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FINANCIAL HIGHLIGHTS - Third Quarter 2009
SAP - Third Quarter 2009(1)
-------------------------------------------------------------
U.S. GAAP Non-GAAP(2)
--------------------------- --------------------------------
Euro million, %
Unless change
stated % % const.
otherwise Q3/2009 Q3/2008 change Q3/2009 Q3/2008 change curr.(3)
------- ------- ------ ------- ------- ------ --------
Software
revenues 525 763 -31 525 763 -31 -30
Software and
software-
related
service
revenues 1,937 1,994 -3 1,937 2,035 -5 -5
Total
revenues 2,508 2,761 -9 2,508 2,802 -10 -10
Operating
expenses 1,902 2,147 -11 1,834 2,071 -11 -12
- Thereof
restructuring
charges 21 - - 21 - - -
Operating
income 606 614 -1 674 731 -8 -7
Operating
margin (%) 24.2 22.2 2.0pp 26.9 26.1 0.8pp 1.1pp
Income from
continuing
operations 436 410 6 488 497 -2
Net income 435 389 12 487 476 2
Basic EPS from
cont.
operations
(Euro) 0.37 0.35 6 0.41 0.41 0
-------------------------------------------------------------------------
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 - Third Quarter 2009
-- U.S. GAAP software and software-related service revenues were Euro 1.94
billion (2008: Euro 1.99 billion), a decrease of 3%. Non-GAAP software
and software-related service revenues were Euro 1.94 billion (2008: Euro
2.04 billion), a decrease of 5% (5% at constant currencies).
-- U.S. GAAP total revenues were Euro 2.51 billion (2008: Euro 2.76
billion), a decrease of 9%. Non-GAAP total revenues were Euro 2.51
billion (2008: Euro 2.80 billion), a decrease of 10% (10% at constant
currencies).
-- U.S. GAAP software revenues were Euro 525 million (2008: Euro 763
million), a decrease of 31% (30% at constant currencies).
Income - Third Quarter 2009
-- U.S. GAAP operating income was Euro 606 million (2008: Euro 614
million), a decrease of 1%. Non-GAAP operating income was Euro 674
million (2008: Euro 731 million), decrease of 8% (7% at constant
currencies). U.S. GAAP and Non-GAAP operating income were negatively
impacted by restructuring charges of Euro 21 million resulting from the
previously announced reduction of positions. The third quarter 2009
operating income was also affected by non-recurring items, particularly
litigation expenses and profit resulting from reversals of provisions
recorded in the accounting for the acquisition of Business Objects. The
net effect of these non-recurring items was an increase of operating
income by Euro 2 million.
-- U.S. GAAP operating margin was 24.2% (2008: 22.2%), an increase of 2.0
percentage points. Non-GAAP operating margin was 26.9% (2008: 26.1%),
or 27.2% at constant currencies, an increase of 0.8 percentage points
(1.1 percentage points at constant currencies). The Euro 21 million in
restructuring charges resulting from the previously announced reduction
of positions negatively impacted the U.S. GAAP and Non-GAAP operating
margin by 0.8 percentage points.
-- U.S. GAAP income from continuing operations was Euro 436 million (2008:
Euro 410 million), an increase of 6%. Non-GAAP income from continuing
operations was Euro 488 million (2008: Euro 497 million), a decrease of
2%. U.S. GAAP and Non-GAAP income from continuing operations were
negatively impacted by restructuring charges of Euro 14 million, net of
tax, resulting from the previously announced reduction of positions. The
effective tax rate in the third quarter of 2009 was 21.0% (2008: 31.9%)
and was affected by non-recurring acquisition-related items which
positively impacted the third quarter 2009 tax rate by approximately
11.7 percentage points.
-- U.S. GAAP basic earnings per share from continuing operations were Euro
0.37 (2008: Euro 0.35), an increase of 6%. Non-GAAP basic earnings per
share from continuing operations were Euro 0.41 (2008: Euro 0.41), flat
year-over-year. The restructuring charges, net of tax, resulting from
the previously announced reduction of positions negatively impacted the
U.S. GAAP and Non-GAAP basic earnings per share by 0.01 Euro.
