Business Objects Reports Q2 Fiscal 2007 Results

Business Objects (Nasdaq:BOBJ)(Paris: BOB), the world's leading provider of business intelligence (BI) solutions, today announced results for the second quarter of fiscal 2007.

Total revenues for the second quarter of fiscal 2007 were $363 million, up 23 percent year-over-year. License revenues were $149 million, up 21 percent year-over-year. Services revenues, including product maintenance, consulting and training, were $214 million, up 25 percent year-over-year.

US GAAP diluted earnings per share for the second quarter of fiscal 2007 were $0.22, up 175 percent year-over-year, as compared to $0.08 per share for the second quarter of fiscal 2006. Non-GAAP diluted earnings per share for the second quarter of fiscal 2007 were $0.48, up 55 percent year-over-year, as compared to $0.31 per share for the second quarter of fiscal 2006.

Business Objects completed the acquisition of Cartesis S.A. on June 1, 2007, and its operations for the month of June were consolidated into the company's financial results. For the second quarter of fiscal 2007, Cartesis contributed $13 million to total revenues, consisting of $6 million in license revenues and $7 million in services revenues, and approximately $0.01 to non-GAAP earnings per share. The company also recorded a restructuring charge of $5 million in the second quarter of fiscal 2007 primarily associated with the acquisition of Cartesis.

"We delivered significant increases in operating margin and very balanced performance this quarter, with double-digit revenue growth in all geographies and all product lines," stated John Schwarz, chief executive officer of Business Objects. "In addition, we continued to extend our leadership position and change the game with the strategic acquisitions of Cartesis and Inxight, adding key products and technologies for enterprise performance management and the understanding of unstructured data."

All figures referred to herein are stated in US dollars unless otherwise indicated. On a constant currencies basis for the second quarter of fiscal 2007, total revenues were up 19 percent year-over-year, license revenues were up 17 percent year-over-year, and services revenues were up 20 percent year-over-year. The non-GAAP results for the second quarter of fiscal 2007, as defined below in the section "Use of Non-GAAP Financial Measures," differ from results measured under US GAAP as they exclude amortization of intangible assets, write-off of in-process R&D, stock-based compensation expense, restructuring costs and other non-recurring or non-cash charges. A reconciliation of US GAAP to non-GAAP results is included at the end of this press release.

Q2 Fiscal 2007 Highlights

Double-Digit Revenue Growth in All Geographies

-- Total revenues in the Americas for the second quarter of fiscal 2007 were $189 million, up 13 percent year-over-year. The Americas closed three transactions over $1 million in license revenues in the second quarter.

-- Total revenues in Europe, Middle-East and Africa (or EMEA) for the second quarter of fiscal 2007 were $147 million, up 38 percent year-over-year (up 29 percent in constant currencies). EMEA closed two transactions over $1 million in license revenues in the second quarter. The majority of the revenues from Cartesis were generated and recorded in EMEA.

-- Total revenues in Asia-Pacific and Japan (or APJ) for the second quarter of fiscal 2007 were $27 million, up 37 percent year-over-year. APJ closed one transaction over $1 million in license revenues in the second quarter.

-- During the quarter, the company added over 1,200 new customers worldwide.

Double-Digit License Growth Driven By All Product Lines

-- License growth was driven in part by strong adoption of Enterprise Performance Management (EPM) solutions, as the company continued to gain traction selling solutions to the CFO and other line-of-business users. The acquisition of Cartesis also contributed to EPM growth in the second quarter.

-- License growth was also driven by strong performance in Information Discovery and Delivery (IDD) and Enterprise Information Management (EIM), as customers look to standardize on one Business Intelligence (BI) vendor and expand their BI investments to include additional seats and new functionalities.

-- Over the second half of fiscal 2007, the company expects to capitalize on cross-selling opportunities with both Cartesis and Inxight by leveraging its global direct sales organization and channel partners.

-- Continued innovation and new product introductions -- including the recently released BusinessObjects Productivity Suite, EPM Performance Suite, BusinessObjects Crystal Decisions (BOCD) Professional Edition, and Information OnDemand (Software-as-a-Service or SaaS) -- are also expected to drive growth over the remainder of 2007 and beyond.

