EX-99.1 3 f00270ex99-1.txt QUARTERLY REPORT 1 EXHIBIT 99.1 SAP QUARTERLY REPORT 2ND QUARTER 2001 SAP GROUP CONSOLIDATED INCOME STATEMENTS THREE MONTHS ENDED JUNE 30, UNAUDITED (In Euro millions)
2001 2000 (DELTA) Software revenue 646 554 17% Maintenance revenue 515 396 30% Product revenue 1,161 950 22% Consulting revenue 529 393 35% Training revenue 127 100 27% Service revenue 656 493 33% Other revenue 36 55 -35% TOTAL REVENUE 1,853 1,498 24% Cost of product -189 -160 18% Cost of service -468 -422 11% Research and development -230 -231 0% Sales and marketing -480 -434 11% General and administration -96 -102 -6% Other income/expenses, net -17 2 -950% TOTAL OPERATING EXPENSE -1,480 -1,347 10% OPERATING INCOME 373 151 147% Other non-operating income/expenses, net -34 -11 209% Financial income, net 15 (1) 53 -72% INCOME BEFORE INCOME TAXES 354 193 83% Income taxes -145 -77 88% Minority interest -3 0 -- NET INCOME 206 116 78% Basic earnings per share (in Euro) 0.65 0.37 76% Weighted average shares outstanding (in thousands of shares) 314,715 314,270
2 SAP GROUP CONSOLIDATED INCOME STATEMENTS SIX MONTHS ENDED JUNE 30, UNAUDITED (In Euro millions)
2001 2000 (DELTA) Software revenue 1,104 923 20% Maintenance revenue 1,000 769 30% Product revenue 2,104 1,692 24% Consulting revenue 987 725 36% Training revenue 236 195 21% Service revenue 1,223 920 33% Other revenue 50 69 -28% TOTAL REVENUE 3,377 2,681 26% Cost of product -386 -313 23% Cost of service -924 -850 9% Research and Development -436 -486 -10% Sales and marketing -845 -770 10% General and administration -182 -217 -16% Other income/expenses, net -25 -5 400% TOTAL OPERATING EXPENSE -2,798 -2,641 6% OPERATING INCOME 579 40 1,348% Other non-operating income/expenses, net -29 -43 -33% Financial income, net -2(1) 291 -101% INCOME BEFORE INCOME TAXES 548 288 90% Income taxes -219 -115 90% Minority interest -6 -1 500% NET INCOME 323 172 88% Basic earnings per share (in Euro) 1.03 0.55 87% Weighted average shares outstanding (in thousands of shares) 314,715 314,270
3 SAP GROUP CONSOLIDATED BALANCE SHEETS UNAUDITED (In Euro millions)
06/30/2001 12/31/2000 ASSETS Intangible assets 519 116 Property, plant and equipment 962 871 Financial assets 406(1) 604 FIXED ASSETS 1,887 1,591 Inventories/accounts receivables 2,267 2,393 Liquid assets/marketable securities 1,145 1,182 CURRENT ASSETS 3,412 3,575 DEFERRED TAXES 289 305 PREPAID EXPENSES 244 115 TOTAL ASSETS 5,832 5,586 SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY 2,647 2,894(2) MINORITY INTEREST 63 61 RESERVES AND ACCRUED LIABILITIES 1,140 1,435 OTHER LIABILITIES 1,121 831 DEFERRED INCOME 861 365 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 5,832 5,586 ----- ----- Days sales outstanding 94 93
(1) As a result of SAP's additional investment in Commerce One Inc., SAP will be required to use the equity method of accounting to record, in finance income, a portion of Commerce One's net income or loss based upon SAP's investment percentage. Under U.S. GAAP, the equity method must also be applied retroactively to allow for comparability after consummation of the acquisition. The acquisition is expected to be finalized in the third quarter of 2001. Accordingly, SAP anticipates including restated first and second quarter 2001 finance income figures in the third quarter press release. Finance income will be restated to include approximately 2.6% and 4.4% of Commerce One's first and second quarter loss, respectively. (2) Includes temporary equity of Euro 409.5 million. 4 SAP GROUP CONSOLIDATED STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, UNAUDITED (In Euro millions) Net income before minority interest 323 Minority interest 6 ----- Net income 329 Depreciation and amortization 124 In Process R&D 6 Loss/gain on disposal of property, plant & equipment and marketable equity securities, net -8 Write-downs of financial assets 15 Unrealized gains/losses from hedging, net 16 Change in pension reserves 25 Change in deferred taxes 38 Change in accounts receivables and other assets 143 Change in other reserves and accrued liabilities, short term -352 Change in other liabilities -70 Change in prepaid expenses and deferred charges -129 Change in deferred income 495 ----- NET CASH PROVIDED BY OPERATING ACTIVITIES 632 ----- Purchase of intangible assets and property, plant and equipment -178 Purchase of financial assets -75 Change in the scope of consolidation -6 Proceeds from disposal of fixed assets 25 Purchase of Top Tier, net of cash -417 Change in liquid assets (maturities greater than 90 days) and marketable securities 11 ----- NET CASH USED IN INVESTING ACTIVITIES -640 ----- Other changes to additional paid-in-capital 27 Payments on settlement of put-options -120 Purchase of Treasury stock -94 Proceeds from issuance of convertible bonds 3 Proceeds from line of credit and long-term debt 350 Proceeds made for STAR hedge -68 ----- NET CASH PROVIDED BY/USED IN FINANCING ACTIVITIES 98 ----- Effect of foreign exchange rates on cash -117 Net increase in cash and cash equivalents -27 Cash and cash equivalents, beginning of period 1.043 ----- Cash and cash equivalents, end of the period 1.016 =====
