SAP Reports Record Fourth Quarter 2010 Software Revenue - Fourth Quarter 2010 Software Revenue Increased 35% (25% at Constant Currencies) to Euro 1.5 Billion

- Full-Year 2010 Non-IFRS Software and Software Related Service Revenue Increased 20% (13% at Constant Currencies) and Exceeded Company Guidance

- Full-Year 2010 Non-IFRS Operating Margin At Constant Currencies Meets Company Guidance; Full-Year 2010 IFRS Operating Margin Negatively Impacted by Litigation Provision

- SAP Executive Board Will Recommend to the SAP Supervisory Board to Increase the 2010 Dividend by 20% from Euro 0.50 to Euro 0.60 Per Share

WALLDORF, Germany, Jan. 26, 2011 /PRNewswire/ -- SAP AG (NYSE: SAP) today announced its preliminary financial results for the fourth quarter and full-year ended December 31, 2010.

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FINANCIAL HIGHLIGHTS -- Fourth Quarter 2010


Fourth Quarter 2010(1)


IFRS

Non-IFRS(2)

euro million, unless
otherwise stated

Q4 2010

Q4 2009

% change

Q4 2010

Q4 2009

% change

% change const. curr.(3)

Software revenue

1,507

1,120

35%

1,507

1,120

35%

25%

Software and software-related service revenue

3,273

2,566

28%

3,309

2,566

29%

20%

Total revenue

4,058

3,190

27%

4,094

3,190

28%

20%

Total operating expenses

-3,515

-2,168

62%

-2,484

-2,055

21%

15%

- thereof TomorrowNow litigation

-933

-49

>100%

na

na

na

na

Operating profit

543

1,022

-47%

1,610

1,134

42%

30%

Operating margin (%)

13.4

32.0

-18.6pp

39.3

35.5

3.8pp

3.0pp

Profit after tax

437

682

-36%

1,103

761

45%


Basic earnings per share (euro)

0.37

0.57

-35%

0.93

0.64

45%










1) All figures are preliminary and unaudited.

2) Adjustments in the revenue line items are for the support revenue that would have been recognized had the acquired entities remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges and discontinued activities.

3) Constant currency revenue and operating profit figures are calculated by translating revenue and operating profit 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-IFRS constant currency numbers with the Non-IFRS number of the previous year's respective period.



Revenue -- Fourth Quarter 2010

  • IFRS software revenue was euro 1.51 billion (2009: euro 1.12 billion), an increase of 35% (25% at constant currencies).
  • IFRS software and software-related service revenue was euro 3.27 billion (2009: euro 2.57 billion), an increase of 28%. Non-IFRS software and software-related service revenue was euro 3.31 billion (2009: euro 2.57 billion), an increase of 29% (20% at constant currencies).
  • Excluding the contribution from Sybase, SAP’s business contributed 21 percentage points to the growth of IFRS and Non-IFRS software and software related service revenue (13 percentage points at constant currencies).
  • IFRS total revenue was euro 4.06 billion (2009: euro 3.19 billion), an increase of 27%. Non-IFRS total revenue was euro 4.09 billion (2009: euro 3.19 billion), an increase of 28% (20% at constant currencies).

Fourth quarter 2010 Non-IFRS software and software-related service revenue as well as total revenue exclude a deferred support revenue write-down from acquisitions of euro 36 million.

Income -- Fourth Quarter 2010

  • IFRS operating profit was euro 543 million (2009: euro 1.02 billion), a decrease of 47%. Non-IFRS operating profit was euro 1.61 billion (2009: euro 1.13 billion), an increase of 42% (30% at constant currencies). In the fourth quarter of 2009, the IFRS and Non-IFRS operating profit was impacted by restructuring charges of euro 5 million and euro 6 million, respectively, resulting from a reduction of positions. In contrast, restructuring charges were insignificant in the fourth quarter of 2010.  In the fourth quarter of 2010, IFRS operating profit was negatively impacted by euro 933 million (2009: euro 49 million), resulting from an increase in the provision for the TomorrowNow litigation.
  • IFRS operating margin was 13.4% (2009: 32.0%), a decrease of 18.6 percentage points. Non-IFRS operating margin was 39.3% (2009: 35.5%), or 38.5% at constant currencies, an increase of 3.8 percentage points (3.0 percentage points at constant currencies). In contrast to the respective quarter in 2009, the fourth quarter of 2010 was not materially impacted by restructuring expenses which had, in the fourth quarter of 2009, negatively impacted the IFRS and Non-IFRS operating margin by 0.2 percentage points.  In the fourth quarter of 2010, the IFRS operating margin was negatively impacted by 23.0 percentage points (2009: 1.5 percentage points), resulting from an increase in the provision for the TomorrowNow litigation.
  • IFRS profit after tax was euro 437 million (2009: euro 682 million), a decrease of 36%. Non-IFRS profit after tax was euro 1.10 billion (2009: euro 761 million), an increase of 45%. IFRS basic earnings per share was euro 0.37 (2009: euro 0.57), a decrease of 35%. Non-IFRS basic earnings per share was euro 0.93 (2009: euro 0.64), an increase of 45%. The impact, net of tax, of the restructuring expenses incurred in the fourth quarter 2009 on the fourth quarter 2009 IFRS and Non-IFRS basic earnings per share was insignificant. In the fourth quarter of 2010, IFRS basic earnings per share was negatively impacted by euro 0.49 (2009: euro 0.03), resulting from an increase in the provision for the TomorrowNow litigation. The IFRS effective tax rate in the fourth quarter of 2010 was 3.1% (2009: 31.1%). Approximately 24 percentage points of the decrease in the IFRS effective tax rate for the fourth quarter 2010 was due to a tax effect resulting from an increase in the provision recorded for the TomorrowNow litigation.

Fourth quarter 2010 Non-IFRS operating profit excludes a deferred support revenue write-down from acquisitions of euro 36 million plus acquisition-related charges of euro 96 million (2009: euro 64 million) and discontinued activities totaling euro 935 million (2009: euro 49 million). Fourth quarter 2010 Non-IFRS profit after tax and Non-IFRS basic earnings per share exclude a deferred support revenue write-down from acquisitions of euro 23 million plus acquisition-related charges of euro 67 million (2009: euro 49 million) and discontinued activities totaling euro 575 million (2009: euro 30 million) net of tax. The amounts excluded from operating profit for discontinued activities related to the TomorrowNow litigation was euro 933 million (2009: euro 49 million), and euro 586 million (2009: euro 31 million), net of tax.

“We finished 2010 with the highest fourth quarter for software revenue in our history. Our strong performance and our business outlook for 2011 demonstrate that SAP is confident about achieving double-digit growth and continued margin expansion,” said Werner Brandt, CFO of SAP.  “Moreover, in light of our excellent results and our confidence in our business going forward, we will recommend to the Supervisory Board that we increase our dividend by 20% from euro 0.50 to euro 0.60 per share payable in 2011.”

“Our results prove that SAP is back to being a growth company,” said Bill McDermott, Co-CEO of SAP.  “We showed rock solid revenue across the globe, particularly in the fast growing emerging markets where customers still have the most choice and are rapidly expanding their businesses. We also performed extremely well in all key customer segments. We have excellent momentum and we are confident in 2011 and beyond.”