Continued Strength in Maintenance and Consulting Drive Services Revenues

-- Maintenance revenues for the second quarter of fiscal 2007 were $152 million, up 23 percent year-over-year (up 19 percent in constant currencies). High customer renewal rates, the up-selling of premium support services, and the renewal of maintenance from previously acquired companies all contributed to the strong growth in maintenance revenues.

-- Global services revenues for the second quarter of fiscal 2007 were $62 million, up 29 percent year-over-year (up 26 percent in constant currencies). Global services benefited from continued high demand for consulting services across the BI industry, more consistent performance in Europe and Asia, and the addition of Cartesis for the month of June.

Higher Gross Margin and Operating Efficiencies Produce Higher Profitability

-- Gross margin improved by almost two percentage points on both a US GAAP as well as a non-GAAP basis, based on the strength of product related revenues, including both license and maintenance, and continued improvement in global services gross margins.

-- Income from operations on a US GAAP basis for the second quarter of fiscal 2007 grew by 145 percent to $33 million, or 9 percent of total revenues, as compared to $13 million, or 5 percent of total revenues, for the second quarter of fiscal 2006.

-- Income from operations on a non-GAAP basis for the second quarter of fiscal 2007 grew by 68 percent to $66 million, or 18 percent of total revenues, as compared to $39 million, or 13 percent of total revenues, for the second quarter of fiscal 2006.

Strong Balance Sheet and Cash Flow

-- Total cash, cash equivalents and short-term investments (excluding restricted cash) were $929 million at June 30, 2007, up $417 million from December 31, 2006.

-- Total deferred revenues were $347 million at June 30, 2007, up $53 million from December 31, 2006.

-- Accounts receivable, on a days-sales-outstanding (DSO) basis, were 88 days for the second quarter of fiscal 2007, as compared to 73 days for the second quarter of fiscal 2006. Days-sales-outstanding increased primarily due to the acquisition of Cartesis, with a complete balance sheet but only one month of revenue in our consolidated statements.

-- In May 2007, the company completed a convertible bond offering in Europe, raising a total nominal amount of EUR 450 million, or approximately $600 million. Approximately $455 million of the net proceeds from the offering have now been used for strategic investments, including the repurchase of two million of the company's shares outstanding in May 2007, the acquisition of Cartesis in June 2007, and the acquisition of Inxight Software in July 2007.

Cartesis Acquisition

On June 1, 2007, the company completed the acquisition of privately-held Cartesis S.A., a leading provider of finance and performance management software. With the addition of the Cartesis financial reporting and consolidation solutions, Business Objects can now provide its customers with a complete set of EPM applications, delivering a comprehensive and powerful suite to the marketplace. The portfolio now includes planning and budgeting, profitability and analytics, financial reporting and consolidation, and governance, risk, and compliance solutions.

Inxight Software Acquisition

On July 3, 2007, the company completed the acquisition of privately-held Inxight Software, Inc., a leading provider of software solutions for unstructured information discovery, including text analytics, federated search, and data visualization. The combination of Business Objects and Inxight Software will provide organizations with a comprehensive BI solution to address all of their data assets. With the combined technology, companies will have streamlined access to both structured information within databases and data warehouses, and unstructured information such as emails, documents, notes fields, and web content that is estimated to comprise more than 80 percent of all organizational data.

Business Outlook

"The $600 million raised in our convertible bond offering, combined with our ongoing strong cash flow from operations, gives us the financial strength and flexibility to drive our strategic agenda, such as the recent acquisitions of Cartesis and Inxight, and return value to shareholders through our stock repurchase program," said Jim Tolonen, chief financial officer of Business Objects. "Looking ahead, we are raising our revenue and non-GAAP EPS guidance for fiscal 2007 to reflect the solid execution in the second quarter as well as the inclusion of Cartesis and Inxight for the remainder of the year. While Cartesis and Inxight are expected to have a positive impact on revenue and on non-GAAP earnings per share for the year, the acquisitions are expected to be dilutive in the third quarter, due in part to the lost deferred maintenance revenue from purchase accounting adjustments, and dilutive to our US GAAP EPS in the second half, primarily due to the amortization of intangible assets and restructuring charges."

Business Objects offers the following guidance for the fiscal year ending December 31, 2007:

-- Total revenues are expected to range from $1.52 billion to $1.53 billion;

-- US GAAP diluted earnings per share are expected to range from $0.83 to $0.91;

-- Non-GAAP diluted earnings per share are expected to range from $2.02 to $2.10.

