WALLDORF, Germany, July 29 /PRNewswire-FirstCall/ -- SAP AG (NYSE: SAP) today announced its preliminary financial results for the second quarter and six months ended June 30, 2009.
FINANCIAL HIGHLIGHTS - Second Quarter 2009
SAP - Second Quarter 2009(1)
-----------------------------
U.S. GAAP Non-GAAP(2)
Euro million, unless
stated otherwise Q2/2009 Q2/2008 % Q2/2009 Q2/2008 % %
change change change
const.
curr.(3)
------------------ ------- ------- ------ ------- ------- ------ -------
Software revenues 543 898 -40 543 898 -40 -40
------------------
Software and
software-related
service revenues 1,953 2,061 -5 1,953 2,113 -8 -10
------------------
Total revenues 2,576 2,858 -10 2,576 2,910 -11 -14
------------------
Operating expenses 1,929 2,265 -15 1,862 2,199 -15 -18
------------------
- Thereof
restructuring
charges 5 - - 5 - - -
------------------
Operating income 647 593 9 714 711 0 -2
------------------
Operating margin(%) 25.1 20.7 4.4pp 27.7 24.4 3.3pp 3.5pp
------------------
Income from
continuing
operations 431 411 5 482 497 -3
------------------
Net income 423 408 4 473 494 -4
------------------
Basic EPS from cont.
operations (euro) 0.36 0.34 6 0.41 0.42 -2
------------------
1) All figures are preliminary and unaudited.
2) Revenue line items are adjusted for the Business Objects support
revenue that Business Objects would have recognized had it remained a
standalone entity but that SAP is not permitted to recognize as revenue
under U.S. GAAP as a result of business combination accounting rules.
Adjustments in the operating expense line items are for
acquisition-related charges. See Explanation of Non-GAAP Measures at
the end of the financial section of the press release for explanations
of the Non-GAAP measures used in this press release and for related
reconciliations to U.S. GAAP.
3) Constant currency Non-GAAP revenue and operating income figures are
calculated by translating Non-GAAP revenue and Non-GAAP operating
income of the current period using the average exchange rates from the
previous year's respective period instead of the current period.
Constant currency period-over-period changes are calculated by
comparing the current year's Non-GAAP constant currency numbers with
the Non-GAAP number of the previous year's respective period. See
Explanation of Non-GAAP Measures at the end of the financial section of
the press release for details.
Revenues - Second Quarter 2009
- U.S. GAAP software and software-related service revenues were euro 1.95 billion (2008: euro 2.06 billion), a decrease of 5%. Non-GAAP software and software-related service revenues were euro 1.95 billion (2008: euro 2.11 billion), a decrease of 8% (10% at constant currencies).
- U.S. GAAP total revenues were euro 2.58 billion (2008: euro 2.86 billion), a decrease of 10%. Non-GAAP total revenues were euro 2.58 billion (2008: euro 2.91 billion), a decrease of 11% (14% at constant currencies).
- U.S. GAAP software revenues were euro 543 million (2008: euro 898 million), a decrease of 40% (40% at constant currencies). The decrease is the result of the difficult operating environment worldwide due to the continued global economic downturn, and the tough comparison to the second quarter of 2008, which was prior to the economic crisis that disrupted the global markets in the third quarter of 2008.
Income - Second Quarter 2009
- U.S. GAAP operating income was euro 647 million (2008: euro 593 million), an increase of 9%. Non-GAAP operating income was euro 714 million (2008: euro 711 million), flat year-over-year (a decrease of 2% at constant currencies). U.S. GAAP and Non-GAAP operating income were negatively impacted by restructuring charges of euro 5 million resulting from the previously announced reduction of positions, which are expected to be euro 200 million for 2009.
- U.S. GAAP operating margin was 25.1% (2008: 20.7%), an increase of 4.4 percentage points. Non-GAAP operating margin was 27.7% (2008: 24.4%), or 27.9% at constant currencies, an increase of 3.3 percentage points (3.5 percentage points at constant currencies). The euro 5 million in restructuring charges resulting from the previously announced reduction of positions negatively impacted the U.S. GAAP and Non-GAAP operating margin by 0.2 percentage points.
- U.S. GAAP income from continuing operations was euro 431 million (2008: euro 411 million), an increase of 5%. Non-GAAP income from continuing operations was euro 482 million (2008: euro 497 million), a decrease of 3%. U.S. GAAP and Non-GAAP income from continuing operations were negatively impacted by restructuring charges of euro 3 million resulting from the previously announced reduction of positions.
- U.S. GAAP basic earnings per share from continuing operations were euro 0.36 (2008: euro 0.34), an increase of 6%. Non-GAAP earnings per share from continuing operations were euro 0.41 (2008: euro 0.42), a decrease of 2%. There was no material impact to U.S. GAAP and Non-GAAP earnings per share from continuing operations resulting from the restructuring charges associated with the previously announced reduction of positions.
Second quarter 2009 Non-GAAP operating income excludes acquisition-related charges totaling euro 67 million (2008: euro 66 million), and second quarter 2009 Non-GAAP income from continuing operations and Non-GAAP earnings per share from continuing operations exclude acquisition-related charges totaling euro 51 million (2008: euro 86 million).
"Despite the challenging economic conditions, the strength of our business model combined with a strong cost discipline has proven itself once again by enabling us to report another quarter of strong operating margin growth," said Werner Brandt, CFO of SAP. "For the remainder of the year, we expect to maintain tight cost controls in all areas of the Company."
"While the operating environment remains difficult, we are beginning to have improved visibility into the second half of the year." said Leo Apotheker, CEO of SAP.
Mr. Apotheker continued, "Our robust business model provides us the ability to continue to innovate, which we believe is the foundation for future growth. I am excited about the new products that we are delivering to our customers, solutions that provide them more transparency and clarity into their businesses, which are especially crucial in times like these."
HIGHLIGHTS - Six Months 2009
SAP - First Half 2009(1)
--------------------------
U.S. GAAP Non-GAAP(2)
--------- -------------
Euro million, unless
stated otherwise H1/2009 H1/2008 % H1/2009 H1/2008 % %
change change change
const.
curr.(3)
----------------- ------- ------- ------ ------- ------- ------ --------
Software revenues 962 1,520 -37 962 1,520 -37 -38
----------------- --- ----- --- --- ----- --- ---
Software and
software-related
service revenues 3,695 3,797 -3 3,706 3,896 -5 -7
----------------- ----- ----- -- ----- ----- -- --
Total revenues 4,974 5,318 -6 4,985 5,417 -8 -10
----------------- ----- ----- -- ----- ----- -- ---
Operating expenses 3,995 4,366 -8 3,861 4,217 -8 -11
----------------- ----- ----- -- ----- ----- -- ---
- Thereof
restructuring
charges 165 - - 165 - - -
----------------- --- - - --- - - -
Operating income 979 952 3 1,124 1,200 -6 -8
----------------- --- --- - ----- ----- -- --
Operating margin(%) 19.7 17.9 1.8pp 22.6 22.2 0.4pp 0.5pp
----------------- ---- ---- ----- ---- ---- ----- -----
Income from
continuing
operations 640 658 -3 749 842 -11
----------------- --- --- -- --- --- ---
Net income 627 650 -4 736 834 -12
----------------- --- --- -- --- --- ---
Basic EPS from
cont. operations
(euro) 0.54 0.55 -2 0.63 0.71 -11
----------------- ---- ---- -- ---- ---- ---
1) All figures are preliminary and unaudited.
2) Revenue line items are adjusted for the Business Objects support
revenue that Business Objects would have recognized had it remained a
standalone entity but that SAP is not permitted to recognize as revenue
under U.S. GAAP as a result of business combination accounting rules.
Adjustments in the operating expense line items are for
acquisition-related charges. See Explanation of Non-GAAP Measures at
the end of the financial section of the press release for explanations
of the Non-GAAP measures used in this press release and for related
reconciliations to U.S. GAAP.
3) Constant currency Non-GAAP revenue and operating income figures are
calculated by translating Non-GAAP revenue and Non-GAAP operating
income of the current period using the average exchange rates from the
previous year's respective period instead of the current period.
Constant currency period-over-period changes are calculated by
comparing the current year's Non-GAAP constant currency numbers with
the Non-GAAP number of the previous year's respective period. See
Explanation of Non-GAAP Measures at the end of the financial section of
the press release for details.
Revenues - First Half 2009
- U.S. GAAP software and software-related service revenues were euro 3.70 billion (2008: euro 3.80 billion), a decrease of 3%. Non-GAAP software and software-related service revenues were euro 3.71 billion (2008: euro 3.90 billion), a decrease of 5% (7% at constant currencies).
- U.S. GAAP total revenues were euro 4.97 billion (2008: euro 5.32 billion), a decrease of 6%. Non-GAAP total revenues were euro 4.99 billion (2008: euro 5.42 billion), a decrease of 8% (10% at constant currencies).
- U.S. GAAP software revenues were euro 962 million (2008: euro 1.52 billion), a decrease of 37% (38% at constant currencies).
First half 2009 Non-GAAP revenue figures exclude a non-recurring deferred support revenue write-down from the acquisition of Business Objects of euro 11 million (2008:99 million).
Income - First Half 2009
- U.S. GAAP operating income was euro 979 million (2008: euro 952 million), an increase of 3%. Non-GAAP operating income was euro 1.12 billion (2008: euro 1.20 billion), a decrease of 6% (8% at constant currencies). U.S. GAAP and Non-GAAP operating income were negatively impacted by restructuring charges of euro 165 million resulting from the previously announced reduction of positions, which are expected to be euro 200 million for 2009.
- U.S. GAAP operating margin was 19.7% (2008: 17.9%), an increase of 1.8 percentage points. Non-GAAP operating margin was 22.6% (2008: 22.2%), or 22.7% at constant currencies, an increase of 0.4 percentage points (0.5 percentage points at constant currencies). The euro 165 million in restructuring charges resulting from the previously announced reduction of positions negatively impacted the U.S. GAAP and Non-GAAP operating margin by 3.3 percentage points.
- U.S. GAAP income from continuing operations was euro 640 million (2008: euro 658 million), a decrease of 3%. Non-GAAP income from continuing operations was euro 749 million (2008: euro 842 million), a decrease of 11%. U.S. GAAP and Non-GAAP income from continuing operations were negatively impacted by restructuring charges of euro 117 million resulting from the previously announced reduction of positions.
- U.S. GAAP basic earnings per share from continuing operations were euro 0.54 (2008: euro 0.55), a decrease of 2%. Non-GAAP earnings per share from continuing operations were euro 0.63 (2008: euro 0.71), a decrease of 11%. The restructuring charges resulting from the previously announced reduction of positions negatively impacted the U.S. GAAP and Non-GAAP basic earnings per share from continuing operations by euro 0.10.
