the individual stock accounts.

Article 8 —participant assets

A portfolio manager keeps the accounts of Plan participants’ individual invested amounts. Each Plan participant is the holder of an account opened in the books of said portfolio manager. This account is updated upon each contribution or withdrawal.

Plan participants’ assets are expressed:

- In “parts” and, where applicable, in fractions thereof, in the company investment fund or a multi-company fund, with each fund “part” equaling the same value of holdings included in said fund. Each participant is the owner of a number of “parts” and fractions thereof purchased via the sums paid in his or her name;

- in Company shares.

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Fongépar a limited company, whose head office is located in Paris at 10 Place de Catalogne, registered with the Paris Trade Registry under number B 692 042 310 serves as the portfolio manager for the Plan regarding the shares of the Company investment funds.

BNP PARIBAS Securities Services, a joint-stock company with a capital of 165,279,835 euros, headquartered in Paris at 3 rue d’Antin, 75002 Paris, registered with the Paris Trade Registry under number 552 108 011 serves as the portfolio manager for the Plan regarding the shares resulting from the exercise of the options.

TITLE IV — UNAVAILABILITY AND PAYMENT

Article 9 — Unavailability of assets and requests for withdrawal

9.1 — Amounts paid into the Plan

Amounts paid into the Plan are unavailable before the expiration of a five-year period, counting from the first day of the fourth month of the fiscal year in which the amounts were paid into the Plan.

The transfer of blocked holdings from one investment vehicle to another within the Plan under the conditions described in the paragraph entitled “Arbitrage from one fund to another” from the article entitled “Use of sums paid in and management of participant holdings “of this Plan Document does not affect the remaining duration of legal unavailability.

The participant may request that the amounts be released before the expiration of the unavailability period under the exceptional circumstances set forth in Article le R. 442-17 of the Labor Code.

As of the date of signature of this Plan Document, such circumstances are defined as the following:

a) Participant’s marriage or signing of a domestic partnership agreement;

b) Birth of a child or arrival of a child in participant’s household for purposes of adoption when the household already includes two dependent children;

c) Divorce, separation or a dissolution of a domestic partnership agreement when formalized by a court decision assigning sole or shared custody of at least one child to the Plan participant;

d) Disability of participant, one of his/her children, a spouse or the person with whom s/he has entered into a domestic partnership agreement. This disability must fall within the definition provided in sections 2 and 3 of Article L. 341-4 of the Social Security Code and must be recognized by a decision of the Functional Commission on Counseling and Rehabilitation as per Article L. 323-11 or of the Regional Commission on Special Education if the disability rate reaches at least 80% and the person does not exercise any professional activity;

e) Death of the participant, a spouse or of the person with whom s/he has entered into the domestic partnership agreement;

f) Termination of the employment contract if the participant is an employee or termination of the term of office if the participant is a person mentioned in the third paragraph of Article L. 443-1 of the Labor Code;

g) Allocation of saved sums to: the creation or purchase of an industrial, commercial, craft or agricultural firm, by the participant, one of his/her children, a spouse or the person with whom s/he has entered into a domestic partnership agreement, either individually, or in the form of a company, as long as control is in fact exercised as per Article R. 351-43; the setting up of another non-wage-earning professional activity; or the purchase of partnership shares in a cooperative production society;

h) Allocation of saved sums to the purchase of or addition to a primary residence which creates a new livable area as defined in Article R. 111-2 of the Construction and Housing Code, as long as a construction permit or preliminary building declaration exists, or to the repair of the primary residence following damaged sustained in a natural disaster as so classified by ministerial order;

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i) Participant’s excessive debt as defined in Article L. 331-2 of the Consumer Code, upon request addressed to the employer’s company savings plan administrator, either by the president of the Commission of Individual Excessive Debt, or by a court, when the release of the amounts held is deemed necessary to the participant’s discharge of debts.

The participant’s request must be made within six months of the event prompting the request, except in the case of employment termination; death of a spouse or the person with whom s/he has entered into a domestic partnership agreement; disability; or excessive debt, which may occur at any time.

9.2 — Company shares contributed to the Plan

Company shares contributed to the Plan, as per paragraph 4.2.4 “Contribution of Company shares resulting from the exercise of options” from Article 4 herein entitled “Payment methods”, are unavailable before the expiration of a five-year period, counting from the date of the stock options exercise.

9.3 — Death of Plan participant

In case of the Plan participant’s death, his/her legal successors may request the liquidation of holdings.

Article 10 — Withdrawal of assets

Following expiration of the holding unavailability period, the participant may choose to request a withdrawal of all or a part of the holdings, or to stay in the Plan and continue to benefit from the advantages offered.

10.1 — Assets invested in the funds

For assets invested in the funds, requests for withdrawal are processed according to the procedures set forth in the fund regulations. In order to be processed on the basis of a valuation price, written requests accompanied by any necessary supporting documents, must be received no later than the day before the setting of the valuation price by the portfolio management company.

Early release of funds shall be made in a single payment of either part or all of the invested amounts, as directed by the employee.

10.2 — Company shares kept in individual stock accounts

For Company shares kept in individual stock accounts, withdrawal requests are sent to the depositary bank and are met by cash payment of the amount of the sale of the shares after deduction of applicable taxes and fees.

Article 11 — Employee departure

When a Plan account holder leaves the Company without asserting his/her rights to released accounts or before the Company is able to liquidate all of participant’s holdings as of the departure date:

- The participant is furnished with a summary of his/her holdings to be filed in the company savings bankbook, separately listing the available holdings and including all necessary information to liquidate or transfer holdings;

The participant is asked to furnish the address where s/he shall receive the notices relevant to his accounts;

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• The participant is informed of the necessary steps to inform the Plan of any change of address.

When the account holder cannot be reached at his/her last known address, the holdings to which s/he has claim are retained by the company savings plan administrator, which shall proceed to liquidate after expiration of the 30 years’ prescription and pay the amount thus obtained to the Treasury Department.

TITLE V — INFORMATION, TAX AND SOCIAL REGIME, FEES

Article 12 — Participant Information

12.1 — How the Plan works

The staff members are informed of the existence and content of this Plan Document which is posted on the “Human Resources” Web site of the Company.

All new hires also receive a copy of this Plan Document.

This Plan Document is furnished to employees upon request.

Any modification to the Plan Document is communicated to all Plan participants and Company employees by being posted on the “Human Resources” Web site of the Company, and, at the case may be, also by sending of a release and/or a note.

A notice distributed to the beneficiaries wherein the nature and details of the offer are explained precedes every Company capital increase reserved to Plan participants.

12.2 — Position of assets, investment methods and miscellaneous information

12.2.1 —Individual account statements

Each participant receives an account statement indicating the breakdown of their assets and their availability date:

- at the end of the quarter, when account movement has transpired over the course of that same period;

- at least once a year, on December 31.

12.2.2 — Minitel

Plan participants may use Minitel to consult their individual account(s) and to obtain general information concerning the proposed investment vehicles, regulations and release of funds.

12.2.3 — Voice response system

Plan participants may use voice response system to consult their individual account(s) and to obtain general information concerning the proposed investment vehicles, regulations and release of funds.

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12.2.4 — Internet

Plan participants may use the Internet to consult their individual account(s) and to obtain general information concerning the proposed investment vehicles, regulations and release of funds. They may also use the Internet to arbitrate shares or “parts” within the Plan.

12.2.5 — Fund management report

Each “part” holder receives at least once a year a fund management report on the activities of the previous year for each of the funds in which s/he has holdings. This report is first submitted to the approval of the Fund supervisory board

Article 13 — Tax and social regime

Amounts paid into the Plan stemming from the special reserves for the statutory and elective profit-sharing schemes are not subject to personal income tax. Nor are these sums subject to the levies described in employment and social security legislation. They are, however, subject to the “CSG” (generalized social levy) and “CRDS” (social security debt reduction contribution) charges.

Moreover, under the reinvestment terms set forth in the articles entitled “Origin of Plan contributions” and “Income, dividend and other tax credits” of this Plan Document, the income and returns on amounts invested in the Plan, as well as the dividend and other tax credits applicable thereto are not subject to income tax.

Finally, capital gains on the holdings are not subject to income tax, but are subject to “CSG” (generalized social levy), “CRDS” (social security debt reduction contribution), and other social charges.

As the available assets, the funds released through June 16 to December 31, 2004, relating to the liquidation of the FCPE shares acquired on or before July 16, 2004 under this Plan and in compliance with the law no. 2004-804 of August 9, 2004 for the support of consumption and investment, are not subject to personal income tax). They are, however, subject to the social taxes (CSG, CRDS and social contributions).

Article 14 — Plan administration fees

14.1 — Portfolio management fees

The portfolio management fees for Plan participants’ accounts are paid by the Company.

In case of corporate bankruptcy reorganization or liquidation, the fees will be payable by the participants.

14.2 — Other fees

In order to facilitate the savings of its participants, the Company pays:

- the fund entry fees, except when due to arbitrage between funds;

- Service charges, auditor’s fees, and brokerage fees for the Business Objects Actionnariat fund;

- Custodial fees for Company shares.

Participants pay:

- the fund entry fees when they are due to arbitrage orders between funds;

- Service charges, auditor’s fees, and brokerage fees for Capi-Sécurité and Capi-Equilibre.

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TITRE V — MISCELLANEOUS PROVISIONS

Article 15 — Conflict resolution

Any participant claim regarding the administration of the Plan should be forwarded to the Company, in writing, setting out the nature of the request. If the claim cannot be settled, the case will be heard before a court of competent jurisdiction.

Article 16 — Entry into effect, duration, modifications and termination of plan

16.1 — Entry into effect and duration of Plan

This Plan Document shall take effect as of the date of signature. They are to apply for the duration of the fiscal year, and can be renewed by tacit agreement by fiscal year periods.

The fiscal year of the Plan begins January 1 and ends December 31. The fiscal year will end December 31 2005 and is therefore, exceptionally, of a shorter duration.

16.2 — Modifications and termination of the Plan

The signatory of this Plan Document may modify or terminate the Plan. Any such decision is recorded through written amendment to the Plan Document. Modifications or termination shall take effect as per the conditions set forth in the amendment.

ARTICLE 17 — Consultation between labor and management

In conformity with Article L.443-1 of the Labor Code, the Plan Document was submitted to Company labor and management for their input. The Workers’ Council was consulted. The meeting minutes of the Workers’ Council meeting wherein its input was requested is annexed to this Plan Document.

ARTICLE 18 — Final clauses

This Plan Document was concluded on the date cited below, having observed the 15-day minimum waiting period following the Company labor-management consultation required under L.443-1 of the Labor Code. Five original copies of the Plan Document and its annexes shall be, at the Company’s request, immediately deposited with the relevant Regional Labor, Employment and Continuing Education Department to which the Company is assigned.

Executed in Levallois-Perret, June 21, 2005

in ten original copies

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EX-10.52

Exhibit 10.52

BUSINESS OBJECTS S.A.

2004 INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN,

adopted on June 10, 2004
as amended on June 14, 2005

     The following terms and conditions constitute the provisions of the 2004 International Employee Stock Purchase Plan of Business Objects S.A, as approved by the extraordinary general meetings of shareholders of June 10, 2004 and amended by the Board at its meeting on October 21, 2004 and the Shareholders at its meeting on June 14, 2005.