“SAP fundamentally believes in innovation and choice as a sustainable business model for us and our customers,” said Jim Hagemann Snabe, Co-CEO of SAP. “We have a full pipeline of innovations and are expanding into new markets for mobility, on demand and in-memory computing. We are convinced that these new innovations will help us drive double digit growth and reach 1 billion users by 2015.”

TomorrowNow Litigation

SAP has great respect for the US legal system and Court decisions. However, SAP believes that the amount awarded by the jury in Oracle v. SAP/TomorrowNow is disproportionate and wrong. After the Court has entered final judgment SAP intends to file post-trial motions in the coming weeks asking the Court to reduce the amount of damages awarded, or to order a new trial. Depending on the outcome of the post-trial motion process, SAP may consider an appeal. Because the motions have not yet been filed and the outcome of the motions remains uncertain the amount by which the jury award would be reduced cannot be reliably measured at this time. Therefore, SAP has based the provision on the jury award. SAP will consider all new information and developments emerging over the coming weeks to determine the appropriate provision amount for SAP’s final full year 2010 financials. Therefore, SAP cannot exclude the possibility that the final provision differs from the preliminary amounts presented in this earnings release.

FINANCIAL HIGHLIGHTS -- Full-Year 2010


Full Year 2010(1)


IFRS

Non-IFRS(2)

euro million, unless
otherwise stated

FY 2010

FY 2009

% change

FY 2010

FY 2009

% change

% change const. curr.(3)

Software revenue

3,265

2,607

25%

3,265

2,607

25%

16%

Software and software-related service revenue

9,794

8,198

19%

9,866

8,209

20%

13%

Total revenue

12,464

10,672

17%

12,536

10,683

17%

11%

Total operating expenses

-9,875

-8,084

22%

-8,592

-7,756

11%

6%

- thereof TomorrowNow litigation

-980

-56

>100%

na

na

na

na

Operating profit

2,589

2,588

0%

3,944

2,927

35%

23%

Operating margin (%)

20.8

24.3

-3.5pp

31.5

27.4

4.1pp

3.1pp

Profit after tax

1,816

1,750

4%

2,694

2,001

35%


Basic earnings per share (euro)

1.53

1.47

4%

2.27

1.68

35%










1) All figures are preliminary and unaudited.

2) Adjustments in the revenue line items are for the support revenue that would have been recognized had the acquired entities remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges and discontinued activities.

3) Constant currency revenue and operating profit figures are calculated by translating revenue and operating profit 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-IFRS constant currency numbers with the Non-IFRS number of the previous year's respective period.



Revenue -- Full-Year 2010

  • IFRS software revenue was euro 3.27 billion (2009: euro 2.61 billion), an increase of 25% (16% at constant currencies)
  • IFRS software and software-related service revenue was euro 9.79 billion (2009: euro 8.20 billion), an increase of 19%. Non-IFRS software and software-related service revenue was euro 9.87 billion (2009: euro 8.21 billion), an increase of 20% (13% at constant currencies).
  • Excluding the contribution from Sybase, SAP’s business contributed 16 percentage points to the growth of IFRS and Non-IFRS software and software related service revenue (10 percentage points at constant currencies).
  • IFRS total revenue was euro 12.46 billion (2009: euro 10.67 billion), an increase of 17%. Non-IFRS total revenue was euro 12.54 billion (2009: euro 10.68 billion), an increase of 17% (11% at constant currencies).

Full-year 2010 Non-IFRS software and software-related service revenue as well as total revenue exclude a deferred support revenue write-down from acquisitions of euro 72 million (2009: euro 11 million).

Income -- Full-Year 2010

  • IFRS operating profit was euro 2.59 billion (2009: euro 2.59 billion).  Non-IFRS operating profit was euro 3.94 billion (2009: euro 2.93 billion), an increase of 35% (23% at constant currencies). For the full-year 2009, the IFRS and Non-IFRS operating profit was impacted by restructuring charges of euro 198 million and euro 194 million, respectively, resulting from a reduction of positions. In contrast, restructuring charges were insignificant for the full-year 2010. For the full-year 2010, IFRS operating profit was negatively impacted by euro 980 million (2009: euro 56 million), resulting from an increase in the provision for the TomorrowNow litigation.
  • IFRS operating margin was 20.8% (2009: 24.3%), a decrease of 3.5 percentage points. Non-IFRS operating margin was 31.5% (2009: 27.4 %), or 30.5% at constant currencies, an increase of 4.1 percentage points (3.1 percentage points at constant currencies). In contrast to the full-year 2009, the full-year 2010 was not materially impacted by restructuring expenses which had, for the full-year 2009, negatively impacted the IFRS and Non-IFRS operating margin by 1.9 percentage points and 1.8 percentage points, respectively. For the full-year 2010, the IFRS operating margin was negatively impacted by 7.9 percentage points (2009: 0.5 percentage points), resulting from an increase in the provision for the TomorrowNow litigation.
  • IFRS profit after tax was euro 1.82 billion (2009: euro 1.75 billion), an increase of 4%. Non-IFRS profit after tax was euro 2.69 billion (2009: euro 2.00 billion), an increase of 35%. IFRS basic earnings per share was euro 1.53 (2009: euro 1.47), an increase of 4%. Non-IFRS basic earnings per share was euro 2.27 (2009: euro 1.68), an increase of 35 %. The impact, net of tax, of the restructuring expenses incurred for the full-year 2009 on the full-year 2009 IFRS and Non-IFRS basic earnings per share was euro 0.12. For the full-year 2010, IFRS basic earnings per share was negatively impacted by euro 0.52 (2009 euro 0.03), resulting from a provision for the TomorrowNow litigation. The IFRS effective tax rate for the full-year 2010 was 22.3% (2009: 28.1%). Approximately 5 percentage points of the decrease in the IFRS effective tax rate for the full-year 2010 was due to a tax effect resulting from an increase in the provision recorded for the TomorrowNow litigation.

Full-year 2010 Non-IFRS operating profit excludes a deferred support revenue write-down from acquisitions of euro 72 million (2009: euro 11 million) plus acquisition-related charges of euro 300 million (2009: euro 271 million) and discontinued activities totaling euro 983 million (2009: euro 57 million). Full-year 2010 Non-IFRS profit after tax and Non-IFRS basic earnings per share exclude a deferred support revenue write-down from acquisitions of euro 47 million (2009: euro 7 million) plus acquisition-related charges of euro 217 million (2009: euro 202 million) and discontinued activities totaling euro 614 million (2009: euro 35 million) net of tax. The excluded amounts from discontinued activities related to the TomorrowNow litigation was euro 980 million (2009: euro 56 million) and euro 615 million (2009: euro 36 million), net of tax.

Cash Flow -- Full-Year 2010

Operating cash flow for the full-year 2010 was euro 2.95 billion (2009: euro 3.02 billion).  Free cash flow was euro 2.62 billion (2009: euro 2.79 billion), a decrease of 6%. Free cash flow was 21% of total revenue (2009: 26%). At December 31, 2010, SAP had a total group liquidity of euro 3.53 billion (December 31, 2009: euro 2.28 billion), which includes cash and cash equivalents and short term investments. Net liquidity at December 31, 2010 was euro -850 million, which included euro 4.38 billion of debt, of which euro 2.20 billion resulted from the proceeds of two successful bond transactions.  These debt offerings were very well received in the market.