First half 2009 Non-GAAP operating income excludes a non-recurring deferred support revenue write-down from the acquisition of Business Objects and acquisition-related charges totaling euro 144 million (2008: euro 248 million), and First half 2009 Non-GAAP income from continuing operations and Non-GAAP earnings per share from continuing operations exclude a non-recurring deferred support revenue write-down from the acquisition of Business Objects and acquisition-related charges totaling euro 109 million (2008: euro 184 million).
Cash Flow - First Half 2009
Operating cash flow from continuing operations was euro 1.83 billion (2008: euro 1.37 billion), an increase of 34%. Free cash flow was euro 1.73 billion (2008: euro 1.20 billion), an increase of 44%. Free cash flow was 35% of total revenues (2008: 23%). At June 30, 2009, SAP had a total group liquidity of euro 3.44 billion (December 31, 2008: euro 1.66 billion), which includes cash and cash equivalents, restricted cash and short term investments.
Cost Containment Measures for 2009
Previously, SAP announced that in order to enable the Company to adapt its size to today's market conditions and the broader impact of the global recession, it implemented a global reduction of positions to 48,500 by year-end 2009, taking full advantage of attrition as a factor in reaching this goal, and that it expected the reduction of positions to trigger one-time restructuring charges of between euro 200 million to euro 300 million for 2009. The Company now expects the total restructuring charges for 2009 to be euro 200 million. The restructuring charge of euro 165 million recorded in operating income in the first half of 2009 covers the reduction of 2,800 positions.
Business Outlook
SAP is providing the following outlook for the full-year 2009, which has changed from the outlook described in its April 29, 2009 first quarter press release.
The Company expects its full-year 2009 Non-GAAP operating margin, which excludes a non-recurring deferred support revenue write-down from the acquisition of Business Objects and acquisition-related charges, to be in the range of 25.5% - 27.0% at constant currencies. This includes one-time restructuring charges of euro 200 million expected to result from the reduction of positions, which negatively impacts the Non-GAAP operating margin outlook by approximately 2 percentage points. The updated 2009 Non-GAAP operating margin outlook is based on the assumption that 2009 Non-GAAP software and software-related service revenues, which exclude a non-recurring deferred support revenue write-down from the acquisition of Business Objects, will be in a range of a decline of 4% - 6% at constant currencies (2008: euro 8.623 billion).
SAP continues to project an effective tax rate of 29.5% - 30.5% (based on U.S. GAAP income from continuing operations) for 2009 (2008: 30.0%).
KEY EVENTS - Second Quarter 2009
- In the second quarter of 2009, SAP closed major contracts in several key regions including Federal Interior Ministry of Germany, Group Danone, Shoosmiths, and Statoil ASA in EMEA; Baker Hughes, Boston University, Confederacao SICREDI, and Eaton Vance Corp. in Americas; and China Export & Credit Insurance Company, Commonwealth Bank of Australia, Ministry of Finance, Singapore, and Tata Teleservices Ltd in Asia Pacific Japan.
- On June 16, SAP announced the first details of SAP's on-demand strategy for large enterprises. Dedicated to its installed customer base, on-demand software for large enterprises from SAP is planned to consist of function-specific software applications, available by subscription, which plug directly into a customer's on-site SAP Business Suite software.
- On June 16, SAP announced that research analyst firm IDC ranked SAP, including the SAP BusinessObjects BI solutions, as the number-one vendor for business intelligence (BI) tools, with a 20.4% market share. The market analysis, titled "Worldwide Business Intelligence Tools 2008 Vendor Shares" (IDC # 218598) finds that SAP has demonstrated leading market share and highest share gain of any vendor, and reports that BI remains one of the top investment priorities for companies globally. The report also highlights that SAP's market share is approximately twice as large as its nearest competitor. In addition, IDC reported that SAP's overall market growth during 2008 was 17.8%, almost double that of overall market growth.
- On June 12, SAP acquired Clear Standards, Inc., a privately held innovator of enterprise carbon management solutions. Clear Standards provides SAP a mature sustainability solution and expertise in carbon management delivered through an agile, Web-based, on-demand delivery model.
- On May 13, SAP introduced additional customers for SAP Business ByDesign, SAP's fully integrated, on-demand business solution that enables midsize companies from various industries to improve transparency and business operations, and support international growth, while helping to reduce IT costs. Charter clients in North America include ADC Rig Services Inc.; Intelepeer; OneVision Solutions; Praxis Energy Agents, LLC; Skullcandy; Suh'dutsing Technologies, LLC; and TAM Ceramics.
- On May 12, SAP announced SAP BusinessObjects Explorer, which it believes is groundbreaking new software that brings together search and navigation capabilities from the SAP BusinessObjects portfolio with SAP NetWeaver Business Warehouse Accelerator software, enabling customers to navigate mountains of business data at the speed of thought and giving them a clear view across their organizations.
- On May 12, SAP published its 2008 Sustainability Report, detailing its activities in support of its ongoing strategic commitment to deliver superior sustainability solutions to customers and improve its own sustainability performance. SAP announced that it reduced its total corporate carbon footprint by 6.7% in 2008 compared to 2007.
- On May 6, SAP announced the acquisition of privately held Highdeal, the leading provider of real-time billing solutions for telecommunications. Highdeal delivers sophisticated pricing and charging solutions designed to support today's new service economy. The combination of SAP and Highdeal is intended to provide customers a packaged consume-to-cash business process platform to support high-volume billing and enable a reduction in cost of ownership.
- On May 5, SAP announced the general availability to customers worldwide of SAP Business Suite 7, the next-generation software suite enabled by service-oriented architecture (SOA). Following a successful ramp-up period, large enterprises across all industries can now achieve process excellence through the modular deployment of industry-specific end-to-end processes that cut across application boundaries; ease upgrades and reduce IT costs with SAP enhancement packages; and capture growth opportunities through insight gained from analytics tools embedded within SAP Business Suite 7.
- On April 29, SAP and the SAP User Group Executive Network (SUGEN) announced an agreement on a defined list of key performance indicators that will be used to measure the success of SAP Enterprise Support services. Also announced was the rollout of a joint benchmarking program that will use key performance indicators to define and measure how SAP customers derive value from SAP Enterprise Support. A joint SAP-SUGEN task force formed in November 2008 has established the SUGEN Key Performance Indicator Index (SUGEN KPI Index), which will measure and verify the ongoing value of SAP Enterprise Support. This effort will help customers by providing a transparent mechanism to link their support investment to the value delivered. SAP has agreed to postpone the subsequent price increase schedule until the targeted improvements measured by the SUGEN KPI Index are met.
- On April 3, SAP announced the successful placement of a "Schuldschein" (private placement transaction) in the amount of approximately euro 660 million on the Euro denominated capital markets. Lead managers were Landesbank Baden-Wuerttemberg LBBW (Technical Lead), Commerzbank AG, Deutsche Bank AG, and DZ Bank AG Deutsche Zentral-Genossenschaftsbank.
IFRS Financial Data
SAP will discontinue its U.S. GAAP reporting and will only report financial data under IFRS from fiscal 2010 onwards. To prepare the capital markets for this change, IFRS financial data are provided in the financial section of this press release.
Use of Non-GAAP Financial Measures
This press release contains certain financial measures such as Non-GAAP revenues, Non-GAAP operating income, Non-GAAP operating margin, free cash flow, constant currency revenue and operating income measures, as well as U.S. Dollar based Non-GAAP revenue numbers. These measures are not prepared in accordance with U.S. GAAP and therefore are considered non-GAAP financial measures. SAP's non-GAAP financial measures may not correspond to non-GAAP financial measures that other companies report. The non-GAAP financial measures that SAP reports should be considered as additional to, and not as a substitute for or superior to revenue, operating margin or SAP's other measures of financial performance prepared in accordance with U.S. GAAP. See the financial section of this press release for additional information regarding the Non-GAAP measures included in this press release and for the reconciliations to the corresponding U.S. GAAP measures.
Webcast / Supplementary Financial Information
SAP senior management will host a conference call today at 3:00 PM (CET) / 2:00 PM (GMT) / 9:00 AM (Eastern) / 6:00 AM (Pacific). The conference call will be web cast live on the Company's website at http://www.sap.com/investor and will be available for replay. Supplementary financial information pertaining to the quarterly results can be found at http://www.sap.com/investor.
About SAP
SAP is the world's leading provider of business software, offering applications and services that enable companies of all sizes and in all industries to become best-run businesses. With approximately 89,000 customers in over 120 countries, SAP is listed on several exchanges, including the Frankfurt stock exchange and NYSE, under the symbol "SAP." (For more information, visit www.sap.com)
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "outlook," "intend," "may," "plan," "project," "predict," "should" and "will" and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission ("SEC"), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
Copyright (C) 2009 SAP AG. All rights reserved.
SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP Business ByDesign, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Business Objects S.A. in the United States and in other countries. Business Objects is an SAP company. All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary.
For more information, press only:
Christoph Liedtke, +49 (6227) 7-50383, christoph.liedtke@sap.com, CET
Guenter Gaugler +49 (6227) 7-65416, guenter.gaugler@sap.com, CET
Jim Dever +1 (610) 661-2161, james.dever@sap.com, EDT
For more information, financial community only:
Stefan Gruber, +49 (6227) 7-44872, investor@sap.com, CET
Martin Cohen, +1 (212) 653-9619, investor@sap.com, EDT
Appendix - Financial Information to Follow
Financial Information
for the Second Quarter 2009
- Condensed, Preliminary and Unaudited -
Page
U.S. GAAP Financial Information
Financial Statements
Statements of Income F1 and F2
Balance Sheets F3
Statements of Cash Flows F4
Supplementary Financial Information
Reconciliations from Non-GAAP Numbers to U.S. GAAP
Numbers F5 and F6
Reconciliations from Non-GAAP Revenue in U.S.