1. Purpose.

     The purpose of the Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to subscribe Shares through accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.

2. Definitions.

(A) “Administrator” means the Board or any committee designated by the Board to administer the Plan pursuant to Section 14.

(B) “ADR” shall mean an American Depositary Receipt evidencing American Depositary Shares corresponding to Shares.

(C) “ADS” shall mean an American Depositary Share corresponding to Shares

(D) “Board” shall mean the Board of Directors of Business Objects S.A.

(E) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(F) “Company” shall mean Business Objects S.A., a corporation organized under the laws of the Republic of France.

(G) “Compensation” shall mean all base straight time gross earnings and sales commissions, exclusive of payments for overtime, shift premium, incentive compensation, incentive payments, bonuses and other compensation.

(H) “Custodian” shall mean Banque BNP Paribas, or any successor or successors thereto.

(I) “Depositary” shall mean the Bank of New York, or any successor or successors thereto.

(J) “Designated Subsidiaries” shall mean the Subsidiaries which have been designated by the Administrator from time to time in its sole discretion as eligible to participate in the Plan.

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(K) “Employee” shall mean any individual who is an Employee of the Company or a Designated Subsidiary for tax purposes. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or a Designated Subsidiary. Where the period of leave exceeds 90 days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated on the 91^st day of such leave. The Administrator, in its discretion, from time to time may, prior to an Enrollment Date for all options to be granted on such Enrollment Date, determine (on a uniform and nondiscriminatory basis) that the definition of Employee will or will not include an individual if he or she: (1) has not completed at least two years of service since his or her last hire date (or such lesser period of time as may be determined by the Administrator in its discretion), (2) customarily works not more than 20 hours per week (or such lesser period of time as may be determined by the Administrator in its discretion), (3) customarily works not more than five (5) months per calendar year (or such lesser period of time as may be determined by the Administrator in its discretion), (4) is an officer or other manager, or (5) is a highly compensated employee under Section 414(q) of the Code.

(L) “Enrollment Date” shall mean the first day of each Offering Period.

(M) “Exercise Date” shall mean the last day of each Offering Period.

(N) “Fair Market Value” means, as of any date, the closing sale price in euros for one Share (or the closing bid, if no sales were registered) as quoted on Eurolist by Euronext ^TM as reported in La Tribune, or such other source as the Administrator deems reliable, on the day of determination.

(O) “Offering Period” shall mean a period of approximately six (6) months, commencing on the first Trading Day on or after May 1 and terminating on the first Trading Day on or after the following November 1, or commencing on the first Trading Day on or after November 1 and terminating on the first Trading Day on or after the following May 1, at the beginning of which an option may be granted and at the end of which an option may be exercised pursuant to the Plan. The duration of Offering Periods may be changed pursuant to Section 4 of this Plan.

(P) “Plan” shall mean this 2004 International Employee Stock Purchase Plan.

(Q) “Shares” shall mean ordinary shares of the Company with a nominal value of €0.10.

(R) “Subscription Price” shall mean an amount no less than 85% of the Fair Market Value of a Share on the Enrollment Date or 85% of the Fair Market Value of a Share on the Exercise Date, whichever is lower, provided the Subscription Price may be adjusted pursuant to Section 19. For countries with currencies denominated in other than the Euro (or tied to the Euro), the local currency equivalent of the Subscription Price will be determined using the actual conversion rate from local currency into Euro on the date the funds are transferred to the 2004 Business Objects S.A. Employee Benefits Trust. This date may or may not be the Exercise Date.

(S) “Reserves” shall mean the maximum number of Shares, which have been authorized for issuance under the Plan pursuant to Section 12 hereof.

(T) “Subsidiary” shall mean a corporation, domestic or foreign, of which not less than 50% of the voting rights are held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.

(U) “Trading Day” means a day on which the Eurolist by Euronext ^TM is open for trading.

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(V) “Trust” shall mean the trust created by the Company under the Trust Agreement;

(W) “Trust Agreement” shall mean the trust agreement between the Company and the Trustee in favor of each of the Employees, attached hereto as Exhibit C.

(X) “Trustee” shall mean the trustee or trustees of the Trust.

3. Eligibility.

     (A) Any Employee who shall be employed by the Company or a Designated Subsidiary on a given Enrollment Date shall be eligible to participate in the Plan, subject to the requirements of Section 5.

     (B) Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) to the extent, immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to subscribe or purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Subsidiary, or (ii) to the extent his or her rights to subscribe or purchase stock under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company and its Subsidiaries would accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined with reference to the fair market value of the Shares at the time such option is granted) for each calendar year in which such option is outstanding at any time.

4. Offering Periods.

     The Plan shall be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day on or after May 1 and November 1 each year, or on such other date as the Administrator shall determine, and continuing thereafter until terminated in accordance with Section 19 hereof. The Administrator shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without shareholder approval if such change is announced prior to the scheduled beginning of the first Offering Period to be affected thereafter.

5. Participation.

     (A) An eligible Employee may become a participant in the Plan by (i) completing a subscription agreement authorizing payroll deductions in the form determined by the Administrator and submitting it to the Company’s or a Designated Subsidiary’s payroll office (or their designee) prior to the applicable Enrollment Date, or (ii) following an electronic or other enrollment procedure prescribed by the Administrator.

     (B) Payroll deductions for a participant shall commence on the first payroll following the Enrollment Date and shall end on the last payroll in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10 hereof.

6. Payroll Deductions.

     (A) At the time a participant enrolls in the Plan pursuant to Section 5, he or she shall elect to have payroll deductions made on each pay day during the Offering Period in an amount, together with amounts contributed under the Company’s Plan d’Epargne d’Entreprise (the “Employee Savings Plan”), of no less than 1% and not to exceed ten percent (10%) of the Compensation which he or she receives on each pay day during the Offering Period.

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     (B) All payroll deductions made for a participant shall be credited to his or her account under the Plan and will be withheld in whole percentages only. After the last payday in an Offering Period such payroll deductions shall be transferred to the Trust as soon as practicable. Funds may be advanced by a Designated Subsidiary to the Trust, or by the Trust to the Company, as necessary or convenient under any applicable law or regulation. A participant may not make any additional payments into his or her account, either with the Company, a Designated Subsidiary, or the Trust.

     (C) A participant may discontinue his or her participation in the Plan as provided in Section 10 hereof, or may increase or decrease the rate of his or her payroll deductions during the Offering Period by (i) properly completing and submitting to the Company’s or Designated Subsidiary’s payroll office (or their designee), on or before a date prescribed by the Administrator prior to an applicable Exercise Date, a new subscription agreement authorizing the change in payroll deduction rate in the form provided by the Administrator for such purpose, or (ii) following an electronic or other procedure prescribed by the Administrator. The Administrator may, in its discretion, limit the number of participation rate changes during any Offering Period. The change in rate shall be effective with the first full payroll period following five (5) business days after the Company’s or Designated Subsidiary’s receipt of the new subscription agreement unless the Company or Designated Subsidiary elects to process a given change in participation more quickly. A participant’s subscription agreement shall remain in effect for successive Offering Periods unless terminated as provided in Section 10 hereof.

     (D) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(B) hereof, a participant’s payroll deductions may be decreased to 0%. Subject to Section 423(b)(8) of the Code and Section 3(B) hereof, payroll deductions shall recommence at the rate at the rate most recently elected by the participant at the beginning of the first Offering Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in Section 10 hereof.

     (E) At the time the option is exercised, in whole or in part, or at the time some or all of the Company’s Shares issued under the Plan is disposed of, the participant must make adequate provision for the Company’s or Designated Subsidiary’s federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Shares. At any time, the Company or Designated Subsidiary may, if required by the laws of the country of residence of the participant, withhold from the participant’s compensation the amount necessary for the Company or Designated Subsidiary to meet applicable withholding obligations, including any withholding required to make available to the Company or Designated Subsidiary any tax deductions or benefits attributable to sale or early disposition of Shares by the Employee. The Administrator may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum number of Shares that a participant may subscribe during each Offering Period. Exercise of the option will occur as provided in Section 8, unless the participant has withdrawn pursuant to Section 10.

7. Grant of Option.

     On the Enrollment Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to subscribe on the Exercise Date of such Offering Period (at the applicable Subscription Price) up to a number of Shares (in the form of ADSs) determined by dividing such Employee’s payroll deductions accumulated and transferred to the Trust on or prior to such Exercise Date by the applicable Subscription Price; provided that in no event shall an Employee be permitted to subscribe during each Offering Period more than 500 Shares, subject to adjustment as provided in Section 18 hereof; and provided further, that such subscription shall be subject to the limitations set forth in Sections 3(B) and 12 hereof. Exercise of the option shall occur as provided in Section 8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof, and shall expire on the last day of the Offering Period.

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8. Exercise of Option

     (A) With respect to each Exercise Date, the Company shall issue Shares to the Trust in accordance with Section 1.3 of the Trust, sufficient to meet its obligations to participating Employees under the Plan. Unless a participant withdraws from the Plan as provided in Section 10 hereof, notice of exercise of his or her option shall be deemed to have been given by the participant and his or her option for the subscription of Shares (in the form of ADSs) shall be exercised automatically by the Trustee on the Exercise Date, and the maximum number of full shares subject to such option shall be subscribed for such participant by the Trustee at the applicable Subscription Price with the accumulated payroll deductions in his or her account with the Trust. Per Company’s instruction, the Custodian issues the subscribed Shares and delivers them to the Depositary which converts the Shares into ADSs; provided, however, no Shares shall be subscribed which would result in the Employee receiving a fractional ADS; any payroll deductions accumulated in a participant’s account which are not sufficient to subscribe a full ADS shall be retained in the participant’s account for use in the subsequent Offering Period, subject to earlier withdrawal by the participant as provided in Section 10 hereof. Any other funds left over in a participant’s account (whether due to withdrawal by the participant from the Plan pursuant to Section 10, termination of the Plan in accordance with Section 19, or otherwise) after the Exercise Date shall be returned to the participant. During a participant’s lifetime, a participant’s option to subscribe ADSs hereunder is exercisable only by him or her.

     (B) Notwithstanding any contrary Plan provision, if the Administrator determines that, on a given Exercise Date, the number of Shares with respect to which options are to be exercised may exceed (i) the number of Shares that were available for sale under the Plan on the Enrollment Date of the applicable Offering Period, or (ii) the number of Shares available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion (x) provide that the Company will make a pro rata allocation of the Shares available for subscription on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and as it will determine in its sole discretion to be equitable among all participants exercising options to subscribe Shares on such Exercise Date, and continue all Offering Periods then in effect, or (y) provide that the Company will make a pro rata allocation of the Shares available for subscription on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and as it will determine in its sole discretion to be equitable among all participants exercising options to subscribe Shares on such Exercise Date, and terminate any or all Offering Periods then in effect pursuant to Section 19. The Company may make pro rata allocation of the Shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional Shares for issuance under the Plan by the Company’s stockholders subsequent to such Enrollment Date.

9. Delivery

     As promptly as practicable after each Exercise Date on which a subscription of Shares occurs, the Company shall arrange the delivery of ADSs representing the Shares subscribed upon exercise of options by the Trustee for the participating Employees to the Trust.

