The accompanying unaudited consolidated financial statements include the accounts of Siebel Systems, Inc. and its wholly owned subsidiaries (the "Company"). The accompanying unaudited consolidated financial statements have been prepared on substantially the same basis as the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations regarding interim financial statements. All amounts included herein related to the consolidated financial statements as of September 30, 2004 and the three and nine months ended September 30, 2003 and 2004 are unaudited. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003.

In the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for their fair presentation. The interim results presented are not necessarily indicative of results for any subsequent quarter or for the year ending December 31, 2004. Certain prior year amounts have been reclassified to conform to the current year presentation.

The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires that the Company make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to revenue recognition, provision for doubtful accounts and sales returns, fair value of investments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, income taxes, restructuring obligations, and contingencies and litigation, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ significantly from the estimates made by management with respect to these and other items.

The Company accounts for its employee stock-based compensation plans using the intrinsic value method, as prescribed by APB No. 25 "Accounting for Stock Issued to Employees" and interpretations thereof (collectively referred to as "APB 25"). Accordingly, the Company records deferred compensation costs related to its employee stock options when the market price of the underlying stock on the date of grant exceeds the exercise price of the stock option on the date of grant. Deferred compensation is expensed on a straight-line basis over the vesting period of the related stock option, which is generally five years. The Company did not grant any stock options at exercise prices below the fair market value of the Company's common stock on the date of grant during any period presented.

An alternative to the intrinsic value method of accounting for stock-based compensation is the fair value approach prescribed by SFAS No. 123 "Accounting for Stock-Based Compensation," as amended by SFAS No. 148 "Accounting for Stock-Based Compensation—Transition and Disclosure" (collectively referred to as "SFAS 123"). If the Company followed the fair value approach, the Company would record deferred compensation based on the fair value of the stock option at the date of grant as determined using the Black-Scholes option valuation model. The deferred compensation calculated under the fair value method would then be amortized on a straight-line basis over the respective vesting period of the stock option.

As required by SFAS 123, the Company has prepared a reconciliation of its earnings as reported on the statement of operations to the earnings that the Company would have reported if it had followed SFAS 123 in accounting for its stock-based compensation arrangements. In accordance with SFAS 123, in preparing this reconciliation the Company must first add back all stock-based compensation expense reflected in its statement of operations, then deduct the stock-based employee compensation expense determined under SFAS 123. Summarized below are the pro forma effects on the Company's earnings and earnings per share, as if the Company had elected to use the fair value approach prescribed by SFAS 123 to account for its employee stock-based compensation plans (in thousands, except per share data):

                                                                      Three Months Ended       Nine Months Ended
                                                                         September 30,            September 30,
                                                                    ----------------------   ----------------------
                                                                       2003        2004         2003        2004
                                                                    ----------  ----------   ----------  ----------
Net income (loss):                                                                                                 
  As reported.....................................................  $ (59,330)  $  19,370    $ (44,944)  $  59,238
                                                                    ----------  ----------   ----------  ----------
Compensation expense related to:
  Stock options dilutive to stockholders:                                                                          
    Stock-based compensation accounted for under APB 25...........        346         386        1,326       2,494
    In-the-money stock options and restricted stock units.........     (7,109)       (584)     (20,853)     (3,140)
    Stock purchase rights under the Purchase Plan.................     (1,904)     (2,554)      (3,973)     (8,071)
                                                                    ----------  ----------   ----------  ----------
       Subtotal...................................................     (8,667)     (2,752)     (23,500)     (8,717)
                                                                    ----------  ----------   ----------  ----------
  Stock options not dilutive to stockholders:                                                                      
    Out-of-the-money stock options................................    (35,738)    (35,109)    (108,320)   (120,002)
    Stock options cancelled for no consideration..................         --          --     (251,821)         --
    Stock options forfeited in connection with terminations.......     (6,390)         --      (29,337)     (1,940)
                                                                    ----------  ----------   ----------  ----------
       Subtotal...................................................    (42,128)    (35,109)    (389,478)   (121,942)
                                                                    ----------  ----------   ----------  ----------
       Total pro forma expense giving effect to SFAS 123..........    (50,795)    (37,861)    (412,978)   (130,659)
                                                                    ----------  ----------   ----------  ----------
  Pro forma net loss giving effect to SFAS 123....................  $(110,125)  $ (18,491)   $(457,922)  $ (71,421)
                                                                    ==========  ==========   ==========  ==========

Diluted net income (loss) per share:                                                                               
  As reported.....................................................  $   (0.12)  $    0.04    $   (0.09)  $    0.11
                                                                    ==========  ==========   ==========  ==========

  Pro forma giving effect to SFAS 123.............................  $   (0.22)  $   (0.04)   $   (0.93)  $   (0.14)
                                                                    ==========  ==========   ==========  ==========


Basic net income (loss) per share:                                                                                 
  As reported.....................................................  $   (0.12)  $    0.04    $   (0.09)  $    0.12
                                                                    ==========  ==========   ==========  ==========

  Pro forma giving effect to SFAS 123.............................  $   (0.22)  $   (0.04)   $   (0.93)  $   (0.14)
                                                                    ==========  ==========   ==========  ==========

Consistent with the Company's accounting for deferred tax assets resulting from the exercise of employee stock options in the accompanying consolidated financial statements, the Company has not provided a tax benefit on the pro forma expense in the above table.

In-the-money stock options in the above table have exercise prices below the closing price of the Company's common stock as of the end of each of the respective periods, and out-of-the-money stock options have exercise prices equal to or greater than the closing price of the Company's common stock as of the end of each of the respective periods. The closing prices as of September 30, 2003 and 2004 were $9.76 and $7.54, respectively.

As the table above illustrates, total pro forma expense for stock options includes $42,128,000 and $389,478,000 of expense during the three and nine months ended September 30, 2003, respectively, and $35,109,000 and $121,942,000 of expense during the three and nine months ended September 30, 2004, respectively, related to (i) stock options that were cancelled by the Company's Chairman for no consideration, (ii) stock options forfeited by employees upon termination for no consideration, and (iii) stock options that are significantly out of the money (e.g., the weighted-average exercise price of the out-of-the-money stock options was $17.77 per share compared to a closing price of $7.54 per share as of September 30, 2004). These items represented 83% and 94% of the pro forma expense for the three and nine months ended September 30, 2003, respectively, and 93% of the pro forma expense for both the three and nine months ended September 30, 2004.