Dollar to U.S. GAAP Revenue in Euro F7
Revenue by Region F8 and F9
Share-Based Compensation F10
Free Cash Flow F10
Days Sales Outstanding F10
Headcount F10
Multi Quarter Summary F11
Explanations of Non-GAAP Measures F12 to F14
IFRS Financial Information
Financial Statements
Statements of Income F15
Statements of Financial Position F16
Supplementary Financial Information
Reconciliations from U.S. GAAP and Non-GAAP to IFRS and
Non-IFRS Numbers F17
U.S. GAAP - IFRS Significant Differences with Impact
on Income F18
Explanations of Non-IFRS Measures F19
CONSOLIDATED STATEMENTS OF INCOME
(U.S. GAAP, preliminary and unaudited)
Euro millions, unless otherwise stated Three months ended June 30
--------------------------
2009 2008 Change in %
---- ---- -----------
Software revenue 543 898 -40
Support revenue 1,337 1,099 22
Subscription and other
software-related service revenue 73 64 14
Software and software-related service
revenue 1,953 2,061 -5
Consulting revenue 517 628 -18
Training revenue 70 114 -39
Other service revenue 23 26 -12
Professional services and other service
revenue 610 768 -21
Other revenue 13 29 -55
------------- -- -- ---
Total revenue 2,576 2,858 -10
------------- ----- ----- ---
Cost of software and software-related
services -399 -418 -5
Cost of professional services and
other services -471 -581 -19
Research and development -373 -421 -11
Sales and marketing -561 -681 -18
General and administration -126 -169 -25
Restructuring -5 0 N/A
Other operating income/expense, net 6 5 20
- - --
Total operating expenses -1,929 -2,265 -15
------------------------
Operating income 647 593 9
---------------- --- --- -
Other non-operating income/expense, net -19 19 <-100
Financial income/expense, net -18 -13 38
----------------------------- --- --- --
Income from continuing operations before
income taxes 610 599 2
------------ --- --- -
Income taxes -179 -188 -5
------------ --- --- --
Income from continuing operations 431 411 5
--------------------------------- --- --- -
Loss from discontinued operations,
net of tax -8 -3 >100
----------------------------------
Net income 423 408 4
---------- --- --- -
- Net income attributable to noncontrolling
interests* 1 0 N/A
- Net income attributable to shareholders
of SAP AG 422 408 3
Earnings per share (EPS)
EPS from continuing operations - basic
in euro 0.36 0.34 6
EPS from continuing operations - diluted
in euro 0.36 0.34 6
EPS from net income attributable to
shareholders of SAP AG - basic in euro 0.36 0.34 6
EPS from net income attributable to
shareholders of SAP AG - diluted in euro 0.35 0.34 3
Weighted average number of shares in
millions, treasury stock excluded 1,188 1,191
----------------------------------- ----- -----
Key ratios
Operating margin in % 25.1 20.7 4.4pp
Effective tax rate from continuing
operations in % 29.3 31.4
*Due to the first-time application of SFAS 160, Noncontrolling
Interests in Consolidated Financial Statements, an amendment of
ARB No. 51 the term minority interest has been replaced with
noncontrolling interests and the categorization of noncontrolling
interests is now shown below net income. The prior year figures have
also been changed as a result of the adoption of this standard.
CONSOLIDATED STATEMENTS OF INCOME
(U.S. GAAP; preliminary and unaudited)
Euro millions, unless otherwise stated Six months ended June 30
------------------------
2009 2008 Change in %
---- ---- -----------
Software revenue 962 1,520 -37
Support revenue 2,589 2,157 20
Subscription and other
software-related service revenue 144 120 20
Software and software-related service
revenue 3,695 3,797 -3
Consulting revenue 1,071 1,215 -12
Training revenue 142 218 -35
Other service revenue 47 51 -8
Professional services and other service
revenue 1,260 1,484 -15
Other revenue 19 37 -49
------------- -- -- ---
Total revenue 4,974 5,318 -6
------------- ----- ----- --
Cost of software and software-related
services -780 -785 -1
Cost of professional services and other
services -988 -1,148 -14
Research and development -737 -838 -12
Sales and marketing -1,074 -1,278 -16
General and administration -257 -321 -20
Restructuring -165 0 N/A
Other operating income/expense, net 6 4 50
- - --
Total operating expenses -3,995 -4,366 -8
------------------------
Operating income 979 952 3
---------------- --- --- -
Other non-operating income/expense, net -22 18 <-100
Financial income/expense, net -39 -15 >100
----------------------------- --- --- ----
Income from continuing operations before
income taxes 918 955 -4
------------ --- --- --
Income taxes -278 -297 -6
------------ --- --- --
Income from continuing operations 640 658 -3
--------------------------------- --- --- --
Loss from discontinued operations,
net of tax -13 -8 63
----------------------------------
Net income 627 650 -4
---------- --- --- --
- Net income attributable to noncontrolling
interests* 1 0 N/A
- Net income attributable to shareholders
of SAP AG 626 650 -4
Earnings per share (EPS)
EPS from continuing operations - basic
in euro 0.54 0.55 -2
EPS from continuing operations - diluted
in euro 0.54 0.55 -2
EPS from net income attributable to
shareholders of SAP AG - basic in euro 0.53 0.54 -2
EPS from net income attributable to
shareholders of SAP AG - diluted in euro 0.53 0.54 -2
Weighted average number of shares in
millions, treasury stock excluded 1,188 1,194
------------------------------------ ----- -----
Key ratios
Operating margin in % 19.7 17.9 1.8pp
Effective tax rate from continuing
operations in % 30.3 31.1
*Due to the first-time application of SFAS 160, Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB No.
51 the term minority interest has been replaced with noncontrolling
interests and the categorization of noncontrolling interests is now
shown below net income. The prior year figures have also been changed as
a result of the adoption of this standard.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. GAAP; preliminary and unaudited)
Euro millions June 30, December 31,
2009 2008
--------------- -------- -----------
Assets
Cash and cash equivalents 2,717 1,277
Restricted cash 1 3
Short-term investments 725 382
Accounts receivable, net 2,442 3,128
Other assets 648 705
Deferred income taxes 223 203
Prepaid expenses/deferred charges 142 84
Current assets 6,898 5,782
Goodwill 5,026 5,009
Intangible assets, net 1,004 1,127
Property, plant, and equipment, net 1,384 1,405
Investments 89 95
Accounts receivable, net 2 2
Other assets 666 566
Deferred income taxes 179 187
Prepaid expenses/deferred charges 33 24
Noncurrent assets 8,383 8,415
Total assets 15,281 14,197
------------ ------ ------
Euro millions June 30, December 31,
2009 2008
--------------- -------- ------------
Liabilities and total equity
Accounts payable 491 538
Income tax obligations 260 363
Financial liabilities 2,445 2,574
Other liabilities 977 1,486
Provisions 299 214
Deferred income taxes 47 48
Deferred income 1,609 611
Current liabilities 6,128 5,834
Accounts payable 0 5
Income tax obligations 293 278
Financial liabilities 719 36
Other liabilities 98 94
Provisions 505 497
Deferred income taxes 146 157
Deferred income 51 61
Noncurrent liabilities 1,812 1,128
Total liabilities 7,940 6,962
Common stock, no par value 1,226 1,226
Treasury stock -1,341 -1,362
Additional paid-in capital 318 320
Retained earnings 7,741 7,709
Accumulated other comprehensive loss -606 -660
Total equity attributable to shareholders
of SAP AG 7,338 7,233
Noncontrolling interests* 3 2
Total equity 7,341 7,235
Total liabilities and total equity 15,281 14,197
---------------------------------- ------ ------
* Reclassification of noncontrolling interests (previously minority
interests) is based on the first-time application of SFAS 160.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. GAAP; preliminary and unaudited)
Euro millions Six months Ended June 30
------------------------
2009 2008
---- ----
Net income 627 650
Net loss from discontinued operations 13 8
Income from continuing operations 640 658
Adjustments to reconcile income from continuing
operations to net cash provided by operating
activities:
Depreciation and amortization 251 271
Losses from equity investees 0 1
Losses on disposal of intangible assets and
property, plant, and equipment 3 1
Gains on disposal of investments 0 -9
Writedowns of financial assets 8 0
Allowances for doubtful accounts 97 35
Impacts of hedging for cash-settled
share-based payment plans 9 12
Stock-based compensation including income
tax benefits 3 14
Excess tax benefit from share-based
compensation 0 -8
Deferred income taxes -53 -44
Change in accounts receivable 628 225
Change in other assets -138 -65
Change in accrued and other liabilities -663 -626
Change in deferred income 1,048 906
------------------------ ----- ---
Net cash provided by operating activities
from continuing operations 1,833 1,371
--------------------------- ----- -----
Business combinations, net of cash and cash
equivalents acquired -49 -3,689
Repayment of acquirees' debt in business
combinations 0 -450
Purchase of intangible assets and property,
plant, and equipment -106 -171
Proceeds from disposal of intangible assets
and property, plant, and equipment 13 20
Cash transferred to restricted cash 0 -451
Reduction of restricted cash 3 1,000
Purchase of investments -566 -14
Sales of investments 225 504
Purchase of other financial assets -7 -7
Sales of other financial assets 8 7
------------------------------- - -
Net cash used in investing activities from
continuing operations -479 -3,251
---------------------- --- ------
Dividends paid -594 -594
Purchase of treasury stock 0 -383
Proceeds from reissuance of treasury stock 10 45
Proceeds from issuance of common stock
(share-based compensation) 4 8
Excess tax benefit from share-based
compensation 0 8
Proceeds from private placement transaction 697 0
Proceeds from short-term and long-term debt 0 3,859
Repayments of short-term and long-term debt 0 -1,260
Proceeds from the exercise of equity-based
derivative instruments (STAR hedge) 4 66
Purchase of equity-based derivative
instruments (hedge for cash-settled share-based
payment plans) 0 -55
----------------- - ---
Net cash provided by financing activities
from continuing operations 121 1,694
--------------------------- --- -----
Effect of foreign exchange rates on cash and
cash equivalents -25 -3
----------------- --- --
Net cash used in operating activities from
discontinued operations -10 -8
------------------------ --- --
Net change in cash and
cash equivalents 1,440 -197
----------------- ----- ----
Cash and cash equivalents at the beginning
of the period 1,277 1,608
-------------- ----- -----
Cash and cash equivalents at the end of the
period 2,717 1,411
--------------- ----- -----
Reconciliations from Non-GAAP Numbers to U.S. GAAP Numbers
Preliminary and uaudited
The following table presents a reconciliation from our non-GAAP numbers
(including our non-GAAP at constantcurrency numbers) to the respective
most comparable U.S. GAAP numbers. Note: Our non-GAAP numbers are not
prepared under a comprehensive set of accounting rules or principles.
