SAP Announces Fourth Quarter and Full-Year 2009 Results that Exceeded Expectations

Full-Year Software and Software-Related Service Revenues Surpasses Market Expectations

Full-Year Non-GAAP Operating Margin Exceeds Company Guidance

2010 Outlook Signals Growth in Software and Software Related Service Revenues and Operating Margin

Jan 27, 2010, 01:07 ET from SAP AG

WALLDORF, Germany, Jan. 27 /PRNewswire-FirstCall/ -- SAP AG (NYSE: SAP) today announced its preliminary financial results for the fourth quarter and full-year ended December 31, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050310/SFTH009LOGO-a )

FINANCIAL HIGHLIGHTS – Full Year 2009

SAP - Full Year 2009(1)

U.S. GAAP

Non-GAAP(2)

€ million, unless stated otherwise

FY 2009

FY 2008

% change

FY 2009

FY 2008

% change

% change const. curr.(3)

Software revenues

2,606

3,606

-28

2,606

3,606

28

-27

Software and software-related service revenues

8,197

8,457

-3

8,208

8,623

-5

-5

Total revenues

10,671

11,565

-8

10,682

11,731

-9

-9

Operating expenses

-8,031

-8,725

-8

-7,766

-8,428

-8

-8

- Thereof restructuring charges

-196

-

-

-196

-

-

-

Operating income

2,640

2,840

-7

2,916

3,303

-12

-11

Operating margin (%)

24.7

24.6

0.1pp

27.3

28.2

-0.9pp

-0.6pp

Income from continuing operations

1,825

1,928

-5

2,036

2,269

-10

Net income

1,789

1,869

-4

2,000

2,210

-10

Basic EPS from cont. operations (€)

1.54

1.62

-5

1.71

1.91

-10

(1) All figures are preliminary and unaudited.

(2) Adjustments in the revenue line items are for support revenue that the acquired entity 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.

(3) 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.

Revenues – Full Year 2009

  • U.S. GAAP software and software-related service revenues were euro 8.20 billion (2008: euro 8.46 billion), a decrease of 3%.  Non-GAAP software and software-related service revenues were euro 8.21 billion (2008: euro 8.62 billion), a decrease of 5% (5% at constant currencies).
  • U.S. GAAP total revenues were euro 10.67 billion (2008: euro 11.57 billion), a decrease of 8%.  Non-GAAP total revenues were euro 10.68 billion (2008: euro 11.73 billion), a decrease of 9% (9% at constant currencies).  
  • U.S. GAAP software revenues were euro 2.61 billion (2008: euro 3.61 billion), a decrease of 28% (27% at constant currencies).

Full Year 2009 Non-GAAP revenue figures exclude an acquisition-related deferred support revenue write-down of euro 11 million (2008: euro 166 million).

Income – Full Year 2009

  • U.S. GAAP operating income was euro 2.64 billion (2008: euro 2.84 billion), a decrease of 7%.  Non-GAAP operating income was euro 2.92 billion (2008: euro 3.30 billion), a decrease of 12% (11% at constant currencies). U.S. GAAP and Non-GAAP operating income were negatively impacted by restructuring charges of euro 196 million resulting from the previously announced reduction of positions.
  • U.S. GAAP operating margin was 24.7% (2008: 24.6%), an increase of 0.1 percentage points.  Non-GAAP operating margin was 27.3% (2008: 28.2%), or 27.6% at constant currencies, a decrease of 0.9 percentage points (0.6 percentage points at constant currencies).  The euro 196 million in restructuring charges resulting from the previously announced reduction of positions negatively impacted the U.S. GAAP and Non-GAAP operating margin by 1.8 percentage points.
  • U.S. GAAP income from continuing operations was euro 1.83 billion (2008: euro 1.93 billion), a decrease of 5%.  Non-GAAP income from continuing operations was euro 2.04 billion (2008: euro 2.27 billion), a decrease of 10%.  U.S. GAAP and Non-GAAP income from continuing operations were negatively impacted by restructuring charges of euro 138 million, net of tax, resulting from the previously announced reduction of positions.
  • U.S. GAAP basic earnings per share from continuing operations were euro 1.54 (2008: euro 1.62), a decrease of 5%.  Non-GAAP earnings per share from continuing operations were euro 1.71 (2008: euro 1.91), a decrease of 10%. 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 0.12.

