SAP Reports 23% Revenue Growth for the First Nine Months of 2001.Business Editors WALLDORF, Germany--(BUSINESS WIRE)--Oct. 18, 2001 -- Revenues for the nine month period exceeded E5.0 billion (23% increase); third quarter revenues were E1.65 billion (16% increase) -- Operating margin, excluding stock based compensation and TopTier acquisition related charges, increased 3% points to 17% for the first nine months -- Meets expectations for the first nine months of 2001 and improves market share -- New full year guidance SAP AG (company) SAP AG - (Systeme, Anwendungen, Produkte in der Datenverarbeitung - German for "Systems, Applications and Products in Data Processing") A company from Germany that sells the leading suite of client-server business software. The US branch is called SAP America. (NYSE NYSE See: New York Stock Exchange : SAP sap, fluid in plants consisting of water and dissolved substances. Cell sap refers to this fluid present in the large vacuole, or cell cavity, that occupies most of the central portion of mature plant cells. ), the leading provider of e-business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. software solutions, today announced its financial results for the third quarter and nine months ended September September: see month. 30, 2001. For the first nine months, sales increased 23% over 2000 to E5.0 billion (2000: E4.1 billion). Third Quarter Results In the third quarter of 2001, revenues rose 16% over the same period last year to E1.65 billion (2000: E1.42 billion). Third quarter 2001 operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , before charges for stock-based compensation programs (STAR and LTI LTI Linear Time Invariant LTI Long Term Incentive (NZ) LTI Lingua Tertii Imperii (language of the NAZI empire, Latin) LTI Lost Time Injury LTI Leadership Training Institute LTI Lost Time Incident ) and TopTier acquisition related charges, were flat at E201 million (2000: E202 million). Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , excluding stock based compensation and TopTier acquisition related charges, was 12% (2000: 14%). Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
"Recently, we have seen significant changes in the software market, mainly in the U.S., with customers and prospects postponing decisions on software purchases," commented Hasso Plattner Hasso Plattner is a cofounder of software giant SAP AG. Today he's Chairman of the Supervisory Board of SAP AG. Biography Hasso Plattner (1944-01-21 – in Berlin) is a German entrepreneur. , Co-Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of SAP AG. "However, companies remain committed to investing in the most cost effective solutions available and are increasingly turning to SAP for high returns on investments, broad functionality and ease of integration." In the quarter, revenues in Europe, the Middle East and Africa Europe, the Middle East and Africa, usually abbreviated to EMEA, is a regional designation used for government, marketing and business purposes. It is particularly common amongst North American based companies, who often divide their international operations into the (EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. ) region increased 32% to E841 million (2000: E639 million) and in the Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). region (APA (All Points Addressable) Refers to an array (bitmapped screen, matrix, etc.) in which all bits or cells can be individually manipulated. APA - Application Portability Architecture ) revenues were down 6% to E195 million (2000: E208 million). Revenues in the Americas A·mer·i·cas , the See America. region rose 7% to E613 million (2000: E574 million); however, at constant currency rates, revenues in the Americas would have risen 9%. "We are pleased to have met our guidance for the first nine months of 2001, although we had thought software license sales for the quarter would be stronger," said Henning Kagermann '''Executive Board: Henning Kagermann. Chairman of the Executive Board of SAP AG and CEO''' Henning Kagermann is chairman of the Executive Board of SAP AG and Chief Executive Officer (CEO). , Co-Chairman and CEO of SAP AG. "Consulting and training revenues contributed significantly to our revenue mix, and our regional strength was evidenced by robust results in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). ."Product revenues in the third quarter rose 9% to E995 million (2000:E913 million). License revenues were down 7% to E447 million (2000:E480 million). Consulting and training revenues rose 30% to E524 million (2000:E404 million) and 19% to E113 million (2000: E95 million), respectively. For the third consecutive quarter, the Company is providing additional