20-F/A

As filed with the Securities and Exchange Commission on June 30, 2003

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 20-F/A

(Amendment No. 1)

(Mark one)
o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2002
	OR
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2002
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 2-20193

KONINKLIJKE PHILIPS ELECTRONICS N.V.
(Exact name of Registrant as specified in charter)

ROYAL PHILIPS ELECTRONICS
(Translation of Registrant’s name into English)

The Netherlands
(Jurisdiction of incorporation or organization)

Breitner Center, Amstelplein 2, 1096 BC Amsterdam, The Netherlands
(Address of principal executive office)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares — par value Euro (EUR) 0.20 per share	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Common Shares — par value Euro (EUR) 0.20 per share

(Title of class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Class			Outstanding at December 31, 2002
Koninklijke Philips Electronics N.V.
Priority Shares par value	EUR	500 per share	10 shares
Common Shares par value	EUR	0.20 per share	1,275,977,923 shares

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o Item 18 x

TABLE OF CONTENTS

EXHIBIT 10a

EXHIBIT 10d

EXHIBIT 10e

Explanatory Note

     As stated in Item 18 of Philips’ Annual Report on Form 20-F for the year ended December 31, 2002, this amendment is being filed to provide separate consolidated financial statements of Atos Origin S.A. (“Atos Origin”) for the fiscal year ended December 31, 2002, as required by Rule 3-09 of Regulation S-X. This amendment amends “Item 18 Financial Statements”, and “Item 19 Exhibits”. The Atos Origin financial statements were prepared in accordance with accounting principles generally accepted in France. The Atos Origin financial statements were not audited in accordance with generally accepted auditing standards in the United States. The audit report relating to the Atos Origin financial statements, which states that an audit of the Atos Origin financial statements was conducted in accordance with professional standards applicable in France, is available, along with the Atos Origin financial statements, on the website of Atos Origin at www.atosorigin.com.

     In addition, Philips is including certain currently dated certifications and an updated consent of its independent auditors, KPMG Accountants N.V. Other than as expressly set forth above, this Form 20-F/A does not, and does not purport to, amend, update or restate the information in any other Item of the Form 20-F filed on March 14, 2003 or reflect any events that have occurred after the Form 20-F was filed.

2

Item 18. Financial statements

The following portions of the Company’s 2002 Annual Report — Financial Statements and Analysis, as set forth on pages 41 through 109, are incorporated herein by reference.

“Auditors’ Report”
“Consolidated statements of income of the Philips Group”
“Consolidated balance sheets of the Philips Group”
“Consolidated statements of cash flows of the Philips Group”
“Consolidated statements of changes in stockholders’ equity of the Philips Group”
“Accounting policies”
“Notes to the consolidated financial statements of the Philips Group”

Separate consolidated financial statements for Atos Origin, included as Exhibit 10 (d) hereto, are hereby incorporated by reference. A discussion of the principal differences in the accounting principles used in preparing financial statements in France from generally accepted accounting principles in the United States, included as Exhibit 10 (e) hereto, is hereby incorporated by reference.

Schedules:
Schedules are omitted as they are either not required or the required information is included in the consolidated financial statements.

3

Item 19. Exhibits

Index of exhibits

Exhibit 1	English translation of the Articles of Association of the Company (incorporated by reference to Exhibit 1 of the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2000 (File No. 2-20193).
Exhibit 2 (b)(1)	The total amount of long-term debt securities of the Company and its subsidiaries authorized under any one instrument does not exceed 10% of the total assets of Philips and its subsidiaries on a consolidated basis. Philips agrees to furnish copies of any or all such instruments to the Securities and Exchange Commission upon request.
Exhibit 4	Form of employment contract (incorporated by reference to Exhibit 4 of the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2000).
Exhibit 8	List of Significant Subsidiaries.*
Exhibit 10 (a)	Consent of KPMG Accountants N.V.
Exhibit 10 (b)	The 2002 Annual Report to Shareholders of the Company, consisting of the Management Report and Financial Statements and Analysis, which is furnished to the Securities and Exchange Commission for information only and is not filed except for such specific portions that are expressly incorporated by reference in this report on Form 20-F. *
Exhibit 10 (c)	Summary of Articles of Association. *
Exhibit 10 (d)	Financial Statements of Atos Origin S.A.
Exhibit 10 (e)	Principal differences between French GAAP and US GAAP.

* Previously filed as an exhibit to the Company’s Annual Report on Form 20-F for the year ended December 31, 2002.

4

SIGNATURES

     The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

KONINKLIJKE PHILIPS ELECTRONICS N.V.
(Registrant)

/s/ G.J. Kleisterlee	/s/ J.H.M. Hommen
G.J. Kleisterlee (President, Chairman of the Board of Management and the Group Management Committee)	J.H.M. Hommen (Vice-Chairman of the Board of Management, and the Group Management Committee and Chief Financial Officer)
Date: June 30, 2003

5

CERTIFICATION

	I, G.J. Kleisterlee, certify that:
1.	I have reviewed this annual report on Form 20-F of Koninklijke Philips Electronics N.V., a company incorporated under the laws of the Netherlands;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: June 30, 2003
	/s/ G.J. Kleisterlee
	G.J. Kleisterlee President, Chairman of the Board of Management and the Group Management Committee

6

CERTIFICATION

	I, J.H.M. Hommen, certify that:
1.	I have reviewed this annual report on Form 20-F of Koninklijke Philips Electronics N.V., a company incorporated under the laws of the Netherlands;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: June 30, 2003
	/s/ J.H.M. Hommen
	J.H.M. Hommen Vice-Chairman of the Board of Management and the Group Management Committee and Chief Financial Officer

7 EX-10.1 3 u46316exv10w1.htm EXHIBIT 10A

Exhibit 10 (a)

Consent of KPMG Accountants N.V.

To the Supervisory Board and Board of Management of Koninklijke Philips Electronics N.V.

We consent to incorporation by reference in the registration statements on Form S-8 (No. 33-65972, No. 33-80027, No. 333-91287, No. 333-70215, No. 333-91289, No. 333-39204, No. 333-75542, No. 333-87852 and No. 333-104104) and in the registration statement on Form F-3 (No. 333-4582 and No. 333-90686) of Koninklijke Philips Electronics N.V. of our report dated February 7, 2003, relating to the consolidated balance sheets of Koninklijke Philips Electronics N.V. and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2002, included in the December 31, 2002 annual report on Form 20-F of Koninklijke Philips Electronics N.V.

Eindhoven, The Netherlands
June 30, 2003	/s/ KPMG Accountants N.V. KPMG ACCOUNTANTS N.V.

8 EX-10.4 4 u46316exv10w4.htm EXHIBIT 10D

Exhibit 10 (d)

Financial Statements of Atos Origin S.A.

The Atos Origin financial statements were prepared in accordance with accounting principles generally accepted in France. The Atos Origin financial statements were not audited in accordance with generally accepted auditing standards in the United States. The audit report relating to the Atos Origin financial statements, which states that an audit of the Atos Origin financial statements was conducted in accordance with professional standards applicable in France, is available, along with the Atos Origin financial statements, on the website of Atos Origin at www.atosorigin.com.

9

FINANCIAL REPORT

Part 2

Chapter 2.1	24
CONSOLIDATED FINANCIAL STATEMENTS
Chapter 2.2	29
CHANGE IN SCOPE OF CONSOLIDATION
Chapter 2.3	29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Chapter 2.4	47
SCOPE OF CONSOLIDATION AS OF DECEMBER 31ST, 2001
Chapter 2.5	49
PARENT COMPANY SUMMARY FINANCIAL STATEMENTS

ATOS ORIGIN ANNUAL REPORT 2002 23

2   ANNUAL REPORT > FINANCIAL REPORT

2. FINANCIAL REPORT

2.1. Consolidated Financial Statements

24 ATOS ORIGIN ANNUAL REPORT 2002

> FINANCIAL REPORT ANNUAL REPORT   2

2.1.2. Consolidated Income Statement

			Period ended			Period ended			Period ended
	Notes		Dec 31st, 2002			Dec 31st, 2001			Dec 31st, 2000(**)
(in EUR millions)	(*)		(12 months)			(12 months)			(15 months)
Revenue				3,042.9			3,037.6			1,913.7
Personnel expenses		2.3.3.a		(1,642.0	)		(1,548.5	)		(933.9	)
Operating costs and expenses		2.3.3.d		(1,135.3	)		(1,227.9	)		(818.8	)
Income from operations				265.6			261.2			161.0
% of revenue				8.7	%		8.6	%		8.4	%
Net financial expense		2.3.3.e		(27.3	)		(9.6	)		(5.8	)
Income of fully consolidated companies				238.3			251.6			155.2
before amortization of goodwill
Non-recurring items		2.3.3.f		(70.8	)		(2.9	)		(42.1	)
Corporate income tax		2.3.3.g		(46.9	)		(84.0	)		(33.9	)
Income of fully consolidated companies				120.6			164.7			79.2
before tax
Share in income of equity affiliates				(0.1	)		(0.1	)		(0.3	)
Minority interests		2.3.3.h		(11.3	)		(18.3	)		(11.2	)
Net income before amortization of goodwill				109.2			146.3			67.7
% of revenue				3.6	%		4.8	%		3.5	%
Amortization of goodwill		2.3.3.a		(38.4	)		(23.3	)		(19.2	)
Net income — Group Share				70.8			123.0			48.5
% of revenue				2.3	%		4.0	%		2.5	%
In EUR
Net earnings per share
Weighted average number of shares (***)(****)				43,954,677			43,806,925			26,064,573
Earnings per share before amortization of goodwill				2.48			3.34			2.60
Basic earnings per share				1.61			2.81			1.86
Diluted average number of shares				50,846,590			53,801,424			34,562,790
Earnings per share before amortization of goodwill				2.15			2.93			2.10
Diluted earnings per share				1.39			2.49			1.62

(*) See Notes to the consolidated financial statements (2.3).

(**) Fiscal year ended December 31^st, 2000: Atos 15 month period, Origin 3 month period.

(***) The 21.9 million new shares issued at the time of the Origin merger came into circulation on October 31^st, 2000.

(****) ORA bonds issued in consideration for the acquisition of KPMG Consulting in the UK and The Netherlands are not included in the weighted average number of shares. The ORA bonds are included in dilutive instruments.

ATOS ORIGIN ANNUAL REPORT 2002 25

2   ANNUAL REPORT > FINANCIAL REPORT

2.1.3. Consolidated Balance Sheet

(in EUR millions)	Notes*		Dec. 31st, 2002		Dec. 31st, 2001		Dec. 31st, 2000
ASSETS
Goodwill		2.3.4.a		1,029.1		405.4		310.0
Other intangible fixed assets		2.3.4.b		32.2		22.9		41.3
Tangible fixed assets		2.3.4.c		217.3		303.9		194.8
Investments		2.3.4.d		21.3		39.5		26.5
Total fixed assets				1,299.9		771.7		572.6
Accounts and notes receivable, trade		2.3.4.e		871.9		970.9		856.3
Other Receivables, Prepayments and accrued income		2.3.4.f		264.2		260.1		244.4
Transferable securities		2.3.4.j		133.1		83.2		49.5
Cash at bank and in hand		2.3.4.j		288.7		93.3		80.8
Total Current Assets				1,557.9		1,407.5		1,231.0
Total Assets				2,857.8		2,179.2		1,803.6

(in EUR millions)	Notes*		Dec. 31st, 2002		Dec. 31st, 2001		Dec. 31st, 2000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Common stock		2.3.4.g		44.1		43.9		43.8
Additional paid-in capital				44.0		35.2		32.9
Consolidated reserves				343.0		226.0		180.3
Translation adjustments				3.8		7.1		5.0
Net income for the period				70.8		123.0		48.5
Other Shareholders’ Equity				234.8		—		—
Shareholders’ Equity — Group Share				740.5		435.2		310.5
Minority interests		2.3.4.l		43.6		43.5		19.4
Total Shareholders’ equity				784.1		478.7		329.9
Provisions for contingencies and losses		2.3.4.i		266.6		251.1		405.0
Borrowings		2.3.4.j		862.1		411.7		243.8
Accounts payable — trade		2.3.4.k		342.8		423.2		335.1
Other Liabilities, Accruals and deferred income		2.3.4.l		602.2		614.5		489.8
Total Liabilities				1,807.1		1,449.4		1,068.7
Total Liabilities and Shareholders’ equity				2,857.8		2,179.2		1,803.6

(*) See Notes to the consolidated financial statements (2.3).