Euro millions, unless
otherwise stated
Three months ended June 30
2009
-------------------------------------
U.S. Adj.* Non- Currency Non-GAAP
GAAP GAAP* impact** constant
currency
**
---- ----- ----- -------- --------
Non-GAAP Revenue Numbers
========================
Software revenue 543 0 543 -8 535
Support revenue 1,337 0 1,337 -38 1,299
Subscription and other
software-related service revenue 73 0 73 -4 69
Software and software-related
service revenue 1,953 0 1,953 -50 1,902
Consulting revenue 517 0 517 -15 502
Training revenue 70 0 70 -1 69
Other service revenue 23 0 23 -1 22
Professional services and other
service revenue 610 0 610 -17 593
Other revenue 13 0 13 -1 12
Total revenue 2,576 0 2,576 -68 2,507
------------- ----- - ----- --- -----
Non-GAAP Operating Expense Numbers
===================================
Cost of software and
software-related services -399 46 -353
Cost of professional services
and other services -471 1 -470
Research and development -373 1 -372
Sales and marketing -561 19 -543
General and administration -126 0 -126
Restructuring -5 0 -5
Other operating income/expense, net 6 0 6
Total operating expenses -1,929 67 -1,862 54 -1,808
------------------------ ------ -- ------ -- ------
Non-GAAP Income Numbers
=======================
Operating income 647 67 714 -14 699
Other non-operating income/expense,
net -19 0 -19
Financial income/expense, net -18 0 -18
Income from continuing operations
before income taxes 610 67 677
Income taxes -179 -16 -195
Income from continuing operations 431 51 482
Loss from discontinued operations,
net of tax -8 0 -8
Net income 423 51 473
- Net income attributable to
noncontrolling interests 1 0 1
- Net income attributable to
shareholders of SAP AG 422 51 472
-------------------------- --- -- ---
Non-GAAP EPS
============
EPS from continuing operations
- basic in euro 0.36 0.41
EPS from continuing operations
- diluted in euro 0.36 0.41
EPS from net income attributable
to shareholders of SAP AG-
basic in euro 0.36 0.40
EPS from net income attributable
to shareholders of SAP AG-
Diluted in euro 0.35 0.40
Weighted average number of
shares in millions, treasury
stock excluded 1,188 1,188
---------------- ----- -----
Non-GAAP Key Ratios
===================
Operating margin in % 25.1 27.7 27.9
Effective tax rate from continuing
operations in % 29.3 28.8
--------------------- ---- ----
Euro millions, unless
otherwise stated
Three months ended June 30
2008 Change in %
------------------------------------------
U.S. Adj.* Non- U.S. Non- Non-GAAP
GAAP GAAP* GAAP GAAP* constant
Currency**
---- ----- ----- ---- ----- ----------
Non-GAAP Revenue Numbers
========================
Software revenue 898 0 898 -40 -40 -40
Support revenue 1,099 52 1,151 22 16 13
Subscription and other
software-related service
revenue 64 0 64 14 14 8
Software and software-related
service revenue 2,061 52 2,113 -5 -8 -10
Consulting revenue 628 0 628 -18 -18 -20
Training revenue 114 0 114 -39 -39 -39
Other service revenue 26 0 26 -12 -12 -15
Professional services and
other service revenue 768 0 768 -21 -2 -23
Other revenue 29 0 29 -55 -55 -59
Total revenue 2,858 52 2,910 -10 -11 -14
------------- ----- -- ----- --- --- ----
Non-GAAP Operating Expense
Numbers
==========
Cost of software and
software-related services -418 45 -373 -5 -5
Cost of professional services
and other services -581 0 -581 -19 -19
Research and development -421 1 -420 -11 -11
Sales and marketing -681 20 -661 -18 -18
General and administration -169 0 -169 -25 -25
Restructuring 0 0 0 N/A N/A
Other operating income/expense,
net 5 0 5 20 20
Total operating expenses -2,265 66 -2,199 -15 -15 -18
------------------------ ------ -- ------ --- --- ---
Non-GAAP Income Numbers
=======================
Operating income 593 118 711 9 0 -2
Other non-operating
income/expense, net 19 0 19 <-100 <-100
Financial income/expense, net -13 0 -13 38 38
Income from continuing
operations before income taxes 599 118 717 2 -6
Income taxes -188 -32 -220 -5 -11
Income from continuing
operations 411 86 497 5 -3
Loss from discontinued
operations, net of tax -3 0 -3 >100 >100
Net income 408 86 494 4 -4
- Net income attributable to
noncontrolling interests 0 0 0 N/A N/A
- Net income attributable to
shareholders of SAP AG 408 86 494 3 -4
---------------------- --- -- --- - --
Non-GAAP EPS
============
EPS from continuingoperations
- basic in euro 0.34 0.42 6 -2
EPS from continuing
operations - diluted in
euro 0.34 0.42 6 -2
EPS from net income
attributable to shareholders
of SAP AG- basic in euro 0.34 0.41 6 -2
EPS from net income
attributable to shareholders
of SAP AG- diluted in euro 0.34 0.41 3 -2
Weighted average number of
shares in millions,
treasury stock excluded 1,191 1,191
------------------------- ----- -----
Non-GAAP Key Ratios
===================
Operating margin in % 20.7 24.4 4.4pp 3.3pp 3.5pp
Effective tax rate from
continuing operations in % 31.4 30.7
--------------------------- ---- ----
* Adjustments in the revenue line items are for the Business Objects
support revenue that Business Objects would have recognized had it
remained a stand-alone entity but that SAP is not permitted to
recognize as revenue under U.S. GAAP as a result of business combination
accounting rules. Adjustments in the operating expense line items are
for acquisition-related charges. See Explanations of Non-GAAP Measures
for details.
** Constant currency revenue and operating income figures are calculated
by translating revenue and operating income of the current period using
the average exchange rates from the previous year's respective period
instead of the current period. Constant currency period-over-period
changes are calculated by comparing the current year's non-GAAP
constant currency numbers with the non-GAAP number of the previous
year's respective period. See Explanations of Non-GAAP Measures for
details.
Differences may exist due to rounding.
Reconciliations from Non-GAAP Numbers to U.S. GAAP Numbers
Preliminary and unaudited
The following table presents a reconciliation from our non-GAAP numbers
(including our non-GAAP at constant currency numbers) to the respective
most comparable U.S. GAAP numbers. Note: Our non-GAAP numbers are not
prepared under a comprehensive set of accounting rules or principles.
Euro millions, unless otherwise stated
Six months ended June 30
2009
-----------------------------------
U.S. Adj.* Non- Currency Non-GAAP
GAAP GAAP* impact** constant
currency
---- ----- ----- -------- --------
Non-GAAP Revenue Numbers
========================
Software revenue 962 0 962 -17 945
Support revenue 2,589 11 2,600 -61 2,539
Subscription and other
software-related service revenue 144 0 144 -7 137
Software and software-related
service revenue 3,695 11 3,706 -85 3,621
Consulting revenue 1,071 0 1,071 -28 1,043
Training revenue 142 0 142 -2 140
Other service revenue 47 0 47 -1 46
Professional services and other
service revenue 1,260 0 1,260 -31 1,230
Other revenue 19 0 19 -1 18
Total revenue 4,974 11 4,985 -117 4,869
------------- ----- -- ----- ---- -----
Non-GAAP Operating Expense
Numbers
==========
Cost of software and
software-related services -780 93 -687
Cost of professional services
and other services -988 1 -986
Research and development -737 1 -735
Sales and marketing -1,074 37 -1,037
General and administration -257 0 -256
Restructuring -165 0 -165
Other operating income/expense, net 6 0 6
Total operating expenses -3,995 133 -3,861 98 -3,763
------------------------ ------ --- ------ -- ------
Non-GAAP Income Numbers
=======================
Operating income 979 144 1,124 -19 1,106
Other non-operating income/expense,
net -22 0 -22
Financial income/expense, net -39 0 -39
Income from continuing operations
before income taxes 918 144 1,062
Income taxes -278 -35 -313
Income from continuing operations 640 109 749
Loss from discontinued operations,
net of tax -13 0 -13
Net income 627 109 736
- Net income attributable to
noncontrolling interests 1 0 1
- Net income attributable to
shareholders of SAP AG 626 109 735
------------------------- --- --- ---
Non-GAAP EPS
============
EPS from continuing operations
- basic in euro 0.54 0.63
EPS from continuing operations
- diluted in euro 0.54 0.63
EPS from net income attributable
to shareholders of SAP AG- basic
in euro 0.53 0.62
EPS from net income attributable
to shareholders of SAP AG-
diluted in euro 0.53 0.62
Weighted average number of
shares in millions, treasury
stock excluded 1,188 1,188
--------------------------- ----- -----
Non-GAAP Key Ratios
===================
Operating margin in % 19.7 22.6 22.7
Effective tax rate from continuing
operations in % 30.3 29.5
------------------- ---- ----
Euro millions, unless
otherwise stated
Six months ended
June 30
2008 Change in %
--------------------------------------
U.S. Adj.* Non- U.S. Non- Non-
GAAP GAAP* GAAP GAAP* GAAP
constant
currency
**
--- ----- ----- ---- ----- --------
Non-GAAP Revenue Numbers
========================
Software revenue 1,520 0 1,520 -37 -37 -38
Support revenue 2,157 99 2,256 20 15 13
Subscription and
other software-related
service revenue 120 0 120 20 20 14
Software and software-related
service revenue 3,797 99 3,896 -3 -5 -7
Consulting revenue 1,215 0 1,215 -12 -12 -14
Training revenue 218 0 218 -35 -35 -36
Other service revenue 51 0 51 -8 -8 -10
Professional services and
other service revenue 1,484 0 1,484 -15 -15 -17
Other revenue 37 0 37 -49 -49 -51
Total revenue 5,318 99 5,417 -6 -8 -10
------------- ----- -- ----- -- -- ---
Non-GAAP Operating Expense
Numbers
==========
Cost of software and
software-related services -785 93 -692 -1 -1
Cost of professional services
and other services -1,148 0 -1,148 -14 -14
Research and development -838 15 -823 -12 -11
Sales and marketing -1,278 41 -1,237 -16 -16
General and administration -321 0 -321 -20 -20
Restructuring 0 0 0 N/A N/A
Other operating income/expense,
net 4 0 4 50 50
Total operating expenses -4,366 149 -4,217 -8 -8 -11
------------------------ ------ --- ------ -- -- ---
Non-GAAP Income Numbers
=======================
Operating income 952 248 1,200 3 -6 -8
Other non-operating
income/expense, net 18 0 18 <-100 <-100
Financial income/expense, net -15 0 -15 >100 >100
Income from continuing operations
before income taxes 955 248 1,203 -4 -12
Income taxes -297 -64 -361 -6 -13
Income from continuing operations 658 184 842 -3 -11
Loss from discontinued
operations, net of tax -8 0 -8 63 63
Net income 650 184 834 -4 -12
- Net income attributable to
noncontrolling interests 0 0 0 N/A N/A
- Net income attributable to
shareholders of SAP AG 650 184 834 -4 -12
---------------------- --- --- --- -- ---
Non-GAAP EPS
============
EPS from continuing operations
- basic in euro 0.55 0.71 -2 -11
EPS from continuing operations
- diluted in euro 0.55 0.71 -2 -11
EPS from net income attributable
to shareholders of SAP AG-
basic in euro 0.54 0.70 -2 -11
EPS from net income attributable
to shareholders of SAP AG-
diluted in euro 0.54 0.70 -2 -11
Weighted average number of
shares in millions, treasury
stock excluded 1,194 1,194
----------------- ----- -----
Non-GAAP Key Ratios
===================
Operating margin in % 17.9 22.2 1.8pp 0.4pp 0.5pp
Effective tax rate from
continuing operations in % 31.1 30.0
--------------------------- ---- ----
* Adjustments in the revenue line items are for the Business Objects
support revenue that Business Objects would have recognized had it
remained a stand-alone entity but that SAP is not permitted to recognize
as revenue under U.S. GAAP as a result of business combination
accounting rules. Adjustments in the operating expense line items are
for acquisition-related charges. See Explanations of Non-GAAP Measures
for details.
