NEW YORK/WALLDORF - July 18, 2002 - SAP AG (NYSE: SAP) today announced its results for the second quarter and half year ended June 30, 2002. SAP announced preliminary results for the second quarter 2002 on July 11, 2002. In the second quarter of 2002, revenues declined 4% over the same period last year to EUR1.78 billion (2001: EUR1.85 billion). At constant currencies revenues would have been unchanged compared to second quarter 2001. Second quarter 2002 operating income, before charges for stock-based compensation programs (STAR and LTI) and acquisition related costs, amounted to EUR324 million (2001: EUR424 million). Respective operating margin was 18% (2001: 23%). Earnings before interest, taxes, depreciation and amortization ("EBITDA") were EUR377 million (2001: EUR450 million). Net income for the second quarter 2002 excluding acquisition charges and other impairment costs of minority investments (including Commerce One) declined 25% to EUR175 million (2001: EUR233 million) and respective earnings per share for the quarter were EUR0.56 (2001: EUR 0.75).
In the quarter, revenues in the Europe, Middle East and Africa (EMEA) region increased 1% to EUR976 million (2001: EUR962 million) with revenues in the Asia-Pacific region (APA) down 5% to EUR209 million (2001: EUR220 million). Revenues in the Americas region declined 12% to EUR593 million (2001: EUR671 million); at constant currency rates, however, revenues in the Americas would have declined 4%. Product revenues in the second quarter were EUR1.09 billion (2001: EUR1.16 billion). License revenues were EUR496 million (2001: EUR646 million). Consulting and training revenues were EUR545 million (2001: EUR529 million) and EUR115 million (2001: EUR127 million), respectively. The number of full-time equivalent employees at June 30, 2002, was 29,354, an increase of 1% since March 31, 2002. In the second quarter of 2002, software revenues related to mySAP CRM (Customer Relationship Management) reached roughly EUR101 million, down 3% from 2001 (EUR104 million). mySAP SCM (Supply Chain Management) related revenues totaled around EUR104 million, down 31% from 2001 (EUR150 million). These figures include revenues from designated solution contracts, as well as figures from integrated solution contracts, which are allocated based on usage surveys.
"In this trying environment, SAP continues to build long-term client relationships and create market-leading software solutions," commented Henning Kagermann, Co-Chairman and CEO of SAP AG. "We will continue to improve the way we do business to reflect the new market realities we encounter on a daily basis."
Half Year Results
For the first half, sales increased 2% over 2001 to EUR3.44 billion (2001: EUR3.38 billion). Operating income before charges for stock based compensation and acquisition related charges was EUR561 million (2001: EUR657 million). License revenues for the first half of 2002 declined 19% to EUR898 million (2001: EUR1.1 billion). Consulting revenues were EUR1.08 billion (2001: EUR987 million) and training revenues were EUR225 million (2001: EUR236 million). In the first half, sales in the APA region were down 1% to EUR394 million (2001: EUR398 million), in the EMEA region, revenues increased 6% to EUR1.86 billion (2001: EUR1.76 billion) and in the Americas, revenues declined 3% to EUR1.18 billion (2001: EUR1.22 billion).
"While today's economic situation continues to challenge our sales efforts, we were pleased to pick-up market share in the first half of 2002," said Hasso Plattner, Co-Chairman and CEO, SAP AG. "Our ongoing product development and R & D efforts will enable us to continue this trend, as customers and the market recognize the value of SAP's solutions."
Write-down of Minority Investments
In line with US GAAP, the Company also recorded in the second quarter charges reflecting the impairment of certain minority investments, mostly related to its 20% investment in Commerce One. These charges are non-recurring and non-cash and totaled EUR409 million, of which EUR315 million relates to SAP's investment in Commerce One. The impact of these charges, which are mostly not tax-deductible, resulted in a reported net loss in the second quarter 2002 of EUR232 million.