Full Year 2009 Non-GAAP operating income excludes an acquisition-related deferred support revenue write-down and acquisition-related charges totaling euro 275 million (2008: euro 463 million), and Full Year 2009 Non-GAAP income from continuing operations and Non-GAAP earnings per share from continuing operations exclude an acquisition-related deferred support revenue write-down and acquisition-related charges totaling euro 211 million net of tax (2008: euro 341 million).

Cash Flow - Full Year 2009

Operating cash flow from continuing operations was euro 3.04 billion (2008: euro 2.18 billion), an increase of 39%. Free cash flow was euro 2.81 billion (2008: euro 1.84 billion), an increase of 52%. Free cash flow was 26% of total revenues (2008: 16%). At December 31, 2009, SAP had a total group liquidity of euro 2.28 billion (December 31, 2008: euro 1.66 billion), which includes cash and cash equivalents, restricted cash and short term investments.  At December 31, 2009, net liquidity, defined as total group liquidity less bank liabilities, was euro 1.58 billion.

FINANCIAL HIGHLIGHTS – Fourth Quarter 2009

SAP - Fourth Quarter 2009(1)

U.S. GAAP

Non-GAAP(2)

€ million, unless stated otherwise

Q4/2009

Q4/2008

% change

Q4/2009

Q4/2008

% change

% change const. curr.(3)

Software revenues

1,119

1,322

-15

1,119

1,322

-15

-14

Software and software-related service revenues

2,565

2,666

-4

2,565

2,692

-5

-2

Total revenues

3,189

3,487

-9

3,189

3,513

-9

-7

Operating expenses

-2,134

-2,212

-4

-2,070

-2,140

-3

0

- Thereof restructuring charges

-10

-

-

-10

-

-

-

Operating income

1,055

1,275

-17

1,119

1,373

-18

-16

Operating margin (%)

33.1

36.6

-3.5pp

35.1

39.1

-4.0pp

-4.1pp

Income from continuing operations

748

860

-13

797

930

-14

Net income

727

830

-12

776

900

-14

Basic EPS from cont. operations (€)

0.63

0.72

-13

0.67

0.78

-14

(1) All figures are preliminary and unaudited.

(2) Adjustments in the revenue line items are for support revenue that the acquired entity 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.

(3) 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.

Revenues - Fourth Quarter 2009

  • U.S. GAAP software and software-related service revenues were euro 2.57 billion (2008: euro 2.67 billion), a decrease of 4%.  Non-GAAP software and software-related service revenues were euro 2.57 billion (2008: euro 2.69 billion), a decrease of 5% (2% at constant currencies).
  • U.S. GAAP total revenues were euro 3.19 billion (2008: euro 3.49 billion), a decrease of 9%.  Non-GAAP total revenues were euro 3.19 billion (2008: euro 3.51 billion), a decrease of 9% (7% at constant currencies).
  • U.S. GAAP software revenues were euro 1.12 billion (2008: euro 1.32 billion), a decrease of 15% (14% at constant currencies).  

Income - Fourth Quarter 2009

  • U.S. GAAP operating income was euro 1.06 billion (2008: euro 1.28 billion), a decrease of 17%.  Non-GAAP operating income was euro 1.12 billion (2008: euro 1.37 billion), decrease of 18% (16% at constant currencies). U.S. GAAP and Non-GAAP operating income were negatively impacted by restructuring charges of euro 10 million resulting from the previously announced reduction of positions.  
  • U.S. GAAP operating margin was 33.1% (2008: 36.6%), a decrease of 3.5 percentage points.  Non-GAAP operating margin was 35.1% (2008: 39.1%), or 35.0% at constant currencies, a decrease of 4.0 percentage points (4.1 percentage points at constant currencies).  The euro 10 million in restructuring charges resulting from the previously announced reduction of positions negatively impacted the U.S. GAAP and Non-GAAP operating margin by 0.3 percentage points.
  • U.S. GAAP income from continuing operations was euro 0.75 billion (2008: euro 0.86 billion), a decrease of 13%.  Non-GAAP income from continuing operations was euro 0.80 billion (2008: euro 0.93 billion), a decrease of 14%.  U.S. GAAP and Non-GAAP income from continuing operations were negatively impacted by restructuring charges of euro 7 million, net of tax, resulting from the previously announced reduction of positions.
  • U.S. GAAP basic earnings per share from continuing operations were euro 0.63 (2008: euro 0.72), a decrease of 13%.  Non-GAAP basic earnings per share from continuing operations were euro 0.67 (2008: euro 0.78), a decrease of 14% 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 euro 0.01.