** Constant currency revenue and operating income figures are calculated
by translating revenue and operating income of the current period
using the average exchange rates from the previous year's respective
period instead of the current period. Constant currency period-over-
period changes are calculated by comparing the current year's non-GAAP
constant currency numbers with the non-GAAP number of the previous
year's respective period. See Explanations of Non-GAAP Measures for
details.
Differences may exist due to rounding.
Reconciliations from Non-GAAP Revenue in U.S. Dollar to U.S. GAAP Revenue
in Euro
Preliminary and unaudited
The following table presents a reconciliation from our non-GAAP revenue
numbers in U.S. dollar to the respective most comparable U.S. GAAP revenue
numbers in euro. Note: Our non-GAAP numbers in U.S. dollar are company-
specific and not prepared under a comprehensive set of accounting rules
or principles.
Three months ended June 30
-------------------------------------------
Software Revenue Software and Software-
Related Service Revenue
-------------------------------------------
2009 2008 Change 2009 2008 Change
in % in %
---- ---- ------ ---- ---- ------
= U.S. GAAP revenue in
euro millions 543 898 -40 1,953 2,061 -5
+/- Adjustment between U.S.
GAAP revenue and non-GAAP
revenue in euro millions* 0 0 0 0 52 -100
= Non-GAAP revenue in euro
millions 543 898 -40 1,953 2,113 -8
+/- Adjustment in
US$millions 213 499 -57 728 1,181 -38
= Non-GAAP revenue in
US$millions 756 1,397 -46 2,681 3,294 -19
------------ --- ----- --- ----- ----- ---
Six months ended June 30
-------------------------------------------
Software Revenue Software and Software-
Related Service Revenue
-------------------------------------------
2009 2008 Change 2009 2008 Change
in % in %
---- ---- ------ ---- ---- ------
= U.S. GAAP revenue in
euro millions 962 1,520 -37 3,695 3,797 -3
+/- Adjustment between
U.S. GAAP revenue and
non-GAAP revenue in euro
millions* 0 0 0 11 99 -89
= Non-GAAP revenue in euro
millions 962 1,520 -37 3,706 3,896 -5
+/- Adjustment in
US$millions 339 835 -59 1,256 2,102 -40
= Non-GAAP revenue in
US$millions 1,301 2,355 -45 4,962 5,998 -17
------------ ----- ----- --- ----- ----- ---
* Adjustments in the revenue line items are for the Business Objects
support revenue that Business Objects would have recognized had it
remained a stand-alone entity but that SAP is not permitted to recognize
as revenue under U.S. GAAP as a result of business combination rules.
See Explanations of Non-GAAP Measures for details.
Differences may exist due to rounding.
REVENUE BY REGION
Preliminary and unaudited
The following table presents our U.S. GAAP and non-GAAP revenue by region.
The table also presents a reconciliation from our non-GAAP revenue
(including our non-GAAP revenue at constant currency) to the respective
most comparable U.S. GAAP revenue. Note: Our non-GAAP revenues are not
prepared under a comprehensive set of accounting rules or principles.
Euro millions
Three months ended June 30
2009
--------------------------------------
U.S. Adj.* Non- Currency Non-GAAP
GAAP GAAP* impact** constant
currency**
---- ----- ----- -------- ----------
Software revenue by region***
EMEA 266 0 266 6 272
Americas 164 0 164 -9 154
Asia Pacific Japan 114 0 114 -6 108
------------------ --- - --- -- ---
Software revenue 543 0 543 -8 535
---------------- --- - --- -- ---
Software and software-related
service revenue by region***
Germany 329 0 329 0 329
Rest of EMEA 701 0 701 19 720
Total EMEA 1,030 0 1,030 19 1,049
United States 481 0 481 -57 424
Rest of Americas 158 0 158 6 164
Total Americas 639 0 639 -51 588
Japan 107 0 107 -20 87
Rest of Asia Pacific Japan 178 0 178 1 179
Total Asia Pacific Japan 285 0 285 -20 265
---------------------------- --- - --- --- ---
Software and software-related
service revenue 1,953 0 1,953 -50 1,902
----------------- ----- - ----- --- -----
Total revenue by region***
Germany 463 0 463 0 463
Rest of EMEA 882 0 882 23 905
Total EMEA 1,345 0 1,345 24 1,369
United States 663 0 663 -81 582
Rest of Americas 214 0 214 9 223
Total Americas 877 0 877 -71 806
Japan 126 0 126 -24 102
Rest of Asia Pacific Japan 229 0 229 2 231
Total Asia Pacific Japan 355 0 355 -22 333
----------------------------- --- - --- --- ---
Total Revenue 2,576 0 2,576 -68 2,507
-------------- ----- - ----- --- -----
Euro millions
Three months ended
June 30
2008 Change in %
-----------------------------------
U.S. Adj.* Non- U.S. Non- Non-
GAAP GAAP* GAAP GAAP* GAAP
constant
currency
**
--- ---- ----- ---- ---- --------
Software revenue by region***
EMEA 444 0 444 -40 -40 -39
Americas 306 0 306 -46 -46 -50
Asia Pacific Japan 148 0 148 -23 -23 -27
------------------ --- - --- --- --- ---
Software revenue 898 0 898 -40 -40 -40
---------------- --- - --- --- --- ---
Software and software-related
service revenue by region***
Germany 353 2 355 -7 -7 -7
Rest of EMEA 758 20 778 -8 -10 -7
Total EMEA 1,111 22 1,133 -7 -9 -7
United States 472 24 496 2 -3 -15
Rest of Americas 190 2 192 -17 -18 -15
Total Americas 662 26 688 -3 -7 -15
Japan 89 1 90 20 19 -3
Rest of Asia Pacific Japan 199 3 202 -11 -12 -11
Total Asia Pacific Japan 288 4 292 -1 -2 -9
------------------------ --- - --- -- -- --
Software and oftware-related
service revenue 2,061 52 2,113 -5 -8 -10
----------------- ----- -- ----- -- -- ---
Total revenue by region***
Germany 524 2 526 -12 -12 -12
Rest of EMEA 1,009 20 1,029 -13 -14 -12
Total EMEA 1,533 22 1,555 -12 -14 -12
United States 703 24 727 -6 -9 -20
Rest of Americas 249 2 251 -14 -15 -11
Total Americas 952 26 978 -8 -10 -18
Japan 115 1 116 10 9 -12
Rest of Asia Pacific Japan 258 3 261 -11 -12 -11
Total Asia Pacific Japan 373 4 377 -5 -6 -12
------------------------ --- - --- -- -- ---
Total Revenue 2,858 52 2,910 -10 -11 -14
------------- ----- -- ----- --- --- ---
* Adjustments in the revenue line items are for the Business Objects
support revenue that Business Objects would have recognized had it
remained a stand-alone entity but that SAP is not permitted to recognize
as revenue under U.S. GAAP as a result of business combination
accounting rules. Adjustments in the operating expense line items are
for acquisition-related charges. See Explanations of Non-GAAP Measures
for details.
** Constant currency revenue figures are calculated by translating revenue
of the current period using the average exchange rates from the
previous year's respective period instead of the current period.
Constant currency period-over-period changes are calculated by
comparing the current year's non-GAAP constant currency numbers with
the non-GAAP number of the previous year's respective period.
*** based on customer location
Differences may exist due to rounding.
REVENUE BY REGION
Preliminary and unaudited
The following table presents our U.S. GAAP and non-GAAP revenue by region.
The table also presents a reconciliation rom our non-GAAP revenue
(including our non-GAAP revenue at constant currency) to the respective
most comparable U.S. GAAP revenue. Note: Our non-GAAP revenues are not
prepared under a comprehensive set of accounting rules or principles.
Euro millions
Six months ended June 30
2009
------------------------------------
U.S. Adj.* Non- Currency Non-GAAP
GAAP GAAP* impact** constant
currency**
---- ----- ----- -------- ----------
Software revenue by region***
EMEA 472 0 472 14 486
Americas 316 0 316 -21 295
Asia Pacific Japan 174 0 174 -10 164
------------------ --- - --- --- ---
Software revenue 962 0 962 -17 945
---------------- --- - --- --- ---
Software and software-related
service revenue by region***
Germany 605 0 605 1 606
Rest of EMEA 1,307 4 1,311 47 1,358
Total EMEA 1,912 4 1,916 47 1,963
United States 941 6 947 -117 830
Rest of Americas 312 0 312 20 332
Total Americas 1,253 6 1,259 -97 1,162
Japan 203 0 204 -40 164
Rest of Asia Pacific Japan 326 0 327 6 333
Total Asia Pacific Japan 530 1 530 -34 496
------------------------ --- - --- --- ---
Software and software-related
service revenue 3,695 11 3,706 -85 3,621
------------------------------ ----- -- ----- --- -----
Total revenue by region***
Germany 895 0 896 0 896
Rest of EMEA 1,673 4 1,676 62 1,738
Total EMEA 2,568 4 2,572 62 2,634
United States 1,313 6 1,319 -166 1,153
Rest of Americas 425 0 425 28 453
Total Americas 1,738 6 1,744 -138 1,606
Japan 246 0 246 -49 197
Rest of Asia Pacific Japan 422 0 423 9 432
Total Asia Pacific Japan 668 1 669 -40 629
------------------------ --- - --- --- ---
Total Revenue 4,974 11 4,985 -117 4,869
------------- ----- -- ----- ---- -----
Euro millions
Six months ended
June 30
2008 Change in %
--------------------------------------
U.S. Adj.* Non- U.S. Non- Non-
GAAP GAAP* GAAP GAAP* GAAP
constant
currency
**
---- ----- ----- ---- ----- --------
Software revenue by region***
EMEA 736 0 736 -36 -36 -34
Americas 523 0 523 -40 -40 -44
Asia Pacific Japan 261 0 261 -33 -33 -37
------------------ --- - --- --- --- ---
Software revenue 1,520 0 1,520 -37 -37 -38
---------------- ----- - ----- --- --- ---
Software and software-related
service revenue by region***
Germany 655 3 658 -8 -8 -8
Rest of EMEA 1,374 37 1,411 -5 -7 -4
Total
EMEA 2,029 40 2,069 -6 -7 -5
United States 885 48 933 6 2 -11
Rest of Americas 340 4 344 -8 -9 -3
Total Americas 1,225 52 1,277 2 -1 -9
Japan 175 2 177 16 15 -7
Rest of Asia Pacific Japan 368 5 373 -11 -12 -11
Total Asia Pacific Japan 543 7 550 -2 -4 -10
------------------------ --- - --- -- -- ---
Software and software-related
service revenue 3,797 99 3,896 -3 -5 -7
---------------- ----- -- ----- -- -- --
Total revenue by region***
Germany 977 3 980 -8 -9 -9
Rest of EMEA 1,846 37 1,883 -9 -11 -8
Total EMEA 2,823 40 2,863 -9 -10 -8
United States 1,338 48 1,386 -2 -5 -17
Rest of Americas 451 4 455 -6 -7 0
Total Americas 1,789 52 1,841 -3 -5 -13
Japan 227 2 229 8 7 -14
Rest of Asia Pacific Japan 479 5 484 -12 -13 -11
Total Asia Pacific Japan 706 7 713 -5 -6 -12
------------------------ --- - --- -- -- ---
Total Revenue 5,318 99 5,417 -6 -8 -10
------------- ----- -- ----- -- -- ---
* Adjustments in the revenue line items are for the Business Objects
support revenue that Business Objects would have recognized had it
remained a stand-alone entity but that SAP is not permitted to recognize
as revenue under U.S. GAAP as a result of business combination
accounting rules. Adjustments in the operating expense line items are
for acquisition-related charges. See Explanations of Non-GAAP Measures
for details.