26 ATOS ORIGIN ANNUAL REPORT 2002

> FINANCIAL REPORT ANNUAL REPORT   2

2.1.4. Consolidated Cash Flow Statement

	Period ended			Period ended			Period ended
(in EUR millions)	Dec. 31st, 2002			Dec. 31st, 2001			Dec. 31st, 2000
Net Income before equity affiliates, minority interests and amortization of goodwill		120.6			164.7			79.2
Depreciation, amortization and provisions		123.0			150.9			104.8
Financial provisions		10.5			5.4			2.7
Exceptional depreciation, amortization and provisions		(23.6	)		(198.8	)		(33.2	)
Net gains on disposals of fixed assets and acquisition costs		(6.1	)		(20.1	)		(1.1	)
Deferred taxes		18.2			36.8			15.6
Net cash from operations before changes in working capital		242.6			138.9			168.0
Changes in working capital		51.2			48.9			(42.1	)
Net cash from operating activities		293.8			187.8			125.9
Purchases of tangible and intangible fixed assets		(102.3	)		(139.3	)		(118.7	)
Proceeds from disposals of tangible and intangible fixed assets		62.3			11.7			11.7
Net Operating Investments		(40.0	)		(127.6	)		(107.0	)
Purchases of financial investments		(478.4	)		(207.8	)		(80.2	)
Proceeds from disposals of financial investments		45.4			33.6			21.8
Net cash and cash equivalents of companies purchased or sold during the year		25.1			4.2			97.9
Net Financial Investments		(407,9	)		(170.0	)		39.5
Net Cash used in investing activities		(447.9	)		(297.6	)		(67.5	)
Common stock issues		9.1			2.4			9.0
Dividends paid to minority shareholders of subsidiaries		(11.3	)		(4.4	)		(6.7	)
New loans		634.1			191.2			35.3
Repayments of long- and medium-term borrowings		(228.2	)		(35.1	)		(114.0	)
Net cash from financing activities		403.7			154.1			(76.4	)
Increase (Decrease) in cash and cash equivalents		249.6			44.3			(18.0	)
Opening cash and cash equivalents		176.5			130.3			149.9
Impact of exchange rate fluctuations on cash and cash equivalents		(4.2	)		1.9			(1.6	)
Increase (decrease) in cash and cash equivalents		249.6			44.3			(18.0	)
Closing cash and cash equivalents		421.9			176.5			130.3
Opening Net Debt		(235.2	)		(113.5	)		(80.0	)
New loans		(634.1	)		(191.2	)		(35.3	)
Repayments of long- and medium-term borrowings		228.2			35.1			114.0
Increase (decrease) in cash and cash equivalents		249.6			44.3			(18.0	)
Other movements (*)		(48.8	)		(9.9	)		(94.2	)
Closing net debt		(440.3	)		(235.2	)		(113.5	)

(*) ‘Other movements’ include the net long- and medium-term debt of companies purchased or sold during the period, the impact of foreign exchange rates on net debt and profit-sharing amounts payable to French employees transferred to debt.

ATOS ORIGIN ANNUAL REPORT 2002 27

2   ANNUAL REPORT > FINANCIAL REPORT

2.1.5. Consolidated Statement of changes in shareholders’ equity

	Number of				Addit.					Translation			Net income			Other
	shares at		Common		paid-in		Consolidated			Adjust-			of the			Shareholders'		Equity,
(in EUR millions)	period end (*)		Stock		capital		reserves			ments			period			equity		Group share
At December 31st, 2000		43,764		43.8		32.9		180.3			5.0			48.5					310.5
* Common stock issues for cash				0.1		2.3													2.4
* Translation adjustments								2.1			2.1								4.2
* Appropriation of prior period net income								48.5						(48.5	)				0.0
* Net Income for the period														123.0					123.0
* Treasury stock								(4.9	)										(4.9	)
At December 31st, 2001		43,854		43.9		35.2		226.0			7.1			123.0					435.2
* Common stock issues for cash		202		0.2		8.8													9.0
* Translation adjustments								1.4			(3.3	)							(1.9	)
* Appropriation of prior period net income								123.0						(123.0	)				0.0
* Net Income for the period														70.8					70.8
* Treasury stock								(7.4	)										(7.4	)
* ORA bonds																	234.8		234.8
At December 31st, 2002		44,056		44.1		44.0		343.0			3.8			70.8			234.8		740.5

(*) in thousands

2.1.6. Segment information

a. Information by Service Line

			Systems		Managed
(in EUR millions)	Consulting		Integration		Operations		Corporate			Group
2002 (12 months)
Revenue		174.5		1,243.0		1,625.4					3,042.9
Income from operations		16.0		65.9		213.6		(30.0	)		265.6
Fixed assets		8.8		37.5		197.9		5.3			249.5
Year-end number of employees		2,383		13,954		12,166		99			28,602
2001 (12 months)
Revenue		19.2		1,470.3		1,548.1					3,037.6
Income from operations		5.5		128.2		172.7		(45.2	)		261.2
Fixed assets		0.4		47.9		272.1		6.4			326.8
Year-end number of employees		126		14,805		11,237		110			26,278
2000 (*)
Revenue		12.7		1,471.2		1,345.9					2,829.8
Income from operations		4.1		112.0		148.4		(89.3	)		175.2
Year-end number of employees		89		14,678		11,988		161			26,916

(*) Data on a pro forma basis (Atos and Origin for 12 months).

28 ATOS ORIGIN ANNUAL REPORT 2002

> FINANCIAL REPORT ANNUAL REPORT   2

b. Information by Geographical Area

			The				EMEA		Americas			Asia
(in EUR millions)	France		Netherlands		UK		others (1)		(2)			Pacific (3)		Corporate			Group
2002
Revenue		1,086.2		912.8		238.4		610.0		132.3			63.2					3,042.9
Income from operations		116.2		124.2		12.9		28.6		7.8			5.8		(30.0	)		265.6
Fixed assets		106.1		95.5		5.5		27.6		3.3			6.2		5.3			249.5
Year-end number of employees		8,685		9,019		2,139		6,319		1,210			1,131		99			28,602
2001
Revenue		1,089.1		797.4		159.8		717.6		207.5			66.2					3,037.6
Income from operations		107.2		117.0		12.9		62.9		5.4			1.0		(45.2	)		261.2
Fixed assets		141.6		132.8		8.8		21.8		7.4			8.0		6.4			326.8
Year-end number of employees		8,419		7,114		1,133		6,838		1,517			1,147		110			26,278
2000 (*)
Revenue		951.5		668.7		161.4		702.6		268.4			77.2					2,829.8
Income from operations		105.4		88.2		8.4		66.8		(11.1	)		6.8		(89.3	)		175.2
Year-end number of employees		9,732		6,093		1,210		6,751		1,881			1,088		161			26,916

(1)	Europe, Middle-East, Africa: Germany, Switzerland, Italy, Spain, Portugal, Andorra, Belgium, Luxembourg, Poland, Austria, Hungary, Czech Republic, Saudi Arabia.
(2)	United States, Canada, Mexico, Argentina, Brazil, Peru.
(3)	Australia, China, Hong-Kong, India, Malaysia, Singapore, Taiwan, Thailand.
(*) Data on a pro forma basis (Atos and Origin for 12 months).

2.2. Scope of consolidation

Major changes to the scope of consolidation during the period were as follows:

2.2.1. Acquisitions

January 2002 Atos Origin increased its interest in Atos Odyssée from 86% to 93% in accordance with the progressive stock purchase agreement. This additional interest was purchased for a consideration of EUR 2.2 million. Atos Odyssée is a French company included in the Consulting Division.

January/May 2002 following on from the contract signed in October 2001 with KPN Group, acquisition of the entire common stock of KPN End User Services, fully consolidated since January 1^st, 2002 at a value of EUR 11.5 million.

January/June 2002 acquisition of the entire common stock of the French company Idée Industrie Services (2IS), fully consolidated since January 1^st, 2002 at a value of EUR 2.7 million. As a result of the acquisition of this company, which holds a 34% stake in A2B, Atos Origin increased its interest in this latter from 51% to 66%.

August 2002 acquisition of the entire common stock of KPMG Consulting in the United Kingdom and in The Netherlands, fully consolidated since September 1^st, 2002. In consideration for the acquisition of KPMG Consulting in the United Kingdom and The Netherlands, Atos Origin issued 3,657,000 bonds redeemable in Atos Origin shares (ORA bonds) at a price of EUR 64.2 each, representing a total of EUR 235 million. The ORA bonds will be redeemed automatically, irrevocably and fully in shares, on August 16^th, 2003 at a rate of one new Atos Origin share for one ORA bond. Given their terms, the ORA bonds are included in other shareholder’s equity. In addition, Atos Origin made a cash payment of EUR 417 million and the total transaction value reached EUR 660 million, after inclusion of acquisition costs of EUR 8 million, net of tax.

September 2002 following on from the contract signed in October 2001 with KPN Group, acquisition of the Dutch company KPN Software House renamed Atos Origin Telecom Software for a consideration of EUR 31.9 million and fully consolidated from September 1^st, 2002.

2.2.2. Disposals

January 2002 the Group disposed of its 35% interest in TIS & Origin Consulting (Japan — System Integration). This disposal does not impact Group Revenue as this company was equity accounted in 2001.

2.3.	Notes to the Consolidated Financial Statements
2.3.1.	Accounting Policies

With effect from January 1^st, 2001, the consolidated financial statements have been prepared in accordance with the ‘new accounting rules and methods applicable to consolidated financial statements’ approved by the Order of June 22^nd, 1999, implementing the Accounting Standards Committee Regulation CRC 99-02.

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These accounting policies do not differ from those previously adopted by the Group and detailed in the Notes to the consolidated financial statements presented in the 2000 Annual Report.

In accordance with the option offered by Regulation 99-02, Atos Origin has not retroactively adjusted investment and divestment transactions performed prior to January 1^st, 2001.

With effect from January 1^st, 2002, the Group adopted CRC Regulation 00-06 regarding liabilities. Application of this regulation has no impact on opening shareholders’ equity.

As part of the preparation of the consolidated financial statements, Atos Origin has aligned itself with the provisions of certain standards established by the IASC with respect to measurement and recognition.

In particular, Atos Origin has aligned itself with the measures prescribed for the recognition of revenue from services involving fixed price contracts based on the percentage of completion method (IAS 11), the determination of income taxes (IAS12) the recording of property, plant and equipment (IAS 16) and leases (IAS 17), the measurement and recognition of employee benefits (IAS 19), the effects of changes in foreign exchange rates (IAS 21), the impairment of assets (IAS 36) and the recognition of provisions, contingent liabilities and contingent assets (IAS 37).

2.3.2. Consolidation rules

a. Methods of consolidation

The financial statements of companies over which Atos Origin (hereinafter referred to as ‘the Company’) exercises exclusive control, whether directly or indirectly, are fully consolidated.

The financial statements of companies in which voting rights are split between the Company and another shareholder are consolidated as follows:

• companies over which the Company has effective control of their business operations are fully consolidated;

• companies over which the Company exercises significant influence are accounted for using the equity method. Significant influence is assumed to exist where more than 20% of voting rights are held.

b. Basis of consolidation

All companies are consolidated on the basis of financial statements or accounts drawn up to December 31st and adjusted, where necessary, in accordance with Group accounting policies.

c. Foreign companies

The balance sheets of subsidiaries, which do not use the single European currency, are translated into euros at year-end rates of exchange and their income statements are translated at average exchange rates for the year. The impact of exchange rate movements on the balance sheet and net income for the year is taken to shareholders’ equity under ‘Translation adjustments’ (IAS21).

d. Review of the value in use of long-term assets

Long-term assets (property, plant and equipment, intangible assets and goodwill) are adjusted to their value in use when significant adverse changes are identified indicating that the value in use of an asset appears to be lower than its net carrying amount on a long-term basis.

