4. Acquisitions

On March 23, 2004, as part of SAP’s efforts to further integrate its global IT-consulting capabilities, SAP announced its intention to bid for the outstanding shares of its 70.03 % owned and fully consolidated publicly-traded subsidiary, SAP Systems Integration AG (“SAP SI”). The price offered for the outstanding SAP SI shares was €20.40, which represented a 35 % premium over the SAP SI share price on the announcement date. SAP’s offer was made effective April 28, 2004, and expired May 27, 2004. From March 23, 2004, through August 2004, SAP acquired 7.7 million shares of SAP SI for cash increasing its ownership interest to 91.6 %.

The aggregate purchase price for the SAP SI shares acquired in 2004 was €168.1 million. SAP accounted for the purchase of SAP SI minority shares using the purchase method. At the acquisition date, because the carrying value of most assets and liabilities of SAP SI approximated their respective fair values, SAP assigned €5.6 million of the aggregate purchase price to customer contracts with a useful life of six months and €120.5 million of the aggregate purchase price to goodwill of the Consulting segment, which is not expected to be deductible for tax purposes.

Effective October 1, 2004, SAP SI sold all of its interests in its wholly owned subsidiaries SAP Systems Integration America Holding, Inc. and SAP Systems Integration (Schweiz) AG to other subsidiaries within the Group. SAP SI, which remains a publicly traded entity, entered into a cooperation agreement with several other entities of the Group in late 2004 to further strengthen the cooperation in the areas of consulting and hosting.

In addition, during the year ended December 31, 2004, SAP completed the following two acquisitions, which are immaterial individually:

• In July 2004, SAP acquired the technology and assets of A2i, Inc., California, USA (“A2i”). A2i specialized in providing product content management, cross-media catalogue publishing, and master data management capabilities.
• In December 2004, SAP acquired the technology and assets of iLytix Systems AS, a privately held software company based in Oslo, Norway.

All acquisitions have been accounted for using the purchase method and are included in SAP’s Consolidated Financial Statements since the date of acquisition. The purchase price allocation for iLytix is preliminary and a final determination of required purchase accounting adjustments will be made within a year of the acquisition date upon completion of the integration plan. The aggregate purchase price of all acquisitions in 2004 was €186.6 million, of which €22.8 million was assigned to identifiable intangible assets and €127.3 million was recorded as goodwill, of which €1.7 million is expected to be fully deductible for tax purposes. The goodwill recognized in 2004 was assigned to the product and consulting segments in the amounts of €1.7 million and €125.6 million, respectively. The aggregate purchase price related to the 2004 acquisitions can increase by approximately €5 million if certain results are achieved subsequently by the acquired companies.

The values assigned to identifiable intangible assets were as follows:

During the year ended December 31, 2003, SAP completed certain acquisitions, which are immaterial individually and in the aggregate. These acquisitions have been accounted for using the purchase method and are included in SAP’s Consolidated Financial Statements since the date of acquisition. The aggregate purchase price of these acquisitions in 2003 was €63.2 million, of which €7.1 million was assigned to identifiable intangible assets and €49.9 million was recorded as goodwill.

During 2000 and 2001, SAP made several investments in Commerce One, Inc. (“Commerce One”) resulting in a cumulative ownership interest of approximately 22 % of Commerce One’s outstanding voting shares and the ability to exercise significant influence. As of December 31, 2002, the carrying value of SAP’s investment in Commerce One was reduced to zero as of result of the recognition of SAP’s equity in the losses of Commerce One since the initial investment date and the recognition of an other-than-temporary impairment charge of approximately €298 million in 2002. In 2004, Commerce One filed for bankruptcy, sold all of its assets, and was renamed CO Liquidation, Inc.