US GAAP diluted earnings per share for fiscal 2007 are expected to include approximately $50 million of stock based compensation expense, approximately $66 million of amortization of intangible assets, and approximately $31 million for a non-cash legal reserve and other restructuring costs, which would impact EPS by approximately $1.19 per share, after tax effect.

Included in the above guidance for fiscal 2007, the acquisitions of Cartesis and Inxight are expected to contribute approximately $78 million to $83 million in total revenue for the full year 2007 (after the write-down of deferred revenue due to purchase accounting adjustments of approximately $10 million).

Business Objects offers the following guidance for the third quarter ending September 30, 2007:

-- Total revenues are expected to range from $382 million to $387 million;

-- US GAAP diluted earnings per share are expected to range from $0.16 to $0.20;

-- Non-GAAP diluted earnings per share are expected to range from $0.43 to $0.47.

US GAAP diluted earnings per share for the third quarter of fiscal 2007 are expected to include approximately $14 million of stock based compensation expense and approximately $19 million of amortization of intangible assets, which would impact EPS by approximately $0.27, after tax effect.

The anticipated stock-based compensation expense of approximately $14 million for the third quarter and $50 million for fiscal 2007 includes the impact of options assumed in prior acquisitions, as well as prior employee grants and estimated employee grants for the current year. These expected expenses are based on estimates, including future stock price, employee turnover, growth in new employees, grants to current and new employees, stock volatility, and future interest rates.

The outlook for the third quarter and fiscal 2007 assumes a US dollar to euro exchange rate of $1.36 per EUR 1.00, a US Dollar to Canadian dollar exchange rate of $0.96 per CDN $1.00, an effective US GAAP tax rate of 43 percent, and an effective non-GAAP tax rate of 33 percent. The non-GAAP tax rate differs from the US GAAP tax rate due to the elimination of the tax rate effect of the US GAAP expenses that are being excluded to arrive at the non-GAAP expenses.

The above information concerning our forecast for the third quarter and fiscal 2007 represents our outlook only as of the date hereof, and we undertake no obligation to update or revise any financial forecast or other forward looking statements, as a result of new developments or otherwise.

Conference Call

Business Objects will hold a conference call to discuss its financial results for the second quarter of 2007 on July 25, 2007. The call will begin at 5:00 a.m. PT (8:00 a.m. ET, 1:00 p.m. GMT, 2:00 p.m. CET). The dial-in numbers are +1 (800) 399-7988 for North America and +1 (706) 634-5428 for Europe and Asia, with ID #6247873. The conference call also will be webcast live, and can be accessed on the investor relations section of the company's website at www.businessobjects.com/company/investors. A replay of the webcast will be available on the site approximately two hours after the end of the live call.

Accounting Principles

Business Objects prepares its financial statements in accordance with US GAAP. Because the company is listed on both the Eurolist by Euronext(TM) in France and the Nasdaq Global Select Market in the United States, it is required to separately report consolidated financial statements prepared in accordance with both US GAAP and International Financial Reporting Standards ("IFRS"). The most significant differences between the two reporting standards for Business Objects relate to the treatment of stock-based compensation expense, the accounting for deferred tax assets on certain intercompany transactions, the accounting for business combinations and the accounting for the convertible bonds that we issued in May, 2007.

In accordance with French regulations and IFRS, Business Objects filed with the Autorite des Marches Financiers in France its Document de Reference 2006 on April 6, 2007 under the registration number D.07-0285, which included its consolidated financial statements for the year ended on December 31, 2006, presented in accordance with International Financial Reporting Standards. The Document de Reference 2006 includes the consolidated information that Business Objects published on April 18, 2007 to the Bulletin des Annonces Legales Obligatoires ("BALO") in France.