Third quarter 2009 Non-GAAP operating income excludes acquisition-related charges totaling Euro 67 million (2008: Euro 76 million), and third quarter 2009 Non-GAAP income from continuing operations and Non-GAAP earnings per share from continuing operations exclude acquisition-related charges totaling Euro 52 million (2008: Euro 87 million, which included a deferred revenue write-down).
"We are pleased to report another quarter of increasing margins despite a decline in revenues. This demonstrates our continued success in maintaining tight cost controls," said Werner Brandt, CFO of SAP. "While we are seeing signs of stabilization in the general environment, the market remains difficult. Third quarter software and software-related service revenues came in lower than we expected mainly because of a particularly challenging environment in the emerging markets and Japan."
"Despite the continued tough spending environment, we are pleased to see further progress in the evolution of our volume business as a result of smaller deals," said Leo Apotheker, CEO of SAP. "In addition, we are driving more multi-year agreements, where customers buy and consume software over many periods, which we believe is a positive transition for both SAP and our customers. We have the benefit of many years of experience in facilitating the purchase of our software in this manner, including the success we had in signing multi-year, Global Enterprise Agreements with our largest customers. We have now started to leverage this approach with a bigger group of customers. And, most importantly, our solutions are built on a highly flexible and modular architecture allowing us to easily adopt this model."
FINANCIAL HIGHLIGHTS - Nine Months 2009
SAP - Nine Months 2009(1)
-----------------------------------------------------------
U.S. GAAP Non-GAAP(2)
------------------------ ---------------------------------
Euro million, % change
unless stated % % const.
otherwise 9M/2009 9M/2008 change 9M/2009 9M/2008 change curr.(3)
------- ------- ------ ------- ------- ------ --------
Software
revenues 1,487 2,283 -35 1,487 2,283 -35 -35
Software and
software-
related
service
revenues 5,632 5,791 -3 5,643 5,931 -5 -6
Total
revenues 7,482 8,079 -7 7,493 8,219 -9 -10
Operating
expenses 5,896 6,513 -9 5,695 6,288 -9 -11
- Thereof
restructuring
charges -186 - - -186 - - -
Operating
income 1,586 1,566 1 1,798 1,931 -7 -7
Operating
Margin (%) 21.2 19.4 1.8pp 24.0 23.5 0.5pp 0.7pp
Income from
continuing
operations 1,077 1,068 1 1,238 1,339 -8
Net income 1,062 1,039 2 1,223 1,310 -7
Basic EPS
from cont.
operations
(Euro) 0.91 0.90 1 1.04 1.12 -7
-------------------------------------------------------------------------
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 - Nine Months 2009
-- U.S. GAAP software and software-related service revenues were Euro 5.63
billion (2008: Euro 5.79 billion), a decrease of 3%. Non-GAAP software
and software-related service revenues were Euro 5.64 billion (2008: Euro
5.93 billion), a decrease of 5% (6% at constant currencies).
-- U.S. GAAP total revenues were Euro 7.48 billion (2008: Euro 8.08
billion), a decrease of 7%. Non-GAAP total revenues were Euro 7.49
billion (2008: Euro 8.22 billion), a decrease of 9% (10% at constant
currencies).
-- U.S. GAAP software revenues were Euro 1.49 billion (2008: Euro 2.28
billion), a decrease of 35% (35% at constant currencies).
Nine Months 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: Euro 140 million).
Income - Nine Months 2009
-- U.S. GAAP operating income was Euro 1.59 billion (2008: Euro 1.57
billion), an increase of 1%. Non-GAAP operating income was Euro 1.80
billion (2008: Euro 1.93 billion), a decrease of 7% (7% at constant
currencies). U.S. GAAP and Non-GAAP operating income were negatively
impacted by restructuring charges of Euro 186 million resulting from the
previously announced reduction of positions.