10. Withdrawal; Termination of Employment

     (A) Under procedures established by the Administrator, a participant may withdraw all but not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan at any time by (i) submitting to the Company’s payroll office (or its designee) a written notice of withdrawal in the form prescribed by the Administrator for such purpose, or (ii) following an electronic or other withdrawal procedure prescribed by the Administrator. All of the participant’s payroll deductions credited to his or her account will be paid to such participant promptly after receipt of notice of withdrawal and such participant’s option for the Offering Period will be automatically terminated, and no further payroll deductions for the subscription of ADSs will be made during the Offering Period. If a participant withdraws

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from an Offering Period, payroll deductions will not resume at the beginning of the succeeding Offering Period unless the participant re-enrolls in the Plan in accordance with the provisions of Section 5.

     (B) Upon a participant’s ceasing to be an Employee for any reason, he or she will be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such participant’s account during the Offering Period but not yet used to exercise the option will be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 14 hereof, and such participant’s option will be automatically terminated; provided, however, that any payroll deductions held by the Trust in an individual account for an Employee shall be subject to the terms of such Trust. The preceding sentence notwithstanding, a participant who receives payment in lieu of notice of termination of employment shall be treated as continuing to be an Employee for the participant’s customary number of hours per week of employment during the period in which the participant is subject to such payment in lieu of notice.

     (C) A participant’s withdrawal from an Offering Period will not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or a Designated Subsidiary or in succeeding Offering Periods which commence after the termination of the Offering Period from which the participant withdraws.

11. Interest

     No interest shall accrue on the payroll deductions of a participant in the Plan.

12. SHARES

     (A) Subject to adjustment upon changes in capitalization of the Company as provided in Section 18, the maximum number of Shares which will be made available for sale under the Plan will be 1,175,000 Shares, including 475,000 Shares approved at extraordinary shareholders’ meetings on June 10, 2004 and 700,000 Shares approved at extraordinary shareholders’ meetings on June 14, 2005. Capital increases to meet the Company’s obligations under the Plan shall be determined and approved at extraordinary shareholders’ meetings to be held at the same time as the annual shareholders’ meetings of the Company, as necessary.

     (B) The Board shall, subject to shareholders authorization, from time to time reserve and issue to the Trust a number of Shares sufficient to meet its obligations under the current Offering Period of the Plan. If on a given Exercise Date the number of shares with respect to which options are to be exercised exceeds the number of Shares then available under the Plan, the Company shall distribute all of the Shares remaining available for subscription under the Plan to the Trust, which shall make an allocation as provided in Section 8(B).

     (C) The participant will have no interest or voting rights in shares covered by his or her option until such option has been exercised.

     (D) ADSs to be delivered to a participant under the Plan will be registered in the name of the participant or in the name of the participant and his or her spouse, or in street name to be deposited with a broker.

13. Administration

     The Plan shall be administered by the Board (or a committee thereof) or the board of directors of a participating Subsidiary (or a committee thereof), as the case may be. Such board or committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine

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eligibility and to adjudicate all disputed claims filed under the Plan with respect to any Employee of such Company or Subsidiary; provided, however, that any such construction, interpretation, application, determination and/or adjudication shall be subject to any terms, constructions, conditions, provisions, interpretations, determinations, adjudications, or decisions as may be adopted or made by the Administrator from time to time. Every finding, decision and determination made by the Administrator shall, to the full extent permitted by law, be final and binding upon all parties.

14. Designation of Beneficiary

     (A) A participant, except for a participant who is an Employee of Business Objects (U.K) Ltd., Business Objects Software Ltd. and any other Designated Subsidiary incorporated in United Kingdom or in Ireland, may file a written designation of a beneficiary who is to receive any ADSs and cash, if any, from the participant’s account under the Plan in the event of such participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such ADSs and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior to exercise of the option. If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective.

     (B) Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the Company shall cause such ADSs and/or cash to be delivered to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may cause such ADSs and/or cash to be delivered to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

     (C) All beneficiary designations under this Section 14 will be made in such form and manner as the Administrator may prescribe from time to time.

15. Transferability

     Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive ADSs under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 14 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof.

16. Use of Funds

     All payroll deductions received or held by the Company or Subsidiary under the Plan for its Employees may be used by the Company or such Subsidiary, as the case may be, for any corporate purpose, and the Company or Subsidiary shall not be obligated to segregate such payroll deductions. Notwithstanding the preceding sentence, all payroll deductions transferred to and held by the Trust shall be used solely by the Trust as specified in the Trust Agreement attached hereto as Exhibit C. Until ADSs are issued under the Plan (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), a participant will only have the rights of an unsecured creditor with respect to such ADSs.

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17. Reports

     Individual accounts will be maintained for each participating Employee by the Company or the Designated Subsidiary as well as the Trust. Statements of account will be given to participating Employees at least annually, which statements will set forth the amounts of payroll deductions, the Subscription Price, the number of ADSs subscribed and the remaining cash balance, if any, for the period covered by such statement.

18. Adjustments Upon Changes in Capitalization

     (A) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares such that an adjustment is determined by the Administrator (in its sole discretion) to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Administrator will, in such manner as it may deem equitable, adjust the number and class of Shares which may be delivered under the Plan, the Subscription Price per Share and the number of Shares covered by each option under the Plan which has not yet been exercised, and the numerical limits of Sections 7.

     (B) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period and the Plan will terminate immediately prior to the consummation of such proposed action and any and all accumulated payroll deductions will be returned to the participating Employees in accordance with Section 19(A), unless otherwise provided by the Administrator.

     (C) Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each option under the Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Administrator determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, to shorten the Offering Period then in progress by setting a new Exercise Date (the “New Exercise Date”) or to cancel each outstanding right to subscribe and refund all sums collected from participants during the Offering Period then in progress. If the Administrator shortens the Offering Period then in progress in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify each participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for his option has been changed to the New Exercise Date and that his option will be exercised automatically on the New Exercise Date, unless prior to such date he has withdrawn from the Offering Period as provided in Section 10 hereof. For purposes of this paragraph, an option granted under the Plan shall be deemed to be assumed if, following the sale of assets or merger, the option confers the right to subscribe, for each share of option stock subject to the option immediately prior to the sale of assets or merger, the consideration (whether stock, cash or other securities or property) received in the sale of assets or merger by holders of ordinary shares for each Share held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the sale of assets or merger was not solely common stock of the successor corporation or its parent (as defined in Section 424(e) of the Code), the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon exercise of the option to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Shares and the sale of assets or merger.

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19. Amendment or Termination

     (A) The Administrator may at any time and for any reason terminate or amend the Plan. Except as provided in Section 19, no such termination can affect options previously granted under the Plan, provided that an Offering Period may be terminated by the Administrator on any Exercise Date if the Administrator determines that the termination or suspension of the Plan is in the best interests of the Company and its stockholders. Except as provided in Section 18 and this Section 19, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law, regulation or stock exchange rule), the Company will obtain stockholder approval in such a manner and to such a degree as required.

     (B) Without stockholder consent and without regard to whether any participant rights may be considered to have been “adversely affected,” the Administrator will be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the subscription of Shares for each participant properly correspond with amounts withheld from the participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable which are consistent with the Plan.

     (C) In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its discretion and, to the extent necessary or desirable, modify, amend or terminate the Plan to reduce or eliminate such accounting consequence including, but not limited to:

          (i) altering the Subscription Price for any Offering Period including an Offering Period underway at the time of the change in Subscription Price;

          (ii) shortening any Offering Period so that Offering Period ends on a new Exercise Date, including an Offering Period underway at the time of the Administrator action; and

          (iii) allocating Shares.

Such modifications or amendments will not require stockholder approval or the consent of any Plan participants.

20. Notices.

     All notices or other communications by a participant to the Company or Designated Subsidiary under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company or Designated Subsidiary at the location, or by the person, designated by the Company or Designated Subsidiary for the receipt thereof.

21. Conditions Upon Issuance.

     Neither Shares nor ADSs or ADRs shall be issued with respect to an option unless the exercise of such option and the issuance and delivery of such ADSs or ADRs pursuant thereto, as well as the issuance of shares from the Company to the Trust and the transfer of shares from the Trust to the Employees, shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the

9

Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, French Commercial Code, and the requirements of any stock exchange upon which the Shares or ADSs may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

     As a condition to the exercise of an option, the Company or Trustee may require the person exercising such option to represent and warrant at the time of any such exercise that the ADSs are being subscribed only for investment and without any present intention to sell or distribute such ADSs if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.

22. Term of Plan

     The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the Company. It shall continue in effect until terminated under Section 19 hereof.

23. Governing Law and Jurisdiction

     This Plan shall be governed by and construed in accordance with the laws of the State of Delaware, except for that body of law pertaining to conflicts of laws.

*

* * *

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Exhibit A

BUSINESS OBJECTS S.A.

2004 INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN

PARTICIPATION AGREEMENT

___Original Application	Original Enrollment Date: ____________
___Change in Payroll Deduction Rate	Change Notice Date: ________________

1. _____________________________________ hereby elects to participate in the Business Objects S.A. 2004 International Employee Stock Purchase Plan (the “International Employee Stock Purchase Plan”).

2. I hereby authorize the Company or any Designated Subsidiary of which I am an Employee to make payroll deductions from each paycheck in the amount of________ % of my Compensation on each payday (together with amounts contributed under the Company’s Employee Savings Plan, no less than 1% and not to exceed 10% during the Offering Period in accordance with the International Employee Stock Purchase Plan. Please note that only whole percentages are permitted.)

3. I understand that said payroll deductions shall be accumulated in order to exercise the option(s) granted to me pursuant to the International Employee Stock Purchase Plan and to purchase ADSs representing Shares at the applicable Purchase Price determined in accordance with the International Employee Stock Purchase Plan. I understand that if I do not elect to withdraw from an Offering Period, any accumulated payroll deductions will be used by the Trustee to automatically exercise my option.

4. I have received a copy of the complete International Employee Stock Purchase Plan. I understand that my participation in the International Employee Stock Purchase Plan is in all respects subject to the terms of the Plan (including, without limitation, the Trust Agreement, which is attached as Exhibit C thereto). I understand that the grant of the option by the Company under this Participation Agreement may be subject to obtaining shareholder approval of the International Employee Stock Purchase Plan, any Exhibit thereto and/or any amendment thereto.

5. ADSs purchased for me under the Employee Stock Purchase Plan should be issued in the name of (Employee Only):__________________________________________

6. I understand that, notwithstanding any other provision of this Participation Agreement or the International Employee Stock Purchase Plan:

     (A) neither the International Employee Stock Purchase Plan nor this Participation Agreement shall form any part of any contract of employment between the Company or any Designated Subsidiary and any Employees of any such company, and it shall not confer on any participant any legal or equitable rights (other than those constituting the Options themselves) against the Company or any Designated Subsidiary, directly or indirectly, or give rise to any cause of action in law or in equity against the Company or any subsidiary;

     (B) the benefits to participants under the Plan shall not form any part of their wages, pay or remuneration or count as wages, pay or remuneration for pension fund or other purposes except if applicable for tax purposes

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     (C) in no circumstances shall any Employee on ceasing to hold his or her office or employment by virtue of which he or she is or may be eligible to participate in the International Employee Stock Purchase Plan be entitled to any compensation for any loss of any right or benefit or prospective right or benefit under the Plan, which he might otherwise have enjoyed, whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or otherwise.