information on revenues from certain specific software solutions. In the third quarter of 2001, software revenues related to mySAP SAP's brand name for a variety of its products. mySAP Business Suite includes modules for enterprise resource planning (ERP), customer relationship management (CRM), product life cycle management (PLM), supplier relationship management (SRM) and supply chain management (SCM). See mySAP.com and SAP. CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. (Customer Relationship Management) reached approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. E78 million, representing 17% of total software license sales (E447 million). Third quarter mySAP SCM (1) (Software Configuration Management, Source Code Management) See configuration management. (2) See supply chain management. (Supply Chain Management) related revenues totaled around E98 million, representing 22% of total software license sales. These figures include revenues from designated solution contracts, as well as figures from integrated solution contracts, which are allocated based on usage surveys. Nine Months Results For the first nine months, sales increased 23% over 2000 to E5.0 billion (2000: E4.1 billion). Operating income, before charges for stock based compensation and TopTier acquisition related charges, was up 49% to E858 million (2000: E576 million). License revenues for the first nine months of 2001 rose 11% to E1.55 billion (2000: E1.4 billion). Consulting revenues grew 34% to E1.51 billion (2000: E1.13 billion) and training revenue increased 20% to E349 million (2000: E290 million). In the first nine months, sales in the APA region were up 10% to E593 million (2000: E539 million), in the EMEA region, revenues increased 33% to E2.6 billion (2000: E1.96 billion) and in the Americas, revenues rose 14% to E1.83 billion (2000: E1.61 billion). In the nine month period, software revenues related to mySAP CRM (Customer Relationship Management) reached approximately E249 million, representing 16% of total software license sales (E1,551 million). Nine month mySAP SCM (Supply Chain Management) related revenues totaled around E351 million, representing 23% of total software license sales. These figures include revenues from designated solution contracts, as well as figures from integrated solution contracts, which are allocated based on usage surveys. Full Year Guidance Due to changes in corporate software spending timetables, SAP has updated its full year outlook and now sees full year 2001 revenues growing by around 15% and expects operating margins excluding stock based compensation and TopTier acquisition related charges to match the 20% levels achieved in 2000. SAP continues to shape and re-focus its global organization and enhance its products and services in this rapidly changing environment. Consequently, the Company is accelerating cost reduction measurements, including adjusting the levels and mix of its employees, particularly in the U.S. The Company continues to extend its infrastructure in certain areas where SAP is growing its profile, such as CRM and SCM. Third Quarter Highlights -- Major contracts in the quarter included Rolls Royce Rolls Royce the millionaire’s vehicle. [Trademarks: Brewer Dictionary, 928] See : Luxury , Centrica Centrica plc (LSE: CNA) is a large multinational company, based in the United Kingdom but also with interests in North America and Europe. It is part of the FTSE 100 Index of companies. and Getronics Getronics N.V. (Euronext: GTN) is a largely Dutch-based Information and Communication Technology (ICT) Company whose stated focus is on creating value for business through Workspace Management Services and Application Services. in the EMEA region; CreoScitex, City of Montreal Of Montreal is an American indie pop band formed in Athens, Georgia, fronted by Kevin Barnes. It was among the second wave of groups to emerge from The Elephant 6 Recording Company. and Agilent (Agilent Technologies, Santa Clara, CA, www.agilent.com) The test and measurement subsidiary of HP. In 1999, HP split off the division that started the company into an independent subsidiary named Agilent Technologies. At the time, the $2. in the Americas; and Samsung, Telephone Organization of Thailand Thailand (tī`lănd, –lənd), Thai Prathet Thai [land of the free], officially Kingdom of Thailand, constitutional monarchy (2005 est. pop. 65,444,000), 198,455 sq mi (514,000 sq km), Southeast Asia. and Shanghai Pudong Development Bank Shanghai Pudong Development Bank Co. Ltd (SPDB), (SSE: B>600000) incorporated on January 9, 1993 with the approval of the People's Bank of China (August 28, 1992), is a joint-stock commercial bank with its headquarters located