8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT

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

January 27, 2005

Date of Report (Date of earliest event reported)

SIEBEL SYSTEMS, INC.
(Exact Name of Registrant as Specified in Charter)

 

Delaware	0-20725	94-3187233
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2207 Bridgepointe Parkway
San Mateo, CA   94404
(Address of Principal Executive Offices, Including Zip Code)

(650) 477-5000
(Registrant's Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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

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

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

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

Item 2.02. Results of Operations and Financial Condition.

On January 27, 2005, Siebel Systems, Inc. (the "Company") issued a press release announcing its financial results for the fourth quarter ended December 31, 2004. A copy of the press release, dated as of January 27, 2005, is furnished as Exhibit 99.1 to this Current Report and is incorporated in this Item 2.02 by reference. The press release is furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

(a) During the fourth quarter of 2004, the Company determined that it had not properly accounted for the impact of escalating lease payments in certain of its facility leases for the years ended December 31, 1998 through 2003, for each of the quarters in those years, and for each of the quarters in the nine months ended September 30, 2004, resulting in an understatement of rent expense in each of those periods and an overstatement of restructuring expense in certain periods. Accordingly, the Company's previously issued financial statements covering such periods should no longer be relied upon.

While the Company believes the impact of this error is not material to any previously issued financial statements, management determined that the cumulative adjustment required to correct this calculation error was too large to record in 2004, and voluntarily decided to correct the error through restatement of previously issued financial statements. The impact on the Company's earnings per share for each affected period was less than $0.01 per share. The Company's management identified this error without the assistance or involvement of any outside parties.

On January 26, 2005, the Company's audit committee discussed the conclusion described above with the Company's management and KPMG LLP, the Company's independent auditors. KPMG informed the audit committee that it concurs with the Company's conclusion described above. The Company expects to file an amended Form 10-K for the year ended December 31, 2003 within the next two weeks.

A reconciliation of the Company's financial statements and certain selected financial data, as originally reported, to the restated amounts is attached hereto as Exhibit 99.2 and is incorporated in this Item 4.02(a) by reference. The information in this Current Report shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits. The following exhibits are filed herewith:

Number	Description
99.1	Press release entitled "Siebel Systems Reports Financial Results for the Quarter and Year Ended December 31, 2004" dated January 27, 2005.
99.2	Reconciliation of previously issued financial statements to the respective restated financial statements.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

SIEBEL SYSTEMS, INC.

(Registrant)

Dated: January 27, 2005

By:  /s/ Kenneth A. Goldman

Kenneth A. Goldman

Senior Vice President,
Finance and Administration
and Chief Financial Officer

EX-99.1

Exhibit 99.1

NEWS RELEASE

Siebel Systems Reports Financial Results for the Quarter and Year Ended December 31, 2004

Confirms Fourth Quarter License Revenues Up 54% and Earnings Per Share Up 233% Sequentially

All Fourth Quarter Revenue Categories and Profitability Up Year Over Year

SAN MATEO, Calif.—January 27, 2005—Siebel Systems, Inc. (NASDAQ: SEBL), a leading provider of business applications software, today announced financial results for the quarter and year ended December 31, 2004, at the high end or above preliminary financial results presented on January 5, 2005.

Financial Results

Total revenues for the fourth quarter of 2004 were $392 million, a 24% increase over the third quarter of 2004. License revenues were $161 million, a 54% increase over the third quarter of 2004. Maintenance revenues were $122 million, a 4% increase over the third quarter of 2004. Services and other revenues were $109 million, a 15% increase over the third quarter of 2004.

Operating income and operating margin for the fourth quarter of 2004 were $65 million and 17%, respectively, a 173% and nine percentage point increase over the third quarter of 2004. Net income and net income margin for the fourth quarter of 2004 were $54 million and 14%, respectively, a 194% and eight percentage point increase over the third quarter of 2004. Earnings per share for the fourth quarter of 2004 were $0.10 per share, a 233% increase over the third quarter of 2004. Income for the fourth quarter benefited from a lower than expected effective tax rate of 32%.

Total revenues for the year ended December 31, 2004 were $1.34 billion, a 1% decrease from 2003. For the year, license revenues were $487 million, maintenance revenues were $470 million and services and other revenues were $383 million, representing a 1% increase, 5% increase and 9% decrease, respectively, from 2003.

Operating income and operating margin for the year ended December 31, 2004 were $129 million and 10%, respectively, a $166 million and thirteen percentage point increase over 2003. Net income and net income margin for the year were $111 million and 8%, respectively, a $116 million and eight percentage point increase over 2003. Earnings per share for the year ended December 31, 2004 were $0.20 per share, a $0.21 per share increase over 2003. Income for 2004 benefited from an effective tax rate of 37%.

The Company's cash, cash equivalents, and short-term investments were $2.25 billion as of December 31, 2004, a $93 million and $223 million increase from September 30, 2004 and from December 31, 2003, respectively. Deferred revenue was $357 million as of December 31, 2004, a $68 million and $75 million increase from September 30, 2004 and from December 31, 2003, respectively. Days sales outstanding in accounts receivable were 67 days for the fourth quarter of 2004.

"I am pleased with our results, which return Siebel Systems to quarterly year-over-year growth for the first time in fourteen quarters. We continue to execute on our strategy for the next phase of the company's development and growth," said J. Michael Lawrie, CEO of Siebel Systems. "During the last three quarters we have renewed our commitment to deliver demonstrable business results for our customers. This initiative, along with our pursuit of growth opportunities in analytics, key vertical industries, hosted software and SMB, and emerging markets in Eastern Europe and Asia Pacific, is designed to return the company to sustained growth and maximize shareholder value."

Restatement of Rent Expense

In the course of preparing its 2004 financial results, the Company identified a calculation error that had resulted in an understatement of facility-related expenses and a corresponding understatement of deferred rent liability since 1998. While the effects of this error were not material to any previously reported period, the Company voluntarily corrected the error by restating previously issued financial statements to ensure full transparency and accuracy of its financial statements. There was no cash impact from these restatements. The impact of these restatements on prior period financial statements are summarized in the supplemental schedules attached to the related Form 8-K we filed today, which may be accessed through our investor relations website at http://www.siebel.com/crm-company/investor_information/index.shtm. We also expect to file an amended Form 10-K for 2003 within the next two weeks.

New Executive Appointments

As part of its continuing strategy to add to its leadership team, Siebel Systems announced the following executive appointments:

• David Sardilli, formerly Client Partner at Accenture, responsible for banking in New England and New York, joined Siebel Systems as Senior Vice President and General Manager for the Company's Financial Services business unit, reporting to the CEO. Mr. Sardilli brings more than 20 years of industry experience from Accenture, Meridian Bancorp and Chemical Bank.

• Peter Burridge, formerly SVP for Communications, Media, and Utilities (CMU), Financial Services Institutions (FSI), and Government, Education, and Healthcare (GEH) of the Enterprise Applications team at Oracle in the Asia Pacific Region, joined Siebel Systems as Senior Vice President and General Manager for the Company's Asia Pacific and Japan region reporting to the CEO. Mr. Burridge brings more than 12 years of industry experience from Oracle.

• Brett Ho, formerly CEO at UFsoft, China's largest software company, joined Siebel Systems as Vice President and General Manager of East Asia. Mr. Ho brings more than 17 years of industry experience in Asia and the US from Broadvision and Oracle.

• Shintaro Nezuka, formerly Director of Linux Sales and Marketing Asia/Pacific at IBM, joined Siebel Systems as Vice President and General Manager of Japan and Korea. Mr. Nezuka brings more than 35 years of industry experience in Asia and the US from IBM.

• Nelson Eng, formerly Managing Director of Global Sales for the Financial Services industry at Dell, joined Siebel Systems as Regional Vice President Financial Services East. Mr. Eng brings more than 15 years of industry experience from Dell and IBM.

• Maruf Majed, formerly Vice President Asia at WebMethods, joined Siebel Systems as Vice President OnDemand, SMB and Manufacturing and Distribution Industries in Asia Pacific. Mr. Majed brings more than 20 years of industry experience from WedMethods, Ariba and IBM.

About Siebel Systems

Siebel Systems, Inc. is a leading provider of business applications software, enabling corporations to sell to, market to, and serve customers across multiple channels and lines of business. With more than 4,000 customer deployments worldwide, Siebel Systems provides organizations with a proven set of industry-specific best practices, CRM applications, market-leading analytics products, and business processes, empowering them to consistently deliver superior customer experiences and establish more profitable customer relationships. Siebel Systems' sales and service facilities are located in more than 30 countries.

# # #

Investor Contact:
Terry Lee
Siebel Systems Investor Relations
(650) 295-5656
Investor.relations@siebel.com Media Contact:
Stacey Burbach
Siebel Systems Public Relations
(480) 377-3725
stacey.burbach@siebel.com

For more information on Siebel Systems solutions and services, please visit our Web site: CRM - http://www.siebel.com/crm; OnDemand Solutions - http://www.crmondemand.com; Industry CRM - http://www.siebel.com/industry-crm; Call Center & Service - http://www.siebel.com/call-center; Sales Force Automation - http://www.siebel.com/sales-force-automation; Marketing Automation - http://www.siebel.com/marketing-automation; Business Intelligence - http://www.siebel.com/business-intelligence; Integration Solutions - http://www.siebel.com/integration-solutions; CRM Services - http://www.siebel.com/crm-services

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include the statements regarding the nature and scope of Siebel Systems' internal review and of its restatement of its financial statements. These statements are just predictions and involve risks and uncertainties, such that actual results may differ significantly. These risks include, but are not limited to, additional actions resulting from the ongoing internal audit committee review of the historical financial statements, as well as the review and audit by the Company's independent auditors of the restated financial statements and actions resulting from any discussions with or required by the Securities and Exchange Commission. In particular, the impact to the Company's restated results for the years ending December 31, 1998, 1999, 2000, 2001, 2002, 2003 and 2004 and each of the quarters in the year ended December 31, 2004 may differ from the anticipated adjustments discussed above due to factors that include, but are not limited to, ongoing review of the results and preparation of the financial statements. In addition, future operating results of Siebel Systems may differ from the results discussed or forecasted in the forward-looking statements due to factors that include, but are not limited to, risks associated with customer relations, such as the availability of Siebel Systems' products and services, customer implementation of products and services, relationships with customers, third- party vendors and systems integrators, concentration of revenues in a relatively small number of customers, existence of errors or defects in products, ability to successfully manage growth, significant current and expected additional competition and the need to continue to expand product distribution and services offerings. Further information on potential factors that could affect the financial results of Siebel Systems are included in Siebel Systems' Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and its other filings with the Securities and Exchange Commission, which are available at www.sec.gov. Siebel Systems assumes no obligation to update the information in this press release.

Siebel is a trademark of Siebel Systems, Inc. and may be registered in certain jurisdictions. All other product and company names mentioned are the property of their respective owners and are mentioned for identification purposes only.

