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(Mark One) | ||
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2008 | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to | ||
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report |
(Translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
69190 Walldorf
Federal Republic of Germany
(Address of principal executive offices)
c/o SAP Labs
3410 Hillview Avenue, Palo Alto, CA, 94304, United States of America
650-849-4000 (Tel)
604-974-4789 (Fax)
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Title of each class | Name of each exchange on which registered | |
American Depositary Receipts, each representing one Ordinary Share, without nominal value | New York Stock Exchange | |
Ordinary Shares, without nominal value | New York Stock Exchange* |
Ordinary Shares, without nominal value (as of December 31, 2008)** | 1,225,762,900 |
Yes þ | No o |
Yes o | No þ |
Yes þ | No o |
Item 17 o | Item 18 o |
Yes o | No þ |
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Exhibit 8 | ||||||||
Exhibit 12.1 | ||||||||
Exhibit 12.2 | ||||||||
Exhibit 12.3 | ||||||||
Exhibit 13.1 | ||||||||
Exhibit 13.2 | ||||||||
Exhibit 13.3 | ||||||||
Exhibit 15 |
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• | economic conditions in general and trends in our business, particularly the current global economic crisis and general global economic uncertainty and any further deterioration of current conditions; | |
• | claims and lawsuits against us that could result in adverse outcomes, including third party infringement claims; | |
• | our ability to use intellectual property, including intellectual property licensed to us by third parties; | |
• | the success of our new SAP Enterprise Support offering; | |
• | our ability to obtain, license and enforce intellectual property rights; | |
• | our ability to successfully implement our business strategy, including our SAP Business ByDesign offering as well as our SAP NetWeaver platform strategy; | |
• | our ability to procure new licenses, renew existing maintenance agreements and to sell additional professional services, particularly with respect to our installed customer base; | |
• | consolidation, competition and rapid technological change in the software industry; | |
• | liquidity and the valuation of our financial assets, particularly in the current economic climate; | |
• | quarterly fluctuations in our sales and the related difficulty of accurately forecasting future revenue, particularly in the current economic climate; | |
• | currency fluctuations; | |
• | our ability to establish new relationships and enhance existing relationships with third party distributors, software suppliers, systems integrators and value-added resellers; | |
• | the effectiveness of our IT security measures and general IT system availability and Internet-related privacy concerns; | |
• | our ability to obtain and expand market acceptance of our services and products, and customer satisfaction with the implementation and installation of our products; | |
• | unauthorized or premature disclosure of our future strategies, technologies and products; | |
• | social and political instabilities, terrorist attacks or other acts of violence or war; | |
• | our ability to retain key personnel with specialized knowledge and technology skills; | |
• | our ability to effectively manage our headcount and our geographically dispersed employee base; | |
• | our ability to successfully integrate newly acquired businesses; | |
• | international regulatory and global political conditions; | |
• | our ability to obtain sufficient insurance coverage to avoid negative impacts on our financial position or results of operations resulting from the settlement of claims; and | |
• | other risks and uncertainties. |
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• | Our management uses these non-GAAP numbers rather than U.S. GAAP numbers as the basis for financial, strategic and operating decisions. |
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• | The variable remuneration components of our board members and employees that are tied to our company’s growth and operating performance are based on SAP’s achievement of its targets for non-GAAP operating income, non-GAAP software and software-related revenue growth at constant currencies, and non-GAAP operating margin at constant currencies. | |
• | The annual budgeting process involving all management units 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. |
• | 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 the acquisition of Business Objects. |
• | Amortization expense of intangibles acquired in business combinations and certain standalone acquisitions of intellectual property; | |
• | Expense from purchased in-process research and development; and | |
• | Restructuring expenses as far as incurred in connection with a business combinations. |
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• | The eliminated amounts may be material to us. | |
• | Without being analyzed 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: |
• | The additional insight into our potential future financial performance that our non-GAAP revenue numbers are intended to provide assumes that Business Objects customers renew their maintenance contracts. Projections of our future revenues made based on these numbers would be overstated if such maintenance renewals do not occur. | |
• | While our non-GAAP income numbers reflect the elimination of certain acquisition-related expenses, no eliminations are made for the additional 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 expenses that we eliminate in deriving our non-GAAP income numbers are recurring expenses 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 as 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. |
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Year Ended December 31, | ||||||||||||||||||||||||
2008 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
US$(1) | € | € | € | € | € | |||||||||||||||||||
In millions, except earnings per share data | ||||||||||||||||||||||||
Income Statement Data(2): | ||||||||||||||||||||||||
Total revenue | 16,097 | 11,565 | 10,242 | 9,393 | 8,509 | 7,514 | ||||||||||||||||||
Operating income | 3,953 | 2,840 | 2,732 | 2,578 | 2,337 | 2,018 | ||||||||||||||||||
Income from continuing operations | 2,682 | 1,927 | 1,934 | 1,881 | 1,502 | 1,311 | ||||||||||||||||||
Net income | 2,600 | 1,868 | 1,919 | 1,871 | 1,496 | 1,311 | ||||||||||||||||||
Earnings per share based on income from continuing operations | ||||||||||||||||||||||||
Basic | 2.25 | 1.62 | 1.60 | 1.53 | 1.21 | 1.05 | ||||||||||||||||||
Diluted | 2.25 | 1.62 | 1.60 | 1.53 | 1.21 | 1.05 | ||||||||||||||||||
Earnings per share based on net income | ||||||||||||||||||||||||
Basic | 2.18 | 1.57 | 1.59 | 1.53 | 1.21 | 1.05 | ||||||||||||||||||
Diluted | 2.18 | 1.57 | 1.59 | 1.52 | 1.20 | 1.05 | ||||||||||||||||||
Other Data: | ||||||||||||||||||||||||
Weighted-average number of shares outstanding | ||||||||||||||||||||||||
Basic | 1,190 | 1,190 | 1,207 | 1,226 | 1,239 | 1,243 | ||||||||||||||||||
Diluted | 1,191 | 1,191 | 1,210 | 1,231 | 1,243 | 1,249 |
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Year Ended December 31, | ||||||||||||||||||||||||
2008 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
US$(1) | € | € | € | € | € | |||||||||||||||||||
In millions, except earnings per share data | ||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||
Cash and cash equivalents | 1,777 | 1,277 | 1,608 | 2,399 | 2,064 | 1,506 | ||||||||||||||||||
Total assets | 19,761 | 14,197 | 10,366 | 9,503 | 9,040 | 7,585 | ||||||||||||||||||
Shareholders’ equity | 10,068 | 7,233 | 6,503 | 6,136 | 5,782 | 4,594 | ||||||||||||||||||
Subscribed capital(3) | 1,706 | 1,226 | 1,246 | 1,268 | 316 | 316 | ||||||||||||||||||
Short-term financial debt(4) | 3,236 | 2,325 | 32 | 31 | 22 | 26 | ||||||||||||||||||
Long-term financial debt(4) | 3 | 2 | 2 | 2 | 9 | 9 |
(1) | Amounts presented in US$ have been translated for the convenience of the reader at €1.00 to US$1.3919, the Noon Buying Rate for converting €1.00 into dollars on December 31, 2008. See “— Exchange Rates” for recent exchange rates between the Euro and the dollar. This convenience translation is not included in our financial statements and, accordingly, our independent registered public accounting firm has not audited these US$ amounts. | |
(2) | All figures are based on continuing operations except for Net income. See Note 11 to our consolidated financial statements in “Item 18. Financial Statements” for further discussion on our discontinued operations. As these discontinued operations were acquired by us in 2005 the 2004 income statement data does not reflect any discontinued operations. | |
(3) | On December 15, 2006 there was a fourfold increase in the number of shares under a capital increase pursuant to German law that resulted in an increase to subscribed capital of approximately 950 million common shares. Furthermore, the 2007 and 2008 figures reflect cancellations of 23 million and 21 million treasury shares effective September 7, 2007 and September 3, 2008, respectively. See “Item 9. The Offer and Listing — General” for more detail of the share increase and the cancellation of shares. | |
(4) | The balances include financial debt representing bank loans, overdrafts and convertible bonds issued to facilitate settlement of share-based compensation plans (See “Item 6. Directors, Senior Management and Employees — Share-Based Compensation Plans.”). Short-term is defined as having a remaining life of one year or less; long-term is defined as having a remaining term exceeding one year. The significant increase in short-term debt during 2008 is due to debt incurred to finance the acquisition of Business Objects and the related incremental obligations under the Business Objects equity programs. |
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Year | Average(1) | High | Low | |||||||||
2004 | 1.2478 | 1.3625 | 1.1801 | |||||||||
2005 | 1.2400 | 1.3476 | 1.1667 | |||||||||
2006 | 1.2661 | 1.3327 | 1.1860 | |||||||||
2007 | 1.3797 | 1.4862 | 1.2904 | |||||||||
2008 | 1.4695 | 1.6010 | 1.2446 |
Month | High | Low | ||||||
2008 | ||||||||
July | 1.5923 | 1.5559 | ||||||
August | 1.5569 | 1.4660 | ||||||
September | 1.4737 | 1.3939 | ||||||
October | 1.4058 | 1.2446 | ||||||
November | 1.3039 | 1.2525 | ||||||
December | 1.4358 | 1.2634 | ||||||
2009 | ||||||||
January | 1.3946 | 1.2804 | ||||||
February | 1.3064 | 1.2547 | ||||||
March (through March 9, 2009) | 1.2674 | 1.2549 |
(1) | The average of the applicable Noon Buying Rates on the last day of each month during the relevant period. |
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Dividend Paid | ||||||||
per Ordinary | ||||||||
Share | ||||||||
Year Ended December 31, | € | US$ | ||||||
2004 | 0.28 | 0.35 | (1) | |||||
2005 | 0.36 | 0.43 | (1) | |||||
2006 | 0.46 | 0.62 | (1) | |||||
2007 | 0.50 | 0.77 | (1) | |||||
2008 (proposed) | 0.50 | (2) | 0.63 | (2)(3) |
(1) | Translated for the convenience of the reader from euro into U.S. dollars at the Noon Buying Rate for converting euro into U.S. dollars on the dividend payment date. The depositary is required to convert any dividend payments received from SAP as promptly as practicable upon receipt. | |
(2) | Subject to approval of the Annual General Meeting of Shareholders of SAP AG to be held on May 19, 2009. | |
(3) | Translated for the convenience of the reader from euro into U.S. dollars at the Noon Buying Rate for converting euro into U.S. dollars on March 9, 2009 of US$1.2565 per €1.00. The depositary is required to convert any dividend payments received from SAP as promptly as practicable upon receipt. The dividend paid may differ due to changes in the exchange rate. |
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• | Decreased IT investments generally; | |
• | Decreased customer demand for our software and services, including order delays and cancellations; | |
• | Customers’ inability to obtain credit on acceptable terms, or at all, to finance purchases of our software and services; | |
• | Insolvency of customers, partners and key suppliers, leading to a negative impact on our business; | |
• | Increased risk in collectability of accounts receivable. For example, the global economic crisis has led to greater write-offs of accounts receivables for SAP in 2008 and may lead to greater write-offs in the future; | |
• | Increased reserves for doubtful accounts; | |
• | Increased price competition for our products and services; | |
• | Decreased customer confidence; and | |
• | Pressure on our operating margin. |
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• | general economic or political conditions in each country or region; | |
• | conflict and overlap among different tax structures; | |
• | potentially adverse tax consequences of doing business in a particular region; | |
• | the management of an organization spread over various jurisdictions; | |
• | exchange rate fluctuations; | |
• | longer payment cycles; | |
• | regulatory constraints such as import and export restrictions, competition law regimes, legislation governing the use of the Internet, additional requirements for the development and distribution of software and services, trade restrictions, changes in tariff and freight rates and travel and communication costs; | |
• | In Brazil, India, and China, and elsewhere, certain regulatory constraints in the form of, for example, special levies on cross-border royalty payments and bureaucratic import-control processes impede international goods traffic and business operations; | |
• | expenses associated with localizing our products and transacting business in the local currency; | |
• | different requirements of worker’s councils and labor unions across countries; and | |
• | higher costs of doing business internationally. |
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• | the relatively long sales cycles for our products; | |
• | the large size and extended timing of individual license transactions; | |
• | the timing of the introduction of new products or product enhancements by us or our competitors; | |
• | changes in customer budgets; | |
• | seasonality of a customer’s technology purchases; and | |
• | other general economic and market conditions, such as the global economic crisis that emerged in late 2008. |
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• | expansion of our operations; | |
• | research and development directed towards new products and product enhancements; and | |
• | development of new distribution and resale channels, particularly for small and midsize enterprises. |
• | the announcement of new products or product enhancements by us or our competitors; | |
• | technological innovation by us or our competitors; | |
• | quarterly variations in our results of operations; | |
• | changes in revenue and revenue growth rates on a consolidated basis or for specific geographic areas, business units, products or product categories; | |
• | speculation in the press or financial community; | |
• | general market conditions specific to particular industries; | |
• | litigation to which we are a party; | |
• | general and country specific economic or political conditions (particularly wars, terrorist attacks, etc.); and | |
• | proposed and completed acquisitions or other significant transactions by us or our competitors. |
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• | shortage of our trained consultants available to assist customers in the implementation of our products; | |
• | requirements that do not meet customer expectations or the software does not fit to the business model of the customer; | |
• | third-party consultants do not have the know-how or resources to successfully implement the software; | |
• | the implementation of the software is destabilized by custom specific software development; and | |
• | the safeguarding measures offered by SAP are not implemented by customers and partners. |
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• | continue to enhance and expand our existing products and services; | |
• | providebest-in-class business solutions and services; and | |
• | develop and introduce new products and provide new services that satisfy increasingly sophisticated customer requirements, keep pace with technological developments and are accepted in the market. |
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• | inability to successfully integrate the acquired business, including integrating different business and licensing models; | |
• | inability to integrate the acquired technologies or products with current products and technologies; | |
• | potential disruption of ongoing business; | |
• | inability to retain key technical and managerial personnel of the acquired business; | |
• | dilution of existing equity holders caused by capital stock issuances to the stockholders of acquired companies; | |
