FINANCIAL HIGHLIGHTS – First Quarter 2009
SAP - First Quarter 2009*
U.S. GAAP Non-GAAP**
€ million, unless otherwise stated Q1/2009 Q1/2008 % change Q1/2009 Q1/2008 % change % change constant currency***
Software revenues 418 622 -33 418 622 -33 -34
Software and software-related service revenues 1,741 1,736 0 1,753 1,783 -2 -4
Total revenues 2,397 2,460 -3 2,409 2,507 -4 -6
Total operating expenses 2,065 2,101 -2 1,999 2,018 -1 -3
- Thereof restructu- ring charges 160 - - 160 - - -
Operating income 332 359 -8 410 489 -16 -17
Operating margin (%) 13.9 14.6 -0.7pp 17.0 19.5 -2.5pp -2.3pp
Income from continuing operations 210 247 -15 267 345 -23 -
Net income 204 242 -16 262 340 -23 -
Basic EPS from cont. operations (€) 0.18 0.21 -14 0.22 0.29 -24 -

*All figures are preliminary and unaudited.
** 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 Explanation of Non-GAAP Measures 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 Explanation of Non-GAAP Measures at the end of the financial section of the press release for details.

Revenues - First Quarter 2009
U.S. GAAP software and software-related service revenues were €1.74 billion (2008: €1.74 billion), flat year-over-year. Non-GAAP software and software-related service revenues were €1.75 billion (2008: €1.78 billion), a decrease of 2% (4% at constant currencies).
U.S. GAAP total revenues were €2.40 billion (2008: €2.46 billion), a decrease of 3%. Non-GAAP total revenues were €2.41 billion (2008: €2.51 billion), a decrease of 4% (6% at constant currencies).
U.S. GAAP software revenues were €418 million (2008: €622 million), a decrease of 33% (34% at constant currencies). The decrease is the result of the difficult operating environment worldwide due to the global economic downturn, and the tough comparison to the first quarter of 2008, which was prior to the economic crisis that disrupted the global markets in the third quarter of 2008 and also included the effects from the acquisition of Business Objects.
First quarter 2009 Non-GAAP revenue figures exclude a non-recurring deferred support revenue write-down from the acquisition of Business Objects of €11 million.

Income - First Quarter 2009
U.S. GAAP operating income was €332 million (2008: €359 million), a decrease of 8%. Non-GAAP operating income was €410 million (2008: €489 million), a decrease of 16% (17% at constant currencies). U.S. GAAP and Non-GAAP operating income were negatively impacted by restructuring charges of €160 million resulting from the previously announced reduction of workforce, which are expected to be between €200 million to €300 million for 2009.
U.S. GAAP operating margin was 13.9% (2008: 14.6%), a decrease of 0.7 percentage points. Non-GAAP operating margin was 17.0% (2008: 19.5%), or 17.2% at constant currencies, a decrease of 2.5 percentage points (2.3 percentage points at constant currencies). The €160 million in restructuring charges resulting from the previously announced reduction of workforce negatively impacted the U.S. GAAP and Non-GAAP operating margin by 6.7 percentage points and 6.6 percentage points, respectively.
U.S. GAAP income from continuing operations was €210 million (2008: €247 million), a decrease of 15%. Non-GAAP income from continuing operations was €267 million (2008: €345 million), a decrease of 23%. U.S. GAAP and Non-GAAP income from continuing operations were negatively impacted by restructuring charges of €160 million resulting from the previously announced reduction of workforce.
U.S. GAAP basic earnings per share from continuing operations were €0.18 (2008: €0.21), a decrease of 14%. Non-GAAP earnings per share from continuing operations were €0.22 (2008: €0.29), a decrease of 24%. The €160 million in restructuring charges resulting from the previously announced reduction of workforce negatively impacted the U.S. GAAP and Non-GAAP basic earnings per share from continuing operations by €0.09 and €0.10, respectively.