-- U.S. GAAP operating margin was 21.2% (2008: 19.4%), an increase of 1.8
percentage points. Non-GAAP operating margin was 24.0% (2008: 23.5%),
or 24.2% at constant currencies, an increase of 0.5 percentage points
(0.7 percentage points at constant currencies). The Euro 186 million in
restructuring charges resulting from the previously announced reduction
of positions negatively impacted the U.S. GAAP and Non-GAAP operating
margin by 2.5 percentage points.
-- U.S. GAAP income from continuing operations was Euro 1.08 billion (2008:
Euro 1.07 billion), an increase of 1%. Non-GAAP income from continuing
operations was Euro 1.24 billion (2008: Euro 1.34 billion), a decrease
of 8%. U.S. GAAP and Non-GAAP income from continuing operations were
negatively impacted by restructuring charges of Euro 131 million, net of
tax, resulting from the previously announced reduction of positions.
-- U.S. GAAP basic earnings per share from continuing operations were Euro
0.91 (2008: Euro 0.90), an increase of 1%. Non-GAAP earnings per share
from continuing operations were Euro 1.04 (2008: Euro 1.12), a decrease
of 7%. The restructuring charges, net of tax, resulting from the
previously announced reduction of positions negatively impacted the U.S.
GAAP and Non-GAAP basic earnings per share by Euro 0.11.
Nine Months 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 211 million (2008: Euro 365 million), and Nine Months 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 161 million (2008: Euro 271 million).
Cash Flow - Nine Months 2009
Operating cash flow from continuing operations was Euro 2.38 billion (2008: Euro 1.97 billion), an increase of 21%. Free cash flow was Euro 2.21 billion (2008: Euro 1.73 billion), an increase of 28%. Free cash flow was 29% of total revenues (2008: 21%). At September 30, 2009, SAP had a total group liquidity of Euro 3.04 billion (December 31, 2008: Euro 1.66 billion), which includes cash and cash equivalents, restricted cash and short term investments. At September 30, 2009, net liquidity, defined as total group liquidity less bank liabilities, was Euro 925 million.
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 in reaching this goal, and that it expected the reduction of positions to trigger one-time restructuring charges of approximately Euro 200 million for 2009. For the first nine months of 2009, the Company recorded in operating income a restructuring charge of Euro 186 million, and reduced approximately 2,900 positions.
Business Outlook
SAP is providing the following outlook for the full-year 2009:
The Company continues to expect 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 impact the Non-GAAP operating margin outlook by approximately 2 percentage points. The 2009 Non-GAAP operating margin outlook is now 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 decline in a range of 6% - 8% at constant currencies (2008: Euro 8.623 billion).
SAP updated its outlook for the 2009 tax rate to 27.0% - 28.0% from the previously expected 2009 tax rate of 29.5% - 30.5% (based on U.S. GAAP income from continuing operations) for 2009 (2008: 30.0%).
KEY EVENTS - Third Quarter 2009
-- In the third quarter of 2009, SAP closed major contracts in several key
regions including Dagrofa/SuperGros, INDRA SISTEMAS, S.A., Prada S.p.A.,
SeverStal OAO, Surgutneftegaz OAO, Swiss Life AG, and Telefonica, S.A.
in EMEA; Banco Industrial S.A., ConocoPhillips, Dolby Laboratories,
Fairfax County, Research In Motion Limited, and Valero Services Inc. in
Americas; and APL Co. Pte. Ltd, Department of Foreign Affairs and Trade,
Australia, HDFC Standard Life Insurance Co Ltd, Philippine Long Distance
Telephone, Samchully Co., Ltd., and Taiwan Power Company in the Asia
Pacific Japan region.
-- On September 24, SAP announced that it is working with Microsoft and
Accenture to develop a global carbon reporting, benchmarking, and
analytics system for the Carbon Disclosure Project (CDP), the world's
largest carbon reporting initiative.