SIEBEL SYSTEMS, INC.
Consolidated Balance Sheets
(In thousands, except per share data)

                                                                               December 31,      September 30,      December 31,
                                                                                  2003               2004               2004
                                                                            -----------------  ----------------  ----------------
Assets
                                                                              (as restated)      (as restated)                     
Current assets:
   Cash and cash equivalents..............................................  $        583,532   $       506,574   $       597,272
   Short-term investments.................................................         1,439,674         1,647,162         1,649,216
                                                                            -----------------  ----------------  ----------------
          Total cash, cash equivalents and short-term investments.........         2,023,206         2,153,736         2,246,488

   Accounts receivable, net...............................................           259,834           208,805           293,527
   Deferred income taxes..................................................            11,973            14,453            17,542
   Prepaids and other.....................................................            52,186            47,557            53,894
                                                                            -----------------  ----------------  ----------------
          Total current assets............................................         2,347,199         2,424,551         2,611,451

Property and equipment, net...............................................           157,391            93,730            83,908
Goodwill..................................................................           140,957           202,488           208,306
Intangible assets, net....................................................            10,786            24,066            23,004
Other assets..............................................................            42,406            37,300            36,937
Deferred income taxes.....................................................           151,788           152,451           123,828
                                                                            -----------------  ----------------  ----------------
          Total assets....................................................  $      2,850,527   $     2,934,586   $     3,087,434
                                                                            =================  ================  ================

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable.......................................................  $         18,907   $        31,898   $        10,048
   Accrued expenses.......................................................           333,270           317,462           346,672
   Restructuring obligations..............................................            53,676            36,397            30,639
   Deferred revenue.......................................................           282,217           288,869           357,223
                                                                            -----------------  ----------------  ----------------
          Total current liabilities.......................................           688,070           674,626           744,582

Restructuring obligations, less current portion...........................            99,250            80,407            75,227
Other long-term liabilities...............................................            22,437            20,781            20,981
                                                                            -----------------  ----------------  ----------------
          Total liabilities...............................................           809,757           775,814           840,790
                                                                            -----------------  ----------------  ----------------

Stockholders' equity:
  Common stock; $0.001 par value; 2,000,000 shares authorized; 498,305
     507,596 and 508,953 shares issued and outstanding, respectively......               498               508               509
  Additional paid-in capital..............................................         1,550,834         1,622,821         1,635,652
  Deferred compensation...................................................            (1,479)           (3,021)           (2,993)
  Accumulated other comprehensive income..................................            58,650            49,366            70,541
  Retained earnings.......................................................           432,267           489,098           542,935
                                                                            -----------------  ----------------  ----------------
          Total stockholders' equity......................................         2,040,770         2,158,772         2,246,644
                                                                            -----------------  ----------------  ----------------
          Total liabilities and stockholders' equity......................  $      2,850,527   $     2,934,586   $     3,087,434
                                                                            =================  ================  ================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                           Three Months Ended                    Year Ended
                                                               December 31,                     December 31,
                                                      -------------------------------  ---------------------------------
                                                            2003            2004             2003              2004
                                                      ---------------  --------------  ----------------  ---------------
                                                       (as restated)                     (as restated)
Revenues:                                                                                                               
   Software.........................................  $      150,285   $     160,920   $       482,274   $      487,127
   Professional services, maintenance and other.....         216,457         231,441           871,954          852,666
                                                      ---------------  --------------  ----------------  ---------------
       Total revenues...............................         366,742         392,361         1,354,228        1,339,793
                                                      ---------------  --------------  ----------------  ---------------
Cost of revenues:
   Software.........................................           3,394           4,262            18,357           13,316
   Professional services, maintenance and other.....         116,211         118,175           490,006          443,585
                                                      ---------------  --------------  ----------------  ---------------
       Total cost of revenues.......................         119,605         122,437           508,363          456,901
                                                      ---------------  --------------  ----------------  ---------------
            Gross margin............................         247,137         269,924           845,865          882,892
                                                      ---------------  --------------  ----------------  ---------------
Operating expenses:
   Product development..............................          83,146          79,981           310,686          299,051
   Sales and marketing..............................          80,612          96,072           358,318          337,690
   General and administrative.......................          24,332          27,954           106,594          104,541
   Restructuring and related expenses...............            (650)            482           102,310            6,789
   Purchased in-process product development.........           5,312              --             5,312            6,000
                                                      ---------------  --------------  ----------------  ---------------
       Total operating expenses.....................         192,752         204,489           883,220          754,071
                                                      ---------------  --------------  ----------------  ---------------
            Operating income (loss).................          54,385          65,435           (37,355)         128,821

Other income, net...................................           9,157          13,670            39,144           46,746
Loss on early extinguishment of debt................              --              --           (10,711)              --
                                                      ---------------  --------------  ----------------  ---------------
            Income (loss) before income taxes.......          63,542          79,105            (8,922)         175,567
Income taxes (benefit)..............................          22,809          25,268            (3,731)          64,899
                                                      ---------------  --------------  ----------------  ---------------
            Net income (loss).......................  $       40,733   $      53,837   $        (5,191)  $      110,668
                                                      ===============  ==============  ================  ===============

Diluted net income (loss) per share.................  $         0.07   $        0.10   $         (0.01)  $         0.20
                                                      ===============  ==============  ================  ===============
Shares used in diluted share computation............         543,535         540,874           491,961          540,530
                                                      ===============  ==============  ================  ===============

Basic net income (loss) per share...................  $         0.08   $        0.11   $         (0.01)  $         0.22
                                                      ===============  ==============  ================  ===============
Shares used in basic share computation..............         496,579         508,229           491,961          505,044
                                                      ===============  ==============  ================  ===============

SIEBEL SYSTEMS, INC.
Consolidated Statements of Cash Flows
(In thousands)

                                                                                       Year Ended        Year Ended
                                                                                      December 31,      December 31,
                                                                                          2003              2004
                                                                                    ----------------  -----------------
                                                                                      (as restated)
Cash flows from operating activities:                                                                                  
   Net income (loss)..............................................................  $        (5,191)  $        110,668
   Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Write-off of property and equipment abandoned in restructuring..............           17,506              1,908
      Write-off of acquired technology............................................            2,449                 --
      Write-off of purchased in process product development.......................            5,312              6,000
      Loss on early extinguishment of debt........................................           10,711                 --
      Depreciation and other amortization.........................................          158,873            115,031
      Tax benefit from exercise of stock options..................................               --             16,586
      Deferred income taxes.......................................................          (17,270)            32,252
      Provision for doubtful accounts and sales returns...........................            5,184             (3,509)
      Other, net..................................................................           (3,387)               133
      Changes in operating assets and liabilities:
         Accounts receivable......................................................           12,775            (27,713)
         Prepaids and other.......................................................          (20,425)             2,876
         Accounts payable and accrued expenses....................................           10,847              3,591
         Restructuring obligations................................................            2,927            (49,175)
         Deferred revenue.........................................................            7,723             73,156
                                                                                    ----------------  -----------------
           Net cash provided by operating activities..............................          188,034            281,804
                                                                                    ----------------  -----------------
Cash flows from investing activities:
   Purchases of property and equipment, net.......................................          (14,958)            (8,725)
   Purchases of short-term investments, net of sales..............................           31,288           (243,457)
   Other, net.....................................................................          (57,500)           (76,801)
                                                                                    ----------------  -----------------
           Net cash used in investing activities..................................          (41,170)          (328,983)
                                                                                    ----------------  -----------------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net of repurchases.....................           62,636             63,566
   Repurchase of convertible subordinated debentures..............................         (307,080)                --
   Repayments of capital lease obligations........................................          (12,766)           (11,887)
                                                                                    ----------------  -----------------
           Net cash provided by (used in) financing activities....................         (257,210)            51,679
                                                                                    ----------------  -----------------
Effect of exchange rate fluctuations..............................................           26,367              9,240
                                                                                    ----------------  -----------------
Change in cash and cash equivalents...............................................          (83,979)            13,740
Cash and cash equivalents, beginning of period....................................          667,511            583,532
                                                                                    ----------------  -----------------
Cash and cash equivalents, end of period..........................................  $       583,532   $        597,272
                                                                                    ================  =================

EX-99.2

Exhibit 99.2

Reconciliation of Previously Issued Financial Statements to the Respective Restated Financial Statements

SIEBEL SYSTEMS, INC.
Reconciliation of Selected As Reported and As Restated Data
(In thousands, except per share data)

                                                                      Year Ended December 31,
                                               -------------------------------------------------------------------------------
Selected Statement of Operations Data:            1998         1999        2000          2001          2002          2003
- ---------------------------------------------  -----------  ----------  ------------  ------------  ------------  ------------
Total Costs and Expenses                     
    as reported                                $  357,085   $ 661,267   $ 1,497,671   $ 1,726,714   $ 1,729,569   $ 1,387,967
    adjustments                                       108         221         2,208         5,091         4,365         3,616
                                                ----------  ----------  ------------  ------------  ------------  ------------
    as restated                                   357,193     661,488     1,499,879     1,731,805     1,733,934     1,391,583
                                               ===========  ==========  ============  ============  ============  ============
Operating Income (Loss)                      
    as reported                                    64,469     161,187       322,535       357,882       (94,262)      (33,739)
    adjustments                                      (108)       (221)       (2,208)       (5,091)       (4,365)       (3,616)
                                               -----------  ----------  ------------  ------------  ------------  ------------
    as restated                                    64,361     160,966       320,327       352,791       (98,627)      (37,355)
                                               ===========  ==========  ============  ============  ============  ============
Net Income (Loss)                            
    as reported                                    42,290     110,025       221,899       254,575       (35,704)       (3,396)
    adjustments                                       (64)       (131)       (1,316)       (3,047)       (3,103)       (1,795)
                                               -----------  ----------  ------------  ------------  ------------  ------------
    as restated                                    42,226     109,894       220,583       251,528       (38,807)       (5,191)
                                               ===========  ==========  ============  ============  ============  ============
Diluted EPS                                  
    as reported                                      0.10        0.12          0.24          0.49         (0.08)        (0.01)
    adjustments                                        --          --         (0.01)        (0.01)           --            --
                                               -----------  ----------  ------------  ------------  ------------  ------------
    as restated                                      0.10        0.12          0.23          0.48         (0.08)        (0.01)
                                               ===========  ==========  ============  ============  ============  ============

Selected Balance Sheet Data:
- ---------------------------------------------
Deferred Income Taxes                          
    as reported                                $   13,270   $      --   $    93,533   $   110,856   $   139,229   $   157,608
    adjustments                                        44         134         1,026         3,070         4,332         6,153
                                               -----------  ----------  ------------  ------------  ------------  ------------
    as restated                                    13,314         134        94,559       113,926       143,561       163,761
                                               ===========  ==========  ============  ============  ============  ============
Restructuring and Other Long-Term Liabilities  
    as reported                                       783       1,439            --         3,048       127,419       106,078
    adjustments                                       108         329         2,537         7,628        11,993        15,609
                                               -----------  ----------  ------------  ------------  ------------  ------------
    as restated                                       891       1,768         2,537        10,676       139,412       121,687
                                               ===========  ==========  ============  ============  ============  ============
Retained Earnings                              
    as reported                                    56,973     103,104       226,248       480,823       445,119       441,723
    adjustments                                       (64)       (195)       (1,511)       (4,558)       (7,661)       (9,456)
                                               -----------  ----------  ------------  ------------  ------------  ------------
    as restated                                    56,909     102,909       224,737       476,265       437,458       432,267
                                               ===========  ==========  ============  ============  ============  ============

SIEBEL SYSTEMS, INC.
Reconciliation of Selected As Reported and As Restated Data
(In thousands, except per share data)