** Constant currency revenue figures are calculated by translating revenue
of the current period using the average exchange rates from the
previous year's respective period instead of the current period.
Constant currency period-over-period changes are calculated by
comparing the current year's non-GAAP constant currency numbers with
the non-GAAP number of the previous year's respective period.
*** based on customer location
Differences may exist due to rounding.
SHARE-BASED COMPENSATION
(U.S. GAAP; preliminary and unaudited)
Euro millions Six months ended June 30
--------------------------
2009 2008 Change in %
--------------------------
Share-based compensation per expense
line item
Cost of software and software-related
services 2 4 -50
Cost of professional services and
other services 4 10 -60
Research and development 7 15 -53
Sales and marketing 4 15 -73
General and administration 3 8 -63
-------------------------- - - ---
Total share-based compensation 20 52 -62
------------------------------ -- -- ---
Note: The share-based compensation expenses do not differ between SAP's
U.S. GAAP and non-GAAP measures.
Differences may exist due to rounding.
FREE CASH FLOW
Preliminary and unaudited
Euro millions Six months ended June 30
--------------------------
2009 2008 Change in %
--------------------------
Net cash provided by operating
activities from continuing operations 1,833 1,371 34
Purchase of long-lived assets
Excluding additions from business
combinations -106 -171 -38
------------------ ---- ---- ---
Free cash flow 1,727 1,200 44
-------------- ----- ----- --
Differences may exist due to rounding.
DAYS SALES OUTSTANDING
Preliminary and unaudited
June 30, December 31, Change in
2009 2008 days
-------- ----------- ---------
Days sales outstanding 77 71 6
---------------------- -- -- -
HEADCOUNT
Preliminary and unaudited
in full-time equivalents -
from continuing operations
--------------------------- June 30, December 31, June 30,
2009 2008 2008
-------- ------------ --------
Headcount by Region
Germany 15,286 15,582 15,303
Rest of EMEA 10,639 11,243 11,235
Total EMEA 25,925 26,825 26,538
United States 8,257 9,214 9,293
Rest of Americas 3,887 4,243 4,491
Total Americas 12,144 13,457 13,784
Japan 1,230 1,413 1,477
Rest of Asia Pacific Japan 9,262 9,841 9,648
Total Asia Pacific Japan 10,492 11,254 11,125
---------------------------- ------ ------ ------
Total 48,561 51,536 51,447
----- ------ ------ ------
-
Headcount by Functional Area
Software and software-related
services 6,311 6,458 6,517
Professional services and
other services 12,871 14,051 14,057
Research and development 15,062 15,547 15,148
Sales and marketing 9,728 10,701 10,794
General and administration 3,113 3,244 3,367
Infrastructure 1,476 1,535 1,564
--------------- ----- ----- -----
Total 48,561 51,536 51,447
----- ------ ------ ------
MULTI QUARTER SUMMARY
(U.S. GAAP and Non-GAAP; preliminary and unaudited)
Euro millions,
unless otherwise
stated Q2/2009 Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008
---------------- ------- ------- ------- ------- ------- -------
Softwarerevenue (U.S.
GAAP) 543 418 1,323 763 898 622
Revenue adjustment* 0 0 0 0 0 0
Software revenue
(Non-GAAP) 543 418 1,323 763 898 622
Support revenue (U.S.
GAAP) 1,337 1,252 1,269 1,167 1,099 1,058
Revenue adjustment* 0 11 26 41 52 47
Support revenue
(Non-GAAP) 1,337 1,263 1,295 1,208 1,151 1,105
Subscription and other
software-related
service revenue (U.S.
GAAP) 73 71 74 64 64 56
Revenue adjustment* 0 0 0 0 0 0
Subscription and other
software-related service
revenue (Non-GAAP) 73 71 74 64 64 56
Software and
software-related
service revenue
(U.S. GAAP) 1,953 1,741 2,666 1,994 2,061 1,736
Revenue adjustment* 0 11 26 41 52 47
Software and
software-related
service revenue
(Non-GAAP) 1,953 1,752 2,692 2,035 2,113 1,783
Total revenue
(U.S. GAAP) 2,576 2,397 3,488 2,761 2,858 2,460
Revenue adjustment* 0 11 26 41 52 47
Total revenue
(Non-GAAP) 2,576 2,408 3,514 2,802 2,910 2,507
Operating income
(U.S. GAAP) 647 332 1,276 614 593 359
Revenue adjustment* 0 11 26 41 52 47
Expense adjustment* 67 66 72 76 66 83
Operating income
(Non-GAAP) 714 409 1,374 731 711 489
Operating margin (U.S.
GAAP) 25.1% 13.9% 36.6% 22.2% 20.7% 14.6%
Operating margin
(Non-GAAP) 27.7% 17.0% 39.1% 26.1% 24.4% 19.5%
Effective tax rate from
Continuing operations
(Non-GAAP) 28.8% 30.6% 28.3% 30.9% 30.7% 29.0%
EPS from continuing
operations - basic in
euro(U.S. GAAP) 0.36 0.18 0.72 0.35 0.34 0.21
EPS from continuing
operations -
diluted in euro
(U.S. GAAP) 0.36 0.18 0.73 0.34 0.34 0.21
EPS from continuing
operations - basic in
euro(Non-GAAP) 0.41 0.22 0.78 0.41 0.42 0.29
EPS from continuing
operations -
diluted in euro
(Non-GAAP) 0.41 0.22 0.78 0.41 0.42 0.29
Headcount** 48,561 49,916 51,536 51,863 51,447 51,274
----------- ------ ------ ------ ------ ------ ------
* Adjustments in the revenue line items are for the Business Objects
support revenue that Business Objects would have recognized had it
remained a stand-alone entity but that SAP is not permitted to recognize
as revenue under U.S. GAAP as a result of business combination accounting
rules. Adjustments in the operating expense line items are for
acquisition-related charges. See Explanations of Non-GAAP Measures for
details.
** in full-time equivalents - from continuing operations
Differences may exist due to rounding.
Explanations of Non-GAAP Measures
This document discloses certain financial measures, such as non-GAAP revenues, non-GAAP expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per share, free cash flow, constant currency revenue and operating income measures as well as U.S. dollar-based non-GAAP revenue numbers that are not prepared in accordance with U.S. GAAP and are therefore considered non-GAAP financial measures. Our non-GAAP financial measures may not correspond to non-GAAP financial measures that other companies report. The non-GAAP financial measures that we report should be considered as additional to, and not as substitutes for or superior to, revenue, operating income, cash flows, or other measures of financial performance prepared in accordance with U.S. GAAP. Our non-GAAP financial measures included in this document are reconciled to the nearest U.S. GAAP measure in the tables on the pages F5 to F11 above.
We believe that it is of interest to investors to receive certain supplemental historical and prospective non-GAAP financial information used by our management in running our business and making financial, strategic and operational decisions - in addition to financial data prepared in accordance with U.S. GAAP - to attain a more transparent understanding of our past performance and our future results. Beginning in 2008, we use these non-GAAP measures as defined below consistently in our planning, forecasting, reporting, compensation and external communication. Specifically,
- Our management uses these non-GAAP numbers rather than U.S. GAAP numbers as the basis for financial, strategic and operating decisions
- The variable remuneration components of our board members and employees that are tied to our company's growth and operating performance are based on SAP's achievement of its targets for non-GAAP operating income, non-GAAP software and software-related revenue growth at constant currencies, cash flow conversion ratio and non-GAAP operating margin at constant currencies. These targets are monitored on a yearly basis and changed if necessary.
- The annual budgeting process involving all management units is based on non-GAAP revenues and non-GAAP operating income numbers rather than U.S. GAAP numbers.
- All monthly forecast and performance reviews with all senior managers globally are based on these non-GAAP measures rather than U.S. GAAP numbers.
- Both, company-internal target setting and guidance provided to the capital markets are based on non-GAAP revenues and non-GAAP income measures rather than U.S. GAAP numbers.
We believe that our non-GAAP measures are useful to investors for the following reasons:
- The non-GAAP measures provide investors with insight into management's decision-making since management uses these non-GAAP measures to run our business and make financial, strategic and operating decisions.
- The non-GAAP measures provide investors with additional information that enables a comparison of year-over-year operating performance by eliminating certain direct effects resulting from the acquisition of Business Objects.
Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:
Non-GAAP revenue:
Revenues in this document identified as non-GAAP revenue have been adjusted from the respective U.S. GAAP numbers by including the full amount of Business Objects support revenues that would have been reflected by Business Objects had it remained a stand-alone entity but which are not permitted to be reflected as revenues under U.S. GAAP as a result of fair value accounting for Business Objects support contracts in effect at the time of the Business Objects acquisition.
Under U.S. GAAP we record at fair value the Business Objects support contracts in effect at the time of the acquisition of Business Objects. Consequently, our U.S. GAAP support revenues, our U.S. GAAP software and software-related service revenues and our U.S. GAAP total revenues for periods subsequent to the Business Objects acquisition do not reflect the full amount of support revenue that Business Objects would have recorded for these support contracts absent the acquisition by SAP. Adjusting revenue numbers for this one-time revenue impact provides additional insight into our ongoing performance. The support contracts are typically one-year contracts, and we expect customers will renew them, which would result in revenues from support fees. However, we cannot provide absolute assurance that these contracts will in fact be renewed.