5 SAP GROUP ADDITIONAL INFORMATION THREE MONTHS ENDED JUNE 30, UNAUDITED (In Euro millions)
2001 2000 (DELTA) OPERATING INCOME 373 151 147% Depreciation & Amortization 71 55 29% In-Process R&D 6 0 n/a EBITDA 450 206 118% AS A % OF SALES 24% 14% OPERATING INCOME 373 151 147% Total stock based compensation 31 95 -67% TopTier Acquisition costs 20 0 n/a OPERATING INCOME EXCLUDING STOCK BASED COMPENSATION AND TOPTIER ACQUISITION COSTS 424 246 72% AS A % OF SALES 23% 16% INCOME BEFORE INCOME TAXES 354 193 83% Income taxes 145 77 88% EFFECTIVE TAX RATE 41% 40% EARNINGS PER SHARE EXCLUDING TOPTIER ACQUISITION COST 0.71 0.37 92%
6 SAP GROUP ADDITIONAL INFORMATION SIX MONTHS ENDED JUNE 30, UNAUDITED (In Euro millions)
2001 2000 (DELTA) OPERATING INCOME 579 40 1,348% Depreciation & Amortization 124 104 19% In-Process R&D 6 0 n/a EBITDA 709 144 392% AS A % OF SALES 21% 5% OPERATING INCOME 579 40 1,348% Total stock based compensation 58 334 -83% TopTier Acquisition costs 20 0 n/a OPERATING INCOME EXCLUDING STOCK BASED COMPENSATION AND TOPTIER ACQUISITION COST 657 374 76% AS A % OF SALES 19% 14% INCOME BEFORE INCOME TAXES 548 288 90% Income taxes 219 115 90% EFFECTIVE TAX RATE 40% 40% EARNINGS PER SHARE EXCLUDING TOPTIER ACQUISITION COST 1.08 0.55 96%
7 1. BASIS OF PRESENTATION: The consolidated financial statements of the SAP Aktiengesellschaft Systeme, Anwendungen, Produkte in der Datenverarbeitung ("SAP AG"), together with its subsidiaries (collectively, "SAP," "Group" or "Company") as provided herein, have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). For further information, refer to the Company's Annual Report on Form 20-F for 2000 filed with the SEC on March 28, 2001. 2. MANAGEMENT DISCUSSION AND ANALYSIS: In the second quarter of 2001, revenues rose 24% over the same period last year to Euro 1.85 billion (2000: Euro 1.5 billion). Second quarter 2001 operating income, before charges for stock-based compensation programs (STAR and LTI) and TopTier acquisition related costs, rose 72% to Euro 424 million (2000: Euro 246 million). Operating margin, excluding stock based compensation and TopTier acquisition related changes, improved to 23% (2000: 16%). Earnings before interest, taxes, depreciation and amortization ("EBITDA") improved by 118% to Euro 450 million (2000: Euro 206 million). Net income for the second quarter 2001 grew 78% to Euro 206 million (2000: Euro 116 million) and earnings per share for the quarter was Euro 0.65 (2000: Euro 0.37). Earnings per share excluding charges related to the acquisition of TopTier were up 92% to Euro 0.71 (2000: Euro 0.37). In the quarter, revenues in Europe, the Middle East and Africa (EMEA) region increased 36% to Euro 962 million (2000: Euro 708 million) and in the Asia-Pacific region (APA) revenues were up 15% to Euro 220 million (2000: Euro 192 million). Revenues in the Americas region rose 12% to Euro 671 million (2000: Euro 598 million); however, at constant currency rates, revenues in the Americas would have risen 6%. REVENUE BY REGION (IN EURO MILLIONS)
REVENUE REVENUE CHANGE % CHANGE 2Q 2001 2Q 2000 TOTAL 1,853 1,498 355 24 - at constant currency rates 22 EMEA 962 708 254 36 - at constant currency rates 36 Asia/Pacific 220 192 28 15 - at constant currency rates 20 Americas 671 598 73 12 - at constant currency rates 6
Product revenues were strong in the second quarter rising 22% to Euro 1.16 billion (2000: Euro 950 million). License revenues were up 17% to Euro 646 million (2000: Euro 554 million). Consulting and training revenues were strong during the second quarter, rising 35% to Euro 529 million (2000: Euro 393 million) and 27% to Euro 127 million (2000: Euro 100 million), respectivELy. For the second consecutive quarter, the company is providing additional information on revenues from certain specific software solutions. In the second quarter of 2001, software revenues related 8 to mySAP CRM (Customer Relationship Management) reached roughly Euro 104 million up 55% from the first quarter (Euro 67 million). mySAP SCM (Supply Chain Management) related revenues totaled around Euro 150 million, up 46% from the first quarter of 2001 (Euro 103 million). In