The value in use is reviewed for each asset category by taking into account the Group expectations in terms of economic and operational trends relating to the use of the assets concerned. When an impairment appears necessary, the amount recognized is equal to the difference between the net carrying amount and the value in use.

The value in use is determined by referring to discounted future cash flows, market prices and replacement costs for the used equipment.

For goodwill, the value in use takes into account, in addition to future economic benefits, the benefits expected from the acquisition, such as the synergies resulting from the integration of the acquired enterprise with the Group’s activities and the enterprise’s strategic value for the Group.

The Group is thus in line with the measures of IAS 36, which inspired CNC opinion 2002-07 regarding asset depreciation and impairment.

e. Goodwill

Goodwill represents that portion of the difference between the cost of an investment and the Group’s share in the adjusted net assets of the company acquired as of the date of acquisition, not allocated to fair value adjustments.

Goodwill is amortized on a straight-line basis over the estimated period of benefit, not exceeding 20 years.

Origin Goodwill

Atos signed a Transfer and Subscription Agreement on August 27^th, 2000 under which Royal Philips Electronics transferred 98.2% of Origin common stock to Atos, in consideration for the issue of 19,532,732 Atos shares and 2,387,836 Atos shares each with two stock subscription warrants attached (ABSA). The ABSA were divided immediately after issue into 2,387,836 shares and 4,775,672 stock subscription warrants. As of December 31^st, 2002, only the second tranche of stock subscription warrants (2,387,836 warrants) remained in circulation. The resulting goodwill was deducted from additional paid-in capital recognized at the time of the transfer, up to the

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amount thereof, in accordance with COB monthly bulletin no. 210 of January 1988. The residual balance was recorded in assets in the consolidated balance sheet.

Notional annual amortization of EUR 9.0 million would have been recorded in respect of the Origin goodwill had this not been partially offset against additional paid-in capital in fiscal year 2000.

Atos KPMG Consulting goodwill

On August 16^th, 2002, Atos Origin purchased the entire common stock of Atos KPMG Consulting in the United Kingdom and The Netherlands. This acquisition was remunerated by the issue of 3,657,000 bonds redeemable in shares (ORA bonds) with stock subscription warrants attached at a price of EUR 64.20 each, representing a total amount of EUR 235 million, and a cash payment of EUR 417 million.

Pursuant to Article 210 of CRC Regulation 99-02, the acquisition cost of the KPMG Consulting in the United Kingdom and The Netherlands securities is equal, at the date on which control becomes effective, to the fair value of securities issued. The fair value of the ORA bonds presented in consideration was determined using a multi-criteria approach taking into account the stock market price of the Atos Origin share and the transaction value set by the parties. This method produced a value of EUR 64.20 per share, or a total value for the ORA bonds of EUR 235 million.

The stock subscription warrants attached to the shares underpin the earn-out clause granted in favor of the Atos KPMG Consulting partners in the United Kingdom and The Netherlands.

The stock subscription warrants detached from the ORA bonds represent an additional component of the purchase price for the Atos KPMG consulting activity, payable solely on the realization of certain activity results (earn-out clause). These stock subscription warrants may only be exercised if revenue and profitability objectives of the activities purchased are realized.

Atos Origin has not recorded the stock subscription warrants in its balance sheet and will treat them as an off-balance sheet commitment until their exercise date.

Given the recent nature of the transaction and the expected benefits of the acquisition, such as synergies resulting from the integration of purchased activities with those of the Group, and the quality, importance and competitive positioning of these activities, it was not considered necessary to perform an impairment test leading to a reduction in the net book value of assets allocated to these activities.

f. Effective date of acquisitions and disposals

Net income of companies acquired or sold during the course of the fiscal year is recorded in the consolidated income statement with effect from the date control is acquired or up to the date of disposal respectively.

g. Research and development expenditure

Research and development expenditure in respect of specific applications or products is expensed in the period incurred.

h. Other intangible fixed assets

Other intangible fixed assets primarily comprise software acquired by the Group and amortized on a straight-line basis over periods specific to each acquisition, subject to a maximum of five years. The cost of software developed for internal or commercial use is generally expensed in the period incurred.

It may however be capitalized within intangible fixed assets where the following conditions are satisfied:

• the project is clearly identified and the corresponding costs are itemized and monitored in a reliable manner;

• the technical design feasibility of the software is demonstrated;

• the Group intends to produce, commercialize or use the software internally;

• a potential market exists for software intended for rental, sale or marketing in any other form and the utility of the software to the Group has been approved in the case of internal use;

• sufficient resources exist to carry the project through to commercialization or internal use;

• the Group possesses the management and monitoring tools necessary to satisfy these conditions.

Only costs incurred during the software production phase are capitalized, with costs incurred during design, user configuration and follow-up phases expensed in the period.

The Group holds a number of patents but has not granted any licenses in respect thereof. The Group incurs license fees in respect of licenses granted to it. These fees are recorded in the Income statement under Operating costs and expenses.

i. Tangible fixed assets

Tangible fixed assets are recorded at acquisition cost net of any interest expenses. They are depreciated on a straight-line or reducing-balance basis over the following expected useful lives:

- Buildings	20 years
- Fixtures and fittings	5 to 10 years
- Computer hardware	3 to 5 years
- Vehicles	4 years
- Office furniture and equipment	5 to 10 years

Assets acquired under operating lease contracts are not capitalized.

Assets acquired under finance lease contacts are capitalized and the corresponding borrowing recorded in liabilities in the

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balance sheet. The accounting policy adopted by the Group is consistent with IAS 17 ‘Leases’.

j. Investments

Non-consolidated participating interests are stated at the lower of acquisition cost and fair value.

Fair value corresponds to fair value to the Group, taking into account the Group’s share in adjusted net worth and the future profitability prospects of the Company. A provision for impairment is recorded where the fair value of an investment falls below its acquisition cost.

k. Treasury stock

The Atos Origin shares held by the parent company are charged against consolidated shareholders’ equity.

The accounting treatment for these shares is attributable to the purpose of their holding.

In the event of a disposal, the gain or loss and the corresponding tax impact are recorded in changes in consolidated shareholders’ equity.

l. Operating Receivables

Operating receivables are recorded at nominal value. They are assessed individually and, where appropriate, a provision is raised to take likely recovery problems into account.

m. Transferable securities

Transferable securities are recorded in the balance sheet at the lower of acquisition cost and market value.

For listed securities, market value is equal to the stock market price at the fiscal year-end. SICAV units are recorded at net asset value. Unrealized capital gains are not recognized.

n. Provisions for contingencies and losses

Provisions for contingencies and losses are recognized in compliance with the rulings of the Comité de la Réglementation Comptable governing liabilities (CRC N° 2000-06), whose application is mandatory for fiscal years beginning as of January 1^st, 2002. This application had no impact on shareholders’ equity.

The regulation defines a liability as an element of the asset base with a negative economic value for the entity, i.e. an obligation (legal, regulatory, or contractual) of the entity with respect to a third party for which an outflow of resources benefiting this third party is probable or certain, without a consideration expected from the latter that is at least equivalent.

The accounting policy adopted by the Group is consistent with IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’.

Atos Origin merger provisions

These provisions concern the Atos Origin merger and break down as follows:

• Origin fair value adjustment initially established to cover long-term commitments to purchase software licenses for which there was no corresponding business, disputes, litigation and claims as well as previously identified employee-related and tax contingencies and losses to completion on fixed-price contracts;

• provisions for discontinued operations;

• provisions for reorganization (employee costs);

• provisions for real estate end data center rationalization (closure of business sites, regrouping, optimization, etc.).

Other provisions on acquisitions

These provisions concern the acquisition of KPMG Consulting in the United Kingdom and The Netherlands and primarily comprise:

•     provisions for employee-related restructuring costs;

• provisions for adjustments to the opening balance sheet recorded to cover shared service contractual commitments subscribed with KPMG International Group without corresponding resources, due to the progressive integration of purchased activities in Atos Origin.

Provisions for retirement benefits and similar commitments

The Group valuation policy for retirement benefits and similar commitments is in line with IAS 19.

In accordance with the recommendations detailed in this standard, a periodic valuation of these commitments is performed by independent actuarial experts using the projected unit credit method. This actuarial method notably involves a number of assumptions regarding employee turnover, salary increases and the expected future return on plan assets. The discounted present value of these commitments is then calculated using a discount rate taking account of the financial environment in the different countries concerned and multiplied by a coefficient reflecting the remaining working life of employees before payment of the benefits provided by the different regimes.

The assets allocated to finance these employee commitments are recorded at fair value and the expected yield on plan assets is determined taking into account the make-up of investments. Actuarial differences resulting from changes in assumptions, plan amendments or differences between actual and expected returns on plan assets, are amortized over the activity period or the expected remaining life of beneficiaries, in so far as they exceed the 10% corridor provided for by IAS 19. Where the value of assets allocated to the financing of regimes exceeds commitments (surplus position), the Group applies IAS 19, which seeks to limit the recognition of prepaid expenses in the balance sheet. Charges relating to defined benefit plans are expensed as incurred.

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o. Debt issuance costs and bond redemption premiums

Debt issuance costs are included in deferred charges and released to the income statement on a straight-line basis over the life of the loan.

Bonds are recorded in liabilities in an amount corresponding to the issue proceeds and a provision raised over the life of the loan to cover the net-of-tax amount of the related premiums.

A provision for the redemption premium is recognized over the life of the loan for the net-of-tax-amount.

The Group has also decided to adopt the position expressed by the COB in its 1994 Annual Report and reiterated in its recommendations for the 2002 year-end closing, which consists in providing for all redemption premiums at the closing from the time the share price falls below the discounted value of the bond redemption.

p. Accounting classification of ORA bonds in the consolidated balance sheet

The bonds redeemable in shares (ORA bonds) issued on the acquisition of KPMG Consulting in the United Kingdom and The Netherlands by Atos Origin are recorded in shareholders’ equity in accordance with French accounting rules and due, primarily, to the absence of any remuneration and the suppression of the escape clause. On August 16^th, 2003, shares will be automatically and irrevocably issued to redeem these bonds.

q. Financial Instruments

The Group uses various financial instruments to hedge against foreign exchange and interest rate risks. All hedging instruments are traded with leading banks.

Foreign exchange risks are hedged using forward contracts and currency swaps and interest rate risks using standard interest rate swap agreements.

Hedging gains and losses are matched against the loss or gain on the hedged item.

r. Revenue

Revenue corresponds to the proceeds from sales of services and equipment carried out by fully consolidated companies in the normal course of business. The Group therefore is in line with IAS 11.

Consulting and Systems Integration Division revenue from fixed-price contracts is recognized in line with the technical completion of projects. When income from fixed-price contracts to develop individual applications or integrated systems is recorded over the course of several fiscal years, it is recognized using the percentage completion method. The excess of costs over billings is recorded in the balance sheet under ‘Accounts and notes receivable — trade’ and the excess of billings over costs under ‘Deferred income’.

Managed Services Division revenue is generally determined based on a fixed-price and/or a number of IT work units.

On-line services Division revenue largely corresponds to transaction volumes and IT services rendered.

s. Net income on ordinary activities

Net income on ordinary activities comprises the results of operations and financing transactions of the various Group business lines and any write-downs of non-consolidated participating interests.

t. Non-recurring items

Non-recurring items include income and expenses relating to events or operations clearly outside the ordinary activities of the Group due to their nature, amount or unusual occurrence.

u. Corporate Income Tax

The tax charge recorded in the Income Statement is the total of the current and deferred tax charge.

The Group accounts for deferred tax using the liability method on all temporary differences between the book value and tax base of assets and liabilities recorded in the consolidated balance sheet, with the exception of goodwill and the undistributed earnings of consolidated companies. The deferred tax charge is not discounted to present value. Deferred tax assets and liabilities are netted off at taxable entity level.

Deferred tax assets corresponding to temporary differences and tax loss carryforwards are recognized in the accounts and a provision raised where the likelihood of realization of taxable profits at tax entity level is considered low based on available historical and forecast information. The accounting policy adopted by the Group is consistent with IAS 12 ‘Income Taxes’.

v. Earnings per share

Earnings per share (basic and diluted) is calculated by dividing net income before or after amortization of goodwill by:

• the weighted average number of shares in issue during the period (basic earnings per share);

• the weighted average number of shares in issue during the period, plus the number of shares that could be issued as a result of the exercise in full of all convertible securities outstanding (diluted earnings per share).