• | assumption of unknown material liabilities of acquired companies; | |
• | incurrence of debt or significant cash expenditures; | |
• | difficulty in implementing, remediating or maintaining controls, procedures and policies; | |
• | potential adverse impact on relationships with partners or third-party providers of technology or products; | |
• | impairment of relationships with employees and customers; | |
• | integration of the acquired company’s accounting, human resource and other administrative systems; | |
• | regulatory constraints; and | |
• | problems with product quality, product architecture, legal contingencies, product development issues or other significant risks that may not be detected through the due diligence process. |
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• | Organic growth: Our primary growth strategy is to continue to develop our own product portfolio and our own base of direct customers — by winning more customers and by selling more to our existing customers. | |
• | Co-innovation: Collaborating with customers and partners remains one of our central policies. We are investing more in our partner ecosystem. This supports the development of solutions built on the SAP NetWeaver technology platform and leverages sales forces to address the various market and customer segments. | |
• | Smart acquisitions: With targeted strategic and “fill-in” acquisitions that add to our broad solution offering for individual industries or across industries, we gain specific technologies and capabilities to meet the needs of our customers. |
• | Efficiency — Innovative business processes to optimize operations: SAP connects and streamlines processes across our customers’ businesses to drive efficiency and help enable business operations to achieve strategic goals. | |
• | Insight — Improved decisions for greater success: SAP enables business people to make more insightful and timely strategic decisions based on better information in the context of specific business issues. |
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• | Flexibility — Strategic and operational agility: With SAP software, customers can more easily pursue new strategies and capture the full benefits of business networks, because business processes are flexible and the business platform is extensible. |
* | depending on form of contract |
• | The SAP Customer Relationship Management (SAP CRM) application, which helps companies acquire and retain customers, build lasting relationships, and improve customer loyalty. Companies can |
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choose between ways to deploy the application: as an on-premise implementation, on-demand as Web-based CRM, or in a hybrid solution that combines both. As our customers’ business needs evolve, they can smoothly transition from one deployment option to another at any time. |
• | The SAP Product Lifecycle Management (SAP PLM) application, which helps companies manage, track, and control all product-related and project-related information over the complete product and asset life cycle and across the extended supply chain. SAP PLM integrates all product-related information needed to collaborate with business partners and supporting processes, including product innovation, design and engineering, quality and maintenance management, and control of environmental issues. | |
• | The SAP Supplier Relationship Management application (SAP SRM), which helps organizations in all industries accelerate and optimize the supply cycle by improving their vendor relationships. It provides strategic value through sustainable cost savings, contract compliance, and quick time-to-value. | |
• | The SAP Supply Chain Management (SAP SCM) application, which gives our customers a base for building transparent, flexible communities of companies. By integrating all partners in the supply chain, supply and demand can be synchronized along the chain, and materials and knowledge can flow freely among all of the partners concerned. That helps companies intelligently adapt to changing market conditions and proactively respond to shorter, less predictable product life cycles. |
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Process Industries • Chemicals • Mill Products • Oil & Gas • Mining Discrete Industries • Aerospace & Defense • Automotive • Engineering, Construction & Operations • High Tech • Industrial Machinery & Components Consumer Industries • Consumer Products • Retail • Wholesale Distribution • Life Sciences | Service Industries • Media • Logistics Service Providers • Airlines • Telecommunications • Utilities • Professional Services Financial Services • Banking • Insurance Public Services • Healthcare • Higher Education & Research • Public Sector • Defense & Security |
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• | SAP BusinessObjects BI solutions help simplify the ways that decision makers use information, enabling business users to access, format, analyze, navigate in, and share information across their organization. | |
• | SAP BusinessObjects information management (IM) solutions help organizations improve their data quality, understand and use information better, track data lineage for compliance purposes, and ensure consistent semantics across the business. | |
• | The SAP BusinessObjects intelligence platform is a BI platform with a wide scope that makes relevant BI available to users in accordance with their roles. The platform has functions to drive productivity and improves organization-wide decision-making processes. | |
• | SAP BusinessObjects enterprise performance management (EPM) solutions empower organizations to manage all financial and operational aspects of strategy, planning, budgeting, forecasting, reporting, and analytic requirements. | |
• | SAP BusinessObjects governance, risk, and compliance (GRC) solutions help ensure that customers have the proper processes and controls in place to realize transparent GRC. |
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• | The SAP Supply Chain Management application is designed to help our customers achieve their sustainability objectives. Companies can use it to consolidate orders and optimize shipments, reducing CO2 emissions and overall energy consumption. | |
• | The SAP Environment, Health, and Safety Management (SAP EHS Management) application supports the management of environment, health, and safety, industrial hygiene, and occupational health processes as well as compliance for product safety, hazardous substances, dangerous goods, and waste management. In addition, SAP EHS Management helps ensure compliance with environmental laws and policies as well as reduce associated costs, efforts, and risks on plant and corporate levels. Companies can also use this software to manage compliance with European law concerning the registration, evaluation, authorization, and restriction of chemicals (REACH), which helps them secure the right to market their products. |
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• | The SAP Recycling Administration application helps ensure compliance with worldwide recycling legislation for packaging, batteries, and waste electrical and electronic equipment. | |
• | The SAP BusinessObjects Risk Management application helps companies balance business opportunities and the associated financial, legal, and operational risks. By specifically monitoring high-impact risks to avoid incurring damaging market sanctions, companies can maximize corporate performance. |
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• | SAP ERP: In May, we announced the general availability of the third enhancement package for the SAP ERP application. Functional improvements provide stronger support for financial close processes, treasury risk, cash management, and expense management. In addition, human capital management capabilities were improved to support end-to-end talent management processes. For organizations that operate global shared-service organizations, new facilities were delivered to support intracompany processes and collaboration. Enhancement packages enable our customers to add functions to their SAP software packages stepwise without upgrades, which reduces the total cost of managing their enterprise software implementation. | |
• | SAP Customer Relationship Management: Since the introduction of SAP CRM 2007 in December 2007, we have experienced significant market momentum on a global basis. In 2008, we further enhanced the |
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capabilities of SAP CRM by delivering new processes to meet industry-specific needs such as investigative case management for the public sector, loyalty management for consumer-focused industries, and service management for discrete industries. In addition, we partnered with Research In Motion (RIM) to extend SAP applications for business users by creating an SAP CRM application accessed from BlackBerry mobile devices. |
• | SAP Supplier Relationship Management: In June 2008, we introduced new versions of our SAPE-Sourcing, SAP Contract Lifecycle Management, and SAP Spend Analytics (now SAP BusinessObjects Spend Performance Management) applications. These new versions were designed to improve the amount of identified and negotiated savings, increasing sustained savings to our customers. In November 2008, the first customers started to use SAP SRM 7.0. SAP SRM now extends compliance capabilities with enhancements to centralized sourcing and contract management, services procurement, catalog management, supplier enablement, usability, and accessibility to information. SAP SRM also helps fully deliver on the complete source-to-pay process for our customers. | |
• | SAP Supply Chain Management: In 2008, we released a new version of SAP SCM with capabilities that leverage point-of-sales data to improve planning accuracy and visibility, provide new forecasting methods and enhanced collaboration with contract manufacturers, and enable attribute- or characteristics-based planning. There were also major enhancements to warehouse and transportation management, such as graphical warehouse layout modeling, improved visualization, tighter integration of export controls, and increased utilization through enhanced integrated processes. We have also expanded the radio-frequency identification (RFID) and auto-ID solution footprint of SAP SCM with support for serialization technology and the EPCIS standard, a global communications standard by EPCglobal that improves transparency in the tracking of goods. | |
• | SAP Product Lifecycle Management: SAP PLM now offers simplified access to information within the context of a specific role to help our customers improve productivity, reduce training, eliminate manual activities, and make decisions more rapidly. SAP PLM now includes an intuitive new user interface that delivers information in the context of the role requesting it. For example, the application now supports product-centric viewing. | |
• | SAP solutions for automatic identification (auto-ID) and serialization: With the release of the latest SAP Auto-ID Enterprise offering, we delivered several new functions in the fields of auto-ID and serialization technology. For example, SAP object event repository now conforms to the EPCIS standard. Delivery processing scenarios now fully support the U.S. Department of Defense item unique identification (IUID) schema, which enables the identification of all inventory items based on bar codes containing unique, fixed number sequences, as well as the electronic product code of EPCglobal and other serialization procedures. This release also includes significant performance enhancements to support high-volume processes. Enhancements to SAP ERP included support for unique item identification (UII) from supply chain to asset management. In addition, the SAP Event Management 7.0 application enhanced usability and flexibility in the Web Dynpro user interface. | |
• | SAP Manufacturing: By acquiring Visiprise, we improved manufacturing operations management capabilities by optimizing execution of manufacturing processes on the plant floor. This acquisition is a continuation of our investment in applications for the shop floor and leverages existing capabilities offered by the SAP Manufacturing Integration and Intelligence (SAP MII) application. Further enhancements included support for outsourced manufacturing, dynamic production planning across multiple plants, and advances in lean planning and operations management. We also made it easier to create composite applications for manufacturing operations that can significantly improve employee productivity. | |
• | Enterprise energy management: In July 2008, we delivered an enterprise energy management solution. It comprises functions from SAP MII, the plant information solution from OSIsoft, and the SAP Environment, Health, and Safety Management application. The solution enables companies to |
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gather information on the use of energy throughout the enterprise, identify areas for energy reduction, monitor the implementation of energy excellence projects, and make the results available throughout the enterprise. Companies can therefore use the enterprise energy management solution to cut their energy costs and emissions. |
• | SAP NetWeaver Composition Environment: We released the first enhancement package for the SAP NetWeaver Composition Environment offering, providing a lean, integrated, standards-based development, modeling, and runtime environment. Software developers and technical consultants can use it to extend application logic and, depending on users’ needs, compose new views and applications based on SAP software. The enhancement package delivers the next generation of tools for increasing process flexibility with new business process management and business rules management capabilities. | |
• | SAP NetWeaver Identity Management: The SAP NetWeaver technology platform now contains embedded identity management capabilities to help companies save time and money by optimizing the administration of user accounts and passwords inside their business network. | |
• | SAP NetWeaver Master Data Management (SAP NetWeaver MDM): Adoption of the SAP NetWeaver MDM component continues to grow among companies in all industries and of all sizes. A new version was delivered in the fourth quarter of 2008. It offers extended flexibility for data modeling and support for complex objects, enabling the deployment of a single master data management repository for multiple data domains. SAP NetWeaver MDM now links with SAP BusinessObjects Data Services software through the MDM enrichment controller. It is thus a solution with innovative data-integration and data-quality capabilities. | |
• | SAP NetWeaver Information Lifecycle Management: SAP has developed a three-pronged approach to information life-cycle management that meets the complex IM needs of today’s organizations: data archiving, which focuses on keeping the growth of data volume in check; retention management, which deals with the life cycle of data from the time it is created until it is destroyed; and a retention warehouse, which addresses the decommissioning of legacy applications and systems. | |
• | SAP NetWeaver Enterprise Search: Launched in 2007, the SAP NetWeaver Enterprise Search application gives business users easy access to data in SAP systems, and intuitive links to find related information and act on the data they find. In 2008, we again significantly extended the range of information sources available and delivered a new user interface for SAP NetWeaver Enterprise Search. | |
• | SAP NetWeaver Mobile: In 2008; we introduced a new version of the mobile application platform, designed to enhance scalability of the platform as well as mobile device management and mobile security features. |
• | SAP Business One: In 2008, SAP Business One version 2007 was released into general availability. The new release offers many new financial and reporting capabilities that are designed to enable small |
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businesses to leverage local best practices and address local business customs. Further, we introduced an industry solutions program that allows our software solution partners to create tightly integrated solutions that extend the power of SAP Business One. Additionally, we enabled integration between SAP Business One and SAP NetWeaver, to make it easy for SAP Business One customers to connect with SAP Business Suite implementations used by their headquarter offices. |
• | SAP BusinessAll-in-One: In the second half of 2008, we released an enhanced version of SAP BusinessAll-in-One with new customer relationship management functions. By combining comprehensive, preconfigured SAP CRM and SAP ERP best practices, midsize companies can now manage their customers, their brands, and sales effectiveness together with core business operations in one solution. This new CRM offering can be added at any time to a customer’s SAP BusinessAll-in-One solution or deployed standalone, and is available from SAP and SAP channel partners. | |