-- As announced on September 23, SAP's ranking rose four places to number
27 in the 2009 BusinessWeek/Interbrand annual list of the 100 Best
Global Brands, with SAP's brand value holding strong at $12.106 billion.
The Company's ranking is now at an all-time high as the 27th most
valuable brand in the world.
-- On September 23, SAP announced that SAP India was honored with the
prestigious Dataquest "Top Software Company" award for 2009. This is the
first time Dataquest has selected an enterprise software company for the
award. SAP was chosen on the basis of its outstanding performance in the
past year.
-- On September 16, SAP announced that it signed a Euro 1.5 billion
three-year Revolving Credit Facility to refinance SAP's previous Euro
1.0 billion revolving credit facility signed in November 2004. SAP
intends to use this credit facility for general corporate purposes.
Deutsche Bank AG, J.P. Morgan plc and The Royal Bank of Scotland plc
acted as mandated lead arrangers and book runners of the Facility. The
new Facility was launched on August 4 at Euro 1.0 billion and was
extremely well received. It was oversubscribed by more than 150 percent
with a total of 28 banks committing to it. In light of this strong
support, SAP elected to increase the amount of the Facility to Euro 1.5
billion.
-- On September 9, SAP announced that its SAP World Tour 2009, a series of
regional customer events held in more than 70 cities across Asia,
Europe, Latin America and North America, have attracted more than 31,000
attendees. The events will run through November 2009.
-- On September 4, SAP announced it acquired the majority shareholding in
SAF Simulation, Analysis and Forecasting AG (SAF), a global forecasting
and replenishment software leader in the retail and wholesale
industries. As of September 24, the aggregate number of SAF shares
attributable to SAP amounted to 4,044,783 SAF shares in total;
corresponding to approximately 73.02% of the share capital and the
voting rights of SAF AG.
-- On September 4, SAP announced that the Dow Jones Sustainability Indexes
(DJSI) named SAP as the software sector leader for the DJSI for the
third consecutive year. SAP had sector-leading scores in 12 of the 20
key dimensions, including operational eco-efficiency (where it scored
100 percent), brand management, human capital development, corporate
citizenship and codes of conduct. SAP also received a 100 percent rating
for its environmental reporting, driven by its innovative and
interactive online sustainability report.
-- On August 12, SAP announced that IT market research firm IDC reported
SAP as the market leader in performance management and analytic
applications for the second consecutive year, based on software license
and maintenance revenue. SAP achieved the fastest market growth rate of
the top five vendors in financial performance and strategy management,
part of the overall business analytics market.
-- On August 5, SAP announced the continued success of hosted offerings
from its channel partners for midsize companies, enabling customers to
better respond to changing market conditions. SAP's midsize customers
worldwide have chosen hosting as an alternative to the traditional
on-premise deployment option, allowing midsize companies to implement
and run the SAP Business All-in-One solutions without the need to hire
and train dedicated IT staff to implement and manage the software.
-- On July 30, SAP announced the availability of feature pack 2.0 for SAP
Business ByDesign, specifically designed for midsize companies. The new
feature pack significantly expands functionality and provides more value
to customers by offering business support for 35 end-to-end process
scenarios through an on-demand solution.
-- On July 20, SAP announced enhancements to SAP BusinessObjects Data
Services and SAP BusinessObjects Data Federator software, part of SAP
BusinessObjects information management (IM) solutions. These solutions
support both SAP and non-SAP IT environments, and now have expanded
support for SAP customers with integration with the SAP NetWeaver
Business Warehouse.
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 in addition 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 (UK) / 10:00 AM (Eastern). The conference call will be webcast live (and for replay purposes) on the Company's website at http://www.sap.com/investor along with supplementary financial information.