Non-GAAP operating expense:
We exclude acquisition-related charges, which are defined as follows:
- Amortization expense/impairment charges of intangibles acquired in business combinations and certain standalone acquisitions of intellectual property;
- Expense from purchased in-process research and development;
- Restructuring expenses and settlements of preexisting relationships as far as incurred in connection with a business combinations; and
- Acquisition-related third-party costs (since the mandatory adoption of SFAS 141R and the revision of IFRS 3) as of January 1, 2009, which requires expensing these costs. The previous version of SFAS 141 and IFRS 3 required capitalization.
Non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP earnings per share
Operating income, operating margin, net income and earnings per share in this document identified as non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP earnings per share have been adjusted from the respective operating income, operating margin, net income and earnings per share numbers as recorded under U.S. GAAP by adjusting for the above mentioned non-GAAP revenues and non-GAAP expenses.
We include these non-GAAP revenues and exclude these non-GAAP expenses for the purpose of calculating non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP earnings per share when evaluating the continuing operational performance of the Company because these expenses generally cannot be changed or influenced by management after the acquisition other than by disposing of the acquired assets. As management at levels below the Executive Board has no influence on these expenses we generally do not consider these expenses for purposes of evaluating the performance of management units. As we believe that our Company-wide performance measures need to be aligned with the measures generally applied by management at varying levels throughout the Company we exclude these expenses when making decisions to allocate resources, both, on a Company level and at lower levels of the organization. In addition, we use these non-GAAP measures to gain a better understanding of the Company's comparative operating performance from period-to-period and as a basis for planning and forecasting future periods. Considering that management at all levels of the organization is heavily focused on our non-GAAP measures in our internal reporting and controlling, we believe that it is in the interest of our investors that they are provided with the same information.
We believe that our non-GAAP financial measures described above have limitations, which include but are not limited to the following:
- The eliminated amounts may be material to us.
- Without being analysed in conjunction with the corresponding U.S. GAAP measures the non-GAAP measures are not indicative of our present and future performance, foremost for the following reasons:
- The additional insight into our potential future financial performance that our non-GAAP revenue numbers are intended to provide assumes that Business Objects customers renew their maintenance contracts. Projections of our future revenues made based on these numbers would be overstated if such maintenance renewals do not occur.
- While our non-GAAP income numbers reflect the elimination of certain acquisition-related expenses, no eliminations are made for the additional revenues that result from the acquisitions.
- The acquisition-related one-time charges that we eliminate in deriving our non-GAAP income numbers are likely to recur should SAP enter into material business combinations in the future.
- The acquisition-related amortization expense that we eliminate in deriving our non-GAAP income numbers are recurring expenses that will impact our financial performance in future years.
- While our non-GAAP revenue numbers are adjusted for a one-time impact only, our non-GAAP expenses are adjusted for both one-time and recurring items. Additionally, the revenue adjustment for the fair value accounting for Business Objects support contracts and the expense adjustment for one-time and recurring acquisition-related charges do not arise from a common conceptual basis as the revenue adjustment aims at improving the comparability of the initial post-acquisition period with future post-acquisition periods while the expense adjustment aims at improving the comparability between post-acquisition periods and pre-acquisition periods. This should particularly be considered when evaluating our non-GAAP operating income and non-GAAP operating margin numbers as these combine our non-GAAP revenues and non-GAAP expenses despite the absence of a common conceptual basis.
We believe, however, that the presentation of the non-GAAP measures in conjunction with the corresponding U.S. GAAP measures provide useful information to management and investors regarding present and future business trends relating to our financial condition and results of operations. We therefore do not evaluate our growth and performance without considering both non-GAAP measures and U.S. GAAP measures. We caution the readers of this document to follow a similar approach by considering our non-GAAP measures only in addition to, and not as a substitute for or superior to, revenues or other measures of our financial performance prepared in accordance with U.S. GAAP.
Free Cash Flow
We believe that free cash flow is a widely accepted supplemental measure of liquidity. Free cash flow measures a company's cash flow remaining after all expenditures required to maintain or expand the business have been paid off. We calculate free cash flow as operating cash flow from continuing operations minus additions to long-lived assets and to intangibles, excluding additions from acquisitions. Free cash flow should be considered in addition to, and not as a substitute for or superior to, cash flow or other measures of liquidity and financial performance prepared in accordance with U.S. GAAP.
Constant Currency Period-Over-Period Changes
We believe it is important for investors to have information that provides insight into our sales. Revenue measures determined under U.S. GAAP provide information that is useful in this regard. However, both sales volume and currency effects impact period-over-period changes in sales revenue. We do not sell standardized units of products and services, so we cannot provide relevant information on sales volume by providing data on the changes in product and service units sold. To provide additional information that may be useful to investors in breaking down and evaluating changes in sales volume, we present information about our revenue and various values and components relating to operating income that are adjusted for foreign currency effects. We calculate constant currency year-over-year changes in revenue and operating income by translating foreign currencies using the average exchange rates from the previous (comparator) year instead of the report year.
We believe that data on constant currency period-over-period changes have limitations, particularly as the currency effects that are eliminated constitute a significant element of our revenues and expenses and may severely impact our performance. We therefore limit our use of constant currency period-over-period changes to the analysis of changes in volume as one element of the full change in a financial measure. We do not evaluate our results and performance without considering both constant currency period-over-period changes on the one hand and changes in revenues, expenses, income, or other measures of financial performance prepared in accordance with U.S. GAAP on the other. We caution the readers of this document to follow a similar approach by considering data on constant currency period-over-period changes only in addition to, and not as a substitute for or superior to, changes in revenues, expenses, income, or other measures of financial performance prepared in accordance with U.S. GAAP.
U.S. Dollar-Based Non-GAAP Revenue Measures
Substantially all of our major competitors report their financial performance in U.S. dollars. Thus changes in exchange rates, particularly in the U.S. dollar to euro rates, affect the financial statements of our competitors differently than our euro-based financial statements. We therefore believe that U.S. dollar-based revenues for SAP provide investors with useful additional information that enables them to better compare SAP's revenue growth with SAP's competitors' revenue growth irrespective of movements in exchange rates.
Our U.S. dollar non-GAAP revenues are determined as if SAP's reporting currency was the U.S. dollar. In fact, the reporting currency of our U.S. GAAP and IFRS consolidated financial statements as filed in Germany and in the U.S. with the U.S. Securities and Exchange Commission is the euro. Additionally, our U.S. dollar non-GAAP revenue numbers have been adjusted from the respective U.S. GAAP revenues by the same support revenue fair value adjustment than our non GAAP revenues explained above.
SAP's management uses our U.S. dollar non-GAAP revenues to gain a better understanding of SAP's operating results compared to SAP's major competitors.
We believe that our U.S. dollar non-GAAP revenues have limitations, particularly because the impact of currency exchange rate fluctuations and the eliminated amounts may be material to us. We therefore do not evaluate our growth and performance without considering both non-GAAP revenues and euro-based U.S. GAAP revenues. We caution the readers of this document to follow a similar approach by considering our U.S. dollar non-GAAP revenues only in addition to, and not as a substitute for or superior to, revenues or other measures of our financial performance prepared in accordance with U.S. GAAP and reported in euros.
CONSOLIDATED STATEMENTS OF INCOME
(IFRS; preliminary and unaudited)
Euro millions, unless otherwise stated Six months ended June 30
------------------------
2009 2008 % change
---- ---- --------
Software revenue 962 1,520 -37
Support revenue 2,589 2,164 20
Subscription and other software-related
service revenue 144 120 20
Software and software-related
service revenue 3,695 3,804 -3
Consulting revenue 1,071 1,215 -12
Training revenue 142 218 -35
Other service revenue 47 51 -8
Professional services and other service
revenue 1,260 1,484 -15
Other revenue 19 36 -47
------------- -- -- ---
Total revenue 4,974 5,324 -7
------------- --- --- --
Cost of software and software-related
services -786 -831 -5
Cost of professional services and other
services -989 -1,150 -14
Research and development -738 -826 -11
Sales and marketing -1,074 -1,280 -16
General and administration -262 -321 -18
Restructuring -183 -12 >100
Other operating income/expense, net 6 4 50
-------------------- - - --
Total operating expenses -4,026 -4,416 -9
------------------------ ------ ----- --
Operating profit 948 908 4
---------------- --- --- -
Other non-operating <-100
income/expense, net -23 18
Interest income 17 42 -60
Interest expense -53 -63 -16
Other financial income -7 7 <-100
Share of gain/loss of <-100
associates accounted for using the equity
method 1 -1
Financial >100
income/expense, net -42 -15
-------------------- --- --- ----
Profit before income
taxes 883 911 -3
-------------------- --- --- --
Income taxes -261 -281 -7
------------ --- --- --
Profit after taxes 622 630 -1
------------------ --- --- --
-Profit attributable to N/A
noncontrolling interests 1 0
-Profit attributable to
shareholders of SAP AG 621 630 -1
-
Earnings per share
Earnings per share attributable to
shareholders of SAP AG - basic in euro 0.52 0.53 -2
Earnings per share attributable to
shareholders of SAP AG - diluted in euro 0.52 0.53 -2
Weighted average number of shares
in millions, treasury stock excluded 1,188 1,194
Key ratios
Operating margin in % 19.1 17.1 2.0pp
Effective tax rate in % 29.6 30.8
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IFRS; preliminary and unaudited)
Euro millions June 30, December
2009 31, 2008
--------- -------- --------
Assets
Cash and cash
equivalents 2,717 1,277
Restricted cash 1 3
Short-term investments 725 382
Other financial assets 160 206
Financial assets 885 588
Accounts receivable, net 2,442 3,128
Other assets 98 92
Income tax receivables 383 399
Prepaid expenses/deferred charges 142 84
Current assets 6,668 5,571
Goodwill 4,990 4,975
Intangible assets, net 1,016 1,140
Property, plant, and equipment,
net 1,383 1,405
At-Equity investments 21 21
Other investments 68 74
Other financial assets 175 167
Financial assets 264 262
Accounts receivable, net 2 2
Other assets 46 39
Income tax receivables 81 33
Deferred income taxes 459 441
Prepaid expenses/deferred charges 30 32
Noncurrent assets 8,271 8,329
Total assets 14,939 13,900
------------ ------ ------
Euro millions June 30, December
2009 31, 2008
--------- -------- --------
Liabilities and total
equity
Accounts payable 492 539
Income tax payable 260 363
Financial liabilities 2,439 2,563
Other liabilities 981 1,488
Financial and Other
liabilities 3,420 4,051
Provisions 342 248
Deferred income* 1,620 623
Current liabilities 6,134 5,824
Accounts payable 0 5
Income tax obligations 293 278
Financial liabilities 719 40
Other liabilities 47 50
Financial and Other
liabilities 766 90
Provisions 214 232
Deferred tax liabilities 209 239
Deferred income* 51 61
Noncurrent liabilities 1,533 905
Total liabilities 7,667 6,729
Common stock, no par value 1,226 1,226
Treasury stock -1,341 -1,362
Additional paid-in capital 318 320
Retained earnings* 7,470 7,442
Accumulated other
comprehensive loss -404 -457
Total equity attributable to
shareholders of SAP AG 7,269 7,169
Noncontrolling interests 3 2
Total equity 7,272 7,171
Total liabilities and
total equity 14,939 13,900
--------------------- ------ ------
* Adjustments to prior year reported numbers are based on the
application of IFRIC 13, Customer Loyalty Programmes.