                                                          Year Ended December 31, 2003                    Year Ended December 31, 2004
                                               ---------------------------------------------------  ----------------------------------------
Selected Statement of Operations Data:           Q1 2003     Q2 2003      Q3 2003       Q4 2003       Q1 2004       Q2 2004       Q3 2004
- ---------------------------------------------  -----------  ----------  ------------  ------------  ------------  ------------  ------------
Total Costs and Expenses                     
    as reported                                $  336,042   $ 328,208   $   412,737   $   310,980   $   291,585   $   297,030   $   291,361
    adjustments                                     1,436       1,325          (522)        1,377         1,137         1,175         1,758
                                                ----------  ----------  ------------  ------------  ------------  ------------  ------------
    as restated                                   337,478     329,533       412,215       312,357       292,722       298,205       293,119
                                               ===========  ==========  ============  ============  ============  ============  ============
Operating Income (Loss)                      
    as reported                                    (3,287)      5,091       (91,305)       55,762        37,702         4,029        25,725
    adjustments                                    (1,436)     (1,325)          522        (1,377)       (1,137)       (1,175)       (1,758)
                                               -----------  ----------  ------------  ------------  ------------  ------------  ------------
    as restated                                    (4,723)      3,766       (90,783)       54,385        36,565         2,854        23,967
                                               ===========  ==========  ============  ============  ============  ============  ============
Net Income (Loss)                            
    as reported                                     4,618       9,768       (59,330)       41,548        31,652         8,216        19,370
    adjustments                                      (850)       (759)          629          (815)         (672)         (695)       (1,040)
                                               -----------  ----------  ------------  ------------  ------------  ------------  ------------
    as restated                                     3,768       9,009       (58,701)       40,733        30,980         7,521        18,330
                                               ===========  ==========  ============  ============  ============  ============  ============
Diluted EPS                                  
    as reported                                      0.01        0.02          0.12          0.08          0.06          0.02          0.04
    adjustments                                        --          --            --         (0.01)           --         (0.01)        (0.01)
                                               -----------  ----------  ------------  ------------  ------------  ------------  ------------
    as restated                                      0.01        0.02          0.12          0.07          0.06          0.01          0.03
                                               ===========  ==========  ============  ============  ============  ============  ============

Selected Balance Sheet Data:
- ---------------------------------------------
Deferred Income Taxes                          
    as reported                                $  139,463   $ 137,831   $   165,717   $   157,608   $   154,652   $   160,469   $   159,088
    adjustments                                     4,918       5,484         5,591         6,153         6,618         7,098         7,816
                                               -----------  ----------  ------------  ------------  ------------  ------------  ------------
    as restated                                   144,381     143,315       171,308       163,761       161,270       167,567       166,904
                                               ===========  ==========  ============  ============  ============  ============  ============
Restructuring and Other Long-Term Liabilities  
    as reported                                   114,812      84,520       127,421       106,078        98,689        89,896        81,509
    adjustments                                    13,429      14,754        14,232        15,609        16,746        17,921        19,679
                                               -----------  ----------  ------------  ------------  ------------  ------------  ------------
    as restated                                   128,241      99,274       141,653       121,687       115,435       107,817       101,188
                                               ===========  ==========  ============  ============  ============  ============  ============
Retained Earnings                              
    as reported                                   449,737     459,505       400,175       441,723       473,375       481,591       500,961
    adjustments                                    (8,511)     (9,270)       (8,641)       (9,456)      (10,128)      (10,823)      (11,863)
                                               -----------  ----------  ------------  ------------  ------------  ------------  ------------
    as restated                                   441,226     450,235       391,534       432,267       463,247       470,768       489,098
                                               ===========  ==========  ============  ============  ============  ============  ============

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                                    Year Ended                           Year Ended
                                                                   December 31,                         December 31,
                                                                       2003            Adjustments          2003
                                                                 ------------------  ---------------  ---------------
                                                                   (as reported)                       (as restated)
Revenues:                                                                                                            
    Software...................................................  $         482,274   $           --   $      482,274
    Professional services, maintenance and other...............            871,954               --          871,954
                                                                 ------------------  ---------------  ---------------
        Total revenues.........................................          1,354,228               --        1,354,228
                                                                 ------------------  ---------------  ---------------
Cost of revenues:
    Software...................................................             18,357               --           18,357
    Professional services, maintenance and other...............            487,840            2,166          490,006
                                                                 ------------------   --------------   --------------
        Total cost of revenues.................................            506,197            2,166          508,363
                                                                 ------------------  ---------------  ---------------
        Gross margin...........................................            848,031           (2,166)         845,865
                                                                 ------------------  ---------------  ---------------
Operating expenses:
    Product development........................................            308,852            1,834          310,686
    Sales and marketing........................................            357,133            1,185          358,318
    General and administrative.................................            106,082              512          106,594
    Restructuring and related expenses.........................            104,391           (2,081)         102,310
    Purchased in-process product development...................              5,312               --            5,312
                                                                 ------------------  ---------------  ---------------
        Total operating expenses...............................            881,770            1,450          883,220
                                                                 ------------------  ---------------  ---------------
        Operating income (loss)................................            (33,739)          (3,616)         (37,355)
                                                                 ------------------  ---------------  ---------------

Other income, net:
    Interest and other income, net.............................             54,071               --           54,071
    Loss on early extinguishment of debt.......................            (10,711)              --          (10,711)
    Interest expense...........................................            (14,927)              --          (14,927)
                                                                 ------------------  ---------------  ---------------
        Total other income, net................................             28,433               --           28,433
                                                                 ------------------  ---------------  ---------------
        Income (loss) before income taxes......................             (5,306)          (3,616)          (8,922)
Income tax provision (benefit).................................             (1,910)          (1,821)          (3,731)
                                                                 ------------------  ---------------  ---------------
        Net income (loss)......................................  $          (3,396)  $       (1,795)  $       (5,191)
                                                                 ==================  ===============  ===============

Diluted net income (loss) per share............................  $           (0.01)  $           --   $        (0.01)
                                                                 ==================  ===============  ===============
Basic net income (loss) per share..............................  $           (0.01)  $           --   $        (0.01)
                                                                 ==================  ===============  ===============

Shares used in diluted share computation.......................            491,961               --          491,961
                                                                 ==================  ===============  ===============
Shares used in basic share computation.........................            491,961               --          491,961
                                                                 ==================  ===============  ===============

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                              Year Ended                           Year Ended
                                                             December 31,                         December 31,
                                                                 2002           Adjustments           2002
                                                           -----------------  ----------------  -----------------
                                                             (as reported)                        (as restated)
Revenues:                                                                                                        
    Software.............................................  $        700,344   $            --   $        700,344
    Professional services, maintenance and other.........           934,963                --            934,963
                                                           -----------------  ----------------  -----------------
        Total revenues...................................         1,635,307                --          1,635,307
                                                           -----------------  ----------------  -----------------
Cost of revenues:
    Software.............................................            21,612                --             21,612
    Professional services, maintenance and other.........           540,194             2,744            542,938
                                                           -----------------   ---------------   ----------------
        Total cost of revenues...........................           561,806             2,744            564,550
                                                           -----------------  ----------------  -----------------
        Gross margin.....................................         1,073,501            (2,744)         1,070,757
                                                           -----------------  ----------------  -----------------
Operating expenses:
    Product development..................................           366,230             2,157            368,387
    Sales and marketing..................................           476,975             1,841            478,816
    General and administrative...........................           119,253               530            119,783
    Restructuring and related expenses...................           205,305            (2,907)           202,398
                                                           -----------------  ----------------  -----------------
        Total operating expenses.........................         1,167,763             1,621          1,169,384
                                                           -----------------  ----------------  -----------------
        Operating income (loss)..........................           (94,262)           (4,365)           (98,627)
                                                           -----------------  ----------------  -----------------

Other income, net:
    Interest and other income, net.......................            58,491                --             58,491
    Interest expense.....................................           (20,016)               --            (20,016)
                                                           -----------------  ----------------  -----------------
        Total other income, net..........................            38,475                --             38,475
                                                           -----------------  ----------------  -----------------
        Income (loss) before income taxes................           (55,787)           (4,365)           (60,152)
Income tax provision (benefit)...........................           (20,083)           (1,262)           (21,345)
                                                           -----------------  ----------------  -----------------
        Net income (loss)................................  $        (35,704)  $        (3,103)  $        (38,807)
                                                           =================  ================  =================

Diluted net income (loss) per share......................  $          (0.08)  $            --   $          (0.08)
                                                           =================  ================  =================
Basic net income (loss) per share........................  $          (0.08)  $            --   $          (0.08)
                                                           =================  ================  =================

Shares used in diluted share computation.................           475,617                --            475,617
                                                           =================  ================  =================
Shares used in basic share computation...................           475,617                --            475,617
                                                           =================  ================  =================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                                Year Ended                        Year Ended
                                                               December 31,                      December 31,
                                                                   2001         Adjustments          2001
                                                             ----------------  --------------  -----------------
                                                               (as reported)                     (as restated)
Revenues:                                                                                                       
    Software...............................................  $     1,065,618   $          --   $      1,065,618
    Professional services, maintenance and other...........        1,018,978              --          1,018,978
                                                             ----------------  --------------  -----------------
        Total revenues.....................................        2,084,596              --          2,084,596
                                                             ----------------  --------------  -----------------
Cost of revenues:
    Software...............................................           16,294              --             16,294
    Professional services, maintenance and other...........          624,731           1,859            626,590
                                                             ----------------   -------------   ----------------
        Total cost of revenues.............................          641,025           1,859            642,884
                                                             ----------------  --------------  -----------------
        Gross margin.......................................        1,443,571          (1,859)         1,441,712
                                                             ----------------  --------------  -----------------
Operating expenses:
    Product development....................................          333,661             993            334,654
    Sales and marketing....................................          615,675           1,833            617,508
    General and administrative.............................          136,353             406            136,759
                                                             ----------------  --------------  -----------------
        Total operating expenses...........................        1,085,689           3,232          1,088,921
                                                             ----------------  --------------  -----------------
        Operating income (loss)............................          357,882          (5,091)           352,791
                                                             ----------------  --------------  -----------------

Other income, net:
    Interest and other income, net.........................           64,528              --             64,528
    Interest expense.......................................          (18,326)             --            (18,326)
                                                             ----------------  --------------  -----------------
        Total other income, net............................           46,202              --             46,202
                                                             ----------------  --------------  -----------------
        Income (loss) before income taxes..................          404,084          (5,091)           398,993
Income tax provision (benefit).............................          149,509          (2,044)           147,465
                                                             ----------------  --------------  -----------------
        Net income (loss)..................................  $       254,575   $      (3,047)  $        251,528
                                                             ================  ==============  =================

Diluted net income (loss) per share........................  $          0.49   $       (0.01)  $           0.48
                                                             ================  ==============  =================
Basic net income (loss) per share..........................  $          0.56   $       (0.01)  $           0.55
                                                             ================  ==============  =================

Shares used in diluted share computation...................          522,970              --            522,970
                                                             ================  ==============  =================
Shares used in basic share computation.....................          457,031              --            457,031
                                                             ================  ==============  =================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                                 Year Ended                         Year Ended
                                                                December 31,                        December 31,
                                                                    2000           Adjustments         2000
                                                              -----------------  ---------------  ---------------
                                                                (as reported)                       (as restated)
Revenues:                                                                                                        
    Software................................................  $      1,114,753   $           --   $    1,114,753
    Professional services, maintenance and other............           705,453               --          705,453
                                                              -----------------  ---------------  ---------------
        Total revenues......................................         1,820,206               --        1,820,206
                                                              -----------------  ---------------  ---------------
Cost of revenues:
    Software................................................            18,391               --           18,391
    Professional services, maintenance and other............           462,694              708          463,402
                                                              -----------------   --------------   --------------
        Total cost of revenues..............................           481,085              708          481,793
                                                              -----------------  ---------------  ---------------
        Gross margin........................................         1,339,121             (708)       1,338,413
                                                              -----------------  ---------------  ---------------
Operating expenses:
    Product development.....................................           238,020              364          238,384
    Sales and marketing.....................................           609,898              934          610,832
    General and administrative..............................           132,164              202          132,366
    Merger-related expenses.................................            36,504               --           36,504
                                                              -----------------  ---------------  ---------------
        Total operating expenses............................         1,016,586            1,500        1,018,086
                                                              -----------------  ---------------  ---------------
        Operating income (loss).............................           322,535           (2,208)         320,327
                                                              -----------------  ---------------  ---------------