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2.3.3. Notes to the consolidated income statement

Comparability of fiscal years:

The figures for fiscal years 2002, 2001 and 2000 are not comparable insofar as:

• The fiscal year ended December 31^st, 2000 had an exceptional term of 15 months and includes the entities resulting from the Atos scope for 15 months and those resulting from the Origin scope for 3 months.

• The fiscal year ended December 31^st, 2002 includes the entities resulting from the KPMG Consulting activities in the UK and The Netherlands with effect from September 1^st, 2002.

a. Personnel expenses

	Period ended			Period ended			Period ended
	Dec. 31st, 2002			Dec. 31st, 2001			Dec. 31st, 2000
(in EUR millions)	(12 months)			(12 months)			(15 months) (*)
Wages and salaries		(1,290.8	)		(1,187.0	)		(678.7	)
Other expenses		(351.2	)		(361.5	)		(255.2	)
Total		(1,642.0	)		(1,548.5	)		(933,9	)

b. Breakdown of employee numbers by geographical region

	Year-end		Year-end		Year-end		Average		Average		Average
	number of		number of		number of		number of		number of		number of
	employees		employees		employees		employees		employees		employees
	2002		2001		2000		2002		2001		2000
France		8,685		8,419		9,732		8,657		10,319		8,757
The Netherlands		9,019		7,114		6,093		8,184		6,259		6,230
United Kingdom		2,139		1,133		1,210		1,592		1,081		1,350
Other EMEA		6,319		6,838		6,751		6,571		6,767		6,617
Americas		1,210		1,517		1,881		1,367		1,740		2,197
Asia — Pacific		1,131		1,147		1,088		1,134		1,149		1,125
Corporate		99		110		161		100		125		168
Total		28,602		26,278		26,916		27,606		27,440		26,442

c. Directors’ compensation

Total compensation allocated between January 1^st, 2002 and December 31^st, 2002 to members of the Atos Origin S.A. Management Board and the Chairman of the Supervisory Board (8 individuals) amounted to EUR 4,966,117. Members of the Atos Origin S.A. Supervisory Board received directors’ fees of EUR 152,424 during the same period.

d. Operating costs and expenses

	Period ended			Period ended			Period ended
	Dec. 31st, 2002			Dec. 31st, 2001			Dec. 31st, 2000
(in EUR millions)	(12 months)			(12 months)			(15 months)
Equipment, supplies and sub-contracting costs		(340.9	)		(425,5	)		(307,5	)
Premises and equipment costs and maintenance		(307.6	)		(262.1	)		(161.5	)
Travel expenses		(81.8	)		(102,2	)		(59,6	)
Telecommunications		(121.4	)		(114,4	)		(68,0	)
Depreciation and amortization		(125.1	)		(136,5	)		(88,7	)
Taxes other than corporate income tax		(21.4	)		(25,1	)		(12,0	)
Other operating costs and expenses		(137.1	)		(162.1	)		(121.5	)
Total		(1,135.3	)		(1,227.9	)		(818,8	)

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e.     Net financial expense

Net financial expense by type

						Period ended			Period ended			Period ended
						Dec. 31st, 2002			Dec. 31st, 2001			Dec. 31st, 2000
(in EUR millions)	Income		Expense			(12 months)			(12 months)			(15 months)
Convertible bond issues				(3.8	)		(3.8	)		(3.9	)		(4.7	)
Long- and medium-term borrowings				(14.1	)		(14.1	)		(3.5	)		(1.3	)
Lease financing				(1.3	)		(1.3	)		(1.7	)		(1.8	)
Short-term financing		16.2		(13.7	)		2.5			0.1			(0.4	)
Net interest expense		16.2		(32.9	)		(16.7	)		(9.0	)		(8.2	)
Exchange gains and losses		10.1		(12.1	)		(2.0	)		0.4			(2.4	)
Financial provisions (*)		0.5		(9.0	)		(8.5	)		(3.2	)		(0.2	)
Other				(0.1	)		(0.1	)		2.2			5.0
Total		26.8		(54.1	)		(27.3	)		(9.6	)		(5.8	)

     (**) Charges to financial provisions included in the net financial expense 2002 total EUR 8.5 million:

     > EUR 4.9 million in respect of the exchange losses and the non-consolidated participating interest,

     > EUR 3.6 million with respect to the exceptional provision for the convertible bond issue redemption premium.

Interest rate information

Average Group borrowings increased from approximately EUR 184 million in fiscal year 2001 to EUR 333 million in fiscal year 2002. The cost of borrowings fell to 5.0% from 5.2% last year.

f.     Non-recurring items

Net non-recurring expenses total EUR 70.8 million, and primarily comprise:

• EUR 76.5 rationalization and reorganization costs including EUR 38.2 million provisions to cover restructuring to be completed in fiscal year 2003.

• Disposals of participating interests for EUR 12.2 million. These net capital gains were generated by the sale of SNT shares received in consideration for the 2001 sale of customer contact centers in France and the Origin TIS minority interest in Japan.

g.     Corporate income tax Current and deferred taxes

	Period ended									Period ended									Period ended
	Dec. 31st, 2002									Dec. 31st, 2001									Dec. 31st, 2000
(in EUR millions)	(12 months)									(12 months)									(15 months)
	France			International			Total			France			International			Total			France			International			Total
Current taxes		(18.2	)		(10.6	)		(28.8	)		(24.9	)		(22.3	)		(47.2	)		(15.0	)		(3.4	)		(18.4	)
Deferred taxes		3.4			(21.5	)		(18.1	)		(0.6	)		(36.2	)		(36.8	)		(3.3	)		(12.2	)		(15.5	)
Total		(14.8	)		(32.1	)		(46.9	)		(25.5	)		(58.5	)		(84.0	)		(18.3	)		(15.6	)		(33.9	)

The corporate income tax charge for the period ended December 31^st, 2002 was EUR 46.9 million, corresponding to a effective rate of 30.3% of income before tax and after deductible amortization of goodwill.

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Net income before tax and amortization of goodwill breaks down as follows:

	Period ended			Period ended			Period ended
(in EUR millions)	Dec. 31st, 2002			Dec. 31st, 2001			Dec. 31st, 2000
Net income on ordinary activities		238.3			251.6			155.2
Non-recurring items		(70.8	)		(2.9	)		(42.1	)
Net income before tax and amortization of goodwill		167.5			248.7			113.1
Deductible amortization of goodwill		(12.7	)		—			—
Theoretical tax base		154.8			248.7			113.1

The deductible goodwill amortization charge is EUR 12.7 million and corresponds to the goodwill generated by the integration of the activities of KPN Data Center, End User Services and KPMG Consulting in the United Kingdom.

Effective rate of tax

The difference between the standard French corporate income tax rate and the effective tax rate breaks down as follows:

	Period ended			Period ended			Period ended
(in EUR millions)	Dec. 31st, 2002			Dec. 31st, 2001			Dec. 31st, 2000
Theoretical tax base		154.8			248.7			113.1
French standard rate of tax		35.4	%		36.4	%		37.7	%
Theoretical tax charge at French standard rate		(54.8	)		(90.5	)		(42.6	)
Impact of permanent differences		1.1			—			—
Foreign income taxed at different rates		1.7			2.6			2.5
Unrecognized deferred tax assets		2.0			5.8			6.2
Others		3.1			(1.9	)		—
Group tax charge		(46.9	)		(84.0	)		(33.9	)
Effective Group tax rate		30.3	%		33.8	%		30.0	%

The decrease in the effective Group tax rate is due to a reduction in the standard tax rates in France and The Netherlands, as well as tax repayments obtained in 2002 and the location of certain activities in countries benefiting from lower tax rates than in France.

Breakdown of deferred tax assets by type and origin

(in EUR millions)	Gross value		Provision			Net value
* Tax losses carried forward		60.9		(44.2	)		16.7
* Temporary differences. adjustments and provisions		67.0		(16.0	)		51.0
Total		127.9		(60.2	)		67.7

Deferred tax assets not provided represent profits recognized in the accounts. tax unit by tax unit. in respect of probable future tax savings. Such savings are restricted to the ability of each tax unit to recover these assets in the near future. Deferred tax assets are not discounted to present value as the impact of discounting is not material at individual tax unit level and certain tax units are unable to produce a reliable reversal schedule. The countries with the largest tax losses available for carry forward are the United States (EUR 54.5 million). Germany and Switzerland (EUR 29.1 million) and Brazil (EUR 7.3 million).

The tax losses carryforward schedule is as follows:

(in EUR millions)	Dec 31st, 2002		Dec 31st, 2001		Dec 31st, 2000
2002		—		1.4		1.6
2003		2.5		2.6		9.1
2004		0.6		4.1		11.1
2005		2.2		1.7		13.0
2006		3.5		5.3
2007		5.6
Tax losses available for carryforward more than 5 years		67.3		54.7		26.3
Ordinary tax losses carryforwards		81.7		69.8		61.1
Evergreen tax losses carryforwards		45.4		63.2		69.9
Total tax losses carryforwards		127.1		133.0		131.0

36 ATOS ORIGIN ANNUAL REPORT 2002

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h. Minority interests

The minority interest share in net income is EUR 11.3 million. The most significant balances concern:

• AtosEuronext, Bourse Connect and companies in partnership with Euronext, for EUR 4.4 million

• Atos Processing Services (APS), a German payment services specialist, for EUR 1.9 million

• Atos Origin Middle East, a System Integration specialist in Saudi Arabia, for EUR 3.5 million

i. Earnings per share

The Group applies the earnings per share calculation rules described in Note 2.3.1. Under this method it is assumed that funds received on the date of exercise of rights are invested at either the money market rate or the Group internal rate of return.

Basic and diluted earnings per share may be reconciled as follows:

		Period ended Dec. 31st,		Period ended Dec. 31st,		Period ended Dec. 31st,
		2002 (12 months)		2001 (12 months)		2000 (15 months)
Net income — Group share [a]			70.8		123.0		48.5
Impact of the conversion of dilutive instruments			0.1		11.3		7.4
Diluted net income — Group share [b]			70.9		134.3		55.9
Weighted-average number of shares outstanding [c]			43,954,677		43,806,925		26,064,573
Impact of dilutive instruments
	Convertible bonds (OCEANE)				1,440,501		1,440,501
	Philips Warrants		2,387,413		4,774,826		4,774,826
	ORA KPMG Consulting UK and NL		3,657,000
	Earn-out Atos KPMG Consulting		847,500
	Stock subscription option plans				3,779,172		2,282,890
Diluted average number of shares outstanding [d]			50,846,590		53,801,424		34,562,790
Earnings per share in EUR [a]/[c]			1.61		2.81		1.86
Diluted earnings per share in EUR [b]/[d]			1.39		2.49		1.62

2.3.4. Notes to the consolidated balance sheet

a. Goodwill

	Dec 31st,			Acq./			Disposals/			Dec 31st,			Acq./		Disposals/	Dec 31st,
(in EUR millions)	2000			Charge			Reversal			2001			Charge		Reversal	2002
Gross value		386.2			123.4			(6.5	)		503.1			690.9			1,194.0
Amortization		(76.2	)		(23.3	)		1.8			(97.7	)		(67.1)*			(164.8	)
Net book value		310.0			100.1			(4.7	)		405.4			623.8			1,029.2

(*) Depreciation and amortization charges for 2002 in the amount of EUR 67.1 million include an exceptional charge for the Origin goodwill in the amount of EUR 28.7 million. This exceptional charge offsets the reversals of provisions, which were no longer founded, as recorded in the Origin opening balance sheet as at October 1^st, 2000.