As a result of its Commerce One investment, SAP has in previous quarters recorded a portion of Commerce One's net losses in the income statements. Due to the impairment charge, the risks of further losses from the Commerce One investment are limited to the investment's book value of approximately EUR22 million. The SAP/Commerce One strategic partnership is not affected by the impairment. Full Year Guidance In a press release issued on July 11, SAP restated its full year guidance for 2002 based on the preliminary second quarter 2002 results. SAP now expects full year 2002 revenues to grow by 5 to 10% year-on-year. Assuming modest market improvements, the sales pipeline looks as it could lead to 10% revenue growth this year. With today's market conditions, the ongoing customer commitments should enable the Company to deliver around 5% revenue growth. The Company's margin expectation remains unchanged. SAP anticipates its operating margin excluding stock-based compensation and acquisition related charges to improve at least one percentage point over the 20% achieved in 2001.
Second Quarter Highlights
* SAP extends its position as the world's leading provider of e-business software solutions. Key contracts in the second quarter include Burger King, City of San Antonio, Textron, and Wrigley, in the Americas; in EMEA Continental, Nordea, Swedish Posten, and UBS; and in Asia/Pacific BHP Biliton, China Resources, Matshushita Electric, and Olympus Optical among others.
* SAP held its international e-business conference, SAPPHIRE '02, in Orlando, attracting more than 8,500 attendees. SAP unveiled several key technology initiatives that help companies leverage existing investments in people, systems, and applications, across heterogeneous technology environments. More than 60 SAP customers, ranging from the world's largest global corporations to small and mid-sized businesses, delivered presentations demonstrating how they leverage their SAP investments to solve real-world business problems.
* SAP launched a new breed of applications called cross applications (xApps), which build on existing applications within and across enterprise boundaries, extending value by delivering adaptable cross-functional business processes. The first xApp to be shipped is Resource and Program Management (RPM), which spans independent enterprise functions such as ERP, CRM, HR, PLM and Financials in order to gain better visibility of project costs, staffing and schedules to facilitate quicker decision making and complex project deployment.
* Delivering on its strategy to serve small and mid-sized businesses (SMBs), SAP announced the availability of an expanded portfolio of smart business solutions for the market. SAP's solutions for SMBs, to be offered under the names mySAP All-in-One and SAP Business One, serve the information technology needs of SMBs, regardless of the size or sophistication of the company's IT investments.
* SAP held its Annual General Meeting in May. All items proposed by the Supervisory Board and Executive Board were approved at the meeting by more than 97 percent of the represented voting capital. A dividend in the amount of EUR0.58 per ordinary share was paid to SAP shareholders. Pekka Ala-Pietilä, President of Nokia Corporation, Finland, and August-Wilhelm Scheer, Chairman of the Supervisory Board of IDS Scheer AG, were elected as new shareholder representatives on the Supervisory Board.
Presentation / Conference Call / Webcast
SAP senior management will host a press conference in New York today at 3:00 PM (CET) / 2:00 PM (GMT) / 9:00 AM (Eastern) / 6:00 AM (Pacific), followed by an investor conference at 6:00 PM (CET) / 5:00 PM (GMT) / 12:00 PM (Eastern) / 9:00 AM (Pacific). Both conferences will be web cast live at <http://www.sap.com/investor> and will be available for replay purposes as well. Slides related to today's announcement will be used during the conference and are also available on the SAP website.
Revenue by Region (in EUR millions)
SAP Group
Revenue 2Q 2002Revenue 2Q 2001Change % Change
Total 1,778 1,853 -75 -4
- at constant currency rates 0
EMEA 976 962 14 1
- at constant currency rates 2
Asia Pacific 209 220 -11 -5
- at constant currency rates 1
Americas 593 671 78 -12
- at constant currency rates -4
Key figures at a glance (in EUR millions)
SAP Group
2Q 2002 2Q 2001 Change % Change
Revenues 1,778 1,853 -75 -4
License revenues 496 646 -150 -23
Income before taxes -107 264 -371 -140
Net income -232 116 -348 -300
Headcount (June 30) 29,354 26,774 2,580 10
For more information, financial community only:
Gundolf Moritz, +49 (6227) 7-41551, investor@sap.com <mailto:investor@sap.com>, CET Stefan Gruber, +1 (212) 653-9821, stefan.gruber@sap.com <mailto:stefan.gruber@sap.com>, EDT Jim Prout, Taylor Rafferty, +1 (212) 889-4350, sap@taylor-rafferty.com <mailto:sap@taylor-rafferty.com>, EDT
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