The Company determined the assumptions used in computing the fair value of its stock options and stock purchase rights issued under its employee stock purchase plan (the "Purchase Plan") as follows:

The fair value of stock options was estimated on the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions:

                                       Three Months Ended     Nine Months Ended
                                          September 30,         September 30,
                                      --------------------  ---------------------
                                         2003       2004       2003        2004
                                      ----------  --------  ----------  ---------
Risk-free interest rate.............      2.02 %    3.06 %      1.69 %     3.00 %
Expected life (in years)............       3.3       3.7         3.1        3.4
Expected volatility.................        46 %      41 %        47 %       41 %

Using the Black-Scholes option valuation model, stock options granted during the three and nine months ended September 30, 2003 had weighted average fair values of $3.21 and $2.92 per share, respectively, as compared to weighted average fair values of $2.60 and $3.20 per share during the three and nine months ended September 30, 2004, respectively.

The fair value of employees' stock purchase rights granted under the Purchase Plan was estimated using the Black-Scholes option valuation model with the following weighted average assumptions used for purchases:

                                       Three Months Ended     Nine Months Ended
                                          September 30,         September 30,
                                      --------------------  ---------------------
                                         2003       2004       2003        2004
                                      ----------  --------  ----------  ---------
Risk-free interest rate.............      1.01 %    1.71 %      1.05 %     1.40 %
Expected life (in years)............       0.6       0.5         0.6        0.5
Expected volatility.................        38 %      46 %        47 %       46 %

The weighted average fair value of the common stock purchase rights granted under the Purchase Plan during the three and nine months ended September 30, 2003 was $2.48 and $2.40 per share, respectively, as compared to a weighted average fair value of $2.22 and $2.85 per share during the three and nine months ended September 30, 2004, respectively.

In June 2004, the Emerging Issues Task Force ("EITF") issued EITF No. 03-01 "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" ("EITF 03-01"). EITF 03-01 provides guidance with respect to determining the meaning of other-than-temporary impairment and its application to debt and equity securities within the scope of SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"), including investments accounted for under the cost method.

The Company expects to apply the recognition and measurement guidance in EITF 03-01 to other-than-temporary impairment evaluations beginning in the fourth quarter of 2004.  The Company adopted the disclosure provisions of EITF 03-01 for marketable investments as of December 31, 2003 and will adopt the disclosure requirements for cost method investments as of December 31, 2004. The Company does not expect the adoption of EITF 03-01 to have a material effect on its financial position, results of operations or cash flows.

During 2002, 2003 and 2004, the Company initiated a series of restructurings designed to better align its operating structure with expected revenue levels. The Company initiated and completed the first restructuring of its operations during 2002 (the "2002 Restructuring"), resulting in a charge to its operations of $205,305,000 during 2002. Due in part to the continued weakening in the global economy and reduced revenue expectations, the Company initiated a further restructuring of its operations in the second quarter of 2003, which was completed in September 2003 (the "2003 Restructuring"). The Company recorded charges to its operations during 2003 totaling $104,391,000, which consisted of $89,500,000 associated with the 2003 Restructuring and $14,891,000 associated with changes in estimates related primarily to the 2002 Restructuring.

The 2002 and 2003 Restructurings included the following key measures: (i) the reduction of the Company's workforce across all functional areas; (ii) the consolidation of its excess facilities; (iii) the abandonment of certain long-lived assets, including leasehold improvements, furniture and fixtures; and (iv) the transfer of certain technical support, quality assurance and other product development positions to labor markets with lower cost structures.

In order to continue to reduce expense levels and to further improve the Company's operating margins, the Company initiated an additional restructuring of its operations during the third quarter of 2004 (the "2004 Restructuring," and collectively with the 2002 Restructuring and 2003 Restructuring, the "Restructurings"). The 2004 Restructuring consisted primarily of the consolidation of additional facilities (located primarily in North America and Asia Pacific) and the abandonment of the related leasehold improvements and furniture and fixtures.

The following table summarizes the restructuring and related expenses incurred during the nine months ended September 30, 2004, and the remaining obligations related to the Restructurings as of December 31, 2003 and September 30, 2004 (in thousands):

                                                           Employee     Facility-       Asset
                                                         Termination     Related     Abandonment
                                                          Costs (1)     Costs (2)     Costs (3)     Total
                                                         ------------ ------------- ------------ -----------
Restructuring obligations, December 31, 2003............ $     3,805  $    147,790  $        --  $  151,595
                                                         ------------ ------------- ------------ -----------
Restructuring and related expenses:
  Recognized related to the 2004 Restructuring (4)......          --         2,833        1,703       4,536
  Recognized related to changes in estimates (5)........      (1,465)          837          205        (423)
  Accretion related to the Restructurings (6)...........          --         1,630           --       1,630
                                                         ------------ ------------- ------------ -----------
     Total (7)..........................................      (1,465)        5,300        1,908       5,743
Cash payments...........................................      (1,557)      (39,002)          --     (40,559)
Non-cash charges........................................          --            --       (1,908)     (1,908)
                                                         ------------ ------------- ------------ -----------
Restructuring obligations, September 30, 2004........... $       783  $    114,088  $        --  $  114,871
                                                         ============ ============= ============
     Less: Restructuring obligations, short-term........                                             36,397
                                                                                                 -----------
     Restructuring obligations, long-term...............                                         $   78,474
                                                                                                 ===========

1. The costs associated with the Company's workforce reductions consist primarily of severance payments, COBRA benefits, payroll taxes and other associated termination costs incurred in connection with the 2003 Restructuring. The remaining obligations as of September 30, 2004 relate to less than 10 terminations that have yet to be completed, primarily due to regulatory requirements in certain countries outside the U.S. The Company expects to complete these terminations within the next six months.

2. The costs associated with the Company's facilities consolidation primarily relate to lease termination costs, costs associated with satisfying remaining lease commitments, and expected brokerage and other re-letting costs, partially offset by estimated sublease income.