Use of Non-GAAP Financial Measures

The non-GAAP financial measures such as operating income, net income, and earnings per share information for the second quarter of 2007 included in this press release are different from those otherwise presented under US GAAP as these non-GAAP measures exclude certain charges. These charges include the write-off of in-process research and development, amortization of intangible assets, stock-based compensation expense, restructuring costs and other non-recurring or non-cash charges. The non-GAAP tax rate differs from the US GAAP tax rate due to the elimination of the tax rate effect of the US GAAP expenses that are being eliminated to arrive at the non-GAAP expenses. Business Objects has provided these measures in addition to US GAAP financial results because management believes these non-GAAP measures provide a consistent basis for comparison between quarters and of growth rates year-over-year that are not influenced by certain non-cash charges or impacts of prior period acquisitions, and therefore are helpful in understanding Business Objects' underlying operating results. In addition, this press release also includes non-GAAP measures that use a constant currency to separate the impact of conversion from other foreign currencies to US dollars from other changes in our business. These non-GAAP measures are some of the primary measures Business Objects' management uses for planning and forecasting. These measures are not in accordance with, or an alternative to, US GAAP and these non-GAAP measures may not be comparable to information provided by other companies. Reconciliations of US GAAP to non-GAAP results are presented at the end of this press release.

Forward-Looking Statements

This document contains forward-looking statements that involve risks and uncertainties concerning our expected financial performance for the third quarter and full year 2007, our product and business strategies, our identification and integration of acquired companies, the impact of our acquisitions on our product strategies and capabilities and on our business and operating results, our anticipated product innovations and our new product introductions. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties. These potential risks and uncertainties include, among others: fluctuations in our quarterly and yearly operating results; our ability to timely and successfully integrate acquired companies and products; our ability to estimate and increase our profitability; our ability to attract and retain customers; our ability to protect our intellectual property rights and to defend litigation and regulatory reviews successfully; our ability to issue new releases of our products, including those obtained through acquired businesses; changes to current accounting policies which may have a significant, adverse impact upon our financial results; the introduction of new products by competitors or the entry of new competitors into the markets for Business Objects' products; the impact of the pricing of competing technologies; our ability to preserve our key strategic relationships; our reliance upon selling products only in the Business Intelligence software market; our ability to manage large scale deployments; our ability to succeed in our mid-market strategy and our on-demand strategy, including our new Information OnDemand offering; the impact of our debt service obligations on our operating results and ability to raise additional capital; and economic and political conditions in the US and abroad. More information about potential factors that could affect Business Objects' business and financial results is included in Business Objects' Form 10-K for the year ended December 31, 2006 and its Quarterly Report on Form 10-Q, which are on file with the SEC and available at the SEC's website at www.sec.gov. Business Objects is not obligated to update these forward-looking statements to reflect events or circumstances after the date of this document.

About Business Objects

Business Objects has been a pioneer in business intelligence (BI) since the dawn of the category. Today, as the world's leading BI software company, Business Objects transforms the way the world works through intelligent information. The company helps illuminate understanding and decision-making at more than 44,000 organizations around the globe. Through a combination of innovative technology, global consulting and education services, and the industry's strongest and most diverse partner network, Business Objects enables companies of all sizes to make transformative business decisions based on intelligent, accurate, and timely information.

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

The Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Intelligent Question, and Xcelsius are trademarks or registered trademarks of Business Objects in the United States and/or other countries. All other names mentioned herein may be trademarks of their respective owners.
BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except nominal value per ordinary share)

June 30, December
2007 31, 2006
----------- -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 922,362 $ 506,792
Short-term investments 6,676 5,736
Restricted cash 57,892 42,997
Accounts receivable, net 354,174 334,387
Deferred tax assets 16,251 15,189
Prepaid and other current assets 77,663 59,462
----------- -----------
Total current assets 1,435,018 964,563

Goodwill 1,503,635 1,266,057
Other intangible assets, net 236,715 128,635
Property and equipment, net 98,634 91,091
Deposits and other assets 27,050 20,897
Long-term restricted cash 37,321 11,131
Long-term deferred tax assets 13,593 12,616
----------- -----------
Total assets $ 3,351,966 $ 2,494,990
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 46,711 $ 36,070
Accrued payroll and related expenses 114,234 105,967
Income taxes payable 16,560 96,088
Deferred revenues 336,244 283,631
Other current liabilities 151,319 106,776
Escrows payable 55,344 34,539
----------- -----------
Total current liabilities 720,412 663,071

Long-term escrows payable 33,844 7,654
Bonds payable 607,635 -
Other long-term liabilities 9,415 7,077
Long-term income taxes payable 104,941 -
Long-term deferred tax liabilities 48,334 4,597
Long-term deferred revenues 10,404 9,772
----------- -----------
Total liabilities 1,534,985 692,171