Fourth Quarter 2009 Non-GAAP operating income excludes acquisition-related charges totaling euro 64 million (2008: euro 98 million, which also included an acquisition-related deferred support revenue write-down), and Fourth Quarter 2009 Non-GAAP income from continuing operations and Non-GAAP earnings per share from continuing operations exclude acquisition-related charges totaling euro 49 million net of tax (2008: euro 70 million, which also included a deferred revenue write-down).

"As a result of a very difficult and unstable market environment that began in the third quarter of 2008 and then continued into 2009, we rapidly put into place a plan to reduce operating expenses in order to protect our operating margin.  I am pleased to report that we exceeded our initial expectations," said Werner Brandt, CFO of SAP.  "In 2009, we significantly reduced Non-GAAP operating expenses by around euro 650 million to euro 7.8 billion despite restructuring costs of approximately euro 200 million.  The Non-GAAP operating margin at constant currencies was 27.6% which included a negative impact of 1.8 percentage points related to the restructuring charge.  For 2010, we will continue to maintain strict cost controls with a spotlight on further margin expansion."

Leo Apotheker, CEO of SAP continued, "Along with margin expansion for 2010, we are also ready to return to top-line growth, although the market continues to be challenging and uncertainty among customers still exists.  Despite the difficult environment last year, we never lost focus on innovation, which is the cornerstone for growth going forward.  Building on a strong foundation, we will drive growth by continuing to strengthen our core business and expand beyond the core with new products and technologies that speed implementation, provide for instant consumption and are easy accessible from anywhere, anytime, and from a broad range of devices."  

IFRS Financial Data

SAP will discontinue its U.S. GAAP reporting and will only report financial data under IFRS from fiscal 2010 onwards.  The guidance provided by SAP for 2010 is based on Non-IFRS numbers that are derived from SAP's IFRS figures by excluding acquisition-related charges and discontinued activities.  To prepare the capital markets for this change, IFRS financial data are provided in the financial section of this press release.

Business Outlook

SAP is providing the following outlook for the full-year 2010:

  • The Company expects full-year 2010 Non-IFRS software and software related service revenue to increase in a range of 4% to 8% at constant currencies (2009: euro 8.2 billion).
  • The Company expects its full-year 2010 Non-IFRS operating margin to be in a range of 30% – 31% at constant currencies (2009: 27.4%).
  • The Company projects an effective tax rate of 27.5% - 28.5% (based on IFRS) for 2010 (2009: 26.7%).