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 92,000 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 A(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, ET
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, ET
Appendix - Financial Information to Follow
Financial Information
for the Third 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 Three months ended
otherwise stated September 30
---------------------
Change
2009 2008 in %
---- ---- ------
Software revenue 525 763 -31
Support revenue 1.333 1.167 14
Subscription and other
software-related
service revenue 79 64 23
Software and software-related
Service revenue 1.937 1.994 -3
Consulting revenue 484 617 -22
Training revenue 60 105 -43
Other service revenue 20 26 -23
Professional services and
other service revenue 564 748 -25
Other revenue 7 19 -63
------------- --- --- ---
Total revenue 2.508 2.761 -9
------------- ----- ----- ---
Cost of software and
software-related
services -412 -381 8
Cost of professional
services and other
services -436 -583 -25
Research and development -381 -398 -4
Sales and marketing -515 -634 -19
General and administration -136 -156 -13
Restructuring -21 0 N/A
Other operating
income/expense, net -1 5 <-100
--- --- -----
Total operating expenses -1.902 -2.147 -11
------------------------
Operating income 606 614 -1
---------------- --- --- ---
Other non-operating
income/expense, net -41 7 <-100
Financial income/expense, net -13 -19 -32
----------------------------- --- --- ---
Income from continuing
operations before
income taxes 552 602 -8
------------ --- --- ---
Income taxes -116 -192 -40
------------ --- --- ---
Income from continuing
operations 436 410 6
---------------------- --- --- ---
Loss from discontinued
operations, net of tax -1 -21 -95
-----------------------
Net income 435 389 12
---------- --- --- ---
- Net income attributable
to noncontrolling interests* 0 1 -100
- Net income attributable
to shareholders of SAP AG 435 388 12
Earnings per share (EPS)
EPS from continuing
operations - basic in euro 0,37 0,35 6
EPS from continuing
operations - diluted in euro 0,37 0,34 9
EPS from net income
attributable to
shareholders of SAP AG -
basic in euro 0,37 0,33 12
EPS from net income
attributable to
shareholders of SAP AG -
diluted in euro 0,37 0,33 12
Weighted average number
of shares in millions,
treasury stock excluded 1.188 1.188
------------------------ ----- -----
Key ratios
Operating margin in % 24,2 22,2 2,0pp
Effective tax rate from
continuing operations in % 21,0 31,9
* 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 Nine months ended
otherwise stated September 30
---------------------
Change
2009 2008 in %
---- ---- ------
Software revenue 1.487 2.283 -35
Support revenue 3.922 3.324 18
Subscription and other
software-related
service revenue 223 184 21
Software and
software-related service
revenue 5.632 5.791 -3
Consulting revenue 1.554 1.832 -15
Training revenue 202 323 -37
Other service revenue 67 77 -13
Professional services and
other service revenue 1.823 2.232 -18
Other revenue 27 56 -52
------------- --- --- ---
Total revenue 7.482 8.079 -7
------------- ----- ----- ---
Cost of software and
software-related
services -1.192 -1.166 2
Cost of professional
services and other
services -1.423 -1.731 -18
Research and development -1.118 -1.236 -10
Sales and marketing -1.589 -1.912 -17
General and
administration -393 -477 -18
Restructuring -186 0 N/A
Other operating
income/expense, net 5 9 -44
--- --- ---
Total operating expenses -5.896 -6.513 -9
------------------------
Operating income 1.586 1.566 1
---------------- ----- ----- ---
Other non-operating
income/expense, net -63 25 <-100
Financial income/expense, net -53 -34 56
----------------------------- --- --- ---
Income from continuing
operations before
income taxes 1.470 1.557 -6
------------ ----- ----- ---
Income taxes -393 -489 -20
------------ ---- ---- ---
Income from continuing
operations 1.077 1.068 1
---------------------- ----- ----- ---
Loss from discontinued
operations, net of tax -15 -29 -48
-----------------------
Net income 1.062 1.039 2
---------- --- --- ---
- Net income attributable
to noncontrolling interests* 1 1 0
- Net income attributable
to shareholders of SAP AG 1.061 1.038 2
Earnings per share (EPS)
EPS from continuing
operations - basic in euro 0,91 0,90 1
EPS from continuing
operations - diluted in euro 0,91 0,89 2
EPS from net income
attributable to
shareholders of SAP AG -
basic in euro 0,89 0,87 2
EPS from net income
attributable to
shareholders of SAP AG -
diluted in euro 0,89 0,87 2
Weighted average number
of shares in millions,
treasury stock excluded 1.188 1.192
------------------------ ----- -----
Key ratios
Operating margin in % 21,2 19,4 1,8pp
Effective tax rate from