     (D) the Company expressly retains the right to terminate the International Employee Stock Purchase Plan at any time and that I will have no right to continue to receive option grants under the International Employee Stock Purchase Plan in such event.

7. I understand that I may be subject to taxation as a result of my participation under the International Employee Stock Purchase Plan. I understand that although the basis for taxation may be calculated based upon the fair market value of the Shares at the exercise date, the Shares may/will not be deposited into my broker account on that day for at least 5 business days subsequent to the exercise date. I therefore understand that there may be a loss of value between the exercise date and the date Shares are deposited into my broker account, I have consulted any tax advisors in connection with my participation under the International Employee Stock Purchase Plan that I deem advisable, and have not relied on the Company for tax advice.

8. I understand that investment purchasing in Shares purchased under the International Stock Purchase Plan is not a risk free investment and is subject to a risk of loss in whole or part.

9. I hereby agree to be bound by the terms of the International Employee Stock Purchase Plan. The effectiveness of this Participation Agreement is dependent upon my eligibility to participate in the International Employee Stock Purchase Plan.

10. I hereby agree to permit (i) the Company or a Company agent to transfer my tax identification, address and other necessary personal information to a broker selected by the Company for the purpose of opening an International Employee Stock Purchase Plan related brokerage account in my name and ii) a broker selected by company to open said account. I consent to the transfer of the aforementioned personal information to any country as required by Company to administer the International Employee Stock Purchase Plan including, without limitation, the United States.

I UNDERSTAND THAT THIS PARTICIPATION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS I TERMINATE MY PARTICIPATION AS EVIDENCED BY ME SUBMITTING A NEW PARTICIPATION AGREEMENT WITH THIS SO INDICATED.

Employee’s Taxpayer

Identification Number (SS#):

Employer:

Employee’s Address:

Signature of Employee

Date: ________________

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Exhibit B

BUSINESS OBJECTS S.A.

2004 INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

The undersigned participant in the Offering Period of the Business Objects S.A. 2004 International Employee Stock Purchase Plan which began on          (the “Enrollment Date”) hereby notifies the Company or Designated Subsidiary that he or she hereby withdraws from the Offering Period. He or she hereby directs the Company or Designated Subsidiary to pay to the undersigned as promptly as practicable all the payroll deductions credited to his or her account with the Company or Designated Subsidiary with respect to such Offering Period. The undersigned understands and agrees that his or her Option for such Offering Period will be automatically terminated. The undersigned understands further that no further payroll deductions will be made for the purchase of ADSs in the current Offering Period and the undersigned shall be eligible to participate in succeeding Offering Periods only by delivering to the Company or Designated Subsidiary a new Participation Agreement.

Name and Address of Participant:

Signature:

Date: 

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Exhibit C

BUSINESS OBJECTS S.A.

2004 INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN

2004 BUSINESS OBJECTS S.A. EMPLOYEE BENEFITS TRUST AGREEMENT

     This declaration of trust and trust agreement (the “Trust Agreement”) is made and entered into this 10^th day of June 2004 by and between Business Objects S.A., a corporation organized under the laws of the Republic of France (the “Company”) and Allecon Stock Associates, a corporation organized under the laws of the State of Michigan, United States (the “Trustee”), in favor of each of the Employees. All terms not defined herein will have the meanings ascribed to them in the Company’s 2004 International Employee Stock Purchase Plan (the “Plan”).

RECITALS:

A. The shareholders of the Company formally authorized the Plan on June 10, 2004, pursuant to which the Employees will receive options to purchase ADS of the Company, corresponding to Shares of the Company.

B. On June 10, 2004, the shareholders of the Company also approved the establishment of the 2004 Business Objects S.A. Employee Benefits Trust (the “Trust”) as a fiscal intermediary and paying agent to facilitate implementation of the Plan.

     NOW, THEREFORE, the Company and the Trustee agree as follows:

ARTICLE 0
DEFINITIONS

(A) “ADR” shall mean an American Depositary Receipt evidencing American Depositary Shares corresponding to Shares.

(B) “ADS” shall mean an American Depositary Share corresponding to Shares

(C) “Board” shall mean the Board of Directors of Business Objects S.A.

(D) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(E) “Company” shall mean Business Objects S.A., a corporation organized under the laws of the Republic of France.

(F) “Custodian” shall mean Banque BNP Paribas, or any successor or successors thereto.

(G) “Depositary” shall mean the Bank of New York, or any successor or successors thereto.

(H) “Designated Subsidiaries” shall mean the Subsidiaries which have been designated by the Board from time to time in its sole discretion as eligible to participate in the Plan.

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(I) “Employee” shall mean any individual who is an Employee of the Company or a Designated Subsidiary for tax purposes. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or a Designated Subsidiary. Where the period of leave exceeds 90 days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated on the 91^st day of such leave.

(J) “Exercise Date” shall mean the last day of each Offering Period.

(K) “Plan” shall mean this 2004 International Employee Stock Purchase Plan.

(L) “Shares” shall mean ordinary shares with a nominal value of €0.10, of the Company.

(M) “Reserves” shall mean the maximum number of Shares, which have been authorized for issuance under the Plan pursuant to Section 12 hereof.

(N) “Subsidiary” shall mean a corporation, domestic or foreign, of which not less than 50% of the voting rights are held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.

(O) “Trust” shall mean the trust created by the Company under the Trust Agreement;

ARTICLE I
CREATION AND FUNDING OF TRUST

     I.1 Creation of Trust. The 2004 Business Objects S.A. Employee Benefits Trust (the “Trust”) is hereby created. Company hereby appoints the Trustee, and irrevocably grants, assigns, transfers, conveys and delivers to the Trustee, and the Trustee hereby accepts, any and all property as specified in Section 1.2, in trust for the use and purposes hereinafter stated, and the Trustee agrees to and does hereby accept the foregoing property subject to such Trust.

     I.2 Initial Funding. Concurrently with the execution of this Trust Agreement, the Company is conveying to the Trust twenty-five (25) dollars.

     I.3 Contributions of the Company. From time to time, the Company shall issue Shares (to be transferred by the Custodian to the Depositary which will convert the Shares into ADSs and shall deliver to participating Employees in the form of ADRs or to a broker in the form of ADSs) and/or cash to the Trust in such amounts and at such times as required for the Company to fulfill its obligations under the Plan and this Trust Agreement. Such Share or cash, when contributed to the Trust, shall be used and applied by the Trustee in accordance with the terms of this Trust Agreement.

     I.4 Contributions of Payroll Deductions. From time to time, as required by and in accordance with the terms of the Plan, the Company and/or any of its Subsidiaries shall contribute to the Trust the accumulated payroll deductions of the Employees to be applied towards the exercise of options held by such Employees.

ARTICLE II
EMPLOYEE ACCOUNTS

     II.1 Individual Accounts. The Trustee shall establish and maintain on its books a separate account for each participating Employee. All contributions of payroll deductions pursuant to Section 1.4

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by the Company shall be allocated to individual accounts within the Trust on the basis of each Employee’s accumulated payroll deduction for the relevant offering period under the Plan.

     II.2 Application of Funds in Individual Accounts. The cash contributed to the individual accounts shall be applied to exercise the options of the Employees in accordance with the terms of the Plan.

ARTICLE III
DISTRIBUTIONS

     III.1 Distributions of ADS to Employees. The Trustee shall as soon as practicable after the Exercise Date, exercise the options of each Employee in accordance with the terms of the Plan. Accordingly the Custodian shall issue the Shares and deliver them with the Depositary which shall convert the Shares into ADSs and shall deliver ADRs to each Employee, or ADSs to such Employee’s broker.

     III.2 Distributions of Payroll Deductions to the Company. The Trustee shall distribute the payroll deductions contributed pursuant to Section 1.4 to the Company in accordance with the terms of the Plan.

ARTICLE IV
NAME, DURATION AND TERMINATION OF TRUST

     IV.1 Name. This Trust shall be known as the “2004 Business Objects S.A. Employee Benefits Trust.”

     IV.2 Nature. This trust shall be a grantor trust within the meaning of the Code and shall be subject to the claims of the Company’s general creditors, to the extent that the assets of the Trust would be otherwise so subject.

     IV.3 Duration. This Trust shall be revocable and may be revoked by the Company at any time. Unless sooner revoked, it shall terminate at the earlier of: (a) twenty (20) years from the effective date of the Plan, or (b) upon the termination of the Plan and the satisfaction of all obligations thereunder.

     IV.4 Distributions by Trustee on Termination. Upon termination of the Trust, the Trustee shall distribute or apply any cash contributed pursuant to Section 1.3 to the Company, and any cash contributed pursuant to Section 1.4 in the individual accounts to the appropriate Employees; provided, however, that the Trustee may, but only on the advice of counsel, retain a reasonable sum for payment of or to provide for all known claims against and expenses of the Trust and the Trustee, but only from contributions made pursuant to Section 1.3.

ARTICLE V
PURPOSE OF TRUST AND LIMITATIONS OF TRUSTEE

     The sole purpose of this Trust is for use in the administration of the Plan. The Trust shall not be nor have the power to be an organization having as a purpose the carrying on of any trade or business. This Trust Agreement is not intended to create and shall not be interpreted as creating an association, partnership, joint venture or any other entity formed to conduct trade or business.

ARTICLE VI
POWERS OF THE TRUSTEE

     VI.1 General Powers. In addition to such powers as may from time to time be granted to the Trustee, the Trustee may take all such actions and is hereby granted such powers as may appear necessary or proper to comply with the laws of the appropriate jurisdictions and to effectuate and carry out the terms

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and purposes of the Trust Agreement. The Trustee shall hold legal and equitable title to all assets at any time constituting a part of the Trust and shall hold such assets in Trust to be administered and disposed of by the Trustee pursuant to the terms of this Trust Agreement for the benefit of the Employees or the Company as the case may be.

     VI.2 Specific Powers Exercisable by Trustee. The Trustee shall have the following specific powers, and the enumeration of such powers shall not be considered in any way to limit or control the power of the Trustee to act as specifically authorized in any other section or provision of this Trust Agreement:

          (A) To sell or otherwise dispose of any of the Trust Assets in exchange for the fair market value thereof.

          (B) To prosecute or defend litigation (in the name of the Trust, the beneficiaries, or otherwise) and to pay, discharge or otherwise satisfy claims, liabilities, and expenses and to pay all expenses incurred in connection therewith, to carry such insurance, as the Trustee shall determine, to protect the Trust and the Trustee from liability.

          (C) To invest any cash not yet available for distribution in accordance with the terms of this Trust Agreement in demand and time deposits in banks or savings institutions, short-term certificates of deposit, treasury bills, or money market account instruments. Any interest earned from such investments shall be applied towards payment of the Trustee’s compensation (determined pursuant to Section 9.1) or other expenses of the Trust. Notwithstanding the preceding sentence, if such interest is in excess of the amount required to compensate the Trustee or to pay any other expenses of the Trust, such excess shall be distributed to the Company.