First quarter 2009 Non-GAAP operating income excludes a non-recurring deferred support revenue write-down from the acquisition of Business Objects and acquisition-related charges totaling €77 million, and first quarter 2009 Non-GAAP income from continuing operations and Non-GAAP earnings per share from continuing operations exclude a non-recurring deferred support revenue write-down from the acquisition of Business Objects and acquisition-related charges totaling €58 million.

“While visibility for software revenues remains limited, we continue to take the necessary steps to protect our margin in this tough operating environment,” said Léo Apotheker, co-CEO of SAP. “The cost containment measures that we initiated in October of last year and carried into the first quarter of 2009 have really taken hold, and we are pleased with the resulting margin performance. We will continue to maintain tight cost controls. Our ability to deliver good margin performance in this environment, especially when you consider the restructuring charges related to the reduction of positions, is due to the strength, flexibility and scalability of our business model.”

Mr. Apotheker continued, “Customers now more than ever need clarity in their businesses, but they also need solutions that are quick to implement and provide a fast return on investment. We are providing customers with both with solutions from SAP BusinessObjects to our new SAP Business Suite 7, which gives customers the ability to quickly address critical pain points with pre-configured industry best practices in a modern and open architecture. In this difficult environment, we have maintained our market leadership because we have the industry’s broadest and deepest product portfolio for large, midsized and small companies, and we have the ability to continue to innovate. SAP is a strong company with a robust business model, a highly skilled workforce and a great customer base. We expect to exit this recession even stronger, just like we did after the downturn earlier in the decade.”

Cash Flow - First Quarter 2009
Operating cash flow from continuing operations was €1.39 billion (2008: €1.07 billion), an increase of 30%. Free cash flow was €1.34 billion (2008: €1.01 billion), an increase of 33%. Free cash flow was 56% of total revenues (2008: 41%). At March 31, 2009, SAP had total group liquidity of €2.95 billion (December 31, 2008: €1.66 billion), which includes cash and cash equivalents, restricted cash and short term investments.

Business Environment and Cost Containment Measures for 2009
SAP expects the 2009 operating environment to remain challenging. In addition, 2009 will no longer include the effects from the acquisition of Business Objects, and like the first quarter of 2009, the second quarter of 2009 will be a difficult comparison to the strong results reported in the second quarter of 2008, which was prior to the economic crisis that disrupted the global markets beginning in the third quarter of 2008.

Previously, SAP announced that in order to enable the Company to adapt its size to today’s market conditions and the broader impact of the global recession, it intended to reduce its workforce globally to 48,500 positions by year-end 2009, taking full advantage of attrition as a factor in reaching this goal, and that it expected the reduction of positions to trigger one-time restructuring charges of between €200 million to €300 million for 2009. The restructuring charge of €160 million in the first quarter of 2009 covers the reduction of 2,200 positions.

SAP will continue with the cost saving measures that it initiated in October 2008 and will take further steps to reduce expenses, including maintaining tight cost controls on all variable expenses, including third-party related costs, as well as capital expenditures.

Business Outlook
SAP maintains the following outlook for the full-year 2009 as described in its January 28, 2009 fourth quarter and full year results press release.
Due to the continued uncertainty surrounding the economic and business environment, SAP will not provide a specific outlook for software and software-related service revenues for the full-year 2009. The Company expects its full-year 2009 Non-GAAP operating margin, which excludes a non-recurring deferred support revenue write-down from the acquisition of Business Objects and acquisition-related charges, to be in the range of 24.5% – 25.5% at constant currencies. This includes one-time restructuring charges between €200 million to €300 million expected to result from the reduction of the workforce, which negatively impacts the Non-GAAP operating margin outlook by approximately 2 - 3 percentage points. The 2009 Non-GAAP operating margin outlook is based on the assumption that 2009 Non-GAAP software and software-related service revenues, which exclude a non-recurring deferred support revenue write-down from the acquisition of Business Objects, will be flat to a decline of 1% at constant currencies (2008: €8.623 billion).
SAP projects an effective tax rate of 29.5% - 30.5% (based on U.S. GAAP income from continuing operations) for 2009 (2008: 30.0%).