KEY EVENTS – Fourth Quarter 2009

  • In the fourth quarter of 2009, SAP closed major contracts in several key regions including Achmea and Rabobank Nederland, Aeroflot Russian Airlines, AOK, Credit Agricole S.A., Deutsche Bank AG, Hilti AG, NMBS-SNCB Group, and Talanx AG in EMEA; 3M Company, Baker & McKenzie, Dairy Farmers of America, Inc., Pfizer Inc., Servicios Nacional de Chocolates S.A., Sybase Inc., Verizon Services Corporation, and W.W. Grainger, Inc. in Americas; and Daiwa House Industry Co., Ltd., Department of Defence, Australia, Hubei Electric Power Corporation, Malaysian Airline System Berhad, National Australia Bank Limited, Singapore Power Ltd, and Vietnam National Petroleum Corporation in the Asia Pacific Japan region.
  • In December, Deutsche Bank and SAP signed a letter of intent to start a multi-year initiative in 2010 to replace individual software solutions in its home market by a new core banking system based on SAP for Banking solutions. The SAP implementation underpins the bank's strategy to push for a high degree of industrialization and standardization of processes.
  • On December 17, SAP announced that Valero Energy Corporation signed a global enterprise agreement with SAP that will create a tighter relationship between the two companies, including a particular focus on collaboration on solution innovation and development over the next five years.
  • On December 10, SAP announced the new SAP Business Objects Sustainability Performance Management application designed to help businesses more easily set sustainability goals and objectives, measure and communicate performance, and reduce data collection costs and errors. The new application helps organizations focus on improving economic, social and environmental performance rather than spending time on data collection and report compilation. The software features a library of key sustainability performance indicators and is the first solution to be certified by the Global Reporting Initiative Certified Software and Tools Program. The Global Reporting Initiative (GRI) is a network-based organization that has pioneered the development of the world's most widely used sustainability reporting framework and is committed to its continuous improvement and application worldwide.
  • On December 7, SAP further extended its modular, market-leading solution offerings tailored for the banking industry by announcing innovations to its industry-specific banking software that supports banks' business processes from the front to the back office.
  • On December 1, SAP announced that the 2009 Key Performance Indicator achievements of the SAP User Group Executive Network (SUGEN) SAP Enterprise Support program have shown clear value to participating SAP customers.
  • On November 20, SAP reported that market research firm IDC identified SAP as a leading vendor of customer information systems (CIS) and customer relationship management (CRM) systems for the utilities industry. The IDC study, published by IDC Energy Insights, is conducted on an annual basis. The report evaluated the seven most relevant vendors of utility-specific CIS / CRM systems in the light of the challenges of the new energy economy. SAP received the highest ratings in the category "ownership confidence" and the second highest ratings in the category "ability to address market needs."
  • On November 19, SAP was named as a leader in business performance solutions in a report by independent analyst firm Forrester Research. In the November 2009 report – "The Forrester Wave: Business Performance Solutions, Q4 2009" – SAP was positioned as a leader and ranked with the strongest overall current offering out of 10 other vendors.
  • On October 27, SAP unveiled an interactive sustainability map for the SAP EcoHub solution marketplace, providing a clear view of the ecosystem of sustainability and "Green IT" solutions and services available from SAP and its partners. By simply clicking on defined areas in the SAP sustainability map within SAP EcoHub, customers can easily discover, evaluate and buy sustainability solutions and services from SAP and its partners.
  • On October 21, SAP announced that Siemens AG, a global leader in electronics and electrical engineering, expanded its strategic relationship with SAP through its selection of the SAP Supplier Relationship Management application for Siemens' worldwide e-procurement operations. Also announced was the completion of Siemens' contract renewal for SAP maintenance support services for all SAP solutions based on SAP's maintenance standards for large customers for duration of three years.

Use of Non-GAAP and Non-IFRS Financial Measures

This press release contains certain financial measures such as Non-GAAP and Non-IFRS revenues, Non-GAAP and Non-IFRS operating income, Non-GAAP and Non-IFRS 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 or IFRS and therefore are considered Non-GAAP or Non-IFRS financial measures. SAP's Non-GAAP and Non-IFRS financial measures may not correspond to Non-GAAP and Non-IFRS financial measures that other companies report. The Non-GAAP and Non-IFRS 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 and IFRS. See the financial section of this press release for additional information regarding the Non-GAAP and Non-IFRS measures included in this press release and for the reconciliations to the corresponding U.S. GAAP and IFRS measures.

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 http://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 http://www.sap.com/investor.

Note to editors (TV/ radio/ print/ online)

SAP will post material from the press conference as well as collective TV interviews with SAP CEO Leo Apotheker in both English and German, in which he will discuss the Company's Q4 2009 and full-year 2009 financial results. You can find these interviews on the SAP stock footage platform www.sap.com/stockfootage on Wednesday, January 27, 2010, following the event. The interviews will be conducted by TV journalists in English and German language.

These interviews will be published in their entirety and without any edits, as well as for your unrestricted use free of charge (also for parts of it). In addition, these clips are not branded, are clean feed, and will be available as high resolution video files, as well as mp3 files for radio journalists. SAP will also broadcast these clips via satellite starting at approximately 11:35 a.m. CET. If you are interested in recording this feed, please contact us via broadcast@sap.com for the necessary satellite and technical 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 95,000 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 © 2010 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, Business Objects, 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 Fourth Quarter and the Full Year 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)