          (D) While serving as Trustee to engage legal counsel for the benefit of the Trustee. The Company, however, shall be obligated to pay the fees and expenses of such counsel. In addition, the Trustee may engage such other consultants as the Trustee shall see fit to assist in the administration of the Trust, and such consultant’s fees shall also be the obligation of the Company.

ARTICLE VII
AMENDMENT OF TRUST AGREEMENT

     This Trust Agreement may be amended at any time and to any extent by a written instrument executed by the Trustee and the Company.

ARTICLE VIII
ACCEPTANCE BY TRUSTEE

     VIII.1 Acceptance of Appointment. The Trustee hereby accepts its appointment made in this Trust Agreement subject to the conditions enumerated below and agrees to act as Trustee pursuant to the terms hereof.

          (A) The Trustee shall in no case or event be liable for any damage caused by the exercise of its discretion as authorized in this Trust Agreement in any particular manner, or for any other reason, except gross negligence or willful misconduct, nor shall the Trustee be liable or responsible for forgeries or false impersonation. .

          (B) If any controversy arises between the parties hereto or with any third person with respect to the subject matter of the Trust or its terms or conditions, the Trustee shall not be required to determine the same or take any action in the premises, but may await the settlement of any such controversy by final appropriate legal proceedings or otherwise as the Trustee may reasonably require.

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          (C) The Trustee may utilize or be reimbursed only from the Trust assets contributed pursuant to Section 1.3 (to the extent that it is not directly paid by the Company) with respect to all liabilities and expenses (including amounts paid in satisfaction of judgments, in compromise, or as attorneys’ fees and expenses) reasonably incurred by the Trustee in connection with the defense or disposition of any action, suit or other proceeding in which the Trustee may be involved or with which the Trustee may be threatened by reason of its being or having been a Trustee pursuant to this Trust Agreement, except with respect to any matter as to which the Trustee shall have been adjudicated to have acted in bad faith or with willful misfeasance, reckless disregard of its duties or gross negligence.

          (D) Notwithstanding any other provision of this Trust Agreement, the Trustee’s responsibility for payment of or provision for any claims against or liabilities or expenses of the Trust or the Trustee shall be limited to the property and assets in the Trust and shall be dischargeable only therefrom.

ARTICLE IX
TRUSTEE’S EXPENSES

     9.1 Trustee Compensation. The Trustee shall be entitled to such reasonable compensation for its services as shall be agreed upon in writing by the Company and the Trustee. To the extent the compensation and expenses of the Trustee are not paid directly by the Company, they shall be paid by the Trust pursuant to Section 6.2(c) or out of assets contributed pursuant to Section 1.3, or a combination thereof. Notwithstanding the preceding two sentences or any other provision of this Trust Agreement, if the Trustee is an Employee he or she shall receive no additional compensation for service as Trustee.

ARTICLE X
RESIGNATION AND REMOVAL OF TRUSTEE

     X.1 Trustee Resignation. The Trustee shall have the right to resign at any time upon fifteen (15) days written notice to the Company. Upon such resignation, the Company shall appoint a successor Trustee.

     X.2 Removal of Trustee. A Trustee may be removed and its duties terminated at any time, and its successor appointed, by the Company.

ARTICLE XI
GOVERNING LAW

     The Trust has been accepted by the Trustee and will be administered in the State of California, and its validity, construction and all rights hereunder, and the validity and construction of this Trust shall be governed by the laws of that State.

     All matters affecting the title, ownership and transferability of any security, whether created or held hereunder, shall be governed by all applicable federal, state, foreign securities laws.

ARTICLE XII
SEVERABILITY

     In the event any provision of this Trust Agreement or the application thereof to any person or circumstance shall be finally determined to be invalid or unenforceable to any extent, the remainder of this Trust Agreement , or the application of such provision to persons or circumstances other than those as to which it is determined to be invalid or unenforceable, shall not be affected thereby, and each provision of this Trust shall be valid and enforced to the fullest extent permitted by law.

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ARTICLE XIII
COUNTERPARTS

     This Trust Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

     IN WITNESS WHEREOF, the Company and the Trustee have executed this Trust Agreement on the day and year hereinabove first written.

“Company”	Business Objects S.A., a corporation organized under the laws of the Republic of France
	By: /s/ Bernard Liautaud
	President and Chief Executive Officer
“Trustee”	Allecon Stock Associates, a corporation organized under the laws of the State of Michigan, United States
	By: /s/ James Mc Bride
	President

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EX-10.63

Exhibit 10.63

BUSINESS OBJECTS S.A.

STOCK SUBSCRIPTION WARRANTS AGREEMENT

The terms and conditions of the warrants (“the Warrants”) which give right to subscribe to a maximum of 45,000 ordinary shares of 0.10 euro nominal value each of Business Objects S.A., a société anonyme organized under the laws of French Republic (the “Company”) have been set by the Company’s board of directors at its meeting held on July 21, 2005. A copy of an extract of the minutes of this Company’s board of directors meeting held on July 21, 2005, is attached hereto as Exhibit A.

This stock subscription warrants agreement and its exhibits (the “Agreement”) is made by and between the Company and Mr. Carl Pascarella (the “Holder”). For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as set forth below.

1. General

The Holder, any subsequent holder or assigns as further defined hereunder, is entitled to subscribe from the Company, a maximum of 45,000 ordinary shares of 0.10 euro nominal value each of the Company, subject to adjustment in accordance with the terms and conditions fixed by the Company’s board of directors on July 21, 2005 (“the Warrant Shares”), at an exercise price of 23.13 euros per share, subject to adjustment in accordance with the terms and conditions fixed by the Company’s board of directors on July 21, 2005, (the “Warrant Price”), and subject to the vesting provisions of section 2 hereof. These 45,000 Warrant Shares are underlying to the Warrants granted and issued by the Board of directors of the Company at the meeting held on July 21, 2005, in accordance to the authorization granted by the Shareholders of the Company at the general shareholders’ meeting held on June 14, 2005.

2. Exercise period and vesting schedule

     (a) To the extent the Warrants have then vested pursuant to Section 2(b) below, they shall be exercisable in whole or in part by the Holder hereof, provided however that upon termination of the Holder’s membership on the Company’s board of directors, these Warrants shall remain exercisable for a period of 90 days.

     (b) These Warrants may be exercised for up to 15,000 shares on or after June 1, 2006, up to an additional 15,000 shares on or after June 1, 2007, and up to an additional 15,000 shares on or after June 1, 2008.

     (c) These Warrants may be exercised in one or several lots, but at the latest on the earlier of the two following dates : (i) on July 21, 2012, or (ii) in case of termination of the term of office as Director of the Company, within 90 days following such termination date.

     (d) On the 91^st day thereafter, the Holder agrees to sell to the Company the non-exercised Warrants for an aggregate price of 1 euro and the Company agrees to purchase such non-exercised Warrants the Holder agreed to sell to the Company for an aggregate price of 1 euro. Then the Company’s board of directors will cancel and void such repurchased non-exercised Warrants.

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3. Exercise of Warrants.

The Warrants may be exercised by the Holder hereof, in accordance with section 2 hereof, by (i) notification of exercise by registered mail to the Company together with a share subscription form (bulletin de souscription) in the form attached hereto, duly completed and signed by the Holder and (ii) full payment of the Warrant Price for the Warrant Shares to be issued with respect to which the Warrants are exercised. The Warrant Price may be paid exclusively in euros, in cash, by check or by wire transfer. In the event of the exercise of the Warrants, confirmations or “attestations d’inscription en compte” shall be delivered by BNP Paribas, or its successor, which administers the Company’s registered shares account and the Warrants account to the Holder, indicating the number of ordinary shares such Holder holds within a reasonable time. The Warrants shall be deemed exercised on the date on which the Company receives payment of the Warrant Price irrespective of the date of delivery of the notification of exercise and/or the subscription form. Any applicable taxes shall be the sole responsibility of the Holder and not of the Company.

4. Adjustment of Warrants.

In the event that the Company proceed to any transaction mentioned in Articles L. 228-98 to L. 228-106 of the French Commercial code and in Article 242-8 to Article 242-16 of the French decree n° 67-236 of March 23, 1967, the rights of the Holder of the Warrants shall be adjusted in accordance with the terms and conditions fixed by the Company’s board of directors of July 21, 2005.

5. Non transferability of Warrants.

     (a) Except as provided in sub-section (b) below, the Holder hereby agrees not to sell, pledge, hypothecate, transfer, or dispose of the Warrants of in any manner other than by will or laws of descent or distribution and that the Warrants may be exercised, during the lifetime of the Holder, only by the Holder.

     (b) The transfer of these Warrants to the Holder’s Immediate Family shall be exempt from the provisions of section 5(a), provided however that the transferee agrees to be bound by and comply with the provisions of this Agreement, and signs a consent in the form attached hereto. « Immediate Family » as used herein shall mean the spouse, a direct descendant or ascendant, a brother or a sister of the Holder.

     (c) This Agreement is not transferable by endorsement or any other means and does not constitute evidence of ownership. If and when allowed, assignment of all or part of these Warrants may only be completed by notifying the form of assignment attached hereto, duly completed and signed by the Holder.

6. Merger.

In the event of merger of the Company, the Holder of the Warrants will be notified and given the same information as if he or she were a shareholder in order to make an investment decision as to whether to exercise his vested Warrants. Moreover, in case of unvested Warrants, the Company’s board of directors may, in its sole discretion and as an exception to section 2(b) hereof, decide to accelerate the vesting date for exercise the Warrants before the vesting date specified in section 2(b) above.

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7. Applicable law.

These Warrants and this Agreement are subject to the laws of the French Republic.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on August 5, 2005.

All signed copies of this Agreement shall be deemed originals.

/s/ Bernard Liautaud	/s/ Carl Pascarella
BUSINESS OBJECTS S.A.	The Holder
By: Bernard Liautaud
Chief Executive Officer

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Exhibit A

BUSINESS OBJECTS S.A.
Société anonyme
with a share capital of 9,592,176.60 euros
Registered office : 157-159rue Anatole France
92300 Levallois-Perret
R.C.S. Nanterre B 379 821 994

Board of Director
Meeting of July 21, 2005

Extract of the minutes

Issuance of warrants to subscribe up to 90,000 Ordinary Shares reserved for some directors; correlative amendment of the articles of association and approval of the related complementary Board report

     The Chairman reminded to the Board that the Extraordinary General Meeting of Shareholders on June 14, 2005 (the “Shareholders Meeting”), under its Eleventh and Twelfth Resolutions, authorized the Board to issue warrants to subscribe up to 90,000 Ordinary Shares, as well as the correlative issuance of these Ordinary Shares, reserved for two directors, Mr. Gerald Held and Mr. Carl Pacarella.

     The Chairman reminded that the Shareholders Meeting waived under the foregoing mentioned resolutions, the statutory preferential right of the shareholders to subscribe to the warrants and to reserve the right to subscribe to such warrants to Mr. Held and Mr. Pascarella. Moreover the Chairman reminded that the issuance of the warrants entails, for the benefit of the holder of such warrants, the express waiver by the shareholders of their preferential right to subscribe to the new shares to be issued upon the exercise of such warrants.