3. As part of the consolidation of the Company's facilities, certain leasehold improvements, furniture and fixtures were abandoned. As a result, the Company recorded a non-cash charge equal to the net book value of these abandoned assets in restructuring and related expenses.

4. In accordance with SFAS 146, the Company recorded the facility-related expenses incurred in the 2004 Restructuring after giving effect to the net present value of the related obligations.

5. The Company revised its estimated obligations with respect to the 2003 Restructuring during the nine months ended September 30, 2004 as follows:

• Employee termination costs—Due primarily to higher than expected voluntary terminations associated with positions included in the 2003 Restructuring, the Company reduced its remaining obligations for employee termination costs during the second quarter of 2004.

• Facility-related costs—Due primarily to the real estate markets in which the Company operates remaining at depressed levels longer than originally anticipated, the Company extended the estimated sublease commencement dates and/or reduced the estimated sublease rates on certain restructured properties. Partially offsetting these reductions in estimated sublease income were favorable changes in estimates that resulted from the Company entering into subleases sooner and/or at higher sublease rates than originally anticipated on certain other restructured properties.

6. Represents the accretion of the 2003 and 2004 Restructuring obligations. The Company will continue to accrete its obligations related to the 2003 and 2004 Restructurings to the then present value and, accordingly, will recognize additional accretion expense as a restructuring and related expense in future periods.

7. The following is a summary of the net restructuring and related expenses recognized during the three and nine months ended September 30, 2004 (in thousands):

                                                                                          Nine Months
                                                            Six Months                       Ended
                                                              Ended           Third       September 30,
                                                          June 30, 2004      Quarter         2004
                                                         ---------------- ------------- ----------------
Restructuring and related expenses:                                                                     
  2004 Restructuring-related............................ $            --  $      4,536  $         4,536
  Changes in estimates..................................          (1,579)        1,156             (423)
  Accretion.............................................           1,171           459            1,630
                                                         ---------------- ------------- ----------------
     Total restructuring and related expenses........... $          (408) $      6,151  $         5,743
                                                         ================ ============= ================

The following table summarizes the time period in which the Company anticipates settling its remaining restructuring obligations as of September 30, 2004 (in thousands):

                                                         Leases               Other          Estimated         Total
                                                         in the           Restructuring-     Sublease      Restructuring
                                                    Restructurings (1)   Related Costs (2)   Income (3)     Obligations
                                                   -------------------  ------------------  ------------  ---------------
Three months ending December 31, 2004............. $            7,581   $           6,752   $    (2,647)  $       11,686
Year ending December 31, 2005.....................             42,068              11,862       (19,777)          34,153
Year ending December 31, 2006.....................             32,199               9,240       (19,944)          21,495
Year ending December 31, 2007.....................             27,394               5,810       (20,010)          13,194
Year ending December 31, 2008.....................             26,450               7,286       (18,531)          15,205
Year ending December 31, 2009, and thereafter.....            120,485              36,509      (129,363)          27,631
                                                   -------------------  ------------------  ------------  ---------------
     Total restructuring obligations, gross....... $          256,177   $          77,459   $  (210,272)         123,364
                                                   ===================  ==================  ============
     Future accretion (4).........................                                                                (8,493)
                                                                                                          ---------------
     Present value of minimum lease payments......                                                               114,871
     Less: restructuring obligations, short-term..                                                                36,397
                                                                                                          ---------------
     Restructuring obligations, long-term portion.                                                        $       78,474
                                                                                                          ===============

1. Represents the Company's remaining lease commitments related to properties included in the Restructurings.

2. Consists primarily of (i) estimated operating costs (i.e., common area maintenance and property taxes) associated with restructured properties, (ii) estimated commissions associated with anticipated subleases of the restructured properties, and (iii) the remaining obligations related to employee termination cost.

3. The Company estimated sublease income and the related timing thereof based upon the opinions of independent real estate consultants, current market conditions, the status of negotiations with potential subtenants, and the location of the respective facility, among other factors. The Company's estimates of sublease income may vary significantly from actual amounts realized depending, in part, on factors which may be beyond the Company's control, such as the time periods required to locate and contract suitable subleases and the market rates at the time of such subleases.

4. The Company has reduced the facility-related obligations associated with the 2003 and 2004 Restructurings to their net present value. Future accretion represents the interest component of these obligations and will be recognized in future periods by the Company as an additional restructuring and related expense and as an increase in the carrying amount of the 2003 and 2004 Restructuring obligations.

The total restructuring charge and related cash outlay are based on management's current estimates, which may change materially if further consolidations are required or if actual lease-related expenditures or sublease income differ from amounts currently expected. The Company will review the status of its restructuring activities quarterly and, if appropriate, record changes to its restructuring obligations in current operations based on management's most current estimates.

Prior to redemption, the Debentures bore interest at a rate of 5.50% per annum, had a maturity date of September 15, 2006, and were convertible at the option of the holder into an aggregate of 12,867,000 shares of the Company's common stock at a conversion price of $23.32 per share.

On May 6, 2003, the Enforcement Division staff ("Staff") of the Securities & Exchange Commission ("SEC") contacted the Company and indicated that a May 1, 2003 article on CBS MarketWatch had raised questions regarding the Company's compliance with Regulation FD. In August 2003, the Staff notified the Company and two of its officers of the Staff's preliminary decision to recommend that the SEC take enforcement action against the Company and these officers in regard to statements allegedly made prior to and during an April 30, 2003 dinner. The Company and its officers have filed submissions with the SEC in response to the SEC notices that the Company believes contained numerous meritorious defenses to these allegations. Despite these submissions, on June 29, 2004, the SEC filed a lawsuit in the United States District Court of the Southern District of New York against the Company and two of its officers alleging, among other things, that the Company and its officers violated Regulation FD in connection with the statements described above. In September 2004, the Company filed a motion to dismiss the complaint. A hearing on the motion has been scheduled for December 2004. The Company believes the allegations in this action are without merit and it intends to defend itself vigorously.