SAP Executive Board Recommends Dividend Increase

The SAP Executive Board will recommend to the SAP Supervisory Board to propose at the AGM to increase the dividend by 20% from euro 0.50 to euro 0.60 per share for the fiscal year 2010, payable in 2011.

Business Outlook

For 2011, the Company is adjusting its definition of Non-IFRS operating profit and Non-IFRS operating margin to align with the performance measures used internally in managing SAP’s segments and reflected in SAP’s segment reporting, and to enhance comparability with other software companies. For 2011, Non-IFRS operating profit and Non-IFRS operating margin will exclude stock based compensation expenses and restructuring charges, in addition to the items that were already excluded in the past (deferred support revenue write-downs from acquisitions, acquisition related charges and discontinued activities).

SAP is providing the following outlook for the full-year 2011.

  • The Company expects full-year 2011 Non-IFRS software and software-related service revenue to increase in a range of 10% - 14% at constant currencies (2010: euro 9.87 billion).
  • The Company expects full-year 2011 Non-IFRS operating profit to be in a range of euro 4.45 billion - euro 4.65 billion at constant currencies (2010: euro 4.00 billion), resulting in a 2011 Non-IFRS operating margin increasing in a range of 0.5 - 1.0 percentage points at constant currencies (2010: 31.9%).
  • For the full-year 2011, the Company projects an IFRS effective tax rate of 27.0% - 28.0% (2010: 22.3%) and a Non-IFRS effective tax rate of 27.5% - 28.5% (2010: 27.2%).  

Major Customer Wins

In the fourth quarter of 2010, SAP closed major contracts in key regions.

EMEA:
SAP - Gruppa VISTA (Vertical Integrated Solutions, Technology and Architecture), LLC, United Nations Industrial Development Organization, Nottinghamshire County Council, Sociedad de Prevencion de FREMAP, Saudi Electricity Company (SEC), Novartis International AG.  
Sybase - European Southern Observatory, Odyssey Financial Technologies, Telefonica Group.


Americas:
SAP - Glazer's Wholesale Distributors, American Family Life Assurance Co.,  Tyco International, Halliburton, Banco Compartamos, S.A., Sonda Supermercados Exportacao.
Sybase - CARMAX, comScore, University of Sao Paulo.


Asia Pacific/Japan:
SAP - China Datang Corporation, Akebono Brake Industry Co., Ltd., China National Chemical Corporation, Vedan International (Holdings) Limited, Thai Airways International Public Company Limited, KOBELCO CONSTRUCTION MACHINERY CO., LTD., BlueScope Steel Limited.
Sybase - Korea Exchange Bank, Total Access Communication (dtac).


SAP Business ByDesign
De Villiers Walton Solutions, Edson Consulting, Airsolia, KPF, Global Office, IS4IT, TVN, Standard Calibrations, Silicon Valley Sports and Entertainment, Longre Education, Octopus e-Internation, Affordable Business Solutions, Zinnov.



Webcast / Supplementary Financial Information

SAP senior management will host a press conference in Frankfurt today at 10:00 AM (CET) / 9:00 AM (GMT) / 4:00 AM (Eastern) / 1:00 AM (Pacific), followed by an investor conference at 2:00 PM (CET) / 1:00 PM (GMT) / 8:00 AM (Eastern) / 5:00 AM (Pacific). Both conferences will be web cast live on the Company’s website at www.sap.com/investor and will be available for replay. Supplementary financial information pertaining to the full-year and quarterly results can be found at www.sap.com/investor.

2010 Annual Report

The 2010 Annual Report is scheduled to be published on March 24, 2011, and will be available for download at www.sap.com/investor.

About SAP

As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device – SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 109,000 customers to operate profitably, adapt continuously, and grow sustainably. 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,” “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.

© 2011 SAP AG. All rights reserved.

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These materials are subject to change without notice. These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.

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Appendix -- Financial Information to Follow

FINANCIAL INFORMATION

FOR THE FOURTH QUARTER AND FULL YEAR 2010

– Condensed, Preliminary and Unaudited –






Page




Financial Statements (IFRS)



Income Statements – Quarter

F1


Statements of Comprehensive Income - Quarter

F2


Income Statements – Full Year

F3


Statements of Comprehensive Income – Full Year

F4


Statements of Financial Position

F5


Statements of Changes in Equity

F6


Statements of Cash Flows

F7




Supplementary Financial Information



Reconciliations from Non-IFRS Numbers to IFRS Numbers

F8 to F9


Revenue by Region

F10 to F11


Share-Based Compensation

F12


Free Cash Flow

F12


Days Sales Outstanding(DSO)

F12


Number of Employees

F12


Multi-Quarter Summary

F13


Explanations of Non-IFRS Measures

F14 to F16



Financial Statements (IFRS)


CONSOLIDATED INCOME STATEMENTS OF SAP GROUP  



for the three months ended December 31




euro  millions, unless otherwise stated

2010

2009

Change in %

        Software revenue

1,507

1,120

35

        Support revenue

1,656

1,364

21

        Subscription and other software-related service revenue

110

82

34

   Software and software-related service revenue

3,273

2,566

28

        Consulting revenue

625

519

20

        Other service revenue

160

105

52

   Professional services and other service revenue

785

624

26

Total revenue

4,058

3,190

27





   Cost of software and software-related services

-549

-465

18

   Cost of professional services and other services

-592

-428

38

   Research and development

-481

-470

2

   Sales and marketing

-787

-609

29

   General and administration

-177

-169

5

   Restructuring

2

-5

<-100

   TomorrowNow litigation

-933

-49

>100

   Other operating income/expense, net

2

27

-93

Total operating expenses

-3,515

-2,168

62

Operating profit

543

1,022

-47





Other non-operating income/expense, net

-50

-11

>100

   Finance income

17

5

>100

        Finance costs TomorrowNow litigation

-12

0

N/A

        Other finance costs

-40

-23

74

   Finance costs

-52

-23

>100

   Other financial gains/losses, net

-7

-3

>100

Financial income, net

-42

-21

100

Profit before tax

451

990

-54





        Income tax TomorrowNow litigation

359

18

>100

        Other income tax expense

-373

-326

14

   Income tax expense

-14

-308

-95

Profit after tax

437

682

-36

   – Profit attributable to non-controlling interests

0

1

-100

   – Profit attributable to owners of parent

437

681

-36





Basic earnings per share, in euros*

0.37

0.57

-36

Diluted earnings per share, in euros*

0.37

0.57

-36


* For the three months ended December  31, 2010 and 2009 the weighted average number of shares were 1,187 million (Diluted: 1,188 million) and 1,189 million (Diluted: 1,189 million), respectively (treasury stock excluded).





CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF SAP GROUP



for the three months ended December 31



euro millions

2010

2009

  Profit after tax

437

681

        Gains (losses) on exchange differences on translation, before tax

139

23

        Reclassification adjustments on exchange differences on translation, before tax

6

-2

  Exchange differences on translation

145

21

        Gains (losses) on remeasuring available-for-sale financial assets, before tax

0

13

        Reclassification adjustments on available-for-sale financial assets, before tax

-2

0

  Available-for-sale financial assets

-2

13

        Gains (losses) on cash flow hedges, before tax

-22

-8

        Reclassification adjustments on cash flow hedges, before tax

20

19

  Cash flow hedges

-2

11

  Actuarial gains (losses) on defined benefit plans, before tax

-37

-11

  Other comprehensive income before tax

104

34

  Income tax relating to components of other comprehensive income

9

-1

  Other comprehensive income after tax

113

33

Total comprehensive income

550

714

   – attributable to non-controlling interests

0

1

   – attributable to owners of parent

550

713





CONSOLIDATED INCOME STATEMENTS OF SAP GROUP  



for the twelve months ended December 31




euro millions, unless otherwise stated

2010

2009

Change in %

        Software revenue

3.265

2.607

25

        Support revenue

6.135

5.285

16

        Subscription and other software-related service revenue

394

306

29

  Software and software-related service revenue

9.794

8.198

19

        Consulting revenue

2.197

2.074

6

        Other service revenue

473

400

18

  Professional services and other service revenue

2.670

2.474

8

Total revenue

12.464

10.672

17





  Cost of software and software-related services

-1.830

-1.658

10

  Cost of professional services and other services

-2.070

-1.851

12

  Research and development

-1.724

-1.591

8

  Sales and marketing

-2.645

-2.199

20

  General and administration

-638

-564

13

  Restructuring

3

-198

<-100

  TomorrowNow litigation

-980

-56

>100

  Other operating income/expense, net

9

33

-73

Total operating expenses

-9.875

-8.084

22

Operating profit

2.589

2.588

0





Other non-operating income/expense, net

-185

-73

>100

  Finance income

56

32

75

        Finance costs TomorrowNow litigation

-12

0

N/A

        Other finance costs

-108

-101

7

  Finance costs

-120

-101

19

  Other financial gains/losses, net

-3

-11

-73

Financial income, net

-67

-80

-16

Profit before tax

2.337

2.435

-4





        Income tax expense TomorrowNow litigation

377

20

>100

        Other income tax expense

-898

-705

27

  Income tax expense

-521

-685

-24

Profit after tax

1.816

1.750

4

  – Profit attributable to non-controlling interests

2

2

0

  – Profit attributable to owners of parent

1.814

1.748

4





Basic earnings per share, in euro*

1,53

1,47

4

Diluted earnings per share, in euro*

1,53

1,47

4


* For the twelve months ended December 31, 2010 and 2009 the weighted average number of shares were 1,188 million (Diluted: 1,189 million) and 1,188 million (Diluted: 1,189 million), respectively (treasury stock excluded).





CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF SAP GROUP



for the twelve months ended December 31



euro millions

2010

2009

  Profit after tax

1.816

1.750

        Gains (losses) on exchange differences on translation, before tax

141

76

        Reclassification adjustments on exchange differences on translation, before tax

0

-2

  Exchange differences on translation

141

74

        Gains (losses) on remeasuring available-for-sale financial assets, before tax

5

15

        Reclassification adjustments on available-for-sale financial assets, before tax

-2

0

  Available-for-sale financial assets

3

15

        Gains (losses) on cash flow hedges, before tax

-88

-41

        Reclassification adjustments on cash flow hedges, before tax

67

84

  Cash flow hedges

-21

43

  Actuarial gains (losses) on defined benefit plans, before tax

-40

-6

  Other comprehensive income before tax

83

126

  Income tax relating to components of other comprehensive income

18

-12

  Other comprehensive income after tax

101

114

Total comprehensive income

1.917

1.864

   – attributable to non-controlling interests

2

2

   – attributable to owners of parent

1.915

1.862





CONSOLIDATED STATEMENTS OF FINANCIAL POSITION OF SAP GROUP



as at December 31, 2010 and 2009


euro millions

2010

2009

Change in %

Assets




        Cash and cash equivalents

3.518

1.884

87

        Other financial assets

158

486

-67

        Trade and other receivables

3.101

2.546

22

        Other non-financial assets

180

147

22

        Tax assets

186

192

-3

  Total current assets

7.143

5.255

36

        Goodwill

8.378

4.994

68

        Intangible assets

2.376

894

>100

        Property, plant, and equipment

1.450

1.371

6

        Other financial assets

404

284

42

        Trade and other receivables

78

52

50

        Other non-financial assets

31

35

-11

        Tax assets

123

91

35

        Deferred tax assets

735

398

85

  Total non-current assets

13.575

8.119

67

Total assets

20.718

13.374

55





euro millions

2010

2009

Change in %

Equity and liabilities




        Trade and other payables

908

638

42

        Tax liabilities

160

125

28

        Financial liabilities

142

146

-3

        Other non-financial liabilities

1.727

1.577

10

           Provision TomorrowNow litigation

998

93

>100

           Other provisions

287

239

20

        Provisions

1.285

332

>100

        Deferred income

911

598

52

  Total current liabilities

5.133

3.416

50





        Trade and other payables

50

35

43

        Tax liabilities

371

239

55

        Financial liabilities

4.449

729

>100

        Other non-financial liabilities

11

12

-8

        Provisions

291

198

47

        Deferred tax liabilities

576

190

>100

        Deferred income

63

64

-2

  Total non-current liabilities

5.811

1.467

>100

Total liabilities

10.944

4.883

>100





        Issued capital

1.227

1.226

0

        Treasury shares

-1.382

-1.320

5

        Share premium

337

317

6

        Retained earnings

9.769

8.571

14

        Other components of equity

-194

-317

-39

  Equity attributable to owners of parent

9.757

8.477

15





        Non-controlling interests

17

14

21

Total equity

9.774

8.491

15

Equity and liabilities

20.718

13.374

55





CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY OF SAP GROUP


for the twelve months ended December 31

euro millions

Issued

Capital

Share

Premium

Retained

Earnings

Other Components of Equity

Treasury

Shares

Equity Attributable

to Owners of Parent

Non-Controlling

Interests

Total

Equity





Exchange

Differences

Available-for-Sale

Financial Assets

Cash Flow Hedges





January 1, 2009

1.226

320

7.422

-393

-1

-43

-1.362

7.169

2

7.171

Profit after tax



1.748





1.748

2

1.750

Other comprehensive income



-6

74

14

32


114


114

Share-based compensation


-2






-2


-2

Dividends



-594





-594


-594

Treasury shares transactions


-6





42

36


36

Convertible bonds and stock options exercised


5






5


5

Other



1





1

10

11

December 31, 2009

1.226

317

8.571

-319

13

-11

-1.320

8.477

14

8.491

Profit after tax



1.814





1.814

2

1.816

Other comprehensive income



-22

136

3

-16


101


101

Share-based compensation








0


0

Dividends



-594





-594


-594

Treasury shares transactions


-4

0




-153

-157


-157

Convertible bonds and stock options exercised

1

24

0




91

116


116

Other








0

1

1

December 31, 2010

1.227

337

9.769

-183

16

-27

-1.382

9.757

17

9.774





CONSOLIDATED STATEMENTS OF CASH FLOWS OF SAP GROUP



as at December 31



euro millions

2010

2009

Profit after tax

1.816

1.750

      Adjustments to reconcile profit after taxes to net cash provided by operating activities:



      Depreciation and amortization

534

499

      Income tax expense

521

685

      Finance income and finance costs, net

67

80

      Gains/losses on disposals of non-current assets

-3

-11

      Decrease/increase in sales and bad debt allowances on trade receivables

-49

64

      Other adjustments for non-cash items

25

14

      Decrease/increase in trade receivables

-125

593

      Decrease/increase in other assets

-28

62

      Decrease/increase in trade payables, provisions and other liabilities

927

178

Decrease/increase in deferred income

66

48

Cash paid due to TomorrowNow litigation

-102

-19

Interest paid

-65

-111

Interest received

56

33

Income taxes paid, net of refunds

-686

-850

Net cash flows from operating activities

2.954

3.015




Business combinations, net of cash and cash equivalents acquired

-4.194

-73

Purchase of intangible assets and property, plant, and equipment

-334

-225

Proceeds from sales of intangible assets or property, plant, and equipment

43

45

Purchase of equity or debt instruments of other entities

-841

-1.073

Proceeds from sales of equity or debt instruments of other entities

1.334

1.027

Net cash flows from investing activities

-3.992

-299




Dividends paid

-594

-594

Purchase of treasury shares

-220

0

Proceeds from reissuance of treasury shares

127

24

Proceeds from issuing shares (share-based compensation)

23

6

Proceeds from borrowings

5.380

697

Repayments of borrowings

-2.196

-2.303

Purchase of equity-based derivative instruments (hedge for cash-settled share-based payment plans)

-14

0

Proceeds from exercise of equity-based derivative financial instruments

4

4

Net cash flows from financing activities

2.510

-2.166




Effect of foreign exchange rates on cash and cash equivalents

162

54

Net decrease/increase in cash and cash equivalents

1.634

604

Cash and cash equivalents at the beginning of the period

1.884

1.280

Cash and cash equivalents at the end of the period

3.518

1.884




Supplementary Financial Information


RECONCILIATIONS FROM NON-IFRS NUMBERS TO IFRS NUMBERS

(Preliminary and unaudited)


The following tables present a reconciliation from our non-IFRS numbers (including our non-IFRS at constant currency numbers) to the respective most comparable IFRS numbers.  Note: Our non-IFRS numbers are not prepared under a comprehensive set of accounting rules or principles.