     The Chairman reminded to the Board that the Shareholders Meeting resolved further to grant to the Board full powers, with the right to sub-delegate in accordance with applicable French statutory provisions, to implement these resolutions, including for the purpose of, to determine the dates and terms of the issuances; to set the price, terms and conditions of such issuance of warrants and shares to be issued upon the exercise of the warrants within the limits set by these resolutions; to modify the articles of associations accordingly and, in particular, the article 6 of the Company’s articles of associations in accordance with article 55 of Decree n° 67-236 of March 23, 1967 in order to indicate the recipient of the beneficiary of the special advantages and the nature of such advantages.

     As a result, and in compliance with the foregoing mentioned resolutions, the Chairman proposed to the Board to issue 90,000 warrants to subscribe up to 90,000 new Ordinary Shares reserved for some directors, as approved by the Shareholders Meeting.

     After deliberation, motion duly made and seconded, and in accordance to the conditions and delegation of the Eleventh and Twelfth Resolution of the Shareholders Meeting, the Board, unanimously:

     Resolved to issue 90,000 warrants to subscribe up to 90,000 new Ordinary Shares, being stipulated that each warrant entitling to the subscription to one share of 0.10 euro nominal value, and to reserve the subscription of these warrants to directors listed below:

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• 45,000 warrants granting the rights to subscribe 45,000 shares, reserved to Mr. Gerald Held, in compliance with the terms and conditions of the Eleventh Resolution of the Shareholders Meeting;

• 45,000 warrants granting the rights to subscribe 45,000 shares, reserved to Mr. Carl Pascarella, in compliance with the terms and conditions of the Twelfth Resolution of the Shareholders Meeting.

     Resolved, in compliance with the condition of price setting determined by the Shareholders Meeting under the foregoing mentioned resolutions, that the subscription price per share, fully payable upon exercise in cash on the date of subscription, shall be 23.13 euros, equal to the closing price of the Company’s shares on Eurolist by Euronext ^TM on June 13, 2005.

     Resolved that the warrants will be granted free of charge to the beneficiaries named above.

     Resolved that the warrants granted to Mr. Held and Mr. Pascarella shall vest over three years, as follows: one-third of the warrants shall be exercisable on or after June 1, 2006, one-third of the warrants shall be exercisable on or after June 1, 2007 and one-third of the warrants shall be exercisable on or after June 1, 2008.

     Resolved further that the warrants may be exercised, in one or several lots, at any time if and when they are exercisable and at the latest, to the earlier of the following dates: (i) on July 21, 2012 or (ii) in case of termination of the term of office as director, within 90 days following such termination date, the non exercised warrants shall be null.

     Resolved that on the 91^st day following such office termination date, the warrants holder shall sell to the Company the non-exercised Warrants for an aggregate price of 1 euro, the Company shall purchase such non-exercised warrants for such aggregate price and then the Company’s Board of directors shall cancel and void such repurchased non-exercised Warrants.

     Resolved that the Company may, at its option, from the date of issuance of the warrants, and in accordance with article L. 228-98 of the French Commercial Code, modify its form and its corporate purpose without needing to obtain the prior consent of the warrant holders at a general meeting.

     Resolved further that in accordance with article L. 228-98 of the French Commercial Code, the Company may modify the rules governing the allocation of profits and redeem its share capital without needing to obtain the prior consent of the warrant holders at a general meeting, provided that the Company takes the necessary measures in order to maintain the rights of the warrant holders in the conditions described below.

     Resolved that in the event of a reduction of the Company’s share capital resulting from losses, whether by way of a reduction in the nominal value or the number of shares composing the share capital, the rights of the warrant holders to receive shares will be reduced accordingly, as if such warrant holders had exercised their rights prior to the date at which the reduction of share capital has become definitive.

     Undertook that, in the event the Company carries out any of the following transactions after the date of issuance of the warrants:

• issuance of new equity securities with preferential subscription rights in favour of shareholders;

• allocation of free shares;

• distribution of reserves in cash or in kind or of share premiums

• modification of the allocation of profits;

• redemption of capital;

• repurchase of its own shares at a price higher than the market price; or

• takeover, merger, or spin-off;

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the Company will maintain the rights of the warrant holders, in accordance with articles L. 228-99 and L. 228-101 of the French Commercial Code and with articles 242-11 et seq. of decree no.67-236 of 23 March 1967, by means of an adjustment of the conditions of subscription according to the conditions described hereafter.

This adjustment will be effected in such a manner as to equalize the value of the shares that will be obtained upon exercise of the right after the completion of the transaction with the value of the shares that would have been obtained upon exercise of the warrants prior to the transaction.

In the event of adjustments carried out in accordance with paragraphs a) to g) hereafter, the new conversion ratio will be calculated to the nearest hundredth of a share (with 0.005 being rounded upwards). Any subsequent adjustments will be carried out on the basis of such newly calculated and rounded conversion ratio. However, since the exercise of the warrants may only result in the delivery of a whole number of shares, fractional entitlements will be settled as specified hereafter.

To this effect, the new basis for the exercise of warrants will be calculated by taking into account the following:

a) In the event of a transaction conferring preferential subscription rights: the formula

   Price of the subscription right   
Share price ex-subscription right

For the purposes of calculating this formula, the price of the share ex-subscription right and the price of the subscription right will be determined on the basis of the average of the opening prices quoted on Eurolist by Euronext ^TM for all stock exchange trading days falling in the subscription period.

b)	In the event of an allocation of free shares: the number of shares allocated to each existing share.
c)	In the event of a distribution of reserves in cash or in kind, or of share premiums: the formula:

      Amount distributed per share     
Share price prior to the distribution

For the purposes of calculating this formula, the share price prior to the distribution will be equal to the weighted average of the market prices on Eurolist by Euronext ^TM of at least the three stock exchange trading days immediately preceding the date of the distribution.

d) In the event of a modification of the allocation of profits: the formula

Reduction per share in the right to profits
Share price prior to the modification

For the purposes of calculating this formula, the share price prior to the modification of the allocation of profits will be equal to the weighted average of the market prices on Eurolist by Euronext ^TM of at least the three stock exchange trading days immediately preceding the date of the modification.

e) In case of a redemption of capital shares: the formula

Amount per share of the redemption
Share price prior to the redemption

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For the purposes of calculating this formula, the share price prior to the redemption will be equal to the weighted average of the market prices on Eurolist by Euronext ^TM of at least the three stock exchange trading days immediately preceding the date of the redemption.

f) In the event of a buy-back by the Company of its own shares at a price higher than the market price: the formula

Pc % x (buy-back price minus share price)
Share price

           For the purposes of calculating this formula:

- “Share price” means the weighted average of the market prices on Eurolist by Euronext ^TM of at least the three stock exchange trading days immediately preceding the buy-back (or the option to buy-back);

- “Pc %” means the percentage of capital bought back;

- “buy-back price” means the actual price at which the shares are bought back (by definition, this will be higher than the market price).

g) In the event that the Company is taken over by another company (absorption) or is merged with one or more companies to form a new company (fusion) or is spun-off (scission), the warrant holders will be entitled to subscribe to shares of the acquiring company, new company, or the beneficiary companies of a spin-off on the same terms as initially provided.

The number of shares of the acquiring company or companies, new company or companies, or the beneficiary companies of a spin-off to which the warrant holders are entitled will be determined by adjusting the number of shares of the issuing company to which they were entitled to the appropriate number of shares to be created by the company or the companies benefiting from the capital contribution.

In the event that the Company carries out transactions in respect of which an adjustment under paragraphs a) to g) herebefore has not been carried out and where subsequently enacted French laws or regulation would require an adjustment, or in the event that a future French law or regulation would modify the adjustment described above, the Company will carry out such an adjustment in accordance with the applicable laws and regulations and relevant market practices in effect in France at the time.

The Board of Directors shall report on the components of the calculation and on the results of any adjustment in the first annual report following such adjustment.

In the event of fractional entitlements, warrant holders will obtain the nearest whole number of shares immediately less than their entitlement and the Company will pay the fractional entitlements in cash.

     Acknowledged that, pursuant to Article L.228-103 of the French Commercial Code, the warrant holders will be grouped automatically in order to defend their respective common interests in a masse that has legal personality (hereinafter “Masse”). The Board specifies that the Masse will be governed by the Articles L.228-47 to L.228-64 and Article L.228-66 and Article L.228-90 of the French Commercial Code.

     Acknowledged that, pursuant to Article L.228-103 of the French Commercial Code, the general meeting of warrant holders is required to authorize any modifications to the terms and conditions of their issuance decided by the Board of Directors and to deliberate upon any decision pertaining to subscription conditions or to the attribution of shares determined upon issuance of the warrants.

7

     Resolved that in the event of merger of the Company, the holders of the warrants will be notified and given the same information as if they were a shareholder in order to exercise, if they wish so, their subscription rights. Moreover, had they not acquired their full rights, the Board of Directors may, in its sole discretion, decide to amend and accelerate the vesting schedule of the warrant set hereunder..

     Resolved to amend the article 6 of the Company’s articles of association by inserting the following paragraphs:

     “Mr. Gerald Held is a recipient of special advantages resulting from the grant by the Board meeting held on July 21, 2005 in compliance with the authorization of the Eleventh Resolution of the Extraordinary General Meeting of shareholders held on June 14, 2005, of 45,000 warrants giving the right to subscribe to one share each; The special advantages consist of (i) the grant of such warrants without payment as consideration and (ii) the benefit from a fixed exercise price per share equal to 23.13 euros, being the closing price of the Company’s shares on the Eurolist by Euronext ^TM. on June 13, 2005.

     Mr. Carl Pascarella is a recipient of special advantages resulting from the grant by the Board meeting held on July 21, 2005 in compliance with the authorization of the Twelfth Resolution of the Extraordinary General Meeting of shareholders held on June 14, 2005, of 45,000 warrants giving the right to subscribe to one share each; The special advantages consist of (i) the grant of such warrants without payment as consideration and (ii) the benefit from a fixed exercise price per share equal to 23.13 euros, being the closing price of the Company’s shares on the Eurolist by Euronext ^TM. on June 13, 2005.”

     Resolved to approve the template of Stock Subscription Warrant Agreement attached as exhibit of these minutes and grant all power to the Chief Executive Officer (Directeur Général) to sign these contrat with the two concerned warrant holders.

     Resolved, in compliance with the terms of the articles 155-1 and 155-2 of the French Decree n°67-236 of March 23, 1967, to draw up and approve the complementary report of the Board relating to the final condition of issuance of the warrants, which will be put at shareholders disposal at the registered of the Company and will be presented at the next shareholders meeting.

8

FORM OF SUBSCRIPTION
[to be signed upon exercise of Warrants]

BUSINESS OBJECTS S.A.
Société anonyme
with a share capital of 9,650,548.50 euros
Registered office: 157-159 rue Anatole France
92300 Levallois-Perret
R.C.S. Nanterre B 379 821 994

     I, the undersigned, Holder of ___Share Warrants in total, the issue of which was decided by the Company’s board of directors at its meeting held on July 21, 2005 in accordance to the authorization granted by the Shareholders of the Company at the general shareholders’ meeting held on June 14, 2005 for a price of ___euros per Share Warrants, hereby elects to exercise ___Warrants and to subscribe ___Company’s ordinary shares of 0.10 euro nominal value each, and herewith makes payment of ___euros.

The undersigned requests that the confirmation for such ordinary shares be issued in the name of and delivered to ____________ Whose address is ____________.