On March 10, 2004, William Wollrab, on behalf of himself and purportedly on behalf of a class of the Company's stockholders, filed an action in the United States District Court for the Northern District of California against the Company and certain of its officers. This complaint was consolidated and amended on August 27, 2004, with the Policemen's Annuity and Benefit Fund of Chicago being appointed to serve as lead plaintiff. In October 2004, the Company filed a motion for dismissal of the consolidated complaint in this case. On April 12, 2004, Pamela Plotkin, on behalf of herself and purportedly on behalf of a class of the Company's stockholders, filed an action in the Superior Court of California (the "Superior Court") against the Company and certain members of the Company's Board of Directors. These actions allege claims in connection with various public statements made by the Company and seek damages together with interest and reimbursement of costs and expenses of litigation. The Superior Court dismissed the complaint by Ms. Plotkin on September 23, 2004, but gave Ms. Plotkin leave to file a new, amended complaint. The Company believes the allegations in these actions are without merit and it intends to defend vigorously against these claims.

In addition, the Company is subject to legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these proceedings and claims cannot be predicted with certainty, management does not believe that the outcome of any pending legal matter will have a material adverse effect on the Company's consolidated financial position, although results of operations or cash flows could be affected in a particular period.

The Company's U.S. Federal income tax returns for 1998 through 2003 are currently under examination by the Internal Revenue Service ("IRS"). During 2003 and 2004, the Company received notices from the IRS of proposed adjustments to certain of these tax returns. In August 2004, the Company reached a tentative settlement with the IRS with respect to the IRS's examination of the Company's income tax returns for 1998 through 2000, which the Company believes resolves all significant matters outstanding with respect to the Company's income tax returns for 1998 through 2000. Please refer to Note 5 below for a discussion of the impact on the Company's effective tax rate for the third quarter of 2004 due to this tentative settlement.

While the final resolution of the IRS's on-going examination of the Company's income tax returns remains uncertain, the Company believes it has made adequate provision in the accompanying consolidated financial statements for any adjustments that the IRS has or may propose with respect to the U.S. Federal income tax returns. Based on currently available information, management believes that the ultimate outcome of these examinations will not have a material adverse effect on the Company's financial position, cash flows or results of operations.

The Company's U.S. payroll tax returns for 1999 through 2001 are currently under examination by the IRS, primarily related to taxes associated with stock option exercises. While to date the Company has not received any notices of proposed adjustments with respect to this examination, the Company expects that the IRS may issue a notice of proposed adjustment to its payroll tax returns in the fourth quarter of 2004. While the final resolution of this on-going examination of the Company's payroll tax returns is uncertain, based on currently available information, the Company believes it has made adequate provision in the accompanying consolidated financial statements for any adjustments that may result from the IRS audit of the Company's U.S. payroll tax returns for 1999 through 2001.

The Company's sales and use tax returns in various states in the U.S. for 2000 through 2003 and certain international sales and value added tax returns for 2002 through 2004 are currently under examination and/or review by the applicable taxing authorities. While the final resolutions of these on-going examinations are uncertain, the Company believes it has made adequate provision in the accompanying consolidated financial statements for any adjustments that may result from the audits of these tax returns.

The Company may receive assessments related to the audits and/or reviews of its U.S. income tax returns, U.S. payroll tax returns, U.S. sales and use tax returns, and international sales and value added tax returns that exceed amounts provided for by the Company. In the event of such an assessment, there exists the possibility of a material adverse impact on the Company's results of operations for the period in which the matter is ultimately resolved or an unfavorable outcome becomes probable and reasonably estimable.

The Company sells software licenses and services to its customers under contracts which the Company refers to as Software License and Service Agreements (each an "SLSA"). Each SLSA contains the key terms of the contractual arrangement with the customer, and generally includes certain provisions for indemnifying the customer against losses, expenses and liabilities from damages that may be awarded against the customer in the event the Company's software is found to infringe upon a patent, copyright, trademark or other proprietary right of a third party. The SLSA generally limits the scope of, and remedies for, such indemnification obligations in a variety of industry-standard respects, including but not limited to certain time- and geography-based scope limitations and the right to replace an infringing product.

The Company believes its internal development processes and other policies and practices are designed to limit its exposure related to the indemnification provisions of the SLSA. In addition, the Company requires its employees to sign a proprietary information and inventions agreement, which, with limited exception, assigns the rights to its employees' development work to the Company. To date, the Company has not had to reimburse any of its customers for any losses related to these indemnification provisions and no material claims are outstanding as of September 30, 2004. For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement claims under the SLSA, the Company cannot determine the maximum amount of potential future payments, if any, related to such indemnification provisions.

As of September 30, 2004, the Company leases facilities and certain equipment under non-cancelable operating leases expiring between 2004 and 2022. The Company also leases certain assets, primarily computer equipment, under capital leases expiring between 2004 and 2005. Future minimum lease payments under both operating and capital leases as of September 30, 2004 are as follows (in thousands):

                                                       Capital     Operating
                                                        Leases      Leases
                                                      ---------- ------------
Three months ending December 31, 2004...............  $   2,620  $    21,070
Year ending December 31, 2005.......................      6,500       65,993
Year ending December 31, 2006.......................         --       63,858
Year ending December 31, 2007.......................         --       61,945
Year ending December 31, 2008.......................         --       61,865
Year ending December 31, 2009, and thereafter.......         --      371,151
                                                      ---------- ------------
     Total minimum lease payments...................      9,120  $   645,882
                                                                 ============
     Amounts representing interest..................       (342)
                                                      ----------
     Present value of minimum lease payments........      8,778
     Less: capital lease obligations, short-term
        portion (included in accrued expenses)......      1,169
                                                      ----------
     Capital lease obligations, long-term portion
       (included in other long-term liabilities)....  $   7,609
                                                      ==========

Operating lease commitments related to properties included in the Restructurings are not reflected in the above table, as the Company has reflected the fair value of these obligations in the accompanying consolidated balance sheet under the caption "Restructuring obligations." Please refer to Note 2 for further discussion of the Company's restructuring obligations, including a five-year summary of anticipated settlement dates of such obligations.