Reconciliations from U.S. GAAP and Non-GAAP to IFRS and Non-IFRS Numbers
Preliminary and unaudited
The following table provides a reconciliation from our U.S. GAAP and
non-GAAP numbers to the respective most comparable IFRS and non-IFRS
numbers. Note: Our non-GAAP and non-IFRS numbers are not prepared under a
comprehensive set of accounting rules or principles.
Euro millions, unless otherwise stated
Six months ended June 30
2009
-------------------------
U.S. IFRS IFRS
vs.
U.S.
GAAP
Diff.
--- ----- ----
Non-GAAP / Non-IFRS Revenue
===========================
U.S. GAAP / IFRS software and
software-related service
revenue 3,695 0 3,695
Discontinued operations* 0 0 0
Deferred revenue write-down** 11 0 11
Non-GAAP / Non-IFRS software and
software-related service revenue 3,706 0 3,706
U.S. GAAP / IFRS total revenue 4,974 0 4,974
Discontinued operations* 0 0 0
Deferred revenue write-down** 11 0 11
Non-GAAP / Non-IFRS total revenue 4,985 0 4,985
--------------------------------- ----- - -----
Non-GAAP / Non-IFRS Operating
Income
=============================
U.S. GAAP / IFRS operating income 979 -32 948
Discontinued operations* 0 6 6
Deferred revenue write-down** 11 0 11
Acquisition related charges*** 133 8 141
Non-GAAP / Non-IFRS
operating income 1,124 -18 1,106
------------------- ----- --- -----
Non-GAAP / Non-IFRS
Operating Margin
===================
U.S. GAAP / IFRS
operating margin in % 19.7 19.1
Non-GAAP / Non-IFRS
operating margin in % 22.6 22.2
---------------------- ---- ----
Euro millions, unless
otherwise stated
Six months ended
June 30
2008 % change
----------------------------------
U.S. IFRS IFRS U.S. IFRS
GAAP vs. GAAP
U.S.
Diff.
---- ----- ---- ---- --------
Non-GAAP /
Non-IFRS Revenue
=================
U.S. GAAP / IFRS software and
software-related service
revenue 3,797 7 3,804 -3 -3
Discontinued operations* 0 -7 -7 0 -100
Deferred revenue write-down** 99 0 99 -89 -89
Non-GAAP / Non-IFRS software
and software-related
service revenue 3,896 0 3,896 -5 -5
0 0
U.S. GAAP / IFRS
total revenue 5,318 7 5,324 -6 -7
Discontinued operations* 0 -7 -7 0 -100
Deferred revenue write-down** 99 0 99 -89 -89
Non-GAAP / Non-IFRS total
revenue 5,417 0 5,416 -8 -8
--------------- ----- - ----- -- --
Non-GAAP / Non-IFRS
Operating Income
=================
U.S. GAAP / IFRS operating
income 952 -44 908 3 4
Discontinued operations* 0 33 33 0 -82
Deferred revenue write-down** 99 0 99 -89 -89
Acquisition related charges*** 149 5 154 -11 -8
Non-GAAP / Non-IFRS
operating income 1,200 -6 1,194 -6 -7
----------------- ----- -- ----- -- --
Non-GAAP / Non-IFRS
Operating Margin
=================
U.S. GAAP / IFRS operating
margin in % 17.9 17.1 1.8pp 2.0pp
Non-GAAP /
Non-IFRS operating margin in % 22.2 22.1 0.4pp 0.1pp
------------------------------- ---- ---- ----- -----
* Adjustments are for the discontinued operations of the
TomorrowNow entities which do not qualify for separate presentation
under IFRS. The adjustment differs from the result from discontinued
operations under U.S. GAAP due to differences in the valuation of
accrued liabilities.
** Adjustments are for the Business Objects support revenue that
Business Objects would have recognized had it remained a stand-alone
entity but that SAP is not permitted to recognize as revenue under both
U.S. GAAP and IFRS as a result of business combination accounting
rules. See Explanations of Non-IFRS Measures for details.
*** Adjustments are for the effects of restructuring accruals (non-IFRS),
in-process R&D (non-GAAP), amortization of intangibles identified as part
of a purchase price allocation (non-GAAP and non-IFRS). See section
Explanations of Non-IFRS Measures for details.
Differences may exist due to rounding.
U.S. GAAP - IFRS Significant Differences with Impact on Income
Acquisition-related restructuring expense
In certain circumstances, U.S. GAAP requires that restructuring expense incurred in connection with a business combination be shown as an assumed liability, and therefore it does not normally affect income. However, this restructuring expense must be shown as a current expense under IFRS. After the application of SFAS 141R and the revision to IFRS 3 the accounting has been aligned under both U.S. GAAP and IFRS. Therefore, we do not expect material differences going forward.
Acquired in-process research and development
Under U.S. GAAP, all in-process research and development acquired in connection with a business combination must be amortized immediately. Under IFRS, if certain criteria are met, it must be shown as an asset and, once completed and ready for market, amortized over its normal useful life. After the application of SFAS 141R and the revision to IFRS 3 the accounting has been aligned under both U.S. GAAP and IFRS. Therefore, we do not expect material differences going forward.
Discontinued Operations
SAP's U.S. GAAP income statement shows the revenue and income of our TomorrowNow subsidiary's activities separately because we discontinued its operation. IFRS does not allow us to show them separately because TomorrowNow is not a material operation. This leads to the only difference between our presentation of revenue under U.S. GAAP and IFRS.
Provisions for litigation costs
Under U.S. GAAP, we report attorneys' fees and other legal costs associated with litigation and claims when we incur them. Under IFRS, where appropriate and except to the extent it is virtually certain that we will recover them, we include an estimated amount for the litigation costs in a provision we create for the litigation.
Deferred taxes
Where differences between our IFRS financial statements and our U.S. GAAP financial statements arise out of tax-relevant transactions that result in temporary differences between the financial statements and our tax accounts, they also result in differences in the deferred tax in our IFRS financial statements and our U.S. GAAP financial statements.
Explanations of Non-IFRS Measures
Since 2007, we have been required by German and European law to prepare consolidated financial statements in accordance with IFRS. We have not, however, discontinued preparing financial statements under U.S. GAAP but have prepared consolidated financial statements under both U.S. GAAP and IFRS.
Despite the adoption of IFRS, our focus has continued to be on our U.S. GAAP financial figures and non-GAAP measures derived from them:
- The non-GAAP numbers have continued to be the key performance measures in our internal management reporting, planning, and forecasting, and in the variable compensation for our management and employees.
- We have maintained the focus of our external communication (for example, our business outlook) on U.S. GAAP numbers and non-GAAP numbers derived from them.
We plan to fully migrate to IFRS and discontinue the preparation of U.S. GAAP financial information with effect from the end of 2009. During 2009, we plan to continue to report our financial information according to both IFRS and U.S. GAAP. Our press release for Q4/2009 will be the last document in which we will provide U.S. GAAP financial information. In our annual report as well as our annual report on Form 20-F for fiscal year 2009 and all quarterly and annual reports thereafter, we plan to include only IFRS financial statements, and we plan to base our business outlook for 2010 and years thereafter on non-IFRS numbers derived from IFRS numbers. Concurrently with this change in our external financial communication, we will modify our internal management reporting, planning and forecasting, and variable compensation plans to align to the non-IFRS numbers we provide in our external communication.
To give investors an insight into what our migration from U.S. GAAP/non-GAAP to IFRS/non-IFRS will mean for SAP's key performance measures, the section titled Reconciliations: U.S. GAAP / IFRS / Non-GAAP / Non-IFRS shows a reconciliation from our U.S. GAAP and non-GAAP numbers to their most comparable IFRS and non-IFRS numbers. Note: Our non-GAAP and non-IFRS numbers are not prepared under a comprehensive set of accounting rules or principles. For more information on our non-GAAP measures, which also applies to our non-IFRS numbers subject to the additional explanations below, see the section titled Explanations of Non-GAAP Measures.
Our non-GAAP measures and our non-IFRS measures have been adjusted from the respective U.S. GAAP and IFRS numbers by:
- Including the full amount of Business Objects support revenue that Business Objects would have recognized had it remained a stand-alone entity but which we are not permitted to recognize as revenue under U.S. GAAP and IFRS as a result of fair value accounting for Business Objects support contracts in effect at the time of the Business Objects acquisition, and
- Excluding acquisition-related charges
However, the adjustment amounts for acquisition-related charges differ between our non-GAAP measures and our non-IFRS measures, due to differences between U.S. GAAP and IFRS. Specifically:
- Certain acquisition-related restructuring costs are accounted for as liabilities assumed in a business combination under U.S. GAAP while being charged to expense under IFRS. Consequently, these costs are eliminated only in our non-IFRS numbers.
- Purchased in-process research and development is charged to expense immediately under U.S. GAAP while being capitalized and amortized over the expected life under IFRS. Consequently, the immediate charge to expense is only eliminated in our non-GAAP measures while the amortization is only eliminated in our non-IFRS measures.
After the application of SFAS 141R and the revision to IFRS 3, the accounting has been aligned under both U.S. GAAP and IFRS. Therefore, we do not expect material differences in acquisition-related restructuring costs and purchased in-process research and development going forward.
Additionally, our non-IFRS measures have been adjusted from the respective IFRS numbers for the results from our discontinued TomorrowNow operations. Under U.S. GAAP, we present the results of operations of the TomorrowNow entities as discontinued operations. Under IFRS, results of discontinued operations may only be presented as discontinued operations if a separate major line of business or geographical area of operations is discontinued. Our TomorrowNow operations were not a separate major line of business and thus did not qualify for separate presentation under IFRS. We believe that this additional adjustment is useful to investors for the following reasons:
- Despite the migration from U.S. GAAP to IFRS, SAP will continue to view the TomorrowNow operations as discontinued operations and thus will continue to exclude potential future TomorrowNow results from its internal management reporting, planning, forecasting, and compensation plans. Therefore, adjusting our non-IFRS measures for the results of the discontinued TomorrowNow operations provides insight into the financial measures that SAP will use internally once SAP has fully migrated to IFRS.
- By adjusting the non-IFRS numbers for the results form our discontinued TomorrowNow operations, the non-IFRS number is more comparable to the non-GAAP measures that SAP uses currently, which makes SAP's performance measures before and after the full IFRS migration easier to compare.