Other income, net:
    Interest and other income, net..........................            79,784               --           79,784
    Interest expense........................................           (17,909)              --          (17,909)
                                                              -----------------  ---------------  ---------------
        Total other income, net.............................            61,875               --           61,875
                                                              -----------------  ---------------  ---------------
        Income (loss) before income taxes...................           384,410           (2,208)         382,202
Income tax provision (benefit)..............................           162,511             (892)         161,619
                                                              -----------------  ---------------  ---------------
        Net income (loss)...................................           221,899           (1,316)         220,583
Accretion of preferred stock................................           (98,755)              --          (98,755)
                                                              -----------------  ---------------  ---------------
        Net income (loss) available to common stockholders..  $        123,144   $       (1,316)  $      121,828
                                                              =================  ===============  ===============

Diluted net income (loss) per share.........................  $           0.24   $        (0.01)  $         0.23
                                                              =================  ===============  ===============
Basic net income (loss) per share...........................  $           0.29   $           --   $         0.29
                                                              =================  ===============  ===============

Shares used in diluted share computation....................           522,321               --          522,321
                                                              =================  ===============  ===============
Shares used in basic share computation......................           423,067               --          423,067
                                                              =================  ===============  ===============

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                                    Year Ended                            Year Ended
                                                                   December 31,                          December 31,
                                                                       1999            Adjustments           1999
                                                                -------------------  ---------------  ------------------
                                                                  (as reported)                         (as restated)
Revenues:                                                                                                               
    Software..................................................  $          510,874   $           --   $         510,874
    Professional services, maintenance and other..............             311,580               --             311,580
                                                                -------------------  ---------------  ------------------
        Total revenues........................................             822,454               --             822,454
                                                                -------------------  ---------------  ------------------
Cost of revenues:
    Software..................................................               8,420               --               8,420
    Professional services, maintenance and other..............             189,957               64             190,021
                                                                -------------------   --------------   -----------------
        Total cost of revenues................................             198,377               64             198,441
                                                                -------------------  ---------------  ------------------
        Gross margin..........................................             624,077              (64)            624,013
                                                                -------------------  ---------------  ------------------
Operating expenses:
    Product development.......................................             120,362               41             120,403
    Sales and marketing.......................................             275,721               93             275,814
    General and administrative................................              66,807               23              66,830
                                                                -------------------  ---------------  ------------------
        Total operating expenses..............................             462,890              157             463,047
                                                                -------------------  ---------------  ------------------
        Operating income (loss)...............................             161,187             (221)            160,966
                                                                -------------------  ---------------  ------------------

Other income, net:
    Interest and other income, net............................              21,190               --              21,190
    Interest expense..........................................              (6,100)              --              (6,100)
                                                                -------------------  ---------------  ------------------
        Total other income, net...............................              15,090               --              15,090
                                                                -------------------  ---------------  ------------------
        Income (loss) before income taxes.....................             176,277             (221)            176,056
Income tax provision (benefit)................................              66,252              (90)             66,162
                                                                -------------------  ---------------  ------------------
        Net income (loss).....................................             110,025             (131)            109,894
Accretion of preferred stock..................................             (53,164)              --             (53,164)
                                                                -------------------  ---------------  ------------------
        Net income (loss) available to common stockholders....  $           56,861   $         (131)  $          56,730
                                                                ===================  ===============  ==================

Diluted net income (loss) per share...........................  $             0.12   $           --   $            0.12
                                                                ===================  ===============  ==================
Basic net income (loss) per share.............................  $             0.15   $           --   $            0.15
                                                                ===================  ===============  ==================

Shares used in diluted share computation......................             467,907               --             467,907
                                                                ===================  ===============  ==================
Shares used in basic share computation........................             387,867               --             387,867
                                                                ===================  ===============  ==================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                                   Year Ended                          Year Ended
                                                                  December 31,                        December 31,
                                                                      1998           Adjustments          1998
                                                                -----------------  ---------------  ---------------
                                                                  (as reported)                       (as restated)
Revenues:                                                                                                          
    Software..................................................  $        294,728   $           --   $      294,728
    Professional services, maintenance and other..............           126,826               --          126,826
                                                                -----------------  ---------------  ---------------
        Total revenues........................................           421,554               --          421,554
                                                                -----------------  ---------------  ---------------
Cost of revenues:
    Software..................................................             5,656               --            5,656
    Professional services, maintenance and other..............            71,580               23           71,603
                                                                -----------------   --------------   --------------
        Total cost of revenues................................            77,236               23           77,259
                                                                -----------------  ---------------  ---------------
        Gross margin..........................................           344,318              (23)         344,295
                                                                -----------------  ---------------  ---------------
Operating expenses:
    Product development.......................................            64,004               20           64,024
    Sales and marketing.......................................           167,669               54          167,723
    General and administrative................................            34,676               11           34,687
    Merger-related expenses...................................            13,500               --           13,500
                                                                -----------------  ---------------  ---------------
        Total operating expenses..............................           279,849               85          279,934
                                                                -----------------  ---------------  ---------------
        Operating income (loss)...............................            64,469             (108)          64,361
                                                                -----------------  ---------------  ---------------

Other income, net:
    Interest and other income, net............................             6,582               --            6,582
    Interest expense..........................................               (96)              --              (96)
                                                                -----------------  ---------------  ---------------
        Total other income, net...............................             6,486               --            6,486
                                                                -----------------  ---------------  ---------------
        Income (loss) before income taxes.....................            70,955             (108)          70,847
Income tax provision (benefit)................................            28,665              (44)          28,621
                                                                -----------------  ---------------  ---------------
        Net income (loss).....................................            42,290              (64)          42,226
Distributions to preferred stockholders as reported...........               (39)              --              (39)
Accretion of preferred stock..................................              (325)              --             (325)
                                                                -----------------  ---------------  ---------------
        Net income (loss) available to common stockholders....  $         41,926   $          (64)  $       41,862
                                                                =================  ===============  ===============

Diluted net income (loss) per share...........................  $           0.10   $           --   $         0.10
                                                                =================  ===============  ===============
Basic net income (loss) per share.............................  $           0.11   $           --   $         0.11
                                                                =================  ===============  ===============

Shares used in diluted share computation......................           416,395               --          416,395
                                                                =================  ===============  ===============
Shares used in basic share computation........................           364,964               --          364,964
                                                                =================  ===============  ===============

SIEBEL SYSTEMS, INC.
Consolidated Balance Sheets
(In thousands, except per share data)

                                                                     
                                                                          December 31,                       December 31,
                                                                             2003           Adjustments          2003
                                                                       -----------------  ---------------  ----------------
Assets
                                                                         (as reported)                       (as restated)
Current assets:
   Cash and cash equivalents.........................................  $        583,532   $           --   $       583,532
   Short-term investments............................................         1,439,674               --         1,439,674
                                                                       -----------------  ---------------  ----------------
          Total cash, cash equivalents, and short-term investments...         2,023,206               --         2,023,206

   Marketable equity securities......................................               118               --               118
   Accounts receivable, net..........................................           259,834               --           259,834
   Deferred income taxes.............................................            11,973               --            11,973
   Prepaids and other................................................            52,068               --            52,068
                                                                       -----------------  ---------------  ----------------
          Total current assets.......................................         2,347,199               --         2,347,199

Property and equipment, net..........................................           157,391               --           157,391
Goodwill.............................................................           140,957               --           140,957
Intangible assets, net...............................................            10,786               --            10,786
Other assets.........................................................            42,406               --            42,406
Deferred income taxes................................................           145,635            6,153           151,788
                                                                       -----------------  ---------------  ----------------
          Total assets...............................................  $      2,844,374   $        6,153   $     2,850,527
                                                                       =================  ===============  ================

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable..................................................  $         18,907   $           --   $        18,907
   Accrued expenses..................................................           333,270               --           333,270
   Restructuring obligations.........................................            53,676               --            53,676
   Deferred revenue..................................................           282,217               --           282,217
                                                                       -----------------  ---------------  ----------------
          Total current liabilities..................................           688,070               --           688,070

Restructuring obligations, less current portion......................            97,919            1,331            99,250
Other long term liabilities..........................................             8,159           14,278            22,437
                                                                       -----------------  ---------------  ----------------
          Total liabilities..........................................           794,148           15,609           809,757
                                                                       -----------------  ---------------  ----------------

Commitments and contingencies

Stockholders' equity:
  Common stock.......................................................               498               --               498
  Additional paid-in capital.........................................         1,550,834               --         1,550,834
  Deferred compensation..............................................            (1,479)              --            (1,479)
  Accumulated other comprehensive income.............................            58,650               --            58,650
  Retained earnings..................................................           441,723           (9,456)          432,267
                                                                       -----------------  ---------------  ----------------
          Total stockholders' equity.................................         2,050,226           (9,456)        2,040,770
                                                                       -----------------  ---------------  ----------------
          Total liabilities and stockholders' equity.................  $      2,844,374   $        6,153   $     2,850,527
                                                                       =================  ===============  ================

SIEBEL SYSTEMS, INC.
Consolidated Balance Sheets
(In thousands, except per share data)

                                                                        
                                                                            December 31,                     December 31,
                                                                               2002          Adjustments         2002
                                                                          ---------------  --------------  ---------------
Assets
                                                                           (as reported)                     (as restated)
Current assets:
   Cash and cash equivalents............................................  $      667,511   $          --   $      667,511
   Short-term investments...............................................       1,494,093              --        1,494,093
                                                                          ---------------  --------------  ---------------
          Total cash, cash equivalents, and short-term investments......       2,161,604              --        2,161,604

   Marketable equity securities.........................................           4,613              --            4,613
   Accounts receivable, net.............................................         275,764              --          275,764
   Deferred income taxes................................................          12,456              --           12,456
   Prepaids and other...................................................          49,901              --           49,901
                                                                          ---------------  --------------  ---------------
          Total current assets..........................................       2,504,338              --        2,504,338

Property and equipment, net.............................................         273,024              --          273,024
Goodwill................................................................          80,949              --           80,949
Intangible assets, net..................................................          10,354              --           10,354
Other assets............................................................          37,580              --           37,580
Deferred income taxes...................................................         126,773           4,332          131,105
                                                                          ---------------  --------------  ---------------
          Total assets..................................................  $    3,033,018   $       4,332   $    3,037,350
                                                                          ===============  ==============  ===============

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable.....................................................  $       15,239   $          --   $       15,239
   Accrued expenses.....................................................         319,622              --          319,622
   Restructuring obligations............................................          42,703              --           42,703
   Deferred revenue.....................................................         270,575              --          270,575
                                                                          ---------------  --------------  ---------------
          Total current liabilities.....................................         648,139              --          648,139

Restructuring obligations, less current portion.........................         111,845           1,228          113,073
Capital lease obligations and other, less current portion...............          15,574          10,765           26,339
Convertible subordinated debentures.....................................         300,000              --          300,000
                                                                          ---------------  --------------  ---------------
          Total liabilities.............................................       1,075,558          11,993        1,087,551
                                                                          ---------------  --------------  ---------------

Commitments and contingencies

Stockholders' equity:
  Common stock..........................................................             486              --              486
  Additional paid-in capital............................................       1,486,612              --        1,486,612
  Deferred compensation.................................................          (3,438)             --           (3,438)
  Accumulated other comprehensive income................................          28,681              --           28,681
  Retained earnings.....................................................         445,119          (7,661)         437,458
                                                                          ---------------  --------------  ---------------
          Total stockholders' equity....................................       1,957,460          (7,661)       1,949,799
                                                                          ---------------  --------------  ---------------
          Total liabilities and stockholders' equity....................  $    3,033,018   $       4,332   $    3,037,350
                                                                          ===============  ==============  ===============