The Company's income tax expense computed at the federal statutory rate of 35% differed from the Company's actual income tax expense for the three and nine months September 30, 2004 primarily due to (i) additional tax expense associated with the tentative settlement of certain IRS income tax examinations, as discussed further in Note 4, and (ii) certain expenses that are not deductible for income tax purposes. The following is a reconciliation of the Company's federal statutory rate to the Company's effective tax rate for the three and nine months ended September 30, 2004 (in thousands):

                                                             Period Ended
                                                          September 30, 2004
                                                        -----------------------
                                                       Three Months  Nine Months
                                                        -----------  ----------
  Expected income tax expense.........................      35.0 %       35.0 %
  State income taxes, net of federal tax benefit......       2.6 %        3.1 %
  Tentative settlement of income tax audit............       9.9 %        3.7 %
  Non-deductible expenses.............................       5.7 %        4.6 %
  Purchased in-process product development............        -- %        2.1 %
  Foreign rate differential...........................      (6.5)%       (6.2)%
  Research and development credit.....................        -- %       (1.0)%
  Other, net..........................................       1.3 %       (0.2)%
                                                        -----------  ----------
    Total income tax expense..........................      48.0 %       41.1 %
                                                        ===========  ==========

The following is a summary of the Company's acquisitions during 2003 and 2004, each of which has been accounted for as a purchase:

On April 20, 2004, the Company acquired all of the outstanding issued share capital of Eontec Limited ("Eontec"), a global provider of multichannel retail banking solutions, for initial cash consideration of $73,586,000 (the "Initial Consideration"). The Initial Consideration consists of the following: (i) the payment of cash consideration of $70,000,000 for all of the outstanding securities of Eontec and (ii) transaction costs of $3,586,000, consisting primarily of professional fees incurred related to investment bankers, attorneys, accountants and valuation advisors.

In the event certain revenue targets defined in the purchase agreement are met for the period from April 20, 2004 to March 31, 2005, the Company could be required to pay up to an additional $37,500,000 in cash to the former shareholders of Eontec and up to an additional $22,500,000 in cash to the former employees of Eontec who are employees of the Company at the time of payment. Any amounts paid by the Company to the Eontec shareholders will be recorded as an increase to goodwill and amounts paid to the former employees of Eontec will be recorded as compensation expense when earned.

The Company believes that Eontec's technology and certain products and functionality under development by Eontec at the time of purchase will enhance the Company's current offerings in the retail banking market. With the acquisition of Eontec, the Company expanded its solutions offering for banking to include branch teller and Internet banking systems, creating one of the first retail banking solutions that enables banks to increase branch profitability using an integrated suite of financial transactions, marketing, sales, service and business intelligence capabilities. The Company expects that its fully integrated solution will offer a standards-based, service-oriented architecture to handle a wide range of customer interactions through multiple channels, including the branch, call center, Internet and ATM.

In accordance with the purchase method of accounting prescribed by SFAS No. 141 "Business Combinations" ("SFAS 141"), the Company allocated the Initial Consideration to the tangible net assets and liabilities and intangible assets acquired, based on their estimated fair values. Under the purchase method of accounting, the Initial Consideration does not include the contingent earnout amounts described above. The Initial Consideration has been allocated as follows (in thousands):

Tangible assets:                                                       
   Cash and cash equivalents................................ $   2,507
   Accounts receivable and other current assets.............     3,169
   Property and equipment...................................       473
   Other assets, long-term..................................        88
                                                             ----------
        Total tangible assets...............................     6,237
                                                             ----------
Intangible assets:                                                     
   Identifiable intangibles.................................    17,300
   Acquired in-process research and development ("IPR&D")...     6,000
   Goodwill.................................................    53,686
                                                             ----------
        Total intangible assets.............................    76,986
                                                             ----------
Liabilities assumed:                                                   
   Accounts payable and accrued liabilities.................    (4,898)
   Deferred revenue.........................................    (1,827)
   Deferred tax liability...................................    (2,912)
                                                             ----------
        Total liabilities assumed...........................    (9,637)
                                                             ----------
        Net assets acquired................................. $  73,586
                                                             ==========

The purchase price allocation is preliminary and a final determination of the purchase accounting adjustments will be made upon the completion of a final analysis of the total purchase cost. The items pending completion by the Company include an analysis of (i) estimated involuntary termination and related costs and (ii) certain commitments under customer contracts assumed in connection with the acquisition. The Company expects to finalize these matters by the end of 2004.

In performing this preliminary purchase price allocation of acquired intangible assets, the Company considered its intention for future use of the assets, analyses of historical financial performance and estimates of future performance of Eontec's products, among other factors. Acquired identifiable intangible assets obtained in the Company's acquisition of Eontec and the associated estimated useful lives are as follows (in thousands, except for years):

                                                                           Wtd. Avg.      Range of
                                                                              Life         Lives
Intangible assets:                                             Amount      (in Years)    (in Years)
- ------------------------------------------------------------ ----------    ----------   ------------
Acquired technology......................................... $  10,700      5.0 years        5 years
Customer relationships......................................     4,100      4.5 years   3 to 6 years
Customer contracts..........................................     2,500      3.6 years   1 to 5 years
                                                             ----------
        Total intangible assets............................. $  17,300
                                                             ==========

In addition to the identifiable intangible assets in the above table, the Company also purchased certain technologies under development, primarily related to Eontec's internet banking and teller products. The Company estimated the fair value of this in-process research and development ("IPR&D") to be $6,000,000, which the Company has reflected in "purchased in-process product development" expense in the accompanying statement of operations. The Company estimated that the technologies under development relating to the Internet banking and teller products were approximately 25% and 75% complete, respectively, at the date of acquisition. As of the acquisition date, the Company estimated it would incur up to an additional $2,500,000 to complete this development, with completion expected in late 2004 or early 2005.

The Company determined the fair values of each of the above identifiable intangible assets and the IPR&D using the "income" valuation approach and discount rates ranging from 23% to 25%. The discount rates selected were based in part on the Company's weighted average cost of capital and determined after consideration of the Company's rate of return on debt capital and equity, the weighted average return on invested capital and the risk associated with achieving forecasted cash flows. Further, the Company also considered risks associated with achieving anticipated levels of market acceptance and penetration, successful completion of various research and development efforts, market growth rates and risks related to the impact of potential changes in future target markets.

The acquired technology and customer contract intangible assets are currently being amortized over their estimated useful lives using the straight-line method and the customer relationship intangible assets are currently being amortized over their estimated useful lives based on the greater of the straight-line method or the estimated customer attrition rates.