in Shanghai. in the APA region among others in all regions. -- SAP concluded additional investment in Commerce One: SAP received all necessary approvals from U. S. antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. authorities for its additional investment. SAP now owns slightly more than 20% of Commerce One outstanding stock. -- SAP began shipping the newest version of mySAP Customer Relationship Management to customers worldwide in August: mySAP CRM provides unparalleled breadth Breadth The percentage of assets or stocks advancing relative to those unchanged or declining. Also the number of independent forecasts available per year. A stock picker forecasting returns to 100 stocks every quarter exhibits a breadth of 400, assuming each forecast is and depth of functionality through a full suite of CRM functions. In addition, mySAP CRM can also serve as a platform to openly integrate with either SAP or non-SAP business applications such as supply chain management, product lifecycle Product lifecycle or product life cycle is the course of a product's sales and profits over time. The five stages of each product lifecycle are product development, introduction, growth, maturity and decline. management and human lifecycle management for flexibility that meets each business's unique needs. -- SAP AG established a Global Professional Services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. Organization (Global PSO PSO - Oracle Parallel Server ) within SAP AG: The new business unit will work closely with the global consulting partners of SAP and focus on high-profile SAP customers that require consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" for global e-business solution projects, independent of geography geography, the science of place, i.e., the study of the surface of the earth, the location and distribution of its physical and cultural features, the areal patterns or places that they form, and the interrelation of these features as they affect humans. and across industries. Conference Call/Webcast/Supporting Slides SAP senior management will host a conference call today at 5:00 PM (CET CET abbr. Central European Time CET Central European Time CET n abbr (= Central European Time) → hora de Europa central CET abbr ) / 4:00 PM (GMT (Greenwich Mean Time) See UTC. GMT - Universal Time 1 ) / 11:00 AM (Eastern) / 8:00 AM (Pacific). This call will be web cast live at http://www.sap.com/investor and will be available for replay purposes as well.
Revenue by Region (in E millions)
----------------------------------------------------------------------
Revenue Revenue
3Q 2001 3Q 2000 Change % Change
Total 1,649 1,421 228 16
- at constant currency
rates 19
EMEA 841 639 202 32
- at constant currency
rates 32
Asia Pacific 195 208 -13 -6
- at constant currency
rates 3
Americas 613 574 39 7
- at constant currency rates 9
Key figures at a glance (in E millions)
SAP Group
----------------------------------------------------------------------
3Q 2001 3Q 2000 Change % Change
Revenues 1649 1,421 228 16
License revenues 447 480 -33 -7
Income before taxes 109 149 -40 -27
Net income 37 83 -46 -55
----------------------------------------------------------------------
Headcount 27,884 23,363 4521 19
(September 30)
Any statements contained in this document that are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as defined in the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Words such as "believe," "estimate," "intend," "may," "will," "expect," and "project" and similar expressions as they relate to the Company are intended to identify such forward-looking statements. The Company 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 the Company's future financial results are discussed more fully in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"), including the Company's Annual Report on Form 20-F for 2000 filed with the SEC on March 28, 2001. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. SAP AG ordinary shares are listed on the Frankfurt Stock Exchange Frankfurt Stock Exchange The largest of Germany's eight securities exchanges, operated by Deutsche Borse AS. as well as a number of other exchanges. In the US, SAP's American Depositary Receipts American Depositary Receipt (ADR) Certificates issued by a US depository bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. (ADRs), each worth one-fourth of a ordinary share, trade on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol `SAP'. SAP is a component of the DAX, the index of 30 German blue chip companies. Information on the SAP common shares is available on Bloomberg Bloomberg A major global provider of 24-hour financial news and information including real-time and historic