continuing operations in % 26,7 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. GAAP; preliminary and unaudited)
September 30, December 31,
Euro millions 2009 2008
------------- ------------- ------------
Assets
Cash and cash equivalents 2.414 1.277
Restricted cash 1 3
Short-term investments 625 382
Accounts receivable, net 2.097 3.128
Other assets 568 705
Deferred income taxes 213 203
Prepaid expenses/deferred charges 115 84
Current assets 6.033 5.782
Goodwill 5.019 5.009
Intangible assets, net 944 1.127
Property, plant, and equipment, net 1.372 1.405
Investments 101 95
Accounts receivable, net 2 2
Other assets 668 566
Deferred income taxes 190 187
Prepaid expenses/deferred charges 45 24
Noncurrent assets 8.341 8.415
Total assets 14.374 14.197
------------ ------ ------
September 30, December 31,
Euro millions 2009 2008
------------- ------------- ------------
Liabilities and total equity
Accounts payable 521 538
Income tax obligations 264 363
Financial liabilities 1.506 2.574
Other liabilities 1.107 1.486
Provisions 323 214
Deferred income taxes 33 48
Deferred income 1.050 611
Current liabilities 4.804 5.834
Accounts payable 0 5
Income tax obligations 188 278
Financial liabilities 726 36
Other liabilities 99 94
Provisions 509 497
Deferred income taxes 151 157
Deferred income 65 61
Noncurrent liabilities 1.738 1.128
Total liabilities 6.542 6.962
Common stock, no par value 1.226 1.226
Treasury stock -1.326 -1.362
Additional paid-in capital 316 320
Retained earnings 8.176 7.709
Accumulated other comprehensive loss -580 -660
Total equity attributable to
shareholders of SAP AG 7.812 7.233
Noncontrolling interests* 20 2
Total equity 7.832 7.235
Total liabilities and total equity 14.374 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 Nine months ended September 30
-------------------------------
2009 2008
---- ----
Net income 1.062 1.039
Net loss from discontinued
operations 15 29
Income from continuing
operations 1.077 1.068
Adjustments to reconcile income
from continuing operations
to net cash provided by operating
activities:
Depreciation and amortization 373 412
Gains/losses from equity
investees -1 1
Losses on disposal of
intangible assets and
property, plant, and equipment 4 2
Gains on disposal of investments 0 -9
Writedowns of financial assets 9 4
Allowances for doubtful accounts 91 34
Impacts of hedging for
cash-settled share-based
payment plans 2 -10
Stock-based compensation
including income tax benefits 7 22
Excess tax benefit from
share-based compensation -1 -14
Deferred income taxes -64 -72
Change in accounts receivable 967 528
Change in other assets -34 77
Change in accrued and other
liabilities -575 -558
Change in deferred income 521 485
------------------------- --- ---
Net cash provided by operating
activities from continuing
operations 2.376 1.970
------------------------------ ----- -----
Business combinations, net of
cash and cash equivalents
acquired -65 -3.767
Repayment of acquirees' debt in
business combinations 0 -450
Purchase of intangible assets
and property, plant, and
equipment -169 -244
Proceeds from disposal of
intangible assets and
property, plant, and equipment 19 27
Cash transferred to restricted
cash 0 -451
Reduction of restricted cash 3 1.000
Purchase of investments -566 -40
Sales of investments 312 521
Purchase of other financial
assets -10 -11
Sales of other financial assets 12 12
------------------------------- --- ---
Net cash used in investing
activities from continuing
operations -464 -3.403
--------------------------- ---- ------
Dividends paid -594 -594
Purchase of treasury stock 0 -487
Proceeds from reissuance of
treasury stock 20 79
Proceeds from issuance of
common stock (share-based
compensation) 4 13
Excess tax benefit from
share-based compensation 0 14
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 -902 -1.521
Proceeds from the exercise of
equity-based derivative
instruments (STAR hedge) 4 33
Purchase of equity-based
derivative instruments (hedge
for cash-settled share-based
payment plans) 0 -55
------------------------------ --- ---
Net cash provided by/used in
financing activities from
continuing operations -771 1.341
---------------------------- ---- -----
Effect of foreign exchange rates
on cash and cash equivalents 10 -9
-------------------------------- -- --
Net cash used in operating
activities from discontinued
operations -14 -21
----------------------------- --- ---
Net change in cash and cash
equivalents 1.137 -122
--------------------------- ----- ----
Cash and cash equivalents at the
beginning of the period 1.277 1.608
-------------------------------- ----- -----
Cash and cash equivalents at the
end of the period 2.414 1.486
-------------------------------- ----- -----
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.