€ millions, unless otherwise stated

Three months ended December 31

2009

2008

Change in %

Software revenue

1,119

1,322

-15

Support revenue

1,364

1,269

7

Subscription and other software-related service revenue

82

75

9

Software and software-related service revenue

2,565

2,666

-4

Consulting revenue

519

666

-22

Training revenue

71

111

-36

Other service revenue

18

30

-40

Professional services and other service revenue

608

807

-25

Other revenue

16

14

14

Total revenue

3,189

3,487

-9

Cost of software and software-related services

-457

-480

-5

Cost of professional services and other services

-439

-565

-22

Research and development

-490

-395

24

Sales and marketing

-602

-629

-4

General and administration

-163

-145

12

Restructuring

-10

0

N/A

Other operating income/expense, net

27

2

>100

Total operating expenses

-2,134

-2,212

-4

Operating income

1,055

1,275

-17

Other non-operating income/expense, net

-17

-50

-66

Financial income/expense, net

-19

-29

-34

Income from continuing operations before

income taxes

1,019

1,196

-15

Income taxes

-271

-336

-19

Income from continuing operations

748

860

-13

Loss from discontinued operations, net of tax

-21

-30

-30

Net income

727

830

-12

- Net income attributable to noncontrolling interests*

1

0

N/A

- Net income attributable to shareholders of SAP AG

726

830

-13

Earnings per share (EPS)

EPS from continuing operations – basic in €

0.63

0.72

-13

EPS from continuing operations – diluted in €

0.63

0.72

-13

EPS from net income attributable to shareholders of SAP AG – basic in €

0.61

0.70

-13

EPS from net income attributable to shareholders of SAP AG – diluted in €

0.61

0.70

-13

Weighted average number of shares in millions, treasury stock excluded

1,189

1,187

Key ratios

Operating margin in %

33.1

36.6

-3.5pp

Effective tax rate from continuing operations in %

26.6

28.1

*Due to the first-time application of SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 the term minority interest has been replaced with noncontrolling interests and the categorization of noncontrolling interests is now shown below net income. The prior year figures have also been changed as a result of the adoption of this standard.

CONSOLIDATED STATEMENTS OF INCOME

(U.S. GAAP; preliminary and unaudited)

€ millions, unless otherwise stated

Twelve months ended December 31

2009

2008

Change in %

Software revenue

2,606

3,606

-28

Support revenue

5,285

4,593

15

Subscription and other software-related service revenue

306

258

19

Software and software-related service revenue

8,197

8,457

-3

Consulting revenue

2,074

2,498

-17

Training revenue

273

434

-37

Other service revenue

85

107

-21

Professional services and other service revenue

2,432

3,039

-20

Other revenue

42

69

-39

Total revenue

10,671

11,565

-8

Cost of software and software-related services

-1,649

-1,646

0

Cost of professional services and other services

-1,862

-2,296

-19

Research and development

-1,608

-1,631

-1

Sales and marketing

-2,192

-2,540

-14

General and administration

-556

-623

-11

Restructuring

-196

0

N/A

Other operating income/expense, net

32

11

>100

Total operating expenses

-8,031

-8,725

-8

Operating income

2,640

2,840

-7

Other non-operating income/expense, net

-80

-25

>100

Financial income/expense, net

-71

-62

15

Income from continuing operations before

income taxes

2,489

2,753

-10

Income taxes

-664

-825

-20

Income from continuing operations

1,825

1,928

-5

Loss from discontinued operations, net of tax

-36

-59

-39

Net income

1,789

1,869

-4

- Net income attributable to noncontrolling interests*

2

1

100

- Net income attributable to shareholders of SAP AG

1,787

1,868

-4

Earnings per share (EPS)

EPS from continuing operations – basic in €

1.54

1.62

-5

EPS from continuing operations – diluted in €

1.53

1.62

-6

EPS from net income attributable to shareholders of SAP AG – basic in €

1.50

1.57

-4

EPS from net income attributable to shareholders of SAP AG – diluted in €

1.50

1.57

-4

Weighted average number of shares in millions, treasury stock excluded

1,188

1,190

Key ratios

Operating margin in %

24.7

24.6

0.1pp

Effective tax rate from continuing operations in %

26.7

30.0

*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)