The excess of the purchase price over the fair value of the identifiable tangible and intangible net assets acquired of $53,686,000 was assigned to goodwill. In accordance with SFAS No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142"), goodwill will not be amortized but will be tested for impairment at least annually. This amount is not expected to be deductible for tax purposes. The operating results of Eontec have been included in the Company's consolidated financial statements from the date of acquisition.

The following table presents unaudited summarized combined results of operations of the Company and Eontec, on a pro forma basis, as though the companies had been combined as of January 1, 2003. The operating results of Eontec have been included in the Company's consolidated financial statements from the date of acquisition and, accordingly, pro forma results for the three months ended September 30, 2004 have not been presented. The following amounts are in thousands, except per share amounts:

                                                Three Months       Nine Months Ended September 30,
                                                   Ended          --------------------------------
                                             September 30, 2003         2003             2004
                                             -------------------  -----------------  -------------
Total revenues.............................. $          324,359   $        996,572   $    949,933
Net income (loss)........................... $          (62,945)  $        (54,406)  $     51,907
Diluted net income (loss) per share......... $            (0.13)  $          (0.11)  $       0.10

The above unaudited pro forma summarized results of operations are intended for informational purposes only and, in the opinion of management, are neither indicative of the financial position or results of operations of the Company had the acquisition actually taken place as of January 1, 2003, nor indicative of the Company's future results of operations. In addition, the above unaudited pro forma summarized results of operations do not include potential cost savings from operating efficiencies or synergies that may result from the Company's acquisition of Eontec.

On January 29, 2004, the Company acquired all of the outstanding shares of Ineto Services, Inc. ("Ineto"), a provider of hosted call center services over the Internet, for a cash payment of $4,841,000. The Company has integrated Ineto's hosted telephony service, which the Company re-branded as Contact OnDemand, with its Siebel CRM OnDemand product offering. The Company expects the acquisition of Ineto to further accelerate its penetration of the hosted CRM market and expand customer choice in this market.

The Company allocated the purchase price of $4,841,000 to the tangible net assets and liabilities and intangible assets acquired, based on their estimated fair values as follows (in thousands):

Tangible assets:                                                       
   Cash and cash equivalents................................ $      20
   Accounts receivable and other current assets.............       507
   Property and equipment...................................        40
   Other assets, long-term..................................         5
                                                             ----------
        Total tangible assets...............................       572
                                                             ----------
Intangible assets:                                                     
   Acquired technology......................................       500
   Customer relationships...................................     1,250
   Non-compete agreements...................................       750
   Goodwill.................................................     3,842
                                                             ----------
        Total intangible assets.............................     6,342
                                                             ----------
Liabilities assumed:                                                   
   Accounts payable and accrued liabilities.................    (1,006)
   Deferred revenue.........................................       (23)
   Deferred tax liability...................................    (1,000)
   Other liabilities, long-term.............................       (44)
                                                             ----------
        Total liabilities assumed...........................    (2,073)
                                                             ----------
        Net assets acquired................................. $   4,841
                                                             ==========

The customer relationship intangible assets are being amortized over a period of six years based on the estimated customer attrition rates, currently estimated based on Ineto's historical attrition rate of approximately 30% per year of the remaining acquired customers. The non-compete agreements and acquired technology intangible assets are being amortized over their estimated lives of two and three years, respectively, using the straight-line method. In performing this purchase price allocation, the Company considered, among other factors, its intention for future use of the acquired assets, analyses of historical financial performance and estimates of the future performance of the acquired business.

The excess of the purchase price over the fair value of the identifiable tangible and intangible net assets acquired of $3,842,000 was assigned to goodwill. In accordance with SFAS 142, goodwill will not be amortized but will be tested for impairment at least annually. This amount is not expected to be deductible for tax purposes. The operating results of Ineto have been included in the Company's consolidated financial statements from the date of acquisition. Pro forma information giving effect to this acquisition has not been presented because the pro forma information would not differ materially from the historical results of the Company.

On November 3, 2003, the Company acquired all of the outstanding shares of UpShot Corporation ("UpShot"), a leading provider of a hosted CRM service, for initial cash consideration of $55,984,000 (the "Initial Purchase Price"). The Company expects the acquisition of UpShot to accelerate its penetration of the hosted CRM market and expand customer choice in this market. Further, the Company believes the acquisition of UpShot will allow it to capitalize on the expertise of the UpShot management team in the hosted CRM market and their ability to develop new products using the Company's existing technology.

In the event certain revenue, revenue-related and product delivery targets defined in the merger agreement are met during 2004, the Company could be required to pay up to an additional $9,000,000 to the former holders of UpShot common stock and an additional $9,000,000 to the former employees of UpShot who are employees of the Company at the time of payment. All amounts paid by the Company to the UpShot shareholders will be recorded as an increase to goodwill and amounts paid to the former employees of UpShot will be recorded as compensation expense when earned.

In accordance with the purchase method of accounting prescribed by SFAS 141, the Company allocated the Initial Purchase Price to the tangible net assets and liabilities and intangible assets acquired, based on their estimated fair values, as follows: (i) $3,199,000 to tangible assets, (ii) $6,700,000 to a "customer relationship" intangible asset, (iii) $1,200,000 to an "acquired technology" intangible asset and (iv) $13,502,000 to assumed liabilities. The excess of the purchase price over the fair value of the identifiable tangible and intangible net assets acquired of $58,387,000 was assigned to goodwill.

The acquired technology intangible asset is currently being amortized over a period of 14 months using the straight-line method and the customer relationship intangible asset is being amortized over a period of six years based on the estimated customer attrition rates, currently estimated based on UpShot's historical attrition rate of approximately 30% per year of the remaining acquired customers. In accordance with SFAS 142, goodwill will not be amortized but will be tested for impairment at least annually. This amount is not deductible for tax purposes.