Three months ended September 30
----------------------------------------
2009
----------------------------------------
Non-GAAP
Euro millions, U.S. Non- Currency constant
unless otherwise stated GAAP Adj.* GAAP* impact** currency**
---- ----- ----- -------- ----------
Non-GAAP Revenue Numbers
========================
Software revenue 525 0 525 10 535
Support revenue 1.333 0 1.333 -6 1.327
Subscription
and other
software-related
service revenue 79 0 79 -1 78
Software and software-
related service
revenue 1.937 0 1.937 3 1.940
Consulting revenue 484 0 484 -2 482
Training revenue 60 0 60 0 60
Other service revenue 20 0 20 0 20
Professional services and
other service revenue 564 0 564 -1 563
Other revenue 7 0 7 0 7
Total revenue 2.508 0 2.508 2 2.510
------------- ----- --- ----- --- -----
Non-GAAP Operating
Expense Numbers
==================
Cost of software and
software-related services -412 46 -366
Cost of professional
services and other
services -436 0 -436
Research and development -381 1 -380
Sales and marketing -515 18 -497
General and administration -136 2 -134
Restructuring -21 0 -21
Other operating
income/expense, net -1 0 -1
Total operating expenses -1.902 67 -1.834 6 -1.828
------------------------ ------ --- ------ --- ------
Non-GAAP Income Numbers
=======================
Operating income 606 67 674 8 682
Other non-operating
income/expense, net -41 0 -41
Financial income/expense,
net -13 0 -13
Income from continuing
operations before income
taxes 552 67 619
Income taxes -116 -15 -131
Income from continuing
operations 436 52 488
Loss from discontinued
operations, net of tax -1 0 -1
Net income 435 52 487
- Net income attributable
to noncontrolling
interests 0 0 0
- Net income attributable
to shareholders
of SAP AG 435 52 487
------------------------- --- --- ---
Non-GAAP EPS
============
EPS from continuing
operations - basic in euro 0,37 0,41
EPS from continuing
operations - diluted
in euro 0,37 0,41
EPS from net income
attributable to
shareholders of SAP
AG - basic in euro 0,37 0,41
EPS from net income
attributable to
shareholders of SAP AG -
diluted in euro 0,37 0,41
Weighted average number
of shares in millions,
treasury stock excluded 1.188 1.188
------------------------ ----- -----
Non-GAAP Key Ratios
===================
Operating margin in % 24,2 26,9 27,2
Effective tax rate from
continuing operations
in % 21,0 21,2
----------------------- ---- ----
Three months ended September 30
----------------------------------------------
2008 Change in %
------------------ -----------------------
Non-GAAP
Euro millions, U.S. Non- U.S. Non- constant
unless otherwise stated GAAP Adj.* GAAP* GAAP GAAP* currency**
---- ----- ----- ---- ----- ----------
Non-GAAP Revenue Numbers
========================
Software revenue 763 0 763 -31 -31 -30
Support revenue 1.167 41 1.208 14 10 10
Subscription and
other software-
related service
revenue 64 0 64 23 23 22
Software and
software-related
service revenue 1.994 41 2.035 -3 -5 -5
Consulting revenue 617 0 617 -22 -22 -22
Training revenue 105 0 105 -43 -43 -43
Other service
revenue 26 0 26 -23 -23 -23
Professional services
and other service
revenue 748 0 748 -25 -25 -25