Shareholders' equity
Ordinary shares, Euro 0.10 nominal value 10,643 10,707
Additional paid-in capital 1,298,842 1,320,993
Treasury, Business Objects Option LLC, and
Employee Benefit Sub-Plan Trust shares (6,919) (5,247)
Retained earnings 436,797 417,709
Accumulated other comprehensive income 77,618 58,657
----------- -----------
Total shareholders' equity 1,816,981 1,802,819
----------- -----------

Total liabilities and shareholders' equity $ 3,351,966 $ 2,494,990
=========== ===========
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,
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues: (unaudited) (unaudited)
Net license fees $ 149,051 $ 123,110 $ 286,444 $ 249,004
Services 214,178 171,374 411,128 323,751
--------- --------- --------- ---------
Total revenues 363,229 294,484 697,572 572,755
Cost of revenues:
Net license fees 14,485 10,276 25,355 18,252
Services 73,896 66,023 142,727 126,790
--------- --------- --------- ---------
Total cost of revenues 88,381 76,299 168,082 145,042
--------- --------- --------- ---------
Gross profit 274,848 218,185 529,490 427,713
Operating expenses:
Sales and marketing 143,480 123,123 280,821 240,623
Research and development 54,265 49,344 106,606 93,081
General and administrative 38,641 28,965 72,280 59,328
Legal contingency reserve - - 25,700 -
Acquired in-process
technology - 3,300 - 3,300
Restructuring costs 5,471 - 5,471 -
--------- --------- --------- ---------
Total operating
expenses 241,857 204,732 490,878 396,332
--------- --------- --------- ---------
Income from operations 32,991 13,453 38,612 31,381
Interest and other income, net 3,897 3,008 8,026 5,863
--------- --------- --------- ---------
Income before provision for
income taxes 36,888 16,461 46,638 37,244
Provision for income taxes (15,282) (8,512) (19,450) (16,958)
--------- --------- --------- ---------
Net income $ 21,606 $ 7,949 $ 27,188 $ 20,286
========= ========= ========= =========

Basic net income per ordinary
share and ADS $ 0.23 $ 0.09 $ 0.29 $ 0.22
========= ========= ========= =========

Diluted net income per
ordinary share and ADS $ 0.22 $ 0.08 $ 0.28 $ 0.21
========= ========= ========= =========

Ordinary shares and ADSs used
in computing basic net income
per ordinary share and ADS 95,074 93,310 95,154 92,946
========= ========= ========= =========

Ordinary shares and ADSs and
equivalents used in computing
diluted net income per
ordinary share and ADS 96,832 95,083 96,967 95,162
========= ========= ========= =========
BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Six Months Ended
June 30,
---------------------
2007 2006
---------- ----------
(unaudited)

Operating activities:
Net income $ 27,188 $ 20,286
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property
and equipment 17,505 15,770
Amortization of other intangible assets 26,871 19,146
Amortization of debt issuance costs 390 -
Stock-based compensation expense 23,862 24,917
Excess tax benefits from stock-based
compensation - (2,422)
Acquired in-process research and development - 3,300
Deferred income taxes (4,375) (5,789)
Changes in operating assets and liabilities:
Accounts receivable, net 12,199 45,546
Prepaid and other current assets (11,560) 6,654
Deposits and other assets 6,462 6,282
Accounts payable 4,828 2,499
Accrued payroll and related expenses (14,451) (21,645)
Income taxes payable 18,279 16,937
Deferred revenues 42,942 45,860
Other liabilities 24,194 (1,953)
Short-term investments classified as trading (940) (390)

---------- ----------
Net cash provided by operating activities 173,394 174,998
---------- ----------

Investing activities:
Purchases of property and equipment (16,881) (22,807)
Business acquisitions, net of acquired cash (306,596) (55,482)
Transfer of cash to restricted cash accounts (41,085) (13,766)
Increase in escrows payable 49,429 12,099
Payments on escrows payable (2,723) -

---------- ----------
Net cash used in investing activities (317,856) (79,956)
---------- ----------