Made on this ___day of ___, ___

By

Signature

[above signature, please handwrite “Valid for subscription of ________________ shares.”]

9

FORM OF ASSIGNMENT
[to be signed upon transfer of Warrants]

     I, the undersigned, Holder of ___Share Warrants in total, the issue of which was decided by the Company’s board of directors at its meeting held on July 21, 2005 in accordance to the authorization granted by the Shareholders of the Company at the general shareholders’ meeting held on June 14, 2005 for a price of ___euros per Share Warrants, hereby elects transfers to ___, who is qualified as an Immediate Family member in his/her capacity as, pursuant to the terms and conditions of the section 5 of the stock subscription warrant agreement.

Made on this ___day of ___, ___

Signature of the Holder

Name

Address

Signed in the presence of:

Signature of the witness

Name

Address

10

FORM OF SALE OF THE NON-EXERCISED WARRANTS

     Pursuant to the terms and conditions of the section 2(d) of the stock subscription warrant agreement, the Holder of ___Share Warrants in total, the issue of which was decided by the Company’s board of directors at its meeting held on July 21, 2005 in accordance to the authorization granted by the Shareholders of the Company at the general shareholders’ meeting held on June 14, 2005 for a price of ___euros per Share Warrants, hereby sells to the Company, ___non-exercised Warrants for an aggregate price of 1 euro.

     Pursuant to the terms and conditions of the section 2(d) of the stock subscription warrant agreement, the Company hereby agrees to purchase such non-exercised Warrants for an aggregate price of 1 euro.

IN WITNESS WHEREOF, the parties hereto have executed this Form on ___.

All signed copies of this Form shall be deemed originals.

The Company	The Holder
BUSINESS OBJECTS S.A.

11

EX-10.64

Exhibit 10.64

BUSINESS OBJECTS S.A.

STOCK SUBSCRIPTION WARRANTS AGREEMENT

The terms and conditions of the warrants (“the Warrants”) which give right to subscribe to a maximum of 45,000 ordinary shares of 0.10 euro nominal value each of Business Objects S.A., a société anonyme organized under the laws of French Republic (the “Company”) have been set by the Company’s board of directors at its meeting held on July 21, 2005. A copy of an extract of the minutes of this Company’s board of directors meeting held on July 21, 2005, is attached hereto as Exhibit A.

This stock subscription warrants agreement and its exhibits (the “Agreement”) is made by and between the Company and Mr. Gerald Held (the “Holder”). For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as set forth below.

1. General

The Holder, any subsequent holder or assigns as further defined hereunder, is entitled to subscribe from the Company, a maximum of 45,000 ordinary shares of 0.10 euro nominal value each of the Company, subject to adjustment in accordance with the terms and conditions fixed by the Company’s board of directors on July 21, 2005 (“the Warrant Shares”), at an exercise price of 23.13 euros per share, subject to adjustment in accordance with the terms and conditions fixed by the Company’s board of directors on July 21, 2005, (the “Warrant Price”), and subject to the vesting provisions of section 2 hereof. These 45,000 Warrant Shares are underlying to the Warrants granted and issued by the Board of directors of the Company at the meeting held on July 21, 2005, in accordance to the authorization granted by the Shareholders of the Company at the general shareholders’ meeting held on June 14, 2005.

2. Exercise period and vesting schedule

     (a) To the extent the Warrants have then vested pursuant to Section 2(b) below, they shall be exercisable in whole or in part by the Holder hereof, provided however that upon termination of the Holder’s membership on the Company’s board of directors, these Warrants shall remain exercisable for a period of 90 days.

     (b) These Warrants may be exercised for up to 15,000 shares on or after June 1, 2006, up to an additional 15,000 shares on or after June 1, 2007, and up to an additional 15,000 shares on or after June 1, 2008.

     (c) These Warrants may be exercised in one or several lots, but at the latest on the earlier of the two following dates : (i) on July 21, 2012, or (ii) in case of termination of the term of office as Director of the Company, within 90 days following such termination date.

     (d) On the 91^st day thereafter, the Holder agrees to sell to the Company the non-exercised Warrants for an aggregate price of 1 euro and the Company agrees to purchase such non-exercised Warrants the Holder agreed to sell to the Company for an aggregate price of 1 euro. Then the Company’s board of directors will cancel and void such repurchased non-exercised Warrants.

1

3. Exercise of Warrants.

The Warrants may be exercised by the Holder hereof, in accordance with section 2 hereof, by (i) notification of exercise by registered mail to the Company together with a share subscription form (bulletin de souscription) in the form attached hereto, duly completed and signed by the Holder and (ii) full payment of the Warrant Price for the Warrant Shares to be issued with respect to which the Warrants are exercised. The Warrant Price may be paid exclusively in euros, in cash, by check or by wire transfer. In the event of the exercise of the Warrants, confirmations or “attestations d’inscription en compte” shall be delivered by BNP Paribas, or its successor, which administers the Company’s registered shares account and the Warrants account to the Holder, indicating the number of ordinary shares such Holder holds within a reasonable time. The Warrants shall be deemed exercised on the date on which the Company receives payment of the Warrant Price irrespective of the date of delivery of the notification of exercise and/or the subscription form. Any applicable taxes shall be the sole responsibility of the Holder and not of the Company.

4. Adjustment of Warrants.

In the event that the Company proceed to any transaction mentioned in Articles L. 228-98 to L. 228-106 of the French Commercial code and in Article 242-8 to Article 242-16 of the French decree n° 67-236 of March 23, 1967, the rights of the Holder of the Warrants shall be adjusted in accordance with the terms and conditions fixed by the Company’s board of directors of July 21, 2005.

5. Non transferability of Warrants.

     (a) Except as provided in sub-section (b) below, the Holder hereby agrees not to sell, pledge, hypothecate, transfer, or dispose of the Warrants of in any manner other than by will or laws of descent or distribution and that the Warrants may be exercised, during the lifetime of the Holder, only by the Holder.

     (b) The transfer of these Warrants to the Holder’s Immediate Family shall be exempt from the provisions of section 5(a), provided however that the transferee agrees to be bound by and comply with the provisions of this Agreement, and signs a consent in the form attached hereto. « Immediate Family » as used herein shall mean the spouse, a direct descendant or ascendant, a brother or a sister of the Holder.

     (c) This Agreement is not transferable by endorsement or any other means and does not constitute evidence of ownership. If and when allowed, assignment of all or part of these Warrants may only be completed by notifying the form of assignment attached hereto, duly completed and signed by the Holder.

6. Merger.

In the event of merger of the Company, the Holder of the Warrants will be notified and given the same information as if he or she were a shareholder in order to make an investment decision as to whether to exercise his vested Warrants. Moreover, in case of unvested Warrants, the Company’s board of directors may, in its sole discretion and as an exception to section 2(b) hereof, decide to accelerate the vesting date for exercise the Warrants before the vesting date specified in section 2(b) above.

2

7. Applicable law.

These Warrants and this Agreement are subject to the laws of the French Republic.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on August 3, 2005.

All signed copies of this Agreement shall be deemed originals.

/s/ Bernard Liautaud	/s/ Gerald Held
BUSINESS OBJECTS S.A.	The Holder
By: Bernard Liautaud
Chief Executive Officer

3

Exhibit A

BUSINESS OBJECTS S.A.
Société anonyme
with a share capital of 9,592,176.60 euros
Registered office : 157-159rue Anatole France
92300 Levallois-Perret
R.C.S. Nanterre B 379 821 994

Board of Director
Meeting of July 21, 2005

Extract of the minutes

Issuance of warrants to subscribe up to 90,000 Ordinary Shares reserved for some directors; correlative amendment of the articles of association and approval of the related complementary Board report

     The Chairman reminded to the Board that the Extraordinary General Meeting of Shareholders on June 14, 2005 (the “Shareholders Meeting”), under its Eleventh and Twelfth Resolutions, authorized the Board to issue warrants to subscribe up to 90,000 Ordinary Shares, as well as the correlative issuance of these Ordinary Shares, reserved for two directors, Mr. Gerald Held and Mr. Carl Pacarella.

     The Chairman reminded that the Shareholders Meeting waived under the foregoing mentioned resolutions, the statutory preferential right of the shareholders to subscribe to the warrants and to reserve the right to subscribe to such warrants to Mr. Held and Mr. Pascarella. Moreover the Chairman reminded that the issuance of the warrants entails, for the benefit of the holder of such warrants, the express waiver by the shareholders of their preferential right to subscribe to the new shares to be issued upon the exercise of such warrants.

     The Chairman reminded to the Board that the Shareholders Meeting resolved further to grant to the Board full powers, with the right to sub-delegate in accordance with applicable French statutory provisions, to implement these resolutions, including for the purpose of, to determine the dates and terms of the issuances; to set the price, terms and conditions of such issuance of warrants and shares to be issued upon the exercise of the warrants within the limits set by these resolutions; to modify the articles of associations accordingly and, in particular, the article 6 of the Company’s articles of associations in accordance with article 55 of Decree n° 67-236 of March 23, 1967 in order to indicate the recipient of the beneficiary of the special advantages and the nature of such advantages.

     As a result, and in compliance with the foregoing mentioned resolutions, the Chairman proposed to the Board to issue 90,000 warrants to subscribe up to 90,000 new Ordinary Shares reserved for some directors, as approved by the Shareholders Meeting.

     After deliberation, motion duly made and seconded, and in accordance to the conditions and delegation of the Eleventh and Twelfth Resolution of the Shareholders Meeting, the Board, unanimously:

     Resolved to issue 90,000 warrants to subscribe up to 90,000 new Ordinary Shares, being stipulated that each warrant entitling to the subscription to one share of 0.10 euro nominal value, and to reserve the subscription of these warrants to directors listed below:

4

• 45,000 warrants granting the rights to subscribe 45,000 shares, reserved to Mr. Gerald Held, in compliance with the terms and conditions of the Eleventh Resolution of the Shareholders Meeting;

• 45,000 warrants granting the rights to subscribe 45,000 shares, reserved to Mr. Carl Pascarella, in compliance with the terms and conditions of the Twelfth Resolution of the Shareholders Meeting.

     Resolved, in compliance with the condition of price setting determined by the Shareholders Meeting under the foregoing mentioned resolutions, that the subscription price per share, fully payable upon exercise in cash on the date of subscription, shall be 23.13 euros, equal to the closing price of the Company’s shares on Eurolist by Euronext ^TM on June 13, 2005.

     Resolved that the warrants will be granted free of charge to the beneficiaries named above.

     Resolved that the warrants granted to Mr. Held and Mr. Pascarella shall vest over three years, as follows: one-third of the warrants shall be exercisable on or after June 1, 2006, one-third of the warrants shall be exercisable on or after June 1, 2007 and one-third of the warrants shall be exercisable on or after June 1, 2008.

     Resolved further that the warrants may be exercised, in one or several lots, at any time if and when they are exercisable and at the latest, to the earlier of the following dates: (i) on July 21, 2012 or (ii) in case of termination of the term of office as director, within 90 days following such termination date, the non exercised warrants shall be null.

     Resolved that on the 91^st day following such office termination date, the warrants holder shall sell to the Company the non-exercised Warrants for an aggregate price of 1 euro, the Company shall purchase such non-exercised warrants for such aggregate price and then the Company’s Board of directors shall cancel and void such repurchased non-exercised Warrants.