Goodwill movements between December 31^st, 2001 and 2002 were as follows:

(in EUR millions)
Net book value as of Dec. 31st, 2001	405.4
Atos Origin End User Services & Telecom Software Solutions	58.0
Atos KPMG Consulting in The Netherlands	166.3
Atos KPMG Consulting in the United Kingdom	453.1
Other	13.5
Total acquisitions	690.9
Exceptional adjustment to goodwill	(28.7	)
Amortization of goodwill	(38.4	)
Net book value as of Dec. 31st, 2002	1,029.2

The acquisition cost of KPMG Consulting securities in The Netherlands was EUR 155.1 million (including acquisition costs), for net worth purchased, after adjustments, of negative EUR 11.2 million. The related goodwill is therefore EUR 166.3 million.

ATOS ORIGIN ANNUAL REPORT 2002 37

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The acquisition cost of KPMG Consulting activities in the United Kingdom was EUR 505.2 million (including acquisition costs), for net assets, after adjustments, of EUR 52.1 million. The related goodwill is therefore EUR 453.1 million.

b. Other intangible fixed assets

(in EUR millions)	Gross value			Amortization			Net value
December 31st, 2000		97.7			(56.4	)		41.3
Additions. charges		10.7			(18.2	)		(7.5	)
Disposals. reversals		(2.6	)		1.5			(1.1	)
Changes in Group structure / Translation differences		(12.8	)		3.0			(9.8	)
December 31st, 2001		93.0			(70.1	)		22.9
Additions. charges		19.5			(11.7	)		7.8
Disposals. reversals		(6.3	)		3.7			(2.6	)
Changes in Group structure / Translation differences		3.5			0.6			4.1
December 31st, 2002		109.7			(77.5	)		32.2

c. Tangible fixed assets

							Computer			Other			Fixed assets			Payments			Gross
(in EUR millions)	Land			Buildings			hardware			assets			in progress			on account			value
Gross value as of Dec. 31st, 2000		2.8			91.0			340.2			141.0			1.4			0.8			577.2
Additions		0.7			17.9			82.6			20.8			5.3			0.5			127.8
Disposals		(0.5	)		(19.8	)		(33.2	)		(32.0	)					(0.6	)		(86.1	)
Changes in Group structure and other		2.3			32.0			114.5			5.9			(1.1	)		0.1			153.7
Gross value as of Dec. 31st, 2001		5.3			121.1			504.1			135.7			5.6			0.8			772.6
Additions					23.4			37.6			12.9			8.5			(0.1	)		82.3
Disposals		(4.0	)		(44.1	)		(68.1	)		(18.6	)								(134.8	)
Changes in Group structure and other		(0.1	)		14.9			5.8			(6.0	)		(10.8	)		(0.5	)		3.3
Gross value as of Dec. 31st, 2002		1.2			115.3			479.4			124.0			3.3			0.2			723.4
Accum. depreciation as of Dec. 31st, 2000					(44.0	)		(234.1	)		(104.0	)		0.0			(0.3	)		(382.4	)
Charge					(9.5	)		(84.9	)		(19.9	)								(114.3	)
Release					12.9			24.3			30.1						0.2			67.5
Changes in Group structure and other					(1.6	)		(32.1	)		(5.8	)								(39.5	)
Accum. depreciation as of Dec. 31st, 2001		0.0			(42.2	)		(326.8	)		(99.6	)		0.0			(0.1	)		(468.7	)
Charge					(12.6	)		(82.1	)		(17.1	)								(111.8	)
Release					7.7			52.8			14.0						0.1			74.6
Changes in Group structure and other					(1.9	)		(9.7	)		11.4									(0.2	)
Accum. depreciation as of Dec. 31st, 2002		0.0			(49.0	)		(365.8	)		(91.3	)		0.0			0.0			(506.1	)
Net Value as of Dec. 31st, 2002		1.2			66.3			113.6			32.7			3.3			0.2			217.3

d. Investments

Investments comprise investments in equity affiliates and non-consolidated participating interests, loans and guarantee deposits.

Investments in equity affiliates total EUR 0.2 million and consist of the Group’s 50% interest in the French company Twinsoft.

Non-consolidated participating interests total EUR 4.6 million and primarily consist of the Group’s 12.4% interest in the German company B+S Card Services.

Loans and guarantee deposits total EUR 16.5 million.

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e. Accounts and notes receivable. trade

(in EUR millions)	2002(*)			2001			2000
Gross value		908.0			1,007.7			872.9
Provisions		(36.1	)		(36.8	)		(16.6	)
Net asset value		871.9			970.9			856.3
Payments on account received on orders		(87,2	)		(87,8	)		(47,6	)
Deferred income and amounts due to customers		(66.0	)		(67.5	)		(66.8	)
Net accounts receivables (incl. VAT)		718.7			815.6			741.9
Number of days revenue outstanding		68			79			77

(*) The average customer turnover period in fiscal 2002 was determined based on revenues for the months October to December 2002.

f. Other receivables. prepayments and accrued income

(in EUR millions)	2002		2001		2000
Recoverable VAT		56.3		41.0		43.0
Tax-related assets (carry back, minimum tax charge, tax credits)		43.7		34.1		53.2
Deferred tax assets		77.4		90.0		75.1
Amounts receivable on disposals of tangible assets and investments (*)		5.9		17.5		1.0
Other receivables		25.2		30.7		36.0
Prepayments and accrued income		55.7		46.8		36.1
Total		264.2		260.1		244.4

(*) Amounts receivable on asset disposals as of December 31^st, 2001 and 2002, comprise that portion of the customer contact center activities consideration receivable in 2002 and 2004.

g. Common stock

	Number		Par	Total
	of shares		value	(in EUR thousands)
Common stock at 31/12/00		(*) 43,764,396	EUR 1		43,764.4
Common stock at 31/12/01		43,853,704	EUR 1		43,853.7
Common stock at 31/12/02		44,055,676	EUR 1		44,055.7

(*) Issue of 21.9 million shares on October 31^st, 2000 as a result of the merger with Origin

The following common stock issues were carried out in fiscal year 2002:

				(in EUR millions)
Date of Management		Number of		Impact on		Impact on additional
Board meeting	Description	shares issued		common stock		paid-in capital
December 31st, 2002	Exercise of stock options		103,095		0.1		2.9
	Shares issued to Employees Savings plan		98,877		0.1		5.9
Total			201,972		0.2		8.8

h. Minority interests

Minority interests in shareholders’ equity total EUR 43.6 million. The most significant balances concern:

• AtosEuronext, Bourse Connect and companies in partnership with Euronext: EUR 32.4 million

• Atos Processing Services (APS), a German payment specialist company: EUR 5.1 million

• Atos Origin Middle-East: EUR 3 million

ATOS ORIGIN ANNUAL REPORT 2002 39

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i. Provisions for contingencies and losses

(in EUR millions)	2000		Other (*)			Charge		Release			2001		Other (*)			Charge		Release			2002
Fair value adjustment Origin		129.0		15.2					(69.0	)		75.2		(18.9	)				(15.5	)		40.8
Merger integration		159.5		(0.4	)		0.7		(135.1	)		24.7		(4.5	)				(14.0	)		6.2
Other provisions on acquisitions														25.0			8.7		(9.6	)		24.1
Operating provisions		60.1		6.5			36.2		(44.6	)		58.2		12.1			52.4		(36.6	)		86.1
Pensions		56.4		28.6			9.8		(1.8	)		93.0		4.8			16.8		(5.2	)		109.4
Total provisions for contingencies and losses		405.0		49.9			46.7		(250.5	)		251.1		18.5			77.9		(80.9	)		266.6

(*) The ‘Other’ column comprises adjustments to the opening balance sheet, changes in Group structure and translation differences, together with amounts transferred to operating liabilities.

Fair value adjustment Origin

(in EUR millions)	2000		Adjust (a)		Charge	Release			2001		Changes (b)			Charge	Release			2002
Fair value adj. Origin		129.0		15.2			(69.0	)		75.2		(18.9	)			(15.5	)		40.8

(a) Adjustments on goodwill & translation differences (b) Changes in Group structure & translation differences.

In October 1, 2000, the company made a number of fair value accounting adjustments to the opening balance sheet of Origin. Provisions were charged against equity to cover long-term software license commitments for which there was no corresponding business, commercial disputes, litigation and claims as well as previously identified employee-related and tax contingencies and losses to completion on fixed-price contracts. These provisions were increased by a further EUR 15 million in 2001, based on our final assessment of those contingencies. EUR 69 million was charged against these provisions in the period. In fiscal 2002 they were utilized in the amount of EUR 15.5 million and released in the amount of EUR 17.1 million in respect of provisions no longer required (EUR 6.8 million — nil impact on consolidated net income) and translation differences (EUR 10.3 million). Provisions of EUR 1.8 million were transferred to operating liabilities At December 31^st, 2002, the majority of the EUR 41 million balance related to commitments to purchase excess software licenses over a residual 5-year period and to employee and tax contingencies yet to be settled.

Origin merger

(in EUR millions)	2000		Adjust (a)			Charge		Release			2001		Adjust (b)			Charge	Release			2002
Discontinued operations		7.2		6.7					(13.9	)		0.0									0.0
Reorganization		115.0		(3.6	)				(91.2	)		20.2		(4.5	)			(11.9	)		3.8
Rationalization		19.1		(1.9	)				(14.1	)		3.1						(0.9	)		2.2
Integration costs		18.2		(1.6	)		0.7		(15.9	)		1.4						(1.2	)		0.2
Total		159.5		(0.4	)		0.7		(135.1	)		24.7		(4.5	)			(14.0	)		6.2

(a) Adjustments on goodwill & translation differences.

The merger provisions concern the merger with Origin.

They covered the cost of implementing restructuring plan including significant staff reductions, the rationalization of premises and data processing facilities, and discontinuing or disposing of a number of loss-making and non-core activities. In 2001, EUR 121 million was charged against these provisions to finance the cost of restructuring in the period, while EUR 14 million of restructuring provisions was accounted for as operating activities to cover restructuring engaged at the closing 2001 and utilized in 2002. During 2002, EUR 14 million was used and EUR 4 million was recognized in operating liabilities and will be utilized in the first half of 2003. As at December 31^st, 2002, the balance of EUR 6 million covers the restructuring to be carried out in 2003.

Other acquisitions

(in EUR millions)	2001		Adjust. (a)		Charge		Release			2002
Atos KPMG Consulting		—		25.0		8.7		(9.6	)		24.1

(a) Adjustments on goodwill & translation differences.

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The provisions recorded on the acquisition of KPMG Consulting in The Netherlands and the United Kingdom cover three types of cost:

• unused shared services with KPMG Audit,

• employee-related costs resulting from economies of scale between Atos Origin activities in the United Kingdom and Atos KPMG Consulting,

• employee-related costs associated with downsizing measures implemented in respect of identified over-capacity. These provisions are in line with those identified when the acquisition was announced.

Operating provisions

(in EUR millions)	2000		Adjust (a)		Charge		Release			2001		Adjust (a)		Charge		Release			2002
Provisions for project commitments		16.6		0.1		12.6		(11.2	)		18.1		2.0		9.4		(15.4	)		14.1
Euro & Y2K		3.1						(3.1	)		0.0									0.0
Provisions for reorganization		6.0		0.7		1.9		(4.4	)		4.2		1.2		27.7		(5.2	)		27.9
Other		34.4		5.7		21.7		(25.9	)		35.9		8.9		15.3		(16.0	)		44.1
Operating provisions		60.1		6.5		36.2		(44.6	)		58.2		12.1		52.4		(36.6	)		86.1

(a) Adjustments on goodwill & translation differences.

The operating provisions essentially concern restructuring unrelated to the Atos Origin merger and the Atos KPMG Consulting acquisition, project commitments, the convertible bond redemption premiums, and various contingencies and losses. The increase in operating provisions in fiscal 2002 is mainly due to identified over-capacity. Other provisions remained stable.

Pensions

(in EUR millions)	2000		Adjust (a)		Charge		Release			2001		Adjust (a)		Charge		Release			2002
Pensions		56.4		28.6		9.8		(1.8	)		93.0		4.8		16.8		(5.2	)		109.4

The Atos Origin Group offers its employees several post-retirement benefits and benefits contingent on the accumulation of a number of years service within the Group. These include defined benefit pension schemes and retirement termination payments.

The terms and conditions of these schemes (services. financing and asset investment policy) vary according to applicable legislation and regulations within each country.

The EUR 109.4 million provision primarily covers the following countries:

– The Netherlands,

– Germany,

– Italy (Leaving service),

– France (retirement termination payments).