Financing activities:
Proceeds from issuance of bonds, net of
issuance costs 592,702 -
Proceeds from issuance of shares 33,862 25,361
Purchase of treasury shares (79,884) -
Excess tax benefits from stock-based
compensation - 2,422

---------- ----------
Net cash provided by financing activities 546,680 27,783
---------- ----------

Effect of foreign exchange rate changes on cash
and cash equivalents 13,352 13,888

---------- ----------
Net increase in cash and cash equivalents 415,570 136,713
Cash and cash equivalents, beginning of the
period 506,792 332,777
---------- ----------

Cash and cash equivalents, end of the period $ 922,362 $ 469,490
========== ==========
BUSINESS OBJECTS S.A.
Reconciliation of GAAP Financial Measures to Non-GAAP Financial
Measures
(in millions, except per ordinary share and ADS data, unaudited)

Three Months Six Months
Ended Ended
June 30, June 30,
2007 2006 2007 2006
------- ------- ------- -------

----------------------------------------------------------------------

-------------------------------
GAAP Cost of Revenues $ 88.4 $ 76.3 $ 168.1 $ 145.1
-------------------------------
Amortization of intangible assets
in cost of net licence fees (11.1) (7.4) (19.8) (13.4)
in cost of services (3.1) (2.9) (5.8) (5.4)
------- ------- ------- -------
Total (14.2) (10.3) (25.6) (18.8)
Stock-based compensation
in cost of services (1.4) (1.5) (2.7) (2.8)
------- ------- ------- -------
Total (1.4) (1.5) (2.7) (2.8)
-------------------------------
Non-GAAP Cost of Revenues 72.8 64.5 139.8 123.5
-------------------------------

----------------------------------------------------------------------

-------------------------------
GAAP Gross Profit 274.8 218.2 529.5 427.7
-------------------------------
% of total revenues 76% 74% 76% 75%
Amortization of intangible assets 14.2 10.3 25.6 18.8
Stock-based compensation 1.4 1.5 2.7 2.8
-------------------------------
Non-GAAP Gross Profit 290.4 230.0 557.8 449.3
-------------------------------
% of total revenues 80% 78% 80% 78%

----------------------------------------------------------------------

-------------------------------
GAAP Operating Expenses 241.8 204.7 490.9 396.3
-------------------------------
Amortization of intangible assets and
in-process R&D
in sales and marketing expenses (0.5) (0.4) (1.1) (0.7)
in research and development expenses (0.1) (3.3) (0.2) (3.3)
------- ------- ------- -------
Total (0.6) (3.7) (1.3) (4.0)
Stock-based compensation
in sales and marketing expenses (4.6) (3.7) (9.0) (7.2)
in research and development expenses (1.3) (1.8) (2.7) (3.7)
in general and administrative
expenses (5.0) (4.5) (9.4) (11.2)
------- ------- ------- -------
Total (10.9) (10.0) (21.1) (22.1)

Legal contingency reserve 0.0 0.0 (25.7) 0.0

Restructuring (5.5) 0.0 (5.5) 0.0

-------------------------------
Non-GAAP Operating Expenses 224.8 191.0 437.3 370.2
-------------------------------

----------------------------------------------------------------------

-------------------------------
GAAP Income from Operations 33.0 13.5 38.6 31.4
-------------------------------
% of total revenues 9% 5% 6% 5%
Total amortization of intangibles and
in-process R&D 14.8 14.0 26.9 22.8
Total stock based compensation 12.3 11.5 23.8 24.9
Legal contingency reserve 0.0 0.0 25.7 0.0
Restructuring 5.5 0.0 5.5 0.0
-------------------------------
Non-GAAP Income from Operations 65.6 39.0 120.5 79.1
-------------------------------
% of total revenues 18% 13% 17% 14%

----------------------------------------------------------------------

-------------------------------
GAAP Net Income 21.6 7.9 27.2 20.3
-------------------------------
Total amortization of intangibles and
in-process R&D 14.8 14.0 26.9 22.8
Total stock based compensation 12.3 11.5 23.8 24.9
Legal contingency reserve 0.0 0.0 25.7 0.0
Restructuring 5.5 0.0 5.5 0.0
Tax effect of the above adjustments (7.6) (4.3) (22.5) (8.0)
-------------------------------
Non-GAAP Net Income 46.6 29.1 86.6 60.0
-------------------------------

