SAP AG: SAP Announces Better-than-Expected 2009 Preliminary Results

SAP AG / Quarter Results/Final Results

14.01.2010 

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SAP Announces Better-than-Expected 2009 Preliminary Results

Full-Year Non-GAAP Operating Margin Exceeds Company Guidance

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

WALLDORF - January 14, 2010 - After a preliminary review of its 2009 fourth
quarter performance, SAP AG (NYSE: SAP) today announced the following
preliminary financial results for the fourth quarter and full year ended
December 31, 2009.

Fourth Quarter 2009

  - U.S. GAAP software and software-related service revenues: approximately
    EUR2.56 billion (2008: EUR2.67 billion), a decrease of around 4%.
    Non-GAAP software and software-related service revenues: approximately
    EUR2.56 billion (2008: EUR2.69 billion), a decrease of around 5%
    (around 2% at constant currencies).

  - U.S. GAAP total revenues: approximately EUR3.18 billion (2008: EUR3.49
    billion), a decrease of around 9%. Non-GAAP total revenues:
    approximately EUR3.18 billion (2008: EUR3.51 billion), a decrease of
    around 10% (around 7% at constant currencies).

  - U.S. GAAP software revenues: approximately EUR1.11 billion (2008:
    EUR1.32 billion), a decrease of around 16% (around 14% at constant
    currencies).

  - U.S. GAAP operating margin: approximately 32.8% (2008: 36.6%), a
    decrease of around 4 percentage points.  Non-GAAP operating margin:
    approximately 34.8% (2008: 39.1%), or around 34.7% at constant
    currencies, a decrease of around 4 percentage points (around 4
    percentage points at constant currencies).  The U.S. GAAP and Non-GAAP
    operating margin were negatively impacted by EUR10 million (0.3
    percentage points) in restructuring charges resulting from the
    previously announced reduction of positions.

Fourth quarter 2008 Non-GAAP software and software-related service revenues
and total revenues exclude a non-recurring deferred support revenue
write-down from the acquisition of Business Objects of EUR26 million

Fourth quarter 2009 and 2008 Non-GAAP operating margin excludes
acquisition-related charges totaling EUR64 million (2008: EUR72 million).

Full Year 2009

  - U.S. GAAP software and software-related service revenues: approximately
    EUR8.19 billion (2008: EUR8.46 billion), a decrease of around 3%.
    Non-GAAP software and software-related service revenues: approximately
    EUR8.20 billion (2008: EUR8.62 billion), a decrease of around 5%
    (around 5% at constant currencies).

  - U.S. GAAP total revenues: approximately EUR10.66 billion (2008:
    EUR11.57 billion), a decrease of around 8%. Non-GAAP total revenues:
    approximately EUR10.67 billion (2008: EUR11.73 billion), a decrease of
    around 9% (around 9% at constant currencies).

  - U.S. GAAP software revenues: approximately EUR2.60 billion (2008:
    EUR3.61 billion), a decrease of around 28% (around 27.5% at constant
    currencies).

  - U.S. GAAP operating margin: approximately 24.7% (2008: 24.6%), an
    increase of 0.1 percentage points.  Non-GAAP operating margin:
    approximately 27.2% (2008: 28.2%), or approximately 27.5% at constant
    currencies, a decrease of 1 percentage points (0.7 percentage points at
    constant currencies).  The U.S. GAAP and Non-GAAP operating margin were
    negatively impacted by EUR196 million (1.8 percentage points) in
    restructuring charges resulting from the previously announced reduction
    of positions.

  - The Company's full-year Non-GAAP operating margin at constant
    currencies exceeded its previously published outlook range of 25.5 -
    27.0%.

Full year 2008 Non-GAAP software and software-related service revenues and
total revenues exclude a non-recurring deferred support revenue write-down
from the acquisition of Business Objects of EUR166 million

Full year 2009 Non-GAAP operating margin excludes acquisition-related
charges totaling EUR264 million (2008: EUR297 million).

SAP will provide further details of its 2009 preliminary results and
outlook for the full-year 2010 on January 27th.  Additionally, later today
the Company will make an announcement with regards to its support
offerings.