     Resolved that the Company may, at its option, from the date of issuance of the warrants, and in accordance with article L. 228-98 of the French Commercial Code, modify its form and its corporate purpose without needing to obtain the prior consent of the warrant holders at a general meeting.

     Resolved further that in accordance with article L. 228-98 of the French Commercial Code, the Company may modify the rules governing the allocation of profits and redeem its share capital without needing to obtain the prior consent of the warrant holders at a general meeting, provided that the Company takes the necessary measures in order to maintain the rights of the warrant holders in the conditions described below.

     Resolved that in the event of a reduction of the Company’s share capital resulting from losses, whether by way of a reduction in the nominal value or the number of shares composing the share capital, the rights of the warrant holders to receive shares will be reduced accordingly, as if such warrant holders had exercised their rights prior to the date at which the reduction of share capital has become definitive.

     Undertook that, in the event the Company carries out any of the following transactions after the date of issuance of the warrants:

• issuance of new equity securities with preferential subscription rights in favour of shareholders;

• allocation of free shares;

• distribution of reserves in cash or in kind or of share premiums

• modification of the allocation of profits;

• redemption of capital;

• repurchase of its own shares at a price higher than the market price; or

• takeover, merger, or spin-off;

5

the Company will maintain the rights of the warrant holders, in accordance with articles L. 228-99 and L. 228-101 of the French Commercial Code and with articles 242-11 et seq. of decree no.67-236 of 23 March 1967, by means of an adjustment of the conditions of subscription according to the conditions described hereafter.

This adjustment will be effected in such a manner as to equalize the value of the shares that will be obtained upon exercise of the right after the completion of the transaction with the value of the shares that would have been obtained upon exercise of the warrants prior to the transaction.

In the event of adjustments carried out in accordance with paragraphs a) to g) hereafter, the new conversion ratio will be calculated to the nearest hundredth of a share (with 0.005 being rounded upwards). Any subsequent adjustments will be carried out on the basis of such newly calculated and rounded conversion ratio. However, since the exercise of the warrants may only result in the delivery of a whole number of shares, fractional entitlements will be settled as specified hereafter.

To this effect, the new basis for the exercise of warrants will be calculated by taking into account the following:

a) In the event of a transaction conferring preferential subscription rights: the formula

   Price of the subscription right   
Share price ex-subscription right

For the purposes of calculating this formula, the price of the share ex-subscription right and the price of the subscription right will be determined on the basis of the average of the opening prices quoted on Eurolist by Euronext ^TM for all stock exchange trading days falling in the subscription period.

b)	In the event of an allocation of free shares: the number of shares allocated to each existing share.
c)	In the event of a distribution of reserves in cash or in kind, or of share premiums: the formula:

     Amount distributed per share     
Share price prior to the distribution

For the purposes of calculating this formula, the share price prior to the distribution will be equal to the weighted average of the market prices on Eurolist by Euronext ^TM of at least the three stock exchange trading days immediately preceding the date of the distribution.

d) In the event of a modification of the allocation of profits: the formula

Reduction per share in the right to profits
Share price prior to the modification

For the purposes of calculating this formula, the share price prior to the modification of the allocation of profits will be equal to the weighted average of the market prices on Eurolist by Euronext ^TM of at least the three stock exchange trading days immediately preceding the date of the modification.

e) In case of a redemption of capital shares: the formula

Amount per share of the redemption
Share price prior to the redemption

6

For the purposes of calculating this formula, the share price prior to the redemption will be equal to the weighted average of the market prices on Eurolist by Euronext ^TM of at least the three stock exchange trading days immediately preceding the date of the redemption.

f) In the event of a buy-back by the Company of its own shares at a price higher than the market price: the formula

Pc % x (buy-back price minus share price)
Share price

For the purposes of calculating this formula:

- “Share price” means the weighted average of the market prices on Eurolist by Euronext ^TM of at least the three stock exchange trading days immediately preceding the buy-back (or the option to buy-back);

- “Pc %” means the percentage of capital bought back;

- “buy-back price” means the actual price at which the shares are bought back (by definition, this will be higher than the market price).

g) In the event that the Company is taken over by another company (absorption) or is merged with one or more companies to form a new company (fusion) or is spun-off (scission), the warrant holders will be entitled to subscribe to shares of the acquiring company, new company, or the beneficiary companies of a spin-off on the same terms as initially provided.

The number of shares of the acquiring company or companies, new company or companies, or the beneficiary companies of a spin-off to which the warrant holders are entitled will be determined by adjusting the number of shares of the issuing company to which they were entitled to the appropriate number of shares to be created by the company or the companies benefiting from the capital contribution.

In the event that the Company carries out transactions in respect of which an adjustment under paragraphs a) to g) herebefore has not been carried out and where subsequently enacted French laws or regulation would require an adjustment, or in the event that a future French law or regulation would modify the adjustment described above, the Company will carry out such an adjustment in accordance with the applicable laws and regulations and relevant market practices in effect in France at the time.

The Board of Directors shall report on the components of the calculation and on the results of any adjustment in the first annual report following such adjustment.

In the event of fractional entitlements, warrant holders will obtain the nearest whole number of shares immediately less than their entitlement and the Company will pay the fractional entitlements in cash.

     Acknowledged that, pursuant to Article L.228-103 of the French Commercial Code, the warrant holders will be grouped automatically in order to defend their respective common interests in a masse that has legal personality (hereinafter “Masse”). The Board specifies that the Masse will be governed by the Articles L.228-47 to L.228-64 and Article L.228-66 and Article L.228-90 of the French Commercial Code.

     Acknowledged that, pursuant to Article L.228-103 of the French Commercial Code, the general meeting of warrant holders is required to authorize any modifications to the terms and conditions of their

7

issuance decided by the Board of Directors and to deliberate upon any decision pertaining to subscription conditions or to the attribution of shares determined upon issuance of the warrants.

     Resolved that in the event of merger of the Company, the holders of the warrants will be notified and given the same information as if they were a shareholder in order to exercise, if they wish so, their subscription rights. Moreover, had they not acquired their full rights, the Board of Directors may, in its sole discretion, decide to amend and accelerate the vesting schedule of the warrant set hereunder..

     Resolved to amend the article 6 of the Company’s articles of association by inserting the following paragraphs:

     “Mr. Gerald Held is a recipient of special advantages resulting from the grant by the Board meeting held on July 21, 2005 in compliance with the authorization of the Eleventh Resolution of the Extraordinary General Meeting of shareholders held on June 14, 2005, of 45,000 warrants giving the right to subscribe to one share each; The special advantages consist of (i) the grant of such warrants without payment as consideration and (ii) the benefit from a fixed exercise price per share equal to 23.13 euros, being the closing price of the Company’s shares on the Eurolist by Euronext ^TM. on June 13, 2005.

     Mr. Carl Pascarella is a recipient of special advantages resulting from the grant by the Board meeting held on July 21, 2005 in compliance with the authorization of the Twelfth Resolution of the Extraordinary General Meeting of shareholders held on June 14, 2005, of 45,000 warrants giving the right to subscribe to one share each; The special advantages consist of (i) the grant of such warrants without payment as consideration and (ii) the benefit from a fixed exercise price per share equal to 23.13 euros, being the closing price of the Company’s shares on the Eurolist by Euronext ^TM. on June 13, 2005.”

     Resolved to approve the template of Stock Subscription Warrant Agreement attached as exhibit of these minutes and grant all power to the Chief Executive Officer (Directeur Général) to sign these contrat with the two concerned warrant holders.

     Resolved, in compliance with the terms of the articles 155-1 and 155-2 of the French Decree n°67-236 of March 23, 1967, to draw up and approve the complementary report of the Board relating to the final condition of issuance of the warrants, which will be put at shareholders disposal at the registered of the Company and will be presented at the next shareholders meeting.

8

FORM OF SUBSCRIPTION
[to be signed upon exercise of Warrants]

BUSINESS OBJECTS S.A.
Société anonyme
with a share capital of 9,650,548.50 euros
Registered office: 157-159 rue Anatole France
92300 Levallois-Perret
R.C.S. Nanterre B 379 821 994

     I, the undersigned, Holder of ___Share Warrants in total, the issue of which was decided by the Company’s board of directors at its meeting held on July 21, 2005 in accordance to the authorization granted by the Shareholders of the Company at the general shareholders’ meeting held on June 14, 2005 for a price of ___euros per Share Warrants, hereby elects to exercise ___Warrants and to subscribe ___Company’s ordinary shares of 0.10 euro nominal value each, and herewith makes payment of ___euros.

The undersigned requests that the confirmation for such ordinary shares be issued in the name of and delivered to ____________ Whose address is ____________.

Made on this ___day of ___, ___

By

Signature

[above signature, please handwrite “Valid for subscription of ________________ shares.”]

9

FORM OF ASSIGNMENT
[to be signed upon transfer of Warrants]

     I, the undersigned, Holder of ___Share Warrants in total, the issue of which was decided by the Company’s board of directors at its meeting held on July 21, 2005 in accordance to the authorization granted by the Shareholders of the Company at the general shareholders’ meeting held on June 14, 2005 for a price of ___euros per Share Warrants, hereby elects transfers to ___, who is qualified as an Immediate Family member in his/her capacity as, pursuant to the terms and conditions of the section 5 of the stock subscription warrant agreement.

Made on this ___day of ___, ___

Signature of the Holder

Name

Address

Signed in the presence of:

Signature of the witness

Name

Address

10

FORM OF SALE OF THE NON-EXERCISED WARRANTS

     Pursuant to the terms and conditions of the section 2(d) of the stock subscription warrant agreement, the Holder of ___Share Warrants in total, the issue of which was decided by the Company’s board of directors at its meeting held on July 21, 2005 in accordance to the authorization granted by the Shareholders of the Company at the general shareholders’ meeting held on June 14, 2005 for a price of ___euros per Share Warrants, hereby sells to the Company, ___non-exercised Warrants for an aggregate price of 1 euro.

     Pursuant to the terms and conditions of the section 2(d) of the stock subscription warrant agreement, the Company hereby agrees to purchase such non-exercised Warrants for an aggregate price of 1 euro.

IN WITNESS WHEREOF, the parties hereto have executed this Form on ___.

All signed copies of this Form shall be deemed originals.

The Company	The Holder
BUSINESS OBJECTS S.A.

11

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Bernard Liautaud, certify that:

I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2005 of Business Objects S.A.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2005	By:	/s/ Bernard Liautaud
		Bernard Liautaud
		Chairman of the Board and
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, James R. Tolonen, certify that:

I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2005 of Business Objects S.A.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2005	By:	/s/ James R. Tolonen
		James R. Tolonen
		Chief Financial Officer and
		Senior Group Vice President

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Bernard Liautaud, and I, James R. Tolonen, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Business Objects S.A. on Form 10-Q for the quarterly period ended June 30, 2005 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Business Objects S.A.

Date: August 9, 2005	By:	/s/ Bernard Liautaud
		Bernard Liautaud
		Chairman of the Board and Chief Executive Officer
Date: August 9, 2005	By:	/s/ James R. Tolonen
		James R. Tolonen
		Chief Financial Officer and Senior Group Vice President