euro millions, unless otherwise stated


Three months ended December 31






2010



2009



Change in %






IFRS

Adj.*

Non-IFRS*

Currency

impact**

Non-IFRS

constant

currency**



IFRS

Adj.*

Non-IFRS*



IFRS



Non-IFRS*


Non-IFRS

constant

currency**

Non-IFRS Revenue Numbers























Software revenue


1.507

0

1.507

-110

1.397



1.120

0

1.120



35



35


25




Support revenue


1.656

36

1.692

-106

1.586



1.364

0

1.364



21



24


16




Subscription and other software-related service revenue

110

0

110

-5

105



82

0

82



34



34


28



Software and software-related service revenue


3.273

36

3.309

-221

3.088



2.566

0

2.566



28



29


20




- thereof SAP excluding Sybase


3.105

0

3.105

-206

2.899



2.566

0

2.566



21



21


13




Consulting revenue


625

0

625

-37

588



519

0

519



20



20


13




Other service revenue


160

0

160

-7

153



105

0

105



52



52


46



Professional services and other service revenue


785

0

785

-44

741



624

0

624



26



26


19


Total revenue


4.058

36

4.094

-265

3.829



3.190

0

3.190



27



28


20

























Non-IFRS Operating Expense Numbers






















Cost of software and software-related services


-549

65

-484





-465

44

-421



18



15





Cost of professional services and other services


-592

4

-588





-428

1

-427



38



38





Research and development


-481

1

-480





-470

1

-469



2



2





Sales and marketing


-787

29

-758





-609

18

-591



29



28





General and administration


-177

2

-175





-169

2

-167



5



5





Restructuring


2

-2

0





-5

-1

-6



<-100



-100





TomorrowNow litigation


-933

933

0





-49

49

0



>100



0





Other operating income/expense, net


2

0

2





27

0

27



-93



-93




Total operating expenses


-3.515

1.031

-2.484

131

-2.353



-2.168

113

-2.055



62



21


15

























Non-IFRS Profit Numbers





















Operating profit


543

1.067

1.610

-134

1.476



1.022

113

1.134



-47



42


30


Other non-operating income/expense, net


-50

-14

-64





-11

-2

-13



>100



>100





Finance income


17

0

17





5

0

5



>100



>100






Finance costs TomorrowNow litigation


-12

12

0





0

0

0



N/A



0






Other finance costs


-40

0

-40





-23

0

-23



74



74





Finance costs


-52

12

-40





-23

0

-23



>100



74





Other financial gains/losses, net


-7

0

-7





-3

0

-3



>100



>100




Financial income, net


-42

12

-30





-21

0

-21



100



43




Profit before tax


451

1.065

1.516





990

111

1.101



-54



38






Income tax TomorrowNow litigation


359

-359

0





18

-18

0



>100



0






Other income tax expense


-373

-40

-413





-326

-14

-340



14



21





Income tax expense


-14

-399

-413





-308

-32

-340



-95



21




Profit after tax


437

666

1.103





682

79

761



-36



45





Profit attributable to non-controlling interests

0

0

0





1

0

1



-100



-100





Profit attributable to owners of parent


437

666

1.103





681

79

760



-36



45



























Non-IFRS Key Ratios





















Operating margin in %


13,4


39,3


38,5



32,0


35,5



-18,6pp



3,8pp


3,0pp


Effective tax rate in %


3,1


27,2





31,1


30,9



-28,0pp



-3,7pp




Basic earnings per share, in euros


0,37


0,93





0,57


0,64



-35



45








euro millions, unless otherwise stated


Twelve months ended December 31






2010



2009



Change in %






IFRS

Adj.*

Non-IFRS*

Currency

impact**

Non-IFRS

constant

currency**



IFRS

Adj.*

Non-IFRS*



IFRS



Non-IFRS*

Non-IFRS

constant

currency**

Non-IFRS Revenue Numbers






















Software revenue


3.265

0

3.265

-244

3.021



2.607

0

2.607



25



25

16




Support revenue


6.135

72

6.207

-313

5.894



5.285

11

5.296



16



17

11




Subscription and other software-related service revenue

394

0

394

-13

381



306

0

306



29



29

25



Software and software-related service revenue


9.794

72

9.866

-570

9.296



8.198

11

8.209



19



20

13




- thereof SAP excluding Sybase


9.537

0

9.537

-545

8.992



8.198

11

8.209



16



16

10




Consulting revenue


2.197

0

2.197

-118

2.079



2.074

0

2.074



6



6

0




Other service revenue


473

0

473

-22

451



400

0

400



18



18

13



Professional services and other service revenue


2.670

0

2.670

-140

2.530



2.474

0

2.474



8



8

2


Total revenue


12.464

72

12.536

-709

11.827



10.672

11

10.683



17



17

11
























Non-IFRS Operating Expense Numbers





















Cost of software and software-related services


-1.830

199

-1.631





-1.658

184

-1.474



10



11




Cost of professional services and other services


-2.070

9

-2.061





-1.851

4

-1.847



12



12




Research and development


-1.724

5

-1.719





-1.591

4

-1.587



8



8




Sales and marketing


-2.645

80

-2.565





-2.199

73

-2.126



20



21




General and administration


-638

16

-622





-564

3

-561



13



11




Restructuring


3

-5

-2





-198

4

-194



<-100



-99




TomorrowNow litigation


-980

980

0





-56

56

0



>100



0




Other operating income/expense, net


9

0

9





33

0

33



-73



-73



Total operating expenses


-9.875

1.283

-8.592

369

-8.223



-8.084

327

-7.756



22



11

6
























Non-IFRS Profit Numbers




















Operating profit


2.589

1.355

3.944

-340

3.604



2.588

339

2.927



0



35

23


Other non-operating income/expense, net


-185

-5

-190





-73

-2

-75



>100



>100




Finance income


56

0

56





32

0

32



75



75





Finance costs TomorrowNow litigation


-12

12

0





0

0

0



N/A



0





Other finance costs


-108

0

-108





-101

0

-101



7



7




Finance costs


-120

12

-108





-101

0

-101



19



7




Other financial gains/losses, net


-3

0

-3





-11

0

-11



-73



-73



Financial income, net


-67

12

-55





-80

0

-80



-16



-31



Profit before tax


2.337

1.362

3.699





2.435

337

2.772



-4



33





Income tax TomorrowNow litigation


377

-377

0





20

-20

0



>100



0





Other income tax expense


-898

-107

-1.005





-705

-66

-771



27



30




Income tax expense


-521

-484

-1.005





-685

-86

-771



-24



30



Profit after tax


1.816

878

2.694





1.750

251

2.001



4



35




Profit attributable to non-controlling interests

2

0

2





2

0

2



0



0




Profit attributable to owners of parent


1.814

878

2.692





1.748

251

1.999



4



35

























Non-IFRS Key Ratios




















Operating margin in %


20,8


31,5


30,5



24,3


27,4



-3,5pp



4,1pp

3,1pp


Effective tax rate in %


22,3


27,2





28,1


27,8



-5,8pp



-0,6pp



Basic earnings per share, in euros


1,53


2,27





1,47


1,68



4



35





* Adjustments in the revenue line items are for support revenue that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges and discontinued activities. See Explanations of Non-IFRS 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-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period.


Starting in 2011, our non-IFRS operating margin will additionally exclude share-based compensation expenses as well as restructuring expenses. Our share-based compensation expense amounted to euro 58 million for 2010 and restructuring expenses were euro 2 million. Excluding these two items from the Non-IFRS operating profit in the table above results in the operating profit number under our new Non-IFRS definition and is the basis for  the Non-IFRS margin of 31.9% that we have provided as the 2010 comparable number for our profit margin outlook for 2011. The same reconciling items (net of tax of euro 44 million) were used in determining the non-IFRS tax rate for 2010  of 27.2% that we have provided as the 2010 comparable number for our Non-IFRS tax rate outlook for 2011.


Differences may exist due to rounding.




REVENUE BY REGION

(Preliminary and unaudited)


The following tables present our IFRS and non-IFRS revenue by region based on customer location. The tables also present a reconciliation from our non-IFRS revenue (including our non-IFRS revenue at constant currency) to the respective most comparable IFRS revenue. Note: Our non-IFRS revenues are not prepared under a comprehensive set of accounting rules or principles.


euro millions


Three months ended December 31






2010



2009


Change

in %






IFRS

Adj.*

Non-IFRS*

Currency

impact**

Non-IFRS

constant

currency**



IFRS

Adj.*

Non-IFRS*


IFRS

Non-IFRS*

Non-IFRS

constant

currency**

Software revenue by region


















EMEA


724

0

724

-23

701



578

0

578


25

25

21



Americas


553

0

553

-53

500



359

0

359


54

54

39



Asia Pacific Japan


230

0

230

-34

196



184

0

184


25

25

7


Software revenue  


1.507

0

1.507

-110

1.397



1.120

0

1.120


35

35

25





















Software and software-related service revenue by region




































Germany


524

0

524

0

524



491

0

491


7

7

7




Rest of EMEA


1.122

11

1.133

-47

1.086



895

0

895


25

27

21



Total EMEA


1.646

11

1.657

-47

1.610



1.386

0

1.386


19

20

16




United States


804

19

823

-68

755



600

0

600


34

37

26




Rest of Americas


331

3

334

-35

299



221

0

221


50

51

35



Total Americas


1.135

22

1.157

-103

1.054



822

0

822


38

41

28




Japan


133

2

135

-21

114



112

0

112


19

21

2




Rest of Asia Pacific Japan


358

2

360

-50

310



246

0

246


46

46

26



Total Asia Pacific Japan


492

3

495

-71

424



358

0

358


37

38

18


Software and software-related service revenue

3.273

36

3.309

-221

3.088



2.566

0

2.566


28

29

20





















Total revenue by region



















Germany


724

0

724

0

724



653

0

653


11

11

11




Rest of EMEA


1.350

11

1.361

-56

1.305



1.083

0

1.083


25

26

20



Total EMEA


2.074

11

2.085

-56

2.029



1.736

0

1.736


19

20

17




United States


1.012

19

1.031

-84

947



754

0

754


34

37

26




Rest of Americas


402

3

405

-43

362



278

0

278


45

46

30



Total Americas


1.414

22

1.436

-127

1.309



1.032

0

1.032


37

39

27




Japan


153

2

155

-25

130



128

0

128


20

21

2




Rest of Asia Pacific Japan


418

2

420

-59

361



294

0

294


42

43

23



Total Asia Pacific Japan


571

3

574

-82

492



422

0

422


35

36

17


Total revenue  


4.058

36

4.094

-265

3.829



3.190

0

3.190


27

28

20






euro millions


Twelve months ended December 31





2010



2009


Change in %






IFRS

Adj.*

Currency impact**

Non-IFRS

constant

currency**



IFRS

Adj.*

Non-IFRS*


IFRS

Non-IFRS*

Non-IFRS

constant

currency**


Software revenue by region


















EMEA


1.471

0

1.471

-49

1.422



1.304

0

1.304


13

13

9



Americas


1.247

0

1.247

-118

1.129



855

0

855


46

46

32



Asia Pacific Japan


548

0

548

-78

470



449

0

449


22

22

5


Software revenue  


3.265

0

3.265

-244

3.021



2.607

0

2.607


25

25

16





















Software and software-related service revenue by region


































Germany


1.564

0

1.564

0

1.564



1.439

0

1.439


9

9

9




Rest of EMEA


3.319

21

3.339

-125

3.214



2.897

4

2.901


15

15

11



Total EMEA


4.883

21

4.903

-125

4.778



4.336

4

4.340


13

13

10




United States


2.497

40

2.537

-151

2.386



2.018

6

2.024


24

25

18




Rest of Americas


930

5

935

-98

837



700

0

700


33

34

20



Total Americas


3.427

45

3.472

-250

3.222



2.718

6

2.724


26

27

18




Japan


448

3

451

-54

397



404

0

404


11

12

-2




Rest of Asia Pacific Japan


1.037

3

1.040

-141

899



740

1

741


40

40

21



Total Asia Pacific Japan


1.485

6

1.491

-195

1.296



1.144

1

1.145


30

30

13


Software and software-related service revenue

9.794

72

9.866

-570

9.296



8.198

11

8.209


19

20

13





















Total revenue by region



















Germany


2.195

0

2.195

-1

2.194



2.029

0

2.029


8

8

8




Rest of EMEA


4.068

21

4.089

-154

3.935



3.614

4

3.618


13

13

9



Total EMEA


6.263

21

6.283

-154

6.129



5.643

4

5.647


11

11

9




United States


3.243

40

3.284

-192

3.092



2.695

6

2.701


20

22

14




Rest of Americas


1.192

5

1.197

-130

1.067



925

0

925


29

29

15



Total Americas


4.435

45

4.480

-322

4.158



3.620

6

3.626


23

24

15




Japan


513

3

516

-61

455



476

0

476


8

8

-4




Rest of Asia Pacific Japan


1.253

3

1.256

-171

1.085



933

1

934


34

34

16



Total Asia Pacific Japan


1.766

6

1.772

-233

1.539



1.409

1

1.410


25

26

9


Total revenue  


12.464

72

12.536

-709

11.827



10.672

11

10.683


17

17

11




* Adjustments in the revenue line items are for support revenue that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. See Explanations of Non-IFRS 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-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period.