• | SAP Business ByDesign: In October 2008, we released Feature Pack 1.2 for SAP Business ByDesign. This new release optimized quality, performance, and system stability. |
• | SAP BusinessObjects IM solutions: Shipped in March 2008 as part of SAP BusinessObjects XI 3.0, our SAP BusinessObjects Data Services XI 3.0 information management solution was one of the first of its kind to combine data integration and data quality in a single product. It offers companies new ways to optimize performance, giving users access to the right information at the right time in an easy user interface. | |
• | SAP BusinessObjects intelligence platform: In 2008, we delivered two releases of the intelligence platform: SAP BusinessObjects XI 3.0 in March and SAP BusinessObjects XI 3.1 in September. SAP BusinessObjects XI 3.0 makes relevant BI available to users in accordance with their roles. The platform now also has new functions to drive productivity and improves organization-wide decision-making processes. Enhanced migration tools ease upgrades for customers. Moreover, SAP BusinessObjects solutions now work within practically any application environment: SAP BusinessObjects XI 3.1 added broader language support, integration with data sources from a variety of vendors — including HP, Microsoft, and Netezza — and native support for the 64-bit architecture many customers now use for their business applications. | |
• | SAP BusinessObjects BI solutions: In 2008, we provided the first platform to combine access to all information (whether it is structured in databases or unstructured text) and access for all people (whether they require reporting, query and analysis, dashboards and visualization, or predictive analysis) in a single environment. We also delivered the SAP BusinessObjects Edge BI 3.0 solutions, addressing the BI needs of midsize companies, and Crystal Reports Server 2008 software for small businesses. | |
• | SAP BusinessObjects GRC solutions: In 2008, we released new versions of the SAP BusinessObjects Access Control and SAP BusinessObjects Process Control (formerly SAP GRC Process Control) applications. SAP BusinessObjects Process Control automates control monitoring in both SAP and non-SAP systems to assist compliance, detects exceptions, and remedies issues with workflow-based processes. The new version of SAP BusinessObjects Access Control includes automated review and approval processes on employee access throughout the enterprise, automatic monitoring and detection of access violations, and reaffirmation of mitigation controls. In addition, we have added extended identity management integration and cross-platform capabilities for non-SAP applications. |
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• | SAP BusinessObjects EPM solutions: In 2008, we delivered several new EPM solutions. The new version of the SAP BusinessObjects Planning and Consolidation application helps customers easily configure their planning and budgeting applications to run on SAP NetWeaver and is also optimized for the Microsoft SQL platform, supporting customers with diverse IT environments. A new version of our SAP BusinessObjects Strategy Management application is now integrated with SAP NetWeaver as well, adding more business context to the strategy management process and lowering the total cost of ownership for SAP customers. We released other new EPM solutions in a new version of the SAP BusinessObjects Spend Performance Management application, delivering actionable visibility into purchasing detail, a new version of the SAP BusinessObjects Financial Consolidation application, which helps organizations leverage their BI investment and enables users to quickly create and distributead-hocfinancial reports to key decision makers, and a new version of the SAP BusinessObjects Profitability and Cost Management application, which helps customers gain more precise insight into cost drivers and their effect on profitability. |
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2008 | 2007 | 2006 | ||||||||||
€ millions | ||||||||||||
Germany | 2,193 | 2,004 | 1,907 | |||||||||
Rest of EMEA | 4,011 | 3,386 | 2,994 | |||||||||
Total EMEA | 6,204 | 5,390 | 4,901 | |||||||||
United States | 2,882 | 2,706 | 2,609 | |||||||||
Rest of Americas | 990 | 871 | 776 | |||||||||
Total Americas | 3,872 | 3,577 | 3,385 | |||||||||
Japan | 515 | 447 | 431 | |||||||||
Rest of APJ | 974 | 828 | 676 | |||||||||
Total APJ | 1,489 | 1,275 | 1,107 | |||||||||
Total revenue | 11,565 | 10,242 | 9,393 | |||||||||
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2008 | 2007 | 2006 | ||||||||||
€ millions | ||||||||||||
Process Industries | 2,365 | 2,135 | 1,995 | |||||||||
Discrete Industries | 2,432 | 2,222 | 2,179 | |||||||||
Consumer Industries | 2,234 | 1,949 | 1,665 | |||||||||
Service Industries | 2,703 | 2,371 | 2,132 | |||||||||
Financial Services | 773 | 678 | 590 | |||||||||
Public Services | 1,058 | 887 | 832 | |||||||||
Total revenue | 11,565 | 10,242 | 9,393 | |||||||||
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Ownership | Country of | |||||
Name of Subsidiary | % | Incorporation | Function | |||
Germany | ||||||
SAP Deutschland AG & Co. KG, Walldorf | 100 | Germany | Sales, consulting and training | |||
Rest of Europe/Middle East/Africa | ||||||
SAP (UK) Limited, Feltham | 100 | Great Britain | Sales, consulting and training | |||
SAP (Schweiz) AG, Biel | 100 | Switzerland | Sales, consulting and training | |||
SAP France S.A., Paris | 100 | France | Sales, consulting and training | |||
SAP ITALIA SISTEMI, APPLICAZIONI, PRODOTTI IN DATA PROCESSING S.P.A., Milan | 100 | Italy | Sales, consulting and training | |||
SAP Nederland B.V.,’s-Hertogenbosch | 100 | The Netherlands | Sales, consulting and training | |||
SAP CIS, Moscow | 100 | Russia | Sales, consulting and training | |||
Americas | ||||||
SAP America, Inc., Newtown Square | 100 | USA | Sales, consulting and training | |||
Business Objects Americas | 100 | USA | Sales, consulting and training | |||
SAP Canada Inc., Toronto | 100 | Canada | Sales, consulting, training, and research and development | |||
SAP Public Services, Inc., Washington, D.C. | 100 | USA | Sales, consulting and training | |||
SAP Brasil Ltda. | 100 | Brasil | Sales, consulting and training | |||
Asia/Pacific | ||||||
SAP JAPAN Co., Ltd., Tokyo | 100 | Japan | Sales, consulting training, and research and development | |||
SAP Australia Pty Limited, Sydney | 100 | Australia | Sales, consulting and training |
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• | the key factors and trends that we believe impacted our performance in 2008; | |
• | our outlook for 2008 compared to our actual performance; | |
• | a discussion of our operating results for 2008 compared to 2007 and for 2007 compared to 2006 (including Segment Discussions); | |
• | the key factors and trends we believe will impact our performance in 2009; and | |
• | our outlook for 2009 (including Medium-Term Perspectives). |
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% | 2007 | 2008e | 2009p | |||||||||
World | 5.2 | 3.4 | 0.5 | |||||||||
Advanced economies | 2.7 | 1.0 | (2.0 | ) | ||||||||
United States | 2.0 | 1.1 | (1.6 | ) | ||||||||
Euro area | 2.6 | 1.0 | (2.0 | ) | ||||||||
Germany | 2.5 | 1.3 | (2.5 | ) | ||||||||
Developing Asia | 10.6 | 7.8 | 5.5 | |||||||||
Japan | 2.4 | (0.3 | ) | (2.6 | ) | |||||||
e = Estimate; p = Projection | ||||||||||||
Source: IMF, January 2009 |
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Percentage Change Since Previous Year
% | 2007 | 2008e | 2009p | |||||||||
World | ||||||||||||
Total IT market | 12.5 | 6.9 | 0.5 | |||||||||
Hardware | 13.0 | 4.9 | (3.6 | ) | ||||||||
Packaged software | 13.8 | 9.1 | 3.4 | |||||||||
Application software | 14.4 | 7.9 | 2.7 | |||||||||
Services | 11.2 | 8.0 | 3.4 | |||||||||
Americas region | ||||||||||||
Total IT market | 8.7 | 3.9 | 0.6 | |||||||||
Packaged software | 11.2 | 5.7 | 3.9 | |||||||||
Application software | 10.0 | 4.8 | 3.6 | |||||||||
Services | 6.5 | 4.8 | 3.5 | |||||||||
EMEA region | ||||||||||||
Total IT market | 16.9 | 8.4 | 0.0 | |||||||||
Packaged software | 19.0 | 11.5 | 1.9 | |||||||||
Application software | 23.0 | 10.9 | 1.0 | |||||||||
Services | 17.2 | 9.1 | 2.5 | |||||||||
APJ region | ||||||||||||
Total IT market | 12.3 | 10.3 | 1.3 | |||||||||
Packaged Software | 11.3 | 16.2 | 5.2 | |||||||||
Application software | 11.0 | 15.0 | 4.3 | |||||||||
Services | 9.4 | 13.7 | 5.4 | |||||||||
e = Estimate; p = Projection | ||||||||||||
Source: IDC Black Book Q4, February 2009 |
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• | With recent cost-savings initiatives in place, the Company expects full-year 2008 non-GAAP operating margin, which excludes a nonrecurring deferred support revenue write-down of €180 million from the acquisition of Business Objects and acquisition-related charges, to be around 28% at constant currencies if we can increase non-GAAP software and software-related service revenues, excluding a nonrecurring deferred support revenue write-down from the acquisition of Business Objects, in a range between 20% and 22% at constant currencies for the full year 2008. We believe that in the fourth quarter of 2008 we can save some €200 million compared to our originally forecasted costs. To this end we will stop all recruitment, considerably reduce spending on externally provided services, and make cuts in travel and other variable expenditure for the rest of 2008. |
• | We continue to project an effective tax rate of 31.0% to 31.5% (based on U.S. GAAP income from continuing operations) for 2008. | |
• | In our previous outlook (given in July 2008) we expected to hire 3,500 employees in 2008 (excluding additions from acquisitions). To date we have hired 1,500 new employees (given in October 2008; excluding new hires from acquisitions). Based on our revised outlook this amount should not significantly change through the end of the year. | |
• | We will continue in 2008 with our strategy of buying back shares in order to give back liquidity to our shareholders. We already bought back shares totaling €486.8 million as of September 30, 2008. | |
• | The investments in fixed assets (excluding acquisitions) planned for 2008 mainly comprise the completion of office buildings at several locations which can be fully financed with operating cash flow. Based on our cost saving programs we reduced the investments which were planned for the fourth quarter. Our financial position shall be further strengthened as a result. | |
• | This outlook is based among others on the presented assumptions regarding the global financial crisis which emerged in the second half of September. The global financial crisis resulted in a |
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clear and until this time unexpected change in the buying behavior of our customers. However, the outlook is also based on the assumption that the buying behavior will follow our normal seasonality of revenues; we expect the fourth quarter contributing the highest revenues of the year 2008. |
Business Objects | ||||||||||||||||||||||||
Support | Currency | Non-GAAP | ||||||||||||||||||||||
Revenue Not | Effect on the | Financial | ||||||||||||||||||||||
U.S. GAAP | Recorded | Acquisition- | Non-GAAP | Non-GAAP | Measure at | |||||||||||||||||||
Financial | Under U.S. | Related | Financial | Financial | Constant | |||||||||||||||||||
2008 | Measure | GAAP | Charges | Measure | Measure | Currency | ||||||||||||||||||
€ millions, except operating margin | ||||||||||||||||||||||||
Software and software-related service revenue | 8,457 | 166 | — | 8,623 | 296 | 8,919 | ||||||||||||||||||
Total revenue(1) | 11,565 | 166 | — | 11,731 | 413 | 12,144 | ||||||||||||||||||
Operating income(1) | 2,840 | 166 | 297 | 3,303 | 147 | 3,450 | ||||||||||||||||||
Operating margin | 24.6% | 1.3% | 2.3% | 28.2% | 0.2% | 28.4% |
(1) | These financial measures are the numerator or the denominator in the calculation of our non-GAAP operating margin and the comparable U.S. GAAP operating margin, and are included in this table for the convenience of the reader. |
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Change | Change | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
Total revenue | 11,565 | 10,242 | 9,393 | 13 | % | 9 | % |
Date | Period-End | |||
December 2007 | 1.4603 | |||
March 2008 | 1.5805 | |||
June 2008 | 1.5748 | |||
September 2008 | 1.4081 | |||
December 2008 | 1.3919 |
Date | Period-End | |||
December 2006 | 1.3197 | |||
March 2007 | 1.3374 | |||
June 2007 | 1.3520 | |||
September 2007 | 1.4219 | |||
December 2007 | 1.4603 |
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Change | Change | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
Software revenue | 3,606 | 3,407 | 3,003 | 6 | % | 13 | % | |||||||||||||
Support revenue | 4,593 | 3,838 | 3,464 | 20 | % | 11 | % | |||||||||||||
Subscription and other software-related service revenue | 258 | 182 | 129 | 42 | % | 41 | % | |||||||||||||
Software and software-related service revenue | 8,457 | 7,427 | 6,596 | 14 | % | 13 | % |
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Change | Change | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
Consulting revenue | 2,498 | 2,221 | 2,249 | 12 | % | (1 | )% | |||||||||||||
Training revenue | 434 | 410 | 383 | 6 | % | 7 | % | |||||||||||||
Other service revenue | 107 | 113 | 96 | (5 | )% | 18 | % | |||||||||||||
Professional services and other service revenue | 3,039 | 2,744 | 2,728 | 11 | % | 1 | % |
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Change | Change | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
Total operating expenses | 8,725 | 7,510 | 6,815 | 16% | 10% | |||||||||||||||
Operating income | 2,840 | 2,732 | 2,578 | 4% | 6% | |||||||||||||||
Operating margin (Operating income as a percentage of total revenue) | 24.6% | 26.7% | 27.4% |
• | In 2008 we increased our personnel expenses by €705 million or 17% to €4,879 million, which is the result of the overall headcount increase in 2008 of 7,675 FTE, including acquisitions, or 17% to 51,536 FTE as of December 31, 2008. Of this 17% Business Objects contributed 14 percentage points or 6,224 FTE. | |
• | In addition to the Business Objects acquisition the 2008 cost of software and software-related services increased due to payments for additional third-party licenses, the effects of license disputes, and further reinforcement of our support resources in the first half of the year. | |
• | The increase in our expenses for sales and marketing was steeper than the rise in our total revenue. This was principally due to our investment in expanding the field organization for our SAP BusinessObjects solutions. | |
• | The modest increase in cost of professional services and other services, research and development and general and administration expense could for the most part be attributed to expenses we incurred in several areas in connection with the acquisition of Business Objects. |
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• | In 2007 we increased our personnel expenses by €356 million or 9% to €4,174 million, which is the result of the overall headcount increase in 2007 of 4,663 FTE or 12% to 43,861 FTE as of December 31, 2007. We continued to keep a tight control on personnel expenses due to minimal fixed salary increases as well as by adding additional headcount primarily in the major emerging markets with modest salary levels. In total, 35% of the headcount increase in 2007 was realized in India, China and Bulgaria. The share of employees in these three countries increased from 14% in 2006 to 16% as of December 31, 2007. Personnel expenses as percentage of total operating expenses remained stable at 56%. | |
• | As a result of the strong increase in software and software-related service revenue, cost of purchased licenses (e.g. databases) increased in 2007 by 27%. | |
• | The incremental headcount and the increase in business activity in 2007 resulted in €54 million or 13% higher travel expenses compared to 2006. | |
• | Our accelerated investments in connection with SAP Business ByDesign. |
Change | Change | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
Cost of software and software-related services | 1,646 | 1,310 | 1,091 | 26% | 20% | |||||||||||||||
As a percentage of software and software-related service revenue | 19% | 18% | 17% |
• | Customer support costs which include: |
• | SAP Enterprise Support (e.g. End-to-end Solution Operations, Global support backbone, 7x 24 Root Cause Analysis (RCA), Custom Code Support, Support for Enhancement Packs, Pro-active Remote Service) | |
• | Support for Large Enterprises (LE) | |
• | Standard support (e.g. 24x7 customer problem resolution, remote service delivery) | |
• | SAP Premium Support (Increased value on standard services) | |
• | Optimized implementation and ongoing management of End-to-end Solution Operations (costs and risks control by managing customers applications end-to-end) | |