€ millions

December 31, 2009

December 31, 2008

Assets

Cash and cash equivalents

1,883

1,277

Restricted cash

1

3

Short-term investments

400

382

Accounts receivable, net

2,447

3,128

Other assets

528

705

Deferred income taxes

190

203

Prepaid expenses/deferred charges

93

84

 Current assets

5,542

5,782

Goodwill

5,034

5,009

Intangible assets, net

884

1,127

Property, plant, and equipment, net

1,371

1,405

Investments

106

95

Accounts receivable, net

1

2

Other assets

690

566

Deferred income taxes

185

187

Prepaid expenses/deferred charges

50

24

 Noncurrent assets

8,321

8,415

Total assets

13,863

14,197

€ millions

December 31, 2009

December 31, 2008

Liabilities and total equity

Accounts payable

512

538

Income tax obligations

323

363

Financial liabilities

148

2,574

Other liabilities

1,640

1,486

Provisions

290

214

Deferred income taxes

22

48

Deferred income

585

611

Current liabilities

3,520

5,834

Accounts payable

0

5

Income tax obligations

193

278

Financial liabilities

739

36

Other liabilities

100

94

Provisions

510

497

Deferred income taxes

142

157

Deferred income

64

61

Noncurrent liabilities

1,748

1,128

 Total liabilities

5,268

6,962

Common stock, no par value

1,226

1,226

Treasury stock

-1,320

-1,362

Additional paid-in capital

317

320

Retained earnings

8,902

7,709

Accumulated other comprehensive loss

-551

-660

Total equity attributable to shareholders of SAP AG

8,574

7,233

Noncontrolling interests*

21

2

 Total equity

8,595

7,235

Total liabilities and total equity

13,863

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)

€ millions

Twelve months ended December 31

2009

2008

Net income

1,789

1,869

Net loss from discontinued operations

36

59

Income from continuing operations

1,825

1,928

Adjustments to reconcile income from continuing operations  

to net cash provided by operating activities:

Depreciation and amortization

496

548

Gains/losses from equity investees

-1

-1

Losses on disposal of intangible assets and property, plant, and equipment

-11

4

Gains on disposal of investments

-1

-15

Writedowns of financial assets

11

15

Allowances for doubtful accounts

66

76

Impacts of hedging for cash-settled share-based payment plans

5

39

Share-based compensation including income tax benefits

9

19

Excess tax benefit from share-based compensation

0

-7

Deferred income taxes

-74

-67

Change in accounts receivable

640

-50

Change in other assets

9

-118

Change in accrued and other liabilities

15

-255

Change in deferred income

47

67

Net cash provided by operating activities from continuing operations

3,036

2,183

Business combinations, net of cash and cash equivalents acquired

-74

-3,773

Repayment of acquirees' debt in business combinations

0

-450

Purchase of intangible assets and property, plant, and equipment

-225

-339

Proceeds from disposal of intangible assets and property, plant, and equipment

45

44

Cash transferred to restricted cash

0

-451

Reduction of restricted cash

3

1,001

Purchase of investments

-1,059

-380

Sales of investments

1,011

579

Purchase of other financial assets

-14

-16

Sales of other financial assets

17

16

Net cash used in investing activities from continuing operations

-297

-3,769

Dividends paid

-594

-594

Purchase of treasury stock

0

-487

Proceeds from reissuance of treasury stock

24

85

Proceeds from issuance of common stock (share-based compensation)

6

13

Excess tax benefit from share-based compensation

0

7

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

-2,303

-1,571

Proceeds from the exercise of equity-based derivative instruments (STAR hedge)

4

24

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

-2,166

1,281

Effect of foreign exchange rates on cash and cash equivalents

52

-1

Net cash used in operating activities from discontinued operations

-17

-25

Net change in cash and cash equivalents

606

-331

Cash and cash equivalents at the beginning of the period

1,277

1,608

Cash and cash equivalents at the end of the period

1,883

1,277

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.  

