Introduction -- Nature of the problem -- Basic equations for the atmosphere and oceans -- Various decompositions of the circulation -- The data -- Radiation balance -- Observed mean state of the atmosphere -- Observed mean state of the oceans -- Observed mean state of the cryosphere -- Exchange processes between the earth's surface and the atmosphere -- Angular momentum cycle -- Water cycle -- Energetics -- The ocean-atmosphere heat engine -- Entropy in the climate system -- Interannual and interdecadal variability in the climate system -- Mathematical simulation of climate -- Appendix A: Analysis in terms of Fourier components -- Appendix B: Analysis in terms of empirical orthogonal functions (EOF's).