Differences may exist due to rounding.




SHARE-BASED COMPENSATION

(Preliminary and unaudited)


euro millions

Twelve months ended December 31






2010


2009


Change in %


Share-based compensation per expense line item








Cost of software and software-related services

4


5


-20



Cost of professional services and other services

9


8


13



Research and development

19


18


6



Sales and marketing

16


12


33



General and administration

10


10


0


Total share-based compensation

58


53


9



Note: The share-based compensation expenses do not differ between SAP's IFRS and non-IFRS measures.


Differences may exist due to rounding.




FREE CASH FLOW

(Preliminary and unaudited)


euro millions

Year ended December 31



2010

2009

Change in %

Net cash flows from operating activities

2.954

3.015

-2

Additions to non-current assets excluding additions from acquisitions

-334

-225

48

Free cash flow

2.620

2.790

-6



Differences may exist due to rounding.




DAYS SALES OUTSTANDING (DSO)

(Unaudited)



as at December 31, 2010 and December 31, 2009


2010

2009

Change in days

Days sales outstanding (DSO) in days*

65

79

-14



* Day Sales Outstanding measures the length of time it takes to collect receivables. SAP calculates DSO by dividing the average invoiced accounts receivables balance of the last 12 months by the average monthly sales of the last 12 months.





NUMBER OF EMPLOYEES (in Full-Time Equivalents)



December 31, 2010

December 31, 2009


EMEA

Americas

Asia Pacific

Japan

Total

EMEA

Americas

Asia Pacific

Japan

Total

Software and software-related services

3.804

1.827

2.254

7.885

3.227

1.276

1.919

6.422

Professional services and other services

6.787

3.955

2.410

13.152

6.635

3.473

2.240

12.348

Research and development

8.617

3.154

4.113

15.884

8.525

2.534

3.755

14.814

Sales and marketing

4.593

4.214

2.180

10.987

4.202

3.559

1.752

9.513

General and administration

2.053

1.005

518

3.576

1.919

724

408

3.051

Infrastructure

1.135

628

266

2.029

854

408

174

1.436

SAP Group (December 31)

26.989

14.783

11.741

53.513

25.362

11.974

10.248

47.584

thereof Sybase

813

1.866

1.047

3.726














SAP Group (months' end average)

25.929

13.164

10.877

49.970

25.927

12.288

10.554

48.769




MULTI-QUARTER SUMMARY

(IFRS and non-IFRS; preliminary und unaudited)


euro millions, unless otherwise stated

Q4/2010

Q3/2010

Q2/2010

Q1/2010

Q4/2009

Q3/2009

Q2/2009

Q1/2009

Software revenue (IFRS)

1.507

656

637

464

1.120

525

543

418


Revenue adjustment*

0

0

0

0

0

0

0

0

Software revenue (non-IFRS)

1.507

656

637

464

1.120

525

543

418











Support revenue (IFRS)

1.656

1.559

1.526

1.394

1.364

1.333

1.337

1.252


Revenue adjustment*

36

36

0

0

0

0

0

11

Support revenue (non-IFRS)

1.692

1.595

1.526

1.394

1.364

1.333

1.337

1.263











Subscription and other software-related service revenue (IFRS)

110

101

95

89

82

79

73

71


Revenue adjustment*

0

0

0

0

0

0

0

0

Subscription and other software-related service revenue (non-IFRS)

110

101

95

89

82

79

73

71











Software and software-related service revenue (IFRS)

3.273

2.316

2.258

1.947

2.566

1.937

1.953

1.741


Revenue adjustment*

36

36

0

0

0

0

0

11

Software and software-related service revenue (non-IFRS)

3.309

2.352

2.258

1.947

2.566

1.937

1.953

1.752











Total revenue (IFRS)

4.058

3.003

2.894

2.509

3.190

2.508

2.576

2.397


Revenue adjustment*

36

36

0

0

0

0

0

11

Total revenue (non-IFRS)

4.094

3.039

2.894

2.509

3.190

2.508

2.576

2.408











Operating profit (IFRS)

543

716

774

557

1.022

619

641

307


Revenue adjustment*

36

36

0

0

0

0

0

11


Expense adjustment*

1.031

131

66

54

113

68

69

78

Operating profit (non-IFRS)

1.610

883

840

612

1.134

687

710

396











Operating margin (IFRS)

13,4

23,8

26,7

22,2

32,0

24,7

24,9

12,8

Operating margin (non-IFRS)

39,3

29,1

29,0

24,4

35,5

27,4

27,6

16,4











Effective tax rate (IFRS)

3,1

27,3

27,4

25,7

31,1

20,5

28,5

31,7

Effective tax rate (non-IFRS)

27,2

28,7

26,8

25,3

30,5

21,0

28,1

30,1











Basic earnings per share, in euro (IFRS)

0,37

0,42

0,41

0,33

0,57

0,38

0,36

0,17

Basic earnings per share, in euro (non-IFRS)

0,93

0,51

0,46

0,37

0,64

0,42

0,40

0,22











Headcount**

53.513

52.921

48.021

47.598

47.584

47.810

48.567

49.922



* Adjustments in the revenue line items are for support revenue that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges and discontinued activities. See Explanations of Non-IFRS Measures for details.


** in full-time equivalents at quarter end


Differences may exist due to rounding.




EXPLANATIONS OF NON-IFRS MEASURES

This document discloses certain financial measures, such as non-IFRS revenue, non-IFRS expenses, non-IFRS operating profit, non-IFRS operating margin, non-IFRS profit after tax, non-IFRS earnings per share, free cash flow as well as constant currency revenue and operating profit measures that are not prepared in accordance with IFRS and are therefore considered non-IFRS financial measures. Our non-IFRS financial measures may not correspond to non-IFRS financial measures that other companies report. The non-IFRS financial measures that we report should be considered in addition to, and not as substitutes for or superior to, revenue, operating profit, operating margin, cash flows, or other measures of financial performance prepared in accordance with IFRS. Our non-IFRS financial measures included in this document are reconciled to the nearest IFRS measure in the tables on the pages F8 to F13 above.

We believe that the supplemental historical and prospective non-IFRS financial information presented in this document provides useful supplemental information to investors because it is also used by our management – in addition to financial data prepared in accordance with IFRS – to attain a more transparent understanding of our past performance and our future results. At the beginning of 2010 the non-IFRS measures (as defined below) replaced the non-GAAP measures we used until the termination of our U.S. GAAP reporting. Specifically, we use these non-IFRS measures consistently in our planning and forecasting, reporting, compensation, and external communication as follows:  

  • Our management primarily uses these non-IFRS measures rather than IFRS measures as the basis for making financial, strategic and operating decisions.
  • The variable remuneration components of our Executive Board members and employees are based on non-IFRS revenue and non-IFRS operating profit rather than the respective IFRS measures.
  • The annual budgeting process for all management units is based on non-IFRS revenues and non-IFRS operating profit numbers rather than the respective IFRS numbers with costs such as share-based compensation and restructuring only being considered on a Company level.
  • All forecast and performance reviews with all senior managers globally are based on these non-IFRS measures, rather than the respective IFRS numbers.
  • Company-internal target setting and guidance provided to the capital markets are both based on non-IFRS revenues and non-IFRS profit measures rather than the respective IFRS numbers.