€ millions, unless otherwise stated

Three months ended December 31

2009

2008

Change in %

U.S. GAAP

Adj.*

Non-GAAP*

Currency impact**

Non-GAAP constant currency**

U.S. GAAP

Adj.*

Non-GAAP*

U.S. GAAP

Non-GAAP*

Non-GAAP constant currency**

Non-GAAP Revenue Numbers

Software revenue

1,119

0

1,119

23

1,142

1,322

0

1,322

-15

-15

-14

Support revenue

1,364

0

1,364

48

1,412

1,269

26

1,295

7

5

9

Subscription and other software-related service revenue

82

0

82

3

85

75

0

75

9

9

13

Software and software-related service revenue

2,565

0

2,565

74

2,639

2,666

26

2,692

-4

-5

-2

Consulting revenue

519

0

519

18

537

666

0

666

-22

-22

-19

Training revenue

71

0

71

2

73

111

0

111

-36

-36

-34

Other service revenue

18

0

18

1

19

30

0

30

-40

-40

-37

Professional services and other service revenue

608

0

608

21

629

807

0

807

-25

-25

-22

Other revenue

16

0

16

0

16

14

0

14

14

14

14

Total revenue

3,189

0

3,189

95

3,284

3,487

26

3,513

-9

-9

-7

Non-GAAP Operating Expense Numbers

Cost of software and software-related services

-457

44

-413

-480

51

-429

-5

-4

Cost of professional services and other services

-439

0

-439

-565

0

-565

-22

-22

Research and development

-490

0

-490

-395

-1

-396

24

24

Sales and marketing

-602

18

-584

-629

22

-607

-4

-4

General and administration

-163

2

-161

-145

0

-145

12

11

Restructuring

-10

0

-10

0

0

0

N/A

N/A

Other operating income/expense, net

27

0

27

2

0

2

>100

>100

Total operating expenses

-2,134

64

-2,070

-64

-2,134

-2,212

72

-2,140

-4

-3

0

Non-GAAP Income Numbers

Operating income

1,055

64

1,119

32

1,151

1,275

98

1,373

-17

-18

-16

Other non-operating income/expense, net

-17

0

-17

-50

0

-50

-66

-66

Financial income/expense, net

-19

0

-19

-29

0

-29

-34

-34

Income from continuing operations

before income taxes

1,019

64

1,083

1,196

98

1,294

-15

-16

Income taxes

-271

-15

-286

-336

-28

-364

-19

-21

Income from continuing operations

748

49

797

860

70

930

-13

-14

Loss from discontinued operations, net of tax

-21

0

-21

-30

0

-30

-30

-30

Net income

727

49

776

830

70

900

-12

-14

- Net income attributable to noncontrolling interests

1

0

1

0

0

0

N/A

N/A

- Net income attributable to shareholders of SAP AG

726

49

775

830

70

900

-13

-14

Non-GAAP EPS

EPS from continuing operations – basic in €

0.63

0.67

0.72

0.78

-13

-14

EPS from continuing operations – diluted in €

0.63

0.67

0.72

0.78

-13

-14

EPS from net income attributable to shareholders of SAP AG – basic in €

0.61

0.65

0.70

0.76

-13

-14

EPS from net income attributable to shareholders of SAP AG – diluted in €

0.61

0.65

0.70

0.76

-13

-14

Weighted average number of shares in millions, treasury stock excluded

1,189

1,189

1,187

1,187

Non-GAAP Key Ratios

Operating margin in %

33.1

35.1

35.0

36.6

39.1

-3.5pp

-4.0pp

-4.1pp

Effective tax rate from continuing operations in %

26.6

26.4

28.1

28.2

* Adjustments in the revenue line items are for support revenue that the acquired entity 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.  