Other revenue 19 0 19 -63 -63 -63
Total revenue 2.761 41 2.802 -9 -10 -10
------------- ----- --- ----- --- --- ---
Non-GAAP Operating
Expense Numbers
==================
Cost of software
and software-related
services -381 49 -332 8 10
Cost of professional
services and other
services -583 0 -583 -25 -25
Research and
development -398 3 -395 -4 -4
Sales and marketing -634 23 -611 -19 -19
General and
administration -156 1 -155 -13 -14
Restructuring 0 0 0 N/A N/A
Other operating
income/expense, net 5 0 5 <-100 <-100
Total operating expenses -2.147 76 -2.071 -11 -11 -12
------------------------ ------ --- ------ --- --- ---
Non-GAAP Income Numbers
=======================
Operating income 614 117 731 -1 -8 -7
Other non-operating
income/expense, net 7 0 7 <-100 <-100
Financial income/
expense, net -19 0 -19 -32 -32
Income from continuing
operations before income
taxes 602 117 719 -8 -14
Income taxes -192 -30 -222 -40 -41
Income from continuing
operations 410 87 497 6 -2
Loss from discontinued
operations, net of tax -21 0 -21 -95 -95
Net income 389 87 476 12 2
- Net income
attributable to
noncontrolling
interests 1 0 1 -100 -100
- Net income
attributable to
shareholders
of SAP AG 388 87 475 12 3
----------------- --- --- --- --- ---
Non-GAAP EPS
============
EPS from continuing
operations - basic
in euro 0,35 0,41 6 0
EPS from continuing
operations - diluted
in euro 0,34 0,41 9 0
EPS from net income
attributable to
shareholders of SAP
AG - basic in euro 0,33 0,40 12 2
EPS from net income
attributable to
shareholders of SAP
AG - diluted
in euro 0,33 0,40 12 2
Weighted average
number of shares in
millions, treasury
stock excluded 1.188 1.188
-------------------- ----- -----
Non-GAAP Key Ratios
===================
Operating margin
in % 22,2 26,1 2,0pp 0,8pp 1,1pp
Effective tax rate
from continuing
operations in % 31,9 30,9
------------------ ---- ----
* 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.
Nine months ended September 30
------------------------------------------
2009
------------------------------------------
Non-GAAP
Euro millions, U.S. Non- Currency constant
unless otherwise stated GAAP Adj.* GAAP* impact** currency**
---- ----- ----- -------- ----------
Non-GAAP Revenue Numbers
========================
Software revenue 1.487 0 1.487 -6 1.481
Support revenue 3.922 11 3.933 -68 3.865
Subscription and
other software-
related service
revenue 223 0 223 -8 215
Software and
software-related
service revenue 5.632 11 5.643 -82 5.561
Consulting revenue 1.554 0 1.554 -28 1.526
Training revenue 202 0 202 -1 201
Other service revenue 67 0 67 -1 66
Professional services and
other service revenue 1.823 0 1.823 -30 1.793
Other revenue 27 0 27 -1 26
Total revenue 7.482 11 7.493 -114 7.379
------------- ----- --- ----- ---- -----
Non-GAAP Operating
Expense Numbers
==================
Cost of software and
software-related
services -1.192 139 -1.053
Cost of professional
services and
other services -1.423 For full details on Sap Ag (SAP) click here. Sap Ag (SAP) has Short Term PowerRatings of 5. Details on Sap Ag (SAP) Short Term PowerRatings is available at This Link.
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