We believe that our non-IFRS measures are useful to investors for the following reasons:

  • The non-IFRS measures provide investors with insight into management's decision-making since management uses these non-IFRS measures to run our business and make financial, strategic and operating decisions.
  • The non-IFRS measures provide investors with additional information that enables a comparison of year-over-year operating performance by eliminating certain direct effects of acquisitions.

Our non-IFRS financial measures reflect adjustments based on the items below, as well as adjustments for the related income tax effects:

Non-IFRS Revenue

Revenues in this document identified as non-IFRS revenue have been adjusted from the respective IFRS numbers by including the full amount of support revenue that would have been recorded by entities acquired by SAP had they remained stand-alone entities but which we are not permitted to record as revenue under IFRS due to fair value accounting for the support contracts in effect at the time of the respective acquisitions.

Under IFRS, we record at fair value the support contracts in effect at the time entities were acquired. Consequently, our IFRS support revenue, our IFRS software and software-related service revenue and our IFRS total revenue for periods subsequent to acquisitions do not reflect the full amount of support revenue that would have been recorded for these support contracts absent these acquisitions by SAP. Adjusting revenue numbers for this revenue impact provides additional insight into the comparability across periods of our ongoing performance.

Non-IFRS Operating Expense

Operating expense figures in this report that are identified as non-IFRS operating expense have been adjusted by excluding the following:

  • Acquisition-related charges
    • Amortization expense/impairment charges of intangibles acquired in business combinations and certain standalone acquisitions of intellectual property (including purchased in-process research and development)
    • Restructuring expenses and settlements of pre-existing relationships incurred in connection with a business combination
    • Acquisition-related third-party expenses
  • Discontinued activities: Results of the discontinued operations that qualify as such under IFRS in all respects except that they do not represent a major line of business

The operating profit and operating margin outlook provided for 2011 and the comparable 2010 operating profit and operating margin numbers are based on an updated non-IFRS definition which additionally excludes the following:

  • Expenses relating to share-based compensation
  • Restructuring expenses

Non-IFRS Operating Profit, non-IFRS Operating Margin, non-IFRS Profit After Tax and non-IFRS Earnings Per Share

Operating profit, operating margin, profit after tax and earnings per share in this document identified as non-IFRS operating profit, non-IFRS operating margin, non-IFRS profit after tax and non-IFRS earnings per share have been adjusted from the respective IFRS measures by adjusting for the above mentioned non-IFRS revenues and non-IFRS operating expenses.

We exclude certain acquisition-related expenses for the purpose of calculating non-IFRS operating profit, non-IFRS operating margin, non-IFRS profit after tax and non-IFRS 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 relevant acquisition other than by disposing of the acquired assets. Since management at levels below the Executive Board has no influence on these expenses we generally do not consider these expenses for the purpose of evaluating the performance of management units.

Additionally, our non-IFRS measures have been adjusted from the respective IFRS measures for the results of the discontinued operations that qualify as such under IFRS in all respects except that they do not represent a major line of business. We refer to these activities as "discontinued activities." Under U.S. GAAP, which we provided until 2009, we presented 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 non-IFRS adjustment to our IFRS numbers for the results of our discontinued TomorrowNow activities is useful to investors for the following reasons:

  • Despite the migration from U.S. GAAP to IFRS, we will continue to internally treat the ceased TomorrowNow activities as discontinued activities and thus will continue to exclude potential future TomorrowNow results, which are expected to mainly comprise of expenses in connection with the Oracle lawsuit, from our internal management reporting, planning, forecasting, and compensation plans. Therefore, adjusting our non-IFRS measures for the results of the discontinued TomorrowNow activities provides insight into the financial measures that SAP uses internally.
  • By adjusting the non-IFRS numbers for the results from our discontinued TomorrowNow operations, the non-IFRS numbers are more comparable to the non-GAAP measures that SAP used through the end of 2009, which make SAP's performance measures before and after the full IFRS migration easier to compare.

The operating profit and operating margin outlook provided for 2011 and the comparable 2010 operating profit and operating margin numbers are based on an updated non-IFRS definition which additionally excludes the expenses relating to share-based compensation and restructuring expenses from our non-IFRS numbers. These expenses are allocated and managed on corporate level only and are not factored in our management's view when managing the continuing operational performance of the Company.

We include the revenue adjustments outlined above and exclude the expense adjustments when making decisions to allocate resources, both on a Company level and at lower levels of the organization. In addition, we use these non-IFRS measures to gain a better understanding of the Company's comparative operating performance from period to period. We believe that our non-IFRS 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 analyzed in conjunction with the corresponding IFRS measures the non-IFRS measures are not indicative of our present and future performance, foremost for the following reasons:
    • While our non-IFRS profit numbers reflect the elimination of certain acquisition-related expenses, no eliminations are made for the additional revenues and other revenues that result from the acquisitions.
    • The acquisition-related charges that we eliminate in deriving our non-IFRS profit 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-IFRS profit numbers is a recurring expense that will impact our financial performance in future years.
    • The revenue adjustment for the fair value accounting of the acquired entities' support contracts and the expense adjustment for acquisition-related charges do not arise from a common conceptual basis. This is because the revenue adjustment aims to improve the comparability of the initial post-acquisition period with future post-acquisition periods while the expense adjustment aims to improve the comparability between post-acquisition periods and pre-acquisition periods. This should particularly be considered when evaluating our non-IFRS operating profit and non-IFRS operating margin numbers as these combine our non-IFRS revenue and non-IFRS expenses despite the absence of a common conceptual basis.
    • Our discontinued activities could result in significant cash outflows.
    • The valuation of our cash-settled shared based payment plans could fluctuate significantly due to the development of our share price and other parameters used in the valuation of these plans
    • We have in the past and intend to continue in the future to issue share based compensation awards to our employees every year. Thus our share-based compensation expense are recurring although the amounts usually change from period to period.

We believe, however, that the presentation of the non-IFRS measures in conjunction with the corresponding IFRS measures together with the relevant reconciliations, provides 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-IFRS measures and the relevant IFRS measures. We caution the readers of this document to follow a similar approach by considering our non-IFRS 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 IFRS.

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 IFRS 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 profit that are adjusted for foreign currency effects. We calculate constant currency year-over-year changes in revenue and operating profit by translating foreign currencies using the average exchange rates from the previous year instead of the current 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 revenue 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 in non-IFRS revenue and non-IFRS operating profit on the one hand and changes in revenue, expenses, profit, or other measures of financial performance prepared in accordance with IFRS 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 revenue, expenses, profit, or other measures of financial performance prepared in accordance with IFRS.

Free Cash Flow

We use our free cash flow measure to estimate the cash flow remaining after all expenditures required to maintain or expand the organic business have been paid off. This assists management with the supplemental information to assess our liquidity needs. We calculate free cash flow as net cash from operating activities minus additions to non-current assets, 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 IFRS.

SOURCE SAP AG



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