HIGHLIGHTS – Third Quarter2008
SAP - Third Quarter2008
U.S. GAAP Non-GAAP**
€ million Q3/2008 Q3/2007 % change Q3/2008 Q3/2007 % change % change constant currency***
Software revenues 763 714 7 763 714 7 11
Software and software-related service revenues 1,994 1,735 15 2,035 1,735 17 22
Total revenues 2,761 2,419 14 2,802 2,419 16 20
Operating income 614 606 1 731 624 17 23
Operating margin (%) 22.2 25.1 -2.9pp 26.1 25.8 0.3pp 0.5pp
Income from continuing operations 409 414 -1 496 425 17 _
Net income 388 408 -5 475 419 13 _
Basic EPS from cont. operations (€) 0.35 0.35 0 0.41 0.36 14 _

*All figures are preliminary and unaudited and are based on the current status of the purchase price allocation for the Business Objects acquisition which is not yet final.
** Revenue line items are adjusted for the Business Objects support revenue that Business Objects would have recognized had it remained a standalone entity but that SAP is not permitted to recognize as revenue under U.S. GAAP as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges. See Appendix at the end of the financial section of the press release for explanations of the Non-GAAP measures used in this press release and for related reconciliations to U.S. GAAP.
*** Constant currency Non-GAAP revenue and operating income figures are calculated by translating Non-GAAP revenue and Non-GAAP operating income of the current period using the average exchange rates from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's Non-GAAP constant currency numbers with the Non-GAAP number of the previous year's respective period. See Appendix at the end of the financial section of press release for details.


Revenues
Third quarter 2008 U.S. GAAP software and software-related service revenues were €1.99 billion (2007: €1.74 billion), representing an increase of 15% compared to the third quarter of 2007. Non-GAAP software and software-related service revenues, which exclude a non-recurring deferred support revenue write-down from the acquisition of Business Objects of €41 million, for the third quarter of 2008 were €2.04 billion (2007: €1.74 billion). This represents an increase of 17% (22% at constant currencies) compared to the third quarter of 2007. If SAP’s reporting currency was the U.S. Dollar, Non-GAAP software and software-related service revenues for the third quarter would have increased 26% compared to the same period one year ago.
Excluding the contribution from Business Objects, SAP’s business contributed 7 percentage points to the constant currency growth of the Non-GAAP software and software-related service revenues for the third quarter of 2008.
U.S. GAAP total revenues for the 2008 third quarter were €2.76 billion (2007: €2.42 billion), which was a year-over-year increase of 14%. Non-GAAP total revenues, which exclude a non-recurring deferred support revenue write-down from the acquisition of Business Objects of €41 million for the third quarter of 2008, were €2.80 billion (2007: €2.42 billion), which is an increase of 16% (20% at constant currencies) compared to the third quarter of 2007.
Third quarter 2008 U.S. GAAP software revenues were €763 million (2007: €714 million), representing an increase of 7% (11% at constant currencies) compared to the third quarter of 2007.
Income
U.S. GAAP operating income for the third quarter was €614 million (2007: €606 million), which was an increase of 1% compared to the third quarter of 2007. Third quarter Non-GAAP operating income, which excludes a non-recurring deferred support revenue write-down from the acquisition of Business Objects and acquisition-related charges totaling €117 million, was €731 million (2007: €624 million), which was an increase of 17% (23% at constant currencies) compared to the third quarter of 2007.
The U.S. GAAP operating margin for the third quarter of 2008 was 22.2% (2007: 25.1%). The third quarter Non-GAAP operating margin was 26.1% (2007: 25.8%), or 26.3% at constant currencies. Both the U.S. GAAP and the Non-GAAP operating margins were impacted by one-time expenses associated with the integration of Business Objects (which are not acquisition-related charges) of approximately €14 million.
U.S. GAAP income from continuing operations for the third quarter of 2008 was €409 million (2007: €414 million), representing a decrease of 1% compared to the third quarter of 2007. Non-GAAP income from continuing operations, which excludes a non-recurring deferred support revenue write-down from the acquisition of Business Objects and acquisition-related charges totaling €87 million, was €496 million (2007: €425 million), representing an increase of 17% compared to the third quarter of 2007.
U.S. GAAP basic earnings per share from continuing operations for the third quarter of 2008 was €0.35 (2007: €0.35), which was flat compared to the same period in 2007. Non-GAAP earnings per share from continuing operations for the third quarter of 2008 was €0.41 (2007: €0.36), which was an increase of 14% compared to the same period in 2007.