The largest commitments concern entities located in the United Kingdom and The Netherlands. where Group employee pensions are primarily assured by separate legal entity pension funds. jointly administered by employees and management. Commitments are funded by employer and employee contributions and the return obtained on plan assets. generally invested in shares and bonds. The solvency of the fund is monitored by local regulators and is reviewed as part of periodic actuarial valuations aimed at ensuring that contribution levels are sufficient to cover services.

Certain other Group entities. primarily in France and Germany. offer complementary pension schemes aimed at increasing expected services provided by mandatory schemes. together with retirement termination payments and long-service bonuses provided for by industry-wide collective bargaining agreements. The Group took into account the 2002 amendment to the limitations provided for in IAS 19 on the recognition of prepaid expenses in the balance sheet, when the value of assets allocated to financing pension regimes (increased by any unrecognized actuarial losses) exceed pension commitments.

ATOS ORIGIN ANNUAL REPORT 2002 41

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The principal assumptions incorporated in the actuarial valuations, performed in accordance with IAS 19 recommendations, are as follows:

	United Kingdom						The Netherlands						Other Euroland countries
	2002			2001			2002			2001			2002			2001
Rate of salary increase		3.75	%		4.0	%		3.35	%		2.5	%	2 to 3%			2 to 3%
Expected return on plan assets		7.70	%		6.5	%		7.00	%		7.0	%	Not applicable
Discount rate		5.75	%		5.8	%		5.50	%		6.0	%		5.50	%	5.8 to 6%

(in EUR millions)	31/12/02		31/12/01
Provisions for pension commitments and equivalent		109.4		93.0
Including, Group commitments at the end of 2002		70.7		65.6
Including, commitments in respect of which the multi-employer funds will be		38.7		27.4
taken over by the Group from January 1st, 2004 (KPN/KPMG)

The main defined-benefit plans are as follows:

	Netherlands			United Kingdom			Other			Total
Total commitments		(439.0	)		(162.2	)		(88.2	)		(689.4	)
Fair value of plan assets		353.0			111.9			19.9			484.8
Net financing surplus/(deficit)		(86.0	)		(50.3	)		(68.3	)		(204.6	)
Provisions		(6.4	)		—			(64.3	)		(70.7	)
Unrecognized losses		(79.6	)		(50.3	)		(4.0	)		(133.9	)
Corridor (10% of commitments)		43.9			16.2			—			60.1
Amortization base		(35.7	)		(34.1	)		—			(69.8	)
Average remaining activity period of employees	8 years			12 years
Forecast 2003 actuarial amortization charge		(4.5	)		(2.8	)					(7.3	)

In accordance with Group policy, unrecognized actuarial losses in the United Kingdom and The Netherlands will be amortized over the average remaining activity period of employees, in so far as they exceed the 10% corridor (10% of the maximum between total commitments and the fair value of plan assets).

An additional expense of approximately EUR 8 million will be recorded in the 2003 Income Statements.

No material impact is expected in respect of other countries.

Analysis of amounts recorded in the Balance Sheet and the Income Statement in respect of existing regimes in the United Kingdom and The Netherlands:

(in EUR millions)	2002			2001
Prepaid expenses / accrued expenses		(6.4	)		47.8
Impact of limitations on the recognition of surpluses		0			47.8
Net amount recognized in the balance sheet		(6.4	)		0
Current service cost		(24.9	)		(25.2	)
Interest expense		(32.1	)		(29.1	)
Expected return on plan assets		38.3			38.2
Amortization of actuarial gains/losses		(0.9	)		0
Total profit / (loss)		(19.6	)		(16.1	)

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j. Net debt

	2002
	Falling due within
																5 years			2001			2000
(in EUR millions)	Total			1 year			2 years			3 years			4 years			or more			Total			Total
Bonds		(173.0	)					(173.0	)											(173.0	)		(173.0	)
Finance leases		(17.2	)		(11.8	)		(4.2	)		(1.0	)		(0.1	)		(0.1	)		(27.1	)		(32.3	)
Long-term borrowings		(636.7	)		(100.0	)		(155.5	)		(152.1	)		(152.1	)		(77.0	)		(181.3	)		(26.0	)
Other borrowings		(35.3	)		(23.0	)		(0.9	)		(0.9	)		(9.4	)		(1.5	)		(30.3	)		(12.5	)
Total borrowings		(862.1	)		(134.8	)		(333.6	)		(154.0	)		(161.6	)		(78.6	)		(411.7	)		(243.8	)
Transferable securities		133.1			133.1															83.2			49.5
Cash at bank and in hand		288.7			288.7															93.3			80.8
Total cash and cash equivalents		421.8			421.8			0.0			0.0			0.0			0.0			176.5			130.3
Net debt		(440.3	)		287.0			(333.1	)		(154.0	)		(161.6	)		(78.6	)		(235.2	)		(113.5	)

Fixed- and floating-rate borrowings break down as follows:

(in EUR millions)	2002			2001			2000
Fixed-rate borrowings		(183.0	)		(178.8	)		(217.0	)
Floating-rate borrowings		(679.1	)		(232.9	)		(26.8	)
Total borrowings		(862.1	)		(411.7	)		(243.8	)

Fixed-rate borrowings primarily consist of convertible bonds and finance lease contracts.

Floating-rate borrowings primarily consist of the syndicated loan and credit facilities and overdrafts used occasionally by Group companies.

In line with Group policy of hedging 50% of floating-rate borrowings using fixed-rate interest swaps, actual fixed-rate borrowings amount to EUR 520 million.

All borrowings are denominated in euros.

Convertible bonds (1999-2004)

In June 1999 Atos carried out a EUR 172.5 million convertible bond issue, represented by 1,440,501 bonds with a nominal value of EUR 119.8.

The bonds pay interest at 1% per year.

They are redeemable at any time after October 1^st, 2002, at the issuers initiative, with a redemption premium of EUR 11.60 or on October 1^st, 2004 at a price of EUR 131.4, representing a yield to maturity of 2.75%.

The bonds may be converted at any time as from July 6^th, 1999, on the basis of one share per bond.

Syndicated loan (2002-2007)

On August 6, 2002 Atos Origin secured a syndicated loan for an amount of EUR 800 million, in order to finance:

• The acquisition of KPMG Consulting in UK and in The Netherlands,

• The repayment of the syndicated loan, signed in 2001,

• General company purpose.

The principal characteristics of this syndicated loan are:

• Tranche A of EUR 475 million, 5 years amortizing,

• Tranche B of EUR 150 million, 4 years amortizing with one year repayment holiday,

• Tranche C of EUR 175 million, 3 years revolving credit facility,

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As of December 31^st, 2002 the loan had been drawn down in the amount of EUR 625 million, representing the whole of tranches A and B. Interest rate swaps fixing the rate payable were entered into for an amount of EUR 175 million, in addition to the existing swap contracts for EUR 163 entered in 2001.

In addition, the Group must comply with two financial criteria throughout the term of the loan:

• Net indebtedness less than consolidated shareholders’ equity, Group share,

• Net indebtedness less than two-times consolidated EBITDA.

The debt-equity ratio as of December 31^st, 2002 is 59%, while Net Debt is 1.1 times EBITDA.

k. Financial instruments

1.     Market value of financial instruments

Cash at bank and in hand, short-term deposits, trade accounts receivable, bank facilities and trade accounts payable

Given the short-term nature of these instruments, the Group considers their book value to represent a reasonable approximation of their market value as of December 31^st, 2002.

Medium- and long-term borrowings

The market value of medium- and long-term borrowings as of December 31^st, 2002 is estimated at EUR 795 million based on:

• the book value of the syndicated loan,

• the market value of the convertible bonds.

The net book value of the syndicated loan and the convertible bonds as of December 31^st, 2002 represent an amount of EUR 798 million.

Derivatives

The Group uses standard interest rate swap contracts entered into with leading banks in the management of its borrowings. As of December 31^st, 2002, Atos Origin held a hedge contract in the amount of EUR 338 million, covering that part of the syndicated loan drawn down at this date.

The average fixed rate of interest guaranteed by swaps entered into during fiscal years 2001 and 2002 exceeds that available on financial markets as of December 31^st, 2002.

The market value of these swaps applied to the residual term of the contracts would represent a loss for Atos Origin of EUR 7.3 million as of December 31^st, 2002, if the Group decided to unwind the swaps. This valuation only concerns derivatives with a residual period to maturity of more than 1 year.

2. Management of counterpart risks

The Group has a strict policy of analyzing counterpart risks. The Group manages the counterpart risks relating to its commercial activities by maintaining a diversified customer portfolio and using risk monitoring instruments. The Group controls the counterpart risk relating to its investments and market transactions by rigorously selecting a range of leading, diversified bank counterparts. As such, the Group considers its exposure to credit risk to be minimal.

3. Exposure to market risk

Exposure to foreign exchange risk

The Group’s monetary assets comprise loans and borrowings, transferable securities and cash at bank and in hand. Monetary liabilities comprise borrowings, operating and other liabilities. A large part of Group commercial and financial transactions are Euro denominated.

The Group has implemented a foreign exchange management policy covering positions resulting from commercial and financial transactions performed in currencies other than the Euro. The Group is primarily exposed to movements in the GBP and USD. This policy involves the hedging of all foreign currency invoices once the transaction commitment becomes firm. The Group uses forward contracts and foreign exchange swaps for hedging purposes.

Exposure to interest rate risk

This encompasses two types of risk:

• a price risk in risk of fixed-rate financial assets and liabilities. For example, by contracting a fixed-rate liability, the Company is exposed to opportunity risk should interest rates fall. A change in interest rates would impact the market value of fixed-rate financial assets and liabilities but would not impact financial income and expenses and, as such, future net income of the Company up to maturity of these assets and liabilities.

• a cash-flow risk in risk of floating-rate financial assets and liabilities. The Group does not believe that a change in interest rates would have a material impact on the value of floating-rate financial assets and liabilities.

Taking into account hedging instruments contracted by the Group as of December 31^st, 2002, borrowings exposed to interest rate risk at this date total EUR 341 million.

An increase in interest rates of approximately 100 base points would have increased the 2002 interest expense by EUR 3.4 million.

If the Group had not contracted these interest rate hedges, the 2002 interest expense would have been lower by EUR 1.4 million.

44 ATOS ORIGIN ANNUAL REPORT 2002

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l. Accounts and notes payable. trade

(in EUR millions)	2002		2001		2000
Trade payables		325.7		403.2		326.0
Amounts payable on assets		17.1		20.0		9.1
Total		342.8		423.2		335.1

m. Other liabilities. accruals and deferred income

(in EUR millions)	2002		2001		2000
Payments on account received on orders		87.2		87.8		47.6
Employee-related liabilities		176.4		189.8		123.7
Social security and other employee welfare liabilities		106.6		111.5		99.0
VAT payable		102.3		95.3		91.7
Corporate income tax payable		39.0		35.2		27.4
Deferred tax liabilities		9.7		12.3		12.2
Liabilities on acquisitions of participating interests		4.6		5.0		4.1
Miscellaneous creditors and other operating liabilities		29.3		32.0		37.9
Deferred income		47.1		45.6		46.2
Total		602.2		614.5		489.8

Payments on account received on orders and deferred income are included in the accounts receivable calculation.

2.3.5. Off-Balance sheet commitments

a. Other financial commitments

(in EUR millions)	2002		2001		2000
Commitments given
- Pledges. securities. guarantees		108.7		108.3		56.0
Commitments received
- Pledges. securities. guarantees		—		—		—
Other commitments
- Retirement commitments not funded by provisions		3.4		3.7		3.9

Pledges, securities and guarantees given in the amount of EUR 108.7 million break down as follows:

(in EUR millions)	2002		2001		2000
Supplier warranties		26.2		15.2
Customer warranties		53.8		(*) 68.4		21.0
Seller warranties		—		0.5		1.0
Premises		6.4		5.3		25.0
Taxation and other		22.3		18.9		8.9
Total		108.7		108.3		56.0

(*) a commitment was given to KPN pursuant to the acquisition of its End User Services business. in order to guarantee the proper completion of service contracts.
A warranty equal to 15% of the total annual value of the contract. subject to a maximum annual amount of EUR 13.5 million (EUR 80 million over the term of the contract) was requested.