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


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Information and Explaination of the Issuer to this News:

Regional Performance - Fourth Quarter 2009

  - U.S. GAAP software and software-related service revenues for the EMEA
    region: approximately EUR1.38 billion, a decrease of around 8%. 
    Non-GAAP software and software-related service revenues: approximately
    EUR1.38 billion, a decrease of around 8% (around 7% at constant
    currencies).

  - U.S. GAAP software and software-related service revenues for the
    Americas region: approximately EUR0.82 billion, a decrease of around
    2%.  Non-GAAP software and software-related service revenues:
    approximately EUR0.82 billion, a decrease of around 4% (increase of
    around 4% at constant currencies).

  - U.S. GAAP software and software-related service revenues for the APJ
    region: approximately EUR0.36 billion, an increase of around 6%. 
    Non-GAAP software and software-related service revenues: approximately
    EUR0.36 billion, an increase of around 6% (around 5% at constant
    currencies).

Regional Performance - Full Year 2009

  - U.S. GAAP software and software-related service revenues for the EMEA
    region: approximately EUR4.33 billion, a decrease of around 5%. 
    Non-GAAP software and software-related service revenues: approximately
    EUR4.34 billion, a decrease of around 7% (around 5% at constant
    currencies).

  - U.S. GAAP software and software-related service revenues for the
    Americas region: approximately EUR2.71 billion, relatively flat
    compared to 2008.  Non-GAAP software and software-related service
    revenues: approximately EUR2.72 billion, a decrease of around 3%
    (around 5% at constant currencies).

  - U.S. GAAP software and software-related service revenues for the APJ
    region: approximately EUR1.14 billion, a decrease of around 1%. 
    Non-GAAP software and software-related service revenues: approximately
    EUR1.14 billion, a decrease of around 2% (around 6% at constant
    currencies).

About SAP

SAP is the world's leading provider of business software, offering
applications and services that enable companies of all sizes and in all
industries to become best-run businesses. With approximately 92,000
customers in over 120 countries, SAP is listed on several exchanges,
including the Frankfurt stock exchange and NYSE, under the symbol 'SAP.'
(For more information, visit www.sap.com)

(*) SAP defines business software as comprising enterprise resource
planning and related applications.

# # #

Any statements contained in this document that are not historical facts are
forward-looking statements as defined in the U.S. Private Securities
Litigation Reform Act of 1995. Words such as 'anticipate,' 'believe,'
'estimate,' 'expect,' 'forecast,' 'outlook,' 'intend,' 'may,' 'plan,'
'project,' 'predict,' 'should' and 'will' and similar expressions as they
relate to SAP are intended to identify such forward-looking statements. SAP
undertakes no obligation to publicly update or revise any forward-looking
statements. All forward-looking statements are subject to various risks and
uncertainties that could cause actual results to differ materially from
expectations. The factors that could affect SAP's future financial results
are discussed more fully in SAP's filings with the U.S. Securities and
Exchange Commission ('SEC'), including SAP's most recent Annual Report on
Form 20-F filed with the SEC. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
dates.

Copyright (c) 2010 SAP AG. All rights reserved. 

SAP, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver 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 in several
other countries all over the world.  All other product and service names
mentioned are the trademarks of their respective companies. Data contained
in this document serve informational purposes only. National product
specifications may vary.

Explanations of Non-GAAP Measures

This document discloses certain financial measures, such as non-GAAP
revenues, non-GAAP expenses, non-GAAP operating income, non-GAAP operating
margin, as well as constant currency revenue and operating income measures
that are not prepared in accordance with U.S. GAAP and are therefore
considered non-GAAP financial measures. Our non-GAAP financial measures may
not correspond to non-GAAP financial measures that other companies report.
The non-GAAP financial measures that we report should be considered as
additional to, and not as substitutes for or superior to, revenue,
operating income, or other measures of financial performance prepared in
accordance with U.S. GAAP. We believe that the supplemental historical and
prospective non-GAAP financial information presented here provides useful
supplemental information to investors because it is the same information
used by our management in running our business and making financial,
strategic and operational decisions - in addition to financial data
prepared in accordance with U.S. GAAP - to attain a more transparent
understanding of our past performance and our future results. Beginning in
2008, we used these non-GAAP measures as defined below consistently in our
planning, forecasting, reporting, compensation and external communication.
Specifically,

  - Our management primarily uses these non-GAAP numbers rather than U.S.
    GAAP numbers as the basis for financial, strategic and operating
    decisions.