€ millions, unless otherwise stated

Twelve months ended December 31

2009

2008

Change in %

U.S. GAAP

Adj.*

Non-GAAP*

Currency impact**

Non-GAAP constant currency**

U.S. GAAP

Adj.*

Non-GAAP*

U.S. GAAP

Non-GAAP*

Non-GAAP constant currency**

Non-GAAP Revenue Numbers

Software revenue

2,606

0

2,606

17

2,623

3,606

0

3,606

-28

-28

-27

Support revenue

5,285

11

5,296

-19

5,277

4,593

166

4,759

15

11

11

Subscription and other software-related service revenue

306

0

306

-6

300

258

0

258

19

19

16

Software and software-related service revenue

8,197

11

8,208

-8

8,200

8,457

166

8,623

-3

-5

-5

Consulting revenue

2,074

0

2,074

-11

2,063

2,498

0

2,498

-17

-17

-17

Training revenue

273

0

273

1

274

434

0

434

-37

-37

-37

Other service revenue

85

0

85

0

85

107

0

107

-21

-21

-21

Professional services and other service revenue

2,432

0

2,432

-11

2,421

3,039

0

3,039

-20

-20

-20

Other revenue

42

0

42

0

42

69

0

69

-39

-39

-39

Total revenue

10,671

11

10,682

-19

10,663

11,565

166

11,731

-8

-9

-9

Non-GAAP Operating Expense Numbers

Cost of software and software-related services

-1,649

183

-1,466

-1,646

193

-1,453

0

1

Cost of professional services and other services

-1,862

2

-1,860

-2,296

0

-2,296

-19

-19

Research and development

-1,608

3

-1,605

-1,631

17

-1,614

-1

-1

Sales and marketing

-2,192

73

-2,119

-2,540

86

-2,454

-14

-14

General and administration

-556

4

-552

-623

1

-622

-11

-11

Restructuring

-196

0

-196

0

0

0

N/A

N/A

Other operating income/expense, net

32

0

32

11

0

11

>100

>100

Total operating expenses

-8,031

264

-7,766

41

-7,725

-8,725

297

-8,428

-8

-8

-8

Non-GAAP Income Numbers

Operating income

2,640

275

2,916

23

2,939

2,840

463

3,303

-7

-12

-11

Other non-operating income/expense, net

-80

0

-80

-25

0

-25

>100

>100

Financial income/expense, net

-71

0

-71

-62

0

-62

15

15

Income from continuing operations

before income taxes

2,489

275

2,764

2,753

463

3,216

-10

-14

Income taxes

-664

-64

-728

-825

-122

-947

-20

-23

Income from continuing operations

1,825

211

2,036

1,928

341

2,269

-5

-10

Loss from discontinued operations, net of tax

-36

0

-36

-59

0

-59

-39

-39

Net income

1,789

211

2,000

1,869

341

2,210

-4

-10

- Net income attributable to noncontrolling interests

2

0

2

1

0

1

100

100

- Net income attributable to shareholders of SAP AG

1,787

211

1,998

1,868

341

2,209

-4

-10

Non-GAAP EPS

EPS from continuing operations – basic in €

1.54

1.71

1.62

1.91

-5

-10

EPS from continuing operations – diluted in €

1.53

1.71

1.62

1.91

-6

-10

EPS from net income attributable to shareholders of SAP AG – basic in €

1.50

1.68

1.57

1.86

-4

-10

EPS from net income attributable to shareholders of SAP AG – diluted in €

1.50

1.68

1.57

1.86

-4

-10

Weighted average number of shares in millions, treasury stock excluded

1,188

1,188

1,190

1,190

Non-GAAP Key Ratios

Operating margin in %

24.7

27.3

27.6

24.6

28.2

0.1pp

-0.9pp

-0.6pp

Effective tax rate from continuing operations in %

26.7

26.3

30.0

29.4

* Adjustments in the revenue line items are for support revenue that the acquired entity would have recognized had it remained a stand-alone entity but that SAP is not permitted to recognize as revenue under U.S. GAAP as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges. See Explanations of Non-GAAP Measures for details.

** Constant currency revenue and operating income figures are calculated by translating revenue and operating income of the current period using the average exchange rates from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's non-GAAP constant currency numbers with the non-GAAP number of the previous year's respective period. See Explanations of Non-GAAP Measures for details.

Differences may exist due to rounding.

Reconciliations from Non-GAAP Revenue in U.S. Dollar to U.S. GAAP Revenue in Euro

Preliminary and unaudited

The following table presents a reconciliation from our non-GAAP revenue numbers in U.S. dollar to the respective most comparable U.S. GAAP revenue numbers in euro.  Note: Our non-GAAP numbers in U.S. dollar are company-specific and not prepared under a comprehensive set of accounting rules or principles.  

Three months ended December 31

Software Revenue

Software and Software-Related Service Revenue

2009

2008

Change in %

2009

2008

Change in %

=    U.S. GAAP revenue in € millions

1,119   

1,322   

-15   

2,565   

2,666   

-4   

+/-  Adjustment between U.S. GAAP revenue and non-GAAP revenue in € millions*

0   

0   

0   

0   

26   

-100   

=    Non-GAAP revenue in € millions

1,119   

1,322   

-15   

2,565   

2,692   

-5   

+/-  Adjustment in US$ millions

522   

446   

17   

1,211   

880   

38   

=    Non-GAAP revenue in US$ millions

1,641   

1,768   

-7   

3,776   

3,572   

6   

Twelve months ended December 31

Software Revenue

Software and Software-Related Service Revenue