----------------------------------------------------------------------

Basic net income per ordinary share
and ADS
GAAP $ 0.23 $ 0.09 $ 0.29 $ 0.22
Non-GAAP $ 0.49 $ 0.31 $ 0.91 $ 0.65

Diluted net income per ordinary share
and ADS
GAAP $ 0.22 $ 0.08 $ 0.28 $ 0.21
Non-GAAP $ 0.48 $ 0.31 $ 0.89 $ 0.63
BUSINESS OBJECTS S.A.
Q2 FISCAL 2007 SUPPLEMENTAL INFORMATION
(in millions, except per ordinary share and ADS data)
(Unaudited)


----------------------------------------------------------------------
Fiscal 2006 Fiscal 2007
----------------------------------- -------------
Q1 Q2 Q3 Q4 Total Q1 Q2
-------------------------------------------------------- -------------
SUPPLEMENTAL INCOME
STATEMENT
INFORMATION

Revenues
Net license fees $125.9 $123.1 $131.6 $179.6 $560.2 $137.4 $149.1
Maintenance 108.6 123.5 128.5 136.9 497.5 143.8 152.3
Consulting and
training 43.8 47.9 50.3 54.1 196.1 53.1 61.8
----------------------------------- -------------
Total revenues 278.3 294.5 310.4 370.6 1,253.8 334.3 363.2
----------------------------------- -------------

Total expenses
Cost of net
license fees 2.0 2.9 3.3 3.0 10.9 2.1 3.4
Cost of services 56.9 61.6 63.8 65.5 247.9 64.7 69.4
Sales and
marketing 113.6 119.0 116.9 139.1 488.6 132.5 138.4
Research and
development 41.9 47.5 48.4 49.8 187.8 50.8 52.8
General and
administrative 23.7 24.5 25.0 29.3 102.4 29.2 33.6
Amortization of
intangible assets
(1) 8.9 14.0 10.6 15.8 49.4 12.1 14.8
Stock-based
compensation (2) 13.4 11.5 12.9 11.2 49.0 11.6 12.3
Legal contingency
reserve - - - - - 25.7 -
Restructuring
costs - - - - - - 5.5
----------------------------------- -------------
Total expenses 260.4 281.0 280.9 313.7 1,136.0 328.7 330.2
----------------------------------- -------------

Income from
operations 17.9 13.5 29.5 56.9 117.8 5.6 33.0
----------------------------------- -------------
Interest and other
income, net 2.9 3.0 4.7 3.2 13.8 4.2 3.9
Income before
provision for
income taxes 20.8 16.5 34.2 60.1 131.6 9.8 36.9

Provision for
income taxes (8.5) (8.6) (14.6) (24.6) (56.2) (4.2) (15.3)
Effective tax rate 41% 52% 43% 41% 43% 43% 41%
----------------------------------- -------------

Net income 12.3 7.9 19.6 35.5 75.4 5.6 21.6
=================================== =============
Net income per
ordinary share and
ADS
Basic 0.13 0.09 0.21 0.37 0.81 0.06 0.23
Diluted 0.13 0.08 0.21 0.37 0.79 0.06 0.22
Ordinary shares and
ADSs used in
computing net
income per share
(000's)
Basic 92,552 93,310 93,685 94,745 93,552 95,235 95,074
Diluted 95,333 95,083 94,976 96,776 95,368 97,094 96,832

----------------------------------------------------------------------

Amortization of
intangible assets
Cost of net
license fees 6.0 7.4 7.5 9.0 30.1 8.8 11.1
Cost of services 2.5 2.9 2.3 2.8 10.5 2.7 3.1
Sales and
marketing 0.4 0.4 0.4 0.5 1.6 0.5 0.5
Research and
development (1) - 3.3 0.4 3.5 7.2 0.1 0.1
----------------------------------- -------------
Total 8.9 14.0 10.6 15.8 49.4 12.1 14.8
=================================== =============

Stock-based
compensation (2)
Cost of services 1.4 1.5 1.5 1.4 5.7 1.4 1.4
Sales and
marketing 3.5 3.7 4.2 4.0 15.4 4.4 4.6
Research and
development 1.8 1.8 1.8 1.7 7.1 1.4 1.3
General and
administrative 6.7 4.5 5.4 4.1 20.8 4.4 5.0
----------------------------------- -------------
Total 13.4 11.5 12.9 11.2 49.0 11.6 12.3
=================================== =============