  - The variable remuneration components of our board members and employees
    that are compensated with regard to our group targeted measures are
    based on SAP's achievement of its targets for non-GAAP operating
    income, cash flow conversion ratio and non-GAAP operating margin at
    constant currencies. These targets are monitored on a yearly basis and
    are adjusted if necessary.

  - The annual budgeting process involving all management units, which
    includes costs such as stock based compensation and restructuring, was
    is based on non-GAAP revenues and non-GAAP operating income numbers
    rather than U.S. GAAP numbers.

  - All monthly forecast and performance reviews with all senior managers
    globally are based on these non-GAAP measures rather than U.S. GAAP
    numbers.

  - Both, company-internal target setting and guidance provided to the
    capital markets are based on non-GAAP revenues and non-GAAP income
    measures rather than U.S. GAAP numbers.

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

  - The non-GAAP measures provide investors with insight into management's
    decision making since management uses these non-GAAP measures to run
    our business and make financial, strategic and operating decisions.

  - The non-GAAP measures provide investors with additional information
    that enables a comparison of year-over-year operating performance by
    eliminating certain direct effects resulting from acquisitions.

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

Non-GAAP Revenue: 

Revenues in this document identified as non-GAAP revenue have been adjusted
from the respective U.S. GAAP numbers by including the full amount of
Business Objects support revenues that would have been recorded by Business
Objects had it remained a stand-alone entity but which we are not permitted
to record as revenue under U.S. GAAP due to fair value accounting for
Business Objects support contracts in effect at the time of the Business
Objects acquisition.

Under U.S. GAAP we record at fair value the Business Objects support
contracts in effect at the time of the acquisition of Business Objects.
Consequently, our U.S. GAAP support revenues, our U.S. GAAP software and
software-related service revenues and our U.S. GAAP total revenues for
periods subsequent to the Business Objects acquisition do not reflect the
full amount of support revenue that Business Objects would have recorded
for these support contracts absent the acquisition by SAP. Adjusting
revenue numbers for this one-time revenue impact provides additional
insight into the comparability across periods of our ongoing performance.

Non-GAAP Operating Expense: 

Operating expense figures in this document that are identified as non-GAAP
operating expenses 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;

  - Expense from purchased in-process research and development; 

  - Restructuring expenses and settlements of preexisting relationships
    incurred in connection with a business combination; and

  - Acquisition-related third-party costs (since our early adoption of SFAS
    141R and the revision of IFRS 3) as of January 1, 2009, which requires
    expensing these costs: the previous version of SFAS 141 and IFRS 3
    required capitalization.

Non-GAAP Operating Income and Non-GAAP Operating Margin  

Operating income and operating margin in this document identified as
non-GAAP operating income and non-GAAP operating margin have been adjusted
from the respective operating income and operating margin as recorded under
U.S. GAAP by adjusting for the above mentioned non-GAAP revenues and
non-GAAP expenses.

We include these non-GAAP revenues and exclude these non-GAAP expenses for
the purpose of calculating non-GAAP operating income and non-GAAP operating
margin 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. As management at levels below the Executive Board has no
influence on these expenses we generally do not consider these expenses for
purposes of evaluating the performance of management units. As we believe
that our Company-wide performance measures need to be aligned with the
measures generally applied by management at varying levels throughout the
Company we include these revenues and exclude these expenses when making
decisions to allocate resources, both, on a Company level and at lower
levels of the organization. In addition, we use these non-GAAP measures to
gain a better understanding of the Company's comparative operating
performance from period-to-period and as a basis for planning and
forecasting future periods. Considering that management at all levels of
the organization is heavily focused on our non-GAAP measures in our
internal reporting and controlling, we believe that it is in the interest
of our investors that they are provided with the same information.