SIEBEL SYSTEMS, INC.
Consolidated Balance Sheets
(In thousands, except per share data)

                                                                      
                                                                          December 31,                      December 31,
                                                                              2001          Adjustments         2001
                                                                        ----------------  --------------  ---------------
Assets
                                                                          (as reported)                     (as restated)
Current assets:
   Cash and cash equivalents..........................................  $       799,090   $          --   $      799,090
   Short-term investments.............................................          857,565              --          857,565
                                                                        ----------------  --------------  ---------------
          Total cash, cash equivalents, and short-term investments....        1,656,655              --        1,656,655

   Marketable equity securities.......................................            8,254              --            8,254
   Accounts receivable, net...........................................          396,297              --          396,297
   Deferred income taxes..............................................            3,472              --            3,472
   Prepaids and other.................................................           70,766              --           70,766
                                                                        ----------------  --------------  ---------------
          Total current assets........................................        2,135,444              --        2,135,444

Property and equipment, net...........................................          353,242              --          353,242
Goodwill..............................................................           72,869              --           72,869
Intangible assets, net................................................           19,000              --           19,000
Other assets..........................................................           56,905              --           56,905
Deferred income taxes.................................................          107,384           3,070          110,454
                                                                        ----------------  --------------  ---------------
          Total assets................................................  $     2,744,844   $       3,070   $    2,747,914
                                                                        ================  ==============  ===============

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable...................................................  $        14,395   $          --   $       14,395
   Accrued expenses...................................................          350,282              --          350,282
   Deferred revenue...................................................          241,017              --          241,017
                                                                        ----------------  --------------  ---------------
          Total current liabilities...................................          605,694              --          605,694

Capital lease obligations and other, less current portion.............            3,048           7,628           10,676
Convertible subordinated debentures...................................          300,000              --          300,000
                                                                        ----------------  --------------  ---------------
          Total liabilities...........................................          908,742           7,628          916,370
                                                                        ----------------  --------------  ---------------

Commitments and contingencies

Stockholders' equity:
  Common stock........................................................              467              --              467
  Additional paid-in capital..........................................        1,357,422              --        1,357,422
  Notes receivable from stockholders..................................             (422)             --             (422)
  Deferred compensation...............................................           (8,362)             --           (8,362)
  Accumulated other comprehensive income..............................            6,174              --            6,174
  Retained earnings...................................................          480,823          (4,558)         476,265
                                                                        ----------------  --------------  ---------------
          Total stockholders' equity..................................        1,836,102          (4,558)       1,831,544
                                                                        ----------------  --------------  ---------------
          Total liabilities and stockholders' equity..................  $     2,744,844   $       3,070   $    2,747,914
                                                                        ================  ==============  ===============

SIEBEL SYSTEMS, INC.
Consolidated Balance Sheets
(In thousands, except per share data)

                                                                      
                                                                          December 31,                          December 31,
                                                                              2000            Adjustments           2000
                                                                        -----------------  -----------------  -----------------
Assets
                                                                          (as reported)                         (as restated)
Current assets:
   Cash and cash equivalents..........................................  $        751,384   $             --   $        751,384
   Short-term investments.............................................           401,200                 --            401,200
                                                                        -----------------  -----------------  -----------------
          Total cash, cash equivalents, and short-term investments....         1,152,584                 --          1,152,584

   Marketable equity securities.......................................            14,285                 --             14,285
   Accounts receivable, net...........................................           521,358                 --            521,358
   Deferred income taxes..............................................             2,852                 --              2,852
   Prepaids and other.................................................            92,825                 --             92,825
                                                                        -----------------  -----------------  -----------------
          Total current assets........................................         1,783,904                 --          1,783,904

Property and equipment, net...........................................           189,610                 --            189,610
Goodwill..............................................................            42,809                 --             42,809
Intangible assets, net................................................             2,008                 --              2,008
Other assets..........................................................            52,729                 --             52,729
Deferred income taxes.................................................            90,681              1,026             91,707
                                                                        -----------------  -----------------  -----------------
          Total assets................................................  $      2,161,741   $          1,026   $      2,162,767
                                                                        =================  =================  =================

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable...................................................  $         24,113   $             --   $         24,113
   Accrued expenses...................................................           355,159                 --            355,159
   Deferred revenue...................................................           202,523                 --            202,523
                                                                        -----------------  -----------------  -----------------
          Total current liabilities...................................           581,795                 --            581,795

Capital lease obligations and other, less current portion.............                --              2,537              2,537
Convertible subordinated debentures...................................           300,000                 --            300,000
                                                                        -----------------  -----------------  -----------------
          Total liabilities...........................................           881,795              2,537            884,332
                                                                        -----------------  -----------------  -----------------

Commitments and contingencies

Stockholders' equity:
  Common stock........................................................               442                 --                442
  Additional paid-in capital..........................................         1,062,599                 --          1,062,599
  Notes receivable from stockholders..................................            (1,623)                --             (1,623)
  Deferred compensation...............................................           (15,199)                --            (15,199)
  Accumulated other comprehensive income..............................             7,479                 --              7,479
  Retained earnings...................................................           226,248             (1,511)           224,737
                                                                        -----------------  -----------------  -----------------
          Total stockholders' equity..................................         1,279,946             (1,511)         1,278,435
                                                                        -----------------  -----------------  -----------------
          Total liabilities and stockholders' equity..................  $      2,161,741   $          1,026   $      2,162,767
                                                                        =================  =================  =================

SIEBEL SYSTEMS, INC.
Consolidated Balance Sheets
(In thousands, except per share data)

                                                                      
                                                                          December 31,                      December 31,
                                                                             1999          Adjustments          1999
                                                                        ---------------  ---------------  ----------------
Assets
                                                                          (as reported)                     (as restated)
Current assets:
   Cash and cash equivalents..........................................  $      486,321   $           --   $       486,321
   Short-term investments.............................................         198,878               --           198,878
                                                                        ---------------  ---------------  ----------------
          Total cash, cash equivalents, and short-term investments....         685,199               --           685,199

   Marketable equity securities.......................................         141,939               --           141,939
   Accounts receivable, net...........................................         300,468               --           300,468
   Deferred income taxes..............................................              --               --                --
   Prepaids and other.................................................          33,401               --            33,401
                                                                        ---------------  ---------------  ----------------
          Total current assets........................................       1,161,007               --         1,161,007

Property and equipment, net...........................................          60,624               --            60,624
Other assets..........................................................          53,970               --            53,970
Deferred income taxes.................................................              --              134               134
                                                                        ---------------  ---------------  ----------------
          Total assets................................................  $    1,275,601   $          134   $     1,275,735
                                                                        ===============  ===============  ================

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable...................................................  $       12,944   $           --   $        12,944
   Accrued expenses...................................................         146,849               --           146,849
   Deferred revenue...................................................          89,240               --            89,240
                                                                        ---------------  ---------------  ----------------
          Total current liabilities...................................         249,033               --           249,033

Capital lease obligations and other, less current portion.............           1,439              329             1,768
Convertible subordinated debentures...................................         300,000               --           300,000
                                                                        ---------------  ---------------  ----------------
          Total liabilities...........................................         550,472              329           550,801
                                                                        ---------------  ---------------  ----------------

Mandatorily redeemable convertible preferred stock....................          80,459               --            80,459

Commitments and contingencies

Stockholders' equity:
  Common stock........................................................             403               --               403
  Preferred stock.....................................................               3               --                 3
  Additional paid-in capital..........................................         461,270               --           461,270
  Notes receivable from stockholders..................................            (548)              --              (548)
  Deferred compensation...............................................          (3,550)              --            (3,550)
  Accumulated other comprehensive income..............................          83,988               --            83,988
  Retained earnings...................................................         103,104             (195)          102,909
                                                                        ---------------  ---------------  ----------------
          Total stockholders' equity..................................         644,670             (195)          644,475
                                                                        ---------------  ---------------  ----------------
          Total liabilities and stockholders' equity..................  $    1,275,601   $          134   $     1,275,735
                                                                        ===============  ===============  ================

SIEBEL SYSTEMS, INC.
Consolidated Balance Sheets
(In thousands, except per share data)

                                                                               
                                                                                   December 31,                        December 31,
                                                                                       1998           Adjustments          1998
                                                                                 -----------------  ---------------  ---------------
Assets
                                                                                   (as reported)                       (as restated)
Current assets:
   Cash and cash equivalents...................................................  $         80,741   $           --   $       80,741
   Short-term investments......................................................           151,888               --          151,888
                                                                                 -----------------  ---------------  ---------------
          Total cash, cash equivalents, and short-term investments.............           232,629               --          232,629

   Accounts receivable, net....................................................           126,081               --          126,081
   Deferred income taxes.......................................................            13,270               --           13,270
   Prepaids and other..........................................................            14,402               --           14,402
                                                                                 -----------------  ---------------  ---------------
          Total current assets.................................................           386,382               --          386,382

Property and equipment, net....................................................            46,384               --           46,384
Other assets...................................................................            14,830               --           14,830
Deferred income taxes..........................................................                --               44               44
                                                                                 -----------------  ---------------  ---------------
          Total assets.........................................................  $        447,596   $           44   $      447,640
                                                                                 =================  ===============  ===============

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable............................................................  $          4,558   $           --   $        4,558
   Accrued expenses............................................................            99,102               --           99,102
   Deferred revenue............................................................            52,033               --           52,033
                                                                                 -----------------  ---------------  ---------------
          Total current liabilities............................................           155,693               --          155,693

Capital lease obligations and other, less current portion......................               783              108              891
                                                                                 -----------------  ---------------  ---------------
          Total liabilities....................................................           156,476              108          156,584
                                                                                 -----------------  ---------------  ---------------

Commitments and contingencies

Stockholders' equity:
  Common stock.................................................................               182               --              182
  Additional paid-in capital...................................................           235,400               --          235,400
  Notes receivable from stockholders...........................................              (406)              --             (406)
  Deferred compensation........................................................              (360)              --             (360)
  Accumulated other comprehensive income.......................................              (669)              --             (669)
  Retained earnings............................................................            56,973              (64)          56,909
                                                                                 -----------------  ---------------  ---------------
          Total stockholders' equity...........................................           291,120              (64)         291,056
                                                                                 -----------------  ---------------  ---------------
          Total liabilities and stockholders' equity...........................  $        447,596   $           44   $      447,640
                                                                                 =================  ===============  ===============

SIEBEL SYSTEMS, INC.
Consolidated Statements of Cash Flows
(In thousands)