• | SAP MaxAttention Support (comprehensive support tailored to customer needs) | |
• | SAP Safeguarding (Reduced implementation or upgrade risk) |
• | Costs of developing custom solutions that address customers’ unique business requirements. | |
• | License fees and commissions paid to third parties for databases and the other complementary third-party products sublicensed by us to customers. |
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Change | Change | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
Cost of professional services and other services | 2,296 | 2,091 | 2,073 | 10% | 1% | |||||||||||||||
As a percentage of professional services and other service revenue | 76% | 76% | 76% |
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Change | Change | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
Research and development | 1,631 | 1,458 | 1,335 | 12% | 9% | |||||||||||||||
As a percentage of total revenue | 14% | 14% | 14% |
• | Personnel expenses related to our R&D employees; | |
• | Costs incurred for independent contractors retained by us to assist in our R&D activities; and | |
• | Amortization of computer hardware and software used in our R&D activities. |
Change | Change | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
Sales and marketing | 2,540 | 2,162 | 1,908 | 17% | 13% | |||||||||||||||
As a percentage of total revenue | 22% | 21% | 20% |
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Change | Change | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
General and administration | 623 | 506 | 464 | 23% | 9% | |||||||||||||||
As a percentage of total revenue | 5% | 5% | 5% |
Change | Change | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
Financial income/expense, net | (62 | ) | 124 | 122 | (150 | )% | 2% | |||||||||||||
As a percentage of total revenue | (1 | )% | 1% | 1% |
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Change | Change | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
Income taxes | 825 | 921 | 805 | (10 | )% | 14% | ||||||||||||||
As a percentage of Income from continuing operations before income taxes | 30% | 32% | 30% |
Change | Change | |||||||||||||||
Product Segment | 2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | |||||||||||
External revenue | 8,366 | 7,369 | 6,643 | 14% | 11% | |||||||||||
Segment expenses | (3,655 | ) | (3,062 | ) | (2,609 | ) | 19% | 17% | ||||||||
Segment contribution | 4,711 | 4,307 | 4,034 | 9% | 7% | |||||||||||
Segment profitability | 56% | 58% | 61% | (2) percentage points | (3) percentage points |
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Change | Change | |||||||||||||||
Consulting Segment | 2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | |||||||||||
External revenue | 2,824 | 2,369 | 2,300 | 19% | 3% | |||||||||||
Segment expenses | (2,040 | ) | (1,738 | ) | (1,704 | ) | 17% | 2% | ||||||||
Segment contribution | 784 | 631 | 596 | 24% | 6% | |||||||||||
Segment profitability | 28% | 27% | 26% | 1 percentage point | 1 percentage point |
Change | Change | |||||||||||||||
Training Segment | 2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | |||||||||||
External revenue | 525 | 493 | 440 | 6% | 12% | |||||||||||
Segment expenses | (300 | ) | (284 | ) | (273 | ) | 5% | 4% | ||||||||
Segment contribution | 225 | 209 | 167 | 8% | 25% | |||||||||||
Segment profitability | 43% | 42% | 38% | 1 percentage point | 4 percentage points |
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• | We expect our 2009 non-GAAP operating margin, which excludes a nonrecurring deferred support revenue writedown from the acquisition of Business Objects of approximately €9 million and acquisition-related charges, to be in the range of 24.5% to 25.5% at constant currencies. That includes nonrecurring restructuring costs of between €200 million and €300 million that we expect to incur as we reduce our workforce and that we expect will negatively impact our non-GAAP operating margin by approximately 2 to 3 percentage points. Our 2009 non-GAAP operating margin outlook is based on the assumption that our 2009 non-GAAP software and software-related service revenue, which excludes a nonrecurring deferred support revenue writedown from the acquisition of Business Objects, will be unchanged or decline not more than 1% at constant currencies (2008: €8,623 million). | |
• | We expect a corresponding decrease in our operating income. |
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• | We project an effective tax rate for 2009 of 29.5% to 30.5% (2008: 30.1%) based on U.S. GAAP income from continuing operations. | |
• | If the Annual General Meeting of Shareholders so resolves, in 2009 we will again pay a dividend that provides a payout ratio of about 32%. |
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• | Revenue recognition; | |
• | Valuation of accounts receivable; | |
• | Accounting for share-based compensation; | |
• | Accounting for income taxes and uncertain income tax positions; | |
• | Valuation of acquired assets; and | |
• | Legal contingencies. |
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2008 | 2007 | 2006 | ||||||||||
€ millions | ||||||||||||
Specific customer credit loss risks | 20 | 9 | 3 | |||||||||
Customer credit loss risks based on aging of the receivables — charged to expense/(income) | 9 | (3 | ) | (43 | ) | |||||||
Total amounts charged to expense/(income) for allowances for doubtful accounts | 29 | 6 | (40 | ) | ||||||||
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2008 | 2007 | % change | ||||||||||
€ millions | ||||||||||||
Cash and cash equivalents | 1,277 | 1,608 | (21 | )% | ||||||||
Restricted cash(1) | 3 | 550 | (99 | )% | ||||||||
Short-term investments | 382 | 598 | (36 | )% | ||||||||
Total | 1,662 | 2,756 | (40 | )% |
(1) | The restricted cash balance as of December 31, 2007 represents a security deposit that served as collateral for the credit facility entered into in connection with the acquisition of Business Objects. |
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Years ended December 31, | Change | Change | ||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
€ millions | ||||||||||||||||||||
Net cash provided by operating activities | 2,183 | 1,950 | 1,855 | 12 | % | 5 | % | |||||||||||||
Net cash used in investing activities | (3,769 | ) | (1,392 | ) | (132 | ) | 171 | % | 955 | % | ||||||||||
Net cash provided by/(used in) financing activities | 1,281 | (1,287 | ) | (1,375 | ) | 200 | % | (6 | )% |
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Payments due by period | ||||||||||||||||||||
Contractual obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
€ millions | ||||||||||||||||||||
Short-term debt obligations(1) | 2,404 | 2,404 | — | — | — | |||||||||||||||
Long-term debt obligations(1) | 2 | — | 2 | — | — | |||||||||||||||
Operating lease obligations(2) | 863 | 229 | 334 | 153 | 147 | |||||||||||||||
Purchase obligations(3) | 249 | 189 | 54 | 4 | 2 | |||||||||||||||
Other long-term liabilities reflected on the balance sheet(4) | 133 | — | 67 | — | 66 | |||||||||||||||
Total | 3,651 | 2,822 | 457 | 157 | 215 |
(1) | This represents bank loans and interest thereon. |
(2) | See Note 23 to our consolidated financial statements in “Item 18. Financial Statements” for additional information about operating lease obligations and the related rental expense. |
(3) | Purchase obligations represent agreements to purchase goods or services that are enforceable and legally binding on us that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. The outstanding obligations include the |
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construction of facilities, office equipment and car purchase commitments, food and security services and other facility commitments. |
(4) | Amounts mainly consist of employee-related liabilities (€57 million) and derivatives (€31 million) and deferred rent (€36 million). Not included in the table are noncurrent income taxes payable of €278 million, which includes provisions for uncertainties in income taxes. Other noncurrent liabilities on the balance sheet such as pension and other post employment benefit liabilities, deferred compensation, deferred income and deferred tax liabilities are not included in this table. For additional information on liabilities see Notes 18 and 19b to our consolidated financial statements in “Item 18 Financial Statements.” |
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Year | Year | |||||||||||||
First | Term | |||||||||||||
Name | Age | Principal Occupation | Elected | Expires | ||||||||||
Prof. Dr. h.c. mult. Hasso Plattner, Chairman(1)(2)(4)(6)(7)(8)(12) | 65 | Chairman of the Supervisory Board | 2003 | 2012 | ||||||||||
Pekka Ala-Pietilä(1)(7)(8)(12) | 52 | Co-founder and CEO Blyk Ltd. | 2002 | 2012 | ||||||||||
Prof. Dr. Wilhelm Haarmann(1)(2)(4)(5)(9) | 58 | Attorney at Law, Certified Public | 1988 | 2012 | ||||||||||
Auditor and Certified Tax Advisor; HAARMANN Partnerschaftsgesellschaft, Rechtsanwälte, Steuerberater, Wirtschaftsprüfer | ||||||||||||||
Bernard Liautaud(7)(13) | 46 | General Partner, Balderton Capital | 2008 | 2012 | ||||||||||
Dr. h.c. Hartmut Mehdorn(1)(5)(6) | 66 | Chairperson of Executive Board, Deutsche Bahn AG | 1998 | 2012 | ||||||||||
Prof. Dr.-Ing. Dr. h.c. mult. Dr.-Ing. E.h. mult. Joachim Milberg(1)(2)(3)(4)(7)(8) | 65 | Chairman of the Supervisory Board of BMW AG | 2007 | 2012 | ||||||||||
Dr. Erhard Schipporeit(1)(3)(11)(12) | 60 | Management Consultant | 2005 | 2012 | ||||||||||
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer(1)(7) | 64 | Managing Director of Dr. Klaus Wucherer Innovations- und Technologieberatung GmbH | 2007 | 2012 | ||||||||||
Lars Lamadé, Vice Chairman(4)(6)(10) | 37 | Employee, Project Manager Service & Support | 2002 | 2012 | ||||||||||
Thomas Bamberger(3)(10) | 41 | Employee, Chief Controlling Officer | 2007 | 2012 | ||||||||||
Research & Breakthrough Innovation, Head of Operations Global Service & Support | ||||||||||||||
Panagiotis Bissiritsas(2)(5)(10) | 40 | Employee, Support Expert | 2007 | 2012 | ||||||||||
Willi Burbach(4)(7)(10) | 46 | Employee, Developer | 1993 | 2012 | ||||||||||
Peter Koop(4)(7)(10) | 42 | Employee, Industry Business Development Expert | 2007 | 2012 | ||||||||||
Christiane Kuntz-Mayr(7)(14) | 46 | Employee, Deputy Chairperson of the Works Council of SAP AG | 2009 | 2012 | ||||||||||
Dr. Gerhard Maier(2)(3)(10) | 55 | Employee, Development Project Manager | 1989 | 2012 | ||||||||||
Stefan Schulz(5)(6)(7)(10) | 39 | Employee, Development Project Manager | 2002 | 2012 |
(1) | Elected by SAP AG’s shareholders on May 10, 2007. | |
(2) | Member of the Compensation Committee. | |
(3) | Member of the Audit Committee. | |
(4) | Member of the General Committee. | |
(5) | Member of the Finance and Investment Committee. | |
(6) | Member of the Mediation Committee. |
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(7) | Member of the Technology and Strategy Committee. | |
(8) | Member of the Nomination Committee | |
(9) | Until January 1, 2006, Wilhelm Haarmann practiced as a partner of Haarmann Hemmelrath which served as special German tax counsel to SAP AG and counseled SAP with regard to other legal matters. On January 1, 2006, he founded HAARMANN Partnerschaftsgesellschaft in Frankfurt. |
(10) | Elected by SAP AG’s employees on April 23, 2007. | |
(11) | Member of the Audit Committee and determined to be the Audit Committee financial expert. | |
(12) | Member of the Special Committee | |
(13) | Elected by SAP AG’s shareholders on June 3, 2008, replacing August-Wilhelm Scheer who resigned from the Supervisory Board on the same day. | |
(14) | Replacing Helga Classen who left the Supervisory Board on December 31, 2008 due to partial retirement. |
Year First | Year Current | |||||||
Name | Appointed | Term Expires | ||||||
Prof. Dr. Henning Kagermann, Co-CEO | 1991 | 2009 | ||||||
Léo Apotheker, Co-CEO | 2002 | 2010 | ||||||
Dr. Werner Brandt | 2001 | 2013 | ||||||
Erwin Gunst | 2008 | 2012 | ||||||
Prof. Dr. Claus Heinrich | 1996 | 2009 | ||||||
Bill McDermott | 2008 | 2012 | ||||||
Gerhard Oswald | 1996 | 2010 | ||||||
John Schwarz | 2008 | 2010 | ||||||
Jim Hageman Snabe | 2008 | 2012 |
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• | On February 19, 2008, we announced that Business Objects CEO John Schwarz was named member of the SAP Executive Board, effective March 1, 2008. | |
• | On April 2, 2008, we announced that the SAP Supervisory Board named then Deputy CEO Léo Apotheker as SAP’s Co-CEO alongside Henning Kagermann, with immediate effect. Henning Kagermann will step down as planned on May 31, 2009 at which time Léo Apotheker will be sole CEO. | |
• | Further on April 2, 2008, we announced that the SAP Supervisory Board appointed Erwin Gunst, Bill McDermott and Jim Hageman Snabe to the SAP Executive Board effective July 1, 2008. | |
• | On October 31, 2008, Claus Heinrich announced that he has decided to leave SAP on May 31, 2009. | |
• | On November 26, 2008, the SAP Supervisory Board named Erwin Gunst the next labor relations director of SAP AG, effective January 1, 2009, succeeding Claus Heinrich. | |
• | On December 31, 2008, Peter Zencke gave up this seat on the SAP Executive Board upon expiration of his contract. |
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• | The fixed element is paid as a monthly salary. | |
• | The amount of performance-related compensation to be paid out in respect of 2008 depends on the SAP Group’s achievement of its targets for (non-GAAP) operating income, (non-GAAP) software and |
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software-related service revenue growth at constant currencies, and the (non-GAAP) operating margin at constant currencies. |
• | On February 11, 2009, the Supervisory Board’s Compensation Committee assessed SAP’s performance against the agreed targets and determined how much performance-related compensation was payable. The payment will be made after the Annual General Meeting of Shareholders in May 2009. | |
• | The regular form of share-based compensation is the issue of virtual stock options under the terms of the 2007 stock option plan (SAP SOP 2007). For the terms and details of SAP SOP 2007, see Note 27 to our consolidated financial statements in “ITEM 18. Financial Statements.” |
Performance Related | Long-Term | |||||||||||||||||||
Fixed Elements | Element | Incentive Elements | ||||||||||||||||||
Directors’ | Share-Based | |||||||||||||||||||
Profit- | Compensation | |||||||||||||||||||
Salary | Other(1) | Sharing | (SAP SOP 2007)(2) | Total | ||||||||||||||||
€(000) | ||||||||||||||||||||
Prof. Dr. Henning Kagermann (Co-CEO) | 750.0 | 15.7 | 2,606.1 | 948.4 | 4,320.2 | |||||||||||||||
Léo Apotheker (Co-CEO) | 687.5 | 334.5 | 2,388.9 | 632.3 | 4,043.2 | |||||||||||||||
Dr. Werner Brandt | 455.0 | 23.5 | 1,581.0 | 577.3 | 2,636.8 | |||||||||||||||
Erwin Gunst(3) | 227.5 | 18.1 | 790.5 | — | 1,036.1 | |||||||||||||||
Prof. Dr. Claus E. Heinrich | 455.0 | 19.8 | 1,581.0 | 577.3 | 2,633.1 | |||||||||||||||
Bill McDermott(3) | 395.2 | 142.4 | 631.3 | — | 1,168.9 | |||||||||||||||
Gerhard Oswald | 455.0 | 627.9 | 1,581.0 | 577.3 | 3,241.2 | |||||||||||||||
John Schwarz(4) | 424.9 | 14.3 | 1,295.2 | 577.3 | 2,311.7 | �� | ||||||||||||||
Jim Hagemann Snabe(3) | 227.5 | 22.3 | 790.5 | — | 1,040.3 | |||||||||||||||
Dr. Peter Zencke | 455.0 | 143.5 | 1,581.0 | 577.3 | 2,756.8 | |||||||||||||||
Total | 4,532.6 | 1,362.0 | 14,826.5 | 4,467.2 | 25,188.3 | |||||||||||||||
1) | Insurance contributions, benefits in kind, expenses for maintenance of two households due to work abroad, compensation from seats on other governing bodies in the SAP Group, leave compensation, reimbursement of legal fees. | |
2) | Fair value at the time of allocation. | |
3) | Member of the Executive Board since July 1, 2008. (The table shows compensation since that date.) | |
4) | Member of the Executive Board since March 1, 2008. (The table shows compensation since that date.) |
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Performance | ||||||||||||||||||||||||||||
Related | Long-Term | |||||||||||||||||||||||||||
Fixed Elements | Element | Incentive Elements | ||||||||||||||||||||||||||
Directors’ | Share-Based | |||||||||||||||||||||||||||
Profit- | Compensation | |||||||||||||||||||||||||||
Salary | Other1) | Sharing | (SAP SOP 2007)(2) | Total | ||||||||||||||||||||||||
€(000) | ||||||||||||||||||||||||||||
Prof. Dr. Henning Kagermann (Co-CEO) | 728.5 | 16.0 | 4,219.7 | 949.1 | 5,913.3 | |||||||||||||||||||||||
Shai Agassi (member until March 31, 2007)(4) | 161.3 | 3.1 | 446.8(3 | ) | — | 611.2 | ||||||||||||||||||||||
Léo Apotheker (Co-CEO) | 485.6 | 59.0 | 2,813.1 | 632.7 | 3,990.4 | |||||||||||||||||||||||
Dr. Werner Brandt | 443.4 | 41.3 | 2,568.5 | 577.7 | 3,630.9 | |||||||||||||||||||||||
Prof. Dr. Claus E. Heinrich | 443.4 | 20.2 | 2,568.5 | 577.7 | 3,609.8 | |||||||||||||||||||||||
Gerhard Oswald | 443.4 | 14.8 | 2,568.5 | 577.7 | 3,604.4 | |||||||||||||||||||||||