the SCM solution market, SAP is now the clear market leader. These figures include revenues from designated solution contracts, as well as figures from integrated solution contracts, which are allocated based on usage surveys. HALF YEAR RESULTS For the first half, sales increased 26% over 2000 to Euro 3.38 billion (2000: Euro 2.68 billion). Operating income before charges for stock based compensation and acquisition charges related to TopTier was up 76% to Euro 657 million (2000: Euro 374 million). License revenues for the first half of 2001 rose 20% to Euro 1.1 billion (2000: Euro 923 million). Consulting revenues grew 36% to Euro 987 million (2000: Euro 725 million) and training revenue increased 21% to Euro 236 million (2000: Euro 195 million). In the first half, sales in the APA region were up 20% to Euro 398 million (2000: Euro 331 million), in the EMEA region, revenues increased 34% to Euro 1.76 billion (2000: Euro 1.32 billion) and in the Americas, revenues rose 18% to Euro 1.22 billion (2000: Euro 1.03 billion). 3. OUTLOOK SAP confirms its earlier expectations for the first nine months of 2001. SAP has also provided its extended expectations for revenue and margin performance for the full year. SAP expects revenue for the full year 2001 to grow by more than 20%. Operating margin, excluding stock based compensation and acquisition related charges, are expected to exceed the 20% achieved in 2000 by 1 to 2 percentage points. 4. HEADCOUNT
IN FULL TIME EQUIVALENTS JUNE DECEMBER ABSOLUTE 2001 2000 INCREASE Research & Development 6,768 6,138 630 Service & Support 12,285 11,054 1,231 Sales & Marketing 4,673 4,229 444 General & Administration 3,048 2,757 291 SAP GROUP 26,774 24,178 2,596 EMEA 16,851 15,305 1,546 Americas 6,778 6,121 657 Asia/Pacific 3,145 2,752 393
5. SECOND QUARTER HIGHLIGHTS Major contracts in the quarter included Acterna and Compaq from the US, Globe and Mail from Canada, and Unibanco from Brazil in the Americas; Cadbury Schweppes, Poste Italiane, 9 AstraZeneca, Nokia, BBC and Siemens Business Services in EMEA; Korean Broadcasting Systems,Japan Airlines and Sankyo from Japan in Asia/Pacific. More than 18,000 delegates attended SAPPHIRE Lisbon and SAPPHIRE Orlando, SAP's International e-business conferences. At the conferences, SAP outlined its open integration strategy based on component integration within the mySAP.com e-business platform, collaborative process integration provided by public and private exchanges from SAPMarkets, and user level integration through Portals provided by the SAP Portals subsidiary. SAP also announced plans for SAP R/3 Enterprise, the evolution of SAP R/3. SAP R/3 Enterprise preserves customers' investments in existing information technology and enables a more seamless evolution to mySAP.com Solutions. In addition, SAP announced an expansion of the long-standing global strategic alliance with IBM to cover the entire mySAP.com e-business platform. SAP and Commerce One Inc, announced an expansion of their alliance in which SAP has agreed to make a substantial additional investment in Commerce One of up to $225 million. Including prior investments and considering Commerce One's recent issuance of new shares, SAP will own approximately 20 percent of Commerce One outstanding common stock. SAP annual general meeting approved the merger of its two chaser classes. The single class of ordinary shares began trading on June 18. This move to a one-share, one-vote standard puts SAP more closely in line with international corporate governance practice and capital market expectations. Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "believe," "estimate," "intend," "may," "will," "expect," and "project" and similar expressions as they relate to the Company are intended to identify such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the Company's future financial results are discussed more fully in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"), including the Company's Annual Report on Form 20-F for 2000 filed with the SEC on March 28, 2001. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. SAP AG ordinary shares are listed on the Frankfurt Stock Exchange as well as a number of other exchanges. In the US, SAP's American Depositary Receipts (ADRs), each worth one-fourth of a ordinary share, trade on the New York Stock Exchange under the symbol `SAP'. SAP is a component of the DAX, the index of 30 German blue chip companies. Information on the SAP common shares is available on Bloomberg under the symbol SAP GR, on Reuters under SAPG.F and on Quotron under SAGR.EU. Additional information is available on SAP AG's home page: http://www.sap.com.