----------------------------------------------------------------------

Non-GAAP income from
operations (3) 40.2 39.0 53.0 83.9 216.2 55.0 65.6
----------------------------------- -------------
% of total
revenues 14% 13% 17% 23% 17% 16% 18%

Interest and other
income, net 2.9 3.0 4.7 3.2 13.8 4.2 3.9
Income before
provision for
income taxes 43.1 42.0 57.7 87.1 230.0 59.2 69.5

Provision for
income taxes (12.0) (12.9) (19.2) (29.4) (73.5) (19.0) (22.9)
Effective tax rate 28% 31% 33% 34% 32% 32% 33%

----------------------------------- -------------
Non-GAAP net income 31.1 29.1 38.5 57.7 156.5 40.2 46.6
=================================== =============
% of total
revenues 11% 10% 12% 16% 12% 12% 13%

Non-GAAP net income
per ordinary share
and ADS
Basic 0.34 0.31 0.41 0.61 1.67 0.42 0.49
Diluted 0.33 0.31 0.41 0.60 1.64 0.41 0.48

----------------------------------------------------------------------

(1) Includes acquired in-process research and development related to
acquisitions

(2) Represents stock-based compensation expense recorded in accordance
with FAS 123R.

(3) Non-GAAP measures are reconciled from US GAAP figures. Non-GAAP
measures exclude in-process research and development, amortization of
intangible assets, stock-based compensation expense, restructuring,
and legal contingency reserve.
BUSINESS OBJECTS S.A.
Q2 FISCAL 2007 SUPPLEMENTAL INFORMATION
(in millions, except for number of transactions, DSO and headcount
information)
(Unaudited)

----------------------------------------------------------------------
Fiscal 2006 Fiscal 2007
------------------------------------ -------------
Q1 Q2 Q3 Q4 Total Q1 Q2
----------------------------------------------------------------------
REVENUE ANALYSIS

Total revenues by
geography

Americas $147.2 $167.7 $175.1 $197.7 $687.7 $172.8 $188.7
EMEA 112.0 106.8 112.7 147.5 479.0 137.2 147.1
Asia Pacific,
including Japan 19.1 20.0 22.6 25.4 87.1 24.3 27.4
------------------------------------ -------------
Total $278.3 $294.5 $310.4 $370.6 $1,253.8 $334.3 $363.2

----------------------------------------------------------------------

Analysis of
currency impact
(year-over-year)

Reported revenue
growth rate 12% 12% 19% 22% 16% 20% 23%
Constant currency
growth rate 17% 12% 16% 16% 16% 14% 19%
------------------------------------ -------------
Impact of foreign
currency on growth
rate -5% 0% 3% 6% 0% 6% 4%

----------------------------------------------------------------------

----------------------------------------------------------------------
Fiscal 2006 Fiscal 2007
------------------------------------ -------------
Q1 Q2 Q3 Q4 Total Q1 Q2
----------------------------------------------------------------------
LICENSE REVENUE
ANALYSIS

License revenues by
channel (4)

Direct 54% 48% 52% 57% 54% 54% 55%
Indirect 46% 52% 48% 43% 46% 46% 45%
------------------------------------ -------------
Total 100% 100% 100% 100% 100% 100% 100%

----------------------------------------------------------------------

Number of
transactions by
size

Over $1 million 9 4 9 13 35 12 6
$200 thousand to
$999 thousand 104 113 107 157 481 121 154

----------------------------------------------------------------------

----------------------------------------------------------------------
Fiscal 2006 Fiscal 2007
--------------------------- -------------
Q1 Q2 Q3 Q4 Q1 Q2
----------------------------------------------------------------------
SELECTED BALANCE
SHEET ITEMS

Cash and cash
equivalents,
restricted cash,
and short-term
investments $474 $532 $548 $567 $687 $1,024
DSO (Days sales
outstanding) 80 73 73 81 83 88

----------------------------------------------------------------------
HEADCOUNT

Total headcount 4,484 4,977 5,141 5,208 5,428 6,138

----------------------------------------------------------------------

(4) The Q1'07 direct and indirect percentages were amended in July
'07.