                                                                                    Year Ended                         Year Ended
                                                                                   December 31,                       December 31,
                                                                                       2003          Adjustments          2003
                                                                                 ----------------  ---------------  ----------------
                                                                                   (as reported)                      (as restated)
Cash flows from operating activities:                                                                                               
   Net income (loss)...........................................................  $        (3,396)  $       (1,795)  $        (5,191)
   Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation and other amortization......................................          150,938               --           150,938
      Write-off of property and equipment abandoned in restructuring...........           17,506               --            17,506
      Loss on early extinguishment of debt.....................................           10,711               --            10,711
      Write-off of acquired technology.........................................            2,449               --             2,449
      Write-off of purchased in process product development....................            5,312               --             5,312
      Amortization of identifiable intangible assets...........................            6,295               --             6,295
      Compensation related to stock options, net...............................            1,640               --             1,640
      Provision for doubtful accounts and sales returns........................            5,184               --             5,184
      Deferred income taxes....................................................          (15,449)          (1,821)          (17,270)
      Write-down of cost-method investments to fair value......................            3,350               --             3,350
      Net realized gains on marketable investments.............................           (6,737)              --            (6,737)
      Changes in operating assets and liabilities:
         Accounts receivable...................................................           12,775               --            12,775
         Prepaids and other....................................................          (20,425)              --           (20,425)
         Accounts payable and accrued expenses.................................            7,334            3,513            10,847
         Restructuring obligations.............................................            2,824              103             2,927
         Deferred revenue......................................................            7,723               --             7,723
                                                                                 ----------------  ---------------  ----------------
           Net cash provided by operating activities...........................          188,034               --           188,034
                                                                                 ----------------  ---------------  ----------------
Cash flows from investing activities:
   Purchases of property and equipment.........................................          (14,958)              --           (14,958)
   Purchases of short-term investments.........................................       (1,980,246)              --        (1,980,246)
   Sales and maturities of short-term investments..............................        2,011,534               --         2,011,534
   Purchase consideration paid for acquired businesses, net of cash received...          (62,574)              --           (62,574)
   Proceeds from sale of marketable equity securities..........................            5,593               --             5,593
   Other non-operating assets and non-marketable securities....................             (519)              --              (519)
                                                                                 ----------------  ---------------  ----------------
           Net cash used in investing activities...............................          (41,170)              --           (41,170)
                                                                                 ----------------  ---------------  ----------------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net of repurchases..................           62,636               --            62,636
   Repurchase of convertible subordinated debentures...........................         (307,080)              --          (307,080)
   Repayments of capital lease obligations.....................................          (12,766)              --           (12,766)
                                                                                 ----------------  ---------------  ----------------
           Net cash provided by (used in) financing activities.................         (257,210)              --          (257,210)
                                                                                 ----------------  ---------------  ----------------
Effect of exchange rate fluctuations...........................................           26,367               --            26,367
                                                                                 ----------------  ---------------  ----------------
Change in cash and cash equivalents............................................          (83,979)              --           (83,979)
Cash and cash equivalents, beginning of period.................................          667,511               --           667,511
                                                                                 ----------------  ---------------  ----------------
Cash and cash equivalents, end of period.......................................  $       583,532   $           --   $       583,532
                                                                                 ================  ===============  ================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Cash Flows
(In thousands)

                                                                                      Year Ended                       Year Ended
                                                                                     December 31,                     December 31,
                                                                                        2002          Adjustments         2002
                                                                                   ---------------  --------------  ----------------
                                                                                     (as reported)                    (as restated)
Cash flows from operating activities:                                                                                               
   Net income (loss).............................................................. $      (35,704)  $      (3,103)  $       (38,807)
   Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation and other amortization.........................................        145,238              --           145,238
      Write-off of property and equipment abandoned in restructuring..............         25,955              --            25,955
      Amortization of identifiable intangible assets..............................          8,646              --             8,646
      Compensation related to stock options, net..................................          4,126              --             4,126
      Compensation expense related to common shares issued in Option Repurchase...         31,471              --            31,471
      Provision for doubtful accounts and sales returns...........................         21,376              --            21,376
      Deferred income taxes.......................................................        (50,431)         (1,262)          (51,693)
      Write-down of cost-method investments to fair value.........................          9,990              --             9,990
      Net realized gains on marketable investments................................        (12,420)             --           (12,420)
      Changes in operating assets and liabilities:
         Accounts receivable......................................................         99,157              --            99,157
         Prepaids and other.......................................................         20,865              --            20,865
         Accounts payable and accrued expenses....................................        (19,172)          3,137           (16,035)
         Restructuring obligations................................................        154,548           1,228           155,776
         Deferred revenue.........................................................         29,558              --            29,558
                                                                                   ---------------  --------------  ----------------
           Net cash provided by operating activities..............................        433,203              --           433,203
                                                                                   ---------------  --------------  ----------------
Cash flows from investing activities:
   Purchases of property and equipment............................................        (70,809)             --           (70,809)
   Purchases of short-term investments............................................     (2,347,660)             --        (2,347,660)
   Sales and maturities of short-term investments.................................      1,718,362              --         1,718,362
   Purchase consideration paid for acquired businesses, net of cash received......           (500)             --              (500)
   Purchase of marketable equity securities.......................................         (1,000)             --            (1,000)
   Proceeds from sale of marketable equity securities.............................          1,189              --             1,189
   Other non-operating assets and non-marketable securities.......................          7,991              --             7,991
                                                                                   ---------------  --------------  ----------------
           Net cash used in investing activities..................................       (692,427)             --          (692,427)
                                                                                   ---------------  --------------  ----------------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net of repurchases.....................         92,532              --            92,532
   Repayments of capital lease obligations........................................         (8,714)             --            (8,714)
   Proceeds from equipment financing..............................................         24,873              --            24,873
   Repayments of stockholder notes................................................            422              --               422
                                                                                   ---------------  --------------  ----------------
           Net cash provided by financing activities..............................        109,113              --           109,113
                                                                                   ---------------  --------------  ----------------
Effect of exchange rate fluctuations..............................................         18,532              --            18,532
                                                                                   ---------------  --------------  ----------------
Change in cash and cash equivalents...............................................       (131,579)             --          (131,579)
Cash and cash equivalents, beginning of period....................................        799,090              --           799,090
                                                                                   ---------------  --------------  ----------------
Cash and cash equivalents, end of period.......................................... $      667,511   $          --   $       667,511
                                                                                   ===============  ==============  ================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Cash Flows
(In thousands)

                                                                                    Year Ended                          Year Ended
                                                                                   December 31,                        December 31,
                                                                                       2001            Adjustments         2001
                                                                                 ------------------  --------------  -----------------
                                                                                   (as reported)                       (as restated)
Cash flows from operating activities:                                                                                                 
   Net income (loss)...........................................................  $         254,575   $      (3,047)  $        251,528
   Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation and other amortization......................................             93,179              --             93,179
      Amortization of identifiable intangible assets...........................              6,518              --              6,518
      Compensation related to stock options, net...............................              5,169              --              5,169
      Amortization of goodwill.................................................             20,041              --             20,041
      Provision for doubtful accounts and sales returns........................             26,403              --             26,403
      Tax benefit from exercise of stock options...............................             53,800              --             53,800
      Deferred income taxes....................................................            (11,636)         (2,044)           (13,680)
      Write-down of cost-method investments to fair value......................              3,073              --              3,073
      Net realized gains on marketable investments.............................             (3,399)             --             (3,399)
      Exchange of software for cost-method investments.........................               (971)             --               (971)
      Changes in operating assets and liabilities:
         Accounts receivable...................................................            105,816              --            105,816
         Prepaids and other....................................................             17,247              --             17,247
         Accounts payable and accrued expenses.................................            (19,616)          5,091            (14,525)
         Deferred revenue......................................................             38,002              --             38,002
                                                                                 ------------------  --------------  -----------------
           Net cash provided by operating activities...........................            588,201              --            588,201
                                                                                 ------------------  --------------  -----------------
Cash flows from investing activities:
   Purchases of property and equipment.........................................           (245,945)             --           (245,945)
   Purchases of short-term investments.........................................         (1,113,004)             --         (1,113,004)
   Sales and maturities of short-term investments..............................            668,028              --            668,028
   Purchase consideration paid for acquired businesses, net of cash received...              8,555              --              8,555
   Proceeds from sale of marketable equity securities..........................                821              --                821
   Other non-operating assets and non-marketable securities....................            (23,068)             --            (23,068)
   Repayments from (advances to) affiliate, net................................             10,579              --             10,579
                                                                                 ------------------  --------------  -----------------
           Net cash used in investing activities...............................           (694,034)             --           (694,034)
                                                                                 ------------------  --------------  -----------------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net of repurchases..................            156,156              --            156,156
   Repayments of capital lease obligations.....................................               (580)             --               (580)
   Repayments of stockholder notes.............................................              1,201              --              1,201
                                                                                 ------------------  --------------  -----------------
           Net cash provided by financing activities...........................            156,777              --            156,777
                                                                                 ------------------  --------------  -----------------
Effect of exchange rate fluctuations...........................................             (3,238)             --             (3,238)
                                                                                 ------------------  --------------  -----------------
Change in cash and cash equivalents............................................             47,706              --             47,706
Cash and cash equivalents, beginning of period.................................            751,384              --            751,384
                                                                                 ------------------  --------------  -----------------
Cash and cash equivalents, end of period.......................................  $         799,090   $          --   $        799,090
                                                                                 ==================  ==============  =================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Cash Flows
(In thousands)

                                                                                    Year Ended                        Year Ended
                                                                                   December 31,                      December 31,
                                                                                       2000          Adjustments         2000
                                                                                 ----------------  --------------  -----------------
                                                                                   (as reported)                     (as restated)
Cash flows from operating activities:                                                                                               
   Net income (loss)...........................................................  $       221,899   $      (1,316)  $        220,583
   Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation and other amortization......................................           35,352              --             35,352
      Write-off of acquired companies' assets..................................            2,298              --              2,298
      Amortization of identifiable intangible assets...........................            1,326              --              1,326
      Compensation related to stock options, net...............................           11,491              --             11,491
      Amortization of goodwill.................................................           14,713              --             14,713
      Provision for doubtful accounts and sales returns........................           39,385              --             39,385
      Tax benefit from exercise of stock options...............................          185,613              --            185,613
      Deferred income taxes....................................................          (62,059)           (892)           (62,951)
      Charitable contribution of marketable investments........................           28,700              --             28,700
      Loss from equity method investee.........................................            7,481              --              7,481
      Loss on disposal of property and equipment...............................               13              --                 13
      Net realized gains on marketable investments.............................          (60,901)             --            (60,901)
      Exchange of software for cost-method investments.........................          (13,068)             --            (13,068)
      Changes in operating assets and liabilities:
         Accounts receivable...................................................         (264,251)             --           (264,251)
         Prepaids and other....................................................          (53,095)             --            (53,095)
         Accounts payable and accrued expenses.................................          230,807           2,208            233,015
         Deferred revenue......................................................          112,864              --            112,864
                                                                                 ----------------  --------------  -----------------
           Net cash provided by operating activities...........................          438,568              --            438,568
                                                                                 ----------------  --------------  -----------------
Cash flows from investing activities:
   Purchases of property and equipment.........................................         (162,161)             --           (162,161)
   Purchases of short-term investments.........................................         (487,888)             --           (487,888)
   Sales and maturities of short-term investments..............................          290,088              --            290,088
   Purchase consideration paid for acquired businesses, net of cash received...          (29,212)             --            (29,212)
   Proceeds from sale of marketable equity securities..........................           35,351              --             35,351
   Other non-operating assets and non-marketable securities....................          (18,084)             --            (18,084)
   Repayments from (advances to) affiliate, net................................          (12,362)             --            (12,362)
                                                                                 ----------------  --------------  -----------------
           Net cash used in investing activities...............................         (384,268)             --           (384,268)
                                                                                 ----------------  --------------  -----------------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net of repurchases..................          189,173              --            189,173
   Proceeds from issuance of preferred stock, net of repurchases...............           19,975              --             19,975
   Repayments of capital lease obligations.....................................             (299)             --               (299)
   Repayments of stockholder notes.............................................               78              --                 78
                                                                                 ----------------  --------------  -----------------
           Net cash provided by financing activities...........................          208,927              --            208,927
                                                                                 ----------------  --------------  -----------------
Effect of exchange rate fluctuations...........................................            1,836              --              1,836
                                                                                 ----------------  --------------  -----------------
Change in cash and cash equivalents............................................          265,063              --            265,063
Cash and cash equivalents, beginning of period.................................          486,321              --            486,321
                                                                                 ----------------  --------------  -----------------
Cash and cash equivalents, end of period.......................................  $       751,384   $          --   $        751,384
                                                                                 ================  ==============  =================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Cash Flows
(In thousands)