The following table presents unaudited summarized combined results of operations of the Company and UpShot, on a pro forma basis, as though the companies had been combined as of January 1, 2002. The operating results of UpShot have been included in the Company's consolidated financial statements from the date of acquisition and, accordingly, pro forma results for the three and nine months ended September 30, 2004 have not been presented. The following amounts are in thousands, except per share amounts:

                                                Three Months         Nine Months
                                                   Ended                Ended
                                             September 30, 2003   September 30, 2003
                                             -------------------  -----------------
Total revenues.............................. $          323,234   $        992,403
Net loss.................................... $          (63,900)  $        (53,768)
Diluted net loss per share.................. $            (0.13)  $          (0.11)

The above unaudited pro forma summarized results of operations are intended for informational purposes only and, in the opinion of management, are neither indicative of the financial position or results of operations of the Company had the acquisition actually taken place as of January 1, 2002, nor indicative of the Company's future results of operations. In addition, the above unaudited pro forma summarized results of operations do not include potential cost savings from operating efficiencies or synergies that may result from the Company's acquisition of UpShot.

The changes in the carrying amount of goodwill during the nine months ended September 30, 2004 were as follows (in thousands):

Balance as of December 31, 2003................ $  140,957
Purchase of Ineto..............................      3,842
Purchase of Eontec.............................     53,686
Payment of earnout consideration...............        656
Foreign currency fluctuation and other.........      3,347
                                                -----------
Balance as of September 30, 2004............... $  202,488
                                                ===========

As required by SFAS 142, the Company does not amortize its goodwill balances, but instead tests its goodwill for impairment annually on July 1 and more frequently upon the occurrence of certain events in accordance with the provisions of SFAS 142. The Company's annual goodwill impairment test performed in the third quarter of 2004 indicated no impairment of goodwill as of July 1, 2004.

Intangible assets as of December 31, 2003 and September 30, 2004, along with the weighted average useful lives as of September 30, 2004, are as follows (in thousands, except years):

                                                                            Wtd. Avg.
                                             December 31,  September 30,      Life
                                                 2003           2004       (in Years)
                                             ------------  --------------  -----------
Gross assets:                                                                         
   Acquired technology.....................  $     9,977   $      21,624          3.9
   Customer relationships..................        6,700          12,221          5.5
   Customer contracts......................           --           2,605          3.6
   Non-compete agreements..................           --             750          2.0
                                             ------------  --------------
      Intangible assets, gross.............       16,677          37,200
                                             ------------  --------------             

Accumulated amortization:                                                             
   Acquired technology.....................       (5,549)         (9,777)
   Customer relationships..................         (342)         (2,578)
   Customer contracts......................           --            (529)
   Non-compete agreements..................           --            (250)
                                             ------------  --------------
      Total accumulated amortization.......       (5,891)        (13,134)
                                             ------------  --------------
        Intangible assets, net.............  $    10,786   $      24,066
                                             ============  ==============

The Company is amortizing its intangible assets as follows: (i) acquired technology, customer contracts and non-compete agreements are currently being amortized over their estimated useful lives using the straight-line method and (ii) customer relationship intangible assets are currently being amortized over their estimated useful lives based on the greater of the straight-line method or the estimated customer attrition rates. Based on identified intangible assets recorded as of September 30, 2004 and assuming no subsequent impairment of the underlying assets, amortization expense is expected to be as follows (in thousands):

                    Period
- -----------------------------------------------            
Three months ending December 31, 2004.......... $    2,645
Year ending December 31, 2005..................      6,416
Year ending December 31, 2006..................      5,065
Year ending December 31, 2007..................      4,046
Year ending December 31, 2008..................      3,800
Year ending December 31, 2009, and thereafter..      2,094
                                                -----------
     Total..................................... $   24,066
                                                ===========

The following is a reconciliation of the number of shares used in the basic and diluted net income (loss) per share computations for the periods presented (in thousands):

                                                                             Three Months Ended     Nine Months Ended
                                                                                September 30,         September 30,
                                                                            --------------------  ---------------------
                                                                               2003      2004        2003       2004
                                                                            ---------- ---------  ----------  --------- 
Shares used in basic net income (loss) per share computation.............     493,933   506,706     490,049    503,983
Effect of dilutive potential common shares resulting from
   stock options.........................................................          --    26,592          --     36,388
Effect of dilutive potential common shares resulting from restricted
  stock units and common stock subject to repurchase.....................          --         5          --         45
                                                                            ---------- ---------  ----------  ---------
Shares used in diluted net income (loss) per share computation...........     493,933   533,303     490,049    540,416
                                                                            ========== =========  ==========  =========

Because the Company reported a net loss during the three and nine months ended September 30, 2003, the Company excluded the impact of its common stock equivalents in the computation of dilutive earnings per share for these periods, as their effect would be anti-dilutive. The dilutive impact of the Company's stock options for the three and nine months ended September 30, 2004 is calculated using the treasury stock method, based on the average share price of the Company's common stock. The average share prices of the Company's common stock during the three and nine months ended September 30, 2004 were $7.84 and $10.65 per share, respectively. Under the treasury stock method, the proceeds that would be hypothetically received from the exercise of all stock options with exercise prices below the average share price of the Company's common stock are assumed to be used to repurchase shares of the Company's common stock.

The Company excludes all potentially dilutive securities from its diluted earnings per share computation when their effect would be anti-dilutive. The following common stock equivalents were excluded from the earnings per share computation, as their inclusion would have been anti-dilutive (in thousands):

                                                                             Three Months Ended    Nine Months Ended
                                                                                September 30,        September 30,
                                                                            --------------------  ---------------------
                                                                               2003      2004        2003       2004
                                                                            ---------- ---------  ----------  --------- 
Stock options excluded due to the exercise price exceeding
  the average fair value of the Company's common stock
  during the period......................................................      73,028    85,856      74,955     60,430
Weighted average stock options and restricted stock, calculated
  using the treasury stock method, that were excluded due to the
  Company reporting a net loss during the period.........................      38,195        --      36,603         --
                                                                            ---------- ---------  ----------  ---------
Total common stock equivalents excluded from diluted net
  income (loss) per share computation....................................     111,223    85,856     111,558     60,430
                                                                            ========== =========  ==========  =========

Under the treasury stock method, stock options with exercise prices exceeding the average share price of the Company's common stock during the applicable period are excluded from the diluted earnings per share computation. These stock options had weighted average exercise prices of $22.32 and $21.99 per share during the three and nine months ended September 30, 2003, respectively, compared to weighted average exercise prices of $18.14 and $21.93 per share during the three and nine months ended September 30, 2004, respectively.