The value of the warranty amounted to EUR 51.9 million and EUR 37.9 million as at December 31^st, 2001 and December 31^st, 2002, respectively.

b. Other commitments

Atos Origin undertook to issue common stock on the exercise of the unattached stock subscription warrants allotted to Royal Philips Electronics in consideration for the transfer of Origin stock. The warrants fell into two categories, conferring entitlement to subscribe for one Atos Origin share.

ATOS ORIGIN ANNUAL REPORT 2002 45

2   ANNUAL REPORT > FINANCIAL REPORT

The first warrant category was not exercised.

The second warrant category (category B) could be exercised if the weighted average daily stock market price of the Atos Origin share over 12 consecutive stock market sessions during a period ending June 30^th, 2003 exceeds EUR 208.

c. Claims and litigation

In recent years, certain Group companies have been subject to tax audits.

In addition, Atos Origin Brazil has been challenged by the Brazilian employee welfare agency as to the amount of contributions due. Provisions have been recorded for the claims; nevertheless the Group considers that it has sound arguments to successfully contest the proposed reassessments.

With respect to commercial transactions, Management has implemented a strict action plan in view of promoting service quality and avoiding claims and litigation. In this regard, the volume of litigation as of December 31^st, 2002, has decreased by more than 50% compared to last year. Further to such measures, the number of new claims and litigation during the year 2002 is considerably below last year’s level. For the current existing claims and litigation, Management is not aware of any claims or litigation likely to have a material impact on the results or assets of the Group that are not adequately provided in the balance sheet as at December 31^st, 2002.

At this date, provisions recorded by the Group to cover identified disputes total EUR 29.5 million.

d. Other risks

Industrial and environmental risks

As the Group is a service provider it is not exposed to any material environmental risks.

Other specific risks

- Suppliers

Atos Origin is not, in its opinion, dependent on one or more suppliers as it has alliances and global industrial agreements with many major suppliers.

- Customers

The five largest customers in fiscal year 2002 generated 34% of Group revenue. The Group’s 42 largest customer accounts represent more than 55% of revenue. Excluding Philips, which now represents less than 14%, KPN 10% and Euronext 6%, no single customer generated more than 3% of total Atos Origin revenue in 2002.

- Employee-related risks

Employee management within the Group is a priority for the Management Board. The close attention paid to human resource issues limits considerably any employee-related risks.

- Legal risks

As the activity of Atos Origin is centered on Consulting, Systems Integration, and IT Managed Services, legal risks primarily lie in the non-performance of contractual obligations. Potential liability could thus arise from delays or deficiencies in providing a service.

The services are, however, largely reliant on the quality of information provided by clients, who have in-house IT experts and must therefore assist the service provider for the performance of services. Accordingly, all Atos Origin contracts contain limitation of liability clauses and require, where necessary, guarantees with respect to intellectual and industrial property right infringement from its software providers.

- Insurance and risk coverage

The Company has taken out a number of third-party liability insurance policies with highly-reputed international companies providing it with a level of coverage considered adequate by Executive Management.

Given the levels of its contractual commitments, the Group subscribed various policies over 2002 covering general and professional liability for a total exceeding MEUR 100. However, because of constant premium increases and the reduction of the coverage scope by insurers, the Group has set up an alternative insurance structure and implemented higher deductibles, while enforcing a stricter contractual liability limitation together with an improved service quality.

In addition, the Company’s assets are covered by a property damage policy, including coverage for business interruption, for all countries where it operates, providing total coverage of EUR 122 million.

Finally, fraud and computer-related abuse are the subject of a specific coverage, including coverage for business interruption.

46 ATOS ORIGIN ANNUAL REPORT 2002

> FINANCIAL REPORT ANNUAL REPORT   2

2.4. Scope of consolidation as of December 31^st, 2002

	Percentage	Consolidation	Percentage
	interest	method	control	Address
HOLDING COMPANY
Atos Origin SA	Consolidating parent company			3. place de la Pyramide — 92800 PUTEAUX
Atos Origin International SAS	100	FC	100	3. place de la Pyramide — 92800 PUTEAUX
Atos Origin BV	100	FC	100	Polarisaveneue 97. 2132 JH HOOFDDORP
Atos Origin International BV	100	FC	100	Polarisaveneue 97. 2132 JH HOOFDDORP
Atos Investissement 5	100	FC	100	3. place de la Pyramide — 92800 PUTEAUX
FRANCE
A2B	66	FC	66	3. place de la Pyramide — 92800 PUTEAUX
Idée Industrie Services (2IS)	100	FC	100	3. place de la Pyramide — 92800 PUTEAUX
AtosEuronext	50	FC	50	Palais de la Bourse. Place de la Bourse. 75002 PARIS
Atos Odyssée	93	FC	93	372. rue Saint-Honoré. 75001 PARIS
Atos Origin Enterprise Services	100	FC	100	3. place de la Pyramide — 92800 PUTEAUX
Atos Origin Formation	100	FC	100	7/13. rue de Bucarest — 75008 PARIS
Atos Origin Infogérance	100	FC	100	3. place de la Pyramide — 92800 PUTEAUX
Atos Origin Intégration	100	FC	100	18. avenue d’Alsace — 92400 COURBEVOIE
Atos Origin Multimédia	100	FC	100	3. place de la Pyramide — 92800 PUTEAUX
Atos Origin Services	100	FC	100	3. place de la Pyramide — 92800 PUTEAUX
Atos TPI	51	FC	51	3. place de la Pyramide — 92800 PUTEAUX
Bourse Connect	59	FC	59	4. rue de la Bourse — 75002 PARIS
Diamis	30	FC	30	18. avenue d’Alsace — 92400 COURBEVOIE
Mantis	100	FC	100	24. rue des Jeûneurs — 75002 PARIS
THE NETHERLANDS
AtosEuronext Nederland B.V	50	FC	50	Beursplein S. 1012 JW Amsterdam
Atos Origin IT Nederland B.V	100	FC	100	Papendorpseweg 93, 3528 BJ UTRECHT
Atos Origin IT Systems Management Nederland BV	100	FC	100	Groenewoudseweg 1. 5621 BA EINDHOVEN
Atos Origin Telco Services	100	FC	100	Henri Dunantlaan 2. 9728 HD GRONINGEN
Atos Origin End User Services	100	FC	100	Regulusweg 11, 2516 AC S GRAVENHAGE
Atos Origin Telecom Software Solutions	100	FC	100	Regulusweg 11, 2516 AC S GRAVENHAGE
Atos Origin KPMG Consulting NV	100	FC	100	Rijnzathe 10, 3454 PV DE MEERN
Atos NLC Holding BV	100	FC	100	Rijnzathe 10, 34545 PV DE MEERN
E.M.E.A. (Europe — Middle East — Africa)
GERMANY
Atos Origin Gmbh	100	FC	100	Curiestraße 5 — D70563 STUTTGART
Atos Origin Processing Services Gmbh	52	FC	52	Hahnstraße 25. 60528 FRANKFURT
SAUDI ARABIA
Atos Origin Middle East	75	FC	75	Po Box 30862 — Al Khobar 31952 — Saudi Arabia
AUSTRIA
Atos Origin Information Technology GmbH	100	FC	100	Triester Strasse 66. Postfach 289. A-1101 VIENNA
BELGIUM
AtosEuronext (Belgium)	50	FC	50	Place de la Bourse. Palais de la Bourse. 1000
				BRUXELLES
Atos Origin Belgium N.V.	100	FC	100	Minervastraat 7. B 1930 ZAVENTEM
Origin International Competencies and Alliances (ICA)	100	FC	100	Imperiastraat 12. B 1930 ZAVENTEM
SPAIN
Atos ODS Origin	98	FC	98	Calle Sardenya 521/523 — 08024 BARCELONA
Twinsoft (Espagne)	50	FC	50	C/cerro del castena 72. 28034 MADRID
HUNGARY
Atos Origin Information Technology Kft	100	FC	100	Fehérvari ut. 84 A. H-1119 BUDAPEST
ITALY
Atos Origin SPA	100	FC	100	Piazza IV Novembre 3 — 20124 MILANO
LUXEMBOURG
Atos Origin Luxembourg S.A.	100	FC	100	ZA Bourmicht — L 8070 BERTRANGE
POLAND
Atos Origin Sp.z.o.o	100	FC	100	Al. Jerozolimskie 195 b 02-222 Warszawa

ATOS ORIGIN ANNUAL REPORT 2002 47

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	Percentage	Consolidation	Percentage
	interest	method	control	Address
PORTUGAL
Atos Origin Portuguesa (Tecnologias de Informaçao). LDA	98	FC	98	Taguspark. Ed. Inovaçao III. no. 512. 2780-920 Porto Salvo
UNITED KINGDOM
Atos Origin UK Limited	100	FC	100	Whyteleafe Business Village. Whyteleafe Hill. Whyteleafe. Surrey CR3 0AT
Atso Origin UK Holding	100	FC	100	Whyteleafe Business Village. Whyteleafe Hill. Whyteleafe. Surrey CR3 0AT
Atos KPMG Consulting	100	FC	100	Whyteleafe Business Village. Whyteleafe Hill. Whyteleafe. Surrey CR3 0AT
SWITZERLAND
Atos Origin (Schweiz) AG	100	FC	100	Industriestrasse 19 — 8304 Wallisellen
ASIA PACIFIC
AUSTRALIA
Atos Origin Australia Pty Limited	100	FC	100	Philips House Level 16 — 15 Blue Street — NORTH SYDNEY NSW 2060
CHINA
Atos Origin Information Technology (Shangai) Co. Ltd.	100	FC	100	Room 1103-B4 -Pu Dong Software Park-498
				Guo Shou Jing Road — Zhang Jiang Hi-Tech. Zone — SHANGAI 201203. P.R.
Atos Origin Hong Kong Ltd.	100	FC	100	43/F Hopewell Centre. 17 Kennedy Road. 17 Kennedy Road. WANCHAI
INDIA
Atos Origin India Private Limited	100	FC	100	Unit No. 126/127. SDF IV. SEEPZ. Andheri (East). MUMBAI — 400 096
MALAYSIA
Atos Origin (Malaysia) Sdn. Bhd	100	FC	100	5th Floor. Menara Merais. No.1. Jalan 19/3. 46300 Petaling Jaya. Selangor Darul Ehsan. West Malaysia
SINGAPORE
Atos Origin (Singapore) Pte	100	FC	100	8 Temasek Boulevard. # 07-01 Suntec Tower Three. Singapore 038988
TAIWAN
Atos Origin Taiwan Ltd.	100	FC	100	9F.. No.117. Sec 3. Ming Sheng E. Rd.. Taipei 105. TAIWAN
THAILAND
Atos Origin IT (Thailand) Limited	100	FC	100	200 Moo 4. 25th Floor. Jasmine international Tower.
				Room No. 2502. Chaengwattana Road.
				Pakkret. Nonthaburi 11120. Thailand
AMERICAS
ARGENTINA
Atos Origin Argentina S.A.	100	FC	100	Vedia 3892 P.B.. capital federal. C1430 DAL - BUENOS AIRES. Argentina
BRAZIL
Atos Origin Brasil Ltda.	100	FC	100	Rua Itapaiuna. 2434 — 2° andar- Parte. Santo Amaro. SAO PAULO
MEXICO
Atos Origin Mexico. S.A. de C.V.	100	FC	100	Mariano Escobedo n°510 PH. Colonia Anzures. CP 11589 MEXICO DF
PEROU
Atos ODS	98	FC	98	Avenue Ricardo Rivira — Navarrete 765 — LIMA 27
UNITED STATES OF AMERICA
Atos Origin Inc.	100	FC	100	430. Mountain Avenue — MURRAY HILL NJ 0797

FC: full consolidation

EA: equity affiliate

48 ATOS ORIGIN ANNUAL REPORT 2002

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2.5. Parent company summary financial statements

Nota Bene

The Atos Origin financial statements present only a partial picture of the financial position of the Atos Origin Group as a whole. This overall picture is presented in the Consolidated Financial Statements section of the Annual Report. The following information. presented in the form of the Atos Origin parent company financial statements. provides a summary of the most material figures and information of greatest interest to readers.