We believe that our non-GAAP financial measures described above have
limitations, which include but are not limited to the following:

  - The eliminated amounts may be material to us.

  - Without being analysed in conjunction with the corresponding U.S. GAAP
    measures the non-GAAP measures are not indicative of our present and
    future performance, foremost for the following reasons:

  - While our non-GAAP income 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 one-time charges that we eliminate in deriving
    our non-GAAP income numbers are likely to recur should SAP enter into
    material business combinations in the future.

  - The acquisition-related amortization expense that we eliminate in
    deriving our non-GAAP income numbers is a recurring expense that will
    impact our financial performance in future years.

  - While our non-GAAP revenue numbers are adjusted for a one-time impact
    only, our non-GAAP expenses are adjusted for both one-time and
    recurring items. Additionally, the revenue adjustment for the fair
    value accounting for Business Objects support contracts and the expense
    adjustment for one-time and recurring acquisition-related charges do
    not arise from a common conceptual basis. This is because the revenue
    adjustment aims at improving the comparability of the initial
    post-acquisition period with future post-acquisition periods while the
    expense adjustment aims at improving the comparability between
    post-acquisition periods and pre-acquisition periods. This should
    particularly be considered when evaluating our non-GAAP operating
    income and non-GAAP operating margin numbers as these combine our
    non-GAAP revenues and non-GAAP expenses despite the absence of a common
    conceptual basis.

We believe, however, that the presentation of the non-GAAP measures in
conjunction with the corresponding U.S. GAAP measures provide useful
information to management and investors regarding present and future
business trends relating to our financial condition and results of
operations. We therefore do not evaluate our growth and performance without
considering both non-GAAP measures and U.S. GAAP measures. We caution the
readers of this document to follow a similar approach by considering our
non-GAAP measures only in addition to, and not as a substitute for or
superior to, revenues or other measures of our financial performance
prepared in accordance with U.S. GAAP.

Constant Currency Period-Over-Period Changes 

We believe it is important for investors to have information that provides
insight into our sales. Revenue measures determined under U.S. GAAP provide
information that is useful in this regard. However, both sales volume and
currency effects impact period-over-period changes in sales revenue. We do
not sell standardized units of products and services, so we cannot provide
relevant information on sales volume by providing data on the changes in
product and service units sold. To provide additional information that may
be useful to investors in breaking down and evaluating changes in sales
volume, we present information about our revenue and various values and
components relating to operating income that are adjusted for foreign
currency effects. We calculate constant currency year-over-year changes in
revenue and operating income by translating foreign currencies using the
average exchange rates from the previous year instead of the report year.

We believe that data on constant currency period-over-period changes have
limitations, particularly as the currency effects that are eliminated
constitute a significant element of our revenues and expenses and may
severely impact our performance. We therefore limit our use of constant
currency period-over-period changes to the analysis of changes in volume as
one element of the full change in a financial measure. We do not evaluate
our results and performance without considering both constant currency
period-over-period changes on the one hand and changes in revenues,
expenses, income, or other measures of financial performance prepared in
accordance with U.S. GAAP on the other. We caution the readers of this
document to follow a similar approach by considering data on constant
currency period-over-period changes only in addition to, and not as a
substitute for or superior to, changes in revenues, expenses, income, or
other measures of financial performance prepared in accordance with U.S.
GAAP.

14.01.2010  Ad hoc announcement, Financial News and Media Release distributed by DGAP.
Media archive at www.dgap-medientreff.de and www.dgap.de

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Language:     English
Company:      SAP AG
              Dietmar-Hopp-Allee 16
              69190 Walldorf
              Deutschland
Phone:        +49 (0)6227 - 74 74 74
Fax:          +49 (0)6227 - 75 75 75
E-mail:       investor@sap.com
Internet:     www.sap.com
ISIN:         DE0007164600
WKN:          716460
Indices:      DAX
Listed:       Regulierter Markt in Berlin, Frankfurt (Prime Standard),
              Stuttgart; Freiverkehr in Düsseldorf, Hannover, München,
              Hamburg; Terminbörse EUREX; Foreign Exchange(s) NYSE
 
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