Dr. Peter Zencke | 443.4 | 28.0 | 2,568.5 | 577.7 | 3,617.6 | |||||||||||||||||||||||
Total | 3,149.0 | 182.4 | 17,753.6 | 3,892.6 | 24,977.6 | |||||||||||||||||||||||
1) | Insurance contributions, benefits in kind, expenses for maintenance of two households due to work abroad, compensation from seats on other governing bodies in the SAP Group. | |
2) | Fair value at the time of allocation. | |
3) | The portion of the directors’ profit-sharing for January through March 2007 was calculated on the basis of the actual directors’ profit-sharing paid in 2006. | |
4) | Shai Agassi left the Executive Board on March 31, 2007. His employment contract with SAP ended on April 30, 2007. |
2008 Allocations | ||||||||||||||||||||
Total Fair | ||||||||||||||||||||
Value of | ||||||||||||||||||||
Long-Term | ||||||||||||||||||||
Fair Value | Incentive | Fair Value | ||||||||||||||||||
per Right | Elements | per Right on | Total Value on | |||||||||||||||||
at Time of | at Time of | December 31, | December 31, | |||||||||||||||||
Quantity | Grant | Grant | 2008 | 2008 | ||||||||||||||||
€ | €(000) | € | €(000) | |||||||||||||||||
Prof. Dr. Henning Kagermann (Co-CEO) | 133,396 | 7.11 | 948.4 | 4.67 | 623.0 | |||||||||||||||
Léo Apotheker (Co-CEO) | 88,933 | 7.11 | 632.3 | 4.67 | 415.3 | |||||||||||||||
Dr. Werner Brandt | 81,200 | 7.11 | 577.3 | 4.67 | 379.2 | |||||||||||||||
Erwin Gunst(1) | — | — | — | — | — | |||||||||||||||
Prof. Dr. Claus E. Heinrich | 81,200 | 7.11 | 577.3 | 4.67 | 379.2 | |||||||||||||||
Bill McDermott(1) | — | — | — | — | — | |||||||||||||||
Gerhard Oswald | 81,200 | 7.11 | 577.3 | 4.67 | 379.2 | |||||||||||||||
John Schwarz(2) | 81,200 | 7.11 | 577.3 | 4.67 | 379.2 | |||||||||||||||
Jim Hagemann Snabe(1) | — | — | — | — | — | |||||||||||||||
Dr. Peter Zencke | 81,200 | 7.11 | 577.3 | 4.67 | 379.2 | |||||||||||||||
Total | 628,329 | 4,467.2 | 2,934.3 | |||||||||||||||||
1) | Member of the Executive Board since July 1, 2008. (No allocations were made after that date.) | |
2) | Member of the Executive Board since March 1, 2008. (The table shows allocations since that date.) |
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2007 Allocations | ||||||||||||||||||||
Total Fair | ||||||||||||||||||||
Value of | ||||||||||||||||||||
Long-Term | ||||||||||||||||||||
Fair Value | Incentive | Fair Value | ||||||||||||||||||
per Right | Elements | per Right on | Total Value on | |||||||||||||||||
at Time of | at Time of | December 31, | December 31, | |||||||||||||||||
Quantity | Grant | Grant | 2007 | 2007 | ||||||||||||||||
€ | €(000) | € | €(000) | |||||||||||||||||
Prof. Dr. Henning Kagermann (Co-CEO) | 118,637 | 8.00 | 949.1 | 8.53 | 1,012.0 | |||||||||||||||
Léo Apotheker (Co-CEO) | 79,093 | 8.00 | 632.7 | 8.53 | 674.7 | |||||||||||||||
Dr. Werner Brandt | 72,216 | 8.00 | 577.7 | 8.53 | 616.0 | |||||||||||||||
Prof. Dr. Claus E. Heinrich | 72,216 | 8.00 | 577.7 | 8.53 | 616.0 | |||||||||||||||
Gerhard Oswald | 72,216 | 8.00 | 577.7 | 8.53 | 616.0 | |||||||||||||||
Dr. Peter Zencke | 72,216 | 8.00 | 577.7 | 8.53 | 616.0 | |||||||||||||||
Total | 486,594 | 3,892.6 | 4,150.7 | |||||||||||||||||
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In Fiscal Year 2008 | ||||
€(000) | ||||
Bill McDermott | 474.5 | |||
Jim Hagemann Snabe | 92.1 |
Prof. Dr. | ||||||||||||||||||||||||||||||||||||||||
Henning | Léo | Prof. Dr. | ||||||||||||||||||||||||||||||||||||||
Kagermann | Apotheker | Dr. Werner | Claus E. | Bill | Gerhard | Dr. Peter | ||||||||||||||||||||||||||||||||||
(Co-CEO) | (Co-CEO) | Shai Agassi | Brandt | Erwin Gunst(1) | Heinrich | McDermott | Oswald | Zencke | Total | |||||||||||||||||||||||||||||||
€(000) | ||||||||||||||||||||||||||||||||||||||||
PBO January 1, 2007 | 5,334.7 | 445.4 | 356.8 | 593.3 | — | 3,015.3 | — | 3,284.3 | 3,875.9 | 16,905.7 | ||||||||||||||||||||||||||||||
Less plan assets market value January 1, 2007 | 4,582.5 | 603.4 | 246.4 | 408.2 | — | 1,763.4 | — | 2,015.1 | 2,947.0 | 12,566.0 | ||||||||||||||||||||||||||||||
Accrued January 1, 2007 | 752.2 | (158.0 | ) | 110.4 | 185.1 | — | 1,251.9 | — | 1,269.2 | 928.9 | 4,339.7 | |||||||||||||||||||||||||||||
PBO change in 2007 | 530.5 | (22.9 | ) | (320.9 | ) | 20.4 | — | (284.4 | ) | — | (269.5 | ) | (228.4 | ) | (575.2 | ) | ||||||||||||||||||||||||
Plan assets change in 2007 | 645.5 | 27.0 | (199.0 | ) | 102.5 | — | 265.3 | — | 301.3 | 407.9 | 1,550.5 | |||||||||||||||||||||||||||||
PBO December 31, 2007 | 5,865.2 | 422.5 | 35.9 | 613.7 | 280.3 | 2,730.9 | 588.4 | 3,014.8 | 3,647.5 | 17,199.2 | ||||||||||||||||||||||||||||||
Less plan assets market value December 31, 2007 | 5,228.0 | 630.4 | 47.4 | 510.7 | 272.9 | 2,028.7 | 45.0 | 2,316.4 | 3,354.9 | 14,434.4 | ||||||||||||||||||||||||||||||
Accrued December 31, 2007 | 637.2 | (207.9 | ) | (11.5 | ) | 103.0 | 7.4 | 702.2 | 543.4 | 698.4 | 292.6 | 2,764.8 | ||||||||||||||||||||||||||||
PBO change in 2008 | (277.2 | ) | 17.3 | — | 88.1 | 108.9 | 81.0 | 366.6 | 84.3 | (36.8 | ) | 432.2 | ||||||||||||||||||||||||||||
Plan assets change in 2008 | 277.2 | 28.4 | — | 113.3 | (224.8 | ) | 282.6 | (11.7 | ) | 320.2 | 431.8 | 1,217.0 | ||||||||||||||||||||||||||||
PBO December 31, 2008 | 5,588.0 | 439.8 | — | 701.8 | 389.2 | 2,811.9 | 955.0 | 3,099.1 | 3,610.7 | 17,595.5 | ||||||||||||||||||||||||||||||
Less plan assets market value December 31, 2008 | 5,505.2 | 658.8 | — | 624.0 | 48.1 | 2,311.3 | 33.3 | 2,636.6 | 3,786.7 | 15,604.0 | ||||||||||||||||||||||||||||||
Accrued December 31, 2008 | 82.8 | (219.0 | ) | — | 77.8 | 341.1 | 500.6 | 921.7 | 462.5 | (176.0 | ) | 1,991.5 | ||||||||||||||||||||||||||||
1) | When Erwin Gunst joined the Executive Board and his employment with SAP’s Switzerland affiliate ended, his vested plan funds were transferred to a vested benefits account. |
Vested on | Vested on | Vested on | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2008 | 2007 | 2006 | ||||||||||
€(000) | ||||||||||||
Prof. Dr. Henning Kagermann (Co-CEO) | 334.9 | (1) | 322.7 | (1) | 289.8 | |||||||
Léo Apotheker (Co-CEO) | 45.5 | 45.5 | 45.5 | |||||||||
Dr. Werner Brandt | 48.0 | 41.0 | 34.4 | |||||||||
Erwin Gunst | 32.8 | — | — | |||||||||
Prof. Dr. Claus E. Heinrich | 186.1 | 175.2 | 165.5 | |||||||||
Bill McDermott | 121.8 | — | — | |||||||||
Gerhard Oswald | 201.2 | 192.8 | 184.6 | |||||||||
Dr. Peter Zencke | 226.5 | 216.9 | 207.2 |
(1) | Due to the extension of Henning Kagermann’s contract beyond his 60th birthday, this value represents the retirement pension entitlement that he would receive after his current Executive Board contract expires on May 31, 2009, based on the entitlements vested on December 31, 2008. |
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Holding on | ||||||||||||||||||||
December 31, | Fair Value | |||||||||||||||||||
2008 | Fair Value | per Unit on | Accrual on | |||||||||||||||||
Year | Quantity of | per Unit at | December 31, | December 31, | ||||||||||||||||
Granted | Options | Time of Grant | 2008 | 2008 | ||||||||||||||||
€ | € | €(000) | ||||||||||||||||||
Prof. Dr. Henning Kagermann (Co-CEO) | 2007 | 118,637 | 8.00 | 3.50 | 363.3 | |||||||||||||||
2008 | 133,396 | 7.11 | 4.67 | 259.6 | ||||||||||||||||
Léo Apotheker (Co-CEO) | 2007 | 79,093 | 8.00 | 3.50 | 242.2 | |||||||||||||||
2008 | 88,933 | 7.11 | 4.67 | 173.0 | ||||||||||||||||
Dr. Werner Brandt | 2007 | 72,216 | 8.00 | 3.50 | 221.2 | |||||||||||||||
2008 | 81,200 | 7.11 | 4.67 | 158.0 | ||||||||||||||||
Erwin Gunst(1) | 2007 | 56,258 | 8.00 | 3.50 | 172.3 | |||||||||||||||
2008 | 70,284 | 7.11 | 4.67 | 136.8 | ||||||||||||||||
Prof. Dr. Claus E. Heinrich | 2007 | 72,216 | 8.00 | 3.50 | 221.2 | |||||||||||||||
2008 | 81,200 | 7.11 | 4.67 | 158.0 | ||||||||||||||||
Bill McDermott(1) | 2007 | 62,508 | 8.00 | 3.50 | 191.4 | |||||||||||||||
2008 | 70,284 | 7.11 | 4.67 | 136.8 | ||||||||||||||||
Gerhard Oswald | 2007 | 72,216 | 8.00 | 3.50 | 221.2 | |||||||||||||||
2008 | 81,200 | 7.11 | 4.67 | 158.0 | ||||||||||||||||
John Schwarz(2) | 2007 | — | — | — | — | |||||||||||||||
2008 | 81,200 | 7.11 | 4.67 | 158.0 | ||||||||||||||||
Jim Hagemann Snabe(1) | 2007 | 37,505 | 8.00 | 3.50 | 114.9 | |||||||||||||||
2008 | 56,228 | 7.11 | 4.67 | 109.4 | ||||||||||||||||
Dr. Peter Zencke | 2007 | 72,216 | 8.00 | 3.50 | 221.2 | |||||||||||||||
2008 | 81,200 | 7.11 | 4.67 | 158.0 | ||||||||||||||||
Total | 1,467,990 | 3,574.5 | ||||||||||||||||||
(1) | Member since July 1, 2008; the holding was allocated before appointment to the Executive Board | |
(2) | Member since March 1, 2008 |
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• | If market capitalization does not increase by 50% or more, the Executive Board will not receive a payout. | |
• | If market capitalization increases by more than 50% but less than 100%, target achievement will be measured progressively. | |
• | If SAP’s market capitalization increases not less than twofold during the said period, the Executive Board will receive a payout of €100 million. |
Original | ||||||||||||||||
Quantity | Fair Value per | |||||||||||||||
Granted | Fair Value per | Unit on | Accrual on | |||||||||||||
Number of | Unit at Time of | December 31, | December 31, | |||||||||||||
Rights | Grant | 2008 | 2008 | |||||||||||||
€ | € | €(000) | ||||||||||||||
Prof. Dr. Henning Kagermann (Co-CEO) | 188,182 | 24.87 | 3.09 | 340.2 | ||||||||||||
Léo Apotheker (Co-CEO) | 125,455 | 24.87 | 3.09 | 226.8 | ||||||||||||
Dr. Werner Brandt | 62,727 | 24.87 | 3.09 | 113.4 | ||||||||||||
Erwin Gunst(1) | 28,815 | 14.02 | 3.09 | 52.1 | ||||||||||||
Prof. Dr. Claus E. Heinrich | 62,727 | 24.87 | 3.09 | 113.4 | ||||||||||||
Bill McDermott(1) | 45,345 | 14.02 | 3.09 | 82.0 | ||||||||||||
Gerhard Oswald | 62,727 | 24.87 | 3.09 | 113.4 | ||||||||||||
Jim Hagemann Snabe(1) | 17,290 | 14.02 | 3.09 | 31.3 | ||||||||||||
Dr. Peter Zencke | 62,727 | 24.87 | 3.09 | 113.4 | ||||||||||||
Total | 655,995 | 1,186.0 | ||||||||||||||
(1) | Member since July 1, 2008; the rights were allocated before appointment to the Executive Board |
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Rights | ||||||||||||||||||||||||||||||||
Holding on | Exercised | |||||||||||||||||||||||||||||||
January 1, 2008 | in 2008 | Holding on December 31, 2008 | ||||||||||||||||||||||||||||||
Remaining | Price on | Remaining | ||||||||||||||||||||||||||||||
Year | Strike Price | Quantity | Term in | Quantity of | Exercise | Quantity of | Term in | |||||||||||||||||||||||||
Granted | per Share | of Shares | Years | Shares | Day | Shares | Years | |||||||||||||||||||||||||
€ | € | |||||||||||||||||||||||||||||||
Prof. Dr. Henning Kagermann (Co-CEO) | 2004 | 37.50 | 200,000 | 1.13 | — | — | 200,000 | 0.13 | ||||||||||||||||||||||||
2005 | 33.55 | 267,820 | 2.11 | — | — | 267,820 | 1.11 | |||||||||||||||||||||||||
2006 | 46.48 | 143,404 | 3.10 | — | — | 143,404 | 2.10 | |||||||||||||||||||||||||
Léo Apotheker (Co-CEO) | 2004 | 37.50 | 112,000 | 1.13 | — | — | 112,000 | 0.13 | ||||||||||||||||||||||||
2005 | 33.55 | 149,980 | 2.11 | — | — | 149,980 | 1.11 | |||||||||||||||||||||||||
2006 | 46.48 | 95,604 | 3.10 | — | — | 95,604 | 2.10 | |||||||||||||||||||||||||
Dr. Werner Brandt | 2004 | 37.50 | 112,000 | 1.13 | — | — | 112,000 | 0.13 | ||||||||||||||||||||||||
2005 | 33.55 | 149,980 | 2.11 | — | — | 149,980 | 1.11 | |||||||||||||||||||||||||
2006 | 46.48 | 87,292 | 3.10 | — | — | 87,292 | 2.10 | |||||||||||||||||||||||||
Erwin Gunst(1) | 2005 | 33.55 | 61,264 | 2.11 | — | — | 61,264 | 1.11 | ||||||||||||||||||||||||
2006 | 46.48 | 44,596 | 3.10 | — | — | 44,596 | 2.10 | |||||||||||||||||||||||||
Prof. Dr. Claus E. Heinrich | 2004 | 37.50 | 112,000 | 1.13 | — | — | 112,000 | 0.13 | ||||||||||||||||||||||||
2005 | 33.55 | 149,980 | 2.11 | — | — | 149,980 | 1.11 | |||||||||||||||||||||||||
2006 | 46.48 | 87,292 | 3.10 | — | — | 87,292 | 2.10 | |||||||||||||||||||||||||
Bill McDermott(1) | 2006 | 46.48 | 77,296 | 3.10 | — | — | 77,296 | 2.10 | ||||||||||||||||||||||||
Gerhard Oswald | 2005 | 33.55 | 149,980 | 2.11 | — | — | 149,980 | 1.11 | ||||||||||||||||||||||||
2006 | 46.48 | 87,292 | 3.10 | — | — | 87,292 | 2.10 | |||||||||||||||||||||||||
Jim Hagemann Snabe(1) | 2005 | 33.55 | 51,180 | 2.11 | — | — | 51,180 | 1.11 | ||||||||||||||||||||||||
2006 | 46.48 | 37,164 | 3.10 | — | — | 37,164 | 2.10 | |||||||||||||||||||||||||
Dr. Peter Zencke | 2004 | 37.50 | 112,000 | 1.13 | — | — | 112,000 | 0.13 | ||||||||||||||||||||||||
2005 | 33.55 | 149,980 | 2.11 | — | — | 149,980 | 1.11 | |||||||||||||||||||||||||
2006 | 46.48 | 87,292 | 3.10 | — | — | 87,292 | 2.10 | |||||||||||||||||||||||||
Total | 2,525,396 | 2,525,396 | ||||||||||||||||||||||||||||||
(1) | Member since July 1, 2008; the shares were allocated before appointment to the Executive Board |
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Rights | ||||||||||||||||||||||||||||||||
Holding on | Exercised in | Holding on December 31, | ||||||||||||||||||||||||||||||
January 1, 2008 | 2008 | 2008 | ||||||||||||||||||||||||||||||
Remaining | Price on | Remaining | ||||||||||||||||||||||||||||||
Year | Strike Price | Quantity | Term in | Quantity of | Exercise | Quantity of | Term | |||||||||||||||||||||||||
Granted | per Share | of Shares | Years | Shares | Day2 | Shares | in Years | |||||||||||||||||||||||||
€ | € | |||||||||||||||||||||||||||||||
Prof. Dr. Henning Kagermann (Co-CEO) | 2000 | — | 112,128 | 2.14 | — | — | 112,128 | 1.14 | ||||||||||||||||||||||||
2001 | — | 157,500 | 3.14 | — | — | 157,500 | 2.14 | |||||||||||||||||||||||||
Léo Apotheker (Co-CEO) | 2002 | — | 87,500 | 4.14 | — | — | 87,500 | 3.14 | ||||||||||||||||||||||||
Dr. Peter Zencke | 2000 | — | 27,924 | 2.14 | — | — | 27,924 | 1.14 | ||||||||||||||||||||||||
2001 | — | 73,700 | 3.14 | — | — | 73,700 | 2.14 | |||||||||||||||||||||||||
Total | 458,752 | 458,752 | ||||||||||||||||||||||||||||||
(1) | No options were exercised in 2008, and the strike price is variable in accordance with the terms of the plan — being ascertained on the day an option is exercised — so there is no information to disclose here. | |
(2) | No options were exercised in 2009, so no strike price is shown. |
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Rights | Holding on | |||||||||||||||||||||||||||||||
Holding on | Exercised in | December 31, | ||||||||||||||||||||||||||||||
January 1, 2008 | 2008 | 2008 | ||||||||||||||||||||||||||||||
Remaining | Price on | Remaining | ||||||||||||||||||||||||||||||
Year | Strike Price | Quantity | Term | Quantity of | Exercise | Quantity | Term | |||||||||||||||||||||||||
Granted | per Share | of Shares | in Years | Shares | Day | of Shares | in Years | |||||||||||||||||||||||||
€ | € | |||||||||||||||||||||||||||||||
Prof. Dr. Henning Kagermann (Co-CEO) | 2000 | 72.58 | 89,700 | 2.14 | — | — | 89,700 | 1.14 | ||||||||||||||||||||||||
2001 | 47.81 | 126,000 | 3.14 | — | — | 126,000 | 2.14 | |||||||||||||||||||||||||
2002 | 37.88 | 360,000 | 4.14 | — | — | 360,000 | 3.14 | |||||||||||||||||||||||||
Léo Apotheker (Co-CEO) | 2000 | 83.67 | 95,400 | 2.19 | — | — | 95,400 | 1.19 | ||||||||||||||||||||||||
2001 | 47.81 | 120,000 | 3.14 | — | — | 120,000 | 2.14 | |||||||||||||||||||||||||
2002 | 37.88 | 70,000 | 4.14 | — | — | 70,000 | 3.14 | |||||||||||||||||||||||||
Dr. Werner Brandt | 2001 | 47.81 | 20,000 | 3.14 | — | — | 20,000 | 2.14 | ||||||||||||||||||||||||
2002 | 37.88 | 120,000 | 4.14 | — | — | 120,000 | 3.14 | |||||||||||||||||||||||||
Prof. Dr. Claus E. Heinrich | 2000 | 72.58 | 65,700 | 2.14 | — | — | 65,700 | 1.14 | ||||||||||||||||||||||||
2001 | 47.81 | 88,000 | 3.14 | — | — | 88,000 | 2.14 | |||||||||||||||||||||||||
2002 | 37.88 | 200,000 | 4.14 | — | — | 200,000 | 3.14 | |||||||||||||||||||||||||
Gerhard Oswald | 2000 | 72.58 | 65,700 | 2.14 | — | — | 65,700 | 1.14 | ||||||||||||||||||||||||
2001 | 47.81 | 88,000 | 3.14 | — | — | 88,000 | 2.14 | |||||||||||||||||||||||||
Dr. Peter Zencke | 2000 | 72.58 | 65,700 | 2.14 | — | — | 65,700 | 1.14 | ||||||||||||||||||||||||
2001 | 47.81 | 88,000 | 3.14 | — | — | 88,000 | 2.14 | |||||||||||||||||||||||||
2002 | 37.88 | 200,000 | 4.14 | — | — | 200,000 | 3.14 | |||||||||||||||||||||||||
Total | 1,862,200 | 1,862,200 | ||||||||||||||||||||||||||||||
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2008 | 2007 | |||||||
€(000) | ||||||||
Prof. Dr. Henning Kagermann (Co-CEO) | 55.9 | 1,047.5 | ||||||
Léo Apotheker (Co-CEO) | 37.3 | 690.3 | ||||||
Dr. Werner Brandt | 98.9 | 601.4 | ||||||
Erwin Gunst(1) | 108.0 | — | ||||||
Prof. Dr. Claus E. Heinrich | 98.9 | 518.7 | ||||||
Bill McDermott(1) | 97.4 | — | ||||||
Gerhard Oswald | 98.9 | 601.4 | ||||||
John Schwarz(2) | 158.1 | — | ||||||
Jim Hagemann Snabe(1) | 95.2 | — | ||||||
Dr. Peter Zencke | 98.9 | 601.4 | ||||||
Total | 947.5 | 4,060.7 |
(1) | Member of the Executive Board since July 1, 2008. | |
(2) | Member of the Executive Board since March 1, 2008. |
Transactions in SAP Shares | ||||||||||||||||
Transaction Date | Transaction | Quantity | Unit Price € | |||||||||||||
Léo Apotheker (Co-CEO) | October 29, 2008 | Stock purchase | 2,000 | 26.35 |