On May 5, 2004, the Company amended its 1996 Equity Incentive Plan and its 1998 Equity Incentive Plan (collectively, the "Plans") to allow the Company to issue restricted stock units ("RSUs"). RSUs are similar to restricted stock in that they are issued for no, or nominal, consideration; however, the holder generally is not entitled to the underlying shares of common stock until the RSU vests.

On May 5, 2004, the Company granted to its Chief Executive Officer, J. Michael Lawrie, an RSU for 350,000 shares of its common stock in connection with his commencement of employment. The terms of this RSU provide that 150,000 of the underlying shares of common stock vested during the second quarter of 2004 and the remaining 200,000 shares vest two years from his commencement of employment. On August 31, 2004, the Company granted two additional RSUs for an aggregate of 105,000 shares of its common stock to an employee upon commencement of employment. As of September 30, 2004, RSUs for a total of 305,000 shares of the Company's common stock were unvested and remain outstanding.

The Company recorded an aggregate of $4,533,000 of deferred compensation during the nine months ended September 30, 2004 in connection with the issuance of these RSUs, which the Company is amortizing on a straight-line basis over the respective vesting periods. The Company has reflected $325,000 and $2,103,000 of compensation expense associated with the RSUs in the accompanying unaudited statements of operations during the three and nine months ended September 30, 2004, respectively.

The Company is principally engaged in the design, development, marketing and support of Siebel eBusiness Applications, its family of industry-specific business software applications. Substantially all revenues result from the license of the Company's customer relationship management ("CRM") software products and related professional services and customer support (maintenance) services. The Company's chief operating decision-maker (i.e., chief executive officer) reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues by geographic region for purposes of making operating decisions and assessing financial performance. Accordingly, the Company considers itself to be in a single reporting segment, specifically the license, implementation and support of its software.

The Company evaluates the performance of its geographic regions based only on revenues. The Company does not assess the performance of its geographic regions on other measures of income or expense, such as depreciation and amortization, operating income or net income. In addition, the Company's assets are primarily located in the United States and not allocated to any specific region. The Company does not produce reports for, or measure the performance of, its geographic regions using any asset-based metrics. Therefore, geographic information is presented only for revenues. The following geographic information for total revenues is presented for the three and nine months ended September 30, 2003 and 2004 (in thousands):

                                                Three Months Ended      Nine Months Ended
                                                   September 30,           September 30,
                                              ----------------------  ---------------------
                                                 2003        2004        2003       2004
                                              ----------- ----------  ---------- ----------
United States...............................  $  193,239  $ 200,612   $ 586,622  $ 583,803
Europe......................................      95,323     93,550     301,034    286,654
Asia Pacific................................      25,734     15,342      68,511     56,139
Canada and Latin America....................       7,136      7,582      31,319     20,836
                                              ----------- ----------  ---------- ----------
                                              $  321,432  $ 317,086   $ 987,486  $ 947,432
                                              =========== ==========  ========== ==========

International software license revenues for the three and nine months ended September 30, 2003 were $50,433,000 and $157,308,000, respectively, representing 46% and 47% of software license revenues, respectively. International software license revenues for the three and nine months ended September 30, 2004 were $34,810,000 and $126,572,000, respectively, representing 33% and 39% of software license revenues, respectively.

The following is a summary of the Company's software license revenues, by CRM product, for the three and nine months ended September 30, 2003 and 2004 (in thousands):

                                                Three Months Ended      Nine Months Ended
                                                   September 30,           September 30,
                                              ----------------------  ---------------------
                                                 2003        2004        2003       2004
                                              ----------- ----------  ---------- ----------
   Sales, marketing and service automation..  $   81,176  $  67,397   $ 255,848  $ 227,163
   Analytics................................      22,176     27,429      50,927     76,139
   Business integration applications........       5,364      8,333      11,725     17,900
   Employee relationship management.........       1,287      1,420      13,489      5,005
                                              ----------- ----------  ---------- ----------
        Total...............................  $  110,003  $ 104,579   $ 331,989  $ 326,207
                                              =========== ==========  ========== ==========

At times the Company licenses a combination of its products to its customers, with the actual product selection and number of licensed users determined subsequent to the initial license. The Company refers to these licenses as "Enterprise Licenses." The Company recognizes revenue from its Enterprise Licenses upon delivery of the first copy, or product master, for all of the products within the license, as all products have been licensed and delivered, and the customer has the right of use. During the three and nine months ended September 30, 2003, software license revenues from Enterprise Licenses were $19,969,000 and $44,796,000, respectively. During the three and nine months ended September 30, 2004, software license revenues from Enterprise Licenses were $11,810,000 and $48,847,000, respectively. The Company estimates the allocation of the revenue from these Enterprise Licenses to individual software products based upon the expected usage by its customers and in a manner consistent with its determination of compensation for its sales personnel. The actual deployment of Enterprise Licenses by the Company's customers may differ from the revenue allocated in the above table.

Although the Company believes the above methodology of allocating revenue from its Enterprise Licenses is reasonable, there can be no assurance that such allocated amounts reflect the amounts that would result had the Company individually licensed each specific software solution. Further, the Company generally does not re-evaluate the allocation of its revenue from Enterprise Licenses based on actual deployment by its customers.

The following is a summary of the Company's professional services, maintenance and other revenues, by service offering, for the three and nine months ended September 30, 2003 and 2004 (in thousands):

                                                Three Months Ended      Nine Months Ended
                                                   September 30,           September 30,
                                              ----------------------  ---------------------
                                                 2003        2004        2003       2004
                                              ----------- ----------  ---------- ----------
  Maintenance...............................  $  110,046  $ 118,059   $ 331,839  $ 347,350
  Professional services and other...........     101,383     94,448     323,658    273,875
                                              ----------- ----------  ---------- ----------
      Total.................................  $  211,429  $ 212,507   $ 655,497  $ 621,225
                                              =========== ==========  ========== ==========

No single customer accounted for 10% or more of total revenues during the three and nine months ended September 30, 2003 and 2004.