“The third quarter 2008 was SAP’s 19th consecutive quarter of double-digit growth in software and software-related service revenues at constant currencies. This was an achievement in a period where the global financial crisis had a significant impact on customer decisions towards quarter end,” said Henning Kagermann, co-CEO of SAP. “Customers are continuing to spend on our products, but the economic and business environment is uncertain. Our business model is flexible, and we are focusing on protecting our operating margins and earnings.”

Mr. Kagermann continued, “We are assessing business activity continuously, and we are balancing the need for greater efficiencies with steady advancements in our products, customer services and technologies, while addressing customers’ most critical business issues. This approach has worked well for customers and SAP throughout the up and down economic cycles of the past, and has contributed to SAP’s market leadership. We’ve been through uncertainty before, and have always emerged as a better, stronger and more efficient company.”

Core Enterprise Applications Vendor Share
Based on U.S. GAAP third quarter 2008 software and software-related service revenues on a rolling four-quarter basis, SAP’s worldwide share of Core Enterprise Applications vendors, which account for approximately $38.7 billion in software and software-related service revenues as defined by the Company based on industry analyst research, was 33.4% for the four-quarter period ended September 30, 2008. This represents a 6.5 percentage point increase compared to the four quarter period ended September 30, 2007, of which approximately 3.3 percentage points came from organic growth and 3.2 percentage points from the acquisition of Business Objects.

Cash Flow
Operating cash flow from continuing operations for the first nine months of 2008 was €1.97 billion (2007: €1.34 billion). Free cash flow for the first nine months of 2008 was €1.73 billion (2007: €1.05 billion), which was 21% of total revenues (2007: 15%). At September 30, 2008, the Company had total group liquidity of €1.6 billion (December 31, 2007: €2.8 billion), which includes cash and cash equivalents, restricted cash and short term investments.

Share Buyback
In the third quarter of 2008 the Company bought back 2.8 million shares at an average price of €37.75 (€104.2 million). Of the total shares purchased in the third quarter, 983,153 shares were subsequently acquired from the Company by employees who exercised stock options under SAP's share-based compensation programs. The number of shares bought back in the third quarter of 2008 represented 0.23% of the total shares outstanding. At September 30, 2008, the Company held treasury stock in the amount of 38.7 million shares (approximately 3.15% of total shares outstanding) at an average price of €35.43. For the first nine months of 2008, the Company invested €486.8 million buying back approximately 14.6 million shares at an average price of €33.34.


BUSINESS OUTLOOK
In its previous outlook provided on July 29, 2008, the Company had expected full-year 2008 Non-GAAP software and software-related service revenues to increase at the upper end of the range of 24% – 27% at constant currencies and full-year 2008 Non-GAAP operating margin to be at the upper end of the range of 28.5% – 29.0% at constant currencies.
In light of the uncertainties surrounding the current economic and business environment, the Company decided to no longer provide a specific outlook for Non-GAAP software and software-related service revenues for the full-year 2008. However, with recent cost savings initiatives in place, the Company expects the full-year 2008 Non-GAAP operating margin, which excludes a non-recurring 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 the Company can increase Non-GAAP software and software-related service revenues, excluding a non-recurring deferred support revenue write-down from the acquisition of Business Objects, in a range between 20% – 22% at constant currencies for the full year 2008.

The Company continues to project an effective tax rate of 31.0% - 31.5% (based on U.S. GAAP income from continuing operations) for 2008.

media, tijd 13.45 in een interview met de pers.
SAP's Kagermann ziet 28% winstmarge na kosten reductie(s).