KEY EVENTS – First Quarter 2009
In the first quarter of 2009, SAP closed major contracts in several key regions including EWE Aktiengesellschaft, Papadopoulos Biscuits, SNCF, and The Bank of Ireland Group in EMEA; Banco de Credito de Colombia, Centerpoint Energy, Open Range Communications and Westinghouse Electric in Americas; and Kingfisher Airlines, Kubota Corporation, Liaoning Electric Power, National University of Singapore in the Asia Pacific Japan region.
On March 18, SAP announced a new version of the SAP BusinessObjects Global Trade Services application, part of the SAP BusinessObjects governance, risk, and compliance (GRC) family of solutions. Combined with the SAP BusinessObjects Risk Management application, also an SAP BusinessObjects GRC solution, the new application automates regulatory compliance across numerous trade processes such as logistics and order fulfilment, helping customers to identify and mitigate supply chain risk easily, quickly and effectively.
On March 11, SAP and Sybase, an industry leader in delivering enterprise and mobile software, announced a partnership centred around co-innovation that will change how users access critical business information anytime, anywhere. The two companies are co-innovating and collaborating to deliver the new SAP Business Suite software for the first time to iPhone, Windows Mobile, BlackBerry and other devices by integrating it with Sybase’s industry-leading mobile enterprise application platform.
On March 4, SAP announced it will collaborate with Intel to optimize SAP Business One applications on Intel Xeon Processor based systems to enable small businesses to lower cost by achieving faster time to value of their IT investments. SAP and Intel intend to encourage original equipment manufacturers (OEM) and solution providers to create industry-specific bundles to leverage the results of this collaboration.
On March 4, SAP announced plans to integrate pre-configured SAP BusinessObjects solutions into SAP Business All-in-One solutions. As part of these enhancements, business intelligence functionality from the SAP BusinessObjects portfolio is intended to be included in SAP Business All-in-One, providing customers with instant access to trusted and timely data.
On March 2, SAP announced a long-term strategic focus on sustainability, covering both its own operations and customer solutions for more sustainable business practices. First, to help its customers with their sustainability efforts, SAP, together with TechniData AG, unveiled expanded solutions for environment, health and safety (EHS) management. In addition, to demonstrate its commitment to sustainable operations internally, SAP announced it will reduce its greenhouse gas emissions down to its year-2000 levels by the year 2020. And, moving forward, SAP announced that its sustainability efforts will be led by a newly formed cross-functional sustainability organization headed by SAP’s first chief sustainability officer.

On February 18, 2009 SAP announced the availability of SAP BusinessObjects XBRL Publishing application by UBmatrix, a new eXtensible Business Reporting Language (XBRL) application that enables customers to communicate financial and business information, which is required by authorities like the Securities and Exchange Commission (SEC) in the U.S. and HM Revenue & Customs in the U.K.
On February 4, SAP unveiled SAP Business Suite 7 software, a next-generation software suite that helps businesses to optimize their performance and reduce IT cost. SAP Business Suite is designed to ease upgrades and help customers reduce IT costs with enhancement packages; gain stronger insights with select analytics capabilities from the SAP BusinessObjects portfolio; and achieve end-to-end process excellence through the modular deployment of industry best practices and service-oriented architecture (SOA).
On February 2, SAP and Landis+Gyr, one of the world's premier metering solutions providers, announced the signing of a software development cooperation agreement for the integration of Landis+Gyr's advanced metering infrastructure with the SAP for Utilities solution portfolio using enterprise services. The integration will enable certain end-to-end business processes - from the meter to the business applications - and deliver a new level of transparency and availability of energy data that can enable higher process and energy efficiency for energy utilities.

IFRS Financial Data
SAP will discontinue its U.S. GAAP reporting and will only report financial data under IFRS from fiscal 2010 onwards. To prepare the capital markets for this change, IFRS financial data are provided in the financial section of this press release.