                                                                                    Year Ended                        Year Ended
                                                                                   December 31,                      December 31,
                                                                                       1999         Adjustments          1999
                                                                                 ----------------  --------------  ----------------
                                                                                   (as reported)                     (as restated)
Cash flows from operating activities:                                                                                              
   Net income (loss)...........................................................  $       110,025   $        (131)  $       109,894
   Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation and other amortization......................................           19,334              --            19,334
      Amortization of identifiable intangible assets...........................              292              --               292
      Compensation related to stock options, net...............................            1,180              --             1,180
      Compensation related to stock warrants...................................              269              --               269
      Amortization of goodwill.................................................            4,529              --             4,529
      Provision for doubtful accounts and sales returns........................            8,111              --             8,111
      Tax benefit from exercise of stock options...............................           91,679              --            91,679
      Deferred income taxes....................................................          (18,217)            (90)          (18,307)
      Loss on disposal of property and equipment...............................              737              --               737
      Net realized gains on marketable investments.............................          (12,343)             --           (12,343)
      Changes in operating assets and liabilities:
         Accounts receivable...................................................         (175,842)             --          (175,842)
         Prepaids and other....................................................          (16,705)             --           (16,705)
         Accounts payable and accrued expenses.................................           40,745             221            40,966
         Deferred revenue......................................................           35,952              --            35,952
                                                                                 ----------------  --------------  ----------------
           Net cash provided by operating activities...........................           89,746              --            89,746
                                                                                 ----------------  --------------  ----------------
Cash flows from investing activities:
   Purchases of property and equipment.........................................          (45,604)             --           (45,604)
   Proceeds from disposal of property and equipment............................           13,284              --            13,284
   Purchases of short-term investments.........................................         (126,171)             --          (126,171)
   Sales and maturities of short-term investments..............................           90,713              --            90,713
   Purchase consideration paid for acquired businesses, net of cash received...             (250)             --              (250)
   Other non-operating assets and non-marketable securities....................          (22,519)             --           (22,519)
                                                                                 ----------------  --------------  ----------------
           Net cash used in investing activities...............................          (90,547)             --           (90,547)
                                                                                 ----------------  --------------  ----------------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net of repurchases..................           76,233              --            76,233
   Proceeds from issuance of preferred stock, net of repurchases...............           33,139              --            33,139
   Proceeds from issuance of convertible debt, net.............................          291,316              --           291,316
   Repayments on line of credit, net...........................................           (2,063)             --            (2,063)
   Subchapter S distributions..................................................           (2,080)             --            (2,080)
                                                                                 ----------------  --------------  ----------------
           Net cash provided by financing activities...........................          396,545              --           396,545
                                                                                 ----------------  --------------  ----------------
Effect of exchange rate fluctuations...........................................              115              --               115
                                                                                 ----------------  --------------  ----------------
Change in cash and cash equivalents............................................          395,859              --           395,859
Cash and cash equivalents, beginning of period.................................           90,462              --            90,462
                                                                                 ----------------  --------------  ----------------
Cash and cash equivalents, end of period.......................................  $       486,321   $          --   $       486,321
                                                                                 ================  ==============  ================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Cash Flows
(In thousands)

                                                                                    Year Ended                        Year Ended
                                                                                   December 31,                      December 31,
                                                                                       1998          Adjustments         1998
                                                                                 ----------------  --------------  ---------------
                                                                                   (as reported)                     (as restated)
Cash flows from operating activities:                                                                                             
   Net income (loss)...........................................................  $        42,290   $         (64)  $       42,226
   Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation and other amortization......................................           13,936              --           13,936
      Compensation related to stock options, net...............................              288              --              288
      Compensation related to stock warrants...................................               54              --               54
      Provision for doubtful accounts and sales returns........................            6,661              --            6,661
      Tax benefit from exercise of stock options...............................           13,517              --           13,517
      Deferred income taxes....................................................           (9,188)            (44)          (9,232)
      Loss on disposal of property and equipment...............................            4,557              --            4,557
      Changes in operating assets and liabilities:
         Accounts receivable...................................................          (70,120)             --          (70,120)
         Prepaids and other....................................................           (7,009)             --           (7,009)
         Accounts payable and accrued expenses.................................           60,294             108           60,402
         Deferred revenue......................................................           31,150              --           31,150
                                                                                 ----------------  --------------  ---------------
           Net cash provided by operating activities...........................           86,430              --           86,430
                                                                                 ----------------  --------------  ---------------
Cash flows from investing activities:
   Purchases of property and equipment.........................................          (40,641)             --          (40,641)
   Purchases, sales and maturities of short-term investments, net..............          (58,454)             --          (58,454)
   Cash acquired in acquisitions...............................................              (31)             --              (31)
   Other non-operating assets and non-marketable securities....................           (2,641)             --           (2,641)
                                                                                 ----------------  --------------  ---------------
           Net cash used in investing activities...............................         (101,767)             --         (101,767)
                                                                                 ----------------  --------------  ---------------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net of repurchases..................           28,987              --           28,987
   Proceeds from issuance of preferred stock, net of repurchases...............           10,544              --           10,544
   Borrowings on line of credit................................................            1,542              --            1,542
   Repayments of line of credit and capital lease obligations..................              (91)             --              (91)
   Subchapter S distributions..................................................           (2,546)             --           (2,546)
                                                                                 ----------------  --------------  ---------------
           Net cash provided by financing activities...........................           38,436              --           38,436
                                                                                 ----------------  --------------  ---------------
Effect of exchange rate fluctuations...........................................             (203)             --             (203)
                                                                                 ----------------  --------------  ---------------
Change in cash and cash equivalents............................................           22,896              --           22,896
Adjustments to conform acquired company's year end.............................           (4,140)             --           (4,140)
Cash and cash equivalents, beginning of period.................................           71,706              --           71,706
                                                                                 ----------------  --------------  ---------------
Cash and cash equivalents, end of period.......................................  $        90,462   $          --   $       90,462
                                                                                 ================  ==============  ===============

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                             Three Months                         Three Months
                                                                Ended                                Ended
                                                             September 30,                        September 30,
                                                                 2004           Adjustments           2004
                                                           -----------------  ----------------  -----------------
                                                             (as reported)                        (as restated)
Revenues:                                                                                                        
    Software.............................................  $        104,579   $            --   $        104,579
    Professional services, maintenance and other.........           212,507                --            212,507
                                                           -----------------  ----------------  -----------------
        Total revenues...................................           317,086                --            317,086
                                                           -----------------  ----------------  -----------------
Cost of revenues:
    Software.............................................             3,010                --              3,010
    Professional services, maintenance and other.........           108,868               278            109,146
                                                           -----------------   ---------------   ----------------
        Total cost of revenues...........................           111,878               278            112,156
                                                           -----------------  ----------------  -----------------
        Gross margin.....................................           205,208              (278)           204,930
                                                           -----------------  ----------------  -----------------
Operating expenses:
    Product development..................................            69,718               592             70,310
    Sales and marketing..................................            76,500               168             76,668
    General and administrative...........................            27,114               129             27,243
    Restructuring and related expenses...................             6,151               591              6,742
                                                           -----------------  ----------------  -----------------
        Total operating expenses.........................           179,483             1,480            180,963
                                                           -----------------  ----------------  -----------------
        Operating income (loss)..........................            25,725            (1,758)            23,967
                                                           -----------------  ----------------  -----------------

Other income, net:
    Interest and other income, net.......................            11,698                --             11,698
    Interest expense.....................................              (174)               --               (174)
                                                           -----------------  ----------------  -----------------
        Total other income, net..........................            11,524                --             11,524
                                                           -----------------  ----------------  -----------------
        Income (loss) before income taxes................            37,249            (1,758)            35,491
Income tax provision (benefit)...........................            17,879              (718)            17,161
                                                           -----------------  ----------------  -----------------
        Net income (loss)................................  $         19,370   $        (1,040)  $         18,330
                                                           =================  ================  =================

Diluted net income (loss) per share......................  $           0.04   $         (0.01)  $           0.03
                                                           =================  ================  =================
Basic net income (loss) per share........................  $           0.04   $            --   $           0.04
                                                           =================  ================  =================

Shares used in diluted share computation.................           533,303                --            533,303
                                                           =================  ================  =================
Shares used in basic share computation...................           506,706                --            506,706
                                                           =================  ================  =================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                                    Three Months                      Three Months
                                                                       Ended                             Ended
                                                                      June 30,                          June 30,
                                                                        2004          Adjustments         2004
                                                                  ----------------  --------------  ---------------
                                                                    (as reported)                     (as restated)
Revenues:                                                                                                          
    Software....................................................  $        94,829   $          --   $       94,829
    Professional services, maintenance and other................          206,230              --          206,230
                                                                  ----------------  --------------  ---------------
        Total revenues..........................................          301,059              --          301,059
                                                                  ----------------  --------------  ---------------
Cost of revenues:
    Software....................................................            2,837              --            2,837
    Professional services, maintenance and other................          107,741             309          108,050
                                                                  ----------------   -------------   --------------
        Total cost of revenues..................................          110,578             309          110,887
                                                                  ----------------  --------------  ---------------
        Gross margin............................................          190,481            (309)         190,172
                                                                  ----------------  --------------  ---------------
Operating expenses:
    Product development.........................................           75,537             590           76,127
    Sales and marketing.........................................           78,409             143           78,552
    General and administrative..................................           27,512             133           27,645
    Restructuring and related expenses..........................           (1,006)             --           (1,006)
    Purchased in-process product development....................            6,000              --            6,000
                                                                  ----------------  --------------  ---------------
        Total operating expenses................................          186,452             866          187,318
                                                                  ----------------  --------------  ---------------
        Operating income (loss).................................            4,029          (1,175)           2,854
                                                                  ----------------  --------------  ---------------

Other income, net:
    Interest and other income, net..............................           10,031              --           10,031
    Interest expense............................................             (234)             --             (234)
                                                                  ----------------  --------------  ---------------
        Total other income, net.................................            9,797              --            9,797
                                                                  ----------------  --------------  ---------------
        Income (loss) before income taxes.......................           13,826          (1,175)          12,651
Income tax provision (benefit)..................................            5,610            (480)           5,130
                                                                  ----------------  --------------  ---------------
        Net income (loss).......................................  $         8,216   $        (695)  $        7,521
                                                                  ================  ==============  ===============

Diluted net income (loss) per share.............................  $          0.02   $       (0.01)  $         0.01
                                                                  ================  ==============  ===============
Basic net income (loss) per share...............................  $          0.02   $       (0.01)  $         0.01
                                                                  ================  ==============  ===============

Shares used in diluted share computation........................          541,543              --          541,543
                                                                  ================  ==============  ===============
Shares used in basic share computation..........................          504,114              --          504,114
                                                                  ================  ==============  ===============