Comparability

Fiscal year 2002, 2001 and 2000 financial data is not comparable as the 2000 fiscal period covers an exceptional period of 15 months to December 31st and takes account of the consolidation of Origin from October 1^st, 2000 (3 months). The following Company financial statements have been audited by the statutory auditors and a clean audit report issued. The Auditor’s report is available on request at the Company’s registered office.

Atos Origin SA activity in 2002

The main activities of Atos Origin SA are:

– Management of the Atos Origin brand,

– Holding Group investments,

– Centralizing financing activities.

The financial statements of the Company reflect its activities. Revenue consists of brand royalties received from Group subsidiaries. 2002 Other expenses are exceptionally high at EUR 10.4 million and comprise Group management costs and Origin brand royalties paid to Atos Origin BV.

Atos Origin BV, a subsidiary of Atos Origin SA, owns the Origin brand.

The net financial income of the holding company comprises dividends received from subsidiaries and loan interest.

The Balance Sheet presents participating interests of EUR 1,155.7 million as of December 31^st, 2002 and borrowings of EUR 714.8 million.

The increase in participating interests and borrowings in fiscal 2002 is attributable to the acquisition of Atos KPMG Consulting.

2.5.1. Income statement

	Period ended			Period ended			Period ended
	Dec. 31st, 2002			Dec. 31st, 2001			Dec. 31st, 2000
(in EUR millions)	(12 months)			(12 months)			(15 months)
Revenue		32.5			23.8			16.4
Cost of sales		(2.1	)		(2.8	)		(1.4	)
Taxes and duties other than CIT		(0.1	)		(0.1	)		(0.1	)
Personnel expenses		(0.1	)		(0.2	)		(0.3	)
Other expenses		(10.4	)		(3.2	)		(2.9	)
Depreciation. amortization and provisions		(3.2	)		(2.6	)		(0.6	)
Total operating expenses		(15.9	)		(8.9	)		(5.3	)
Income from operations		16.6			14.9			11.1
Net financial income		(1.0	)		4.3			16.1
Net income on ordinary activities		15.6			19.2			27.3
Non-recurring items		(0.8	)		(0.7	)		2.6
Corporate income tax		3.8			1.9
Net income for the period		18.6			20.4			29.9

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2.5.2. Balance sheet

(in EUR millions)	Dec 31st, 2002		Dec 31st, 2001		Dec 31st, 2000
ASSETS
Intangible fixed assets		5.7		6.1		6.6
Tangible fixed assets		1.3		1.2		0.3
Participating interests		1,155.7		515.2		471.3
Other investments		12.3		181.7		15.4
Total fixed assets		1,175.0		704.3		493.7
Accounts and notes receivable. trade		3.5		3.0		3.3
Other receivables *		37.7		153.1		99.9
Transferable securities		30.0		0.0		49.1
Cash at bank and in hand		244.1		39.6		0.1
Total current assets		315.3		195.7		152.4
Prepayments and accrued income		6.6		1.4		2.3
TOTAL ASSETS		1,496.9		901.4		648.4
* of which inter-company accounts		28.5		130.2		91.7

(in EUR millions)	Dec 31st, 2002		Dec 31st, 2001		Dec 31st, 2000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Common stock		44.0		43.9		43.8
Additional paid-in capital		228.5		219.6		217.4
Legal reserves		4.4		4.4		2.1
Other reserves and Retained earnings		112.0		91.6		64.0
Net income for the period		18.6		20.4		29.9
Shareholders’ equity		407.5		379.9		357.1
Other Shareholders’ equity (a)		234.8
Provisions for contingencies and losses		21.1		14.0		9.2
Borrowings		714.8		382.0		199.5
Accounts payable. trade		23.3		12.1		19.9
Other liabilities*		95.4		113.4		62.6
Total liabilities		833.5		507.5		282.0
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		1,496.9		901.4		648.4
*of which inter-company accounts		92.9		96.8		61.2

(a) On August 16^th, 2002, the Company issued 3,657,000 ORA bonds redeemable in ordinary shares as part consideration for the acquisition of KPMG Consulting in the United Kingdom and The Netherlands. The ORA bonds were issued at a price of EUR 64.2 each, representing a total of EUR 234.8 million.

50 ATOS ORIGIN ANNUAL REPORT 2002

> FINANCIAL REPORT ANNUAL REPORT   2

2.5.3. Subsidiaries and investments

							Common					Outstanding
							stock/		Reserves			loans and	Guarantees						Dividends
	Gross value at		Net value at				Additional		and			advances	given	Dec 31st,		Dec 31st,			received
Companies	Dec 31st,		Dec 31st,				paid-in		retained			granted by	by the	2002		2002			during
(in EUR thousands)	2002		2002		% interest		capital		earnings			Atos Origin	Company	Revenues		Net income			the period
I — Detailed information
A — Subsidiaries (50% or more of common stock)
FRANCE
Atos Origin Services		29,596.1		29,596.0		100		18,209		2,845					196,993		8,187			7,564
Mantis		6,722.1		6,722.1		100		40		3,034					18,684		2,358			2,489
Atos Investissement 5		476,300.7		476,300.7		100		476,301		0					0		2,327
Segin Immobilier		5,927.2		5,649.0		100		5,927		(239	)				0		(39	)
Immobilière Industrielle Faidherbe		15.2		15.2		100		15		(140	)				108		632
Atos Origin Multimédia		3,696.9		3,696.9		100		3,600		484					116,977		10,795			8,003
Atos Origin Infogérance		47,014.4		47,014.4		93		23,348		172					282,533		15,298			4,025
Atos TPI		316.3		316.3		51		150		23					27,929		1,676			643
Atos Origin Formation		1.8		1.8		100		436		44					8,460		(471	)		890
Atos Origin Intégration		36,400.2		36,400.2		97		13,941		8,171					206,303		6,741			8,932
Atos Odyssée		11,253.7		11,253.7		93		42		960					23,873		3,344			2,684
AtosEuronext		33,853.9		33,059.8		15		57,169		394					233,172		1,976			1,080
Origin France		30,300.0		30,300.0		100		15,235		(16,114	)				0		177
Atos Origin Enterprises Services		1,000.0		59.4		2		9,093		295					63,461		(5,937	)
Atos Origin International		2,378.2		1,945.0		100		1,003		(360	)				5,825		1,196
ITALY
Atos Multimédia		67.5		52.0		100		52		428					2,047		(428	)
Atos SPA		54,218.6		47,657.0		100		47,000		(2,628	)				144,743		(10,659	)
BENELUX
Atos Service NV		0.0		0.0		100		334		(530	)				0		(6	)
SPAIN — PORTUGAL
Atos-ODS Origin		18,798.6		18,798.6		98.2		639		19,830					61,969		(1,321	)
GTI		721.6		588.0		100.0		71		698					1,327		(222	)
GERMANY
Atos Origin GMBH		40,750.2		32,205.0		100		41,926		(996	)				141,425		(17,363	)
THE NETHERLANDS
Atos Origin Engenering BV		1,116.9		1,116.9		100		108		283					8,091		348
Atos Origin BV		372,736.4		372,736.4		100		229,034		206,959					0		118,655
B — Investments (less than 50% of common stock)
Twinsoft		190.5		190.5		50		381		76					1,224		4
II — SUMMARY INFORMATIONS
Other investments		554,4		459.0
TOTAL		1,173,931		1,156,134																36,310

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2.5.4. Company five-year financial summary

(in EUR millions)	2002		2001		2000		1999			1998
I — COMMON STOCK AT PERIOD END
Common stock		44.0		43.9		43.8		21.4			16.2
Number of shares outstanding		44,055,676		43,853,704		43,764,396		21,366,235			10,603,627
Maximum number of shares that may be created by:
* conversion of convertible bonds		1,440,501		1,440,501		1,440,501		1,440,501
* exercise of stock subscription options		10,782,146		8,553,998		7,057,716		1,377,420			502 240
II — INCOME FOR THE PERIOD
Revenue. net		32.5		23.8		16.4		13.0			7.1
Net income before tax. employee profit-sharing and incentive schemes depreciation. amortization and provisions		46.6		23.4		27.7		14.6			(41.2	)
Corporate income tax		3.8		1.9		0.0		(1.5	)		3.1
Net income after tax. employee profit-sharing. depreciation. amortization and provisions		18.6		20.4		29.9		23.1			39.4
Dividend distribution
III — PER SHARE DATA (in EUR)
Net income after tax and employee profit-sharing but before depreciation. amortization and provisions		1.14		0.58		0.63		N.A.			N.A.
Net income after tax. employee profit-sharing. depreciation. amortization and provisions		0.42		0.47		0.68		1.08			3.72
Dividend per share
IV — EMPLOYEES
Average number of employees during the period		0		0		0		0			0
Total payroll for the period		0.1		0.2		0.3		0.1			0.2
Employee social security and welfare payments		0		0		0		0			0

2.5.5. Special statutory auditors’ report on regulated agreements

In accordance with our appointment as statutory auditors of your company, we are required to report on the regulated agreements that have been brought to our attention. The terms of our engagement do not require us to identify such agreements.

We inform you that no agreement directed by article L225-86 of the French Companies Act (Code de commerce) has been brought to our attention.

Paris and Neuilly-sur-Seine, March 12^th, 2003
The Auditors,

Amyot Exco Grant Thornton
 
Daniel Kurkdjian
Vincent Papazian Deloitte Touche Tohmatsu
 
Jean-Paul Picard
Jean-Marc Lumet

(This is a free translation of the original text in French for information purposes only. It should be understood that the agreements reported on are only those provided by the Commercial code and that the report does not apply to those related party transactions described in IAS 24 or other equivalent accounting standards).

52 ATOS ORIGIN ANNUAL REPORT 2002

> PERSONS RESPONSIBLE FOR THE FINANCIAL STATEMENTS ANNUAL REPORT   6

6.3.2. Auditors fees

	Amyot Exco Grant Thornton					Deloitte Touche Tohmatsu
	Amount		%			Amount		%
(in EUR)	2002		2002			2002		2002
Legal audit
- On consolidated & individual statements		909,774		75	%		1,790,074		63	%
- Other missions related to legal audit		298,262		25	%		583,830		21	%
Sub-total		1,208,036		100	%		2,373,904		84	%
Other allowances
- Legal, tax, social audit		1,500		—			219,913		8	%
- IT audit
- Internal audit
- Others				—			230,222		8	%
Sub-total		1,500		—			450,135		16	%
Total		1,209,536		100	%		2,824,039		100	%

EX-10.1

EXHIBIT 10a

EX-10.4

EXHIBIT 10d

EX-10.5

Exhibit 10 (e)

Principal differences between French GAAP and US GAAP

Accounting principles generally accepted in France (French GAAP) differ in certain material respects from US GAAP. With respect to the Atos Origin financial statements, the principal differences between French GAAP and US GAAP are as follows:

1.	Under French GAAP, certain business combinations, which would be recorded using the purchase method of accounting under US GAAP, were recorded similar to a pooling. The effect of this difference is that goodwill and other intangibles that would be recorded as assets under US GAAP are not recognized, with a corresponding reduction in the amount reflected in Shareholders’ Equity. Prior to 2002, this difference also resulted in lower amounts recorded as goodwill amortization expense under French GAAP compared to that which would be recorded under US GAAP.
2.	Beginning in 2002, US GAAP does not permit goodwill to be amortized. Rather, it is tested for impairment at least annually. French GAAP requires goodwill to be amortized.
3.	French GAAP and US GAAP differ in some respects as to the timing of recognition of provisions for restructuring and other liabilities. Generally, these types of provisions may be recorded earlier under French GAAP than would be the case under US GAAP.
4.	French GAAP and US GAAP differ in some respects as to the treatment of certain costs incurred in connection with business combinations. Under French GAAP, certain costs that would have to be recorded as expenses when incurred under US GAAP, may be accrued at the acquisition date and treated as part of the cost of an acquisition.
5.	While deferred taxes are accounted for using an asset and liability approach under both French and US GAAP, there are differences in the criteria for the recognition of deferred tax assets and liabilities and the determination of the need for a valuation allowance.

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