price data, financials data, trading news and analyst coverage, as well as general news and sports. under the symbol SAP GR, on Reuters Reuters British cooperative news agency. Founded in 1851 by Paul Julius Reuter, it was initially concerned with commercial news but began to serve a growing newspaper clientele after the London Morning Advertiser subscribed in 1858. under SAPG SAPG Software Acquisition Process Group SAPG Sam Ace Plumbing Goods SAPG Secret Army of Pro Gamers (online gaming army) .F and on Quotron under SAGR SAGR Stand-Alone Air GPS Receiver .EU. Additional information is available on SAP AG's home page: http://www.sap.com EDITOR'S NOTE Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat. Trained by D. : E = Euro Dollar (Tables to follow)
Consolidated Income Statements 3rd Quarter
SAP Group (in E millions)
------------------------------------------------------------------
2001 2000 (DELTA)
------------------------------------------------------------------
Software revenue 447 480 -7%
Maintenance revenue 548 433 27%
Product revenue 995 913 9%
Consulting revenue 524 404 30%
Training revenue 113 95 19%
Service revenue 637 499 28%
Other revenue 17 9 89%
------------------------------------------------------------------
Total revenue 1,649 1,421 16%
------------------------------------------------------------------
Cost of product -203 -174 17%
Cost of service -510 -429 19%
Research and development -217 -223 -3%
Sales and marketing -438 -347 26%
General and administration -97 -93 4%
Other income/expenses, net -25 -7 257%
------------------------------------------------------------------
Total operating expense -1,490 -1,273 17%
------------------------------------------------------------------
------------------------------------------------------------------
Operating income 159 148 7%
------------------------------------------------------------------
Other non-operating income/
expenses, net 20 5 300%
Financial income, net -70 -4 -1650%
------------------------------------------------------------------
Income before income taxes 109 149 -27%
------------------------------------------------------------------
Income taxes -69 -62 11%
Minority interest -3 -4 -25%
------------------------------------------------------------------
Net income 37 83 -55%
------------------------------------------------------------------
------------------------------------------------------------------
Basic EPS (in E) 0.12 0.26 -54%
------------------------------------------------------------------
Consolidated Income Statements 3rd Quarter
SAP Group (in E millions)
Additional Information
-------------------------------------------------------------------
2001 2000 (DELTA)
-------------------------------------------------------------------
Operating Income 159 148 7%
Depreciation & Amortization 76 52 46%
-------------------------------------------------------------------
EBITDA 235 200 18%
as a % of Sales 14% 14%
-------------------------------------------------------------------
Operating Income 159 148 7%
Total Stock Based Compensation 21 54 -61%
TopTier Acquisition costs 21 0 n/a
-------------------------------------------------------------------
Operating Income excluding
Stock Based Compensation
and TopTier acquisition costs 201 202 0%
as a % of Sales 12% 14%
-------------------------------------------------------------------
-------------------------------------------------------------------
Commerce One impact -24 -5 -380%
on finance income
-------------------------------------------------------------------
-------------------------------------------------------------------
Income before income taxes 109 149 -27%
-------------------------------------------------------------------
Income taxes 69 62 11%
-------------------------------------------------------------------
Effective Tax Rate 63% 42%
-------------------------------------------------------------------
Impact of TopTier & Commerce
One in percentage points 16% 2% 14(a)%
-------------------------------------------------------------------
-------------------------------------------------------------------
EPS excluding acquisition cost
of TopTier & Commerce
One (in E) 0.25 0.28 -11%
-------------------------------------------------------------------
(a) percentage points
Consolidated Income Statements - 1st - 3rd Quarter
SAP Group (in E millions)
----------------------------------------------------------------------
2001 2000 (DELTA)
------ ------ ---------
Software revenue 1,551 1,403 11%
Maintenance revenue 1,548 1,202 29%
Product revenue 3,099 2,605 19%
Consulting revenue 1,511 1,129 34%
Training revenue 349 290 20%
Service revenue 1,860 1.419 31%
Other revenue 67 78 -14%
------ ----- -----