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2008 | 2007 | |||||||||||||||||||||||||||||||
Compensation | Compensation | |||||||||||||||||||||||||||||||
Fixed | Variable | for Committee | Fixed | Variable | for Committee | |||||||||||||||||||||||||||
Compensation | Compensation | Work | Total | Compensation | Compensation | Work | Total | |||||||||||||||||||||||||
€(000) | ||||||||||||||||||||||||||||||||
Prof. Dr. h.c. mult. Hasso Plattner (chairperson) | 75.0 | 125.0 | 25.0 | 225.0 | 75.0 | 125.0 | 15.0 | 215.0 | ||||||||||||||||||||||||
Lars Lamadé (deputy chairperson from May 10, 2007) | 50.0 | 100.0 | 2.5 | 152.5 | 49.0 | 80.2 | 2.5 | 131.7 | ||||||||||||||||||||||||
Pekka Ala-Pietilä | 37.5 | 62.5 | 7.5 | 107.5 | 37.5 | 62.5 | 2.5 | 102.5 | ||||||||||||||||||||||||
Thomas Bamberger (from May 10, 2007) | 37.5 | 62.5 | 2.5 | 102.5 | 25.0 | 41.7 | 1.7 | 68.3 | ||||||||||||||||||||||||
Panagiotis Bissiritsas (from May 10, 2007) | 37.5 | 62.5 | 5.0 | 105.0 | 25.0 | 41.7 | 3.3 | 70.0 | ||||||||||||||||||||||||
Willi Burbach | 37.5 | 62.5 | 5.0 | 105.0 | 37.5 | 62.5 | 4.2 | 104.2 | ||||||||||||||||||||||||
Helga Classen (deputy chairperson until May 10, 2007) | 37.5 | 62.5 | 2.5 | 102.5 | 45.8 | 75.0 | 2.5 | 123.3 | ||||||||||||||||||||||||
Prof. Dr. Wilhelm Haarmann | 37.5 | 62.5 | 9.0 | 109.0 | 37.5 | 62.5 | 7.5 | 107.5 | ||||||||||||||||||||||||
Bernhard Koller (until May 10, 2007) | 0.0 | 0.0 | 0.0 | 0.0 | 15.6 | 26.0 | 1.0 | 42.7 | ||||||||||||||||||||||||
Peter Koop (from May 10, 2007) | 37.5 | 62.5 | 2.5 | 102.5 | 25.0 | 41.7 | 1.6 | 68.3 | ||||||||||||||||||||||||
Christiane Kuntz-Mayr (until May 10, 2007) | 0.0 | 0.0 | 0.0 | 0.0 | 15.6 | 26.0 | 2.1 | 43.8 | ||||||||||||||||||||||||
Bernard Liautaud (from June 3, 2008) | 21.9 | 36.5 | 1.5 | 59.8 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||||||||||||||
Dr. Gerhard Maier | 37.5 | 62.5 | 5.0 | 105.0 | 37.5 | 62.5 | 5.0 | 105.0 | ||||||||||||||||||||||||
Dr. h.c. Hartmut Mehdorn | 37.5 | 62.5 | 1.5 | 101.5 | 37.5 | 62.5 | 0.0 | 100.0 | ||||||||||||||||||||||||
Prof. Dr.-Ing. Dr. h.c. Dr.-Ing. E.h. Joachim Milberg (from May 10, 2007) | 37.5 | 62.5 | 11.5 | 111.5 | 25.0 | 41.7 | 5.0 | 71.7 | ||||||||||||||||||||||||
Prof. Dr. Dr. h.c. August-Wilhelm Scheer (until April 4, 2008) | 12.5 | 20.8 | 2.5 | 35.8 | 37.5 | 62.5 | 7.5 | 107.5 | ||||||||||||||||||||||||
Dr. Barbara Schennerlein (until May 10, 2007) | 0.0 | 0.0 | 0.0 | 0.0 | 15.6 | 26.0 | 1.0 | 42.7 | ||||||||||||||||||||||||
Dr. Erhard Schipporeit | 37.5 | 62.5 | 7.5 | 107.5 | 37.5 | 62.5 | 5.0 | 105.0 | ||||||||||||||||||||||||
Stefan Schulz | 37.5 | 62.5 | 5.0 | 105.0 | 37.5 | 62.5 | 5.0 | 105.0 | ||||||||||||||||||||||||
Dr. Dieter Spöri (until May 10, 2007) | 0.0 | 0.0 | 0.0 | 0.0 | 15.6 | 26.0 | 1.0 | 42.7 | ||||||||||||||||||||||||
Dr. h.c. Klaus Tschira (until May 10, 2007) | 0.0 | 0.0 | 0.0 | 0.0 | 15.6 | 26.0 | 1.0 | 42.7 | ||||||||||||||||||||||||
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer (from May 10, 2007) | 37.5 | 62.5 | 2.5 | 102.5 | 25.0 | 41.7 | 1.7 | 68.3 | ||||||||||||||||||||||||
Total | 646.9 | 1,094.8 | 98.3 | 1,840.0 | 672.9 | 1,118.8 | 76.3 | 1,867.9 | ||||||||||||||||||||||||
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Transactions in SAP Shares | ||||||||||||||||
Transaction Date | Transaction | Quantity | Unit Price in € | |||||||||||||
Dr. Elisabeth Strobl-Haarmann | March 13, 2008 | Stock sale | 4,490 | 31.50 | ||||||||||||
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer | July 4, 2008 | Stock purchase | 1,500 | 33.08 |
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Employees as of December 31, continuing operations | ||||||||||||||||||||||||||||||||||||||||||||||||
2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||
FTEs | EMEA | Americas | APJ | Total | EMEA | Americas | APJ | Total | EMEA | Americas | APJ | Total | ||||||||||||||||||||||||||||||||||||
Product | 3,266 | 1,301 | 1,891 | 6,458 | 3,022 | 1,002 | 1,807 | 5,831 | 2,840 | 808 | 1,595 | 5,243 | ||||||||||||||||||||||||||||||||||||
Service | 7,326 | 4,142 | 2,583 | 14,051 | 6,558 | 3,893 | 2,334 | 12,785 | 6,336 | 3,363 | 1,819 | 11,518 | ||||||||||||||||||||||||||||||||||||
Development | 8,687 | 2,767 | 4,093 | 15,547 | 7,787 | 1,749 | 3,415 | 12,951 | 7,507 | 1,530 | 2,764 | 11,801 | ||||||||||||||||||||||||||||||||||||
Sales & Marketing | 4,645 | 4,014 | 2,042 | 10,701 | 3,688 | 3,129 | 1,465 | 8,282 | 3,330 | 2,604 | 1,116 | 7,050 | ||||||||||||||||||||||||||||||||||||
General & Administration | 1,996 | 788 | 460 | 3,244 | 1,810 | 571 | 416 | 2,797 | 1,613 | 523 | 336 | 2,472 | ||||||||||||||||||||||||||||||||||||
Infrastructure | 905 | 445 | 185 | 1,535 | 789 | 285 | 141 | 1,215 | 713 | 281 | 120 | 1,114 | ||||||||||||||||||||||||||||||||||||
SAP Group | 26,825 | 13,457 | 11,254 | 51,536 | 23,654 | 10,629 | 9,578 | 43,861 | 22,339 | 9,109 | 7,750 | 39,198 | ||||||||||||||||||||||||||||||||||||
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Ordinary Shares | ||||||||
Beneficially Owned | ||||||||
% of | ||||||||
Major Shareholders | Number | Outstanding | ||||||
Dietmar Hopp, collectively(1) | 110,273,200 | 8.996 | % | |||||
Hasso Plattner, Chairperson Supervisory Board, collectively(2) | 128,987,982 | 10.522 | % | |||||
Klaus Tschira, collectively(3) | 109,754,305 | 8.953 | % | |||||
Executive Board Members as a group (7 persons) | 88,527 | 0.007 | % | |||||
Supervisory Board Members as a group (16 persons) | 128,994,969 | 10.523 | % | |||||
Executive Board Members and Supervisory Board Members as a group (23 persons) | 129,083,496 | 10.530 | % | |||||
Options and convertible bonds that are vested and exercisable within 60 days of March 9, 2009, held by Executive Board Members and Supervisory Board Members, collectively(4) | 914,997 | N/A |
(1) | Includes Dietmar Hopp Stiftung GmbH and DH Besitzgesellschaft mbH & Co. KG in which Dietmar Hopp exercises sole voting and dispositive power. |
(2) | Includes Hasso Plattner Förderstiftung gGmbH and Hasso Plattner GmbH & Co. Beteiligungs-KG in which Hasso Plattner exercises sole voting and dispositive power. |
(3) | Includes Klaus Tschira Stiftung gGmbH and Dr. h. c. Tschira Beteiligungs GmbH & Co. KG in which Klaus Tschira exercises sole voting and dispositive power. |
(4) | Includes 511,147 stock options and 403,850 convertible bonds. Each of these stock options and convertible bonds entitles the holder, if exercised or converted, to four SAP AG ordinary shares. |
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Price per | ||||||||||||||||||||||||
Ordinary Share(1) | DAX(2) | Price per ADR | ||||||||||||||||||||||
High | Low | High | Low | High | Low | |||||||||||||||||||
In € | In € | In US$ | ||||||||||||||||||||||
Annual Highs and Lows | ||||||||||||||||||||||||
2004 | 35.68 | 29.03 | 4,261.79 | 3,646.99 | 45.45 | 35.50 | ||||||||||||||||||
2005 | 38.95 | 28.63 | 5,458.58 | 4,178.10 | 46.43 | 36.96 | ||||||||||||||||||
2006 | 46.86 | 34.56 | 6,611.81 | 5,292.14 | 57.00 | 43.57 | ||||||||||||||||||
2007 | 42.27 | 33.37 | 8,105.69 | 6,447.70 | 59.86 | 44.45 | ||||||||||||||||||
2008 | 39,93 | 23,45 | 7,949.11 | 4,127.41 | 58.98 | 29.70 | ||||||||||||||||||
Quarterly Highs and Lows | ||||||||||||||||||||||||
2007 | ||||||||||||||||||||||||
First Quarter | 42.27 | 33.37 | 7,027.59 | 6,447.70 | 55.71 | 44.45 | ||||||||||||||||||
Second Quarter | 38.15 | 33.65 | 8,090.49 | 6,937.17 | 51.35 | 45.08 | ||||||||||||||||||
Third Quarter | 41.76 | 36.61 | 8,105.69 | 7,270.07 | 58.67 | 49.85 | ||||||||||||||||||
Fourth Quarter | 41.66 | 34.31 | 8,076.12 | 7,511.97 | 59.86 | 50.05 | ||||||||||||||||||
2008 | ||||||||||||||||||||||||
First Quarter | 34.88 | 29.96 | 7,949.11 | 6.182,30 | 51.93 | 45.77 | ||||||||||||||||||
Second Quarter | 35.52 | 31.50 | 7,225.94 | 6,418.32 | 55.20 | 48.72 | ||||||||||||||||||
Third Quarter | 39.93 | 32.38 | 6,609.63 | 5,807.08 | 58.98 | 51.40 | ||||||||||||||||||
Fourth Quarter | 36.98 | 23.45 | 5,806.33 | 4,127.41 | 51.85 | 29.70 | ||||||||||||||||||
Monthly Highs and Lows | ||||||||||||||||||||||||
2008 | ||||||||||||||||||||||||
July | 37.26 | 32.38 | 6,536.09 | 6,081.70 | 58.98 | 51.40 | ||||||||||||||||||
August | 38.71 | 37.00 | 6,609.63 | 6,236.96 | 58.56 | 55.71 | ||||||||||||||||||
September | 39.93 | 36.97 | 6,518.47 | 5,807.08 | 58.13 | 52.19 | ||||||||||||||||||
October | 36.98 | 23.45 | 5,806.33 | 4,295.67 | 51.85 | 30.22 | ||||||||||||||||||
November | 29.44 | 23.80 | 5,278.04 | 4,127.41 | 38.38 | 29.70 | ||||||||||||||||||
December | 27.74 | 24.10 | 4,810.20 | 4,381.47 | 36.27 | 32.21 | ||||||||||||||||||
2009 | ||||||||||||||||||||||||
January | 27.85 | 25.91 | 5,026.31 | 4,178.94 | 37.62 | 33.30 | ||||||||||||||||||
February | 29.64 | 25.52 | 4,666.82 | 3,843.74 | 38.61 | 32.14 | ||||||||||||||||||
March (through March 9, 2009) | 26.43 | 25.00 | 3,890.94 | 3,666.41 | 33.11 | 31.69 |
(1) | Share prices for 2006 and prior are retrospectively adjusted for the effect of the fourfold increase in the number of shares resulting from the capital increase which became effective December 15, 2006 (see the immediately preceding section “— General” for more detail of the share increase). |
(2) | The DAX is a continuously updated, capital-weighted performance index of 30 German blue chip companies. In principle, the shares included in the DAX are selected on the basis of their stock exchange turnover and the issuer’s market capitalization. Adjustments to the DAX are made for capital changes, subscription rights and dividends. |
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• | developing and marketing integrated product and service solutions fore-commerce; | |
• | developing software for information technology and the licensing of its use to others; | |
• | organization and deployment consulting, as well as user training, fore-commerce and other software solutions; | |
• | selling, leasing, renting and arranging the procurement and provision of all other forms of use of information technology systems and related equipment; and | |
• | making capital investments in enterprises active in the field of information technology to promote the opening and advancement of international markets in the field of information technology. |
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��� | changing the corporate purpose of the company set out in the articles of incorporation; | |
• | capital increases and capital decreases; | |
• | excluding preemptive rights of shareholders to subscribe for new shares; | |
• | dissolution; | |
• | a merger into, or a consolidation with, another company; | |
• | a transfer of all or virtually all of the assets; and | |
• | a change of corporate form. |
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• | derivatives held within a designated cash-flow hedging relationship and | |
• | foreign currency embedded derivatives (which arise for instance due to a foreign-currency denominated contract in Switzerland). |
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• | Changes in interest rates only affect nonderivative fixed-rate financial instruments if they are recognized at fair value. As we have classified our investments as available for sale we carry interest-rate sensitive debt investments at fair value with fair value changes recognized in other comprehensive income. For this reason, changes in prevailing market rates are included in the equity-related sensitivity calculation. | |
• | Income or expenses for nonderivative financial instruments with variable interest are subject to interest rate risk if they are not hedged items in an effective hedging relationship. We therefore have no significant interest-rate risk arising from our financial liabilities and consider interest rate changes for our variable rate debt investments in the earnings-related sensitivity calculation. | |
• | Due to the aforementioned designation of interest rate derivatives to a cash-flow hedge relationship, the respective interest rate changes affect the unrealized interest rate cash-flow hedge position in other comprehensive income. The movements related to the interest rate swaps’ variable leg are not reflected in the sensitivity calculation as they offset the variable interest payments for the credit facility. We therefore consider only changes from the interest rate swaps’ fixed leg in the equity-related sensitivity calculation for the interest swaps in a hedge relationship. | |
• | As the deal contingent interest rate payer swaps are freestanding derivatives with fair value fluctuations charged to profit or loss we include only changes from the interest rate swaps’ fixed leg in the earnings-related sensitivity calculation. The movements related to the interest rate swaps’ variable leg are not reflected in the sensitivity calculation as they offset the variable interest payments for the credit facility. |
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1. | “Prohibited services:” This category includes services that our independent auditors must not be engaged to perform. These are services that are not permitted by applicable law or that would be inconsistent with maintaining the auditors’ independence. | |
2. | “Services requiring universal approval:” Services of this category may be provided by our independent auditors up to a certain aggregate amount in fees per year that is determined annually by the Audit Committee. | |
3. | “Services requiring individual approval:” Services of this category may only be provided by our independent auditors if they have been individually (specifically) pre-approved by the Audit Committee or an Audit Committee member who is authorized by the Audit Committee to make such approvals. |
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(b) | (c) | (d) | ||||||||||||||
(a) | Average | Total Number of Shares | Maximum Number of | |||||||||||||
Total Number | Price Paid | Purchased as Part of | Shares that May Yet | |||||||||||||
of Shares | per Share | Publicly Announced | Be Purchased Under | |||||||||||||
Period | Purchased | (in €) | Plans or Programs | the Plans or Programs | ||||||||||||
January 1/1/08 — 1/31/08 | 0 | — | 0 | 77,023,001 | ||||||||||||
February 2/1/08 — 2/28/08 | 3,339,428 | 32,47 | 3,339,428 | 74,926,777 | ||||||||||||
March 3/1/08 — 3/31/08 | 4,687,699 | 31,98 | 4,687,699 | 70,324,007 | ||||||||||||
April 4/1/08 — 4/30/08 | 0 | — | 0 | 70,372,708 | ||||||||||||
May 5/1/08 — 5/31/08 | 3,813,435 | 32,58 | 3,813,435 | 66,606,519 | ||||||||||||
June 6/1/08 — 6/30/08 | 0 | — | 0 | 66,777,219 | ||||||||||||
July 7/1/08 — 7/31/08 | 0 | — | 0 | 66,868,806 | ||||||||||||
August 8/1/08 — 8/31/08 | 2,361,207 | 37,83 | 2,361,207 | 64,985,901 | ||||||||||||
September 9/1/08 — 9/30/08 | 400,000 | 37,32 | 400,000 | 83,915,467 | ||||||||||||
October 10/1/08 — 10/31/08 | 0 | — | 0 | 83,975,123 | ||||||||||||
November 11/1/08 — 11/30/08 | 0 | — | 0 | 84,049,348 | ||||||||||||
December 12/1/08 — 12/31/08 | 0 | — | 0 | 84,119,556 | ||||||||||||
Total | 14,601,769 | 33,34 | 14,601,769 | |||||||||||||
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• | Report of Independent Registered Public Accounting Firm. | |
• | Consolidated Statements of Income for the years ended 2008, 2007 and 2006. | |
• | Consolidated Balance Sheets as of December 31, 2008 and 2007. | |
• | Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2008, 2007 and 2006. | |
• | Consolidated Statements of Comprehensive Income for the years ended December 31, 2008, 2007 and 2006. | |
• | Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006. | |
• | Notes to Consolidated Financial Statements. |
1 | Articles of Incorporation (Satzung) of SAP AG, as amended to date (English translation).(1) | |||
2 | .1 | Form of global share certificate for ordinary shares (English translation).(1) |
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2 | .2 | Form of American Depositary Receipt.(2) | ||
4 | .1 | Form of Amended and Restated Deposit Agreement among SAP AG, Deutsche Bank Trust Company Americas, as Depositary, and all owners and holders from time to time of American Depositary Receipts issued thereunder, including the form of American Depositary Receipts, dated as of December 3, 2004.(3) | ||
4 | .2 | Amendment No. 1 dated as of December 20, 2006 to Amended and Restated Deposit Agreement among SAP AG, Deutsche Bank Trust Company Americas, as Depository, and all owners and holders from time to time of American Depositary Receipts issued thereunder, including the form of American Depositary Receipts.(2) | ||
4 | .3 | Tender Offer Agreement dated as of October 7, 2007 between SAP AG and Business Objects S.A.(4) | ||
4 | .3.1 | Assignment and Assumption Agreement dated as of October 22, 2007 between SAP AG and SAP France S.A.(4) | ||
4 | .4 | Amendment and Restatement Agreement relating to the €5,000,000,000 (subsequently reduced to €2,947,679,513.45) Syndicated Multicurrency Term Loan Facility Agreement dated October 1, 2007 by and among SAP AG (Borrower), Deutsche Bank AG, ABN Amro Bank N.V., Niederlassung Deutschland, BNP Paribas S.A., Commerzbank Aktiengesellschaft, J.P. Morgan plc and Sumitomo Mitsui Banking Corporation (Mandated Lead Arrangers), Deutsche Bank AG Paris Branch (Offer Guarantor), Deutsche Bank Luxemburg S.A. (Agent) and Certain Financial Institutions (Lenders).(5) | ||