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                                 Three Months                      Three Months
                                                                    Ended                             Ended
                                                                   March 31,                         March 31,
                                                                     2004          Adjustments         2004
                                                               ----------------  --------------  -----------------
                                                                 (as reported)                     (as restated)
Revenues:                                                                                                         
    Software.................................................  $       126,799   $          --   $        126,799
    Professional services, maintenance and other.............          202,488              --            202,488
                                                               ----------------  --------------  -----------------
        Total revenues.......................................          329,287              --            329,287
                                                               ----------------  --------------  -----------------
Cost of revenues:
    Software.................................................            3,207              --              3,207
    Professional services, maintenance and other.............          107,925             289            108,214
                                                               ----------------   -------------   ----------------
        Total cost of revenues...............................          111,132             289            111,421
                                                               ----------------  --------------  -----------------
        Gross margin.........................................          218,155            (289)           217,866
                                                               ----------------  --------------  -----------------
Operating expenses:
    Product development......................................           72,024             609             72,633
    Sales and marketing......................................           86,257             141             86,398
    General and administrative...............................           21,574             125             21,699
    Restructuring and related expenses.......................              598             (27)               571
                                                               ----------------  --------------  -----------------
        Total operating expenses.............................          180,453             848            181,301
                                                               ----------------  --------------  -----------------
        Operating income (loss)..............................           37,702          (1,137)            36,565
                                                               ----------------  --------------  -----------------

Other income, net:
    Interest and other income, net...........................           12,075              --             12,075
    Interest expense.........................................             (320)             --               (320)
                                                               ----------------  --------------  -----------------
        Total other income, net..............................           11,755              --             11,755
                                                               ----------------  --------------  -----------------
        Income (loss) before income taxes....................           49,457          (1,137)            48,320
Income tax provision (benefit)...............................           17,805            (465)            17,340
                                                               ----------------  --------------  -----------------
        Net income (loss)....................................  $        31,652   $        (672)  $         30,980
                                                               ================  ==============  =================

Diluted net income (loss) per share..........................  $          0.06   $          --   $           0.06
                                                               ================  ==============  =================
Basic net income (loss) per share............................  $          0.06   $          --   $           0.06
                                                               ================  ==============  =================

Shares used in diluted share computation.....................          546,401              --            546,401
                                                               ================  ==============  =================
Shares used in basic share computation.......................          501,128              --            501,128
                                                               ================  ==============  =================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                                     Three Months                           Three Months
                                                                        Ended                                  Ended
                                                                     December 31,                           December 31,
                                                                         2003             Adjustments           2003
                                                                   ------------------  -----------------  -----------------
                                                                     (as reported)                          (as restated)
Revenues:                                                                                                                  
    Software.....................................................  $         150,285   $             --   $        150,285
    Professional services, maintenance and other.................            216,457                 --            216,457
                                                                   ------------------  -----------------  -----------------
        Total revenues...........................................            366,742                 --            366,742
                                                                   ------------------  -----------------  -----------------
Cost of revenues:
    Software.....................................................              3,394                 --              3,394
    Professional services, maintenance and other.................            115,698                513            116,211
                                                                   ------------------   ----------------   ----------------
        Total cost of revenues...................................            119,092                513            119,605
                                                                   ------------------  -----------------  -----------------
        Gross margin.............................................            247,650               (513)           247,137
                                                                   ------------------  -----------------  -----------------
Operating expenses:
    Product development..........................................             82,675                471             83,146
    Sales and marketing..........................................             80,329                283             80,612
    General and administrative...................................             24,222                110             24,332
    Restructuring and related expenses...........................               (650)                --               (650)
    Purchased in-process product development.....................              5,312                 --              5,312
                                                                   ------------------  -----------------  -----------------
        Total operating expenses.................................            191,888                864            192,752
                                                                   ------------------  -----------------  -----------------
        Operating income (loss)..................................             55,762             (1,377)            54,385
                                                                   ------------------  -----------------  -----------------

Other income, net:
    Interest and other income, net...............................              9,509                 --              9,509
    Interest expense.............................................               (352)                --               (352)
                                                                   ------------------  -----------------  -----------------
        Total other income, net..................................              9,157                 --              9,157
                                                                   ------------------  -----------------  -----------------
        Income (loss) before income taxes........................             64,919             (1,377)            63,542
Income tax provision (benefit)...................................             23,371               (562)            22,809
                                                                   ------------------  -----------------  -----------------
        Net income (loss)........................................  $          41,548   $           (815)  $         40,733
                                                                   ==================  =================  =================

Diluted net income (loss) per share..............................  $            0.08   $          (0.01)  $           0.07
                                                                   ==================  =================  =================
Basic net income (loss) per share................................  $            0.08   $             --   $           0.08
                                                                   ==================  =================  =================

Shares used in diluted share computation.........................            543,535                 --            543,535
                                                                   ==================  =================  =================
Shares used in basic share computation...........................            496,579                 --            496,579
                                                                   ==================  =================  =================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                                  Three Months                         Three Months
                                                                     Ended                                Ended
                                                                  September 30,                        September 30,
                                                                      2003            Adjustments          2003
                                                                ------------------  ---------------  ----------------
                                                                  (as reported)                        (as restated)
Revenues:                                                                                                            
    Software..................................................  $         110,003   $           --   $       110,003
    Professional services, maintenance and other..............            211,429               --           211,429
                                                                ------------------  ---------------  ----------------
        Total revenues........................................            321,432               --           321,432
                                                                ------------------  ---------------  ----------------
Cost of revenues:
    Software..................................................              5,974               --             5,974
    Professional services, maintenance and other..............            120,489              562           121,051
                                                                ------------------   --------------   ---------------
        Total cost of revenues................................            126,463              562           127,025
                                                                ------------------  ---------------  ----------------
        Gross margin..........................................            194,969             (562)          194,407
                                                                ------------------  ---------------  ----------------
Operating expenses:
    Product development.......................................             71,432              463            71,895
    Sales and marketing.......................................             82,756              280            83,036
    General and administrative................................             27,319              107            27,426
    Restructuring and related expenses........................            104,767           (1,934)          102,833
                                                                ------------------  ---------------  ----------------
        Total operating expenses..............................            286,274           (1,084)          285,190
                                                                ------------------  ---------------  ----------------
        Operating income (loss)...............................            (91,305)             522           (90,783)
                                                                ------------------  ---------------  ----------------

Other income, net:
    Interest and other income, net............................             14,140               --            14,140
    Loss on early extinguishment of debt......................            (10,711)              --           (10,711)
    Interest expense..........................................             (4,827)              --            (4,827)
                                                                ------------------  ---------------  ----------------
        Total other income, net...............................             (1,398)              --            (1,398)
                                                                ------------------  ---------------  ----------------
        Income (loss) before income taxes.....................            (92,703)             522           (92,181)
Income tax provision (benefit)................................            (33,373)            (107)          (33,480)
                                                                ------------------  ---------------  ----------------
        Net income (loss).....................................  $         (59,330)  $          629   $       (58,701)
                                                                ==================  ===============  ================

Diluted net income (loss) per share...........................  $           (0.12)  $           --   $         (0.12)
                                                                ==================  ===============  ================
Basic net income (loss) per share.............................  $           (0.12)  $           --   $         (0.12)
                                                                ==================  ===============  ================

Shares used in diluted share computation......................            493,933               --           493,933
                                                                ==================  ===============  ================
Shares used in basic share computation........................            493,933               --           493,933
                                                                ==================  ===============  ================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                                   Three Months                       Three Months
                                                                      Ended                              Ended
                                                                     June 30,                           June 30,
                                                                      2003           Adjustments          2003
                                                                 ----------------  ---------------  -----------------
                                                                   (as reported)                      (as restated)
Revenues:                                                                                                            
    Software...................................................  $       109,894   $           --   $        109,894
    Professional services, maintenance and other...............          223,405               --            223,405
                                                                 ----------------  ---------------  -----------------
        Total revenues.........................................          333,299               --            333,299
                                                                 ----------------  ---------------  -----------------
Cost of revenues:
    Software...................................................            4,268               --              4,268
    Professional services, maintenance and other...............          126,141              531            126,672
                                                                 ----------------   --------------   ----------------
        Total cost of revenues.................................          130,409              531            130,940
                                                                 ----------------  ---------------  -----------------
        Gross margin...........................................          202,890             (531)           202,359
                                                                 ----------------  ---------------  -----------------
Operating expenses:
    Product development........................................           75,474              463             75,937
    Sales and marketing........................................           93,876              316             94,192
    General and administrative.................................           28,175              162             28,337
    Restructuring and related expenses.........................              274             (147)               127
                                                                 ----------------  ---------------  -----------------
        Total operating expenses...............................          197,799              794            198,593
                                                                 ----------------  ---------------  -----------------
        Operating income (loss)................................            5,091           (1,325)             3,766
                                                                 ----------------  ---------------  -----------------

Other income, net:
    Interest and other income, net.............................           15,025               --             15,025
    Interest expense...........................................           (4,854)              --             (4,854)
                                                                 ----------------  ---------------  -----------------
        Total other income, net................................           10,171               --             10,171
                                                                 ----------------  ---------------  -----------------
        Income (loss) before income taxes......................           15,262           (1,325)            13,937
Income tax provision (benefit).................................            5,494             (566)             4,928
                                                                 ----------------  ---------------  -----------------
        Net income (loss)......................................  $         9,768   $         (759)  $          9,009
                                                                 ================  ===============  =================

Diluted net income (loss) per share............................  $          0.02   $           --   $           0.02
                                                                 ================  ===============  =================
Basic net income (loss) per share..............................  $          0.02   $           --   $           0.02
                                                                 ================  ===============  =================

Shares used in diluted share computation.......................          526,726               --            526,726
                                                                 ================  ===============  =================
Shares used in basic share computation.........................          490,078               --            490,078
                                                                 ================  ===============  =================

SIEBEL SYSTEMS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)

                                                            Three Months                       Three Months
                                                               Ended                              Ended
                                                              March 31,                          March 31,
                                                                2003           Adjustments         2003
                                                          -----------------  --------------  -----------------
                                                            (as reported)                      (as restated)
Revenues:                                                                                                     
    Software............................................  $        112,092   $          --   $        112,092
    Professional services, maintenance and other........           220,663              --            220,663
                                                          -----------------  --------------  -----------------
        Total revenues..................................           332,755              --            332,755
                                                          -----------------  --------------  -----------------
Cost of revenues:
    Software............................................             4,721              --              4,721
    Professional services, maintenance and other........           125,512             560            126,072
                                                          -----------------   -------------   ----------------
        Total cost of revenues..........................           130,233             560            130,793
                                                          -----------------  --------------  -----------------
        Gross margin....................................           202,522            (560)           201,962
                                                          -----------------  --------------  -----------------
Operating expenses:
    Product development.................................            79,271             437             79,708
    Sales and marketing.................................           100,172             306            100,478
    General and administrative..........................            26,366             133             26,499
                                                          -----------------  --------------  -----------------
        Total operating expenses........................           205,809             876            206,685
                                                          -----------------  --------------  -----------------
        Operating income (loss).........................            (3,287)         (1,436)            (4,723)
                                                          -----------------  --------------  -----------------

Other income, net:
    Interest and other income, net......................            15,397              --             15,397
    Interest expense....................................            (4,894)             --             (4,894)
                                                          -----------------  --------------  -----------------
        Total other income, net.........................            10,503              --             10,503
                                                          -----------------  --------------  -----------------
        Income (loss) before income taxes...............             7,216          (1,436)             5,780
Income tax provision (benefit)..........................             2,598            (586)             2,012
                                                          -----------------  --------------  -----------------
        Net income (loss)...............................  $          4,618   $        (850)  $          3,768
                                                          =================  ==============  =================

Diluted net income (loss) per share.....................  $           0.01   $          --   $           0.01
                                                          =================  ==============  =================
Basic net income (loss) per share.......................  $           0.01   $          --   $           0.01
                                                          =================  ==============  =================

Shares used in diluted share computation................           511,391              --            511,391
                                                          =================  ==============  =================
Shares used in basic share computation..................           487,254              --            487,254
                                                          =================  ==============  =================

* Certain prior year amounts have been reclassified to conform to the current year presentation.