Total revenue 5,026 4,102 23%
------ ----- -----
Cost of product -589 -487 21%
Cost of service -1,434 -1,279 12%
Research and development -653 -709 -8%
Sales and marketing -1,283 -1,117 15%
General and administration -279 -310 -10%
Other income/expenses, net -50 -12 317%
------ ------ -----
Total operating expense -4,288 -3,914 10%
------ ------ -----
Operating income 738 188 293%
------ ------ -----
Other non-operating
income/expenses, net -9 -38 -76%
Financial income, net -170 281 -160%
------ ------ -----
Income before income taxes 559 431 30%
------ ------ -----
Income taxes -288 -177 63%
Minority interest -9 -5 80%
------ ------ ------
Net income 262 249 5%
------ ------ ------
Basic EPS (in E) 0.83 0.79 5%
------ ------ -----
Consolidated Income Statements - 1st - 3rd Quarter
SAP Group (in E millions)
Additional Information
----------------------------------------------------------------------
2001 2000 (DELTA)
------ ------ ---------
Operating Income 738 188 293%
Depreciation & Amortization 200 156 28%
In-Process R&D 6 0 n/a
------ ------ -----
EBITDA 944 344 174%
as a % of Sales 19% 8%
------ ------ -----
Operating Income 738 188 293%
Total Stock Based Compensation 79 388 -80%
TopTier acquisition costs 41 0 n/a
------ ------ -----
Operating Income excluding
Stock Based Compensation
and TopTier acquisition costs 858 576 49%
as a % of Sales 17% 14%
------ ------ -----
Commerce One impact on finance income -122 -11 -1009%
Income before income taxes 559 431 30%
Income taxes 288 177 63%
Effective Tax Rate 52% 41%
Impact of TopTier & Commerce
One in percentage points 13% 1% 12%(a)
EPS excluding acquisition cost
of Top Tier & Commerce One (in E) 1.33 0.83 60%
------ ------ -----
(a) percentage points
Consolidated Balance Sheet
SAP Group (in E millions)
ASSETS
----------------------------------------------------------------------
09/30/2001 12/31/2000
----------------------------------------------------------------------
Intangible Assets 496 116
Property, plant and equipment 957 871
Financial Assets 748 637
----------------------------------------------------------------------
FIXED ASSETS 2,201 1,624
Inventories/Accounts receivables 2,002 2,393
Liquid Assets/Marketable Securities 809 1,182
----------------------------------------------------------------------
CURRENT ASSETS 2,811 3,575
DEFERRED TAXES 295 305
PREPAID EXPENSES 196 115
----------------------------------------------------------------------
TOTAL ASSETS 5,503 5,619
----------------------------------------------------------------------
SHAREHOLDERS' EQUITY AND LIABILITIES
----------------------------------------------------------------------
09/30/2001 12/31/2000
----------------------------------------------------------------------
SHAREHOLDERS' EQUITY 2,722 2,927 (a)
MINORITY INTEREST 57 61
RESERVES AND ACCRUED LIABILITIES 966 1,435
OTHER LIABILITIES 1,212 831
DEFERRED INCOME 546 365
----------------------------------------------------------------------
TOTAL SHAREHOLDERS'
EQUITY AND LIABILITIES 5,503 5,619
----------------------------------------------------------------------
Days Sales Outstanding 92 93
(a) includes temporary equity of EUR 409.5 million
As a result of surpassing the 20% ownership threshold in Commerce
One Inc., SAP is required to use the equity method of accounting to
record, in finance income, a portion of Commerce One's net income or
loss based upon SAP's investment percentage. In addition, SAP
allocated the purchase price based on the ownership percentage of the
Commerce One's recorded net equity. Any excess purchase price resulted
in capitalization of additional assets including, in-process research
and development ("in-process R&D"), software or other intangibles.
Amounts pertaining to in-process R&D were written off immediately.
Other intangibles identified are amortized over their estimated useful
lives. Remaining amounts were considered goodwill, which is not
amortized but rather will be subjected to annual impairment testing.
Amounts capitalized are recorded in financial assets and related
expenses are reflected in finance income.
Under U.S. GAAP, the equity method must also be applied
retroactively for investments previously held in Commerce One Inc., to
improve comparability. Accordingly, financial result, financial assets
and stockholders' equity amounts included since the second quarter of
2000 have been restated to reflect this retroactive change in
accounting. This is purely an accounting measure that neither effects
SAP's cash position, nor its operating results. The 2001 second
quarter impact is largely due to Commerce One's one-time charges
resulting from the write-off of intangible assets.
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