4 | .4.1 | Accession Agreement relating to the €5,000,000,000 (subsequently reduced to €2,947,679,513.45) Syndicated Multicurrency Term Loan Facility Agreement dated October 1, 2007 by and among SAP AG (Borrower), Deutsche Bank AG, ABN Amro Bank N.V., Niederlassung Deutscheland, BNP PARIBAS S.A., Commerzbank Aktiengesellschaft, J.P. Morgan plc and Sumitomo Mitsui Banking Corporation (Mandated Lead Arrangers), Deutsche Bank AG Paris Branch (Offer Guarantor), certain financial institutions (Existing Lenders), certain financial institutions (New Lenders), and Deutsche Bank Luxembourg S.A. (Agent).(5) | ||
8 | Subsidiaries, Equity Method Investments, and Other Investments of SAP AG. | |||
12 | .1 | Certification of Henning Kagermann, Co-Chief Executive Officer, required byRule 13a-14(a) orRule 15d-14(a). | ||
12 | .2 | Certification of Léo Apotheker, Co-Chief Executive Officer, required byRule 13a-14(a) orRule 15d-14(a). | ||
12 | .3 | Certification of Werner Brandt, Chief Financial Officer, required byRule 13a-14(a) orRule 15d-14(a). | ||
13 | .1 | Certification of Henning Kagermann, Co-Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
13 | .2 | Certification of Léo Apotheker, Co-Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
13 | .3 | Certification of Werner Brandt, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
15 | Consent of Independent Registered Public Accounting Firm. |
(1) | Incorporated by reference to the Annual Report onForm 20-F of SAP AG filed on March 22, 2006. | |
(2) | Incorporated by reference to Post Effective Amendment No. 1 toForm F-6 filed on December 20, 2006. | |
(3) | Incorporated by reference to the Current Report onForm 6-K of SAP AG, filed on December 13, 2004. | |
(4) | Incorporated by reference to the Tender Offer Statement on Schedule TO filed with the SEC by SAP France S.A. on December 4, 2007. | |
(5) | Incorporated by reference to the Annual Report onForm 20-F of SAP AG filed on April 2, 2008. |
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By: /s/ | HENNING KAGERMANN |
By: /s/ | LÉO APOTHEKER |
By: /s/ | WERNER BRANDT |
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Note | 2008(1) | 2008 | 2007 | 2006 | ||||||||||||||||
€ millions, unless otherwise stated | ||||||||||||||||||||
Software revenue | 5,019 | 3,606 | 3,407 | 3,003 | ||||||||||||||||
Support revenue | 6,393 | 4,593 | 3,838 | 3,464 | ||||||||||||||||
Subscription and other software-related service revenue | 359 | 258 | 182 | 129 | ||||||||||||||||
Software and software-related service revenue | 11,771 | 8,457 | 7,427 | 6,596 | ||||||||||||||||
Consulting revenue | 3,477 | 2,498 | 2,221 | 2,249 | ||||||||||||||||
Training revenue | 604 | 434 | 410 | 383 | ||||||||||||||||
Other service revenue | 149 | 107 | 113 | 96 | ||||||||||||||||
Professional services and other service revenue | 4,230 | 3,039 | 2,744 | 2,728 | ||||||||||||||||
Other revenue | 96 | 69 | 71 | 69 | ||||||||||||||||
Total revenue | (5 | ) | 16,097 | 11,565 | 10,242 | 9,393 | ||||||||||||||
Cost of software and software-related services | (2,291 | ) | (1,646 | ) | (1,310 | ) | (1,091 | ) | ||||||||||||
Cost of professional services and other services | (3,196 | ) | (2,296 | ) | (2,091 | ) | (2,073 | ) | ||||||||||||
Research and development | (2,270 | ) | (1,631 | ) | (1,458 | ) | (1,335 | ) | ||||||||||||
Sales and marketing | (3,535 | ) | (2,540 | ) | (2,162 | ) | (1,908 | ) | ||||||||||||
General and administration | (867 | ) | (623 | ) | (506 | ) | (464 | ) | ||||||||||||
Other operating income/expense, net | (7 | ) | 15 | 11 | 17 | 56 | ||||||||||||||
Total operating expenses | (12,144 | ) | (8,725 | ) | (7,510 | ) | (6,815 | ) | ||||||||||||
Operating income | 3,953 | 2,840 | 2,732 | 2,578 | ||||||||||||||||
Other non-operating income/expense, net | (8 | ) | (35 | ) | (25 | ) | 1 | (12 | ) | |||||||||||
Financial income/expense, net | (9 | ) | (86 | ) | (62 | ) | 124 | 122 | ||||||||||||
Income from continuing operations before income taxes | 3,832 | 2,753 | 2,857 | 2,688 | ||||||||||||||||
Income taxes | (10 | ) | (1,148 | ) | (825 | ) | (921 | ) | (805 | ) | ||||||||||
Minority interests | (1 | ) | (1 | ) | (2 | ) | (2 | ) | ||||||||||||
Income from continuing operations | 2,682 | 1,927 | 1,934 | 1,881 | ||||||||||||||||
Loss from discontinued operations, net of tax | (11 | ) | (82 | ) | (59 | ) | (15 | ) | (10 | ) | ||||||||||
Net income | 2,600 | 1,868 | 1,919 | 1,871 | ||||||||||||||||
Earnings per share from continuing operations — basic in € | (12 | ) | 2.25 | 1.62 | 1.60 | 1.53 | ||||||||||||||
Earnings per share from continuing operations — diluted in € | (12 | ) | 2.25 | 1.62 | 1.60 | 1.53 | ||||||||||||||
Earnings per share from net income — basic in € | (12 | ) | 2.18 | 1.57 | 1.59 | 1.53 | ||||||||||||||
Earnings per share from net income — diluted in € | (12 | ) | 2.18 | 1.57 | 1.59 | 1.52 |
(1) | The 2008 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.3919 to €1.00, the Noon Buying Rate certified by the Federal Reserve Bank of New York on December 31, 2008. |
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Note | 2008(1) | 2008 | 2007 | |||||||||||||
€ millions | ||||||||||||||||
Cash and cash equivalents | (13 | ) | 1,777 | 1,277 | 1,608 | |||||||||||
Restricted cash | (13 | ) | 4 | 3 | 550 | |||||||||||
Short-term investments | (13 | ) | 532 | 382 | 598 | |||||||||||
Accounts receivable, net | (14 | ) | 4,354 | 3,128 | 2,895 | |||||||||||
Other assets | (15 | ) | 981 | 705 | 541 | |||||||||||
Deferred income taxes | (10 | ) | 283 | 203 | 125 | |||||||||||
Prepaid expenses/deferred charges | 117 | 84 | 76 | |||||||||||||
Assets held for sale | (11 | ) | 0 | 0 | 15 | |||||||||||
Current assets | 8,048 | 5,782 | 6,408 | |||||||||||||
Goodwill | (16 | ) | 6,972 | 5,009 | 1,423 | |||||||||||
Intangible assets, net | (16 | ) | 1,569 | 1,127 | 403 | |||||||||||
Property, plant and equipment | (17 | ) | 1,956 | 1,405 | 1,316 | |||||||||||
Investments | (13 | ) | 132 | 95 | 89 | |||||||||||
Accounts receivable, net | (14 | ) | 3 | 2 | 3 | |||||||||||
Other assets | (15 | ) | 788 | 566 | 555 | |||||||||||
Deferred income taxes | (10 | ) | 260 | 187 | 146 | |||||||||||
Prepaid expenses/deferred charges | 33 | 24 | 23 | |||||||||||||
Noncurrent assets | 11,713 | 8,415 | 3,958 | |||||||||||||
Total assets | 19,761 | 14,197 | 10,366 | |||||||||||||
Accounts payable | (18 | ) | 749 | 538 | 715 | |||||||||||
Income tax obligations | 505 | 363 | 341 | |||||||||||||
Financial liabilities | (18 | ) | 3,583 | 2,574 | 82 | |||||||||||
Other liabilities | (18 | ) | 2,068 | 1,486 | 1,374 | |||||||||||
Provisions | (19 | ) | 298 | 214 | 154 | |||||||||||
Deferred income taxes | (10 | ) | 67 | 48 | 47 | |||||||||||
Deferred Income | (5 | ) | 850 | 611 | 477 | |||||||||||
Liabilities held for sale | (11 | ) | 0 | 0 | 9 | |||||||||||
Current liabilities | 8,120 | 5,834 | 3,199 | |||||||||||||
Accounts payable | (18 | ) | 7 | 5 | 10 | |||||||||||
Income tax obligations | 387 | 278 | 90 | |||||||||||||
Financial liabilities | (18 | ) | 50 | 36 | 6 | |||||||||||
Other liabilities | (18 | ) | 131 | 94 | 73 | |||||||||||
Provisions | (19 | ) | 692 | 497 | 369 | |||||||||||
Deferred income taxes | (10 | ) | 219 | 157 | 73 | |||||||||||
Deferred income | (5 | ) | 85 | 61 | 42 | |||||||||||
Noncurrent liabilities | 1,570 | 1,128 | 663 | |||||||||||||
Total liabilities | 9,690 | 6,962 | 3,862 | |||||||||||||
Minority interests | 3 | 2 | 1 | |||||||||||||
Common stock, no par values | 1,706 | 1,226 | 1,246 | |||||||||||||
Authorized — Not issued or outstanding: 480 million at December 31, 2008 and December 31, 2007 | ||||||||||||||||
Authorized — Issued and outstanding: 1.226 million and 1.246 million shares at December 31, 2008 and December 31, 2007 | ||||||||||||||||
Treasury stock | (1,896 | ) | (1,362 | ) | (1,734 | ) | ||||||||||
Additional paid-in capital | 445 | 320 | 347 | |||||||||||||
Retained earnings | 10,730 | 7,709 | 7,159 | |||||||||||||
Accumulated other comprehensive loss | (919 | ) | (660 | ) | (515 | ) | ||||||||||
Shareholders’ equity | (20 | ) | 10,068 | 7,233 | 6,503 | |||||||||||
Total liabilities and shareholders’ equity | 19,761 | 14,197 | 10,366 | |||||||||||||
(1) | The 2008 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.3919 to €1.00, the Noon Buying Rate certified by the Federal Reserve Bank of New York on December 31, 2008. |
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Accumulated | ||||||||||||||||||||||||
Additional | other | |||||||||||||||||||||||
Common | paid-in | Retained | comprehensive | Treasury | ||||||||||||||||||||
stock | capital | earnings | income/loss | stock | Total | |||||||||||||||||||
€ millions | ||||||||||||||||||||||||
January 1, 2006 | 316 | 352 | 5,980 | (91 | ) | (775 | ) | 5,782 | ||||||||||||||||
Net Income | 0 | 0 | 1,871 | 0 | 0 | 1,871 | ||||||||||||||||||
Other comprehensive income/loss, net of tax | 0 | 0 | 0 | (220 | ) | 0 | (220 | ) | ||||||||||||||||
Total comprehensive income/loss | 0 | 0 | 1,871 | (220 | ) | 0 | 1,651 | |||||||||||||||||
Share-based compensation | 0 | 18 | 0 | 0 | 0 | 18 | ||||||||||||||||||
Dividends | 0 | 0 | (447 | ) | 0 | 0 | (447 | ) | ||||||||||||||||
Cancellation of treasury stock | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Other treasury stock transactions | 0 | 44 | 0 | 0 | (967 | ) | (923 | ) | ||||||||||||||||
Convertible bonds and stock options exercised | 1 | 49 | 0 | 0 | 0 | 50 | ||||||||||||||||||
Issuance of common stock | 951 | (135 | ) | (816 | ) | 0 | 0 | 0 | ||||||||||||||||
Other | 0 | 4 | 1 | 0 | 0 | 5 | ||||||||||||||||||
December 31, 2006 | 1,268 | 332 | 6,589 | (311 | ) | (1,742 | ) | 6,136 | ||||||||||||||||
Net Income | 0 | 0 | 1,919 | 0 | 0 | 1,919 | ||||||||||||||||||
Other comprehensive income/loss, net of tax | 0 | 0 | 0 | (204 | ) | 0 | (204 | ) | ||||||||||||||||
Total comprehensive income/loss | 0 | 0 | 1,919 | (204 | ) | 0 | 1,715 | |||||||||||||||||
Share-based compensation | 0 | (40 | ) | 0 | 0 | 0 | (40 | ) | ||||||||||||||||
Dividends | 0 | 0 | (556 | ) | 0 | 0 | (556 | ) | ||||||||||||||||
Cancellation of treasury stock | (23 | ) | 0 | (796 | ) | 0 | 819 | 0 | ||||||||||||||||
Other treasury stock transactions | 0 | 12 | 0 | 0 | (811 | ) | (799 | ) | ||||||||||||||||
Convertible bonds and stock options exercised | 1 | 43 | 0 | 0 | 0 | 44 | ||||||||||||||||||
Other | 0 | 0 | 3 | 0 | 0 | 3 | ||||||||||||||||||
December 31, 2007 | 1,246 | 347 | 7,159 | (515 | ) | (1,734 | ) | 6,503 | ||||||||||||||||
Net Income | 0 | 0 | 1,868 | 0 | 0 | 1,868 | ||||||||||||||||||
Other comprehensive income/loss, net of tax | 0 | 0 | 0 | (145 | ) | 0 | (145 | ) | ||||||||||||||||
Total comprehensive income/loss | 0 | 0 | 1,868 | (145 | ) | 0 | 1,723 | |||||||||||||||||
Share-based compensation | 0 | (34 | ) | 0 | 0 | 0 | (34 | ) | ||||||||||||||||
Dividends | 0 | 0 | (594 | ) | 0 | 0 | (594 | ) | ||||||||||||||||
Cancellation of treasury stock | (21 | ) | 0 | (723 | ) | 0 | 744 | 0 | ||||||||||||||||
Other treasury stock transactions | 0 | (6 | ) | 0 | 0 | (372 | ) | (378 | ) | |||||||||||||||
Convertible bonds and stock options exercised | 1 | 13 | 0 | 0 | 0 | 14 | ||||||||||||||||||
Other | 0 | 0 | (1 | ) | 0 | 0 | (1 | ) | ||||||||||||||||
December 31, 2008 | 1,226 | 320 | 7,709 | (660 | ) | (1,362 | ) | 7,233 | ||||||||||||||||
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2008 | 2007 | 2006 | ||||||||||
€ millions | ||||||||||||
Net income | 1,868 | 1,919 | 1,871 | |||||||||
Currency translation adjustments | (21 | ) | (194 | ) | (149 | ) | ||||||
Unrealized holding gains/losses on marketable securities (tax 2008: 1; 2007: 0; 2006: 0) | 1 | (2 | ) | (8 | ) | |||||||
Reclassification adjustments on marketable securities for gains/losses included in net income (tax 2008: -1; 2007: 0; 2006: -1) | (3 | ) | (1 | ) | 2 | |||||||
Net unrealized gains/losses on marketable securities | (2 | ) | (3 | ) | (6 | ) | ||||||
Unrecognized pension costs (tax 2008: 19; 2007: 1; 2006: 2) | (47 | ) | (1 | ) | (12 | ) | ||||||
Unrealized foreign currency cash flow hedge and interest rate hedge gains/losses (tax 2008: 13; 2007: -6; 2006: -15) | (50 | ) | 55 | 41 | ||||||||
Reclassification foreign currency cash flow hedge and interest rate hedge adjustments for gains/losses included in net income (tax 2008: 9; 2007: 4; 2006: 4) | (36 | ) | (43 | ) | (10 | ) | ||||||
Net unrealized foreign currency cash flow hedge and interest rate hedge gains/losses | (86 | ) | 12 | 31 | ||||||||
Unrealized gains on STAR hedge (tax 2008: -11; 2007: -3; 2006: -13) | 32 | 10 | 37 | |||||||||
Reclassification adjustments on STAR hedge for gains included in net income (tax 2008: 6; 2007: 9; 2006: 39) | (19 | ) | (28 | ) | (111 | ) | ||||||
Net unrealized losses on STAR hedge | 13 | (18 | ) | (74 | ) | |||||||
Currency effects from intercompany long-term investment transactions | (38 | ) | (5 | ) | (26 | ) | ||||||
Tax on income and expense items recognized directly in equity | 36 | 5 | 16 | |||||||||
Other comprehensive income/loss | (145 | ) | (204 | ) | (220 | ) | ||||||
Total comprehensive income | 1,723 | 1,715 | 1,651 | |||||||||
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2008(1) | 2008 | 2007 | 2006 | |||||||||||||
€ millions | ||||||||||||||||
Net income | 2,600 | 1,868 | 1,919 | 1,871 | ||||||||||||
Net loss from discontinued operations | 82 | 59 | 15 | 10 | ||||||||||||
Minority interests | 1 | 1 | 2 | 2 | ||||||||||||
Income from continuing operations before minority interests | 2,684 | 1,928 | 1,936 | 1,883 | ||||||||||||
Adjustments to reconcile income from continuing operations before minority interests to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 763 | 548 | 261 | 214 | ||||||||||||
Gains/losses from equity investees | (1 | ) | (1 | ) | 1 | 1 | ||||||||||
Gains/losses on disposal of intangible assets and property, plant, and equipment | 6 | 4 | 1 | (2 | ) | |||||||||||
Gains on disposal of investments | (21 | ) | (15 | ) | (2 | ) | 0 | |||||||||
Writedowns of financial assets | 21 | 15 | 8 | 0 | ||||||||||||
Allowances for doubtful accounts | 106 | 76 | 0 | (40 | ||||||||||||
Impacts of hedging for cash-settled share-based payment plans | 54 | 39 | 21 | (79 | ) | |||||||||||
Share-based compensation including income tax benefits | 26 | 19 | 13 | 82 | ||||||||||||
Excess tax benefit from share-based compensation | (10 | ) | (7 | ) | 0 | (3 | ) | |||||||||
Deferred income taxes | (93 | (67 | ) | 8 | (2 | ) | ||||||||||
Change in accounts receivable | (70 | ) | (50 | ) | (521 | ) | (230 | ) | ||||||||
Change in other assets | (164 | ) | (118 | ) | (322 | ) | (216 | ) | ||||||||
Change in accrued and other liabilities | (355 | ) | (255 | ) | 423 | 130 | ||||||||||
Change in deferred income | 93 | 67 | 123 | 117 | ||||||||||||
Net cash provided by operating activities from continuing operations | 3,039 | 2,183 | 1,950 | 1,855 | ||||||||||||
Acquisition of minority interests in subsidiaries | 0 | 0 | (48 | ) | 0 | |||||||||||
Business combinations, net of cash and cash equivalents acquired | (5,252 | ) | (3,773 | ) | (672 | ) | (504 | ) | ||||||||
Repayment of acquirees debt in business combinations | (626 | ) | (450 | ) | 0 | 0 | ||||||||||
Purchase of intangible assets and property, plant, and equipment | (472 | ) | (339 | ) | (401 | ) | (365 | ) | ||||||||
Proceeds from disposal of intangible assets and property, plant, and equipment | 61 | 44 | 27 | 29 | ||||||||||||
Cash transferred to restricted cash | (628 | ) | (451 | ) | (550 | ) | 0 | |||||||||
Use of restricted cash | 1,393 | 1,001 | 0 | 0 | ||||||||||||
Purchase of investments | (529 | ) | (380 | ) | (768 | ) | (2,055 | ) | ||||||||
Sales of investments | 806 | 579 | 1,025 | 2,765 | ||||||||||||
Purchase of other financial assets | (22 | ) | (16 | ) | (20 | ) | (17 | ) | ||||||||
Sales of other financial assets | 22 | 16 | 15 | 15 | ||||||||||||
Net cash used in investing activities from continuing operations | (5,246 | ) | (3,769 | ) | (1,392 | ) | (132 | ) | ||||||||
Dividends paid | (827 | ) | (594 | ) | (556 | ) | (447 | ) | ||||||||
Purchase of treasury stock | (678 | ) | (487 | ) | (1,005 | ) | (1,149 | ) | ||||||||
Proceeds from reissuance of treasury stock | 118 | 85 | 156 | 165 | ||||||||||||
Proceeds from issuance of common stock (share-based compensation) | 18 | 13 | 44 | 49 | ||||||||||||
Excess tax benefit from share-based compensation | 10 | 7 | 0 | 3 | ||||||||||||
Repayment of bonds | 0 | 0 | 0 | (1 | ) | |||||||||||
Proceeds from short-term and long-term debt | 5,371 | 3,859 | 47 | 44 | ||||||||||||
Repayments of short-term and long-term debt | (2,187 | ) | (1,571 | ) | (48 | ) | (43 | ) | ||||||||
Proceeds from the exercise of equity-based derivative instruments (STAR hedge) | 33 | 24 | 75 | 57 | ||||||||||||
Purchase of equity-based derivative instruments (hedge for cash-settled share-based payment plans) | (77 | ) | (55 | ) | 0 | (53 | ) | |||||||||
Net cash provided by/used in financing activities from continuing operations | 1,783 | 1,281 | (1,287 | ) | (1,375 | ) | ||||||||||
Effect of foreign exchange rates on cash and cash equivalents | (1 | ) | (1 | ) | (49 | ) | (3 | ) | ||||||||
Net cash used in operating activities from discontinued operations | (35 | ) | (25 | ) | (12 | ) | (8 | ) | ||||||||
Net cash used in investing activities from discontinued operations | 0 | 0 | (1 | ) | (2 | ) | ||||||||||
Net cash used in financing activities from discontinued operations | 0 | 0 | 0 | 0 | ||||||||||||
Net cash used in discontinued operations | (35 | ) | (25 | ) | (13 | ) | (10 | ) | ||||||||
Net change in cash and cash equivalents | (461 | ) | (331 | ) | (791 | ) | 335 | |||||||||
Cash and cash equivalents at the beginning of the period | 2,238 | 1,608 | 2,399 | 2,064 | ||||||||||||
Cash and cash equivalents at the end of the period | 1,777 | 1,277 | 1,608 | 2,399 | ||||||||||||
(1) | The 2008 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.3919 to €1.00, the Noon Buying Rate certified by the Federal Reserve Bank of New York on December 31, 2008. |
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(1) | GENERAL |
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(2) | SCOPE OF CONSOLIDATION |
(3) | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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• | Derivative financial instruments,available-for-sale financial assets and liabilities for cash-settled share-based payment arrangements are measured at fair value; | |
• | Foreign exchange receivables and payables are translated at period-end exchange rates; and | |
• | Pensions are measured according to Statement of Financial Accounting Standards (SFAS) No. 158 (“SFAS 158”), Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,as described in Note 19a. |
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(4) | ACQUISITIONS |
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(13) | CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND INVESTMENTS |
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(14) | ACCOUNTS RECEIVABLE, NET |
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(15) | OTHER ASSETS |
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(16) | GOODWILL AND INTANGIBLE ASSETS |
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(17) | PROPERTY, PLANT, AND EQUIPMENT |
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(18) | ACCOUNTS PAYABLE, FINANCIAL LIABILITIES AND OTHER LIABILITIES |
2008 | 2007 | |||||||||||||||
Term | Term | |||||||||||||||
less than | between 1 | more than | Balance on | less than 1 | between 1 | more than | Balance on | |||||||||
€ millions | 1 year | and 5 years | 5 years | 31.12.2008 | year | and 5 years | 5 years | 31.12.2007 | ||||||||
Payable to suppliers | 506 | 3 | 0 | 509 | 688 | 6 | 0 | 694 | ||||||||
Advance payments received | 32 | 2 | 0 | 34 | 27 | 4 | 0 | 31 | ||||||||
Accounts payable | 538 | 5 | 0 | 543 | 715 | 10 | 0 | 725 | ||||||||
Bank loans and overdraft | 2,319 | 1 | 1 | 2,321 | 25 | 2 | 0 | 27 | ||||||||
Other financial liabilities | 255 | 33 | 0 | 288 | 57 | 4 | 0 | 61 | ||||||||
Financial liabilities | 2,574 | 34 | 1 | 2,609 | 82 | 6 | 0 | 88 | ||||||||
Other employee-related liabilities | 1,161 | 6 | 51 | 1,218 | 1,060 | 6 | 49 | 1,115 | ||||||||
Other taxes | 268 | 0 | 0 | 268 | 262 | 0 | 0 | 262 | ||||||||
Miscellaneous other liabilities | 57 | 23 | 15 | 95 | 52 | 11 | 7 | 70 | ||||||||
Other liabilities | 1,486 | 29 | 66 | 1,581 | 1,374 | 17 | 56 | 1,447 | ||||||||
4,598 | 68 | 67 | 4,733 | 2,171 | 33 | 56 | 2,260 | |||||||||
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(19) | PROVISIONS |
a) | Pension Plans and Similar Obligations |
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and Other Post-Employment Obligations
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Obligation in excess of Plan Assets
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(20) | SHAREHOLDERS’ EQUITY |
• | Up to a total amount of €60 million through the issuance of new common shares in return for contributions in cash until May 11, 2010 (“Authorized Capital I”). The issuance is subject to the statutory subscription rights of existing shareholders. | |
• | Up to a total amount of €180 million through the issuance of new common shares in return for contributions in cash until May 8, 2011 (“Authorized Capital Ia”). The issuance is subject to the statutory subscription rights of existing shareholders. | |
• | Up to a total amount of €60 million through the issuance of new common shares in return for contributions in cash or in kind until May 11, 2010 (“Authorized Capital II”). This capital increase could also be executed as a result of a business combination. Subject to certain preconditions and the consent |
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of the Supervisory Board, the Executive Board is authorized to exclude the shareholders’ statutory subscription rights. |
• | Up to a total amount of €180 million through the issuance of new common shares in return for contributions in cash or in kind until May 8, 2011 (“Authorized Capital IIa”). This capital increase could also be executed as a result of a business combination. Subject to certain preconditions and the consent of the Supervisory Board, the Executive Board is authorized to exclude the shareholders’ statutory subscription rights. |
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• | Currency translation adjustments comprise all foreign currency differences arising from the translation of the financial statements of foreign operations. | |
• | Unrealized gains and losses on marketable securities represent the net cumulative change between fair value and cost for available-for-sale financial assets since the respective acquisition date. | |
• | Unrecognized pension costs comprise actuarial gains and losses relating to defined benefit pension plans and similar obligations. | |
• | Gains and losses on foreign currency cash flow hedges comprise the net change in fair value of foreign currency cash flow hedges related to hedged transactions that have not impacted earnings, less the component of the financial instrument’s gain or loss that was excluded from the assessment of hedge effectiveness. In addition, gains and losses on the effective part of interest rate hedges are also included. | |
• | Gains and losses on STAR hedges comprise the net change in fair value of cash flow hedging instruments associated with the unrecognized portion of nonvested STARs (see Note 25). | |
• | Currency effects from intercompany long-term investments related to intercompany foreign currency transactions that are of a long-term investment nature. |
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(21) | SUPPLEMENTAL CASH FLOW INFORMATION |
(22) | CONTINGENT LIABILITIES |
(23) | OTHER FINANCIAL COMMITMENTS |
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(24) | LITIGATION AND CLAIMS |
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(25) | DERIVATIVE FINANCIAL INSTRUMENTS |
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* | with designated hedge relationship |
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• | derivatives held within a designated cash-flow hedging relationship and | |
• | foreign currency embedded derivatives (which arise for instance due to a foreign-currency denominated contract in Switzerland). |
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• | Changes in interest rates only affect nonderivative fixed-rate financial instruments if they are recognized at fair value. As we have classified our investments as available for sale we carry interest-rate sensitive debt investments at fair value with fair value changes recognized in Other comprehensive income/loss. For this reason, changes in prevailing market rates are included in the equity-related sensitivity calculation. | |
• | Income or expenses for nonderivative financial instruments with variable interest are subject to interest rate risk if they are not hedged items in an effective hedging relationship. We therefore have no significant interest-rate risk arising from our financial liabilities and consider interest rate changes for our variable rate debt investments in the earnings-related sensitivity calculation. | |
• | Due to the aforementioned designation of interest rate derivatives to a cash-flow hedge relationship, the respective interest rate changes affect the Unrealized interest rate cash-flow hedge position in Other comprehensive income/loss. The movements related to the interest rate swaps’ variable leg are not reflected in the sensitivity calculation as they offset the variable interest payments for the credit facility. We therefore consider only changes from the interest rate swaps’ fixed leg in the equity-related sensitivity calculation for the interest swaps in a hedge relationship. | |
• | As the deal contingent interest rate payer swaps are freestanding derivatives with fair value fluctuations charged to profit or loss we include only changes from the interest rate swaps’ fixed leg in the earnings-related sensitivity calculation. The movements related to the interest rate swaps’ variable leg are not reflected in the sensitivity calculation as they offset the variable interest payments for the credit facility. |
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• | Cash and cash equivalents, Accounts receivable, other nonderivative financial assets: Because the financial assets are primarily of short-term nature it is assumed that the fair values of these assets approximate their carrying values. Investments in insurance policies held for postemployment pension plans and semiretirement as well as prepaid pensions are valued at their cash surrender values. Non-interest-bearing or below market-rate loans to third parties or employees are discounted to the present value of estimated future cash flows using the original effective interest rate the respective borrower would have to pay to a bank for a similar loan. In case of bad debts and sales allowances the carrying amount is reduced accordingly. | |
• | Investments: The fair values of marketable securities are based on quoted market prices as at December 31. For non-listed equity securities fair values could not readily be observed due to the absence of an active market with market prices. Also, calculating fair values by discounting estimated future cash flows is not possible as a determination of cash flows is not reliable. Therefore, fair values for nonlisted equity securities are not presented. | |
• | Bank liabilities: As almost all our bank liabilities are variable interest debts their carrying values approximate their fair values. | |
• | Accounts payable and other nonderivative financial liabilities: Because these financial liabilities are mainly of short-term nature it is assumed that their fair values approximate their carrying values. | |
• | Derivative financial instruments: The fair value of foreign exchange forward contracts is based on discounting the expected future cash flows over the respective zero-coupon interest rates, spot rates and the remaining term of the contracts. The fair value of the derivatives entered into to hedge our share-based compensation programs are calculated considering risk-free interest rates, the remaining term of the derivatives, the dividend yields, the stock price and the volatility of our share. Fair values of our derivative interest rate contracts are calculated by discounting the expected future cash flows by taking the prevailing market rates for the remaining term of the contracts as a basis. | |
• | The fair values of nonderivative financial assets and liabilities and of derivative financial instruments are generally determined for each type of instrument on an individual basis. |
• | Level 1: Quoted prices in active markets for identical assets or liabilities |
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• | Level 2: Inputs other than observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or | |
• | Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities |
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a) | Employee Discounted Stock Purchase Programs |
b) | Cash-Settled Share-Based Payment Plans |
b.1) | Stock Appreciation Rights (STAR) Plans |
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b. 2) | Incentive Plan 2010 |
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b.3) | Virtual Stock Option Plan 2007 |
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b.4) | Business Objects cash-settled awards based on former Business Objects option and Restricted Stock Unit plans |
• | Stock options with a4-year monthly graded vesting schedule from grant date, subject to a minimum of one year of continued service with the Company. The contractual terms range from 7 — 10 years. The exercise price for one sub-category of the awards was equal to 100% of the closing price of the Business Objects stock as reported on the Eurolist by Euronext on the last trading day prior to the option grant date; while the other subcategory of awards the exercise price was 100% of the average of the opening share price as reported on such market over the 20 trading days immediately preceding the historical grant date. | |
• | International RSUs were subject to a3-year graded vesting schedule. These rights were provided free of charge to the employees (no exercise price). | |
• | French RSUs had a two-year vesting period followed by a two-year holding period. These rights were also provided to the employees free of charge (no exercise price). |
• | The replaced awards were planned to be settled by issuing equity instruments whereas the replacing awards are settled in cash either via the CPM or via the LAM mechanism. |
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• | The replaced awards were indexed to Business Objects’ share price whereas the replacing awards are indexed to SAP’s stock price as follows: SAP’s offering price for Business Objects shares during the tender offer (€42) is divided by SAP AG’s share price at the tender offer closing date (€32.28) and the result is multiplied by the weighted average SAP share closing price during the 20 trading days preceding the exercise or disposition date. |
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c.1) | Stock Option Plan 2002 |
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(28) | SEGMENT AND GEOGRAPHIC INFORMATION |
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• | The internal reporting to our CODM generally attributes revenue to the segment that is responsible for the related transaction regardless of revenue classification in our income statement. Thus, for example, the Training segment’s revenue includes certain amounts classified as software revenue. Since our segments are organized on the basis of products and services, the amounts of external revenue for the Product, Consulting and Training segments are materially consistent with the amounts of Software and software-related service revenue, Consulting revenue, and Training revenue, respectively, as reported in the Consolidated Statements of Income. | |
• | The internal reporting to our CODM allocates expenses to the segments based on organizational structures and cost centers rather than cost classification to functional areas. | |
• | The internal reporting to our CODM excludes share-based compensation expenses. | |
• | Differences in foreign currency translations result in minor deviations between the amounts reported internally to our CODM and the amounts reported in the Consolidated Financial Statements. |
• | In contrast to our U.S. GAAP revenue figures presented in our Consolidated Statements of Income, the revenue numbers in our management reporting system include the support revenue that would have been reflected by Business Objects had it remained a standalone entity but are not permitted to be reflected as revenue under U.S. GAAP as a result of fair value accounting for Business Objects support contracts in effect at the time of our acquisition of Business Objects. | |
• | In contrast to our U.S. GAAP income figures presented in our Consolidated Statements of Income, the income measures in our management reporting system include the full amount of Business Objects support revenue and exclude acquisition-related charges. Acquisition-related charges in this context comprise: |
— | Amortization expense of intangibles acquired in business combinations and standalone acquisitions of intellectual property. | |
— | Expenses from purchased in-process research and development. | |
— | Restructuring expenses incurred in connection with business combinations. |
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(29) | BOARD OF DIRECTORS |
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(30) | RELATED PARTY TRANSACTIONS |
(31) | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
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(32) | SUBSEQUENT EVENTS |
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